Document:

Global Amendments Agreement

  EXHIBIT 10.35
 GLOBAL AMENDMENTS AGREEMENT
 I.       INTRODUCTION
 This Global Amendments Agreement is made and entered into as of the 31st day of July, 1999 (the “Effective Date”) by and between Equifax Credit Information Services, Inc., hereinafter referred to as
“Equifax”, as successor in interest to Equifax, Inc., and Fair, Isaac and Company, Incorporated, a Delaware corporation with offices at 120 North Redwood Drive, San Rafael, California 94903, hereinafter referred to as “Fair,
Isaac”, as successor in interest to Fair, Isaac Analysis Corporation. Unless otherwise defined in this Global Amendments Agreement, capitalized terms shall have the meanings given them in that certain Analytic Products and Services Master
Contract, Fair, Isaac Contract No. 880246, (hereinafter referred to as the “Master Contract”), as amended or modified, including, as applicable, in the pertinent Amendment or Addendum thereto. 
 II.     RECITALS
 Fair, Isaac and Equifax desire
to amend the Master Contract and certain Addenda thereto for the purpose of modifying certain terms applicable to the joint products and services and adding additional joint products and services (collectively, the “Services”). Each credit
scoring system now or hereafter provided to End Users as part of the Master Contract, whether by addenda or otherwise, is considered a part of the Services and shall hereinafter be referred to generically as a “Performance Score,”
including, without limitation, the Performance Scores known specifically as BEACON, BEACON Industry Options, Revenue Evaluator (REV), the attrition scoring system and NewGen scoring system described herein and in addenda to the Master Contract. Each
of the amendments and new agreements executed concurrently herewith and listed herein are made a part of the Master Contract as amended hereby and may individually be referred to as an “Amendment” and collectively as the “Global
Agreements.” 
 III.   AGREEMENT AND AMENDMENTS
 A.        Amendments to Master Contract Addenda
 The following Amendments to Addenda to the Master Contract are to be executed concurrently herewith and made a part of the Master Contract as amended hereby, all effective as of July 31, 1999.
 Miscellaneous
 •          Archive Score Amendment to the Master Contract 880246 including all its related Attachments, Exhibits and Appendices
 
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  •          Prospect Database Amendment to the Master Contract 880246 including all its related Attachments, Exhibits and Appendices
 •          NewGen Risk Score Addendum to the Master
Contract 880246 including all its related Attachments, Exhibits and Appendices
 •          Attachment A to the NewGen Risk Score Addendum (Business Terms for On-Line)
 •          Attachment B to the NewGen Risk Score Addendum (Account Management Batch Mode
Delivery)
 •          Attachment C to the NewGen Risk Score Addendum (Prescreen Batch Mode Delivery)
 •          On-Line Beacon Rebate Amendment to the On-Line Score Addendum to Master Contract 880246
 •          Amendment Number Two to the Account Management Addendum and to
the Prescreen Score Addendum to Master Contract 880246 
 Revenue Score
 •          Amendment Number One To Attachment A to the General Bankcard Revenue Score Addendum to
Master Contract 880246 including all its related Attachments, Exhibits and Appendices
 •          Annex 1 Restated Attachment A to the General Bankcard Revenue Score Addendum (Business Terms for Prescreen Batch-Mode Delivery)
 •          Attachment B to the
General Bankcard Revenue Score Addendum (Business Terms for Account Management Batch-Mode Delivery)
 •          Attachment C to the General Bankcard Revenue Score Addendum (Business Terms for On-Line Delivery)
 ScoreNet Service
 •          Addendum Number Two to the ScoreNet Addendum to Master Contract No. 880246 including all its related Attachments, Exhibits and Appendices
 •          Addendum Number Three to
the ScoreNet Addendum to Master Contract No. 880246 including all its related Attachments, Exhibits and Appendices (Additional & Custom Attributes)
 •          Addendum Number Four to the ScoreNet Addendum to Master Contract No. 880246 including
all its related Attachments, Exhibits and Appendices (Revenue Score)
 •          Addendum Number Five to the ScoreNet Addendum to Master Contract No. 880246 including all its related Attachments, Exhibits and Appendices (Attrition
Score)
 •          Addendum Number Six to the ScoreNet Addendum to Master Contract No. 880246 including all its related Attachments, Exhibits and Appendices (Custom Scores)
 •          Addendum Number Seven to the ScoreNet Addendum to Master Contract No. 880246 including
all its related Attachments, Exhibits and Appendices (NewGen Score)
 
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  Attrition Score
 •          Analytic Products and Services Bankcard Attrition Score Addendum To Master Contract 880246 including all its related
Attachments, Exhibits and Appendices
 •          Attachment A to Master Contract Revised per Bankcard Attrition Score Addendum
 B.        Amendments to Terms of the Master Contract and Addenda
 1.        PreScore Agreement. The current term of the PreScore Agreement executed by the parties hereto on May
20, 1985, as amended as of May 30, 1988 (the “PreScore Agreement”) is hereby extended to May 30, 2003. Thereafter, the term of the PreScore Agreement will be automatically renewed for consecutive two (2) year terms, unless one party
notifies the other in writing at least 270 days prior to the termination date of its intent to terminate the PreScore Agreement upon the conclusion of the 270 day notice period.
 2.        Prescreen Score Addendum. The current term of the Prescreen Score Addendum to the Master Contract
executed by the parties hereto on June 1, 1989, as amended (the “Prescreen Addendum”) is hereby extended to September 30, 2003. Thereafter, the term of the Prescreen Addendum will be automatically renewed for consecutive two (2) year
terms, unless one party notifies the other in writing at least 270 days prior to the termination date of its intent to terminate the Prescreen Addendum upon the conclusion of the 270 day notice period.
 3.        On-Line Score Addendum. The current term of the On-Line Score Addendum to the
Master Contract executed by the parties hereto on December 19, 1988, as amended (the “On-Line Score Addendum”) is hereby extended to December 31, 2004. Thereafter, the term of the On-Line Score Addendum will be automatically renewed for
consecutive two (2) year terms, unless one party notifies the other in writing at least 270 days prior to the termination date of its intent to terminate the On-Line Score Addendum upon the conclusion of the 270 day notice period.
 4.        Account Management Addendum. The current term of the
Account Management Addendum to the Master Contract executed by the parties hereto on June 7, 1989, as amended (the “Account Management Addendum”) is hereby extended to October 31, 2003. Thereafter, the term of the Account Management
Addendum will be automatically renewed for consecutive two (2) year terms, unless one party notifies the other in writing at least 270 days prior to the termination date of its intent to terminate the Account Management Addendum upon the conclusion
of the 270 day notice period.
 5.        ScoreNet Addendum. The current term of the ScoreNet Addendum executed by the parties hereto on March 2, 1992, as amended (the “ScoreNet Addendum”) is hereby extended to November 30, 2003. Thereafter, the term of the ScoreNet Addendum will be
automatically 
 
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  renewed for consecutive two (2) year terms, unless one party notifies the other in writing at least 270 days prior to the termination date of its intent to
terminate the ScoreNet Addendum upon the conclusion of the 270 day notice period.
 6.        Revenue Score Addendum. The current term of the General Bankcard Revenue Score Addendum to the Master Contract executed by the parties hereto on
February 17, 1995, as amended (the “Revenue Score Addendum”) is hereby extended to November 30, 2004. Thereafter, the term of the Revenue Score Addendum will be automatically renewed for consecutive two (2) year terms, unless one party
notifies the other in writing at least 270 days prior to the termination date of its intent to terminate the Revenue Score Addendum upon the conclusion of the 270 day notice period.
 C.        Software Scoring Addendum
 Equifax and Fair,
Isaac agree to negotiate in good faith regarding the terms of a Scoring Software Addendum to the Master Contract, which will contain terms and conditions applicable to Performance Scores for which Equifax does not write the Software Facility
according to Structured Specifications provided by Fair, Isaac, and to execute a mutually acceptable Scoring Software Addendum within forty-five (45) days of the Effective Date.
 D.        Conflicting End User Agreements
 Fair, Isaac
acknowledges and agrees that certain existing Equifax End User Agreements do not comply with certain terms of the Global Agreements. Equifax shall have no obligation to cause such Equifax End User Agreements that are in effect as of the Effective
Date to comply with any of the Global Amendments; provided, however, that in any case where such End User Agreement provides for the renewal of the current term thereof, Equifax shall use good faith efforts to cause such End User Agreement to be
amended to comply with all applicable Global Amendments, concurrently with the beginning of the first renewal term after December 31, 1999.
 E.        Amendments to Master Contract
 The Master Contract is hereby amended
as follows, as of July 31, 1999:
 1.        Financial
Reviews. Section 20 of the Master Contract is hereby redesignated as Section 32, and the following text is added to the Master Contract as Section 20 thereof:
 (a)       Equifax shall maintain materially accurate books and records and follow appropriate accounting practices in
respect of its sales of Performance Scores.
 
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  (b)       Equifax agrees that Fair, Isaac
shall have the right, not more frequently than annually and upon at least twenty (20) business days notice, to visit the facility or facilities at which Equifax prepares and maintains the books and records described in Section 20(a) and at which
Equifax maintains and utilizes the Software Facility during normal business hours. Fair, Isaac may inspect and evaluate Equifax’s security processes and procedures in effect at such facility as they relate to the security of the Software
Facility and review the books and records used by Equifax to determine the amounts payable to Fair, Isaac under this Agreement and the Addenda hereto. Such reviews shall be reasonable in scope and length and shall be subject to Equifax’s
security regulations. All information reviewed by Fair, Isaac or its agent shall be subject to the confidentiality provisions of this Agreement. Fair, Isaac shall cause its agent to execute a confidentiality agreement mutually acceptable to Fair,
Isaac and Equifax before any such agent will be permitted to conduct any review under this Section 20 of this Agreement.
 (c)       Equifax will cooperate reasonably with Fair, Isaac or its agent in connection with Fair, Isaac’s exercise of its rights as set forth in this Section 20.
 (d)       The reviews shall be conducted in a manner which does not unreasonably
disrupt, delay or interfere with Equifax’s performance of its business.
 (e)       Each party shall bear its own expenses incurred in relation to such examination. If Fair, Isaac or its agent certifies in writing, a copy of which will be provided to Equifax, that
an underpayment has occurred, Equifax shall pay the undisputed arrears within sixty (60) days of receipt of sufficient documentation demonstrating Equifax’s underpayment. If Fair, Isaac or its agent certifies that an overpayment has occurred,
the amount of such overpayment shall be credited against any outstanding or subsequent amounts owed by Equifax to Fair, Isaac.
 (f)       On a periodic basis, not more frequently than monthly and not less frequently than quarterly, Fair, Isaac will send Equifax a billing exception report,
including a list of billing exceptions and the reason the billing is being questioned. Equifax shall notify Fair, Isaac within sixty (60) days of receipt of the billing exception report of the nature of any items therein which Equifax disputes in
good faith. Equifax will pay Fair, Isaac for the items identified in the billing exception report that are not disputed or take other such action requested by Fair, Isaac with respect to such exceptions. The parties agree to cooperate in good faith
to resolve such disputed items within thirty (30) days of receipt of such notice from Equifax. All billing for periods beginning August 1, 1999 which Fair, Isaac does not include 
 
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  on a billing exception report will be deemed final, unless it was not reasonably possible for Fair, Isaac to determine the correct
billing looking only at the monthly reports required to be provided to Fair, Isaac under the Master Contract together with any other information delivered by Equifax to the Fair, Isaac Revenue Manager (as identified by Fair, Isaac from time to
time), or his or her designee, in response to and related to a question from the Revenue Manager regarding a given report.
 (g)       Fair, Isaac acknowledges that all information contained in the monthly reports required to be provided to Fair, Isaac under this Master Contract and the
Amendments and Addenda hereto, together with any other information delivered by Equifax to the Fair, Isaac Revenue Manager or his or her designee in response to a question from the Revenue Manager regarding a given report, constitute confidential
information of Equifax that shall only be used for internal financial and administrative reporting, evaluation of industry trends, and to reconcile End User usage as reported therein with Equifax’s payments to Fair, Isaac; provided that such
information shall not be used for any competitive purpose.
 2.        ScoreNet® Service. The following text is added to the Master Contract as Section 21 thereof:
 21.      ScoreNet. ScoreNet Service is a registered trademark of Fair, Isaac and is a proprietary account management information delivery service
implemented at all the major U.S.A. credit bureaus, including Equifax. ScoreNet Service is addressed in the ScoreNet Addendum to Master Contract No. 880246.
 Equifax and Fair, Isaac agree to enter into contracts to make available BEACON, BEACON Industry Options, Revenue Evaluator, Attrition scoring system and NewGen scoring system, to Fair, Isaac as agent for its customers electing to use Fair,
Isaac’s ScoreNet Service as set forth in the ScoreNet Agreement and such other scores and information to which Equifax, Fair, Isaac and the ScoreNet subscriber may agree. Equifax agrees to make a good faith effort to update the Software Modules
within a reasonable time frame to be consistent with the then most current version of those Performance Scores being offered through ScoreNet if and only if Equifax has updated the applicable Performance Score for its on-line and off-line delivery
to Equifax customers.
 3.        Equifax Pricing.
The text of Section 4.1 of the Master Contract is deleted and replaced with the following:
 
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  4.1(a) General Pricing Reviews. Equifax and
Fair, Isaac shall agree on an initial schedule of End User charges for each product or service offered and incorporate such schedule into the applicable Addendum. Equifax and Fair, Isaac agree that it may be desirable to modify the Minimum End User
pricing schedules set forth in Addenda to this Agreement from time to time when markets and competition change. Such modifications may only occur by mutual written consent. Either party may initiate an End User price review for this purpose, with no
greater frequency than once every twelve (12) months for any given Performance Score in any given distribution channel. The initiating party shall provide the other party with a written proposal outlining the proposed changes to Minimum End User
prices, and the reasons for such change. Any agreed upon changes to Minimum End User pricing resulting from price reviews shall pertain to the then remaining term of the pertinent Addendum unless otherwise specified. Should the parties not reach
agreement as to Minimum End User pricing changes, the prices currently in effect for such Addendum will prevail for the remainder of the term thereof.
 4.1(b) Customer-Specific Pricing Concessions. Fair, Isaac shall consider in good faith reductions in Minimum End User Price requested by Equifax
for particular End User programs or annual End User agreements with an actual program volume or annual volume commitment, as the case may be, in excess of 10 million Performance Scores having the same performance definition, provided Fair, Isaac
shall be under no obligation to consider more than ten (10) such requests in a calendar month. Any reduction in Minimum End User Price is permissible only with Fair, Isaac’s consent; provided, however, that such consent shall be given under the
following circumstances:
 (i)        If Equifax makes such
a request with respect to one or more Performance Score(s) and (A) Fair, Isaac has offered to provide such Performance Score(s) through the ScoreNet Distribution Channel at a ScoreNet Performance Score Price (as defined below) that is less than the
Minimum End User Price, calculated at the annual volume tier that equates to four times the quarterly volume commitment underlying the ScoreNet Performance Score Price, in effect under the applicable Addendum; and (B) the Performance Score(s),
contract term and volume commitment to which such ScoreNet Performance Score Price applies, are comparable to the Performance Score(s), contract term and volume commitment to which the Equifax request applies, Fair, Isaac shall match and extend to
Equifax the ScoreNet Performance Score Price for such Performance Score(s). “ScoreNet Performance Score Price” means 
 
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  the ScoreNet charge to the End User applicable to each specific Performance Score(s), stated on a per-unit basis.
 (ii)      If Equifax makes such a request with respect to one or more Performance
Score(s) and (A) Fair, Isaac has authorized any third party to provide any Comparable Performance Score(s) (as defined below), at a lower price than the Minimum End User Price in effect under the applicable Addendum, and (B) the Comparable
Performance Score(s), contract term and volume commitment to which such lower price applies, are comparable to the Performance Score(s), contract term and volume commitment to which the Equifax request applies, Fair, Isaac shall match and extend to
Equifax the lowest customer price available for such Comparable Performance Score(s). “Comparable Performance Score” means a score generated from scorecards (w) developed by Fair, Isaac from a body of credit bureau records, (x) installed
and delivered through software located at such credit bureau’s facility, (y) with a performance definition comparable to that of a given Performance Score for which a request under this section has been made by Equifax, and (z) in the
comparable generation as such Performance Score (e.g., BEACON and Empirica are Comparable Performance Scores, but NewGen and Empirica are not Comparable Performance Scores). 
 If the conditions stated in Subsections 4.1(b)(i) and 4.1(b)(ii) both apply in any given situation, the lower of the two prices shall be made available to Equifax. In the event that Fair, Isaac denies a request subject
to Subsections 4.1(b), the relevant Minimum End User Price (from the pertinent addendum) shall prevail, and if Equifax does not obtain the End User program or annual agreement with respect to which Equifax submitted its price concession request, for
forty five (45) days following receipt of Equifax’s pricing proposal, Fair, Isaac shall be precluded from providing the Performance Score(s) to the End User subject to Equifax’s proposal for a program substantially similar to the subject
program through the ScoreNet Distribution Channel at a ScoreNet Performance Score Price that is less than the lowest End User price proposed by Fair, Isaac in response to Equifax’s request for a Minimum End User Price reduction, or permitting
any third party to provide Comparable Performance Score(s) to the End User subject to Equifax’s proposal for a program substantially similar to the subject program at a price lower than the lowest End User price proposed by Fair, Isaac in
response to Equifax’s request for a Minimum End User Price reduction.
 
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  Nothing in this Section 4.1(b) shall be construed to prohibit Equifax from submitting, or to excuse Fair, Isaac from considering in good
faith, additional price reduction requests or price reduction requests with respect to programs or agreements not meeting the foregoing volume threshold. For the avoidance of doubt, no request for a price reduction shall be subject to the foregoing
paragraphs of this Section 4.1(b) unless Equifax so states (which statement shall be confirmed in writing if originally made orally), and Fair, Isaac shall only be obligated to consider such requests in good faith.
 4.        Marketing of Performance Scores and Sales Staff Support.
 The following text is added to the Master Contract as Section 9.3:
 9.3(a) Equifax
shall select the product names for the Performance Scores offered hereunder that have not already received a designated and mutually approved name. Equifax’s name selection shall be subject to the approval of Fair, Isaac, which approval shall
not be unreasonably withheld. These names shall be used to uniquely identify the applicable Performance Scores as distinct from a similar product or service developed by an entity other than Fair, Isaac and/or Equifax; and shall be the trademarks or
service marks of Equifax which both parties may use only to promote the applicable Performance Scores and only during the term of the applicable Addendum. For the term of the applicable Addendum, each party grants to the other party a limited
license to use the Performance Score trademarks and each other’s name as necessary for the sole purpose of allowing the other party to promote and market the Performance Scores pursuant to the terms of this Agreement and the various Addenda.
Whenever either party employs any trademark of the other in any medium or in any form of published material which is prepared for distribution outside of Equifax and/or Fair, Isaac, the using party shall place an asterisk immediately after and
slightly above the first use of the trademark referring to a footnote reading “Trademark of [the owning party].” Upon the expiration or termination of any Addendum, or any particular Attachment thereto, both Equifax and Fair, Isaac will
thereafter discontinue the use of the applicable Performance Score trademark.
 9.3(b) Both
parties agree that all media releases, public announcements and public disclosures by either party directly referring to a specific Performance Score or the name of a Service offered hereunder, including without limitation promotional or marketing
material (but not including any announcement intended solely for its internal distribution), will be coordinated with and approved by the other party prior to the release thereof. All such materials shall bear Equifax and Fair, Isaac’s name and
include a mutually-agreed upon development attribution and description of
 
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  the pertinent product or Service immediately following the first use of such product or Service name. Fair, Isaac reserves the right to
approve for technical accuracy materials prepared for external distribution by Equifax that describe the technical functioning of the Performance Score. 
 9.3(c) Both parties will make a good faith effort to promote and sell the Performance Scores, but neither party shall be obligated to incur expenses with respect to the
promotion of a given Performance Score that are not expressly set forth in the relevant Addendum.
 9.3(d) Both parties agree to promptly prepare, publish and disseminate joint press releases and other marketing communications each time a new Service or an enhancement thereto is developed and made commercially available
as set forth herein. Both parties agree to use commercially reasonable efforts to finalize the press release prior to the date of commercial availability of the joint product or service.
 9.3(e) The parties further acknowledge that the development of sales, marketing and End User materials will require the dissemination of information
regarding the techniques used by Fair, Isaac in developing Performance Scores. Equifax agrees to accurately depict, to the level of detail reasonably appropriate for such materials, the development methods as described to Equifax by Fair,
Isaac.
 9.3(f)  Each party shall provide its sales staff with user guides, sales
literature, retail price and terms information, education and training. If either party elects to produce such materials, the other party shall, upon request, provide reasonable technical assistance in the preparation of script and graphic content
to insure technical accuracy.
 5.        Year 2000 Warranty.  The following text is added to the Master Contract as Section 22:
 22.      Equifax will use commercially reasonable efforts, as well as sound business practices, to make the Performance Score services “Year 2000 Ready.” For purposes of this Master
Contract and each Addendum or Amendment hereto, and any subsequent Amendments, Addenda or attachments hereto or thereto, Year 2000 Ready means that the subject Performance Score will process and handle date and time data without material
interruption or delay (including, but not limited to calculating, comparing and sequencing) from, into and between the twentieth and twenty-first centuries, and the years 1999 and 2000, including leap year calculations, to the extent that all other
information technology used in combination with such Performance Score properly exchanges date data
 
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  with the pertinent Performance Score Software Facility. As the sole and exclusive remedy for any breach of this Section
22, Equifax will (a) exercise commercially reasonable efforts to correct any material non-compliance caused solely by the performance of the hardware and software at Equifax that is used to generate the applicable Performance Score and (b) reprocess
affected Performance Score output, if any, to Fair, Isaac or the affected End User, without charge, when it is generally available.
 Fair,
Isaac will use commercially reasonable efforts, as well as sound business practices, to make the ScoreNet Service “Year 2000 Ready.” For purposes of this Master Contract and each Addendum or Amendment hereto, and any subsequent Amendments,
Addenda or attachments hereto or thereto, Year 2000 Ready means that the ScoreNet Service will process and handle date and time data without material interruption or delay (including, but not limited to calculating, comparing and sequencing) from,
into and between the twentieth and twenty-first centuries, and the years 1999 and 2000, including leap year calculations, to the extent that all other information technology used in combination with such ScoreNet Service properly exchanges date data
with the ScoreNet Service. As the sole and exclusive remedy for any breach of this Section 22, Fair, Isaac will (a) exercise commercially reasonable efforts to correct any material noncompliance caused solely by the performance of the hardware and
software at Fair, Isaac that is used to generate the ScoreNet Service and (b) reprocess affected ScoreNet Service output, if any, to the affected End User, without charge, when it is generally available.
 6.        Performance Score Updates.  The following text is added to the Master
Contract as Section 26:
 26.      Equifax will provide Fair, Isaac
with Snapshot Data from the Basic Records at least every 18 months for each Performance Score in order for Fair, Isaac to review the performance of the Scorecards for Performance Scores then available from Equifax. Fair, Isaac shall use such
Snapshot Data (and any other data provided by Equifax under this Master Contract or any addendum or amendment hereto) only as expressly permitted in this Master Contract or any Addendum or Amendment hereto. Notwithstanding anything in this Master
Contract or any Addendum or Amendment hereto to the contrary, the contents of the Snapshot Data, Basic Records or other information provided by Equifax shall be as agreed by the parties from time to time. Fair, Isaac acknowledges that Equifax may be
prohibited by data contributors from providing certain information to Fair, Isaac. Equifax will advise Fair, Isaac of such prohibitions and the industry codes of such data contributors and the relative size of the data
 
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  contribution affected, and the parties will in good faith address the impact on the Performance Score(s) as mutually
agreed.
 If such review indicates, in the judgment of Fair, Isaac, that new Scorecards are warranted, and if mutual agreement is reached that
the Scorecards should at that time be replaced, then Fair, Isaac shall develop replacement Scorecards and Equifax will install them. Equifax will be under no obligation to install updates, provided, however, that Fair, Isaac may require Equifax to
install a Fair, Isaac provided update to the scorecards for each of the existing Performance Scores once within the thirty (30) month period beginning on the Effective Date (and, as to Performance Scores that become Commercially Available after the
Effective Date, once within the thirty (30) month period beginning on the date on which such Performance Score becomes Commercially Available) and thereafter not more than once every 4 years for as long as the pertinent Performance Score Addendum
remains in effect, or as otherwise agreed. This Section applies only to Scorecards for which Fair, Isaac provides the update Specifications to Equifax for coding by Equifax.
 7.        Adverse Action.  The following text is added to the Master Contract as Section 27:
 27.      For each Performance Score to be provided hereunder in account management
or on-line mode, score factor codes may be developed by Fair, Isaac and in such event the Structured Specification document will provide Score Factor Codes which are to accompany each delivery of such Performance Score by Equifax to End Users along
with the pertinent Performance Scores in account management or on-line delivery modes (but not with Performance Scores delivered for prescreening, for population of a prospect database, or archive scores, except as agreed by Equifax and Fair,
Isaac). If adverse Score Factor Codes are not developed by Fair, Isaac for delivery by Equifax to End Users along with such Performance Scores, Equifax shall instruct End Users that such Performance Scores or any of the related information provided
hereunder shall not be used for “adverse action” as defined by the Equal Credit Opportunity Act or Regulation B. Equifax will have ten business days to approve the score factor codes following delivery of Fair, Isaac’s list of the
same or the Score Factor Codes will be deemed approved. If Equifax does not approve of the Score Factor Codes, Fair, Isaac will make such modifications as are mutually acceptable. Following approval of the Score Factor Codes, Equifax will add them
to the Software Facility within a reasonable period of time.
 
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  8.        End User Agreements.
 The following text is added to the Master Contract as Section 28; provided, however, that Equifax shall have 180 days from the Effective Date to include the following specified terms in its End User Agreements, and it shall not be a violation
of the Master Contract for Equifax to enter into any End User Agreement that does not comply with Section 28 of the Master Contract, as amended hereby, during such 180 day period; provided that Equifax shall make a good faith effort to include such
terms within its standard contract forms within such 180 day period: 
 Except for the use of the Performance Scores as permitted under Section 31 of the Master
Contract, Equifax may provide Performance Scores only to End Users who have duly executed an End User Agreement with Equifax. For purposes of this Master Contract, End User shall mean individuals or entities requesting and obtaining individually
identified Performance Scores only for a permissible purpose as defined by the Fair Credit Reporting Act. Such agreement must include at a minimum the following terms:
 (a)       A description of the applicable Performance Score, product(s) and/or Service(s); 
 (b)       A provision limiting the combined liability of Equifax and Fair, Isaac to the End User to the
fees received from the End User for use of the Performance Score service in the preceding twelve (12) months; 
 (c)       A statement that Equifax is the authorized agent of Fair, Isaac for purposes of executing the End User Agreement as it pertains to the specified Performance Score(s) and for
collection of all fees and charges arising thereunder with respect to the specified Performance Score(s); 
 (d)       A provision certifying that the End User has a permissible purpose for obtaining the Performance Score(s) (except as otherwise permitted by law or in the applicable Addendum or
Amendment hereto); 
 (e)       A provision representing that
the End User will not publicly disseminate or otherwise disclose to others any results of the validations or other reports derived from the Performance Score service without Equifax’s and Fair, Isaac’s express written permission;

 (f)       A provision representing that the End User
acknowledges that the Performance Score service and its associated output are proprietary
 
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  and that, except for (1) disclosure to the subject consumer if the End User has taken adverse action against such consumer based in whole
or in part on the consumer report with which the Performance Score was delivered or (2) as required by law, End User will not provide the Performance Scores to any other party without Equifax’s and Fair, Isaac’s prior written consent;

 (g)       Pricing terms in accordance with the applicable
Addendum or Attachments thereto, unless modified as provided herein;
 (h)       If applicable, a provision whereby the End User asserts that any use of the Performance Scores for the purposes of evaluating the credit risk associated with applicants, prospects,
or existing customers will be in a manner consistent with the provisions described in the Equal Credit Opportunity Act, Regulation B, or the FCRA;
 (i)        A statement that the Performance Score(s) shall not be used for “Adverse Action” as defined by the Equal Credit
Opportunity Act or Regulation B, unless Score Factor Codes have been delivered to the End User along with the Performance Score(s);
 (j)        Any additional terms required pursuant to the Addenda and/or Amendment applicable to the pertinent Performance Score(s) and distribution channel(s),
including without limitation the warranties of Fair, Isaac set forth therein; and
 (k)       An agreement that End User will, before delivering or directing Equifax to deliver Performance Scores to any third party, enter into a contract with such third party that (1)
limits the use of the Performance Scores by the third party only to the use permitted to the End User and (2) identifies Fair, Isaac as an express third party beneficiary to such contract.
 Equifax may additionally provide Performance Scores to third parties performing supplemental processing functions on behalf of Equifax for the End User if that third party has duly executed a third party agreement with
Equifax. Such agreement must include at a minimum the following terms:
 (a)       A description of the applicable Performance Score, product(s) and/or Service(s); 
 (b)       A provision representing that the third party acknowledges that the Performance Scores are proprietary and will not provide the
Performance Scores to any other party other than the End User
 
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  without Equifax’s and Fair, Isaac’s prior written consent or use the Performance Scores for any purpose other than the
supplemental processing required by Equifax on behalf of the End User(s); 
 (c)       A provision representing that such third party supplemental processing shall not use the Performance Scores for model development, model validation, reverse engineering, or model
calibration; and
 (d)       A provision that prohibits such
third party from reselling the Performance Scores or using the Performance Scores to maintain or populate a Prospect Database unless the appropriate Prospect Database End User agreement has been executed.
 Equifax may additionally provide Performance Scores to affiliates or resellers only for sale to End Users so long as such End Users duly execute an End User agreement containing at a minimum the End
User Agreement provisions above.
 The final version of the End User or third party contract utilized by one party in any instance shall not be subject to
approval by the other party unless such version includes deviations from the foregoing terms that affect the other party, it being understood that no provision in an End User or third party contract shall, as between Equifax and Fair, Isaac, be
construed to change the limitations or allocations of liability set forth in this Agreement and in the applicable Addendum. If a party hereto is engaged in negotiations with an End User (“Negotiating Party”) and desires to change the terms
of the End User contract in a manner that would materially affect the other party hereto (“Other Party”), the Negotiating Party must submit the proposed changes to the Other Party in writing and the Other Party shall approve or disapprove
the suggested changes.
 9.        Financial Information
Reporting.  The following text is added to the Master Contract as Section 29:
 For each Performance Score provided under this
Master Contract, Equifax agrees to program all processes required to calculate and make available to Fair, Isaac in the time frames set forth in the Master Contract and its Addenda, the detailed financial information set forth in the Master Contract
and its Addenda. Equifax also agrees to revise its reporting procedures to separately identify and report each Performance Score by Distribution Channel in the Monthly Usage Summary Report and Royalty Model Owner Report. For purposes of this Master
Contract and all
 
Page 15 of
21

  addenda and amendments hereto, the term “Distribution Channel” means, unless the context clearly requires otherwise, one or
more of the following methods of delivering (and/or uses of) Performance Scores: off-line Prescreen, off-line Account Management (which, together with off-line Prescreen, may be referred to as the Off-line Distribution Channel), on-line, Archive,
Prospect Database, PreScore and ScoreNet.
 10.      Notices.
 The following text is added to the Master Contract as Section 30:
 Notices and consents that are required or permitted under this Master Contract or any
addendum, amendment or attachment hereto, or any addendum, amendment or attachment to any of the foregoing, shall either be (i) served personally upon the person(s) identified below at the address(es) identified below (“Personal Service”);
(ii) delivered by first class U.S. mail, certified or registered, postage prepaid and addressed to the addressee(s) as set forth below (“U.S. Mail”); (iii) delivered by overnight courier service, addressed to the addressee(s) as set forth
below (“Courier Service”); (iv) delivered by telecopy or facsimile transmission, directed to the recipient(s) at the telecopy or facsimile number(s) set forth below (“Fax Delivery”); or (v) delivered electronically via e-mail,
directed to the recipient(s) at the e-mail address(es) set forth below (“Electronic Delivery”). In the case of Fax Delivery or Electronic Delivery, a confirming hard copy of such transmission shall be sent on the same day by U.S. Mail or
Courier Service. A communication by Personal Service, U.S. Mail or Courier Service shall be deemed received upon delivery; a communication by Fax Delivery shall be deemed received upon successful completion of the transmission; and a communication
by E-Mail shall be deemed received upon transmission; provided, however, that in the event of delivery or transmission on a Saturday, Sunday or holiday, such communication shall be deemed received on the next business day. The parties may change the
following addresses and facsimile numbers by giving notice thereof to the other party.
 
Page 16 of
21

   

	 Equifax:
 	  
 	 Linda Willson
 Equifax, Inc.
 1600 Peachtree Street, H10C
 Atlanta, GA 30309
 Tel: 404 888 3525
 Fax: 404 885 8872
 E-mail: linda.willson@equifax.com
 
	  
 	  
 	  
 
	  
 	 With copy
 to:
 	  
 	 ECIS Group Counsel
 Equifax, Inc.
 1600 Peachtree Street, H10A
 Atlanta, GA 30309
 Tel: 404 885 8034
 Fax: 404 885 8922
 E-mail: richard.goerss@equifax.com
 
	  
 	  
 	  
 
	 Fair, Isaac:
  
 	  
 	 Cheri St. John
 Fair, Isaac & Co.
 120 North Redwood Drive
 San Rafael, CA 94903
 Tel: 415 491 5176
 Fax: 415 444 5070
 E-mail: cherist.john@fairisaac.com
 
	  
 	  
 	  
 
	  
 	 With copy
 to:
 	  
 	 General Counsel
 Fair, Isaac & Co.
 120 North Redwood Drive
 San Rafael, CA 94903
 Tel: 415 472 2211
 Fax: 415 444 5029
 E-mail: pmccorkell@fairisaac.com
 

 
 11.      Internal Use. The following text is added to the Master Contract Section as 31:
 (a)       Equifax Credit Information Services, Inc. (“ECIS”) shall
have the right to use all or part of the Software Facility for each Performance Score to generate Scores to be used only for the following purposes, without payment to Fair, Isaac:
 (i)        To derive score distribution information to assist in developing End User score cut-offs and strategies and
to assist in future sales efforts that include joint products, provided that ECIS shall provide only analysis reports
 
Page 17 of
21

  regarding such score cut-offs and strategies and will not deliver the scores;
 (ii)      For internal fraud detection, in which Scores are generated to identify improper Score
manipulation by employees, customers and other parties having a means of performing such manipulation;
 (iii)     To perform depersonalized file and score comparisons commissioned by End Users, provided that Equifax must not charge the End User for this service (other than computer processing charges
passed through to the End User); and
 (iv)     To build databases for the
subsequent sale of prescreen scores to End Users, such as the Readi-Screen product, provided that the Performance Scores housed in such databases shall be used for no purpose other than the sale of such Performance Scores to End Users subject to an
appropriate End User contract.
 (b)       ECIS and any other
company controlled by Equifax, Inc. (“Equifax End User”) shall have the right to use all or part of the Software Facility for each Performance Score to generate Scores to be used only for the following purposes, provided that such Equifax
End User shall pay Fair, Isaac for the use of such Performance Scores at the rates set forth with respect to End Users in the Archive Score Amendment to this Master Contract: (1) internal validation of the Performance Scores; (2) comparisons to
other Performance Scores; and (3) evaluation of the predictiveness of the Performance Scores as compared to other scores. Such use shall further be subject to the following restrictions:
 (i)        The Equifax End User will not publicly disseminate or otherwise disclose to others any results of the
validations, analysis or other reports derived from the permitted use of the Performance Scores without Fair, Isaac’s consent;
 (ii)      The Equifax End User will not provide the Performance Scores generated for such internal use to any other party without Fair, Isaac’s consent; and

Page 18 of
21

  (iii)     The Equifax End User will not use the
Performance Scores for model development, reverse engineering or model calibration.
 (c)       To the extent that a given instance of Performance Score use by ECIS is authorized by both subsections (a) and (b), such use shall be deemed to be made under subsection
(a).
 12.      Geographic Scope.
The Master Contract as amended hereby governs the parties’ rights and responsibilities regarding the promotion, sale and delivery of Services in the United States of America and its territories and possessions
(“United States”) only and shall have no applicability to any other geographic region unless the parties expressly agree otherwise.
 IV.    ON-LINE REBATE AMENDMENT INCENTIVE CONDITIONS
 Under the terms of the On-Line Rebate Amendment to the
On-Line Addendum to the Master Contract (the “Rebate Amendment”), in order to create certain volume-based incentives for the sale of On-Line Scores for BEACON and NewGen as defined in the Rebate Amendment and to encourage Equifax to offer
certain new Performance Scores in accordance with the timelines set forth below, Fair, Isaac has agreed to provide certain Rebates as calculated therein subject to the conditions set forth herein. Fair, Isaac will calculate and conditionally accrue
the Rebate Amount for Equifax starting with the October 1, 1998 to December 31, 1998 calendar quarter but will not be obligated to remit payment to Equifax until Equifax and Fair, Isaac execute the Global Agreements.
 In addition, time is of the essence with respect to a number of Equifax’s and Fair, Isaac’s obligations which are set forth below and contained in the Global Agreements
(“Enhancements”). The calculation of the Fair, Isaac Share for BEACON and the corresponding Rebate Amount will vary as described below in the event Equifax fails to meet the Completion Dates set forth below.
 The parties acknowledge that Equifax’s obligations to complete its tasks set forth below such that a given Enhancement is Commercially Available (as defined below) on or
before the applicable “Completion Date” specified below for the identified Distribution Channels require the timely performance by Equifax and Fair, Isaac of certain preliminary tasks. The column identified below as Specification Date
(“Specification Date”) represents the date by which Fair, Isaac shall be required to have delivered to Equifax the Structured Specifications and other documentation adequately detailing the process by which Equifax will code the applicable
Enhancement. The column identified below as Audit Date (“Audit Date”) represents the date by which Equifax shall be required to have the Enhancement programming completed and have reasonable audit materials available for Fair, Isaac to
conduct assurance testing. Fair, Isaac and Equifax will allocate reasonable resources and make a diligent effort to ensure that the relevant Enhancement timeframes are achieved. The parties will in advance of the Specification Date(s) mutually agree
to a comprehensive project schedule for each Enhancement which will specify the 
 
Page 19 of
21

  obligations of each party and the associated deadlines. The Audit Date and the Completion Date for each Enhancement set forth below will be extended by one
business day for each day that Fair, Isaac fails to meet any of its obligations. If it happens that the completion dates are not achieved due to unforeseen complexity in implementing the Performance Scores despite diligent effort on the part of both
parties, the Completion Date will be extended appropriately.
  

	 Enhancement
 	  
 	 Specification
 Date
 	  
 	 Audit Date
 	  
 	 Completion
 Date
 	  
 
	 
 	  
 	 
 	  
 	 
 	  
 	 
 	  
 
	 New version of REV and reason codes (AM) in the Online, Offline, PreScore and ScoreNet
channels
 	  
 	 NA
 	  
 	 5/01/99
 	  
 	 7/30/99 
 	  
 
	 51 Additional Attributes in ScoreNet and Triggering Trade Line Information (credit limit,
balance and status)
 	  
 	 NA
 	  
 	 5/15/99
 	  
 	 7/30/99
 	  
 
	 Attrition Model and reason codes (when available) in Account Management and ScoreNet

	  
 	 4/02/99
 	  
 	 8/31/99
 	  
 	 9/30/99
 	  
 
	 NewGen Model and reason codes in the Online, Offline, PreScore and ScoreNet Distribution
Channels
 	  
 	 NA
 	  
 	 7/31/99
 	  
 	 9/30/99
 	  
 
	 ScoreNet Custom attribute and custom score capability sufficient to enable compliance with the
ScoreNet Amendment to the Master Contract and the Addenda thereto.
 	  
 	 5/01/99
 	  
 	 7/15/99
 	  
 	 8/31/99
 	  
 

 
 An Enhancement will be deemed Commercially
Available when the Equifax system requirements necessary to allow an End User wishing to use the pertinent Enhancement through the agreed to Distribution Channels are operational. Should Equifax fail to meet a Completion Date as extended above, with
the exception of the Attrition Score Completion Date, the Rebate Amount for that quarter will be reduced pro rata for each business day that one or more Enhancements (except the Attrition Score) is not Commercially Available according to the above
schedule as extended. Should Equifax fail to meet a Completion Date as extended above for REV in ScoreNet or the Additional Attribute information, the Rebate Amount for that quarter will be reduced pro rata for a minimum of 30 business
days.
 If the Fair, Isaac Share per Name Scored would fall from $0.06 under the provisions of the On-Line Beacon Rebate Amendment and one or more Enhancements
is not Commercially
 
Page 20 of
21

  Available, the Fair, Isaac Share per Name Scored will revert to or remain at $0.06, as the case may be, until all such Enhancements that are then due
according to the above schedule (as extended) are Commercially Available. Notwithstanding any other provision in this Master Contract, the only liability of Equifax and the sole remedy of Fair, Isaac for Equifax’s failure to make an Enhancement
Commercially Available within the required timeframe under this Section IV shall be to only affect Fair, Isaac’s requirement to pay a Rebate Amount as set forth in this Section IV. If Fair, Isaac is permitted to reduce a Rebate Amount in
accordance with the terms and conditions in the immediately preceding paragraph, such reduction of payment shall not affect the redetermination of the Fair, Isaac Share per Name Scored for BEACON pursuant to the On-Line Addendum to the Master
Contract. Accordingly, notwithstanding any reduction in the Rebate Amount to be paid, the parties shall in all cases calculate the Rebate Amount and the corresponding Fair, Isaac Share per Name Scored for BEACON in Year 1 or beyond as described in
the On-Line Rebate Amendment to the On-Line Addendum to the Master Contract.
 V.     NO FURTHER
CHANGES
 Except as expressly amended hereby, all of the terms and conditions of the Master Contract and any heretofore executed amendments, addenda,
exhibits, schedules or attachments thereto shall remain in full force and effect.
 IN WITNESS WHEREOF, each of the parties have duly executed this Amendment to
the Master Contract as of the date first set forth above.
  

	 Accepted for:
 
 Equifax Credit Information
 Services, Inc.
 	  
 	  
 	 
 
 
 Fair, Isaac and Company, Inc.
 
	 
 
 /s/ M. SHANNON 
 	  
 	  
 	 
 
 /s/ CHERI ST. JOHN 
 
	 
 	  
 	  
 	 
 
	 (Signature)
 	  
 	  
 	 (Signature)
 
	 Michael Shannon
 	  
 	  
 	 Cheri St. John
 
	 Senior Vice President
 	  
 	  
 	 Senior Vice President
 
	  
 	  
 	  
 	  
 
	  7/30/99
 	  
 	  
 	  7/30/99
 
	 
 	  
 	  
 	 
 
	 Date
 	  
 	  
 	 Date
 

 
Page 21 of 21<PAGE>
                                                                     EXHIBIT 4.1

                                    FORM OF

                         SECURITIES PURCHASE AGREEMENT

                                     BETWEEN

                             NOVATEL WIRELESS, INC.

                                       AND

               THE PURCHASERS LISTED ON THE SIGNATURE PAGES HERETO

                                 MARCH 12, 2003

<PAGE>

                          SECURITIES PURCHASE AGREEMENT

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

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

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

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

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

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

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

                                      - 1 -

<PAGE>

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

                                      - 2 -

<PAGE>

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

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

         2.       Closing; Deliveries.

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

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

                                      - 3 -

<PAGE>

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

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

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

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

                                      - 4 -

<PAGE>

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

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

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

                                      - 5 -

<PAGE>

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

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

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

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

                                      - 6 -

<PAGE>

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

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

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

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

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

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

                                      - 7 -

<PAGE>

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

                  3.8.     SEC Reports; Financial Statements.

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

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

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

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

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

                                      - 8 -

<PAGE>

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

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

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

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

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

                                      - 9 -

<PAGE>

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

                  3.14.    Intellectual Property Rights.

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

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

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

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

                                     - 10 -

<PAGE>

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

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

                  3.16.    Tax Matters.

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

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

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

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

                                     - 11 -

<PAGE>

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

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

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

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

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

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

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

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

                                     - 12 -

<PAGE>

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

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

                                     - 13 -

<PAGE>

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

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

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

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

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

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

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

                                     - 14 -

<PAGE>

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

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

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

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

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

                                     - 15 -

<PAGE>

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

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

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

                  3.26.    Transactions with Affiliated Persons.

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

                                     - 16 -

<PAGE>

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

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

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

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

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

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

                                     - 17 -

<PAGE>

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

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

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

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

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

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

                  4.5.     Absence of Registration. Such Purchaser understands
that:

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

                                     - 18 -

<PAGE>

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

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

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

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

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

                                     - 19 -

<PAGE>

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

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

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

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

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

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

                                     - 20 -

<PAGE>

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

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

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

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

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

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

                                     - 21 -

<PAGE>

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

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

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

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

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

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

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

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

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

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

                                     - 22 -

<PAGE>

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

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

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

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

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

                  5.5.     No Solicitation.

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

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

                                     - 23 -

<PAGE>

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

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

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

                                     - 24 -

<PAGE>

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

         5.6.     Additional Issuances.

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

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

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

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

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

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

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

                                     - 25 -

<PAGE>

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

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

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

         6.       Additional Covenants of the Parties.

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

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

                                     - 26 -

<PAGE>

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

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

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

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

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

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

                                     - 27 -

<PAGE>

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

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

         7.       Conditions to the First Closing

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

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

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

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

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

                                     - 28 -

<PAGE>

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

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

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

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

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

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

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

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

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

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

                                     - 29 -

<PAGE>

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

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

         8.       Conditions to the Sanmina Closing

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

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

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

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

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

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

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

         9.       Conditions to the Third Closing.

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

                                     - 30 -

<PAGE>

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

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

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

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

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

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

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

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

                                     - 31 -

<PAGE>

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

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

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

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

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

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

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

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

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

         10.      Termination.

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

                                     - 32 -

<PAGE>

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

                           10.1.2.  By either the Company or Purchaser
Representative if:

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

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

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

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

                           10.1.3.  By Purchaser Representative if:

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

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

                                     - 33 -

<PAGE>

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

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

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

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

         11.      Fees and Expenses.

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

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

                                     - 34 -

<PAGE>

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

         12.      Miscellaneous.

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

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

                                     - 35 -

<PAGE>

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

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

                           if to the Company, to:

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

                           with a copy so mailed to:

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

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

                           with a copy so mailed to:

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

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

                                     - 36 -

<PAGE>

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

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

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

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

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

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

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

                                     - 37 -

<PAGE>

         13.      Note Agent.

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

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

                  13.3.    Duties, Powers and Rights of the Agent.

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

                                     - 38 -

<PAGE>

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

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

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

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

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

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

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

                                     - 39 -

<PAGE>

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

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

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

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

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

                           13.3.2.  Duties Limited.

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

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

                                     - 40 -

<PAGE>

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

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

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

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

             (vi)     advance any monies for any purpose; or

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

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

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

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

                                     - 41 -

<PAGE>

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

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

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

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

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

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

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

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

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

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

                                     - 42 -

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

                                     - 43 -

<PAGE>

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

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

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

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

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

                                     - 44 -

<PAGE>

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

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

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

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                     - 45 -

<PAGE>

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

                                      "COMPANY"
                                      Novatel Wireless, Inc.

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

                                     - 46 -

<PAGE>

"PURCHASER"

<TABLE>
<CAPTION>
                                                                 SANMINA TRANCHE
                                                 TRANCHE I       PERCENTAGE AND         TRANCHE III
PRINTED NAME OF PURCHASER:                        AMOUNT             AMOUNT                AMOUNT
<S>                                              <C>             <C>                    <C>
BAY INVESTMENTS LIMITED                          $ 400,000                 33.33%       $   683,333

                                                                 $       916,667
</TABLE>

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

Title: Director

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

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT

<PAGE>

"PURCHASER"

<TABLE>
<CAPTION>
                                                                 SANMINA TRANCHE
                                                 TRANCHE I       PERCENTAGE AND         TRANCHE III
PRINTED NAME OF PURCHASER:                        AMOUNT             AMOUNT                AMOUNT
<S>                                              <C>             <C>                    <C>
MUTUAL TRUST MANAGEMENT (BERMUDA)

LIMITED AS TRUSTEE OF SOFAER FUNDS/

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

                                                                 $       600,000
</TABLE>

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

Title: Authorised signatory of Sofaer Capital Inc.

       Authorised Investment Adviser

Address:   Hemisphere House

           9 Church Street

           P.O. Box HM 951

           Hamilton HM DX, Bermuda

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT

<PAGE>

"PURCHASER"

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

                                                                 $       316,667
</TABLE>

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

Title: Authorised signatory of Sofaer Capital Inc.

       Authorised Investment Adviser

Address:   Spencer House

           27 St James' Place

           London

           SW1A 1NR

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT

<PAGE>

"PURCHASER"

<TABLE>
<CAPTION>
                                                                 SANMINA TRANCHE
                                                 TRANCHE I       PERCENTAGE AND         TRANCHE III
PRINTED NAME OF PURCHASER:                        AMOUNT             AMOUNT                AMOUNT
<S>                                              <C>             <C>                    <C>
SOEN YONG LEE                                    $ 100,000                  8.33%       $   170,833

                                                                 $       229,167
</TABLE>

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

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

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT

<PAGE>

"PURCHASER"

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

                                                                 $       114,583
</TABLE>

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

Name:     Bruno Sidler

Title:    Director

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

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT

<PAGE>

"PURCHASER"

<TABLE>
<CAPTION>
                                                                 SANMINA TRANCHE
                                                 TRANCHE I       PERCENTAGE AND         TRANCHE III
PRINTED NAME OF PURCHASER:                        AMOUNT             AMOUNT                AMOUNT
<S>                                              <C>             <C>                    <C>
PETER LEPARULO                                   $  10,000                   .83%       $    17,083

                                                                 $        22,917
</TABLE>

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

Address:   9360 Towne Centre Drive

           Suite 110

           San Diego, CA 92121

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT

<PAGE>

"PURCHASER"

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

                                                                 $       458,333
</TABLE>

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

Title: Managing Director

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

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT

<PAGE>

"PURCHASER"

<TABLE>
<CAPTION>
                                                                 SANMINA TRANCHE
                                                 TRANCHE I       PERCENTAGE AND         TRANCHE III
PRINTED NAME OF PURCHASER:                        AMOUNT             AMOUNT                AMOUNT
<S>                                              <C>             <C>                    <C>
PS CAPITAL LLC                                   $  40,000                  3.33%       $    68,333

                                                                 $        91,667
</TABLE>

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

Name:  Stanley M. Blau

Title: Managing Director

Address:   880 Fifth Ave, Suite 19A

           New York City

           New York 10021

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT

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