Document:

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                                                                    EXHIBIT 10.1

                           BUNGEE COMMUNICATIONS, INC.

                       PREFERRED STOCK PURCHASE AGREEMENT

                                OCTOBER 27, 2000

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                           BUNGEE COMMUNICATIONS, INC.

                       PREFERRED STOCK PURCHASE AGREEMENT

       This Preferred Stock Purchase Agreement (this "Agreement") is made as of
the _____ day of October, 2000 by and between Bungee Communications, Inc., a
Delaware corporation (the "Company") and the investors listed on Exhibit A
hereto (each a "Purchaser" and together the "Purchasers").

       The parties hereby agree as follows:

       1. PURCHASE AND SALE OF PREFERRED STOCK.

              1.1 SALE AND ISSUANCE OF SERIES A PREFERRED STOCK.

                     (a) The Company shall adopt and file with the Secretary of
State of the State of Delaware on or before the initial Series A Closing (as
defined below) the Amended and Restated Certificate of Incorporation in the form
attached hereto as Exhibit B-1 (the "Restated Certificate").

                     (b) Subject to the terms and conditions of this Agreement,
each Purchaser agrees to purchase at the Series A Closings and the Company
agrees to sell and issue to each Purchaser at the Series A Closings that number
of shares of Series A Preferred Stock set forth opposite each such Purchaser's
name on Exhibit A hereto at a purchase price of $0.60 per share, in the
aggregate purchase price of $5,250,000 in the initial Series A Closing, and an
additional $3,750,000 in a subsequent Series A Closing. The shares of Series A
Preferred Stock issued to the Purchaser pursuant to this Agreement shall be
hereinafter referred to as the "Series A Stock".

              1.2 SERIES A CLOSINGS; DELIVERY.

                     (a) Each closing of the purchase and sale of Series A Stock
(each, a "Series A Closing") shall take place at such time and place as the
Company and the Purchasers mutually agree upon, orally or in writing, such
agreement to be made within five days after each of the applicable closing
conditions set forth in Sections 4 and 5 below are satisfied or waived, and if
such agreement is not reached within such time, each Series A Closing shall take
place at the offices of Venture Law Group, 2800 Sand Hill Road, Menlo Park,
California, at 2:00 p.m. on the first business day following such five-day
period.

                     (b) At the initial Series A Closing, the Company shall
deliver to each initial Purchaser a certificate representing the Series A Stock
being purchased thereby against payment of the purchase price therefor of an
aggregate of $5,250,000, by any combination of the following: (i) check payable
to the Company; (ii) wire transfer to the Company's bank account; (iii)
conversion of outstanding convertible debt; or (iv) cancellation of outstanding
indebtedness of the Company to a Purchaser under that certain License Agreement
in substantially the form hereto as Exhibit D.

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                     (c) At the subsequent Series A Closing (the "Second A
Closing"), the Company shall deliver to each subsequent Purchaser a certificate
representing the Series A Stock being purchased thereby against payment of the
purchase price therefor of an aggregate of $3,750,000, by any combination of the
following: (i) check payable to the Company; (ii) wire transfer to the Company's
bank account; (iii) conversion of outstanding convertible debt; or (iv)
cancellation of outstanding indebtedness of the Company to a Purchaser.

              1.3 SALE AND ISSUANCE OF SERIES B PREFERRED STOCK.

                     (a) The Company shall adopt and file with the Secretary of
State of the State of Delaware on or before the initial Series B Closing (as
defined below) an Amended and Restated Certificate of Incorporation in the form
attached hereto as Exhibit B-2, as amended to reflect the number of shares of
Series B Stock (as defined below) to be sold and the price per share as
determined in accordance with this Agreement (as so amended and restated, the
"Series B Certificate").

                     (b) Subject to the terms and conditions of this Agreement,
Netro Corporation ("Netro") agrees to purchase at the Series B Closings and the
Company agrees to sell and issue to Netro at the Series B Closings shares of
Series B Preferred Stock in an amount and at a purchase price calculated as set
forth in Section 1.3(c) below, in the aggregate purchase price of $5,000,000 in
the initial Series B Closing, and an additional $5,000,000 in a subsequent
Series B Closing. The shares of Series B Preferred Stock issued and sold
pursuant to this Agreement shall be hereinafter referred to as the "Series B
Stock". At any time prior to the initial or subsequent Series B Closing, Netro
may elect to designate other parties, subject to the approval of the Company
(which approval shall not be unreasonably withheld or delayed), to purchase a
portion or all of the Series B Stock at such Series B Closing, and any such
party shall be joined to this Agreement as a purchaser of Series B Stock by
execution of a signature page to this Agreement by such party. Any purchaser of
Series B Stock pursuant to this Agreement (including Netro) shall be referred to
hereinafter as a "Series B Purchaser".

                     (c) The price per share of the Series B Stock shall be
equal to the Post A Valuation multiplied by the B Multiplier, divided by the Pre
B Common. The following definitions apply:

                            (i) "Post A Valuation" means the valuation of the
Company immediately following the Second A Closing, calculated as follows:
Outstanding Common immediately following the Second A Closing multiplied by the
purchase price per share of the Series A Stock in the Second A Closing.

                            (ii) "Outstanding Common" means the number of all
shares of Common Stock of the Company then outstanding, assuming (i) the
conversion and exercise of all outstanding securities convertible or exercisable
into Common Stock of the Company and (ii) the issuance and exercise of all
available options and stock purchase rights for Common Stock of the Company
reserved for issuance under any stock plan of the Company.

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                            (iii) "Pre B Common" means the number of Outstanding
Common immediately prior to the initial Series B Closing.

                            (iv) "B Multiplier" means:

                                   (A) 4.0, if the milestones set forth in
Section I of Attachment 1 have been achieved by the Company;

                                   (B) 1.5, if the milestones set forth in
Section I of Attachment 1 have not been achieved, but milestones set forth in
Section II of Attachment I have been achieved by the Company; or

                                   (C) Notwithstanding anything else in this
Agreement, if the milestones in Section II of Attachment 1 have not been
achieved, then the Series B Purchasers shall not be obligated to purchase Series
B Stock at any price; provided however, that the Company shall remain obligated
to sell Series B Stock to the Series B Purchasers in accordance with this
Agreement, and in the event that the Series B Purchasers elect to purchase
Series B Stock, the B Multiplier shall equal 0.8, or such other value as is
mutually agreed by the parties.

              1.4 SERIES B CLOSINGS; DELIVERY.

                     (a) Each closing of the purchase and sale of Series B Stock
(each, a "Series B Closing") shall take place at such time and place as the
Company and the Series B Purchasers mutually agree upon, orally or in writing,
such agreement to be made within five days after each of the closing conditions
set forth in Sections 4 and 5 below are satisfied or waived, and if such
agreement is not reached within such time, each Series B Closing shall take
place at the offices of Venture Law Group, 2800 Sand Hill Road, Menlo Park,
California, at 2:00 p.m. on the first business day following such five-day
period.

                     (b) At the initial Series B Closing, the Company shall
deliver to the Series B Purchasers a certificate representing the Series B Stock
being purchased thereby against payment of the purchase price therefor of an
aggregate of $5,000,000 by any combination of the following: (i) check payable
to the Company; (ii) wire transfer to the Company's bank account; (iii)
conversion of outstanding convertible debt; or (iv) cancellation of outstanding
indebtedness of the Company to a Purchaser.

                     (c) At the subsequent Series B Closing (the "Second B
Closing"), the Company shall deliver to each subsequent Series B Purchaser a
certificate representing the Series B Stock being purchased thereby against
payment of the purchase price therefor of an aggregate of $5,000,000, by any
combination of the following: (i) check payable to the Company; (ii) wire
transfer to the Company's bank account; (iii) conversion of outstanding
convertible debt; or (iv) cancellation of outstanding indebtedness of the
Company to a Purchaser.

              1.5 SALE AND ISSUANCE OF SERIES C PREFERRED STOCK.

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                     (a) The Company shall adopt and file with the Secretary of
State of the State of Delaware on or before the Series C Closing (as defined
below) an Amended and Restated Certificate of Incorporation in the form attached
hereto as Exhibit B-3, as amended to reflect the number of shares of Series C
Stock (as defined below) to be sold and the price per share as determined in
accordance with this Agreement (as so amended and restated, the "Series C
Certificate").

                     (b) Subject to the terms and conditions of this Agreement,
Netro agrees to purchase at the Series C Closing and the Company agrees to sell
and issue to Netro at the Series C Closing shares of Series C Preferred Stock in
an amount and at a purchase price calculated as set forth in Section 1.5(c)
below, in the aggregate purchase price of $12,500,000. The shares of Series C
Preferred Stock issued and sold pursuant to this Agreement shall be hereinafter
referred to as the "Series C Stock". At any time prior to the Series C Closing,
Netro may elect to designate other parties, subject to the approval of the
Company (which approval shall not be unreasonably withheld or delayed), to
purchase a portion or all of the Series C Stock at such Series C Closing, and
any such party shall be joined to this Agreement as a purchaser of Series C
Stock by execution of a signature page to this Agreement by such party. Any
purchaser of Series C Stock pursuant to this Agreement (including Netro) shall
be referred to hereinafter as a "Series C Purchaser".

                     (c) The price per share of the Series C Stock shall be
equal to the Post B Valuation multiplied by the C Multiplier, divided by the Pre
C Common. The following definitions apply:

                            (i) "Post B Valuation" means the valuation of the
Company immediately following the Second B Closing, calculated as follows:
Outstanding Common immediately following the Second B Closing multiplied by the
purchase price per share of the Series B Stock in the Second B Closing.

                            (ii) "Outstanding Common" has the meaning set forth
in Section 1.3(c)(ii) above.

                            (iii) "Pre C Common" means the number of Outstanding
Common immediately prior to the initial Series C Closing.

                            (iv) "C Multiplier" means (subject to subsection (d)
below):

                                   (A) 4.0, if the milestones set forth in
Section I of Attachment 2 have been achieved by the Company;

                                   (B) 1.5, if the milestones set forth in
Section I of Attachment 2 have not been achieved, but milestones set forth in
Section II of Attachment 2 have been achieved by the Company; or

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                                   (C) Notwithstanding anything else in this
Agreement, if the milestones in Section II of Attachment 2 have not been
achieved, then the Series C Purchasers shall not be obligated to purchase Series
C Stock at any price; provided however, that the Company shall remain obligated
to sell Series C Stock to the Series C Purchasers in accordance with this
Agreement, and in the event that the Series C Purchasers elect to purchase
Series C Stock, the C Multiplier shall equal 0.8, or such other value as is
mutually agreed by the parties.

                     (d) In the event that the B Multiplier is less than 4.0,
the parties agree to work together in good faith to determine what milestones,
if any, can be added to Attachment 2 which, upon their achievement, would result
in a C Multiplier with a value greater than 4.0.

              1.6 SERIES C CLOSINGS; DELIVERY.

                     (a) The closing of the purchase and sale of Series C Stock
(the "Series C Closing") shall take place at such time and place as the Company
and the Series C Purchasers mutually agree upon, orally or in writing, such
agreement to be made within five days after each of the closing conditions set
forth in Sections 4 and 5 below are satisfied or waived, and if such agreement
is not reached within such time, the Series C Closing shall take place at the
offices of Venture Law Group, 2800 Sand Hill Road, Menlo Park, California, at
2:00 p.m. on the first business day following such five-day period.

                     (b) At the Series C Closing, the Company shall deliver to
the Series C Purchasers a certificate representing the Series C Stock being
purchased thereby against payment of the purchase price therefor of an aggregate
of $12,500,000 by any combination of the following: (i) check payable to the
Company; (ii) wire transfer to the Company's bank account; (iii) conversion of
outstanding convertible debt; or (iv) cancellation of outstanding indebtedness
of the Company to a Purchaser.

       2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The term "Closing"
hereinafter shall refer to the pending Series A Closing, Series B Closing or
Series C Closing, as applicable. The Company hereby represents and warrants to
each Purchaser in the Closing that as of the date hereof and as of the date of
the Closing, except as set forth on a Schedule of Exceptions attached hereto as
Exhibit C, which exceptions shall be deemed to be representations and warranties
as if made hereunder:

              2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to carry on its business as now
conducted and as proposed to be conducted. The Company and each of its
subsidiaries is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure so to qualify would have a material
adverse effect on its business or properties.

              2.2 CAPITALIZATION. The authorized capital of the Company
consists, or will consist, immediately prior to the Closing, of:

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                     (a) 12,500,000 shares of Preferred Stock, all of which
shares have been designated Series A Preferred Stock, none of which are issued
and outstanding immediately prior to the Closing. The rights, privileges and
preferences of the Preferred Stock are as stated in the Restated Certificate.

                     (b) 25,000,000 shares of Common Stock, 2,500,000 shares of
which are issued and outstanding immediately prior to the Closing. All of the
outstanding shares of Common Stock have been duly authorized, fully paid and are
nonassessable and issued in compliance with all applicable federal and state
securities laws.

                     (c) The Company has reserved 10,000,000 shares of Common
Stock for issuance to officers, directors, employees and consultants of the
Company pursuant to its 2000 Stock Plan duly adopted by the Company's Board of
Directors and approved by the Company stockholders (the "Stock Plan"). No shares
or options therefor have been issued under the Stock Plan, and all of such
reserved shares remain available for issuance to officers, directors, employees
and consultants pursuant to the Stock Plan.

                     (d) Except for an outstanding convertible note issued to
Netro, there are no outstanding options, warrants, rights (including conversion
or preemptive rights and rights of first refusal or similar rights) or
agreements, orally or in writing, for the purchase or acquisition from the
Company of any shares of its capital stock. There are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal or similar rights) or agreements, orally or in writing, for the purchase
or acquisition from any subsidiary of the Company of any shares of the capital
stock of such subsidiary.

              2.3 SUBSIDIARIES. The Company does not currently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity, except as set forth on the Schedule of Exceptions. With
respect to each such subsidiary set forth on the Schedule of Exceptions, all of
its issued and outstanding shares of capital stock are validly issued, fully
paid and nonassessable, and are held of record and owned beneficially by the
Company, free and clear of any liens or other restrictions on transfer.

              2.4 AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the License Agreement
in the form attached hereto as Exhibit D (the "License Agreement"), the
Investors' Rights Agreement, in the form attached hereto as Exhibit E (the
"Rights Agreement"), the Right of First Refusal and Co-Sale Agreement in the
form attached hereto as Exhibit F (the "Co-Sale Agreement"), the Voting
Agreement in the form attached hereto as Exhibit G (the "Voting Agreement") and
the Option Agreement in the form attached hereto as Exhibit H (the "Option
Agreement", and collectively with this Agreement, the Rights Agreement, Co-Sale
Agreement, Voting Agreement and Option Agreement, the "Agreements"), the
performance of all obligations of the Company hereunder and thereunder and the
authorization, issuance and delivery of the securities to be issued at the
Closing (the "Stock") and the Common Stock issuable upon conversion of the Stock
(together with the Stock, the "Securities") has been taken or will be taken
prior to the Closing, and the Agreements, when

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executed and delivered by the Company, shall constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of
general application affecting enforcement of creditors' rights generally, as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, or (ii) to the extent the indemnification
provisions contained in the Rights Agreement may be limited by applicable
federal or state securities laws.

              2.5 VALID ISSUANCE OF SECURITIES. The Stock that is being issued
to the Purchasers hereunder, when issued, sold and delivered in accordance with
the terms hereof for the consideration expressed herein, will be duly and
validly issued, fully paid and nonassessable and free of restrictions on
transfer other than restrictions on transfer under this Agreement, the Rights
Agreement and applicable state and federal securities laws. Based in part upon
the representations of the Purchasers in this Agreement and subject to the
provisions of Section 2.6 below, the Stock will be issued in compliance with all
applicable federal and state securities laws. The Common Stock issuable upon
conversion of the Stock has been duly and validly reserved for issuance, and
upon issuance in accordance with the terms of the Restated Certificate, shall be
duly and validly issued, fully paid and nonassessable and free of restrictions
on transfer other than restrictions on transfer under this Agreement, the Rights
Agreement and applicable federal and state securities laws and will be issued in
compliance with all applicable federal and state securities laws.

              2.6 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company or any of its subsidiaries is required in connection with the
consummation of the transactions contemplated by this Agreement, except for
filings pursuant to Section 25102(f) of the California Corporate Securities Law
of 1968, as amended, and the rules thereunder, other applicable state securities
laws and Regulation D of the Securities Act of 1933, as amended (the "Securities
Act").

              2.7 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company or any of its subsidiaries that questions the validity of
the Agreements or the right of the Company to enter into them, or to consummate
the transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any material adverse changes in the assets,
condition or affairs of the Company, financially or otherwise, or any change in
the current equity ownership of the Company or any of its subsidiaries, nor is
the Company aware that there is any basis for the foregoing. Neither the Company
nor any of its subsidiaries is a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company or any of its subsidiaries currently pending or which the Company or any
of its subsidiaries intends to initiate.

              2.8 INTELLECTUAL PROPERTY. The Company owns or possesses
sufficient legal rights to all patents, trademarks, service marks, tradenames,
copyrights, trade secrets, licenses,

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information and proprietary rights and processes necessary for its business
without any conflict with, or infringement of, the rights of others. Neither the
Company nor any of its subsidiaries has received any communications alleging
that the Company or any of its subsidiaries has violated or, by conducting its
business, would violate any of the patents, trademarks, service marks,
tradenames, copyrights, trade secrets or other proprietary rights or processes
of any other person or entity. The Company is not aware that any of its or its
subsidiaries' employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of such employee's best efforts to promote the interest
of the Company or that would conflict with the Company's business. Neither the
execution or delivery of this Agreement, nor the carrying on of the Company's
business by the employees of the Company and its subsidiaries, nor the conduct
of the Company's business as proposed, will, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions, or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any such employee is now obligated. The Company does not believe it is or will
be necessary to use any inventions of any of its employees (or persons it
currently intends to hire) made prior to their employment by the Company or its
subsidiaries. Set forth in Section 2.8 of the Schedule of Exceptions is a
listing of all patents, trademarks and licenses of the Company and its
subsidiaries.

              2.9 COMPLIANCE WITH OTHER INSTRUMENTS.

                     (a) Neither the Company nor any of its subsidiaries is in
violation or default of any provisions of its Certificate of Incorporation or
Bylaws or (with respect to subsidiaries) similar organizational documents, or of
any instrument, judgment, order, writ, decree or contract to which it is a party
or by which it is bound or, of any provision of any applicable federal or state
statute, rule or regulation. The execution, delivery and performance of the
Agreements and the consummation of the transactions contemplated hereby or
thereby will not result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument, judgment, order, writ, decree or
contract or an event which results in the creation of any lien, charge or
encumbrance upon any assets of the Company or its subsidiaries.

                     (b) Each of the Company and its subsidiaries has avoided
every condition, and has not performed any act, the occurrence of which would
result in the Company's or any subsidiary's loss of any right granted under any
license, distribution agreement or other agreement.

              2.10 AGREEMENTS; ACTION.

                     (a) Neither the Company nor any of its subsidiaries has
entered into any agreements, understandings or proposed transactions with any of
its officers, directors, affiliates, or any affiliate thereof.

                     (b) Except for agreements explicitly contemplated by the
Agreements, there are no agreements, understandings, instruments, contracts or
proposed transactions to

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which the Company or any of its subsidiaries is a party or by which it is bound
that involve (i) obligations (contingent or otherwise) of, or payments to, the
Company or any of its subsidiaries in excess of, $25,000, (ii) the license of
any patent, copyright, trade secret or other proprietary right to or from the
Company or any of its subsidiaries, or (iii) the grant of rights to manufacture,
produce, assemble, license, market, or sell its products to any other person or
affect the Company's or any subsidiary's exclusive right to develop,
manufacture, assemble, distribute, market or sell its products.

                     (c) Neither the Company nor any of its subsidiaries has (i)
declared or paid any dividends, or authorized or made any distribution upon or
with respect to any class or series of its capital stock, (ii) incurred any
indebtedness for money borrowed or incurred any other liabilities individually
in excess of $25,000 or in excess of $100,000 in the aggregate, (iii) made any
loans or advances to any person, other than ordinary advances for travel
expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or
rights, other than the sale of its inventory in the ordinary course of business.

                     (d) The Company has not engaged in the past three (3)
months in any discussion (i) with any representative of any corporation or
corporations regarding the merger of the Company with or into any such
corporation or corporations, (ii) with any representative of any corporation,
partnership, association or other business entity or any individual regarding
the sale, conveyance or disposition of all or substantially all of the assets of
the Company or a transaction or series of related transactions in which more
than fifty percent (50%) of the voting power of the Company would be disposed
of, or (iii) regarding any other form of liquidation, dissolution or winding up
of the Company.

              2.11 DISCLOSURE. The Company has fully provided the Purchasers
with all the information that the Purchasers have requested for deciding whether
to acquire the Stock and all information that the Company believes is reasonably
necessary to enable the Purchasers to make such a decision, including certain of
the Company's projections describing its proposed business (collectively, the
"Business Materials"). No representation or warranty of the Company contained in
this Agreement and the exhibits hereto, any certificate furnished or to be
furnished to Purchasers at the Closing, or the Business Materials (when read
together) contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
To the extent the Business Materials were prepared by management of the Company,
the Business Materials and the financial and other projections contained in the
Business Materials were prepared in good faith; however, the Company does not
warrant that it will achieve such projections.

              2.12 NO CONFLICT OF INTEREST. Neither the Company nor any of its
subsidiaries is indebted, directly or indirectly, to any of its officers or
directors or to their respective spouses or children, in any amount whatsoever
other than in connection with expenses or advances of expenses incurred in the
ordinary course of business or relocation expenses of employees. To the
Company's knowledge, none of the officers or directors of the Company or its
subsidiaries, or any members of their immediate families, are, directly or
indirectly, indebted to the Company or

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any of its subsidiaries (other than in connection with purchases of the
Company's stock) or have any direct or indirect ownership interest in any firm
or corporation with which the Company is affiliated or with which the Company
has a business relationship, or any firm or corporation which competes with the
Company except that officers, directors and/or stockholders of the Company may
own stock in (but not exceeding two percent of the outstanding capital stock of)
any publicly traded companies that may compete with the Company. To the
Company's knowledge, none of the officers or directors of the Company and its
subsidiaries or any members of their immediate families are, directly or
indirectly, interested in any material contract with the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries is a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.

              2.13 RIGHTS OF REGISTRATION AND VOTING RIGHTS. Except as
contemplated in the Rights Agreement, neither the Company nor any of its
subsidiaries has granted or agreed to grant any registration rights, including
piggyback rights, to any person or entity. To the Company's knowledge, except as
contemplated in the Voting Agreement, no stockholder of the Company has entered
into any agreements with respect to the voting of capital shares of the Company.

              2.14 TITLE TO PROPERTY AND ASSETS. Each of the Company and its
subsidiaries owns its property and assets free and clear of all mortgages,
liens, loans and encumbrances, except such encumbrances and liens which arise in
the ordinary course of business and do not materially impair the Company's or
such subsidiary's ownership or use of such property or assets. With respect to
the property and assets it leases, each of the Company and its subsidiaries is
in compliance with such leases and, to it's the Company's knowledge, holds a
valid leasehold interest free of any liens, claims or encumbrances.

              2.15 FINANCIAL STATEMENTS. The Company has made available to each
Purchaser its unaudited consolidated financial statements (including balance
sheet, income statement and statement of cash flows) as of the most recent
available balance sheet date (such date, the "Balance Sheet Date", and such
financial statements collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated,
except that the unaudited Financial Statements may not contain all footnotes
required by generally accepted accounting principles. The Financial Statements
fairly present the financial condition and operating results of the Company and
its subsidiaries as of the dates, and for the periods, indicated therein,
subject to normal year-end audit adjustments. Except as set forth in the
Financial Statements, neither the Company nor any of its subsidiaries has any
material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to the Balance Sheet Date
and (ii) obligations under contracts and commitments incurred in the ordinary
course of business and not required under generally accepted accounting
principles to be reflected in the Financial Statements, which, in both cases,
individually or in the aggregate are not material to the financial condition or
operating results of the Company.

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              2.16 CHANGES. Since the Balance Sheet Date, there has not been:

                     (a) any change in the assets, liabilities, financial
condition or operating results of the Company or any of its subsidiaries from
that reflected in the Financial Statements, except changes in the ordinary
course of business that have not been, in the aggregate, materially adverse;

                     (b) any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company or any of its subsidiaries;

                     (c) any waiver or compromise by the Company or any of its
subsidiaries of a valuable right or of a material debt owed to it;

                     (d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company or any of its
subsidiaries, except in the ordinary course of business and that is not material
to the business, properties, prospects or financial condition of the Company;

                     (e) any material change to a material contract or agreement
by which the Company or any of its subsidiaries or any of their respective
assets is bound or subject;

                     (f) any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;

                     (g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;

                     (h) any resignation or termination of employment of any
officer or key employee of the Company or any of its subsidiaries; and the
Company is not aware of any impending resignation or termination of employment
of any such officer or key employee;

                     (i) any mortgage, pledge, transfer of a security interest
in, or lien, created by the Company or any of its subsidiaries, with respect to
any of their respective material properties or assets, except liens for taxes
not yet due or payable;

                     (j) any loans or guarantees made by the Company or any of
its subsidiaries to or for the benefit of its employees, officers or directors,
or any members of their immediate families, other than travel advances and other
advances made in the ordinary course of its business;

                     (k) any declaration, setting aside or payment or other
distribution in respect to any of the Company's or any of its subsidiary's
capital stock, or any direct or indirect redemption, purchase, or other
acquisition of any of such stock by the Company or any of its subsidiaries;

                                      -11-
<PAGE>   13

                     (l) to the Company's knowledge, any other event or
condition of any character that might materially and adversely affect the
business, properties, prospects or financial condition of the Company; or

                     (m) any arrangement or commitment by the Company or any of
its subsidiaries to do any of the things described in this Section 2.16.

              2.17 EMPLOYEE BENEFIT PLANS. Neither the Company nor any of its
subsidiaries has any Employee Benefit Plan as defined in the Employee Retirement
Income Security Act of 1974.

              2.18 TAX RETURNS AND PAYMENTS. Each of the Company and its
subsidiaries has filed all tax returns and reports as required by law. These
returns and reports are true and correct in all material respects. The Company
has paid all taxes and other assessments due on behalf of itself and each of its
subsidiaries.

              2.19 INSURANCE. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its and each
of its subsidiaries properties that might be damaged or destroyed.

              2.20 LABOR AGREEMENTS AND ACTIONS. Neither the Company nor any of
its subsidiaries is bound by or subject to (and none of its assets or properties
is bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or, to the knowledge of the Company, has sought to represent any of the
employees, representatives or agents of the Company or any of its subsidiaries.
There is no strike or other labor dispute involving the Company or any of its
subsidiaries pending, or to the knowledge of the Company threatened, which could
have a material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company, nor is the Company aware of any
labor organization activity involving its employees. The employment of each
officer and employee of the Company and each of its subsidiaries is terminable
at the will of the Company. The Company and each of its subsidiaries has
complied in all material respects with all applicable state and federal equal
employment opportunity laws and with other laws related to employment.

              2.21 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENTS.
Each employee, consultant and officer of the Company and each of its
subsidiaries has executed an agreement regarding confidentiality and proprietary
information substantially in the forms attached as Exhibit I. The Company is not
aware that any of the employees or consultants of the Company or any of its
subsidiaries is in violation thereof, and the Company will use its best efforts
to prevent any such violation.

              2.22 PERMITS. The Company and each of its subsidiaries has all
franchises, permits, licenses and any similar authority necessary for the
conduct of its business, the lack of which could materially and adversely affect
the business, properties, prospects, or financial

                                      -12-
<PAGE>   14

condition of the Company. Neither the Company nor any of its subsidiaries is in
default in any material respect under any of such franchises, permits, licenses
or other similar authority.

              2.23 CORPORATE DOCUMENTS. The Restated Certificate and Bylaws of
the Company, and equivalent organizational documents with respect to the
Company's subsidiaries, are in the form provided to counsel for the Purchasers.
The copy of the minute books of the Company and its subsidiaries provided to the
Purchasers' counsel contains minutes of all meetings of directors and
stockholders and all actions by written consent without a meeting by the
directors and stockholders since the date of incorporation and reflects all
actions by the directors (and any committee of directors) and stockholders with
respect to all transactions referred to in such minutes accurately in all
material respects.

       3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser (such
term to refer to the Series B Purchasers with respect to each Series B Closing,
and to the Series C Purchasers with respect to the Series C Closing) hereby
represents and warrants to the Company that as of the date hereof and as of the
date of the Closing:

              3.1 AUTHORIZATION. Such Purchaser has full power and authority to
enter into this Agreement. The Agreements, when executed and delivered by the
Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting enforcement of
creditors' rights generally, and as limited by laws relating to the availability
of a specific performance, injunctive relief, or other equitable remedies, or
(b) to the extent the indemnification provisions contained in the Rights
Agreement may be limited by applicable federal or state securities laws.

              3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
the Purchaser in reliance upon the Purchaser's representation to the Company,
which by the Purchaser's execution of this Agreement, the Purchaser hereby
confirms, that the Securities to be acquired by the Purchaser will be acquired
for investment for the Purchaser's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and that the
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, the Purchaser
further represents that the Purchaser does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities. The Purchaser has not been formed for the specific purpose of
acquiring the Securities.

              3.3 DISCLOSURE OF INFORMATION. The Purchaser has had an
opportunity to discuss the Company's business, management, financial affairs and
the terms and conditions of the offering of the Stock with the Company's
management and has had an opportunity to review the Company's facilities. The
Purchaser understands that such discussions, as well as the Business Materials
and any other written information delivered by the Company to the

                                      -13-
<PAGE>   15

Purchaser, were intended to describe the aspects of the Company's business which
it believes to be material.

              3.4 RESTRICTED SECURITIES. The Purchaser understands that the
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser understands that the Securities are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Securities for resale
except as set forth in the Rights Agreement. The Purchaser further acknowledges
that if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Securities, and on requirements
relating to the Company which are outside of the Purchaser's control, and which
the Company is under no obligation and may not be able to satisfy.

              3.5 NO PUBLIC MARKET. The Purchaser understands that no public
market now exists for any of the securities issued by the Company, and that the
Company has made no assurances that a public market will ever exist for the
Securities.

              3.6 LEGENDS. The Purchaser understands that the Securities and any
securities issued in respect of or exchange for the Securities, may bear one or
all of the following legends:

                     (a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933."

                     (b) Any legend set forth in the other Agreements.

                     (c) Any legend required by the Blue Sky laws of any state
to the extent such laws are applicable to the shares represented by the
certificate so legended.

              3.7 ACCREDITED INVESTOR. The Purchaser is an accredited investor
as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

              3.8 FOREIGN INVESTORS. If the Purchaser is not a United States
person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986,
as amended), such Purchaser hereby represents that it has satisfied itself as to
the full observance of the laws of its

                                      -14-
<PAGE>   16

jurisdiction in connection with any invitation to subscribe for the Stock or any
use of this Agreement, including (i) the legal requirements within its
jurisdiction for the purchase of the Stock, (ii) any foreign exchange
restrictions applicable to such purchase, (iii) any governmental or other
consents that may need to be obtained, and (iv) the income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, redemption,
sale, or transfer of the Stock. Such Purchaser's subscription and payment for
and continued beneficial ownership of the Stock, will not violate any applicable
securities or other laws of the Purchaser's jurisdiction.

       4. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING. The obligations
of each Purchaser, Series B Purchaser and Series C Purchaser to the Company
under this Agreement are subject to the fulfillment, on or before the Closing,
of the following conditions, unless otherwise waived:

              4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true and correct on
and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing. Prior to Closing,
the Company shall have delivered an updated Schedule of Exceptions or confirm
that the current Schedule of Exceptions remains complete and accurate.

              4.2 PERFORMANCE. The Company shall have performed and complied
with all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.

              4.3 COMPLIANCE CERTIFICATE. The President of the Company shall
deliver to the Purchasers at the Closing a certificate certifying that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled.

              4.4 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be obtained and effective as of the
Closing.

              4.5 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT.
The Company and each of its employees shall have entered into the Company's
standard form Confidential Information and Invention Assignment Agreement, in
substantially the form attached as Exhibit I.

              4.6 CHANGE IN STRATEGIC DIRECTION. There shall not have been, (a)
any material adverse change in the business, financial condition, operations,
results of operations or future prospects of the Company, or (b) a determination
by the holders of a majority of the then outstanding shares of Preferred Stock
of the Company that the then current product plan for the Company would result
in inapplicable, obsolete or non-strategic products. Notwithstanding the
foregoing, the occurrence of either event in the preceding sentence will not
relieve the Purchasers of their obligations to perform at a Closing unless (x)
after working together in good faith for at least thirty (30) days, the
Purchasers and the Company have been unable to revise the product

                                      -15-
<PAGE>   17

plan for the Company in a way that ameliorates such adverse change or product
deficiency in a way that is mutually satisfactory to the Company and the
Purchasers, and (y) such Purchasers shall have purchased the required securities
in at least one Closing that took place after the expiration of the period
specified in the foregoing clause (x).

              4.7 INITIAL SERIES A CLOSING CONDITIONS. The following closing
conditions shall apply only to the initial Series A Closing:

                     (a) The Company shall have filed the Restated Certificate
with the Secretary of State of Delaware, which shall continue to be in full
force and effect as of the date of the initial Series A Closing.

                     (b) As of the Closing, the Company's Board of Directors
(the "Board"), as well as the Board of Directors of each subsidiary of the
Company, shall be comprised of Shlomo Yariv (the "Founder") and Gideon
Ben-Efraim, with one vacancy.

                     (c) Within ten days prior to the Closing, the Board shall
have approved a detailed product specification for the Company's current
product.

                     (d) The Company and Netro shall have executed and delivered
the License Agreement in substantially the form attached as Exhibit D.

                     (e) The Company, each Purchaser and the Founder shall have
executed and delivered the Rights Agreement in substantially the form attached
as Exhibit E.

                     (f) The Company, each Purchaser and the Founder shall have
executed and delivered the Co-Sale Agreement in substantially the form attached
as Exhibit F.

                     (g) The Company, each Purchaser and the Founder shall have
executed and delivered the Voting Agreement in substantially the form attached
as Exhibit G.

                     (h) The Company and Netro shall have executed and delivered
the Option Agreement in substantially the form attached as Exhibit H.

                     (i) The Company and Netro shall have entered into the OEM
Agreement Term Sheet substantially in the form attached as Exhibit J.

              4.8 SECOND A CLOSING CONDITIONS. The following closing conditions
shall apply only to the Second A Closing:

                     (a) The milestones set forth on Attachment 3 shall have
been achieved.

                     (b) Each of the Agreements shall continue to be in full
force and effect and the Company shall not have breached any material term
thereof, which breach has not been cured with thirty (30) days following notice
thereof.

                                      -16-
<PAGE>   18

              4.9 INITIAL SERIES B CLOSING CONDITIONS. The following closing
conditions shall apply only to the initial Series B Closing:

                     (a) The milestones set forth on Attachment 1 (either
Section I or Section II) shall have been achieved.

                     (b) Each of the Agreements shall continue to be in full
force and effect and the Company shall not have breached any material term
thereof, which breach has not been cured with thirty (30) days following notice
thereof.

                     (c) The Rights Agreement and Co-Sale Agreement shall be
amended and restated to join the Series B Purchasers as parties and provide them
with rights and obligations pari passu with holders of the Series A Stock.

                     (d) The Company shall have filed the Series B Certificate
with the Secretary of State of Delaware, which shall continue to be in full
force and effect as of the date of the initial Series B Closing.

                     (e) The Company and Netro shall have entered into the
agreement contemplated by the OEM Agreement Term Sheet.

              4.10 SECOND B CLOSING CONDITIONS. The following closing conditions
shall apply only to the Second B Closing:

                     (a) The milestones set forth on Attachment 4 hereto shall
have been achieved.

                     (b) Each of the Agreements shall continue to be in full
force and effect and the Company shall not have breached any material term
thereof, which breach has not been cured with thirty (30) days following notice
thereof.

              4.11 SERIES C CLOSING CONDITIONS. The following closing conditions
shall apply only to the Series C Closing:

                     (a) The milestones set forth on Attachment 2 (either
Section I or Section II) shall have been achieved.

                     (b) The Rights Agreement and Co-Sale Agreement shall be
amended and restated to join the Series C Purchasers as parties and provide them
with rights and obligations pari passu with holders of the Series A Stock and
Series B Stock.

                     (c) The Company shall have filed the Series C Certificate
with the Secretary of State of Delaware, which shall continue to be in full
force and effect as of the date of the Series C Closing.

                                      -17-
<PAGE>   19

       5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of
the Company to each Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:

              5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of such Purchaser contained in Section 3 shall be true and correct on
and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.

              5.2 PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed by such Purchaser on or prior to the
Closing shall have been performed or complied with in all material respects.

              5.3 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be obtained and effective as of the
Closing.

              5.4 AGREEMENTS. Each of the Agreements shall continue to be in
full force and effect and such Purchaser shall not have breached any material
term thereof, which breach has not been cured with thirty (30) days following
notice thereof.

       6. COVENANTS. The Company and Netro agree as set forth in this Section 6
with respect to the period between execution of this Agreement through the
initial Closing and further until such time as Netro ceases to own a majority of
the outstanding voting securities of the Company:

              (a) Netro will undertake in good faith to provide the benefit of
certain of its human resources to the Company as follows, provided there has
been no determination as set forth in Section 4.6(b) above:

                     (i) marketing and business development assistance through a
number of mutually agreed upon Netro employees,

                     (ii) limited, temporary technical development assistance
from selected Netro employees who are not required for ongoing development of
Netro's AirStar product line, and

                     (iii) operational and manufacturing assistance, as
appropriate, such assistance not to impair Netro's operations or Netro
employees' ability to perform their other responsibilities to Netro.

              (b) The Company agrees that it will not undertake any sales and
marketing activities, joint or otherwise, without the prior consent of Netro.
Particular support and joint marketing activities shall be identified and
mutually agreed, including local inspection and

                                      -18-
<PAGE>   20

testing of AirStar products, co-location of sales facilities, and other
functions of similar range and expense.

              (c) The Company will cooperate in all financial and accounting
matters with the Netro in order to enable Netro to meet its financial reporting
requirements as a company subject to the Exchange Act of 1934, as amended. The
Chief Financial Officer of Netro will have substantial oversight over the
financial affairs of the Company, including approval of: (i) monthly and annual
budgets of the Company, (ii) expenditures in excess of the monthly and annual
budgets, by more than 10% with respect to any line item or 20% in the aggregate,
or (iii) any individual expenditure in excess of $100,000.

              (d) The Company will establish an advisory board consisting of
senior industry professionals who can provide the Company with technical,
financial and marketing contacts. Netro will assist in the identification and
recruitment of advisory board members.

              (e) In connection with the initial Series B Closing, the Company
will effect, and Netro will consent to, an increase in the maximum aggregate
number of shares available for issuance pursuant to the Stock Plan, such that
the number of shares of such increase equals 3.5% of the Outstanding Common (as
defined in Section 1.3(c)(ii) above and including such increase) following the
initial Series B Closing.

              (f) In connection with the Series C Closing, the Company will
effect, and Netro will consent to, an increase in the maximum aggregate number
of shares available for issuance pursuant to the Stock Plan, such that the
number of shares of such increase equals 1.0% of the Outstanding Common (as
defined in Section 1.3(c)(ii) above and including such increase) following the
Series C Closing.

              (g) In the event that the Company is obligated to perform in any
Closing (other than the initial Series A Closing) and Netro is not obligated to
purchase in such Closing by reason (and for no other reason) of failure of any
of the conditions set forth in Sections 4.6, 4.8(a), 4.9(a), 4.10(a) or 4.11(a),
then Netro shall provide reasonable support and assistance in the Company's
efforts to obtain alternate sources of funding. In the case of a public offering
of the Company's securities, such reasonable support shall include the
following:

                     (i) conversion of securities of the Company held by Netro
into Common Stock of the Company;

                     (ii) sale of a portion of securities of the Company held by
Netro sufficient to reduce Netro's holdings of the Company's securities
immediately following such offering to less than fifty percent (50%) of the
Company's Outstanding Common immediately following such offering;

                     (iii) compliance with request for information and
shareholder consents reasonably required in connection with such offering; and

                                      -19-
<PAGE>   21

                     (iv) agreement with underwriters of such offering and the
Company's accountants, on customary terms and conditions.

Netro acknowledges that its obligations under this subsection (g) run to the
Founder as well as the Company, and in the event that the Company does not elect
to require performance of Netro's obligations under this subsection (g), the
Founder may elect to require such performance; provided that the Founder is
employed by the Company at the time performance of this paragraph is sought.

       7. MISCELLANEOUS.

              7.1 DETERMINATION OF MILESTONE ACHIEVEMENT. For purposes of this
Agreement, in order to determine whether a particular milestone has been
achieved, the Company will present its assessment of milestone accomplishment to
Netro together with such equipment and supporting data as is reasonably
necessary to evaluate such claims. Netro personnel will provide the Company with
notice within fifteen (15) business days following such presentation of whether
it agrees or disagrees with the Company's assessment. In the event that the
Company and Netro disagree with one another, and are unable to resolve such
disagreement after good faith discussions between the parties, including
discussions between the respective presidents of the two organizations, then the
matter will be submitted to a three (3) person panel for determination. One (1)
member of such panel will be selected by the Company, one (1) member of such
panel will be selected by Netro and the third panel member will be selected by
the mutual agreement of the initial panel members. No panel member will be an
employee of or consultant to the Company or Netro, but each panel member will be
technically knowledgeable regarding fixed-wireless system development. Any fees
and costs of such panel members shall be borne equally by the Company and Netro.

              7.2 SURVIVAL OF WARRANTIES. Unless otherwise set forth in this
Agreement, the warranties, representations and covenants of the Company and the
Purchasers contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing.

              7.2 TRANSFER; SUCCESSORS AND ASSIGNS. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

              7.4 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law.

                                      -20-
<PAGE>   22

              7.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

              7.6 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

              7.7 NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, or forty-eight
(48) hours after being deposited in the U.S. mail, as certified or registered
mail, with postage prepaid, addressed to the party to be notified at such
party's address as set forth on the signature page or Exhibit A hereto, or as
subsequently modified by written notice.

              7.8 FINDER'S FEE. Each party represents that it neither is nor
will be obligated for any finder's fee or commission in connection with this
transaction. Each Purchaser agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which each Purchaser or any of its officers, employees,
or representatives is responsible. The Company agrees to indemnify and hold
harmless each Purchaser from any liability for any commission or compensation in
the nature of a finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.

              7.9 FEES AND EXPENSES. The Company shall pay the reasonable fees
and expenses of Venture Law Group, the counsel for the Purchasers, incurred with
respect to this Agreement, the documents referred to herein and the transactions
contemplated hereby and thereby, provided such fees and expenses do not exceed
$20,000.

              7.10 ATTORNEY'S FEES. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of any of the
Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.

              7.11 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only with the written consent of the Company and the holders
of at least a majority of the Common Stock issued or issuable upon conversion of
the then outstanding Stock. Any amendment or waiver effected in accordance with
this Section 7.11 shall be binding upon the Purchasers and each transferee of
the Stock (or the Common Stock issuable upon conversion thereof), each future
holder of all such securities, and the Company.

              7.12 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of

                                      -21-
<PAGE>   23

the Agreement shall be interpreted as if such provision were so excluded and (c)
the balance of the Agreement shall be enforceable in accordance with its terms.

              7.13 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.

              7.14 ENTIRE AGREEMENT. This Agreement, and the documents referred
to herein constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof, and any and all other written or oral agreements
relating to the subject matter hereof existing between the parties hereto are
expressly canceled.

              7.15 CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.

              7.16 CONFIDENTIALITY. Each party hereto agrees that, except with
the prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other parties to which such party has been
or shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, the performance of its obligations hereunder or the
ownership of Stock purchased hereunder. The provisions of this Section 7.16
shall be in addition to, and not in substitution for, the provisions of any
separate nondisclosure agreement executed by the parties hereto with respect to
the transactions contemplated hereby.

              7.17 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges
that it is not relying upon any person, firm or corporation, other than the
Company and its officers and directors, in making its investment or decision to
invest in the Company. Each Purchaser agrees that no Purchaser nor the
respective controlling persons, officers, directors, partners, agents, or

                                      -22-
<PAGE>   24

employees of any Purchaser shall be liable to any other Purchaser for any action
heretofore or hereafter taken or omitted to be taken by any of them in
connection with the purchase of the Securities.

                            [Signature Pages Follow]

                                      -23-
<PAGE>   25

              The parties have executed this Preferred Stock Purchase Agreement
as of the date first written above.

                                COMPANY:

                                BUNGEE COMMUNICATIONS, INC.

                                By:  /s/ Shlomo Yariv
                                   ---------------------------------------------

                                Name: Shlomo Yariv
                                     -------------------------------------------
                                                   (print)
                                Title:   President
                                      ------------------------------------------

                                Address:

                                PURCHASERS:

                                NETRO CORPORATION

                                By:  /s/ Gideon Ben-Efraim
                                   ---------------------------------------------

                                Name:  Gideon Ben-Efraim
                                     -------------------------------------------
                                                   (print)
                                Title: Chairman and Chief Executive Officer
                                      ------------------------------------------

                                Address:

              SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT<PAGE>   1

                                                                    EXHIBIT 10.2

                                OPTION AGREEMENT

       THIS OPTION AGREEMENT (this "Agreement") is made and entered into as of
October 27, 2000 ("Effective Date") by and among Bungee Communications, Inc., a
Delaware corporation (the "Company"), Netro Corporation, a California
corporation ("Netro") and SSY LLC and its beneficial owner, Shlomo Yariv
(collectively, the "Founder").

                                    RECITALS

       The Founder currently owns, beneficially and of record, all of the
Securities (as defined below) of the Company outstanding on the date hereof,
other than Securities held by Netro. Netro is purchasing Securities and is
committing, under certain conditions, to purchase additional Securities,
pursuant to a Preferred Stock Purchase Agreement of even date herewith (the
"Purchase Agreement").

       The Company desires to grant Netro an option to purchase all of the
outstanding capital stock, and assume all outstanding rights to purchase capital
stock, of the Company, on the terms and subject to the conditions set forth
herein.

       In consideration of the mutual promises, covenants and agreements
contained herein, the parties agree as follows:

       1. Definitions.

              "Option Period" means the period beginning on the date of the
Second A Closing until the earlier of: (a) the date that is three (3) months
following the date on which the milestones set forth on Section 1 of Exhibit A
hereto have been achieved within the time period initially scheduled for such
achievement, and (b) January 1, 2004.

              "Option Exercise Date" means the date Netro gives written notice
to the Company of its election to exercise the Option (as defined below).

              "Option Expiration" means the expiration of the Option at the end
of the Option Period without the Option having been exercised by Netro or the
termination of the Option under the terms of this Agreement.

              "Securities" means all Common Stock and Preferred Stock of the
Company, all options, warrants, convertible notes, rights of conversion and
other rights to acquire stock of the Company, and all shares issuable upon
exercise or conversion of the Preferred Stock, options, warrants, convertible
notes, rights of conversion and other rights to acquire stock of the Company,
whether or not then currently vested, exercisable or convertible, excluding only
the Option.

              Capitalized terms not otherwise defined herein shall have the
meaning given them in the Purchase Agreement.

<PAGE>   2

       2. Option to Purchase Company.

              (a) Option. The Company and each Securityholder hereby grant to
Netro an exclusive right, at any time during the Option Period, to purchase all,
but not less than all, of the outstanding capital stock and assume all, but not
less than all, of the outstanding rights, including unvested rights, to purchase
capital stock of the Company (other than Securities held by Netro and options to
purchase the Company's capital stock held by employees of the Company pursuant
to stock plans or other compensatory agreements approved by the Company's Board
of Directors), on the terms set forth herein (the "Option").

              (b) Purchase Price. The aggregate purchase price to be paid by
Netro for the Securities (the "Purchase Price") shall be determined and payable
as set forth below.

                     (i) In the event the Option is exercised prior to the
Second B Closing, the Purchase Price shall be:

                            (A) $230,000,000, if all of the milestones set forth
on Attachment 1, Section I, of the Purchase Agreement have been achieved as of
the Option Exercise Date;

                            (B) $50,000,000, if some or all of the milestones
set forth on Attachment 1, Section I, of the Purchase Agreement have not been
achieved, but all of the milestones set forth on Attachment 1, Section II, of
the Purchase Agreement have been achieved as of the Option Exercise Date; or

                            (C) $20,000,000, if some or all of the milestones
set forth on Attachment 1, Section II, of the Purchase Agreement have not been
achieved as of the Option Exercise Date.

                     (ii) In the event the Option is exercised after the Second
B Closing and prior to the Series C Closing, the Purchase Price shall be:

                            (A) $280,000,000, if all of the milestones set forth
on Attachment 2, Section I, of the Purchase Agreement have been achieved as of
the Option Exercise Date;

                            (B) $75,000,000, if some or all of the milestones
set forth on Attachment 2, Section I, of the Purchase Agreement have not been
achieved, but all of the milestones set forth on Attachment 2, Section II, of
the Purchase Agreement have been achieved as of the Option Exercise Date; or

                            (C) $30,000,000, if some or all of the milestones
set forth on Attachment 2, Section II, of the Purchase Agreement have not been
achieved as of the Option Exercise Date.

                                      -2-
<PAGE>   3

                     (iii) In the event the Option is exercised after the Series
C Closing and prior to the date of the Option Expiration, the Purchase Price
shall be:

                            (A) $350,000,000, if all of the milestones set forth
on Section I of Exhibit A hereto have been achieved as of the Option Exercise
Date;

                            (B) $125,000,000, if some or all of the milestones
set forth on Section I of Exhibit A hereto have not been achieved, but all of
the milestones set forth on Section II of Exhibit A hereto have been achieved as
of the Option Exercise Date; or

                            (C) $50,000,000, if some or all of the milestones
set forth on Section I and Section II of Exhibit A hereto have not been
achieved, but all of the milestones set forth on Section III of Exhibit A hereto
as of the Option Exercise Date.

              (c) Terms of Purchase.

                     (i) Allocation of Purchase Price. The Purchase Price shall
be allocated among all holders of Company Securities in accordance with the
terms and conditions of such securities and the Company's then-effective
Certificate of Incorporation.

                     (ii) Form of Purchase Price. The Purchase Price may be
paid, at the election of Netro, in cash or in shares of Netro Common Stock,
valued based on the average closing price of such Common Stock on the Nasdaq
National Market over the thirty (30) trading days immediately preceding and
ending on the Option Exercise Date (the "Netro Average Price"). Notwithstanding
the foregoing, in the event that (1) the acquisition is being completed pursuant
to Section 2(b)(i)(A), 2(b)(ii)(A) or 2(b)(iii)(A), above, and (2) the Netro
Average Price is greater than $500.00 per share (as adjusted for any stock
splits, dividends or the like that occur after the date hereof), then the
Purchase Price shall be required to be paid in shares of Netro Common Stock and
the number of shares of Netro Common Stock to be issued as Purchase Price will
be the lesser of (x) the Purchase Price divided by $500.00 per share (as
adjusted for any stock splits, dividends or the like that occur after the date
hereof) and (y) $500,000,000 divided by the Netro Average Price.

                     (iii) Treatment of Options, Warrants. All options and
warrants to purchase Common Stock or Preferred Stock of the Company will be
converted into options and/or warrants to purchase Common Stock of Netro. The
number of shares subject to such securities and the applicable exercise price
per share will be adjusted at the applicable conversion ratio as determined in
accordance with subsection (i) above. There will be no change in the vesting or
exercisability restrictions on such options or warrants as a result of such
acquisition.

                     (iv) Tax Treatment. To the extent possible on commercially
reasonable terms, the acquisition will be structured so as to qualify as a
tax-free reorganization under the U.S. Internal Revenue Code and any similar
Israeli tax provisions.

                     (v) Representations and Warranties. In connection with the
acquisition, the Company will make customary representations regarding the
business, assets,

                                      -3-
<PAGE>   4

financial statements and prospects of the Company. Such representations and
warranties will terminate upon the closing of the acquisition, provided,
however, that Netro will have full recourse against the Securityholders of the
Company in the event of any willful or fraudulent breach of any such
representation or warranty.

                     (vi) Registration of Securities. In the event that the
Purchase Price is paid by Netro in Netro Common Stock, such securities will be
registered pursuant to a Registration Statement on Form S-4 (or such appropriate
international analog or successor form).

                     (vii) Other Terms and Conditions. Other terms of such
acquisition which are not specifically provided for in this Agreement shall be
mutually agreed upon, in good faith, by the Company and Netro.

              (d) Exercise of Option. Netro may exercise the Option by
delivering written notice of such exercise to the Company at any time during the
Option Period. In the event Netro exercises the Option, the parties will use
their best efforts to enter into a definitive reorganization agreement, which
contains the terms set forth in Section 2(c) and other mutually agreed upon
terms, within twenty (20) days after the Option Exercise Date. The Company and
the Founder agree to use their best efforts to cause all Securityholders to
become parties to such reorganization agreement or otherwise ensure that Netro
acquires all Securities (other than options to purchase the Company's capital
stock held by employees of the Company pursuant to stock plans or other
compensatory agreements approved by the Board).

       3. Put Option. Following the Series C Closing, if all of the milestones
set forth on Section I of Exhibit A hereto have been achieved on or before the
date that is six months following the date such milestones were originally
scheduled to be achieved, then the Company may request that Netro purchase all,
but not less than all, of the Securities (other than Securities held by Netro
and options to purchase the Company's capital stock held by employees of the
Company pursuant to stock plans or other compensatory agreements approved by the
Board). Upon such a request, Netro may either:

              (a) agree to acquire the Company pursuant to the terms of Section
2(c) above at a purchase price of $280,000,000. In connection with any such
transaction, the "Option Exercise Date" shall be the effective date of the
Company's notice to Netro; or

              (b) agree to support an initial public offering or other financing
of the Company as set forth in Section 6(g) of the Purchase Agreement.

       4. Confidentiality. Each party hereto agrees that, except with the prior
written permission of the other party, it shall at all times keep confidential
and not divulge, furnish or make accessible to anyone any confidential
information, knowledge or data concerning or relating to the business or
financial affairs of the other parties to which such party has been or shall
become privy by reason of this Agreement, discussions or negotiations relating
to this Agreement, the performance of its obligations hereunder or the existence
of this Agreement. The provisions of this paragraph shall be in addition to, and
not in substitution for, the provisions of any separate nondisclosure agreement
executed by the parties hereto with respect to the

                                      -4-
<PAGE>   5

transactions contemplated hereby. The obligations in this paragraph shall
survive the Option Expiration and any termination of this Agreement.

       5. Determination of Milestone Achievement. For purposes of this
Agreement, in order to determine whether a particular milestone has been
achieved, within five (5) business days following the Option Exercise Date, the
Company will present its assessment of milestone accomplishment to Netro
together with such equipment and supporting data as is reasonably necessary to
evaluate such claims. Netro personnel will provide the Company with notice
within fifteen (15) business days following such presentation of whether it
agrees or disagrees with the Company's assessment. In the event that the Company
and Netro disagree with one another, and are unable to resolve such disagreement
after good faith discussions between the parties, including discussions between
the respective presidents of the two organizations, then the matter will be
submitted to a three (3) person panel for determination. One (1) member of such
panel will be selected by the Company, one (1) member of such panel will be
selected by Netro and the third panel member will be selected by the mutual
agreement of the initial panel members. No panel member will be an employee of
or consultant to the Company or Netro, but each panel member will be technically
knowledgeable regarding fixed-wireless system development.

       6. Cooperation of Founder. The Founder agrees to use its best efforts to
effect any transactions required to be consummated hereby. Such assistance will
include, but not be limited to, voting all Company Securities held by the
Founder in furtherance of such transaction and soliciting the cooperation and
votes of other Securityholders with respect to such a transaction.

       7. Miscellaneous.

              (a) Entire Agreement; No Conflicts. This Agreement, the Purchase
Agreement and the documents referred to herein and therein constitute the entire
agreement between the parties hereto pertaining to the subject matter hereof,
and any and all other written or oral agreements existing between the parties
hereto are expressly canceled. In the event of any conflict between this
Agreement and any other Agreement between or among the parties, the terms of
this Agreement shall control. Further, in the event of any conflict between the
terms of this Agreement and the organizational documents of the Company, the
Company and the Founder shall use their best efforts to amend such documents in
order to effect the consummation of the transactions contemplated by this
Agreement.

              (b) Governing Law. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.

              (c) Non-assignability and Binding Effect. No party's rights and
obligations under this Agreement may be transferred or assigned directly or
indirectly without the prior written consent of the other parties, except that a
party may transfer or assign its rights and obligations under this Agreement to
a person or entity into which it is merged or which has otherwise succeeded to
all or substantially all of its business and assets by merger, reorganization or
otherwise, and which has assumed in writing or by operation of law its
obligations under this

                                      -5-
<PAGE>   6

Agreement. Subject to the foregoing sentence, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their successors and
assigns. The Founder shall not transfer any of its Securities to any party
unless such party agrees in writing to be bound by the terms of this Agreement.

              (d) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

              (e) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

              (f) Notices. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, or forty-eight
(48) hours after being deposited in the U.S. mail, as certified or registered
mail, with postage prepaid, addressed to the party to be notified at such
party's address as set forth on the signature page hereto, or as subsequently
modified by written notice.

              (g) Attorney's Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.

              (h) Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company, Netro and the
Founder.

              (i) Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.

              (j) Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and

                                      -6-
<PAGE>   7

shall be effective only to the extent specifically set forth in such writing.
All remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.

                            [Signature pages follow]

                                      -7-
<PAGE>   8

              The parties have executed this Option Agreement as of the date
first above written.

COMPANY:                                           NETRO:

BUNGEE COMMUNICATIONS, INC.                        NETRO CORPORATION

By:   /s/ Shlomo Yariv                  By:  /s/ Gideon Ben-Efraim
   -----------------------------           ------------------------------------

Name: Shlomo Yariv                      Name: Gideon Ben-Efraim
     ---------------------------             ----------------------------------
             (print)                                     (print)

Title:  President                       Title: Chairman and Chief Executive Off.
      --------------------------              ---------------------------------

Address:                                Address:

FOUNDER:

SSY LLC

By:   /s/ Shlomo Yariv
   -----------------------------

Name: Shlomo Yariv
     ---------------------------
               (print)
Title:  Managing Partner
      --------------------------

Address:

SHLOMO YARIV

     /s/ Shlomo Yariv
--------------------------------

Address:

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