Document:

<PAGE>

                                SAKS INCORPORATED

                              9 7/8% Notes Due 2011

                          REGISTRATION RIGHTS AGREEMENT

                                                              New York, New York
                                                                 October 4, 2001

Salomon Smith Barney Inc.
Banc of America Securities LLC
Banc One Capital Markets, Inc.
BNY Capital Markets, Inc.
First Union Securities, Inc.
Fleet Securities, Inc.
   as Dealer Managers

c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013

Ladies and Gentlemen:

          Saks Incorporated, a Tennessee corporation (the "Company"), proposes
to issue its 9 7/8% Notes Due 2011 (the "New Notes"), which New Notes are
guaranteed by the subsidiaries of the Company named in Schedule A hereto (the
"Guarantors," and together with the Company, the "Issuers") as part of an
exchange offer (the "Initial Exchange Offer") for its outstanding 7% Notes Due
2004 and 7 1/4% Notes Due 2004 (collectively, the "Old Notes"), upon the terms
set forth in a Dealer Manager Agreement (the "Dealer Manager Agreement") dated
as of August 30, 2001, among the Company, the Guarantors and you as the dealer
managers (the "Dealer Managers"), relating to the Initial Exchange Offer. The
New Notes are to be issued under an indenture (the "Indenture") dated as of
October 4, 2001, among the Company, the Guarantors and Bank One Trust Company,
National Association, as trustee (the "Trustee"). To induce the Dealer Managers
to enter into the Dealer Manager Agreement and to satisfy a condition of your
obligations thereunder, the Issuers, jointly and severally, agree with you for
your benefit and the benefit of the holders (each a "Holder" and, together, the
"Holders") from time to time of the New Notes or the Exchange Notes (as
hereinafter defined), as follows:

          1. Definitions. Capitalized terms used herein without definition shall
             -----------
have their respective meanings set forth in the Dealer Manager Agreement. As
used in this Agreement, the following capitalized defined terms shall have the
following meanings:

          "Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.

          "Additional Interest" shall have the meaning set forth in Section 5
hereto.

<PAGE>

          "Affiliate" of any specified person shall mean any other person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control of
a person shall mean the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.

          "Broker-Dealer" shall mean any broker or dealer registered as such
under the Exchange Act.

          "Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City, New York.

          "Commission" shall mean the Securities and Exchange Commission.

          "Dealer Manager" shall have the meaning set forth in the preamble
hereto.

          "Dealer Manager Agreement" shall have the meaning set forth in the
preamble hereto.

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.

          "Exchange Offer Registration Period" shall mean the one-year period
following the consummation of the Registered Exchange Offer, exclusive of any
period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.

          "Exchange Offer Registration Statement" shall mean a registration
statement of the Issuers on an appropriate form under the Act with respect to
the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments thereto, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

          "Exchange Notes" shall mean debt securities of the Company, guaranteed
by the Guarantors, identical in all material respects to the New Notes (except
that the cash interest and interest rate step-up provisions and the transfer
restrictions shall be modified or eliminated, as appropriate) and to be issued
under the Exchange Notes Indenture.

          "Exchange Notes Indenture" shall mean an indenture among the Company,
the Guarantors and the Exchange Notes Trustee, identical in all material
respects to the Indenture (except that the cash interest and interest rate
step-up provisions and the transfer restrictions shall be modified or
eliminated, as appropriate) entered into in connection with the issuance of the
Exchange Notes.

                                        2

<PAGE>

          "Exchange Notes Trustee" shall mean a bank or trust company reasonably
satisfactory to the Dealer Manager, as trustee with respect to the Exchange
Notes under the Exchange Notes Indenture.

          "Exchanging Dealer" shall mean any Holder (which may include any
Dealer Manager) that is a Broker-Dealer and elects to exchange for Exchange
Notes any New Notes that it acquired for its own account as a result of
market-making activities or other trading activities (but not directly from the
Company or any Affiliate of the Company) for Exchange Notes.

          "Expiration Date" shall have the meaning set forth in Section 2(c)(ii)
hereto.

          "Fee" shall have the meaning set forth in the Dealer Manager
Agreement.

          "Holder" shall have the meaning set forth in the preamble hereto.

          "Indenture" shall have the meaning set forth in the preamble hereto.

          "Initial Exchange Offer" shall have the meaning set forth in the
preamble hereto.

          "Losses" shall have the meaning set forth in Section 7(d) hereof.

          "Majority Holders" shall mean, on any date, the Holders of a majority
of the aggregate principal amount of the New Notes registered or to be
registered under a Registration Statement.

          "Managing Underwriters" shall mean the investment banker or investment
bankers and manager or managers that shall administer any underwritten offering.

          "New Notes" shall have the meaning set forth in the preamble hereto.

          "Old Notes" shall have the meaning set forth in the preamble hereto.

          "Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the New Notes or the Exchange Notes covered by such
Registration Statement, and all amendments and supplements thereto and all
material incorporated by reference therein.

          "Registered Exchange Offer" shall mean the proposed offer of the
Issuers to issue and deliver to the Holders of the New Notes that are not
prohibited by any law or policy of the Commission from participating in such
offer, in exchange for the New Notes, a like aggregate principal amount of the
Exchange Notes.

          "Registration Statement" shall mean any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the New Notes or
the Exchange Notes pursuant to the provisions of this Agreement, any amendments
and supplements to such

                                        3

<PAGE>

registration statement, including post-effective amendments (in each case
including the Prospectus contained therein), all exhibits thereto and all
material incorporated by reference therein.

          "Settlement Date" shall mean the date on which the Initial Exchange
Offer has been consummated.

          "Shelf Registration" shall mean a registration under the Act effected
pursuant to Section 3 hereof.

          "Shelf Registration Period" has the meaning set forth in Section 3(b)
hereof.

          "Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 3 hereof which
covers some or all of the New Notes, on an appropriate form under Rule 415 under
the Act, or any similar rule that may be adopted by the Commission, amendments
and supplements to such registration statement, including (i) post-effective
amendments and (ii) any "shelf" registration statement filed prior to the date
of this Agreement under which the Company may register resales of the New Notes,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.

          "Trustee" shall have the meaning set forth in the preamble hereto.

          "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission promulgated thereunder.

          "underwriter" shall mean any underwriter of New Notes in connection
with an offering thereof under a Shelf Registration Statement.

          2. Registered Exchange Offer. (a) The Issuers shall prepare and, not
             -------------------------
later than 90 days following the Settlement Date (or if such 90th day is not a
Business Day, the next succeeding Business Day), shall file with the Commission
the Exchange Offer Registration Statement with respect to the Registered
Exchange Offer. The Issuers shall use their best efforts to (i) cause the
Exchange Offer Registration Statement to become effective under the Act within
180 days of the Settlement Date (or if such 180th day is not a Business Day, the
next succeeding Business Day) and (ii) consummate the Registered Exchange Offer
within 210 days of the Settlement Date (or if such 210/th/ day is not a Business
Day, the next succeeding Business Day).

          (b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Issuers shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange New Notes for Exchange Notes (provided that such Holder is
not an Affiliate of any of the Issuers, acquires the Exchange Notes in the
ordinary course of such Holder's business, has no arrangements with any person
to participate in the distribution of the Exchange Notes and is not prohibited
by any law, rule or policy of the Commission from participating in the
Registered Exchange Offer) to trade such Exchange Notes from and after their
receipt without any limitations or restrictions under the Act and without
material restrictions under the securities laws of a substantial proportion of
the several states of the United States.

                                       4

<PAGE>

          (c)  In connection with the Registered Exchange Offer, the Issuers
               shall:

               (i)    mail to each Holder a copy of the Prospectus forming part
     of the Exchange Offer Registration Statement, together with an appropriate
     letter of transmittal and related documents;

               (ii)   keep the Registered Exchange Offer open for not less than
     20 Business Days and not more than 30 Business Days after the date notice
     thereof is mailed to the Holders (or, in each case, longer if required by
     applicable law) (the "Expiration Date");

               (iii)  use their best efforts to keep the Exchange Offer
     Registration Statement continuously effective under the Act, supplemented
     and amended as required under the Act to ensure that it is available for
     sales of Exchange Notes by Exchanging Dealers during the Exchange Offer
     Registration Period;

               (iv)   utilize the services of a depositary for the Registered
     Exchange Offer with an address in the Borough of Manhattan in New York
     City, which may be the Trustee, the Exchange Notes Trustee or an Affiliate
     of either of them;

               (v)    permit Holders to withdraw tendered New Notes at any time
     prior to the close of business, New York time, on the last Business Day on
     which the Registered Exchange Offer is open;

               (vi)   prior to effectiveness of the Exchange Offer Registration
     Statement, provide a supplemental letter to the Commission (A) stating that
     the Issuers are conducting the Registered Exchange Offer in reliance on the
     position of the Commission in Exxon Capital Holdings Corporation (pub.
                                   ----------------------------------
     avail. May 13, 1988) and Morgan Stanley and Co., Inc. (pub. avail. June 5,
                              ---------------------------
     1991), and (B) including a representation that the Issuers have not entered
     into any arrangement or understanding with any person to distribute the
     Exchange Notes to be received in the Registered Exchange Offer and that, to
     the best of the Issuers' information and belief, each Holder participating
     in the Registered Exchange Offer is acquiring the Exchange Notes in the
     ordinary course of business and has no arrangement or understanding with
     any person to participate in the distribution of the Exchange Notes; and

               (vii)  comply in all respects with all applicable laws.

          (d)  As soon as practicable after the close of the Registered Exchange
Offer, the Issuers shall:

               (i)    accept for exchange all New Notes tendered and not validly
     withdrawn pursuant to the Registered Exchange Offer;

               (ii)   deliver to the Trustee for cancellation in accordance with
     Section 4(t) all New Notes so accepted for exchange; and

                                        5

<PAGE>

               (iii) cause the Exchange Notes Trustee promptly to authenticate
     and deliver to each Holder of New Notes a principal amount of Exchange
     Notes equal to the principal amount of the New Notes of such Holder so
     accepted for exchange.

          (e)  Each Holder hereby acknowledges and agrees that any Broker-Dealer
and any such Holder using the Registered Exchange Offer to participate in a
distribution of the Exchange Notes (x) could not under Commission policy as in
effect on the date of this Agreement rely on the position of the Commission in
Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991) and Exxon Capital
---------------------------                                 -------------
Holdings Corporation (pub. avail. May 13, 1988), as interpreted in the
--------------------
Commission's letter to Shearman & Sterling dated July 2, 1993 and similar
no-action letters, and (y) must comply with the registration and prospectus
delivery requirements of the Act in connection with any secondary resale
transaction, and any secondary resale transactions by such Holder must be
covered by an effective registration statement containing the selling security
holder and plan of distribution information required by Item 507 or 508, as
applicable, of the Commission's Regulation S-K if the resales are of Exchange
Notes obtained by such Holder in exchange for New Notes acquired by such Holder
directly from any of the Issuers or one of their respective Affiliates.
Accordingly, each Holder participating in the Registered Exchange Offer shall be
required to represent to the Issuers that, at the time of the consummation of
the Registered Exchange Offer:

               (i)   any Exchange Notes received by such Holder will be acquired
     in the ordinary course of such Holder's business;

               (ii)  such Holder will have no arrangement or understanding with
     any person to participate in the distribution of the New Notes or the
     Exchange Notes within the meaning of the Act; and

               (iii) such Holder is not an Affiliate of any of the Issuers.

          3. Shelf Registration. (a) If (i) due to any change in law or
             ------------------
applicable interpretations thereof by the Commission's staff, the Issuers
determine upon advice of their outside counsel that they are not permitted to
effect the Registered Exchange Offer as contemplated by Section 2 hereof; or
(ii) for any other reason the Registered Exchange Offer is not consummated
within 210 days of the Settlement Date; or (iii) any Holder is not eligible to
participate in the Registered Exchange Offer, the Issuers shall effect a Shelf
Registration Statement in accordance with subsection (b) below.

          (b)  (i) The Issuers shall as promptly as practicable (but in no event
more than 30 days after so required or requested pursuant to this Section 3),
file with the Commission and thereafter shall use their best efforts to cause to
be declared effective under the Act a Shelf Registration Statement relating to
the offer and sale of the New Notes by the Holders thereof from time to time in
accordance with the methods of distribution elected by such Holders and set
forth in such Shelf Registration Statement; provided, however, that no Holder
shall be entitled to have the New Notes held by it covered by such Shelf
Registration Statement unless such Holder agrees in writing to be bound by all
of the provisions of this Agreement applicable to such Holder; and provided
further that with respect to a Shelf Registration Statement required pursuant to
clause (ii) of Section 3(a), the consummation of a Registered Exchange Offer
shall

                                        6

<PAGE>

relieve the Issuers of their obligations under this Section 3(b) but only in
respect of their obligations under such clause (ii) of Section 3(a).

               (ii)   The Issuers shall use their best efforts to keep the Shelf
     Registration Statement continuously effective, supplemented and amended as
     required by the Act, in order to permit the Prospectus forming part thereof
     to be usable by Holders for a period of two years from the date the Shelf
     Registration Statement is declared effective by the Commission or such
     shorter period that will terminate when all the New Notes covered by the
     Shelf Registration Statement have been sold pursuant to the Shelf
     Registration Statement (in any such case, such period being called the
     "Shelf Registration Period"). The Issuers shall be deemed not to have used
     their best efforts to keep the Shelf Registration Statement effective
     during the requisite period if they voluntarily take any action that would
     result in Holders of New Notes covered thereby not being able to offer and
     sell such New Notes during that period, unless (A) such action is required
     by applicable law or (B) such action is taken by the Issuers in good faith
     and for valid business reasons (not including avoidance of the Issuers'
     obligations hereunder), including, without limitation, the acquisition or
     divestiture of assets, so long as the Issuers promptly thereafter comply
     with the requirements of Section 4(k) hereof, if applicable.

               (iii)  The Issuers shall cause the Shelf Registration Statement
     and the related Prospectus and any amendment or supplement thereto, as of
     the effective date of the Shelf Registration Statement or such amendment or
     supplement, (A) to comply in all material respects with the applicable
     requirements of the Act and the rules and regulations of the Commission;
     and (B) not to contain any untrue statement of a material fact or omit to
     state a material fact required to be stated therein or necessary in order
     to make the statements therein (in the case of a Prospectus contained
     therein, in the light of the circumstances under which they were made) not
     misleading.

          4. Additional Registration Procedures. In connection with any Shelf
             ----------------------------------
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply.

          (a)  The Issuers shall:

               (i)    furnish to you, at a reasonable time prior to the filing
     thereof with the Commission, a copy of any Exchange Offer Registration
     Statement and any Shelf Registration Statement, and each amendment thereof
     and each amendment or supplement, if any, to the Prospectus included
     therein (including all documents incorporated by reference therein after
     the initial filing) and shall use their best efforts to reflect in each
     such document, when so filed with the Commission, such comments as you
     reasonably propose;

               (ii)   include the information, substantially in the form set
     forth in Annex A hereto, on the facing page of the Exchange Offer
     Registration Statement, in Annex B hereto in the forepart of the Exchange
     Offer Registration Statement in a section setting forth details of the
     Registered Exchange Offer, in Annex C hereto in the

                                        7

<PAGE>

     underwriting or plan of distribution section of the Prospectus contained in
     the Exchange Offer Registration Statement, and in Annex D hereto in the
     letter of transmittal delivered pursuant to the Registered Exchange Offer;
     and

               (iii)  in the case of a Shelf Registration Statement, include the
     information regarding the Holders that propose to sell New Notes pursuant
     to the Shelf Registration Statement as selling security holders.

          (b)  The Issuers shall ensure that:

               (i)    any Registration Statement and any amendment thereto and
     any Prospectus forming part thereof and any amendment or supplement thereto
     complies in all material respects with the Act and the rules and
     regulations thereunder; and

               (ii)   any Registration Statement and any amendment thereto does
     not, when it becomes effective, contain an untrue statement of a material
     fact or omit to state a material fact required to be stated therein or
     necessary to make the statements therein not misleading.

          (c)  The Issuers shall advise you, the Holders of New Notes or
Exchange Notes, as the case may be, covered by any Registration Statement and
any Exchanging Dealer under any Exchange Offer Registration Statement that has
provided in writing to the Issuers a telephone or facsimile number and address
for notices, and, if requested by you or any such Holder or Exchanging Dealer,
shall confirm such advice in writing (which notice pursuant to clauses (ii)-(v)
below shall be accompanied by an instruction to suspend the use of the
Prospectus until the Issuers shall have remedied the basis for such suspension):

               (i)    when a Registration Statement and any amendment thereto
     has been filed with the Commission and when such Registration Statement or
     any post-effective amendment thereto has become effective;

               (ii)   of any request by the Commission for any amendment or
     supplement to a Registration Statement or the Prospectus or for additional
     information;

               (iii)  of any Issuer's knowledge of the issuance by the
     Commission of any stop order suspending the effectiveness of a Registration
     Statement or the initiation or threatening of any proceedings for that
     purpose;

               (iv)   of the receipt by any Issuer of any notification with
     respect to the suspension of the qualification of the securities included
     in any Registration Statement for sale in any jurisdiction or the
     initiation of any proceeding for such purpose; and

               (v)    of the happening of any event that requires any change in
     a Registration Statement or the Prospectus so that, as of such date, the
     statements therein do not contain any untrue statement of a material fact
     and do not omit to state a material fact required to be stated therein or
     necessary to make the statements therein (in the case of the Prospectus, in
     the light of the circumstances under which they were made) not misleading.

                                       8

<PAGE>

          Upon receiving notice of the occurrence of any of the events listed in
this Section 4(c), each Holder will, upon request by the Company in writing,
immediately discontinue disposition of New Notes or Exchange Notes pursuant to a
Registration Statement until such Holder's receipt of copies of the supplemented
or amended Prospectus contemplated by Section 4(k) or until it is advised in
writing by the Issuers that use of the applicable Prospectus may resume, and, if
so directed by the Issuers, such Holder will deliver to the Company (at the
Issuers' expense) all copies in such Holder's possession, other than permanent
file copies, of the Prospectus covering such New Notes or Exchange Notes that
was current at the time of receipt of such notice.

          (d) The Issuers shall use their best efforts to prevent the issuance
and, if issued, to obtain the withdrawal at the earliest possible time of any
order suspending the effectiveness of any Registration Statement or the
qualification of the securities therein for sale in any jurisdiction.

          (e) The Issuers shall promptly furnish to each Holder of New Notes
covered by any Shelf Registration Statement, without charge, at least one copy
of such Shelf Registration Statement and any post-effective amendment thereto,
including all material incorporated therein by reference, and, if the Holder so
requests in writing, all exhibits thereto (including exhibits incorporated by
reference therein).

          (f) The Issuers shall, during the Shelf Registration Period, promptly
deliver to you and to each Holder, and any sales or placement agents or
underwriters acting on behalf of such Holder of New Notes covered by any Shelf
Registration Statement, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in such Shelf Registration
Statement and any amendment or supplement thereto as such person may reasonably
request. The Issuers consent to the use of the Prospectus or any amendment or
supplement thereto by each of the foregoing in connection with the offering and
sale of the New Notes covered by the Prospectus, or any amendment or supplement
thereto, included in the Shelf Registration Statement.

          (g) The Issuers shall furnish to each Exchanging Dealer which so
requests, without charge, at least one copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including all material
incorporated by reference therein, and, if the Exchanging Dealer so requests in
writing, all exhibits thereto (including exhibits incorporated by reference
therein).

          (h) The Issuers shall promptly deliver to you and to each Holder, each
Exchanging Dealer and each other person required to deliver a Prospectus during
the Exchange Offer Registration Period, without charge, as many copies of the
Prospectus included in such Exchange Offer Registration Statement and any
amendment or supplement thereto as any such person may reasonably request. The
Issuers consent to the use of the Prospectus or any amendment or supplement
thereto by you, any Holder, any Exchanging Dealer and any such other person that
may be required to deliver a Prospectus following the Registered Exchange Offer
in connection with the offering and sale of the Exchange Notes covered by the
Prospectus, or any amendment or supplement thereto, included in the Exchange
Offer Registration Statement.

                                        9

<PAGE>

          (i) Prior to the Registered Exchange Offer or any other offering of
New Notes or Exchange Notes, as the case may be, pursuant to any Registration
Statement, the Issuers shall arrange, if necessary, for the qualification of the
New Notes or the Exchange Notes, as the case may be, for sale under the laws of
such jurisdictions as any Holder shall reasonably request and will maintain such
qualification in effect so long as required; provided that in no event shall the
Issuers be obligated to (i) qualify to do business or as a broker or dealer of
securities in any jurisdiction where it is not then so qualified, (ii) take any
action that would subject it to service of process in suits, other than those
arising out of the Initial Exchange Offer, the Registered Exchange Offer or any
offering pursuant to a Shelf Registration Statement, in any such jurisdiction
where it is not then so subject or (iii) subject itself to taxation in any
jurisdiction if it is not already so subject.

          (j) The Issuers shall cooperate with the Holders of New Notes or
Exchange Notes, as the case may be, to facilitate the timely preparation and
delivery of certificates representing New Notes or Exchange Notes to be issued
or sold pursuant to any Registration Statement free of any restrictive legends
and in such denominations and registered in such names as Holders may request.

          (k) Upon the occurrence of any event contemplated by subsections (ii)
through (v) of Section 4(c) hereof, the Issuers shall promptly prepare a
post-effective amendment to the applicable Registration Statement or an
amendment or supplement to the related Prospectus or file any other required
document so that, as thereafter delivered to the persons entitled to the
delivery thereof pursuant to Section 4(c) hereof, the Prospectus will not
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and to notify each Holder to suspend
use of the Prospectus as promptly as practicable after the occurrence of such an
event, and each Holder hereby agrees to suspend use of the Prospectus until the
Issuers have amended or supplemented the Prospectus to correct such misstatement
or omission. In such circumstances, the period of effectiveness of the Exchange
Offer Registration Statement provided for in Section 2 and the Shelf
Registration Statement provided for in Section 3(b) shall each be extended by
the number of days from and including the date of the giving of a notice of
suspension pursuant to Section 4(c) hereof to and including the date the persons
entitled to the delivery thereof pursuant to Section 4(c) hereof shall have
received such amended or supplemented Prospectus pursuant to this Section.

          (l) (A) Not later than the effective date of an Exchange Offer
Registration Statement, the Issuers shall provide a CUSIP number for the
Exchange Notes registered under such Exchange Offer Registration Statement and
provide the Exchange Notes Trustee with printed certificates for such Exchange
Notes, free of any restrictive legends, in a form eligible for deposit with The
Depository Trust Company ("DTC") and (B) on the first business day following the
effective date of any Shelf Registration Statement hereunder or as soon as
possible thereafter, the Issuers shall use their best efforts to cause DTC to
remove (1) from any existing CUSIP number assigned to the New Notes any
designation indicating that the New Notes are "restricted securities," which
efforts shall include delivery to DTC of a letter executed by the Company
substantially in the form of Exhibit A hereto and (2) any other stop or
restriction on DTC's system with respect to the New Notes. In the event the
Issuers are unable to cause DTC to take the actions described in the immediately
preceding sentence, the Issuers shall take such

                                       10

<PAGE>

actions as the Majority Holders may reasonably request to provide, as soon as
practicable, a CUSIP number for the New Notes registered under the Shelf
Registration Statement and to cause the CUSIP number to be assigned to the New
Notes or Exchange Notes, as the case may be (or to the maximum aggregate
principal amount of the New Notes or Exchange Notes, as the case may be, to
which such number may be assigned). Upon compliance with the foregoing
requirements of this Section 4(l)(B), the Company shall provide the Trustee with
printed certificates for such New Notes in a form eligible for deposit with DTC.

          (m) The Issuers shall comply with all applicable rules and regulations
of the Commission and shall make generally available to its security holders as
soon as practicable after the effective date of the applicable Registration
Statement an earnings statement satisfying the provisions of Section 11(a) of
the Act.

          (n) The Issuers shall cause the Indenture or the Exchange Notes
Indenture, as the case may be, to be qualified under the Trust Indenture Act in
a timely manner.

          (o) The Issuers may require each Holder of New Notes to be sold
pursuant to any Shelf Registration Statement to furnish to the Issuers such
information regarding the Holder and the distribution of such New Notes as the
Issuers may from time to time reasonably require for inclusion in such Shelf
Registration Statement. The Issuers may exclude from such Shelf Registration
Statement the New Notes of any Holder that fails to furnish such information
within a reasonable time after receiving such request.

          (p) The Issuers shall, if requested, use their best efforts to
incorporate promptly in a Prospectus supplement or post-effective amendment to a
Shelf Registration Statement such information as a Holder may reasonably provide
from time to time to the Company in writing for inclusion in a Prospectus or any
Shelf Registration Statement concerning such Holder and the distribution of such
Holder's New Notes and shall make all required filings of such Prospectus
supplement or post-effective amendment as soon as reasonably possible after
receipt of notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.

          (q) In the case of any Shelf Registration Statement, the Issuers shall
enter into such agreements and take all other reasonable and appropriate actions
(including if requested an underwriting agreement in customary form) in order to
expedite or facilitate the registration or the disposition of the New Notes or
Exchange Notes, as the case may be, and in connection therewith, if an
underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures no less favorable than those set forth
in Section 7 (or such other provisions and procedures acceptable to the Majority
Holders and the Managing Underwriters, if any, with respect to all parties to be
indemnified pursuant to Section 7).

          (r) In the case of any Shelf Registration Statement, the Issuers
shall:

              (i) make reasonably available for inspection by the selling
     Holders of New Notes to be registered thereunder, any underwriter
     participating in any disposition pursuant to such Shelf Registration
     Statement, and any attorney, accountant or other agent retained by the
     selling Holders or any such underwriter, all relevant financial and

                                       11

<PAGE>

     other records, pertinent corporate documents and properties of the Company
     and its subsidiaries; provided, however, that any information that is
     designated in writing by the Issuers, in good faith, as confidential at the
     time of delivery of such information shall be kept confidential by the
     selling Holders or any such underwriter, attorney, accountant or agent,
     unless such disclosure is made in connection with a court proceeding or
     required by law, or such information becomes available to the public
     generally or through a third party without an accompanying obligation of
     confidentiality and without any action or omission by any selling Holder in
     violation of this subsection (i);

              (ii)  cause the Company's officers, directors, employees,
     accountants and auditors to supply all relevant information reasonably
     requested by the selling Holders or any such underwriter, attorney,
     accountant or agent in connection with any such Registration Statement as
     is customary for similar due diligence examinations; provided, however,
     that any information that is designated in writing by the Issuers, in good
     faith, as confidential at the time of delivery of such information shall be
     kept confidential by the selling Holders or any such underwriter, attorney,
     accountant or agent, unless such disclosure is made in connection with a
     court proceeding or required by law, or such information becomes available
     to the public generally or through a third party without an accompanying
     obligation of confidentiality and without any action or omission by any
     selling Holder in violation of this subsection (ii);

              (iii) make such representations and warranties to the Holders of
     New Notes registered thereunder and the underwriters, if any, in form,
     substance and scope as are customarily made by the Issuers to underwriters
     in primary underwritten offerings and covering matters including, but not
     limited to, those set forth in the Dealer Manager Agreement;

              (iv)  obtain opinions of counsel to the Issuers and updates
     thereof (which counsel and opinions (in form, scope and substance) shall be
     reasonably satisfactory to the Managing Underwriters, if any) addressed to
     each selling Holder and the underwriters, if any, covering such matters as
     are customarily covered in opinions requested in underwritten offerings and
     such other matters as may be reasonably requested by such Holders and
     underwriters;

              (v)   obtain "cold comfort" letters and updates thereof from the
     independent certified public accountants of the Issuers (and, if necessary,
     any other independent certified public accountants of any subsidiary of the
     Company or of any business acquired directly or indirectly by the Company
     for which financial statements and financial data are, or are required to
     be, included in the Registration Statement), addressed to each selling
     Holder of New Notes registered thereunder and the underwriters, if any, in
     customary form and covering matters of the type customarily covered in
     "cold comfort" letters in connection with primary underwritten offerings;
     and

              (vi)  deliver such documents and certificates as may be reasonably
     requested by the Majority Holders and the Managing Underwriters, if any,
     including those to evidence compliance with Section 4(k) hereof and with
     any customary

                                       12

<PAGE>

     conditions contained in the underwriting agreement or other agreement
     entered into by the Issuers.

The actions set forth in the foregoing subclauses (iii), (iv), (v) and (vi)
shall be performed at (A) the effectiveness of such Registration Statement and
each post-effective amendment thereto; and (B) each closing under any
underwriting or similar agreement as and to the extent required thereunder.

          (s)  In the case of any Exchange Offer Registration Statement, the
Issuers shall:

               (i)   make reasonably available for inspection by you, and any
     attorney, accountant or other agent retained by you, all relevant financial
     and other records, pertinent corporate documents and properties of the
     Company and its subsidiaries; provided, however, that any information that
     is designated in writing by the Issuers, in good faith, as confidential at
     the time of delivery of such information shall be kept confidential by you
     or any such attorney, accountant or agent, unless such disclosure is made
     in connection with a court proceeding or required by law, or such
     information becomes available to the public generally or through a third
     party without an accompanying obligation of confidentiality and without any
     action or omission by any selling Holder in violation of this subsection
     (i);

               (ii)  cause the Company's officers, directors, employees,
     accountants and auditors to supply all relevant information reasonably
     requested by you or any such attorney, accountant or agent in connection
     with any such Registration Statement as is customary for similar due
     diligence examinations; provided, however, that any information that is
     designated in writing by the Issuers, in good faith, as confidential at the
     time of delivery of such information shall be kept confidential by you or
     any such attorney, accountant or agent, unless such disclosure is made in
     connection with a court proceeding or required by law, or such information
     becomes available to the public generally or through a third party without
     an accompanying obligation of confidentiality and without any action or
     omission by any selling Holder in violation of this subsection (ii);

               (iii) make such representations and warranties to you, in form,
     substance and scope as are customarily made by the Issuers to underwriters
     in primary underwritten offerings and covering matters including, but not
     limited to, those set forth in the Dealer Manager Agreement;

               (iv)  obtain opinions of counsel to the Issuers (which counsel
     and opinions (in form, scope and substance) shall be reasonably
     satisfactory to you and your counsel) and updates thereof, addressed to
     you, covering such matters as are customarily covered in opinions requested
     in underwritten offerings and such other matters as may be reasonably
     requested by you or your counsel;

               (v)   obtain "cold comfort" letters and updates thereof from the
     independent certified public accountants of the Issuers (and, if necessary,
     any other

                                       13

<PAGE>

     independent certified public accountants of any subsidiary of the Company
     or of any business acquired directly or indirectly by the Company for which
     financial statements and financial data are, or are required to be,
     included in the Registration Statement), addressed to you, in customary
     form and covering matters of the type customarily covered in "cold comfort"
     letters in connection with primary underwritten offerings, or if requested
     by you or your counsel in lieu of a "cold comfort" letter, an agreed-upon
     procedures letter under Statement on Auditing Standards No. 35, covering
     matters requested by you or your counsel; and

               (vi) deliver such documents and certificates as may be reasonably
     requested by you or your counsel, including those to evidence compliance
     with Section 4(k) and with conditions customarily contained in underwriting
     agreements.

The actions set forth in the foregoing subclauses (iii), (iv), (v) and (vi)
shall be performed at (A) the close of the Registered Exchange Offer and (B) the
effective date of any post-effective amendment to the Exchange Offer
Registration Statement.

          (t)  If a Registered Exchange Offer is to be consummated, upon
delivery of the New Notes by Holders to the Issuers (or to such other person as
directed by the Issuers) in exchange for the Exchange Notes, the Issuers shall
mark, or cause to be marked, on the New Notes so exchanged that such New Notes
are being canceled in exchange for the Exchange Notes. In no event shall the New
Notes be marked as paid or otherwise satisfied.

          (u)  The Issuers shall use their best efforts to cause the securities
covered by a Registration Statement to be rated with at least one nationally
recognized statistical rating agency, if so requested by the Majority Holders or
by any Managing Underwriters.

          (v)  In the case of any Shelf Registration Statement, if any
Broker-Dealer shall underwrite any New Notes or participate as a member of an
underwriting syndicate or selling group or "assist in the distribution" (within
the meaning of the Rules of Fair Practice and the By-Laws of the National
Association of Securities Dealers, Inc.) thereof, whether as a Holder of such
New Notes or as an underwriter, a placement or sales agent or a broker or dealer
in respect thereof, or otherwise, the Issuers shall assist such Broker-Dealer in
complying with the requirements of such Rules and By-Laws, including, without
limitation, by:

               (i)   if such Rules or By-Laws shall so require, engaging a
     "qualified independent underwriter" (as defined in such Rules) to
     participate in the preparation of such Registration Statement, to exercise
     usual standards of due diligence with respect thereto and, if any portion
     of the offering contemplated by such Registration Statement is an
     underwritten offering or is made through a placement or sales agent, to
     recommend the yield of such New Notes;

               (ii)  indemnifying any such qualified independent underwriter to
     the extent of the indemnification of underwriters provided in Section 7
     hereof; and

               (iii) providing such information to such Broker-Dealer as may be
     required in order for such Broker-Dealer to comply with the requirements of
     such Rules or By-Laws.

                                       14

<PAGE>

     (w) The Issuers shall use their best efforts to take all other steps
necessary to effect the registration of New Notes or Exchange Notes, as the case
may be, covered by a Registration Statement.

     5. Additional Interest
        -------------------

     (a) The parties hereto acknowledge that the Holders of New Notes or
Exchange Notes, as the case may be, will suffer damages if the Issuers fail to
perform their obligations under Section 2 or 3 hereof and that it would not be
feasible to ascertain the extent of such damages. Accordingly, in the event
that:

         (i)   the Exchange Offer Registration Statement has not been filed on
               or prior to the 90th day following the Settlement Date;

         (ii)  the Exchange Offer Registration Statement has not been declared
               effective on or prior to the 180th day following the Settlement
               Date;

         (iii) neither the Exchange Offer has been completed nor the Shelf
               Registration Statement has been declared effective on or prior to
               the 210th day following the Settlement Date; or

         (iv)  after either the Exchange Offer Registration Statement or Shelf
               Registration Statement has been declared effective, such
               Registration Statement ceases to be effective or usable in
               connection with the Registered Exchange Offer or resales of the
               New Notes during a period in which it is required to be effective
               hereunder without being succeeded immediately by any additional
               Registration Statement or post-effective amendment covering the
               New Notes or the Exchange Notes, as the case may be, which has
               been filed and declared effective;

(each such event referred to in the foregoing clauses (i) through (iv), a
"Registration Default"), then additional interest ("Additional Interest") will
accrue on the principal amount of the New Notes and the Exchange Notes,
respectively (in addition to the stated interest on the New Notes and the
Exchange Notes), from and including the date on which any Registration Default
first occurs and while any such Registration Default has occurred and is
continuing, to but excluding the date on which all filings, declarations of
effectiveness and consummations, as the case may be, have been achieved which,
if achieved on a timely basis, would have prevented the occurrence of all of the
then existing Registration Defaults. Additional Interest will accrue at a rate
of 0.25% per annum during the 90-day period immediately following such first
occurrence of a Registration Default and while any such Registration Default has
occurred and is continuing, and shall increase by 0.25% per annum at the end of
each subsequent 90-day period up to a maximum of 0.50% per annum with respect to
all Registration Defaults, until the date on which all of the filings,
declarations of effectiveness and consummations referred to in the preceding
sentence have been achieved, on which date the interest rate on the New Notes
and the Exchange Notes, respectively, will revert to the interest rate
originally borne by such notes.

                                       15

<PAGE>

          (b) The Issuers shall notify the Trustee or the Exchange Notes
Trustee, as applicable, immediately upon their knowledge the happening of each
and every Registration Default. The Issuers shall pay the Additional Interest
due on the New Notes or Exchange Notes, as the case may be, by depositing with
the Trustee or the Exchange Notes Trustee, as applicable (which in either case
shall not be any of the Issuers for these purposes), in trust, for the benefit
of the Holders thereof, prior to 11:00 A.M. on the next interest payment date
specified in the Indenture or the Exchange Notes Indenture, as applicable, sums
sufficient to pay the Additional Interest then due. The Additional Interest due
shall be payable on each interest payment date specified by the Indenture or the
Exchange Notes Indenture, as applicable, to the record holders entitled to
receive the interest payment to be made on such date.

          (c) The parties hereto agree that the Additional Interest provided for
in this Section 5 constitutes a reasonable estimate of the damages that will be
suffered by Holders of New Notes or Exchange Notes by reason of the happening of
any Registration Default.

          (d) All of the Issuers' obligations set forth in this Section 5 shall
survive the termination of this Agreement.

          6.  Registration Expenses. The Issuers shall, jointly and severally,
              ---------------------
bear all expenses incurred in connection with the performance of their
obligations under Sections 2, 3 and 4 hereof and, in connection with any Shelf
Registration Statement, shall reimburse the Holders for the reasonable fees and
disbursements of one firm or counsel designated by the Majority Holders to act
as counsel for the Holders in connection therewith, and, in the case of any
Exchange Offer Registration Statement, will reimburse the Dealer Manager for the
reasonable fees and disbursements of counsel acting in connection therewith.

          7.  Indemnification and Contribution. (a) The Issuers, jointly and
              --------------------------------
severally, agree to indemnify and hold harmless each Holder of New Notes or
Exchange Notes, as the case maybe, covered by any Registration Statement
(including each Dealer Manager and, with respect to any Prospectus delivery as
contemplated in Section 4(h) hereof, each Exchanging Dealer), the directors,
officers, employees and agents of each such Holder and each person who controls
you or any such Holder within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which any of the foregoing may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement as
originally filed or in any amendment thereof, or in any preliminary Prospectus
or the Prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a Prospectus, in the light of the circumstances under
which they were made) not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Issuers will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to

                                       16

<PAGE>

the Issuers by or on behalf of any such Holder specifically for inclusion
therein. This indemnity agreement shall be in addition to any liability which
the Issuers may otherwise have.

         The Issuers, jointly and severally, also agree to indemnify as provided
in this Section 7(a) or contribute as provided in Section 7(d) hereof to Losses
of each underwriter of New Notes or Exchange Notes, as the case may be,
registered under a Shelf Registration Statement, their directors, officers,
employees or agents and each person who controls such underwriter on
substantially the same basis as that of the indemnification of the selling
Holders provided in this Section 7(a) and shall, if requested by any Holder,
enter into an underwriting agreement reflecting such agreement, as provided in
Section 4(p) hereof.

         (b) Each Holder of securities covered by a Registration Statement
(including each Dealer Manager and, with respect to any Prospectus delivery as
contemplated in Section 4(h) hereof, each Exchanging Dealer), severally and not
jointly, agrees to indemnify and hold harmless the Issuers, and each of their
respective directors and officers who signs such Registration Statement and each
person who controls the Issuers within the meaning of either the Act or the
Exchange Act, to the same extent as the indemnity in Section 7(a) from the
Issuers to each such Holder, but only with reference to written information
relating to such Holder furnished to the Issuers by or on behalf of such Holder
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement shall be in addition to any liability which
any such Holder may otherwise have.

         (c) Promptly after receipt by an indemnified party under this Section 7
or notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses; and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest; (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party; (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action; or (iv) the
indemnifying party shall authorize the

                                       17

<PAGE>

indemnified party to employ separate counsel at the expense of the indemnifying
party. An indemnifying party shall not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.

         (d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 7 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party shall have a joint
and several obligation to contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which such indemnified party may be subject in such proportion as is appropriate
to reflect the relative benefits received by such indemnifying party, on the one
hand, and such indemnified party, on the other hand, from the Initial Exchange
Offer and the Registration Statement which resulted in such Losses; provided,
however, that in no case shall any Dealer Manager or any Holder of any New Note
or Exchange Note be responsible, in the aggregate, for any amount in excess of
the Fee applicable to such New Note, or in the case of an Exchange Note,
applicable to the New Note that was exchangeable into such Exchange Note, in
connection with the Initial Exchange Offer as set forth in the Dealer Manger
Agreement, nor shall any underwriter be responsible for any amount in excess of
the underwriting discount or commission applicable to the New Notes or Exchange
Notes, as the case may be, purchased by such underwriter under the Registration
Statement which resulted in such Losses. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the indemnifying
party and the indemnified party shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of such indemnifying party, on the one hand, and such indemnified party,
on the other hand, in connection with the statements or omissions which resulted
in such Losses as well as any other relevant equitable considerations. Benefits
received by the Issuers shall be deemed to be equal to (x) the aggregate
principal amount of Old Notes exchanged in the Initial Exchange Offer (before
deducting expenses), plus (y) the total amount of Additional Interest which the
                     ----
Company was not required to pay as a result of registering the New Notes or
Exchange Notes covered by the Registration Statement which resulted in such
Losses, minus (z) the aggregate amount of Fees paid by the Company in connection
with the Initial Exchange Offer under the Dealer Manager Agreement. Benefits
received by the Dealer Managers shall be deemed to be equal to the aggregate
amount of Fees received by the Dealer Managers in connection with the Initial
Exchange Offer under the Dealer Manager Agreement, and benefits received by any
Holders shall be deemed to be equal to the value of receiving New Notes or
Exchange Notes, as applicable, registered under the Act. Benefits received by
any underwriter shall be deemed to be equal to the total underwriting discounts
and commissions, as set forth on the cover page of the Prospectus forming a part
of the Registration Statement which resulted in such Losses. Relative fault
shall be determined by reference to, among other things, whether any alleged
untrue statement or omission relates to information provided by the indemnifying
party, on the one hand, or by the indemnified party, on the other hand, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties
agree that it would not be just and equitable if contribution were determined by
pro rata allocation (even if the Holders were treated

                                       18

<PAGE>

as one entity for such purpose) or any other method of allocation which does not
take account of the equitable considerations referred to above. Notwithstanding
the provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person who controls a
Holder within the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of such Holder shall have the same rights
to contribution as such Holder, and each person who controls the Issuers within
the meaning of either the Act or the Exchange Act, each officer of the Issuers
who shall have signed the Registration Statement and each director of the
Issuers shall have the same rights to contribution as the Issuers, subject in
each case to the applicable terms and conditions of this paragraph (d).

         (e) The provisions of this Section 7 shall remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
any Issuer or any of the officers, directors or controlling persons referred to
in this Section 7, and shall survive the sale by a Holder of securities covered
by a Registration Statement.

         8.  Underwritten Registrations. (a) If any of the New Notes covered by
             --------------------------
any Shelf Registration Statement are to be sold in an underwritten offering, the
Managing Underwriters shall be selected by the Majority Holders.

         (b)  No Holder may participate in any underwritten offering pursuant to
any Shelf Registration Statement, unless such Holder (i) agrees to sell such
Holder's New Notes on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements, and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.

         9.  No Inconsistent Agreements. None of the Issuers has, as of the date
             --------------------------
hereof, entered into, nor shall any of the Issuers, on or after the date hereof,
enter into, any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders herein or that otherwise
conflicts with the provisions hereof.

         10. Amendments and Waivers. The provisions of this Agreement, including
             ----------------------
the provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Issuers have obtained the written consent of the
Majority Holders (or, after the consummation of any Registered Exchange Offer in
accordance with Section 2 hereof, the Holders of a majority in the aggregate
principal amount of the Exchange Notes); provided that, with respect to any
matter that directly or indirectly affects the rights of any Dealer Manager
hereunder, the Issuers shall obtain the written consent of each such Dealer
Manager against which such amendment, qualification, supplement, waiver or
consent is to be effective. Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders whose securities are being sold pursuant to
a Registration Statement and that does not directly or indirectly affect the
rights of other Holders may alternatively be given by the Majority Holders of
the New Notes or Exchange Notes, as the case may be, being sold rather than
registered under such Registration Statement.

                                       19

<PAGE>

         11. Notices. All notices and other communications provided for or
             -------
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier or air courier guaranteeing overnight delivery:

         (a) if to a Holder, at the most current address given by such Holder to
the Issuers in accordance with the provisions of this Section 11, which address
initially is, with respect to each Holder, the address of such Holder maintained
by the Registrar under the Indenture, with a copy in like manner to you;

         (b) if to you, initially at the address set forth in the Dealer Manager
Agreement; and

         (c) if to the Issuers, initially at the Company's address set forth in
the Dealer Manager Agreement.

         All such notices and communications shall be deemed to have been duly
given when received.

         Each party hereto by notice to the other parties may designate
additional or different addresses of such party for subsequent notices or
communications.

         12. Successors. This Agreement shall inure to the benefit of and be
             ----------
binding upon the successors and assigns of each of the parties, including,
without the need for an express assignment or any consent by the Issuers
thereto, subsequent Holders of New Notes and Exchange Notes. The Issuers hereby
agree to extend the benefits of this Agreement to any Holder of New Notes and
Exchange Notes, and any such Holder may specifically enforce the provisions of
this Agreement as if an original party hereto. Each Issuer agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by the Issuers of the provisions of this Agreement and hereby agrees to
waive in any action for specific performance the defense that a remedy at law
would be adequate.

         13. Counterparts. This Agreement may be in signed counterparts, each of
             ------------
which shall be deemed an original and all of which together shall constitute one
and the same agreement.

         14. Headings. The headings used herein are for convenience only and
             --------
shall not affect the construction hereof.

         15. Applicable Law. This Agreement shall be governed by and construed
             --------------
in accordance with the laws of the State of New York applicable to contracts
made and to be performed in the State of New York.

         16. Severability. In the event that any one or more of the provisions
             ------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.

                                       20

<PAGE>

         17. Securities Held by the Issuers, etc. Whenever the consent or
             ------------------------------------
approval of Holders of a specified percentage of principal amount of New Notes
or Exchange Notes is required hereunder, New Notes or Exchange Notes, as
applicable, held by any of the Issuers or any of their Affiliates (other than
subsequent Holders of New Notes or Exchange Notes if such subsequent Holders are
deemed to be Affiliates solely by reason of their holdings of such New Notes or
Exchange Notes) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.

                                       21

<PAGE>

         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Issuers and the Dealer Managers.

                                     Very truly yours,

                                     Saks Incorporated

                                     By /s/ Scott A. Honnold
                                        -----------------------------
                                        Name:  Scott A. Honnold
                                        Title: Vice President

                                     Carson Pirie Holdings, Inc.

                                     By /s/ Charles J. Hansen
                                        -----------------------------
                                        Name:  Charles J. Hansen
                                        Title: Senior Vice President

                                     Herberger's Department Stores, LLC

                                     By /s/ Charles J. Hansen
                                        -----------------------------
                                        Name:  Charles J. Hansen
                                        Title: Senior Vice President

                                     Jackson Leasing LLC

                                     By /s/ Charles J. Hansen
                                        -----------------------------
                                        Name:  Charles J. Hansen
                                        Title: Senior Vice President

                                     McRae's of Alabama, Inc.

                                     By /s/ Charles J. Hansen
                                        -----------------------------
                                        Name:  Charles J. Hansen
                                        Title: Senior Vice President

                                     McRae's Stores Services, Inc.

                                     By /s/ Charles J. Hansen
                                        -----------------------------
                                        Name:  Charles J. Hansen
                                        Title: Senior Vice President

<PAGE>

                                 McRae's Inc. (for itself and as partner of
                                  McRae's Stores Partnership)

                                 By /s/ Charles J. Hansen
                                        -----------------------------
                                    Name:  Charles J. Hansen
                                    Title: Senior Vice President

                                 McRIL, LLC

                                 By /s/ Charles J. Hansen
                                        -----------------------------
                                    Name:  Charles J. Hansen
                                    Title: Senior Vice President

                                 New York City Saks, LLC

                                 By /s/ Charles J. Hansen
                                        -----------------------------
                                    Name:  Charles J. Hansen
                                    Title: Senior Vice President

                                 Parisian, Inc. (for itself and as Managing
                                  Partner of PMIN General Partnership)

                                 By /s/ Charles J. Hansen
                                        -----------------------------
                                    Name:  Charles J. Hansen
                                    Title: Senior Vice President

                                 Saks & Company

                                 By /s/ Charles J. Hansen
                                        -----------------------------
                                    Name:  Charles J. Hansen
                                    Title: Senior Vice President

                                 Saks Direct, Inc.

                                 By /s/ Charles J. Hansen
                                        -----------------------------
                                    Name:  Charles J. Hansen
                                    Title: Senior Vice President

                                 Saks Distribution Centers, Inc.

                                 By /s/ Charles J. Hansen
                                        -----------------------------
                                    Name:  Charles J. Hansen
                                    Title: Senior Vice President

                                 Saks Fifth Avenue Distribution Company

                                 By /s/ Charles J. Hansen
                                        -----------------------------
                                    Name:  Charles J. Hansen

<PAGE>

                                           Title: Senior Vice President

                                        Saks Fifth Avenue of Texas, Inc.

                                        By /s/ Charles J. Hansen
                                           ------------------------------
                                           Name:  Charles J. Hansen
                                           Title: Senior Vice President

                                        Saks Fifth Avenue of Texas, L.P.

                                        By /s/ Charles J. Hansen
                                           ------------------------------
                                           Name:  Charles J. Hansen
                                           Title: Senior Vice President

                                        Saks Fifth Avenue, Inc.

                                        By /s/ Charles J. Hansen
                                           ------------------------------
                                           Name:  Charles J. Hansen
                                           Title: Senior Vice President

                                        Saks Holdings, Inc.

                                        By /s/ Charles J. Hansen
                                           ------------------------------
                                           Name:  Charles J. Hansen
                                           Title: Senior Vice President

                                        Saks Shipping Company, Inc.

                                        By /s/ Charles J. Hansen
                                           ------------------------------
                                           Name:  Charles J. Hansen
                                           Title: Senior Vice President

                                        SCCA Store Holdings, Inc.

                                        By /s/ Charles J. Hansen
                                           ------------------------------
                                           Name:  Charles J. Hansen
                                           Title: Senior Vice President

                                        SCCA, LLC

                                        By /s/ Charles J. Hansen
                                           ------------------------------
                                           Name:  Charles J. Hansen
                                           Title: Senior Vice President

<PAGE>

                                            SCIL, LLC

                                            By /s/ Charles J. Hansen
                                               ----------------------------
                                               Name:  Charles J. Hansen
                                               Title: Senior Vice President

                                            SFAILA, LLC

                                            By /s/ Charles J. Hansen
                                               ----------------------------
                                               Name:  Charles J. Hansen
                                               Title: Senior Vice President

<PAGE>

The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.

By: Salomon Smith Barney Inc.
    as Dealer Manager

By  /s/ Steven Beeton
    ---------------------------------
    Name:  Steven Beeton
    Title: Director

By: Banc of America Securities LLC
    as Dealer Manager

By  /s/ Andrew Karp
    ---------------------------------
    Name:  Andrew Karp
    Title: Managing Director

By: Banc One Capital Markets, Inc.
    as Dealer Manager

By  /s/ Thomas J. McGrath
    ---------------------------------
    Name:  Thomas J. McGrath
    Title: Managing Director

By: BNY Capital Markets, Inc.
    as Dealer Manager

By  /s/ Philip M. Benedict
    ---------------------------------
    Name:  Philip M. Benedict
    Title: Vice President

By: First Union Securities, Inc.
    as Dealer Manager

By  /s/ Eric Cloyd
    ---------------------------------
    Name:  Eric Cloyd
    Title: Managing Director

By: Fleet Securities, Inc.
    as Dealer Manager

By  /s/ John Berman
    ---------------------------------
    Name:  John Berman
    Title: Managing Director

<PAGE>

                                                                      SCHEDULE A

                                   GUARANTORS

Carson Pirie Holdings, Inc.
Herberger's Department Stores, LLC
Jackson Leasing LLC
McRae's of Alabama, Inc.
McRae's Stores Services, Inc.
McRae's Inc. (for itself and as partner of McRae's Stores Partnership)
McRIL, LLC
New York City Saks, LLC
Parisian, Inc. (for itself and as Managing Partner of PMIN General Partnership)
Saks & Company
Saks Direct, Inc.
Saks Distribution Centers, Inc.
Saks Fifth Avenue Distribution Company
Saks Fifth Avenue of Texas, Inc.
Saks Fifth Avenue of Texas, L.P.
Saks Fifth Avenue, Inc.
Saks Holdings, Inc.
Saks Shipping Company, Inc.
SCCA Store Holdings, Inc.
SCCA, LLC
SCIL, LLC
SFAILA, LLC

                                       26

<PAGE>

                                                                         ANNEX A

          Each Broker-Dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
Broker-Dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a Broker-Dealer in connection with resales of
Exchange Notes received in exchange for New Notes where such New Notes were
acquired by such Broker-Dealer as a result of market-making activities or other
trading activities. The Issuers have agreed that, starting on the Expiration
Date (as defined herein) and ending on the close of business one year after the
Expiration Date, they will make this Prospectus available to any Broker-Dealer
for use in connection with any such resale. See "Plan of Distribution."

                                       27

<PAGE>

                                                                         ANNEX B

          Each Broker-Dealer that receives Exchange Notes for its own account in
exchange for New Notes, where such New Notes were acquired by such Broker-Dealer
as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. See "Plan of Distribution."

                                       28

<PAGE>

                                                                         ANNEX C

                              PLAN OF DISTRIBUTION

          Each Broker-Dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus (the "Prospectus") in connection with any resale of such Exchange
Notes. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a Broker-Dealer in connection with resales of Exchange Notes
received in exchange for New Notes where such New Notes were acquired as a
result of market-making activities or other trading activities. The Issuers have
agreed that, starting on the Expiration Date and ending on the close of business
one year after the Expiration Date, they will make this Prospectus, as amended
or supplemented, available to any Broker-Dealer for use in connection with any
such resale. In addition, until [__________, ____,] all dealers effecting
transactions in the Exchange Notes may be required to deliver a prospectus.

          The Issuers will not receive any proceeds from any sale of Exchange
Notes by Broker-Dealers. Exchange Notes received by Broker-Dealers for their own
account pursuant to the Registered Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Broker-Dealer and/or the purchasers of any such
Exchange Notes. Any Broker-Dealer that resells Exchange Notes that were received
by it for its own account pursuant to the Registered Exchange Offer and any
broker or dealer that participates in a distribution of such Exchange Notes may
be deemed to be an "underwriter" within the meaning of the Act and any profit of
any such resale of Exchange Notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the Act.
The Letter of Transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a Broker-Dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Act.

          For a period of one year after the Expiration Date, the Issuers shall
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Broker-Dealer that requests such documents
in the Letter of Transmittal. The Issuers have agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the holders of the New Notes) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the New Notes (including
any Broker-Dealers) against certain liabilities, including liabilities under the
Act.

          [If applicable, add information required by Items 507 and 508 of
Regulation S-K.]

                                       29

<PAGE>

                                                                         ANNEX D

Rider A
-------

                  CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
                  ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
                  AMENDMENTS OR SUPPLEMENTS THERETO.

                  Name:      ________________________
                  Address:   ________________________
                             ________________________

Rider B
-------

If the undersigned is not a Broker-Dealer, the undersigned represents that it
acquired the Exchange Notes in the ordinary course of its business, it is not
engaged in, and does not intend to engage in, a distribution of Exchange Notes
and it has no arrangements or understandings with any person to participate in a
distribution of the Exchange Notes. If the undersigned is a Broker-Dealer that
will receive Exchange Notes for its own account in exchange for New Notes, it
represents that the New Notes to be exchanged for Exchange Notes were acquired
by it as a result of market-making activities or other trading activities and
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Act.

                                       30

<PAGE>

                                                                       EXHIBIT A

                 FORM OF LETTER TO BE PROVIDED BY THE COMPANY TO

                          THE DEPOSITORY TRUST COMPANY

The Depository Trust Company
7 Hanover Square, 23/rd/ Floor
New York, NY 10004

          Re:   9 7/8% Notes Due 2011 (the "Notes") of Saks Incorporated (the
"Issuer")

Ladies and Gentlemen:

          Please be advised that the Securities and Exchange Commission has
declared effective a Registration Statement on Form S-3 under the Securities Act
of 1933, as amended, with regard to all of the Notes referenced above.
Accordingly, there is no longer any restriction as to whom such Notes may be
sold and any restrictions on the CUSIP designation are no longer appropriate and
may be removed. I understand that upon receipt of this letter, DTC will remove
any stop or restriction on its system with respect to this issue.

          As always, please do not hesitate to call if we can be of further
assistance.

                                                  Very truly yours,

                                                  Authorized Officer

                                       26<PAGE>

                                                                     Exhibit 4.1

                       PREFERRED STOCK PURCHASE AGREEMENT

     Preferred Stock Purchase Agreement (this "Agreement"), dated as of October
10, 2001, among Wireless Facilities, Inc., a Delaware corporation (the
"Company"); Oak Investment Partners X, Limited Partnership, a Delaware Limited
Partnership ("Purchaser 1"); and Oak X Affiliates Fund, Limited Partnership, a
Delaware Limited Partnership ("Purchaser 2," and, together with Purchaser 1, the
"Purchasers").

                                R E C I T A L S:

     A.   Whereas, the Company desires to issue and sell to the Purchasers, and
the Purchasers desire to purchase from the Company, an aggregate of sixty-three
thousand six hundred thirty-seven (63,637) shares of a newly designated class of
the Company's preferred stock, par value U.S.$0.001 per share ("Preferred
Stock"), entitled Series A Preferred Stock (the "Series A Preferred Stock"),
having an total aggregate purchase price of thirty-five million three hundred
fifty dollars (U.S.$35,000,350.00); and

     B.   Whereas, the Company intends to file a certificate of designations
with the Secretary of State of the State of Delaware setting forth the rights,
preferences and privileges of the Series A Preferred Stock in the form attached
hereto as Exhibit A (the "Certificate of Designations").
          ---------

                               A G R E E M E N T:

     In consideration of the foregoing premises and the mutual covenants
contained herein, the sufficiency of which is hereby acknowledged, the parties
hereby agree as follows:

SECTION 1. PURCHASE AND SALE OF PREFERRED STOCK

     1.1   Purchase and Sale.

     (a) Purchase and Sale. On October 29, 2001 (the "Closing Date"),
----------------- Purchaser 1 shall pay thirty-four million four hundred
forty-seven thousand six hundred dollars ($34,447,600) and Purchaser 2 shall pay
five hundred fifty-two thousand seven hundred fifty dollars ($552,750) to the
Company in immediately available funds by wire transfer to an account at a bank
named by the Company, subject to the closing conditions set forth in Section 4.
At the Closing, subject to the terms and conditions hereof, the Company shall
issue and sell, at five hundred fifty dollars (US$550.00) per share, to
Purchaser 1 and Purchaser 2 the respective number of shares of Series A
Preferred Stock set forth opposite each of the Purchasers' names on Schedule 1
hereto (collectively, the "Offered Securities"), subject to satisfaction of the
closing conditions set forth in Section 5.

           (b) Time and Place of Closing. The closing of the purchase and sale
               -------------------------
of the Offered Securities (the "Closing") shall occur on the Closing Date. The
Closing shall be held at the offices of Cooley Godward LLP, 4401 Eastgate Mall,
San Diego, California 92121 (by means of facsimile or overnight mail).

                     WFI Preferred Stock Purchase Agreement

<PAGE>

     1.2 Closing Delivery. On the Closing Date, subject to the terms and
conditions hereof:

         (a) Each Purchaser, severally and not jointly, shall pay the
applicable amount specified in Section 1.1(a) above by wire transfer of
immediately available U.S. funds to an account designated in writing by the
Company; and

         (b) The Company shall execute and deliver to each Purchaser: (i) a
certificate representing the Offered Securities purchased by such Purchaser, and
(ii) a customary certificate from the secretary of the Company satisfactory to
such Purchaser.

SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants as of the date hereof to each Purchaser that:

     2.1 The Company has been duly incorporated and is an existing corporation
in good standing under the laws of the State of Delaware, with requisite
corporate power and authority to own its properties and conduct its business as
presently conducted. The Company is duly qualified to do business as a foreign
corporation in good standing in all other U.S. jurisdictions in which its
ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries, taken
as a whole (hereinafter, a "Material Adverse Effect"). The Company has furnished
representatives of the Purchasers with correct and complete copies of the
charter and by-laws of the Company, both as amended and currently in effect.

     2.2 Each subsidiary of the Company has been duly incorporated and is an
existing corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own its properties and
conduct its business as presently conducted. Each subsidiary of the Company is
duly qualified to do business as a foreign corporation in good standing in all
other U.S. jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the failure to
be so qualified would not have a Material Adverse Effect; all of the issued and
outstanding capital stock of each subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable and is owned
of record by the Company.

     2.3 As of September 30, 2001, the authorized capital stock of the Company
consists of: (i) one hundred ninety-five million (195,000,000) shares of Common
Stock and (ii) five million (5,000,000) shares of Preferred Stock. As of
September 30, 2001, 46,428,276 shares of Common Stock have been issued and are
outstanding and no shares of Preferred Stock are issued and outstanding. As of
September 30, 2001, 31,000 shares of Common Stock are held in the Company's
treasury. As reflected in the Company's records as of October 2, 2001, other
than with respect to an aggregate of 19,427,214 shares of Common Stock reserved
for issuance under the Company's equity incentive plans, there are no
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal), proxy or stockholder agreements, or agreements of
any kind for the purchase or acquisition from the Company of any of its equity
securities.

                     WFI Preferred Stock Purchase Agreement
                                       2.

<PAGE>

     2.4 The Offered Securities, and the shares of Common Stock issuable upon
conversion of the Offered Securities (the "Conversion Shares"), and all
outstanding shares of capital stock of the Company have been duly authorized;
all outstanding shares of capital stock of the Company are, and, when the
Offered Securities have been delivered and paid for in accordance with this
Agreement on the Closing Date, and, when the Conversion Shares have been
delivered in accordance with the terms of the Certificate of Designations, such
Offered Securities and Conversion Shares will have been, validly issued, fully
paid and nonassessable. None of the Offered Securities or Conversion Shares are
subject to any preemptive right or any right of refusal.

     2.5 No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required for the consummation of the
transactions contemplated by this Agreement in connection with the issuance and
sale of the Offered Securities or the Conversion Shares by the Company, except
for the filing of a Form D with the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "Securities Act"), and
such as may be required under state securities laws.

     2.6 This Agreement has been duly authorized, executed and delivered by the
Company. All corporate action on the part of the Company and its stockholders,
directors and officers necessary for the authorization, execution and delivery
of this Agreement, the performance of all the Company's obligations hereunder
and for the authorization, issuance or reservation for issuance, sale and
delivery of the Offered Securities or the Conversion Shares has been taken. This
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, (ii) rules of law governing specific performance, injunctive relief and
other equitable remedies, and (iii) the limitations imposed by applicable
federal or state securities laws on the indemnification provisions contained in
this Agreement.

     2.7 The execution, delivery and performance of this Agreement, and the
issuance and sale of the Offered Securities and the Conversion Shares will not
result in a breach or violation of (i) any of the terms and provisions of the
charter or bylaws of the Company or any of its subsidiaries, nor (ii) any of the
terms and provisions of, or constitute a default under any statute, rule,
regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any subsidiary of the Company
or any of their properties, or any agreement or instrument to which the Company
or any such subsidiary is a party or by which the Company or any such subsidiary
is bound or to which any of the properties of the Company or any such subsidiary
is subject (except where such breaches, violations or defaults individually or
in the aggregate would not have a Material Adverse Effect). The Company has full
power and authority to authorize, issue and sell the Offered Securities or the
Conversion Shares as contemplated by this Agreement.

     2.8 There have been no investment bankers, brokers or finders used by the
Company or its affiliates in connection with the transactions contemplated by
this Agreement and no persons or entities are entitled to a fee or compensation
in respect thereof.

                     WFI Preferred Stock Purchase Agreement
                                       3.

<PAGE>

     2.9  The Company and its subsidiaries have good and marketable title to all
real properties and all other properties and assets owned by them that are
material to the operation of the Company's business, in each case free from
liens, encumbrances and defects that would materially affect the value thereof
or materially interfere with the use made or to be made thereof by them; and the
Company and its subsidiaries hold any leased real or personal property that are
material to the operation of the Company's business under valid and enforceable
leases with no exceptions that would materially interfere with the use made or
to be made thereof by them.

     2.10 The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by them and have not received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or
any of its subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.

     2.11 There are no pending actions, suits or proceedings against or
affecting the Company, any of its subsidiaries or any of their respective
properties or any director, officer or employee (related to any such person's
services as a director, officer or employee of the Company) that, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a Material Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its obligations under this
Agreement, or which are otherwise material in the context of the sale of the
Offered Securities and, to the Company's knowledge, no such actions, suits or
proceedings are threatened or contemplated. The Company has not initiated and
has no plan to initiate any action, suit or proceeding that, if decided
adversely to the Company, would, individually or in the aggregate, result in a
Material Adverse Effect.

     2.12 The Company has made available to representatives of the Purchasers
all registration statements, proxy statements and other statements, reports,
schedules, forms and other documents filed by the Company with SEC since January
1, 2001, including copies of all the exhibits referenced therein (the "SEC
Documents"). All statements, reports, schedules, forms and other documents
required to have been filed by the Company with the SEC since January 1, 2001
have been so filed. As of their respective dates (or, if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
amendment or superseding filing): (i) each of the SEC Documents complied in all
material respects with the applicable requirements of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case
may be; and (ii) none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

     2.13 The financial statements included in the SEC Documents present fairly
the financial position of the Company and its consolidated subsidiaries as of
the dates shown and their results of operations and cash flows for the periods
shown, and such financial statements have been prepared in conformity with the
generally accepted accounting principles in the United States applied on a
consistent basis (except as may be indicated in the notes to such

                     WFI Preferred Stock Purchase Agreement
                                       4.

<PAGE>

financial statements or, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC, and except that the unaudited financial statements may
not have contained footnotes and were subject to normal and recurring year-end
adjustments which were not, or are not reasonably expected to be, individually
or in the aggregate, material in amount), complied as to form in all material
respects with the published rules and regulations of the SEC applicable thereto.

     2.14 The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, sufficient legal rights to all material patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable propriety or confidential information,
systems or procedures), trademarks, service marks and trade names currently
employed by them in connection with the business now operated by them, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to any
of the foregoing that, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect.

     2.15 Neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D under the Securities Act) (an "Affiliate") of the Company has,
directly, or through any agent, (a) sold, offered for sale, solicited any offers
to buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sales of the Offered
Securities in a manner that would require the registration under the Securities
Act of the Offered Securities; or (b) offered, solicited offers to buy or sold
the Offered Securities in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act; and the Company will not engage in any of the actions
described in subsections (a) and (b) of this paragraph.

     2.16 Subject to the accuracy of each of the Purchaser's representations
herein, it is not necessary in connection with the offer, sale and delivery of
the Offered Securities to the several Purchasers in the manner contemplated by
this Agreement to register the Offered Securities under the Securities Act.

     2.17 The issuance of the Offered Securities and the Conversion Shares,
neither individually nor in the aggregate, constitute an anti-dilution event for
any existing securityholders of the Company, pursuant to which such
securityholders would be entitled to additional securities or a reduction in the
applicable conversion price or exercise price of any securities due to any
issuance proposed to be conducted hereunder.

     2.18 The information contained in this Agreement and the SEC documents with
respect to the business, operations, assets, results of operations and financial
condition of the Company, and the transactions contemplated by this Agreement,
are true and complete in all material respects and do not omit to state any
material fact or facts necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.

                     WFI Preferred Stock Purchase Agreement
                                       5.

<PAGE>

SECTION 3. Representation and Warranties of the Purchasers. Each Purchaser
hereby, severally and not jointly, represents and warrants to the Company, as of
the date hereof, as follows:

     3.1 Such Purchaser is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all requisite
limited partnership power and authority to consummate the transactions
contemplated hereby

     3.2 Such Purchaser has full limited partnership power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the legal, valid and binding obligation of such
Purchaser, enforceable against such Purchaser in accordance with its terms,
subject to (a) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, (b) rules of law governing specific performance,
injunctive relief and other equitable remedies, and (c) the limitations imposed
by applicable federal or state securities laws on the indemnification provisions
contained in this Agreement.

     3.3 The execution, delivery and performance of this Agreement, and the
purchase and acceptance of the Offered Securities by such Purchaser will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under any statute, rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over such Purchaser or any subsidiary of such Purchaser or any of
their properties, or any material agreement or instrument to which such
Purchaser or any such subsidiary is a party or by which such Purchaser or any
such subsidiary is bound or to which any of the properties of such Purchaser or
any such subsidiary is subject, or the charter or by-laws of such Purchaser or
any such subsidiary (except where any such breaches, violations or defaults
individually or in the aggregate would not have a material adverse effect on
Purchaser's ability to perform this Agreement).

     3.4 Investment Representations.

         (a) Such Purchaser is sophisticated in transactions of this type and
capable of evaluating the merits and risks of the transactions described herein
and has the capacity to protect its own interests. Such Purchaser has not been
formed solely for the purpose of entering into the transactions described herein
and is acquiring the Offered Securities for investment for its own account, not
as a nominee or agent, and not with the view to, or for resale, distribution
thereof, in whole or in part.

         (b) Such Purchaser has not and does not intend to enter into any
contract, undertaking, agreement or arrangement with any person or entity to
sell, transfer or pledge the Offered Securities, other than to an affiliate,
partner or former partner of such Purchaser in compliance with the Securities
Act.

         (c) Such Purchaser acknowledges its understanding that the Company
intends to sell the Offered Securities pursuant to a private placement exempt
from registration under the Securities Act. In furtherance thereof, such
Purchaser represents and warrants that it is an "accredited investor" as that
term is defined in Rule 501 of Regulation D under the Securities

                     WFI Preferred Stock Purchase Agreement
                                       6.

<PAGE>

Act, has the financial ability to bear the economic risk of its investment,
has adequate means for providing for its current needs and personal
contingencies and has no need for liquidity with respect to its investment in
the Company.

           (d) Such Purchaser agrees that it shall not sell or otherwise
transfer any of the Offered Securities without registration under the Securities
Act, pursuant to Rule 144 (or any successor rule) under the Securities Act or
pursuant to an opinion of counsel reasonably satisfactory to the Company that no
violation of the Securities Act will be involved in such transfer. Such
Purchaser fully understands that none of the Offered Securities have been
registered under the Securities Act or under the securities laws of any
applicable state or other jurisdiction and, therefore, cannot be resold,
pledged, assigned or otherwise disposed of unless subsequently registered under
the Securities Act and under the applicable securities laws of such states or
jurisdictions or an exemption from such registration is available. Such
Purchaser understands that the Company is under no obligation to register the
Offered Securities on its behalf with the exception of certain registration
rights set forth herein. Such Purchaser understands the lack of liquidity and
restrictions on transfer of the Offered Securities and that this investment is
suitable only for a person or entity of adequate financial means that has no
need for liquidity of this investment and that can afford a total loss of its
investment.

     3.5   There is no legal, administrative, arbitration or other action or
proceeding or governmental investigation pending, or to the knowledge of such
Purchaser threatened, against such Purchaser that challenges the validity or
performance of this Agreement or which, if successful, could hinder or prevent
such Purchaser from performing its obligations hereunder.

     3.6   There have been no investment bankers, brokers or finders used by
such Purchaser or its affiliates in connection with the transactions
contemplated by this Agreement and no persons or entities are entitled to a fee
or compensation in respect thereof.

SECTION 4. CONDITIONS OF THE OBLIGATIONS OF THE PURCHASERS. The several
obligations of each Purchaser to purchase and pay for the Offered Securities on
the Closing Date will be subject to the satisfaction, or waiver by each
Purchaser, of each of the conditions below:

     4.1   The representations and warranties of the Company herein must be
correct and complete on the Closing Date and the Company must have performed all
of its obligations hereunder required to be performed prior to the Closing Date.

     4.2   The Company shall have filed the Certificate of Designations.

     4.3   Each Purchaser must have received a customary opinion, dated the
Closing Date, from Cooley Godward LLP, counsel for the Company, which is
reasonably acceptable to its counsel, Wilson Sonsini Goodrich & Rosati, P.C.
("WSGR").

     4.4   Each Purchaser must have received a certificate, dated the Closing
Date, of an officer of the Company in which such officer shall state that: the
representations and warranties of the Company in Section 2 of this Agreement are
                                                 ---------
correct; the Company has complied with all

                     WFI Preferred Stock Purchase Agreement
                                       7.

<PAGE>

agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date; and there has been no
material and adverse change in the business of the Company since the date of
this Agreement.

     4.5   The business, assets, financial condition and operations of the
Company shall be substantially as represented to the Purchasers and no change
shall have occurred that, in the reasonable good faith judgment of the
Purchasers, is or could have a Material Adverse Effect, provided, however, that
no change constituting or related to (i) the economy or financial markets of the
United States of America or any other region, (ii) any change, effect or
development that is primarily caused by conditions generally effecting the
industry in which the Company conducts its business, (iii) any change that is
primarily caused by the announcement or pendency of this Agreement or the
transactions contemplated hereby or (iv) any generally applicable change in law,
rule or regulation, shall be deemed to be or have a Material Adverse Effect for
the purposes of this Section.

     4.6   Satisfactory completion of legal due diligence by the Purchasers.

     4.7   The Company, Massih Tayebi and Masood Tayebi shall have entered into
a voting agreement providing for the election of Bandel Carano to the Board of
Directors of the Company for so long as 50% of the Offered Securities remain
outstanding, in such form reasonably acceptable to the Company and the
Purchasers.

SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company to sell the Offered Securities on the Closing Date to a Purchaser will
be subject to the satisfaction, or waiver by the Company, of each of the
conditions below:

     5.1   The representations and warranties of such Purchaser herein must be
correct and complete on the Closing Date and such Purchaser must have performed
all of its obligations hereunder required to be performed prior to the Closing
Date.

     5.2   Satisfaction of any notice period required by NASDAQ.

SECTION 6. REGISTRATION OF THE REGISTRABLE SECURITIES; COMPLIANCE WITH THE
SECURITIES ACT.

     6.1   Registration Procedures. The Company is obligated to do the
following:

           (a) On the date that is 17 months after the Closing Date, subject to
delivery by the Purchasers of information statements reasonably satisfactory to
the Company regarding the Purchasers' addresses and holdings of capital stock of
the Company, the Company shall prepare and file with the SEC one or more
registration statements in order to register with the SEC the resale by the
Purchasers, from time to time, of the Conversion Shares (which, along with only
Common Stock issued as (or issuable upon the conversion of exercise of any
warrant, right or other security that is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
Offered Securities or the Conversion Shares, are sometimes referred to herein as
the "Registrable Securities") through NASDAQ or the facilities of any national
securities exchange on which the Company's Common Stock is then traded, or in
privately

                     WFI Preferred Stock Purchase Agreement
                                       8.

<PAGE>

negotiated transactions. The Company shall use its best efforts to cause
such registration statement to be declared effective as soon thereafter as
reasonably possible. The Company shall promptly notify the Purchasers of the
effectiveness of such registration statement.

          (b) The Company shall prepare and file with the SEC (i) such
amendments and supplements to any registration statement and the prospectus used
in connection therewith, and (ii) such other filings required by the SEC, in
each case as may be necessary to keep the registration statement continuously
effective and not misleading until the earlier of (A) the date that the
Purchasers have completed the distribution related to the Registrable
Securities, or (B) such time that all Registrable Securities then held by the
Purchasers can be sold within a given three (3) month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
under the Securities Act; provided, however, that at any time, upon written
notice to the Purchasers and for a period not to exceed fifteen (15) days
thereafter (the "Suspension Period"), the Company may delay the filing or
effectiveness of any registration statement or suspend the use or effectiveness
of any registration statement (and the Purchasers hereby agree not to offer or
sell any Registrable Securities pursuant to such registration statement during
the Suspension Period) if the Company reasonably believes that the Company may,
in the absence of such delay or suspension hereunder, be required under state or
federal securities laws to disclose any corporate development the disclosure of
which could reasonably be expected to have an adverse effect upon the Company,
its stockholders, a potentially significant transaction or event involving the
Company, or any negotiations, discussions, or proposals directly relating
thereto. The Company may extend the Suspension Period for an additional
consecutive fifteen (15) days upon written notice to the Purchasers. The Company
agrees to use its commercially reasonable best efforts to insure that the
Suspension Period is kept to a minimum number of days If so directed by the
Company, the Purchasers shall use their best efforts to deliver to the Company
(at the Company's expense) all copies, other than permanent file copies then in
the Purchasers' possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.

          (c) Furnish to the Purchasers such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them, unless
the Company is already subject to service in such jurisdiction and except as
required by the Securities Act.

          (d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Purchasers;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.

          (e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Purchaser
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

                     WFI Preferred Stock Purchase Agreement
                                       9.

<PAGE>

          (f) Notify each Purchaser whose Registrable Securities are covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing. The Company shall promptly amend or supplement such prospectus in
order to cause such prospectus not to include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the circumstances
then existing.

          (g) Furnish, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, (i) an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and (ii) a letter, dated as of
such date, from the independent certified public accountants of the Company, in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering addressed to the
underwriters.

          (h) Cause all such Registrable Securities registered pursuant
hereunder to be listed on NASDAQ and each other securities exchange on which
similar securities issued by the Company are then listed.

     6.2  Transfer of Securities After Registration. Each Purchaser, severally
and not jointly, agrees that it will not effect any disposition of the
Registrable Securities that would constitute a sale within the meaning of the
Securities Act, unless:

          (a) pursuant to a registration statement then in effect covering such
disposition, if such disposition is made in accordance with such; or

          (b) the Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a reasonably detailed
statement of the circumstances surrounding the proposed disposition, and if
reasonably requested by the Company, the Purchaser shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, or
other evidence, reasonably satisfactory to the Company, that such disposition
will not require registration of such Registrable Securities under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to and in compliance with Rule 144, will
not require (i) that such holder furnish the Company with a reasonably detailed
statement of the circumstances of the proposed disposition or (ii) an opinion of
counsel except in unusual circumstances.

          (c) Notwithstanding the provisions of paragraphs (a) and (b) above, no
such registration statement or opinion of counsel shall be necessary for a
transfer by a Purchaser (A) that is a partnership to its partners or former
partners in accordance with partnership interests, (B) that is a limited
liability company to its members or former members in accordance

                     WFI Preferred Stock Purchase Agreement
                                       10.

<PAGE>

with their interest in the limited liability company, (C) that is a corporation
to its majority owned subsidiaries or affiliates or (D) that is an individual to
the Purchaser's family member or trust for the benefit of such Purchaser or his
or her family members or an entity whose equity owners consist solely of the
Purchaser and his or her family members; provided that in each case the
transferee will be subject to the terms of this Agreement to the same extent as
if he were an original Purchaser hereunder.

     6.3 Legends. Each certificate representing Registrable Securities shall
(unless otherwise permitted by the provisions of the Agreement) be stamped or
otherwise imprinted with a legend substantially similar to the following (in
addition to any legend required under applicable state securities laws or as
provided elsewhere in this Agreement):

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
     OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
     UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL OR BASED ON
     OTHER WRITTEN EVIDENCE IN THE FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
     OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION
     IS IN COMPLIANCE THEREWITH.

     6.4 Expenses of Registration. Except as specifically provided herein, all
expenses incurred by the Company in complying with Section 6 hereof, including,
                                                   ---------
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and expenses of one counsel to the
Purchasers, blue sky fees and expenses, reasonable fees and disbursements of one
counsel for the Purchasers, fees and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company which shall be paid in any event by the
Company) (collectively, the "Registration Expenses") shall be borne by the
Company. All underwriting discounts and selling commissions applicable to a sale
incurred in connection with any registrations hereunder shall be borne by the
holders of the securities so registered pro rata on the basis of the number of
shares so sold.

     6.5 Delay of Registration; Furnishing Information.

         (a) The Purchasers shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them and the intended
method of disposition of such securities as shall be required to effect the
registration of their Registrable Securities. Furthermore, each Purchaser,
severally and not jointly, agrees to promptly notify the Company of any changes
in the information set forth in a registration statement regarding such
Purchaser or its plan of distribution set forth in such registration statement.

     6.6 Indemnification. In the event any Registrable Securities are included
in a registration statement under this Section 6.
                                       ---------

                     WFI Preferred Stock Purchase Agreement
                                       11.

<PAGE>

          (a) To the extent permitted by law, the Company will indemnify and
hold harmless each Purchaser, the partners, officers and directors of each
Purchaser, any underwriter (as defined in the Securities Act) for such Purchaser
and each person, if any, who controls such Purchaser or underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law in connection with the
offering covered by such registration statement; and the Company will pay as
incurred to each such Purchaser, partner, officer, director, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 6.6 shall not apply to amounts paid in settlement of any such
        -----------
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company, which consent shall not be unreasonably withheld,
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Purchaser, partner, officer, director, underwriter or controlling person of
such Purchaser.

          (b) To the extent permitted by law, each Purchaser will, if
Registrable Securities held by such Purchaser are included in the securities as
to which such registration qualifications or compliance is being effected,
indemnify and hold harmless the Company, each of its directors, its officers and
each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Purchaser selling securities under
such registration statement or any of such other Purchaser's partners, directors
or officers or any person who controls such Purchaser, against any losses,
claims, damages or liabilities (joint or several) to which the Company or any
such director, officer, controlling person, underwriter or other such Purchaser,
or partner, director, officer or controlling person of such other Purchaser may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Purchaser under an
instrument duly executed by such Purchaser and stated to be specifically for use
in connection with such registration; and each such Purchaser will pay as
incurred any legal or other expenses reasonably incurred by the Company or any
such director, officer, controlling person, underwriter or other person
registering shares under such registration, or partner, officer, director or
controlling person of such other person registering shares under such
registration in connection with investigating or defending any such loss, claim,
damage, liability or action if it

                     WFI Preferred Stock Purchase Agreement
                                       12.

<PAGE>

is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 6.6 shall not apply to
                                               -----------
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Purchaser, which
consent shall not be unreasonably withheld; provided further, that in no event
shall any indemnity under this Section 6.6 exceed the net proceeds from the
                               -----------
offering received by such Purchaser.

          (c) Promptly after receipt by an indemnified party under this Section
                                                                        -------
6.6 of notice of the commencement of any action (including any governmental
---
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 6.6, deliver to the
                                               -----------
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 6.6, but the omission so to deliver
                                 -----------
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 6.6.
                                                                    -----------

          (d) If the indemnification provided for in this Section 6.6 is held by
                                                          -----------
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by a Purchaser hereunder
exceed the net proceeds from the offering received by such Purchaser.

          (e) The obligations of the Company and the Purchasers under this
Section 6.6 shall survive completion of any offering of Registrable Securities
-----------
in a registration statement and the termination of this Agreement. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof

                     WFI Preferred Stock Purchase Agreement
                                       13.

<PAGE>

the giving by the claimant or plaintiff to such indemnified party of a release
from all liability in respect to such claim or litigation.

     6.7   Agreement to Furnish Information. In connection with a registration
in which such Purchaser is participating, each Purchaser agrees to execute and
deliver such other agreements as may be reasonably requested by the Company or
the underwriter. In addition, if requested by the Company or the representative
of the underwriters of Common Stock (or other securities) of the Company, each
Purchaser shall provide, within ten (10) days of such request, such information
related to such Purchaser as may be required by the Company or such
representative in connection with the completion of any public offering of the
Company's securities pursuant to a registration statement filed under the
Securities Act.

     6.8   Rule 144 Reporting. With a view to making available to the Purchasers
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:

           (a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act;

           (b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act; and

           (c) So long as a Purchaser owns any Registrable Securities, furnish
to such Purchaser forthwith upon request: a written statement by the Company as
to its compliance with the reporting requirements of said Rule 144 of the
Securities Act, and of the Exchange Act (at any time after it has become subject
to such reporting requirements); a copy of the most recent annual or quarterly
report of the Company; and such other reports and documents as a Purchaser may
reasonably request in availing itself of any rule or regulation of the SEC
allowing it to sell any such securities without registration.

     6.9   S-3 Eligibility. The Company will use its best efforts to meet the
requirements for the use of Form S-3 for registration of the resale by the
Purchasers of the Registrable Securities. The Company will use its best efforts
to file all reports required to be filed by the Company with the SEC in a timely
manner and take all other necessary action so as to maintain such eligibility
for the use of Form S-3.

SECTION 7. COVENANTS OF THE COMPANY.

     7.1   Board Representation. The Company will increase the number of
directors that sit on the Company's Board of Directors (the "Board") so that
there is a vacancy and the Board will appoint Bandel Carano to fill the newly
created vacancy. In addition, for so long as the Offered Securities have not
converted into the Conversion Shares, the Company will use its best efforts to
ensure that the Board shall nominate Mr. Carano for re-election to the Board at
each meeting of stockholders at which Mr. Carano's re-election will be put to a
vote.

                     WFI Preferred Stock Purchase Agreement
                                       14.

<PAGE>

     7.2 Due Diligence. The Company hereby undertakes to provide all information
and to make its employees available to the extent reasonably requested by the
Purchasers and WSGR in the course of performing their due diligence
investigation of the Company prior to the Closing Date.

SECTION 8. COVENANTS OF THE PURCHASERS.

     8.1   Confidentiality of Records. Each Purchaser agrees to use, and to use
its best efforts to insure that it and its authorized representatives use, the
same degree of care as such person uses to protect its own confidential
information to keep confidential any information furnished to it which the
Company identifies as being confidential or proprietary (so long as such
information has not been publicly disclosed by the Company or otherwise
generally known by such Purchaser or transferee), except that such person may
disclose such proprietary or confidential information to any partner, subsidiary
or parent of such person for the purpose of evaluating its investment in the
Company as long as such partner, subsidiary or parent is advised of the
confidentiality provisions of this Section 8.1. Notwithstanding the above, a
Purchase shall not be in violation of this Section 8.1 with regard to a
                                           -----------
disclosure that was in response to a valid order by a court or other
governmental body or as required by law or regulation, provided that such
Purchaser provides the Company with prior written notice of such disclosure in
order to permit the Company to seek confidential treatment or other appropriate
remedy of such confidential information; provided that, in the event that such
confidential treatment or other remedy is not requested or obtained, the
Purchaser shall furnish only that part of the confidential information that is
legally required and shall exercise its reasonable best efforts to ensure that
the confidential information so obtained is accorded treatment as confidential
property.

     8.2   Prohibition on Use of Insider Information. Each Purchaser understands
that federal and state securities laws prohibit trading in the Company's
securities while such Purchaser is in the possession of "material nonpublic
information" concerning the Company and/or its affiliates. Each Purchaser
represents that it has been advised by its counsel of such laws and the
consequences of breaking such laws. Each Purchaser, and any transferee of
Registrable Securities, covenants not to enter into any transactions that would
violate applicable securities laws.

     8.3   Lock-up Period. Each of the Purchasers, severally and not jointly,
hereby agrees that from the date hereof and until 30 months after the Closing
Date (the "Lock-Up Expiration Date"), such Purchaser will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, any
shares of the Company's Common Stock or securities convertible into or
exchangeable or exercisable for any shares of Common Stock (collectively, the
"Securities"), enter into a transaction which would have the same effect, or
enter into any swap, hedge or other arrangement that transfers, in whole or in
part, any of the economic consequences of ownership of the Securities, whether
any such aforementioned transaction is to be settled by delivery of the
Securities or other securities, in cash or otherwise, or publicly disclose the
intention to make any such offer, sale, pledge or disposition, or to enter into
any such transaction, swap, hedge or other arrangement, without, in each case,
the prior written consent of the Company. The foregoing sentence (x) shall not
apply to transactions relating to Securities acquired (i) by the Purchasers
prior to the execution of this Agreement or (ii) by the Purchasers in the open
market after the

                     WFI Preferred Stock Purchase Agreement
                                       15.

<PAGE>

date of this Agreement, (y) shall expire, for each Purchaser, with respect
to 20% of the total number of Offered Securities purchased by such Purchaser, on
each of the 18 month anniversary of the Closing Date, the 21 month anniversary
of the Closing Date, the 24 month anniversary of the Closing Date and the 27
month anniversary of the Closing Date, and (z) shall expire, for each Purchaser,
in its entirety upon the occurrence of any event deemed a Liquidation (as such
term in defined in the Certificate of Designations). In furtherance of the
foregoing, each of the Purchasers, severally and not jointly, agrees that the
Company and its transfer agent and registrar are hereby authorized to decline to
make any transfer of shares of Securities if such transfer would constitute a
violation or breach of the terms of this Section.

SECTION 9. EXEMPTION FROM REGISTRATION; LEGEND. The Offered Securities and the
Conversion Shares will be issued under an exemption or exemptions from
registration under the Securities Act, and are also subject to certain rights
and obligations set forth herein. Accordingly, the certificates evidencing the
Offered Securities and any Conversion Shares issuable upon the conversion
thereof shall, upon issuance, contain a legend, substantially in the form as
follows:

                  THE SECURITIES REPRESENTED HEREBY HAVE NOT
                  BEEN REGISTERED UNDER THE U.S. SECURITIES
                  ACT OF 1933, AS AMENDED (THE "ACT"), OR
                  APPLICABLE STATE SECURITIES LAWS AND NO
                  INTEREST HEREIN MAY BE SOLD, TRANSFERRED
                  OR OTHERWISE DISPOSED OF UNLESS (1) A
                  REGISTRATION STATEMENT WITH RESPECT TO
                  SUCH SECURITIES SHALL BE EFFECTIVE UNDER
                  THE ACT AND ANY APPLICABLE STATE SECURITIES
                  LAWS OR (2) SUCH SECURITIES ARE TRANSFERRED
                  PURSUANT TO RULE 144 PROMULGATED UNDER THE
                  ACT (OR ANY SUCCESSOR RULE) OR (3) THE
                  ISSUER OF THESE SECURITIES SHALL HAVE
                  RECEIVED AN OPINION OF COUNSEL FOR THE
                  HOLDER OF THESE SECURITIES SATISFACTORY TO
                  THE ISSUER THAT NO VIOLATION OF  THE ACT OR
                  SIMILAR STATE SECURITIES LAWS WILL BE INVOLVED
                  IN SUCH TRANSFER.

SECTION 10. NOTICES.  All communications hereunder will be in writing and, (a)
if sent to Purchaser 1, will be mailed, delivered or telegraphed and confirmed
to             , Attention:                  ; (b) if sent to Purchaser 2, will
be mailed, delivered or telegraphed and confirmed to               , Attention:
; or (c) if sent to the Company, will be mailed, delivered or  telegraphed and
confirmed to it at 9725 Scranton Road, Suite 140, San Diego, CA 92121,
Attention: Chief Executive Officer.

SECTION 11. EXPENSES. The Company, on the one hand, and each Purchaser, on the
other hand, are each responsible for its own expenses associated with the
purchases and sales of the Offered Securities pursuant to the terms of this
Agreement; provided, that the Company will pay,

                     WFI Preferred Stock Purchase Agreement
                                      16.

<PAGE>

on the Closing Date, the reasonable legal fees and expenses of one legal counsel
to the Purchasers.

SECTION 12. AMENDMENT AND WAIVER

     12.1 Except as otherwise expressly provided, this Agreement may be amended
or modified only upon the written consent of the Company and Purchaser.

     12.2 Except as otherwise expressly provided herein, (i) rights arising
under this Agreement may only be waived in writing by the party entitled to
such right and (ii) obligations under this Agreement may only be waived by the
party to whose benefit the obligations runs.

SECTION 13. SUCCESSORS.  This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and no other
person will have any right or obligation hereunder.

SECTION 14. COUNTERPARTS.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.

SECTION 15. APPLICABLE LAW AND VENUE. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, without
regard to principles of conflicts of laws. Any dispute under this Agreement
that is not settled by mutual consent shall be finally adjudicated by any
federal or state court sitting in the City and County of San Diego in the State
of California, and each party consents to the exclusive jurisdiction of such
courts (or any appellate court therefrom) over any such dispute. Each party
further consents to personal jurisdiction in the courts mentioned in the prior
sentence.

                            [Signature Page Follows]

                     WFI Preferred Stock Purchase Agreement
                                       17.

<PAGE>

     IN WITNESS WHEREOF, this Agreement is entered into by the undersigned
parties as of the date first written above.

                                                   Very truly yours,

                                                   WIRELESS FACILITIES, INC.

                                                   By:  /S/ Wm. Bradford Weller
                                                       ------------------------
                                                       Name: Wm. Bradford Weller
                                                       Title: Vice President,
                                                       Legal Affairs, General
                                                       Counsel and Secretary

Oak Investment Partners X, Limited
Partnership

 /S/ Bandel Carano
-----------------------------------------------
Bandel Carano
Managing Member of Oak Associates X, LLC
The General Partner of Oak Investments Partners
X, Limited Partnership

Oak X Affiliates Fund, Limited
Partnership

 /S/ Bandel Carano
------------------------------------------------
Bandel Carano
Managing Member of Oak Associates X, LLC
The General Partner of Oak X Affiliates Fund,
Limited Partnership

                     WFI Preferred Stock Purchase Agreement
                                       18.

<PAGE>

                                   Schedule 1

Purchaser                                     Offered Securities
---------                                     ------------------

Oak Investment Partners X, L.P.               62,632

Oak X Affiliates Fund, L.P.,                  1,005

                     WFI Preferred Stock Purchase Agreement

<PAGE>

                                    Exhibit A

                       FORM OF CERTIFICATE OF DESIGNATIONS

                     WFI Preferred Stock Purchase Agreement

<PAGE>

               CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
                                       of
                            SERIES A PREFERRED STOCK
                                       of
                            WIRELESS FACILITIES, INC.

     I, Masood K. Tayebi, Chief Executive Officer of WIRELESS FACILITIES, INC.,
a corporation organized and existing under the laws of the State of Delaware
(the "Corporation"), in accordance with the provisions of Section 151 of the
Delaware General Corporation Law, DO HEREBY CERTIFY:

     That pursuant to the authority conferred upon the Board of Directors of the
Corporation (the "Board of Directors") by the Certificate of Incorporation of
the Corporation and by Section 151(g) of the Delaware General Corporation Law,
on October __, 2001, the Board of Directors adopted the following resolution,
creating a series of shares of convertible preferred stock, Series A, designated
as "Series A Preferred Stock":

     "RESOLVED, that pursuant to the authority vested in the Board of Directors
     (the "Board of Directors") of WIRELESS FACILITIES, INC., a corporation
     organized and existing under the laws of the State of Delaware (the
     "Corporation"), by the Certificate of Incorporation of the Corporation (the
     "Certificate of Incorporation"), the Board of Directors does hereby provide
     for the authorization and issuance of a series of convertible preferred
     stock, Series A, par value U.S.$0.001 per share, of the Corporation, to be
     designated "Series A Preferred Stock," initially consisting of 63,637
     shares, and to the extent that the designations, powers, preferences, and
     relative participating, optional, or other special rights, and the
     qualifications, limitations, and restrictions of the Series A Preferred
     Stock are not stated and expressed in the Certificate of Incorporation, the
     Board of Directors does hereby fix and herein state and express such
     designations, powers, preferences, and relative participating, optional, or
     other special rights, and the qualifications, limitations, and restrictions
     thereof, as follows:

1.   Designation and Rank.

     (a)  Sixty-three thousand six hundred thirty-seven (63,637) shares of the
preferred stock of the Corporation, par value $0.001 per share, shall be
designated and known as the "Series A Preferred Stock."

     (b)  The Series A Preferred Stock shall rank senior and prior to the common
stock, par value U.S.$0.001 per share, of the Corporation (the "Common Stock"),
and all other classes or series of the capital stock (other than preferred
stock) of the Corporation (now or hereafter authorized or issued), with respect
to the payment of any dividends, the conversion rights set forth herein and any
payment upon liquidation or redemption. The Corporation may not issue any
additional classes or series of preferred stock with liquidation, redemption or
conversion rights or right of payment of any kind that is senior to the Series A
Preferred Stock, except pursuant to Section 12.

                                       1.

<PAGE>

2.   Dividend Rights.

     From and after the date hereof, when and if the Board of Directors declares
a dividend or distribution payable with respect to the then-outstanding shares
of Common Stock (other than in additional shares of Common Stock or Common Stock
Equivalents (as defined in Section 4(e)(i) below), the holders of the Series A
Preferred Stock shall be entitled to the amount of dividends per share in the
same form as such Common Stock dividends that would be payable on the largest
number of whole shares of Common Stock into which a holder's aggregate shares of
Series A Preferred Stock could then be converted pursuant to Section 4 hereof
(such number to be determined as of the record date for the determination of
holders of Common Stock entitled to receive such dividend).

3.   Liquidation Rights.

     (a)  Liquidation Events. The occurrence of any of the following events
shall be deemed a "Liquidation": (i) any liquidation, dissolution, or winding-up
of the affairs of the Corporation; (ii) any transaction or series of related
transactions in which securities of the Corporation representing 50% or more of
the combined voting power of the Corporation's then outstanding voting
securities are acquired by a person, entity or group of related persons or
entities, excluding any consolidation or merger effected exclusively to change
the domicile of the Corporation; (iii) any consolidation, merger or
reorganization of the Corporation with or into any other corporation or other
entity or person pursuant to which the holders of the Corporation's outstanding
securities receive, pursuant to such transaction, securities in the surviving
entity that represent less than 50% of the voting power of such surviving
entity; or (iv) any sale, lease, exclusive license or other disposition of all
or substantially all of the assets of the Corporation.

     (b)  Liquidation Preference.

          (i)  In the event of any Liquidation, whether voluntary or
involuntary, before any payment of cash or distribution of other property shall
be made to the holders of Common Stock, or any other class or series of stock
subordinate in liquidation preference to the Series A Preferred Stock, the
holders of the Series A Preferred Stock shall be entitled to receive out of the
assets of the Corporation legally available for distribution to its
stockholders, on behalf of each share of Series A Preferred Stock held by such
holder, U.S.$550.00 (the "Original Issue Price") (as appropriately adjusted for
any combinations, divisions, or similar recapitalizations affecting the Series A
Preferred Stock after issuance) and all accumulated or accrued and unpaid
dividends thereon (collectively, the "Series A Liquidation Preference").

          (ii) If, upon any Liquidation, the assets of the Corporation available
for distribution to its stockholders are insufficient to pay the holders of the
Series A Preferred Stock the full amounts to which they are entitled pursuant to
clause (b)(i) above, the holders of the Series A Preferred Stock shall share pro
rata in any distribution of assets in proportion to the respective amounts which
would be payable to the holders of the Series A Preferred Stock and any other
class or series of capital stock of the Corporation ranking on par with the
Series A Preferred Stock in respect of the shares held by them if all amounts
payable to them in respect of such were paid in full pursuant to clause (b)(i)
above.

                                       2.

<PAGE>

          (iii) After the distributions described in clause (b)(i) or (b)(ii)
above have been paid, subject to the rights of any other class or series of
capital stock of the Corporation that may from time to time come into existence,
the remaining assets of the Corporation available for distribution to
stockholders shall be distributed among the holders of Common Stock pro rata
based on the number of shares of Common Stock held by each.

     (c)  Non-Cash Distributions. If any distribution to be made pursuant to
this Section 3 is to be paid other than in cash or Common Stock or Common Stock
Equivalents, the value of such distribution will be deemed its fair market value
as determined in good faith by the Board of Directors. Any securities shall be
valued as follows:

          (i)  Securities not subject to investment letter or other similar
restrictions on free marketability covered by clause (ii) below:

                (1)  if traded on a securities exchange or through the Nasdaq
National Market, the value shall be deemed to be the average of the closing
prices of the securities on such quotation system over the thirty (30) trading
day period ending three (3) trading days prior to the occurrence of the
Liquidation;

                (2)  if actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty (30) trading day period ending three (3) trading
days prior to the occurrence of the Liquidation; and

                (3)  if there is no active public market, the value shall be the
fair market value thereof, as determined by the Board of Directors.

          (ii)  The method of valuation of securities subject to investment
letter or other restrictions on free marketability (other than restrictions
arising solely by virtue of a stockholder's status as an affiliate or former
affiliate) shall be to effectuate an appropriate discount from the market value,
as determined by clause (i)(A), (B) or (C) of this Section 3(c), so as to
reflect the approximate fair market value thereof, as determined by the Board of
Directors.

          (iii) The holders of at least a majority of the outstanding Series A
Preferred Stock shall have the right to challenge any determination by the Board
of Directors of fair market value pursuant to this Section 3(c), in which case
the determination of fair market value shall be made by an independent appraiser
selected jointly by the Board of Directors and the challenging parties, the cost
of such appraisal to be borne equally by the Corporation and the challenging
parties.

     Conversion Rights.

     The holders of the Series A Preferred Stock shall have conversion rights as
follows (the "Conversion Right"):

     (d)  Conversion Price. The "Conversion Price" shall, initially, be
U.S.$5.50 per share and shall be subject to adjustment as set forth below in
Sections 4(e) and 4(f).

                                       3.

<PAGE>

     (e)  Automatic Conversion. If the closing price for the shares of the
Corporation's Common Stock (trading on a securities exchange or through Nasdaq
National Market or other national exchange or market) exceeds $11.00 per share
(as adjusted for events described in Section 4(e)(ii) and 4(e)(iii) below) for
any thirty consecutive trading day period that begins after July __, 2004, then,
upon such occurrence, each share of Series A Preferred Stock shall be
automatically converted into such number of fully paid and non-assessable shares
of Common Stock as is determined by dividing (x) the Original Issue Price of
such share of Series A Preferred Stock (including any accumulated or accrued but
unpaid dividends thereon) by (y) the Conversion Price. The date of such
conversion is herein referred to as the "Conversion Date."

     (f)  Optional Conversion. The holders of the Series A Preferred Stock shall
have the right, at any time, to convert the shares of Series A Preferred Stock
held by such holder into that number of shares of Common Stock into which such
shares are convertible pursuant to Section 4(b) ("Optional Conversion"). In the
event of any Optional Conversion, the date of the such conversion shall be
referred to as the "Optional Conversion Date."

     (g)  Mechanics of Conversion. On the Conversion Date or Optional Conversion
Date, as the case may be, (x) each holder shall tender such holder's shares of
Series A Preferred Stock to the Corporation for cancellation, free and clear of
encumbrances of any type or nature, and (y) the Corporation shall cause to be
delivered to such holder a number of shares of Common Stock as calculated
pursuant to Section 4(b) above, free and clear of encumbrances of any type or
nature. Each holder and the Corporation shall take all other necessary or
appropriate actions in connection with or to effect such closing.

     (h)  Certain Adjustments. To the extent that the holders of Series A
Preferred Stock do not participate fully with other stockholders of the
Corporation with respect to dividends paid pursuant to Section 2 hereof, the
following adjustments shall be made to the Conversion Price:

          (i)  Adjustment for Common Stock Dividends and Distributions. If, at
any time after the original issue date of the Series A Preferred Stock (the
"Original Issue Date"), the Corporation makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock or Common Stock
Equivalents, in each such event the Conversion Price that is then in effect
shall be decreased as of the time of such issuance or, in the event such record
date is fixed, as of the close of business on such record date, by multiplying
the Conversion Price then in effect by a fraction (i) the numerator of which is
the total number of shares of Common Stock and Common Stock Equivalents issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date, and (ii) the denominator of which is the total
number of shares of Common Stock and Common Stock Equivalents issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common Stock or Common
Stock Equivalents issuable in payment of such dividend or distribution;
provided, however, that if such record date is fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Conversion Price shall be recomputed accordingly as of the close of business
on such record date and thereafter the Conversion Price shall be adjusted
pursuant to this Section 4(e)(i) to reflect the actual payment of such dividend
or distribution.

                                       4.

<PAGE>

                A "Common Stock Equivalent" shall mean each share of Common
Stock into which securities or property or rights are convertible, exchangeable
or exercisable for or into shares of Common Stock, or otherwise entitle the
holder thereof to receive directly or indirectly, any of the foregoing.

          (ii)  Adjustments for Stock Splits, Stock Subdivisions and
Combinations. If, at any time after the Original Issue Date, the Corporation
subdivides or combines the Common Stock without making a corresponding
subdivision or combination of the Series A Preferred Stock, (A) in the case of a
subdivision (including a stock split), the Conversion Price in effect
immediately prior to such event shall be proportionately decreased and the
number of shares of Common Stock purchasable thereunder shall be proportionately
increased, and (B) in the case of a combination (including a reverse stock
split), the Conversion Price in effect immediately prior to such event shall be
proportionately increased and the number of shares of Common Stock purchasable
thereunder shall be proportionately decreased. Any adjustment under this Section
4(e)(ii) shall become effective at the close of business on the date the
subdivision or combination becomes effective.

          (iii) Adjustments for Reclassification, Reorganization and
Consolidation. In case of (A) any reclassification, reorganization, change or
conversion of securities of the class issuable upon conversion of the Series A
Preferred Stock (other than a change in par value, or from par value to no par
value) into other shares or securities of the Corporation, or (B) any merger or
consolidation of the Corporation with or into another entity (other than a
Liquidation or a merger or consolidation with another entity in which the
Corporation is the acquiring and the surviving entity and that does not result
in any reclassification or change of outstanding securities issuable upon
conversion of the Series A Preferred Stock) each holder of shares of Series A
Preferred Stock shall have the right to receive, in lieu of the shares of Common
Stock otherwise issuable upon the conversion of its shares of Series A Preferred
Stock (and accumulated or accrued and unpaid dividends then-outstanding
thereunder) in accordance with Section 4(b), the kind and amount of shares of
stock and other securities, money and property receivable upon such
reclassification, reorganization, change, merger or consolidation upon
conversion by a holder of the maximum number of shares of Common Stock into
which such shares of Series A Preferred Stock could have been converted
immediately prior to such reclassification, reorganization, change, merger or
consolidation, all subject to further adjustment as provided herein or with
respect to such other securities or property by the terms thereof. The
provisions of this clause (iii) shall similarly attach to successive
reclassifications, reorganizations, changes, mergers and consolidations.

     (i)  Antidilution Adjustments. To the extent that (i) the Corporation
issues after the Original Issue Date and before April __, 2003, Additional
Shares of Common Stock (as defined below) (in one or more transactions, whether
or not related), (ii) each such issuance is at an Effective Price (as defined
below) per share less than Conversion Price then in effect and (iii) the
aggregate gross proceeds of such issuances exceed $15 million, then the
Conversion Price shall be adjusted to equal the lowest Effective Price received
by the Corporation pursuant to any such issuance. The previous sentence will
apply to any issuances of Additional Shares of Common Stock after the $15
million threshold has been met (provided any such issuance is below the
Conversion Price then in effect) but will not apply to any issuance of
Additional Shares of

                                       5.

<PAGE>

Common Stock occurring after April ___, 2003. Notwithstanding the foregoing, the
Conversion Price shall in no event be lower than U.S.$3.77.

          (i)  For the purpose of making any adjustment required under this
Section 4(f), the consideration received by the Company for any issue or sale of
securities shall (A) to the extent it consists of cash, be computed at the net
amount of cash received by the Company after deduction of any underwriting or
similar commissions, compensation or concessions paid or allowed by the Company
in connection with such issue or sale but without deduction of any expenses
payable by the Company (except for purposes of determining if the $15 million
threshold referred to above has been met, in which case the consideration
received will be deemed to be the aggregate gross proceeds received by the
Company), (B) to the extent it consists of property other than cash, be computed
at the fair value of that property as determined in good faith by the Board of
Directors, and (C) if Additional Shares of Common Stock, Convertible Securities
(as defined below) or rights or options to purchase either Additional Shares of
Common Stock or Convertible Securities are issued or sold together with other
stock or securities or other assets of the Company for a consideration which
covers both, be computed as the portion of the consideration so received that
may be reasonably determined in good faith by the Board of Directors to be
allocable to such Additional Shares of Common Stock, Convertible Securities or
rights or options; provided, however, that the holders of at least a majority of
the outstanding Series A Preferred Stock shall have the right to challenge any
determination by the Board of Directors of fair market value pursuant to this
Section 4(i)(i), in which case the determination of fair market value shall be
made by an independent appraiser selected jointly by the Board of Directors and
the challenging parties, the cost of such appraisal to be borne equally by the
Corporation and the challenging parties.

          (ii) For the purpose of the adjustment required under this Section
4(f), if the Company issues or sells (A) stock or other securities convertible
into, Additional Shares of Common Stock (such convertible stock or securities
being herein referred to as "Convertible Securities") or (B) rights or options
for the purchase of Additional Shares of Common Stock or Convertible Securities
and if the Effective Price of such Additional Shares of Common Stock is less
than the Conversion Price, in each case the Company shall be deemed to have
issued at the time of the issuance of such rights or options or Convertible
Securities the maximum number of Additional Shares of Common Stock issuable upon
exercise or conversion thereof and to have received as consideration for the
issuance of such shares an amount equal to the total amount of the
consideration, if any, received by the Company for the issuance of such rights
or options or Convertible Securities, plus, in the case of such rights or
options, the minimum amounts of consideration, if any, payable to the Company
upon the exercise of such rights or options, plus, in the case of Convertible
Securities, the minimum amounts of consideration, if any, payable to the Company
(other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities) upon the conversion thereof; provided that if in the
case of Convertible Securities the minimum amounts of such consideration cannot
be ascertained, but are a function of antidilution or similar protective
clauses, the Company shall be deemed to have received the minimum amounts of
consideration without reference to such clauses; provided further that if the
minimum amount of consideration payable to the Company upon the exercise or
conversion of rights, options or Convertible Securities is reduced over time or
on the occurrence or non-occurrence of specified events other than by reason of
antidilution adjustments, the Effective Price shall be recalculated using the
figure to which such minimum amount of consideration is

                                       6.

<PAGE>

reduced; provided further that if the minimum amount of consideration
payable to the Company upon the exercise or conversion of such rights, options
or Convertible Securities is subsequently increased, the Effective Price shall
be again recalculated using the increased minimum amount of consideration
payable to the Company upon the exercise or conversion of such rights, options
or Convertible Securities. No further adjustment of the Conversion Price, as
adjusted upon the issuance of such rights, options or Convertible Securities,
shall be made as a result of the actual issuance of Additional Shares of Common
Stock on the exercise of any such rights or options or the conversion of any
such Convertible Securities. If any such rights or options or the conversion
privilege represented by any such Convertible Securities shall expire without
having been exercised, the Conversion Price, as adjusted upon the issuance of
such rights, options or Convertible Securities, shall be readjusted to the
Conversion Price which would have been in effect had an adjustment been made on
the basis that the only Additional Shares of Common Stock so issued were the
Additional Shares of Common Stock, if any, actually issued or sold on the
exercise of such rights or options or rights of conversion of such Convertible
Securities, and such Additional Shares of Common Stock, if any, were issued or
sold for the consideration actually received by the Company upon such exercise,
plus the consideration, if any, actually received by the Company for the
granting of all such rights or options, whether or not exercised, plus the
consideration received for issuing or selling the Convertible Securities
actually converted, plus the consideration, if any, actually received by the
Company (other than by cancellation of liabilities or obligations evidenced by
such Convertible Securities) on the conversion of such Convertible Securities.

               "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company or deemed to be issued pursuant to this
Section 4(f), whether or not subsequently reacquired or retired by the Company
other than (A) shares of Common Stock and/or options, warrants or other Common
Stock purchase rights, and the Common Stock issued or issuable pursuant to such
options, warrants or other rights to employees, officers or directors of, or
consultants or advisors to the Company or any subsidiary pursuant to stock
purchase or stock option plans or other arrangements that are approved by the
Board; (B) shares of Common Stock issued or issuable pursuant to any equipment
loan or leasing arrangement, or debt financing from a bank or similar financial
institution; (C) shares of Common Stock issued or issuable in connection with
licensing transactions involving the Company and other entities, including (1)
joint ventures, manufacturing, marketing or distribution arrangements or (2)
technology transfer or development arrangements; provided that such transactions
in (1) and (2) and the issuance of shares therein has been approved by a
majority of the members of the Company's Board of Directors and the aggregate
number of shares so issued does not exceed four million (4,000,000) shares (as
adjusted for stock splits, stock dividends, stock combinations, recapitalizatons
and the like); and (D) any other issuances approved by the holders of a majority
of the Series A Preferred Stock then outstanding

               The "Effective Price" of Additional Shares of Common Stock shall
mean the quotient determined by dividing the total number of Additional Shares
of Common Stock issued or sold, or deemed to have been issued or sold by the
Company under this Section 4(f), into the aggregate consideration received, or
deemed to have been received by the Company for such issue under this Section
4(f), for such Additional Shares of Common Stock.

                                       7.

<PAGE>

4.   Other Distributions.

     In the event the Corporation provides the holders of its Common Stock with
consideration that is not otherwise addressed in Section 4 (including, without
limitation, declaring a distribution payable in securities, assets, cash or
evidences of indebtedness issued by other persons or the Corporation (excluding
cash dividends declared and paid by the Corporation out of retained earnings)),
then, in each such case, the holders of the Series A Preferred Stock shall be
entitled to a pro rata share of any such distribution as though such holders
were holders of the number of shares of Common Stock of the Corporation as
though the Series A Preferred Stock had been converted in whole as of the record
date fixed for the determination of the holders of Common Stock of the
Corporation entitled to receive such distribution.

5.   Recapitalizations.

     If at any time there occurs a recapitalization of the Common Stock (other
than a subdivision, combination, or merger or sale of assets provided for in
Section 4 hereof), the holders of the Series A Preferred Stock shall be entitled
to receive upon conversion of the Series A Preferred Stock the number of shares
of capital stock or other securities or property of the Corporation or otherwise
to which a holder of the Common Stock deliverable upon conversion would have
been entitled on such recapitalization. In any such case, appropriate adjustment
shall be made in the application of the provisions of Section 4 hereof with
respect to the rights of the holders of the Series A Preferred Stock after the
recapitalization to the end that the provisions of Section 4 hereof (including
adjustment of the Conversion Price then in effect and the number of shares
purchasable upon conversion of the Series A Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.

6.   No Impairment.

     The Corporation will not, by amendment of the Certificate of Incorporation
or through any reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions hereof
and in the taking of all such action as may be necessary or appropriate in order
to protect the Conversion Right of the holders of the Series A Preferred Stock
against impairment.

7.   No Fractional Shares and Certificate as to Adjustments.

     (a)  No fractional shares of Common Stock will be issued upon the
conversion of any share or shares of the Series A Preferred Stock. All shares of
Common Stock (including fractions thereof) issuable upon conversion of more than
one share of Series A Preferred Stock by a holder shall be aggregated for
purposes of determining whether the conversion would result in the issuance of
any fractional share. If, after the aforementioned aggregation, the conversion
would result in the issuance of a fraction of a share of Common Stock, the
Corporation shall, in lieu of issuing any fractional share, pay the holder
otherwise entitled to such fraction a sum in cash equal to such fraction
multiplied by the closing price of the Corporation's Common Stock on the Nasdaq
National Market (or any other national securities exchange on which the Common

                                       8.

<PAGE>

Stock is then traded) on the day immediately preceding the conversion. All
calculations under Section 4 hereof and this Section 8(a) shall be made to the
nearest cent or to the nearest share, as the case may be.

     (b)  Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to Section 4 hereof, the Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of shares of Series A
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Series A Preferred Stock, use its reasonable best efforts to furnish or cause to
be furnished to such holder a like certificate setting forth (i) such adjustment
or readjustment, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of a share of Series A
Preferred Stock.

8.   Reservation of Stock Issuable Upon Conversion.

     The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Preferred Stock, such
number of its shares of Common Stock that shall from time to time be sufficient
to effect the conversion of all outstanding shares of the Series A Preferred
Stock; and if at any time the number of authorized but unissued shares of Common
Stock not otherwise reserved for issuance shall not be sufficient to effect the
conversion of all then outstanding shares of the Series A Preferred Stock, the
Corporation shall take such corporate action that may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to its Certificate of
Incorporation.

9.   Notices.

     Any notice required by the provisions hereof to be given to the holders of
shares of Series A Preferred Stock shall be given in writing and shall be deemed
to have been given (i) in the case of personal or hand delivery, on the date of
such delivery, (ii) in the case of an internationally-recognized overnight
delivery courier, on the second business day after the date when sent, (iii) in
the case of mailing, on the fifth business day following that day on which the
piece of mail containing such communication is posted and (iv) in the case of
facsimile transmission, the date of telephone confirmation of receipt.

10.  Voting Rights.

     Holders of Series A Preferred Stock shall be entitled to vote, including
with respect to the election of directors of the Corporation, on a [100%] as if
converted basis (i.e. applying the conversion formula provided in Section 4(b)
on the record date for determination of the holders of stock of the Corporation
eligible to vote) with the shares of the Corporation's Common Stock as a class.

                                       9.

<PAGE>

11.  Protective Provisions.

Subject to the rights of any series of preferred stock that may from time to
time come into existence, so long as any shares of Series A Preferred Stock are
outstanding, the Corporation shall not without first obtaining the approval (by
vote or written consent, as provided by law) of the holders of at least a
majority of the then-outstanding shares of Series A Preferred Stock, voting
separately as a series:

     (a)  amend its Certificate of Incorporation (including the filing of a
Certificate of Designations) so as to (i) increase the number of authorized
shares of the Corporation's preferred stock or (ii) affect adversely the shares
of Series A Preferred Stock or any holder thereof, including, without
limitation, by creating any additional series of preferred stock (or issuing
shares under any such series) that is senior or pari passu in liquidation
preference, redemption right, conversion rights or right of payment to the
Series A Preferred Stock;

     (b)  after the date of this Certificate of Designation, create any new debt
instrument or create or increase any new or existing bank line (or similar
arrangement pursuant to which the Company is or becomes indebted), so that the
Company's total indebtedness pursuant to such instruments, lines or arrangements
exceeds $105,000,000 in the aggregate; or

     (c)  change the rights of the holders of the Series A Preferred Stock in
any other respect;

provided, however, that the authorization and issuance of additional shares of
Common Stock, and creation of any series of preferred stock (or issuing shares
under any such series) that is junior in right of payment upon liquidation,
redemption, conversion or payment rights or otherwise to the Series A Preferred
Stock shall not be deemed to adversely affect the rights, preferences or
privileges of the Series A Preferred Stock or any holder thereof or change the
rights of the holders of the Series A Preferred Stock in any other respect.

     The Series A Preferred Stock shall have no preemptive rights pursuant
hereto.

12.  Legend.

     The Series A Preferred Stock and any underlying shares of Common Stock will
be issued under an exemption or exemptions from registration under the Act.
Accordingly, the certificates evidencing the Series A Preferred Stock and the
underlying Common Stock shall, upon issuance, contain a legend, substantially in
the form as follows:

     "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
     SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE
     SECURITIES LAWS AND NO INTEREST HEREIN MAY BE SOLD, TRANSFERRED OR
     OTHERWISE DISPOSED OF UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT TO
     SUCH SECURITIES SHALL BE EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE
     SECURITIES LAWS OR (2) SUCH SECURITIES ARE TRANSFERRED PURSUANT TO RULE 144
     PROMULGATED UNDER THE ACT (OR ANY SUCCESSOR RULE) OR (3)

                                       10.

<PAGE>

     THE ISSUER OF THESE SECURITIES SHALL HAVE RECEIVED AN OPINION OF COUNSEL
     FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE ISSUER
     THAT NO VIOLATION OF THE ACT OR SIMILAR STATE SECURITIES LAWS WILL BE
     INVOLVED IN SUCH TRANSFER.

13.  Status of Converted Stock.

     In the event any shares of Series A Preferred Stock shall be converted
pursuant to Section 4 hereof, the shares so converted shall be canceled and
shall not be reissuable by the Corporation.

                            [Signature page follows]

                                       11.

<PAGE>

     IN WITNESS WHEREOF, said Wireless Facilities, Inc. has caused this
Certificate of Designations to be signed by Masood K. Tayebi, its Chief
Executive Officer, as of October  , 2001.

                                           WIRELESS FACILITIES, INC.

                                           By:__________________________________
                                           Name:   Masood K. Tayebi
                                           Title:  Chief Executive Officer

                                       12.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}]]