<SUBMISSION>
<ACCESSION-NUMBER>0000950150-00-000617
<TYPE>S-1
<PUBLIC-DOCUMENT-COUNT>14
<FILING-DATE>20000728
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>NOVATEL WIRELESS INC
<CIK>0001022652
<ASSIGNED-SIC>
<IRS-NUMBER>860824673
<STATE-OF-INCORPORATION>DE
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-1
<ACT>33
<FILE-NUMBER>333-42570
<FILM-NUMBER>681671
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>9360 TOWNE CENTRE DR
<STREET2>SUITE 110
<CITY>SAN DIEGO
<STATE>CA
<ZIP>92121
<PHONE>8583208800
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>9360 TOWNE CENTRE DR
<STREET2>SUITE 110
<CITY>SAN DIEGO
<STATE>CA
<ZIP>92121
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-1
<SEQUENCE>1
<FILENAME>s-1.txt
<DESCRIPTION>FORM S-1
<TEXT>

<PAGE>   1

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 2000
                                                    REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                    FORM S-1
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------

                             NOVATEL WIRELESS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                            ------------------------

<TABLE>
<S>                             <C>                                                   <C>
           DELAWARE                                     8412                                    86-0824673
(STATE OR OTHER JURISDICTION OF             (PRIMARY STANDARD INDUSTRIAL                     (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)               CLASSIFICATION CODE NUMBER)                  IDENTIFICATION NUMBER)
</TABLE>

                            9360 TOWNE CENTRE DRIVE
                                   SUITE 110
                              SAN DIEGO, CA 92121
                                 (858) 320-8800
         (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
            AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------

                                   JOHN MAJOR
                            CHIEF EXECUTIVE OFFICER
                             NOVATEL WIRELESS, INC.
                            9360 TOWNE CENTRE DRIVE
                                   SUITE 110
                              SAN DIEGO, CA 92121
                                 (858) 320-8800
                (NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE
               NUMBER INCLUDING AREA CODE, OF AGENT FOR SERVICE)
                            ------------------------

                                   COPIES TO:

                            PETER V. LEPARULO, ESQ.
                            PATRICK T. WATERS, ESQ.
                          JEAN-JACQUES B. DUPRE, ESQ.
                       ORRICK, HERRINGTON & SUTCLIFFE LLP
                               777 SOUTH FIGUEROA
                             LOS ANGELES, CA 90017
                                 (213) 629-2020
                            J. SCOTT HODGKINS, ESQ.
                                LATHAM & WATKINS
                             633 WEST FIFTH STREET
                             LOS ANGELES, CA 90017
                                 (213) 485-1234

                            ------------------------

        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
                            ------------------------

    If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box.  [ ]

    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  [ ] ______

    If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ] ______

    If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ] ______
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]

                        CALCULATION OF REGISTRATION FEE

<TABLE>
<S>                                                        <C>                              <C>
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
                                                                  PROPOSED MAXIMUM                     AMOUNT OF
   TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED             OFFERING PRICE(1)                REGISTRATION FEE
---------------------------------------------------------------------------------------------------------------------------
Common Stock, $0.001 par value per share.................           $105,000,000                        $27,720
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of computing the amount of the registration
    fee pursuant to Rule 457(o) under the Securities Act.

    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

        The information in this preliminary prospectus is not complete and may
        be changed. We may not sell these securities until the registration
        statement filed with the Securities and Exchange Commission is
        effective. This preliminary prospectus is not an offer to sell these
        securities and it is not soliciting an offer to buy these securities in
        any state where the offer or sale is not permitted.

            SUBJECT TO COMPLETION, DATED                     , 2000

                                                 Shares

                                 [NOVATEL LOGO]

                                  Common Stock
                               ------------------

     Prior to this offering, there has been no public market for our common
stock. The initial public offering price of the common stock is expected to be
between $     and $     per share. We have applied to list our common stock on
The Nasdaq Stock Market's National Market under the symbol "NVTL".

     The underwriters have an option to purchase a maximum of
               additional shares to cover over-allotments of shares.

     INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 6.

<TABLE>
<CAPTION>
                                                                            UNDERWRITING
                                                           PRICE TO         DISCOUNTS AND       PROCEEDS TO
                                                            PUBLIC           COMMISSIONS     NOVATEL WIRELESS
                                                       -----------------  -----------------  -----------------
<S>                                                    <C>                <C>                <C>
Per Share............................................          $                  $                  $
Total................................................          $                  $                  $
</TABLE>

     Delivery of the shares of common stock will be made on or about
                    , 2000.

     Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
CREDIT SUISSE FIRST BOSTON
                     U.S. BANCORP PIPER JAFFRAY
                                         BANC OF AMERICA SECURITIES LLC

           The date of this prospectus is                     , 2000
<PAGE>   3

     The inside front cover contains a graphic of our product portfolio.
<PAGE>   4

                               ------------------

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
PROSPECTUS SUMMARY....................    2
RISK FACTORS..........................    6
SPECIAL NOTE REGARDING FORWARD-
  LOOKING STATEMENTS..................   17
USE OF PROCEEDS.......................   18
DIVIDEND POLICY.......................   18
CAPITALIZATION........................   19
DILUTION..............................   20
SELECTED FINANCIAL DATA...............   21
MANAGEMENT'S DISCUSSION AND ANALYSIS
  OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS.......................   23
BUSINESS..............................   30
</TABLE>

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
MANAGEMENT............................   45
RELATED PARTY TRANSACTIONS............   57
PRINCIPAL STOCKHOLDERS................   61
DESCRIPTION OF SECURITIES.............   63
SHARES ELIGIBLE FOR FUTURE SALE.......   66
UNDERWRITING..........................   68
NOTICE TO CANADIAN RESIDENTS..........   70
LEGAL MATTERS.........................   71
EXPERTS...............................   71
WHERE YOU CAN FIND ADDITIONAL
  INFORMATION.........................   72
INDEX TO CONSOLIDATED FINANCIAL
  STATEMENTS..........................  F-1
</TABLE>

                               ------------------

     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. NEITHER WE NOR THE UNDERWRITERS HAVE AUTHORIZED
ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY BE
USED ONLY WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE INFORMATION IN THIS
PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS DOCUMENT.

                     DEALER PROSPECTUS DELIVERY OBLIGATION

     UNTIL             , 2000 (25 DAYS AFTER COMMENCEMENT OF THIS OFFERING), ALL
DEALERS THAT EFFECT TRANSACTION IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
AN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
<PAGE>   5

                               PROSPECTUS SUMMARY

     You should read the following summary together with the more detailed
information regarding our company and financial statements appearing elsewhere
in this prospectus. This prospectus contains forward-looking statements. The
outcome of the events described in these forward-looking statements is subject
to risks and actual results could differ materially. The sections entitled "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business," as well as those discussed elsewhere in
this prospectus, contain a discussion of some of the factors that could
contribute to those differences.

                                  OUR COMPANY

     We are a leading provider of wireless data communications access solutions.
We provide wireless data modems and software for use with handheld computing
devices and portable personal computers. Our products enable professionals and
consumers to access enterprise networks and the Internet "anytime, anywhere." We
also provide wireless data modems which can be integrated into other devices for
a wide range of vertical applications. We also offer provisioning, activation
and systems integration services to our customers to facilitate use of our
products.

     We have a strong history of designing innovative wireless access products.
We designed and delivered the first products to enable wireless connectivity for
the Palm family of handheld computing devices. We have successfully developed
and are continuing to develop solutions that enable our customers to wirelessly
access data utilizing a wide range of mobile computing devices across a broad
range of wireless data network technologies. Our current product portfolio
includes the following:

     - The Minstrel line of Wireless Modem cradles, for the Palm family of
       handheld computing devices and the Casio E-15 Windows Pocket PC handheld
       device;

     - The Merlin Type II PC Card, for portable and desktop personal computers
       (PCs);

     - The Sage Wireless Modem, for portable and desktop PCs;

     - The NRM-6812 and Expedite Wireless OEM Modem, for custom integration with
       computers and other devices; and

     - The Lancer 3W Wireless Modem, for vehicle-mounted applications.

     Our core modem technology is easily customized to address a broad range of
vertical applications. Our customers include wireless telecommunications
operators such as Verizon Wireless, AT&T Wireless, and wireless data content and
service providers such as OmniSky Corporation, GoAmerica Communications Corp.
and CreSenda Wireless. We also have original equipment manufacturer (OEM)
customers such as @Road, Harvest/Coca Cola and KeyCorp and we have entered into
strategic technology and development relationships within the wireless
communications industry with Hewlett-Packard Company, Metricom, Inc., OmniSky,
Symbol Technologies, Inc. and VoiceStream Wireless Corp.

     The convergence of mobile computing, wireless communications and the
Internet and enterprise networks is driving the rapidly expanding demand for
wireless data access. The explosion of the Internet and enterprise networks has
accelerated the development of applications for communications, information
access, content and commerce. As professionals and consumers have become
increasingly dependent on the growing functionality, productivity and
convenience offered by these applications, they are demanding wireless
connectivity for their mobile computing devices. We believe that demand for an
ever increasing range of wireless data applications will continue to grow as
wireless data network coverage, bandwidth and security improve to allow higher
quality service.

                                        2
<PAGE>   6

     To meet this rapidly growing demand, we provide the following advantages to
our customers:

     Breadth of Wireless Access Products. Our products enable both handheld
computing devices and portable PCs to wirelessly access the Internet and
enterprise networks. We also provide wireless modems to enable wireless
connectivity to a broad range of devices for vertical applications.

     Price Performance Leadership. We have designed our products to provide high
levels of performance and functionality with attractive pricing to drive
widespread adoption among users.

     Convenience. Our products provide users with wireless connectivity to the
Internet and enterprise networks with a focus on ease-of-use and real-time
access to e-mail, online content and critical personal and professional
information. We have designed our products to reduce their size and weight
without compromising performance.

     Productivity. Our products enhance productivity by enabling handheld
devices and portable PCs to be in constant connection with the Internet and
enterprise networks. Our products for handheld devices also enable wireless
synchronization so users can backup and access personal and professional data
from remote locations.

     Customized Solutions. Our technology platform enables us to provide
wireless data solutions for a wide range of specialized applications and to
adapt our products to specific customer needs. We enable our OEM customers to
provide their clients with tailored solutions for vertical market applications
such as securities trading, field services and sales, public safety
transportation, retail and point of sale terminals, telemetry and vending system
monitoring.

     Our objective is to be the leading global provider of wireless data access
products. The key elements of our strategy include:

     - Extending our technology leadership to capitalize on the evolution and
       expansion of global wireless data access technologies;

     - Driving widespread adoption of our products by increasing our sales and
       marketing activities, continuing to price our products strategically and
       to improve their ease-of-use;

     - Expanding and developing strategic relationships to improve the design
       and functionality of our wireless access products and rapidly gain market
       share;

     - Continuing to target key vertical markets by offering products that
       increase productivity, reduce costs and create operational efficiencies;
       and

     - Developing value-added applications to expand the capabilities of our
       products.

                             CORPORATE INFORMATION

     We were incorporated in Delaware on April 26, 1996 when we acquired certain
intellectual property rights relating to wireless communications. Our principal
executive offices are located at 9360 Towne Centre Drive, Suite 110, San Diego,
California 92121. Our telephone number at that location is (858) 320-8800.
References in the prospectus to "we," "our," "us" and the "Company" refer to
Novatel Wireless, Inc. together with our consolidated subsidiaries. Our Web site
is www.novatelwireless.com. This reference to our website is not an active
hyperlink, nor is the information contained in our Web site incorporated by
reference into this prospectus and it does not constitute part of this
prospectus.

     Our trademarks and service marks include Contact(R), Expedite(TM), Lancer
3W(TM), Merlin(TM), Minstrel(R), Minstrel IIIc(TM), Minstrel III(TM), Minstrel
V(TM), Minstrel Plus(TM), Minstrel S(TM), MissionONE(TM), Sage(R), Viking(TM),
Expedite(TM) with the accompanying design, and the Novatel Wireless logo.
Novatel Wireless, our logo and other trademarks and service marks mentioned in
this prospectus are the property of Novatel Wireless, Inc. or its subsidiaries.
All other brand names, trademarks, or service marks of other companies and
products appearing in this prospectus are the property of their respective
holders.

                                        3
<PAGE>   7

                                  THE OFFERING

Common stock offered by us..........                    shares of our common
                                         stock

Common stock to be outstanding after
  the offering......................                    shares of our common
                                         stock

Use of proceeds.....................     For working capital and general
                                         corporate purposes, including increased
                                         research and development and sales and
                                         marketing expenditures. See "Use of
                                         Proceeds."

Nasdaq National Market symbol.......     NVTL

     The number of shares of our common stock to be issued and outstanding
immediately after this offering is based on the number of shares issued and
outstanding as of July 25, 2000. It also reflects the automatic conversion into
shares of our common stock upon completion of this offering of (i) Series A, B
and C preferred stock outstanding as of June 30, 2000 into 8,022,415 shares of
our common stock and (ii) all shares of our Series D preferred stock which we
issued and sold to investors on June 30, 2000 and on July 14, 2000 into
1,964,050 shares of our common stock, and (iii) all shares of preferred stock of
our subsidiary Novatel Wireless Technologies, Ltd. an Alberta, Canada
corporation (NWT) (discussed below). In addition to the shares of common stock
to be outstanding after this offering, there are:

     - 2,900,731 shares of common stock that could be issued upon the exercise
       of options outstanding as of July 25, 2000 at a weighted average exercise
       price of $9.09 per share;

     - 3,539,305 shares of common stock that could be issued upon the exercise
       of warrants outstanding as of July 25, 2000;

     - 1,099,269 shares of common stock that could be issued in the future under
       our stock option plans as of July 25, 2000;

     - 500,000 shares of common stock that could be issued in the future under
       our 2000 employee stock purchase plan.

     Prior to this offering, the authorized capital stock of our subsidiary,
NWT, consisted of an unlimited number of Series A preferred shares, an unlimited
number of Series B preferred shares and an unlimited number of common shares.
Upon consummation of this offering, all the NWT Series A preferred shares and
all the NWT Series B preferred shares will be exchanged for an equal number of
shares of our Series A preferred stock and our Series B preferred stock,
respectively, and thereafter will be immediately converted into an aggregate of
1,465,412 shares of our common stock. In this prospectus, we refer to this
exchange and subsequent conversion as the "NWT Exchange."

     Except as otherwise specified in this prospectus, all information in this
prospectus assumes:

     - the occurrence of the NWT Exchange prior to this offering;

     - the automatic conversion of all the outstanding shares of our preferred
       stock into shares of our common stock immediately prior to the completion
       of this offering;

     - the filing of our amended and restated certificate of incorporation with
       the Delaware Secretary of State;

     - the effectiveness of our 2000 stock incentive plan and our 2000 employee
       stock purchase plan; and

     - no exercise of the underwriters' over-allotment option.

                                        4
<PAGE>   8

                             SUMMARY FINANCIAL DATA

     You should read the following selected financial data in conjunction with
our consolidated financial statements and the related notes and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which are included elsewhere in this prospectus. The consolidated
statements of operations data for the years ended December 31, 1997, 1998 and
1999, and the balance sheet data at December 31, 1998 and 1999, are derived from
our consolidated financial statements which have been audited by Arthur Andersen
LLP and which are included elsewhere in this prospectus. The consolidated
statement of operations data for the period from inception to December 31, 1996
is derived from audited consolidated financial statements not included in this
prospectus. The balance sheet data at March 31, 2000 and consolidated statements
of operations data for the quarters ended March 31, 1999 and 2000 are derived
from unaudited consolidated financial statements which are included elsewhere in
this prospectus. See notes 4 and 14 of the notes to the consolidated financial
statements for an explanation of the number of shares used to compute net loss
per share and pro forma net loss per share. The historical financial information
may not be indicative of our future performance, and results of interim periods
may not be indicative of results that may be expected for any other interim
period or for the year as a whole.

<TABLE>
<CAPTION>
                                         PERIOD FROM                                                    QUARTER
                                        APRIL 26, 1996                                                   ENDED
                                        (INCEPTION) TO      FISCAL YEAR ENDED DECEMBER 31,             MARCH 31,
                                         DECEMBER 31,    ------------------------------------   -----------------------
                                             1996           1997         1998         1999         1999         2000
                                        --------------   ----------   ----------   ----------   ----------   ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)                                                       (UNAUDITED)
<S>                                     <C>              <C>          <C>          <C>          <C>          <C>
CONSOLIDATED STATEMENT OF OPERATIONS
  DATA:
Revenue...............................    $      277     $    3,354   $    5,378   $    9,556   $    1,273   $    6,837
Cost of revenue.......................           168          1,136        3,433       11,955        1,076        7,865
                                          ----------     ----------   ----------   ----------   ----------   ----------
Gross margin..........................           109          2,218        1,945       (2,399)         197       (1,028)
                                          ----------     ----------   ----------   ----------   ----------   ----------
Operating expenses:
  Research and development............         2,650          2,715        2,333        3,717          457        2,076
  Sales and marketing.................           256          2,058        2,685        4,480          391        2,319
  General and administrative..........           656          1,944        2,611        4,663          878        1,066
                                          ----------     ----------   ----------   ----------   ----------   ----------
Net loss..............................        (3,462)        (4,476)      (5,506)     (18,469)      (1,513)      (6,268)
                                          ==========     ==========   ==========   ==========   ==========   ==========
Net loss per common share:
  Basic and diluted...................    $    (1.11)    $    (1.54)  $    (2.06)  $    (6.13)  $    (0.58)  $    (2.21)
                                          ==========     ==========   ==========   ==========   ==========   ==========
  Weighted average shares
    outstanding.......................     3,237,210      3,237,210    3,237,210    3,242,807    3,237,210    3,339,998
                                          ==========     ==========   ==========   ==========   ==========   ==========
Pro forma net loss per share
  (unaudited)(1):
  Basic and diluted...................                                             $    (2.19)  $    (0.21)  $    (0.57)
                                                                                   ==========   ==========   ==========
  Weighted average shares
    outstanding.......................                                              9,066,423    9,050,760   12,827,825
                                                                                   ==========   ==========   ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                    MARCH 31, 2000
                                                              --------------------------
                                                                                 AS
                                                                 ACTUAL      ADJUSTED(2)
                                                              ------------   -----------
<S>                                                           <C>            <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents...................................  $     14,065
Working capital.............................................         8,395
Total assets................................................        31,673
Total long-term liabilities.................................            89
Stockholders' equity........................................       (38,341)
</TABLE>

---------------
(1) See notes 4 and 14 of the notes to the consolidated financial statements for
    an explanation of the determination of the number of shares and share
    equivalents used in computing pro forma per share amounts.

(2) "As adjusted" reflects the application of the net proceeds from the sale of
                   shares of common stock offered by us at an assumed initial
    public offering price of $     per share, after deducting the underwriting
    discounts and commissions and the estimated offering expenses. See "Use of
    Proceeds" and "Capitalization."

                                        5
<PAGE>   9

                                  RISK FACTORS

     An investment in our common stock involves a high degree of risk. You
should carefully consider the risks and uncertainties described below and the
other information contained in this prospectus before you decide whether to
invest in our common stock. If any of the following risks actually occurs, our
business, financial condition, results of operations and liquidity could be
materially adversely affected. This may cause the trading price of our common
stock to decline after this offering, and you could lose part or all of the
money you paid to purchase our common stock.

                         RISKS RELATED TO OUR BUSINESS

WE HAVE INCURRED SIGNIFICANT OPERATING LOSSES SINCE OUR INCEPTION AND WE EXPECT
TO CONTINUE TO INCUR SIGNIFICANT NET LOSSES AND NEGATIVE CASH FLOWS FOR THE
FORESEEABLE FUTURE.

     We have experienced operating losses and net losses in each quarterly and
annual period since our inception, and we expect to continue to incur
significant losses for the foreseeable future. We incurred net losses of $3.5
million for the eight months ended December 31, 1996, $4.5 million for the year
ended December 31, 1997, $5.5 million for the year ended December 31, 1998 and
$18.5 million for the year ended December 31, 1999. In addition, we had negative
cash flows from operations of $3.5 million for the year ended December 31, 1997,
$5.0 million for the year ended December 31, 1998 and $5.2 million for the year
ended December 31, 1999. As of March 31, 2000, we had an accumulated deficit of
$42.5 million. We expect our operating expenses and negative cash flows will
increase substantially as we continue to attempt to expand our business. We also
expect to significantly increase our product development, sales and marketing,
research and development, manufacturing, and general and administrative expenses
in future periods. We have entered into and expect to continue to enter into
significant customer contracts for the development and supply of our products.
These contracts may place significant demands on our resources. If we are unable
to increase our revenue sufficiently to offset these expected increases in our
expenses, we will not achieve profitability and our operating losses, net losses
and negative cash flows will increase.

BECAUSE WE HAVE BEEN OPERATING ONLY SINCE 1996, OUR HISTORIC OPERATING RESULTS
MAY NOT BE MEANINGFUL TO AN INVESTOR EVALUATING OUR COMPANY.

     We launched our first wireless modem in 1996. Because we have a limited
operating history for you to evaluate when considering an investment in our
company, it may be difficult for you to evaluate our current business and
prospects. You must consider the risks, expenses and uncertainties that an early
stage company like ours faces, particularly in the new and rapidly evolving
wireless communications market. These considerations include our ability to
continue to expand our customer base, maintain our current
strategic-relationships and develop new ones, deliver products associated with
our key contracts in a profitable and timely manner, attract and retain
qualified personnel and manage our growth. Because we have only recently
commenced commercial sales of our products, our past results and rates of growth
may not be meaningful, and you should not rely on them as an indication of our
future performance.

IF WE DO NOT CORRECTLY ANTICIPATE DEMAND FOR OUR PRODUCTS, WE MAY NOT BE ABLE TO
ARRANGE COST-EFFECTIVE PRODUCTION OF OUR PRODUCTS OR WE COULD HAVE COSTLY EXCESS
INVENTORIES OR PRODUCTION.

     Historically, we have experienced steady increases in demand for our
products and generally have been able to arrange for increased production to
meet that demand. However, the demand for our products depends on many factors
and is difficult to predict. We expect that it will become more difficult to
predict demand for specific products as we introduce and support multiple
wireless communications products and as competition in the market for our
products intensifies. Significant unanticipated fluctuations in demand could
cause the following problems in our operations:

     - If demand increases beyond what we anticipate, we would have to rapidly
       arrange for increased production at our third-party manufacturers. Our
       manufacturers depend on suppliers to provide
                                        6
<PAGE>   10

       additional volumes of components. If these suppliers cannot provide the
       additional volumes of components, our manufacturers may not be able to
       increase production rapidly enough to meet the unexpected demand. Even if
       our manufacturers are able to procure enough components, they may not be
       able to produce enough of our products to allow us to deliver them in a
       timely manner to our customers. The inability of our suppliers to provide
       material components or of our manufacturers to increase production
       rapidly enough or to sufficient levels could cause us to fail to meet
       customer demand.

     - Rapid increases in production levels to meet unanticipated demand could
       result in higher costs for manufacturing and supply of components and
       other expenses. These higher costs could lower our profit margins.
       Further, if production is increased rapidly, manufacturing yields could
       decline, which may also lower our profit margins.

     - If anticipated demand does not develop, we could have excess inventories
       of finished products and components, which would reduce our cash flow and
       could lead to write-offs of some or all of the excess inventories. Lower
       than anticipated demand could also result in manufacturing activity at
       our third-party manufacturers below the minimum manufacturing activity
       level for which we are financially committed, which could result in
       higher costs of goods sold and lower profit margins.

IF WE CANNOT DELIVER PRODUCTS ASSOCIATED WITH OUR SIGNIFICANT CONTRACTS IN A
PROFITABLE AND TIMELY MANNER, OUR REPUTATION COULD BE HARMED AND OUR REVENUE AND
PROFIT MARGINS MAY DECREASE.

     Our ability to generate future revenue under many of our significant supply
contracts depends upon our ability to manufacture and supply products that meet
defined specifications. To realize the benefits of these agreements, we will
have to manage the following risks successfully:

     - We have priced these contracts on our estimate of future production
       costs. If we incur higher costs than anticipated, our gross margins on
       these contracts will decrease and these contracts may not be as
       profitable as they otherwise may have been.

     - If we are unable to commit the necessary resources or are unable to
       deliver our products as required by the terms of these contracts, our
       customers may cancel the contracts. In that event, we might not recover
       any costs that we incurred for research and development, sales and
       marketing, production and otherwise and we may incur additional costs as
       contractual penalties.

     - If we fail to meet a delivery deadline, or a customer determines that the
       products we delivered do not meet the agreed-upon specifications, we may
       have to reduce the price we can charge for our products, or we may be
       liable to pay damages to the customer.

If we are unable to successfully manage these risks or meet required deadlines
in connection with one or more of our key contracts, our reputation could be
harmed and our business, financial condition, results of operations and
liquidity could be materially adversely affected.

IF THE MARKET FOR WIRELESS ACCESS TO THE INTERNET DOES NOT CONTINUE TO GROW, OUR
REVENUE WILL LIKELY DECLINE.

     The market for wireless access to the Internet has experienced significant
growth in recent years. However, we cannot assure you that the market for our
existing products will continue to grow, that potential customers within the
industry will adopt our products for integration with their wireless data
communications solutions, or that we will be successful in independently
establishing markets for our products. If the wireless data communications
market fails to grow, or grows more slowly than we currently anticipate, or if
we are unable to establish markets for our new products, our business, financial
condition, results of operations and liquidity could be materially adversely
affected.

                                        7
<PAGE>   11

THE MARKETABILITY OF OUR PRODUCTS MAY SUFFER IF WIRELESS TELECOMMUNICATIONS
OPERATORS DO NOT DELIVER ACCEPTABLE WIRELESS SERVICES.

     The success of our business depends on the capacity, affordability and
reliability of wireless data access provided by various wireless
telecommunications operators. Currently, various wireless telecommunications
operators such as Verizon Wireless and AT&T Wireless, either directly or jointly
with us, sell our products in connection with the sale of their wireless data
access services to their customers. Growth in demand for wireless data access
may be limited if wireless telecommunications operators fail to offer services
which customers consider valuable, fail to maintain sufficient capacity to meet
demand for wireless data access, delay the expansion of their wireless networks
and services, fail to offer and maintain reliable wireless network services or
fail to market their services effectively. If any of these occurs, or if for any
other reason the demand for wireless data access fails to grow, sales of our
products will decline and our business, financial condition and results of
operations could be materially adversely affected.

     In addition, our future growth depends on the successful deployment of next
generation wireless data networks by third parties, including those networks for
which we currently are developing products. If these next generation networks
are not deployed or widely accepted, or if deployment is delayed, there will be
no market for the products we are developing to operate on these networks. As a
result, we will not be able to recover our research and development expenses and
our financial condition and results of operations and liquidity could be
materially adversely affected.

OUR SUCCESS DEPENDS ON OUR ABILITY TO MANAGE ADDITIONAL GROWTH SUCCESSFULLY.

     Our ability to successfully offer our products and implement our business
plan in a rapidly evolving market requires an effective planning and management
process. We have continued to increase the scope of our operations domestically
and have grown our shipments and headcount substantially. At June 30, 2000, we
had a total of approximately 219 employees, representing an increase from 36
employees since March 31, 1997. In addition, we expect to continue to hire a
significant number of employees during the remainder of 2000. Our growth has
resulted, and any future growth will result, in increased responsibilities for
our management and increased demands on our resources. To be successful, we will
need to:

     - implement additional management information systems;

     - improve our operating, administrative, financial and accounting systems,
       procedures and controls;

     - maintain and expand our manufacturing capacity;

     - continue to train, motivate, manage and retain our existing employees and
       attract and integrate new employees; and

     - maintain close coordination among our executive, engineering,
       professional services, accounting, finance, marketing, sales and
       operations organizations.

     We may not adequately anticipate all the demands that growth may impose on
our systems, procedures and structure. If we fail to anticipate and respond
adequately to these demands or if we are otherwise unable to manage our growth
effectively, we may not be able to compete effectively and our business,
financial condition, results of operations and liquidity could be materially
adversely affected.

WE CURRENTLY RELY EXCLUSIVELY ON A THIRD-PARTY MANUFACTURER TO PRODUCE OUR
PRODUCTS, AND OUR ABILITY TO CONTROL ITS OPERATIONS IS LIMITED.

     We currently outsource all our manufacturing to Sanmina Corporation. In
April 2000, we entered into a manufacturing agreement with GVC Corporation.
Because we only recently entered into this agreement, GVC has not yet begun
production on our products and we have not had any significant working
experience with GVC. We expect GVC to begin manufacturing some of our products
at its facilities in Taiwan in the near future. We expect to continue to depend
exclusively on third-party manufacturers to produce our products in a timely
fashion and at satisfactory quality levels. Neither of these third-party
manufactures is obligated to supply products to us for any specific quantity,
except as may be provided in
                                        8
<PAGE>   12

particular purchase orders which we submit to them from time to time. If our
third-party manufacturers experience delays, disruptions, capacity constraints
or quality control problems in their manufacturing operations, then product
shipments to our customers could be delayed, which would negatively impact our
revenues and our competitive position and reputation. The cost, quality and
availability of third-party manufacturing operations are essential to the
successful production and sale of our products. Our reliance on our third-party
manufacturers exposes us to a number of risks which are outside our control:

     - unexpected increases in manufacturing costs;

     - interruptions in shipments if our third-party manufacturers are unable to
       complete production timely;

     - inability to control quality of finished products;

     - inability to control delivery schedules;

     - inability to control production levels and to meet minimum volume
       commitments to our customers;

     - inability to control manufacturing yield;

     - inability to maintain adequate manufacturing capacity; and

     - inability to secure adequate volumes of components.

     If we are unable to manage successfully our relationships with these
third-party manufacturers, the quality and availability of our products may be
harmed. If Sanmina stopped manufacturing our products or reduced its
manufacturing capacity, we may be unable to replace the lost manufacturing
capacity on a timely basis. In addition, if Sanmina changed the terms under
which it manufactures for us, our manufacturing costs could significantly
increase. We generally place orders with Sanmina at least three months prior to
scheduled delivery of products to our customers. Accordingly, if we inaccurately
anticipate demand for our products, we may be unable to obtain adequate
quantities of components to meet our customers' delivery requirements or we may
accumulate excess inventories. If one or more of these events were to occur, our
business, financial condition and results of operations could be materially
adversely affected by increased costs, reduced revenue and lower profit margins.

IF WE FAIL TO ADOPT NEW TECHNOLOGY AND FAIL TO DEVELOP AND INTRODUCE NEW
PRODUCTS SUCCESSFULLY, WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY.

     We operate in a highly competitive environment, characterized by rapidly
changing technology and industry standards. New products based on emerging
technologies or evolving industry standards may quickly render an existing
product obsolete and unmarketable. Our growth and future operating results
depend in part upon our ability to enhance existing products and introduce newly
developed products that conform to prevailing and evolving industry standards,
meet or exceed technological advances in the marketplace, meet changing customer
requirements, achieve market acceptance and respond to our competitors'
products.

     The development of new products can be very difficult and requires
technological innovation. The development process is also lengthy and costly. In
addition, wireless communications service providers require that wireless data
systems deployed on their networks comply with their own standards, which may
differ from the standards of other providers. If we fail to anticipate our
customers' needs and technological trends accurately or are otherwise unable to
complete the development of products on time and within budgeted amounts, we
will be unable to introduce new products into the market on a timely basis, if
at all. If we are unsuccessful at developing and introducing new products that
are appealing to consumers, we may be unable to recover our significant research
and development costs and our business, financial condition and results of
operations could be materially adversely affected. In addition, as we introduce
new versions of our products or new products, our current customers may not
require the technological innovations of our new products and may not purchase
them.

                                        9
<PAGE>   13

     To grow our revenue and achieve profitability, we must retain our current
customers and develop new ones. If consumers view our competitors' products as
superior to ours, or if our products are unable to meet their expectations or
requirements, we may be unable to retain our existing customers or to develop
new customers which would materially and adversely effect our business,
financial condition and results of operations.

THE FLUCTUATION OF OUR QUARTERLY OPERATING RESULTS MAY CAUSE OUR STOCK PRICE TO
DECLINE.

     Our future quarterly operating results may fluctuate significantly and may
not meet the expectations of securities analysts or investors. If this occurs,
the market price of our stock would likely decline. The following factors may
cause fluctuations in our operating results:

     - INCREASES IN OPERATING EXPENSES. We expect that our operating expenses,
       particularly our sales and marketing, and our research and development
       costs, will increase. We budget our operating expenses based on
       anticipated sales, and a significant portion of our sales and marketing,
       research and development and general and administrative costs are fixed,
       at least in the short term. If revenue decreases and we are unable to
       reduce our operating costs quickly and sufficiently, our operating
       results could be materially adversely affected. We have entered into and
       expect to continue to enter into significant customer contracts for the
       development and supply of our products. We expect to incur significant
       research and development, sales and marketing and other costs relating to
       the development, manufacture and sale of these products prior to
       receiving revenue from these contracts.

     - PRODUCT MIX. The product mix of our sales affects profit margins in any
       given quarter. As our business evolves and the revenue from the product
       mix of our sales varies from quarter to quarter, our operating results
       will likely fluctuate.

     - NEW PRODUCT INTRODUCTIONS. As we introduce new products, the timing of
       these introductions will affect our quarterly operating results. We may
       have difficulty predicting the timing of new product introductions and
       the market acceptance of these new products. If products and services are
       introduced earlier or later than anticipated, or if market acceptance is
       unexpectedly high or low, our quarterly operating results may fluctuate
       unexpectedly. Our quarterly operating results also fluctuate because we
       incur substantial upfront research and development, sales and marketing,
       production and other costs to support new product introductions prior to
       the periods in which we will recognize revenue from new products.

     - USE OF SUPPLY CONTRACTS WITH CUSTOMERS. We rely on long-term supply
       contracts with our distributor customers. These contracts typically have
       minimum purchase volumes, and also typically include a non-binding,
       forward-looking rolling forecast and allow the customer to make certain
       volume changes within specified periods of time in advance of scheduled
       production dates. We use these forecasts for internal planning of
       material procurement and required manufacturing capacity, but cannot
       predict with certainty incoming orders or changes in forecasts. Our
       operating results may fluctuate as a result of deviations from forecasted
       amounts, the timing of substantial orders, decreases in orders, failure
       to fulfill orders, possible delays or shortages in component supplies, or
       possible delays in the manufacture or shipment of current or new
       products.

     - LENGTHY SALES CYCLE. In addition, the length of time between the date of
       initial contact with a potential customer and the execution of a contract
       may take several months, and is subject to delays over which we have
       little or no control. The sale of our products is subject to delays from
       our customers' budgeting, approval and competitive evaluation processes
       that typically accompany significant information technology purchasing
       decisions. For example, customers frequently begin by evaluating our
       products on a limited basis and devote time and resources to testing our
       products before they decide whether or not to purchase a product. We
       commit substantial time and resources to educate potential customers on
       the use and benefits of our products. Customers may also defer orders as
       a result of anticipated releases of newer or enhanced products by us or
       our competitors. As a result, our ability to anticipate the timing and
       volume of sales to specific
                                       10
<PAGE>   14

       customers is limited, and the delay or failure to complete one or more
       large transactions could cause our operating results to vary
       significantly from quarter to quarter.

     We believe that quarter-to-quarter comparisons of our operating results
will not necessarily be meaningful in predicting our future performance. If we
do not achieve our expected revenue, it is possible that our operating results
will fall below the expectations of market analysts or investors in some future
quarter or quarters. Our failure to meet these expectations would likely
adversely affect the trading price of our common stock.

WE DEPEND UPON A SMALL NUMBER OF OUR CUSTOMERS FOR A SUBSTANTIAL PORTION OF OUR
REVENUE.

     A significant portion of our revenue comes from a small number of
customers. Our top ten customers for the year ended December 31, 1999 and the
quarter ended March 31, 2000 accounted for approximately 83.7% and 87.6% of our
revenue, respectively. @Road, OmniSky and AirLink Communications, Inc. accounted
for 23.1%, 14.3% and 9.2% of our revenue, respectively, for the year ended
December 31, 1999. OmniSky, @Road, and Pivot International accounted for 24.2%,
23.6% and 13.0% of our revenue, respectively, for the quarter ended March 31,
2000. We expect that a small number of customers will continue to account for a
substantial portion of our revenue for the foreseeable future. If there is a
downturn in the business of any of these customers, if we are unable to continue
to retain their business, or if we are unable to diversify our customer base,
our revenue may decline.

WE DEPEND ON SOLE SOURCE SUPPLIERS FOR SOME OF OUR COMPONENTS, AND OUR PRODUCT
AVAILABILITY AND SALES WOULD BE HARMED IF THESE SUPPLIERS ARE NOT ABLE TO MEET
OUR DEMAND AND ALTERNATIVE SOURCES ARE NOT AVAILABLE.

     Our products contain a variety of components that are procured from a
variety of suppliers. These components include both tooled parts and
industry-standard parts, many of which are similar to parts used in cellular
telephone handsets. The cost, quality and availability of components are
essential to the successful production and sale of our products. Some of these
components come from sole or single source suppliers for which alternative
sources may not be available. If suppliers are unable to meet our demand for
sole source components and if we are unable to obtain an alternative source or
if the price for a substitute is prohibitive, our ability to maintain timely and
cost-effective production of our products would be seriously harmed. Currently,
some components and certain integrated circuits are in short supply world-wide
due to the explosive growth in demand for cellular-telephone handsets. If the
shortage of such components or any other key component persists or worsens, we
may not be able to deliver sufficient quantities of our products to satisfy
demand.

IF WE FAIL TO DEVELOP AND MAINTAIN STRATEGIC ALLIANCES, WE MAY NOT BE ABLE TO
PENETRATE NEW MARKETS.

     A key element of our business strategy is to penetrate new markets by
developing new products through strategic alliances with leading companies. We
are currently investing, and plan to continue to invest, significant resources
to develop these relationships. We believe that our success in penetrating new
markets for our products will depend in part on our ability to maintain these
relationships and to cultivate additional or alternative relationships. We
cannot assure you that we will be able to develop additional strategic
alliances, that existing relationships will continue or be successful in
achieving their purposes or that strategic partners will not form competing
arrangements.

ANY SIGNIFICANT REDUCTION IN DEMAND FOR HANDHELD COMPUTING DEVICES OR FOR OUR
PRODUCTS DESIGNED FOR THOSE DEVICES MAY HARM OUR BUSINESS.

     A significant amount of our revenue is generated by our products for
handheld computing devices and portable PCs. Although the demand for handheld
computing devices and portable PCs has historically increased at a steady rate,
we cannot assure you that the demand for those devices will continue to grow in
the future. In addition, certain recent models of handheld computing devices and
portable PCs include internal wireless modems installed by the manufacturer
which reduce the need for consumers to purchase

                                       11
<PAGE>   15

our wireless modem products. If demand for handheld computing devices and
portable PCs declines or as more consumers purchase handheld computing devices
and PCs with internal wireless modems, the demand for our products would
materially decrease and our revenue would decline.

WE MAY NOT BE ABLE TO MAINTAIN AND EXPAND OUR BUSINESS IF WE ARE NOT ABLE TO
INTEGRATE OUR MANAGEMENT TEAM AND RETAIN, HIRE, INTEGRATE AND MANAGE ADDITIONAL
QUALIFIED PERSONNEL.

     Many members of our senior management have joined our company within the
last nine months. In particular, John Major, our chief executive officer, joined
us in July 2000. Melvin Flowers, our chief financial officer, and Steven
Schlief, our vice president of operations, joined us February 2000 and July
2000, respectively. As a result, our current management team has worked together
for only a relatively short time and is in the process of integrating as a
management team. Our ability to execute our strategies will depend upon our
ability to integrate these and future managers into our operations, and there
can be no assurance that we will be able to achieve the rapid execution
necessary to fully exploit the market opportunity for our products.

     Our success in the future depends in part on the continued contribution of
our executive, technical, engineering, sales, marketing, manufacturing and
administrative personnel. Recruiting and retaining skilled personnel, including
software and hardware engineers, is highly competitive, especially in the San
Diego area. Cash compensation is likely to increase for employees with these
skills whom we hire after our initial public offering because prospective
employees may perceive that the stock option component of our compensation
package is not as valuable as it was prior to the offering. In addition, most of
our senior management and other key personnel are not bound by employment
agreements. If we are not able to attract or retain qualified personnel in the
future, or if we experience delays in hiring required personnel, particularly
qualified engineers, we will not be able to maintain and expand our business.

     Over the past year, we have rapidly expanded our direct sales force and
expect to hire additional sales personnel commensurate with our sales
objectives. We may experience difficulty in integrating the new members of our
sales team into our operations. We have limited experience in managing a large,
expanding, geographically dispersed sales force. We cannot be certain that we
will be able to effectively manage the growing sales force in the future or that
newly-hired employees will achieve levels of productivity necessary to sustain
our sales and revenue growth.

ANY ACQUISITIONS WE MAKE COULD DISRUPT OUR BUSINESS AND HARM OUR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

     As part of our business strategy, we intend to review on an ongoing basis
acquisition opportunities that we believe would be advantageous to the
development of our business. While we have no current agreements or current
discussions with respect to any acquisitions, we may acquire businesses,
products, or technologies in the future. If we make any acquisitions, we could
take any or all of the following actions, any one of which could adversely
affect our business, financial condition, results of operations and the price of
our common stock:

     - issue equity securities that would dilute existing stockholders'
       percentage ownership;

     - use a substantial portion of our available cash, including proceeds from
       this offering;

     - incur substantial debt, which may not be available to us on favorable
       terms and may adversely affect our liquidity;

     - assume contingent liabilities; and

     - take substantial charges in connection with the amortization of goodwill
       and other intangible assets.

     Acquisitions also entail numerous risks, including: difficulties in
assimilating acquired operations, products and personnel; unanticipated costs;
diversion of management's attention from other business concerns; adverse
effects on existing business relationships with suppliers and customers; risks
of entering markets in which we have limited or no prior experience; and
potential loss of key employees from either
                                       12
<PAGE>   16

our preexisting business or the acquired organization. We may not be able to
successfully integrate any businesses, products, technologies or personnel that
we might acquire in the future, and our failure to do so could harm our business
and operating results.

OUR FUTURE RESULTS COULD BE HARMED BY RISKS ASSOCIATED WITH INTERNATIONAL SALES
AND OPERATIONS.

     We plan to expand our international sales and marketing activities in the
future. We have limited experience in marketing, selling, distributing and
manufacturing our products and services internationally. For the year ended
December 31, 1999, only approximately 12% of our revenue was derived from
international accounts. As we expand international sales, we expect to become
subject to a number of risks which may increase our costs, lengthen our sales
cycle and require significant management attention. These risks associated with
doing business internationally generally include:

     - changes in foreign currency exchange rates;

     - changes in a specific country's or region's political or economic
       conditions, particularly in emerging markets, and changes in diplomatic
       and trade relationships;

     - less effective protection of intellectual property;

     - trade protection measures and import or export licensing requirements;

     - potentially negative consequences from changes in tax laws;

     - increased expenses associated with customizing products for foreign
       countries;

     - unexpected changes in regulatory requirements resulting in unanticipated
       costs and delays;

     - longer collection cycles and difficulties in collecting accounts
       receivable; and

     - difficulty in managing widespread sales and research and development
       operations.

     Our sales and invoices are currently denominated in U.S. dollars. In the
future, however, we may record sales and invoice customers in the applicable
local foreign currency. If that occurs, we may be exposed to international
currency fluctuations.

THE WIRELESS COMMUNICATIONS MARKET IS HIGHLY COMPETITIVE AND WE MAY BE UNABLE TO
COMPETE EFFECTIVELY.

     We compete in the wireless communications markets. The markets for wireless
data access products are highly competitive and we expect competition to
increase. Many of our competitors or potential competitors have significantly
greater financial, technical and marketing resources than we do. These
competitors may be able to respond more rapidly than we can to new or emerging
technologies or changes in customer requirements. They also may devote greater
resources than we do to the development, promotion and sale of their products.

     Many of our competitors have more extensive customer bases and broader
customer relationships and industry alliances that they could leverage to
establish relationships with many of our current and potential customers. These
companies also have significantly more established customer support and
professional services organizations. In addition, these companies may adopt
aggressive pricing policies or offer more attractive terms to customers, may
bundle their competitive products with broader product offerings and may
introduce new products and enhancements. Current and potential competitors may
establish cooperative relationships among themselves or with third parties to
enhance their products. As a result, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share.

                                       13
<PAGE>   17

     Our wireless communications products compete with a variety of devices,
including wireless modems, traditional wired modems, wireless handsets, wireless
handheld computing devices and other wireless devices. Our current and potential
competitors include:

     - Wireless modem manufacturers, such as Sierra Wireless, Uniden, NextCell
       and Tellus;

     - Traditional wired modem manufacturers, such as 3Com and Xircom;

     - Wireless device manufacturers, such as Handspring, Palm and Research in
       Motion;

     - Wireless handset manufacturers and next generation wireless technology
       providers, such as Ericsson, Motorola and Nokia; and

     - Non-CDPD private communications network providers, such as Emotiant, Bell
       South and Metricom.

     We expect our competitors to continue to improve the performance of their
current products and to introduce new products, services and technologies.
Successful new product introductions or enhancements by our competitors could
reduce our sales and the market acceptance of our products, cause intense price
competition and make our products obsolete. To be competitive, we must continue
to invest significant resources in research and development, sales and
marketing, and customer support. We cannot be sure that we will have sufficient
resources to make these investments or that we will be able to make the
technological advances necessary to remain competitive. Increased competition
could result in price reductions, fewer customer orders, reduced margins and
loss of our market share. Our failure to compete successfully could seriously
harm our business, financial condition and results of operations.

OUR PRODUCTS MAY CONTAIN ERRORS OR DEFECTS WHICH COULD DECREASE THEIR MARKET
ACCEPTANCE.

     Our products are technologically complex and must meet stringent user
requirements. We must develop our software and hardware products quickly to keep
pace with the rapidly changing and technologically advanced wireless
communications market. Products as sophisticated as ours may contain undetected
errors or defects, especially when first introduced or when new models or
versions are released. Our products may not be free from errors or defects after
commercial shipments have begun, which could result in the rejection of our
products, damage to our reputation, lost revenues, diverted development
resources, and increased customer service and support costs and warranty claims.

WE COULD INCUR SUBSTANTIAL COSTS DEFENDING OUR INTELLECTUAL PROPERTY FROM
INFRINGEMENT OR A CLAIM OF INFRINGEMENT.

     Our success depends in large part on our proprietary technology. We rely on
a combination of patents, copyrights, trademarks and trade secrets,
confidentiality provisions and licensing arrangements to establish and protect
our proprietary rights. We may be required to spend significant resources to
monitor and police our intellectual property rights. Before we do so, we may not
be able to detect infringement and we may lose competitive position in the
market. Intellectual property rights also may be unavailable or limited in some
foreign countries, which could make it easier for competitors to capture market
share. The unauthorized use of our technology by competitors could have a
material adverse effect on our ability to sell our products in some markets.

     Although we are not currently involved in any intellectual property
litigation, we may be a party to litigation in the future either to protect our
intellectual property or as a result of an alleged infringement of others'
intellectual property. These claims and any resulting litigation could subject
us to significant liability for damages and could cause our proprietary rights
to be invalidated. Litigation, regardless of the merits of the claim or outcome,
would likely be time-consuming and expensive to resolve and would divert
management time and attention. Any potential intellectual property litigation
could also force us to do one or more of the following:

     - stop using the challenged intellectual property and refrain from selling
       our products or services that incorporate it;

                                       14
<PAGE>   18

     - obtain a license to use the challenged intellectual property or to sell
       products or services that incorporate it, which license may not be
       available on reasonable terms, or at all; and

     - redesign those products or services that are based on or incorporate the
       challenged intellectual property.

     If we are forced to take any of the foregoing actions, we may be unable to
manufacture and sell our products, and our business, financial condition and
results of operations may be materially adversely affected.

WE MAY NOT BE ABLE TO DEVELOP PRODUCTS THAT COMPLY WITH APPLICABLE GOVERNMENT
REGULATIONS.

     Our products must comply with government regulations. For example, in the
United States, the Federal Communications Commission (FCC) regulates many
aspects of communications devices, including radiation of electromagnetic
energy, biological safety and rules for devices to be connected to the telephone
networks. Modems must be approved under the above regulations by the FCC prior
to being offered for sale. Additionally, we cannot anticipate the effect that
changes in government regulations may have on our ability to develop products in
the future. Failure to comply with existing or evolving government regulations
or to obtain timely regulatory approvals or certificates could materially
adversely affect our business, financial condition and results of operations.

                        --------------------------------

                         RISKS RELATED TO THIS OFFERING

OUR STOCK PRICE COULD BE ADVERSELY AFFECTED BY SHARES BECOMING AVAILABLE FOR
SALE UNDER RULE 144 AND AS A RESULT OF REGISTRATION RIGHTS AGREEMENTS WE HAVE
ENTERED INTO WITH SOME OF OUR INVESTORS.

     Our current stockholders hold a substantial number of shares, which they
will be able to sell in the public market in the near future. Sales of a
substantial number of shares of our common stock under Rule 144, or the
perception that these sales could occur, could cause our common stock price to
fall and could impair our ability to raise capital through the sale of
additional equity securities. In addition, we have entered into registration
rights agreements with some investors that entitle these investors to have their
shares registered for sale in the public market. The exercise of these rights
could affect the market price of our common stock. See "Shares Eligible for
Future Sale" for further information concerning potential sales of our shares
after this offering, including information concerning Rule 144 and the
registration rights we have granted.

OUR STOCK PRICE MAY BE VOLATILE, AND WE CANNOT ASSURE YOU THAT OUR STOCK PRICE
WILL NOT DECLINE.

     The market price of our common stock could be subject to significant
fluctuations after this offering as a result of factors many of which are beyond
our control. Among the factors that could affect our stock price are:

     - quarterly variations in our operating results;

     - changes in revenue or earnings estimates or publication of research
       reports by analysts;

     - speculation in the press or investment community about our business or
       the wireless communications industry generally;

     - changes in market valuations of similar companies and stock market price
       and volume fluctuations generally;

     - strategic actions by us or our competitors such as acquisitions or
       restructurings;

     - regulatory developments;

     - additions or departures of key personnel;

     - general market conditions; and

     - domestic and international economic factors unrelated to our performance.

                                       15
<PAGE>   19

     The stock markets in general, and the markets for high technology stocks in
particular, have experienced extreme volatility that has often been unrelated to
the operating performance of particular companies. These broad market
fluctuations may adversely affect the trading price of our common stock. We
cannot assure you that you will be able to resell your shares at or above the
initial public offering price, which will be determined by negotiations between
the representatives of the underwriters and us.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER DELAWARE LAW COULD
PREVENT OR DELAY A CHANGE IN CONTROL IN OUR COMPANY.

     Our certificate of incorporation and bylaws contain anti-takeover
provisions that could prevent or delay an acquisition of our business at a
premium price. These provisions:

     - provide for a staggered board;

     - prevent stockholders from taking action by written consent;

     - limit the persons who may call special meetings of stockholders;

     - authorize our board of directors to approve the issuance of undesignated
       preferred stock without stockholder approval; and

     - provide for automatic acceleration of option vesting upon the occurrence
       of certain events.

In addition, Delaware law imposes some restrictions on mergers and other
business combinations between us and any holder of 15% or more of our common
stock.

YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN THE NET TANGIBLE BOOK
VALUE OF YOUR SHARES.

     The initial public offering price per share of our common stock is
substantially higher than the average net tangible book value per share of
common stock. As a result, if you purchase shares of common stock in this
offering your interest will suffer immediate and substantial dilution. This
dilution will reduce the net tangible book value of your shares since any shares
of our common stock that you purchase in this offering will be at a
substantially higher per share price than the current average net tangible book
value per share of our common stock. The dilution will be $     per share in the
net tangible book value of the common stock from the initial public offering
price. If additional shares are sold by the underwriters following exercise of
their over-allotment option, or if outstanding options or warrants to purchase
shares of common stock are exercised, any shares of our common stock that you
may purchase in this offering will be subject to further dilution. As a result
of this dilution, in the event of a liquidation, common stockholders purchasing
stock in this offering may receive significantly less than the full purchase
price that they paid for the shares they purchased in this offering.

OUR DIRECTORS, EXECUTIVE OFFICERS AND EXISTING STOCKHOLDERS AND THEIR AFFILIATES
WILL CONTINUE TO HAVE SUBSTANTIAL CONTROL OVER US AFTER THIS OFFERING, AND THEIR
INTERESTS MAY DIFFER FROM AND CONFLICT WITH YOURS.

     Upon completion of this offering, our executive officers, directors and
principal stockholders will beneficially own, in total,    % of our outstanding
common stock. As a result, these stockholders, whose interests may be different
from and may conflict with yours, will be able to influence matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions. This could have the effect of delaying or
preventing a change of control of our company or otherwise cause us to take
action that may not be in the best interests of all stockholders, either of
which in turn could reduce the market price per share of our common stock.

                                       16
<PAGE>   20

               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     You should not rely on forward-looking statements in this prospectus. This
prospectus contains forward-looking statements that relate to future events or
to our future business or performance. In some cases, you can identify
forward-looking statements by words such as "anticipates, " "believes," plans,"
"expects," "future," "intends," "may," "will," "should," "estimates,"
"predicts," "potential," "continue" and similar expressions. Our actual results
could differ materially from the results contemplated by these forward-looking
statements due to a number of factors, including those discussed in "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and elsewhere in this prospectus. This prospectus also
contains forward-looking statements attributed to third parties relating to
their estimates regarding the growth of our markets. Forward-looking statements
are subject to known and unknown risks, uncertainties and other factors that may
cause our actual results, as well as those of the markets we serve, levels of
activity, performance, achievements and prospects to be materially different
from those expressed or implied by the forward-looking statements. These risks,
uncertainties and other factors include, among others, those identified in "Risk
Factors" and elsewhere in this prospectus. Except as required by law, we
undertake no obligation to update publicly any forward-looking statement for any
reason, even if new information becomes available or other events occur.

                                       17
<PAGE>   21

                                USE OF PROCEEDS

     We estimate that the net proceeds to us from our sale in this offering of
shares of common stock at an assumed initial public offering price of $     per
share, after deducting estimated underwriting discounts and commissions and
estimated offering expenses, will be $       . If the underwriters' exercise in
full their over-allotment option, we estimate that our net proceeds will be
$       .

     We currently intend to use the net proceeds of this offering for working
capital and general corporate purposes, including increased research and
development and sales and marketing expenditures. We may also use a portion of
the net proceeds of this offering to acquire or invest in complementary
businesses or technologies, or complementary services or products, although we
have no current agreements or negotiations with respect to any such
transactions.

     As of the date of this prospectus, we have not allocated any specific
amount of the net proceeds for the purposes listed above. Management will
maintain broad discretion in the allocation of the net proceeds of this
offering. You will not have the opportunity to evaluate the economic, financial
or other information on which we base our decisions on how to use the proceeds.
Pending our use of the net proceeds of this offering, we intend to invest the
net proceeds from the offering in interest-bearing, investment grade securities.

                                DIVIDEND POLICY

     We have never declared or paid cash dividends on our capital stock. We
currently intend to retain all available funds and any future earnings for use
in the operation of our business and do not anticipate declaring or paying any
cash dividends in the foreseeable future. The declaration and payment of
dividends, if any, will be at the discretion of our board of directors, after
taking into account various factors our board of directors deems relevant,
including our financial condition, operating results, current and anticipated
cash needs, expansion plans and debt covenants. Our revolving line of credit
with Venture Banking Group, a division of Cupertino National Bank, currently
prohibits us from paying dividends without its prior approval.

                                       18
<PAGE>   22

                                 CAPITALIZATION

     The following table sets forth our consolidated total capitalization as of
March 31, 2000. You should read this table in conjunction with "Selected
Consolidated Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our consolidated financial statements
and the notes to our financial statements appearing elsewhere in this
prospectus. This information is presented:

     - on an actual basis at March 31, 2000;

     - on a pro forma basis at March 31, 2000 after giving effect to the
       automatic conversion of all the outstanding shares of our preferred stock
       and minority interest shares outstanding at March 31, 2000 and after
       giving effect to our receipt of the net proceeds of $33,560,000 from the
       sale in June and July 2000 of a total of 1,964,050 shares of our Series D
       preferred stock; and

     - on a pro forma as adjusted basis to give effect to the receipt of the net
       proceeds from the sale by us of shares of common stock in this offering
       at an assumed price of $     per share and after deducting underwriting
       discounts and commissions and offering expenses payable by us.

<TABLE>
<CAPTION>
                                                                       MARCH 31, 2000
                                                                        (UNAUDITED)
                                                            ------------------------------------
                                                                                      PRO FORMA
                                                             ACTUAL     PRO FORMA    AS ADJUSTED
(IN THOUSANDS)                                              --------    ---------    -----------
<S>                                                         <C>         <C>          <C>
Cash and cash equivalents.................................  $ 14,065    $ 14,065
                                                            ========    ========
Capital lease obligations, current portion................  $     74    $     74
Capital lease obligations, net of current portion.........        89          89
                                                            --------    --------
Total indebtedness........................................       163         163
                                                            --------    --------
Convertible and redeemable minority interest..............     4,457
                                                            --------
Convertible and redeemable preferred stock................    44,833
                                                            --------
Stockholders' equity (deficit):
  Common stock............................................         3          15
  Additional paid in capital..............................     5,131      87,969
  Deferred stock compensation.............................      (986)       (986)
  Accumulated deficit.....................................   (42,489)    (42,489)
                                                            --------    --------
     Total stockholders' equity (deficit).................   (38,341)     44,509
                                                            --------    --------
     Total capitalization.................................  $(11,112)   $ 44,672
                                                            ========    ========
</TABLE>

---------------
The common stock outstanding as shown above is based on shares outstanding as of
March 31, 2000, and excludes:

     - 2,900,731 shares of common stock that could be issued upon the exercise
       of options outstanding as of July 25, 2000;

     - 3,539,305 shares of common stock that could be issued upon the exercise
       of warrants outstanding as of July 25, 2000;

     - 1,099,269 shares of common stock that could be issued in the future under
       our stock option plans as of July 25, 2000;

     - 500,000 shares of common stock that could be issued in the future under
       our 2000 employee stock purchase plan.

                                       19
<PAGE>   23

                                    DILUTION

     If you invest in our common stock, your interest will be diluted to the
extent of the difference between the public offering price per share of our
common stock and the pro forma as adjusted net tangible book value per share of
our common stock after this offering. The pro forma net tangible book value of
our common stock as of June 30, 2000 was approximately $     million or $  per
share of common stock. Pro forma net tangible book value per share represents
the dollar amount of our total tangible assets reduced by the dollar amount of
our total liabilities and divided by the total number of shares of our common
stock outstanding at June 30, 2000, after giving effect to the sale of shares of
our Series D preferred stock on June 30, 2000 and July 14, 2000.

     After giving effect to the receipt of the estimated net proceeds from this
offering, based upon an assumed initial public offering price of $     per
share, and after deducting underwriting discounts and commissions and estimated
offering expenses and the adjustments, the pro forma net tangible book value of
our common stock as of June 30, 2000 would have been $          or $     per
share. This represents an immediate increase in net tangible book value of $ per
share to existing stockholders and an immediate dilution of $     per share to
new investors purchasing shares at the initial public offering price. The
following table illustrates this per share dilution:

<TABLE>
<S>                                                           <C>         <C>
Estimated initial public offering price per share...........              $
  Pro forma net tangible book value per share as of March
     31, 2000...............................................  $
  Increase per share attributable to new investors..........
                                                              --------
Pro forma as adjusted net tangible book value after the
  offering..................................................
                                                                          --------
As adjusted dilution per share to new investors.............              $
                                                                          ========
</TABLE>

     Assuming the exercise in full of the underwriters' over-allotment option,
our pro forma as adjusted net tangible book value at June 30, 2000 would have
been approximately $     per share, representing an immediate increase in net
tangible book value of $     per share to our existing stockholders and an
immediate and substantial dilution in net tangible book value of $     per share
to new investors.

     The following table summarizes, at June 30, 2000, on a pro forma basis, the
total number of shares purchased from us, and consideration paid to us and the
average price per share paid by existing holders of common stock and by new
investors purchasing shares of common stock in this offering at an assumed
initial public offering price of $     per share, before deducting the estimated
underwriting discounts and commissions and offering expenses:

<TABLE>
<CAPTION>
                                                                                    TOTAL
                                                          SHARES PURCHASED      CONSIDERATION      AVERAGE
                                                         ------------------   -----------------     PRICE
                                                          NUMBER    PERCENT   AMOUNT    PERCENT   PER SHARE
                                                         --------   -------   -------   -------   ---------
<S>                                                      <C>        <C>       <C>       <C>       <C>
Existing stockholders..................................                   %   $               %    $
New investors..........................................
                                                         --------    -----    -------    -----
  Total................................................                   %                   %
                                                         ========    =====    =======    =====
</TABLE>

     The foregoing discussion and table assume no exercise of the underwriters'
overallotment option and exclude the effect of:

     - 2,900,731 shares of common stock that could be issued upon the exercise
       of options outstanding as of July 25, 2000;

     - 3,539,305 shares of common stock that could be issued upon exercise of
       warrants outstanding as of July 25, 2000;

     - 1,099,269 shares of common stock that could be issued in the future under
       our stock option plans as of July 25, 2000; and

     - 500,000 shares of common stock that could be issued in the future under
       our 2000 employee stock purchase plan.

To the extent that any of our these options or warrants are exercised or shares
are issued, there will be further dilution to new public investors. See
"Capitalization," "Management -- Stock Plans," "Description of Securities
Stock," and notes 8 and 9 of notes to consolidated financial statements
contained elsewhere in this prospectus.

                                       20
<PAGE>   24

                            SELECTED FINANCIAL DATA

     You should read the following selected financial data in conjunction with
our consolidated financial statements and notes to our consolidated financial
statements and with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," which are included elsewhere in this prospectus. The
consolidated statement of operations data for each of the years ended December
31, 1997, 1998 and 1999, and the balance sheet data at December 31, 1998 and
1999 are derived from our consolidated financial statements which have been
audited by Arthur Andersen LLP and which are included elsewhere in this
prospectus. The consolidated statement of operations data for the period from
inception to December 31, 1996 and the balance sheet data at December 31, 1996
and 1997 are derived from audited consolidated financial statements not included
in this prospectus. The consolidated balance sheet data at March 31, 1999 is
derived from unaudited consolidated financial statements not included in this
prospectus. The consolidated balance sheet data at March 31, 2000 is derived
from unaudited consolidated financial statements included elsewhere in this
prospectus. See notes 4 and 14 of the notes to consolidated financial statements
for an explanation of the number of shares used to compute net loss per share
and pro forma net loss per share. The historical financial information may not
be indicative of our future performance and results of interim periods may not
be indicative of results that may be expected for any other interim period or
for the year as a whole.

<TABLE>
<CAPTION>
                                  PERIOD FROM                                                  QUARTER ENDED
                                APRIL 26, 1996           YEAR ENDED DECEMBER 31,                 MARCH 31,
                                (INCEPTION) TO     ------------------------------------   ------------------------
                               DECEMBER 31, 1996      1997         1998         1999         1999         2000
                               -----------------   ----------   ----------   ----------   ----------   -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)                                                 (UNAUDITED)
<S>                            <C>                 <C>          <C>          <C>          <C>          <C>
CONSOLIDATED STATEMENT OF
  OPERATIONS DATA:
Revenue......................     $      277       $    3,354   $    5,378   $    9,556   $    1,273   $     6,837
Cost of revenue..............            168            1,136        3,433       11,955        1,076         7,865
                                  ----------       ----------   ----------   ----------   ----------   -----------
Gross margin.................            109            2,218        1,945       (2,399)         197        (1,028)
                                  ----------       ----------   ----------   ----------   ----------   -----------
Operating expenses:
  Research and development...          2,650            2,715        2,333        3,717          457         2,076
  Sales and marketing........            256            2,058        2,685        4,480          391         2,319
  General and
    administrative...........            656            1,944        2,611        4,663          878         1,066
                                  ----------       ----------   ----------   ----------   ----------   -----------
    Total operating
      expenses...............          3,562            6,717        7,629       12,860        1,726         5,461
                                  ----------       ----------   ----------   ----------   ----------   -----------
Loss from operations.........         (3,453)          (4,499)      (5,684)     (15,259)      (1,529)       (6,489)
Other income (expense) net...             (9)              23          178       (3,210)          16           221
                                  ----------       ----------   ----------   ----------   ----------   -----------
Net loss.....................     $   (3,462)      $   (4,476)  $   (5,506)  $  (18,469)  $   (1,513)  $    (6,268)
                                  ==========       ==========   ==========   ==========   ==========   ===========
Net loss per common share:
  Basic and diluted..........     $    (1.11)      $    (1.54)  $    (2.06)  $    (6.13)  $    (0.58)  $     (2.21)
                                  ==========       ==========   ==========   ==========   ==========   ===========
  Weighted average shares
    outstanding..............      3,237,210        3,237,210    3,237,210    3,242,807    3,237,210     3,339,998
                                  ==========       ==========   ==========   ==========   ==========   ===========
Pro forma net loss per share
  (unaudited)(1):
  Basic and diluted..........                                                $    (2.19)  $    (0.21)  $     (0.57)
                                                                             ==========   ==========   ===========
  Weighted average shares
    outstanding..............                                                 9,066,423    9,050,760    12,827,825
                                                                             ==========   ==========   ===========
</TABLE>

                                       21
<PAGE>   25

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,                  MARCH 31,
                                                     ---------------------------------------   -----------
                                                      1996      1997       1998       1999        2000
                                                     -------   -------   --------   --------   -----------
(IN THOUSANDS)                                                                                 (UNAUDITED)
<S>                                                  <C>       <C>       <C>        <C>        <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents..........................  $ 1,262   $ 1,927   $  3,497   $ 25,455    $ 14,065
Working capital....................................      274       937      3,383     15,769       8,395
Total assets.......................................    3,065     3,879      6,184     38,118      31,673
Long-term obligations, net of current portion......       --        --         --        106          89
Convertible and redeemable preferred stock.........    4,316     9,769     14,812     43,805      44,833
Common stock.......................................        3         3          3          3           3
Accumulated deficit................................   (3,462)   (7,937)   (15,249)   (35,122)    (42,489)
Stockholders' equity (deficit).....................     (752)   (1,100)   (14,625)   (31,128)    (38,341)
</TABLE>

---------------
(1) See notes 4 and 14 of the notes to the consolidated financial statements for
    an explanation of the determination of the number of shares and share
    equivalents used in computing pro forma per share amounts.

                                       22
<PAGE>   26

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

     The following discussion of our consolidated financial condition and
results of operations should be read in conjunction with our consolidated
financial statements and related notes included elsewhere in this prospectus.
This prospectus contains certain statements of a forward-looking nature relating
to future events or our future financial performance. We caution prospective
investors that such statements involve risks and uncertainties, and that actual
events or results may differ materially. In evaluating such statements,
prospective investors should specifically consider the various factors
identified in this prospectus, including the matters set forth under the caption
"Risk Factors" contained elsewhere in this prospectus which could cause actual
results to differ materially from those indicated by such forward-looking
statements.

OVERVIEW

     We are a leading provider of wireless data access solutions. Since our
inception in April 1996, we have been focused on the development and
commercialization of two-way wireless data communications technologies. We
launched our NRM-6812 OEM module in September 1996, our Sage and first Minstrel
products in 1997, our Minstrel II Wireless Modem and Expedite Wireless Modem in
April 1999 and our Merlin Type II Wireless Modem in August 1999. In addition, we
announced our Minstrel V Wireless Modem for the Palm V handheld computing device
in October 1999 and our Lancer 3W Modem in April 2000.

     Since our inception, we have incurred substantial costs to develop our
technology and products, to recruit and train personnel for our product
development, sales and marketing and professional services departments, and to
establish our administrative infrastructure. Historically, our operating
expenses have exceeded the revenue generated by our products and services. As a
result, we have incurred net operating losses in each quarter since inception
and had an accumulated deficit of $42.5 million as of March 31, 2000. In
addition, we have increased our number of employees and independent contractors
from 56 as of December 31, 1998 to 219 as of June 30, 2000.

     We have entered into, and expect to continue to enter into, significant
customer contracts for the development and supply of our products. These
contracts may place significant demands on our resources. As a result, we expect
research and development, sales and marketing and other costs relating to the
development, manufacture and sale of our products to increase. We also expect to
continue to incur these expenses in periods prior to recognizing revenue from
these contracts.

     Revenue. Our revenue has been generated from the sale of wireless modems to
wireless telecommunications operators, wireless data content and service
providers, resellers and OEM customers. We also generate revenue from the
systems activation and integration services we provide prior to shipping;
through March 31, 2000, such revenue has not been significant. Revenue from
product sales and services is recognized upon the later of transfer of title or
upon shipment of the product to the customer and rendering services. We
establish reserves for estimated product returns and allowances in the period in
which revenue is recognized.

     Cost of Revenue. Our cost of revenue typically consists of material
components, labor for system assembly and testing, product activations,
technical support, warranty costs and overhead expenses. We currently outsource
our manufacturing operations to third parties to minimize our capital
expenditures and to benefit from contract manufacturer economies of scale.

     Gross Margin. Our overall gross margin, or revenue less cost of revenue,
may fluctuate from quarter to quarter as a result of the availability and costs
of components, shifts in product mix, the proportion of direct and indirect
sales, anticipated decreases in average selling prices and our ability to manage
manufacturing costs.

     Research and Development. Our research and development expenses consist of
employee compensation, related personnel expenses, consultant fees and prototype
expenses related to the design, development,
                                       23
<PAGE>   27

testing and enhancement of our products. Our research and development costs are
expensed as incurred. We believe that continued investment in research and
development is critical to achieving our strategic product development and cost
reduction objectives and, as a result, expect these expenses to continue to
increase significantly in absolute dollars in the future.

     Sales and Marketing. Our sales and marketing expenses consist of employee
compensation, sales commissions and related expenses for personnel engaged in
marketing, sales and field service support and advertising and promotional
materials. We anticipate that sales and marketing expenses will increase in
future quarters as we increase sales and marketing operations, expand
distribution channels, increase the number of sales and marketing personnel and
increase our international sales efforts.

     General and Administrative. Our general and administrative expenses consist
of employee compensation and related personnel expenses, recruiting and
relocation expenses, professional and consulting fees, and other general
corporate expenses. We expect these expenses to increase as we increase the
number of personnel and incur additional costs related to our operation as a
public company.

     Stock-Based Compensation Expense. We recorded deferred compensation expense
of $1.4 million as a result of stock options granted below fair value for
accounting purposes through March 31, 2000. This amount represents the
difference between the exercise price of these stock option grants and the
estimated fair value of the underlying common stock at the time of grant. Of
this amount, we have amortized approximately $444,000 through March 31, 2000.
The remaining $986,000 will be amortized over the remaining vesting period of
the options, which is generally four years.

RESULTS OF OPERATIONS

     The following table sets forth our consolidated statements of operations
expressed as a percentage of revenue for the periods indicated. Data for the
period from inception through December 31, 1996 is not presented because revenue
for that period was not material.

<TABLE>
<CAPTION>
                                                                                QUARTER ENDED
                                                  YEAR ENDED DECEMBER 31,         MARCH 31,
                                                 --------------------------    ---------------
                                                  1997      1998      1999      1999     2000
                                                 ------    ------    ------    ------    -----
                                                           (AS A PERCENT OF REVENUE)
<S>                                              <C>       <C>       <C>       <C>       <C>
Revenue......................................     100.0%    100.0%    100.0%    100.0%   100.0%
Cost of revenue..............................      33.9      63.8     125.1      84.5    115.0
                                                 ------    ------    ------    ------    -----
Gross margin.................................      66.1      36.2     (25.1)     15.5    (15.0)
                                                 ------    ------    ------    ------    -----
Operating expenses:
  Research and development...................      80.9      43.4      38.9      35.9     30.4
  Sales and marketing........................      61.4      49.9      46.9      30.7     33.9
  General and administrative.................      58.0      48.5      48.8      69.0     15.6
                                                 ------    ------    ------    ------    -----
     Total operating expenses................     200.3     141.8     134.6     135.6     79.9
                                                 ------    ------    ------    ------    -----
Loss from operations.........................    (134.2)   (105.6)   (159.7)   (120.1)   (94.9)
                                                 ------    ------    ------    ------    -----
Interest income..............................       0.7       3.3       0.5       1.3      3.1
Interest expense.............................        --        --     (34.2)       --     (0.2)
Other, net...................................        --        --       0.1        --      0.3
                                                 ------    ------    ------    ------    -----
Net loss.....................................    (133.5)%  (102.3)%  (193.3)%  (118.8)%  (91.7)%
                                                 ======    ======    ======    ======    =====
</TABLE>

QUARTER ENDED MARCH 31, 2000 COMPARED TO QUARTER ENDED MARCH 31, 1999

     Revenue. Revenue for the quarter ended March 31, 2000 increased $5.5
million, or 437%, to $6.8 million compared to $1.3 million for the same period
in 1999. In 2000, sales of existing products increased due to the overall
increase in demand for wireless products. New products contributed to the
overall sales increases with the introduction of the Expedite Wireless Modem in
April 1999, the Merlin Type II Wireless Modem in August 1999 and the Minstrel V
Wireless Modem in October 1999.

                                       24
<PAGE>   28

     Cost of Revenue. Our cost of revenue for the quarter ended March 31, 2000
increased $6.8 million, or 631%, to $7.9 million compared to $1.1 million in the
same period in 1999. The increase in cost of revenue was primarily the result of
increased units sold, start-up costs associated with the production of new
products, increases in the cost of raw materials and costs associated with
changing manufacturers and moving production during the latter half of 1999.

     Gross Margin. Our gross margin for the quarter ended March 31, 2000
decreased by $1.2 million, or 622%, to negative $1.0 million compared to
$200,000 in the same period in 1999. This decrease was primarily the result of
the manufacturing changes and cost increases described above.

     Research and Development. Our research and development expenses for the
quarter ended March 31, 2000 increased $1.6 million, or 354%, to $2.1 million
compared to $500,000 in the same period in 1999. The increase was primarily due
to an increase in the number of personnel and to an increase in the number of
projects in development.

     Sales and Marketing. Sales and marketing expenses for the quarter ended
March 31, 2000 increased $1.9 million, or 493%, to $2.3 million compared to
$400,000 in the same period in 1999. The increase was the result of increased
headcount, expanded advertising, increased participation in trade shows and
increased expenditures to support new products and expand distribution channels.

     General and Administrative. General and administrative expenses for the
quarter ended March 31, 2000 increased $200,000, or 21.4%, to $1.1 million
compared to $900,000 in the same period in 1999. Included in general and
administrative expenses is $109,000 of non-cash stock-based compensation expense
(the difference between the exercise price of options granted and the estimated
fair value of the common stock underlying those options on the date of grant) in
2000 compared to $69,000 in 1999.

     Interest Income. Interest income for the quarter ended March 31, 2000
increased $198,000 to $215,000 compared to $17,000 in 1999. The increase was due
to income on the proceeds from the Series C financing which closed on December
31, 1999.

     Net Loss. The net loss for the quarter ended March 31, 2000 increased $4.8
million, or 314%, to $6.3 million compared to $1.5 million in 1999.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998

     Revenue. Revenue for 1999 increased $4.2 million, or 78%, to $9.6 million
compared to $5.4 million in 1998. In 1999, sales of existing products increased
due to the overall increase in demand for wireless products. New products also
contributed to the overall sales with the introduction of the Expedite Wireless
Modem in April 1999 and the Merlin Type II Wireless Modem in August 1999.

     Cost of Revenue. Our cost of revenue for 1999 increased $8.5 million, or
248%, to $12.0 million compared to $3.4 million in 1998. The increase in cost of
revenue was primarily the result of increased units sold, start-up costs
associated with the production of new products and costs associated with
changing manufacturers and moving production during the year. Prior to 1999, we
used offshore contract manufacturers. In the first quarter of 1999, our
principal manufacturer experienced financial difficulties as a result of the
general downturn in the Asian economies and, as a result, ceased production of
our finished goods. To maintain production levels in the short-term, we and our
new manufacturer were forced to purchase raw materials for immediate delivery at
premium prices. We also incurred substantial start-up costs associated with
commencing production at our new manufacturer's facility.

     Gross Margin. Gross margin for 1999 decreased by $4.3 million, or 223%, to
negative $2.4 million compared to $1.9 million in 1998. This decrease was
primarily the result of the manufacturing changes and cost increases described
above.

     Research and Development. Research and development expenses for 1999
increased $1.4 million, or 59%, to $3.7 million compared to $2.3 million in
1998. The increase was primarily due to an increase in the number of personnel
and to an increase in the number of projects in development.

                                       25
<PAGE>   29

     Sales and Marketing. Sales and marketing expenses for 1999 increased $1.8
million, or 67%, to $4.5 million compared to $2.7 million in 1998. The increase
was the result of increased headcount, expanded advertising, increased
participation in trade shows and expenditures to support new products and to
expand our distribution channels.

     General and Administrative. General and administrative expenses for 1999
increased $2.1 million, or 79%, to $4.7 million compared to $2.6 million in
1998. This increase was due to an increase in the number of personnel from 1998
to 1999 and our relocation of the administrative functions from Calgary to San
Diego. We recorded $220,000 in non-cash compensation expense (the difference
between the exercise price of options granted and the estimated fair value of
the common stock underlying those options on the date of grant) in 1999 compared
to $115,000 in 1998.

     Interest Expense. Interest expense amounted to $3.3 million for 1999 due to
the non-cash charges we incurred in connection with the convertible subordinated
debentures that we issued and sold in 1999 and the related common stock warrants
issued in connection with these debentures. We did not incur any interest
expense during 1998.

     Interest Income. Interest income for 1999 decreased $131,000, or 74%, to
$47,000 compared to $178,000 in 1998. The decrease was due to lower average cash
invested in 1999 compared to 1998.

     Net Loss. The net loss for the year ending December 31, 1999 increased
$13.0 million, or 235%, to $18.5 million compared to $5.5 million in 1998.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31, 1997

     Revenue. Revenue for 1998 increased $2.0 million, or 60%, to $5.4 million
compared to $3.4 million in 1997. This increase reflects the introduction of the
original Minstrel, Sage and Contact products in late 1997. Shipments of these
new products accounted for $1.5 million of the increase in our 1998 revenue. Our
existing products accounted for the remaining increase.

     Cost of Revenue. Our cost of revenue for 1998 increased $2.3 million, or
202%, to $3.4 million compared to $1.1 million in 1997. The increase in cost of
revenue was the result of the costs of increased units sold and the start-up
costs associated with the production of new products.

     Gross Margin. Gross margin for 1998 decreased by $300,000, or 12%, to $1.9
million compared to $2.2 million in 1997. This decrease was primarily the result
of the factors described above.

     Research and Development. Research and development expenses for 1998
decreased $400,000, or 14%, to $2.3 million compared to $2.7 million in 1997.
Fiscal year 1997 included approximately $500,000 for research and development
costs to further projects we commenced in 1996.

     Sales and Marketing. Sales and marketing expenses for 1998 increased
$600,000, or 30%, to $2.7 million compared to $2.1 million in 1997. The increase
was the result of increased headcount, expanded advertising and increased
participation in trade shows. During 1998, we also increased marketing
expenditures to support new products and expand our distribution channels.

     General and Administrative. General and administrative expenses for 1998
increased $700,000, or 34%, to $2.6 million compared to $1.9 million in 1997.
This increase was primarily due to additions to our senior management team and
administrative personnel. In addition, we recorded $115,000 in non-cash
compensation expense in 1998 compared to none in 1997.

     Interest Income. Interest income for 1998 increased $155,000 to $178,000
compared to $23,000 in 1997. This increase was due to additional interest income
earned on our increased average cash and short-term investment balances.

     Net Loss. The net loss for the year ending December 31, 1998 increased $1.0
million or 23% to $5.5 million compared to $4.5 million in 1997.

                                       26
<PAGE>   30

SELECTED QUARTERLY RESULTS OF OPERATIONS

     The following table sets forth our historic unaudited quarterly
consolidated statements of operations data for each of the five fiscal quarters
ended March 31, 2000, and such information expressed as a percentage of our
revenue. This unaudited quarterly information has been prepared on the same
basis as the annual audited financial statements appearing elsewhere in this
prospectus, and includes all necessary adjustments, consisting only of normal
recurring adjustments, that we consider necessary to present fairly the
financial information for the quarters presented. The quarterly data should be
read in conjunction with the audited consolidated financial statements and the
notes thereto appearing elsewhere in this prospectus.

<TABLE>
<CAPTION>
                                                                 QUARTER ENDED
                                          -----------------------------------------------------------
                                          MARCH 31,    JUNE 30,    SEPT. 30,    DEC. 31,    MARCH 31,
                                            1999         1999        1999         1999        2000
                                          ---------    --------    ---------    --------    ---------
                                                                (IN THOUSANDS)
<S>                                       <C>          <C>         <C>          <C>         <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
  DATA:
Revenue.................................   $ 1,273     $   822      $ 3,825     $ 3,636      $ 6,837
Cost of revenue.........................     1,076       1,452        2,594       6,834        7,865
                                           -------     -------      -------     -------      -------
Gross margin............................       197        (630)       1,231      (3,198)      (1,028)
                                           -------     -------      -------     -------      -------
Operating expenses:
  Research and development..............       457         578          891       1,792        2,076
  Sales and marketing...................       391         988        1,175       1,925        2,319
  General and administrative............       878         936        1,957         892        1,066
                                           -------     -------      -------     -------      -------
Total operating expense.................     1,726       2,502        4,023       4,609        5,461
                                           -------     -------      -------     -------      -------
Loss from operations....................    (1,529)     (3,132)      (2,792)     (7,807)      (6,489)
Interest income.........................        17           8            8          15          215
Interest expense........................        --          --       (1,268)     (2,000)         (11)
Other, net..............................        (1)         --           --          12           17
                                           -------     -------      -------     -------      -------
Net loss................................   $(1,513)    $(3,124)     $(4,052)    $(9,780)     $(6,268)
                                           =======     =======      =======     =======      =======
</TABLE>

<TABLE>
<S>                                        <C>          <C>         <C>          <C>        <C>
AS A PERCENTAGE OF REVENUE:
Revenue..................................    100.0%      100.0%       100.0%      100.0%      100.0%
Cost of revenue..........................     84.5       177.0         67.8       187.9       115.0
                                            ------      -------      ------      ------       -----
Gross margin.............................     15.5       (77.0)        32.2       (87.9)      (15.0)
                                            ------      -------      ------      ------       -----
Operating expenses:
  Research and development...............     35.9        70.3         23.3        49.3        30.4
  Sales and marketing....................     30.7       120.3         30.7        52.9        33.9
  General and administrative.............     69.0       113.9         51.2        24.5        15.6
                                            ------      -------      ------      ------       -----
Total operating expense..................    135.6       304.5        105.2       126.7        79.9
                                            ------      -------      ------      ------       -----
Loss from operations.....................   (120.1)     (381.5)       (73.0)     (214.6)      (94.9)
Interest income..........................      1.3         1.0          0.2         0.4         3.1
Interest expense.........................       --        --          (33.2)      (55.0)       (0.2)
Other, net...............................       --        --             --         0.3         0.3
                                            ------      -------      ------      ------       -----
Net loss.................................   (118.8)%    (380.5)%     (106.0)%    (268.9)%     (91.7)%
                                            ======      =======      ======      ======       =====
</TABLE>

     We have experienced and expect to continue to experience significant
fluctuations in quarterly operating results. We believe that quarter-to-quarter
comparisons of our operating results should not be relied upon as an indication
of our future performance.

     See "Risk Factors -- Because we have been operating only since 1996, our
historic operating results may not be meaningful to an investor evaluating our
company" and " -- The fluctuation of our quarterly operating results may cause
our stock price to decline."

                                       27
<PAGE>   31

LIQUIDITY AND CAPITAL RESOURCES

     Since our inception, we have funded our operations primarily through
private sales of our equity securities and the issuance of debt instruments, and
to a lesser extent, capital lease arrangements and borrowings under various
lines of credit. To date, net proceeds from these transactions have totaled
approximately $78 million. At June 30, 2000 we had approximately $32.7 million
in cash and cash equivalents.

     For the years ended December 31, 1997, 1998 and 1999, we used net cash in
operating activities of $3.5 million, $5.0 million and $5.2 million,
respectively. Our operating activities included major uses of cash to fund our
1999 net loss of $18.5 million which included a $3.3 million non-cash charge for
interest expenses related to the warrants we issued with our convertible
subordinated debentures. During 1999, we used cash in operating activities by
increasing our due-from-supplier account by $4.7 million, inventories by $4.1
million and accounts receivable by $900,000, and generated cash flows by
increasing accounts payable and accrued expenses by approximately $11.0 million
and our deferred revenue increased by $8.1 million. Our net cash used in
operating activities in the first quarter of 2000 amounted to $10.1 million.

     Our net cash used in investing activities in 1999 was $600,000, which was
primarily for purchases of property and equipment. Our net cash used in
investing activities in 1997 and 1998 was $800,000 and $300,000, respectively,
and $1,400,000 during the quarter ending March 31, 2000, and was also primarily
for purchases of property and equipment. These capital expenditures were
primarily investments for equipment to test our products and to support our
business.

     Cash provided from financing activities, consisting primarily of net
proceeds from the sale of our equity securities, was approximately $4.7 million
for the year ending December 31, 1997, $7.2 million for the year ending December
31, 1998, $27.7 million for the year ending December 31, 1999 and $21,000 during
the quarter ending March 31, 2000.

     We believe that our available cash reserves, which includes proceeds from
the sale of our Series D preferred stock completed in June and July 2000,
together with the estimated net proceeds of this offering, will be sufficient to
fund operations and to meet our working capital needs and anticipated capital
expenditures for at least the next twelve months. We do not anticipate
significant capital expenditures over the course of the next twelve months. We
may also use a portion of the net proceeds to invest in complementary products,
to license other technology or to make acquisitions. Thereafter, we may raise
additional funds to fund more rapid expansion of our business, fund unexpected
expenditures, continue to develop new products and enhancements to our current
products, or acquire technologies or businesses. Additional financing may not be
available when needed, on favorable terms, or at all.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We do not currently use derivative financial instruments. We generally
place our marketable security investments in high credit quality instruments,
primarily U.S. Government obligations and corporate obligations with contractual
maturities of less than one year. We do not expect any material loss from our
marketable security investments and therefore believe that our potential
interest rate exposure is not material; however, these investments are subject
to interest rate risk. We do not currently enter into foreign currency hedge
transactions. Through June 30, 2000, foreign currency fluctuations have not had
a material impact on our financial position or results of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

     In 1998, the Financial Accounting Standards Board, or FASB, issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" and in June
1999 issued SFAS No. 137, "Accounting for Derivatives and Hedging
Activities -- Deferral of the Effective Date of FASB Statement No. 133." Under
SFAS No. 133, derivatives not meeting hedge criteria are recorded in the balance
sheet as either an asset or liability measured at fair value and changes in fair
value are recognized currently in earnings. The

                                       28
<PAGE>   32

Company will be required to implement SFAS No. 133, as amended by SFAS No. 137,
in fiscal 2001. The Company does not anticipate that the adoption of SFAS No.
133 and SFAS No. 137 will have a material impact on its financial position or
results of operations.

     In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 summarizes the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
SAB No. 101 is effective during the fourth quarter of fiscal 2000. Management
has reviewed the provisions of SAB No. 101 and does not believe that its
adoption thus far has had a material impact on the Company's financial position
or results of operations.

YEAR 2000 COMPLIANCE

     As a result of the change over from 1999 to 2000, none of our systems or
products was affected nor are we aware of any significant issues that have
affected our third-party suppliers or customers.

                                       29
<PAGE>   33

                                    BUSINESS

OVERVIEW

     We are a leading provider of wireless data modems and software for use with
handheld computing devices and portable personal computers. We also provide
wireless data modems which can be integrated into other devices for a wide range
of vertical applications. We also offer provisioning, activation and systems
integration services to our customers to facilitate use of our products.

     We have a strong history of designing innovative wireless access products.
We designed and delivered the first products to enable wireless connectivity for
the Palm family of handheld computing devices. We have successfully developed
and are continuing to develop solutions that enable our customers to wirelessly
access data utilizing a wide range of mobile computing devices across a broad
range of wireless data network technologies. Our current product portfolio
includes the following:

     - The Minstrel line of Wireless Modem cradles, for the Palm family of
       handheld computing devices and the Casio E-15 Windows Pocket PC handheld
       device;

     - The Merlin Type II PC Card for portable and desktop PCs;

     - The Sage Wireless Modem for portable and desktop PCs;

     - The NRM-6812 and Expedite Wireless OEM Modems for custom integration with
       computers and other devices; and

     - The Lancer 3W Wireless Modem for vehicle-mounted applications.

     Our core modem technology is easily customized to address a broad range of
vertical applications. Our customers include wireless telecommunications
operators such as Verizon Wireless and AT&T Wireless (which services our
products, through its distribution partner Global Data Wireless) as well as
wireless data content and service providers such as OmniSky, GoAmerica and
CreSenda. We also have OEM customers such as @Road, Harvest/Coca Cola and
KeyCorp and we have entered into strategic technology and development
relationships within the wireless communications industry with Hewlett-Packard,
Metricom, OmniSky, Symbol and VoiceStream.

INDUSTRY BACKGROUND

     The convergence of mobile computing, wireless communications and the
Internet and enterprise networks is driving the rapidly expanding demand for
wireless data access. The explosion of the Internet and enterprise networks has
accelerated the development of applications for communications, information
access, content and commerce. As professionals and consumers increasingly depend
on the growing functionality, productivity and convenience that these
applications afford, they are demanding "anytime, anywhere" connectivity for
their mobile computing devices. International Data Corporation projects that by
the end of 2002, the number of worldwide mobile users with two-way
communications to the Internet could exceed the number of wired users.

Growth in Mobile Computing

     Competition and productivity demands are requiring an increasing number of
professionals to maintain remote and mobile access to the Internet, e-mail and
enterprise networks. International Data Corporation forecasts that the remote
and mobile workforce in the United States, defined as employees spending more
than 20% of their time on the job away from the office, will grow from 34
million individuals at the end of 1998 to 47 million at the end of 2003. This
trend towards mobile computing has led to the increased use of handheld
computing devices and portable PCs both on the road and in the office.
International Data Corporation projects that worldwide shipments of handheld
companions will grow from approximately 4 million in 1998 to approximately 19
million units in 2003, and that portable PC shipments will grow from
approximately 15 million in 1998 to approximately 33 million in 2003.

                                       30
<PAGE>   34

Growth in Wireless Communications

     The adoption of digital wireless voice communications has grown rapidly due
to improved service, declining prices, expanding network coverage and the
availability of extended service features such as voice and text messaging.
Dataquest projects that the number of worldwide digital wireless subscribers
will grow from approximately 217 million at the end of 1998 to approximately 828
million by the end of 2003. Recent developments in wireless data technology,
increased network coverage and deployment of digital data networks combined with
price reductions for data communications have enabled the adoption of wireless
data applications such as e-mail, financial services, news and lifestyle
content.

     There are currently several standards-based technologies for the
transmission and reception of wireless data. Existing digital wireless
communications technologies such as Time Division Multiple Access (TDMA), Code
Division Multiple Access (CDMA) and Global System for Mobile Communications
(GSM), collectively known as second generation, or 2G, wireless technologies,
offer low speed transmission rates. The transmission rates afforded by these
circuit-switched technologies are adequate for limited content applications such
as short messaging, financial services, news and other text-based applications.
Cellular Digital Packet Data (CDPD) technology is a packet-switched standard
that is deployed over traditional analog networks and provides a continuous
network connection at slightly higher transmission speeds.

     A new set of technologies, often referred to as 2.5G, is under development
to provide high-speed packet-based data services over GSM, CDMA and TDMA
networks. These 2.5G technologies are expected to support a broader set of data
applications, such as streaming media and web browsing. Packet-based technology
affords its users several advantages over circuit-switched systems, including
continuous connectivity and higher bandwidth performance, leading to significant
cost savings for data transmission. As a result, the 2.5G standards are expected
to generate even wider use of wireless data access devices. Third generation, or
3G, systems are being developed for longer-term deployment eventually to replace
2G and 2.5G digital wireless systems. 3G networks will provide for broadband
transmission rates enabling enhanced multimedia applications.

Growth in the Internet and Enterprise Networks

     The Internet has emerged as a global communications medium enabling
millions of people to deliver and share information and conduct business
electronically. The development of applications for the digital delivery of
products and services such as news, weather, stock quotes and trading, books,
music, driving directions and lifestyle information is increasing the everyday
use of the Internet. International Data Corporation estimates that the number of
worldwide Internet users will grow from approximately 142 million in 1998 to 602
million by the end of 2003. This dramatic growth has led to a proliferation of
information and services available on or through the Internet. As access speed
and the breadth of applications for the Internet increase, we believe the
Internet is quickly becoming a necessary medium for information access, commerce
and communication.

     Similarly, the proliferation of enterprise networks continues to drive the
increasing need for the remote retrieval and use of information. As wireless
data communications improve, and as business computing systems are redesigned to
integrate and manage wireless enterprise solutions, wireless Internet access
applications and services will increasingly play a key role in providing mobile
access to corporate information.

Convergence of Mobile Computing, Wireless Communications and the Internet and
Enterprise Networks

     The increase in demand for "anytime, anywhere" access is driving the
convergence of mobile computing, wireless communications and the Internet and
enterprise networks, creating new opportunities for wireless data products and
services. We have designed our wireless products to capitalize on these
opportunities and to afford increased mobile access to enterprise networks and
the Internet. We believe that demand for wireless data applications will
continue to increase as wireless data network coverage, bandwidth and security
improve to allow higher quality service. New wireless technologies that enable
high
                                       31
<PAGE>   35

speed access to the Internet allow service providers to offer end-users greater
access to a vast array of services and content. These offerings are expected to
increase usage, attract new customers and improve customer loyalty. Dataquest
estimates that the number of wireless data subscribers worldwide will grow from
approximately 16 million at the end of 1998 to approximately 111 million by the
end of 2003.

     As this convergence evolves, a large opportunity exists to develop wireless
connectivity applications for a wide range of vertical industry segments, such
as:

     - Securities Trading;

     - Enterprise Networking, for access to corporate databases and intranets
       and the facilitation of virtual office applications;

     - Field Services and Sales, to provide Web access, enterprise network
       access and contact management in the field;

     - Public Safety, for police, fire and ambulance related applications such
       as remote database access, information dissemination, police substation
       communication and electronic monitoring;

     - Transportation, for applications related to trucking and mobile dispatch,
       vehicle fleet management and location, driver communications, order entry
       and vehicle location and tracking;

     - Retail and Point of Sale Terminals, for applications such as remote
       credit card verification and automated teller machines; and

     - Vending System Monitoring.

Need for Cost-Effective Wireless Data Access for Mobile Computing Devices

     We believe that as mobile professionals and consumers increasingly depend
on the Internet and other enterprise computing applications, they will demand
convenient, cost-effective and user-friendly wireless data solutions for all
mobile computing devices. Until now, devices such as smart phones and two-way
pagers have been introduced to address this demand. Smart phones are enhanced
cellular telephones that are designed for voice applications rather than data
applications, and two-way paging devices allow users to access e-mail and other
information, but are not currently suited for interactive or large display
applications. While these products may adequately address low bandwidth
applications, such as messaging, we believe devices that allow greater display
and interactive capabilities, such as handheld computing devices and portable
PCs, are better suited for wireless data applications.

OUR SOLUTION

     We are a leading provider of integrated wireless data access solutions. We
provide a suite of wireless data modems and enabling software for use with
handheld computing devices and portable PCs and for vertical applications. We
provide our customers the following advantages:

Breadth of Wireless Access Products

     Our products enable both handheld computing devices and portable PCs to
access the Internet and enterprise networks wirelessly. We also provide wireless
modems which enable connections to a broad range of appliances for vertical
applications. We are developing additional capabilities for emerging wireless
networks in order to afford our customers maximum flexibility in choosing their
wireless data access solutions.

Price Performance Leadership

     We have designed our products to provide high levels of performance and
functionality at an attractive price to drive widespread adoption among users.
We use software solutions where others still use hardware and we build our
products around a core common hardware and software platform. As a result,

                                       32
<PAGE>   36

we are able to offer products which present a substantially better value
proposition than do other wireless data access products with similar
functionality.

Convenience

     Our products provide users with a wireless connection to the Internet and
enterprise networks with a focus on ease-of-use and real-time access to e-mail,
online content and critical personal and professional information. We have
designed our products to reduce their size and weight without sacrificing
performance. For example, our Minstrel modems for handheld computing devices are
lightweight and slip easily into a suit pocket or purse. We have also designed
our products to enhance range and functionality with low power requirements, so
that they can be used for extended periods of time without needing to recharge.
Moreover, we offer activation services to service providers prior to shipping so
that our products are ready for immediate use upon their delivery.

Productivity

     Our products improve productivity by enabling handheld computing devices
and portable PCs to be continuously connected to the Internet and enterprise
networks. Our products for handheld computing devices also enable wireless
synchronization so users can backup and access personal and professional data
from remote locations. These features allow mobile professionals to access and
manage data and information even while they are away from traditional work
settings, thereby significantly increasing their productivity.

Customized Solutions

     Our technology platform enables us to provide wireless data solutions for a
wide range of specialized applications and to adapt our products to specific
customer needs. We enable our OEM customers to provide their clients with
tailored solutions for vertical market applications such as securities trading,
public safety, transportation and retail and point of sale terminals. Our
engineering group assists with the integration of our wireless products to
provide comprehensive solutions to our customers.

OUR STRATEGY

     Our objective is to be the leading global provider of wireless data access
products. The key elements of our strategy are to:

Extend Our Technology Leadership

     We intend to continue developing higher speed integrated wireless data
access solutions to capitalize on the expansion of global wireless data access
technologies. We plan to rapidly develop new modem technologies based on
evolving wireless data standards and to offer customers a comprehensive range of
wireless access products for mobile computing devices. We also intend to
continue to apply our technological expertise to reduce the overall size,
weight, cost and power consumption of our products, while increasing their
capabilities and performance.

Drive Widespread Adoption of Our Products and Increased Market Penetration

     We intend to drive widespread adoption of our products through increased
global marketing activities, strategic pricing and expansion of our
international and direct sales distribution networks. We believe these efforts
will increase our revenue and our brand recognition. Our product pricing is an
important part of this strategy and we will continue to adjust our prices to
ensure market penetration by offering value to our customers. We also intend to
promote and extend our technology integration services which, in simplifying
customer use, will help ensure the widespread adoption of our products.

                                       33
<PAGE>   37

Expand and Develop Strategic Relationships

     We plan to build and expand on strategic relationships to improve the
design and functionality of our wireless access products and rapidly gain market
share. We intend to establish and maintain relationships with a strategic focus
on:

     - Wireless computing communications companies, such as our existing
       relationships with Hewlett-Packard, Symbol and VoiceStream, to extend our
       platform and expand distribution of our products;

     - Software applications companies, such as our existing relationships with
       FusionOne, Inc. AvantGo, Inc., Puma Technologies, Inc. and JP Systems,
       Inc. to offer a wide array of value-added applications for our customers;
       and

     - Technology companies, such as our existing relationships with Metricom,
       Inc. and TPP Communications Ltd. to accelerate the time to market and
       expand the capabilities of our new products.

Continue to Target Key Vertical Markets

     We market our products to key vertical industry segments by offering them
products that increase productivity, reduce costs and create operational
efficiencies. We are currently working with, among others, Harvest in vending
system monitoring, KeyCorp in retail/point of sale, @Road in vehicle tracking
and Symbol in inventory control. We believe that continuing improvements in
wireless computing technologies will create additional vertical markets and more
applications for our products.

Focus on Developing Value-added Applications

     Developing value-added applications to expand the capabilities of our
products will be an important factor in increasing the overall demand for and
the use of our products. As competition in our marketplace intensifies, we
believe that developing proprietary value-added applications for our products in
vertical enterprise markets will give us a competitive advantage and
differentiate us from our competitors. To this end, we may pursue acquisition
opportunities to extend our product lines and provide additional solutions to
our customers.

PRODUCTS

     We successfully deliver innovative and comprehensive solutions to our
customers. We currently offer a variety of wireless data access solutions to
OEMs, VARs, systems integrators, wireless telecommunications operators,
enterprise, mobile professionals and consumers. We delivered the first wireless
cradle modem for the Palm family of handheld computing devices and currently
provide the only commercially available wireless cradle modem for the Palm III
and Palm V product families. We also offer a Type II PC Card modem for portable
personal computers and Windows Pocket PC mobile computing devices.

                                       34
<PAGE>   38

     The following table describes our principal product lines:

<TABLE>
<CAPTION>
                 PRODUCT                                  APPLICATION
                 -------                                  -----------
<S>                                        <C>

WIRELESS CRADLE DEVICES
- Minstrel III Wireless Modem              - Palm III handheld device
- Minstrel E-15 Wireless Modem             - Casio E-15 Palm-Size PC
- Minstrel V Wireless Modem                - Palm V handheld device

WIRELESS PC CARD AND MODEMS
- Merlin Type II Wireless Modem            - Portable and desktop PCs
- Sage Wireless Modem                      - Portable and desktop PCs

OEM PRODUCTS
- Expedite Wireless Modem                  - point of sale terminals, automated
                                           teller machines, vehicle tracking
- NRM-6812 Wireless Modem                  - utility monitoring, vending system
- Lancer 3W Wireless Modem                 monitoring
                                           - public safety vehicle mounted
                                           applications
</TABLE>

Wireless Cradle Devices

     Our Minstrel family of wireless data modems adds two-way communications
capability to the Palm family of handheld computing devices, private labeled
derivatives and the Casio E-15 Windows Pocket PC handheld device. The Minstrel
wireless "cradles" maintain the key advantages of these devices: size, ease-
of-use, synchronization and customization. Minstrel provides users with complete
portable access to enterprise networks, e-mail and the Internet without the
limitation of wired connections. The Minstrel/ Palm handheld computing device
integrated product is lightweight and slips easily into a suit pocket or purse.
Minstrel can also be used with most third-party software developed for the Palm
family of handheld computing devices.

     The Minstrel III Wireless Modem offers two-way wireless data communications
on the Palm III connected organizers. Improvements to prior versions include a
smaller and thinner form factor, lighter weight and improved battery life. The
Minstrel E-15 Wireless Modem, which is designed exclusively for the Casio E-15
Windows Pocket PC handheld computer, offers two-way wireless data
communications. The Minstrel V Wireless Modem, which is designed for the Palm V
connected organizer and is currently branded by OmniSky for sales and
distribution, also offers two-way wireless data communications.

Wireless PC Cards and Modems

     Our Merlin Type II Wireless Modem, which was designed for Windows
95/98/2000/NT/Pocket PC computers, allows mobile professionals and consumers to
send and receive e-mail, and to connect wirelessly to their enterprise networks
and to the Internet.

     Our Sage Wireless Modem is a self-powered, external, wireless modem for
desktop PCs. The key strengths of Sage include its low price, extended battery
life and versatility. Sage provides its users with wireless access to e-mail,
enterprise networks and the Internet. Sage is also well suited for fixed
installations, particularly in situations where telephone lines are unavailable
or inconvenient.

OEM Products and Devices

     The Expedite Wireless Modem offers 0.6-watt full-duplex wireless CDPD modem
capabilities with minimal power requirements and a form factor almost four times
smaller than its predecessor. The Expedite's 3.6 volt power supply has an
extended battery life and is compatible with more integrated products. The
Expedite is currently used in numerous applications, including wireless
telemetry monitoring, inventory monitoring, point-of-sale terminals, automated
teller machines and automated vehicle location and tracking. The Expedite is
also priced below comparable products offered by our competitors, making it
extremely attractive to OEMs, VARs and systems integrators that require wireless
CDPD solutions. The
                                       35
<PAGE>   39

Expedite's small form factor, standards-based interfaces and adherence to
specifications, together with its simple design, make it easy for OEM customers
to incorporate a wireless CDPD solution into their existing or new product
lines.

     The forerunner of the Expedite, the NRM-6812 Wireless Modem, remains an
industry leader in terms of size, performance and cost. The NRM-6812 has a wider
temperature range and differing voltage levels than the Expedite, making it
preferable for certain types of wireless applications such as oil and gas
telemetry and vehicle tracking.

     The Lancer 3W is a wireless CDPD modem with extreme temperature tolerance
capabilities, high vibration tolerance and a ruggedized form factor which, with
input power voltage capabilities from 9 to 30 volts, is ideally suited for a
variety of applications ranging from public safety vehicle mounted applications
to field service and wireless telemetry monitoring. In addition, the Lancer 3W
has power saving capabilities offered by the "sleep mode," which maintains
network connection at low battery levels and reduces battery drainage. The
Lancer 3W is equipped with modem manager software and remote diagnostics which
allow users to monitor and control the modem remotely.

CURRENT WIRELESS TECHNOLOGY

     Wireless data communications are currently transmitted over various public
and private networks utilizing either circuit-switched data or packet-switched
data, such as Cellular Digital Packet Data (CDPD), ARDIS and Mobitex. The
following table outlines these technologies.

<TABLE>
<CAPTION>
  TECHNOLOGY STANDARD      DATA TRANSMISSION ATTRIBUTES      NOMINAL DATA RATES
  -------------------      ----------------------------      ------------------
<S>                       <C>                               <C>
Analog Circuit-Switched      Analog Circuit                    9.6 Kbps
  Data
Cellular Digital Packet      Digital Packet                    19.2 Kbps
  Data
ARDIS                        Digital Packet                    19.2 Kbps
Metricom                     Digital Packet                    28.8 Kbps
Mobitex                      Digital Packet                    9.6 Kbps
</TABLE>

     In a circuit-switched system the user is temporarily connected to the
network and pays for the total connection time. Although circuit-switched
systems cover a very broad geographical area, the newer packet networks have
significant performance, technical and economic advantages over circuit-switched
systems. CDPD uses a packet system which sends and receives content consisting
of individually addressed segments or "packets." The user is continually
connected to the network and pays either a flat monthly service fee or a fee
based on the amount of data transferred.

     We believe that one of our competitive advantages is our broad base of core
technologies. Currently, we offer products based on the CDPD standard. We have
developed and continue to build on the following key current technology areas:

     CDPD. CDPD is one of the most widely adopted wide-area wireless packet data
system in North and South America. CDPD technology enhances the efficiency of a
cellular channel, but is transparent within it, allowing the voice system's
capability and quality to remain unaffected. CDPD technology improves the
efficiency of existing cellular channel infrastructure as it detects idle
moments when cellular channels are unused, packages data in small packets and
sends it in short bursts. As a result, CDPD is an extremely cost-effective
solution for cellular carriers to offer data services. CDPD provides for access
at speeds up to 19.2 Kbps.

     Metricom. Metricom designs, provisions and operates digital networks and
services for mobile users. Metricom's Ricochet network, which is based upon
modified CDPD network technology, works by broadcasting signals back and forth
from transceivers mounted on utility poles to small radio modems connected to
subscribers' computers. Ricochet is generally available at speeds up to 28.8
Kbps in the greater San Francisco Bay Area, Seattle, Washington DC, selected
areas of New York City and selected

                                       36
<PAGE>   40

airports and college campuses. Metricom is currently under construction in 21
major service areas to bring its higher speed Ricochet II 128 Kbps network to
market, and ultimately expects to deploy a network in 46 markets covering 100
million in population.

EMERGING STANDARDS

     Current wireless data technologies work well with text-based applications
such as messaging and securities trading. Next generation wireless data
technologies are expected to allow for higher interaction levels, making
multi-media applications, such as Web browsing, appeal to a broader group of
wireless data users. 2.5G and 3G technologies based on GSM, TDMA, CDMA and
W-CDMA standards, will offer much higher bandwidth performance than existing
technology. These emerging standards, summarized in the following table, will
enable service providers to offer a broader range of wireless data services
relative to those currently available.

<TABLE>
<CAPTION>
TECHNOLOGY      DEVELOPMENT STAGE FOR           DATA TRANSMISSION        CURRENT/EXPECTED    2.5G/3G
 STANDARD         DATA TRANSMISSION                 ATTRIBUTES              DATA RATES      STANDARDS
----------   ----------------------------  ----------------------------  ----------------   ---------
<S>          <C>                           <C>                           <C>                <C>
GSM          Circuit-Switched and short    Digital Packet, Circuit-       14.4 Kbps/ 384    GPRS/
             messaging offered, standard   Switched                       Kbps              EDGE
             published for packet data
TDMA         Circuit-Switched and short    Digital Packet, Circuit-       9.6 Kbps/ 384     IS136
             messaging offered             Switched                       Kbps              GPRS/
                                                                                            EDGE
CDMA         Circuit-Switched and short    Digital Packet, Internet       14.4 Kbps/ 384    1XRTT/
             messaging offered, standard   Protocol, Circuit-Switched     Kbps 1-2 Mbps     3XRTT
             published for packet data
W-CDMA       Standard published for        Digital Packet                 115 Kbps/ 2       3Gpp
             digital packet voice, data                                   Mbps
             and multimedia
</TABLE>

     In addition to the products we offer based on current technology standards,
we are in the process of developing second and third generation versions of our
branded and OEM products that will include new technologies to enhance customer
usability and performance, as well as address new market opportunities. We
intend to develop solutions that build on the following emerging key technology
areas:

     GPRS. General Packet Radio Service (GPRS), commonly referred to as a 2.5G
standard, is a high-speed wireless packet data service that runs on GSM or TDMA
networks. GPRS is being adopted by many GSM and TDMA networks in North America,
Europe and Asia. GPRS is a packet network, allowing for always-on connectivity,
that offers data speeds up to 115 Kbps. This technology is expected to be
developed by major GSM carriers by the end of 2000.

     1XRTT. CDMAOne 2000 Phase 1 or 1XRTT, commonly referred to as a 2.5G
standard, is a spread spectrum technology, based on CDMA technology standards,
that forms the basis for 3G. CDMA is used primarily in North and South America,
Japan and South Korea. 1XRTT offers access speeds of up to 144 Kbps. This
technology is expected to be implemented by major CDMA carriers by the middle of
2001.

     W-CDMA. Wideband CDMA (W-CDMA), commonly referred to as a 3G standard, is a
high-speed wireless packet voice, data and multi-media services based on CDMA
technology. W-CDMA offers data speeds of up to 2 Mbps. W-CDMA technology is
adopted by major carriers and standard organizations as the global standard for
3G. This technology is expected to be implemented in Japan by the end of 2001
and in Europe and North America in 2003.

                                       37
<PAGE>   41

OUR TECHNOLOGY FOCUS

     In addition to developing products based on the technology standards
mentioned above, we have developed and continue to build on the following key
technology areas:

     Advanced Radio Frequency Design. Advanced Radio Frequency (RF) design is
the key technology that determines the performance of wireless devices. We have
specialized in the 800/900 MHz designs for analog and digital cellular, packet
data and spread spectrum systems. Our proprietary RF technology contributes to
the performance, small size and low cost of products. We are currently
developing the 1800 and 1900 MHz RF technology for future high speed wireless
systems including GPRS, 1XRTT and 3G technologies.

     Miniaturization and System Integration. Small systems integration is the
integration of application specific integrated circuits, RF, baseband and
packaging technologies. The complete wireless modem is packaged into a
sub-credit card module with the advent of proprietary integrated circuit design,
embedded software modem and multi-layer RF stripline technologies. We have one
of the smallest wireless modems available, the only pocket-sized wireless modem
for the Palm family of personal computing devices, and a Type II PC card modem.
We will continue to augment the miniaturization technology to drive down the
size and cost of current and future products.

CUSTOMERS

     Our customers include wireless telecommunications operators, wireless data
content and service providers, OEM customers, professionals and consumers. The
following is a representative selection of our customers:

<TABLE>
<CAPTION>
         WIRELESS
    TELECOMMUNICATIONS        WIRELESS DATA CONTENT AND SERVICE
    OPERATOR CUSTOMERS         PROVIDER AND RESELLER CUSTOMERS             OEM CUSTOMERS
    ------------------        ---------------------------------            -------------
<S>                           <C>                                <C>
Verizon Wireless              GoAmerica Communications Corp.     AirLink
AT&T Wireless(1)              CreSenda (Internet content         @Road (vehicle tracking)
Cellcom (Middle East)         provider)                          Harvest/Coca Cola (vending)
Movilnet (Latin America)      OmniSky                            IVI Checkmate
NTE (China)                                                      KeyCorp (mobile point of sale)
                                                                 Pivot International (voting
                                                                 booths)
                                                                 Symbol (inventory control)
</TABLE>

---------------
(1) AT&T currently sources our products through its distribution partner, Global
    Data Wireless.

     Each of the customers listed in the table above has accounted for at least
$50,000 in revenue to us since January 1, 1999. OmniSky, @Road and Pivot
International accounted for 24.2%, 23.6% and 13.0% of our revenue, respectively,
for the quarter ended March 31, 2000. @Road, OmniSky and AirLink accounted for
23.1%, 14.3% and 9.2% of our revenue, respectively, for the year ended December
31, 1999.

     Many of our customer relationships provide us with the opportunity to
expand our customer base and market reach. Among those mutually beneficial
relationships that augment our sales opportunities are the following:

     Wireless Telecommunications Operators. We work closely with our carrier
customers to generate demand for our products. Our carrier customers serve as an
important sales channel for our products. Verizon Wireless, which was recently
formed by AirTouch Communications, Bell Atlantic Mobile, GTE Wireless and
PrimeCo, sources our products through Global Data Wireless. AT&T Wireless also
sources our products, through its distribution partner Global Data Wireless.
Verizon Wireless and AT&T Wireless both maintain large sales forces that develop
sales opportunities for us. These sales leads are either consummated directly by
the carrier or jointly with our account executives. This approach allows us to
combine our wireless data expertise with the carriers' vast end-customer
relationships and broad sales reach. Our carrier customers also provide us and
our customers with important services, including field

                                       38
<PAGE>   42

trial participation, first-tier technical support, wireless data marketing and
access to additional indirect distribution channels. To leverage these services,
we provide carriers with early access to new products, technical training and
co-marketing resources.

     Wireless Data Content and Service Providers. Wireless data content and
service providers purchase our products either directly from us or from a
distributor and resell them to end-users. These providers typically integrate
our products with other elements and provide an overall wireless access solution
to the end-user in a particular field or vertical market. These solutions
include hardware, software and ongoing service components. Examples of our
content and service-provider customers include OmniSky and CreSenda.

     OEM Customers. Our OEM customers integrate our products into devices that
they manufacture and sell to end-users through their own direct sales forces and
indirect distribution channels. Our products are integrated into a broad range
of devices, including but not limited to, handheld computing devices, laptops,
vehicle location devices (AVLs), electric meters, vending machines, industrial
equipment, wireless credit processing and point of sale (POS). Major customers
include @Road, Harvest and KeyCorp. We build strong relationships with our OEM
customers because they rely heavily on our application engineering support
during the process of integrating our products into theirs.

STRATEGIC ALLIANCES

     We intend to develop and maintain strategic relationships within the
wireless communications industry which complement and expand our existing
distribution network and extend our technology and market reach. These
arrangements include strategic technology and marketing relationships with
providers of next generation wireless technology, application software
developers focused on wireless products, OEM customers which integrate our
products into other devices, value-added resellers, distributors, systems
integrators and cellular carriers. These strategic relationships allow us to
develop the most compelling wireless data products and provide us with access to
additional markets, channels of distribution and increased sales opportunities.
Our principal strategic alliances to date include the following:

     Hewlett-Packard Company. Hewlett-Packard is a leading global provider of
computing and imaging solutions and services and focuses on capitalizing on the
opportunities of the Internet and the proliferation of electronic services. In
March 2000, we entered into a supply agreement under which we will sell and
provide technical support for a wireless modem cradle for use with the HP
Jornada 540 Series Color Pocket PC.

     Metricom, Inc. Metricom designs, provisions and operates networks and
services for mobile users. Metricom operates a Ricochet wireless network, which
is a system that broadcasts signals back and forth from transceivers mounted on
utility poles to small radio modems connected to subscribers' computers.
Ricochet network coverage is generally available at speeds up to 28.8 Kbps in
the greater San Francisco Bay Area, Seattle, Washington, DC, selected areas of
New York City and selected airports and college campuses. Metricom is currently
under construction in 21 major service areas to bring the higher speed Ricochet
128 Kbps network to market, and ultimately expects to deploy a network in the
markets covering 100 million in population. In October 1999, we entered into a
license, manufacturing and purchase agreement with Metricom under which we will
custom develop a wireless radio modem compatible with Metricom's Ricochet
network. Metricom will also purchase modems during the term of the agreement,
which lasts until October 2001. We currently expect to begin shipping the modems
later this year.

     OmniSky Corporation. OmniSky offers a wireless service under its own brand
for use on handheld mobile devices. In July 1999, we entered into an agreement
with OmniSky, a wireless Internet service provider, for the development and sale
of our Minstrel III and Minstrel V cradle modems for the Palm III and Palm V
handheld computing devices. In November 1999, we began shipments to OmniSky.
Although the term of this agreement ended on May 1, 2000, we are currently
shipping and provisioning modems to OmniSky pursuant to the agreement.

     Symbol Technologies, Inc. Symbol is a manufacturer of bar code-driven data
transaction systems and is engaged in the design, manufacture and marketing of
bar code reading equipment, handheld computers
                                       39
<PAGE>   43

and radio frequency (RF) data communications systems. In March 2000, we entered
into an agreement with Symbol to integrate our Merlin OEM CDPD modems into
Symbol's radio frequency data communications systems.

     VoiceStream Wireless Corporation. VoiceStream is a leading provider of
digital wireless communications. Through a license from the FCC, VoiceStream
constructs and operates Personal Communication Service (PCS) networks. Nearly
three out of every four people in the United States live in areas licensed to be
served by VoiceStream or its affiliates. In March 2000, we entered into an
agreement with VoiceStream, under which we will develop three types of wireless
GPRS-PCS PC card modems for wireless mobile computing devices. The modems may be
co-branded by VoiceStream. VoiceStream will also purchase our modems during the
term of the agreement, which lasts until March 2003.

     Novatel Wireless Developer Program. Because of our commitment to mobile
computing platforms such as the Palm family of handheld computing devices,
Microsoft Windows Pocket PC, and Microsoft Windows 9x/NT, we formed the Novatel
Wireless Developer Program, which is a forum for us to work with application
software developers to develop wireless data products and markets. The mission
of the Developer Program is to encourage development of the best wireless data
solutions using our products, and successfully to market those solutions to our
customers. There are currently over 100 software developers enrolled in the
Novatel Wireless Developer Program. We have established a partner community
working together to create, deliver and support the best and most compelling
wireless data applications. Once these companies have a commercial software
package or service available, they are listed and promoted in the Wireless
Solutions Guide. This guide is available on our Web site and is frequently used
as a resource by internal sales personnel as well as carrier staff.

SALES AND MARKETING

     As of June 30, 2000, our sales and marketing organization consisted of 63
professionals, including those located in six sales offices throughout the
United States.

Sales

     We sell our products using a multi-channel distribution model which
includes both direct and indirect sales. In order to maintain strong sales
relationships, we provide co-marketing, trade show, low-cost sales demo unit and
joint press release support. In addition to our direct sales relationships with
carriers and service providers, OEMs and VARs, we sell our products through the
following channels:

     - Domestic Distributors. In the United States, we sell our products through
       dedicated domestic distributors. As of June 30, 2000, our domestic
       distributors were D&H Distributing Company, Global Data Wireless and
       Ingram Micro.

     - International Distributors. We sell our products through international
       distributors in Latin America, Israel, the Far East and New Zealand. As
       of June 30, 2000, our international distributors were Bismark, Insite,
       Cellcom and Golden Net.

     - Mail-Order and Internet Catalogs. We sell our products to mail-order and
       Internet catalogues, including CDW, Mobile Planet, Multiple Zone,
       Outpost.com, PC Connection and PC Mall.

     - Direct End-User Sales. Some end-users purchase products directly from us.
       Direct sales are facilitated through our Web site and our toll-free
       telephone number.

Marketing

     We support our sales efforts through a variety of marketing initiatives.
Our marketing organization focuses on creating market awareness of and promoting
our products, generating sales leads, maintaining strong customer relationships,
and developing interest in and demand for our products in new market segments.

                                       40
<PAGE>   44

     We engage in a wide variety of marketing initiatives, which include:

     - conducting marketing programs in conjunction with industry, business and
       trade publications;

     - building awareness for our products and the Novatel Wireless brand
       through a wide variety of media;

     - participating in industry and technology related trade shows,
       associations and conferences; and

     - engaging in cooperative marketing programs and partnerships.

     We also conduct extensive market research through our end-users,
third-party developer community and channel customers. We use this information
on a continuous basis to refine our product development and the position and
assortment of our products in our sales channels.

PRODUCT DEVELOPMENT

     Our product development efforts are focused on developing innovative
products and improving the functionality, design and performance of our existing
products. We intend to continue to identify and respond to our customers' needs
by introducing new product designs with an emphasis on innovations in the
ease-of-use, performance, size, weight, cost and power consumption of our
products. We are also currently developing technology and products for high
bandwidth wireless applications to address opportunities presented by the next
generation of public and private wireless networks.

     Our product development effort is driven by a highly skilled and
experienced team. The core members of our research and development team have
worked together for over 16 years, and the entire team has benefited from a low
turnover rate in an intensely competitive environment for skilled engineers.
While we have developed most new products and enhancements to existing products
internally, we have also licensed technology from third parties.

     We manage our products through a structured life cycle process, from
identifying customer requirements through development and commercial
introduction to eventual phase-out. Product development emphasis is placed on
time-to-market, meeting industry standards and end-item product specifications,
ease of integration, cost reduction, manufacturability, quality and reliability.

     We believe that our future success will depend, in part, on our ability to
identify and respond to emerging technological trends in our target markets,
develop and maintain competitive products, enhance our existing products by
adding features and functionality that differentiate them from those of our
competitors, and bring products to market on a timely basis. As a result, we
have devoted a significant portion of our resources to product development, and
we intend to continue making substantial investments in research and
development.

     For the three months ended March 31, 2000, our research and development
expense totaled $2.1 million. Our research and development expense totaled
approximately $3.7 million for the year ended December 31, 1999, $2.3 million
for the year ended December 31, 1998 and $2.7 million for the year ended
December 31, 1997. As of June 30, 2000, we had 123 engineering and technical
professionals in product development and manufacturing, which includes
purchasing, fulfillment, quality assurance, quality control, reliability,
technical documentation and technical publication.

MANUFACTURING

     We currently outsource our manufacturing operations to Sanmina Corporation.
In September 1999, we entered into a two-year agreement with Sanmina for the
manufacture of our products. Under the agreement, Sanmina provides all component
procurement, product manufacturing, final assembly, testing, quality control and
delivery services for us. Under this agreement, we are required to provide
Sanmina with firm purchase orders covering a minimum period of three months.
Recently, we moved our principal manufacturing operations from Sanmina's
facility in Calgary, Canada to its facility in Guntersville,

                                       41
<PAGE>   45

Alabama. In April 2000, we entered into a manufacturing agreement with GVC
Corporation. We expect GVC to begin manufacturing some of our products at its
facilities in Taiwan in the near future.

     Our outsourced manufacturing activity allows us to:

     - focus on our core competencies;

     - minimize our capital expenditures;

     - participate in contract manufacturer economies of scale and achieve rapid
       production scalability by adjusting to manufacturing volumes quickly to
       meet changes in demand;

     - access best-in-class manufacturing resources; and

     - operate without dedicating any space to manufacturing operations.

     We believe that additional assembly line efficiencies are realized due to
our product architecture and our commitment to process design. The components
that make up our products are supplied by a number of vendors. Direct materials
for our products consist of tooled parts such as printed circuit boards, molded-
plastic components, unique metal components and application-specific integrated
circuits (ASICs), as well as industry-standard components such as transistor,
integrated circuits, piezo-electric filters, duplexers, inductors, resistor and
capacitors, many of which are similar to components used in cellular telephone
handsets. Although we generally use standard components for our products and try
to maintain alternative sources of supply, some components, such as
printed-circuit boards, molded plastic components, unique metal components and
ASICs, are purchased from suppliers for which alternative sources are not
currently available in the quantities and at the prices we require.

     We employ our own manufacturing staff that focuses on managing the
relationship with our third-party manufacturers and particularly on
design-for-manufacturing, test procedures, quality, procurement and cost
optimization, production scheduling and continuous improvement. We also perform
certain manufacturing related functions internally, including manufacturing
engineering and the development of manufacturing test procedures and fixtures.

GOVERNMENT REGULATION

     Our products are subject to certain mandatory regulatory approvals. In the
United States, the FCC regulates many aspects of communications devices,
including radiation of electromagnetic energy, biological safety and rules for
devices to be connected to the telephone networks. Modems must be approved under
the above regulations by the FCC prior to being offered for sale. We have
obtained from the FCC all necessary approvals for all products we currently
manufacture and sell.

COMPETITION

     The wireless data communications market is intense, rapidly evolving and
highly competitive. It is subject to technological changes and is significantly
affected by new product introductions and the market activities of industry
participants. We compete in this market on the basis of price, form factor, time
to market, functionality, quality and variety of product offerings. Moreover, we
expect that this market will experience several new entrants in the future. To
maintain and improve our competitive position, we must continue to develop new
products, expand our customer base, grow our distribution network and leverage
our strategic partnerships.

     Our current and prospective competitors generally fall within the following
categories:

     - Wireless modem manufacturers, such as Sierra Wireless, Uniden, NextCell
       and Tellus;

     - Traditional wired modem manufacturers, such as 3Com and Xircom;

     - Wireless device manufacturers, such as Handspring, Palm and Research In
       Motion;

                                       42
<PAGE>   46

     - Wireless handset manufacturers and next generation wireless technology
       providers, such as Ericsson, Motorola, and Nokia; and

     - Non-CDPD private communications network providers, such as Emotiant, Bell
       South and Metricom.

     We believe the principal competitive factors impacting the market for our
products are functionality, features, performance, convenience, availability,
brand and price. We believe that we compete better than many of our current
competitors with respect to some or all of these factors due to the broad range
of products we offer, the ease-of-use in design and engineering of our products,
our ability to adapt our products to specific customer needs and our price
leadership.

     There can be no assurance that our current or potential competitors will
not develop products comparable or superior to those developed by us or adapt
more quickly to new technologies, evolving industry standards, new product
introductions, or changing customer requirements. As a result, we must
continuously introduce new products and educate existing and prospective
customers as to the advantages of our products versus those of our competitors.

     Many of our current and potential competitors have had longer operating
histories and significantly greater financial, manufacturing, technical, sales,
customer support, marketing and other resources, as well as greater name
recognition and a larger installed products and technologies base. In addition,
the global acceptance of our products could lead to increased competition as
third parties develop products competitive with our own. Any of these
competitors may be able to respond faster than we can to new or emerging
technologies and changes in customer requirements and to devote greater
resources to the development, promotion and sale of their products than we can.
We cannot assure you that our current or potential competitors will not develop
products comparable or superior to those that we develop or adapt more quickly
than we do to new technologies, evolving industry trends or changing customer
requirements.

     In addition, as the wireless data communications product market develops, a
number of companies with significantly greater resources than we have could
attempt to increase their presence in the market by acquiring or forming
strategic alliances with our competitors, resulting in increased competition.

PROPRIETARY TECHNOLOGY

     Our software, hardware and operations rely on and benefit from an extensive
portfolio of intellectual property. We currently hold 11 United States patents
issued for our technology and have four United States patent applications
pending. We also have four foreign patents issued and four foreign patent
applications pending.

     We own a number of trademarks, including Contact(R), Expedite(TM), Lancer
3W(TM), Merlin(TM), Minstrel(R), Minstrel III(TM), Minstrel V(TM), Minstrel
Plus(TM), Minstrel S(TM), MissionONE(TM), Sage(R), with the accompanying
designs, and the Novatel Wireless logo.

     We license CDMA technology from QUALCOMM, Incorporated for integration into
our products. This license allows us to manufacture CDMA-based wireless modems
and sell or distribute them worldwide. The license does not have a specified
term and may be terminated by us or by QUALCOMM for cause or upon the occurrence
of other specified events. In addition, we may terminate the license for any
reason upon 60 days' prior written notice. We have also granted to QUALCOMM a
nontransferable, worldwide, nonexclusive, fully paid and royalty-free license to
use, in connection with wireless communications applications, certain
intellectual property of ours that is used in our products which incorporate the
CDMA technology licensed to us by QUALCOMM. This license allows QUALCOMM to
make, use, sell or dispose of such products and the components therein.

     We primarily rely on a combination of copyright, trade secret and trademark
laws, and nondisclosure and other contractual restrictions on copying and
distribution to protect our proprietary technology. In addition, as part of our
confidentiality procedures, we generally enter into nondisclosure agreements
with our employees, consultants, distributors and corporate partners and limit
access to and distribution of our

                                       43
<PAGE>   47

software, documentation and other proprietary information. It may be possible
for a third party to copy or otherwise obtain and use our products or technology
without authorization, or to develop similar technology. In addition, our
products are licensed in foreign countries and the laws of such countries may
treat the protection of proprietary rights differently from and may not protect
our proprietary rights to the same extent as do laws in the United States.

EMPLOYEES

     As of June 30, 2000, we had a total of approximately 219 employees,
including 63 in sales and marketing, 123 in engineering, manufacturing, research
and development and 33 in general and administrative functions. Our future
performance depends, in significant part, upon our ability to attract new
personnel and retain existing personnel in key areas including engineering,
technical support and sales. Competition for personnel is intense, especially in
the San Diego area where we are headquartered, and we cannot be sure that we
will be successful in attracting or retaining personnel in the future. Our
employees are not represented by any collective bargaining unit, and we consider
our relationship with our employees to be good.

LEGAL PROCEEDINGS

     We are not a party to any legal proceedings which, if adversely determined,
would have a material adverse effect on our business, financial condition and
results of operations. We may, from time to time, become a party to various
legal proceedings arising in the ordinary course of business.

FACILITIES

     Our principal executive offices are located in San Diego, California where
we lease approximately 20,000 square feet under a lease that expires in July
2005. We also lease approximately 4,500 square feet in San Diego under a lease
that expires in March of 2005. In addition, we lease approximately 20,000 square
feet in Calgary, Alberta, Canada for our research and development organization
under a lease that expires in January 2002, and 14,500 square feet in Carlsbad,
California utilized for distribution purposes under a lease that expires in
August 2002. We also lease space in various geographic locations primarily for
sales and support personnel or for temporary facilities. We believe that our
existing facilities are adequate to meet our current needs, and that suitable
additional or substitute space will be available as needed.

                                       44
<PAGE>   48

                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

     The following table sets forth information regarding our executive officers
and directors:

<TABLE>
<CAPTION>
            NAME              AGE                           POSITION(S)
            ----              ---                           -----------
<S>                           <C>   <C>
John Major..................  54    Chairman of the Board and Chief Executive Officer
Ambrose Tam.................  44    President, Chief Operating Officer and Chief Technology
                                    Officer
Bruce Gray..................  45    Senior Vice President, Sales and Marketing
Melvin Flowers..............  47    Vice President of Finance, Chief Financial Officer and
                                    Secretary
Steven G. Schlief...........  44    Vice President, Operations
Bernice Bradin..............  54    Director
Robert Getz(1)..............  38    Director
Nathan Gibb(1)..............  30    Director
H.H. Haight(1)(2)...........  66    Director
David Oros..................  40    Director Nominee
Mark Rossi(2)...............  43    Director
Steven Sherman..............  54    Director
</TABLE>

---------------
(1) Member of Audit Committee

(2) Member of Compensation Committee

     John Major has served as our Chairman of the Board and Chief Executive
since July 2000. From November 1999 until July 2000, Mr. Major was Chief
Executive Officer of Wireless Internet Solutions Group, a strategic consulting
services firm. From November 1998 to November 1999, Mr. Major was President and
Chief Executive Officer of WirelessKnowledge, a joint venture between Microsoft
Corporation, a software and Internet technology company, and QUALCOMM,
Incorporated, a digital wireless communications company. From May 1997 to
November 1998, he was an Executive Vice-President of QUALCOMM and served as
President of QUALCOMM Infrastructure Products Division. From 1977 until he
joined QUALCOMM in 1997, Mr. Major held a number of executive positions at
Motorola, Inc., a communications and electronics company, ultimately serving as
Senior Vice President and Chief Technical Officer. Mr. Major currently serves on
the board of directors of Littelfuse Corporation, a circuit protection
technology company; Verilink, an intelligent edge connection wireline modem
company; Identix, Inc., an identification technology company; Advanced Remote
Communications Solutions, Inc., a communications systems company, and Lennox
Corporation, an HVAC products company. He also serves on the Board of Directors'
Executive Committee for the Telecommunications Industry Association and the
Electronics Industry Association. Mr. Major holds a Bachelor of Science degree
in Mechanical and Aerospace Engineering from the University of Rochester, and a
Master of Science degree in Mechanical Engineering from the University of
Illinois. He also holds an Master of Business Administration degree, with
distinction, from Northwestern University and a Juris Doctor from Loyola
University.

     Ambrose Tam has served as the President and Chief Operating Officer of our
company since August 1996 and as our Chief Technical Officer since that time as
well. From 1990 to 1993, he was the Research and Development Director of NovAtel
Communications Ltd., which is now NovAtel, Inc., and in 1994 he became the
General Manager of the Personal Communications Products division of NovAtel
Communications. Our company was founded when we acquired the assets of this
division from NovAtel Communications Ltd. Prior to joining NovAtel
Communications, Mr. Tam spent 12 years in various electronic and radio frequency
engineering capacities with Astec Components Ltd., a Hong Kong-based
manufacturing, engineering and distribution company specializing in radio
frequency, satellite receivers and cellular phone components. Mr. Tam holds a
Higher Certificate in Electronic Engineering from Hong

                                       45
<PAGE>   49

Kong Polytechnic University and a Master of Business Administration degree from
the University of Calgary.

     Bruce Gray has served as our Senior Vice President of Sales and Marketing
since February 2000. Prior to that he was our vice president of sales and
marketing since joining our company in October 1998. From October 1997 to
October 1998, Mr. Gray was the Senior Director of Uniden Electronics
Corporation's Data Products Division, where he was responsible for sales
performance, strategic planning, channel development and new product
development. Prior to joining Uniden, a wireless communications company, Mr.
Gray was a Director of Sales and Marketing for Sensormatic Electronics
Corporation, a supplier of electronic security products, from December 1994 to
October 1997. From May 1992 to January 1994, Mr. Gray was a Director of
Marketing and Product Management for U.S. Robotics Corporation, a communications
products company. Mr. Gray holds a Bachelor of Science degree in Engineering
from the University of Alabama and a Master of Business Administration degree
from the University of San Diego.

     Melvin Flowers has served as our Vice President of Finance and Chief
Financial Officer since joining our company in February 2000, and Secretary of
our company since April 2000. Mr. Flowers served as a Vice President and the
Chief Financial Officer of KNC Software, LLC, an Internet software company from
July 1999 until November 1999. Prior to joining KNC Software, Mr. Flowers served
as a Vice President and the Chief Financial Officer of Microwave dB, from
November 1998 until June 1999. Prior to joining Microwave, Mr. Flowers served as
the Chief Financial Officer and Vice President of Finance of ACT Networks, Inc.,
a network access device manufacturer from July 1993 to October 1998. Previously,
Mr. Flowers also served as President and Chief Financial Officer of Pacific
Earth Resources, an ornamental horticultural company, and as Vice President and
Chief Financial Officer of Spectramed, Inc., a medical device manufacturing
company. Mr. Flowers received a Bachelor of Science degree in Accounting from
Northern Illinois University.

     Steven Schlief has served as Vice President of Operations since joining our
company in July 2000. Prior to joining us, he was Vice President, Supply Chain
Management, for the Asian operations of Celestica Inc., a contract manufacturer
from September 1997 to July 2000. Prior to that, Mr. Schlief was Director of
Materials at Polycom Inc., a telecommunications and video conferencing company,
from January 1995 to September 1997. Mr. Schlief has also held positions with
Apple Computer, IEC Electronics and Lockheed Corporation where he worked in a
number of areas including materials, supply chain management and operations. Mr.
Schlief holds a Bachelor of Arts degree from San Jose State University and a
Master of Business Administration from Santa Clara University.

     Bernice Bradin has served as a director of our company since August 1996.
Upon completion of certain regulatory approvals in connection with the issuance
of our Series D preferred stock, which approval is expected to occur prior to
completion of this offering, Ms. Bradin will resign as a member of the Board of
Directors. Ms. Bradin has served as a Vice President and one of the founders of
Argo Global Capital, Inc., the entity that manages GSM Capital Limited
Partnership, a venture capital firm, since September 1997. Prior to founding
Argo Global Capital, Inc., Ms. Bradin was a Vice President at Advent
International Corporation, a venture capital firm, from May 1991 to June 1998.
Ms. Bradin also currently serves as a director of several private companies,
including Melard Technologies Inc., a data communications company, Hyperchip
Inc., a router development company and WatchMark, Corp., a network management
systems developer. Ms. Bradin received a Bachelor of Arts degree from Cornell
University and a Master of Business Administration degree from Harvard
University.

     Robert Getz has served as a director of our company since December 1999.
Since December 1996, Mr. Getz has served as a Managing Director of Cornerstone
Equity Investors, LLC, a private equity investment firm that specializes in
technology and telecommunications, business service and healthcare information
investments. Prior to joining Cornerstone, Mr. Getz served as a Managing
Director of Prudential Equity Investors, Inc., also a private equity investment
firm, from June 1994 until December 1996. Mr. Getz also serves as a director for
several private companies, including Artel Video Systems, Inc., a developer of
broadband video networking equipment, and Centurion International, Inc. a
designer and manufacturer of antenna and power solutions for the wireless device
industry. Mr. Getz holds a

                                       46
<PAGE>   50

Bachelor of Arts degree from Boston University and a Master of Business
Administration in finance from the Stern School of Business at New York
University.

     Nathan Gibb has served as a director of our company since June 1999. Mr.
Gibb is an Investment Manager with Working Ventures Canadian Fund Inc., a
Canadian investment fund. Mr. Gibb joined Working Ventures after receiving his
Masters of Business Administration from the University of Western Ontario in
1997. Mr. Gibb also serves on the board of directors of a number of private
portfolio companies, including InterUnion Asset Management Ltd., an asset
management firm consolidator. Mr. Gibb holds a Bachelor of Arts degree and a
Master of Business Administration degree from the University of Western Ontario.

     H.H. Haight has served as a director of our company since August 1996. Mr.
Haight is President, Chief Executive Officer and founder of Argo Global Capital,
Inc., the entity that manages GSM Capital Limited Partnership, a venture capital
firm. Prior to founding Argo Global Capital, Inc., Mr. Haight was a Managing
Director and co-founder of Advent International, a venture capital firm from
June 1983 to June 1998. Mr. Haight also currently serves as a director of Coast
Mountain Hardwoods, a lumber concern, Genelabs Technologies, Inc., a
pharmaceutical company, Saraide, a wireless service provider, and several other
private companies. Mr. Haight received a Bachelor of Science degree from the
University of California at Berkeley and a Master of Business Administration
degree from Harvard University.

     David S. Oros has been nominated and has consented to becoming a director
upon the completion of certain regulatory approvals in connection with the
issuance of our Series D preferred stock. Mr. Oros will serve as a director of
our company beginning at that time. In 1996, Mr. Oros founded Aether Systems,
Inc., a provider of wireless data services and systems for wireless handheld
devices, and has been Aether's chairman, chief executive officer and president
since its inception. Mr. Oros also serves on the board of directors of OmniSky
Corporation, which offers a wireless service for use on handheld mobile devices.
From 1994 until 1996, Mr. Oros was president of NexGen Technologies, L.L.C., a
wireless software development company that contributed all of its assets to
Aether. From 1992 until 1994, he was president of the Wireless Data Group at
Westinghouse Electric Company. Prior to that, Mr. Oros spent from 1982 until
1992 at Westinghouse Electric directing internal research and managing large
programs in advanced airborne radar design and development. Mr. Oros received a
Bachelor of Science degree in mathematics and physics from the University of
Maryland and holds a U.S. patent for a multi-function radar system.

     Mark Rossi has served as a director of our company since December 1999.
Since December 1996, Mr. Rossi has served as Managing Director of Cornerstone
Equity Investors, LLC, a private equity investment firm that specializes in
technology and telecommunications, business service and healthcare information
investments. Prior to joining Cornerstone, Mr. Rossi served as the President of
Prudential Equity Investors, Inc., a private equity investment firm, from June
1994 to December 1996. Mr. Rossi also serves as a Director of Maxwell
Technologies, Inc., a diversified technology products and services company,
MCMS, Inc. an electronics manufacturing services company, True Temper Sports,
Inc., a designer and manufacturer of golf shafts and specialty tubing products,
and several private companies. Mr. Rossi holds a Bachelor of Arts degree from
Saint Vincent College and a Master of Business Administration in finance from
the Kellogg School of Management at Northwestern University.

     Steven Sherman has served as a director of our company since August 1996.
Mr. Sherman also served as our Chief Executive Officer from August 1997 until
November 1998 and as Chairman of the Board from August 1997 until September
1999. In 1990, Mr. Sherman founded Main Street and Main, a restaurant franchise
holding company, and served as its Chairman until 1994. Since 1988, Mr. Sherman
has been the managing member of Sherman Capital Group, L.L.C., a merchant
banking organization. Mr. Sherman founded and served in various capacities,
including Chairman and Chief Executive Officer at Vodavi Communication Systems,
Inc., a telephone hardware and software company, until its acquisition of
Executone Information Systems, Inc. in 1988. He was a director of Executone from
1988 until 1990. Currently, Mr. Sherman is chairman of the board of Airlink
Communications, Inc., a wireless software infrastructure business. Mr. Sherman
holds a Bachelor of Arts degree in Business Administration from City College of
New York.

                                       47
<PAGE>   51

BOARD COMPOSITION

     We currently have authorized eight directors. Our amended and restated
certificate of incorporation provides for a classified board of directors that
consists of three classes of directors, each serving staggered three year terms.
As a result, a portion of the board of directors will be elected each year. The
three classes will be as nearly equal in number as possible, as determined by
the board of directors. The Class I directors will serve an initial term until
the annual meeting of stockholders to be held in 2001, the Class II directors
will serve an initial term until the annual meeting of stockholders to be held
in 2002, and the Class III directors will serve an initial term until the annual
meeting of stockholders to be held in 2003. Each class will be elected for
three-year terms following its respective initial term. Messrs. Gibb and Haight
have been designated Class I directors whose terms expire at the 2001 meeting of
stockholders. Messrs. Rossi and Sherman have been designated Class II directors
whose terms expire at the 2002 annual meeting of stockholders. Messrs. Getz,
Major and Oros have been designated Class III directors whose terms expire at
the 2003 annual meeting of stockholders. At each annual meeting of stockholders,
directors will be elected by the holders of common stock to succeed those
directors whose terms are expiring. Any additional directorships resulting from
an increase in the number of directors will be distributed among the three
classes of directorships so that, as nearly as possible, each class will consist
of one-third of the total number of directors. This classification of our board
of directors may have the effect of delaying or preventing changes in control of
our company or in our management. See "Description of Securities -- Delaware
Antitakeover Law and Charter and Bylaw Provisions." The executive officers are
elected by and serve at the discretion of our board of directors. Our
non-employee directors devote such time to the affairs of our company as is
necessary to discharge their duties. There are no family relationships among any
of our directors or our executive officers.

BOARD COMMITTEES

     We have established an audit committee composed of independent directors
that reviews and supervises our financial controls, including the selection of
our independent accountants, reviews our books and accounts, meets with our
officers regarding our financial controls, acts upon recommendations of our
auditors and takes further actions as the audit committee deems necessary to
complete an audit of our books and accounts. The audit committee also performs
other duties as may from time to time be determined. The audit committee
currently consists of three directors, Messrs. Getz, Gibb and Haight.

     We have also established a compensation committee that reviews and approves
the compensation and benefits of our executive officers, administers our
compensation, stock incentive, and stock purchase plans, makes recommendations
to the board of directors regarding these matters and performs other duties as
may from time to time be determined by our board of directors. The compensation
committee currently consists of two directors, Messrs. Haight and Rossi.

DIRECTOR COMPENSATION

     Directors do not currently receive any cash compensation from us for
attending board of directors or committee meetings, except for reimbursement of
reasonable expenses incurred in connection with attending those meetings.
Directors who are employees of ours are eligible to participate in our 2000
stock incentive plan and our 2000 employee stock purchase plan. Non-employee
directors who join our board after this offering are eligible to participate in
our 2000 stock incentive plan. Our 2000 stock incentive plan and our 2000
employee stock purchase plan were adopted by our board on July 24, 2000 and will
be approved by our stockholders prior to the consummation of this offering. Our
2000 stock incentive plan generally provides for an automatic initial grant of
options to purchase 20,000 shares of our common stock to each non-employee
director on the date on which a person first becomes a non-employee director of
our company. After the initial grant, a non-employee director will be granted
each year on the date of our annual meeting of stockholders a subsequent option
to purchase 5,000 shares of our common stock, if he or she continues to serve
after such annual meeting and if he or she received an initial stock option
grant. These options vest over a four-year period with 25% of the option shares
vesting on the first anniversary of the date of grant and the remainder vesting
in 36 equal monthly installments, with accelerated vesting in
                                       48
<PAGE>   52

the event of certain changes of control. Non-employee directors receive grants
solely at the discretion of the compensation committee. The exercise price of
options will be 100% of the fair market value per share of our common stock on
its date of grant. For an additional description of these option plans, please
refer to our discussion under "Compensation Plans."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     None of our compensation committee members has been an officer or employee
of our company or any subsidiary of our company at any time. None of our
executive officers serves on the board of directors or compensation committee of
any entity that has one or more executive officers serving as a member of our
board of directors or our compensation committee. Until April 2000, Mr. Sherman,
one of our directors, was a member of our compensation committee. Mr. Sherman
has been chief executive officer of Novatel Wireless Solutions, Inc., one of our
subsidiaries, since April 1996.

EXECUTIVE COMPENSATION

     The following table sets forth summary information concerning the
compensation received for services rendered to us during the fiscal year ended
December 31, 1999 by our Chief Executive Officer and each of the other four most
highly compensated executive officers, each of whose aggregate compensation
during the last fiscal year exceeded $100,000, referred to collectively in this
prospectus as the named executive officers. No individual who would otherwise
have been includable in the table on the basis of salary and bonus earned during
1999 has resigned or otherwise terminated his or her employment during 1999.

     In July 2000, Mr. Major was appointed as our Chief Executive Officer. His
annual base salary is $325,000. In September 1999, Mr. Weitzner joined us as our
Vice President of Operations and Research and Development. His annualized salary
for 1999 was $220,000. Mr. Weitzner's employment was terminated in July 2000. In
July 2000, Mr. Schlief was appointed as our Vice President of Operations. His
annual salary is $225,000, and he received a one time sign-on bonus of $28,000.
In February 2000, Mr. Flowers was appointed as our Chief Financial Officer. His
annual salary is $160,000.

                                       49
<PAGE>   53

     Annual compensation listed in the following table excludes other
compensation in the form of perquisites and other personal benefits that is less
than the lesser of $50,000 or 10% of the total annual salary and bonus of each
of the named executive officers in 1999. The options listed in the following
table were originally granted under our 1997 employee stock option plan. These
options will be incorporated into our 2000 stock incentive plan, but will
continue to be governed by their existing terms. See "Management -- 2000 Stock
Incentive Plan."

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                    LONG-TERM
                                                                                   COMPENSATION
                                                                                      AWARDS
                                                                                   ------------
                                                            ANNUAL COMPENSATION     SECURITIES
                                                            -------------------     UNDERLYING
               NAME AND PRINCIPAL POSITION                   SALARY      BONUS       OPTIONS
               ---------------------------                  --------    -------    ------------
<S>                                                         <C>         <C>        <C>
Robert Corey(1)...........................................  $200,000    $50,000           --
  Chief Executive Officer
Ambrose Tam(2)............................................   162,302     48,418           --
  President, Chief Operating Officer and Chief Technology
  Officer
Bruce Gray................................................   141,750         --       50,000
  Senior Vice President, Sales and Marketing
Roger Hartman(1)..........................................   157,225     20,000           --
  Chief Financial Officer and Vice President
James Palmer(1)...........................................   179,815         --           --
  Vice President, Operations and Research & Development
</TABLE>

---------------
(1) Mr. Corey ceased serving as our Chief Executive Officer in July 2000, Mr.
    Hartman ceased serving as our Chief Financial Officer in February 2000 and
    Mr. Palmer ceased serving as our Vice President, Operations and Research and
    Development, in October 1999.

(2) Mr. Tam's annual salary compensation in 1999 was (Canadian) $238,568, and
    his annual bonus compensation in 1999 was (Canadian) $71,280. The amount
    shown is based on the daily Noon Buying Rate of (Canadian) $1.46 per (US)
    $1.00 on July 26, 2000.

                                       50
<PAGE>   54

OPTION GRANTS IN FISCAL YEAR 1999

     The following table provides summary information regarding stock options
granted to our named executive officers during the fiscal year ended December
31, 1999. No stock appreciation rights were granted during 1999.

     The potential realizable value is calculated assuming the fair market value
of the common stock appreciates at the indicated rate for the entire term of the
option and that the option is exercised and sold on the last day of its term at
the appreciated price. Stock price appreciation of 5% and 10% is assumed
pursuant to the rules of the Securities and Exchange Commission and does not
represent our estimate or projection of future common stock prices. We cannot
assure you that the actual stock price will appreciate over the term of the
options at the assumed 5% and 10% rates or at any other defined rate. Actual
gains, if any, on stock option exercises will depend on the future performance
of our common stock. Unless the market price of the common stock appreciates
over the option term, no value will be realized from the option grants made to
the named executive officers.

<TABLE>
<CAPTION>
                                                     INDIVIDUAL GRANTS                                   POTENTIAL REALIZABLE
                       ------------------------------------------------------------------------------      VALUE AT ASSUMED
                                          NUMBER OF     PERCENT OF                                      ANNUAL RATES OF STOCK
                                          SECURITIES   TOTAL OPTIONS                                    PRICE APPRECIATION FOR
                                          UNDERLYING    GRANTED TO     EXERCISE OR                           OPTION TERM
                           DATE OF         OPTIONS     EMPLOYEES IN    BASE PRICE       EXPIRATION      ----------------------
        NAME                GRANT          GRANTED      FISCAL YEAR     PER SHARE          DATE            5%           10%
        ----           ----------------   ----------   -------------   -----------   ----------------   ---------    ---------
<S>                    <C>                <C>          <C>             <C>           <C>                <C>          <C>
Bruce Gray...........  October 25, 1999     50,000         17.83%         $2.86      October 24, 2009   $ 89,932     $227,905
John Weitzner........   August 18, 1999     75,000         26.74%         $2.86       August 17, 2009   $134,898     $341,858
</TABLE>

     In 1999, we granted options to purchase up to a total of 280,500 shares to
employees, directors and consultants under our 1997 employee stock option plan
at an exercise price equal to the fair market value of our common stock on the
date of grant, as determined in good faith by our board of directors.

     Mr. Gray's options began to vest on January 1, 2000. The options vest over
a four-year period, with 25% of the option shares vesting on the first
anniversary of the date of grant, and the remaining shares vesting in equal
monthly installments over the 36-month period following that date. The vesting
of the options will immediately accelerate upon a sale or merger of our company.
Mr. Weitzner's options began to vest on September 1, 1999. In July 2000, Mr.
Weitzner ceased to be an employee of our company. As of July 25, Mr. Weitzner
held options to purchase 75,000 shares of our common stock at an exercise price
of $2.86 per share, none of which had vested.

     In July 2000, Mr. Major was appointed Chief Executive Officer, and we
granted Mr. Major options to purchase 1,012,180 shares of common stock at an
exercise price of $15.00 per share. The option shares will vest and become
exercisable as follows: 202,436 option shares are immediately exercisable;
126,523 option shares vest and become exercisable on July 24, 2001; 126,523
option shares vest and become exercisable on July 24, 2002; and 101,218 option
shares vest and become exercisable on each July 24 of 2001, 2002, 2003 and 2004.
In addition, 151,827 option shares shall vest and become exercisable on the
earlier to occur of (1) our attaining certain milestones before December 31,
2000 and (2) with respect to 75,916 option shares, on July 24, 2003 and with
respect to another 75,916 option shares, on July 24, 2004. The vesting of the
option shares will immediately accelerate upon a change in control of our
company. The options expire on the first to occur of 6 months after termination
(in the event of termination of Mr. Major's employment by death or disability),
90 days after termination (in the event of termination of Mr. Major's employment
for any other reason) or July 24, 2010.

     In July 2000, Mr. Schlief was appointed Vice President, Operations, and we
granted Mr. Schlief options to purchase 200,000 shares of common stock at an
exercise price of $15.00 per share. The options are subject to our 1997 employee
stock option plan and will vest over a four-year period, with 25% of the option
shares vesting each year.

     In February 2000, Mr. Flowers was appointed Vice President of Finance and
Chief Financial Officer, and we granted Mr. Flowers options to purchase 125,000
shares of common stock at an exercise price of

                                       51
<PAGE>   55

$5.00 per share. The options will vest over a four-year period, with 25% of the
option shares vesting on February 17, 2001, and the remainder vesting in equal
monthly installments over the 36-month period following that date. The vesting
of the options will immediately accelerate upon a sale or merger of our company.

OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES

     The following table sets forth information concerning the number and value
of shares of common stock underlying the unexercised options held by the named
executive officers as of December 31, 1999. The table also sets forth the value
realized upon exercise of stock options in fiscal year 1999, and the year-end
number and value of unexercised options with respect to each of the named
executive officers as of December 31, 1999. The value was calculated by
determining the fair market value of our common stock on the date of exercise,
as determined in good faith by our board of directors, less the exercise price
paid for the shares. The value of unexercised in-the-money options at December
31, 1999 is calculated based on an assumed initial public offering price of
$          , less the exercise prices of the options, multiplied by the number
of shares underlying those options.

                         FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                               NUMBER OF SECURITIES
                                                              UNDERLYING UNEXERCISED         VALUE OF UNEXERCISED
                                                              OPTIONS AT DECEMBER 31,        IN-THE-MONEY OPTIONS
                            NUMBER OF                                  1999                  AT DECEMBER 31, 1999
                         SHARES ACQUIRED                    ---------------------------   ---------------------------
         NAME              ON EXERCISE     VALUE REALIZED   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
         ----            ---------------   --------------   -----------   -------------   -----------   -------------
<S>                      <C>               <C>              <C>           <C>             <C>           <C>
Robert Corey(1)........           --                --        145,833        354,167
Ambrose Tam............           --                --         15,000         15,000
John Weitzner(1).......           --                --             --         75,000
Bruce Gray.............           --                --         10,000         80,000
Roger Hartman(1).......           --                --         25,000         75,000
James Palmer(1)........      100,000          $490,000        100,000             --
</TABLE>

---------------
(1) Messrs. Corey and Weitzner left the company in July 2000; Mr. Hartman left
    the company in February 2000; Roger Hartman left the Company in February
    2000 and Mr. Palmer left the company in October 1999.

EMPLOYMENT-RELATED ARRANGEMENTS

     In August 2000, we entered into an employment agreement with John Major
covering an initial term of three years under which Mr. Major will serve as the
Chairman of our board of directors and as our Chief Executive Officer. The
agreement provides for Mr. Major to receive an annual base salary of $325,000,
subject to review by our board at least annually, and an annual performance
incentive bonus payable in a single installment in an amount equal to up to 100%
of Mr. Major's then applicable annual salary. The agreement provides for Mr.
Major to receive half his bonus in cash and the remaining half in shares of our
common stock. In addition, we granted Mr. Major options to purchase up to
1,012,181 shares of our common stock at an exercise price of $15.00 per share.
Twenty percent of these options vested and became exercisable on their date of
grant and the remaining options will vest and become exercisable with the
passage of time or upon the occurrence of specified events. In the event that we
terminate Mr. Major without cause, or in the event he terminates his employment
with us because we have materially breached the terms of his employment
agreement or because a change of control occurs, he is entitled to receive in a
lump sum payment an amount equal to his base salary then in effect and all
unvested options will immediately vest and become exercisable. Mr. Major would
then also be entitled to a bonus equal to the amount of the bonus he had earned
as of the date of his termination as well as to the continuation of certain
employee benefits pursuant to the terms of existing company plans. If we
terminate Mr. Major's employment for cause, or Mr. Major terminates his
employment without good reason,

                                       52
<PAGE>   56

Mr. Major will be entitled to received severance and other benefits only as may
then be established under our existing severance and benefit plans and policies
at the time of such termination.

     On August 21, 1996, Ambrose Tam entered into a five-year employment
agreement with us and one of our subsidiaries, NWT, under which Mr. Tam agreed
to serve as our and NWT's President and Chief Operating Officer. The employment
agreement provides for an annual salary of no less than (Canadian) $187,440 (US
$127,523) adjusted from time to time, and an annual performance incentive bonus
targeted to be 33% of his annual base salary, based on the achievement of
certain performance objectives. The employment agreement provides that if Mr.
Tam is terminated without cause, he will be entitled to (Canadian) $250,000 (US
$170,486), payable in two equal installments, the first of which would occur
upon his termination and the second of which would occur six months thereafter.
In this event, Mr. Tam would also receive a performance bonus prorated for the
period it covers and he would continue to receive certain employee benefits for
12 months. If Mr. Tam terminates his employment because of a material breach of
the employment agreement by either us or NWT, he will be entitled to (Canadian)
$250,000 (US $170,486), his incentive bonus prorated for the year and the
continuation of certain employee benefits for 12 months. In the event of a
change of control of either us or NWT, Mr. Tam will be entitled to (Canadian)
$125,000 (US $85,243) if he resigns from employment within 30 days from the date
of the change of control. All US dollar amounts presented above are based on the
daily Noon Buying Rate of (Canadian) $1.46 per (US)$1.00 on July 26, 2000.

     We have entered into arrangements with several of our employees which
provide that the salary of each of these employees will continue for six months
if we cease to do business or if the employee's employment is terminated without
cause.

     On April 17, 2000, we entered into a separation agreement and general
release with Roger Hartman pursuant to which, effective April 30, 2000, Mr.
Hartman agreed to terminate his employment with us. As of April 30, 2000, Mr.
Hartman held 100,000 options to purchase shares of our common stock at an
exercise price of $2.86 per share, 25,000 of which had vested. Under our
agreement, Mr. Hartman will serve as a consultant to us for a period of six
months ending October 31, 2000 for a monthly consultant fee of approximately
$12,000 and will be considered an employee for purposes of the vesting of his
stock options and participation in our 401(k) plan. After October 31, 2000, for
the two-month period ending December 31, 2000, Mr. Hartman will serve us as a
part-time consultant for which he will not be paid a consulting fee, though his
stock options will continue to vest.

COMPENSATION PLANS

1997 EMPLOYEE STOCK OPTION PLAN

     Our 1997 employee stock option plan provided for the grant to employees of
incentive and nonstatutory stock options. As of July 25, 2000, 2,987,819 shares
were authorized under the plan, 1,888,550 shares were subject to outstanding
options and 1,099,269 shares remain available for future grant. Our board of
directors has determined that no further options will be granted under the 1997
stock option plan after the completion this offering. The remaining shares
issuable under the 1997 employee stock option plan shall be available for
issuance under our 2000 stock incentive plan.

2000 STOCK INCENTIVE PLAN

     Our 2000 stock incentive plan was adopted by our board of directors on July
24, 2000 and will be approved by our stockholders prior to consummation of this
offering. The plan will become effective upon our initial public offering. At
that time, all outstanding options under our 1997 employee stock option plan
will be transferred to the 2000 stock incentive plan, and no further option
grants will be made under the 1997 plan. The transferred options will continue
to be governed by their existing terms, unless a committee of our board
administrating the plan decides to extend one or more of those features of the
2000 stock incentive plan to those options.

                                       53
<PAGE>   57

     The 2000 stock incentive plan provides for the discretionary grant of
incentive stock options to employees, including officers and employee directors,
and for the discretionary grant of nonstatutory stock options, stock
appreciation rights, stock units and stock purchase rights to employees,
directors and consultants. A total of 4,500,000 shares of our common stock has
been reserved for issuance under the 2000 stock incentive plan including the
shares attributable to the 1997 employee stock option plan, excluding shares
issuable upon exercise of options granted to our Chief Executive Officer in
connection with his employment agreement. Beginning with the first fiscal year
following the effective date of the 2000 stock incentive plan, on the first day
of each fiscal year, shares will be added to the 2000 stock incentive plan equal
to the lesser of (i) 500,000 shares, (ii) three percent of the shares of our
common stock outstanding in the last day of the prior fiscal year, or (iii) such
lesser number of shares as may be determined by our board in its sole
discretion. Unless terminated sooner, the 2000 stock incentive plan will
terminate on July 23, 2010.

     A committee of our board which is comprised solely of independent directors
will generally serve as administrator of the 2000 stock incentive plan from and
after the date of this offering. The administrator of our 2000 stock incentive
plan generally has the power to select the key employees who are to receive
awards under the plan, interpret and operate the plan, determine the type,
number, vesting requirements and other features and conditions of an award of
the options, restricted stock, stock appreciation rights and stock units
granted. The compensation committee shall consist of at least two independent
directors who shall satisfy the requirements of Rule 16b-3 (or its successor)
promulgated under the Securities Exchange Act of 1934, as amended, with respect
to awards granted to our officers and directors under Section 16 of this Act.

     Our board is the administrator of the 2000 stock incentive plan's
non-employee director grant program. Non-employee directors who first join our
board after the effective date of our initial public offering will receive a
grant of an option to purchase 20,000 shares of our common stock when they
become non-employee directors. In addition, all non-employee directors who
receive such an initial grant will receive a grant each subsequent annual
meeting of an option to purchase 5,000 shares, provided they continue to serve
after such annual meeting. These options generally vest over a four-year period
with 25% of the option shares vesting on the first anniversary of the date of
grant and the remainder vesting in 36 equal monthly installments commencing on
the date one month and one year after the date of grant. These options also
provide for accelerated vesting in the event of certain changes of control.
Non-employee directors receive grants solely at the discretion of our
compensation committee.

     Our board has the authority to amend, suspend or terminate the 2000 stock
incentive plan at any time for any reason, but no such action shall affect any
award previously granted under the plan. The maximum number of shares subject to
options and/or stock appreciation rights that each optionee may be granted
during a fiscal year is 1,000,000 shares, or 2,000,000 shares in the first
fiscal year of an optionee's employment with us. Restricted stock and stock unit
grants are limited to 500,000 shares per person in any fiscal year, or 1,000,000
shares, in the first fiscal year of a participant's employment with us.

     Awards granted under our 2000 stock incentive plan are generally not
transferable by the optionee, and each option and stock appreciation right is
exercisable during the lifetime of the optionee only or by the optionee's
guardian or legal representative. The plan provides that a stock appreciation
rights agreement under the plan may provide for accelerated exercisability in
the event of the optionee's death, disability or retirement or other events and
may provide for expiration prior to the end of its term in the event of the
termination of the optionee's service to us.

     In the case of restricted stock and stock units, unless the administrator
determines otherwise, the restricted stock purchase agreement shall grant us a
repurchase option exercisable after the purchaser's employment or other service
relationship with us has ended for any reason, including his or her death or
disability. Each award of restricted stock and stock units will be granted
pursuant to an agreement between us and the participant, and will vest in full
or in installments in accordance with the respective agreement, which may
provide for acceleration upon the occurrence of certain events. The purchase
price for shares repurchased pursuant to the restricted stock purchase agreement
shall be the original price paid by the

                                       54
<PAGE>   58

purchaser and may be paid by cancellation of any indebtedness of the purchaser
to us. The repurchase option shall lapse at a rate determined by the
administrator.

     The exercise price of all incentive stock options and nonstatutory stock
options granted automatically to non-employee directors must be at least equal
to the fair market value of our common stock on the date of grant. The exercise
price of other nonstatutory stock options and stock purchase rights granted
under the 2000 stock incentive plan is determined by the administrator, but with
respect to nonstatutory stock options intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended (Internal Revenue Code), the exercise price must be at least
equal to the fair market value of our common stock on the date of the grant.
With respect to any participant who owns stock possessing more than 10% of the
voting power of all classes of our outstanding capital stock, the exercise price
of any incentive stock option granted must at least equal 110% of the fair
market value on the grant date and the term of such incentive stock option must
not exceed five years. The term of all other options granted under the 2000
stock incentive plan may not exceed ten years.

     The 2000 stock incentive plan provides that in the event that our company
is a party to a merger or other reorganization, outstanding awards, other than
grants to directors, shall be subject to the agreement of merger or
reorganization. Such agreement may provide, without limitation, for the
assumption of outstanding awards by the surviving corporation or its parent, for
their continuation by us if we are the surviving corporation, for accelerated
vesting or for their cancellation with or without consideration. The plan
administrator may determine, at the time of granting an award or thereafter,
that such award shall become fully vested as to all shares subject to such award
in the event that a change in control occurs with respect to our company.

2000 EMPLOYEE STOCK PURCHASE PLAN

     Our 2000 employee stock purchase plan (2000 purchase plan) was adopted by
our board of directors on July 24, 2000 and will be approved by our stockholders
prior to consummation of this offering. The plan will become effective upon our
initial public offering. A total of 500,000 shares of our common stock will be
reserved for issuance under the 2000 purchase plan. Also, beginning with our
first fiscal year beginning after the effective date of the 2000 purchase plan,
on the first day of each fiscal year, shares will be added to the 2000 purchase
plan equal to the lesser of (a) 0.5% of the outstanding shares of our common
stock on the last day of the prior fiscal year, (b) 90,000 shares, or (c) such
lesser number of shares as may be determined by our board in its sole
discretion.

     Under the 2000 purchase plan, which is intended to qualify under Section
423 of the Internal Revenue Code, our board of directors may determine the
duration and frequency of stock purchase periods. Initially the plan will
operate using consecutive, overlapping, twenty-four month offering periods. Each
offering period will include four approximately six-month purchase periods. The
offering periods generally start on the first trading day on or after February 1
and August 1 of each year, except for the first such offering period which
commences on the effective date of the initial public offering and ends on the
last trading day on or before January 31, 2002.

     Employees of our company or of any designated subsidiary of ours will be
eligible to participate. However, no employee may be granted an opportunity to
purchase stock under the 2000 purchase plan if immediately after the grant, he
or she would own stock possessing 5% or more of the total combined voting power
or value of all classes of our capital stock.

     The 2000 purchase plan permits participants to purchase our common stock
through payroll deductions of up to 10% of their total annual compensation.
Amounts deducted and accumulated by the participant are used to purchase shares
of common stock at the end of each purchase period. The price of stock purchased
under the 2000 purchase plan is generally 85% of the lower of the fair market
value of the common stock either at the beginning of the offering period (85% of
the price at which a share is first offered by the underwriters to the public in
the case of the first offering period) or at the end of the purchase period. In
the event the fair market value at the end of a purchase period is less than the
fair market value at the beginning of the offering period, the participants will
be withdrawn from the current
                                       55
<PAGE>   59

offering period following exercise and automatically re-enrolled in a new
offering period. Participants may end their participation at any time during an
offering period, and they will be paid their payroll deductions to date.
Participation ends automatically upon termination of employment with us.

     Rights granted under the 2000 purchase plan are not transferable by a
participant other than upon his or her death or by a special determination by
the plan administrator. Each outstanding option under the 2000 purchase plan
will be subject to the acquisition agreement in the event we merge with or into
another corporation or sell substantially all of our assets.

     Our board of directors has the authority to amend or terminate the 2000
purchase plan at any time for any reason. Unless earlier terminated by our board
of directors, the 2000 purchase plan will terminate automatically 10 years from
its effective date.

401(K) PLAN

     Our 401(k) plan covers our employees located in the United States. The
401(k) plan is intended to qualify under Section 401(k) of the Internal Revenue
Code. Consequently, contributions to the 401(k) plan by the employees or by us,
and the investment earnings thereon, are not taxable to employees until
withdrawn from the 401(k) plan. Further, contributions by us, if any, will be
deductible by us when made. Employees may elect to contribute up to 15% of their
current annual compensation to the 401(k) plan up to the statutorily prescribed
annual limit. The 401(k) plan does not currently permit, but may in the future
be amended to permit, additional matching contributions to the 401(k) plan by us
on behalf of all participants in the 401(k) plan.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

     As permitted by the Delaware General Corporation Law, we have included a
provision in our amended and restated certificate of incorporation to indemnify
our officers and directors against liability for monetary damages for breach or
alleged breach of their fiduciary duties as officers or directors, other than in
cases of fraud or other willful misconduct. Our bylaws provide that we will
indemnify our officers and directors to the maximum extent permitted by Delaware
law and may indemnify our other employees and agents to the maximum extent
permitted by Delaware. In addition, our bylaws provide that we will advance
expenses to our officers and directors as incurred in connection with
proceedings against them for which they may be indemnified. In addition, we plan
to enter into indemnification agreements with our officers and directors. The
indemnification agreements will require us, among other things, to indemnify
officers and directors against liabilities that may arise by reason of their
status or service as officers and directors (but not for liabilities arising
from willful misconduct of a culpable nature), and to advance sums covering the
expenses they incurred as a result of any proceeding against them as to which
they could be indemnified.

     We have obtained an insurance policy covering directors and officers for
claims they would otherwise be required to pay or for which we are required to
indemnify them.

     At present, we are not aware of any pending or threatened litigation or
proceeding involving a director, officer, employee or agent of ours in which
indemnification would be required or permitted. We are not aware of any
threatened litigation or proceeding that might result in a material claim for
such indemnification. We believe that our charter provisions and indemnification
agreements are necessary to attract and retain qualified persons as directors
and officers.

                                       56
<PAGE>   60

                           RELATED PARTY TRANSACTIONS

     Since January 1, 1997, there has not been any transaction or series of
similar transactions to which we were or are a party in which the amount
exceeded or exceeds $60,000 and in which any executive officer, director or any
holder of more than 5% of any class of our voting securities or any member of
the immediate family or any of the foregoing persons had or will have a direct
or indirect material interest, other than the transactions described below.

SERIES D FINANCING

     On June 30, 2000 and on July 14, 2000 we issued and sold an aggregate of
1,964,050 shares of our Series D preferred stock at a purchase price of $17.25
per share. We also issued warrants to purchase an aggregate of 392,800 shares of
our common stock at an exercise price of $17.25 per share. Of the 1,964,050
shares of Series D preferred stock and the 392,800 accompanying warrants that we
issued and sold, we issued and sold a total of 1,752,105 such shares and a total
of 350,418 warrants to the following executive officers, directors, and greater
than 5% stockholders of our company and persons associated with them for a total
purchase price of approximately $30,223,812.

<TABLE>
<CAPTION>
                                                          NUMBER OF    NUMBER OF        TOTAL
                       PURCHASER                           SHARES      WARRANTS     PURCHASE PRICE
                       ---------                          ---------    ---------    --------------
<S>                                                       <C>          <C>          <C>
Aether Capital, LLC.....................................  1,159,420     231,884      $19,999,995
Cornerstone Equity Investors IV, L.P. ..................    289,855      57,971        4,999,999
GSM Capital Limited Partnership.........................    172,173      34,434        2,969,984
Bank of Montreal Capital Corporation....................     60,638      12,127        1,046,006
Working Ventures Canadian Fund, Inc.....................     57,971      11,594        1,000,000
Ventures West Investments Limited.......................      9,096       1,819          156,906
ARGC III, LLC...........................................      1,739         347           29,998
Sam Znaimer.............................................      1,213         242           20,924
</TABLE>

     David S. Oros, who is a director nominee of ours, serves as Chairman, Chief
Executive Officer and President of Aether Systems, Inc., which is the sole
member of Aether Capital, LLC. Mr. Oros is also a director of OmniSky
Corporation, of which Aether Systems, Inc. is an investor. In July 1999, we
entered into an agreement with OmniSky for the development and sale of our
Minstrel III and Minstrel V cradle modems for the Palm III and Palm V handheld
computing devices. Although the term of this agreement ended on May 1, 2000, we
are currently shipping and provisioning modems to OmniSky pursuant to this
agreement. For the year ended December 31, 1999 OmniSky accounted for 14.3% of
our revenue.

     Robert Getz and Mark Rossi, two of our directors, are each managing
directors of Cornerstone Equity Investors, LLC, which is the managing general
partner of Cornerstone Equity Investors IV, L.P. Sam Znaimer, one of our former
directors, is a senior vice president of Ventures West Capital Ltd., which
wholly owns Ventures West Management TIP, Inc., which in turn manages Bank of
Montreal Capital Corporation. Ventures West Capital Limited also controls
Ventures West Investments Limited.

     Two of our directors, H.H. Haight and Bernice Bradin, are executives of
Argo Global Capital, Inc., which manages GSM Capital Limited Partnership. They
are also both members of ARGC III, LLC and of ARGC, LLC (the latter of which
purchased certain of our convertible subordinated debentures in our bridge
financing transaction which we discuss below) and are limited partners of Advent
Partners Limited Partnership, an entity that participated in some of our earlier
financing rounds. In addition, they are entitled to receive a percentage of the
carried interest payable to the managing general partner of each of Advent
Israel Limited Partnership, Advent Israel (Bermuda) Limited Partnership, Golden
Gate Development & Investment Limited Partnership and Digital Media &
Communications Limited Partnership provided these funds show a gain on their
investments. Each such fund purchased shares of our preferred stock in earlier
rounds of financing.

     Nathan Gibb, one of our directors, is an investment manager of Working
Ventures Canadian Fund, Inc.

                                       57
<PAGE>   61

SERIES C FINANCING

     On December 31, 1999, we issued and sold a total of 3,674,277 shares of
Series C preferred stock at a purchase price of $8.34 per share. We also issued
warrants to purchase a total of 706,357 and 9,856 shares of common stock at an
exercise price of $10.00 and $8.34 per share, respectively, on or prior to
December 31, 2004.

     Of the 3,674,277 shares of Series C preferred stock that we issued and
sold, a total of 1,916,628 shares of Series C preferred stock and warrants to
purchase a total of 679,124 shares of common stock were issued and sold to the
following executive officers, directors and greater than 5% stockholders of our
company and persons affiliated with them for a total purchase price of
approximately $16.0 million:

<TABLE>
<CAPTION>
                                                          NUMBER OF    NUMBER OF        TOTAL
                       PURCHASER                           SHARES      WARRANTS     PURCHASE PRICE
                       ---------                          ---------    ---------    --------------
<S>                                                       <C>          <C>          <C>
Cornerstone Equity Investors IV, L.P. ..................  1,798,561     359,712      $15,000,000
Bank of Montreal Capital Corporation....................    100,913     273,001          841,614
Ventures West Investments Limited.......................     15,136      40,950          126,234
Sam Znaimer.............................................      2,018       5,461           16,830
</TABLE>

1999 BRIDGE FINANCING

     On June 24, 1999 and July 15, 1999, we issued and sold convertible
subordinated debentures to purchasers in the total original principal amount of
$3,120,000 bearing interest at the rate of 8% per annum. Of this amount,
$500,000 was issued and sold by our subsidiary NWT. We also issued warrants to
purchase a total of 1,310,002 shares of common stock at an exercise price of
$2.00 per share on or prior to June 24, 2004 or July 15, 2004, respectively. NWT
also issued warrants to purchase 250,000 shares of NWT's common stock at an
exercise price of $2.00 per share. Upon the exercise of these NWT Warrants, the
resulting shares of NWT common stock are thereafter exchangeable on a
one-for-one basis for shares of our common stock. Immediately upon the closing
of our Series C preferred stock financing, the principal amount then outstanding
under the convertible subordinated debentures that we and NWT issued, together
with accrued but unpaid interest thereon, automatically converted into an
aggregate of 388,907 shares of Series C preferred stock at a price of $8.34 per
share.

     Of the $3,120,000 original principal amount of debentures that we and NWT
issued and sold, we and NWT issued and sold a total original principal amount of
$2,772,522 and warrants to purchase a total of 1,386,261 shares of Series C
preferred stock and NWT common stock to the following executive officers,
directors or greater than 5% stockholders of our company and persons affiliated
with them:

<TABLE>
<CAPTION>
                                                                          TOTAL PRINCIPAL
                                                                             AMOUNT OF
                                                                            CONVERTIBLE
                                                              NUMBER OF    SUBORDINATED
                         PURCHASER                            WARRANTS      DEBENTURES
                         ---------                            ---------   ---------------
<S>                                                           <C>         <C>
GSM Capital Limited Partnership.............................   438,884       $877,768
Bank of Montreal Capital Corporation........................   266,078        532,156
Working Ventures Canadian Fund, Inc. .......................   250,000        500,000
Marco Polo Industries Co., Ltd. ............................   148,985        297,970
Digital Media & Communications Limited Partnership..........    95,131        190,262
Robert Corey................................................    50,000        100,000
Ventures West Investments Limited...........................    39,912         79,824
Golden Gate Development & Investment Limited Partnership....    39,574         79,148
Advent Israel Limited Partnership...........................    27,158         54,316
Advent Partners Limited Partnership.........................    13,011         26,022
Roger Hartman...............................................    10,000         20,000
Sam Znaimer.................................................     5,322         10,644
ARGC, LLC...................................................     2,206          4,412
</TABLE>

                                       58
<PAGE>   62

     Mr. Corey is a former chief executive officer and Mr. Hartman is a former
chief financial officers of ours. Horst Pudwill, who is a former director of
ours, owns a limited partnership interest in Marco Polo Industries Co., Ltd.

SERIES B FINANCING

     On December 23, 1997, April 24, 1998 and September 1, 1998, we issued and
sold a total of 2,084,281 shares of our Series B preferred stock at a purchase
price of $4.26 per share. We also issued warrants to purchase a total of 861,710
shares of common stock at an exercise price of $4.26 per share on or prior to
December 31, 2002 or April 24, 2003, depending on their date of issuance. In
addition, on December 23, 1997, our subsidiary NWT issued 213,614 shares of its
Series B preferred stock at a purchase price of $4.26 per share. These NWT
shares are exchangeable on a one-for-one basis for shares of our Series B
preferred stock, which will automatically convert into shares of our common
stock immediately prior to the completion of this offering.

     Of the 2,297,895 shares of Series B preferred stock that each of Novatel
Wireless and NWT issued and sold, a total of 1,659,042 shares of Series B
preferred stock and warrants to purchase a total of 622,141 of common stock were
issued and sold to the following executive officers, directors and greater than
5% stockholders of Novatel Wireless and persons associated with them:

<TABLE>
<CAPTION>
                                                          NUMBER OF    NUMBER OF        TOTAL
                       PURCHASER                           SHARES      WARRANTS     PURCHASE PRICE
                       ---------                          ---------    ---------    --------------
<S>                                                       <C>          <C>          <C>
GSM Capital Limited Partnership.........................  1,027,523     385,321       $4,377,248
Working Ventures Canadian Fund, Inc. ...................    213,614      80,105          909,996
Bank of Montreal Capital Corporation....................    176,793      66,297          753,138
Steven Sherman..........................................    117,371      44,014          500,000
Marco Polo Industries Co., Limited......................     58,685      22,007          249,998
Sherman Capital Group, LLC..............................     35,000      13,125          149,100
Ventures West Investments Limited.......................     26,519       9,945          112,971
Sam Znaimer.............................................      3,537       1,327           15,068
</TABLE>

     Steven Sherman, who serves on our board of directors, is the managing
member of Sherman Capital Group, LLC.

SERIES A FINANCING

     Between August 26, 1996, and December 11, 1997, we issued and sold a total
of 2,263,857 shares of our Series A preferred stock at a purchase price of $2.13
per share. In addition, during that period our subsidiary NWT issued a total of
1,251,798 shares of its Series A preferred stock at a purchase price of $2.13
per share. These NWT shares are exchangeable on a one-for-one basis for shares
of our Series A preferred stock, which will automatically convert into shares of
our common stock immediately prior to the completion of this offering.

                                       59
<PAGE>   63

     Of the 3,515,655 shares of Series A preferred stock that we and NWT issued
and sold a total of 3,438,016 shares were issued and sold to the following
executive officers, directors and greater than 5% stockholders of our company
and persons affiliated with them.

<TABLE>
<CAPTION>
                                                              NUMBER OF        TOTAL
                         PURCHASER                             SHARES      PURCHASE PRICE
                         ---------                            ---------    --------------
<S>                                                           <C>          <C>
Working Ventures Canadian Fund, Inc. .......................  1,251,798      $2,666,330
Bank of Montreal Capital Corporation........................    625,947       1,333,267
Digital Media & Communications Limited Partnership..........    563,265       1,199,754
GSM Capital Limited Partnership.............................    288,534         614,577
Golden Gate Development & Investment Limited................    234,375         499,219
Advent Israel Limited Partnership...........................    160,800         342,504
Steven Sherman..............................................    108,010         230,061
Ventures West Investments Limited...........................     93,895         199,996
Advent Partners Limited Partnership.........................     77,040         164,095
Advent Israel (Bermuda) Limited Partnership.................     19,680          41,918
Sam Znaimer.................................................     12,512          26,651
ARGC, LLC...................................................      2,160           4,601
</TABLE>

     We believe that each transaction set forth above was made on terms no less
favorable to us than we could have obtained from unaffiliated third parties. All
future transactions, including loans, if any, between us and our officers,
directors and principal stockholders and their affiliates and any transaction
between us and any entity with which our officers, directors or greater than 5%
stockholders are affiliated will be approved by a majority of the members of the
board of directors, including a majority of the independent and disinterested
outside members of our board of directors and will be on terms no less favorable
to us than we could obtain from unaffiliated third parties.

RELATIONSHIPS WITH OFFICERS AND DIRECTORS

     In June 1998 we entered into a consulting services agreement with one of
our directors, Steven Sherman. Pursuant to the agreement, Mr. Sherman agreed to
serve us as a special consultant for strategic business development in return
for monthly compensation in the amount of $7,000. In October 1999, this
agreement was terminated.

                                       60
<PAGE>   64

                             PRINCIPAL STOCKHOLDERS

     The following table sets forth information regarding the beneficial
ownership of our common stock as of July 25, 2000, and as adjusted for this
offering, by:

     - each person or entity whom we know beneficially to own more than 5% of
       our outstanding stock;

     - each of our directors and named executive officers; and

     - all directors and executive officers as a group.

     Each stockholder's percentage ownership in the following table prior to the
offering is based on 14,838,566 shares of common stock outstanding as of July
25, 2000. For purposes of calculating each stockholder's percentage ownership,
all options and warrants exercisable within 60 days of July 25, 2000 held by the
particular stockholder and that are included in the first column are treated as
outstanding shares, but are not deemed outstanding for computing the percentage
ownership of any other person. The numbers shown in the table below assume no
exercise by the underwriters of their over-allotment option.

     Except as otherwise noted, the principal address of each person listed in
the table below is c/o Novatel Wireless, Inc., 9360 Towne Centre Drive, Suite
110, San Diego, CA 92121. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission and includes voting and
investment power with respect to shares. To our knowledge, except under
applicable community property laws or as otherwise indicated, the persons named
in the table have sole voting and sole investment control with respect to all
shares beneficially owned.

<TABLE>
<CAPTION>
                                                                                PERCENTAGE OF SHARES
                                                                                 BENEFICIALLY OWNED
                                                        NUMBER OF SHARES    ----------------------------
                                                          BENEFICIALLY        PRIOR TO         AFTER
         NAME AND ADDRESS OF BENEFICIAL OWNER                OWNED          THE OFFERING    THE OFFERING
         ------------------------------------           ----------------    ------------    ------------
<S>                                                     <C>                 <C>             <C>
Cornerstone Equity Investors LLC(1)...................      2,506,099           16.43%
  717 Fifth Avenue, Suite 1100
  New York, NY 10022.
Robert Getz(1)........................................      2,506,099           16.43
Marc Rossi(1).........................................      2,506,099           16.43
Entities affiliated with Argo Global Capital,
  Inc.(2).............................................      2,463,750           15.69
  Lynnfield Woods Office Park
  210 Broadway, Suite 101
  Lynnfield, MA 01949
Bernice Bradin(2).....................................      2,463,750           15.69
H.H. Haight(2)........................................      2,463,750           15.69
Working Ventures Canadian Fund, Inc.(3)...............      1,927,504           12.70
  250 Bloor Street, East Suite 1600
  Toronto, Ontario
  CANADA M4W 1E6
Nathan Gibb(3)........................................              *               *
Steven Sherman(4).....................................      1,874,915           12.57
Entities affiliated with Ventures West Capital
  Limited(5)..........................................      1,572,272           10.30
  1285 West Pender Street, Suite 280
  Vancouver, British Columbia
  CANADA V6E 4B1
Aether Capital, LLC(6)................................      1,391,304            9.23
  11460 Cronridge Drive
  Owings Mills, MD
Entities affiliated with Advent International
  Corporation(7)......................................      1,273,702            8.48
  75 State Street, 29th Floor
  Boston, MA 02109
</TABLE>

                                       61
<PAGE>   65

<TABLE>
<CAPTION>
                                                                                PERCENTAGE OF SHARES
                                                                                 BENEFICIALLY OWNED
                                                        NUMBER OF SHARES    ----------------------------
                                                          BENEFICIALLY        PRIOR TO         AFTER
         NAME AND ADDRESS OF BENEFICIAL OWNER                OWNED          THE OFFERING    THE OFFERING
         ------------------------------------           ----------------    ------------    ------------
<S>                                                     <C>                 <C>             <C>
Marco Polo Industries Co., Ltd.(8)....................      1,164,091            7.76
  1806, 18F, Central Plaza
  18 Harbour Road
  Wanchai, Hong Kong
  Hong Kong
Ambrose Tam(9)........................................        576,450            3.88
John Major(10)........................................        354,263            2.36
Bruce Gray(11)........................................         10,000               *
Melvin Flowers........................................              *               *
Steven Schlief........................................              *               *
                                                           ----------          ------
All directors and executive officers as a group (
  persons)............................................     11,104,285           65.49
                                                           ----------          ------
</TABLE>

---------------
  *  Less than one percent of the outstanding shares of our common stock.

 (1) Represents 2,088,416 shares of common stock and warrants to purchase
     417,683 shares of common stock. Each of Messrs. Rossi and Getz disclaims
     beneficial ownership of these securities except to the extent of his
     pecuniary interest.

 (2) Represents 1,602,400 shares of common stock and warrants to purchase
     861,350 shares of common stock. Each of Mr. Haight and Ms. Bradin disclaims
     beneficial ownership of these securities except to the extent of his or her
     pecuniary interest.

 (3) Represents 1,585,805 shares of common stock and warrants to purchase
     341,699 shares of common stock held of record by Working Ventures Canadian
     Fund. Mr. Gibb disclaims beneficial ownership of these securities except to
     the extent of his pecuniary interest.

 (4) Represents 1,795,276 shares of common stock, warrants to purchase 57,139
     shares of common stock and options to purchase 22,500 shares of common
     stock which are vested and immediately exercisable.

 (5) Represents 1,152,318 shares of common stock and warrants to purchase
     419,954 share of common stock.

 (6) Represents 1,159,420 shares of common stock and warrants to purchase
     231,884 shares of common stock.

 (7) Represents 1,098,828 shares of common stock and warrants to purchase
     174,874 shares of common stock.

 (8) Represents 993,099 shares of common stock and warrants to purchase 170,992
     shares of common stock. Mr. Pudwill, a former director of our company, owns
     a limited partnership interest in Marco Polo Industries Co., Ltd. and
     disclaims beneficial ownership of these securities except to the extent of
     his pecuniary interest.

 (9) Represents 553,950 shares of common stock and options to purchase 22,500
     shares of our common stock which are vested and immediately exercisable.

(10) Represents 202,436 shares of common stock issuable upon exercise of
     immediately exercisable options and 151,827 shares of common stock issuable
     upon the exercise of options which may become exercisable before December
     31, 2000.

(11) Represents options to purchase 10,000 shares of common stock which are
     vested and immediately exercisable.

                                       62
<PAGE>   66

                           DESCRIPTION OF SECURITIES

     Upon the completion of this offering, we will be authorized to issue up to
350,000,000 shares of common stock, $0.001 par value per share, and up to 15
million shares of undesignated preferred stock, $0.001 par value per share. All
shares of preferred stock currently outstanding will be converted into shares of
common stock upon the completion of this offering. As of July 15, 2000, assuming
conversion of all outstanding shares of preferred stock (including shares
converted into preferred stock in the NWT Exchange) into common stock and no
exercise of the underwriters' overallotment option, there were outstanding
14,838,566 shares of our common stock, warrants to purchase 3,539,305 shares of
common stock, and options to purchase 2,900,731 shares of common stock.

     The following description of our securities does not purport to be complete
and is subject to and qualified by our amended and restated certificate of
incorporation and by our amended and restated bylaws, each of which is included
as an exhibit to the registration statement of which this prospectus forms a
part, and by the provisions of applicable Delaware law.

COMMON STOCK

     As of July 25, 2000, we had 70 holders of record of our common stock,
assuming both the conversion exchange of all outstanding shares of our preferred
stock and the NWT Exchange. There will be                shares of common stock
outstanding after giving effect to this offering assuming no exercise of the
underwriter's overallotment option or exercise of outstanding options under our
stock option plans after July 25, 2000.

     The holders of our common stock are entitled to one vote for each share
held of record on each matter submitted to a vote of our stockholders. Subject
to preferences that may be applicable to any outstanding preferred stock,
holders of our common stock are entitled to receive ratably such dividends as
may be declared by our board of directors from funds legally available for that
purpose. See "Dividend Policy." In the event of our liquidation, dissolution or
winding up, the holders of our common stock are entitled to share ratably in all
assets remaining after payment of liabilities and subject to the prior
distribution rights of any outstanding preferred stock. Our common stock carries
no preemptive or conversion rights or other subscription rights and there are no
redemption or sinking fund provisions applicable to it. The outstanding shares
of common stock are, and the shares of common stock to be issued upon completion
of this offering will be, duly authorized, validly issued, fully paid and non-
assessable.

PREFERRED STOCK

     Our board of directors has the authority, without the need for further
action by our stockholders, to issue any or all our authorized but unissued
shares of preferred stock in one or more series. Our board of directors also has
the authority to designate the rights, preferences, privileges and restrictions
of each such series, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series. Any series of
preferred stock may possess voting, dividend, liquidation and redemption rights
superior to those of our common stock.

     The issuance of preferred stock, while providing flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of entrenching our board of directors or of delaying, deferring or preventing a
third party from acquiring a majority of our outstanding voting stock. The
issuance of preferred stock with voting or conversion rights may also adversely
affect the voting power of the holders of our common stock. In certain
circumstances, an issuance of preferred stock could have the effect of
decreasing the market price of shares of our common stock and delaying or
preventing a change of control. As of the closing of the offering, no shares of
preferred stock will be outstanding. We currently have no plans to issue any
shares of, or designate any series of, our preferred stock.

                                       63
<PAGE>   67

WARRANTS

     As of July 25, 2000, there were warrants outstanding to purchase a total of
3,539,305 shares of our common stock. The warrants to purchase shares of
preferred stock that survive the closing of this offering will convert into
warrants to purchase shares of our common stock on the closing of this offering
on a one-for-one basis. Generally, each warrant contains provisions for the
adjustment of its exercise price and the number of shares issuable upon its
exercise upon the occurrence of any stock dividend, stock split, reorganization,
reclassification, consolidation and certain dilutive issuances of securities at
prices below the then existing applicable warrant exercise price. In addition,
the shares of our common stock issuable upon any exercise of the warrants
provide their holders with rights to have those shares registered and qualified
under federal and state securities laws, as discussed more fully below. Some of
these warrants have net exercise provisions under which the holder may, in lieu
of payment of the exercise price in cash, surrender the warrant and receive a
net amount of shares based on the fair market value of our common stock at the
time of exercise of the warrant after deduction of the aggregate exercise price.

REGISTRATION RIGHTS

     Upon completion of this offering, under an amended and restated
registration rights agreement dated August 21, 1996, the holders of
approximately 5,813,550 shares of our common stock and warrants to purchase
approximately 944,156 shares of our common stock will be entitled to certain
rights with respect to the registration of shares under the Securities Act.
Under the terms of this agreement, if we propose to register any of our
securities under the Securities Act, these holders are entitled to notice of the
registration and are entitled to include shares of common stock in the
registration. The rights are subject to conditions and limitations, among them
the right of the underwriters of an offering to limit the number of shares
included in the registration. At any time following 180 days after this offering
and prior to five years after this offering, the holders of a majority of these
securities may require us to file registration statements under the Securities
Act with respect to their shares of common stock, and we are required to use our
best efforts to effect the registrations, subject to conditions and limitations.
Additionally, if any holder of these securities requests that we file a
registration statement on Form S-3 when such form becomes available to us, we
are required to effect such registration as long as the holders propose to sell
such securities at an aggregate price to the public of not less than $500,000.
Subject to the limitations contained in the agreement, we will be responsible
for paying all registration expenses and the holders selling their shares will
be responsible for paying all selling expenses.

     In addition, upon completion of this offering, under an amended and
restated investors' rights agreement dated June 30, 2000, the holders of
approximately 5,638,327 shares of common stock and warrants to purchase up to
approximately 2,690,879 shares of common stock will be entitled to certain
rights with respect to the registration of shares under the Securities Act. If
we propose to register any of our securities under the Securities Act, these
holders are entitled to notice of the registration and are entitled to include
shares of common stock in the registration. The rights are subject to conditions
and limitations, among them the right of the underwriters of an offering to
limit the number of shares included in the registration. At any time following
the first anniversary of this offering, the holders of at least 33 1/3% of these
securities may require that we file up to two registration statements under the
Securities Act with respect to their shares of common stock, and we are required
to use our best efforts to effect those registrations, subject to conditions and
limitations. Additionally, if any holder of these securities requests that we to
file a registration statement on Form S-3 when such form becomes available to
us, we are required to effect such registration as long as the holders propose
to sell such securities at an aggregate price to the public of not less than
$1,000,000.

     The registration rights granted in this amended and restated investors'
rights agreement will expire on the third anniversary of this offering, or
earlier with respect to a particular stockholder if that holder can resell all
its securities in a three month period under Rule 144 of the Securities Act.
Subject to the limitations contained in the amended and restated investors'
rights agreement, we will be responsible for paying all registration expenses
and the holders selling their shares will be responsible for paying all selling
expenses.
                                       64
<PAGE>   68

DELAWARE ANTI-TAKEOVER LAW AND CHARTER AND BYLAW PROVISIONS

     Certain provisions of Delaware law and our amended and restated certificate
of incorporation and bylaws could make it more difficult for a third party to
acquire us through a tender offer, a proxy contest or otherwise and the removal
of incumbent officers and directors. These provisions are expected to discourage
certain types of coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control of us to negotiate with us first.
We believe that the benefits of increased protection of our potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire
or restructure us outweigh the disadvantages of discouraging such proposals
because, among other things, negotiation of such proposals could result in an
improvement of their terms.

     Our amended and restated certificate of incorporation authorizes our board
to establish one or more Series of undesignated preferred stock, the terms of
which can be determined by our board at the time of issuance. Our amended and
restated certificates of incorporation also provides that stockholder action can
be taken only at an annual or special meeting of stockholders and may not be
taken by written consent. In addition, our amended and restated certificate of
incorporation and bylaws provide that special meetings of stockholders can be
called only by our board of directors, the chairman of our board or our chief
executive officer, but do not permit our stockholders to call a special meeting
of stockholders. Our amended and restated certificate of incorporation also
provides that our board of directors is divided into three classes, with each
director assigned to a class with a term of three years, and that the number of
directors may only be determined by our board of directors. Our bylaws establish
an advance notice procedure with regard to stockholder proposals and the
nomination of candidates for election of directors other than by or at the
direction of our board of directors.

     We are subject to Section 203 of the Delaware General Corporation Law,
which includes anti-takeover provisions. In general, Section 203 prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date that
the person became an interested stockholder unless, subject to exceptions, the
business combination or the transaction in which the person became an interested
stockholder is approved in a prescribed manner. Generally, a "business
combination" includes a merger, asset or stock sale, or other transaction
resulting in a financial benefit to the interested stockholder. Generally, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years prior to the determination of interested
stockholder status, did own, 15% or more of the corporation's voting stock.
These provisions may have an anti-takeover effect, including discouraging
attempts that might result in the payment of a premium over the market price for
the shares of common stock held by stockholders, or delaying, deferring or
preventing a change in control without further action by the stockholders.

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for shares of our common stock is U.S.
Stock Transfer Corporation. The Transfer Agent's address and telephone number is
1745 Gardena Avenue, Glendale, California 91204, (818) 502-1404.

                                       65
<PAGE>   69

                        SHARES ELIGIBLE FOR FUTURE SALE

     Prior to this offering there has been no market for our common stock.
Future sales of substantial amounts of common stock, including shares issuable
upon the exercise of outstanding options and warrants, in the public market
could adversely affect prevailing market prices. Sales of substantially all
amounts of our common stock in the public market after contractual restrictions
lapse could adversely affect the prevailing market price and our ability to
raise equity capital in the future.

     Upon completion of the offering, we will have outstanding
shares of common stock, and                if the underwriters exercise their
overallotment option in full, which excludes:

     - 2,900,731 shares of common stock that could be issued upon the exercise
       of options outstanding as of July 25, 2000;

     - 3,539,305 shares of common stock that could be issued upon the exercise
       of warrants outstanding as of July 25, 2000;

     - 1,099,269 shares of common stock that could be issued in the future under
       our stock option plans as of July 25, 2000;

     - 500,000 shares of common stock that could be issued in the future under
       our 2000 employee stock purchase plan.

     Of the outstanding shares, all the shares of common stock sold in this
offering will be freely tradable without restriction under the Securities Act,
except that shares purchased by our affiliates, as Rule 144 promulgated under
the Securities Act defines that term, may be sold only in compliance with the
limitations described below. The remaining 14,862,376 shares of common stock
will be deemed "restricted securities" as defined under Rule 144. Restricted
shares may be sold in the public market only if they are registered under the
Securities Act or if they qualify for an exemption from registration under Rules
144 or 701 promulgated under the Securities Act, which we summarize below.
Subject to the lock-up agreements described below and the provisions of Rules
144 and 701, shares will be available in the public market as follows:

<TABLE>
<CAPTION>
NUMBER OF SHARES                               DATE
----------------                               ----
<C>                <S>
                   After the date of this prospectus, freely tradable shares
                   sold in this offering and shares eligible for resale under
                   Rule 144(k) that are not subject to the 180-day lock-up.
   16,000,021      After 180 days from the date of this prospectus, the 180-day
                   lock-up is released and these share are saleable under Rule
                   144 (subject, in some cases, to volume limitations).
    1,341,232      After 180 days from the date of this prospectus, the 180-day
                   lock-up is released and these share are saleable under Rule
                   701.
    2,356,850      After 180 days from the date of this prospectus, restricted
                   securities that are held for less than one year and are not
                   yet saleable under Rule 144.
</TABLE>

LOCK-UP AGREEMENTS WITH THE UNDERWRITERS

     Each of our directors and officers and substantially all our security
holders have signed lock-up agreements with the underwriters of this offering
under which they have agreed not to offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, any shares of common stock or any
securities convertible into or exercisable or exchangeable for any shares of
common stock, or publicly disclose the intention to make any such offer, sale,
pledge or disposition, without the prior consent of Credit Suisse First Boston
Corporation for a period of 180 days after the date of this prospectus, except
any shares sold to the underwriters pursuant to the underwriting agreement or
any shares acquired in the open market. See "Underwriting."

     Credit Suisse First Boston Corporation may, in its sole discretion and at
any time without notice, release some or all of these securities from these
restrictions prior to the expiration of this 180-day period, although we are not
aware of any current intention for them to do so.

                                       66
<PAGE>   70

RULE 144

     In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of 1% of
the number of shares of our common stock then outstanding, which will equal
approximately                shares immediately after this offering; or the
average weekly trading volume of the common stock on the Nasdaq National Market
during the four calendar weeks preceding the filing with the Securities and
Exchange Commission of a notice on Form 144 with respect to the proposed sale.
Sales under Rule 144 are also subject to manner-of-sale provisions and notice
requirements and to the availability of current public information about us.

RULE 144(K)

     Under Rule 144(k), a person who has not been one of our affiliates at any
time during the 90 days preceding a proposed disposition of the subject
securities and who has beneficially owned the shares proposed to be sold for at
least two years is entitled to sell those shares without complying with the
manner of sale, public information, volume limitation or notice provisions of
Rule 144. However, because substantially all shares that we have issued are
subject to lock-up agreements, they will become eligible for re-sale only when
the 180-day lock-up agreements expire. As a result, they may be sold 90 days
after the offering only if the holder obtains our prior written consent.

RULE 701

     Any of our employees, officers, directors or consultants who purchased his
or her shares under a written compensatory plan or contract may be entitled to
sell those shares in reliance on Rule 701. Rule 701 permits our affiliates to
sell their Rule 701 shares under Rule 144 without complying with the holding
period requirements of Rule 144. Rule 701 further provides that non-affiliates
may sell these shares in reliance on Rule 144 without having to comply with the
holding period, public information, volume limitation or notice provisions of
Rule 144. Under this rule, all holders of Rule 701 shares are required to wait
until 90 days after the date of this prospectus before selling those shares.
However, because substantially all shares that we have issued under Rule 701 are
subject to lock-up agreements, they will become eligible for sale only when the
180-day lock-up agreements expire. As a result, they may be sold 90 days after
the offering only if the holder obtains our prior written consent.

REGISTRATION RIGHTS

     Following this offering, under specified circumstances and subject to
customary conditions, holders of approximately 15,086,912 shares of our common
stock, including approximately 3,635,035 shares that may be acquired upon the
exercise of warrants to purchase our common stock, will have registration rights
with respect to their shares of common stock. These registration rights require
us to register their shares of common stock under the Securities Act, and permit
these holders to participate in any future registrations of our securities. If
the holders of these registrable securities request that we register their
shares, and if the registration is declared effective, these shares will become
freely tradable without restriction under the Securities Act. Any sales of
securities by these stockholders could have a material adverse effect on the
trading price of our common stock. See "Description of
Securities -- Registration Rights."

                                       67
<PAGE>   71

                                  UNDERWRITING

     Under the terms and subject to the conditions contained in an underwriting
agreement dated                     , 2000, we have agreed to sell to the
underwriters named below, for whom Credit Suisse First Boston Corporation, U.S.
Bancorp Piper Jaffray Inc. and Banc of America Securities LLC are acting as
representatives, the following respective numbers of shares of common stock:

<TABLE>
<CAPTION>
                                                               NUMBER
                        UNDERWRITER                           OF SHARES
                        -----------                           ---------
<S>                                                           <C>
Credit Suisse First Boston Corporation......................
U.S. Bancorp Piper Jaffray Inc..............................
Banc of America Securities LLC..............................
                                                              --------
  Total.....................................................
                                                              ========
</TABLE>

     The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in the offering, if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that, if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common stock may be terminated.

     We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to                     additional shares from us at the initial
public offering price less the underwriting discounts and commissions. The
option may be exercised only to cover any over-allotments of common stock.

     The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $     per share. The
underwriters and the selling group members may allow a discount of $     per
share on sales to other broker/dealers. After the initial public offering, the
public offering price and concession and discount to broker/dealers may be
changed by the representatives.

     The following table summarizes the compensation and estimated expenses we
will pay.

<TABLE>
<CAPTION>
                                                       PER SHARE                           TOTAL
                                            -------------------------------   -------------------------------
                                               WITHOUT            WITH           WITHOUT            WITH
                                            OVER-ALLOTMENT   OVER-ALLOTMENT   OVER-ALLOTMENT   OVER-ALLOTMENT
                                            --------------   --------------   --------------   --------------
<S>                                         <C>              <C>              <C>              <C>
Underwriting Discounts and
  Commissions paid by us..................     $                $                $                $
Expenses payable by us....................     $                $                $                $
</TABLE>

     The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.

     We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act relating
to, any shares of our common stock or any securities convertible into or
exchangeable or exercisable for any shares of our common stock, or publicly
disclose the intention to make any such offer, sale, pledge, disposition or
filing, without the prior written consent of Credit Suisse First Boston
Corporation for a period of 180 days after the date of this prospectus, except
issuances pursuant to the exercise of employee stock options outstanding on the
date hereof.

     Our officers and directors and each holder of shares of our common stock or
securities convertible into or exchangeable or exercisable for any shares of our
common stock have agreed that they will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any shares of our common
stock or securities convertible into or exchangeable or exercisable for any
shares of our common stock, enter into a transaction which would have the same
effect, or enter into any swap, hedge or other arrangement that transfers, in
whole or in part, any of the economic consequences of ownership of our

                                       68
<PAGE>   72

common stock, whether any such aforementioned transaction is to be settled by
delivery of our common stock or such other securities, in cash or otherwise, or
publicly disclose the intention to make any such offer, sale, pledge or
disposition, or to enter into any such transaction, swap, hedge or other
arrangement, without, in each case, the prior written consent of Credit Suisse
First Boston Corporation for a period of 180 days after the date of this
prospectus.

     The underwriters have reserved for sale, at the initial public offering
price, up to           shares of the common stock for employees, directors and
certain other persons associated with us who have expressed an interest in
purchasing common stock in the offering. The number of shares available for sale
to the general public in the offering will be reduced to the extent such persons
purchase such reserved shares. Any reserved shares not so purchased will be
offered by the underwriters to the general public on the same terms as the other
shares.

     We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments which the underwriters may be required
to make in that respect.

     We have applied to list the shares of common stock on The Nasdaq Stock
Market's National Market under the symbol "NVTL".

     Prior to this offering, there has been no public market for our common
stock. The initial public offering price will be determined by negotiation
between us and the underwriters. The principal factors to be considered in
determining the public offering price include the following:

     - the information included in this prospectus and otherwise available to
       the representatives;

     - market conditions for initial public offerings;

     - the history and the prospects for the industry in which we compete;

     - the ability of our management;

     - the prospects for our future earnings;

     - the present state of our business development and our current financial
       condition;

     - the general condition of the securities markets at the time of this
       offering; and

     - the recent market prices of, and the demand for, publicly traded common
       stock of generally comparable companies.

     We cannot be sure that the initial public offering price will correspond to
the price at which the common stock will trade in the public market following
this offering or that an active trading market for the common stock will develop
and continue after this offering.

     U.S. Bancorp Piper Jaffray Inc. and its affiliates have provided financial
services to us in the past for which they received customary compensation.

     Prior to this offering, U.S. Bancorp Piper Jaffray Inc. participated in our
private placement as placement agent in which it received warrants to purchase
our common stock as compensation and its affiliates purchased our Series C
preferred stock and warrants to purchase our common stock. In addition, U.S.
Bancorp Piper Jaffray's affiliates purchased Series D preferred stock and
warrants to purchase our common stock. U.S. Bancorp Piper Jaffray and its
affiliates currently hold 18,585 shares of our Series C preferred stock, 9,563
shares of our Series D preferred stock and warrants to purchase 64,765 shares of
our common stock. U.S. Bancorp Piper Jaffray and its affiliates are in
compliance with section 2710 of the National Association of Securities Dealers
Rules of Conduct regarding underwriter compensation.

                                       69
<PAGE>   73

     In connection with the offering the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.

     - Stabilizing transactions permit bids to purchase the underlying security
       so long as the stabilizing bids do not exceed a specified maximum.

     - Over-allotment involves sales by the underwriters of shares in excess of
       the number of shares the underwriters are obligated to purchase, which
       creates a syndicate short position. The short position may be either a
       covered short position or a naked short position. In a covered short
       position, the number of shares over-allotted by the underwriters is not
       greater than the number of shares that they may purchase in the
       over-allotment option. In a naked short position, the number of shares
       involved is greater than the number of shares in the over-allotment
       option. The underwriters may close out any short position by either
       exercising their over-allotment option and/or purchasing shares in the
       open market.

     - Syndicate covering transactions involve purchases of the common stock in
       the open market after the distribution has been completed in order to
       cover syndicate short positions. In determining the source of shares to
       close out the short position, the underwriters will consider, among other
       things, the price of shares available for purchase in the open market as
       compared to the price at which they may purchase shares through the
       over-allotment option. If the underwriters sell more shares than could be
       covered by the over-allotment option -- a naked short position -- that
       position can only be closed out by buying shares in the open market. A
       naked short position is more likely to be created if the underwriters are
       concerned that there may be downward pressure on the price of the shares
       in the open market after pricing that could adversely affect investors
       who purchase in the offering.

     - Penalty bids permit the representatives to reclaim a selling concession
       from a syndicate member when the common stock originally sold by the
       syndicate member is purchased in a stabilizing or syndicate covering
       transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids
may have the effect of raising or maintaining the market price of the common
stock or preventing or retarding a decline in the market price of the common
stock. As a result the price of the common stock may be higher than the price
that might otherwise exist in the open market. These transactions may be
effected on The Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.

     A prospectus in electronic format may be made available on the web sites
maintained by one or more of the underwriters participating in this offering.
The representatives may agree to allocate a number of shares to underwriters for
sale to their online brokerage account holders. Internet distributions will be
allocated by the underwriters that will make internet distributions on the same
basis as other allocations.

                          NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

     The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of the common stock are effected. Accordingly, any resale of the common
stock in Canada must be made in accordance with applicable securities laws which
will vary depending on the relevant jurisdiction, and which may require resales
to be made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
the common stock.

                                       70
<PAGE>   74

REPRESENTATIONS OF PURCHASERS

     Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom such
purchase confirmation is received that: (i) such purchaser is entitled under
applicable provincial securities laws to purchase such common stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, such purchaser is purchasing as a principal and not as an
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions."

RIGHTS OF ACTION (ONTARIO PURCHASERS)

     The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.

ENFORCEMENT OF LEGAL RIGHTS

     All the issuer's directors and officers as well as the experts we name
herein may be located outside Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

     A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one such report
must be filed in respect of common stock acquired on the same date and under the
same prospectus exemption.

TAXATION AND ELIGIBILITY FOR INVESTMENT

     Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences in their particular circumstances
of an investment in our common stock and with respect to the eligibility of our
common stock for investment by the purchaser under relevant Canadian
legislation.

                                 LEGAL MATTERS

     The validity of the common stock offered hereby will be passed upon for us
by Orrick, Herrington & Sutcliffe LLP, Los Angeles, California. Orrick,
Herrington & Sutcliffe LLP owns a total of 5,797 shares of our preferred stock
and warrants to purchase 1,159 shares of our common stock. Individuals who are
partners of Orrick, Herrington & Sutcliffe LLP own 3,797 shares of our preferred
stock and warrants to purchase 751 shares of our common stock. Certain legal
matters in connection with this offering will be passed upon for the
underwriters by Latham & Watkins, Los Angeles, California.

                                    EXPERTS

     The consolidated balance sheets as of December 31, 1999 and 1998, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for each of the three years in the period ended December 31, 1999
included in the prospectus and elsewhere in the registration statement

                                       71
<PAGE>   75

have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of such firm as experts in accounting and auditing
in giving said report.

                   WHERE YOU CAN FIND ADDITIONAL INFORMATION

     We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the common stock
offered by this prospectus. This prospectus does not contain all the information
set forth in the registration statement and its exhibits and schedules. For
further information about us and our common stock, we refer you to the
registration statement and to its exhibits and schedules. Statements made in
this prospectus concerning the contents of any document referred to in this
prospectus are not necessarily complete. With respect to each such document
filed as an exhibit to the registration statement, we refer you to the exhibit
for a more complete description of the matter involved. Each statement in this
prospectus relating to a contract or document filed as an exhibit to the
registration statement is qualified in all respects by the filed exhibit. You
may read or obtain a copy of the registration statement with exhibits at the
SEC's public reference room located at 450 Fifth Street, N.W., Washington, DC
20549. You may obtain information on the operation of the public reference room
by calling the SEC at 1-800-SEC-0300. The SEC maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC. The address of the site is
http://www.sec.gov.

     As a result of the offering, the information and reporting requirements of
the Securities Exchange Act of 1934, as amended, will apply to us. We will
fulfill our obligations with respect to those requirements by filing periodic
reports and other information with the SEC. We intend to furnish our
stockholders with annual reports containing consolidated financial statements
certified by an independent public accounting firm.

                                       72
<PAGE>   76

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Public Accountants....................  F-2
Consolidated Balance Sheets.................................  F-3
Consolidated Statements of Operations.......................  F-4
Consolidated Statements of Stockholders' Equity (Deficit)...  F-5
Consolidated Statements of Cash Flows.......................  F-6
Notes to Consolidated Financial Statements..................  F-7
</TABLE>

                               ------------------

The information required by the applicable financial statement schedules has
been disclosed in the financial statements and notes thereto and, accordingly,
the schedules have been omitted.

                                       F-1
<PAGE>   77

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Novatel Wireless, Inc.:

     We have audited the accompanying consolidated balance sheets of Novatel
Wireless, Inc. (a Delaware corporation) and Subsidiaries as of December 31, 1999
and 1998, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for each of the three years in the period ended
December 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Novatel Wireless, Inc. and
Subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.

/s/ ARTHUR ANDERSEN LLP

San Diego, California
July 26, 2000

                                       F-2
<PAGE>   78

                             NOVATEL WIRELESS, INC.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                             PRO FORMA
                                                     DECEMBER 31,                          STOCKHOLDERS'
                                              ---------------------------    MARCH 31,         EQUITY
                                                  1998           1999           2000       MARCH 31, 2000
                                              ------------   ------------   ------------   --------------
                                                                            (UNAUDITED)     (UNAUDITED)
<S>                                           <C>            <C>            <C>            <C>
                                                 ASSETS
Current assets:
  Cash and cash equivalents.................  $  3,497,000   $ 25,455,000   $ 14,065,000
  Short-term investments....................       296,000             --             --
  Accounts receivable, net of reserve of
    $44,000
    (1998), $181,000 (1999), and $212,000
       (2000)...............................       607,000      1,345,000      2,753,000
  Inventories...............................       656,000      4,706,000      6,758,000
  Due from supplier.........................            --      4,732,000      4,712,000
  Prepaid expenses and other................       224,000        480,000        742,000
                                              ------------   ------------   ------------
    Total current assets....................     5,280,000     36,718,000     29,030,000
                                              ------------   ------------   ------------
  Property and equipment, net...............       904,000      1,346,000      2,280,000
  Intangible asset..........................            --             --        225,000
  Other assets..............................            --         54,000        138,000
                                              ------------   ------------   ------------
                                              $  6,184,000   $ 38,118,000   $ 31,673,000
                                              ============   ============   ============

                             LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
  Accounts payable..........................  $  1,169,000   $ 11,560,000   $ 13,297,000
  Accrued expenses..........................       728,000      1,174,000      1,531,000
  Deferred revenues.........................            --      8,134,000      5,733,000
  Current portion of capital lease
    obligations.............................            --         81,000         74,000
                                              ------------   ------------   ------------
    Total current liabilities...............     1,897,000     20,949,000     20,635,000
                                              ------------   ------------   ------------
Capital lease obligations, net of current
  portion...................................            --        106,000         89,000
Convertible and redeemable minority
  interest..................................     4,100,000      4,386,000      4,457,000
Convertible and redeemable preferred stock,
  4,348,138 (1998), 8,022,415 (1999 and
  2000), and 0 (Pro Forma) shares issued and
  outstanding, at liquidation value, net of
  unamortized offering costs of $127,000
  (1998), $2,875,000 (1999) and $2,729,000
  (2000)....................................    14,812,000     43,805,000     44,833,000
Commitments and contingencies
Stockholders' equity (deficit):
  Common stock, par value $.001, 26,500,000
    shares authorized, 3,237,210 (1998),
    3,250,960 (1999), 3,366,960 (2000) and
    12,854,787 (Pro Forma) shares issued and
    outstanding.............................         3,000          3,000          3,000    $     13,000
  Additional paid-in capital................       782,000      4,791,000      5,131,000      54,411,000
  Deferred stock compensation...............      (161,000)      (800,000)      (986,000)       (986,000)
  Accumulated deficit.......................   (15,249,000)   (35,122,000)   (42,489,000)    (42,489,000)
                                              ------------   ------------   ------------    ------------
    Total stockholders' equity (deficit)....   (14,625,000)   (31,128,000)   (38,341,000)   $ 10,949,000
                                              ------------   ------------   ------------    ------------
                                              $  6,184,000   $ 38,118,000   $ 31,673,000
                                              ============   ============   ============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-3
<PAGE>   79

                             NOVATEL WIRELESS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                         YEAR ENDED DECEMBER 31,             QUARTER ENDED MARCH 31,
                                 ----------------------------------------   -------------------------
                                    1997          1998           1999          1999          2000
                                 -----------   -----------   ------------   -----------   -----------
                                                                            (UNAUDITED)   (UNAUDITED)
<S>                              <C>           <C>           <C>            <C>           <C>
Revenue........................  $ 3,354,000   $ 5,378,000   $  9,556,000   $ 1,273,000   $ 6,837,000
Cost of revenue................    1,136,000     3,433,000     11,955,000     1,076,000     7,865,000
                                 -----------   -----------   ------------   -----------   -----------
     Gross margin..............    2,218,000     1,945,000     (2,399,000)      197,000    (1,028,000)
                                 -----------   -----------   ------------   -----------   -----------
Operating costs and expenses:
  Research and development.....    2,715,000     2,333,000      3,717,000       457,000     2,076,000
  Sales and marketing..........    2,058,000     2,685,000      4,480,000       391,000     2,319,000
  General and administrative...    1,944,000     2,611,000      4,663,000       878,000     1,066,000
                                 -----------   -----------   ------------   -----------   -----------
                                   6,717,000     7,629,000     12,860,000     1,726,000     5,461,000
                                 -----------   -----------   ------------   -----------   -----------
     Operating loss............   (4,499,000)   (5,684,000)   (15,259,000)   (1,529,000)   (6,489,000)
Other income (expense):
  Interest income..............       23,000       178,000         47,000        17,000       215,000
  Interest expense.............           --            --     (3,267,000)           --       (11,000)
  Other, net...................           --            --         10,000        (1,000)       17,000
                                 -----------   -----------   ------------   -----------   -----------
     Net loss..................  $(4,476,000)  $(5,506,000)  $(18,469,000)  $(1,513,000)  $(6,268,000)
                                 ===========   ===========   ============   ===========   ===========
Per share date (Note 14):
  Net loss applicable to common
     stockholders..............  $(4,979,000)  $(6,657,000)  $(19,873,000)  $(1,863,000)  $(7,367,000)
  Weighted average shares used
     in computation of basic
     and diluted net loss per
     common share..............    3,237,210     3,237,210      3,242,807     3,237,210     3,339,998
                                 -----------   -----------   ------------   -----------   -----------
  Basic and diluted net loss
     per common share..........  $     (1.54)  $     (2.06)  $      (6.13)  $     (0.58)  $     (2.21)
                                 ===========   ===========   ============   ===========   ===========
  Shares used in computation of
     pro forma basic and
     diluted net loss per
     share.....................                                 9,066,423     9,050,760    12,827,825
                                                             ------------   -----------   -----------
  Pro forma basic and diluted
     net loss per share........                              $      (2.19)  $     (0.21)  $     (0.57)
                                                             ============   ===========   ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>   80

                             NOVATEL WIRELESS, INC.

           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                                   COMMON STOCK      ADDITIONAL                                      TOTAL
                                                ------------------    PAID-IN     ACCUMULATED      DEFERRED      STOCKHOLDERS'
                                                 SHARES     AMOUNT    CAPITAL       DEFICIT      COMPENSATION   EQUITY (DEFICIT)
                                                ---------   ------   ----------   ------------   ------------   ----------------
<S>                                             <C>         <C>      <C>          <C>            <C>            <C>
Balance, January 1, 1997......................  3,237,210   $3,000   $  506,000   $ (3,613,000)   $      --       $ (3,104,000)
  Accretion of dividends on minority interest
    in NWT....................................         --      --            --       (189,000)          --           (189,000)
  Accretion of dividends on convertible and
    redeemable preferred stock of NWI.........         --      --            --       (308,000)          --           (308,000)
  Amortization of offering costs for
    convertible and redeemable preferred
    stock.....................................         --      --            --         (6,000)          --             (6,000)
  Net loss....................................         --      --            --     (4,476,000)          --         (4,476,000)
                                                ---------   ------   ----------   ------------    ---------       ------------
Balance, December 31, 1997....................  3,237,210   3,000       506,000     (8,592,000)          --         (8,083,000)
  Deferred compensation for stock options
    issued....................................         --      --       276,000             --     (276,000)                --
  Amortization of deferred compensation.......         --      --            --             --      115,000            115,000
  Accretion of dividends on minority interest
    in NWT....................................         --      --            --       (273,000)          --           (273,000)
  Accretion of dividends on convertible and
    redeemable preferred stock of NWI.........         --      --            --       (859,000)          --           (859,000)
  Amortization of offering costs for
    convertible and redeemable preferred
    stock.....................................         --      --            --        (19,000)          --            (19,000)
  Net loss....................................         --      --            --     (5,506,000)          --         (5,506,000)
                                                ---------   ------   ----------   ------------    ---------       ------------
Balance, December 31, 1998....................  3,237,210   3,000       782,000    (15,249,000)    (161,000)       (14,625,000)
  Additional paid-in capital from stock
    options exercised.........................     13,750      --        30,000                                         30,000
  Deferred compensation for stock options
    issued....................................                 --       859,000             --     (859,000)                --
  Amortization of deferred compensation.......         --      --            --             --      220,000            220,000
  Accretion of dividends on minority interest
    in NWT....................................         --      --            --       (286,000)          --           (286,000)
  Accretion of dividends on convertible and
    redeemable preferred stock of NWI.........         --      --            --     (1,096,000)          --         (1,096,000)
  Amortization of offering costs for
    convertible and redeemable preferred
    stock.....................................         --      --            --        (22,000)          --            (22,000)
  Imputed value of warrants issued with
    convertible subordinated debentures.......         --      --     3,120,000             --           --          3,120,000
  Net loss....................................                                     (18,469,000)                    (18,469,000)
                                                ---------   ------   ----------   ------------    ---------       ------------
Balance, December 31, 1999....................  3,250,960   3,000     4,791,000    (35,122,000)    (800,000)       (31,128,000)
  Additional paid-in capital from stock
    options exercised (unaudited).............    116,000      --        45,000             --           --             45,000
  Deferred compensation for stock options
    issued (unaudited)........................         --      --       295,000             --     (295,000)                --
  Amortization of deferred compensation
    (unaudited)...............................         --      --            --             --      109,000            109,000
  Accretion of dividends on minority interest
    in NWT (unaudited)........................         --      --            --        (71,000)          --            (71,000)
  Accretion of dividends on convertible and
    redeemable preferred stock of NWI
    (unaudited)...............................         --      --            --       (882,000)          --           (882,000)
  Amortization of offering costs for
    convertible and redeemable preferred stock
    (unaudited)...............................         --      --            --       (146,000)          --           (146,000)
  Net loss (unaudited)........................         --      --            --     (6,268,000)          --         (6,268,000)
                                                ---------   ------   ----------   ------------    ---------       ------------
Balance, March 31, 2000 (unaudited)...........  3,366,960   $3,000   $5,131,000   $(42,489,000)   $(986,000)      $(38,341,000)
                                                =========   ======   ==========   ============    =========       ============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-5
<PAGE>   81

                             NOVATEL WIRELESS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,             QUARTER ENDED MARCH 31,
                                                      ----------------------------------------   --------------------------
                                                         1997          1998           1999          1999           2000
                                                      -----------   -----------   ------------   -----------   ------------
                                                                                                 (UNAUDITED)   (UNAUDITED)
<S>                                                   <C>           <C>           <C>            <C>           <C>
Operating activities:
  Net loss..........................................  $(4,476,000)  $(5,506,000)  $(18,469,000)  $(1,513,000)  $ (6,268,000)
  Adjustments to reconcile net loss to net cash used
    in operating activities:
    Depreciation and amortization...................      462,000       442,000        672,000        89,000        200,000
    Provision for bad debt..........................           --            --        137,000            --         31,000
    Compensation for stock options issued below fair
      value.........................................           --       115,000        220,000        69,000        109,000
    Compensation for warrants issued in connection
      with convertible subordinated debentures......           --            --      3,120,000            --             --
    Changes in assets and liabilities:
      Accounts receivable...........................      (56,000)     (214,000)      (875,000)     (391,000)    (1,439,000)
      Due from supplier.............................           --            --     (4,732,000)           --         20,000
      Inventories...................................       22,000      (226,000)    (4,050,000)     (102,000)    (2,052,000)
      Prepaid expenses and other....................      (86,000)     (127,000)      (256,000)      (67,000)      (262,000)
      Other assets..................................           --            --        (54,000)           --        (84,000)
      Accounts payable..............................      544,000       332,000     10,391,000       179,000      1,737,000
      Accrued expenses..............................       78,000       156,000        576,000        (8,000)       357,000
      Deferred revenues.............................           --            --      8,134,000            --     (2,401,000)
                                                      -----------   -----------   ------------   -----------   ------------
        Net cash used in operating activities.......   (3,512,000)   (5,028,000)    (5,186,000)   (1,744,000)   (10,052,000)
                                                      -----------   -----------   ------------   -----------   ------------
Investing activities:
  Purchases of property and equipment...............     (521,000)     (313,000)      (880,000)     (179,000)    (1,134,000)
  Purchase of intangibles...........................           --            --             --            --       (225,000)
  Net change in short-term investments..............     (260,000)      (36,000)       296,000       296,000             --
                                                      -----------   -----------   ------------   -----------   ------------
        Net cash (used in) provided by investing
          activities................................     (781,000)     (349,000)      (584,000)      117,000     (1,359,000)
                                                      -----------   -----------   ------------   -----------   ------------
Financing activities:
  Borrowings on promissory notes....................      500,000            --             --            --             --
  Payments on promissory notes......................   (1,000,000)     (500,000)            --            --             --
  Issuance of convertible and redeemable preferred
    stock...........................................    4,128,000     7,197,000     24,625,000            --             --
  Issuance of convertible and redeemable minority
    interest shares.................................    1,070,000       510,000             --            --             --
  Proceeds from exercise of stock options...........           --            --         30,000            --         45,000
  Proceeds from issuance of convertible subordinated
    debentures......................................           --            --      3,120,000            --             --
  Payments under capital lease obligation...........           --            --        (47,000)           --        (24,000)
                                                      -----------   -----------   ------------   -----------   ------------
        Net cash provided by financing activities...    4,698,000     7,207,000     27,728,000            --         21,000
                                                      -----------   -----------   ------------   -----------   ------------
        Net increase (decrease) in cash and cash
          equivalents...............................      405,000     1,830,000     21,958,000    (1,627,000)   (11,390,000)
Cash and cash equivalents, beginning of period......    1,262,000     1,667,000      3,497,000     3,497,000     25,455,000
                                                      -----------   -----------   ------------   -----------   ------------
Cash and cash equivalents, end of period............  $ 1,667,000   $ 3,497,000   $ 25,455,000   $ 1,870,000   $ 14,065,000
                                                      ===========   ===========   ============   ===========   ============
Supplemental disclosures of non-cash investing and
  financing activities:
  Conversion of convertible subordinated debentures
    and related accrued interest into Series C
    convertible and redeemable preferred stock......  $        --   $        --   $  3,250,000   $        --   $         --
  Accretion of dividends on minority interest.......     (189,000)     (273,000)      (286,000)      (71,000)       (71,000)
  Accretion of dividends on convertible and
    redeemable preferred stock......................     (308,000)     (859,000)    (1,096,000)     (274,000)      (882,000)
  Amortization of offering costs for convertible and
    redeemable preferred stock......................       (6,000)      (19,000)       (22,000)       (5,000)      (146,000)
  Deferred compensation for stock options issued....           --       276,000        859,000            --        295,000
  Property and equipment acquired under capital
    lease obligations...............................           --            --        234,000            --             --
Supplemental disclosures of cash flows information:
  Cash paid during the period for:
    Interest........................................  $        --   $        --   $      7,000   $        --   $      2,000
    Income taxes....................................        1,000         1,000          1,000         1,000          1,000
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-6
<PAGE>   82

                             NOVATEL WIRELESS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

1. THE COMPANY

     Novatel Wireless, Inc., a Delaware corporation ("Novatel," "NWI," the
"Company," or "we") is headquartered in San Diego, California. We are a provider
of wireless data communications access solutions. We provide wireless data
modems and enabling software for use with handheld computing devices and
portable personal computers. We also provide wireless data modems that can be
integrated into other devices for vertical OEM applications. Our products enable
professionals and consumers to access enterprise networks and the Internet.

     Prior to being established as an independent operating entity in April of
1996, the Company was formerly the Personal Communications Product Division of
NovAtel Communications, a Canadian telecommunications company. The Company's
subsidiaries include wholly owned Novatel Wireless Solutions, Inc., incorporated
in Delaware, and fifty-percent owned Novatel Wireless Technologies Ltd. ("NWT"),
incorporated in Alberta, Canada.

2. RISKS AND UNCERTAINTIES

Company Operations

     The Company is subject to a number of risks and uncertainties associated
with companies at a similar stage of maturity, has only a limited operating
history and the revenue and income potential of the Company's business and
market are unproven. Further, the market for wireless Internet products and
services is relatively new and rapidly evolving both technologically and
competitively.

     The Company has experienced net losses in each year since its inception and
had an accumulated deficit of $35.1 million at December 31, 1999 and $42.5
million (unaudited) at March 31, 2000. The Company incurred net losses of $4.5
million, $5.5 million, $18.5 million, $1.5 million (unaudited) and $6.3 million
(unaudited) and negative cash flows from operations of $3.5 million, $5.0
million, $5.2 million, $1.7 million (unaudited) and $10.1 million (unaudited)
for the years ended December 31, 1997, 1998 and 1999 and the quarters ended
March 31, 1999 and 2000, respectively. The Company expects to continue to incur
net losses for at least the next several quarters. While the Company is unable
to predict accurately its future operating expenses, the Company currently
expects these expenses to increase substantially, as it, among other things,
expands its selling and marketing activities, increases its research and
development efforts to upgrade its existing services and develop new services
and technologies, upgrades its operational and financial systems, procedures and
controls, and hires and trains additional personnel.

     The Company will need to significantly increase its revenues to achieve and
maintain profitability. If we fail to significantly increase our revenues, the
Company will continue to experience losses indefinitely and, accordingly, the
Company may be required to obtain additional financing in the future. Management
believes that the Company's cash reserves including net proceeds from the Series
D financing (see Note 3) will be sufficient to fund operations for at least the
next twelve months.

Initial Public Offering

     In April 2000, the Company's Board of Directors authorized management to
file a registration statement with the Securities and Exchange Commission to
permit the Company to offer shares of common stock to the public. In April 2000,
the Company's Board of Directors authorized an increase in the capitalization of
the Company to 350,000,000 shares of common stock, par value $.001 per share,
and up to 15,000,000 shares of undesignated preferred stock, par value $.001 per
share, upon the effective date of the Company's public offering. If the offering
is consummated under terms presently anticipated, all

                                       F-7
<PAGE>   83
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

outstanding shares of convertible and redeemable preferred stock and minority
interest shares outstanding at March 31, 2000 will convert into 9,487,827 shares
of common stock. Unaudited pro forma stockholders' equity reflects the assumed
conversion of the convertible and redeemable preferred stock and minority
interest shares outstanding at March 31, 2000 into common stock.

3. RECENT FINANCINGS

Series D

     In June and July of 2000, the Company issued 1,964,050 shares of Series D
preferred stock to accredited investors in a private offering. Net proceeds from
the financing amounted to approximately $33.6 million, or $17.25 per share,
after offering costs of approximately $320,000. We also issued warrants to
purchase a total of 392,800 shares of NWI common stock at an exercise price of
$17.25 expiring June 30, 2005.

     The Company amended its Certificate of Incorporation to authorize 2,600,000
shares of Series D Convertible Preferred Stock, par value $0.001.

Line of Credit Commitment

     In July 2000, the Company entered into a commitment for credit facility
with a bank, which will allow the Company to borrow up to the lesser of $10
million or 80% of eligible accounts receivable. This credit facility will bear
interest at prime plus 1%, will be collateralized by substantially all assets of
the Company and will expire in June 2001.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

     The consolidated financial statements include the accounts of Novatel and
its subsidiaries. All significant intercompany transactions and balances have
been eliminated in consolidation. Certain reclassifications have been made to
amounts included in the prior years' financial statements to conform to the
presentation for the year ended December 31, 1999.

Unaudited Interim Results

     The accompanying balance sheet as of March 31, 2000, the statements of
operations and cash flows for the three months ended March 31, 1999 and March
31, 2000 and the statement of stockholders' equity (deficit) for the three
months ended March 31, 2000 are unaudited. The unaudited interim financial
statements have been prepared on the same basis as the annual financial
statements and, in the opinion of management, reflect all adjustments, which
include only normal recurring adjustments, necessary to present fairly the
Company's financial position and its results of operations and its cash flows
for the three months ended March 31, 1999 and March 31, 2000. The financial data
and other information disclosed in these notes to financial statements related
to these periods are also unaudited. The results for the three months ended
March 31, 2000 are not necessarily indicative of the results to be expected for
the year ending December 31, 2000.

Use of Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions. These estimates and

                                       F-8
<PAGE>   84
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

assumptions affect the reported amounts of assets, liabilities, revenues,
expenses and disclosures of contingent assets and liabilities. Actual results
could differ from these estimates.

Revenue Recognition

     Revenues from product sales and services are recognized upon the later of
transfer of title or upon shipment of the product to the customer and upon
rendering services. Our customers include distributors, resellers and individual
end users. We recognize contract research and development agreements when
certain criteria stipulated under the terms of those agreements have been met.
We record deferred revenue for cash payments received from customers in advance
of the revenue recognition criteria being met.

     In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 summarizes the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
SAB No. 101 is effective during the fourth quarter of fiscal 2000. Management
has reviewed and adopted the provisions of SAB No. 101 which did not have a
material impact on the Company's financial position or results of operations.

Research and Development Costs

     Research and development costs are expensed as incurred. To date, we have
not incurred significant software development costs that would be capitalized in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 86,
"Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise
Marketed."

Warranty Costs

     We accrue warranty costs based on our best estimates, with reference to our
past experience.

Cash and Cash Equivalents

     Cash and cash equivalents include highly liquid investments with original
maturities of three months or less. Cash and cash equivalents consist of money
market and mutual funds and are carried at market, which approximates cost.

Short-Term Investments

     From time to time, the Company invests its excess cash in U.S. government
securities and debt instruments of financial institutions and corporations with
strong credit ratings. The Company has established guidelines to diversify its
short-term investments and their maturities to manage safety and liquidity.
These guidelines are periodically reviewed and modified to take advantage of
trends in yields and interest rates. The Company has not experienced any
significant losses on its short-term investments.

Inventories

     Inventories are stated at the lower of cost (first-in, first-out method) or
market. The Company provides reserves against inventories which it believes to
be excess or obsolete to state such inventories at realizable value.

                                       F-9
<PAGE>   85
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

Due from Supplier

     Due from supplier represents amounts due from the Company's outsourced
product manufacturer from the sale of materials inventories by the Company to
the manufacturer. These sales represented a transfer of assets and were not
recognized as revenues in the accompanying consolidated statements of
operations.

Property and Equipment

     Property and equipment are stated at cost and depreciated primarily using
the straight-line method. Test equipment, computer equipment and software,
furniture and fixtures and product tooling are depreciated over lives between
one and five years and leasehold improvements are depreciated over the shorter
of the related lease period or useful life.

Intangible Asset

     Intangible asset consists of a non-exclusive and perpetual worldwide
software product license. The Company capitalized the cost to acquire the
license and will amortize the cost on a straight-line basis over the estimated
useful life of the asset.

Long-Lived Assets

     The Company continually evaluates the carrying value of the unamortized
balances of its long-lived assets to determine whether any impairment of these
assets has occurred or whether any revision to the related amortization periods
should be made. This evaluation is based on management's projections of the
undiscounted future cash flows associated with each asset. If management's
evaluation were to indicate that the carrying values of these assets were
impaired, such impairment would be recognized by a write down of the applicable
asset to its estimated fair value and expensed through operations.

Income Taxes

     The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires the use of the liability method of
accounting for deferred income taxes. Under this method, deferred income taxes
are recorded to reflect the tax consequences on future years of temporary
differences between the tax bases of assets and liabilities and their financial
reporting amounts at each period end. If it is more likely than not that some
portion or all of a deferred tax asset will not be realized, a valuation
allowance is recognized.

Stock-Based Compensation

     As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company accounts for costs of stock-based employee compensation in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees." Accordingly, the Company discloses the pro forma
effect on net loss and related per share amounts as if the fair-value method
prescribed by SFAS No. 123 had been used to account for its stock-based employee
compensation. The Company accounts for equity instruments issued to
non-employees in accordance with the provisions of SFAS No. 123 and related
interpretations.

                                      F-10
<PAGE>   86
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

Computation of Net Loss Per Share

     SFAS No. 128, "Earnings Per Share," requires companies to compute basic and
diluted per share data for all periods for which a statement of operations is
presented. Basic net loss per share is computed by dividing the net loss
applicable to common stockholders by the weighted average number of common
shares that were outstanding during the period. Diluted earnings per share is
computed by giving effect to all potentially dilutive securities that were
outstanding for the periods presented. Potentially dilutive securities
consisting of options, warrants, convertible and redeemable minority interest
and convertible and redeemable preferred stock were not considered in the
calculation of diluted earnings per share as their impact would be antidilutive.
For the periods presented, there is no difference between the basic and diluted
net loss per share.

     Pro forma net loss per share (unaudited) is computed by dividing net loss
applicable to common stockholders by the weighted average number of common
shares outstanding and the weighted average number of shares of convertible and
redeemable preferred stock, including the minority interest shares, outstanding
as if such shares were converted to common stock at the time of issuance.

Foreign Currency Translation

     Monetary balance sheet accounts of the Company's Canadian subsidiary are
translated from Canadian dollars into U.S. dollars at the exchange rate in
effect at the balance sheet date, non-monetary balance sheet accounts are
translated at historical rates and revenue and expense accounts are translated
using an average exchange rate during the period of recognition. The functional
currency of the Canadian subsidiary is the U.S. dollar, thus translation gains
and losses are reflected in operations. Exchange gains and losses arising from
transactions denominated in foreign currencies are recorded using the actual
exchange differences on the date of the transaction and are reflected in
operations.

Fair Value of Financial Instruments

     The carrying amounts of the Company's financial instruments, primarily
including cash, accounts receivable, accounts payable and accrued expenses
approximate their fair value due to their short term nature. The Company
performs credit evaluations of key customers and management believes it is not
exposed to significant credit risk on its accounts receivable in excess of
established reserves.

Comprehensive Income

     SFAS No. 130, "Comprehensive Income," requires that all items recognized
under accounting standards as components of comprehensive income be reported
with the same prominence as other financial statements. The Company has no items
requiring separate display of comprehensive income.

Segment Information

     SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information," requires public companies to report financial and descriptive
information about their reportable operating segments. The Company identifies
its operating segments based on how management internally evaluates separate
financial information, business activities and management responsibility. The
Company believes it operates in a single business segment consisting of the
development, manufacture and sale of wireless Internet products.

                                      F-11
<PAGE>   87
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

Recent Accounting Pronouncements

     In 1998, the Financial Accounting Standards Board, ("FASB"), issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities" and in
June 1999 issued SFAS No. 137, "Accounting for Derivatives and Hedging
Activities -- Deferral of the Effective Date of FASB Statement No. 133." Under
SFAS No. 133, derivatives not meeting hedge criteria are recorded in the balance
sheet as either an asset or liability measured at fair value and changes in fair
value are recognized currently in earnings. The Company will be required to
implement SFAS No. 133, as amended by SFAS No. 137, in fiscal 2001. The Company
does not anticipate that the adoption of SFAS No. 133, as amended by SFAS No.
137, will have a material impact on its financial position or results of
operations.

5. FINANCIAL STATEMENT DETAILS

Due from Supplier

     Due from supplier represents amounts due from the Company's third party
product manufacturer from the sale of materials inventories by the Company to
the manufacturer. These sales represented a transfer of assets and were not
recognized as revenues in the accompanying consolidated statements of
operations. At December 31, 1999, the inventory amount sold to and due from
supplier was $4.7 million. Subsequent to year-end, we received $4.5 million of
this receivable from our supplier.

Inventories

     Inventories consist of the following:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                         ----------------------     MARCH 31,
                                                           1998         1999          2000
                                                         --------    ----------    -----------
                                                                                   (UNAUDITED)
<S>                                                      <C>         <C>           <C>
Finished goods.........................................  $656,000    $3,377,000    $ 4,063,000
Raw materials and components...........................        --     1,942,000      3,645,000
                                                         --------    ----------    -----------
                                                          656,000     5,319,000      7,708,000
  Less -- reserve for estimated excess and
     obsolescence......................................        --      (613,000)      (950,000)
                                                         --------    ----------    -----------
                                                         $656,000    $4,706,000    $ 6,758,000
                                                         ========    ==========    ===========
</TABLE>

Property and Equipment

     Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                      --------------------------     MARCH 31,
                                                         1998           1999           2000
                                                      -----------    -----------    -----------
                                                                                    (UNAUDITED)
<S>                                                   <C>            <C>            <C>
Test equipment......................................  $   449,000    $   650,000    $ 1,071,000
Computer equipment and purchased software...........    1,013,000      1,550,000      2,001,000
Furniture and fixtures..............................      291,000        396,000        407,000
Product tooling.....................................      235,000        491,000        507,000
Leasehold improvements..............................           --         15,000        250,000
                                                      -----------    -----------    -----------
                                                      $ 1,988,000      3,102,000      4,236,000
  Less -- accumulated depreciation and
     amortization...................................   (1,084,000)    (1,756,000)    (1,956,000)
                                                      -----------    -----------    -----------
                                                      $   904,000    $ 1,346,000    $ 2,280,000
                                                      ===========    ===========    ===========
</TABLE>

                                      F-12
<PAGE>   88
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

     Depreciation expense was $462,000, $442,000, $672,000, $89,000 (unaudited)
and $200,000 (unaudited) for the years ended December 31, 1997, 1998, 1999 and
the quarters ended March 31, 1999 and 2000, respectively. At December 31, 1999,
assets held under capital leases had a net book value of $190,000, net of
accumulated amortization of $31,000.

Accrued Expenses

     Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                          ----------------------     MARCH 31,
                                                            1998         1999          2000
                                                          --------    ----------    -----------
                                                                                    (UNAUDITED)
<S>                                                       <C>         <C>           <C>
Sales taxes.............................................  $  5,000    $  346,000    $  310,000
Payroll and related.....................................    80,000       430,000       739,000
Product warranty........................................   244,000       236,000       347,000
Royalties...............................................   176,000        62,000            --
Other...................................................   223,000       100,000       135,000
                                                          --------    ----------    ----------
                                                          $728,000    $1,174,000    $1,531,000
                                                          ========    ==========    ==========
</TABLE>

6. LINE OF CREDIT

     The Company has a line of credit agreement with a bank that allows the
Company to borrow the lesser of $2.5 million, or 80%, of eligible accounts
receivable balances plus 40% of raw materials and finished goods inventories, as
defined in the agreement. The line of credit bears interest at prime rate plus
0.5% (9.0% at December 31, 1999), is collateralized by substantially all assets
of the Company and expires during September 2000. In connection with this line
of credit, 23,810 NWI warrants were granted to purchase shares of Series C
convertible and redeemable preferred stock. As of December 31, 1999 and March
31, 2000 (unaudited), there were no borrowings outstanding under the line of
credit. However, the Company was in violation of certain covenants defined in
the line of credit agreement. The Company has obtained a waiver from the bank
related to such covenant violations through March 31, 2000. (See Note 3)

7. CONVERTIBLE AND REDEEMABLE MINORITY INTEREST

     Minority interest consists of 1,251,798 Series A convertible and redeemable
preferred shares (Series A shares) and 213,614 Series B (Series B shares)
convertible and redeemable preferred shares of NWT at December 31, 1998 and
1999.

     In 1996, we issued 937,500 Series A shares to accredited investors in a
private offering. Proceeds from the financing were approximately $1,997,000, or
$2.13 per share.

     In 1997, we issued 314,298 Series A shares to accredited investors in a
private offering. Proceeds from the financing were approximately $669,000, or
$2.13 per share. Additionally, we issued 93,896 Series B shares to accredited
investors in a private offering. Proceeds from the financing were approximately
$400,000, or $4.26 per share. In connection with this offering, we also issued
warrants to purchase a total of 35,211 shares of NWT common stock at an exercise
price of $4.26 on or prior to December 31, 2002.

     In 1998, we issued 119,718 Series B shares to accredited investors in a
private offering. Proceeds from the financing were approximately $510,000, or
$4.26 per share. We also issued warrants to purchase a total of 44,894 shares of
NWT common stock at an exercise price of $4.26 on or prior to April 24, 2003.

                                      F-13
<PAGE>   89
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

     The NWT Series A shares are exchangeable at the option of the holder, on a
1:1 basis to NWI Series A preferred shares without the payment of any additional
consideration any time after issuance but before August 21, 2002. The NWT Series
B shares are exchangeable, at the option of the holder, on a 1:1 basis to NWI
Series B preferred shares without the payment of any additional consideration
any time after issuance but before December 23, 2003. In the event that NWI
becomes listed on a public exchange, the Company has the right to require
holders of the Series A and Series B shares to exchange all such shares into NWI
Series A and NWI Series B shares. In the event that NWT becomes listed on a
public exchange, merges or consolidates with or into another company or sells
all or substantially all of its assets, these Series A and Series B shares would
be automatically converted into NWT common shares, provided certain minimum
proceeds requirements are met. Further, automatic conversion into NWT common
shares for each Series would occur provided two-thirds of the preferred
stockholders of that Series voted to convert.

     NWT's preferred stockholders may elect, after August 21, 2000 for Series A
preferred shares and after December 23, 2001 for Series B preferred shares, to
have NWT redeem the shares provided that funds are legally available. After
August 21, 2002 for Series A preferred shares and after December 23, 2003 for
Series B preferred shares, NWT must redeem all of the outstanding preferred
shares provided that funds are legally available. If funds legally available are
not sufficient to redeem the total number of shares submitted for redemption, or
those subject to mandatory redemption, those shares not redeemed will carry a
dividend rate of 12%.

     Each of NWT's preferred stockholders are entitled to receive, from funds
legally available, a cumulative annual dividend of 8% per annum based on their
respective purchase price upon any liquidation, dissolution or winding up of the
affairs of NWT, redemption, or when declared by the Board of Directors provided
that, upon optional or automatic conversion of the preferred shares, all accrued
and unpaid dividends are forfeited. Dividends on these shares of $189,000,
$273,000, $286,000, $71,000 (unaudited) and $71,000 (unaudited) for the years
ended December 31, 1997, 1998 and 1999 and for the quarters ended March 31, 1999
and 2000, respectively, have been accrued and recorded in the accompanying
consolidated financial statements.

8. CONVERTIBLE AND REDEEMABLE PREFERRED STOCK

     The Company has three classes of convertible and redeemable preferred stock
as follows.

<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                      --------------------------     MARCH 31,
                                                         1998           1999           2000
                                                      -----------    -----------    -----------
                                                                                    (UNAUDITED)
<S>                                                   <C>            <C>            <C>
Convertible and redeemable preferred stock, Series
  A, par value $.001, 5,500,000 shares authorized,
  2,263,857 shares issued and outstanding...........  $ 5,472,000    $ 5,870,000    $ 5,969,000
Convertible and redeemable preferred stock, Series
  B, par value $.001, 2,500,000 shares authorized
  (161,747 are non-voting), 2,084,281 shares issued
  and outstanding...................................    9,340,000     10,060,000     10,240,000
Convertible and redeemable preferred stock, Series
  C, par value $.001, 5,500,000 shares authorized,
  3,674,277 shares issued and outstanding...........           --     27,875,000     28,624,000
                                                      -----------    -----------    -----------
                                                      $14,812,000    $43,805,000    $44,833,000
                                                      ===========    ===========    ===========
</TABLE>

                                      F-14
<PAGE>   90
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

     In 1996, the Company issued 1,029,855 shares of Series A convertible and
redeemable preferred stock (Series A) to accredited investors in a private
offering. Proceeds from the financing were approximately $2,194,000, or $2.13
per share.

     In 1997, the Company issued 1,234,002 shares of Series A preferred stock to
accredited investors in a private offering. Proceeds from the financing were
approximately $2,628,000, or $2.13 per share and related offering costs were
approximately $83,000. Additionally, we issued 375,587 shares of Series B
convertible and redeemable preferred stock (Series B) to accredited investors in
a private offering. Proceeds from the financing were approximately $1,600,000,
or $4.26 per share and related offering costs were approximately $17,000. We
also issued warrants to purchase a total of 140,845 shares of NWI common stock
at an exercise price of $4.26 on or prior to December 31, 2002.

     In 1998, the Company issued 1,708,694 shares of Series B preferred stock to
accredited investors in a private offering. Proceeds from the financing were
approximately $7,279,000, or $4.26 per share and related offering costs were
approximately $82,000. We also issued warrants to purchase a total of 640,760
shares of NWI common stock at an exercise price of $4.26 on or prior to December
31, 2004.

     In December 1999, the Company issued 3,674,277 shares of Series C
convertible and redeemable preferred stock (Series C) to accredited investors in
a private offering at a price of $8.34 per share. Proceeds from the financing
were approximately $27,875,000, including conversion of subordinated debentures
of $3,120,000 and related accrued interest of $130,000 after deducting offering
costs and underwriters' commissions of approximately $2,768,000.

     Subject to adjustment under certain circumstances, the Series A, Series B,
and Series C shares are convertible to NWI common shares on a 1:1 basis without
the payment of additional consideration at the option of the holder at any time
after issuance but before August 21, 2002 for Series A, before December 23, 2001
for Series B, and before June 30, 2001 for Series C. Automatic conversion occurs
if:

          a. NWI becomes listed on a public exchange with minimum net proceeds
     of $10 million and the offering price is not less than $4.26 per share for
     Series A, $7.50 per share for Series B, and $14.60 per share for Series C.

          b. NWI sells all or substantially all of its assets, merges or
     consolidates into or with another corporation provided the portion of
     proceeds distributable are not less than $4.26 per share for Series A,
     $7.50 per share for Series B, and $14.60 per share for Series C.

          c. Two-thirds of each Series of the preferred stockholders vote to
     convert.

     Holders of the Series A, Series B and Series C shares may elect, after
January 1, 2005 to have the Company redeem the shares, provided that funds are
legally available. After January 1, 2005, the Company must redeem all of the
outstanding preferred shares, provided that funds are legally available. If
funds legally available are not sufficient to redeem the total number of shares
submitted for redemption, or those subject to mandatory redemption, those shares
not redeemed will carry a dividend rate of 12%.

     The holders of the Series A, Series B and Series C shares are entitled to
receive, from funds legally available, a cumulative annual dividend of 8% of the
purchase price upon any liquidation, dissolution or winding up of the affairs of
the Company, upon redemption, or when declared by the Board of Directors,
provided that upon optional or automatic conversion of the preferred shares all
accrued and unpaid dividends shall be forfeited. Dividends on these shares of
$308,000, $859,000, $1,096,000, $274,000 (unaudited) and $882,000 (unaudited)
for the years ended December 31, 1997, 1998 and 1999, and the quarters ended
March 31, 1999 and 2000, respectively, have been accrued and recorded in the
accompanying consolidated financial statements.
                                      F-15
<PAGE>   91
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

9. STOCKHOLDERS' EQUITY

     During fiscal 1999, the Company amended its Certificate of Incorporation to
change its authorized share capital. As a result, the Company is authorized to
issue 26,500,000 shares of common stock, par value $.001; 5,500,000 shares of
Series A convertible and redeemable preferred stock, par value $.001; 2,500,000
shares of Series B convertible and redeemable preferred stock (of which 161,747
are non-voting), par value $.001; and 5,500,000 shares of Series C convertible
and redeemable preferred stock, par value $.001. With the exception of 18,788
outstanding shares of Series B convertible and redeemable preferred stock, all
outstanding shares carry voting rights (see Note 3).

Convertible Subordinated Debentures

     On June 24, 1999 and July 15, 1999, the Company issued convertible
subordinated debentures to accredited investors in the total principal amount of
$3,120,000 bearing interest at the rate of 8% per annum. The Company also issued
warrants to purchase a total of 1,310,002 common shares of NWI and 250,000
common shares of NWT at an exercise price of $2.00 per share. Of these warrants,
1,550,207 expire on June 24, 2004 and 9,795 expire on July 15, 2004. Immediately
upon the closing of the Series C preferred stock financing, the principal amount
under convertible subordinated debentures and accrued interest of approximately
$130,000 thereon converted into shares of Series C preferred stock at $8.34 per
share.

Warrants

     Since inception, NWI and NWT have issued warrants to purchase shares of NWI
and NWT stock to various investors and lenders as approved by the Board of
Directors.

     A summary of warrant activity is as follows:

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                         ------------------------------------------------------------------
                                                 1997                   1998                   1999
                                         --------------------   --------------------   --------------------
                                                     WEIGHTED               WEIGHTED               WEIGHTED
                                                     AVERAGE                AVERAGE                AVERAGE
                                          NUMBER     EXERCISE    NUMBER     EXERCISE    NUMBER     EXERCISE
                                         OF SHARES    PRICE     OF SHARES    PRICE     OF SHARES    PRICE
                                         ---------   --------   ---------   --------   ---------   --------
<S>                                      <C>         <C>        <C>         <C>        <C>         <C>
NWI WARRANTS
Outstanding, beginning of year.........        --        --      140,845     $4.26       781,605    $4.26
  Granted..............................   140,845     $4.26      640,760     $4.26     2,050,025    $4.84
                                          -------                -------               ---------
Outstanding, end of year...............   140,845     $4.26      781,605     $4.26     2,831,630    $4.68
                                          =======                =======               =========
NWT WARRANTS
Outstanding, beginning of year.........        --                 35,211     $4.26        80,105    $4.26
  Granted..............................    35,211     $4.26       44,894     $4.26       250,000    $2.00
                                          -------                -------               ---------
Outstanding, end of year...............    35,211     $4.26       80,105     $4.26       330,105    $2.55
                                          =======                =======               =========
</TABLE>

     In connection with Series C financing in 1999 (see Note 8), the Company
issued warrants to buy 716,213 common shares of the Company. These warrants may
be exercised at $10.00 per share (for 706,357 warrants) and $8.34 per share (for
9,856 warrants) at any time up to December 31, 2004. The Company estimated the
fair market value of these warrants at the date of issuance was nominal and,
accordingly, no value has been assigned to them.

                                      F-16
<PAGE>   92
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

     In connection with the convertible subordinated debenture transaction, the
Company issued warrants to buy 1,310,002 common shares of NWI and 250,000 common
shares of NWT. These warrants may be exercised at $2.00 per share. The Company
estimated that the fair value of the warrants at the date of issuance was
approximately $4.3 million as the exercise price per common share was less than
deemed fair value per common share. Accordingly, the Company allocated the gross
debenture proceeds of $3,120,000 toward the value of these warrants. This also
resulted in non-cash interest expense totaling $3,120,000 in fiscal 1999 to
accrete the debt discount (resulting from the allocation of proceeds to the
warrant) from the time of debenture issuance to conversion to Series C.

     In connection with line of credit financing (see Note 6), the Company
issued warrants to buy 23,810 Series C convertible and redeemable preferred
shares of the Company. These warrants may be exercised at $6.30 per share at any
time up to expiration at December 31, 2004. The Company believes the fair value
of these warrants at the date of issuance was nominal and, accordingly, no value
has been assigned to them.

     In connection with the Series B financing in 1997 and 1998 (see Note 8),
NWI issued warrants to buy 140,845 and 640,760 common shares of NWI,
respectively, and NWT issued warrants to buy 35,211 and 44,894 common shares of
NWT, respectively. These warrants may be exercised at $4.26 per share at any
time up to December 31, 2002 (for 176,056 of the warrants) and April 24, 2003
(for 685,654 of the warrants). The Company believes the fair market value of
these warrants at the date of issuance was nominal and, accordingly, no value
has been assigned to them.

Stock Option Plans

     The Company's June 1997 stock option plan (the "1997 Plan") for employees
authorizes the granting of options for up to 2,000,000 shares of the Company's
common stock as of December 31, 1999. Generally, options are to be granted at
prices equal to at least 100% of the fair value of the stock at the date of
grant, expire not later than ten years from the date of grant and become
exercisable ratably over a four-year period following the date of grant. From
time to time, as approved by the Company's Board of Directors, options with
differing terms have also been granted. The Plan provides that any shares issued
come from the Company's authorized but unissued or reacquired common stock.

     In July 2000 the Company's Board of Directors approved the 2000 Stock
Incentive Plan (the "2000 Plan"). The Company will implement the 2000 Plan upon
the effective date of an initial public offering (see Note 2). Options granted
under the 2000 Plan generally vest on the same terms as the 1997 Plan and are
exercisable for a period of ten years.

                                      F-17
<PAGE>   93
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

     A summary of stock option activity is as follows:

<TABLE>
<CAPTION>
                                                                       OPTIONS     WEIGHTED AVERAGE
                                                         OPTIONS      AVAILABLE     EXERCISE PRICE
                                                       OUTSTANDING    FOR GRANT       PER SHARE
                                                       -----------    ---------    ----------------
<S>                                                    <C>            <C>          <C>
Options authorized at inception (June 2, 1997).......          --       600,000            --
  Granted............................................     507,000      (507,000)        $2.16
  Cancelled..........................................     (38,500)       38,500         $2.13
  New authorized options.............................          --       196,050            --
                                                        ---------     ---------         -----
Options outstanding, December 31, 1997...............     468,500       327,550         $2.16
  New authorized options.............................          --       500,000            --
  Granted............................................     779,000      (779,000)        $2.51
  Cancelled..........................................    (107,500)      107,500         $2.28
                                                        ---------     ---------         -----
Options outstanding, December 31, 1998...............   1,140,000       156,050         $2.39
  New authorized options.............................          --       703,950            --
  Granted............................................     284,000      (284,000)        $2.86
  Exercised..........................................     (13,750)                      $2.13
  Cancelled..........................................     (66,250)       66,250         $2.34
                                                        ---------     ---------         -----
Options outstanding, December 31, 1999...............   1,344,000       642,250         $2.49
  Granted (unaudited)................................     125,000      (125,000)        $5.00
  Exercised (unaudited)..............................    (116,000)           --         $ .39
  Cancelled (unaudited)..............................     (28,000)       28,000         $2.31
                                                        ---------     ---------         -----
Options outstanding, March 31, 2000 (unaudited)......   1,325,000       545,250         $2.91
                                                        =========     =========         =====
Exercisable, December 31, 1997.......................       1,667                       $2.13
                                                        =========                       =====
Exercisable, December 31, 1998.......................     109,584                       $1.94
                                                        =========                       =====
Exercisable, December 31, 1999.......................     442,584                       $1.98
                                                        =========                       =====
Exercisable, March 31, 2000 (unaudited)..............     366,083                       $2.58
                                                        =========                       =====
</TABLE>

     Additional information relating to stock options outstanding and
exercisable at December 31, 1999, summarized by exercise price is as follows:

<TABLE>
<CAPTION>
                                OUTSTANDING                EXERCISABLE
                              WEIGHTED AVERAGE           WEIGHTED AVERAGE
      EXERCISE         ------------------------------   ------------------
        PRICE                       LIFE     EXERCISE             EXERCISE
      PER SHARE         SHARES     (YEARS)    PRICE     SHARES     PRICE
---------------------  ---------   -------   --------   -------   --------
<S>                    <C>         <C>       <C>        <C>       <C>
        $0.10            100,000    8.77      $0.10     100,000    $0.10
        $2.13            303,250    7.00       2.13     157,001     2.13
        $2.86            937,250    9.10       2.86     185,583     2.86
                       ---------                        -------
                       1,340,500                        442,584
                       =========                        =======
</TABLE>

     In 1998, the Company granted 100,000 options to an employee at $0.10 per
share. On the grant date, the deemed fair value of a share of common stock was
in excess of the exercise price. Accordingly, the Company has recognized gross
deferred compensation of $276,000, of which $115,000 and $161,000 were
recognized in 1998 and 1999, respectively.

     In 1999, the Company issued 284,000 options at $2.86 per share to
employees. On the grant dates the deemed fair value of a share of common stock
was in excess of $2.86 per share. Accordingly, the

                                      F-18
<PAGE>   94
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

Company has recognized gross deferred compensation related to these grants of
$859,000 of which $800,000 is unamortized as of December 31, 1999. This deferred
charge will be amortized to expense over the four-year vesting period of these
options.

     Of the remaining 1,186,000 options granted through December 31, 1999,
507,000 and 679,000 were granted in 1997 and 1998, respectively. These options
were granted at exercise prices which the Company believes approximated fair
value at the date of grant.

     In February 2000, the Company granted 125,000 additional stock options at
$5.00 per share. In connection with this grant, the Company has recorded
$295,000 (unaudited) of gross deferred stock compensation in the first quarter
of fiscal 2000. The deferred compensation will be amortized over the four year
vesting from the date of the grant.

     As permitted, the Company has adopted the disclosure only provisions of
SFAS No. 123. Accordingly, no compensation expense, except as specifically
described above, has been recognized for the stock option plans. The fair value
of these option grants were estimated on the date of grant using an
option-pricing model with the following weighted-average assumptions: zero
dividend yield; risk-free interest rates between 5.28% and 6.45%; and an
expected life of five years. Had compensation expense been determined based on
the fair value at the dates of grant for the years ended December 31, 1997,
1998, 1999 and for the quarters ended March 31, 1999 and 2000 consistent with
the provisions of SFAS No. 123, the Company's net loss per share would have been
reported as the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                         YEAR ENDED DECEMBER 31,             QUARTER ENDED MARCH 31,
                                 ----------------------------------------   -------------------------
                                    1997          1998           1999          1999          2000
                                 -----------   -----------   ------------   -----------   -----------
                                                                            (UNAUDITED)   (UNAUDITED)
<S>                              <C>           <C>           <C>            <C>           <C>
Net loss applicable to common
  stockholders, as reported....  $(4,979,000)  $(6,657,000)  $(19,873,000)  $(1,863,000)  $(7,367,000)
Net loss applicable to common
  stockholders, pro forma......  $(5,031,000)  $(6,789,000)  $(20,201,000)  $(1,939,000)  $(7,556,000)
Net loss per share, as
  reported.....................  $     (1.54)  $     (2.06)  $      (6.13)  $     (0.58)  $     (2.21)
Net loss per share, pro
  forma........................  $     (1.55)  $     (2.10)  $      (6.23)  $     (0.60)  $     (2.26)
</TABLE>

     The option pricing model was developed for use in estimating the fair value
of traded options that have no vesting restrictions and are fully transferable.
Option valuation models also require the input of highly subjective assumptions.
Because the Company's employee stock-based compensations plans have
characteristics significantly different from these of traded options and because
changes in the subjective input assumptions can materially affect fair value
estimates, the Company believes that existing option valuation models do not
necessarily provide a reliable single measure of the fair value of awards from
the plans.

                                      F-19
<PAGE>   95
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

Common Shares Reserved for Future Issuance

     The Company has reserved shares of common stock as follows:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,    MARCH 31,
                                                                  1999          2000
                                                              ------------   -----------
                                                                             (UNAUDITED)
<S>                                                           <C>            <C>
Stock options outstanding...................................    1,344,000     1,325,000
Stock options available for future grant....................      642,250       545,250
Conversion of:
  Series A NWI convertible and redeemable preferred stock...    2,263,857     2,263,857
  Series B NWI convertible and redeemable preferred stock...    2,084,281     2,084,281
  Series C NWI convertible and redeemable preferred stock...    3,674,277     3,674,277
  Series A NWT convertible and redeemable preferred stock...    1,251,798     1,251,798
  Series B NWT convertible and redeemable preferred stock...      213,614       213,614
  Stock warrants -- NWI.....................................    2,831,630     2,831,630
  Stock warrants -- NWT.....................................      330,105       330,105
                                                               ----------    ----------
     Total reserved shares for issuance of common stock.....   14,635,812    14,519,812
                                                               ==========    ==========
</TABLE>

Employee Stock Purchase Plan

     In July 2000, the Company's Board of Directors approved the 2000 Employee
Stock Purchase Plan (ESPP), subject to stockholder approval. The Company will
implement the ESPP upon the effective date of an initial public offering (see
Note 2). The ESPP, subject to certain limitations, will permit eligible
employees of the Company to purchase common stock through payroll deductions of
up to 10% of their compensation. The Company has authorized the issuance of
500,000 shares of common stock under the ESPP, plus an automatic annual
increase, to be added on the first day of the fiscal year beginning in 2001,
equal to the lesser of (a) 0.5% of the outstanding shares on the last day of the
prior fiscal year, (b) 90,000 shares, or such lesser number of shares as may
determined by the Board in its sole discretion. If purchases of stock through
the plan deplete this supply, we will limit, suspend or discontinue purchases
under the plan until additional shares of stock are available.

                                      F-20
<PAGE>   96
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

10. INCOME TAXES

     The Company's deferred tax assets and liabilities consist of the following:

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                              --------------------------
                                                                 1998           1999
                                                              -----------    -----------
<S>                                                           <C>            <C>
Current deferred taxes:
  Accounts receivable reserve...............................  $    18,000    $   327,000
  Accrued expenses..........................................      125,000        393,000
  Other.....................................................           --        183,000
                                                              -----------    -----------
  Deferred tax asset -- current.............................      143,000        903,000
  Valuation allowance.......................................     (143,000)      (903,000)
                                                              -----------    -----------
  Net current deferred taxes................................           --             --
                                                              ===========    ===========
Long-term deferred taxes:
  Depreciation and amortization.............................      879,000      1,095,000
  Research and development costs............................      205,000        205,000
  Net operating loss and credit carryforwards...............    3,802,000      8,462,000
                                                              -----------    -----------
  Deferred tax asset -- noncurrent..........................    4,886,000      9,762,000
  Valuation allowance.......................................   (4,886,000)    (9,762,000)
                                                              -----------    -----------
  Net long-term deferred taxes..............................           --             --
                                                              -----------    -----------
Net deferred income taxes...................................  $        --    $        --
                                                              ===========    ===========
</TABLE>

     Management has established a valuation allowance against its net deferred
tax assets due to the uncertainty surrounding the realization of such assets. At
December 31, 1999 the Company has U.S. federal net operating loss carryforwards
of approximately $13.6 million, which expire at various dates through 2020. The
Company has California net operating loss carryforwards of approximately $8.2
million, which expire at various dates through 2004. In addition, the Company
has state operating loss carryforwards of approximately $9.2 million, which
expire at various dates through 2006. The Company's use of net operating loss
carryforwards in future years will be substantially limited due to previous
ownership changes as defined under Internal Revenue Code section 382.

     The provision for income taxes reconciles to the amount computed by
applying the statutory federal income tax rate to income before provision for
income taxes as follows:

<TABLE>
<CAPTION>
                                                YEAR ENDED DECEMBER 31,
                                       -----------------------------------------    QUARTER ENDED
                                          1997           1998           1999        MARCH 31, 2000
                                       -----------    -----------    -----------    --------------
                                                                                     (UNAUDITED)
<S>                                    <C>            <C>            <C>            <C>
Federal tax provision, at statutory
  rate...............................  $(1,567,000)   $(1,927,000)   $(6,464,000)    $(1,991,000)
State tax, net of federal benefit....      (42,000)      (195,000)      (543,000)       (167,000)
Change in valuation allowance........    1,602,000      2,069,000      5,636,000       2,135,000
Interest expense on convertible
  subordinated debentures............           --             --      1,279,000              --
Other................................        7,000         53,000         92,000          23,000
                                       -----------    -----------    -----------     -----------
                                       $        --    $        --    $        --     $        --
                                       ===========    ===========    ===========     ===========
</TABLE>

                                      F-21
<PAGE>   97
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

11. COMMITMENTS AND CONTINGENCIES

Operating and Capital Leases

     The Company leases its office space and certain equipment under
non-cancelable operating and capital leases. Rental expense under operating
leases in fiscal 1997, 1998 and 1999 was approximately $327,000, $370,000 and
$517,000, respectively. The minimum future lease payments under non-cancelable
operating leases and future minimum capital lease payments as of December 31,
1999 are:

<TABLE>
<CAPTION>
                                                              OPERATING    CAPITAL
                                                              ----------   --------
<S>                                                           <C>          <C>
2000........................................................  $1,053,000   $108,000
2001........................................................   1,104,000     76,000
2002........................................................     826,000     24,000
2003........................................................     742,000     19,000
2004........................................................     759,000     13,000
Thereafter..................................................      87,000         --
                                                              ----------   --------
          Total minimum lease payments......................  $4,571,000    240,000
                                                              ==========
Less -- amount representing interest (at rates ranging from
  9.9% to 20.1%)............................................                (53,000)
                                                                           --------
Present value of net minimum lease payments.................                187,000
Less -- current installments of obligations under capital
  leases....................................................                (81,000)
                                                                           --------
Obligations under capital leases, excluding current
  installments..............................................               $106,000
                                                                           ========
</TABLE>

Royalties

     The Company is required to pay quarterly royalties for its products shipped
with CDPD technology. The Company incurred royalty expenses of $27,000, $136,000
and $353,000 in fiscal 1997, 1998 and 1999, respectively.

Employment Agreements

     The Company has entered into an employment agreement with its President and
Chief Operating Officer that provides for compensation in the event of
termination of employment of 250,000 Canadian dollars (approximately $168,000 at
December 31, 1999) or 125,000 Canadian dollars (approximately $84,000 at
December 31, 1999) in the event of resignation within 30 days of a change in
control of the Company, plus continuation of certain benefits and pro rata
payment of incentive bonuses. The Company has also entered into an employment
agreement with its Chief Executive Officer that provides for a lump sum payment
equivalent to annual base salary and certain additional benefits upon
termination without cause or upon a change in control of the Company. Employment
agreements with certain other key employees provide for six months salary
payment in the event of termination without cause.

Legal Matters

     The Company is party to various legal matters and subject to claims in the
ordinary course of business. In the opinion of management, such matters will not
have a material adverse impact on the Company's financial position or results of
operations.

                                      F-22
<PAGE>   98
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

12. SEGMENT INFORMATION AND CONCENTRATIONS OF RISK

Segment Information

     The Company operates in the wireless data modem technology industry and all
sales of the Company's products and services are made in this segment.
Management makes decisions about allocating resources based on this one
operating segment.

     The Company has operations in the United States and Canada. The
distribution of the Company's assets in the United States and Canada as of
December 31, 1998, December 31, 1999, and March 31, 2000 are $3.5 million and
$2.7 million, $27.4 million and $10.7 million, and $21.4 and $10.3 million,
respectively.

Concentrations of Risk

     Two customers accounted for 23% and 14%, respectively, of 1999 revenues. No
customer accounts for more than 10% of 1998 revenues and one customer accounts
for 19% of 1997 revenues. Substantially all of the Company's revenues come from
wireless Internet products. Any decline in market acceptance of the Company's
products may impair the Company's ability to operate effectively.

     The Company currently outsources substantially all of its manufacturing
operations to a single third party. This outsource manufacturer provides the
Company with procurement, manufacturing, assembly, test, quality control and
delivery services. Subsequent to December 31, 1999, the Company has entered into
a manufacturing agreement with another vendor, but manufacturing activities have
not begun with this new vendor. If there were disruptions to, or terminations
of, the Company's outsourced manufacturing relationships, the Company's
financial position and results of operations would be materially adversely
effected.

13. RETIREMENT SAVINGS PLAN

     The Company has a defined contribution 401(k) retirement savings plan (the
"Plan"). Substantially all of the Company's U.S. employees are eligible to
participate in the Plan after meeting certain minimum age and service
requirements. Employees may make discretionary contributions to the Plan subject
to Internal Revenue Service limitations. As of December 31, 1999, there are no
provisions for employer contributions to the Plan. Participants are fully vested
in all contributions to the Plan.

14. UNAUDITED PRO FORMA NET LOSS PER COMMON SHARE AND PRO FORMA STOCKHOLDERS'
EQUITY (DEFICIT)

     Upon the closing of the Company's initial public offering, all outstanding
NWI Series A, B and C convertible and redeemable preferred stock will be
converted into NWI common stock. In addition, the NWT Series A and B will be
exchanged and converted into NWI common stock with the initial public offering.
The pro forma effect of this conversion has been presented as a separate column
in the accompanying balance sheet.

     Pro forma basic and diluted net loss per share have been computed to give
effect to common equivalent shares from convertible and redeemable preferred
stock and minority interest shares that will convert upon the closing of the
Company's initial public offering (using the as-if-converted method) for the
year ended December 31, 1999 and the quarters ended March 31, 1999 and 2000.

                                      F-23
<PAGE>   99
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999
                         AND MARCH 31, 2000 (UNAUDITED)

     A reconciliation of the numerator and denominator used in the calculation
of pro forma basic and diluted net loss per common share follows (in thousands,
except per share data):

<TABLE>
<CAPTION>
                                         YEAR ENDED DECEMBER 31,             QUARTER ENDED MARCH 31,
                                 ----------------------------------------   -------------------------
                                    1997          1998           1999          1999          2000
                                 -----------   -----------   ------------   -----------   -----------
                                                                            (UNAUDITED)   (UNAUDITED)
<S>                              <C>           <C>           <C>            <C>           <C>
Net loss.......................  $(4,476,000)  $(5,506,000)  $(18,469,000)  $(1,513,000)  $(6,268,000)
Adjustments to net loss used in
  computing basic and diluted
  net loss applicable to common
  stockholders:
Accretion of dividends on
  minority interest............     (189,000)     (273,000)      (286,000)      (71,000)      (71,000)
Accretion of dividends on
  convertible and redeemable
  preferred stock..............     (308,000)     (859,000)    (1,096,000)     (274,000)     (882,000)
Amortization of offering costs
  for convertible and
  redeemable preferred stock...       (6,000)      (19,000)       (22,000)       (5,000)     (146,000)
                                 -----------   -----------   ------------   -----------   -----------
Net loss applicable to common
  stockholders.................  $(4,979,000)  $(6,657,000)  $(19,873,000)  $(1,863,000)  $(7,367,000)
                                 ===========   ===========   ============   ===========   ===========
Denominator:
  Weighted average common
     shares outstanding........                                 3,242,807     3,237,210     3,339,998
  Adjustments to reflect
     assumed conversion of
     convertible and redeemable
     preferred stock and
     warrants from the date of
     issuance:
     Series A NWI..............                                 2,263,857     2,263,857     2,263,857
     Series B NWI..............                                 2,084,281     2,084,281     2,084,281
     Series C NWI..............                                    10,066            --     3,674,277
     Class A NWT...............                                 1,251,798     1,251,798     1,251,798
     Class B NWT...............                                   213,614       213,614       213,614
                                                             ------------   -----------   -----------
     Weighted average shares
       used in computing pro
       forma basic and diluted
       net loss per share......                                 9,066,423     9,050,760    12,827,825
                                                             ============   ===========   ===========
</TABLE>

                                      F-24
<PAGE>   100

     The inside back cover contains a diagram showing the relationship and
architecture of our product line to the Internet through wireless networks.
<PAGE>   101

                                 [NOVATEL LOGO]
<PAGE>   102

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

     The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of common stock being registered. All amounts are estimates except the SEC
registration fee and the NASD filing fee and the Nasdaq National Market listing
fee.

<TABLE>
<CAPTION>
                                                              AMOUNT TO
                                                               BE PAID
                                                              ---------
<S>                                                           <C>
SEC registration fee........................................  $ 27,720
NASD filing fee.............................................    11,000
Nasdaq National Market listing fee..........................         *
Printing and engraving expenses.............................   200,000
Legal fees and expenses.....................................   500,000
Accounting fees and expenses................................   250,000
Blue Sky qualification fees and expenses....................    25,000
Transfer Agent and Registrar fees...........................    15,000
Miscellaneous fees and expenses.............................    50,000
                                                              --------
  Total.....................................................  $      *
                                                              ========
</TABLE>

---------------
* To be provided by amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under some circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the Securities Act). Article XIV of our amended and restated
certificate of incorporation (Exhibit 3.1 to this registration statement) and
Article VI of our bylaws (Exhibit 3.2 to this registration statement) provide
for indemnification of our directors, officers, employees and other agents to
the maximum extent permitted by Delaware law. In addition, we have entered into
Indemnification Agreements (Exhibit 10.6 to this registration statement) with
our officers and directors. The underwriting agreement (Exhibit 1.1 to this
registration statement) also provides for cross-indemnification among us and the
underwriters with respect to certain matters, including matters arising under
the Securities Act. Our amended and restated certificate of incorporation
provides that subject to Delaware law, our directors will not be personally
liable for monetary damages awarded as a result of a breach of their fiduciary
duty owed to Novatel Wireless, Inc. and its stockholders. This provision does
not eliminate our directors' fiduciary duty and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

     During the past three years, we have issued and sold the following
securities:

          1. On June 30 and July 14, 2000, we issued and sold a total of
     1,964,050 shares of our Series D preferred stock to accredited investors at
     a purchase price of $17.25 per share. We also issued and sold warrants to
     purchase a total of 392,800 shares of our common stock at an exercise price
     of $17.25 per share. These warrants are exercisable upon the earliest to
     occur of June 30, 2001, the closing of this offering or a transaction which
     results in a change of control of our company.

                                      II-1
<PAGE>   103

          2. On December 31, 1999, we issued and sold a total of 3,674,277
     shares of our Series C preferred stock to accredited investors at a
     purchase price of $8.34 per share. We also issued and sold warrants to
     purchase a total of 706,357 and 9,856 shares of common stock at an exercise
     price of $10.00 and $8.34 per share, respectively, on or prior to December
     31, 2004.

          3. On October 12, 1999, we issued and sold a warrant to purchase
     23,810 shares of our Series C preferred stock to a financial institution in
     connection with a working line of credit at an exercise price of $6.30 per
     share.

          4. On June 24, 1999 and on July 15, 1999, we and NWT issued and sold
     convertible subordinated debentures to accredited investors in the total
     original principal amount of $3,120,000 bearing interest at the rate of 8%
     per annum. Of this amount, $500,000 in original principal amount was issued
     by our subsidiary NWT. We also issued warrants to purchase a total of
     1,310,002 shares of common stock at an exercise price of $2.00 per share on
     or prior to June 24, 2004 or July 15, 2004 depending on their date of
     issuance. In connection with this financing, NWT issued warrants to
     purchase 250,000 shares of NWT's common stock, which shares of NWT common
     stock are thereafter exchangeable on a one-for-one basis for shares of our
     common stock. Immediately upon the closing of our Series C preferred stock
     financing, the principal amount then outstanding under these convertible
     subordinated debentures, together with accrued interest thereon,
     automatically converted into 388,907 shares of our Series C preferred stock
     at a price of $8.34 per share without the payment of additional
     consideration.

          5. On December 23, 1997, April 24, 1998 and September 1, 1998, we
     issued and sold a total of 2,084,281 shares of our Series B preferred stock
     to accredited investors at a purchase price of $4.26 per share. In
     addition, on December 23, 1997, our subsidiary NWT issued an aggregate of
     213,614 shares of its Series B preferred stock. These NWT shares are
     exchangeable on a one-for-one basis for shares of our Series B preferred
     stock. During this period, we also issued warrants to purchase 781,605
     shares of our common stock at an exercise price of $4.26 per share. In
     connection with this financing, NWT issued warrants to purchase 80,105
     shares of NWT's common stock at an exercise price of $4.26 per share which
     shares of NWT common stock are thereafter exchangeable on a one-for-one
     basis for shares of our common stock. 176,056 of the warrants that each of
     Novatel and NWT issued in connection with this Series B financing are
     exercisable on or before December 31, 2002 and 685,654 of such warrants are
     exercisable on or before April 24, 2003.

          6. At July 25, 2000, we have outstanding options to purchase 2,900,731
     shares of our common stock to a number of our employees, directors and
     consultants.

     None of the foregoing transactions involved any underwriters, underwriting
discounts or commissions, or any public offering, and we believe that each
transaction was exempt from the registration requirements under the Securities
Act by virtue of Section 4(2) thereof, Regulation D promulgated thereunder or
Rule 701 with respect to compensatory benefit plans and contracts relating to
compensation as provided under Rule 701. The recipients of securities in each
such transaction represented their intention to acquire the securities for
investment purposes only and not with a view to or for sale in connection with
any distribution thereof, and appropriate legends were affixed to the stock
certificates and warrants issued in such transactions. All recipients had
adequate access, through their relationships with us, to information about us.

                                      II-2
<PAGE>   104

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                      DESCRIPTION OF DOCUMENT
-------                     -----------------------
<C>       <S>
  1.1*    Form of underwriting agreement.
  3.1*    Amended and Restated Certificate of Incorporation of Novatel
          Wireless, Inc., to be effective upon consummation of this
          offering.
  3.2*    Amended and Restated Bylaws of Novatel Wireless, Inc., to be
          effective upon consummation of this offering.
  4.1*    Form of Specimen Common Stock Certificate.
  5.1*    Opinion of Orrick, Herrington & Sutcliffe LLP regarding the
          legality of the common stock being registered.
 10.1     1997 Stock Option Plan of Novatel Wireless, Inc.
 10.2*    2000 Stock Incentive Plan of Novatel Wireless, Inc.
 10.3*    2000 Employee Stock Purchase Plan of Novatel Wireless, Inc.
 10.4     Amended and Restated Registration Rights Agreement, dated as
          of June 15, 1999, by and among Novatel Wireless, Inc. and
          some of its stockholders.
 10.5     Amended and Restated Investors' Rights Agreement, dated as
          of June 30, 2000, by and among Novatel Wireless, Inc. and
          some of its stockholders.
 10.6*    Form of Indemnification Agreement to be entered into by and
          between Novatel Wireless, Inc. and its officers and
          directors.
 10.7*    Loan and Security Agreement, dated as of October 12, 1999,
          by and between Novatel Wireless, Inc. and Venture Banking
          Group, a division of Cupertino National Bank.
 10.8*    Sublease Agreement, dated as of July 7, 2000, by and between
          Sicor Inc. (formerly Gensia Sicor, Inc.) and Novatel
          Wireless, Inc., for 9360 Towne Centre Drive, San Diego,
          California.
 10.9     Real Property Lease, dated as of February 1, 1997, by and
          between Novatel Wireless Technologies Ltd. and Sun Life
          Assurance Company of Canada, for 6715 8th St., N.E.,
          Calgary, Alberta.
 10.10+   Supply Agreement, dated as of March 31, 2000, by and between
          Novatel Wireless, Inc. and Hewlett-Packard Company.
 10.11+   Technology License, Manufacturing and Purchase Agreement,
          dated as of October 13, 1999, by and between Novatel
          Wireless, Inc. and Metricom, Inc.
 10.12+   Supply Agreement, dated as of July 15, 1999, by and between
          Novatel Wireless, Inc. and OpenSky Corporation (currently
          known as OmniSky Corporation).
 10.13+   Electronic Manufacturing Services, dated as of September 3,
          1999, by and between Novatel Wireless, Inc. and Sanmina
          (Canada) ULC.
 10.14+   Letter Agreement, dated as of March 15, 2000, by and between
          Novatel Wireless, Inc. and Symbol Technologies, Inc.
 10.15+   Agreement for Purchase and Sale of Novatel Wireless, Inc.
          Mobile Terminal Units dated as March 2000 by and between
          Novatel Wireless, Inc. and VoiceStream Wireless Corporation.
 21.1     Subsidiaries of Novatel Wireless, Inc.
 23.1     Consent of Arthur Andersen LLP, Independent Public
          Accountants.
 23.2*    Consent of Orrick, Herrington & Sutcliffe LLP (contained in
          their opinion filed as Exhibit 5.1).
 24.1     Power of Attorney (included in the signature page to this
          registration statement).
 27.1     Financial Data Schedule.
</TABLE>

---------------
* To be filed by amendment.

+ Confidential treatment requested as to some portions of this exhibit.

(b) FINANCIAL STATEMENT SCHEDULES

     Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
                                      II-3
<PAGE>   105

ITEM 17. UNDERTAKINGS

     We undertake to provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names the underwriters require to permit prompt delivery to each purchaser in
the offering.

     To the extent indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, our certificate of
incorporation, our bylaws, indemnification agreements entered into between the
company and our officers and directors, the underwriting agreement, or
otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission this indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against these liabilities (other than our payment of
expenses incurred or paid by any of our directors, officers or controlling
persons in the successful defense of any action, suit or proceeding) is asserted
by a director, officer or controlling person in connection with the securities
being registered, we will, unless our legal counsel opines that controlling
precedent has settled the matter, submit to a court of appropriate jurisdiction
the question whether this indemnification by us is against public policy as
expressed in the Securities Act and we will be governed by the final
adjudication of the issue.

     The undersigned registrant undertakes:

          (1) For the purpose of determining any liability under the Securities
     Act, the information omitted from the form of prospectus filed as part of
     this registration statement in reliance upon Rule 430A and contained in a
     form of prospectus we filed pursuant to Rule 424(b)(1) or (4) or 497(h) of
     the Securities Act shall be deemed to be part of this registration
     statement as of the time the registration statement was declared effective.

          (2) For the purpose of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of those securities at that time shall be
     deemed to be the initial bona fide offering thereof.

                                      II-4
<PAGE>   106

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of San Diego, State of
California on July 27, 2000.

                                          NOVATEL WIRELESS, INC.

                                          By:        /s/ JOHN MAJOR
                                            ------------------------------------
                                                         John Major
                                                  Chief Executive Officer

                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints, jointly and severally, John Major
and Melvin Flowers, and each of them, as his or her attorney-in-fact, with full
power of substitution, for him or her in any and all capacities, to sign any and
all amendments to this registration statement (including any and all
post-effective amendments), and any and all registration statements filed
pursuant to Rule 462 under the Securities Act, in connection with or related to
the offering contemplated by this registration statement and its amendments, if
any, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming our signatures as they may be signed by our said
attorney to any and all amendments to said registration statement.

     Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated:

<TABLE>
<CAPTION>
                     SIGNATURE                                     TITLE                     DATE
                     ---------                                     -----                     ----
<S>                                                  <C>                                <C>
                  /s/ JOHN MAJOR                        Chief Executive Officer and       July 27, 2000
---------------------------------------------------      Director (Chief Executive
                    John Major                                   Officer)

                  /s/ AMBROSE TAM                       President, Chief Operating        July 27, 2000
---------------------------------------------------    Officer and Chief Technology
                    Ambrose Tam                                   Officer

                /s/ MELVIN FLOWERS                    Chief Financial Officer (Chief      July 27, 2000
---------------------------------------------------  Financial and Accounting Officer)
                  Melvin Flowers

                 /s/ H. H. HAIGHT                                Director                 July 27, 2000
---------------------------------------------------
                   H. H. Haight

                /s/ BERNICE BRADIN                               Director                 July 27, 2000
---------------------------------------------------
                  Bernice Bradin

                  /s/ NATHAN GIBB                                Director                 July 27, 2000
---------------------------------------------------
                    Nathan Gibb
</TABLE>

                                      II-5
<PAGE>   107

<TABLE>
<CAPTION>
                     SIGNATURE                                     TITLE                     DATE
                     ---------                                     -----                     ----
<S>                                                  <C>                                <C>
                  /s/ ROBERT GETZ                                Director                 July 27, 2000
---------------------------------------------------
                    Robert Getz

                  /s/ MARK ROSSI                                 Director                 July 27, 2000
---------------------------------------------------
                    Mark Rossi

                /s/ STEVEN SHERMAN                               Director                 July 27, 2000
---------------------------------------------------
                  Steven Sherman
</TABLE>

                                      II-6
<PAGE>   108

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT                                                                  PAGE
NUMBER                      DESCRIPTION OF DOCUMENT                     NUMBER
-------                     -----------------------                     ------
<C>       <S>                                                           <C>
  1.1*    Form of underwriting agreement..............................
  3.1*    Amended and Restated Certificate of Incorporation of Novatel
          Wireless, Inc., to be effective upon consummation of this
          offering....................................................
  3.2*    Amended and Restated Bylaws of Novatel Wireless, Inc., to be
          effective upon consummation of this offering................
  4.1*    Form of Specimen Common Stock Certificate...................
  5.1*    Opinion of Orrick, Herrington & Sutcliffe LLP regarding the
          legality of the common stock being registered...............
 10.1     1997 Stock Option Plan of Novatel Wireless, Inc. ...........
 10.2*    2000 Stock Incentive Plan of Novatel Wireless, Inc. ........
 10.3*    2000 Employee Stock Purchase Plan of Novatel Wireless,
          Inc. .......................................................
 10.4     Amended and Restated Registration Rights Agreement, dated as
          of June 15, 1999, by and among Novatel Wireless, Inc. and
          some of its stockholders....................................
 10.5     Amended and Restated Investors' Rights Agreement, dated as
          of June 30, 2000, by and among Novatel Wireless, Inc. and
          some of its stockholders....................................
 10.6*    Form of Indemnification Agreement to be entered into by and
          between Novatel Wireless, Inc. and its officers and
          directors...................................................
 10.7*    Loan and Security Agreement, dated as of October 12, 1999,
          by and between Novatel Wireless, Inc. and Venture Banking
          Group, a division of Cupertino National Bank................
 10.8*    Sublease Agreement, dated as of July 7, 2000, by and between
          Sicor Inc. (formerly Gensia Sicor, Inc.) and Novatel
          Wireless, Inc., for 9360 Towne Centre Drive, San Diego,
          California..................................................
 10.9     Real Property Lease, dated as of February 1, 1997, by and
          between Novatel Wireless Technologies Ltd. and Sun Life
          Assurance Company of Canada, for 6715 8th St., N.E.,
          Calgary, Alberta............................................
 10.10+   Supply Agreement, dated as of March 31, 2000, by and between
          Novatel Wireless, Inc. and Hewlett-Packard Company..........
 10.11+   Technology License, Manufacturing and Purchase Agreement,
          dated as of October 13, 1999, by and between Novatel
          Wireless, Inc. and Metricom, Inc. ..........................
 10.12+   Supply Agreement, dated as of July 15, 1999, by and between
          Novatel Wireless, Inc. and OpenSky Corporation (currently
          known as OmniSky Corporation)...............................
 10.13+   Electronic Manufacturing Services, dated as of September 3,
          1999, by and between Novatel Wireless, Inc. and Sanmina
          (Canada) ULC................................................
 10.14+   Letter Agreement, dated as of March 15, 2000, by and between
          Novatel Wireless, Inc. and Symbol Technologies, Inc. .......
 10.15+   Agreement for Purchase and Sale of Novatel Wireless, Inc.
          Mobile Terminal Units dated as March 2000 by and between
          Novatel Wireless, Inc. and VoiceStream Wireless
          Corporation.................................................
 21.1     Subsidiaries of Novatel Wireless, Inc. .....................
 23.1     Consent of Arthur Andersen LLP, Independent Public
          Accountants.................................................
 23.2*    Consent of Orrick, Herrington & Sutcliffe LLP (contained in
          their opinion filed as Exhibit 5.1).........................
 24.1     Power of Attorney (included in the signature page to this
          registration statement).....................................
 27.1     Financial Data Schedule.....................................
</TABLE>

---------------
* To be filed by amendment.

+ Confidential treatment requested as to some portions of this exhibit.

                                      II-7
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>ex10-1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.1

                             NOVATEL WIRELESS, INC.
                        1997 EMPLOYEE STOCK OPTION PLAN
                          (ADOPTED AS OF JUNE 2, 1997)

                                    ARTICLE I

                                  GENERAL TERMS


        1.1 PURPOSE OF PLAN; TERM

               (a) ADOPTION. On June 2, 1997, the Board of Directors (the
"Board") of Novatel Wireless, Inc., a Delaware corporation (the "Company"),
adopted this stock option plan to be known as the Novatel 1997 Employee Stock
Option Plan (the "Plan").

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

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

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

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

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


<PAGE>   2

        1.2 STOCK AND MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN

               (a) DESCRIPTION OF STOCK AND MAXIMUM SHARES ALLOCATED. The stock
subject to the provisions of the Plan and issuable upon exercise of Options
granted under the Plan is shares of the Company's Common Stock, $.001 par value
pet share (the "Stock"), which may be either unissued or treasury shares, as the
Board may from time to time determine. Subject to adjustment as provided in
Section 3.1 hereof, the aggregate number of shares of Stock covered by the Plan
and issuable hereunder shall be 600,000 shares of Stock.

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

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

        1.3 APPROVAL; AMENDMENTS

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

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

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


                                      -2-
<PAGE>   3

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

                                   ARTICLE II

                                  GRANT PROGRAM

        2.1 PARTICIPANTS; ADMINISTRATION

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

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

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


                                      -3-
<PAGE>   4

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

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

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

        2.2 TERMS AND CONDITIONS OF OPTIONS

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

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

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


                                      -4-
<PAGE>   5

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

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

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

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

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

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

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

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


                                      -5-
<PAGE>   6

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

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

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

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

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

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

               (j) TERMINATION OF INCENTIVE STOCK OPTIONS

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


                                      -6-
<PAGE>   7

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

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

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

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

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


                                      -7-
<PAGE>   8

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

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

                                   ARTICLE III

                                  MISCELLANEOUS

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

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

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

        3.4 CHANGE IN CONTROL

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

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


                                      -8-
<PAGE>   9

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

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

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

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

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

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

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

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

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


                                      -9-
<PAGE>   10

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

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

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

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

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

        3.14 SECURITIES RESTRICTIONS

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

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


                                      -10-
<PAGE>   11

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

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

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

        3.15 TAX WITHHOLDING

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

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

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

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


                                      -11-
<PAGE>   12

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

                                   ARTICLE IV

                                   DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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


                                      -12-
<PAGE>   13

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


                                      -13-
<PAGE>   14

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

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

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

               EXECUTED as of the 2nd day of June, 1997.

                                   NOVATEL WIRELESS, INC.


                                   By: /s/
                                      ------------------------------------------
                                   Its: President

ATTESTED BY:

/s/
------------------------------
Its: Secretary





                                      -14-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>3
<FILENAME>ex10-4.txt
<DESCRIPTION>EXHIBIT 10.4
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.4

               AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT


        This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "Amended
Registration Rights Agreement") is entered into as of June 15, 1999 by and among
the following parties:

1. Novatel Wireless, Inc., a Delaware corporation (the "Corporation");

2. Golden Gate Development and Investment Limited Partnership, Advent Israel
Limited Partnership, Advent Partners Limited Partnership, each a Delaware
limited partnership, and Advent Israel (Bermuda) Limited Partnership, a Bermuda
limited partnership (collectively, the "Advent Investors");

3. Ventures West Investments Limited, a Canada corporation ("Ventures West"),
Bank of Montreal Capital Corporation, a specialized financing corporation
incorporated under the laws of Canada ("BMO-CC"), Sam Znaimer and Robin Louis
(collectively, "Ventures West Investors");

4. Working Ventures Canadian Fund, Inc., a Canadian corporation ("Working
Ventures");

5. GSM Capital Limited Partnership, a Delaware limited partnership ("GSM");

6. Harcol Limited Partnership ("Harcol");

7. Ventures West Investors, Working Ventures, GSM, BT Investment Partners, Inc.
("BT Partners") and certain other holders of the Corporation's Series B
Convertible Preferred Stock, par value $.001 per shares ("Series B Stock")
(each, individually, a "Series B Investor", and collectively, the "Series B
Investors"); and

8. any additional investors ("Additional Investors") who comply with the
provisions of Section 16 hereof (each of the Additional Investors and each of
the investors as named under paragraphs 2 through 7 above, an "Investor" and
collectively, the "Investors").

        WHEREAS, the Corporation has entered into a certain Registration Rights
Agreement, dated as of August 21, 1996, as amended by that certain Amendment No.
1, dated as of December 23, 1997, as further amended by that certain Amendment
Agreement, dated as of April 24, 1998 and by that certain Second Amendment
Agreement, dated as of August 31, 1998, entered into by and among the
Corporation and other parties listed therein (the "Original Registration Rights
Agreement"); and

        WHEREAS, pursuant to that certain Series A Convertible Preferred Stock
Purchase Agreement, dated as of August 21, 1996 by and among the Corporation and
Advent Investors, GSM, Harcol, the Venture West Investors and such other
investors named in the Schedule of Investors thereto (collectively, the "Initial
Investors") (the "Stock Purchase Agreement"), the Corporation issued and sold to
the Initial Investors certain shares of the Corporation's Series A Convertible
Preferred Stock, par value $.001 per share ("Series A Stock"); and


<PAGE>   2

        WHEREAS, as of August 21, 1996, Working Ventures purchased certain
shares of Series A Preferred Stock of Novatel Wireless Technologies Ltd., an
Alberta corporation and a subsidiary of the Corporation ("NWT") (the "NWT Series
A Shares") which shares are convertible into Series A Stock pursuant to the
Share Purchase Agreement dated as of the date hereof between NWT and Working
Ventures (the "NWT Share Purchase Agreement"); and

        WHEREAS, pursuant to that certain Series B Preferred Stock and Warrant
Purchase Agreement, dated as of December 23, 1997, as amended by that certain
Amended and Restated Series B Convertible Preferred Stock and Warrant Purchase
Agreement, dated as of April 24, 1998 and that certain Second Amendment
Agreement, dated as of September 1, 1998 (the "Series B Stock Purchase
Agreement"), the Corporation issued and sold to Venture West Investors, Working
Ventures, GSM, BT Partners and certain other investors listed in Schedule of
Investors thereto, certain shares of the Corporation's Series B Convertible
Preferred Stock, par value $.001 per share ("Series B Stock") and certain
warrants to purchase certain shares of Common Stock (as defined below) (the
"Initial Warrants"); and

        WHEREAS, as of December 23, 1997, Working Ventures purchased certain
shares of the Series B Preferred Stock of NWT (the "NWT Series B Shares"), which
shares are convertible into shares of the Series B Stock and certain warrants to
purchase certain shares of the NWT's exchangeable common stock ("NWT
Exchangeable Common Shares"), which shares are exchangeable for shares of Common
Stock, pursuant to the Series B Stock Purchase Agreement and the Novatel
Wireless Technologies Ltd. Share and Warrant Purchase Agreement (the "NWT Series
B Share Purchase Agreement"); and

        WHEREAS, the Corporation proposes to issue and sell to certain persons
listed on the Schedule of Investors set forth in Exhibit A attached hereto (the
"Schedule of Investors") (each, individually, an "Investor" and, collectively,
the "Investors") a certain number of "Units" (defined as follows) in exchange
for an aggregate investment of up $3,120,000, each Unit consisting of (a) a
Convertible Subordinated Debenture issued by the Corporation ("Debenture") which
may under certain circumstances convert into shares of Series A Preferred Stock
in accordance with the terms and conditions set forth in that certain Unit
Purchase Agreement, dated as of the date hereof by and among the Corporation and
the Investors (the "Unit Purchase Agreement") and (b) a Common Stock Purchase
Warrant ("Warrant") to purchase a certain number of shares of Common Stock at a
price of $2.00, in accordance with the terms and conditions of the Unit Purchase
Agreement; and

        WHEREAS, concurrently with the closing of the Unit Purchase Agreement
and pursuant to the terms and conditions therein and in that certain Unit
Purchase Agreement, dated as of the date hereof by and between NWT and Working
Ventures (the "NWT Unit Purchase Agreement"), Working Ventures will purchase a
certain number of "NWT Units" (defined as follows), each NWT Unit consisting of
(a) a Convertible Subordinated Debenture issued by NWT (the "NWT Debenture"),
which NWT Debenture may under certain circumstances convert into shares of
equity securities of NWT in accordance with the terms and conditions set forth
in the NWT Unit Purchase Agreement and (b) a NWT Common Stock Purchase Warrant
(the "NWT Warrant") to purchase a number of shares of the NWT Exchangeable
Common Stock; and


<PAGE>   3

        WHEREAS, it is a condition to closing pursuant to the Unit Purchase
Agreement and the NWT Unit Purchase Agreement that that the the parties hereto
enter into this Amended and Restated Registration Rights Agreement.

        NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto do hereby agree that the Original Registration Rights Agreement is hereby
amended and restated in its entirety, and hereafter shall contain the following
terms and conditions:

        The Corporation hereby grants to each party hereto the registration
rights set forth in this Amended and Restated Registration Rights Agreement with
respect to the Registrable Securities (as hereinafter defined) owned by such
party.

        1. Definitions. As used in this Amended Registration Rights Agreement:

               (a) "Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Securities and
Exchange Commission (the "SEC") thereunder, all as the same shall be in effect
at the time;

               (b) "Additional Shares" shall mean the shares of Preferred Stock
issued and sold to the Initial Investors, other than the Advent Investors, GSM,
Harcol and the Venture West Investors, pursuant to the Stock Purchase Agreement;

               (c) "Common Stock" shall mean the Corporation's Common Stock, par
value $.001 per share;

               (d) "Follow-on Shares" shall mean the shares of Preferred Stock
issued and sold to investors pursuant to Section 2.3 of the Stock Purchase
Agreement;

               (e) "Form S-3" shall mean such form under the Act as in effect on
the date hereof or any successor registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents fried by the Corporation with the
SEC;

               (f) "Holder" shall mean any person owning or having the fight to
acquire Registrable Securities or any assignee thereof in accordance with
Section 13 hereof;

               (g) "NWT Conversion Shares" shall mean, as of any given date, the
number of shares of Common Stock into which the NWT Shares are convertible as of
such date, or if as of such date the NWT Shares have been converted into
Preferred Stock, the number of shares of Common Stock into which such shares of
Preferred Stock are convertible as of such date.

               (h) "Preferred Stock" shall mean those shares of the
Corporation's (i) Series A Convertible Preferred Stock, par value $.001 per
share, issued to the Initial Investors pursuant to the Stock Purchase Agreement;
issued to the Investors upon the conversion of the Debentures or the pursuant to
that certain Unit Purchase Agreement, dated as of the date hereof; or issued
upon conversion of the NWT Shares and (ii) Series B Convertible Preferred Stock
issued and sold pursuant to that certain Amended and Restated Series B
Convertible Preferred Stock and


<PAGE>   4

Warrant Purchase Agreement, dated as of April 24, 1998, by and among the
Corporation and the investors named in the Schedule of Investors thereto
("Series B Stock Purchase Agreement"), including without limitation those shares
issued to BT Investment Partners, pursuant to the Series B Stock Purchase
Agreement, as amended by that certain Second Amendment Agreement, dated as of
August 31, 1998, by and among the parties hereto, or issued upon the conversion
of any preferred shares of NWT sold pursuant to the NWT Series B Stock Purchase
Agreement reference therein (the "Series B NWT Shares").

               (i) "Register," "registered," and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.

               (j) "Registrable Securities" shall mean (1) the Common Stock
issuable or issued upon conversion of the Preferred Stock, (2) the NWT
Conversion Shares and shares of Common Stock issuable upon conversion of the
Series B NWT Shares (the "Series B NWT Conversion Shares") upon issuance
thereof, (3) the Common Stock issuable or issued upon exercise of warrants to
purchase Common Stock granted in accordance with the Series B Stock Purchase
Agreement or the Unit Purchase Agreement and (4) any Common Stock of the
Corporation issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
Preferred Stock, NWT Conversion Shares and Series B NWT Conversion Shares (after
issuance thereof), shares of NWT's exchangeable common stock issued upon
exercise of warrants to purchase such exchangeable shares (after issuance
thereof), or such Common Stock, excluding in all cases, however, any Registrable
Securities sold by a person in a transaction in which his rights under this
Amended Registration Rights Agreement are not assigned and shares sold by a
person pursuant to a registration statement filed pursuant to the Act or Rule
144 adopted thereunder.

               (k) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock then
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable securities which are, Registrable Securities.

        2. Demand Registration.

               (a) If the Corporation shall receive at any time after the
earlier of (i) the date two years from the date hereof, or (ii) 180 days after
the effective date of the first registration statement for a public offering of
securities of the Corporation ("IPO") (other than a registration statement
relating either to the sale of securities to employees of the Corporation
pursuant to a stock option, stock purchase or similar plan or a SEC Rule 145
transaction), and prior to five years after the effective date of such IPO, a
written request (a "Registration Request") from the Holders of a majority of the
Registrable Securities then outstanding that the Corporation file a registration
statement under the Act covering the registration of all or a portion of the
Registrable Securities, then the Corporation shall within 10 days of the receipt
thereof, give written notice of such request to all Holders and shall, subject
to the limitations in Section 3, effect as soon as practicable (and in any event
use its best efforts to file the registration statement within 60 days


<PAGE>   5

of the receipt of such request) the registration under the Act of all
Registrable Securities which the Holders request to be registered within 20 days
of the mailing of such notice by the Corporation.

               (b) If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise the
Corporation as a part of their request made pursuant to this Section 2 and the
Corporation shall include such information in the written notice referred to in
subsection 2(a). The underwriter will be selected by a majority in interest of
the Initiating Holders, shall be of recognized national standing and shall be
reasonably acceptable to the Corporation. In such event, the fight of any Holder
to include his Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Corporation as provided in
subsection 5(e)) enter into an underwriting agreement in usual and customary
form with the underwriter or underwriters selected for such underwriting.

        3. Limitations on Demand Registration. Notwithstanding any provision of
Section

               (a) If the underwriter advises the Initiating Holders in writing
that marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Corporation owned by each Holder.

               (b) If the Corporation shall furnish to Holders requesting a
registration statement pursuant to Section 2, a certificate signed by Steven
Sherman, as an authorized officer of the Corporation, or his replacement,
stating that in the good faith judgment of the Board of Directors of the
Corporation, it would be seriously detrimental to the Corporation and its
stockholders for such registration statement to be fried at the time requested,
and it is therefore necessary to defer the filing of such registration
statement, the Corporation shall have the fight to defer notifying all Holders
of its receipt of a Registration Request, as otherwise required under Section
2(a), for a period of not more than 90 days after receipt of the request of the
Initiating Holders in which case the Corporation shall thereafter use its best
efforts to file the registration statement within 150 days after its receipt of
the Registration Request; provided, however, that the Corporation may not
utilize this fight more than once in any 12-month period.

               (c) The Corporation shall not be obligated to file a registration
statement to effect any registration, qualification or compliance pursuant to
Section 2 during the period starting with the date 60 days prior to the
Corporation's bona fide estimated date of filing (as certified to the Holders by
the Corporation promptly after their Registration Request) of, and ending on the
date 180 days immediately following the effective date of, any registration
statement pertaining to securities of the Corporation, including any securities
registered pursuant


<PAGE>   6

to Section. 2 (other than a registration of securities in a Rule 145 transaction
or with respect to a stock or option plan or other employee benefit plan),
provided that the Corporation is actively employing its best efforts, during
such period, to cause such registration statement to become effective.

        4. Corporation Registration. If at any time the Corporation proposes to
register (including for this purpose a registration effected by the Corporation
for stockholders other than the Holders) any of its stock or other equity
securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Corporation stock or option plan or
other employee benefit plan, a registration relating solely to a Rule 145
transaction on a form inapplicable to the sale of Registrable Securities, or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Corporation shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within 20 days after mailing of such notice
by the Corporation, the Corporation shall, subject to the provisions of Section
8, cause to be registered under the Act all of the Registrable Securities that
each such Holder has requested to be registered. Notwithstanding the foregoing,
should the Corporation, prior to the sale of any shares pursuant to a
registration statement described above in this Section 4, decide to deregister
or not proceed with such offering, the Corporation shall have no further
obligation to the Holders with respect to such offering or registration except
to promptly notify them of its decision.

        5. Obligations of the Corporation. Whenever required under this Amended
Registration Rights Agreement to effect the registration of any Registrable
Securities, the Corporation shall, as expeditiously as reasonably possible:

               (a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to muse such
registration statement to become effective, and upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to 90 days.

               (b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.

               (c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.

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


<PAGE>   7

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

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

               (g) Use its best efforts to furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to Section 2 of this
Amended Registration Rights Agreement, on the date that such Registrable
Securities are delivered to the underwriters for sale in connection with a
registration pursuant to this Amended Registration Rights Agreement, if such
securities are being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Corporation for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities and (ii) a letter
dated such date, from the independent certified public accountants of the
Corporation, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.

        6. Furnish Information. It shall be a condition precedent to the
obligations of the Corporation to take any action pursuant to this Amended
Registration Rights Agreement with respect to the Registrable Securities of any
selling Holder that such Holder shall furnish to the Corporation such
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be required to effect
the registration of such Holder's Registrable Securities.

        7. Expenses of Registration. The Corporation shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
2 or Section 4 for each Holder (which fight may be assigned as provided in
Section 13), including, without limitation, all registration, filing, and
qualification fees, printers' and accounting fees relating or apportionable
thereto and the fees and disbursements of one counsel for the selling Holders,
but excluding underwriting discounts and commissions relating to Registrable
Securities.

        8. Underwriting Requirements.

               (a) In connection with any offering involving an underwriting of
shares of the Corporation, the Corporation shall not be required under Section 4
to include any of the Holders' securities in such underwriting unless they
accept the terms of the underwriting as agreed upon


<PAGE>   8

between the Corporation and the underwriters selected by it, and then only in
such quantity, which may be none, as will not, in the good faith opinion of the
underwriters, materially jeopardize the success of the offering by the
Corporation. If the total amount of securities, including Registrable
Securities, requested by stockholders to be included in such offering exceeds
the amount of securities sold other than by the Corporation that the
underwriters reasonably believe compatible with the success of the offering,
then the Corporation shall be required to include in the offering only that
number, which may be none, of such securities, including Registrable Securities,
which the underwriters believe will not materially jeopardize the success of the
offering (the securities so included to be apportioned pro rata among the
selling Holders according to the total amount of securities entitled to be
included therein owned by each selling Holder or in such other proportions as
shall mutually be agreed to by such selling Holders).

               (b) With respect to any underwriting of shares to be registered
under Section 2, or an underwriting of shares to be registered under Section 12
if the Holders of a majority of the then outstanding Registrable Securities have
requested registration thereunder, such Holders shall have the fight to
designate the managing underwriter or underwriters, who shall be of recognized
national standing and shall be reasonably acceptable to the Corporation, which
acceptance shall not be unreasonably withheld or delayed. In all other
circumstances under such Sections and in connection with registrations under
Section 4, the Corporation shall have the fight to designate the managing
underwriter or underwriters, who shall be of recognized national standing.

        9. Delay of Registration. No Holder shall have any fight to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Amended Registration Rights Agreement.

        10. Indemnification. In the event any Registrable Securities are
included in a registration statement under this Amended Registration Rights
Agreement:

               (a) To the extent permitted by law, the Corporation will
indemnify and hold harmless each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the Securities Exchange Act of 1934, as amended
(the "1934 Act"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Corporation of the Act, the 1934
Act, any state securities law or any rule or regulation promulgated under the
Act, the 1934 Act or any state securities law; and Corporation will pay, as
incurred, to each such Holder, underwriter or controlling person, any legal or
other expense reasonably incurred by them in connection with investigating or
defending any such loss, claim,


<PAGE>   9

damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 10(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of the Corporation, which consent shall not be
unreasonably withheld, nor shall the Corporation be liable in any such case for
any such loss, claim, damage, liability, or action to the extent that' it arises
out of or is based upon a violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person;
and provided further, that reimbursement by the Corporation of attorneys' fees
incurred by Holders or such controlling persons in investigating or defending
any such loss; claim, damage, liability or action, shall be limited to fees of
one counsel representing such Holders and controlling persons jointly.

               (b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Corporation, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Corporation within the meaning of the Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Act, the 1934 Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by such Holder
expressly for use in connection with such registration; and each such Holder
will pay, as incurred, any legal or other expense reasonably incurred by any
person intended to be indemnified pursuant to this subsection 10(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 10(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld, and provided further that no Holder shall have any liability under
this Section 10(b) in excess of the net pros actually received by such Holder in
the relevant public offering.

               (c) Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the fight to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the fight to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
prying. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, to the extent materially
prejudicial to the indemnifying party's ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 10, but the omission so to deliver written


<PAGE>   10

notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 10; and

               (d) The obligations of the Corporation and Holders under this
Section 10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Amended Registration Rights
Agreement.

        11. Reports Under Securities Exchange Act of 1934. With a view of making
available to the Holders the benefits of Rule 144 and Rule 144A promulgated
under the Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Corporation to the public without
registration or pursuant to a registration on Form S-3, the Corporation agrees
to use its best efforts to:

               (a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after 90 days after the
effective date of the first registration statement filed by the Corporation for
the offering of its equity securities to the general public;

               (b) take all such action, including, without limitation, the
furnishing of all such information as a Holder or a proposed transferee may
reasonably request, to enable such Holder to sell securities of the Corporation
pursuant to SEC Rule 144A;

               (c) take all such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the first fiscal year
in which a registration statement on Form S-1 or other applicable form is filed
by the Corporation for the offering of its securities to the general public is
declared effective;

               (d) file with the SEC in a timely manner all reports and other
documents required of the Corporation under the Act and the 1934 Act; and

               (e) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Corporation that it has complied with the reporting requirements of SEC Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Corporation), the Act and the 1934 Act (at any time after
it has become subject to such reporting requirements), or that it qualified as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Corporation and such other reports and documents so filed by the
Corporation, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.

        12. Form S-3 Registration. In case the Corporation shall receive from
any Holder or Holders a written request or requests that the Corporation effect
a registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Corporation will:


<PAGE>   11

               (a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and

               (b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holders or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within 20
days after receipt of such written notice from the Corporation; provided,
however, that the Corporation shall not be obligated to effect any registration,
qualification or compliance, pursuant to this Section 12: (1) if Form S-3 is not
available for such offering by the Holders; (2) if the Holders, together with
the holders of any other securities of the Corporation entitled to inclusion in
such registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $500,000; (3) if the
Corporation shall furnish to the Holders a certificate signed by Steven Sherman
as an authorized officer of the Corporation, or his replacement, stating that in
the good faith judgment of the Board of Directors of the Corporation, it would
be seriously detrimental to the Corporation and its stockholders for such Form
S-3 Registration to be effected at such time, in which event the Corporation
shall have the fight to defer the filing of the Form S-3 registration statement
for a period of not more than 90 days after receipt of the request of the Holder
or Holders under this Section 12; provided, however, that the Corporation shall
not utilize this fight more than once in any 12 month period; (4) if the
Corporation has, within the 12 month period preceding the date of such request,
already effected two registrations on Form S-3 for the Holders pursuant to this
Section 12; or (5) in any particular jurisdiction in which the Corporation would
be required to qualify to do business or to execute a general consent to service
of pros in effecting such registration, qualification or compliance.

               (c) Subject to the foregoing, the Corporation shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses incurred in connection with a
registration requested pursuant to Section 12, including (without limitation)
all registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the selling Holder or Holders
and counsel for the Corporation, shall be borne by the Corporation.

               (d) The restriction on registrations pursuant to Section 2
provided for in subsection 2(d) shall apply equally to a registration under this
Section 12.

               (e) The Corporation is obligated to effect only two (2)
registrations pursuant to this Section 12.

        13. Assignment of Registration Rights. The rights to cause the
Corporation to register Registrable Securities pursuant to this Amended
Registration Rights Agreement may be assigned by a Holder to a legally and
contractually permitted transferee or assignee provided the Corporation is,
within a reasonable time after such transfer, furnished with written notice of
the name and address of such transferee or assignee and the securities with
respect to which such registration fights are being assigned; and provided,
further, that such assignment shall be


<PAGE>   12

effective only if immediately following such transfer the further disposition of
such securities by the transferee or assignee is restricted under the Act.

        14. Limitations on Subsequent Registration Rights. From and after the
date of this Amended Registration Rights Agreement, but subject to the
provisions of Section 16, the Corporation shall not, without the prior written
consent of the Holders of a majority of the outstanding Registrable Securities
and securities convertible into or exercisable for Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Corporation which would allow such holder or prospective holder (a) to
include such securities in any registration filed under Section 2 hereof, unless
under the terms of such agreement, such holder or prospective holder may include
such securities in any such registration only to the extent that the inclusion
of his securities will not reduce the amount of the Registrable Securities of
the Holders which is included or (b) to make a demand registration which could
result in such registration statement being declared effective prior to the
earlier of either of the dates set forth in subsection 2(a) or within 180 days
of the effective date of any registration effected pursuant to Section 2. The
limitation on subsequent registration rights contained in this Section 14 shall
not apply to the Additional Shares, the Follow-On Shares or the NWT Conversion
Shares.

        15. "Market Stand-Off" Agreement. Each Investor hereby agrees that,
during the period of duration (not to exceed 180 days) specified by the
Corporation and an underwriter of Common Stock or other securities of the
Corporation, following the effective date of a registration statement of the
Corporation filed under the Act, it shall not, to the extent requested by the
Corporation and such underwriter, sell or otherwise transfer or dispose of
(other than to donees who agree to be similarly bound) any Common Stock held by
it at any time during such period except Common Stock included in such
registration; provided, however, that:

               (a) such agreement shall be applicable only to registration
statements of the Corporation which cover Common Stock (or other securities) to
be sold on its behalf to the public in a bona fide firm commitment underwritten
offering and, after the first registration statement under the Act, shall be
applicable only to Investors holding securities representing one percent or more
of the equity or voting power of the Corporation; and

               (b) all other persons with registration rights (whether or not
pursuant to this Amended Registration Rights Agreement) and, except in the case
of the first registration statement filed under the Act, without the incentive
of the grant of additional participation or other special rights, all holders of
one percent or more of the equity or voting power of the Corporation, enter into
similar agreements.

        In order to enforce the foregoing covenant, the Corporation may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period. Notwithstanding anything
else herein (i) no transferee, assignee or successor of a Investor shall be
bound by this Section 15 if such transferee, assignee or successor has not been
transferred registration rights hereunder and (ii) the obligations of Investors
under this Section 15 shall expire upon expiration of the fights of the Holders
under Sections 2 and 4.


<PAGE>   13

        16. Accession. Any Additional Investors and any purchasers of Follow-on
Shares shall automatically become an Investor hereunder by delivering to the
Corporation a written instrument in the form of Exhibit A hereto, by which such
Additional Investor or purchaser of Follow-on Shares shall thereby agree to be
bound by the obligations imposed under this Amended Registration Rights
Agreement, whereupon such Additional Investor or purchaser of Follow-on Shares
shall automatically become a party to this Amended Registration Rights Agreement
and shall thereupon be deemed an "Investor" for all purposes of this Amended
Registration Rights Agreement.

        17. Governing Law. This Amended Registration Rights Agreement shall be
governed by and construed under the laws of the State of Delaware without regard
to its principles governing conflicts of laws.

        18. Entire Agreement; Amendment.

               (a) This Amended Registration Rights Agreement constitutes the
full and entire understanding and agreement between the parties with respect to
the subject matter hereof. Any provisions of this Amended Registration Rights
Agreement may be amended, and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only by written consent of the Corporation and the holders of at least a
majority of the Registrable Securities and securities convertible into or
exercisable for Registrable Securities and then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of all
such securities, and the Corporation.

        19. Notices. All notices, requests, consents, demands and other
communications required or permitted under this Amended Registration Rights
Agreement shall be in writing and shall be deemed to have been duly given, made
and received (a) when delivered against receipt, (b) upon transmitter's
confirmation of the receipt of a facsimile transmission, which shall be followed
by an original sent otherwise in accordance with this Section 19, (c) upon
confirmed delivery by a standard overnight carrier, or (d) if to a U.S.
resident, upon expiration of three business days after the day when deposited in
the U.S. mail, first class postage prepaid, addressed in accordance with Section
20 of the Stock Purchase Agreement.

        20. Counterparts. This Amended Registration Rights Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Any such counterpart may contain one or more signature pages.

        21. Severability. In the event that any provision of this Amended
Registration Rights Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Amended Registration
Rights Agreement shall continue in full force and effect without said provision.

        22. Captions. The captions and headings to Sections of this Amended
Registration Rights Agreement have been inserted for identification and
reference purposes only and shall not


<PAGE>   14

be used to construe the meaning or the interpretation of this Amended
Registration Rights Agreement.



                            [SIGNATURE PAGES FOLLOW]




<PAGE>   15

        IN WITNESS WHEREOF, this Amended Registration Rights Agreement has been
duly executed under seal as of the date first written above.





                                        NOVATEL WIRELESS, INC.

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------


                                       ADVENT PARTNERS LIMITED PARTNERSHIP

                                         By:  Advent International Corporation,
                                              General Partner

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



                                       ADVENT ISRAEL LIMITED PARTNERSHIP

                                         By:  Advent International Limited
                                              Partnership,
                                              General Partner

                                         By:  Advent International Corporation,
                                              General Partner

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------


<PAGE>   16

                                        ADVENT ISRAEL (BERMUDA) LIMITED
                                        PARTNERSHIP

                                          By:  Advent International Limited
                                               Partnership,
                                               General Partner

                                          By:  Advent International Corporation,
                                               General Partner

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



                                        DIGITAL MEDIA & COMMUNICATIONS, LIMITED
                                        PARTNERSHIP

                                          By:  Advent International Limited
                                               Partnership,
                                               General Partner

                                          By:  Advent International Corporation,
                                               General Partner


                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------


<PAGE>   17

                                        GOLDEN GATE DEVELOPMENT AND INVESTMENT
                                        LIMITED PARTNERSHIP

                                          By:  Advent International Limited
                                               Partnership,
                                               General Partner

                                          By:  Advent International Corporation,
                                               General Partner

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



                                        AMBROSE TAM

                                        ----------------------------------------
                                        Ambrose Tam




                                        BT INVESTMENT PARTNERS, INC.

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



                                        CARL BILDNER

                                        ----------------------------------------
                                        Carl Bildner



<PAGE>   18

                                        DAVID S. OROS

                                        ----------------------------------------
                                        David S. Oros



                                        DEE ANDERSON


                                        Dee Anderson



                                        DIGICOM CELLULAR INTERNATIONAL CO., LTD

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



                                        ECOLOGY MANAGEMENT CORPORATION

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



                                        ELLIOT J. TUCKEL

                                        ----------------------------------------
                                        Elliot J. Tuckel



<PAGE>   19

                                        GSM CAPITAL LIMITED PARTNERSHIP

                                          By:  Telcom Management Limited
                                               Partnership,
                                               General Partner

                                          By:  Telcom Investments Inc.,
                                               General Partner


                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



                                        HARCOL LIMITED PARTNERSHIP

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



                                        JOAN LEVINSON

                                        ----------------------------------------
                                        Joan Levinson



                                        JONG TAE CHOI

                                        ----------------------------------------
                                        Jong Tae Choi



                                        KATHRYN E. COOPERMAN

                                        ----------------------------------------
                                        Kathryn E. Cooperman


<PAGE>   20

                                        NADEAU TRAIL, INC.

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



                                        P.S. CAPITAL L.L.C.

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



                                        STEVEN SHERMAN

                                        ----------------------------------------
                                        Steven Sherman



                                        THOMAS BEAL

                                        ----------------------------------------
                                        Thomas Beal



                                        VENTURES WEST MANAGEMENT, INC.

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------


<PAGE>   21

                                        BANK OF MONTREAL CAPITAL CORPORATION

                                          By: Ventures West Management TIP Inc.,
                                              Manager

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



                                        ROBIN LOUIS

                                        ----------------------------------------
                                        Robin Louis



                                        SAM ZNAIMER

                                        ----------------------------------------
                                        Sam Znaimer



                                        WONG'S SHERMAN PARTNERS

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



<PAGE>   22

                                        WORKING VENTURES CANADIAN FUND INC.

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



                                        ROBERT COREY

                                        ----------------------------------------
                                        Robert Corey



                                        ROGER HARTMAN

                                        ----------------------------------------
                                        Roger Hartman



                                        ROLLING PROFIT HOLDINGS, LTD

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



                                        SHERMAN CAPITAL PARTNERS, L.L.C.

                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------



<PAGE>   23

                                    EXHIBIT A

                              SCHEDULE OF INVESTORS




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>4
<FILENAME>ex10-5.txt
<DESCRIPTION>EXHIBIT 10.5
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.5

================================================================================




                            [NOVATEL WIRELESS LOGO]




                              AMENDED AND RESTATED

                           INVESTORS' RIGHTS AGREEMENT






                              ---------------------

                                  JUNE 30, 2000

                              ---------------------



================================================================================


<PAGE>   2

                             NOVATEL WIRELESS, INC.

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT


        This Amended and Restated Investors' Rights Agreement (this "Agreement")
is entered into as of June 30, 2000 by and among Novatel Wireless, Inc., a
Delaware Corporation (the "Corporation") and the persons identified on Exhibit A
attached hereto (the "Investors").

                                    RECITALS

        WHEREAS, certain of the Investors hold shares of the Corporation's
Series C Preferred Stock, par value $0.001 per share (the "Series C Preferred
Stock") and possess registration rights and information rights pursuant to the
Series C Preferred Stock Investors' Rights Agreement dated as of December 31,
1999 by and between the Corporation and such Investors (the "1999 Agreement");
and

        WHEREAS, the undersigned Investors who hold Series C Preferred Stock
desire to terminate the 1999 Agreement and to accept the rights created pursuant
hereto in lieu of the rights granted to them under the 1999 Agreement;

        WHEREAS, certain Investors and the Corporation are parties to the Series
D Convertible Preferred Stock and Warrant Purchase Agreement dated as of June
30, 2000 by and among the Corporation and such Investors (the "Series D
Agreement"); and

        WHEREAS, as a condition to the execution and delivery of the Series D
Agreement, the Corporation, each Investor and holders of at least a majority of
the Registrable Securities (as defined in the 1999 Agreement) and securities
convertible into or exercisable for Registrable Securities then outstanding,
must amend and restate the 1999 Agreement to include the Series D Investors;

        NOW, THEREFORE, in consideration of the mutual agreements, covenants and
conditions contained herein, the Investors who are parties to the 1999 Agreement
hereby agree that the 1999 Agreement shall be superseded and replaced in its
entirety by this Agreement, and the parties hereto further agree as follows:

                                   ARTICLE 1

                  RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS

        1.1 Definitions. As used in this Agreement:

               (a) "Closing" shall mean the date of the initial sale of shares
of the Corporation's Series D Preferred Stock pursuant to the Series D
Agreement.

               (b) "Common Stock" shall mean the Corporation's Common Stock, par
value $0.001 per share.


                                       1
<PAGE>   3

               (c) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.

               (d) "Form S-3" means such form under the Securities Act as in
effect on the date hereof or any successor registration form under the
Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Corporation with the SEC.

               (e) "Holder" means any Investor who holds Registrable Securities
and any holder of Registrable Securities to whom the registration rights
conferred by this Agreement have been validly transferred in compliance with
Sections 1.2 and 1.12 hereof.

               (f) "Initiating Holders" means any Holder or Holders who holds or
hold in the aggregate not less than 30% of the outstanding Registrable
Securities.

               (g) "Investors" means persons who purchased shares of Series D
Preferred Stock pursuant to the Series D Agreement or who possessed registration
rights pursuant to the 1999 Agreement immediately prior to its termination
hereunder.

               (h) "Other Stockholders" means persons other than the Holders
who, by virtue of agreements with the Corporation, are entitled to include their
securities in certain registrations hereunder.

               (i) The terms "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.

               (j) "Registrable Securities" means (1) the Common Stock issuable
or issued upon conversion of the Series C Preferred Stock, conversion of the
Series D Preferred Stock or exercise of the Warrants, and (2) any Common Stock
of the Corporation issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of the shares
referenced in (1) above, excluding in all cases, however, any Registrable
Securities which have been sold to the public either pursuant to a registration
statement filed pursuant to the Securities Act or Rule 144 adopted thereunder,
or which have been sold in a private transaction in which the transferor's
rights under this Agreement are not assigned.

               (k) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock then
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then convertible or exercisable securities which are, Registrable
Securities.

               (l) "Restricted Securities" means any Registrable Securities
required to bear the legend set forth in Section 1.2 hereof.


                                       2
<PAGE>   4

               (m) "Rule 144" means Rule 144 as promulgated by the SEC under the
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC.

               (n) "Rule 145" means Rule 145 as promulgated by the SEC under the
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC.

               (o) "SEC" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.

               (p) "Securities Act" means the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Securities and Exchange Commission thereunder, all as the same shall be in
effect at the time.

               (q) "Series C Agreement" means the Series C Convertible Preferred
Stock and Warrant Purchase Agreement dated December 31, 1999 between the
Corporation and certain of the Investors.

               (r) "Series D Preferred Stock" means the shares of the
Corporation's Series D Convertible Preferred Stock, par value $0.001 per share.

               (s) "Warrants" means the 5-year warrants to purchase Common Stock
at an exercise price of $10.00 per share, granted pursuant to the Series C
Agreement and the 5-year warrants to purchase Common Stock at an exercise price
of $17.25 per share, granted pursuant to the Series D Agreement.

        1.2 Restrictions on Transfer.

               (a) Each Holder agrees not to make any disposition of all or any
portion of the Registrable Securities unless and until the transferee has agreed
in writing for the benefit of the Corporation to be bound by this Section 1.2
(unless such disposition of Registrable Securities is to the general public),
provided and to the extent such Section is then applicable, and:

                      (i) there is then in effect a registration statement under
        the Securities Act covering such proposed disposition and such
        disposition is made in accordance with such registration statement; or

                      (ii) unless such disposition of Registrable Securities is
        to the general public, (A) such Holder shall have notified the
        Corporation of the proposed disposition and shall have furnished the
        Corporation with a detailed statement of the circumstances surrounding
        the proposed disposition, and (B) if reasonably requested by the
        Corporation, such Holder shall have furnished the Corporation with an
        opinion of counsel, reasonably satisfactory to the Corporation, that
        such disposition will not require registration of such shares under the
        Securities Act, provided that the requirements of this Section
        1.2(a)(ii) shall not apply to a disposition made in compliance with Rule
        144A under the Securities Act if, before or contemporaneously with such
        disposition, the Holder supplies the Corporation with a written
        certificate describing the disposition and certifying that it is


                                       3
<PAGE>   5

        made in compliance with Rule 144A under the Securities Act and with the
        transferee's written agreement to be bound by Section 1.2 hereof.

                      (iii) Notwithstanding the provisions of paragraphs (i) and
        (ii) above, no such registration statement or opinion of counsel shall
        be necessary for a transfer by a Holder which is (A) a partnership to
        its partners or retired partners in accordance with their partnership
        interests, (B) a corporation to its shareholders in accordance with
        their interests in the corporation, (C) a limited liability company to
        its members or former members in accordance with their interest in the
        limited liability company, (D) to the Holder's family member or trust
        for the benefit of an individual Holder, or (E) to the Holder's
        affiliates, provided in each of the above cases, that the transferee
        will be subject to the terms of this Section 1.2 to the same extent as
        if such transferee were an original Holder hereunder.

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

                   THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
                   UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
                   BE SOLD OR TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
                   UNLESS AND UNTIL REGISTERED UNDER SUCH ACT OR UNLESS THE
                   CORPORATION HAS RECEIVED AN OPINION OF COUNSEL OR OTHER
                   EVIDENCE, SATISFACTORY TO THE CORPORATION AND ITS COUNSEL,
                   THAT SUCH REGISTRATION IS NOT REQUIRED.

               (c) The Corporation shall be obligated to reissue promptly
unlegended certificates at the request of any Holder thereof if the Holder shall
have obtained an opinion of counsel at such Holder's expense (which counsel may
be counsel to the Corporation) reasonably acceptable to the Corporation to the
effect that the securities proposed to be disposed of may lawfully be so
disposed of without registration, qualification or legend. If such disposition
is to the general public (either through a registration or pursuant to Rule 144
under the Securities Act), then the Corporation shall obtain an opinion of
counsel at the corporation's expense, (provided the Corporation is provided with
the supporting documentation and information deemed necessary by such counsel),
to the effect that the legend may be removed and shall deliver such opinion to
the transfer agent for the common stock.

               (d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Corporation of an order of the
appropriate blue sky authority authorizing such removal.


                                       4
<PAGE>   6

        1.3 Demand Registration.

               (a) Request for Registration. If the Corporation shall receive
from Initiating Holders at any time or times not earlier than the earlier of (i)
two years after the date of the 1999 Agreement (in the case of Initiating
Holders who are Holders of Series C Preferred Stock) and two years after the
date of this Agreement (in the case of Initiating Holders who are Holders of
Series D Preferred Stock), or (ii) one year after the effective date of the
first registration statement filed by the Corporation covering an underwritten
public offering of securities of the Corporation to the general public ("IPO")
(other than a registration statement relating either to the sale of securities
to employees of the Corporation pursuant to a stock option, stock purchase or
similar plan or a SEC Rule 145 transaction), a written request (a "Registration
Request") that the Corporation file a registration statement under the
Securities Act covering all or a portion of the Registrable Securities the
aggregate proceeds of which exceed $7,500,000, then the Corporation shall (i)
within 10 days of the receipt thereof, give written notice of such request to
all other Holders, and (ii) subject to the limitations in Section 1.3(b), as
soon as practicable use its best efforts to effect such registration under the
Securities Act of all Registrable Securities which the Holders specify in a
written request received by the Corporation within 10 days of the mailing or
delivery of such notice by the Corporation.

               (b) Limitations on Registration. Notwithstanding any provision of
this Agreement, the Corporation shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to this Section 1.3:

                      (i) In any particular jurisdiction in which the
        Corporation would be required to execute a general consent to service of
        process in effecting such registration, qualification or compliance,
        unless the Corporation is already subject to service in such
        jurisdiction and except as may be required by the Securities Act;

                      (ii) After the Corporation has initiated two (2) such
        registrations pursuant to Section 1.3 (counting for these purposes only
        registrations which have been declared or ordered effective);

                      (iii) If the Corporation shall furnish to Holders
        requesting a registration statement pursuant to this Agreement, a
        certificate signed by the President of the Corporation stating that in
        the good faith judgment of the Board of Directors of the Corporation, it
        would be seriously detrimental to the Corporation and its stockholders
        for such registration statement to be filed at the time requested, and
        it is therefore necessary to defer the filing of such registration
        statement, the Corporation shall have the right to defer such filing and
        notice, as otherwise required under this Agreement, for a period of not
        more than 180 days after receipt of the request of the Initiating
        Holders; provided, however, that the Corporation may not utilize this
        right more than once in any 12 month period; or

                      (iv) During the period starting with the date 60 days
        prior to the Corporation's good faith estimated date of filing of, and
        ending on the date 180 days immediately following the effective date of,
        any registration statement pertaining to securities of the Corporation,
        including any securities registered pursuant to Section 1.3


                                       5
<PAGE>   7

        (other than a registration of securities in a Rule 145 transaction or
        with respect to a stock or option plan or other employee benefit plan),
        provided that the Corporation is actively employing in good faith all
        reasonable efforts during such period to cause such registration
        statement to become effective and provided that the Holders of
        Registrable Securities were entitled to request inclusion of their
        Registrable Securities to the extent they are otherwise entitled to
        pursuant to the terms of this Agreement;

                      (v) If the Initiating Holders propose to dispose of shares
        of Registrable Securities which may be immediately registered on Form
        S-3 pursuant to a request made under Section 1.5 hereof;

                      (vi) If the Initiating Holders do not request that such
        offering be firmly underwritten by underwriters selected by the
        Initiating Holders (subject to the consent of the Corporation, which
        consent shall not be unreasonably withheld);

                      (vii) If the Corporation and the Initiating Holders are
        unable to obtain the commitment of the underwriter described in clause
        (vi) above to firmly underwrite the offer.

               The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of Sections 1.3(d) and 1.13
hereof, include other securities of the Corporation, with respect to which
registration rights have been granted, and may include securities of the
Corporation sold for the account of the Corporation.

               (c) Underwriting. The right of any Holder to registration
pursuant to Section 1.3 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting (unless otherwise mutually agreed by a majority in interest of
the Initiating Holders and such Holder with respect to such participation and
inclusion) to the extent provided herein. A Holder may elect to include in such
underwriting all or a part of the Registrable Securities such Holder holds.

               (d) Procedures. If the Corporation shall request inclusion in any
registration pursuant to Section 1.3 of securities being sold for its own
account, or if other persons shall request inclusion in any registration
pursuant to Section 1.3, the Initiating Holders shall, on behalf of all Holders,
offer to include such securities in the underwriting and may condition such
offer on their acceptance of the further applicable conditions of this Article 1
(including Section 1.11). The Corporation shall (together with all Holders and
other persons proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for such underwriting
by a majority in interest of the Initiating Holders, which underwriters are
reasonably acceptable to the Corporation. Notwithstanding any other provision of
this Agreement, if the representative of the underwriters advises the Initiating
Holders in writing that marketing factors require a limitation on the number of
shares to be underwritten, the number of shares to be included in the
underwriting or registration shall be allocated, first, to the holders of
Registrable Securities pro rata on the basis of the number of Registrable
Securities that would be sold by such Holders, and second, as set forth in
Section 1.13 hereof. If a person who has requested inclusion in such
registration as provided above does not agree to the terms of any such
underwriting, such person


                                       6
<PAGE>   8

shall be excluded therefrom by written notice from the Corporation, the
underwriter or the Initiating Holders. The securities so excluded shall also be
withdrawn from registration. If shares are so withdrawn from registration and if
the number of shares to be included in such registration was previously reduced
as a result of marketing factors pursuant to this Section 1.3 or otherwise, then
the Corporation shall offer to all holders who have retained rights to include
securities in the registration the right to include additional securities in the
registration in an aggregate amount equal to the number of shares so withdrawn,
with such shares to be allocated among such Holders requesting additional
inclusion in accordance with this Section 1.3.

        1.4 Corporation Registration.

               (a) If at any time after the effective date of the first
registration statement filed by the Corporation covering an underwritten public
offering of securities of the Corporation to the general public, the Corporation
determines to register (including for this purpose a registration effected by
the Corporation for stockholders other than the Holders) any of its stock or
other equity securities under the Securities Act in connection with the public
offering of such securities (other than a registration relating solely to
employee benefit plans, or a registration relating to a corporate reorganization
or other transaction on Form S-4, or a registration on any form which does not
permit secondary sales or does not include substantially the same information as
would be required to be included in a registration statement covering the sale
of the Registrable Securities), the Corporation shall (i) promptly give each
Holder written notice of such registration and (ii) use its best efforts to
include in such registration, subject to the provisions of Section 1.4(b) below,
and in any underwriting involved therein, all the Registrable Securities
specified in a written request or requests made by any Holder and received by
the Corporation within ten (10) days after the written notice from the
Corporation described in clause (i) above is mailed or delivered by the
Corporation. Notwithstanding the foregoing, should the Corporation, prior to the
sale of any shares pursuant to a registration statement described above in this
Section 1.4, decide to deregister or not proceed with such offering, the
Corporation shall have no further obligation to the Holders with respect to such
offering or registration except to promptly notify them of its decision.

               (b) Underwriting. If the registration of which the Corporation
gives notice is for a registered public offering involving an underwriting, the
Corporation shall so advise the Holders as part of the written notice given
pursuant to Section 1.4(a). In such event, the right of any Holder to
registration pursuant to this Section 1.4 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Corporation and the other holders of securities of the
Company with registration rights to participate therein distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected by the Corporation.

               Notwithstanding any other provision of this Section 1.4, if the
representative of the underwriters advises the Corporation in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the representative may, subject to the limitations set forth
below, exclude all Registrable Securities from, or limit the number of
Registrable Securities to be included in, the registration and underwriting. The
Corporation shall so advise


                                       7
<PAGE>   9

all holders of securities requesting registration, and the number of shares of
securities that are entitled to be included in the registration and underwriting
shall be allocated as set forth in Section 1.13. If any person does not agree to
the terms of any such underwriting, such person shall be excluded therefrom by
written notice from the Corporation or the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.

               If shares are so withdrawn from the registration and if the
number of shares of Registrable Securities to be included in such registration
was previously reduced as a result of marketing factors, the Corporation shall
then offer to all persons who have retained the right to include securities in
the registration the right to include additional securities in the registration
in an aggregate amount equal to the number of shares so withdrawn, with such
shares to be allocated among the persons requesting additional inclusion in
accordance with Section 1.13 hereof.

        1.5 Form S-3 Registration. If, after the Corporation has qualified for
registration on Form S-3 or any comparable or successor form after its IPO, the
Corporation shall receive from any Holder or Holders a written request or
requests that the Corporation effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders (such request shall be in writing and
shall state the number of shares of Registrable Securities to be disposed of and
the intended methods of disposition by such Holder or Holders), the Corporation
will:

               (a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and

               (b) as soon as practicable, use its best efforts to effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within 10 days after receipt of such written notice from
the Corporation; provided, however, that the Corporation shall not be obligated
to effect any registration, qualification or compliance (i) if Form S-3 is not
available for such offering by the Holders; (ii) if the Holders, together with
the holders of any other securities of the Corporation entitled to inclusion in
such registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public of less than $1,000,000;
(iii) if the Corporation shall furnish to the Holders a certificate signed by
the President of the Corporation stating that in the good faith judgment of the
Board of Directors of the Corporation, it would be seriously detrimental to the
Corporation and its stockholders for such Form S-3 registration to be effected
at such time, in which event the Corporation shall have the right to defer the
filing of the Form S-3 registration statement for a period of not more than 180
days after receipt of the request of the Holder or Holders under this Section
1.5; provided, however, that the Corporation shall not utilize this right more
than once in any 12 month period; (iv) in the circumstances described in clauses
(i) and (iv) of Section 1.3(b) hereof; or (v) if the Corporation has, within the
12-month period preceding the date of such request, already effected one such
registration on Form S-3 in such period.


                                       8
<PAGE>   10

               (c) If a request complying with the requirements of Section
1.5(a) hereof is delivered to the Corporation, the provisions of Section
1.3(b)(i), (iii) and (iv) hereof shall apply to such registration. If the
registration is for an underwritten offering, the provisions of Section 1.3(c)
and (d) hereof shall apply to such registration.

               (d) Notwithstanding Section 1.7 of this Agreement, the
Corporation shall be required to pay the Registration Expenses in connection
with only two (2) registrations pursuant to this Section 1.5 and the Holders
shall pay the Registration Expenses in connection with any additional
registrations pursuant to this Section 1.5.

        1.6 Obligations of the Corporation. Whenever required under this
Agreement to effect the registration of any Registrable Securities, the
Corporation shall promptly use its best efforts to:

               (a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to 120 days or until the Holder or
Holders have completed the distribution described in the registration relating
thereto, whichever first occurs; provided however, that (i) such 120-day period
shall be extended for a period of time equal to the period the Holder refrains
from selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of the Corporation; and (ii)
in the case of any registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, such 120-day period
shall be extended, if necessary, to keep the registration statement effective
until all such Registrable Securities are sold, however, in no event longer than
one year from the effective date of the registration statement and provided that
Rule 145, or any successor rule under the Securities Act, permits an offering on
a continuous or delayed basis, and provided further that applicable rules of the
Securities Act governing the obligation to file a post-effective amendment
permit, in lieu of filing a post-effective amendment that (I) included any
prospectus required by Section 10(a)(3) of the Securities Act or (II) reflects
facts or events representing a material or fundamental change in the information
set forth in the registration statement, the incorporation by reference of
information required to be included in (I) and (II) above to be contained in
periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in
the registration statement.

               (b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.

               (c) Furnish to the Holders such number of prospectuses, including
a preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents, records and information as they may reasonably
request in order to facilitate the disposition of Registrable Securities held by
them.


                                       9
<PAGE>   11

               (d) Register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders, provided that the
Corporation shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.

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

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

               (g) Cause such Registrable Securities registered pursuant hereto
to be listed on each securities exchange on which similar securities issued by
the Corporation are then listed.

               (h) Provide a transfer agent and registrar for all Registrable
Securities not later than the effective date of such registration.

               (i) Permit any Holder of Registrable Securities which, in its
reasonable judgment, might be deemed to be an underwriter or a controlling
person of the Corporation, to participate in the preparation of such
registration statement or comparable statement.

               (j) Otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with the first
month after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.

               (k) Obtain a cold comfort letter from the Corporation's
independent public accountants in customary form and covering such matters of
the type customarily covered by cold comfort letters with respect to the
financial statements and certain financial information contained in the
registration statement as the holders of a majority of the Registrable
Securities being sold reasonably request (provided that such Registrable
Securities constitute at least 10% of the securities covered by such
registration statement).

        In the event of the issuance by the SEC of any stop order suspending the
effectiveness of a registration statement, any order preventing or suspending
the use of any preliminary prospectus, or of the suspension of the qualification
of securities for offering or sale in any jurisdiction, the Corporation will
make reasonable efforts to obtain the withdrawal of such order or suspension.


                                       10
<PAGE>   12

        1.7 Expenses of Registration. The Corporation shall bear and pay all
expenses incurred in effecting any registration, filing or qualification of
Registrable Securities with respect to both registrations pursuant to Sections
1.3, all of the registrations pursuant to Section 1.4, and two (2) registrations
pursuant to Section 1.5, which expenses shall include all registration, filing,
and qualification fees, printers' and accounting fees relating thereto and the
reasonable fees and disbursements of one counsel (in the case of registrations
pursuant to Section 1.3) for the selling Holders ("Registration Expenses").
Notwithstanding the foregoing, all underwriting discounts, selling commissions
and stock transfer taxes relating to the registration of Registrable Securities
and fees and disbursements of counsel for any Holder (other than the reasonable
fees and disbursements of one counsel included in the foregoing sentence) shall
be borne by the Holders of such securities pro rata on the basis of the number
of shares of securities so registered on their behalf, as shall any other
expenses in connection with the registration required to be borne by the Holders
of such securities.

        1.8 Indemnification.

               (a) To the extent permitted by law, the Corporation will
indemnify and hold harmless each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the Exchange
Act, with respect to which registration, qualification has been effected
pursuant to this Agreement, against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Securities Act,
the Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Corporation of the Securities Act or any rule or regulation
thereunder applicable to the Corporation and relating to action or inaction
required of the Corporation in connection with any such registration,
qualification or compliance; and the Corporation will reimburse each such
Holder, underwriter or controlling person, for any legal and other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 1.8(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Corporation, which consent
shall not be unreasonably withheld, nor shall the Corporation be liable in any
such case for any such loss, claim, damage, liability, or action to the extent
that it arises out of or is based upon a Violation based upon written
information furnished specifically for use in connection with such registration
by any such Holder, underwriter or controlling person; and provided further,
that reimbursement by the Corporation of attorneys' fees incurred by Holders or
such controlling persons in investigating or defending any such loss, claim,
damage, liability or action, shall be limited to fees of one counsel
representing such Holders and controlling persons jointly.

               (b) To the extent permitted by law, each Holder will indemnify
and hold harmless the Corporation, each of its directors, each of its officers
who has signed the


                                       11
<PAGE>   13

registration statement, each person, if any, who controls the Corporation within
the meaning of the Securities Act, each underwriter of the Corporation's
securities covered by such a registration statement, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will reimburse
the Corporation and each such person for any legal and other expenses reasonably
incurred in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this Section 1.8(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall not be
unreasonably withheld, and provided further that no Holder shall have any
liability under this Section 1.8(b) in excess of the gross proceeds received by
such Holder in the relevant offering.

               (c) Each party entitled to indemnification under this Section 1.8
(the "Indemnified Party") shall give written notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after receipt by
such Indemnified Party of the commencement of any claim for which indemnity may
be sought, and the Indemnifying Party shall have the right to participate in,
and, to the extent the Indemnifying Party so desires, jointly with any other
Indemnifying Party similarly notified, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
Indemnified Party (together with all other Indemnified Parties that may be
represented without conflict by one counsel) shall have the right to retain its
own counsel, with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between such Indemnified Party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
Indemnifying Party, as provided herein, to the extent materially prejudicial to
the Indemnifying Party's ability to defend such action, shall relieve such
Indemnifying Party of any liability to the Indemnified Party under this Section
1.8, but the omission so to deliver written notice to the Indemnifying Party
will not relieve it of any liability that it may have to any Indemnified Party
otherwise than under this Section 1.8.

               (d) If the indemnification provided for in this Section 1.8 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, claim, damage or liability, or expense referred
to therein, then the Indemnified Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage, liability or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss, claim,
damage, liability or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the Violation or alleged Violation relates to information supplied by
the Indemnifying Party or by the Indemnified Party and the


                                       12
<PAGE>   14

parties' relative intent, knowledge, access to information, and the opportunity
to correct or prevent such Violation.

               (e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.

        1.9 Furnish Information. It shall be a condition precedent to the
obligations of the Corporation to take any action pursuant to this Agreement
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Corporation such information regarding itself, the
Registrable Securities held by it, and the intended method of distribution of
such securities as the Corporation may reasonably request and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement.

        1.10 Reports Under Securities Exchange Act of 1934. With a view of
making available to the Holders the benefits of Rule 144 and Rule 144A
promulgated under the Securities Act and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the Corporation to
the public without registration or pursuant to a registration on Form S-3, the
Corporation agrees to use its best efforts to:

               (a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
from and after 90 days after the effective date of the first registration
statement under the Securities Act filed by the Corporation for the offering of
its equity securities to the general public,

               (b) File with the SEC in a timely manner all reports and other
documents required of the Corporation under the Securities Act and the Exchange
Act at any time it has become subject to such reporting requirements; and

               (c) Furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon written request (i) a written statement
by the Corporation that it has complied with the reporting requirements of Rule
144 (at any time after 90 days after the effective date of the first
registration statement filed by the Corporation for an offering of its
securities to the general public), the Securities Act and the Exchange Act (at
any time after it has become subject to such reporting requirements), or that it
qualified as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Corporation and such other reports and documents so
filed by the Corporation, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration.

        1.11 "Market Stand-Off" Agreement. Each Holder hereby agrees that,
during the period (not to exceed 180 days in the case of an IPO and 90 days in
all other cases) specified by the Corporation and an underwriter of Common Stock
or other securities of the Corporation, following the effective date of a
registration statement of the Corporation filed under the


                                       13
<PAGE>   15

Securities Act, it shall not, to the extent requested by the Corporation and
such underwriter, sell or otherwise transfer or dispose of (other than to
transferees who agree to be similarly bound) any Common Stock held by it at any
time during such period except Common Stock included in such registration,
including Common Stock acquired by such Holder in the public offering registered
on such Registration Statement; provided however, that:

               (a) such agreement shall be applicable only to registration
statements of the Corporation which cover Common Stock (or other securities) to
be sold on its behalf to the public in a bona fide firm commitment underwritten
offering; and

               (b) all officers and directors of the Corporation, all other
persons with registration rights (whether or not pursuant to this Agreement) and
all holders of one percent (1%) or more of the equity or voting power of the
Corporation, enter into similar agreements.

        In order to enforce the foregoing covenant, the Corporation may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such 180-day period.

        1.12 Transfer or Assignment of Registration Rights. The rights to cause
the Corporation to register securities granted to a Holder by the Corporation
under this Agreement may be transferred or assigned by a Holder only to a
transferee or assignee, who together with its affiliates hold not less than five
percent (5%) of Registrable Securities (as presently constituted and subject to
subsequent adjustments for stock splits, stock dividends, reverse stock splits,
and the like), provided that the Corporation is given written notice at the time
of or within a reasonable time after such transfer or assignment, stating the
name and address of the transferee or assignee and identifying the securities
with respect to which such registration rights are being transferred or
assigned, and provided further, that the transferee or assignee of such rights
assumes the obligations of such Holder under this Agreement.

        1.13 Allocation of Registration Opportunities. Subject to Section 1.3,
in any circumstance in which all of the Registrable Securities and other shares
of Common Stock of the Corporation (including shares of Common Stock issued or
issuable upon conversion of any currently issued or unissued series of Preferred
Stock of the Corporation) with registration rights (the "Other Shares")
requested to be included in a registration on behalf of the Holders or other
selling stockholders cannot be so included as a result of limitations of the
aggregate number of shares of Registrable Securities and Other Shares that may
be so included, the number of shares of Registrable Securities and Other Shares
that may be so included shall be allocated among the Holders and other selling
stockholders requesting inclusion of shares pro rata on the basis of the number
of shares of Registrable Securities and Other Shares that would be held by such
Holders and other selling stockholders, assuming conversion; provided however,
that such allocation shall not operate to reduce the aggregate number of
Registrable Securities and Other Shares to be included in such registration if
any Holder or other selling stockholder does not request inclusion of the
maximum number of shares of Registrable Securities and Other Shares allocated to
him pursuant to the above-described procedure, in which case the remaining
portion of his allocation shall be reallocated among those requesting Holders
and other selling stockholders whose allocations did not satisfy their requests
pro rata on the basis of the number of shares of


                                       14
<PAGE>   16

Registrable Securities and Other Shares which would be held by such Holders and
other selling stockholders, assuming conversion, and this procedure shall be
repeated until all of the shares of Registrable Securities and Other Shares
which may be included in the registration on behalf of the Holders and other
selling stockholders have been so allocated. The Corporation shall not limit the
number of Registrable Securities to be included in a registration pursuant to
this Agreement in order to include shares held by stockholders with no
registration rights.

        1.14 Delay of Registration. No Holder shall have any right to take any
action to restrain, enjoin or otherwise delay any registration as a result of
any controversy that might arise with respect to the interpretation or
implementation of this Agreement.

        1.15 Termination of Registration Rights.

               (a) Except as set forth in subparagraph (b) below, the right of
any Holder to request registration or inclusion in any registration pursuant to
this Agreement shall terminate on the closing of the first Corporation-initiated
registered public offering of Common Stock of the Corporation, if all shares of
Registrable Securities held or entitled to be held upon conversion by such
Holder may immediately be sold under Rule 144 during any 90-day period, or the
earlier of (i) such date after the closing of the first Corporation-initiated
registered public offering of Common Stock of the Corporation as all shares of
Registrable Securities held or entitled to be held upon conversion by such
Holder may immediately be sold under Rule 144 during any 90-day period and (ii)
3 years after the closing of the first Corporation-initiated registered public
offering.

               (b) The provisions of subparagraph (a) above shall not apply to
any Holder (together with its affiliates) who owns more than five percent (5%)
of the Corporation's outstanding stock until such time as such Holder (together
with its affiliates) owns less than five percent (5%) of the outstanding stock
of the Corporation.

               (c) Limitations on Subsequent Registration Rights. From and after
the date of this Agreement, the Corporation shall not, without the prior written
consent of a majority in interest of the Holders, enter into any agreement with
any holder of any securities of the Corporation giving such holder any
registration rights on terms more favorable than the registration rights granted
to the Holders hereunder.

                                   ARTICLE 2

                          COVENANTS OF THE CORPORATION

        Until the Corporation becomes subject to the reporting requirements of
the Exchange Act, so long as any Holder owns any Registrable Security, the
Corporation agrees as follows:

        2.1 Basic Financial Information. The Corporation will furnish the
following to (a) each Holder of Series C Preferred Stock, so long as such Holder
(together with its affiliates) owns at least 370,000 shares of Series C
Preferred Stock of the Corporation, or such number of shares of Common Stock of
the Corporation issued upon conversion of 370,000 shares of Series C Preferred
Stock of the Corporation, or any combination thereof (as presently constituted
and subject to subsequent adjustment for stock splits, stock dividends, reverse
stock splits,


                                       15
<PAGE>   17

recapitalizations and the like) who so requests in writing and (b) each Holder
of Series D Preferred Stock, so long as such Holder (together with its
affiliates) who owns at least five percent (5%) of the shares of Series D
Preferred Stock of the Corporation, or such number of shares of Common Stock of
the Corporation issued upon conversion of five percent (5%) of the shares of
Series D Preferred Stock of the Corporation, or any combination thereof (as
presently constituted and subject to subsequent adjustment for stock splits,
stock dividends, reverse stock splits, recapitalizations and the like) who so
requests in writing:

               (a) As soon as practicable after the end of each fiscal year of
the Corporation, and in any event within ninety (90) days thereafter, an audited
consolidated balance sheet of the Corporation and its subsidiaries, if any, as
at the end of such fiscal year, and an audited consolidated statements of income
and cash flows of the Corporation and its subsidiaries, if any, for such year,
prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and certified by
independent public accountants selected by the Corporation;

               (b) As soon as practicable at the end of the first, second, and
third quarterly accounting periods in each fiscal year of the Corporation, and
in any event within forty five (45) days thereafter, an unaudited consolidated
balance sheet of the Corporation and its subsidiaries, if any, as of the end of
each such quarterly period, and unaudited consolidated statements of income and
cash flows of the Corporation and its subsidiaries, if any, for such period and
for the current fiscal year to date, prepared in accordance with generally
accepted accounting principles consistently applied and setting forth in
comparative form the figures for the corresponding periods of the previous year,
subject to changes resulting from normal year-end adjustments, all in reasonable
detail, except that such financial statements need not contain the notes
required by generally accepted accounting principles; and

               (c) Annually (and in any event no later than five (5) days before
adoption by the Board of Directors of the Corporation), the annual budget and
operating plan of the Corporation for each fiscal year.

        2.2 Additional Information. As soon as practicable after the end of each
month and in any event within thirty (30) days thereafter, the Corporation will
deliver to each director of the Corporation designated by the Holders of Series
C Preferred Stock and the Holders of Series D Preferred Stock, a consolidated
balance sheet of the Corporation and its subsidiaries, if any, as at the end of
such month and consolidated statements of income and cash flows of the
Corporation and its subsidiaries, for each month and for the current fiscal year
of the Corporation to date, all subject to normal year-end audits adjustments,
prepared in accordance with generally accepted accounting principles
consistently applied, together with a comparison of such statements to the
corresponding periods of the prior fiscal year and to the Corporation's
operating plan then in effect and approved by its Board of Directors.

        2.3 Limitations. Anything in Article 2 of this Agreement to the contrary
notwithstanding, no Holder by reason of this Agreement shall have access to any
trade secrets or classified information of the Corporation. Each Holder hereby
agrees to hold in confidence and trust and not to misuse or disclose any
confidential information provided pursuant to this


                                       16
<PAGE>   18

Article 2. The Corporation shall not be required to comply with Article 2 of
this Agreement in respect of any Holder whom the Corporation reasonably
determines to be a competitor or an officer, employee, director or greater than
five percent (5%) stockholder of a competitor.

                                   ARTICLE 3

                                  MISCELLANEOUS

        3.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware without regard to its principles
governing conflicts of laws.

        3.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors and assigns of the parties hereto.

        3.3 Entire Agreement; Amendment. This Agreement (including the Exhibits
hereto) constitutes the full and entire understanding and agreement between the
parties with respect to the subject matter hereof. Any provisions of this
Agreement may be amended, and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only by written consent of the Corporation and the holders of at least a
majority of the Registrable Securities and securities convertible into or
exercisable for Registrable Securities and then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of all
such securities, and the Corporation.

        3.4 Notices. All notices, requests, consents, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received (a) when
delivered against receipt, (b) upon transmitter's confirmation of the receipt of
a facsimile transmission, which shall be followed by an original sent otherwise
in accordance with this Section 3.4, (c) upon confirmed delivery by a standard
overnight carrier, or (d) if to a U.S. resident, upon expiration of three
business days after the day when deposited in the U.S. mail, first class postage
prepaid, addressed in accordance with Section 16 of the Series C Stock Purchase
Agreement and the Series D Stock Purchase Agreement.

        3.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Any such counterpart may
contain one or more signature pages.

        3.6 Rights; Severability. Unless otherwise expressly provided herein, a
Holder's rights hereunder are several rights, not rights jointly held with any
of the other Holders. In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement shall continue in full force and effect without said
provision.

        3.7 Further Assurances. Each party agrees to execute and deliver to the
other parties hereto such other documents, and to take such further action, as
the other parties hereto may reasonably request in order to carry out the
purpose of this Agreement.


                                       17
<PAGE>   19

        3.8 Information Confidential. Each Holder acknowledges that the
information received by them pursuant hereto may be confidential and for its use
only, and it will not use such information in violation of the Exchange Act or
reproduce, disclose or disseminate such information to any other person (other
than its employees or agents having a need to know the contents of such
information, and its attorneys), except in connection with the exercise of
rights under this Agreement, unless the Corporation has made such information
available to the public generally or such Holder is required to disclose such
information by a governmental body.

        3.9 Captions. The captions and headings to Sections of this Agreement
have been inserted for identification and reference purposes only and shall not
be used to construe the meaning or the interpretation of this Agreement.




                                       18
<PAGE>   20

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.

                                          THE CORPORATION:


                                          NOVATEL WIRELESS, INC.


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          THE INVESTORS:


                                          CORNERSTONE EQUITY INVESTORS IV, LP

                                          By:  Cornerstone Equity Investors, LLC
                                               General Partner


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          CAPITAL RESEARCH AND MANAGEMENT
                                          COMPANY on behalf of The New Economy
                                          Fund


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


<PAGE>   21

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          GMN INVESTORS II, L.P.

                                          By:   GMN Investors LLC
                                                General Partner


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          THE MANUFACTURERS LIFE INSURANCE
                                          COMPANY (U.S.A.)


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          RANDOLPH STREET PARTNERS 1998 DIF, LLC


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          RANDOLPH STREET PARTNERS III
                                          (THIRD VENTURE)


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


<PAGE>   22

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          GARY KUCK



                                          ______________________________________
                                          Gary Kuck
                                          Date of Execution:______________


                                          SAMUEL MAY


                                          ______________________________________
                                          Samuel May
                                          Date of Execution:______________


                                          MICHAEL MITGANG


                                          ______________________________________
                                          Michael Mitgang
                                          Date of Execution:______________


                                          JEFFREY CHENG


                                          ______________________________________
                                          Jeffrey Cheng
                                          Date of Execution:______________


                                          THEODORE J. CHRISTIANSON


                                          ______________________________________
                                          Theodore J. Christianson
                                          Date of Execution:______________



<PAGE>   23

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          TAD W. PIPER


                                          ______________________________________
                                          Tad W. Piper
                                          Date of Execution:______________


                                          VENTURES WEST INVESTMENTS LIMITED


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          BANK OF MONTREAL CAPITAL CORPORATION

                                          By:  Ventures West Management TIP,
                                               Inc., Manager

                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          GOLDEN GATE DEVELOPMENT & INVESTMENT
                                          LIMITED PARTNERSHIP

                                          By:  Advent International Limited
                                               Partnership, General Partner

                                          By:  Advent International Corporation,
                                               General Partner

                                          ______________________________________
                                          By:  Greg Smitherman
                                          Its:__________________________________
                                          Date of Execution:______________



<PAGE>   24

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          ADVENT ISRAEL LIMITED PARTNERSHIP

                                          By:  Advent International Limited
                                               Partnership, General Partner

                                          By:  Advent International Corporation,
                                               General Partner

                                          ______________________________________
                                          By:  Greg Smitherman
                                          Its:__________________________________
                                          Date of Execution:______________


                                          ADVENT PARTNERS LIMITED PARTNERSHIP

                                          By:  Advent International Corporation,
                                               General Partner

                                          ______________________________________
                                          By: Greg Smitherman
                                          Its:__________________________________
                                          Date of Execution:______________


                                          DIGITAL MEDIA & COMMUNICATIONS LIMITED
                                          PARTNERSHIP

                                          By:  Advent International Limited
                                               Partnership, General Partner

                                          By:  Advent International Corporation,
                                               General Partner

                                          ______________________________________
                                          By:  Greg Smitherman
                                          Its:__________________________________
                                          Date of Execution:______________



<PAGE>   25

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          GSM CAPITAL LIMITED PARTNERSHIP

                                          By:   Telcom Management Limited
                                                Partnership, General Partner

                                          By:   Telcom Investments Inc.,
                                                General Partner

                                          ______________________________________
                                          By:  Bernice E. Bradin
                                          Its:__________________________________
                                          Date of Execution:______________


                                          ARGC, LLC


                                          ______________________________________
                                          By:  Bernice E. Bradin
                                          Its:__________________________________
                                          Date of Execution:______________


                                          THOMAS BEAL


                                          ______________________________________
                                          Thomas Beal
                                          Date of Execution:______________


                                          CARL BILDNER


                                          ______________________________________
                                          Carl Bildner
                                          Date of Execution:______________


                                          JONG TAE CHOI


                                          ______________________________________
                                          Jong Tae Choi
                                          Date of Execution:______________



<PAGE>   26

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          KATHRYN COOPERMAN


                                          ______________________________________
                                          Kathryn Cooperman
                                          Date of Execution:______________


                                          ROBERT COREY


                                          ______________________________________
                                          Robert Corey
                                          Date of Execution:______________


                                          MARCO POLO INDUSTRIES CO., LTD


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          ECOLOGY MANAGEMENT


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          ROGER HARTMAN


                                          ______________________________________
                                          Roger Hartman
                                          Date of Execution:______________



<PAGE>   27

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          JOAN LEVINSON


                                          ______________________________________
                                          Joan Levinson
                                          Date of Execution:____________


                                          NADEAU TRAIL, INC.


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          DAVID OROS


                                          ______________________________________
                                          David Oros
                                          Date of Execution:_____________


                                          P.S. CAPITAL LLC



                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          ELLIOT TUCKEL


                                          ______________________________________
                                          Elliot Tuckel
                                          Date of Execution:______________



<PAGE>   28

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          WORKING VENTURES CANADIAN FUND, INC.


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          ROBIN LOUIS


                                          ______________________________________
                                          Robin Louis
                                          Date of Execution:______________


                                          SAM ZNAIMER


                                          ______________________________________
                                          Sam Znaimer
                                          Date of Execution:_____________


                                          AETHER CAPITAL LLC

                                          By:  Aether Systems, Inc.
                                               Its Sole Member


                                          By:___________________________________
                                          Name:
                                          Title:
                                          Date of Execution:_____________



<PAGE>   29

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          CORNERSTONE EQUITY INVESTORS IV, LP

                                          By:  Cornerstone Equity Investors, LLC
                                               General Partner


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          GSM CAPITAL LIMITED PARTNERSHIP

                                          By:   Telcom Management Limited
                                                Partnership, General Partner

                                          By:   Telcom Investments Inc.,
                                                General Partner

                                          ______________________________________
                                          By:  Bernice E. Bradin
                                          Its:
                                          Date of Execution:______________


                                          ARGC III, LLC


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          WORKING VENTURES CANADIAN FUND


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________



<PAGE>   30

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          VENTURES WEST INVESTMENTS LIMITED


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          BANK OF MONTREAL CAPITAL CORPORATION


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          SAM ZNAIMER

                                          ______________________________________
                                          By: Sam Znaimer
                                          Its:
                                          Date of Execution:_______________


                                          ROBIN LOUIS


                                          ______________________________________
                                          By: Robin Louis
                                          Its:
                                          Date of Execution:_______________


                                          RANDOLPH STREET PARTNERS 1998 DIF, LLC


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________



<PAGE>   31

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          RANDOLPH STREET PARTNERS III (Third
                                          Venture Tranche B)


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________
                                          Date of Execution:______________


                                          MICHAEL MITGANG


                                          ______________________________________
                                          Michael Mitgang
                                          Date of Execution:_______________


                                          CALEP EQUITIES LLC


                                          ______________________________________
                                          By: Angelo Leparulo
                                          Its: Manager
                                          Date of Execution:_______________



<PAGE>   32

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          IRONSIDE VENTURE PARTNERS II LLC


                                          By: __________________________________


                                          Name: ________________________________
                                               (Print)

                                          Title: _______________________________
                                                (If applicable)





<PAGE>   33

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          GMN INVESTORS II, L.P.

                                          By:  GMN Investors LLC,
                                               its general partner


                                          By: __________________________________


                                          Name: ________________________________
                                               (Print)

                                          Title: _______________________________
                                                (If applicable)


<PAGE>   34

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          GARY KUCK


                                          ______________________________________
                                          Gary Kuck





<PAGE>   35

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          SAMUEL MAY


                                          ______________________________________
                                          Samuel May





<PAGE>   36

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          JEFFREY CHENG


                                          ______________________________________
                                          Jeffrey Cheng




<PAGE>   37

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          ORRICK, HERRINGTON & SUTCLIFFE LLP


                                          ______________________________________
                                          By:  Peter V. Leparulo
                                          Its:   Authorized Signatory





<PAGE>   38

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          PETER V. LEPARULO


                                          ______________________________________
                                          Peter V. Leparulo





<PAGE>   39

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          UMB BANK, n.a. as TRUSTEE of the
                                          ORRICK, HERRINGTON & SUTCLIFFE LLP
                                          DEFINED CONTRIBUTION PLAN FBO BLASE
                                          DILLINGHAM


                                          ______________________________________
                                          By:___________________________________
                                          Its:__________________________________




<PAGE>   40

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                          KEITH BIANCAMANO


                                          ______________________________________
                                          Keith Biancamano





<PAGE>   41

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


                                    EXHIBIT A

                                    Investors


SERIES C INVESTORS
    Cornerstone Equity Investors IV, LP
    Capital Research and Management Company on behalf of the New Economy Fund
    GMN Investors II, L.P.
    The Manufactures Life Insurance Company (U.S.A.)
    Randolph Street Partners 1998 DIF, LLC
    Randolph Street Partners III (Third Venture)
    Kuck, Gary L.
    May, Samuel
    Mitgang, Michael
    Cheng, Jeffrey
    Christianson, Theodore J.
    Piper, Tad W.
    Ventures West Investments Ltd.
    Bank of Montreal Capital Corp.
    Golden Gate Development & Investment Limited Partnership
    Advent Israel Limited Partnership
    Advent Partners Limited Partnership
    Digital Media & Communications Limited Partnership
    GSM Capital Limited Partnership
    ARGC, LLC
    Beal, Thomas
    Bildner, Carl
    Choi, Jong Tae
    Cooperman, Kathryn
    Corey, Robert
    Marco Polo Industries Co., Ltd.
    Ecology Management
    Hartman, Roger
    Levinson, Joan
    Nadeau Trail, Inc.
    Oros, David
    P.S. Capital LLC
    Tuckel, Elliot
    Working Ventures Canadian Fund
    Robin Louis
    Sam Znaimer


<PAGE>   42

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
                 SERIES D CONVERTIBLE PREFERRED STOCK FINANCING


SERIES D INVESTORS
    Aether Capital LLC
    Cornerstone Equity Investors IV, LP
    GSM Capital Limited Partnership
    ARGC III, LLC
    Working Ventures Canadian Fund
    Ventures West Investments Ltd.
    Bank of Montreal Capital Corp.
    Sam Znaimer
    Robin Louis
    Randolph Street Partners 1998 DIF, LLC
    Randolph Street Partners III (Third Venture Tranche B)
    Mitgang, Michael
    Calep Equities LLC
    Ironside Venture Partners II LLC
    GMN Investors II, L.P.
    Gary Kuck
    Samuel May
    Jeffrey Cheng
    Orrick, Herrington & Sutcliffe LLP
    Peter V. Leparulo
    UMB Bank, n.a. as Trustee of the Orrick, Herrington & Sutcliffe LLP Defined
       Contribution Plan FBO Blase Dillingham
    Keith Biancamano



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>5
<FILENAME>ex10-9.txt
<DESCRIPTION>EXHIBIT 10.9
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.9

        THIS LEASE made as of the 1st day of February, 1997.

BETWEEN:

        SUN LIFE ASSURANCE COMPANY OF CANADA, a body corporate incorporated
under the laws of Canada

(hereinafter called the "Landlord")

                                                              OF THE FIRST PART.

                                     - and -

                       NOVATEL WIRELESS TECHNOLOGIES LTD.

        (hereinafter called the "Tenant")

                                                             OF THE SECOND PART.

             WHEREAS the Landlord is registered as owner, subject to such
encumbrances, liens and interests as are notified by memorandum underwritten (or
endorsed hereon) of that certain parcel of land municipally described as 6715
8th St. N.E. and situated in the City of Calgary in the Province of Alberta and
more particularly described in Schedule "A" attached hereto (hereinafter called
the "Land") upon which Land is situated an office building and related
improvements (the said office building and all other fixed improvements now or
hereafter on the Land being hereinafter referred to as the "Building"); and

             WHEREAS the Tenant has agreed to lease space in the Building which
will comprise the area more particularly hereinafter set forth for the term and
at the rental and subject to the terms, covenants, conditions and agreements
hereinafter contained; and

             WHEREAS in this Lease certain expressions have the defined meanings
set out in Article 16 hereof;

             WITNESSETH THAT

                                    ARTICLE 1
                                    PREMISES

Premises                 1.01 In consideration of the rents, covenants,
                         agreements and conditions hereinafter reserved and
                         contained on the part of the Tenant to be respectively
                         paid, kept, observed and performed, the Landlord hereby
                         demises and leases unto the Tenant those certain
                         premises situate on the 2nd floor of the Building
                         containing a Rentable Area of 11,494 square feet as
                         shown outlined in red on the floor plan hereto annexed
                         as Schedule "B" (hereinafter referred to as the "Leased
                         Premises") which Leased Premises shall have for
                         purposes hereinafter set out a Gross Area of 12,644
                         square feet and the Rentable Area and Gross Area of the
                         Leased Premises shall be measured as provided in
                         Sub-sections 16.01 (g), (h), and (j) hereof.

                                    ARTICLE 2
                                      TERM

Term                     2.01 TO HAVE AND TO HOLD the Leased Premises for a term
                         of FIVE (5) YEARS commencing on the 1ST DAY of
                         FEBRUARY, 1997 (hereinafter referred to as the
                         "commencement date") and to be fully completed and
                         ended on the 31ST DAY OF JANUARY, 2002.


<PAGE>   2

                                       -2-

Possession               2.02 It is expressly understood and agreed between the
                         Landlord and the Tenant that, should all of the Leased
                         Premises not be ready for occupancy by the Tenant on
                         the commencement date, the Term of this lease shall
                         nonetheless commence on the commencement date and this
                         Lease shall remain in full force and effect and subject
                         as hereinafter provided the Tenant shall take
                         possession of the Leased Premises when all of the said
                         Leased Premises are ready for occupancy (or in the
                         opinion of the Landlord's Architect would have been
                         ready for occupancy except for the fault of the
                         Tenant). The Tenant shall be obligated to pay rent for
                         the Leased Premises as and from the date that all of
                         the Leased Premises are ready for occupancy. If such
                         date shall occur on a day other than the first day of a
                         month, the basic rent and electrical charges for such
                         month shall be payable only for the proportionate part
                         (being the balance of the month commencing on the date
                         the Leased Premises are ready for occupancy) and the
                         full monthly installments payable under the within
                         Lease shall commence and be payable as of and from the
                         first day of the month next following the date when the
                         Leased Premises are ready for occupancy.

Ready for Occupancy      2.03 For the purposes of this Article, the date on
                         which the Leased Premises are "ready for occupancy"
                         shall be the commencement date.

Inability to Deliver     2.04 The Landlord shall not be liable Possession for
                         loss, injury, damage or inconvenience which the Tenant
                         may sustain by reason of the inability of the Landlord
                         to deliver the Leased Premises ready for occupancy on
                         the commencement date.

Relocation of Leased     2.05 The Tenant agrees that notwithstanding of Leased
Premises                 anything herein contained, the Landlord shall have a
                         ONE TIME RIGHT, to change the location of the Leased
                         Premises as set forth in Article I hereof and Schedule
                         "B" attached hereto to comparable premises in the
                         Building on or above the 2nd floor provided such
                         premises are acceptable to the Tenant, acting
                         reasonably. If the Landlord exercises its right to
                         relocate the Tenant hereunder after the date upon which
                         the Landlord gives notice to the Tenant that the Leased
                         Premises are ready for installation of the Tenant's
                         improvements, THE LANDLORD SHALL PAY THE COSTS OF THE
                         TENANT IN RELOCATING IN THE AMOUNT OF $250,000.00. THE
                         LANDLORD SHALL PROVIDE THE TENANT WITH FOUR MONTHS
                         ADVANCE NOTICE OF THE RELOCATION AND THE TENANT SHALL
                         HAVE ACCESS TO THE NEW LOCATION IN ORDER TO PERFORM
                         IMPROVEMENTS AND ALTERATIONS OF THE NEW LOCATION. SUCH
                         ACCESS TO BE PROVIDED AT LEAST THREE MONTHS PRIOR TO
                         THE DATE OF THE RELOCATION.


                                    ARTICLE 3
                                      RENT

Rent                     3.01 YIELDING AND PAYING THEREFOR unto the Landlord, at
                         the Landlord's office in the City of Toronto, Ontario
                         (or to such other persons at such other places as the
                         Landlord may from time to time in writing designate),
                         subject to adjustment as hereinafter provided, in
                         lawful money of Canada, the annual basic rent of ONE
                         HUNDRED TEN THOUSAND TWO DOLLARS EIGHTY CENTS
                         ($110,002.80) payable without deduction by equal
                         consecutive monthly installments of NINE THOUSAND ONE
                         HUNDRED SIXTY SIX DOLLARS NINETY CENTS ($9,166.90) in
                         advance on the first day of each and every month during
                         the Term.

Basis of determining     3.02 The aforesaid annual basic rent is calculated on
Rent                     the basis of the Gross Area of the Leased Premises
                         being 12,644 SQUARE FEET leased at a rate of $8.70 for
                         each square foot of Gross Area for the Term.


<PAGE>   3

                                      -3-

Apportionment            3.03 Annual basic rent and Common Costs Escalation are
of Annual Basic Rent     considered to accrue from day to day, and where it
and Common Costs         becomes necessary to calculate annual basic rent or
Escalation               Common Costs Escalation for an irregular period of less
                         than twelve calendar months, or an installment of
                         annual basic rent or Common Costs Escalation for a
                         period of less than one calendar month, an appropriate
                         apportionment and adjustment will be made on a per diem
                         basis.

                                    ARTICLE 4
                               TENANT' S COVENANTS

                         The Tenant covenants with the Landlord as follows:

Occupancy                4.01 To occupy the Leased Premises on the date the
                         Leased Premises are ready for occupancy subject to the
                         terms hereof.

Rent                     4.02 To pay the rent hereby reserved promptly on the
                         days and at the times and in the manner herein
                         mentioned, without demand or deduction.

Permitted Use            4.03 To use the Leased Premises only for general office
                         purposes and ELECTRICAL ENGINEERING LABORATORY, and
                         such normal and lawful business, duties and functions
                         of a general business office and ELECTRONIC ENGINEERING
                         LABORATORY, that will not unreasonably interfere with
                         normal use of a first-class office building OF A NATURE
                         AND TYPE SIMILAR TO THE WITHIN BUILDING; and not to use
                         or permit to be used the Leased Premises or any part
                         thereof for any business which is that of a bank,
                         treasury branch, credit union, trust or acceptance or
                         loan company or any other organization engaged in the
                         business of accepting, money on deposit, or any similar
                         banking business (excluding insurance, stock brokers or
                         investment dealers), nor use nor permit the use of any
                         part of the Leased Premises for the purpose of
                         installation or operation of any electronic or
                         mechanical equipment, or machines by which any banking
                         transaction, operation or function may be available to
                         the public, nor use or permit the use of any part of
                         the Leased Premises for or as a restaurant, cafeteria,
                         lunch counter, food dispensary, snack bar or other food
                         services operation, OTHER THAN FOR STAFF PURPOSES.


Waste and Nuisance       4.04 Not to commit or permit any waste or injury to the
                         Leased Premises including the Leasehold improvements
                         and trade fixtures therein, any overloading of the
                         floors thereof, any nuisance therein or any use or
                         manner of use causing annoyance to other tenants and
                         occupants of the Building and not to use or permit to
                         be used any part of the Leased Premises for any
                         dangerous, noxious or offensive trade or business; and
                         not to place any objects on or otherwise howsoever
                         obstruct the heating or air conditioning vents within
                         the Leased Premises. The Landlord acknowledges that the
                         Tenant's existing use mentioned in Section 4.03 of the
                         Lease does not constitute a nuisance.

Floor Loads              4.05 That the Tenant shall not place a load upon any
                         portion of any floor of the Leased Premises which
                         exceeds the floor load which the area of such floor
                         being loaded was designed to carry having regard to the
                         loading of adjacent areas and that which is allowed by
                         law. The Landlord reserves the right to prescribe the
                         weight and position of all safes and heavy
                         installations which the Tenant wishes to place in the
                         Leased Premises, so as to distribute properly the
                         weight thereof and the Tenant shall pay for all costs
                         incurred by the Landlord and the Landlord's Architect
                         in making such assessment.


<PAGE>   4

                                      -4-

Insurance Risk           4.06 EXCEPT FOR THE PERMITTED USES DESCRIBED IN
                         PARAGRAPH 4.03, not to do, omit to do or permit to be
                         done or omitted to be done upon the Leased Premises
                         anything which would cause the Landlord's cost of
                         insurance (whether fire or liability) to be increased
                         (and, without waiving the foregoing prohibition the
                         Landlord may demand, and the Tenant shall pay to the
                         Landlord upon demand, the amount of any such increase
                         of cost caused by anything so done or omitted or
                         permitted to be done or omitted) or which would cause
                         any policy of insurance to be subject to cancellation
                         or refusal of placement or renewal.

Noxious Fumes Vapours    4.07 The Tenant shall so use the Leased Premises that
and Odours               noxious or objectionable fumes, vapours and odours will
                         not occur beyond the extent to which they are
                         discharged or eliminated by means of the flues and
                         other devices provided in the Building by the Landlord
                         and shall prevent any such noxious or objectionable
                         fumes, vapours and odours from entering into the air
                         conditioning or being discharged into other vents or
                         flues of the Building or annoying any of the tenants in
                         the Building. Any discharge of fumes, vapours and
                         odours shall be permitted only during such period or
                         periods, to such extent, in such conditions and in such
                         manner as is directed by the Landlord from time to
                         time. THE LANDLORD SHALL BE RESPONSIBLE TO MAINTAIN
                         REASONABLE VENTILATION AND FLUES COMMONLY FOUND IN A
                         BUILDING OF THE NATURE AND TYPE OF THE WITHIN BUILDING.

Condition                4.08 Not to permit the Leased Premises to become
                         untidy, unsightly, offensive or hazardous or permit
                         unreasonable quantities of waste or refuse to
                         accumulate therein, and at the end of each business day
                         to leave the Leased Premises in a condition such as
                         reasonably to facilitate the performance of the
                         Landlord's janitor and cleaning services referred to in
                         Section 5.06.

By-laws                  4.09 To comply at its own expense with all municipal,
                         federal, provincial, sanitary, fire, building and
                         safety statutes, laws, by-laws, and safety statutes,
                         laws, by-laws, regulations, ordinances, orders and
                         requirements pertaining to the operation and use of the
                         Leased Premises, the condition of the Leasehold
                         Improvements, trade fixtures, furniture and equipment
                         installed by the Tenant therein and the making by the
                         Tenant of any repairs, changes or improvements therein
                         or any other matter pertaining to the Leased Premises
                         or the Tenant as well as all rules and regulations of
                         the Canadian Board of Fire Underwriters, or any
                         successor body and with the requirements of all
                         insurance companies having policies of any kind
                         whatsoever in effect covering the Building which are
                         communicated to the Tenant.

Rules and Regulations    4.10 To observe, and to cause its employees, invitees
                         and all others over whom the Tenant can reasonably be
                         expected to exercise control to observe the Rules and
                         Regulations attached as Schedule "C" hereto, and such
                         further and other reasonable Rules and Regulations and
                         amendments and changes therein as may hereafter be made
                         by the Landlord of which notice in writing shall be
                         given to the Tenant and all such Rules and Regulations
                         shall be deemed to be incorporated into and form part
                         of this Lease. For the enforcement of such Rules and
                         Regulations, the Landlord shall have available to it
                         all remedies in this Lease provided for a breach
                         thereof and all legal remedies whether or not provided
                         for in this Lease, both at law and in equity. The
                         Landlord shall not be responsible or liable to the
                         Tenant for the non-observance or violation by any other
                         tenant of any such Rules and Regulations or the
                         non-enforcement as against other tenants of such Rules
                         and Regulations or any loss or damage arising out of
                         the same.

Surrender, Overholding   4.11 That upon the expiration or other termination of
                         the Term of this Lease, the Tenant shall quit and
                         surrender the Leased Premises in vacant and clean
                         possession and in good order, repair, decoration, and
                         condition (subject to the provisions of Sub-section
                         6.02 (a) hereof) and shall remove all its property
                         therefrom, except as otherwise provided in this Lease.
                         The Tenant's obligation to observe or perform this
                         covenant shall survive the expiration or other
                         termination of the Term of this Lease. If the Tenant
                         shall continue to occupy the Leased Premises after the
                         expiration of this Lease without further written


<PAGE>   5

                                      -5-

                         agreement and without objection by the Landlord, the
                         Tenant shall be a month-to-month tenant at double the
                         annual basic rent and (except as to length of tenancy)
                         on and subject to the provisions and conditions herein
                         set out including the payment of electrical charges and
                         Common Costs Escalation.

Signs and Directory      4.12 Not to paint, display, inscribe, place or affix
                         any sign, notice or lettering of any kind anywhere
                         outside the Leased Premises (whether on the outside or
                         inside of the Building) or within the Leased Premises
SEE                      so as to be visible from the outside of the Leased
SECTION 17.06            Premise with the exception only of any identification
                         sign at or near the entrance of the Leased Premises and
                         a directory listing in the main lobby of the Building,
                         in each case containing only the name of the Tenant and
                         such other names as the Landlord may permit, and to be
                         subject to the approval of the Landlord as to design,
                         size, location and content. Such identification sign
                         and directory listing shall be installed at the expense
                         of the Tenant, and the Landlord reserves the right to
                         install them as an Additional Service.

Inspection Access        4.13 Other than regularly scheduled access as agreed to
                         by the Tenant and Landlord, during Normal Business
                         Hours and on at least one hours notice to the Tenant,
                         the Landlord shall be permitted, as reasonably
                         required, any time and from time to time to enter and
                         to have its authorized agents, employees and
                         contractors enter the Leased Premises for the purpose
                         of inspection, window cleaning, maintenance, providing
                         janitor services, making repairs, alterations or
                         improvements to the Leased Premises, adjoining premises
                         or the Building, or to have access to or make changes
                         in utilities and services (including underfloor and
                         overhead ducts, air conditioning, heating, plumbing,
                         electrical and telephone facilities and access panels,
                         all of which the Tenant agrees not to obstruct) or to
                         determine the electric light and power consumption by
                         the Tenant in the Leased Premises and the Tenant shall
                         provide free and unhampered access for such purposes,
                         and shall not be entitled to compensation for any
                         inconvenience, nuisance and discomfort or loss caused
                         thereby, but the Landlord in exercising its rights
                         hereunder shall proceed to the extent reasonably
                         possible so as to minimize interference with the
                         Tenant's use and enjoyment of the Leased Premises.

Exhibiting Premises      4.14 That the Landlord or its agents may, ON 24 HOURS
                         NOTICE TO THE TENANT enter and exhibit the Leased
                         Premises during Normal Business Hours during the Term
                         hereof, and place upon the Leased Premises a notice, of
                         reasonable dimensions and reasonably placed, stating
                         that said Land or the Leased Premises are for sale or
                         to let which notice the Tenant shall not remove or
                         obscure or permit to be removed or obscured, but the
                         Landlord in exercising its rights hereunder shall
                         proceed to the extent reasonably possible so as to
                         minimize interference with the Tenant's use and
                         enjoyment of the Leased Premises. THE TENANT SHALL BE
                         PERMITTED TO BE PRESENT AT THE TIME OF ANY SUCH
                         ENTERING AND EXHIBITING.

Name of Building         4.15 Not to refer to the Building by any name other
                         than that designated from time to time by the Landlord,
                         nor to use such name for any purpose other than that of
                         the business address of the Tenant.

Acceptance Leased        4.16 That the Tenant shall be deemed to have examined
                         the Leased Premises Premises before taking possession
                         and the taking of possession shall be conclusive
                         evidence as against the Tenant that at the time thereof
                         the Leased Premises were in good order and satisfactory
                         condition and that all alterations, remodelling,
                         decorating and installation of equipment and fixtures
                         required to be done by the Landlord have been
                         satisfactorily completed save only for such
                         deficiencies of which notice shall have been given to
                         the Landlord within fifteen (15) days after the taking
                         of possession. Any dispute as to any aspects of the
                         Landlord's work or completion or adequacy of the
                         Building, the Leased Premises or any part thereof shall
                         be determined by the Landlord's Architect.


<PAGE>   6

                                       -6-

                                    ARTICLE 5
                              LANDLORD'S COVENANTS

        The Landlord covenants with the Tenant as follows:

Quiet Enjoyment          5.01 That the Tenant paying the rent hereby reserved at
                         the times mentioned and in the manner aforesaid and
                         observing and performing each and every of the
                         covenants, conditions, restrictions and stipulations by
                         the Tenant to be observed or performed shall and may
                         peaceably and quietly possess and enjoy the Leased
                         Premises for the Term hereby granted without any
                         interruption from the Landlord or any other person
                         lawfully claiming by, through, or under it.

Interior Climate         5.02 To maintain in the Leased Premises during Normal
Control                  Business Hours, and to the extent permitted by law by
                         means of a heating and cooling system, conditions of
                         reasonable temperature and comfort in accordance with
                         good standards of interior climate control generally
                         pertaining at the date of this Lease applicable to
                         normal occupancy of the said premises, but the Landlord
                         shall have no responsibility for any inadequacy of
                         performance of the said system if the Leased Premises
                         depart from the design criteria for such system as
                         determined by the Landlord's Architect. If the use of
                         the Leased Premises does not accord with the said
                         design criteria and changes in the system are feasible
                         and desirable to accommodate such use, the Landlord may
                         make such changes and the entire expense of such
                         changes will be paid by the Tenant.

Elevators                5.03 Subject to the supervision of the Landlord and
                         except when repairs are being made thereto, to furnish
                         for use by the tenant and its employees and invitees in
                         common with other persons entitled thereto passenger
                         elevator service (operatorless automatic elevator
                         service, if used, shall be deemed "elevator service"
                         within the meaning of this Section) to the floor on
                         which the Leased Premises or portions thereof are
                         located, and to furnish for the use of the Tenant in
                         common with others entitled thereto at reasonable
                         intervals and at such hours as the Landlord may
                         REASONABLY select, elevator service for the carriage of
                         furniture, equipment, deliveries and supplies, provided
                         however, that if the elevators shall become inoperative
                         or shall be damaged or destroyed the Landlord shall
                         have reasonable time within which to repair such damage
                         or replace such elevator and the Landlord shall repair
                         or replace the same as soon as reasonably possible, but
                         shall in no event be liable for indirect or
                         consequential damages or other damages for personal
                         discomfort or illness during such period of repair or
                         replacement. THE ELEVATORS WILL BE AVAILABLE TO THE
                         TENANT 24 HOURS A DAY.

Entrances, Lobbies,      5.04 To permit the Tenant and its employees and
etc.                     Lobbies, etc. invitees to have the use during Normal
                         Business Hours in common with others entitled thereto
                         of the common entrances, lobbies, stairways and
                         corridors of the Building giving access to the Leased
                         Premises, THE TENANT SHALL BE PERMITTED ACCESS TO SUCH
                         AREAS AT SUCH OTHER TIMES OF ITS OPERATIONS ON SUCH
                         TERMS AS MAY BE REASONABLE IN ALL OF THE CIRCUMSTANCES,
                         (subject to the Rules and Regulations referred to in
                         Section 4.10 and such other reasonable limitations as
                         the Landlord may from time to time impose) provided
                         that notwithstanding the foregoing the Landlord
                         reserves the right to restrict for security purposes
                         the method of access on Saturdays even during Normal
                         Business Hours; and to permit access to the Leased
                         Premises outside of Normal Business Hours by the Tenant
                         and its authorized employees subject to such reasonable
                         restrictions for security purposes as the Landlord may
                         impose.

Washrooms                5.05 To permit the Tenant and its employees and
                         invitees in common with others, entitled thereto to use
                         the washrooms in the Building on the floor or floors on
                         which the Leased Premises are situate and to provide in
                         such washrooms washroom supplies to a standard
                         consistent with normal standards.


<PAGE>   7

                                      -7-

Janitor Services         5.06 To provide cleaning and janitorial services,
                         including window cleaning, to a standard and with
                         services consistent with normal standards from time to
                         time for similar buildings in similar locations in the
                         city in which the Building is situate, provided that
                         the Tenant shall at the end of each business day leave
                         the Leased Premises in a reasonably tidy condition.
                         With the exception of the obligation to cause such work
                         to be done, the Landlord shall not be responsible for
                         any act of omission on the part of the person or
                         persons, firm or corporation employed to perform such
                         work, and such work shall be done at the Landlord's
                         direction, without interference by the Tenant, its
                         servants, agents or employees.

                                    ARTICLE 6
                        REPAIR AND DAMAGE AND DESTRUCTION

        The Landlord and Tenant further covenant and agree as follows:

Landlord's Repairs       6.01 The Landlord covenants with the Tenant, subject to
                         Sub-section 6.03 (b) and Section 11.02 hereof and
                         except for reasonable wear and tear, to keep in good
                         and substantial state of repair the exterior walls,
                         roof, foundations, and bearing structure of the
                         Building and the pipes, heating and air conditioning,
                         plumbing and electrical wires installed by the
                         Landlord.

Tenant's Repairs         6.02 The Tenant covenants with the Landlord:

                              (a)     subject to Sub-section 6.03 (b) and except
                                      for reasonable wear and tear and Insured
                                      Damage, except where the latter is caused
                                      by the Tenant, its agents, employees,
                                      invitees or licensees, to keep in good and
                                      substantial state of repair and
                                      decoration, including repainting and
                                      cleaning of drapes and carpets at
                                      reasonable intervals as needed, the Leased
                                      Premises including all Leasehold
                                      Improvements and all trade fixtures
                                      therein and all glass therein other than
                                      (subject to Sub-section 6.02 (d) hereof)
                                      perimeter windows on floors above the
                                      Ground Floor of the Building;

                              (b)     that the Landlord may, ON AT LEAST ONE
                                      HOURS NOTICE TO THE TENANT, from time to
                                      time enter and view the state of repair,
                                      and that the Tenant will repair according
                                      to notice in writing;

                              (c)     that if any part of the Building including
                                      without limitation, the structure or the
                                      structural elements of the Building, or
                                      the systems for interior climate control
                                      or for the provisions of utilities or
                                      services get out of repair, or become
                                      damaged or destroyed through the
                                      negligence or misuse of the Tenant or of
                                      its employees, invitees or others over
                                      whom the Tenant can reasonably be expected
                                      to exercise control, the expense of
                                      repairs or replacements thereto
                                      necessitated thereby shall be paid by the
                                      Tenant;

                              (d)     that the Tenant shall during the
                                      continuance of this lease at its expense
                                      repair and replace with as good quality
                                      and size any glass broken on the Leased
                                      Premises, and such obligation shall
                                      include outside windows and doors on the
                                      perimeter of the Leased Premises whenever
                                      such glass shall be broken by the Tenant,
                                      its servants, employees, agents or
                                      invitees; and



<PAGE>   8

                                      -8-

                              (e)     that the Tenant will notify the Landlord
                                      immediately upon the Tenant becoming aware
                                      of any defect in the Leased Premises or of
                                      any other condition which may cause damage
                                      to the Leased Premises or the Building.

Abatement and            6.03 It is agreed between the Landlord and the Tenant
Termination              that:

                              (a)     (i)     in the event of partial
                                              destruction (as hereinafter
                                              defined) of the Leased Premises by
                                              fire, the elements or other cause
                                              or casualty, then in such event,
                                              if the destruction is such that,
                                              in the REASONABLE opinion of the
                                              Landlord's Architect, the Leased
                                              Premises may be partially used for
                                              the Tenant's business while the
                                              repairs are being made, then the
                                              rent shall abate in the proportion
                                              that the part of the Leased
                                              Premises rendered unusable bears
                                              to the whole of the Leased
                                              Premises, PROVIDED ALWAYS that if
                                              the part rendered unusable exceeds
                                              one-half (1/2) of the area of the
                                              Leased Premises there shall be a
                                              total abatement of rent until the
                                              repairs have been made unless the
                                              Tenant, with the permission of the
                                              Landlord, in fact, uses the
                                              undamaged part, in which case the
                                              Tenant shall pay proportionate
                                              rent for the part so used (being
                                              annual basic rent, electrical
                                              charges and Common Costs
                                              Escalation bearing the same
                                              proportion to the annual basic
                                              rent, electrical charges and
                                              Common Costs Escalation for the
                                              whole of the Leased Premises as
                                              the area in square feet of the
                                              part of the Leased Premises being
                                              used bears to the Rentable Area of
                                              the Leased Premises). "Partial
                                              destruction" shall mean any damage
                                              to the Leased Premises less than
                                              total destruction, but which
                                              renders all or any part of the
                                              Leased Premises temporarily unfit
                                              for use by the Tenant for the
                                              Tenant's business. A certificate
                                              of the Landlord's Architect as to
                                              whether the whole or a part of the
                                              Leased Premises is rendered
                                              unusable, and certifying the
                                              extent of the part rendered
                                              unusable, shall be binding and
                                              conclusive upon both Landlord and
                                              Tenant for the purposes hereof.
                                              Provided that if the partial
                                              destruction is repaired within
                                              fifteen (15) days after the date
                                              of destruction, there shall be no
                                              abatement of rent.

                                              (ii) Notwithstanding the foregoing
                                              provisions concerning total or
                                              partial destruction of the Leased
                                              Premises, in the event of total or
                                              partial destruction of the
                                              Building of which the Leased
                                              Premises form a part (and whether
                                              or not the Leased Premises are
                                              destroyed) to such a material
                                              extent or of such a nature that in
                                              the opinion of the Landlord the
                                              Building must be or should be
                                              totally or partially demolished,
                                              whether to be re-constructed in
                                              whole or in part or not, then the
                                              Landlord may, at its option (to be
                                              exercised within sixty (60) days
                                              from the date of destruction) give
                                              notice to the Tenant that this
                                              Lease is terminated with effect
                                              from the date stated in the
                                              notice. If the Tenant is able
                                              effectively to use the Leased
                                              Premises after the destruction,
                                              such date shall be not less than
                                              thirty (30) days from the date of
                                              the notice. If the Tenant is
                                              unable effectively to use the
                                              Leased Premises after the
                                              destruction, the date given in the
                                              notice shall be the date of
                                              destruction. Upon such
                                              termination, the Tenant shall
                                              immediately surrender the Leased
                                              Premises and all its interest
                                              therein to the Landlord and the
                                              rent shall abate and be
                                              apportioned to the date of


<PAGE>   9

                                      -9-

                                              termination and the Tenant shall
                                              remain liable to the landlord for
                                              all sums accrued due pursuant to
                                              the terms hereof to the date of
                                              termination. The Landlord's
                                              Architect shall determine whether
                                              the Leased Premises can or cannot
                                              be effectively used by the Tenant
                                              and his certificate thereon shall
                                              be binding and conclusive upon
                                              both Landlord and Tenant for the
                                              purposes hereof.

                                      (iii)   In none of the cases aforesaid
                                              shall the Tenant have any claim
                                              upon the Landlord for any damages
                                              sustained by it nor shall the
                                              Landlord be obligated to rebuild
                                              the Building or any part thereof
                                              in accordance with the original
                                              plans and specifications therefor.
                                              No damages, compensation or claim
                                              whatsoever shall be payable by the
                                              Landlord for inconvenience, loss
                                              of business or annoyance or other
                                              loss or damage whatsoever arising
                                              from the occurrence of any such
                                              damage or destruction of the
                                              Leased Premises or of the building
                                              and/or the repair or restoration
                                              thereof.

                                    ARTICLE 7
                            TAXES AND OPERATING COSTS

        The Landlord and Tenant further covenant and agree:

Landlord's Obligations   7.01 The Landlord covenants with the Tenant subject to
                         the Tax provisions of Sections 7.02 and 7.03 to pay
                         promptly when due to the taxing authority or
                         authorities having jurisdiction, all Taxes (as defined
                         in section 16.01 hereof).

Business Taxes           7.02 The Tenant covenants with the Landlord:
and Common Costs
Escalation                    (a)     to pay when due all business taxes,
                                      business licence fees, and other taxes,
                                      rates, duties or charges levied or
                                      assessed by lawful authority in respect of
                                      the use or occupancy of the Leased
                                      Premises by the Tenant, the business or
                                      businesses carried on therein, or the
                                      equipment, machinery or fixtures brought
                                      therein by or belonging to the Tenant, or
                                      anyone occupying the Leased Premises with
                                      the Tenant's consent, and to pay to the
                                      Landlord upon demand the portion of any
                                      tax, rate, duty or charge levied or
                                      assessed upon the land and Building that
                                      is attributable to any equipment,
                                      machinery or fixtures on the Leased
                                      Premises which are not the property of the
                                      Landlord.

                              (b)     to pay to the Landlord in the manner
                                      specified in Section 7.03 as additional
                                      rent any Common Costs Escalation.

                              (c)     to reimburse the Landlord throughout the
                                      Term and at the times and in the manner
                                      specified by the Landlord from time to
                                      time, the full amount of any tax, sales
                                      tax, goods and services tax, value added
                                      tax, multi-stage sales tax, business
                                      transfer tax or any other similar tax
                                      levied, rated, charged, imposed or
                                      assessed in respect of the rent,
                                      additional rent or any other amounts
                                      payable pursuant to this Lease or in
                                      respect of the space demised under this
                                      Lease.

Payment of Common        7.03 (a)     After the commencement of the Term of this
Costs Escalation                      Lease and prior to the commencement of
                                      each calendar year thereafter which
                                      commences during the Term the Landlord
                                      shall estimate the Common Costs Escalation
                                      for the ensuing calendar year or (if
                                      applicable) broken


<PAGE>   10

                                      -10-

                                      portion thereof, as the case may be, to
                                      become payable under Section 7.02, and
                                      notify the Tenant in writing of such
                                      estimate. The amount so estimated (which
                                      amount may be re-estimated from time to
                                      time during the calendar year) shall be
                                      payable in equal monthly installments in
                                      advance over the calendar year in
                                      question, each such installment being
                                      payable on each monthly rental payment
                                      date proved in Article 3 hereof.

See Section 17.08             (b)     When the Common Costs for the calendar
                                      year or broken portion of the calendar
                                      year in question become finally determined
                                      the Landlord shall recalculate the Common
                                      Costs Escalation. If the Tenant has
                                      overpaid such Common Costs Escalation, the
                                      Landlord shall refund any excess paid, but
                                      if any balance remains unpaid the Tenant
                                      shall pay such remaining balance within
                                      thirty (30) days of demand by the
                                      Landlord. If for any reason the Common
                                      Costs Escalation is not finally determined
                                      within such calendar year or broken
                                      portion thereof, the parties shall make
                                      the appropriate re-adjustment when such
                                      Common Costs Escalation becomes finally
                                      determined. The obligation of the parties
                                      to observe or perform this covenant shall
                                      survive the expiration or other
                                      termination of the Term of this Lease.
                                      Within 120 days after the end of each
                                      calendar year, the Landlord shall furnish
                                      to the Tenant a statement in writing
                                      certified by the Landlord's external
                                      auditors of the amount of Common Costs for
                                      such calendar year showing in reasonable
                                      detail the main classification of items
                                      included in Common Costs. If the amount
                                      payable by the Tenant as shown on such
                                      statement is greater or less than the
                                      portion paid by the Tenant to the landlord
                                      pursuant to Article 7.03 (a) or (b) , the
                                      proper adjustments shall be paid by the
                                      party liable for such amount within ten
                                      (10) days after delivery of the statement.

                              (c)     Neither party may claim a re-adjustment in
                                      respect of the Common Costs Escalation
                                      based upon any error of estimation,
                                      determination or calculation thereof
                                      unless claimed in writing prior to the
                                      expiration of one (1) year after the end
                                      of the calendar year to which the Common
                                      Costs Escalation relates. Any report of
                                      the Landlord's accountant (who may be the
                                      Landlord's internal auditor or accountant)
                                      as to the Common Costs Escalation shall be
                                      conclusive as to the amount thereof for
                                      any period to which such report relates.
                                      THE TENANT SHALL BE ENTITLED TO REASONABLY
                                      REQUEST THE DOCUMENTATION BASED UPON WHICH
                                      THE LANDLORD HAS DETERMINED THE COMMON
                                      COSTS ESCALATION. THE COMMON COSTS ARE
                                      ESTIMATED TO BE $6.65 PER SQUARE FOOT
                                      INCLUDING ELECTRICITY FOR THE FISCAL YEAR
                                      1996. FURTHER THE LANDLORD AGREES TO LIMIT
                                      ANNUAL INCREASES IN ADDITIONAL RENT,
                                      EXCLUDING PROPERTY TAX AND UTILITIES AND
                                      ANY OTHER LEGISLATED COSTS NOT UNDER THE
                                      LANDLORD'S CONTROL, TO ACTUAL INCREASES OF
                                      5%, WHICHEVER IS LESS.

Postponement, etc.,      7.04 The Landlord may postpone payment of any Taxes
of Taxes                 payable by it pursuant to Section 7.01 and the Tenant
                         may postpone payment of any taxes, rates, duties,
                         levies and assessments payable by it under Sub-section
                         7.02 (a), in each case to the extent permitted by law
                         and if prosecuting in good faith any appeal against the
                         imposition thereof, and provided in the case of a
                         postponement by the Tenant that if the Building or any
                         part thereof or the Landlord shall become liable to
                         assessment, prosecution, fine or other liability the
                         Tenant shall have given security in a form and of an
                         amount satisfactory to the landlord in respect of such
                         liability and such undertakings as the Landlord may
                         reasonably require to ensure payment thereof.


<PAGE>   11

                                      -11-

Receipts, etc.           7.05 Whenever requested by the Landlord the Tenant will
                         deliver to it receipts for payment of all taxes, rates,
                         duties, levies and assessments payable by the Tenant
                         pursuant to Sub-section 7.02 (a) hereof and furnish
                         such other information in connection therewith as the
                         Landlord may reasonably require.


                                    ARTICLE 8
                        UTILITIES AND ADDITIONAL SERVICES

        The Landlord and Tenant further covenant and agree as follows:

Water, Telephone and     8.01 The Landlord shall furnish appropriate conduits
Electricity              for bringing building standard electrical and telephone
                         services to the Leased Premises and shall provide hot
                         and cold or tempered water to the building standard
                         washrooms on each floor on which the Leased Premises
                         are situate. (SEE SECTION 16.01(o).


Utilities                8.02 The Tenant shall pay for the cost of all utilities
                         provided for its exclusive use in the Leased Premises,
                         including without restricting the generality of the
                         foregoing or of Section 8.03, gas, water, electricity,
                         telephone and communication service charges and rates
                         incurred by the Tenant and any other charges and/or
                         rates relating to services and/or utilities provided
                         for the exclusive use of the Tenant in respect of the
                         Tenant's occupation of the Leased Premises and
                         operation of its business carried on therein or
                         therefrom, including laboratory work and any special
                         systems servicing its own computers, or any other
                         machinery.



Electricity              8.03 The Landlord may from time to time determine the
                         Tenant' s electrical consumption in the Leased Premises
                         upon whatever reasonable basis may be selected by it,
                         including without limitation, the metering of
                         electricity either to the Leased Premises or to special
                         equipment therein or by estimating the consumption of
                         the Leased Premises or any special equipment therein
                         having regard to electrical capacity and hours of use.
                         If the Landlord determines that the Tenant' s
                         electrical consumption is disproportionate to the
                         electrical consumption of other tenants in the
                         Building, the Landlord may require the Tenant to
                         install at the Tenant's expense a domestic meter for
                         measurement or checking of the Tenant's electrical
                         consumption or any part of such consumption or use; and
                         in that event the Tenant shall pay directly to the
                         supplier of the electricity as and when due from time
                         to time any and all electrical charges for such
                         electrical consumption which is disproportionate as
                         aforesaid and which the Landlord has required to be
                         metered. The Landlord's determination shall be verified
                         by an engineer selected by the Landlord (who may be an
                         employee of the Landlord) and being so verified shall
                         be binding on the parties hereto. THE TENANT SHALL,
                         WHEN REASONABLY REQUESTED BE PERMITTED TO REVIEW THE
                         RECORDS AND RECEIVE AN ACCOUNTING FROM THE LANDLORD IN
                         REGARD TO THE DETERMINATION OF THE ELECTRICAL
                         CONSUMPTION IN THE BUILDING.

Excess Use               8.04 The Tenant's use of electric power in the Leased
                         Premises shall not be for the operation of other than
                         normal office electrical fixtures, lights, lamps,
                         typewriters, photocopiers, bookkeeping machines,
                         telexes, adding machines and similar small office
                         machines for the Tenant's own use solely (the Landlord
                         to determine what equipment is characterizable as
                         "small office machines" and "normal office" equipment),
                         AND SUCH OTHER ITEMS AND EQUIPMENT REASONABLY NECESSARY
                         FOR THE PERMITTED USE AS DESCRIBED IN PARAGRAPH 4.03
                         HEREOF, without the prior written consent of the
                         Landlord and shall not at any time exceed the capacity
                         of any of the electrical conductors and equipment in or
                         otherwise serving the Leased Premises.


<PAGE>   12

                                      -12-

                         As a condition of granting such consent, the Landlord
                         may require the Tenant to pay as additional rent the
                         cost of all additional risers and other equipment
                         required therefor as well as the increased cost to the
                         Landlord of the electric power and the Additional
                         Services to be furnished by the Landlord in connection
                         therewith.

Lamps                    8.05 The Tenant shall pay throughout the Term promptly
                         to the Landlord when demanded the cost of maintaining
                         and servicing in all respects all electric lighting
                         fixtures in the Leased Premises including the
                         REASONABLE cost of replacement on a group basis or
                         otherwise of electric light bulbs, fluorescent tubes,
                         starters and ballasts installed on commencement of the
                         said Term. Such maintaining, servicing and replacing
                         shall be within the exclusive right of the Landlord
                         and shall be carried out at reasonably competitive
                         rates.

Additional Services      8.06 The Landlord, if it shall from time to time so
                         elect, shall have the exclusive right, by way of
                         Additional Services, to provide or have its designated
                         agents or contractors provide any janitor or cleaning
                         services to the Leased Premises required by the Tenant
                         which are additional to those required to be provided
                         by the Landlord under Section 5.06, and to supervise
                         the moving of furniture or equipment of the Tenant and
                         the making of repairs or alterations conducted within
                         the Leased Premises, and to supervise or make
                         deliveries to the Leased Premises. The cost of
                         Additional Services provided to the Tenant shall be
                         REASONABLY COMPETITIVE IN RELATION TO SUCH SERVICES IN
                         THE MARKET PLACE AND SHALL BE paid to the Landlord by
                         the Tenant from time to time promptly upon receipt of
                         invoices therefor from the Landlord. The Landlord may
                         include as part of its costs of rendering such
                         Additional Services the Landlord's then current
                         administration fee. Costs of Additional Services
                         recovered directly from the Tenant and other tenants
                         shall not be included in computing Operating Costs.

                         8.07 NOTWITHSTANDING PARAGRAPH 8.06, IF THE ADDITIONAL
                         COSTS ARISING FROM OR OUT OF PARAGRAPH 8.06 EXCEED
                         $500.00, THE TENANT, IN ITS SOLE DISCRETION, MAY SEEK
                         OTHER ARRANGEMENTS FOR THE PROVISION OF THE ADDITIONAL
                         SERVICES DESCRIBED IN PARAGRAPH 8.06 AND SHALL ADVISE
                         THE LANDLORD OF THE ALTERNATIVE ARRANGEMENTS MADE AND
                         WHICH ALTERNATIVE ARRANGEMENTS SHALL IN ALL OF THE
                         CIRCUMSTANCES, BE REASONABLE.

                         8.08 NOTWITHSTANDING THE FOREGOING PROVISIONS CONTAINED
                         IN THIS ARTICLE 8, THE TENANT SHALL NOT BE CHARGED NOR
                         OBLIGATED TO PAY FOR ANY UTILITIES AND/OR ADDITIONAL
                         SERVICES REFERRED TO IN THIS ARTICLE 8, WHICH HAVE BEEN
                         INCLUDED IN THE DETERMINATION OF THE COMMON COSTS
                         AND/OR OPERATING COSTS AS DEFINED IN THE WITHIN LEASE.


                                    ARTICLE 9
                      LICENSES, ASSIGNMENTS AND SUBLETTINGS

Assignments and/or       9.01 (a)     The Tenant shall not assign, mortgage or
Sublettings                           charge this Lease or sublet or part with
                                      possession of the whole or any part of the
                                      Leased Premises nor shall it permit any
                                      subtenant to assign, mortgage or charge
                                      its sublease or sublet or part with
                                      possession of the whole or any part of the
                                      Leased Premises (each of the foregoing
                                      transactions being sometimes referred to
                                      herein as a "Transfer") unless it shall
                                      have first requested and obtained the
                                      consent in writing of the Landlord
                                      thereto, which consent shall not be
                                      unreasonably withheld. Any request for
                                      such consent shall be in writing and shall
                                      be accompanied by a true copy of any
                                      agreements relating to the Transfer which
                                      the Tenant may have originated or
                                      received, and the Tenant shall furnish to
                                      the Landlord all information reasonably
                                      requested by the Landlord available to the
                                      Tenant as to the business and financial
                                      responsibility and standing of the
                                      proposed assignee, subtenant, mortgagee or
                                      chargee



<PAGE>   13

                                      -13-

                                      or occupant (herein referred to as the
                                      "Transferee").

                              (b)     The Landlord's consent to the Tenant's
                                      request for consent to a Transfer shall
                                      not unreasonably be withheld, provided
                                      nevertheless that the Landlord shall be
                                      entitled to withhold consent unreasonably
                                      if the Landlord exercises the right
                                      hereinafter set out in subsection 9.01(c).
                                      Provided further that the landlord's
                                      consent to any Transfer shall be
                                      conditional upon the Transferee entering
                                      into an agreement in form and content
                                      stipulated by the Landlord to perform,
                                      observe and keep each and every covenant,
                                      proviso, condition and agreement in this
                                      Lease on the part of the Tenant to be
                                      performed, observed and kept, including
                                      (except in the case of a subtenancy
                                      payment of rent and all other sums and
                                      payments agreed to be paid or payable
                                      under this Lease-on the days and at the
                                      times and in the manner herein specified.
                                      In the case of a subtenancy, the agreement
                                      shall contain an assignment to the
                                      Landlord of the rents and other amounts
                                      payable under the sublease involved and a
                                      provision whereby the subtenant agrees to
                                      pay to the landlord, unless the latter
                                      otherwise directs, all such rents and
                                      other amounts payable under the sublease.
                                      The assignment shall be given as security
                                      for payment of the rents and other amounts
                                      payable under this Lease. Without limiting
                                      the grounds for withholding consent to a
                                      Transfer, the Landlord's refusal to
                                      consent will not be considered
                                      unreasonable if a reason for withholding
                                      the consent is (i) that the Landlord has
                                      concerns, on reasonable grounds, about the
                                      business, financial background, business
                                      history or creditworthiness of the
                                      proposed Transferee or about the use to
                                      which the Leased Premises may be put or
                                      (ii) the Transferee's refusal to execute
                                      an agreement of the type referred to
                                      above.

                              (c)     Upon the receipt from the Tenant of such
                                      request and such required information, the
                                      Landlord shall have the right, exercisable
                                      in writing within fourteen (14) days after
                                      such receipt, to cancel and terminate this
                                      Lease if the request relates to all the
                                      Leased Premises or to cancel this Lease
                                      only with respect to the applicable part
                                      of the Leased Premises if the request
                                      relates only to a part of the Leased
                                      Premises. In a case where the Tenant's
                                      request for consent to a Transfer relates
                                      only to a part of the Leased Premises, the
                                      phrase "cancellation of this Lease" means
                                      cancellation of this Lease only with
                                      respect to the applicable part of the
                                      Premises, and similar expressions have
                                      similar meanings. Such cancellation shall
                                      be effective as of the date set forth in
                                      the Landlord's notice of exercise of such
                                      right, which shall be neither less than
                                      sixty (60) nor more than one hundred and
                                      twenty (120) days following the service of
                                      such notice. If the lease is cancelled
                                      only with respect to a part of the Leased
                                      Premises, basic rent will abate in the
                                      proportion that the Rentable Area of the
                                      part of the Leased Premises for which this
                                      lease is cancelled bears to the Rentable
                                      Area of the Leased Premises, and this
                                      lease will be amended accordingly.

                              (d)     If the landlord shall exercise such right
                                      the Tenant shall surrender possession of
                                      the Leased Premises or the cancelled
                                      portion thereof on the date set forth in
                                      such notice in accordance with the
                                      provisions of this Lease relating to
                                      surrender of the Leased Premises at the
                                      expiration of the Term.

                              (e)     If the Landlord shall not exercise the
                                      right to cancel this Lease or a proportion
                                      thereof, as above provided after the
                                      receipt of the Tenant's written request,
                                      then the Landlord's consent to such
                                      request shall not be


<PAGE>   14

                                      -14-

                                      unreasonably withheld. In no event shall
                                      any Transfer to which the Landlord may
                                      have consented release or relieve the
                                      Tenant from its obligations fully to
                                      perform all the terms, covenants and
                                      conditions of this Lease on its part to be
                                      performed. No consent by the Landlord to
                                      any Transfer shall be construed to mean
                                      that the Landlord has consented or will
                                      consent to any further Transfer.

                              (f)     Documents evidencing the Landlord's
                                      consent to a Transfer, if permitted or
                                      consented to by the Landlord, will be
                                      prepared by the Landlord or its solicitors
                                      and all related legal costs will be paid
                                      by the Tenant to the Landlord or its
                                      solicitors, as Additional Rent, within
                                      fifteen (15) days after receipt of an
                                      invoice from the Landlord setting out
                                      reasonable particulars of the charges.

                              (g)     If after the date of execution of this
                                      Lease shares not listed for sale on a
                                      recognized stock exchange in Canada or the
                                      United States in the capital of either the
                                      Tenant or a corporation that controls the
                                      Tenant are transferred by sale,
                                      assignment, bequest, inheritance,
                                      operation of law or other disposition, or
                                      are issued by subscription or allotment,
                                      or are cancelled or redeemed, so as to
                                      result in a change in the effective voting
                                      or other control of the Tenant, or of a
                                      corporation that controls the Tenant, by
                                      the person or persons holding control on
                                      the date of execution of this Lease, or if
                                      other steps are taken to accomplish a
                                      change of control, the Tenant promptly
                                      will notify the Landlord in writing of the
                                      change of control, which will be
                                      considered to be an assignment of this
                                      Lease to which the provision of this
                                      Article shall apply. Whether or not the
                                      Tenant notifies the Landlord, unless the
                                      Landlord previously had consented to the
                                      change of control, the landlord may,
                                      within sixty (60) days after it learns of
                                      the change in control, notify the Tenant
                                      that it elects to terminate this Lease.
                                      The Tenant will make available to the
                                      landlord or its lawful representative all
                                      PERTINENT corporate books and records of
                                      the Tenant and of any corporation that
                                      controls the Tenant for inspection at all
                                      reasonable times, to ascertain to the
                                      extent possible whether there has been a
                                      change of control. For the purposes of
                                      this section, control means the direct or
                                      indirect beneficial ownership of more than
                                      fifty percent (50%) of the voting shares
                                      in the capital of a corporation.

                              (h)     If an approved Transferee has sublet or
                                      taken an assignment of all or part of the
                                      leased Premises from the Tenant and has
                                      agreed to pay the Tenant a rent or other
                                      amount in respect of the Leased Premises
                                      or any part of the Leased Premises that
                                      exceeds the rent payable by the Tenant to
                                      the Landlord (or a pro-rated portion of
                                      such rent in the case of a sublease or
                                      assignment of less than the entire Leased
                                      Premises), the Tenant will pay to the
                                      Landlord monthly, as additional rent,
                                      together with basic rent, an amount equal
                                      to the excess rent or other amount
                                      received or receivable by the Tenant from
                                      the Transferee.

                              (i)     If the Landlord sells or otherwise
                                      disposes of the Building or an interest in
                                      the Building or in this Lease to the
                                      extent that the purchaser or assignee
                                      assumes responsibility for compliance with
                                      the covenants and obligations of the
                                      Landlord under this Lease, the Landlord
                                      without further written agreement will be
                                      relieved of liability under the covenants
                                      and obligations.

                              (j)     The Tenant covenants and agrees that it
                                      shall not grant to any lender or other
                                      creditor an assignment, mortgage or charge
                                      of its interest in any



<PAGE>   15

                                      -15-

                                      sublease of all or any part of the Leased
                                      Premises or of its interest in any of the
                                      rents payable under any such sublease. The
                                      Tenant hereby agrees that upon the request
                                      of the Landlord from time to time, it
                                      shall assign unto the Landlord, as
                                      security for the payment of the rent under
                                      this Lease, all of its right, title and
                                      interest in the rents payable under any
                                      and all such sublease. Such assignment
                                      shall be acceptable to the Landlord as to
                                      form and content and it is agreed that the
                                      Landlord may withhold its consent to a
                                      proposed sublease if the Tenant fails to
                                      execute the assignment.

                                   ARTICLE 10
                            FIXTURES AND IMPROVEMENTS

        The Landlord and Tenant further covenant and agree as follows:

Installation Fixtures    10.01(a)     AFTER FEBRUARY 1, 1997 the Tenant will not
and Improvements                      make, erect, install or alter any of
                                      Improvements or trade fixtures in the
                                      Leased Premises without having requested
                                      and obtained the Landlord's prior written
                                      approval, which the Landlord shall not
                                      unreasonably withhold.

                              (b)     AFTER FEBRUARY 1, 1997 in making,
                                      erecting, installing or altering any
                                      Leasehold Improvements or trade fixtures
                                      the Tenant will not alter or interfere
                                      with any installations which have been
                                      made by the Landlord without the prior
                                      written approval of the Landlord, and in
                                      no event shall alter or interfere with or
                                      affect the structural elements or the
                                      strength or outside appearance of the
                                      Building, or the mechanical, electrical,
                                      plumbing and climate control systems
                                      thereof or the window coverings installed
                                      by the Landlord on exterior windows.

                              (c)     The Tenant's request for any approval
                                      hereunder shall be in writing and
                                      accompanied by an adequate description of
                                      the contemplated work and where
                                      appropriate, working drawings and
                                      specifications therefor. Any out-of-pocket
                                      expenses incurred by the Landlord in
                                      connection with any such request for
                                      approval shall be deemed incurred by way
                                      of an Additional Service. All work to be
                                      performed by competent contractors and
                                      subcontractors of whom the Landlord shall
                                      have approved (such approval not to be
                                      unreasonably withheld, but provided that
                                      the Landlord may require that the
                                      Landlord's contractors and subcontractors
                                      be engaged for any mechanical or
                                      electrical work) and by workmen whose
                                      labour affiliations are compatible with
                                      those of workmen employed by the Landlord
                                      and its contractors and subcontractors. At
                                      the option of the Landlord, all such work
                                      shall be subject to inspection by and the
                                      reasonable supervision of the Landlord, as
                                      an Additional Service, and shall be
                                      performed in accordance with any
                                      reasonable conditions or regulations
                                      imposed by the Landlord (including without
                                      limitation the examination by the
                                      Landlord's Architect or other experts of
                                      the detailed drawings and specifications
                                      as an Additional Service and contractor's
                                      liability insurance in reasonable amounts)
                                      and completed in a good and workmanlike
                                      manner in accordance with the description
                                      of the work approved by the Landlord.

Liens and                10.02 In connection with the making, erection,
Encumbrances on          installation or alteration of Leasehold Improvements
Fixtures and             and on trade fixtures and all other work or
Improvements             installations made by or for the Tenant in the Leased
                         Premises the Tenant shall comply with all the
                         provisions of the applicable provincial legislation in
                         respect of mechanics' (builders') liens and workmen's
                         (workers') compensation and other statutes from time to
                         time applicable thereto


<PAGE>   16

                                      -16-

                         (including any provision requiring or enabling the
                         retention of portions of any sums payable by way of
                         holdbacks) and except as to any such holdback shall
                         promptly pay all accounts relating thereto. The Tenant
                         will not create or cause to be created any mortgage,
                         conditional sale agreement or other encumbrance in
                         respect of the Leasehold Improvements or permit any
                         such mortgage, conditional sale agreement or other
                         encumbrance to attach to the Leased Premises or the
                         Building or any part thereof. If and whenever any
                         mechanics' (builders') or other lien for work, labour,
                         services or materials supplied to or for the Tenant or
                         for the cost of which the Tenant may be in any way
                         liable or claims therefor shall arise or be filed or
                         any such mortgage, conditional sale agreement or other
                         encumbrance shall attach, the Tenant shall within
                         twenty (20) days after receipt of notice thereof
                         procure the discharge thereof, including any
                         certificate of action registered in respect of any
                         lien, by payment or giving security or in such other
                         manner as may be required or permitted by law, and
                         failing which the Landlord may in addition to all other
                         remedies hereunder avail itself of its remedy under
                         Section 13.01 and may make any payments required to
                         procure the discharge of any such liens or
                         encumbrances, shall be reimbursed by the Tenant as
                         provided in Section 13.01, and its right to
                         reimbursement shall not be affected or impaired if the
                         Tenant shall then or subsequently establish or claim
                         that any lien or encumbrance so discharged was without
                         merit or excessive or subject to any abatement, set-off
                         or defence.

Tenant's Goods           10.03 The Tenant covenants that it will not sell,
                         dispose of or remove any of the trade fixtures, goods
                         or chattels of the Tenant from or out of the Leased
                         Premises, during the Term without the consent of the
                         Landlord, unless the Tenant is substituting new trade
                         fixtures, goods or chattels of equal value or is bona
                         fide disposing of individual items in the normal course
                         of its business. The Tenant further covenants that
                         OTHER THAN GOODS AND CHATTELS WHICH ARE LEASED BY THE
                         TENANT it will at all times have and retain full legal
                         and beneficial ownership of its trade fixtures, goods
                         and chattels and will not permit them to be or become
                         subject to any lien, mortgage, charge, encumbrance or
                         title retention agreement except such as are bona fide
                         incurred for the purpose of financing the purchase of
                         such trade fixtures, good or chattels.

Removal of Fixtures      10.04 All Leasehold Improvements in or upon the Leased
and Improvements         Premises installed by the Tenant shall immediately upon
                         termination of this Lease be and become the Landlord's
                         property without compensation therefor to the Tenant.
                         Except to the extent herein or otherwise expressly
                         agreed by the Landlord in writing, no Leasehold
                         Improvements, trade fixtures, furniture or equipment
                         shall be removed by the Tenant from the Leased Premises
                         either during or at the expiration or sooner
                         termination of the Term, except that (1) the Tenant, if
                         not in default hereunder, may at the end of the Term
                         remove its trade fixtures; (2) the Tenant, if not in
                         default hereunder, may remove its furniture and
                         equipment at the end of the Term; and (3) the Tenant
                         shall at the end of the Term remove such of the
                         Leasehold Improvements installed by it, and such of its
                         trade fixtures, furniture and equipment as the Landlord
                         shall require to be removed. The Tenant shall, in the
                         case of every removal either during or at the end of
                         the Term, make good any damage caused to the Leased
                         Premises and/or the Building by the installation and
                         removal.
                                   ARTICLE 11
                             INSURANCE AND LIABILITY

        The Landlord and Tenant further covenant and agree as follows:

Tenant's Insurance       11.01 The Tenant shall take out and keep in force
                         during the Term:

                              (a)     comprehensive general public liability
                                      insurance (covering bodily injury, death
                                      and property damage) on an occurrence
                                      basis with respect to all construction,
                                      installation and alteration done in the
                                      Leased


<PAGE>   17
                                     - 17 -


                                      Premises by the Tenant, the business
                                      carried on, in or from the Leased Premises
                                      and the Tenant's use and occupancy
                                      thereof, of not less than $1,000,000.00;

                              (b)     insurance in such amounts as may be
                                      reasonably required by the Landlord in
                                      respect of fire and such other perils as
                                      are from time to time defined in the usual
                                      extended coverage endorsement covering the
                                      Tenant's trade fixtures and the furniture
                                      and equipment of the Tenant and all
                                      Leasehold Improvements of the Tenant, and
                                      which insurance shall include the Landlord
                                      as a named insured as the Landlord's
                                      interest may appear with respect to
                                      insured Leasehold Improvements and provide
                                      that any proceeds recoverable in the event
                                      of loss to Leasehold Improvements shall be
                                      payable to the Landlord but the Landlord
                                      agrees to make available such proceeds
                                      toward the repair or replacement of the
                                      insured property if this Lease is not
                                      terminated pursuant to any provision
                                      hereof, and if this Lease is terminated
                                      for reasons other than the default of the
                                      Tenant hereunder, the Landlord and Tenant
                                      agree that the proceeds shall be divided
                                      between the Landlord and the Tenant as
                                      their respective interest in the Leasehold
                                      Improvements may appear, (as determined by
                                      agreement or failing agreement by
                                      arbitration pursuant to Section 15.10
                                      hereof); and

                              (c)     plate glass insurance (if there shall be
                                      plate glass in the Lease Premises) in
                                      amount and on terms satisfactory to the
                                      Landlord.

                         All insurance required to be maintained by the Tenant
                         hereunder shall be in amounts and on terms REASONABLY
                         satisfactory to the Landlord. Such insurance shall be
                         by policies in form satisfactory from time to time to
                         the Landlord and with insurers acceptable to the
                         Landlord, ACTING REASONABLY, and shall provide that
                         such insurers shall provide to the Landlord thirty (30)
                         days prior written notice of cancellation or material
                         alteration of such policies. Each policy shall name the
                         Landlord as an additional insured except for coverage
                         for the Tenant's trade fixtures and furnishings and
                         equipment but including coverage for Leasehold
                         Improvements in respect contain a waiver of cross-claim
                         and subrogation against the Landlord and shall protect
                         and indemnify both the Landlord and the Tenant. The
                         Tenant shall furnish to the Landlord certificates, or,
                         if required by the Landlord, certified copies of the
                         policies (signed by the insurers) of the insurance from
                         time to time required to be effected by the Tenant and
                         evidence acceptable to the Landlord of their
                         continuation in force. If the Tenant shall fail to take
                         out, renew and keep in force such insurance the
                         Landlord may do so as the agent of the Tenant and the
                         Tenant shall repay to the Landlord any amounts paid by
                         the Landlord as premiums forthwith upon demand.

                         11.02 The Tenant covenants and agrees that:

                              (a)     the Landlord shall not be liable for any
                                      bodily injury to or the death of, or loss
                                      or damage to any property belonging to,
                                      the Tenant or its employees, invitees, or
                                      licensees or any other person (on Land for
                                      the purpose of attending at the Leased
                                      Premises), on or about the Land, unless
                                      resulting from the actual fault or
                                      negligence of the Landlord. Provided that,
                                      THE LANDLORD IS NOT DEEMED RESPONSIBLE, in
                                      no event shall the Landlord be liable for
                                      any consequential injury, loss or damage,
                                      or:

                                      (i)     for any injury or damage of any
                                              nature whatsoever to any persons
                                              or property caused by the failure
                                              by reason of a breakdown or other
                                              cause, to supply adequate
                                              drainage, snow or ice removal, or
                                              by reason of the interruption of
                                              any public


<PAGE>   18
                                     - 18 -


                                              utility or other service, or in
                                              the event of gas, steam, water,
                                              rain, snow, ice, or other
                                              substances leaking, issuing or
                                              flowing from the water, steam,
                                              sprinkler or drainage pipes or
                                              plumbing of the Building or from
                                              any other place or quarter, into
                                              any part of the Leased Premises or
                                              for any loss or damage caused by
                                              or attributable to the condition
                                              or arrangement of any electric or
                                              other wiring or for any damage
                                              caused by anything done or omitted
                                              to be done by any other tenant of
                                              the Building;

                                      (ii)    for any act or omission (including
                                              theft, malfeasance or negligence)
                                              on the part of any agent,
                                              contractor or person from time to
                                              time employed by it to perform
                                              janitor services, security
                                              services, maintenance, supervision
                                              or Additional Services or any
                                              other work in or about the Leased
                                              Premises or the Building. THE
                                              LANDLORD, ACTING REASONABLY, SHALL
                                              ENSURE THAT SUCH SERVICES SHALL
                                              CARRY SUFFICIENT AND APPROPRIATE
                                              INSURANCE AND/OR ARE BONDED;

                                      (iii)   for loss or damage, however
                                              caused, to money, securities,
                                              negotiable instruments, papers or
                                              other valuables of the Tenant,
                                              including any consequential loss
                                              or damage resulting therefrom; or

                                      (iv)    for loss or damage to any
                                              automobiles or their contents for
                                              the unauthorized use by other
                                              tenants or strangers of parking
                                              space allotted to the Tenant, but
                                              the covenants to indemnify the
                                              Landlord against and from all
                                              loss, costs, claims and demands in
                                              respect of any such injury or loss
                                              to it or its employees, invitees
                                              or licensees or any other person
                                              on the Land for the purpose of
                                              attending at the Leased Premises
                                              or in respect of any such damage
                                              to property belonging to or
                                              entrusted to the care of any of
                                              the aforementioned;

                              (b)     the Landlord shall have no responsibility
                                      or liability for the failure to supply
                                      interior climate control or elevator
                                      service when prevented from doing so by
                                      strikes, the necessity of repairs, any
                                      order or regulation of any body having
                                      jurisdiction, the failure of the supply of
                                      any utility required for the operation
                                      thereof or any other cause beyond the
                                      Landlord's reasonable control, and shall
                                      not be held responsible for indirect or
                                      consequential damages or other damages for
                                      personal discomfort or illness or injury
                                      resulting therefrom or for any bodily
                                      injury, death or damage to property
                                      arising from the use of, or any happening
                                      in or about, any elevator;

                              (c)     the Landlord may require one (1) year
                                      after the Tenant has fully occupied the
                                      Leased Premises in order to adjust and
                                      balance the climate control system and the
                                      Landlord shall not be responsible for any
                                      inconvenience, discomfort, damages, loss
                                      or claims whatsoever arising out of the
                                      process of such adjustment or balancing;

                              (d)     the Landlord shall be under no obligation
                                      to repair or maintain or insure the
                                      Tenant' s Leasehold Improvements,
                                      furniture, equipment or other property;

                              (e)     the Landlord shall be under no obligation
                                      to remedy any default of the Tenant, and
                                      shall not incur any liability to the
                                      Tenant for any act or
<PAGE>   19
                                     - 19 -


                                      omission in the course of its curing or
                                      attempting to cure any such default or in
                                      the event of its entering upon the Leased
                                      Premises to undertake any examination
                                      thereof or any work therein or in the case
                                      of any emergency.

                         11.03 The Tenant agrees to defend, indemnify and save
                         harmless the Landlord in respect of all claims for
                         bodily injury or death, property damage or other loss
                         or damage arising howsoever out of the use or
                         occupation of the Leased Premises or from the conduct
                         of any work by or any act or omission of the Tenant or
                         any assignee, subtenant, agent, employee, contractor,
                         invitee or licensee of the Tenant, and in respect of
                         all costs, expenses and liabilities incurred by the
                         Landlord in connection with or arising out of all such
                         claims, including the expenses of any action or
                         proceeding pertaining thereto, and in respect of any
                         loss, cost, expense or damage suffered or incurred by
                         the Landlord arising from any breach or non-performance
                         by the Tenant of any of its covenants or obligations
                         under this Lease. The Tenant's obligation to observe or
                         perform this covenant shall survive the expiration or
                         other termination of the Term of this Lease.

                                   ARTICLE 12
                     SUBORDINATION, ATTORNMENT, REGISTRATION
                                AND CERTIFICATES

        The Tenant agrees with the Landlord that:

Subordinations and       12.01 This Lease and all rights of the Tenant are
Attornment               subject and subordinate to all mortgages, trust deeds
                         or trust indentures (and all instruments supplemental
                         thereto) or other forms of loan security now or
                         hereafter existing which may now or hereafter affect
                         the Land or Building and to all renewals,
                         modifications, consolidations, replacements and
                         extensions thereof; provided that the Tenant whenever
                         requested by any mortgagee (including any trustee under
                         a trust deed or trust indenture) shall attorn to such
                         mortgagee as the tenant upon all terms of this Lease.
                         The Tenant agrees to execute promptly whenever
                         requested by the Landlord or by such mortgagee an
                         instrument or subordination and/or attornment, as may
                         be required of it.


Registration             12.02 The Tenant will not register this Lease in this
                         form in the Registry Office or the Land Titles Office
                         and will not request or apply for issue for a leasehold
                         title for this Lease. If the Tenant desires to make a
                         registration in respect of this Lease, the Tenant shall
                         effect registration by caveat or by a short form of
                         lease, provided that such caveat or short form of lease
                         shall not disclose the rental rate or rates payable
                         under this Lease.

Certificates             12.03 The Tenant shall promptly whenever requested by
                         the Landlord from time to time execute and deliver to
                         the Landlord (and if required by the Landlord, to any
                         mortgagee (including any trustee under a trust deed or
                         trust indenture) designated by the Landlord a
                         certificate in writing as to the status of this Lease,
                         including as to whether it is in full force and effect,
                         is modified or unmodified, confirming the rental
                         payable hereunder and the state of the accounts between
                         the Landlord and Tenant, the existence or non-existence
                         of defaults, and any other matter pertaining to this
                         Lease as to which the Landlord shall request a
                         certificate.

                                   ARTICLE 13
                   REMEDIES OF LANDLORD AND TENANT'S DEFAULT

        The Landlord and Tenant further covenant and agree as follows:


<PAGE>   20
                                     - 20 -


Remedying by Landlord    13.01 In addition to all rights and remedies of the
Non-Payment and          Landlord available to it in the event of any default
Interest                 hereunder by the Tenant either by any other provisions
                         of this Lease or by statute or the general law, the
                         Landlord:

                              (a)     shall have the right (but shall not be
                                      obligated to) at all times to remedy or
                                      attempt to remedy any default of the
                                      Tenant, and in so doing may make any
                                      payments due or alleged to be due by the
                                      Tenant to third parties and may enter upon
                                      the Leased Premises to do any work or
                                      other things therein, and in such event
                                      all expenses of the Landlord in remedying
                                      or attempting to remedy such default shall
                                      be payable by the Tenant to the Landlord
                                      forthwith upon demand, together with a fee
                                      for supervision for carrying out the
                                      Tenant's obligations in an amount equal to
                                      the product of the Prime Rate plus two
                                      percent (2%) multiplied by the cost of
                                      repairs or other work carried out by or
                                      under the supervision of the Landlord
                                      which amount shall be in addition to the
                                      incurred costs of such work;

                              (b)     may recover as additional rent all sums
                                      paid or expenses incurred hereunder by the
                                      Landlord, which ought to have been paid or
                                      incurred by the Tenant, or for which the
                                      Landlord hereunder is entitled to
                                      reimbursement from the Tenant, and any
                                      interest owing to the Landlord hereunder,
                                      by any and all remedies available to it
                                      for the recovery of rent in arrears;

                              (c)     if the Tenant shall fail to pay any rent
                                      or other amount from time to time, payable
                                      by it to the Landlord hereunder promptly
                                      when due, shall be entitled to interest
                                      thereon at the Prime Rate plus two percent
                                      (2%) per annum from the date upon which
                                      the same was due until actual payment
                                      thereof.

Remedies Cumulative      13.02 The Landlord may from time to time resort to any
                         or all of the rights and remedies available to it in
                         the event of any default hereunder by the Tenant,
                         either by any provision of this Lease or by statute or
                         the general law, all of which rights and remedies are
                         intended to be cumulative and not alternative, and the
                         express provision hereunder as to certain rights and
                         remedies are not to be interpreted as excluding any
                         other or additional rights and remedies available to
                         the Landlord by statute or the general law.

Right of Re-entry on     13.03 If this Lease shall have become terminated
Termination              pursuant to any provision hereof, or if the Landlord
                         shall have become entitled to terminate this Lease and
                         shall have given notice terminating it pursuant to any
                         provisions hereof, then and in every such case it shall
                         be lawful for the Landlord thereafter to enter into and
                         upon the Leased Premises or any part thereof in the
                         name of the whole and the same to have again, repossess
                         and enjoy as of its former estate.

Re-entry and             13.04 If and whenever the Landlord becomes entitled to
Termination              or does re-enter the Leased Premises under any
                         provision of this Lease, the Landlord, in addition to
                         all other rights and remedies, shall have the right to
                         terminate this Lease forthwith by leaving upon the
                         Leased Premises notice in writing of such termination,
                         and in such event the Tenant shall forthwith vacate and
                         surrender the Leased Premises.

Rights on Re-entry       13.05 Whenever the Landlord becomes entitled to
                         re-enter upon the Leased Premises under any provision
                         of this Lease, the Landlord in addition to all other
                         rights it may have shall have the right to enter the
                         Leased Premises as agent of the Tenant, either by force
                         or otherwise without being liable for any loss or
                         damage occasioned thereby and to re-let them and to
                         receive the rent therefor and as the agent of the
                         Tenant to take possession of any furniture or other
                         property thereon and to sell the same at public or
                         private sale without notice and to apply the proceeds
                         thereof and any rent derived from re-letting the


<PAGE>   21
                                     - 21 -


                         Leased Premises, after deducting its costs of
                         conducting such sale and its costs of re-letting, upon
                         account of the rent due and to become due under this
                         Lease and the Tenant shall be liable to the Landlord
                         for the deficiency, if any.

Payment of Rent, etc.    13.06 If the Landlord shall re-enter and this Lease
on Termination           shall be terminated as provided for herein, then the
                         Tenant shall pay to the Landlord on demand:

                              (a)     rent up to the time of re-entry or
                                      termination whichever shall be the later
                                      plus accelerated rent as herein provided;

                              (b)     all other amounts payable hereunder until
                                      such time;

                              (c)     such expenses as the Landlord may incur or
                                      have incurred in connection with
                                      re-entering or terminating and re-letting,
                                      or collecting sums due or payable by the
                                      Tenant or realizing upon assets seized
                                      including brokerage, legal fees and
                                      disbursements, (on a solicitor-client
                                      basis) and the expenses of keeping the
                                      Leased Premises in good order, repairing
                                      the same and preparing them for re-letting
                                      them; and

                              (d)     as liquidated damages for the loss of rent
                                      and other income of the Landlord expected
                                      to be derived from the Lease during the
                                      period which would have constituted the
                                      unexpired portion of the Term had it not
                                      been terminated, the amount, if any, by
                                      which the rental value of the Leased
                                      Premises for such period established by
                                      reference to the terms and provisions of
                                      this Lease exceeds the rental value of the
                                      Leased Premises for such period
                                      established by reference to the terms, and
                                      provisions upon which the Landlord re-lets
                                      them, if such re-letting is accomplished
                                      within a reasonable time after termination
                                      of this Lease, and otherwise with
                                      reference to all market and other relevant
                                      circumstances. Rental value is to be
                                      computed in each case by reducing to
                                      present worth at an interest rate equal to
                                      the then current Prime Rate all rent and
                                      other amounts to become payable for such
                                      period and where the ascertainment of
                                      amounts to become payable requires it, the
                                      Landlord may make estimates and
                                      assumptions of fact which shall govern
                                      unless shown to be unreasonable or
                                      erroneous.

                                   ARTICLE 14
                            EVENTS TERMINATING LEASE

        The Landlord and Tenant further covenant and agree as follows:

Cancellation of          14.01 If any policy of insurance upon the Building from
Insurance                time to time effected by the Landlord shall be
                         cancelled or be about to be cancelled by the insurer or
                         an insurer shall refuse or decline to place or renew
                         insurance EACH AS A reason of the use or occupation of
                         the Leased Premises by the Tenant, OTHER THAN A USE OR
                         OCCUPATION PERMITTED PURSUANT TO PARAGRAPH 4.03 HEREOF,
                         or any assignee, subtenant or licensee of the Tenant or
                         anyone permitted by the Tenant to be upon the Leased
                         Premises and the Tenant after receipt of notice in
                         writing from the Landlord shall have failed to take
                         such immediate steps in respect of such use or
                         occupation as shall enable the Landlord to reinstate,
                         renew, replace or avoid cancellation of (as the case
                         may be), such policy or insurance,, the Landlord may at
                         its option, at anytime and without notice:


<PAGE>   22
                                     - 22 -


                              (a)     enter upon the Leased Premises and remove
                                      said use or condition, or

                              (b)     re-enter upon and take possession of the
                                      Leased Premises and/or terminate this
                                      Lease by leaving upon the Leased Premises
                                      notice in writing of such termination.

Default                  14.02 If and whenever:

                              (a)     the rent, additional rent, or other moneys
                                      payable by the Tenant or any part thereof
                                      shall not be paid on the day appointed for
                                      payment thereof, whether lawfully demanded
                                      or not, and the Tenant shall have failed
                                      to pay such rent or other moneys within
                                      five (5) BUSINESS days after the Landlord
                                      shall have given to the Tenant notice of
                                      default in such payment;

                              (b)     The Tenant shall breach or fail to observe
                                      or perform any of the covenants,
                                      agreements, provisos, conditions, Rules
                                      and Regulations or other obligations on
                                      the part of the Tenant to be kept,
                                      observed, or performed hereunder and shall
                                      persist in such failure after fifteen (15)
                                      days notice by the Landlord requiring that
                                      the Tenant remedy, correct, desist or
                                      comply (or in the case of any such breach
                                      which reasonably would require more than
                                      fifteen (15) days to rectify unless the
                                      Tenant shall commence rectifications
                                      within the fifteen ( 15 ) day period and
                                      thereafter promptly and diligently and
                                      continuously proceed with the
                                      rectification of the breach);

                              (c)     without the written consent of the
                                      Landlord, the Leased Premises shall be
                                      used by any persons other than the Tenant
                                      or its permitted assigns or subtenants or
                                      for any purpose other than that for which
                                      they were leased, or occupied by any
                                      persons whose occupancy is prohibited by
                                      this Lease;

                              (d)     the Leased Premises shall be vacated or
                                      abandoned, or remain unoccupied for
                                      fifteen (15) BUSINESS days or more while
                                      capable of being occupied;

                              (e)     the Term or any of the goods and chattels
                                      of the Tenant shall at any time be taken
                                      or be exigible in execution or in
                                      attachment or if a writ of execution shall
                                      BE ENFORCED, the Tenant shall attempt or
                                      threaten to move its goods, chattels or
                                      equipment out of the Leased Premises
                                      (other than in the ordinary course of its
                                      business or as permitted hereunder) or
                                      shall cease to conduct business from the
                                      Leased Premises;

                              (f)     the Tenant shall make a general assignment
                                      for the benefit of creditors or a bulk
                                      sale of its goods or if a receiver shall
                                      be appointed for the business, property,
                                      affairs or revenues of the Tenant; or

                              (g)     the Tenant shall become insolvent or
                                      commit an act of bankruptcy or become
                                      bankrupt or take the benefit of any
                                      statute now or hereafter in force for
                                      bankrupt or insolvent debtors or ( if a
                                      corporation) shall take any steps or
                                      suffer any order to be made for its
                                      winding-up or other termination of its
                                      corporate existence;

                         then and in any of such cases, at the option of the
                         Landlord, the full amount of the current month's and
                         the next three (3) months' monthly rent shall
                         immediately become due and payable and the Landlord may
                         immediately distrain for the same, together with any


<PAGE>   23
                                     - 23 -


                         arrears then unpaid; and the Landlord may without
                         notice or any form of legal process forthwith re-enter
                         and take possession of the Leased Premises or any part
                         thereof in the name of the whole and remove and sell
                         the Tenant's goods, chattels and equipment therefrom,
                         any rule of law or equity to the contrary
                         notwithstanding; and the Landlord may seize and sell
                         such goods, chattels and equipment of the Tenant as are
                         in the Leased Premises or at any place to which the
                         Tenant or any other person may have removed them in the
                         same manner as if they had remained and been distrained
                         upon the Leased Premises; and such sale may be effected
                         in the discretion of the Landlord either by public
                         auction or by private treaty; and either in bulk or by
                         individual item, or partly by one means and partly by
                         another, all as the Landlord in its entire discretion
                         may decide.

                                   ARTICLE 15
                                  MISCELLANEOUS

        The Landlord and Tenant further covenant and agree as follows:

Notices                  15.01 All notices, demands, requests, consents,
                         approvals and other instruments required or permitted
                         to be given pursuant to the terms of this Lease shall
                         be given in writing and shall be deemed to have been
                         properly given if personally served, sent by registered
                         mail or certified mail (postage prepaid with return
                         receipt requested) or sent by telegram or by confirmed
                         receipt of facsimile with report of delivery to:

                         The Landlord at: Sun Life Assurance Company of Canada
                                          #210, 140 - 4 Avenue S.W.
                                          Calgary, Alberta
                                          T2P 3N3

                        The Tenant at:    200, 6715 8th St. N.E.
                                          Calgary, AB
                                          T2E 7H7

                         Provided, however, that such addresses may be changed
                         upon five (5) business days written notice or confirmed
                         receipt of facsimile thereof, similarly given to the
                         other party.

                         The date of receipt of any such notice, demand,
                         request, consent, approval or other instrument shall be
                         deemed to be as follows:

                              (a)     in the case of personal service, the date
                                      of service;

                              (b)     in the case of registered mail or
                                      certified mail, the fifth (5th) business
                                      day following the date of delivery to the
                                      Post Office, provided, however, that in
                                      the event of an interruption of normal
                                      mail service, service shall be effected by
                                      personal delivery;

                              (c)     in the case of telegram, the business day
                                      next following the day of sending.

Entire Agreement         15.02 The Parties acknowledge that there are no
                         covenants, representations, warranties, agreements or
                         conditions expressed or implied relating to this Lease
                         or the Leased Premises save as expressly set out in
                         this Lease. This Lease may not be modified except by an
                         agreement in writing executed by the Landlord and the
                         Parties.


<PAGE>   24
                                     - 24 -

Area Determination       15.03 In the event that any calculation or
                         determination by the Landlord of the Rentable Area or
                         Gross Area of any premises (including the Leased
                         Premises) of the Building is disputed or called into
                         question, it shall be calculated or determined by the
                         Landlord's Architect, USING BOMA STANDARDS, whose
                         certification shall be conclusive.

Successors and Assigns,  15.04 This Lease and everything herein contained shall
Interpretation           enure to the benefit of and be binding upon the
                         successors and assigns of the Landlord and theirs,
                         executors, administrators, successors and permitted
                         assigns of the Tenant. References to the Tenant shall
                         be read with such changes in gender as may be
                         appropriate, depending on whether the Tenant is a male
                         or female person or a firm or corporation, and if the
                         Tenant is more than one person or entity, the covenants
                         of the Tenant shall be deemed joint and several.

Force Majeure            15.05 Save and except for the obligations of the Tenant
                         as set forth in this Lease to pay rent, additional
                         rent, increased rent and other moneys to the Landlord,
                         if either party shall fail to meet its obligations
                         hereunder within the time prescribed, and such failure
                         shall be caused or materially contributed to by force
                         majeure (and for the purpose of this Lease, force
                         majeure shall mean any acts of God, strikes, lockouts,
                         or other industrial disturbance, acts of the Queen's
                         enemies, sabotage, war, blockades, insurrections,
                         riots, epidemics, lightning, earthquakes, storms,
                         fires, washouts, nuclear and radiation activity or
                         fallout, arrests, and restraints of rulers and people,
                         civil disturbances, explosions, breakage of or accident
                         to machinery, inability to obtain materials or
                         equipment, any legislative, administrative or judicial
                         action which has been resisted in good faith by all
                         reasonable legal means, any act, omission or event
                         whether of the kind enumerated or otherwise not within
                         the control of such part, and which by the exercise of
                         due diligence such party could not have prevented (but
                         lack of funds on the part of such party shall be deemed
                         not to be a force majeure), such failure shall be
                         deemed not to be a breach of the obligations of such
                         party hereunder but such party shall use reasonable
                         diligence to put itself in a position to carry out its
                         obligations hereunder.

Waiver                   15.06 Failure of the Landlord to insist upon strict
                         performance of any of the covenants or conditions of
                         this Lease or to exercise any right or option herein
                         contained shall not be construed as a waiver or
                         relinquishment of any such covenant, condition, right
                         or option, but the same shall remain in full force and
                         effect. The Tenant undertakes and agrees, for itself
                         and for any person claiming to be a subtenant or
                         assignee, that the acceptance by the Landlord of any
                         rent from any person other than the Tenant shall not be
                         construed as a recognition of any rights not herein
                         expressly granted, or as a waiver of any of the
                         Landlord's rights, or as an admission that such person
                         is, or as a consent that such person shall be deemed to
                         be, a subtenant or assignee of this Lease, irrespective
                         of whether the Landlord or said person claims that such
                         person is a subtenant or assignee of this Lease. The
                         Landlord may accept rent from any person occupying the
                         Leased Premises at any time without in any way waiving
                         any right under this Lease.

Governing Law,           15.07 This Lease shall be governed by and construed in
Covenants, Severability  accordance with the laws of the province in which the
                         Building is situate. The Landlord and the Tenant agree
                         that all of the provisions of this Lease are to be
                         construed as covenants and agreements as though the
                         words importing such covenants and agreements were used
                         in each separate section hereof. Should any provision
                         or provisions of this Lease be illegal or not
                         enforceable, it or they shall be considered separate
                         and severable from the Lease and its remaining
                         provisions shall remain in force and be binding upon
                         the parties hereto as though the said provision or
                         provisions had never been included.

Headings, Captions       15.08 The heading and captions appearing in this Lease
                         have been inserted for convenience of reference only
                         and in no way define, limit or enlarge the scope or
                         meaning of this Lease or of any provision hereof.

Expropriation            15.09 If at any time during the Term of this Lease
                         title is taken by the right or exercise of condemnation
                         or expropriation to the whole or a portion of the
                         Building (whether or


<PAGE>   25
                                     - 25 -


                         not including the Leased Premises) the Landlord may, at
                         its option, give notice to the Tenant terminating this
                         Lease on the date stated in the said notice. Upon such
                         termination, the Tenant shall immediately surrender the
                         Leased Premises and all its interest therein to the
                         Landlord, and the rent shall abate and be apportioned
                         to the date of termination and the Tenant shall
                         forthwith pay to the Landlord the apportioned rent and
                         all other amounts which may be due to the Landlord up
                         to the date of termination. The Tenant shall have no
                         claim upon the Landlord for the value of the unexpired
                         Term of this Lease, but the parties shall each be
                         entitled to separately advance their claims for
                         compensation for the loss of their respective interests
                         in the Leased Premises and the parties shall be
                         entitled to receive and retain such compensation as may
                         be awarded to each respectively.

Arbitration              15.10 That in the case of any dispute between the
                         Landlord and the Tenant during the Term hereof as to
                         any matter which by the provisions hereof is required
                         to be determined by arbitration in accordance with the
                         provisions of this Section, the matter in dispute shall
                         be referred to a single arbitrator appointed by the
                         parties for determination. If the parties cannot agree
                         on a single arbitrator, then upon the application of
                         either party a Justice of the Superior Court of the
                         province in which the Building is situate shall appoint
                         an arbitrator whose sole determination shall be final.
                         The arbitrator shall be a disinterested party of
                         recognized competence in the real estate business in
                         the city in which the Building is situate. The expense
                         of such arbitration shall be conducted in accordance
                         with the provisions of the Arbitration Act of the
                         province in which the Building is situate and any
                         amendments thereto or successors to such statute which
                         provisions shall apply mutatis mutandis.

                                   ARTICLE 16
                                   DEFINITIONS

Definitions              The Landlord and Tenant further covenant and agree as
                         follows:

                              (a)     "Landlord's Architect" means the
                                      independent architect, or engineer or
                                      quantity surveyor selected by the Landlord
                                      from time to time for the purpose of
                                      making determinations hereunder.

                              (b)     The terms "Land" and "building" have the
                                      meanings set out on page one hereof.

                              (c)     "Leased Premises" means that portion of
                                      the Building shown outlined in red on the
                                      Plan attached as Schedule "B" hereto and
                                      described on page 1 hereof. The exterior
                                      face of the Building and any space in the
                                      Leased Premises used for stairways or
                                      passageways to other premises, stacks,
                                      shafts, pipes, conduits, ducts or other
                                      building facilities, the heating,
                                      electrical, plumbing, air conditioning and
                                      other systems in the Building and the use
                                      thereof, as well as access thereto through
                                      the Leased Premises for the purpose of
                                      use, operation, maintenance, replacement
                                      and repair, are expressly excluded from
                                      the Leased Premises and reserved to the
                                      Landlord.

                              (d)     "Leasehold Improvements" means all
                                      fixtures, improvements, installations,
                                      alterations and additions from time to
                                      time made, erected or installed by or on
                                      behalf of the Tenant with the exception of
                                      trade fixtures and furniture and equipment
                                      not of the nature of fixtures, and
                                      includes all wall-to-wall carpeting
                                      (whether or not supplied by the Landlord),
                                      and drapes supplied by the Landlord.


<PAGE>   26
                                     - 26 -


                              (e)     "Term" means the term of this Lease set
                                      forth in Section 2.01 and any extension
                                      thereof and any period of permitted
                                      overholding.

                              (f)     "Normal Business Hours" means the hours
                                      from 7:30 a.m. to 6:00 p.m., Monday to
                                      Friday, inclusive, of each week, and the
                                      hours from 7:30 a.m. to 1:00 p.m.,
                                      Saturdays, statutory holidays excepted.

                              (g)     "Rentable Area" in the case of a whole
                                      floor shall mean the area within the
                                      outside walls and shall be computed by
                                      measuring to the glass line (that is, the
                                      inside surface of the windows) on the
                                      outer Building walls without deduction for
                                      columns and projections necessary to the
                                      Building, but shall not include stairs and
                                      elevator shafts (supplied by the Landlord
                                      for use in common with other tenants),
                                      flues, stacks, pipes, shafts or vertical
                                      ducts with their enclosing walls.

                              (h)     "Rentable Area" in the case of part of a
                                      floor shall mean all the area occupied and
                                      shall be computed by measuring from the
                                      glass line (that is, the inside surface of
                                      the windows) on the outer Building walls
                                      to the office side of corridors or other
                                      permanent partitions which separate the
                                      area occupied from adjoining Rentable
                                      Areas without deduction for columns and
                                      projections necessary to the Building but
                                      shall not include stairs and elevator
                                      shafts (supplied by the Landlord for use
                                      in common With other tenants) flues,
                                      stacks, pipe shafts or vertical ducts with
                                      their enclosing walls within the area
                                      occupied or janitorial or electrical or
                                      telephone closets not for the exclusive
                                      use of the Tenant.

                              (i)     "Service Areas" shall mean the area of
                                      corridors, fire protection cross-over
                                      corridors, elevator lobbies, washrooms,
                                      air-conditioning rooms, fan rooms,
                                      janitor's closets, telephone and
                                      electrical closets and other closets
                                      serving the Lease Premises in common with
                                      other premises.

                              (j)     "Gross Area" of any Leased Premises means:

                                      (i)     in the case of Leased Premises
                                              consisting of a whole floor or
                                              whole floors the Rentable Area
                                              thereof; and

                                      (ii)    in the case of Leased Premises
                                              consisting of or including only
                                              part of a floor of the Building,
                                              the Rentable Area thereof plus an
                                              amount equal to the product of (a)
                                              the fraction having as its
                                              numerator the Rentable Area
                                              contained in the Leased Premises
                                              on such floor and as its
                                              denominator the sum of the
                                              Rentable Areas of such floor,
                                              multiplied by (b) the total area
                                              in square feet of Service Areas,
                                              if any, on such floor.

                              (k)     "Total Rentable Area" shall mean the total
                                      Rentable Area of the Building whether
                                      rented or not, calculated as if the
                                      Building were entirely occupied by tenants
                                      renting whole floors. The lobby and
                                      entrances on the ground floor and
                                      subsurface floors used in common by
                                      tenants, mechanical equipment areas and
                                      areas rented or to be rented for
                                      automobile parking or for storage, shall
                                      be excluded from the foregoing
                                      calculations. The calculation of the Total
                                      Rentable Area, whether rented or not,
                                      shall be determined by the Landlord's
                                      Architect upon completion of the Building
                                      and shall be adjusted from time to time to
                                      give effect to any structural or
                                      fractional change affecting the same.


<PAGE>   27
                                     - 27 -


                              (l)     "Additional Services" means the services
                                      and supervision supplied by the Landlord
                                      and referenced in Section 8.06 or in any
                                      other provision hereof as Additional
                                      Services, and any other services which
                                      from time to time the Landlord supplies to
                                      the Tenant and which are additional to the
                                      janitor and cleaning and other services
                                      which the Landlord has agreed to supply
                                      pursuant to the provisions of this Lease
                                      and to like provisions of other leases of
                                      the Building or may elect to supply to be
                                      included within the standard level of
                                      services available to tenants generally
                                      and includes janitor and cleaning
                                      services, in addition to those normally
                                      supplied, the provision of labour and
                                      supervision in connection with deliveries,
                                      supervision in connection with the moving
                                      of any furniture or equipment of any
                                      tenant and the making of any repairs or
                                      alterations by the tenant and maintenance
                                      or other services not normally furnished
                                      to tenants generally.

                              (m)     "Cost of Additional Services" shall mean
                                      in the case of Additional Services
                                      provided by the Landlord a reasonable
                                      charge made therefor by the Landlord which
                                      shall not exceed the cost of obtaining
                                      such services from independent contractors
                                      and in the case of Additional Services
                                      provided by independent labour (including
                                      salaries, wages and fringe benefits) and
                                      materials and other direct expenses
                                      incurred, the cost of supervision and
                                      other indirect expenses capable of being
                                      allocated thereto (such allocation to be
                                      made upon a reasonable basis) and all
                                      other out-of-pocket expenses made in
                                      connection therewith including amounts
                                      paid to independent contractors, plus the
                                      Landlord's then current administration
                                      fee. A report of the Landlord's accountant
                                      (who may be the Landlord's internal
                                      auditor or accountant) as to the amount of
                                      any Cost of Additional Services shall be
                                      conclusive.

                              (n)     "Taxes" means all taxes, rates, duties,
                                      levies and assessments whatsoever, whether
                                      municipal, provincial, federal or
                                      otherwise, levied, imposed or assessed
                                      against the Building, the Land and any
                                      Leasehold Improvements or any of them or
                                      upon the Landlord in respect thereof or
                                      from time to time levied, imposed or
                                      assessed in lieu thereof, including those
                                      levied, imposed or assessed for education,
                                      schools and local improvements, and
                                      including all costs and expenses
                                      (including legal and other professional
                                      fees and interest and penalties on
                                      deferred payments) incurred by the
                                      Landlord in good faith in contesting,
                                      resisting or appealing any taxes, rates,
                                      duties, levies or assessments but
                                      excluding taxes and license fees in
                                      respect of any business carried on by
                                      tenants and occupants of the Building
                                      (including the Landlord) and income or
                                      profits taxes upon the income of the
                                      Landlord to the extent such taxes are not
                                      levied in lieu of taxes, rates, duties,
                                      levies and assessments against the
                                      Building, the Land or Leasehold
                                      Improvements or upon the Landlord in
                                      respect thereof and shall also include any
                                      and all taxes which may in the future by
                                      levied in lieu of Taxes as hereinbefore
                                      defined.

                              (o)     "Operating Costs" means the total of all
                                      expenses, costs and outlays of every
                                      nature incurred in the complete
                                      maintenance, repair, operation and
                                      management of the Building and the Land
                                      and a reasonable proportion as determined
                                      by the Landlord from time to time of all
                                      expenses incurred by or on behalf of
                                      tenants in the Building with whom the
                                      Landlord may from time to time have
                                      agreements whereby in respect of their
                                      premises such tenants perform any
                                      cleaning, maintenance or other work or
                                      services usually performed by the
                                      Landlord, and which expenses if directly
                                      incurred by the Landlord


<PAGE>   28
                                     - 28 -


                                      would have been included in Operating
                                      Costs. Without limiting the generality of
                                      the foregoing, Operating Costs shall
                                      include (but subject to certain deductions
                                      as hereinafter provided):

                                      (i)     the cost of providing complete
                                              cleaning, janitor, supervisory and
                                              maintenance services;

                                      (ii)    the cost of operating elevators;

                                      (iii)   the cost of heating, cooling and
                                              ventilating all space including
                                              both rentable and non-rentable
                                              areas;

                                      (iv)    the cost of providing hot and cold
                                              water, electric light and power,
                                              telephone, sewer, gas and other
                                              utilities and services to both
                                              rentable and non-rentable areas;

                                      (v)     the cost of all repairs including
                                              repairs to the Building,
                                              equipment, or services (including
                                              elevators);

                                      (vi)    the cost of window cleaning;

                                      (vii)   the cost of providing security and
                                              supervision;

                                      (viii)  the costs of all insurance for or
                                              against liability, fire, extended
                                              perils, loss of rental, elevator
                                              liability, plate glass, boiler,
                                              sprinkler leakage and all such
                                              other casualties and losses as the
                                              Landlord may elect to insure
                                              against; and if the Landlord shall
                                              elect in whole or in part to
                                              self-insure, the amount of
                                              reasonable contingency reserves
                                              not exceeding the amount of
                                              premiums which would otherwise
                                              have been incurred in respect of
                                              the risks undertaken;

                                      (ix)    accounting costs incurred in
                                              connection with the maintenance,
                                              repair, operation or management
                                              including computations required
                                              for the imposition of charges to
                                              tenants and audit charges required
                                              to be incurred for the
                                              determination of any costs
                                              hereunder;

                                      (x)     the reasonable rental value
                                              (having regard to the rentals
                                              prevailing from time to time for
                                              similar space) of space utilized
                                              by the Landlord in connection with
                                              the maintenance, repair, operation
                                              or management of the Building and
                                              the Land; (xi) the amount of all
                                              salaries, wages and fringe
                                              benefits paid to employees engaged
                                              in the maintenance, repair,
                                              operation or management of the
                                              Building and the Land;

                                      (xii)   amounts paid to independent
                                              contractors for any services in
                                              connection with such maintenance,
                                              repair, operation or management;

                                      (xiii)  the cost of direct supervision and
                                              of management and all other
                                              indirect expenses to the extent
                                              allocable to the maintenance,
                                              repair or operation of the
                                              Building and the Land;

                                      (xiv)   the cost of any management fees or
                                              management agent fees (if


<PAGE>   29
                                     - 29 -

                                              any for the Building), (or of the
                                              Landlord if it elects to manage
                                              the Building itself), in an amount
                                              not exceeding four percent (4%) of
                                              the gross rentals received or
                                              receivable from the Building;

                                      (xv)    depreciation of the cots of
                                              machinery, equipment, facilities,
                                              systems, and property
                                              (individually and collectively in
                                              this clause called "machinery")
                                              installed in or used in connection
                                              with the Building (except to the
                                              extent that the costs are charged
                                              fully to income account in the
                                              Landlord's tax year in which they
                                              are incurred) if a principal
                                              purpose or intention of such
                                              installation or use is to conserve
                                              energy or to reduce the cost of
                                              other items included in Operating
                                              Costs and interest on the
                                              undepreciated portion of the
                                              original cost of such machinery,
                                              payable monthly, from the date on
                                              which the relevant cost was
                                              incurred, at an annual rate of
                                              interest that is two percentage
                                              points above the Prime Rate in
                                              effect on the date on which the
                                              relevant cost was incurred, (the
                                              rate of interest to be applied to
                                              the undepreciated portion of the
                                              original cost, in each case, to be
                                              adjusted, as long as a rate is
                                              required, every five years, on the
                                              anniversary date of the
                                              acquisition of the relevant
                                              machinery, to the annual rate of
                                              interest that is two percentage
                                              points above the Prime Rate then
                                              in effect); the depreciation costs
                                              and interest charged under this
                                              clause in respect of machinery
                                              installed or used to conserve
                                              energy or reduce the cost of other
                                              items included in Operating Costs
                                              may be equal to, but in no event
                                              shall exceed in any year the
                                              savings resulting from such
                                              installation or use, estimated by
                                              the Landlord, acting reasonably;

                                      (xvi)   cost of services by and salaries
                                              for elevator operators, porters,
                                              sidewalk shovellers, window
                                              cleaners, janitors, cleaners,
                                              dusters, handymen, watchmen,
                                              commissionaires, caretakers,
                                              security personnel, carpenters,
                                              engineers,firemen, mechanics,
                                              electricians, plumbers, and other
                                              persons or firms engaged in the
                                              operating, maintenance and repair
                                              of the Building, or the heating,
                                              air conditioning, ventilating,
                                              plumbing, electrical and elevator
                                              systems in the Building and
                                              superintendents, and accounting
                                              and clerical staff attached to the
                                              Building superintendent's or
                                              manager's office;

                                      (xvii)  uniforms of employees and agents;

                                      (xviii) supplies and equipment used in
                                              connection with the repair,
                                              maintenance, management,
                                              caretaking and operating of the
                                              Building (including without
                                              limitation straight-line
                                              amortization based on
                                              tax-deductible depreciation
                                              allowance of capitalized cleaning
                                              equipment used in the Building);

                                      (xix)   supplies and materials for
                                              washrooms, and other common
                                              facilities;

                                      (xx)    workers' compensation costs,
                                              unemployment insurance premiums,
                                              pension plan contributions,
                                              health, accident and group life
                                              insurance for employees, managers,
                                              and superintendents employed by
                                              the Landlord in connection with
                                              the Building;


<PAGE>   30
                                     - 30 -


                                      (xxi)   servicing and inspection costs for
                                              elevators, electrical distribution
                                              systems and mechanical, heating,
                                              ventilating and air conditioning
                                              systems;

                                      (xxii)  parking area staff and maintenance
                                              costs;

                                      (xxiii) snow and ice removal and related
                                              costs;

                                      (xxiv)  sales and excise taxes on goods
                                              and services provided by the
                                              Landlord in the management,
                                              operating, maintenance and repair
                                              of the Building;

                                      (xxv)   REASONABLE costs of stationery
                                              supplies and other materials
                                              required for the normal operation
                                              of the superintendent's or
                                              manager's office; and

                                      (xxvi)  all other direct and indirect
                                              REASONABLE costs and expenses
                                              whatsoever to the extent allocable
                                              to the operating, maintaining,
                                              managing or repairing of the said
                                              Land, the Building or any
                                              appurtenances thereto.

                                      Notwithstanding any of the foregoing, it
                                      is understood and agreed that Operating
                                      Costs for any period are to be calculated
                                      as if the Building were fully occupied
                                      during such period. Therefore, in addition
                                      to expenses, costs and outlays actually
                                      incurred in the maintenance, repair,
                                      operation and management of the Building,
                                      the Landlord may include in the
                                      calculation and estimation of operating
                                      costs, such additional amounts that in the
                                      Landlord's estimation would have been
                                      incurred had all rentable areas in the
                                      Building been fully occupied during the
                                      period in question. However, in no event
                                      shall the Tenant be required to pay more
                                      on account of its proportionate share of
                                      Operating Costs that it would be if the
                                      Building were fully occupied.

                                      It is understood and agreed that the
                                      Building is one of two office buildings
                                      contained in the development. In this
                                      connection, the Tenant acknowledges that
                                      certain materials and services which
                                      relate in part to the Building will be
                                      incurred in connection with the provision
                                      of materials and services for all of the
                                      Development. The Tenant therefore agrees
                                      that in computing Operating Costs, the
                                      Landlord shall be entitled to allocate to
                                      the Building a reasonable portion of such
                                      Operating Costs that are incurred in
                                      respect of the Development generally.

                                      Operating Costs shall exclude (except as
                                      herein otherwise provided) Taxes, debt
                                      service, depreciation, expenses properly
                                      chargeable to capital account, costs
                                      determined by the Landlord from time to
                                      time to be fairly allocable to the
                                      correction of construction faults or
                                      initial maladjustments in operating
                                      equipment, all management cost not
                                      allocable to the actual maintenance,
                                      repair or operation of the Building (such
                                      as in connection with leasing and rental
                                      advertising), work performed in connection
                                      with the initial construction of the
                                      Building and the Leased Premises, changes
                                      for tenants, capital cost of addition,
                                      improvements and modernizations to the
                                      Building subsequent to date of original
                                      construction, advertising and promotion
                                      expenses, and expenses of redecorating and
                                      renovating space for new tenants.


<PAGE>   31
                                     - 31 -


                                      In computing Operating Costs there shall
                                      be credited as a deduction the amounts of
                                      proceeds of insurance relating to Insured
                                      Damage and other damage actually recovered
                                      by the Landlord (or if the Landlord has
                                      self-insured, a corresponding application
                                      of reserves) applicable to damage, and
                                      also electricity and light bulbs, tube and
                                      ballast replacement costs and insurance
                                      premiums that are directly payable by any
                                      tenants, in each case to the extent that
                                      the cost thereof was included therein. Any
                                      expenses not directly incurred by the
                                      landlord but which are included in
                                      Operating Costs may be estimated by the
                                      Landlord on whatever reasonable basis the
                                      Landlord may select if and to the extent
                                      that the Landlord cannot ascertain the
                                      actual amount of such expenses from the
                                      tenants who incurred them. Any report of
                                      the Landlord' s accountant (who may be the
                                      Landlord's internal auditor or accountant)
                                      for such purpose shall be conclusive as to
                                      the amount of Operating costs for any
                                      period to which such report relates.

                              (p)     "Common Costs" means the aggregate of the
                                      Taxes plus the Operating Costs for or
                                      incurred in a twelve (12) month period.

                              (q)     "Base Common Costs" means $nil per square
                                      foot of the Total Rentable Area;

                              (r)     "Current Common Costs" in respect of any
                                      twelve (12) month period means an amount
                                      equal to the total Common Costs for such
                                      twelve (12) month period divided by the
                                      Total Rentable Area;

                              (s)     "Common Costs Escalation" in any twelve
                                      (12) month period means an amount equal
                                      to:

                                      (i)     the amount by which the Current
                                              Common Costs for such period
                                              exceed the Base Common Costs
                                              multiplied by

                                      (ii)    the Gross Area of the Leased
                                              Premises.

                              (t)     "Insured Damage" means that part of any
                                      damage occurring to the Leased Premises to
                                      the extent to which the cost of repair is
                                      actually recoverable by the Landlord under
                                      a policy of insurance in respect of fire
                                      or other perils from time to time effected
                                      by the Landlord;

                              (u)     "Prime Rate" means that rate of interest
                                      charged and published from time to time by
                                      the main branch in the city in which the
                                      Building is situate, of the Landlord's
                                      bank, as its most favourable rate of
                                      interest to its most credit-worthy
                                      commercial customers and commonly known as
                                      its Prime Rate.

                                   ARTICLE 17
                               SPECIAL PROVISIONS

Required Conditions      17.01 The Tenant acknowledges that certain provisions
                         contained herein are personal to the Tenant and will be
                         available to the Tenant only in the event that certain
                         conditions (the "Required Conditions") have been
                         satisfied. The Required Conditions are as follows:

                              (a)     the Tenant is NOVATEL WIRELESS
                                      TECHNOLOGIES LTD.;


<PAGE>   32
                                     - 32 -


                              (b)     the Tenant is in occupation of the
                                      Premises; and

                              (c)     the Tenant has not been and is not in
                                      default of any of the terms and conditions
                                      contained in the Lease including, without
                                      limitation, the payment of any rent.

Parking                  17.02 The Landlord shall permit for the use of the
                         Tenant during the Term of the Lease, THIRTY FIVE (35)
                         random surface stalls at no cost to the Tenant.

Right to Renew           17.03 This clause is specific and personal solely to
                         the Tenant and, provided that:

                              a)      and subject to the rights of existing
                                      tenants on these premises as and when it
                                      becomes available for renewal; and

                              b)      the Tenant has duly and regularly paid all
                                      of the annual basic rent and additional
                                      rent and other sums to be paid pursuant to
                                      this Lease and within the times and in the
                                      manner set out in this Lease; and

                              c)      the Tenant has duly and regularly observed
                                      and performed each and every one of the
                                      terms, covenants and conditions contained
                                      in this Lease on its part to be observed
                                      and performed and within the times and in
                                      the manner set out in this Lease; and

                              d)      the Tenant has given notice to the
                                      Landlord at least SIX (6) months (but not
                                      sooner than TWELVE (12) months) prior to
                                      the expiration of the Term of its
                                      intention to renew the Lease,

                         then the Landlord will grant to the Tenant the right to
                         renew this Lease for the Leased Premises on an "as-is"
                         basis, for a further period of THREE (3) years (the
                         "Renewal Term") commencing on the expiration of the
                         Term and such Renewal Term shall be upon the same terms
                         and conditions as are contained during the Term, save
                         and except Leasehold Improvement Allowance, and that
                         there shall be no further right to renew the term and
                         that the annual basic rent during the Renewal Term
                         shall be such amount as may be agreed upon between the
                         parties on or before the commencement of the Renewal
                         Term, based upon the then current market basic rent
                         being charged, without deduction, for similarly
                         improved space in comparable office buildings in the
                         City of Calgary, in any event not less than the last
                         annual basic rent paid during the original Lease Term.
                         If the parties are unable to agree upon the annual
                         basic rent to be charged during the Renewal Term on or
                         before the commencement of the Renewal Term then the
                         annual basic rent shall be determined by arbitration in
                         accordance with the Arbitration Act of Alberta. If the
                         annual basic rent for the Renewal Term is to be
                         determined by arbitration and a final decision under
                         the arbitration is not reached before the commencement
                         of the Renewal Term, the Tenant will pay on account in
                         equal monthly installments, annual basic rent at the
                         rate charged during the Term. After a decision is
                         reached under the arbitration, the Tenant will pay to
                         the Landlord the balance, if any, of annual basic rent
                         then due together with interest on the balance at an
                         annual rate equal to one percentage point above the
                         Prime Rate.


<PAGE>   33
                                     - 33 -


Leasehold Improvement    17.04 The Landlord shall contribute toward the cost of
Allowance                the Leasehold Improvements installed by the Tenant
                         which by the terms of this Lease shall be the property
                         of the Landlord immediately upon such installation to a
                         maximum of FOURTEEN DOLLARS AND SEVENTY-FIVE CENTS
                         ($14.75) (the Tenant Improvement Allowance) multiplied
                         by the number of square feet comprising the Gross Area
                         of the Leased Premises for which the Tenant pays rent.
                         The Tenant shall be responsible for any costs which
                         exceed the Landlord's maximum contribution. If the
                         Landlord's maximum contribution is not required to
                         complete the Leasehold Improvements, any savings shall
                         be applied towards the Basic Rent as it comes due.

                         The Landlord will carry out the Improvements in
                         accordance with the design prepared by R S & A Interior
                         Design and dated the 24th day of October, 1996 or as
                         otherwise mutually agreed by the Landlord and Tenant
                         and in accordance with the lawful requirements of all
                         Government bodies having jurisdiction.

                         The Landlord will not be obliged to commence the
                         Improvements except for any preliminary layout design
                         which the Landlord has authorized in writing, until the
                         Lease has been fully and unconditionally executed in a
                         form acceptable to the Landlord.

                         The construction drawings and specifications shall be
                         mutually approved by Landlord and Tenant prior to
                         arranging for construction bids.

                         The Tenant shall retain the right to review, accept or
                         alter the Landlord's selected construction bid for the
                         purpose of deleting any such items deemed necessary to
                         maintain the cost of construction below the maximum
                         allowance provided by the Landlord, provided such
                         deletions in no way make the Improvements below
                         building standards and provided all Improvements
                         continue to meet the requirements of all Government
                         Bodies having jurisdiction.

Lease Termination        17.05 Notwithstanding anything else contained in this
                         Lease, Provided the Tenant's Required Conditions are
                         satisfied, the Tenant with SIX (6) months prior written
                         notice may terminate the Lease on the Anniversary Date
                         of the term at the end of the second year and each year
                         thereafter with a one time payment accompanying the
                         notice as follows:

<TABLE>
<CAPTION>
                         END OF YEAR   PAYMENTS $S/SQ. FT.   ESTIMATED TOTAL*
                         -----------   -------------------   ---------------
<S>                                    <C>                   <C>
                              2              $10.72           $135,500.00
                              3              $ 7.20           $ 91,000.00
                              4              $ 3.44           $ 43,500.00
</TABLE>

                         * Plus GST as applicable

Signage                  17.06 The Landlord will permit the Tenant to install
                         signage on the pylon by The Deerfoot Atrium Building at
                         the Tenant's expense in accordance to the Building
                         specifications and design to be approved by the
                         Landlord. Tenant will be required to sign a licence
                         agreement for the sign, at no charge.

Early Occupancy          17.07 If the Landlord completes improvements prior to
                         the Commencement Date, the Landlord will permit the
                         Tenant to take occupancy of the premises, and the net
                         basic rent and proportionate share of taxes and
                         operating costs will be abetted until the Commencement
                         Date. The Landlord will do everything reasonably
                         possible to ensure that the premises are ready for
                         occupancy on December 1, 1996.


<PAGE>   34
                                     - 34 -


Right of Examination     17.08 The Tenant and its duly authorized
                         representatives, shall be permitted, from time to time,
                         during the Landlord's normal business hours, to examine
                         and make copies, at its entire expense at the main
                         offices of the Landlord, all books, ledgers and records
                         of the Landlord required to substantiate the Tenant's
                         Proportionate Share of Additional Rentals, save that
                         such right of examination shall cease NINE (9) months
                         following the date of each annual certification of the
                         amounts payable by the auditors of the Landlord.
                         Payment by the Tenant of the Tenant's Proportionate
                         Share shall not preclude the Tenant from thereafter
                         contesting such amounts. Should the Tenant and its
                         auditors and/or consultants determine there is a bona
                         fide discrepancy of more than three percent (3%)
                         between the Landlord's stated costs and the actual
                         audited costs, then the Landlord shall pay the
                         difference to the Tenant forthwith and be responsible
                         for the cost of the Tenant's audit.


<PAGE>   35
                                     - 35 -


                                   ARTICLE 18
                                   ACCEPTANCE

Acceptance               18.01 The Tenant hereby accepts this Lease of the
                         within described lands and premises to be held by it as
                         Tenant and subject to the conditions, restrictions and
                         covenants above set forth.

                                   SCHEDULES:

                         "A" - Legal Description of Land

                         "B" - Plan of Leased Premises

                         "C" - Rules and Regulations

             IN WITNESS WHEREOF the Landlord and Tenant have executed this Lease
as of the day and year first above written.

                                       SUN LIFE ASSURANCE COMPANY
                                       OF CANADA

                                       Per: /s/
                                           ------------------------------------
                                           Landlord

                                           ------------------------------------
                                           Name (Please Print)

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

                                                                             c/s

                                       Per: /s/
                                           ------------------------------------
                                           Landlord

                                           ------------------------------------
                                           Name (Please Print)

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

                                       NOVATEL WIRELESS TECHNOLOGIES, LTD.

                                       Per: /s/
                                           ------------------------------------
                                           Landlord

                                           ------------------------------------
                                           Name (Please Print)

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

                                                                             c/s

                                       Per: /s/
                                           ------------------------------------
                                           Landlord

                                           ------------------------------------
                                           Name (Please Print)

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


<PAGE>   36


                                  SCHEDULE "A"

                            LEGAL DESCRIPTION OF LAND
                                6715 8TH ST. N.E.
                                   CALGARY, AB
                                     T2E 7H7

        The northwesterly 110 feet in perpendicular width throughout Lot Nine
        (9), all of Lots Ten (10) to Fourteen (14) and the southerly 26.50 feet
        in perpendicular width throughout Lot Fifteen (15) inclusive, Block Two
        (2), Calgary Deerfoot Business Centre, plan 7911331. Reserving unto her
        Majesty all Mines and Minerals.


<PAGE>   37

                                  SCHEDULE "B"



                    [DEERFOOT BUSINESS CENTRE MAP GOES HERE]


<PAGE>   38

                                  SCHEDULE "C"

                              RULES AND REGULATIONS



             1. The landlord shall have the right to control and operate the
             public portions of the Building and the public facilities, as well
             as facilities furnished for the common use of the tenants, in such
             manner as it deems best for the benefit of the tenants generally.
             No tenant shall invite to the Lease Premises, or permit the visit
             of, persons in such numbers or under such conditions as to
             interfere with the use and enjoyment of the entrances, corridors,
             elevators and facilities of the Building by other tenants.

             2. The sidewalks, driveways, entrances, vestibules, passages,
             corridors, halls, elevators and stairways shall not be encumbered
             or obstructed by tenants or tenants' agents, servants, employees,
             licensees or invitees, or be used by them for any purpose other
             than for ingress to and egress from the Leased Premises. Landlord
             reserves the right to restrict and regulate the use of
             aforementioned public areas of the Building by tenants and tenants'
             agents, employees, servants, licensees and invitees and by persons
             making deliveries to tenants (including, but not limited to, the
             right to allocate certain elevator or elevators, if any, and the
             reasonable hours of use thereof for delivery service), and the
             right to designate which Building entrance or entrances shall be
             used by persons making deliveries in the Building.

             3. No awnings or other projections shall be attached to the outside
             walls of the Building. No curtains, blinds, shades or screens other
             than those furnished by Landlord shall be attached to, or hung, or
             used in connection with, any window or door of the Leased Premises,
             without the prior written consent of Landlord. Such curtains,
             blinds, shades, screens or other fixtures must be of a quality,
             type, design and colour, and attached in the manner approved by
             Landlord.

             4. No sign, advertisement, notice or other lettering shall be
             exhibited, inscribed, painted or affixed by any tenant on any
             window or part of the outside or inside of the Leased Premises or
             the Building without the prior written consent of Landlord. In the
             event of the violation of the foregoing by any tenant, Landlord may
             remove same without any liability, and may charge the expense
             incurred by such removal to such tenant. Interior signs on doors
             shall be inscribed, painted, or affixed for tenants by Landlord or
             by sign painters, first approved by the Landlord, at the expense of
             tenants and shall be of a size, colour, and style acceptable to
             Landlord.

             5. The windows and doors, and, if any, the sashes, sash doors, and
             skylights, that reflect or admit light and air into the halls,
             passageways, or other public places in the Building shall not be
             covered or obstructed by tenants, nor shall any bottles, parcels,
             files, papers or other articles be placed on the windowsills.

             6. No showcases or other articles shall be put in front of or
             affixed to any part of the exterior of the Building, nor placed in
             the halls, corridors, or vestibules without the prior written
             consent of Landlord.

             7. The toilet, urinals, sinks and other water apparatus shall not
             be used for any purposes other than those for which they were
             constructed, and no sweepings, rubbish, rags, ashes or other
             substances shall be thrown therein. Any damage resulting by misuse
             shall be borne by the tenants by whom or by whose agents, servants,
             employees, customers or invitees the same was caused. Tenants shall
             not let the water run unless it is in actual use, and shall not
             deface or damage any part of the Building, nor drive nails, spikes,
             hooks, or screws into the walls or woodwork of the Building.


<PAGE>   39
                                     - 2 -


             8. Tenants shall not mark, paint, drill into, or in any way deface
             any part of the Leased Premises or the Building. No boring, cutting
             or stringing of wires shall be permitted except with the prior
             written consent of Landlord and as Landlord may direct. Only
             contractors approved in writing by Landlord may be employed by
             tenants for making repairs, changes or any improvements to the
             Leased Premises. Tenants shall not (without Landlord's prior
             consent) lay floor coverings other than unaffixed rugs, so that the
             same shall come in direct contact with the floor of the Leased
             Premises, and, if wall to wall carpeting, linoleum or other similar
             floor coverings other than the Building Standard carpet are desired
             to be used and such use is approved by the Landlord, and if such
             floor coverings are placed or to be placed over tile flooring then
             an interlining of builder's deadening felt shall be first affixed
             to the floor, by a paste or other material soluble in water, the
             use of cement or similar adhesive materials being expressly
             prohibited. Metal cabinets shall be set on a non-corrosive pad
             wherever the floors are tile. In those portions of the Leased
             Premises where the Landlord has provided carpeting, whether
             directly or indirectly, the Tenant shall install at its own expense
             protective padding under all furniture not equipped with carpet
             casters.

             9. No bicycles, vehicles or animals or birds of any kind shall be
             brought into or kept in or about the Building or the Leased
             Premises excepting that those vehicles so authorized by the
             Landlord may enter and be kept in the Buildings' parking facilities
             (if any).

             10. No space in the Building shall be used for lodging, sleeping,
             or any immoral or illegal purposes. No space shall be used for the
             storage of merchandise or for the sale of merchandise, goods, or
             property, and no auction sales shall be made, by tenants without
             prior written consent of Landlord.

             11. Tenants shall not make, or permit to be made, any unseemly or
             disturbing noises or disturb or interfere with occupants of this or
             neighbouring buildings or premises or those having business with
             them whether by the use of any musical instrument, radio,
             television, talking machine, unmusical noise, whistling, singing or
             in any other way. Tenants shall not throw anything out of the
             doors, windows, or skylights, of any, or down the passageways,
             stairs or elevator shafts nor sweep anything into the corridors,
             hallways or stairs of the Building.

             12. No additional locks or bolts of any kind shall be placed upon
             any of the doors or windows by tenants, nor shall any changes
             whatsoever be made to existing locks or the mechanics thereof
             except by the Landlord, at its option. Tenants shall not permit any
             duplicate keys to be made, but additional keys as reasonably
             required shall be supplied by the Landlord when requested by the
             tenant in writing and such keys shall be paid for by the tenant,
             and upon termination of tenant's Lease, the tenant shall surrender
             to the Landlord all keys of the Leased Premises and other part or
             parts of the Building.

             13. The tenants and their agents, servants, contractors, invitees
             or employees, shall not bring in or take out, position, construct,
             install or move any safe, business machine or other heavy office
             equipment without first obtaining the consent in writing of the
             Landlord. In giving such consent, the Landlord shall have the right
             in its sole discretion, to prescribe the weight permitted and the
             position thereof, and the use and design of planks, skids or
             platforms to distribute the weight thereof. All damage done to the
             Building by moving or using any such heavy equipment or other
             office equipment or furniture shall be repaired at the expense of
             the tenant. The moving of all heavy equipment or other office
             equipment or furniture shall occur only outside of Normal Business
             Hours or at any other time consented to by the Landlord and the
             persons employed to move the same in and out of the Building and
             must be acceptable to the Landlord. Safes and other heavy office
             equipment will be moved through the halls and corridors only upon
             steel bearing plates. No freight or bulky matter of any description
             will be received into the Building or carried in the elevators,
             except during hours approved by the Landlord.


<PAGE>   40
                                     - 3 -


             14. Tenants shall not occupy or permit any portion of the Leased
             Premises to be occupied as an office for a public stenographer or
             typist, or, for the possession, storage, manufacture, or sale of
             narcotics or drugs, or, except as incidental to tenant's main
             business, as an employment bureau.

             15. Tenants shall not use the name of the Building or the owner in
             any advertising without the express consent in writing of the
             Landlord. Landlord shall have the right to prohibit any advertising
             by any tenant which, in any way, tends to impair the reputation of
             the Building or its desirability as a building for offices, and
             upon written notice from Landlord, tenants shall refrain from or
             discontinue such advertising.

             16. All entrance doors in the demised premises shall be left locked
             and all windows shall be left closed by tenants when the Leased
             Premises are not in use.

             17. Except for the negligence of the Landlord or persons for whom
             in law it is responsible, Landlord shall be in no way responsible
             to any tenant for loss of property from the Leased Premises,
             however occurring, or for damage done to the furniture or other
             effects of any tenant by Landlord's agents, janitors, cleaners,
             employees, or contractors doing work in the Leased Premises. The
             tenants shall permit window cleaners to clean the windows of the
             Leased Premises during Normal Business Hours.

             18. The requirements of tenants will be attended to only upon
             application to the Building manager or such other authorized
             representative as the Landlord may designate in writing. Landlord's
             employees shall not perform any work or do anything outside of
             their regular duties, unless under specific instructions from the
             office of the Landlord, from the Building manager or other
             representative as aforesaid.

             19. Canvassing, soliciting, and peddling in the Building are
             prohibited, and tenants shall cooperate to prevent the same.

             20. Any hand trucks, carryalls, or similar appliances used in the
             Building shall be equipped with rubber tires, side guards and such
             other safeguards as Landlord shall require.

             21. Without first obtaining Landlord's written permission, tenants
             shall not install, attach, or bring into the Leased Premises any
             equipment (other than normal office equipment such as electric
             typewriters, computers, printers, calculators, and the like) or any
             instrument, duct, refrigerator, air conditioner, water cooler, or
             any other appliance requiring the use of gas, electric current or
             water. Any breach of this rule will entitle the Landlord at the
             tenant's expense to enter the Leased Premises and remove whatever
             the tenant may have so installed, attached, or brought in.

             22. Landlord reserves the right to exclude from the Building
             outside of Normal Business Hours and during all hours on Saturdays
             all persons not authorized by a tenant in writing, by pass, or
             otherwise, to have access to the Building and the Leased Premises.
             Each tenant shall be responsible for all persons authorized to have
             access to the Building and shall be liable to Landlord for all of
             their acts while in the Building. When security service is in
             effect, entrance to the Building, deliveries, and exits shall be
             made via designated entrances and the Landlord may require all
             persons to sign a register on entering and leaving the Building


<PAGE>   41
                                     - 4 -


             23. Tenant shall at all times keep all drapes, blinds or curtains
             adjusted to block the direct rays of the sun in order to avoid
             overloading the air conditioning systems.

             24. Neither tenants nor their servants, employees, agents,
             visitors, or licensees shall at any time bring or keep upon the
             Leased Premises any inflammable, combustible or explosive fluid,
             chemical or substance, nor do nor permit to be done anything in
             conflict with any insurance policy which may or might be in force
             upon the Building or any part thereof or with the laws relating to
             fires, or with the regulations of the Fire Department or the Health
             Department, or with any of the rules, regulations or ordinances of
             the City in which the Leased Premises are located, or of any other
             duly constituted authority.

             25. Subject to section 4.3 hereof, Tenants shall not, without first
             obtaining Landlord's prior written approval, do any cooking,
             conduct any restaurant, luncheonette, or cafeteria for the sale or
             service of food or beverages to its employees or to others, or
             cause or permit any odours of cooking or other processes or any
             unusual or objectionable odours to emanate from the Leased
             Premises. Tenants shall not, without first obtaining Landlord's
             written approval, install or permit the installation or use of any
             food, beverage, cigarette, cigar, or stamp dispensing machine; or
             permit the delivery of any food or beverage to the Leased Premises,
             except by such persons delivering the same as shall be approved by
             the Landlord. No food or beverage shall be carried in the public
             halls or elevators except in closed containers.

             26. Lists of automobile license numbers of people working in the
             Building and the names of people who normally work off-hours may be
             required by the Landlord, who may also require tenants' employees
             to display a card or sticker as a prerequisite to admission to the
             parking facility (if any).

             27. The Landlord reserves the right to promulgate, rescind, alter
             or waive any rules or regulations at any time prescribed for the
             Building when it is necessary, desirable or proper for its best
             interest and in the opinion of the Landlord, for the best interests
             of the tenants.

             28. The Landlord may publish from time to time emergency fire
             regulations and evacuation procedures in consultation with the
             applicable municipal authorities. Each tenant will appoint a
             premises warden (wardens for multi-floor users) who will be
             responsible for liaison with building management in all emergency
             matters and who will be responsible for instructing employees of
             the tenant in emergency matters.

             29. The tenants shall promptly notify the Landlord of all requests
             by any taxing authority for information relating to the Leased
             Premises (including fixtures, improvements, or machinery and
             equipment therein) or the tenant's occupation or use thereof and
             any such information to be given by the tenant to such taxing
             authority shall be forwarded by the tenant to the Landlord for
             delivery of such taxing authority.

             30. If any apparatus used or installed by a tenant requires a
             permit as a condition for its installation, the tenant must file a
             copy of such permit with the Landlord.

             31. Tenants shall be responsible for the cleaning of any drapes
             and/or curtains that may be installed in their Leased Premises,
             including those installed by the Landlord.


<PAGE>   42

--------------------------------------------------------------------------------







                                      LEASE


                                     BETWEEN



                      SUN LIFE ASSURANCE COMPANY OF CANADA



                                    LANDLORD



                                       AND



                       NOVATEL WIRELESS TECHNOLOGIES, LTD.



                                     TENANT







Lease #387170
--------------------------------------------------------------------------------


<PAGE>   43
                                      LEASE
                      SUN LIFE ASSURANCE COMPANY OF CANADA

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                         PAGE
                                                                                         ----
<S>                              <C>                                                     <C>
               ARTICLE I         PREMISES
                                    1.01    PREMISES                                        1
               ARTICLE II        TERM
                                    2.01    TERM                                            1
                                    2.02    POSSESSION                                      1
                                    2.03    READY FOR OCCUPANCY                             2
                                    2.04    INABILITY TO DELIVER POSSESSION                 2
                                    2.05    RELOCATION OF LEASED PREMISES                   2
               ARTICLE III       RENT
                                    3.01    RENT                                            2
                                    3.02    BASIS OF DETERMINING RENT                       3
                                    3.03    APPORTIONMENT OF ANNUAL BASIC RENT
                                            AND COMMON COSTS ESCALATION                     3
               ARTICLE IV        TENANT'S COVENANTS
                                    4.01    OCCUPANCY                                       3
                                    4.02    RENT                                            3
                                    4.03    PERMITTED USE                                   3
                                    4.04    WASTE AND NUISANCE                              3
                                    4.05    FLOOR LOADS                                     4
                                    4.06    INSURANCE RISK                                  4
                                    4.07    NOXIOUS FUMES VAPOURS AND
                                            ODOURS                                          4
                                    4.08    CONDITION                                       4
                                    4.09    BY-LAWS                                         4
                                    4.10    RULES AND REGULATIONS                           5
                                    4.11    SURRENDER, OVERHOLDING                          5
                                    4.12    SIGNS AND DIRECTORY                             5
                                    4.13    INSPECTION ACCESS                               6
                                    4.14    EXHIBITING PREMISES                             6
                                    4.15    NAME OF BUILDING                                6
                                    4.16    ACCEPTANCE LEASED PREMISES                      6
               ARTICLE V         LANDLORD'S COVENANTS
                                    5.01    QUIET ENJOYMENT                                 7
                                    5.02    INTERIOR CLIMATE CONTROL                        7
                                    5.03    ELEVATORS                                       7
                                    5.04    ENTRANCES, LOBBIES, ETC.                        7
                                    5.05    WASHROOMS                                       8
                                    5.06    JANITOR SERVICES                                8
               ARTICLE VI        REPAIR AND DAMAGE AND DESTRUCTION
                                    6.01    LANDLORD'S REPAIRS                              8
                                    6.02    TENANT'S REPAIRS                                8
                                    6.03    ABATEMENT AND TERMINATION                       9
               ARTICLE VII       TAXES AND OPERATING COSTS
                                    7.01    LANDLORD'S OBLIGATIONS                         12
                                    7.02    BUSINESS TAXES AND COMMON COSTS ESCALATION     12
                                    7.03    PAYMENT OF COMMON COSTS ESCALATION             13
                                    7.04    POSTPONEMENT, ETC., OF TAXES                   14
                                    7.05    RECEIPTS, ETC                                  14
               ARTICLE VIII      UTILITIES AND ADDITIONAL SERVICES
                                    8.01    WATER, TELEPHONE AND ELECTRICITY               14
</TABLE>


<PAGE>   44



<TABLE>
<S>                              <C>                                                      <C>
                                    8.02    UTILITIES                                      14
                                    8.03    ELECTRICITY                                    15
                                    8.04    EXCESS USE                                     15
                                    8.05    LAMPS                                          15
                                    8.06    ADDITIONAL SERVICES                            16
               ARTICLE IX        LICENSES, ASSIGNMENTS AND SUBLETTINGS
                                    9.01    ASSIGNMENTS AND/OR SUBLETTINGS                 16
               ARTICLE X         FIXTURES AND IMPROVEMENTS
                                    10.01   INSTALLATION FIXTURES AND IMPROVEMENTS         20
                                    10.02   LIENS AND ENCUMBRANCES ON FIXTURES AND
                                            IMPROVEMENTS                                   21
                                    10.03   TENANT'S GOODS                                 21
                                    10.04   REMOVAL OF FIXTURES AND IMPROVEMENTS           22
               ARTICLE XI        INSURANCE AND LIABILITY
                                    11.01   TENANT'S INSURANCE                             22
                                    11.02   LIMITATION ON LANDLORD'S LIABILITY             23
                                    11.03   INDEMNITY OF LANDLORD                          25
               ARTICLE XII       SUBORDINATION, ATTORNMENT, REGISTRATION AND
                                 CERTIFICATES
                                    12.01   SUBORDINATIONS AND ATTORNMENT                  26
                                    12.02   REGISTRATION                                   26
                                    12.03   CERTIFICATES                                   26
               ARTICLE XIII      REMEDIES OF LANDLORD AND TENANT'S DEFAULT
                                    13.01   REMEDYING BY LANDLORD NON-PAYMENT AND
                                            INTEREST                                       27
                                    13.02   REMEDIES CUMULATIVE                            27
                                    13.03   RIGHT OF RE-ENTRY ON TERMINATION               28
                                    13.04   RE-ENTRY AND TERMINATION                       28
                                    13.05   RIGHTS ON RE-ENTRY                             28
                                    13.06   PAYMENT OF RENT, ETC. ON TERMINATION           28
               ARTICLE XIV       EVENTS TERMINATING LEASE
                                    14.01   CANCELLATION OF INSURANCE                      29
                                    14.02   DEFAULT                                        29
               ARTICLE XV        MISCELLANEOUS
                                    15.01   NOTICES                                        31
                                    15.02   ENTIRE AGREEMENT                               32
                                    15.03   AREA DETERMINATION                             32
                                    15.04   SUCCESSORS AND ASSIGNS, INTERPRETATION         32
                                    15.05   FORCE MAJEURE                                  32
                                    15.06   WAIVER                                         33
                                    15.07   GOVERNING LAW, COVENANTS, SEVERABILITY         33
                                    15.08   HEADINGS, CAPTIONS                             33
                                    15.09   EXPROPRIATION                                  33
                                    15.10   ARBITRATION                                    34
               ARTICLE XVI       DEFINITIONS
                                    16.01   DEFINITIONS                                    34
               ARTICLE XVII      SPECIAL PROVISIONS                                        43
               ARTICLE XVIII     ACCEPTANCE
                                    ACCEPTANCE                                             42
               SCHEDULE "A"         -  LEGAL DESCRIPTION OF LAND
               SCHEDULE "B"         -  PLAN OF LEASED PREMISES
               SCHEDULE "C"         -  RULES AND REGULATIONS
</TABLE>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>6
<FILENAME>ex10-10.txt
<DESCRIPTION>EXHIBIT 10.10
<TEXT>

<PAGE>   1

                                                                   EXHIBIT 10.10



                                SUPPLY AGREEMENT

        This Supply Agreement ("Agreement") is being entered into and is
effective as of March 31, 2000 (the "Effective Date"), by and between NOVATEL
WIRELESS, INC., a Delaware corporation ("Novatel Wireless" or "Seller"), having
its principal place of business at 9360 Towne Centre Drive, San Diego,
California 92121 and Hewlett-Packard Company, a Delaware corporation
("Hewlett-Packard" or "Buyer"), having its principal place of business at 3000
Hanover Street, Palo Alto, California 94304.

        WHEREAS, Seller is engaged in, among other things, the development and
manufacture of wireless modem cradles ("Modems");

        WHEREAS, Buyer desires to purchase certain quantities of Modems from
Seller, and Seller is willing to supply such quantities of Modems to Buyer,
subject to the terms and conditions of this Agreement;

        NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants set forth below, the parties agree as follows:

1.      SALE AND PURCHASE OF PRODUCTS.

        1.1 Sale and Purchase. Buyer shall purchase from Seller, and Seller
shall supply to Buyer *** Modems in accord with the specifications set forth in
Annex B (the "Product Specifications").

        1.2 Price and Payments.

            1.2.1 Buyer shall make payments due to Seller for Modems either
directly to Seller or to such bank as Seller may designate in writing. Order
payment terms are Net 30 Days.

            1.2.2 Buyer shall pay in accordance with the terms set forth in
Annex D ("Purchase Price and Volume Commitments") per unit for each Modem.

        1.3 Modems. The price per unit as set forth above includes the finished
product modem, installation and configuration software on CD ROM, AC adapter,
display packaging and user documentation.

        1.4 Shipment and Forecast. Buyer shall order and Seller shall deliver to
Buyer the Modems set forth in Section 1.1 in accord with the delivery schedule
attached set forth in Annex C ("Forecast and Delivery Schedules").

        1.5 Delivery. Seller shall deliver the Modems sold to Buyer in accord
with the delivery schedule set forth in Annex C. The Modems shall be shipped
f.o.b. shipping point from the Seller's manufacturing site.

        1.6 Warranties. Acceptance of a Modem shall not relieve Seller from its
obligations thereunder with respect to warranties under Section 6 below.


* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

<PAGE>   2


        1.7 Title; Risk of Loss. Title to and risk of loss in Modems covered by
this Agreement shall pass to Buyer at such time Seller ships the Modems.

        1.8 Taxes. The prices of all Modems hereunder include all taxes, duties
and excise which are directly imposed on the Modems. Notwithstanding the
foregoing, Buyer shall bear the responsibility for any taxes or duties imposed
on Modems in any other country or state of destination, including without
limitation, taxes imposed on the sale by Buyer of a product that includes Seller
products.

        1.9 Preferred Supplier Status. For the term of this Agreement, Seller
shall have the right of first refusal as a supplier with respect to any wireless
data modem project initiated by the Hewlett-Packard Wireless and Internet
Services Division.

2.      TRADEMARKS.

        2.1 Seller's Trademarks.

            2.1.1 Buyer shall not use the trademark "Novatel" or "Novatel
Wireless" or any other trademark owned by Seller or any mark confusingly similar
thereto without the prior written consent of Seller in each instance.
Notwithstanding the foregoing, Buyer shall be entitled to use the trademark
"Novatel" or "Novatel Wireless" or any other trademark owned by Seller in
association with the Modems, but such use shall be in strict accord with the
latest (most recent) version of Seller's Trademark Style Guide as provided by
Seller to Buyer.

            2.1.2 Buyer shall not use the Seller's trademark or any other
trademark owned by Seller or any mark confusingly similar thereto without the
prior written consent of Seller in each instance.

            2.1.3 Buyer acknowledges Seller's sole ownership and exclusive
right, title and interest in and to the use of each of its trademarks, and that
any use of any of the trademarks of Seller will inure solely to the benefit of
Seller. Buyer shall not acquire any right to or under any of Seller's
trademarks. Nothing contained herein shall in any way limit Seller's rights
under its patents or licensing agreements or grant Buyer any rights under such
patents or licensing agreements.

            2.1.4 License to the Documentation. Solely for purposes as required
in accordance with this Agreement, Seller hereby grants to Buyer, under Seller"s
intellectual property rights, a non-exclusive, worldwide license to use,
reproduce and display the appropriate Documentation for the Modems.

        2.2 Buyer's Trademarks.

            2.2.1 Trademarks. Neither party is granted any ownership in or
            license to the trademarks, marks or trade names (collectively,
            "Marks") of the other party. Seller's use of Buyer's Marks shall be
            in accordance with the latest (most recent) Buyer's Trademark
            guidelines as provided by Buyer to Seller.



                                       2
<PAGE>   3

            2.2.2 Seller shall not use the Buyer's trademark or any other
            trademark owned by Buyer or any mark confusingly similar thereto
            without the prior written consent of Buyer in each instance.

            2.2.3 Seller acknowledges Buyer's sole ownership and exclusive
            right, title and interest in and to the use of each of its
            trademarks, and that any use of any of the trademarks of Buyer will
            inure solely to the benefit of Buyer. Seller shall not acquire any
            right to or under any of Buyer's trademarks. Nothing contained
            herein shall in any way limit Buyer's rights under its patents or
            licensing agreements or grant Seller any rights under such patents
            or licensing agreements.

        2.3 Co-Branding. Buyer and Seller agree that the Modems manufactured and
sold under this Agreement shall be co-branded with the trademarks of both Buyer
and Seller. Buyer and Seller agree to reasonably cooperate with one another in
developing an appropriate co-branding strategy.


3.      KNOW-HOW AND SUPPORT.

        Seller shall provide Level II and Level III Technical Support (as set
forth in Annex A ("Technical Support")), and training to Buyer's designated
service technicians to enable Buyer to provide Level I Support and engineering
support at Buyer's facilities to enable Buyer to support the Modems, including
the details of modem functionality and design required for detection and
correction of bugs or failures. The parties hereto acknowledge and agree that
Seller shall not provide direct end-user support to any end-user on its own
behalf or on behalf of Buyer (Level I Technical Support). Seller will provide
technical support during the term of this Agreement in accordance with the terms
of this Agreement, except that Seller shall not be obligated to provide support
for any change in Seller's specifications of the Modems as set forth in Annex B
(the "Product Specifications") requested by the Buyer to the extent that this
change proposed by Buyer is not incorporated into the standard Modems sold by
Seller.

4.      REPRESENTATION, WARRANTY and indemnification.

        4.1 Seller represents and warrants that no additional Federal Trade
Commission certification or CDPD carrier certification or other governmental
certification is required for the Modems. If either certification becomes
necessary for the sale of the Modems, Seller shall immediately stop delivery of
the Modems. Seller shall make the necessary changes to certify the Modems and
all previously delivered Modems shall be retrofitted to meet the certified
configuration.

        4.2 Seller also represents and warrants that it is entitled to enter
into this Supply Agreement and that Seller's performance according to the terms
of this Supply Agreement shall not violate any other agreement to which Seller
is a party. Seller shall, at its sole cost and expense, indemnify, defend and
hold Buyer harmless from and against any claims, demands, liability or suit,
including costs and expenses, for or by reason of any actual or alleged breach
of this warranty in this Section 4.2.




                                       3
<PAGE>   4

        4.3 General Indemnity. Seller agrees to indemnify and hold Buyer
harmless of and from any and all loss, cost, claim, liability, suit, judgment or
expense, including reasonable attorneys' fees, arising out of any breach of the
above described warranties.

        4.4 No Infringement. Seller warrants that the computer software provided
by Seller with the Modems to Buyer (the "Program"), and accompanying
Documentation, referred to in this Agreement do not violate or infringe any
patent, copyright, trademark, trade secret or other proprietary right of any
third party and that Seller is not aware of any facts upon which such a claim
for infringement could be based.

        4.5 Infringement Indemnity.

            (a) Seller will defend any claim, suit, or proceeding brought
against Buyer or its customers insofar as it is based on a claim that the
Program or Documentation, or any part thereof, furnished by Seller under this
Agreement constitutes an infringement of any third party's patent, copyright,
trademark, trade name, other proprietary right, or unauthorized trade secret
use; provided that Seller is notified promptly in writing of such claim, and
given authority, information and assistance (at Seller's expense) to handle the
claim or the defense of any suit or proceeding. Seller agrees to pay damages and
costs awarded therein against Buyer and its customers but only to the extent
such damages and costs are directly attributable to infringement caused by the
Program or Documentation which is provided by Buyer to Seller. Notwithstanding
the foregoing, Seller's total liability under this Section shall not exceed the
total amounts actually paid by Buyer to Seller under this Supply Agreement.

            (b) In case any Program or Documentation or any part thereof in such
suit is held to constitute an infringement and its use is enjoined, Seller
shall, at its own expense and at its option (i) procure for Buyer and its
customers the right to continue use, or (ii) if applicable, replace the same
with a noninfringing program and documentation of substantially equivalent
function and performance, or (iii) modify them so they become noninfringing
without detracting substantially from function or performance.

            (c) Notwithstanding the foregoing, Seller shall have no
responsibility for claims arising from (i) unauthorized modifications of the
Program made by Buyer or its customers if such claim would not have arisen but
for such modifications, or (ii) unauthorized combination or use of the Program
with products not contemplated herein if such claim would not have arisen but
for such combination or use.


5.      TERM; TERMINATION; RIGHTS AND OBLIGATIONS UPON TERMINATION.

        5.1 Except as otherwise provided for herein, the term of this Agreement
shall be for the period set forth on Annex D, unless terminated earlier by
either party pursuant to the provisions of this Section 5 or extended by mutual
written agreement of the parties.

        5.2 Notwithstanding the foregoing, the following provisions shall
continue in effect after termination of this Agreement in accordance with their
terms:




                                       4
<PAGE>   5

            (a) All payment provisions to the extent unpaid at the time of
termination shall be paid in accordance with the terms of this Agreement.

            (b) All warranties specified in the Agreement.

            (c) Sections 2.1 and 2.2 (Trademarks).

            (d) Section 5.6 (Commitment Termination Event).

            (e) Sections 9.1 and 9.2 (Confidentiality and Advertising).

            (f) Section 9.3 (Confidential Information).

            (g) Section 9.8 (Applicable Law).

        5.3 Buyer's Right to Terminate. Buyer shall have the right, by providing
Seller with thirty (30) days' prior written notice, to terminate this Agreement
upon the occurrence of any of the following events, any one of which shall be
considered a "Seller Default":

            (a) Seller discontinues the Modems;

            (b) Seller is adjudged bankrupt;

            (c) Seller files a voluntary petition in bankruptcy or liquidation
or for the appointment of a receiver;

            (d) Filing of an involuntary petition to have Seller declared
bankrupt, or subject to receivership, provided that such petition is not vacated
or set aside within ninety (90) days from the date of filing;

            (e) The execution by Seller of any assignment for the benefit of
creditors; or

            (f) Seller breaches any material provision of this Agreement and
fails to cure such material breach within thirty (30) days from receipt of
written notice describing the breach.

            (g) Seller, after receiving written notice from Buyer, fails to make
product deliveries as provided in this Agreement, unless such failure is cured
within thirty (30) days of Seller receiving such written notice from Buyer.

        5.4 Seller's Right to Terminate. Seller shall have the right, by
providing Buyer with thirty (30) days' prior written notice, to terminate this
Agreement upon the occurrence of any of the following events, any one of which
shall be considered a "Buyer Default":

            (a) Buyer fails to make payments as provided in this Agreement,
unless such failure is cured within thirty (30) days from receipt of written
demand for such payment. Any late payments shall bear interest at the annual
rate of ***;

            (b) Buyer is adjudged bankrupt;


* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.




                                       5
<PAGE>   6

            (c) Buyer files a voluntary petition in bankruptcy or liquidation or
for the appointment of a receiver;

            (d) Filing of an involuntary petition to have Buyer declared
bankrupt, or subject to receivership, provided that such petition is not vacated
or set aside within ninety (90) days from the date of filing;

            (e) The execution by Buyer of any assignment for the benefit of
creditors; or

            (f) Buyer breaches any material provision of this Agreement and
fails to cure such material breach within thirty (30) days from receipt of
written notice describing the breach.

        5.5 Remedy Upon Default. In the event that this Agreement is terminated
pursuant to Section 5.3 or 5.4 above, both parties shall have the right to
exercise any and all rights surviving such termination pursuant to Section 5.2.

        5.6 Commitment Termination Event. In the event of a Commitment
Termination Event, Buyer shall, as soon as practicable and in no event later
than five (5) days after the occurrence of such Commitment Termination Event,
pay Seller, ***. Seller agrees to use commercially reasonable efforts to dispose
of or otherwise use excess finished product in an effort to reduce any residual
amount owed to Seller. "Commitment Termination Event" means (i) the failure by
Buyer to purchase Modems in the amounts set forth in Section 1.1 ("Sale and
Purchase") hereof pursuant to the schedule of payment and delivery set forth in
the Delivery Schedule (Annex C); (ii) termination of this Agreement by Buyer for
any reason whatsoever other than pursuant to an uncured material breach by
Seller; (iii) any uncured material breach by Buyer of any representation,
covenant or agreement on the part of Buyer set forth in this Agreement, and
subsequent termination of this Agreement by Seller for such breach. ***

6.      PRODUCT WARRANTY.

        6.1 Product Warranty. The following Sections 6.l through 6.6 refer only
to Product Warranty.

            (a) Seller warrants that all Modems, including components thereof,
to be delivered hereunder, will conform substantially to the Product
Specifications and be free from defects in material and workmanship. The
foregoing warranty is given provided Buyer gives written notice of any defect,
deficiency or non-conformance of any Modem, or parts thereof, within: (i) ***
from the purchase date by the end-user/consumer (the "Warranty Period"). Seller
shall, at no cost to Buyer, and within the "Turn-Around Time" as defined in
Section 6.2(a) below, repair or furnish replacements for all such defective,
deficient or non-conforming items or parts thereof; provided, however, the
Modems have been maintained in accordance with Seller's specifications and have
not been modified by any party other than Seller except as expressly permitted
by Seller in writing.

            (b) The foregoing warranties do not extend to:

                (i) defects, errors or nonconformities in a Modem due to
accident, abuse, misuse or negligent use of such Modem or use in other than a
normal and customary


* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.




                                       6
<PAGE>   7

manner, environmental conditions not conforming to Seller's specifications, or
failure to follow prescribed operating maintenance procedures;

                (ii) defects, errors or nonconformities in the Modem due to
modifications, alterations, additions or changes in the Modem not made or
authorized to be made by Seller in writing;

                (iii) normal wear and tear; or

                (iv) damage caused by force of nature or act of any third party.

        6.2 Turn-Around Time.

            (a) "Turn-Around Time" for the purposes of this Section 6 means ***
from the date on which such defective item, or defective or non-conforming part
thereof, is furnished to Seller, for repair or replacement until the date on
which such replaced or repaired item is returned to Buyer.

            (b) Seller shall bear air shipment costs of the deficient, repaired
or replaced item as well as the risk or loss or damage to the item or its
replacement throughout the period between the shipment of the defective item and
the receipt of the repaired or replaced item. Repaired or replaced items shall
be subject to the warranty provided on the original finished product only (the
time during which Seller repairs or replaces the item shall not be considered as
part of the Warranty Period), in accordance with this Section 6. Notwithstanding
the foregoing, Buyer shall bear all expenses if no fault on the part of Seller
was found in the items returned for repair or replacement.

        6.3 Inspection; Acceptance. This warranty shall survive inspection,
acceptance or payments by Buyer and is provided for the sole and exclusive
benefit of Buyer and shall not extend to any third party, including without
limitation, any reseller or end-user.

        6.4 Exclusive Remedy. The warranty granted in this Section 6 sets forth
Buyer's sole and exclusive remedy and Seller's sole and exclusive liability for
any claim of warranty for any product delivered by Seller.

        6.5 No Authority. Buyer acknowledges that it is not authorized to make
any warranty or representation on behalf of Seller or its suppliers regarding
the Modems, whether express or implied, other than the warranty terms set forth
in this Section 6.

        6.6 Year 2000 Compliance. Novatel Wireless hereby warrants that the
Software included as part of the overall product is Year 2000 Compliant; "Year
2000 Compliant" shall be defined as having the capability to (i) correctly
process date field dependent logic to accurately process and utilize any date
prior to and any date after December 31, 1999; and (ii) store and represent
dates in a manner which enables the user to easily identify or use the century
portion of any date fields without any special processing.


* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


                                       7
<PAGE>   8

        6.7 No Other Warranty. THE WARRANTY MADE UNDER THIS SECTION 6 IS
EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.

7.      LIMITATION OF LIABILITY.

        SELLER SHALL NOT BE LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL,
INDIRECT OR PUNITIVE DAMAGES (INCLUDING LOST REVENUES OR PROFITS) OF ANY KIND
DUE TO ANY CAUSE, REGARDLESS OF WHETHER SELLER HAS BEEN ADVISED OR IS AWARE OF
THE POSSIBILITY OF SUCH DAMAGES.

8.      FORCE MAJEURE.

        8.1 Events of Force Majeure. Neither party shall be liable for a default
or delay in the performance under this Agreement if and to the extent such
default or delay is caused, directly or indirectly, by (i) fire, flood, natural
disturbances or other acts of God; (ii) any outbreak or escalation of
hostilities, war, civil commotion, riot or insurrection; (iii) any act or
omission of the other party or any governmental authority or (iv) any other
similar causes beyond the control of such party that arise without the fault or
negligence of such party. Any delay resulting from such events shall be referred
to herein as a "Force Majeure," shall not constitute a default by such party
under this Agreement and shall entitle the delayed party to a corresponding
extension of its delayed obligation. The party whose performance will be delayed
by such events will use its best efforts to notify the other party within three
(3) days after delayed party becomes aware of such event, as well as the
cessation thereof.

        8.2 Subcontractor's Default. Any delays in performance by Seller's
subcontractors or suppliers shall be deemed excusable delays with respect to
Seller only if (i) such subcontractor's non-performance is caused by Force
Majeure and (ii) Seller could not have obtained the supplies or services of such
subcontractor from other sources in sufficient time and on customary terms to
prevent interruption of Seller's performance of this Agreement.

        8.3 Termination.

            (a) If Force Majeure results in a delay to make any scheduled
delivery under this Agreement by more than sixty (60) days, Buyer may terminate
this Agreement in whole or in part and such termination shall not be deemed a
breach of this Agreement.

            (b) If Buyer does not terminate within such sixty (60) day period,
and the Force Majeure prevails for further forty-five (45) days, Buyer may
terminate this Agreement, but it shall have no right to claim damages from
Seller for breach of the Agreement. The foregoing expresses Buyer's sole remedy
and Seller's sole liability for such termination resulting from Force Majeure.




                                       8
<PAGE>   9

9.      MISCELLANEOUS.

        9.1 Confidentiality of Agreement; Permitted Disclosures. Throughout the
term of this Agreement, each party agrees that the terms of this Agreement shall
be kept confidential. No disclosure of the identity of Buyer's customers or
end-users or other information concerning this Agreement shall be released by
Seller without the prior written consent of Buyer except in Seller's or Buyer's
communication with its respective shareholders, investors or potential
investors.

        9.2 Required Disclosures; Advertising. Notwithstanding Section 9.1
above:

            (a) Each party may divulge information hereunder as is reasonably
required for the performance of the Agreement or as is required by law; and

            (b) Each party shall have the right to list the other party as a
customer or supplier (as the case may be) in its advertising material.

        9.3 Confidential Information.

            (a) In performance of this Agreement, it may be necessary or
desirable for either party to disclose to the other certain business and/or
technical information which the disclosing party regards as proprietary and
confidential (the "Confidential Information"). Any Confidential Information
disclosed shall be reduced to writing and provided to the other party within
twenty (20) days after it was first disclosed. The disclosing party shall make
commercially reasonable efforts to mark all tangible embodiments of Confidential
Information with an appropriate confidentiality legend. Each of the parties
hereto agree that it shall (i) not make use of or disclose the Confidential
Information for any purpose whatsoever at any time, other than for the purposes
of this Agreement and (ii) limit access to the Confidential Information of the
other party to its employees and contractors who shall be advised of and agree
to be subject to the terms of this Section 9.3.

            (b) Nothing herein shall be construed as granting to either party,
by implication, estoppel or otherwise, any right, title or interest in, or any
license under, any patent or Confidential Information.

            (c) Items shall not be considered Confidential Information if such
information was (i) available to the public other than by a breach of an
agreement with the disclosing party; (ii) rightfully received from a third party
not in breach of any obligation of confidentiality; (iii) independently
developed by one party without access to the Confidential Information of the
other; (iv) known to the recipient at the time of disclosure; or (v) produced in
compliance with applicable law or a court order, provided that other party is
given reasonable notice of such law or order and an opportunity to attempt to
preclude or limit such production.

        9.4 Severability. If any provision of this Agreement shall be held
illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.




                                       9
<PAGE>   10

        9.5 Assignment. Neither Seller nor Buyer may assign this Agreement in
whole or in part, or any rights hereunder without the prior written consent of
the other, except to (i) a wholly-owned subsidiary of such party, (ii) a
successor in interest of all or substantially all of such party's assets or
business or (iii) a bank trust company or other financial institution for money
due or to become due under this Agreement. In the event of any assignment, the
assigning party shall promptly supply the other party with two (2) copies of
such assignment and, in the instance of an assignment pursuant to this Section
9.5, shall indicate on each invoice to whom payment is to be made. In the event
of any assignment pursuant to this Section 9.5, the assigning party also shall
provide a written guarantee by such party of the obligations assigned to such
party's subsidiary.

        9.6 Relations of the Parties. Nothing in this Agreement shall be
construed as creating relationship of principal and agent or of employer and
employee between the parties. Furthermore, nothing in this Agreement is intended
to constitute, create, give effect to or otherwise contemplate a joint venture,
partnership or formal business entity of any kind. The rights and obligations of
the parties with respect to this Agreement shall not be construed as providing
for sharing of profits or losses arising out of the effort of either of the
parties. The parties shall not incur any liability on behalf of the other.

        9.7 Waiver. No waiver by either Seller or Buyer of any breach of this
Agreement shall be held to be a waiver of any other subsequent breach. No waiver
or time extension given by either Seller or Buyer shall have effect unless made
expressly and in writing.

        9.8 Applicable Law. This Agreement and all matters regarding the
interpretation and/or enforcement hereof shall be governed exclusively by the
law of the State of California without reference to its choice of law rules.

        9.9 Entire Agreement. This Agreement constitutes the entire agreement
between the parties, supersedes and cancels any previous understandings or
agreements between all the parties relating to the provisions hereof, and
expresses the complete and final understanding of the parties in respect
thereto. This Agreement may not be changed, modified, amended or supplemented
except by a written instrument signed by the parties.

        9.10 Notices. Any notice contemplated by or made pursuant to this
Agreement shall be in writing and shall be deemed delivered on the date of
delivery if delivered personally or by commercial overnight courier with
tracking capabilities or by fax, or five (5) days after mailing if placed in the
mail, postage prepaid, registered or certified mail, return receipt requested,
addressed to Buyer or Seller (as the case may be) as follows:

                    Seller:     Novatel Wireless, Inc.
                                9360 Towne Centre Drive
                                Suite 110
                                San Diego, CA  92121
                                Attn:  Bruce Gray, Vice President of Sales
                                and Marketing




                                       10
<PAGE>   11

                     Buyer:      Hewlett-Packard Company
                                 3000 Hanover Street
                                 Palo Alto, CA 94304
                                 Attn:  General Counsel

or such other address as each party may designate for itself by notice given in
accordance with this Section 9.10.

        9.11 Headings. The headings in this Agreement are for convenience only
and shall not be regarded in the interpretation hereof.

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the Effective Date written above.



                           SELLER: NOVATEL WIRELESS, INC.



                           By: _______________________________________________
                               Name: Bruce Gray
                               Title: Vice President of Sales and Marketing


                           BUYER:  HEWLETT-PACKARD COMPANY



                           By: _______________________________________________
                               Name:
                               Title:



                                       11
<PAGE>   12

ANNEX A; TECHNICAL SUPPORT


Technical Support for the H.P. Jornada 540 series modem cradle Product delivered
to Hewlett Packard customers will be managed via a three-tier Technical Support
infrastructure and process as follows:


LEVEL ONE TECHNICAL SUPPORT

        Level one Technical Support will be provided by Hewlett Packard to their
        direct and indirect customers. Level one support is defined as calls*
        originating from Hewlett Packard customers, resellers or distributors
        regarding H.P. Jornada 540 series modem cradle products including but
        not limited to pre and post sale inquiries concerning the basic
        operation of the hardware and software, functionality, interoperability
        and capabilities of those products and services.


        For calls regarding the H.P. Jornada 540 series modem cradle products,
        Hewlett Packard will make every attempt to answer customer questions and
        resolve issues using available tools, documentation, test equipment and
        other materials used to support the H.P. Jornada 540 series modem cradle
        products (see training section below). If the customer question/issue
        regarding the H.P. Jornada 540 series modem cradle product cannot be
        resolved by Hewlett Packard support personnel to the customers'
        satisfaction, the issue will be forwarded to Seller level two Technical
        Support for further investigation and resolution.


        *Calls include phone calls, e-mail, web-based inquiries, faxes and
        letters.



LEVEL TWO TECHNICAL SUPPORT

    Level two Technical Support will be provided by Seller support staff
    directly to Hewlett Packard level one support personnel to assist in the
    resolution of open customer issues that have not been resolved to Hewlett
    Packard customers satisfaction during a level one support call. Hewlett
    Packard will have direct access to designated support staff within the
    Seller support organization for this purpose. A direct line of communication
    between the two organizations will be established and Seller support
    technicians will be available during normal Hewlett Packard Technical
    Support operation hours to assist in resolution of customer problems. Seller
    support engineering will work directly with Hewlett Packard support staff to
    resolve issues and answer questions, this may require Hewlett Packard
    support staff to gather additional information and provide system
    information or test results back to Seller





<PAGE>   13

    support staff to aid in the definition and resolution of the problem It will
    be Hewlett Packard support staff's responsibility to communicate directly
    with the end-user customer. Problems that are not resolved WITHIN 72 HOURS
    or problems that are flagged as sensitive/mission critical will be escalated
    to level three Technical Support for final resolution.


LEVEL THREE TECHNICAL SUPPORT (ESCALATION)

    Level three Technical Support will be provided by Seller support and system
    engineering staff to resolve issues that cannot be satisfactorily resolved
    by level one and level two support personnel. Level three support will
    handle all Hewlett Packard product escalations issues including unresolved
    support calls and will work directly with Seller engineering staff to
    resolve those issues.



TECHNICAL SUPPORT TRAINING

    Technical Support training and documentation for the H.P. Jornada 540 series
    modem cradle will be provided to Hewlett Packard level one support staff by
    Seller. Hewlett Packard support staff will receive training on the general
    use, functionality, operation and compatibility of the Seller H.P. Jornada
    540 series modem cradle products. In addition all support related
    documentation, training materials, notes, FAQ's, and web based support
    materials will be made available to Hewlett Packard for their use in
    supporting these products.


<PAGE>   14

ANNEX B; PRODUCT SPECIFICATIONS

HARDWARE AND SOFTWARE DESCRIPTIONS


TOPCAT POCKET PC MODEM CRADLE PRODUCT DESCRIPTION

This product is a "cradle" or "sled" module that will fit the form factor of the
TopCat Pocket PC providing wireless connectivity. The modem will connect via a
serial port interface and will have a form factor that fits a small area on the
back of the Pocket PC device. A rechargeable Lithium Ion battery will power the
modem and provide battery life of between 6 - 8 hours of average use. This
battery will be charged with an external AC adapter.


PRODUCT FEATURES DESCRIPTION

-       GSM/GPRS version: Dual band (900/1800Mhz)GSM data transmission at
        9600bps (optional 900/1900Mhz available)

-       GSM/GPRS version: GPRS support with high speed data transmission

-       CDPD version: Compliant with the CDPD Part 409 specifications.

-       GSM/GPRS versions: Short messaging (SMS) send and receive

-       GSM/GPRS versions: Automatic message polling

-       GSM/GPRS versions: Buzzer and/or vibrating alarm functionality

-       Stand-alone charging mechanism for Cradle

-       LED Status indication

-       Minimal battery requirement: 90h stand-by time or 1.5 hours online time.

-       GSM/GPRS versions: PIN Protection

-       Power switched by the Pocket PC

-       Software Tools

-       Pre-packaged Applications for Email and Web-browsing

-       Desktop/Laptop synchronization software


FEATURE SET DETAILS

***


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

<PAGE>   15

***

***

***

***

***

***


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.




<PAGE>   16

***

***

***

***

***

***

***

***

***


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

<PAGE>   17

***


***


***


HARDWARE SPECIFICATIONS

        ***



HARDWARE SPECIFICATION DETAILS

***


***


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>   18

***

***

***

***

***


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>   19

3.  INDUSTRIAL DESIGN

***




Overview:

        This is a Type II PC Card based on GSM GPRS specifications and designed
        to work with a Windows laptop or handheld PC. It is wireless modem based
        on digital packet technology and allows high-speed data communication on
        a world recognized wireless standard.

Features:

        -  900/1900 operation in a North American GSM environment, 900/1800
           operation in European and Asian GSM environments.

        -  has support for circuit switched operation to allow coverage in areas
           where advanced features of GPRS have not yet been rolled out

        -  capable of power output at 1 watt.

        -  size is compatible with Type II PC Card (PCMCIA)

        -  GPRS technology allows for over the air download of data at 56Kbps
           nominally in MS10 mode of operation and upload at 28Kbps

        -  SIM card features and proven security are the same as for standard
           GSM products with the SIM card itself being supplied by the carrier
           as a separate item

        -  Over the Air programming is available for user feature implementation

        -  This assumes downloading to the laptop or handheld PC from the web
           site and then downloading to the PC Card.

        -  Application Software available for setup, configuration, operation
           and status monitoring of the PC Card

        -  Designed for Windows 95/98/NT/CE and 2000 computers equipped with a
           Type II PC Card (PCMCIA) slot


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>   20

Specifications:

***






CDPD PC CARD
Product Description

Overview:
        This is a Type II PC Card based on the CDPD specifications and designed
        to work with a Windows laptop or handheld PC. It is wireless modem based
        on digital packet technology and allows high-speed data communication on
        a world recognized wireless standard.

Features:

        -  Operation in all CDPD environments.

        -  capable of power output at .6 watts

        -  size is compatible with Type II PC Card (PCMCIA)

        -  CDPD technology allows for over the air download of data at 19.2Kbps
           nominally

        -  Over the Air programming is available for user feature implementation

        -  Application Software available for setup, configuration, operation
           and status monitoring of the PC Card


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

<PAGE>   21

***

Specifications:

***

*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>   22


ANNEX C; FORECAST AND DELIVERY SCHEDULES

PRODUCT MANUFACTURING AND FORECASTING: Hewlett Packard will need to submit a ***
forecast to Novatel Wireless. The forecast for the *** of shipments shall be
given *** days in advance of the scheduled production date and will be
considered fixed. After the forecast for first *** of shipments is submitted to
Novatel Wireless, forecast changes may be made as follows for the remaining
months:


               ***

NOTE: Hewlett Packard can reserve the right to provide forecasting for the
consumption of the entire volume commitment (product mix and quantity) by
providing a minimum of *** advance notice.



DEVELOPMENT AND DELIVERY SCHEDULE: The schedule below indicates the total
development time (time-to-market) for all versions of the cradle starting from
the date the agreement is signed to the date when volume quantities are shipped
to Hewlett Packard's designated point of distribution. Development of all
devices will begin once an agreement between the two parties is signed.



The schedule is detailed as follows (Time listed in months ARO):

                                            CDPD                 GSM/GPRS

               ***


FORECAST BEGINNING WITH FIRST MONTH'S AVAILABILITY:

               ***


* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

<PAGE>   23

               ***



Novatel Wireless, during the term of this Agreement, for all H.P. Jornada series
540 modem cradles that are shipped through Novatel Wireless channels, will
bundle collateral marketing and advertising materials and any other related
collaterals, electronic or otherwise which are supplied by Hewlett-Packard or
Hewlett-Packard partners.


For each H.P. Jornada series 540 modem cradle shipped by Novatel Wireless to
Hewlett-Packard pursuant to this Agreement, Novatel Wireless will provide
Hewlett-Packard on a monthly basis with all EID Numbers for such modem cradles.



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>   24


ANNEX D; PRODUCT PRICING AND VOLUME COMMITMENTS


VOLUME COMMITMENT: *** units between H.P. Jornada 540 series modem cradle and PC
Card form factors using either CDPD or GSM/GPRS technologies.



TERM: *** beginning from the first revenue GSM/GPRS H.P. Jornada 540 series
modem cradle Cradle modem shipment to Hewlett Packard from Novatel Wireless.



DISTRIBUTION: During the term of this Agreement, Novatel Wireless agrees not to
sell H.P. Jornada 540 series modem cradles to wireless network providers and
aggregators of wireless service. During the term of this Agreement, all carrier
service bundles offered for the H.P. Jornada 540 series modem cradles by Novatel
Wireless shall be provided by Hewlett-Packard or one of its assigned agents.
Hewlett-Packard agrees, during the term of this Agreement, to make the H.P.
Jornada 540 series modem cradles available to all wireless carriers on a
non-discriminatory basis, pursuant to comparable business terms and pricing.



UNIT PRICING: Unit pricing for the H.P. Jornada 540 series modem cradle cradle
is as follows:

Quantity:             ***

GSM/GPRS              ***

CDPD                  ***

Unit Pricing for the Type II PCMCIA cards is as follows:

GSM/GPRS              ***

CDPD                  ***



DEVELOPMENT FEE:



Hewlett-Packard agrees to provide a product development fee of *** to Novatel
Wireless. One payment of *** shall be made by Hewlett-Packard to Novatel
Wireless upon execution of this Agreement and a second payment of *** shall be
made one week prior to the first manufacturing run for the products.


* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>7
<FILENAME>ex10-11.txt
<DESCRIPTION>EXHIBIT 10.11
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.11


        TECHNOLOGY LICENSE, MANUFACTURING AND PURCHASE AGREEMENT

        THIS TECHNOLOGY LICENSE, MANUFACTURING AND PURCHASE AGREEMENT, (the
"Agreement") is entered Into as of the 13th day of October, 1999, (the
"Effective Date") by and between METRICOM, INC., a Delaware corporation, with
its principal offices at 980 University Avenue, Los Gatos, California 95030-2375
("Metricom") and NOVATEL WIRELESS, INC., a Delaware corporation, with its
principal offices at 9360 Towne Centre, Suite 110, San Diego, CA 92121
("Novatel").

        WHEREAS, Metricom has developed a Network; and

        WHEREAS, the parties desire to enter into an agreement regarding
Metricom's Network whereby Novatel will develop Network interoperable and
compatible Modem as a product; and

        WHEREAS, Novatel wishes to obtain from Metricom a technology license to
use Metricom's technology and incorporate the Licensed Technology into a Modem;
and

        WHEREAS, Metricom is prepared to grant such a license upon the
terms and conditions of this Agreement; and

        WHEREAS, the parties now desire to enter into an agreement whereby
Novatel will manufacture the Modem; and

        WHEREAS, Novatel wishes to supply such Modem to the general marketplace,
Metricom's Designee(s) or Metricom; and

        WHEREAS, Metricom wishes Novatel to supply Modems built to the
Specifications to Metricom's Designee(s) or Metricom.

        NOW THEREFORE, in consideration of the foregoing and the covenants and
premises contained in this Agreement, the parties agree as follows:

PART I: DEFINITIONS

        1. DEFINITIONS. As used herein, capitalized terms will have the meanings
set forth below.

               1.1 "ACCEPTANCE CERTIFICATE" means a document issued by Metricom
confirming that a Modem shipment meets all applicable Specifications.

               1.2 "CONFIDENTIAL INFORMATION" means any confidential or
proprietary information, including without limitation any source code, software
tools, designs, schematics, plans or any other information relating to any
research project, work in process, future development, scientific, engineering,
manufacturing, marketing or business plan or financial or personnel matter
relating to either party, its present or future products, sales, customers,
employees, investors or business, identified by the disclosing party as
Confidential Information, whether in oral, written, graphic or electronic form.
If disclosed in oral form, such Confidential



* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.
<PAGE>   2
Information must be reduced to writing and marked as Confidential Information
within 30 days following disclosure.

               1.3 "DESIGNEE" means a Metricom partner approved, in writing, by
Metricom.

               1.4 "EFFECTIVE DATE" means the date first mentioned above.

               1.5 "FCC" means the Federal Communications Commission.

               1.6 "LICENSED TECHNOLOGY" means the Metricom Know-how, Metricom
Patents, Metricom Technology, Metricom Improvements and the Specifications.

               1.7 "METRICOM KNOW-HOW" means techniques, inventions, practices,
methods, knowledge, skill, experience, test data and cost, sales and
manufacturing data relating to the manufacture of the Modem which Metricom
discloses to Novatel under this Agreement, including without limitation any
technology developed by either party on behalf of Metricom.

               1.8 "METRICOM PATENTS" means the existing patents and patent
applications listed on Exhibit B hereto and such patents obtained and patent
applications filed by Metricom relating to the patents listed on Exhibit B, and
improvements thereto, including without limitation, all foreign counterparts,
all substitutions, extensions, reissues, renewals, divisions, continuations and
continuations in part relating to such Metricom Patents and their foreign
counterparts.

               1.9 "METRICOM SOFTWARE" means certain software developed by
Metricom and embedded in the Modem, and such additional or modified software
features and functions that Metricom may specify from time to time pursuant to
this Agreement.

               1.10 "METRICOM SPECIFICATIONS" means the performance, usage and
form factor specifications written by Metricom to which the Guaranteed Volume of
Modems will conform. Such Metricom Specifications shall be attached as Exhibit D
hereto upon completion of development of such Metricom Specifications, which
shall not be later than thirty (30) days from the execution of this Agreement.

               1.11 "METRICOM TECHNOLOGY" means (a) the inventions, discoveries
and processes covered under the Metricom Patents and (b) the Metricom Know-how.

               1.12 "MODEM" means a portable 900 MHz-enabled data device
interoperable and compatible with Metricom's Ricochet2 data network to be custom
developed and manufactured by Novatel.

               1.13 "NETWORK" means Metricom's Ricochet network.

               1.14 "NETWORK SPECIFICATIONS" means the software, firmware and
hardware performance and usage specifications for the Network as written by
Metricom with which the Modem must be interoperable and compatible. Such Network
Specifications shall be attached as Exhibit C hereto within thirty (30) days
from the execution of this Agreement.


                                      -2-
<PAGE>   3
               1.15 "NOVATEL KNOW-HOW" means techniques, inventions, practices,
methods, knowledge, skill, experience, test data and cost, sales and
manufacturing data relating to those parts that may be specified for inclusion
in the Modem as set forth in Exhibit A.

               1.16 "NOVATEL PATENTS" means the existing patents and patent
applications listed on Exhibit B hereto and such patents obtained and patent
applications filed by Novatel relating to the patents listed on Exhibit A, and
improvements thereto, including without limitation, all foreign counterparts,
all substitutions, extensions, reissues, renewals, divisions, continuations and
continuations in part relating to such Novatel Patents and their foreign
counterparts.

               1.17 "NOVATEL TECHNOLOGY" means the inventions, discoveries and
processes relating to those parts that may be specified for inclusion in the
Modem as set forth in Exhibit A.

               1.18 "NRE COSTS" means foundry, non-recurring engineering and
development costs associated with this Agreement.

               1.19 "SPECIFICATIONS" means the Network Specifications and the
Metricom Specifications.

               1.20 "ROYALTIES" means those royalties payable by Novatel to
Metricom pursuant to this Agreement.

               1.21 "THIRD PARTY SOFTWARE" means any software that belongs to a
third party which is used in the Network and is licensed to Metricom for such
use.

PART II: TECHNOLOGY LICENSE, DEVELOPMENT AND MANUFACTURING

        2. LICENSE GRANTS.

               2.1 METRICOM LICENSE GRANT.

                      (a) TECHNOLOGY LICENSE. Subject to the terms and
conditions of this Agreement, Metricom hereby grants to Novatel during the term
of this Agreement a nonexclusive, non-transferable, royalty bearing license,
without right to sublicense, under the Licensed Technology, to develop,
manufacture, market and sell the Modem for use with the Network.

                      (b) METRICOM SOFTWARE LICENSE. During the term of this
Agreement and subject to the terms and conditions of this Agreement, Metricom
grants to Novatel a nonexclusive, non-transferable license, without right to
sublicense, to reproduce and embed the Metricom Software in object code form
only in the Modem. Except as expressly stated in this Agreement, no rights to
prepare derivative works, perform, display or distribute the Metricom Software
are granted hereunder.

                      (c) SOURCE CODE. Should Novatel require it and subject to
the terms and conditions of this Agreement, Metricom may disclose to Novatel the
source code for the Metricom Software for purposes of enabling Novatel to port
the Metricom Software to the


                                      -3-
<PAGE>   4
Modem. Any disclosure of source code, and all notes made by Novatel pertaining
thereto, shall be treated as Metricom's Confidential Information pursuant to the
terms of this Agreement.

                             (i) Novatel shall not make any changes to the
source code other than those changes necessary to run the Metricom Software on
hardware platforms other than as originally developed. Novatel shall provide
Metricom with an electronic copy (ASCII text) of the updated source code in the
event it makes any changes.

                             (ii) Except as needed to port the Metricom
Software as set forth in this Agreement. No copyright rights to reproduce,
prepare derivative works, perform, display or distribute the Metricom Software
in source code format are granted to Novatel hereunder.

                      (d) RESTRICTIONS ON USE. Novatel shall not, and shall not
permit any person within its control, to use the Licensed Technology and the
Metricom Software or any of Metricom's Confidential Information for any other
purpose than as expressly set forth in this Agreement.

               2.2 NOVATEL LICENSE GRANT. Subject to the terms and conditions of
this Agreement, Novatel hereby grants Metricom a non-exclusive, non-
transferable, royalty-free, perpetual and irrevocable right, with right of
sublicense through multiple tiers of distribution, under the Novatel Patents,
the Novatel Technology, the Novatel Know-how and the Novatel Improvements, to
offer to sell, sell and use the Modems.

               2.3 THIRD PARTY SOFTWARE. Should the Metricom Software contain
Third Party Software, Metricom shall, at Novatel's request, assist Novatel in
obtaining the rights to use such Third Party Software. The parties acknowledge
and agree that it is Novatel's obligation to license such Third Party Software.

        3. DEVELOPMENT AND MANUFACTURING.

               3.1 DEVELOPMENT. Upon execution of this Agreement, Novatel shall
begin development of the Modem in accordance with the Network Specifications and
the terms of this Agreement, and for the Guaranteed Volume, also in accordance
with the Metricom Specifications. Prior to manufacturing, Novatel shall provide
a reasonable quantity of a prototype Modem along with an electronic copy (ASCII
text) of the software source code including release notes to Metricom for
acceptance testing. Novatel shall not commence manufacturing prior to Metricom's
written acceptance of the prototype Modem.

               3.2 MANUFACTURING. Novatel shall custom-manufacture, assemble,
test, label, package (includes plastic or other material housing including
retail packaging with approved use of Ricochet brand) and deliver the Modem in
accordance with the Network Specifications and the terms of this Agreement, and,
for the Guaranteed Volume, also in accordance with the Metricom Specifications.

               3.3 MARKET AND USE. For the consideration described in this
Agreement, the parties acknowledge and agree that Novatel shall sell the Modems
only for use on the Network.

               3.4 NRE COSTS.  ***

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


                                      -4-
<PAGE>   5
               3.5 REGULATORY AGENCY APPROVAL. Novatel shall be responsible for
obtaining any regulatory agency approval, including, but not limited to, FCC
approval, for the Modem. Metricom shall, at Novatel's request and expense,
assist Novatel in obtaining FCC approval.

               3.6 MODIFICATIONS REQUESTED BY METRICOM. During the term hereof,
changes to Metricom's Know-how, government regulations (including FCC Part 15
regulations), or other masons may require changes to the Network Specifications
and/or the Metricom Specifications and therefore the Modem.

                      (a) Metricom shall, from time to time, provide Metricom
Software updates to Novatel. Novatel shall incorporate such changes into the
Modem software and make it available to Level I Technical Support providers
within (i) fourteen (14) days of receipt of such update for critical changes;
and (ii) thirty (30) days of receipt of such update for non-critical changes.
Novatel's changes shall be subject to acceptance testing by Metricom.

                      (b) In the event Metricom requests an engineering change
to a Guaranteed Volume Modem, Novatel shall notify Metricom in writing of any
impact on the cost and/or scheduled delivery of such Modem within ten (10)
business days of the receipt of Metricom's written change request. This should
include, but not be limited to, a costed bill of materials, scheduled delivery,
and any additional NRE.

                      (c) Upon receipt by Metricom of such estimate, the parties
shall agree in writing to which such engineering changes shall be made as well
as adjustments, if any, in pricing and delivery schedules and the parties shall
agree in writing upon any such engineering changes prior to their
implementation.

               3.7 MODIFICATIONS BY NOVATEL. Novatel may make changes to the
Modem without Metricom's prior written consent; provided, however, that (i) the
Modem shall continue to meet the specifications of the Network, and the terms of
this Agreement and, for the Guaranteed Volume, also meet the Metricom
Specifications; (ii) Metricom receives an electronic copy (ASCII text) of the
modified source code and any related release notes and documentation and
approves such modifications prior to release to end-users; and (iii) is subject
to acceptance testing by Metricom. Novatel may make changes in design,
components or materials that may have the effect of reducing the cost of
production of the Modem or increase reliability or improve performance or expand
procurement options.

               3.8 UPDATE MECHANISM. Novatel shall provide a mechanism by which
an end-user can update the software in their Modem and shall make it available
to Level I Technical Support providers at the same time it makes the Modem
software, including any updates, available.

               3.9 FUTURE DEVELOPMENTS. The parties envision that Novatel may
develop, custom manufacture, and deliver to the marketplace, Metricom's
Designee(s) or Metricom future generations of the Modems and/or replacement
products, subject to satisfactory performance under this Agreement and future
technical and market conditions.

               3.10 UNIT IDENTIFICATION AND SERIAL NUMBERS. Metricom shall
supply Novatel within a range of individual unit identification and serial
numbers to be applied to units of the


                                      -5-
<PAGE>   6
Modem. Novatel shall incorporate in all Modems and any accompanying
documentation therefor one of the individual Metricom-assigned unit
identification and serial numbers for each such Modem. Such unit identification
and serial number shall be clearly marked and visible externally on each Modem
and encoded in the Metricom Software embedded in each Modem. Novatel shall
provide Metricom with the unit identification and serial number of each Modem it
sells, leases or otherwise puts into use at the time of shipment.

               3.11 DEVELOPMENT SCHEDULE. Total time between execution of this
Agreement and when the first shipment of the Guaranteed Volume shall be made is
*** for development with the first delivery suitable for distribution to
end-users to occur *** after receipt of both Metricom's and the FCC's approval.

               3.12 TESTING. Novatel shall test all Modem deliveries prior to
shipment to confirm conformance with the Network Specifications and the terms of
the Agreement, and additionally, for the Guaranteed Volume, the Metricom
Specifications. Prior to implementation of such testing, Novatel shall submit to
Metricom, and Metricom shall have final approval of, the interoperability and
compatibility test plans. Upon request, Novatel shall provide test data to
Metricom.

               3.13 SUPPORT. Except as provided for in Section 8 of this
Agreement, Novatel shall provide for Levels I, II and III Technical Support as
set forth in Exhibit I attached hereto for Modems which it sells, leases or
otherwise puts into use.

        4. OWNERSHIP AND INTELLECTUAL PROPERTY.

               4.1 OWNERSHIP.

                      (a) Novatel acknowledges and agrees that Metricom
is and shall remain the sole owner of the Metricom Technology, the Metricom
Patents, the Metricom Know-how, the Specifications and the Metricom Software and
any improvements to the Metricom Patents, the Metricom Know-how, the Metricom
Technology, Specifications and Metricom Software (the "Metricom Improvements")
and that Novatel has no rights in or to the Metricom Technology, the Metricom
Patents, the Metricom Know-how, the Specifications or the Metricom Software and
any Metricom Improvements other than the license rights specifically granted
herein.

                      (b) Metricom acknowledges and agrees that Novatel
is and shall remain the sole owner of the Novatel Technology, Novatel Patents
and Novatel Know-how and any improvements to the Novatel Technology, Novatel
Patents and Novatel Know-how (the "Novatel Improvements") and that Metricom has
no rights in or to the Novatel Technology, Novatel Patents and Novatel Know-how
and any Novatel Improvements other than the license rights specifically granted
herein.

               4.2 FUTURE INVENTIONS AND JOINT INVENTIONS. Each party
acknowledges and agrees that any and all discoveries, know-how, inventions,
methods, ideas and the like ("Inventions") made or discovered pursuant to this
Agreement solely by its employees, agents or subcontractors shall be owned
solely by such party and that any and all Inventions made jointly by employees,
agents or subcontractors of each shall be jointly owned (the "Joint
Inventions"),

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


                                      -6-
<PAGE>   7
all as determined in accordance with U.S. laws of inventorship. Notwithstanding
the foregoing, the parties agree that any Inventions made by employees, agents
or subcontractors of either party that result in Metricom Improvements shall be
owned solely by Metricom and licensed to Novatel pursuant to this Agreement.
Novatel shall assign any rights it may obtain in or to such Metricom
Improvements and any patents it obtains for such Metricom Improvements to
Metricom when such Metricom Improvements are first fixed in a tangible medium or
reduced to practice, as applicable. Joint Inventions shall be treated as
Confidential Information of each party.

               4.3 PROPRIETARY RIGHTS NOTICES. Each unit of the Modem and any
accompanying documentation shall include all copyright and proprietary legends
provided to Novatel by Metricom.

        5. TRADEMARKS.

               5.1 Metricom hereby grants Novatel the right to use, and requires
Novatel to place on the Modems and on the packaging for Modems during the term
of this Agreement, the Metricom trademarks and trade names set forth in Exhibit
G hereto (the "Marks") solely to affix the Marks to the Modems in accordance
with the Metricom Corporate Style Guide attached hereto as Exhibit H, the
Network Specifications, and, for the Guaranteed Volume, the Metricom
Specifications or other Metricom requirements. Metricom may alter or replace
such Marks or may revise its policies and guidelines related thereto in its sole
discretion upon ninety (90) day's prior written notice to Novatel. Novatel
hereby admits and recognizes Metricom's exclusive worldwide ownership of such
Marks and the renown of Metricom's Marks. Novatel agrees not to take any action
inconsistent with such ownership and further agrees to take any action, at
Metricom's reasonable expense, including without limitation the conduct of legal
proceedings, which Metricom deems necessary to establish and preserve Metricom's
rights in and to its Marks. Reproductions of Metricom's Mark's, logos, symbols,
etc., shall be true reproductions and done photographically.

        6. ROYALTY. Novatel shall pay Metricom *** on all Modems manufactured
and sold, leased or otherwise put into use by Novatel. ***

               6.1 ***

               6.2 ***

               6.3 ***

                      (a) ***

                      (b) ***

                      (c) ALL PAYMENTS DUE BY NOVATEL SHALL BE MADE TO METRICOM
WITHOUT ANY DEDUCTIONS FOR TAXES, DUTIES, FEES OR CHARGES OF ANY KIND.

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


                                      -7-
<PAGE>   8
               6.4 INSPECTION OF ROYALTY RECORDS.

                      (a) Novatel shall maintain appropriate books of
account and record, in accordance with generally accepted U.S. accounting
principles, which shall include inventory records, and shall make accurate
entries concerning all transactions relevant to this Agreement (the "Records").

                      (b) Metricom shall have the right during the term
and for six (6) years thereafter (or in the event of a dispute during the Term
or within five years thereafter involving in any way the Records, until the
dispute is resolved, whichever is later), on reasonable notice to Novatel to
inspect, examine, take extracts and make copies from Novatel's Records to the
extent necessary to verify the ROYALTY and payments made under this Agreement.

                      (c) If, upon inspection of the Records of
Novatel, Metricom discovers that it did not receive the correct AMOUNT OF
ROYALTIES PAYABLE UNDER THIS AGREEMENT, Metricom shall notify Novatel of such
discovery. In the event Novatel disagrees with such discovery, the parties
shall, acting reasonably and in good faith, work together to resolve such
dispute. Within ten (10) days of receipt of Metricom's notice or, in the case of
dispute within ten (10) days of resolution of such dispute, Novatel shall pay to
Metricom the difference between what was paid and what should have been paid. If
the difference exceeds *** of the amount found by Metricom, then Novatel shall
bear Metricom's reasonable costs in connection with such Inspection, including
all reasonable legal and auditors' fees.

               6.5 OBLIGATION TO PAY. ***

PART III: SUPPLY TO AND PURCHASE OF MODEMS BY METRICOM

        7. MODEM PURCHASES.

               7.1 GUARANTEED VOLUME. Metricom agrees to purchase at least ***
Modems (the "Guaranteed Volume") during the Term of this Agreement. The
Guaranteed Volume may be purchased by either Metricom or its Designee(s). The
Guaranteed Volume shall conform to the Specifications.

               7.2 PILOT TEST. Upon completion of Modem development and
Metricom's written acceptance of a prototype Modem that conforms to the
Specifications, approximately *** from execution of this Agreement, Novatel
shall manufacture and deliver *** Modems, which shall be deducted from
Metricom's initial delivery, to Metricom for use in conducting end-user testing
and soliciting feedback relative to the Modem ("Pilot Test").

                      (a) Metricom shall perform one (1) week of testing at its
facilities to ensure interoperability and compatibility with the Network.

                      (b) Thereafter, Metricom shall identify and supply
qualified end-users with Modems to conduct Pilot Testing for a period of thirty
(30) days.

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


                                      -8-
<PAGE>   9
                      (c) If any necessary changes may be handled in the
firmware or installation software then manufacturing of the Modems may continue
provided that patches for the necessary changes can be effected as part of the
manufacturing process.

               7.3 FORECAST. Metricom shall submit a one-year forecast to
Novatel, attached hereto as Exhibit E. The forecast for the first three months
of shipments shall be given to Novatel at least sixty (60) days in advance of
the scheduled delivery date and shall be considered fixed at sixty (60) days
prior to the delivery date. Thereafter, changes to the forecast for the
remaining months may be made in writing as set forth below, provided, however,
that Metricom shall have the right to forecast for the entire volume guaranteed
within the first six months of shipment by providing seven (7) months advance
notice.

<TABLE>
<CAPTION>
       NUMBER OF DAYS                PERCENT OF CHANGE TO
   ADVANCE WRITTEN NOTICE             FORECASTED VOLUME
   ----------------------            --------------------
<S>                                  <C>
             ***                             ***
             ***                             ***
             ***                             ***
             ***                             ***
</TABLE>

               7.4 PURCHASE ORDERS.

                      (a) Metricom or its Designee(s) agrees to provide Novatel
with binding purchase orders. All purchase orders are binding, and cannot be
cancelled or rescheduled except as set forth In the Agreement. Purchase orders
shall set forth the quantity of Modems ordered, the destination of delivery and
the delivery date required.

                      (b) Should a Metricom Designee(s) place the purchase
order, Novatel shall ship and bill directly to the Metricom Designee(s). During
the term of this Agreement, unless mutually agreed to by Novatel, Metricom and
the Metricom Designee(s), the terms and conditions of this Agreement shall
govern all Metricom Designee(s) purchase orders. Metricom shall inform its
Designee(s) of the terms of this Agreement.

                      (c) Any terms or conditions in any purchase order, sales
acknowledgment or receipt that is different from, inconsistent with or
additional to the terms and conditions of this Agreement that are not expressly
accepted by the other party in writing are void, of no effect, and am hereby
rejected by the parties.

               7.5 DELIVERY. Novatel shall deliver the Guaranteed Volume of
Modems to Metricom or it's Designee(s), in accordance with the Specifications,
the applicable purchase order and the delivery schedule set forth in Exhibit E,
as may be modified from time to time in accordance with this Agreement, to the
location specified in the applicable purchase order provided, however, that:


                                      -9-
<PAGE>   10
                      (a) no deliveries shall occur until Metricom has approved
in writing the Modem's compliance with the Specifications and issued an initial
Acceptance Certificate; and

                      (b) all future deliveries shall also be subject to
acceptance testing by Metricom or its Designee(s) as set forth in this
Agreement.

Title and risk of loss shall pass to Metricom upon Metricom's acceptance of the
Modem shipments. Time is of the essence for all deliveries. Novatel will provide
Metricom or its Designee(s) documentation on all known errors or unresolved
product issues at the time of delivery.

               7.6 ACCEPTANCE TEST PROCEDURES. Novatel shall inspect and test
all Guaranteed Volume Modem deliveries prior to shipment to confirm conformance
with the Specifications. Following receipt of delivery of a Modem shipment,
Metricom or its Designee(s), as specified in the applicable purchase order, may
inspect such shipment for conformance with the Specifications.

                      (a) Upon determination that a shipment does meet
Specifications, Metricom will issue an Acceptance Certificate for such shipment.
Such Acceptance Certificate does not imply acceptance of any other shipment nor
waive the warranty provisions under this Agreement or any other remedy that
Metricom may have for a defective shipment.

                      (b) In the event that a shipment is rejected for failure
to meet Specifications, Metricom or its Designee(s) shall return the shipment at
Novatels expense and provide Novatel with written notification of the shipment's
nonconformity. Novatel shall undertake to repair or replace the shipment or any
nonconforming portion thereof at no charge to Metricom. or its Designee(s) and
resubmit the shipment to Metricom or its Designee(s) within five (5) days of
receipt of the rejected shipment.

        8. MODEM SUPPORT.

               8.1 TECHNICAL SUPPORT TRAINING AND DOCUMENTATION. Novatel shall
provide training and documentation for the Modem to service technicians and
engineering support at Metricom and its Designee(s) which shall be sufficient to
allow Metricom or its Designee(s) to provide Level I Technical Support with
reasonable product knowledge and troubleshooting skills. Training shall include,
but not be limited to, general use, support, troubleshooting, functionality,
operation, interoperability and compatibility of the Modem that is developed and
purchased under this Agreement. In addition, all support related documentation,
troubleshooting tools and materials, test equipment, training materials, notes,
frequently asked questions ("FAQ's"), and web based support materials shall be
made available to Metricom or its Designee(s) for their use in supporting the
Modem. In the event any product changes result in new functionality or change in
operation and compatibility, Novatel shall provide additional training to
Metricom and its Designee(s).

               8.2 SUPPORT LEVELS. Level I, Level II and Level III Technical
Support shall be defined in Exhibit I of this Agreement.


                                      -10-
<PAGE>   11
               8.3 METRICOM SUPPORT OBLIGATIONS.

                      (a) Metricom or its Designee(s) shall, in a diligent
manner consistent with industry practices, provide Level I Technical Support to
their direct end-user(s) for Modems which Metricom or its Designees have
purchased under the terms of this Agreement.

                      (b) If Metricom or its Designee is unable to resolve the
question or issues to Customer's satisfaction, Metricom or its Designee shall
forward the request to Novatel Level II Technical Support for further
investigation and resolution.

                      (c) Upon approval from Novatel, Metricom or its
Designee(s) may refer a Customer directly to Novatel for Level II and Level III
Technical Support.

               8.4 NOVATEL SUPPORT OBLIGATIONS.

                      (a) Novatel support and engineering staff shall provide
Level II and Level III Technical Support directly to Metricom or its Designee(s)
by telephone via a toll free number twenty-four (24) hours a day, seven (7) days
a week for Moderns which Metricom or its Designees have purchased under the
terms of this Agreement. Upon approval from Novatel, Metricom or its Designee(s)
may refer a Customer directly to Novatel for Level II and Level III Technical
Support.

                      (b) Level II Technical Support issues that remain
unresolved longer than *** after notification of the problem or issues flagged
as sensitive or mission critical, shall be escalated to Level III Technical
Support for final resolution.

                      (c) Novatel shall provide written explanation to Metricom
or its Designee of the problem, known symptoms, possible causes, and expected
time for resolution for any Level III Support issue that remains unresolved
longer than *** after escalation to Level III Support.

                      (d) Novatel shall provide Metricom or its Designee(s)
documentation on all known errors or unresolved product issues (i) at the time
of delivery; and (ii) as discovered by Novatel's Level III Support staff after
the initial launch of the Modem.

        9. PRICE AND PAYMENT.

               9.1 PRICE. Metricom shall pay Novatel *** set forth in Exhibit F
attached hereto.

               9.2 DELIVERY. Novatel shall deliver all Modems to Metricom or any
other location Metricom or its Designee(s) shall designate FOB Buyer's Dock.
Novatel shall prepay the freight charges and bill such freight charges to
Metricom for reimbursement by Metricom. Title and risk of loss shall pass to
Metricom upon Metricom's or its Designee(s)'s acceptance of the Modem shipments
as evidenced by an Acceptance Certificate. Metricom or its Designee(s) shall
assume all freight charges which result from expedited shipment dates requested
by Metricom or its Designee(s). The parties acknowledge and agree that time is
of the essence for all deliveries.

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


                                      -11-
<PAGE>   12
               9.3 PAYMENT.

                      (a) All payments for Modems purchased by Metricom under
this Agreement shall be due and payable thirty (30) clays following receipt of
valid invoice.

                      (b) Should Metricom issue the purchase order, invoices
shall accompany applicable Modem shipments or, if the Modem shipments are to be
made to a location other than Metricom's Los Gatos facilities, then such invoice
shall be sent to the Los Gatos facility at the same time the shipment is made to
the alternate destination.

                      (c) Should a Metricom Designee(s) issue the purchase
order, invoices shall accompany the applicable Modem shipment or, if the Modem
shipments are made to a location other than the billing address, then
such-invoice shall be sent to the Metricom Designee(s)'s billing address at the
same time the shipment is made to the alternate destination.

                      (d) The parties acknowledge and agree that Metricom shall
have no obligation, financial or otherwise, for purchase orders made by a
Metricom Designee(s).

               9.4 TAX. Novatel shall separately state on the invoices delivered
to Metricom all taxes applicable to sale of the Modems to Metricom, excluding
any taxes based on the net income of Novatel. Metricom shall pay Novatel any
such properly invoiced and applicable amounts and Novatel shall pay the relevant
taxing authorities any such amounts when due. Novatel hereby indemnifies and
holds Metricom harmless from and against any and all liabilities, penalties, and
amounts due regarding any taxes or fees due to the applicable government not
properly or timely invoiced or paid by Novatel which was the responsibility of
Novatel.

               9.5 FREIGHT. Novatel shall separately stale on the invoices
delivered to Metricom all applicable freight charges, at cost. Metricom shall
pay Novatel any such properly invoiced and applicable amounts.

        10. INCENTIVES AND PENALTIES.

               10.1 ***

               10.2 ***

        11. FUTURE RELATIONSHIPS. In the event Novatel enters into a separate
purchase agreement with other parties, Novatel agrees that (i) ***

PART IV: GENERAL

        12. CONFIDENTIALITY.

               12.1 CONFIDENTIALITY. Each party hereto will maintain in
confidence all Confidential Information disclosed by the other party hereto.
Neither party will use, disclose or grant use of such Confidential Information
except as expressly authorized by this Agreement. To the extent that disclosure
is authorized by this Agreement, the disclosing party will obtain

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


                                      -12-
<PAGE>   13
prior agreement from its employees, agents or consultants to whom disclosure is
to be made to hold in confidence and not make use of such information for any
purpose other than those permitted by this Agreement. Each party will use at
least the same standard of care as it uses to protect its own most confidential
information to ensure that such employees, agents or consultants do not disclose
or make any unauthorized use of such Confidential Information. Each party will
promptly notify the other upon discovery of any unauthorized use or disclosure
of the Confidential Information. Notwithstanding any other provision in this
Agreement to the contrary, the obligations set forth in this section shall
survive any termination or expiration of this Agreement for a period of ten
years thereafter.

               12.2 EXCEPTIONS. The obligations of confidentiality contained in
this section will not apply to the extent that it can be established by the
receiving party by competent proof that such Confidential Information:

                      (a) was already known to the receiving party, other than
under an obligation of confidentiality, at the time of disclosure by the other
party;

                      (b) was generally available to the public or otherwise
part of the public domain at the time of its disclosure to the other party;

                      (c) became generally available to the public or otherwise
part of the public domain after its disclosure and other than through any act or
omission of the receiving party in broach of this Agreement;

                      (d) was disclosed to the receiving party, other than under
an obligation of confidentiality, by a third party which had no obligation to
the other party not to disclose such Information to others.

               12.3 AUTHORIZED DISCLOSURE. Each party may disclose the
Confidential Information to the extent such disclosure is reasonably necessary
in filing or prosecuting patent applications, prosecuting or defending
litigation or complying with applicable governmental regulations, provided that
if such party is required to make any such disclosure of the Confidential
Information it will to the extent practicable give reasonable advance notice to
the other party of such disclosure requirement and, except to the extent
inappropriate in the case of patent applications, will use its best efforts to
secure confidential treatment of such information required to be disclosed. The
parties acknowledge that the sale of the Modem may necessarily disclose
Confidential Information of the parties and the parties agree to use
commercially reasonable efforts to limit such disclosure. In furtherance
thereof, Novatel agrees to provide Metricom a copy of all documentation.

               12.4 OWNERSHIP OF CONFIDENTIAL INFORMATION. All Confidential
Information of a party shall remain the exclusive property of such party, and no
right, title or interest in such information shall be conveyed to the other
party by release of such information to it. Each party receiving such
information agrees to return or destroy all such information upon the written
request of the other party, or upon the reasonable determination by the other
party that the receiving Party no longer has a need for such information. Each
party agrees to notify the other party if it becomes aware of any use of the
information that is not authorized by this Agreement.


                                      -13-
<PAGE>   14
               12.5 INJUNCTIVE RELIEF. Each party acknowledges that, in the
event of a breach of this Section by such party or any of its officers,
directors, agents and/or employees, the other party will suffer irreparable
damages that cannot be fully remedied by monetary damages. Each party therefore
agrees that the other party shall be entitled to seek injunctive relief against
any such breach in any court of competent jurisdiction. The rights of each party
under this Section shall not in any way be construed to limit or restrict its
rights to seek or obtain other damages or relief available under this Agreement
or applicable law.

               12.6 INDEPENDENT DEVELOPMENT. The terms of this Section shall not
be construed to limit a party's right to independently develop or acquire
products which are similar in functionality to those of the other party so long
as such development or acquisition is made without the use of the Confidential
Information of the other Party. Both parties acknowledge that each of them may
currently or in the future be developing information internally, or receiving
information from other parties, that is similar to the Confidential Information
of the other. Nothing in this Agreement will be construed as a representation or
agreement that the receiving party will not develop or have developed for its
products, concepts, systems or techniques that are similar to or compete with
the products, concepts, systems or techniques contemplated by or embodied in the
Confidential Information provided that the receiving party does not violate any
of its obligations under this Agreement.

        13. TERM AND TERMINATION.

               13.1 TERM. This Agreement will commence as of the Effective Date
and, unless sooner terminated as provided hereunder, ***. The term may be
extended only upon the mutual written agreement of the parties.

               13.2 TERMINATION FOR CAUSE.

                      (a) The Agreement and the Metricom licenses granted herein
will terminate prior to the end of the term at the option of the non-breaching
party upon thirty (30) days written notice if the other party breaches or
defaults on any material obligation under this Agreement and fails to cure such
breach or default during such thirty (30) day period. In the event such breach
cannot reasonably be cured within such thirty (30) day period, the breaching
party shall be required to (i) commence curing such breach or default during
such thirty (30) day period and diligently pursue such cure until the breach or
default has been cured; and (ii) and provide written notice to the non-breaching
party of the time required to cure such breach or default.

                      (b) Metricom shall have the right to terminate this
Agreement upon written notice to Novatel in the event Novatel does not agree to
the Specifications for the Guaranteed Volume within sixty (60) days from the
execution of this Agreement. Upon such termination, Metricom will reimburse
Novatel for any expenses related to the development of the Modems incurred prior
to the termination date, ***.

               13.3 EFFECT OF TERMINATION.


* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


                                      -14-
<PAGE>   15
                      (a) RESTOCKING FEE. If termination occurs as a result of
Metricom's material breach of the Agreement or upon Metricom's request without
cause, end such termination occurs prior to Metricom's receipt and acceptance of
*** that comply with this Agreement, then Metricom shall pay Novatel, ***.
Without limiting the foregoing, Metricom shall still be responsible for paying
any amounts due under any outstanding purchase orders where Novatel has
delivered and Metricom has accepted such deliveries.

                      (b) DUTIES OF THE PARTIES UPON TERMINATION. Upon any
termination or expiration of this Agreement, Novatel agrees to do the following:
(1) refrain thereafter from representing itself as a distributor or manufacturer
of the Modem; and (2) return to Metricom all tangible items in its possession or
under its control evidencing the Licensed Technology and Confidential
Information of Metricom, including all copies of the Metricom Software, the
source code, modified or otherwise, and any related documentation. Upon any
termination or expiration of this Agreement, Metricom agrees to return to
Novatel all tangible items in its possession or under its control evidencing
Confidential Information of Novatel.

                      (c) LICENSE TERMINATION. Upon any termination or
expiration of this Agreement, all licenses granted by Metricom under this
Agreement shall be terminated. Upon any termination or expiration of this
Agreement, all licenses, except those for Modems delivered to Metricom or its
Designee(s), granted by Novatel under this Agreement shall be terminated.

                      (d) SURVIVAL. Except as set forth in the applicable
section, Sections 1, 2, 3.3, 4, 5, 6.4, 6.5, 7, 12, 14, 15, 16 and 18 shall
survive any termination of this Agreement.

        14. REPRESENTATIONS AND WARRANTIES.

               14.1 REPRESENTATIONS AND WARRANTIES. Each party hereby represents
and warrants:

                      (a) CORPORATE POWER. Such party is duly organized and
validly existing under the laws of the state or county of its incorporation and
has full corporate power and authority to enter into this Agreement and to carry
out the provisions hereof.

                      (b) DUE AUTHORIZATION. Such party is duly authorized to
execute and deliver this Agreement and to perform its obligations hereunder,

                      (c) BINDING AGREEMENT. This Agreement is a legal and valid
obligation binding upon it and enforceable in accordance with Its terms. The
execution, delivery and performance of this Agreement by such party does not
conflict with any agreement, instrument or understanding, oral or written, to
which it is a party or by which it may be bound, nor violate any law or
regulation of any court, governmental body or administrative or other agency
having jurisdiction over it.

               14.2 WARRANTY. Novatel represents and warrants that for a period
of twelve (12) months from the Metricom's or its Designee(s)'s acceptance of a
shipment as evidenced by the Acceptance Certificate, all Modems delivered under
this Agreement shall be free of defects in materials or workmanship and shall
conform with the applicable Specifications. In the event

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


                                      -15-
<PAGE>   16
of a breach of this Warranty, Novatel shall repair or replace the defective
Modem(s) at no additional charge to Metricom or its Designee(s).

               14.3 DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED
HEREIN, METRICOM HEREBY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND
OR NATURE, WHETHER EXPRESS OR IMPLIED, RELATING TO THE METRICOM TECHNOLOGY, THE
METRICOM SOFTWARE OR THE METRICOM PATENTS, INCLUDING WITHOUT LIMITATION ANY
WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. Without limiting the generality of the foregoing, Metricom
expressly does not warrant (i) the patentability of any of the Inventions, or
(ii) the accuracy, safety, or usefulness for any purpose, of the Licensed
Technology or the Modem. Except as set forth in Section 15, Metricom assumes no
liability in respect of any infringement of any patent or other right of third
parties due to any activities of Novatel under this Agreement.

        15. INDEMNIFICATION.

               15.1 INFRINGEMENT INDEMNITY.

                      (a) METRICOM INDEMNITY. Metricom shall indemnify and hold
Novatel harmless and will defend Novatel against any actions based on a claim
that the Technology, Metricom Know-How and Metricom Patents relied upon by
Novatel or the Metricom Software, in the absence of any modifications and not in
combination with any other technology, infringes any patent, copyright or other
proprietary rights of any third party, or misappropriates any trade secret of
any third party.

                      (b) NOVATEL INDEMNITY. Novatel shall indemnify and hold
Metricom harmless from and will defend against any action brought against
Metricom to the extent that it is based on a claim that the manufacture, use or
sale of the Modem infringes any patent, copyright or other proprietary rights of
any third party or misappropriates any trade secret of any third party, but not
to the extent such action is based on the incorporation or use of the
Technology. Metricom Know-How, Metricom Patents relied upon by Novatel or the
Metricom Software in such Modem.

                      (c) INDEMNIFICATION PROCEDURES. An indemnifying party
hereunder shall be liable for any costs and damages to third parties incurred by
the other party which are attributable to any such claims, provided that such
other party (i) notifies the indemnifying party promptly in writing of the
claim, (ii) permits the indemnifying party to defend, compromise or settle the
claim, and (iii) provides all available information, assistance and authority to
enable the indemnifying party to defend, compromise or settle such claim. Any
indemnifying party hereunder shall diligently pursue any defense required to be
rendered hereunder, shall keep the indemnified party informed of all significant
developments in any action defended by the indemnified party, and shall allow
the indemnified party reasonable opportunity to comment upon any settlement
proposed to be entered into by the indemnifying party on behalf of the
indemnified party.



                                      -16-
<PAGE>   17
               15.2 GENERAL INDEMNIFICATION. Both parties agree to indemnify and
save harmless the other party, its subsidiaries, other affiliates, and the
officers, directors, employees, successors and assigns of any of them, from all
costs, damages and expenses including costs of settlement, reasonable attorney's
fees and court costs that arise out of or result from injuries or death to
persons or damage to property, including theft, caused by or on account of
negligence or willful misconduct by the indemnifying party or person furnished
by the indemnifying party.

        16. LIMITATION OF LIABILITY.

               16.1 WAIVER OF CONSEQUENTIAL DAMAGES. IN NO EVENT WILL EITHER
PARTY BE LIABLE TO THE OTHER FOR ANY LOST PROFITS, LOST SAVINGS, OR ANY OTHER
INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES, EVEN IF SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING OUT OF OR IN CONNECTION WITH
THE GRANTING OR USE OF THE LICENSES HEREUNDER.

               16.2 LIMITATION OF LIABILITY. EXCEPT AS SET FORTH IN THIS
AGREEMENT OR IN THE CASE OF A KNOWING OR WILLFUL VIOLATION OF A PARTY'S OR ANY
THIRD PARTY'S INTELLECTUAL PROPERTY RIGHTS BY EITHER PARTY, NEITHER PARTY'S
TOTAL LIABILITY TO THE OTHER HEREUNDER SHALL EXCEED THE NET AMOUNT PAID BY
METRICOM TO NOVATEL UNDER THIS AGREEMENT.

        17. INSPECTION AND AUDIT. Metricom shall be entitled, at its sole
expense, upon reasonable request and during normal business hours to witness
testing and manufacturing of the Modem at Novatel's facilities and to audit
Novatel's conformance with the Specification conformance test procedures upon
reasonable written notice. Such notice to exceed 72 hours and inspections not to
exceed five business days. Metricom personnel, in conducting such inspections
for audits, shall be bound by the confidentiality provisions set forth herein.

        18. MISCELLANEOUS PROVISIONS.

               18.1 RELATIONSHIP OF THE PARTIES. Neither party is, nor will be
deemed to be, an agent or legal representative of the other party for any
purpose. Neither party will be entitled to enter into any contracts in the name
of or on behalf of the other party, and neither party will be entitled to pledge
the credit of the other party in any way or hold itself out as having authority
to do so. No party will incur any debts or make any commitments for the other,
except to the extent, if at all, specifically provided herein.

               18.2 ASSIGNMENT. Except as otherwise provided herein, neither
this Agreement nor any interest hereunder will be assignable in part or in whole
by either party without the prior written consent of the other; provided,
however, that Metricom may assign this Agreement to its Designee(s). This
Agreement will be binding upon the successors and permitted assigns of the
parties and the name of a party appearing herein will be deemed to include the
names of such party's successor's and permitted assigns to the extent necessary
to carry out the intent of this Agreement. Any assignment which is not in
accordance with this Section will be void.


                                      -17-
<PAGE>   18
               18.3 the disclosing party will obtain prior agreement from its
employees, agents or consultants to whom disclosure is to be made to hold in
confidence and not make use of such information for

               18.4 FORCE MAJEURE. Neither party will be liable to the other for
loss or damages or will have any right to terminate this Agreement for any
default or delay attributable to any fire, floods, earthquake, embargo, war, act
of war (whether declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, acts of God or act, omission or
delay in acting by any governmental authority other than those regulatory
agencies from whom approval or certification must be obtained or the other
party, if the party affected gives prompt notice of any such cause to the other
party. The party giving such notice will thereupon be excused from such of its
obligations hereunder as it is thereby disabled from performing for so long as
it is so disabled and for 30 days thereafter; provided, however, that such
affected party commences and continues to take reasonable and diligent actions
to cure such cause.

               18.5 GOVERNING LAW AND VENUE. This Agreement is made in
accordance with and shall be governed and construed in accordance with the laws
of the State of California, without regard to conflicts of laws rules. All
disputes arising hereunder not resolved amicably by discussions between the
appropriate representatives of the parties shall be adjudicated in the state and
federal courts having jurisdiction over disputes arising in Santa Clara County,
California, and Novatel hereby consents to the jurisdiction of such courts. The
official language of this Agreement is English.

               18.6 COMPLIANCE WITH LAWS AND REGULATIONS. Each party agrees that
it will comply with all federal, state and local laws and regulations in force
as of the Effective Date.

               18.7 EXPORT CONTROL. The parties acknowledge that the manufacture
and sale of the Modem is subject to the export control laws of the United States
of America, including the U.S. Bureau of Export Administration regulations, as
amended, and hereby agree to obey any and all such laws. The parties agree not
to take any actions that would cause either party to violate the U.S. Foreign
Corrupt Practices Act of 1977, as amended.

               18.8 NOTICES. All notices and other communications hereunder will
be in writing and will be deemed given if delivered personally or by facsimile
transmission (receipt verified), telexed or sent by express courier service, to
the parties at the following addresses (or at such other address for a party as
will be specified by like notice; provided, that notices of a change or address
will be effective only upon receipt thereof): If to Metricom, addressed to:

                             Metricom, Inc.
                             980 University Avenue
                             Los Gatos, CA 95030

                             if to Novatel, addressed to:

                             Novatel Wireless, Inc.
                             9380 Towne Centre
                             Suite 110
                             San Diego, CA 92121


                                      -18-
<PAGE>   19

               18.9 AMENDMENT. No amendment, modification or supplement of any
provision of the Agreement will be valid or effective unless made in writing and
signed by a duly authorized officer of each party.

               18.10 WAIVER. No provision of the Agreement unless such provision
otherwise provides will be waived by any act, omission or knowledge of a party
or its agents or employees except by an instrument in writing expressly waiving
such provision and signed by a duly authorized officer of the waiving party.

               18.11 SEVERABILITY. Whenever possible, each provision of the
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of the Agreement.

               18.12 HEADINGS. The section headings appearing in this Agreement
are inserted only as a matter of convenience and in no way define, limit,
construe or describe the scope or intent of any such section nor in any way
affect this Agreement.

               18.13 PARTIES ADVISED BY COUNSEL. This Agreement has been
negotiated between unrelated parties who are sophisticated and knowledgeable in
the matters contained in this Agreement and who have acted in their own self
interest. In addition, each party has been represented by legal counsel. The
provisions of this Agreement shall be interpreted in a reasonable manner to
effect the purpose of the parties, and this Agreement shall not be interpreted
or construed against any party to this Agreement because that party or any
attorney or representative for that party drafted this Agreement or participated
in the drafting of this Agreement.

               18.14 ENTIRE ASSIGNMENT OF THE PARTIES. The Agreement and the
Development Agreement will constitute and contain the complete, final and
exclusive understanding and agreement of the parties and cancels and supersedes
any and all prior negotiations, correspondence, understandings and agreements,
whether oral or written, between the parties respecting the subject matter
thereof.


                                      -19-
<PAGE>   20
        IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, including the Exhibits attached hereto and incorporated herein by
reference, as of the Effective Date.

METRICOM, INC.                           NOVATEL WIRELESS, INC.

/s/                                      /s/
-----------------------------------      ---------------------------------------
Signature                                Signature

-----------------------------------      ---------------------------------------
Printed Name                             Printed Name

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

-----------------------------------      ---------------------------------------
Date                                     Date


                                      -20-
<PAGE>   21
                                    EXHIBIT A

                    NOVATEL KNOW-HOW, PATENTS AND TECHNOLOGY

                                      NONE

<PAGE>   22
                                    EXHIBIT B

                                     PATENTS

METRICOM PATENTS

***

***

***

***

***

***

***

***

***

***

***

*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

<PAGE>   23
                                    EXHIBIT C

                             NETWORK SPECIFICATIONS

To be provided within thirty (30) days from the execution of this Agreement.

<PAGE>   24
                                    EXHIBIT D

                             METRICOM SPECIFICATIONS

      GUARANTEED VOLUME MODEMS PERFORMANCE AND USAGE SPECIFICATION

1.      SUMMARY OF FEATURES

***

2.      PRODUCT REQUIREMENTS

        The high level requirements for this product are listed below.

***

        2.2.   PHYSICAL CHARACTERISTICS

***


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

<PAGE>   25
               The antenna shall protrude no further than 1" from the side of
               the attached computer and have an extended length of no more than
               6".

        2.3.   EXTERNAL MATERIAL

               ***

        2.4.   COLOR

               ***

        2.5.   BRAND IDENTIFICATION

               ***

        2.6.   STRUCTURAL INTEGRITY

               ***

        2.7.   MOUNTING AND ATTACHMENT TO OTHER DEVICES

               ***


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

<PAGE>   26
        2.8.   ANTENNA ATTRIBUTES

               ***

        2.9.   COMMUNICATION I/O PORT

               ***

        2.10.  IN-BOX MATERIAL

               ***


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

<PAGE>   27
3.      USABILITY

        3.1.   INSTALLATION

               ***

        3.2.   USER INTERFACE

               ***

4.      FUNCTIONALITY

        4.1.   OPERATING LIFE/POWER REQUIREMENTS

               ***


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

<PAGE>   28
               ***

        4.2    COMPATIBILITY

               ***


        4.3.   SOFTWARE/FIRMWARE

               ***

5.      ACCESSORIES

        ***

6.      COMPATIBILITY

        ***


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

<PAGE>   29
        6.2.   OPERATING SYSTEMS

               ***

        6.3    USER APPLICATIONS

               ***



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>   30
                                    EXHIBIT E

                     INITIAL FORECAST AND DELIVERY SCHEDULE


<TABLE>
<S>                            <C>
        ***                    ***

        ***                    ***

        ***                    ***

        ***                    ***

        ***                    ***

        ***                    ***

        ***                    ***

        ***                    ***

        ***                    ***

        ***                    ***

        ***                    ***

        ***                    ***

        ***                    ***
</TABLE>

Changes may be made to the Forecast and Delivery Schedule in accordance with
Section 7.3 of this Agreement.

***

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

<PAGE>   31
                                    EXHIBIT F

                                      PRICE

The parties acknowledge and agree that the prices of the initial design Modems
shall be as follows:

<TABLE>
<S>                                 <C>
         ***                        ***

         ***                        ***

         ***                        ***

         ***                        ***
</TABLE>

***

***
***
***
***

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

<PAGE>   32
                                    EXHIBIT G

                                   TRADEMARKS


                                   Metricom(R)

                                   Ricochet(R)

                              Metricom design logo

                              Ricochet design logo

<PAGE>   33
                                    EXHIBIT H

                         METRICOM CORPORATE STYLE GUIDE


To be provided within thirty (30) days from execution of the Agreement.

<PAGE>   34
                                    EXHIBIT I

           TECHNICAL SUPPORT LEVEL DEFINITIONS AND ESCALATION PROCESS

I. DEFINITIONS

        LEVEL I TECHNICAL SUPPORT:

        Level I Technical Support receives Customer calls and answers routine
        inquires and frequently asked questions related to the basic operation
        of the hardware and software, functionality, interoperability and
        capabilities of the Modem using available tools, documentation, test
        equipment and other materials provided by Novatel.

        LEVEL II TECHNICAL SUPPORT:

        Level II Technical Support shall be provided by Novatel support and
        engineering staff and includes, but is not limited to, providing
        assistance in resolving any outstanding Level I Support issues and
        questions. Level II Technical Support shall be provided directly to
        Level I Technical support personnel and Level I Technical Support
        personnel shall have direct access to designated support staff within
        the Novatel support organization for this purpose.

        LEVEL III TECHNICAL SUPPORT:

        Level III Technical Support shall be provided by Novatel support and
        engineering staff and includes, but is not limited to, resolution of any
        issues that cannot or have not been satisfactorily resolved by Level I
        and Level II Support personnel and any problems with the engineering or
        manufacturing of the Modem.

II. ESCALATION PROCESS:

        Support issues related to the engineering or manufacturing of the Modem
        shall immediately be escalated to Level III Technical Support

        Level I Technical Support issues that are not resolved to Customer's
        satisfaction will be forwarded to Level II Technical Support for further
        investigation and resolution.

        Level I Technical Support may refer a Customer directly to Novatel for
        Level II and Level III Technical Support upon approval from Novatel.

        Level II Technical Support issues that remain unresolved after *** from
        the initial notification by Level I Technical Support of the problem, or
        problems that are flagged as sensitive or mission critical, shall be
        escalated to Level III Technical Support for final resolution.

        Novatel shall provide prompt written explanation to Metricom or its
        Designee of the problem, known symptoms, possible causes, and expected
        time of resolution for any Level III Support issue that remains
        unresolved longer than *** after escalation to Level

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

<PAGE>   35

III Support.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>8
<FILENAME>ex10-12.txt
<DESCRIPTION>EXHIBIT 10.12
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.12



                                SUPPLY AGREEMENT



        This Supply Agreement ("Agreement") is being entered into and is
effective as of August 12, 1999 (the "Effective Date"), by and between NOVATEL
WIRELESS, INC., a Delaware corporation ("Novatel" or "Seller"), having its
principal place of business at 9360 Towne Centre Drive, San Diego, California
and OPENSKY CORPORATION, a Delaware corporation ("OpenSky" or "Buyer"), having
its principal place of business at 471 Emerson Street, Suite 200, Palo Alto,
California.

        WHEREAS, Seller is engaged in, among other things, the development and
manufacture of the Minstrel III(TM) wireless modem cradle ("Minstrel III") and
the Minstrel V(TM) wireless modem cradle ("Minstrel V"), for the Palm III and
Palm V connected organizers, respectively (the Minstrel III and the Minstrel V
are referred to herein collectively as the "Modems");

        WHEREAS, Buyer desires to purchase certain quantities of such Modems
from Seller, and Seller is willing to supply such quantities of such Modems to
Buyer, subject to the terms and conditions of this Agreement;

        NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants set forth below, the parties agree as follows:

1.      SALE AND PURCHASE OF PRODUCTS.

        1.1 Sale and Purchase. Buyer shall purchase from Seller, and Seller
shall supply to Buyer, an *** Modems pursuant to the schedule of payment and
delivery in Annex A, for an ***, subject to any adjustments to the Mix (as
described in Section 1.3) made in accordance with Section 1.3 hereof.

        1.2 Payments. Buyer shall make payments due to Seller for Deliverable
Items either directly to Seller or to such bank as Seller may designate in
writing. Payments for Modems shall be due and payable in full, in cash, by Buyer
thirty (30) days prior to each scheduled delivery of Modems into Seller's
Distribution Facility in San Diego, California (the "Novatel Distribution
Facility"). Each delivery of specification compliant Modems in accordance with
Annex D for which a pre-payment by Buyer has been received may not be canceled.
Payments for Deliverable Items (other than Modems), shall be due and payable in
full, in cash, by Buyer within thirty (30) days following the date of shipment
to end-users on behalf of Buyer. For purposes of this Agreement, "Deliverable
Items" shall mean any item, or parts thereof, that Seller is obligated to
provide under this Agreement including but not limited to Modems, documentation,
know-how and information. Payment for shipping and configuration and activation
shall be due and payable in full, in cash, as set forth in Sections 1.8 and 2.1,
respectively.

        1.3 Prices and Mix. The Modems shall be supplied to Buyer at a *** for
the Minstrel III and *** for the Minstrel V. Pricing is based on ***. During the
term of this Agreement, unless changed in accordance with this Section 1.3, the
number of each type of Modem to be purchased in each delivery and in the
aggregate under this Agreement shall be 80%



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>   2
Minstrel V and 20% Minstrel III (the "Mix"). Buyer may change the Mix (i) by 10%
upon 30-days' advance written notice to Seller; (ii) by 30% upon 60-days'
advance written notice to Seller or (iii) in its entirety upon 90-days' advance
written notice to Seller. Buyer may change the delivery schedule set forth on
Annex A as to the total monthly quantity of Modems shipped upon sixty (60) days
prior written notice to Seller; provided, however, that (i) any increase in the
monthly quantity of Modems shall not exceed 20% of the monthly quantity of
Modems set forth on Annex A for the relevant month; (ii) any decrease in the
monthly quantity of Modems shall not exceed 30% of the monthly quantity of
Modems set forth on Annex A for the relevant month and (iii) the total quantity
of Modems purchased under this Agreement shall remain unchanged. If Buyer
reduces the monthly quantity of Modems during the Exclusivity Period pursuant to
the previous sentence, then notwithstanding anything to the contrary in this
Agreement, the exclusivity provided for in Section 1.9 shall not apply with
respect to the number of Modems by which such monthly quantity of Modems was so
reduced.

        1.4 Advance. The parties hereto acknowledge and agree that in order to
ensure the prompt availability of the Modems of the initial scheduled delivery
hereunder as provided in Annex A, Seller must make an initial commitment to its
suppliers of components. On the dates set forth below, Buyer shall advance an
***:

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</TABLE>


***

        1.5 Accessories. During the Shipping Period (as defined in Section 1.8
below), Seller shall hold for Buyer 1,000 Minstrel III batteries in reserve
inventory and shall make available accessories for the Modems at such prices
listed in Annex B.

        1.6 Acceptance Criteria. The Modems shall be run through an acceptance
test prior to delivery. The acceptance test will be based on an agreed to
statistical sampling of the Modems and will demonstrate that the Modems meet all
of the Product Specifications outlined in Annex D. If there is a statistical
failure rate of greater than *** for any Product Specifications, then every
modem shall be tested prior to acceptance by Buyer. Seller shall provide Buyer
notice of when acceptance test will be performed. Buyer shall have the right to
witness each such test. Upon completion of the acceptance test, Seller shall
provide Buyer with the results of such test and Buyer shall indicate acceptance
by signing the acceptance test documentation.

        1.7 Delivery and Title. The Modems sold to Buyer shall be delivered to
the Novatel Distribution Facility in accordance to the delivery schedule set
forth in Annex A. Title and risk of loss in the Modems shall transfer to Buyer
at such time as Seller ships the Modems to



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       2
<PAGE>   3
an end-user on behalf of Buyer or to a third party distributor on behalf of
Buyer. Seller shall warehouse the inventory on behalf of Buyer and ship to
end-users the Modems on behalf of Buyer from the Novatel Distribution Facility
in accordance with Section 1.8 below. Subject to Section 8 below, all Modems
shipped to Buyer or to the end-users on behalf of Buyer shall be non-returnable.

        1.8    Shipping.

               1.8.1 From the period beginning November 1, 1999 and ending March
1, 2000 (the "Shipping Period") Seller shall make shipments FOB Destination of
the Modems to end-users on behalf of Buyer. In each case, Buyer shall provide to
Seller in writing, by electronic transmission or any other mode of communication
as set forth in Section 13.11, such information as is necessary to complete the
requested shipment, including without limitation, the address or location of
shipment, the number and type of Modem to be shipped and the type of shipment to
be utilized pursuant to Section 1.8.2 below. Seller shall arrange for the
requested shipment FOB Destination within a 24-hour period from receipt by
Seller of Buyer's shipment request pursuant to this Section 1.8.1.

               1.8.2 During the Shipment Period, Seller shall arrange, in
coordination with Buyer, for the air carrier insurance and freight from the
Novatel Distribution Facility to end-users on behalf of Buyer, and the CIF cost
shall be borne by Buyer directly. Seller shall provide three (3) shipment
options to Buyer: (i) overnight delivery; (ii) 2-day delivery or (iii) ground
delivery; and for which Buyer shall pay Seller, in cash, fees for shipment of
the Modems pursuant to this Section 1.8.2. As additional shipping options and
volume discounts become available, the fees for shipment paid by Buyer to Seller
may be agreed upon on a case by case basis by Buyer and Seller. Seller shall
deliver monthly invoices to Buyer for the costs and fees in connection with the
shipment of the Modems made to end-users on behalf of Buyer. In addition to such
other amounts as may be due hereunder, Buyer shall pay Seller in full, in cash,
for Seller's costs and fees for such shipments within thirty (30) days following
the date of delivery of such invoice to Buyer pursuant to this Section 1.8.2.

        1.9 Exclusivity. The Minstrel V shall be made available for sale and
purchase exclusively to Buyer for the Exclusivity Period. The "Exclusivity
Period" means the four-month period commencing as of the later of (i) such date
Seller has delivered *** Minstrel V units in accordance with this Agreement on
account of Buyer to the Novatel Distribution Facility or (ii) November 30, 1999.
In the event that Seller's delivery of field trial Minstrel V Modems is not made
prior to September 30, 1999 or Seller retrofits Modems pursuant to Section 1.17
or Section 5 hereof, then (i) the initial delivery of Modems into the Novatel
Distribution Facility shall be due on December 31, 1999; (ii) each subsequent
delivery date on Annex A shall be adjusted accordingly; and (iii) the
Exclusivity Period will begin on such date Seller has delivered 18,000 Minsrel V
units in accordance with this Agreement to the Novatel Distribution Facility.

        1.10 Warranties. Acceptance of a Modem shall not relieve Seller from its
obligations thereunder with respect to warranties under Section 8 below.

        1.11 Title; Risk of Loss. Title to Deliverable Items covered by this
Agreement shall pass to Buyer and risk of loss of or damage to Deliverable Items
shall be assumed by



                                       3
<PAGE>   4
Buyer, at such time Seller ships the Deliverable Items to an end-user on behalf
of Buyer or to a third party distributor on behalf of Buyer.

        1.12 Taxes. The prices of all Modems and Deliverable Items hereunder
include all taxes, duties and excises which are directly imposed on the Modems
or Deliverable Items. Notwithstanding the foregoing, Buyer shall bear the
responsibility for any taxes or duties imposed on Deliverable Items in any other
country or state of destination, including without limitation, taxes imposed on
the sale by Buyer of a product that includes Seller products.

        1.13 Adverse Results; Government Action. Each party agrees to promptly
notify the other party of any adverse or unexpected results or any actual or
potential government action relevant to a Modem of which it becomes aware.

        1.14 Invoices; Errors. Invoices shall be submitted by Seller in
duplicate (original and one copy) for each delivery of Deliverable Items (other
than Modems) and will enclose as an integral part thereof documentary proof of
delivery of such Deliverable Items, according to commercially accepted standards
for exports.

        1.15 Additional Supply. Beginning after completion of delivery of ***
Modems and for a period of ***. The *** option of available allocation granted
to Buyer under this Section 1.15 shall be on such terms and conditions and at
such price as mutually agreed upon between the parties hereto or as then in
effect pursuant to future Modem supply agreements entered into between Buyer and
Seller but ***.

        1.16 Schedule. If Seller fails to deliver the Modems to the Novatel
Distribution Facility as scheduled in Annex A and Buyer waives the delay, Annex
A shall be adjusted by changing the dates in Annex A by an equivalent number of
days. For example, a thirty (30) day delay in delivery will cause a thirty (30)
day delay in every subsequent delivery requirement pursuant to Annex A. If
Seller is only able to deliver a portion of the Modems as scheduled, then the
remaining portion shall be delivered fifteen (15) days after the final delivery
pursuant to Annex A. Any prepayment in accordance with Section 1.2 for
undelivered Modems shall be applied to the prepayment for the next scheduled
delivery of Modems. In the event the Modems are not delivered for field trial by
September 30, 1999 pursuant to Section 1.17 below then the delivery schedule on
Annex A will be adjusted so that the initial delivery shall be due on December
31, 1999 and each subsequent delivery on Annex A shall be adjusted accordingly.

        1.17 Field Trials. Seller will deliver Modems for Buyer to conduct field
trials on or prior to September 30, 1999. If the Modems have mechanical or
electrical failures in excess of *** during Buyer field trial then Seller shall
immediately stop delivery of Modems to the Novatel Distribution Facility. Seller
shall make the necessary changes to rectify the identified failures and all
previously delivered Modems shall be retrofitted to meet the specification
configuration.

2.      CONFIGURATION AND ACTIVATION; TRADEMARKS.

        2.1 Configuration and Activation.


*Certain information on this page has been omitted and filed separately with the
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omitted portions.



                                       4
<PAGE>   5
               2.1.1 Seller shall configure and activate each Modem on behalf of
Buyer. Buyer shall provide shipping, configuration and activation instructions
in writing, by electronic transmission or any other mode of communication as set
forth in Section 13.11, to Seller for each Modem to be shipped on behalf of
Buyer. *** Seller shall deliver a monthly invoices to Buyer stating the
aggregate activation fees due and payable in connection with the activation of
the units. Buyer shall pay such fee in full, in cash, within thirty (30) days
following the delivery date of such invoice to Buyer.

               2.1.2 The parties agree that all Modem units shipped to end-users
on behalf of Buyer shall be activated by Seller in accordance with this Section
2 and in consideration of the fee set forth in Section 2.1.1 hereof. In
activating the Modems, Seller shall undertake the following steps:

                        -       Unpack Minstrel Cradle

                        -       Plug into AC power source

                        -       Attach pre-configured Palm test unit

                        -       Run "Modem Manager" software

                        -       Program Modem parameters and confirm
                                registration

                        -       Send Test Packet

                        -       Repackage Minstrel in retain box, including
                                activation/IP documentation

               2.1.3 Each Modem shall be shipped to an end-user on behalf of
Buyer with a joint branding configuration consisting of the word "Novatel
Wireless" on the back of the Modem and such name as may be designated by Buyer
in writing, by electronic transmission or any other mode of communication as set
forth in Section 13.11 on the front of the Modem. Such branding configuration
shall extend to the Modem, user documentation and retail packaging. All Modems
will be packaged according to standards of trade generally applicable to similar
products shipped on a global basis.

        2.2 Seller's Trademarks. Buyer shall not use the trademark "Novatel" or
"Novatel Wireless" or any other trademark owned or used by Seller or any mark
confusingly similar thereto without the prior written consent of Seller in each.

               2.2.1 Buyer acknowledges Seller's sole ownership and exclusive
right, title and interest in and to the use of each of its trademarks, and that
any use of any of the trademarks of Seller will inure solely to the benefit of
Seller. Buyer shall not at any time, either during the term hereof or at any
time thereafter, directly contest, or aid others in contesting, or do anything
which might impair the validity of, any or all of Seller's trademarks or the
exclusive ownership thereof by Seller. Buyer shall not acquire any right to or
under any of Seller's trademarks. If any such rights should become vested in
Buyer by operation of law or otherwise, Buyer agrees it will immediately assign
any and all such rights to Seller. Nothing contained herein in any way limit
Seller's rights under its patents or licensing agreements nor grant Buyer any
rights under such patents or licensing agreements.

        2.3 Buyer's Trademarks.



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       5
<PAGE>   6
               2.3.1 Seller shall use the trademarks of Buyer only on or in
connection with the terms of Section 2.1 hereof and shall not use any marks
confusingly similar to Buyer's trademarks on any other goods.

               2.3.2 Seller acknowledges Buyer's sole ownership and exclusive
right, title and interest in and to the use of each of its trademarks, and that
any use of any of the trademarks of Buyer will inure solely to the benefit of
Buyer. Seller shall not at any time, either during the term hereof or at any
time thereafter, directly contest, or aid others in contesting, or do anything
which might impair the validity of, any or all of Buyer's trademarks or the
exclusive ownership thereof by Buyer. Seller shall not acquire any right to or
under any of Buyer's trademarks. If any such rights should become vested in
Seller by operation of law or otherwise, Seller agrees it will immediately
assign any and all such rights to Buyer. Nothing contained herein in any way
limit Buyer's rights under its patents or licensing agreements nor grant Seller
any rights under such patents or licensing agreements.

3.      KNOW-HOW AND SUPPORT.

        Seller shall provide Level II and Level III Technical Support (as
described in Annex C), and training to Buyer's designated service technicians to
enable Buyer to provide Level I Support and engineering support at Buyer's
facilities to enable Buyer to support the Modems, including the details of modem
functionality and design required for detection and correction of bugs or
failures . The parties hereto acknowledge and agree that Seller shall not
provide direct end-user support to any end-user on its own behalf or on behalf
of Buyer (Level I Technical Support). Seller will provide technical support
during the term of this Agreement in accordance with the terms of this Agreement
for so long as Buyer does not request any change in Seller's specifications of
the Modems as set forth in Annex D (the "Product Specifications").

4.      AUDIT.

        During the term of this Agreement, Seller shall maintain separate,
complete and accurate accounting records, in a form in accordance with generally
accepted accounting principles, to substantiate Seller's invoices hereunder.
Buyer, or any other person designated by it, reserves the right during the term
of this Agreement to audit and review, with reasonable notice to Seller,
Seller's books and records pertaining to such invoices to substantiate the
invoices delivered in connection with this Agreement. Seller shall preserve such
books and records for this purpose for a period of seven (7) years from the
receipt of last payment from Buyer. Buyer shall have the right to visit the
Novatel Distribution Facility to take a physical inventory of Modems that have
been delivered in accordance with Section 1.7.

5.      REPRESENTATION AND WARRANTY.

        Seller represents and warrants that no Federal Trade Commission
certification of CDPD carrier certification is required for the Modems. If
either certification becomes necessary for the sale of the Modems, Seller shall
immediately stop delivery of the Modems to the Novatel Distribution Facility.
Seller shall make the necessary changes to certify the Modems and all previously
delivered Modems shall be retrofitted to meet the certified configuration.



                                       6
<PAGE>   7
6.      INSURANCE.

        Seller shall maintain sufficient general liability insurance for the
Novatel Distribution Facility to cover the Modems stored at the site.

7.      TERM; TERMINATION; RIGHTS AND OBLIGATIONS UPON TERMINATION.

        7.1 Except as otherwise provided for herein, the term of this Agreement
shall be for the period commencing on the Effective Date and ending on April 1,
2000, unless terminated earlier by either party pursuant to the provisions of
this Section 7 or extended by mutual written agreement of the parties.

        7.2 Notwithstanding the foregoing, the following provisions shall
continue in effect after termination of this Agreement in accordance with their
terms:

                      (a) All payment provisions, and any payment due at the
time of termination shall be paid in accordance with the terms of this
Agreement.

                      (b) All warranties specified in the Agreement.

                      (c) All Patent Indemnity obligations.

                      (d) Section 1.14 (Additional Supply).

                      (e) Sections 2.2 and 2.3 (Trademarks).

                      (f) Section 7.6 (Commitment Termination Event).

                      (g) Section 11.3 (Spare Parts).

                      (h) Sections 13.l and 13.2 (Confidentiality and
Advertising).

                      (i) Section 13.3 (Confidential Information).

                      (j) Section 13.8 (Applicable Law), which shall govern any
dispute between the parties under the Agreement that may subsequently arise.

        7.3 Buyer's Right to Terminate. Buyer shall have the right, by providing
Seller with thirty (30) days' prior written notice, to terminate this Agreement
upon the occurrence of any of the following events, any one of which shall be
considered a "Seller Default:"

                      (a) Seller discontinues the Modems;

                      (b) Seller is adjudged bankrupt;

                      (c) Seller files a voluntary petition in bankruptcy or
liquidation or for the appointment of a receiver;



                                       7
<PAGE>   8
                      (d) Filing of an involuntary petition to have Seller
declared bankrupt, or subject to receivership, provided that such petition is
not vacated or set aside within ninety (90) days from the date of filing;

                      (e) The execution by Seller of any assignment for the
benefit of creditors; or

                      (f) Seller breaches any material provision of this
Agreement and fails to cure such material breach within thirty (30) days from
receipt of written notice describing the breach.

        7.4 Seller's Right to Terminate. Seller shall have the right, by
providing Buyer with written notice, to immediately terminate this Agreement
upon the occurrence of any of the following events, any one of which shall be
considered a "Buyer Default:"

                      (a) Buyer fails to make payments as provided in this
Agreement, unless such failure is cured within thirty (30) days from receipt of
written demand for such payment. Any late payments shall bear interest at the
annual rate of ***;

                      (b) Buyer is adjudged bankrupt;

                      (c) Buyer files a voluntary petition in bankruptcy or
liquidation or for the appointment of a receiver;

                      (d) Filing of an involuntary petition to have Buyer
declared bankrupt, or subject to receivership, provided that such petition is
not vacated or set aside within ninety (90) days from the date of filing;

                      (e) The execution by Buyer of any assignment for the
benefit of creditors; or

                      (f) Buyer breaches any material provision of this
Agreement and fails to cure such material breach within thirty (30) days from
receipt of written notice describing the breach.

        7.5 Remedy Upon Seller Default. In the event that this Agreement is
terminated pursuant to Section 7.3 above, Buyer shall have the right to exercise
any and all rights surviving such termination pursuant to Section 7.2.

        7.6 Commitment Termination Event. In the event of a Commitment
Termination Event, Buyer shall, as soon as practicable and in no event later
than five (5) days after the occurrence of such Commitment Termination Event,
pay Seller, in ***. "Commitment Termination Event" means (i) the failure by
Buyer to purchase Modems in the amounts set forth in Section 1.1 ("Sale and
Purchase") hereof pursuant to the schedule of payment and delivery set forth in
Annex A (giving effect to any adjustments made in accordance with Section 1.3
hereof); (ii) termination of this Agreement by Buyer for any reason whatsoever
other than pursuant to a breach by Seller of the provisions of Section 8.1
hereof (Product Warranty) or failure by Seller to make the scheduled deliveries
in accordance with Section 1.7 hereof; (iii) any breach by Buyer



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       8
<PAGE>   9
of any representation, covenant or agreement on the part of Buyer set forth in
this Agreement or (iv) Buyer's use of another CDPD modem vendor for the Palm III
and Palm V during the term of this Agreement.

8.      PRODUCT WARRANTY.

        8.1 Product Warranty. The following Sections 8.l through 8.6 refer only
to Product Warranty.

                      (a) Seller warrants (i) that all Modems, including
components thereof, to be delivered hereunder, will conform to the Product
Specifications, be free from defects in material and workmanship and (ii) that
the "Modem Manager" software installed pursuant to Section 2.1 hereof shall be
free from errors which materially affect performance. The foregoing warranty is
given provided Buyer gives written notice of any defect, deficiency or
non-conformance of any Modem, or parts thereof, within: (i) twelve (12) months
from the shipment date to the end-user, or (ii) fifteen (15) months from the
date the Modems are delivered to Buyer at the Novatel Distribution Facility (the
"Warranty Period"). Seller shall, at no cost to Buyer, and within the
"Turn-Around Time" as defined in Section 8.2(a) below, repair or furnish
replacements for all such defective, deficient or non-conforming items or parts
thereof; provided, however, the Modems have been maintained in accordance with
Seller's specifications and have not been modified by any party other than
Seller except as expressly permitted by Seller in writing.

                      (b) The foregoing warranties do not extend to:

                             (i) defects, errors or nonconformities in a Modem
due to accident, abuse, misuse or negligent use of such Modem or use in other
than a normal and customary manner, environmental conditions not conforming to
Seller's specifications, or failure to follow prescribed operating maintenance
procedures;

                             (ii) defects, errors or nonconformities in the
Modem due to modifications, alterations, additions or changes in the Modem not
made or authorized to be made by Seller in writing;

                             (iii) normal wear and tear; or

                             (iv) damage caused by force of nature or act of any
third party.

        8.2 Turn-Around Time.

                      (a) "Turn-Around Time" for the purposes of this Section 8
means fifteen (15) days from the date on which such defective item, or defective
or non-conforming part thereof, is furnished to Seller, for repair or
replacement until the date on which such replaced or repaired item is returned
to Buyer.

                      (b) Seller shall bear air shipment costs of the deficient,
repaired or replaced item as well as the risk or loss or damage to the item or
its replacement throughout the period between the shipment of the defective item
and the receipt of the repaired or replaced



                                       9
<PAGE>   10
item. Repaired or replaced items shall be subject to the warranty provided on
the original Modem only (the time during which Seller repairs or replaces the
item shall not be considered as part of the Warranty Period), in accordance with
this Section 8. Notwithstanding the foregoing, Buyer shall bear all expenses if
no fault on the part of Seller was found in the items returned for repair or
replacement.

        8.3 Extended Warranty. In the event Buyer elects to offer an extended
warranty, Buyer may, up to one (1) year after an order is received from an
end-user, extend the Warranty Period at a cost of ***. Discounts in the cost of
such extension of warranty may be negotiated between Seller and Buyer, based on
the number of the Modems on which Buyer elects to extend the Warranty Period.

        8.4 Inspection; Acceptance. This warranty shall survive inspection,
acceptance or payments by Buyer and is provided for the sole and exclusive
benefit of Buyer and shall not extend to any third party, including without
limitation, any reseller or end-user.

        8.5 Exclusive Remedy. The warranty granted in this Section 8 sets forth
Buyer's sole and exclusive remedy and Seller's sole and exclusive liability for
any claim of warranty for any product delivered by Seller.

        8.6 No Authority. Buyer acknowledges that it is not authorized to make
any warranty or representation on behalf of Seller or its suppliers regarding
the Modems, whether express or implied, other than the warranty terms set forth
in this Section 8.

        8.7 No Other Warranty. THE WARRANTY MADE UNDER THIS SECTION 8 IS
EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.

9.      PATENT INDEMNITY.

        9.1 Patent Indemnity. Seller shall, at its sole cost and expense,
indemnify, defend and hold Buyer harmless from and against any claims, demands,
liability or suit, including costs and expenses, for or by reason of any actual
or alleged infringement of any third party patent, trademark or copyright
resulting from the design, development, manufacture, use, sale or disposal of
any Modem or Deliverable Items furnished hereunder. Buyer shall promptly notify
Seller in writing of any such infringement claim after Buyer becomes aware of
such claim, and shall provide Seller with such assistance and cooperation as
Seller may reasonably request from time to time in connection with the defense
thereof. In the event Buyer determines that Seller is unable or unwilling to
defend the claim, Buyer may assume control of the defense of any infringement
claim; provided that under such circumstances Buyer shall bear all costs of such
defense (but not of any consequent judgment or liability). If any settlement
requires an affirmative obligation of, results in any ongoing liability to, or
prejudices or detrimentally impacts in any way, Buyer, then such settlement
shall require Buyer's written consent.

        9.2 Right to Substitute. Should Buyer be prevented as a result of such
claims, actions or suits regarding infringement, from utilizing the Modems or
Deliverable Items in

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Commission. Confidential treatment has been requested with respect to the
omitted portions.


                                       10
<PAGE>   11
question, or if Seller believes such a claim is likely, then Seller shall, at
Seller's expense, either substitute an equivalent non-infringing item, or modify
the item so that same no longer infringes but remains equivalent, or obtain (at
its own expense) for Buyer the right to continue use of the item in accordance
with the terms of this Agreement.

        9.3 Procedure. Seller's obligation to indemnify will be subject to the
following terms and conditions:

                      (a) The obligation will arise only if Seller receives
prompt written notice of the infringement claim.

                      (b) The obligation will not cover any claim that the
Modems infringe any third party's rights only as used in combination with any
software or hardware not supplied by Seller, if that claim could have been
avoided by the use of the Modems in combination with equivalent other available
software or hardware.

10.     LIMITATION OF LIABILITY.

        SELLER SHALL NOT BE LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL,
INDIRECT OR PUNITIVE DAMAGES (INCLUDING LOST REVENUES OR PROFITS) OF ANY KIND
DUE TO ANY CAUSE, REGARDLESS OF WHETHER SELLER HAS BEEN ADVISED OR IS AWARE OF
THE POSSIBILITY OF SUCH DAMAGES.

11.     POST WARRANTY OBLIGATIONS.

        11.1 Support. Seller agrees that for the term of this Agreement, plus
the Warranty Period, it will retain a staff of technical personnel in connection
with the design, manufacture and trouble-shooting of the Modems and Deliverable
Items supplied under this Agreement. This staff will be available to render
technical assistance to Buyer upon Buyer's reasonable request regarding the
Modems or a Deliverable Item and will provide such assistance as may be
reasonably required to support systems integration, system debug, basic
parameter changes in the Modems, modification of the Modems, upgrades in the
Modems, and customer and production support in accordance with the provisions of
Section 6.

        11.2 Repair. During the term of this Agreement, in the event that Buyer
requires repair of the Modems, or any part thereof, after the date of completion
of Seller's warranty obligations under this Agreement, Seller will perform such
repairs on terms at and prices in accordance with its standard support and
maintenance fees, or at a fair and reasonable prices if standard fees have not
been set.

        11.3 Spare Parts. Seller undertakes, for a period of five years after
the completion Seller's warranty obligations under this Agreement, to supply
Buyer with spare parts for the Modems and the Deliverable Items as Buyer may
reasonably request from time to time, at prices that are fair and reasonable,
considering prevailing market prices at the time said items are ordered.



                                       11
<PAGE>   12
12.     FORCE MAJEURE.

        12.1 Events of Force Majeure. Neither party shall be liable for a
default or delay in the performance under this Agreement if and to the extent
such default or delay is caused, directly or indirectly, by (i) fire, flood,
natural disturbances or other acts of God; (ii) any outbreak or escalation of
hostilities, war, civil commotion, riot or insurrection; (iii) any act or
omission of the other party or any governmental authority or (iv) any other
similar causes beyond the control of such party that arise without the fault or
negligence of such party. Any delay resulting from such events shall be referred
to herein as a "Force Majeure," shall not constitute a default by such party
under this Agreement and shall entitle the delayed party to a corresponding
extension of its delayed obligation. The party whose performance will be delayed
by such events will use its best efforts to notify the other party within three
(3) days after delayed party becomes aware of such event, as well as the
cessation thereof.

        12.2 Subcontractor's Default. Any delays in performance by Seller's
subcontractors or suppliers shall be deemed excusable delays with respect to
Seller only if (i) such subcontractor's non-performance is caused by Force
Majeure and (ii) Seller could not have obtained the supplies or services of such
subcontractor from other sources in sufficient time and on customary terms to
prevent interruption of Seller's performance of this Agreement.

        12.3   Termination.

                      (a) If Force Majeure results in a delay to make any
scheduled delivery under this Agreement by more than sixty (60) days, Buyer may
terminate this Agreement in whole or in part and such termination shall not be
deemed a breach of this Agreement.

                      (b) If Buyer does not terminate within such sixty (60) day
period, and the Force Majeure prevails for further forty-five (45) days, Buyer
may terminate this Agreement, but it shall have no right to claim damages from
Seller for breach of the Agreement. The foregoing expresses Buyer's sole remedy
and Seller's sole liability for such termination resulting from Force Majeure.

13.     MISCELLANEOUS.

        13.1 Confidentiality of Agreement; Permitted Disclosures. Throughout the
term of this Agreement, each party agrees that the terms of this Agreement shall
be kept confidential. No disclosure of the identity of Buyer's customers or
end-users or other information concerning this Agreement shall be released by
Seller without the prior written consent of Buyer except (i) in Seller's or
Buyer's communication with its respective shareholders, investors or potential
investors, and (ii) as to such advertising or other marketing in which Seller
may engage in the ordinary course of business.

        13.2 Required Disclosures; Advertising. Notwithstanding Section 13.1
above:

                      (a) Each party may divulge information hereunder as is
reasonably required for the performance of the Agreement or as is required by
law; and



                                       12
<PAGE>   13
                      (b) Each party shall have the right to list the other
party as a customer or supplier (as the case may be) in its advertising
material.

        13.3 Confidential Information.

                      (a) In performance of this Agreement, it may be necessary
or desirable for either party to disclose to the other certain business and/or
technical information which the disclosing party regards as proprietary and
confidential (the "Confidential Information"). Any Confidential Information
disclosed shall be reduced to writing and provided to the other party within
twenty (20) days after it was first disclosed. Each of the parties hereto agree
that it shall (i) not make use of or disclose the Confidential Information for
any purpose whatsoever at any time, other than for the purposes of this
Agreement and (ii) limit access to the Confidential Information of the other
party to its employees who shall be advised of and agree to be subject to the
terms of this Section 13.3.

                      (b) Nothing herein shall be construed as granting to
either party, by implication, estoppel or otherwise, any right, title or
interest in, or any license under, any patent or Confidential Information.

                      (c) Items shall not be considered Confidential Information
if such information was (i) available to the public other than by a breach of an
agreement with the disclosing party; (ii) rightfully received from a third party
not in breach of any obligation of confidentiality; (iii) independently
developed by one party without access to the Confidential Information of the
other; (iv) known to the recipient at the time of disclosure; or (v) produced in
compliance with applicable law or a court order, provided that other party is
given reasonable notice of such law or order and an opportunity to attempt to
preclude or limit such production.

        13.4 Severability. If any provision of this Agreement shall be held
illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.

        13.5 Assignment. Neither Seller nor Buyer may assign this Agreement in
whole or in part, or any rights hereunder without the prior written consent of
the other, except to (i) a wholly-owned subsidiary of such party, (ii) a
successor in interest of all or substantially all of such party's assets or
business or (iii) a bank trust company or other financial institution for money
due or to become due under this Agreement. In the event of any assignment, the
assigning party shall promptly supply the other party with two (2) copies of
such assignment and, in the instance of an assignment pursuant to this Section
13.5, shall indicate on each invoice to whom payment is to be made. In the event
of any assignment pursuant to this Section 13.5, the assigning party also shall
provide a written guarantee by such party of the obligations assigned to such
party's subsidiary.

        13.6 Relations of the Parties. Nothing in this Agreement shall be
construed as creating relationship of principal and agent or of employer and
employee between the parties. Furthermore, nothing in this Agreement is intended
to constitute, create, give effect to or otherwise contemplate a joint venture,
partnership or formal business entity of any kind. The rights and obligations of
the parties with respect to this Agreement shall not be construed as



                                       13
<PAGE>   14
providing for sharing of profits or losses arising out of the effort of either
of the parties. The parties shall not incur any liability on behalf of the
other.

        13.7 Waiver. No waiver by either Seller or Buyer of any breach of this
Agreement shall be held to be a waiver of any other subsequent breach. No waiver
or time extension given by either Seller or Buyer shall have effect unless made
expressly and in writing.

        13.8 Applicable Law. This Agreement and all matters regarding the
interpretation and/or enforcement hereof, shall be governed exclusively by the
law of the State of California without reference to its choice of law rules.

        13.9 Arbitration. Any dispute arising out of or in connection with this
Agreement, including any question regarding its breach, validity or termination,
or the transactions contemplated hereby, including any dispute based in whole or
in part on tort or other non-contractual principles of law, shall be fully and
finally resolved and settled by arbitration under the Rules of the American
Arbitration Association for Commercial Disputes (the "Rules") (as modified by
this Section 13.9). The number of arbitrators shall be one (1) if all parties to
the dispute agree on the arbitrator. If there is a disagreement on selection of
a sole arbitrator, the number of arbitrators then shall be three (3), with the
arbitrators to be appointed in accordance with the Rules from a panel of
arbitrators in San Diego, California. The place of arbitration shall be San
Diego, California or such other place as the parties to the dispute shall
mutually agree upon in writing. The arbitration proceedings shall state the
reasons for the award. Judgment upon the award rendered by the arbitrator or
arbitrators may be entered in any court having jurisdiction thereof, and shall
be binding on the parties hereto. The costs of arbitration, including reasonable
legal fees and costs, shall be borne by either or both of the parties in
whatever proportion as the arbitrator or arbitrators may award. This Section
13.9 shall not apply to actions seeking enforcement of this Agreement to
arbitrate or to enforce Section 2.2 ("Seller's Trademarks"), Section 2.3
("Buyer's Trademarks"), Section 13.1 ("Confidentiality") or Section 13.3
("Confidential Information") hereof or with respect to any request for
provisional or interim relief brought prior to the appointment of an arbitrator.

        The dispute resolution proceedings contemplated by this provision shall
be as confidential and private as permitted by law. To that end, the parties
shall not disclose the existence, content or results of any claims hereunder or
proceedings conducted in accordance with this provision, and materials submitted
in connection with such proceedings shall not be admissible in any other
proceeding; provided, however, that this confidentiality provision shall not
prevent a petition to vacate or enforce an arbitration award, and shall not bar
disclosures required by law. The parties hereto agree that any decision or award
resulting from proceedings in accordance with this dispute resolution provision
shall have no preclusive effect in any other matter involving third parties.

        13.10 Entire Agreement. This Agreement constitutes the entire agreement
between the parties, supersedes and cancels any previous understandings or
agreements between all the parties relating to the provisions hereof, and
expresses the complete and final understanding of the parties in respect
thereto. This Agreement may not be changed, modified, amended or supplemented
except by a written instrument signed by the parties.



                                       14
<PAGE>   15
        13.11 Notices. Any notice contemplated by or made pursuant to this
Agreement shall be in writing and shall be deemed delivered on the date of
delivery if delivered personally or by commercial overnight courier with
tracking capabilities or by fax, or five (5) days after mailing if placed in the
mail, postage prepaid, registered or certified mail, return receipt requested,
addressed to Buyer or Seller (as the case may be) as follows:

                    Seller:                       Novatel Wireless, Inc.
                                                  9360 Towne Centre Drive
                                                  Suite 110
                                                  San Diego, CA  92121
                                                  Attn:  Chief Executive Officer
                                                  Fax: (858) 784-0626

                     Buyer:                       OpenSky Corporation
                                                  471 Emerson Street, Suite 200
                                                  Palo Alto, CA  94301
                                                  Attn:  Chief Executive Officer
                                                  Fax:  (650) 561-9968

or such other address as each party may designate for itself by notice given in
accordance with this Section 13.11.

        13.12 Headings. The headings in this Agreement are for convenience only
and shall not be regarded in the interpretation hereof.

                            [Signature Page Follows]



                                       15
<PAGE>   16

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the Effective Date written above.



                                    SELLER: NOVATEL WIRELESS, INC.



                                    By:  /s/
                                       -----------------------------------------
                                       Name:  Bruce Gray
                                       Title: Vice President -- Sales/Marketing



                                    BUYER: OPENSKY CORPORATION


                                    By:  /s/
                                       -----------------------------------------
                                       Name:  Michael Dolbec
                                       Title:  Vice President --
                                               Business Development

<PAGE>   17
                                     Annex A

                        SCHEDULE OF PAYMENT AND DELIVERY



                                       ***



** Buyer shall pre-pay in full for any forecasted bi-monthly quantity 30 days
prior to delivery into the Novatel Distribution Center in San Diego California
subject to Sections 1.2 and 1.4 of this Agreement.



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>   18
                                     ANNEX B

                                ACCESSORY PRICING

<TABLE>
<S>                               <C>                <C>
-----------------------------------------------------------------------
                                  ***                ***
-----------------------------------------------------------------------
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              ***                 ***                ***
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              ***                 ***                ***
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              ***                 ***                ***
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              ***                 ***                ***
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</TABLE>


***



                                     ANNEX C

                                TECHNICAL SUPPORT

Technical Support for the Minstrel III and Minstrel V products delivered to
OpenSky customers will be managed via a three-tier Technical Support
infrastructure and process as follows:

LEVEL I TECHNICAL SUPPORT

        Level I Technical Support will be provided by OpenSky to their direct
        and indirect customers. Level I Support is defined as calls* originating
        from OpenSky customers, resellers or distributors regarding Palm
        Products, OpenSky Service, Wireless Service Providers, Minstrel III or
        Minstrel V products including but not limited to pre and post sale
        inquiries concerning the basic operation of the hardware and software,
        functionality, interoperability and capabilities of those products and
        services.

        For calls regarding the Minstrel III and Minstrel V products, OpenSky
        will make every attempt to answer customer questions and resolve issues
        using available tools, documentation, test equipment and other materials
        used to support the Minstrel III and Minstrel V products (see training
        section below). If the customer question/issue regarding the Minstrel
        III or Minstrel V product cannot be resolved by OpenSky support
        personnel to the customers' satisfaction, the issue will be forwarded to
        Novatel Wireless Level II Technical Support for further investigation
        and resolution.

        *Calls include phone calls, e-mail, web-based inquiries, faxes and
        letters.


LEVEL II TECHNICAL SUPPORT

        Level II Technical Support will be provided by Novatel Wireless support
        staff directly to OpenSky Level I Support personnel to assist in the
        resolution of open customer issues that have not been resolved to the
        satisfaction of OpenSky customers during a Level I Support call. OpenSky
        will have direct access to designated support staff within the Novatel
        Wireless support organization for this purpose. A direct line of
        communication between the two organizations will be established and
        Novatel Wireless support technicians will be available during normal
        OpenSky technical support operation hours to assist in



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.


<PAGE>   19
        resolution of customer problems. Novatel Wireless support engineering
        will work directly with OpenSky support staff to resolve issues and
        answer questions, this may require OpenSky support staff to gather
        additional information and provide system information or test results
        back to Novatel support staff to aid in the definition and resolution of
        the problem. It will be OpenSky support staff's responsibility to
        communicate directly with the end-user customer. Problems that are not
        resolved within three business days or problems that are flagged as
        sensitive/mission critical will be escalated to Level III Technical
        Support for final resolution.

LEVEL III TECHNICAL SUPPORT (ESCALATION)

        Level III Technical Support will be provided by the Novatel Wireless
        support and system engineering staff to resolve issues that cannot be
        satisfactorily resolved by Level I and Level II Support personnel. Level
        III Technical Support will handle all OpenSky product escalations issues
        including unresolved support calls and will work directly with Novatel
        Wireless engineering staff to resolve those issues.


TECHNICAL SUPPORT TRAINING

        Technical Support training and documentation for the Minstrel III and
        Minstrel V will be provided to OpenSky Level I Support staff by Novatel
        Wireless. OpenSky support staff will receive training on the general
        use, functionality, operation and compatibility of the Minstrel III and
        Minstrel V products. In addition, all support related documentation,
        training materials, notes, FAQ's, and web based support materials will
        be made available to OpenSky for their use in supporting these products.


<PAGE>   20
                       FIRST AMENDMENT TO SUPPLY AGREEMENT

        This First Amendment to Supply Agreement (this "Amendment") is made as
of October ___, 1999 by and among Novatel Wireless, Inc., a Delaware corporation
("Novatel") and OpenSky Corporation, a Delaware corporation ("OpenSky").

        WHEREAS, Novatel and OpenSky entered into that certain Supply Agreement,
dated and effective as of August 12, 1999 (the "Supply Agreement"); and

        WHEREAS, pursuant to Section 13.10 of the Supply Agreement, Novatel and
OpenSky desire to amend certain terms and provisions of the Supply Agreement;

        NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties hereto agree as follows (all capitalized
terms not otherwise defined herein shall have the meanings therefor set forth in
the Supply Agreement):

        1. Pursuant to Section 1.3, OpenSky hereby changes the Mix and delivery
schedule in accordance with Exhibit A hereto.

2.      Section 1.2 is amended in its entirety to read as follows:

                             "1.2 Payments. Buyer shall make payments due to
        Seller for Deliverable Items either directly to Seller or to such bank
        as Seller may designate in writing. Payments for Modems shall be due and
        payable in full, in cash, by Buyer thirty (30) days prior to each
        scheduled delivery of Modems into Seller's Distribution Facility in San
        Diego, California (the "Novatel Distribution Facility") with respect to
        any delivery scheduled in Annex A to be made on or before December 31,
        1999. Payments for Modems shall be due and payable in full, in cash, by
        Buyer within thirty (30) days following the date of each scheduled
        delivery of Modems into the Novatel Distribution Facility with respect
        to any delivery scheduled in Annex A to be made on or after January 1,
        2000. Each delivery of specification compliant Modems in accordance with
        Annex D for which a pre-payment by Buyer has been received may not be
        canceled. Payments for Deliverable Items (other than Modems), shall be
        due and payable in full, in cash, by Buyer within thirty (30) days
        following the date of shipment to end-users on behalf of Buyer. For
        purposes of this Agreement, "Deliverable Items" shall mean any item, or
        parts thereof, that Seller is obligated to provide under this Agreement
        including but not limited to Modems, documentation, know-how and
        information. Payment for shipping and configuration and activation shall
        be due and payable in full, in cash, as set forth in Sections 1.8 and
        2.1, respectively."

        3. Section 1.7 is amended in its entirety to read as follows:

                             "1.7 Delivery and Title. The Modems sold to Buyer
        shall be delivered to the Novatel Distribution Facility in accordance to
        the delivery schedule set forth in Annex A. Title and risk of loss in
        the Modems shall transfer to Buyer FOB Manufacturer, as determined by
        Seller. Seller shall warehouse the inventory on behalf of Buyer and ship
        to end-users the Modems on behalf of Buyer from the Novatel Distribution
        Facility in accordance with Section 1.8 below. Subject to Section 8
        below, all Modems delivered to Buyer shall be non-returnable."

<PAGE>   21
        4. Section 1.8.1 is amended by deleting the date "March 1, 2000" in the
first sentence and replacing it with the date "May 1, 2000", so that the
Shipping Period ends on May 1, 2000.

        5. Section 7.1 is amended by deleting the date "April 1, 2000" in the
first sentence and replacing it with the date "May 1, 2000", so that the term of
the Supply Agreement ends on May 1, 2000.

        6. In all other respects, the Supply Agreement, as herein amended, shall
remain in full force and effect, including Section 1.3 of the Supply Agreement
without giving effect to this Amendment. Subject to the foregoing, to the extent
that any provisions of the Supply Agreement and any provisions of this Amendment
are in conflict, the provisions of this Amendment shall govern. In the event any
one or more of the provisions contained in this Amendment or any instrument
entered into in connection herewith is for any reason held to be invalid or
unenforceable in any respect, that event shall not affect any other provision of
this Amendment or such other instrument.

        7. This Amendment shall be governed by, and construed and enforced in
accordance with, the substantive laws of the State of California, without regard
to its principles of conflicts of laws.

        8. This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, legal
representatives and heirs.

        9. This Amendment may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which take together shall
constitute one and the same instrument.


<PAGE>   22
        IN WITNESS WHEREOF, this Amendment has been duly executed as of the date
first written above.


                                       NOVATEL WIRELESS, INC.
                                       /s/
                                       --------------------------------
                                       By:
                                          -----------------------------
                                       Its:
                                           ----------------------------


                                       OPENSKY CORPORATION

                                       /s/
                                       --------------------------------
                                       By:
                                          -----------------------------
                                       Its:
                                           ----------------------------


<PAGE>   23
                                    EXHIBIT A

                        SCHEDULE OF PAYMENT AND DELIVERY



                                       ***



               ** Buyer shall pre-pay in full for any forecasted bi-monthly
quantity 30 days prior to delivery into the Novatel Distribution Facility in
Calgary, Canada with respect to any shipments scheduled for delivery on or
before December 31, 1999 in accordance with Sections 1.2 and 1.4 of this
Agreement.



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>   24
                                     ANNEX D

                             PRODUCT SPECIFICATIONS



DESCRIPTION

***

DIMENSIONS

***

MODEM FEATURES

***

BUILT-IN FEATURES

***

POWER SUPPLY

***

TEMPERATURES

***

POWER REQUIREMENTS

***



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>9
<FILENAME>ex10-13.txt
<DESCRIPTION>EXHIBIT 10.13
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.13


                               SANMINA CANADA ULC
                                 AGREEMENT FOR
                       ELECTRONIC MANUFACTURING SERVICES


THIS AGREEMENT made as of this 3rd day of September, 1999 between SANMINA CANADA
ULC, having offices at Calgary, Alberta, Canada ("Sanmina") and NOVATEL WIRELESS
INC., having offices at Suite 110, 9360 Towne Center Drive, San Diego,
California, U.S.A. 92121 ("Customer").

FOR AND IN CONSIDERATION of the mutual covenants of the parties hereto, the
parties hereby agree as follows:

                                    ARTICLE 1
                                      TERM

1.1 This Agreement shall be in effect for a term of twenty-four (24) months,
commencing upon the date of this Agreement (the "Term"). Unless the parties
agree in writing to extend such Term for an additional period prior to the
termination of the Term, this Agreement shall terminate upon the expiry of the
said Term.

                                    ARTICLE 2
                                SCOPE OF SERVICES

2.1 Customer hereby retains Sanmina and Sanmina hereby agrees to provide to
Customer during the Term manufacturing and delivery services in respect of
electronic products or assemblies, as more particularly identified in Exhibit
"A" hereto (collectively, the "Products"). Sanmina and Customer shall mutually
agree in writing upon the delivery schedule(s) applicable to the Products.

2.2 Sanmina shall purchase all components necessary for the manufacture by it of
the Products in accordance with a vendor list approved by Sanmina and Customer
(the "AVL"), which approval shall occur as of or as soon as practicable
following the date of execution hereof. In the event Sanmina cannot purchase a
component from a vendor on the AVL for any reason, Sanmina may purchase such
components from an alternate vendor, subject to the prior written consent of
Customer, which consent shall not be unduly withheld or delayed.

                                    ARTICLE 3
                        PLANNING AND PROCUREMENT PROCESS

3.1 Upon the date of execution of this Agreement and thereafter on the first
business day of each month of the Term, except for the last three (3) months of
the Term, Customer shall provide Sanmina with firm purchase orders covering a
minimum period of three (3) months (each, a "Purchase Order").

3.2 Upon the dates on which Customer provides Sanmina with the Purchase Orders
pursuant to Section 3.1, Customer also shall deliver to Sanmina a forecast
(each, a "Forecast") covering the nine (9) month period immediately following
the applicable three (3)month Purchase Order



                                      -1-

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>   2
period. It is understood that each Forecast is delivered by Customer to Sanmina
for information purposes only and cannot be relied upon by Sanmina, save and
except in respect of Sanmina's procurement activities in order to fulfill its
obligations herein and, in such respect, Customer's liability in respect of each
Forecast is limited in accordance with Article 4 below.

3.3 Upon the basis of the Purchase Orders and Forecasts referred to in Sections
3.1 and 3.2, Sanmina shall develop and deliver to Customer a master production
schedule ("MPS") for a *** period as follows:

         (a)      the MPS will define the master plan upon which Sanmina will
                  base its procurement activities, internal capacity projections
                  and commitments to Customer hereunder;

         (b)      Sanmina will use the Purchase Orders referred to in Section
                  3.1 to generate the *** of the MPS; and

         (c)      Sanmina will use the Forecasts referred to in Section 3.2 to
                  generate the following *** of the MPS.

It is understood and agreed that the MPS shall be generated by Sanmina for
information purposes only and that neither party shall rely upon the MPS, save
and except in respect of Sanmina's procurement activities in order to fulfill
its obligations herein and, in such respect, Sanmina's liability in respect of
each MPS shall be limited in accordance with Article 4 below.

3.4 Sanmina will develop the MPS through industry-standard MRP software that
will convert the MPS reflecting Customer's Purchase Orders and Forecasts into
requirements for the components to develop the necessary Products. In so
developing the MPS, Sanmina will allow for the following times required to
develop the Products:

         (a)      In-Circuit Testing/Functional Testing - ***;

         (b)      Assembly- ***;

         (c)      Kitting - ***;

         (d)      Material Handling- ***; and

         (e)      Sanmina shall plan and schedule for materials to be at its
                  facilities *** business days before the Products are due to be
                  delivered to Customer in the event no testing is required, and
                  *** business days before the Products are due to Customer in
                  the event testing is required.

3.5 Sanmina will place orders to suppliers of materials and components within a
reasonable period prior to the anticipated date that the same are needed and in
accordance with the provisions of Section 3.4. The actual date of placement by
it of an order by Sanmina will depend upon the lead time that Sanmina reasonably
determines to be necessary from time to time.



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                      -2-
<PAGE>   3
3.6 Through its "MRP System", Sanmina will issue an instruction ("MRP Signal")
to its procurement department to purchase or procure a component approximately
seven (7) days before it places an order with materials suppliers in accordance
with Section 3.5.

3.7 When Sanmina places an order with materials suppliers pursuant to Section
3.5, it will order components in various quantities (defined in
periods-worth-of-supply) as defined by the "ABC Classification" for each
component (the "Classification"). The Classification, together with the expected
distribution or characteristics of various classes of components, and the
applicable periods-worth-of-supply ("Periods-of-Supply") that will be bought for
each class of component is shown on the table below:

             ABC Classifications, Descriptions and Periods-of-Supply

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                             Expected Percentage        Expected Percentage of Total     Periods Worth of Supply to be
       Part Class            of Total Components        Value (of Gross Requirements)        Bought with Each Order
----------------------------------------------------------------------------------------------------------------------
<S>                          <C>                        <C>                              <C>
           A                         ***                             ***                              ***
----------------------------------------------------------------------------------------------------------------------
           B                         ***                             ***                              ***
----------------------------------------------------------------------------------------------------------------------
           C                         ***                             ***                              ***
----------------------------------------------------------------------------------------------------------------------
</TABLE>


3.8 In addition to ordering components for various Periods-of-Supply, Sanmina
will order components according to various minimum-buy quantities, tape and reel
quantities, and multiples of packaging quantities.

3.9 The costs of the components Sanmina purchases or orders in order to fulfill
each Purchase Order and the related Forecast as set forth in Article 4 and any
associated expenses related to such purchasing, ordering, manufacturing (labor
and overhead), shipping, storing and eliminating by Sanmina of any such
components, plus a cost-of-money mark-up equal to *** to be applied for the
duration of Sanmina ownership of the materials, in favor of Sanmina, shall
constitute the aggregate consideration payable by Customer to Sanmina in respect
of the services rendered by Sanmina pursuant hereto ("Total Liability").

3.10 Notwithstanding any provision hereof including, without limitation, Section
3.9, Customer shall be liable for any and all taxes, customs duties,
withholding, assessments or levies arising from time to time or at any time in
respect of the services provided by Sanmina to Customer pursuant to and in
respect of the transfer, sale, delivery and use of the Products, save and except
that Sanmina shall be responsible for any and all taxes arising on or measured
by its net income or gain.



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.


                                      -3-
<PAGE>   4
                                    ARTICLE 4
                           LIABILITIES FOR COMPONENTS

4.1 In the event of cancellation or decrease in a Purchase Order pursuant to
Section 5.2, Customer's liability for costs of components that Sanmina has
procured pursuant hereto, up to the limit of Customer's forecast, is as follows:

         (a)      for costs of components that Sanmina has ordered pursuant
                  hereto and cannot cancel prior to receipt (including
                  components that may not be cancellable by virtue of having
                  insufficient time between the MRP Signal to cancel and the
                  expected or real receipt date by Sanmina);

         (b)      for Sanmina's costs of components that Sanmina has ordered
                  pursuant hereto and cannot return to the suppliers where the
                  value of the parts exceeds USD. *** in total, and where
                  Sanmina has made reasonable efforts to return the components;
                  and

         (c)      for Sanmina's costs of components that are in aggregate worth
                  less than USD. *** in total and where Sanmina is not required
                  to attempt to return same to the suppliers.

4.2 In the event Sanmina is able to return components by paying re-stocking fees
or other fees, ***.

4.3 With Customer's prior written consent (not to be unreasonably withheld or
delayed), Sanmina shall purchase tools that it may require in order to fulfill
the Purchase Orders and Forecasts. The costs of same shall be borne by Customer.
Title in and to all such tooling purchased by Sanmina shall vest in Customer,
and Sanmina shall deliver to Customer possession of such tooling in the same
condition as when received by Sanmina (ordinary wear and tear excepted) upon the
earlier of the completion of the relevant Purchase Order or the termination of
this Agreement.

4.4 Customer's liability for the costs of components referred to in this Article
4 will be at the ***.



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                      -4-
<PAGE>   5
                                    ARTICLE 5
                                  RESCHEDULING

5.1 Customer at any time may reschedule the delivery dates of any of the
Products, subject to the following:


<TABLE>
<CAPTION>
       WRITTEN NOTICE BY CUSTOMER                 PERCENTAGE OF ORIGINAL QUANTITY
      TO SANMINA PRIOR TO ORIGINAL              OF PRODUCTS THAT CAN BE RESCHEDULED
             DELIVERY DATE                                  FOR DELIVERY
      ---------------------------               -----------------------------------
<S>                                             <C>
                 ***                                            ***
                 ***                                            ***
                 ***                                            ***
                 ***                                            ***
</TABLE>


As an example, if Customer notifies Sanmina in writing between thirty-one (31)
and sixty (60) days prior to the scheduled delivery date of the Products, a
maximum of *** of the total amount of the Products to be delivered on such date
may be rescheduled for delivery by Sanmina.

5.2 In the event Customer shall require decreased quantities of Products from
those originally scheduled for delivery at a specific date, Sanmina and
Customer, each acting reasonably and in good faith, shall agree upon a
rescheduled delivery date for the decreased quantities of Products within
forth-five (45) days of the original delivery date.

5.3 In the event Customer shall require an increase of quantities of Products
from those originally scheduled for delivery at a specific date, then Customer
shall notify Sanmina in writing at least thirty (30) days prior to the original
scheduled delivery date and Sanmina, on a reasonable commercial efforts basis,
will attempt to accommodate such increase.

5.4 If the Customer changes the delivery dates of any Product by a period
exceeding ninety (90) days in the aggregate, and if such change results in
additional expenses to Sanmina to store such Products or to acquire additional
components, such additional expenses shall be borne by Customer.

                                    ARTICLE 6
                                    REVISIONS

6.1 In the event Customer requests an engineering change to a Product, which
change shall be requested within a reasonable period prior to scheduled
delivery, Sanmina shall notify Customer of any impact on the costs and/or
scheduled delivery of such Products within five (5) business days of the receipt
of Customer's request. Unless Customer consents to such revisions of costs
and/or delivery by notice in writing within two (2) business days of receipt of
Sanmina's notification, the requested engineering change shall be deemed
cancelled. Any increases in the costs of Products resulting from any such
engineering change order ("ECO") shall be borne by



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.


                                      -5-
<PAGE>   6
Customer. Any decreases in the costs of Products resulting from any such
engineering change order shall result in a commensurate price reduction by
Sanmina. The costs of components made obsolete or components purchased by
Sanmina in excess as a result of any such ECO shall be borne by Customer. A USD.
*** administrative fee per ECO also shall be borne by *** to partially cover
***.

                                    ARTICLE 7
                                  CANCELLATIONS

7.1 Customer may cancel any Purchase Order by notifying Sanmina in writing at
least ninety (90) days prior to the scheduled delivery date. Within thirty (30)
days of such cancellation, Sanmina shall provide Customer with a written
calculation of Customer's total costs related to such cancelled order. Customer
shall pay such costs to Sanmina within thirty (30) days of the receipt of such
calculation. Upon receipt of payment for same, Sanmina shall deliver to
Customer, at Customer's expense, any components purchased but unused as a result
of such cancellation or shall scrap such components, at the direction of the
Customer as specified in the cancellation notice.

                                    ARTICLE 8
                                     PRICING

8.1 The prices for the Products manufactured and delivered by Sanmina pursuant
hereto are set forth in Exhibit "A" hereto and shall remain fixed for the Term,
with the following exceptions:

         (a)      in respect of an ECO, the provisions of Section 6.1 shall
                  apply;

         (b)      in respect of any rescheduling of delivery, the terms of
                  Article 5 shall apply; and

         (c)      material variations on the market prices of components shall
                  be applied to all Products' prices.

8.2 Quarterly Cost Reviews

Sanmina and Customer shall meet quarterly, starting three (3) months after the
date of this Agreement, to review the materials and process costs of the
Products. Where differences greater than 0.5 percent of the Product price shown
in Exhibit A are achievable, Sanmina and Customer agree to adjust the price
effective on the date that the changes are (or will be) implemented.

                                    ARTICLE 9
                                    DELIVERY

9.1

         (a)      Sanmina will deliver products on time, defined as shipment
                  according to the delivery dates Sanmina commits; or if Sanmina
                  has not made a specific commitment, to the date(s) identified
                  on the Purchase Order within a window of five (5) business
                  days early and two (2) business days late.



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.


                                      -6-
<PAGE>   7
         (b)      Delivery of all Products by Sanmina to Customer shall be
                  F.O.B. Sanmina's plant located at the address specified in
                  Exhibit "A" ("Delivery Point"), at which location risk of loss
                  and title to the Products shall be transferred by Sanmina to
                  Customer. Products held or stored by Sanmina at the Delivery
                  Point or any other location after the scheduled or rescheduled
                  delivery date of such Product, shall be held or stored at the
                  sole risk and expense of Customer.

         (c)      Unless otherwise specified by Customer, Sanmina shall
                  transport the Products to Customer by such mode or modes of
                  transportation as Sanmina reasonably determines, to Customer's
                  address or an address specified in writing by Customer. All
                  packaging, freight, insurance and other shipping expenses from
                  the Delivery Point shall be borne by Customer. When special
                  packaging is requested or, in the reasonable opinion of
                  Sanmina, is required, the additional costs related to such
                  special packaging shall also be borne by Customer.

                                   ARTICLE 10
                              PAYMENT AND INVOICING

10.1 Payment terms will be net thirty (30) days from each invoice date. Sanmina
will provide Customer with a credit limit to be determined by Sanmina, acting
reasonably, on or by the date of execution hereof. In the event Customer exceeds
such credit limit or amounts remain due and owing on any invoices for more than
sixty (60) days, Sanmina may stop shipments of Products to Customer until
Customer makes full payment upon such invoices. Sanmina further may reduce the
credit limit upon written notice to the Customer. Any and all overdue payments
over thirty (30) days shall bear interest at the rate of *** until paid in full.

                                   ARTICLE 11
                                    WARRANTY

11.1 Sanmina expressly warrants that each Product (excluding components
purchased from third-party vendors ("Vendor Components")) shall be free from any
defects in workmanship for a period of one (1) year from the date of manufacture
of such Product by Sanmina. Warranties on any Vendor Components are limited to
the warranties provided by the component manufacturers or Vendors. Sanmina will
use reasonable commercial efforts to make all warranties of its parts suppliers
assignable to the Customer. Sanmina shall pass on any unexpired assignable
warranties for any such Vendor Components to Customer until the expiration of
such warranties or up to a maximum of one (1) year from the date of manufacture
of the Product by Sanmina, whichever period is lesser. As Customer's sole remedy
under this Section 11.1 warranty, Sanmina will, at no charge, rework, repair and
retest any Product returned to Sanmina and found to contain such defects in
workmanship caused by Sanmina. Warranty coverage does not include failures due
to Customer design errors, improper or defective parts or materials used by
Customer, Customer-requested changes to the parts or materials, damages caused
by Customer's misuse, unauthorized repair or negligence. Sanmina does not assume
any liability for expendable items such as lamps and fuses. Sanmina reserves the
right to inspect the Products and verify that they are defective and, in the
event Sanmina, acting reasonably, determines they are not so defective, costs of
any inspection, testing or transportation of Products to and from Sanmina's
facilities shall be borne by Customer. Sanmina's total liability under this


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.


                                      -7-
<PAGE>   8
Article 11 shall be limited to the price of the Product supplied under this
Agreement, as given in Exhibit A and amendments thereto.

         The warranty afforded under this Article 11 also is limited to items,
parts and defects that are within the capability of existing test equipment and
Sanmina's programs and processes.

         The performance of any repair or replacement by Sanmina does not extend
the warranty period for any Products beyond the period applicable to the Product
as originally delivered pursuant hereto.

         EXCEPT FOR THE ABOVE EXPRESS WARRANTIES CONTAINED IN ARTICLE 11 AND
ARTICLE 13, SANMINA EXPRESSLY DISCLAIMS AND MAKES NO WARRANTIES, GUARANTEES OR
REPRESENTATIONS OF ANY KIND WHATSOEVER WITH RESPECT TO THE CONDITION OF THE
PRODUCTS OR ANY PARTS OR COMPONENTS THEREOF, EITHER EXPRESS OR IMPLIED, ARISING
BY LAW, IN CONTRACT, TORT, EQUITY OR OTHERWISE, INCLUDING BUT NOT LIMITED TO ANY
OBLIGATION OR LIABILITY OF SANMINA WITH RESPECT TO ANY WARRANTY AS TO FITNESS
FOR USE, CONDITION, SERVICEABILITY, SUITABILITY, VALUE, DESIGN, OPERATION OR
MERCHANTABILITY, AS THE CASE MAY BE, ANY IMPLIED WARRANTY ARISING BY STATUTE OR
COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE.

                                   ARTICLE 12
                                GENERAL INDEMNITY

12.1 Customer hereby indemnifies and saves harmless Sanmina, its parent and
affiliate corporations and their respective directors, officers, employees,
agents and servants from and against any and all actions, claims, losses, costs,
liabilities or expenses (including court costs and the fees and costs of
attorneys and other professionals) ("Claims") to the extent arising out of, or
in connection with, in whole or in part, (A) infringements of any patents,
trademarks, copyrights or other intellectual property by Customer, or (B) any
negligence or willful misconduct in respect of the Products by Customer, its
employees, agents and subcontractors, including but not limited to any such act
or omission that contributes to: (i) any bodily injury, sickness, disease or
death; (ii) any injury or destruction to tangible or intangible property of the
injured party or any loss of use resulting therefrom; or (iii) any violation of
any statute, ordinance or regulation.

12.2 Sanmina hereby indemnifies and saves harmless Customer, its parent and
affiliate corporations and their respective directors, officers, employees,
agents and servants from and against any and all actions, claims, losses, costs,
liabilities or expenses (including court costs and the fees and costs of
attorneys and other professionals) ("Claims") to the extent arising out of, or
in connection with, in whole or in part, (A) infringements of any patents,
trademarks, copyrights or other intellectual property of Sanmina, or (B) any
negligence or willful misconduct in the manufacture of the Products by Sanmina,
its employees, agents and subcontractors, including but not limited to any such
act or omission that is the sole cause of: (i) bodily injury, sickness, disease
or death; (ii) any injury or destruction to tangible or intangible property of
the injured party or any loss of use resulting therefrom; or (iii) any violation
of any statute, ordinance or regulation.



                                      -8-
<PAGE>   9
                                   ARTICLE 13
                        QUALITY, INSPECTION AND REPORTING

13.1 Customer has the right at all reasonable times, upon reasonable advance
written notice, to visit Sanmina's facilities and the Delivery Location to
inspect the work being performed on the Products pursuant hereto, provided such
inspection shall not unduly affect Sanmina's operations and provided Customer
and its representatives shall be on Sanmina's facilities and the Delivery
Location at Customer's sole risk. Inspection of the work by Customer shall not
relieve Sanmina of any of its obligations under the Agreement or the Purchase
Orders. Sanmina shall provide Customer with all mutually agreed upon quality
reports at agreed upon intervals. Sanmina reserves the right to restrict
Customer's access to its facilities or any area to protect confidential
information of Sanmina or its other customers or third parties.

13.2 If Customer requests inspection of the Products prior to the delivery of
such Products as a condition of acceptance of such Products, Customer shall
inspect the Products within forty-eight (48) hours of transmission of written
notice by facsimile from Sanmina informing Customer that the Products are ready
to be shipped. If Customer does not inspect the Products within such forty-eight
(48) hour period, Customer shall be deemed to have waived its rights to inspect
the Products as a condition of acceptance of such Products.

13.3 Customer and Sanmina, at Customer's cost, will implement a joint quality
improvement program that will develop and implement continuous quality
improvement processes with respect to the Products.

13.4 Sanmina shall manufacture the Customer's products in accordance to an
industry workmanship standard, agreed to by both parties. Unless otherwise
specified by the Customer, Sanmina will manufacture the Customer's products as
per ANSI/IPC-A-610, Revision B "Acceptability Of Electronic Assemblies", Class 2
"Dedicated Service Electronic Products".

13.5 If product manufactured by Sanmina is tested using equipment and fixtures
supplied by the Customer, the Customer is responsible to ensure that the
equipment and fixtures have been calibrated and maintained at a regular interval
as recommended by the manufacturer, and that the equipment and fixtures are in
proper operating condition. Calibration of equipment is to be performed by
qualified, licensed individuals.

13.6 Sanmina is responsible for assuring that Products are delivered to Customer
only after Products successfully complete the specified inspection and test
processes. If the product is being tested using equipment, fixtures, and/or
software provided by the Customer, Sanmina is not responsible for product
functionality beyond that assured by the Customer provided test processes.
Product testing is to be performed in accordance to product specifications and
test procedures, agreed to by both parties.

13.7 Sanmina is not responsible for workmanship quality if a subassembly of the
finished product is being manufactured by another EMS supplier that does not
conform to the workmanship standard specified in Section 13.4.



                                      -9-
<PAGE>   10
                                   ARTICLE 14
                                   TERMINATION

14.1 If either party fails to meet one or more of the terms and conditions as
stated in this Agreement or addenda, Sanmina and Customer agree to negotiate in
good faith to resolve such default. If the defaulting party fails to cure such
default or submit an acceptable written plan to resolve such default within
thirty (30) days following notice of default, the nondefaulting party shall have
the right to terminate this Agreement by furnishing the defaulting party within
thirty (30) days written notice of termination.

This Agreement shall immediately terminate should either party; (i) become
insolvent; (ii) enter into or file a petition, arraignment or proceeding seeking
an order for relief under the bankruptcy laws of its respective jurisdiction;
(iii) enter into a receivership of any of its assets or; (iv) enter into a
dissolution of liquidation of its assets or an assignment for the benefit of its
creditors.

14.2 Upon any such early termination caused by the Customer, Sanmina shall
provide Customer with an invoice of the Customer's Total Liabilities as of the
effective date of termination. In addition, the Customer shall be liable for all
work-in-progress and any outstanding charges in respect of the Products, and
shall receive all related stock, work-in-progress, and finished Products. Upon
termination, Customer shall pay all invoiced charges net thirty (30) days. Upon
any such early termination caused by Sanmina, Customer shall have the right to
receive all related stock, work-in-progress, and finished Products at prices
given in Exhibit A and amendments thereto, but Customer's liability shall be
limited to paying for finished Products it receives, at prices given in Exhibit
A and amendments thereto.

                                   ARTICLE 15
                                 CONFIDENTIALITY

Sanmina and Customer recognize that, for the term of this Agreement, it will be
necessary to disclose to each other certain confidential information, and that
each has a responsibility to protect such confidential information.

"Confidential Information" shall mean the confidential and proprietary
information related to the design, manufacture, application, know-how,
experimentation, research and development, components, hardware and software,
contents, workings, data, installation and implementation of the systems or
products of Customer and the business, manufacturing, inspection, and test
processes of Sanmina. It is understood that Confidential Information shall not
include:

(a)      information which was in the public domain at the time of the
         disclosure, or

(b)      information which, though originally Confidential Information,
         subsequently becomes part of the public knowledge or literature through
         no fault of the receiving party, as of the date of its becoming part of
         the public knowledge or literature, or

(c)      information independently developed by employees or agents of the
         receiving party who the receiving party can show had no access to
         Confidential Information received under this Agreement, or



                                      -10-
<PAGE>   11
(d)      is rightfully received from a third party without restriction on
         disclosure and without breach of this Agreement, or

(e)      is disclosed pursuant to a requirement of a governmental agency or the
         disclosure of which is required by law, or

(f)      is approved for release by written authorization of the disclosure
         party.

Sanmina and Customer mutually agree to hold each other's Confidential
Information in strict confidence and not to disclose such Confidential
Information to any third parties, nor use any Confidential Information for other
than the purposes of carrying out their obligations under this Agreement.
Sanmina and Customer may disclose each other's Confidential Information to their
respective employees, but only to the extent necessary to carry out the purposes
for which the Confidential Information was disclosed, and Sanmina and Customer
agree to instruct all such employees to not disclose such Confidential
Information to third parties without the prior written permission of the parties
disclosing such Confidential Information.

Sanmina and Customer acknowledge that all Confidential Information shall be
owned solely by the disclosing party and that the unauthorized disclosure or use
of such Confidential Information could cause irreparable harm and significant
injury which may be difficult to ascertain. Accordingly, Sanmina and Customer
agree that the disclosing party shall have the right to seek an immediate
injunction enjoining any breach of this Article.

Upon the written request of either party, the other party shall return to the
disclosing party proof of destruction, or provide all data, plans, drawings,
maskworks, computer files, or tangible items representing the other party's
Confidential information and all copies thereof.

Sanmina and Customer recognize and agree that nothing in this Agreement shall be
construed as granting any rights, license or otherwise, to any Confidential
Information disclosed pursuant to this Agreement.

                                   ARTICLE 16
                                 NON-COMPETITION

During the Term of this Agreement, and in perpetuity thereafter, Sanmina shall
not have the right to manufacture, anywhere in the world, products based on
Customer designs exclusively owned by the Customer and/or other Customer
intellectual property, other than the manufacture of products pursuant to this
Agreement or based on Customer designs and/or other Customer intellectual
property in respect of which title to or the right to use has been legally
acquired by Sanmina or by a third party which engages Sanmina for the purposes
of manufacturing the products.

                                   ARTICLE 17
                                TIMELY DISCLOSURE

Sanmina agrees to promptly inform Customer if it becomes aware of any material
threat to the uninterrupted production and delivery of the Products that may
develop from time to time from



                                      -11-
<PAGE>   12
any cause whatsoever, regardless of whether the cause is attributable to events
internal or external to Sanmina.

                                   ARTICLE 18
                                  MISCELLANEOUS

18.1 Governing Law. This Agreement will be governed by and interpreted under the
laws of the Province of Alberta and the federal laws of Canada applicable
thereto.

18.2 Jurisdiction. For any dispute arising out of this Agreement, the parties
consent and attorn to the non-exclusive jurisdiction of the courts of Alberta.

18.3 Entire Agreement; Enforcement of Rights. This Agreement, including Exhibit
A Pricing, Exhibit B Costed Bill of Materials, sets forth the entire agreement
and understanding of the parties relating to the subject matter herein and
merges all prior discussions and arrangements between them. No modification of
or amendment of this Agreement, nor any waiver of any rights under this
Agreement, will be effective unless in writing and duly executed by the parties.
The failure by either party to enforce any rights thereunder will not be
construed as a waiver of any rights of such party.

18.4 Assignment. Neither party shall assign its rights and obligations herein.
The rights and liabilities of the parties hereto will bind and inure to the
benefit of their respective successors.

18.5 Notices. Any required notices thereunder will be given in writing to the
addresses set forth below, or at such other address as either party may
substitute by written notice to the other in the manner contemplated herein, and
will be deemed to be received when hand-delivered or delivered by facsimile:

If to Sanmina:

Sanmina Canada ULC
6751 - 9th Street, N.E.
Calgary, Alberta
Canada T2E 8R9.

If to Customer:

Novatel Wireless .Inc.                 or     Novatel Wireless Technologies Ltd.
Suite 110, 9360 Towne Center Drive            Ste. 200, 6715 - 8th Street, N.E.
San Diego, CA                                 Calgary, Alberta
U.S.A.  92121                                 Canada T2E 7H7

18.6 Force Majeure. Neither party will be liable for any delay or failure in
performance thereunder if such delay or failure is caused by an event beyond
such party's reasonable control including, without limitation, acts or failures
to act of the other party, strikes or labour disputes, component shortages,
unavailability of transportation, floods, fires, governmental requirements and
acts of God (each, a "Force Majeure Event"). In the event of a threatened or
actual non-performance as a result of the above causes, the non-performing party
will exercise



                                      -12-
<PAGE>   13
commercially reasonable efforts to avoid and cure such non-performance. Lack of
funds shall not constitute a Force Majeure Event. Should a Force Majeure Event
prevent a party's performance thereunder for a period in excess of ninety (90)
days, then the other party may elect to terminate this Agreement by written
notice.

18.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which will be deemed an original and all of which together will
constitute one and the same instrument.




                                       SANMINA CANADA ULC



                                        by: /s/
                                           -------------------------------------
                                        its:
                                            ------------------------------------

                                        NOVATEL WIRELESS INC.


                                        by: /s/
                                           -------------------------------------
                                        its:
                                            ------------------------------------



                                      -13-
<PAGE>   14
                                    EXHIBIT A

DELIVERY POINT:

         Sanmina Canada ULC
         6751 - 9th Street N.E.
         Calgary, Alberta
         Canada T2E 8R9


PRODUCT PRICING:

<TABLE>
<CAPTION>
                                                                       SELLING PRICE
PART NUMBER     DESCRIPTION                            REVISION        ($USD.)
-----------     -----------                            --------        -------------
<S>             <C>                                    <C>             <C>
01016446        CDPD MODEM MODULE NRM-6812SM ASSY      11              ***
                                                       ***:            ***

01016476        CDPD MODEM MODULE NRM-6812SM-M         5               ***
                                                       ***:            ***
649496001551    CDPD MODEM ASSEMBLY EXPEDITE           TBD             ***
                                                       Material        ***
</TABLE>


THE SELLING PRICE WILL BE REDUCED AS FOLLOWS WHEN THE CUSTOMER AND SANMINA
IMPLEMENT ALL OF THE FOLLOWING COST REDUCTION PROGRAMS FOR 649496001551:

(a)      ***

(b)      ***

(c)      ***

(d)      ***

(e)      ***

(f)      ***


When all above opportunities are completed the price is: ***



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                      A-1
<PAGE>   15
<TABLE>
<CAPTION>
                                                                           SELLING PRICE
PART NUMBER     DESCRIPTION              REVISION                          ($USD.)
-----------     -----------              --------                          -------------
<S>             <C>                      <C>             <C>
649496001506    MINSTREL III-P2H         1                                 ***
                                         Price based on material costs:    ***

649496001513    MINSTREL III-P1H         1                                 ***
                                         Price based on material costs:    ***
</TABLE>


THE SELLING PRICE WILL BE REDUCED AS FOLLOWS WHEN THE CUSTOMER AND SANMINA
IMPLEMENT ALL OF THE FOLLOWING COST REDUCTION PROGRAMS FOR 649496001506 AND
649496001513:

(a)      ***

(b)      ***

(c)      ***

(d)      ***

(e)      ***

                                                                      ***

When all above opportunities are completed with the cost reductions
for P/N 649496001551, the price is:                                   ***


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>10
<FILENAME>ex10-14.txt
<DESCRIPTION>EXHIBIT 10.14
<TEXT>

<PAGE>   1
March 15, 2000                                                     EXHIBIT 10.14


Christopher Ciervo
Symbol Technologies, Inc.
1 Symbol Plaza
Hotsville, NY  11742-1300

Dear Chris:

Here are the terms we have discussed for the supply of CDPD modems in your
application.

1.      Novatel Wireless Inc. ("Novatel") agrees to supply the Merlin
        OEM CDPD modem, as well as Ricochet II, GPRS, GSM EDGE and CDMA
        technologies to Symbol Technologies, Inc. ("Symbol").

2.      This agreement shall run from *** through ***.

3.      Novatel agrees to supply the CDPD modems to Symbol at a unit
        price not to exceed $139 US or at ***, whichever is lower.  For
        GPRS, Ricochet II, GSM EDGE and CDMA technologies, Symbol's
        cost will be ***.

4.      Symbol agrees to purchase a total of *** or *** from Novatel over the
        *** of the agreement. If Symbol does not meet this commitment ***, and
        does not integrate another CDPD modem solution, Symbol will not be
        liable for any monetary penalty.

5.      If Symbol chooses to utilize another CDPD modem vendor for reasons other
        than under performance of Novatel's hardware, software or record in
        meeting agreed delivery dates, Symbol will make payments equaling *** on
        any outstanding forecast volumes.

6.      The per unit price as set forth includes the communications board made
        up of the 0.6-Watt CDPD radio modem, top and bottom shield covers of
        metal-plated plastic, and a 50ohm RF connector for antennae connection.

7.      Symbol shall provide a 12-month rolling forecast to Novatel
        Wireless.  The following changes to the quantity forecasts will
        be allowed:

<TABLE>
<CAPTION>
         -----------------------------------------------------------------------
         TIME LINE              STOCKING AGREEMENT
         -----------------------------------------------------------------------
<S>                             <C>
         ***                    ***
         -----------------------------------------------------------------------
         ***                    ***
         -----------------------------------------------------------------------
</TABLE>

8.      All prices are FOB Novatel's facility in Carlsbad, CA. All prices
        include normal packing for domestic shipment. All duty, insurance,
        special packing costs and expenses, and all Federal, Provincial, State
        and local excise, sales, use and other similar taxes are for Customer's
        account and will appear as additional items on invoices.

9.      Warranties shall be defined in Schedule "A".



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                      -1-
<PAGE>   2

10.     Novatel Wireless may, at its discretion, implement changes in
        the Product, modify the drawings and its specifications, or
        substitute a Product of more recent design; provided, however,
        that any such changes, modifications or substitutions, under
        normal and proper use shall not materially and adversely affect
        functional performance, form or fit of the product.  Novatel
        Wireless agrees to use reasonable efforts to provide Customer
        with 30 days written notice of such changes.

11.     Neither party shall be liable for any loss or damage due to delays in
        its delivery or performance, for its failure to manufacture, deliver or
        perform, arising out of any cause beyond its reasonable control.

12.     Customer shall not assign this Agreement or any of its rights or
        obligations under this Agreement without the prior written consent of
        Novatel Wireless.

13.     This agreement represents the business intent of both parties,
        and will be replaced by a formal agreement 30 days after
        execution.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.

NOVATEL WIRELESS INC.                         SYMBOL TECHNOLOGIES INC.


/s/                                           /s/
----------------------------                  ----------------------------------
Robert Corey                                  Ron Goldman
President and CEO                             Vice President and General Manager



                                      -2-
<PAGE>   3
                                  SCHEDULE "A"

Warranties

1.      Novatel Wireless warrants for a period of 1 year from delivery
        at the FCA point that its Products are free from defects in
        material and workmanship, conform to Novatel Wireless
        specifications and that the software shall be free from errors
        which materially affect performance.  THESE WARRANTIES ARE
        EXPRESSLY IN LIEU OF ALL OTHER WARRANTIE3S, EXPRESS OR IMPLIED,
        INCLUDING, WITHOUT LIMITATION, ALL IMPLIED WARRRANTEIS OF
        MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.  NOVATEL
        WIRELESS SHALL IN NO EVENT BE LIABLE FOR SPECIAL, INDIRECT,
        INCIDENTAL, OR CONSEQUENTIAL DAMAGES, OF ANY KIND OR NATURE DUE
        TO ANY CAUSE.

2.      Novatel Wireless' obligations are limited to correction of such failure,
        by implementation of the module swap warranty procedure whenever
        practicable and are conditioned upon the Product having been maintained
        in accordance with Novatel Wireless specifications and the Product not
        having been modified by any party other than Novatel Wireless except as
        expressly permitted in writing.

3.      The foregoing warranties do not extend to (i) non-conformities,
        defects or errors in the Product due to accident, abuse, misuse
        or negligent use of the Product or use in other than a normal
        and customary manner, environmental conditions not conforming
        to Novatel Wireless' specifications, or failure to follow
        prescribed operating maintenance procedures, (ii) defects,
        errors or non-conformities in the Product due to modifications,
        alterations, additions or Product changes not made or
        authorized to be made by Novatel Wireless, (iii) normal wear
        and tear, or (iv) damage caused by force of nature or act of
        yany third party.



                                      A-1
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>11
<FILENAME>ex10-15.txt
<DESCRIPTION>EXHIBIT 10.15
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.15



                         AGREEMENT FOR PURCHASE AND SALE
                                       OF
                   NOVATEL WIRELESS INC. MOBILE TERMINAL UNITS


                                     BETWEEN

                              NOVATEL WIRELESS INC.

                                       AND

                        VOICESTREAM WIRELESS CORPORATION





* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE>   2

   TABLE OF CONTENTS


<TABLE>
<S>                                                                                        <C>
   1 DEFINITIONS.............................................................................1


   2 PURCHASES AND SCOPE OF SUPPLY...........................................................4

   2.3  PERSONS AUTHORIZED TO PURCHASE; SUPPLY OF DELIVERABLES AND PURCHASE ORDERS...........4
   2.5  TECHNICAL INTERFACE..................................................................4
   2.6  POINT-OF-SALE PACKAGING..............................................................5
   2.13 CO PRODUCTS..........................................................................7
   2.8  PRODUCT TEST INSTRUMENTATION.........................................................7
   2.9  ACCESSORIES..........................................................................7
   2.12 UPDATE TO CHANGED STANDARDS..........................................................8
   2.15 MINIMUM HANDSET PROCUREMENT..........................................................8
   2.14 ALLOCATION OF PRODUCTION.............................................................9
   2.18 EMBEDDED PERMITTED SYSTEM RESTRICTION; PRE-LOADED SIM................................9
   2.19 RESALE BY BUYER.....................................................................10
   2.20 SOFTWARE LICENSE....................................................................10
   2.21 DATABASE............................................................................10
   2.22 COUNTRY OF ORIGIN...................................................................10
   2.23 BATTERY RECYCLING...................................................................10
   2.24 ADVERTISING DISPLAY MATERIAL........................................................10

   3 CUSTOMER REPRESENTATIVE................................................................11

   3.1  PROGRAM MANAGER REQUIRED............................................................11
   3.3  REPORTING AND MEETINGS..............................................................11

   4 PRICES.................................................................................11

   5.1  PRICE LIST; CHANGES AS NEW PRODUCTS ARE INTRODUCED..................................12
   5.2  MOST FAVORED CUSTOMER...............................................................13
   5.7  TAXES AND OTHER CHARGES.............................................................14

   5 INVOICING AND TERMS OF PAYMENT.........................................................14

   6.2  INVOICE UPON SHIPMENT...............................................................14
   6.5  PAYMENT.............................................................................14
   6.6  PAST DUE PAYMENTS...................................................................14
   6.7  AMOUNTS IN DISPUTE..................................................................14

   6 SELLER ADVERTISING ACCOUNT.............................................................14


   7 TRADEMARKS AND LOGOS...................................................................15

   9.1  BUYER'S LOGO ON PRODUCTS; ADVANCE CONSENT OF BUYER FOR OTHER LOGOS..................15
   9.2  ARTWORK AND REPRODUCTION............................................................15
   10.8 INABILITY TO MEET REQUIRED DELIVERY DATE............................................18
   10.10  FAILURE TO MEET REQUIRED DELIVERY DATE............................................18
   10.10  RIGHT TO COVER....................................................................18
   10.12  DISCREPANCIES.....................................................................19
</TABLE>



                                       i
<PAGE>   3

<TABLE>
<S>                                                                                        <C>
   10.15 MODIFICATIONS TO PURCHASE ORDER....................................................19
   4.1  ACCEPTANCE TEST PROCEDURE TO BE DEFINED.............................................20
   4.2  REGULATORY..........................................................................20
   4.7  ISO 9000 COMPLIANCE; AUDITS.........................................................20
   4.4  COMMERCIAL TEST PROCEDURES MARKET VERIFICATION TEST.................................21
   4.6  SAMPLE TESTING......................................................................21
   12.2 EXTENDED TERM FOR CERTAIN PROVISIONS................................................23

   11. TITLE AND RISK OF LOSS...............................................................23

   12 PRODUCT SUPPORT.......................................................................23

   14.1 TRAINING SUPPORT....................................................................23
   14.2 TECHNICAL SUPPORT...................................................................24
   14.3 DOCUMENTATION.......................................................................24
   14.4 SURVIVAL AND EXTENDED TERM..........................................................25

   13 WARRANTY AND SERVICE REPAIR...........................................................26

   4.3  INTER-OPERABILITY TESTING...........................................................26
   2.4  COMPLIANCE..........................................................................26
   11.1 RETURN OF DEFECTIVE PRODUCTS........................................................28
   16.3 SURVIVAL AND TERM...................................................................29

   14 TERMINATION; LIMITATION OF LIABILITY..................................................29

   17.1 DEFAULT.............................................................................29
   17.3 BANKRUPTCY..........................................................................29
   17.4 LIMITATION OF LIABILITY.............................................................30
   17.6 RIGHTS OF PARTIES UPON TERMINATION BY SELLER........................................31

   15 CONFIDENTIALITY.......................................................................31

   18.1 CONFIDENTIAL INFORMATION DEFINED....................................................31
   18.2 EXCEPTIONS..........................................................................32
   18.3 SURVIVAL............................................................................32

   16 FORCE MAJEURE.........................................................................32

   19.1 FORCE MAJEURE.......................................................................32
   19.3 BUYER'S RIGHT TO TERMINATE FOR FORCE MAJEURE........................................33
   19.4 SELLER'S RIGHT TO TERMINATE FOR FORCE MAJEURE.......................................33

   17 PRODUCT LIABILITY INDEMNIFICATION.....................................................33

   18 INTELLECTUAL PROPERTY INDEMNIFICATION.................................................33

   19 DISPUTE RESOLUTION....................................................................34

   22.1 INTERNAL ESCALATION.................................................................34
   22.2 MEDIATION...........................................................................35
   22.3 ARBITRATION OF DISPUTES.............................................................35
   22.4 CONTINUE TO PERFORM.................................................................36

   20 NON-EXCLUSIVE AGREEMENT...............................................................36

   21 INSURANCE.............................................................................36

   24.1 SELLER TO MAINTAIN..................................................................36
   24.3 LEVEL OF INSURANCE..................................................................37
</TABLE>



                                       ii
<PAGE>   4

<TABLE>
<S>                                                                                        <C>
   24.4 CERTIFICATES OF INSURANCE...........................................................37
   24.5 NO WAIVER...........................................................................37

   22 ASSIGNMENT............................................................................37

   25.1 CONSENT REQUIRED....................................................................37
   25.2 INVALID WITHOUT COMPLIANCE..........................................................37
   25.3 ASSIGNS.............................................................................38

   23 NOTICES...............................................................................38

   24 PUBLICITY.............................................................................38

   25 COMPLIANCE WITH LAWS; GOVERNING LAW...................................................39

   26 WAIVERS OF DEFAULT....................................................................39

   27 AMENDMENTS............................................................................39

   28 ORDER OF PRECEDENCE...................................................................39

   29 HEADINGS..............................................................................40

   30 SEVERABILITY..........................................................................40

   31 SURVIVAL..............................................................................40

   32 LICENSE...............................................................................40

   33 PARTY RELATIONSHIP....................................................................40

   35 COUNTERPARTS..........................................................................41

   39.1 INCORPORATION.......................................................................41

   37 ENTIRE AGREEMENT......................................................................41

   ATTACHMENT A-1 PRODUCT 1 -- GPRS  - PCS PC CARD..........................................44

   ATTACHMENT A-2 PRODUCT 2 -- GPRS  - PCS PC CARD 8-SLOT...................................46

   ATTACHMENT A-3 PRODUCT 3 -- GPRS  - GSM/PCS PC CARD 900/1900.............................48

   ATTACHMENT B DATES FOR COMPLETION OF ATTACHMENTS.........................................50

   ATTACHMENT C PRICES......................................................................51

   ATTACHMENT D SAMPLE TESTING PROTOCOL.....................................................53

   ATTACHMENT E  ACCEPTANCE TEST PROCEDURE..................................................56

   PENDING..................................................................................56

   ATTACHMENT F WARRANTY....................................................................57
</TABLE>



                                       iii
<PAGE>   5

<TABLE>
<S>                                                                                        <C>
   ATTACHMENT G DATABASE FORMAT.............................................................58

   ATTACHMENT H ADVERTISING DISPLAY MATERIAL................................................59

   ATTACHMENT I RETURN POLICY...............................................................60

   ATTACHMENT J  GPRS DEVELOPMENT SCHEDULE..................................................61

   LEVEL ONE TECHNICAL SUPPORT..............................................................63

   LEVEL TWO TECHNICAL SUPPORT..............................................................63

   TECHNICAL SUPPORT TRAINING...............................................................64
</TABLE>



                                       iv
<PAGE>   6

  LIST OF CONTRACT ATTACHMENTS

  ATTACHMENT               DESCRIPTION
  Attachment A-1           Description of Product 1 (specifications)
  Attachment A-2           Description of Product 2 (specifications)
  Attachment A-3           Description of Product 3 (specifications)

  Attachment B             Dates for Completion of Attachments
  Attachment C             Prices
  Attachment D             Sample Testing Protocol
  Attachment E             Acceptance Test Procedure

  Attachment F             End-user warranty
  Attachment G             Database Format
  Attachment H             Advertising Display Material
  Attachment I             Return Policy
  Attachment J             GPRS Development Schedule
  Attachment K             Technical Support



                                       v
<PAGE>   7

                         AGREEMENT FOR PURCHASE AND SALE

                                       OF

                NOVATEL WIRELESS INC. GPRS MOBILE TERMINAL UNITS

THIS AGREEMENT FOR PURCHASE AND SALE OF NOVATEL WIRELESS INC. MOBILE TERMINAL
UNITS (the "Agreement"), is made and effective as of the __ day of March, 2000,
by and between VoiceStream Wireless Corporation, a Delaware corporation with its
principal place of business in Bellevue, Washington ("Buyer"), and Novatel
Wireless Inc., a Delaware corporation, with its principal place of business in
San Diego, California ("Seller").

                                    RECITALS

A.       Buyer has received authority from the FCC (as defined herein below) to
         construct and operate PCS (as defined herein below) networks in certain
         areas within the jurisdiction of the United States and may receive
         authority to operate additional such systems.

B.      Seller has offered to sell to Buyer and Buyer wishes to buy the wireless
        communications subscriber devices and accessories described herein at
        the prices and discounts and on the terms and conditions specified
        herein .

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the premises and mutual covenants
        set forth herein and for other good and valuable consideration, the
        sufficiency of which is hereby acknowledged, the parties, intending to
        be legally bound, agree as follows:


1       DEFINITIONS

        The capitalized terms used in this Agreement or in an Attachment to this
        Agreement have the meanings set forth below:

AFFILIATE means any partnership, corporation or other entity in which Buyer owns
        a fifteen percent (15%) or greater equity interest or any entity
        controlling, controlled by or under common control with Buyer, which
        operates or is authorized to operate a Cellular System or PCS system in
        North America including the Caribbean Islands.

ANNUAL FORECAST means that annual forecast of Buyer's purchase volume only,
        updated monthly, supplied by Buyer to Seller, as more specifically
        described in Section 8.1.

AUTHORIZED PURCHASER means Buyer's selected, dealers, and agents, GSM network
        operators, retail stores, distribution centers, third party warehouses,
        and those other third party



                                       1
<PAGE>   8

        dealers with whom Buyer has a relationship at the time of such third
        party's contracting with Seller for the purchase of Handsets.

BTA means Basic Trading Area, a geographic area designated by the Federal
        Communications Commission for the purpose of granting authorizations to
        construct and operate PCS networks.

COMMERCIAL PRODUCTS means that Products have passed the testing process defined
        in Section 9, have received any necessary regulatory approvals, and is
        ready in all respects for public sale.

COMMERCIAL TEST PROCEDURES (CTP) means that test procedure, as provided in
        Section 9 and elsewhere, for Commercial Products.

CONFIDENTIAL INFORMATION means information that the parties are obligated to
        protect as more fully provided in Section 15.

END-USER means the owner or user of a Handset (i.e., the person who buys and
        uses a Product).

FCC OR FEDERAL COMMUNICATIONS COMMISSION means the agency of the United States
        Government charged with authorizing PCS networks, currently the Federal
        Communications Commission, or its successor agency.

HANDSET(s) means a mobile station in the PCS service intended to be used while
        in motion or during halts at unspecified points and conforming to the
        PCS 1900 specifications, as appropriate. Handsets include handheld
        portable units and units installed in vehicles. Handsets shall also
        include data-only or voice and data subscriber equipment products
        designed for use with computer devices, and includes the PCS cards
        described on Attachments A-1 through A-3 and such other attachments upon
        which the parties may subsequently agree in writing and attach to this
        Agreement.

INTELLECTUAL PROPERTY CLAIM (IP CLAIM) means a claim involving Buyer's or
        Seller's intellectual property rights, as more fully described in
        Section 19.

INVENTORY means all Products owned and held by Buyer or its Authorized
        Purchasers for resale or use.

MINIMUM PURCHASE TERM means that 12-month period of time (i) commencing on the
        date of delivery from Seller of the first Commercial Products purchased
        and accepted by Buyer.

MTA means Major Trading Area, a geographic area designated by the Federal
        Communications Commission for the purpose of granting authorizations to
        construct and operate PCS networks. References to MTAs shall include
        BTAs.



                                       2
<PAGE>   9

PERSONAL COMMUNICATIONS SERVICE ("PCS") means a system authorized by the FCC to
        provide public correspondence using cellular radio techniques and
        operating in the frequency band 1850 MHz to 1910 MHz and 1930 MHz to
        1990 MHz.

PRODUCTS means the Handsets and accessories identified in Attachments A-1
        through A-3 hereto, including related documentation as the same may be
        modified, added or discontinued during the Term (where the addition,
        modification or discontinuance is in accordance with this Agreement) and
        available for purchase by Buyer or otherwise supplied to Buyer under
        this Agreement.

PROTOTYPE PRODUCT means an engineering version of a Product that is not a
        Commercial Product, capable of demonstrating size, weight, feel and some
        basic functionality (e.g., the ability to place/receive voice telephony
        calls, of the final Product). Prototype Products are not necessarily
        produced with production tooling nor do they necessarily have final
        production software. Prototype Products are built in limited volumes,
        primarily for engineering design validation purposes, and may include
        Alpha (first generation) and Beta versions..

PURCHASE ORDER means Buyer's order to Seller for specific Products, as more
        fully described in Section 8.

SECTION means, when used without any other reference, sections, including
        subsections, within this Agreement.

SOFTWARE means (a) all computer software furnished hereunder for use with
        Products including, but not limited to, computer programs contained on a
        magnetic or optical storage medium, in a semiconductor device, or in
        another memory device or system memory consisting of (i) hardwired logic
        instructions which manipulate data in central processors, control
        input-output operations, and error diagnostic and recovery routines,
        (ii) instruction sequences in machine-readable code that control call
        processing, peripheral equipment and administration and maintenance
        functions; and (b) documentation furnished hereunder for use and
        maintenance of the Software.

SPECIFIED SHIPPING DATE means the date, as shown in a Purchase Order or
        otherwise, upon which Buyer requests shipping of certain Products, as
        more fully described in Section 8.

SUBSCRIBER IDENTITY MODULE (SIM) means mean an electronic module, either in the
        form of an integrated circuit "smart card" or otherwise, that contains
        personalization information concerning a user and is intended to be
        inserted in and removed from a SIM reader in Handset Products.

TERM means, unless sooner terminated subject to section 14, the initial ***
        duration of this Agreement commencing on the date that it is completely
        executed by the parties, which initial term shall be extended for
        additional *** terms unless, ninety (90) days before the


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       3
<PAGE>   10

        expiration of the initial or any other term, one party gives written
        notice to the other of non-renewal.

2       PURCHASES AND SCOPE OF SUPPLY

          2.1  PERSONS AUTHORIZED TO PURCHASE .

               2.1.1  PERSONS PERMITTED TO BUY PRODUCTS. This Agreement
                      contemplates purchases by Buyer, its Affiliates, and its
                      Authorized Purchasers, all sometimes collectively referred
                      to as "Permitted Purchasers."

                      2.1.1.1  BUYER AND AFFILIATES. Buyer is permitted to
                               purchase under the terms and conditions
                               applicable to Buyer on its own account or for its
                               Affiliates and Authorized Purchasers.

                      2.1.1.2  AUTHORIZED PURCHASERS. To simplify administration
                               of purchases by Affiliates and Authorized
                               Purchasers, unless otherwise agreed by the
                               parties, each Affiliate or Authorized Purchaser
                               may enter into a separate contract with Seller
                               consistent with Seller's obligations to provide
                               to such Affiliate or Authorized Purchaser
                               identical pricing and substantially and
                               materially the same terms and conditions provided
                               to Buyer herein

               2.1.2  Nothwithstanding the foregoing, Buyer has no
                      responsibility for payments of obligations incurred by any
                      other purchaser. Seller shall not seek payment from Buyer
                      for any sums owed by any purchaser except Buyer.

               2.1.3  EXCLUSIVE PURCHASES. Nothing in this Agreement shall
                      require Buyer, or any other Permitted Purchasers, to
                      purchase exclusively from Seller.

               2.14   CREDITWORTHINESS. For any Permitted Purchaser other than
                      Buyer, Seller may establish commercially reasonable,
                      non-discriminatory credit (and other) qualifications as a
                      pre-condition to sales. Seller shall provide written
                      notice to Buyer of any proposed disqualification.

        2.2    TECHNICAL INTERFACE.



                                       4
<PAGE>   11

               2.2.1  INFORMATION REQUIRED. Within forty five (45) days from the
                      effective date hereof, Seller shall provide Buyer with
                      detailed information concerning the diagnostic and
                      monitoring capabilities, operating software
                      specifications, and detailed product specifications of
                      Products, except information Seller reasonably considers
                      proprietary or confidential. The information to be
                      provided by Seller to Buyer shall also include the
                      electrical interface specifications and the data flow
                      specifications. All such information provided by Seller
                      shall be sufficient enough to permit Buyer to use and
                      maintain the Products as test equipment and to effectively
                      test the Products in Buyer's network. As new Products are
                      developed or as the electrical interface or data flow
                      specifications are changed, Seller shall timely supply
                      updated information to Buyer, except information Seller
                      reasonably considers to be proprietary or confidential.
                      The information supplied shall include instruction on how
                      to place Products into diagnostic or monitor mode and, if
                      hardware or Software components are necessary, Seller
                      shall supply Buyer, without charge, with a quantity of
                      such components sufficient for Buyer's reasonable
                      requirements. The diagnostic and monitoring information to
                      be provided by Seller shall include specific
                      diagnostic/monitoring testing features on PCS 1900
                      equipment. If unique or proprietary connecting cables are
                      necessary to communicate with the Product when in
                      diagnostic or monitor mode, Seller shall furnish Buyer
                      with a reasonable quantity of such cables, without charge.

               2.2.2  USE OF INFORMATION. Seller hereby grants to Buyer a
                      royalty-free license to use the information described in
                      2.2.1 for Buyer's purposes in constructing, testing,
                      maintaining, using, and operating the Products. Seller
                      shall develop sample software demonstrating interfaces and
                      communications with the Product in diagnostic or monitor
                      mode and Seller shall supply, without charge, copies of
                      same, including sample source code (i.e., sample AT
                      command script), to Buyer for Buyer's use. Buyer shall
                      have the right to incorporate Products in this
                      configuration into its test equipment for testing the
                      Products, including the right to transfer information
                      furnished under this Section 2.2.2 to third parties to
                      develop test equipment for Buyer or to develop such test
                      equipment directly. Seller shall not charge Buyer or any
                      such third party any royalty or other similar charge where
                      the test equipment so developed is used for Buyer's
                      purposes testing the Products.

        2.3    POINT-OF-SALE PACKAGING.

               Seller shall use EAN 328, "3 of 9", or Universal Product Code
               ("UPC") stock control numbering ("SKU") markings or other
               customer-specific bar code markings and human readable format on
               the outside of the point-of-sale package



                                       5
<PAGE>   12

               for each of the packaging options described below. Seller shall
               provide information to Buyer concerning Seller's bar coding and
               serial number coding for Products, sufficient to permit Buyer to
               properly electronically read Seller's bar coding and to be able
               to monitor and track Products received. Invoices and shipping
               notices shall include electronic copies of serial numbers and
               other information reasonably needed by Buyer to track and control
               inventory.

               Buyer shall select, from time-to-time, its desired packaging
               format from among the options described below, subject to the
               limitations established therein. In the event that Buyer wishes
               to change its desired packaging format, Buyer and Seller shall
               agree upon the lead time necessary to effect such change, Buyer
               shall provide Seller with Notice of its desire to change
               packaging format as soon as possible (but no less than 90 days
               before the format change is desired), and Seller shall use
               reasonable efforts to afford the shortest lead time possible.

               2.3.1  SELLER-LABELED BOX. The Product is packaged and shipped in
                      Seller's standard size rectangular box labeled with
                      Seller's trade name.

               2.3.2  GENERIC BOX. The Product is packaged and shipped in
                      Seller's standard size rectangular box without any labels,
                      in a plain white cardboard format. In the event that any
                      labels, packaging or identifying marks are intended to be
                      attached to, or wrapped around such box, and Buyer uses
                      its transparent packaging, Seller shall design the Product
                      so that the "Novatel Inc." logo will be visible to the End
                      User.

               2.3.3  BULK-SHIP. The Product is shipped in a bulk package,
                      without individual packages for each unit of Product.
                      Buyer has the obligation to arrange for individual unit
                      packaging. In the event that any labels, packaging or
                      identifying marks are attached to, or wrapped around any
                      individual unit packaging, and Buyer uses its transparent
                      packaging, Seller shall design the Product so that the
                      "Novatel Inc." logo will be visible to the End User.

               2.3.4  CUSTOM PACKAGE. The Product is packaged and shipped in
                      Seller's standard size rectangular box with Buyer's
                      artwork and inserts (Commercial Product packaging). Buyer
                      shall provide the necessary artwork in such format and
                      upon such schedules as may be reasonably agreed by the
                      parties. The parties shall agree upon a
                      commercially-reasonable minimum order for such custom
                      packaging. In the event that the cost for producing and
                      shipping such a custom package exceeds Seller's cost to
                      produce and ship its Seller-labeled box, Buyer shall pay
                      that excess amount upon Seller's providing such
                      documentation as Buyer may reasonably require.



                                       6
<PAGE>   13

               2.3.5  PACKAGE INSERTS. With respect to the packaging performed
                      in sections 2.3.1, 2.3.2, and 2.3.4, Seller shall, without
                      charge to Buyer, insert into each point-of-sale package up
                      to four (4) pieces of Buyer-provided materials such as,
                      but not limited to, promotional materials and Buyer's
                      service provider information. Buyer's promotional
                      materials and information may be different for different
                      models of Products and may differ geographically, which
                      would require different SKU's for each package
                      configuration, but they shall be designed to fit within
                      the point of sale packaging with the Product, without
                      significantly increasing the packaging costs. Seller shall
                      ensure that the proper materials and information are
                      inserted into the corresponding Commercial Product
                      packaging and are delivered to the corresponding
                      geographical regions.

        2.4    CO-BRANDED PRODUCTS.

               2.4.1  CO-BRANDED PRODUCTS. Buyer may wish to receive all or part
                      of its orders in the form of co-branded Products in such
                      form as Buyer shall direct in advance, whereby Buyer's
                      name appears on the Product in addition to Seller's name
                      (such Products being referred to as "Co-Branded
                      Products"). Such Co-Branded Products may be in slightly
                      different form, different color, etc. as may be mutually
                      agreed by Buyer and Seller. Co-Branded Products shall be
                      available to Permitted Purchasers to the extent determined
                      and permitted in writing by Buyer. Seller's logo shall
                      also appear on Co-Branded Products.

               2.4.2  PRICES FOR CO-BRANDED PRODUCTS.

                      2.4.2.1  ***

                      2.4.2.2  *** the *** charge for a Co-Branded Product shall
                               be based upon ***. Seller shall document its
                               incremental expenses and present the
                               documentation to Buyer. Notwithstanding anything
                               to the contrary contained in the preceding
                               sentences, the parties may mutually agree upon a
                               commercially reasonable charge for custom
                               manuals, documentation or other similar changes
                               from Seller's standard practices. ***" Seller's
                               charges for packaging of a Co-Branded Product are
                               to be determined consistent with this Section
                               2.4.

        2.5    PRODUCT TEST INSTRUMENTATION. ***, beginning when the first
               Commercial Products are delivered, Seller shall provide Buyer
               with current Software and shall continue to provide current
               updated Software subject to the terms of this Agreement.

        2.6    ACCESSORIES. Seller will include a standard set of accessories
               with each Handset as identified and set forth in Attachment A-1
               through Attachment A-3, including, at


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       7
<PAGE>   14

               a minimum, antenna, headpiece/earset, user guide and necessary
               device driver software supplied on computer readable media (i.e.
               CD-ROM). In addition, Seller will offer a set of optional
               accessories available *** as identified in Attachment C, which
               shall be updated from time to time as mutually agreed to by the
               parties.

        2.7    UPDATE TO CHANGED STANDARDS. The parties recognize that the PCS
               1900 technology is still undergoing development and that
               Commercial Products may require post-production modification to
               meet changes in the various standards governing such Commercial
               Products.

               2.7.1  Seller agrees to provide to Buyer, ***, all Software
                      necessary to update any Products provided under this
                      Agreement to meet standards changes relevant to the
                      Product, where such standards change becomes effective
                      within *** from the date of delivery of the Product to the
                      End-User and (i) where, without the update, use of the
                      Product would be significantly impaired; or (ii) where the
                      update is necessary to remove a safety risk to users of
                      the Product; or (iii) where the update is necessary in
                      order to continue the safe, efficient and economic
                      operation of Buyer's network; or (iv) where the change is
                      required by operation of federal, state, local, or
                      international law or regulation.

               2.7.2  Further, Seller agrees to provide to Buyer, ***, any
                      Software necessary to update any Products provided under
                      this Agreement to meet standards changes relevant to such
                      Products where such standards changes become effective
                      within *** from the date of delivery of the Products to
                      Buyer and where, without the update (i) there would be a
                      material degradation in the operation of significant
                      features of the Products available to End-Users prior to
                      such standards changes and such material degradation
                      occurred with respect to a material number of Products, or
                      (ii) there would be a material degradation in the
                      operation of the network.

               2.7.3  Notwithstanding anything to the contrary contained herein,
                      Seller shall comply with the final order of any court or
                      administrative body with respect to any required
                      modification of any Product.

         2.8   MINIMUM PRODUCT PROCUREMENT.  ***

               2.8.1  RECORDS AND REPORTS. Seller shall maintain records
                      sufficient to accurately determine the actual purchase
                      volume credited to Buyer. Not later than thirty (30) days
                      after the end of each preceding month, Seller shall
                      prepare and provide to Buyer a report of qualifying
                      purchases and credits toward purchases (if appropriate)
                      for the preceding month. The report shall be furnished in
                      both paper and electronic versions. Seller shall certify
                      the accuracy of the report by signature of an appropriate
                      officer of Seller. The report shall be categorized by
                      identity of purchaser


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       8
<PAGE>   15

                      (Buyer,Affiliates, Authorized Purchasers) and model of
                      Product purchased or credits toward purchases made, and
                      the report shall indicate the unit volume of purchases
                      qualifying for aggregation in each category.

               2.8.2  CONTINUE TO DEVELOP COMPETITIVE PRODUCTS. Buyer's guaranty
                      to purchase the Minimum Purchase Quantity is conditioned
                      upon Seller's ability to continue to supply
                      state-of-the-art Products that are readily accepted by the
                      marketplace.

        2.9    ALLOCATION OF PRODUCTION. In the event that Seller is unable to
               meet its orders for Products as set forth in Purchase Orders that
               have been accepted by the Seller, and without derogation of
               Buyer's other remedies under this Agreement, Seller grants Buyer
               ***. Buyer shall retain this right of first refusal until Buyer
               has met its Minimum Purchase Quantity commitment, or the Minimum
               Purchase Term has expired, whichever is earlier. Buyer's right of
               first refusal shall apply to purchases by Affiliates and
               Authorized Purchasers.

        2.10   EMBEDDED PERMITTED SYSTEM RESTRICTION; PRE-LOADED SIM.

               2.10.1 EMBEDDED PERMITTED SYSTEM RESTRICTION. All Co-Branded
                      Handset Products sold to Permitted Purchasers shall be
                      configured with embedded software so as to function only
                      with a SIM supplied by Buyer or, as provided in Section
                      2.10.2, by Seller, unless otherwise specifically requested
                      by Buyer. Handsets shall be inoperable, except for
                      emergency calls, using a SIM for a network other than
                      Buyer's. Roaming operation with Buyer's network as the
                      subscriber's home system shall be unaffected by this
                      restriction. Such restriction shall be removable only
                      through an input key sequence unique to each individual
                      Handset (i.e., a common un-restriction code for all
                      Handsets of a particular model is not acceptable).
                      Following removal, the Handset shall operate with any SIM.
                      The removal key sequence shall be supplied to Buyer in an
                      electronic database, indexed by the serial number of the
                      Handset or other unique identifier agreed to by Buyer. The
                      removal key sequence shall not be supplied to any other
                      Permitted Purchaser or to the users of Handsets without
                      the written consent of Buyer on a case-by-case basis.

               2.10.2 PRE-LOADED SIM; PRE-PAID SIMS. Buyer intends that all
                      Handsets sold to Permitted Purchasers shall have a SIM
                      configured for Buyer's network pre-installed unless
                      otherwise directed by Buyer. The parties shall negotiate
                      the method of effecting Buyer's intention, recognizing the
                      need for security in the SIM configuration and the need to
                      accomplish installation in a cost-effective fashion. The
                      installation method may involve Buyer supplying configured
                      SIMs to Seller for installation. In those instances where
                      Seller is to install SIMs, the compensation to be


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       9
<PAGE>   16

                      paid to Seller shall be as set forth in Attachment C.
                      Where the parties agree that Seller is to assume
                      responsibility for installing SIMs, information concerning
                      the SIM and International Mobile Equipment Identity
                      ("IMEI"), etc., shall be provided to Buyer in a mutually
                      agreed electronic form. ***. Seller agrees that it will
                      implement reasonable and prudent safeguards to protect all
                      SIMs over which it has custody. In connection therewith,
                      no less frequently than once per calendar quarter, Seller
                      shall provide Buyer with a detail inventory report and
                      proper accounting of SIMs provided to Seller hereunder.

                      Seller agrees promptly to implement pre-paid SIM support
                      in its Handsets upon completion of pre-paid SIM standards.

        2.11   RESALE BY BUYER. Buyer shall have the right to resell Products
               upon the prices and terms and conditions to be determined by
               Buyer. Seller shall honor the warranty and other obligations
               imposed in this Agreement with respect to any Affiliate,
               Authorized Purchaser, or End User to the same extent required for
               a direct sale by Seller.

        2.12   SOFTWARE LICENSE. Subject to the limitations set forth elsewhere
               in this Agreement, at no charge to Buyer, Seller hereby grants to
               Buyer and its End Users a nonexclusive license to use Software
               associated with Products delivered to Buyer.

        2.13   DATABASE. Seller shall provide electronic format data concerning
               each Handset Product shipped, in the format and on the dates set
               forth in Attachment G. The form of data and its media may be
               changed from time-to-time by mutual agreement of the parties.

        2.14   COUNTRY OF ORIGIN. Upon request by Buyer, Seller shall provide
               Buyer with evidence of country of origin of Products, including
               the usual and customary certificates of country of origin, signed
               by an appropriate authorized official of Seller.

        2.15   BATTERY RECYCLING. If Seller's Products contain separate
               batteries or batteries replacable by End-Users, Seller shall
               establish a "used battery return program," whereby Buyer and
               End-Users of Seller's Products may obtain information on
               recycling used batteries through a nationwide toll-free "800"
               telephone number. Information concerning this program shall be
               included in the user information supplied with Products and
               replacement batteries.

        2.16   ADVERTISING DISPLAY MATERIAL. Seller shall create the normal and
               customary point-of-sale display material, product brochures,
               dummy Handsets, etc. and furnish reasonable quantities of the
               same to Permitted Purchasers at the prices set forth in
               Attachment C. Seller shall cooperate with Buyer in producing this


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               material and, upon request by Buyer, add reasonable Buyer-defined
               information to the point-of-sale material. Reasonable quantities
               of the sales material described in Attachment H will be provided
               by Seller to Buyer without charge. Such quantities shall be
               consistent with those quantities offered to other customers of
               Seller under similar circumstances.

3       CUSTOMER REPRESENTATIVE

        3.1    CUSTOMER REPRESENTATIVE. No more than 30 days subsequent to the
               effective date hereof, Seller shall identify a customer
               representative (the "Customer Representative") to whom it shall
               delegate such authority within Seller's organization as is
               necessary for proper discharge of the duties and obligations set
               forth in this Agreement. By illustration and not limitation, the
               Customer Representative shall provide timely information to Buyer
               concerning development, testing and manufacturing schedules, test
               procedures, test execution, shipping and delivery schedules,
               manufacturing of co-branded or other custom Products,
               specifications, features and functions, inter-operability, and
               other related matters. The Customer Representative shall be
               Buyer's primary point of contact for all issues arising from the
               implementation and execution of the terms and conditions of this
               Agreement.

        3.2    UPDATE MEETINGS. The parties shall meet not less than once every
               calendar quarter to review Buyer's needs for Products, and
               discuss new Products (such meeting being referred to as an
               "Update Meeting"). At least thirty (30) days prior to each Update
               Meeting, Buyer shall submit to Seller a written, proposed agenda,
               outlining the development issues Buyer would like addressed by
               Seller. Seller shall review such proposed agenda and will provide
               an update to Buyer on any such issue where Seller has provided,
               or is willing to provide, an update to any customer or other
               third party. Further, at each Update Meeting, Seller will provide
               to Buyer an update on the status of the development of any
               features Seller anticipates will be launched within the
               forthcoming two (2) years, provided that Seller has disclosed, or
               is willing to disclose, such information to any customer or other
               third party. Buyer agrees that certain of this information may be
               Confidential Information and shall be treated as such in accord
               with the terms of this Agreement.

4       PRICES

        4.1    ***


        4.2    ***. Subject to the terms and conditions set forth in Section 8,
               ***


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               4.2.1 In the event that Seller fails for any reason to develop
               and deliver any of the Commercial Products listed on Attachments
               A-1, A-2, or A-3 within the time periods previously agreed upon
               by the parties, then ***

        4.3    PRICE LIST; CHANGES AS NEW PRODUCTS ARE INTRODUCED. The prices
               for the Products as set forth in Attachment C are ***. If Seller
               implements changes in the Products, modifies the drawings and
               specifications relating thereto, or substitutes therefor products
               of more recent design through proposed amendments to Attachments
               A-1 through A-3 or the addition of a new Attachment, in addition
               to any other requirements provided in this Agreement, any
               changes, modifications or substitutions must comply with each of
               the following requirements with respect to changes to existing
               Products or new Products intended as replacements for existing
               Products:

               4.3.1  INTERCHANGEABILITY. Where the new or changed Product is
                      intended to be physically interchangeable with an existing
                      Product, such new or changed Product must not adversely
                      affect physical or functional interchangeability with
                      existing Products or performance, unless otherwise agreed
                      in writing by Buyer.

               4.3.2  PRICE. The price for an equivalent Product (i.e., with
                      similar form including size and weight, features,
                      functionality and accessories) must be ***.

               4.3.3  ADVANCE NOTICE.

                      4.3.3.1  Seller will provide Buyer with advance written
                               notice of any substantial change, modification
                               substitution, or discontinuance, including notice
                               of Seller's intention to change the Product's
                               price as set forth in section 4.3.2. Except where
                               unplanned and immediate market changes make such
                               notice impracticable, the notice shall be given
                               at least ninety (90) days in advance of the
                               effective date of the change, modification or
                               substitution, except that notice of Seller's
                               intention to change the Product's price shall be
                               given at least thirty (30) days in advance of the
                               effective date of the change. Should Seller not
                               have made its final pricing decisions at the date
                               of notice, Seller shall provide Buyer with
                               Seller's estimated prices *** and shall furnish
                               the final price information to Buyer not later
                               than thirty (30) days in advance of the effective
                               date. In the event that Seller has failed to
                               provide the required advance written notice, then
                               Buyer may, at its option, return all unsold
                               inventory of the Products to which the price
                               change applies and receive a credit from Seller
                               in the amount paid by Buyer for the


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                               returned products. The price for any Product that
                               has not been shipped as of the effective date of
                               the price change shall be deemed to be restated
                               at the new, lower amount.

               4.3.4  ACCESSORY COMPATIBILITY. Where a new Product is
                      introduced, Seller shall ensure that, to the greatest
                      extent reasonably feasible, the new Product is
                      plug-compatible with older Products for accessories. It is
                      not Buyer's intention to limit Seller's ability to
                      introduce smaller or lighter Products through this Section
                      4.3.4. However, Seller shall give due consideration to
                      ensuring compatibility of, among other things, battery
                      chargers, hands-free kits, etc., when introducing new
                      Products.

        4.4    ***.

               ***

               4.4.2  *** either by (i) delivering a check made payable to the
                      order of Buyer or delivering cash to Buyer; or (ii)
                      applying a credit or offset against any outstanding
                      undisputed invoices Buyer has with Seller and delivering a
                      check to Buyer for the remaining amount. In addition to
                      the foregoing, the parties may agree that Seller may apply
                      *** rebate either by (x) delivering to Buyer such quantity
                      of Products as has an aggregate value equal to the ***; or
                      (y) combining any of the first three methods set forth in
                      this Section 4.4.2.

               4.4.3  CERTIFICATION. Buyer may from time to time obtain from
                      Seller, ***, a certification signed by an authorized
                      officer, stating that the price review was performed and
                      whether Buyer or any other Permitted Purchaser is entitled
                      to a rebate or a lower price upon the conclusion of the
                      quarterly price analysis described above. At Buyer's
                      request, Seller shall provide the results and
                      documentation of the review to Buyer's outside independent
                      firm of certified public accountants for verification;
                      provided that the accountants shall not disclose any
                      information related to such review to Buyer, unless Buyer
                      is entitled to lower prices or more favorable terms of
                      sale under this provision and then only such information
                      as may be necessary to request such prices or terms. All
                      information delivered to Buyer shall also be delivered to
                      Seller. In the event that the outside audit determines
                      that a price reduction should have been made but was not
                      made by Seller, Seller shall bear all expenses of the
                      audit. In the event that the outside audit determines that
                      no price reduction should have been made, Buyer shall bear
                      all expenses of the audit.


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        4.5    RETURN POLICY. Buyer shall have the right to return Product,
               subject to re-stocking charges and other reasonable limitations
               set forth in Seller's "Standard Return Policy," as amended from
               time to time by mutual agreement, a copy of which is attached
               hereto as Attachment I. ***

        4.6    TAXES AND OTHER CHARGES. Seller shall bear the cost of all taxes,
               import and export duties, and other governmental fees of whatever
               nature except sales and use taxes. Seller shall not charge Buyer
               sales tax, provided that Buyer has provided Seller with a current
               tax-exempt certificate.

        4.7    SELLER TO HOLD BUYER HARMLESS. Seller agrees to pay, and to hold
               Buyer harmless from and against, any penalty, interest, tax or
               other charge that may be levied or assessed as a result of the
               delay or failure of Seller for any reason to pay any tax or file
               any return or information required by law, rule or regulation or
               by this Agreement to be paid or filed by Seller.


5       INVOICING AND TERMS OF PAYMENT

        5.1    INVOICE UPON SHIPMENT. Seller shall issue an invoice to Buyer in
               detail satisfactory to Buyer, including a mutually-agreed upon
               electronic format, for Products at the time of shipment.

        5.2    PAYMENT. Buyer guarantees to Seller to pay invoices within thirty
               (30) calendar days of the later of both (i) Buyer's receipt of an
               invoice and (ii) receipt by Buyer of Products corresponding to
               such Invoice.

        5.3    PAST DUE PAYMENTS. Any payment not made within thirty (30) days
               of receipt of invoice shall be subject to a late payment charge
               of *** per month applied against the unpaid portion of the
               charge. In the event that any payment becomes more than sixty
               (60) days past due, Seller may at its option (i) cease shipment
               of any Products ordered in accord with this Agreement and (ii)
               provide the thirty (30) notice of termination with Buyer's right
               to cure as set forth in section 14.1.

        5.4    AMOUNTS IN DISPUTE. Where Buyer disputes the amount due under an
               invoice, Buyer shall pay the sum not in dispute. Sums disputed in
               good faith shall not be considered late under Section 5.3.


6       SELLER ADVERTISING ACCOUNT

        Buyer may purchase advertising and promotion in the Buyer's MTA's and
        BTA's with a total value of *** purchased by Permitted Purchasers from
        Seller hereunder, and Seller shall credit *** against amounts otherwise
        due Seller (the "Advertising Allowance"). Buyer shall earn the
        Advertising Allowance monthly and may use it at any time over the


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                                       14
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        twelve (12) month period immediately following the month in which the
        Advertising Allowance was earned. The Advertising Allowance shall be
        applicable to the Minimum Purchase Quantity only once the Minimum
        Purchase Quantity has been delivered, but it may be spent at any time in
        the twelve (12) month period immediately following completion of
        delivery of the Minimum Purchase Quantity.


7       TRADEMARKS AND LOGOS

        7.1    LOGOS ON PRODUCTS; ADVANCE CONSENT FOR OTHER LOGOS. At either
               party's reasonable request, the Products shipped under this
               Agreement shall carry that party's designated logo and/or
               labeling as described in Section 2.

        7.2    LIMITED USE OF MARKS. To ensure protection of each party's
               trademarks, trade names, corporate slogans, corporate logo,
               goodwill and product designations, neither party, without the
               express written consent of the other, shall have the right to use
               any such marks, names, slogans or designations of the other, in
               the sales, lease or advertising of any Products or on any Product
               container, component part, business forms, sales, advertising and
               promotional materials or other business supplies or material,
               whether in writing, orally or otherwise.

        7.3    ARTWORK AND REPRODUCTION. To the extent requested by a party and
               in accordance with Sections 2 and 7.1, the other shall provide
               camera-ready artwork of the other's trademarked logo labels. The
               providing party hereby authorizes the receiving party to
               reproduce such trademarked labels to the providing party's
               satisfaction for the sole purpose of affixing such trademarked
               labels to the Products and point-of-sale packaging in accordance
               with the providing party's specifications. Each party represents
               and warrants to the other that it has the right, by way of
               ownership or otherwise, to use such logo and further agrees to
               indemnify and hold the other harmless for any losses, damages or
               other liabilities resulting from the use of the providing party's
               designated logo. The parties will agree upon reasonable
               provisions for samples and approval of trademarked labels added
               to Products.

        8.     FORECASTING AND PURCHASE ORDERS.

               8.1 FORECAST OF DEMAND. Buyer shall MONTHLY FURNISH SELLER WITH
twelve-month rolling forecasts, showing Buyer's projected purchases month by
month. Buyer shall use its reasonable efforts to make the rolling forecasts
accurate but the rolling forecast does not obligate Buyer to purchase any
specific Products or quantities of Products, subject to the Minimum Purchase
Quantity commitment. Seller shall notify Buyer promptly upon receipt of each
forecast whether Seller can provide Products sufficient to meet the forecast.
Buyer shall provide the first forecast within two business days after complete
execution of this Agreement.



                                       15
<PAGE>   22

               8.2 PURCHASE ORDERS; ACCEPTANCE; THE MINIMUM PURCHASE QUANTITY.
Buyer shall periodically submit to Seller orders for the purchase of the
Products (each a "Purchase Order") as set forth below. Purchase Orders shall be
governed by the terms and conditions of this Agreement. If a Purchase Order
specifies quantities that do not exceed the forecast, then Seller must accept
that Purchase Order. If a Purchase Order specifies quantities that exceed the
forecast, Seller may at its option accept all of the Purchase Order, but it must
accept that portion or quantity of the Purchase Order specified in the forecast.
If a Purchase Order is within the forecast and Seller can only deliver less, the
difference between the quantity within the forecast and the quantity delivered
shall be applied against Buyer's obligation to purchase the Minimum Purchase
Quantity. In the event that Seller refuses to provide Products in excess of the
quantities set forth in the forecast, then such amounts shall not be applied
against Buyer's obligation to purchase the Minimum Purchase Quantity.

               8.3 FORM OF PURCHASE ORDER. Each Purchase Order shall specify:

                          (a)    the models, unit extended, and total cost of
                                 Products to be delivered;

                          (b)    the quantity of Products to be delivered,
                                 provided, however, that each Purchase Order
                                 shall be for a minimum of four pallets, each
                                 sized 40" X 48" X 60", and containing no fewer
                                 than *** units of the Products;

                          (c)    Buyer's required date of delivery of the
                                 Products (the "Specified Delivery Date"),
                                 provided, however, that in no event shall the
                                 Specified Delivery Date be sooner than ninety
                                 (90) days after Seller receives the Purchase
                                 Order;

                          (d)    Where the Products are to be delivered, which
                                 may include any or all of Buyer's, Affiliates',
                                 or Authorized Purchasers' delivery points, or
                                 third party delivery points or warehouses [the
                                 "Delivery Location(s)"];

                          (e)    the preferred method of shipping;

                          (f)    the SKU and any other Products packaging or
                                 labeling requirements; and

                          (g)    Name, address and phone number of the person to
                                 receive the notice of receipt.

               8.4. RECEIPTS OF PURCHASE ORDERS. Seller shall provide Buyer with
electronic (to include facsimile) or written notice of receipt of Purchase
Orders. Subject to the terms and restrictions of section 8.2, within five (5)
business days of Buyer's placement of a


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                                       16
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Purchase Order, Seller shall notify Buyer in writing of its acceptance or
rejection of Buyer's Purchase Order including shipment dates. Seller shall also
provide to Buyer notices of actual shipments on each day of shipment. Such
notices shall include the serial numbers of Products being shipped and the
Purchase Order number being filled, SKU, description, quantity shipped and
quantities backordered, the name of the carrier and the carrier's tracking
number, delivery date, and Universal Product Codes ("UPC") related to the
shipment.

               8.5. SIM UNLOCK DATA. Seller shall provide Buyer with all handset
SIM unlock data via electronic or disks within five (5) days of any handset
deliveries. The data format shall follow the GSM NA reference document NAPT 14
(or successor thereto). Upon prior written approval by Buyer, Seller may
implement an alternate means of Seller's choice of providing the SIM unlock
data, provided, however, that if such alternate means requires additional costs
or equipment, this shall be provided to Buyer by Seller free of charge.

               8.6 CHANGES TO DELIVERY LOCATIONS. Changes to the Delivery
Location(s) originally specified on a purchase order must be submitted to Seller
in writing at least fifteen (15) business days prior to the Shipment Date.


               8.7 TEMPORARY HOLD ON DELIVERIES. Buyer shall have the right to
require Seller to hold delivery of up to twenty percent (20%) of any shipment
for a period not to exceed sixty (60) days, where the hold notice is given at
least thirty (30) days in advance of the scheduled shipping date; provided,
however, for all such shipments scheduled to be made during the last calendar
quarter of any year, Seller may, at its option, in lieu of postponing shipment
according to the terms of this Section 8.7, ship the Products as scheduled.
However, if Seller elects not to honor Buyer's hold notice and instead elects to
ship the entire quantity of Product ordered by Buyer, Buyer shall be afforded
sixty (60) days from the date of receipt of the invoice applicable to such
shipped order in which to pay Seller for such shipment. Notwithstanding anything
to the contrary contained in this Section 8.7, if Buyer shall invoke its
privilege to delay delivery of up to twenty percent (20%) and shipment is
delayed as provided herein, the liquidated damages provision of Section 8.10
shall not apply to the late delivery of the re-scheduled shipment(s) and Buyer
expressly acknowledges that Seller may sell to another of Seller's customers any
delayed Handset inventory on hold.

               8.8    CHANGE OF MODEL MIX. Buyer may change the model mix of any
                      shipment of any Purchase Order and Seller shall honor such
                      changes subject to the following:

                      8.8.1.   All such changes must be made in writing.

                      8.8.2.   For changes requested where Products are sought
                               to be substituted for other Products within that
                               same model family, requests for changes made at
                               least ninety (90) days prior to the Specified



                                       17
<PAGE>   24

                             Shipping Date shall be honored, without adjustment
                             to the Specified Shipping Date.

                      8.8.3    For changes requested where (a) Products are
                               sought to be substituted for other Products
                               within that same model family, but the request is
                               made less than ninety (90) prior to the Specified
                               Shipping Date or (b) Products are sought to be
                               substituted for other Products outside the model
                               family, Seller shall, within ten (10) days of
                               receipt of such request, notify Seller whether
                               the requested change is acceptable and/or whether
                               such changes will necessitate a change in the
                               Specified Shipping Date.

        8.9    INABILITY TO MEET A SPECIFIED SHIPPING DATE. Once a Purchase
               Order has been accepted, Seller is expected to deliver the
               Products in such quantities, in such manner and in such time as
               specified in the Purchase Order. As soon as Seller believes that
               it will be unable to meet the Specified Shipping Date, Seller
               shall without delay provide notice to Buyer.

        8.10.  FAILURE TO MEET SPECIFIED SHIPPING DATE. Regardless of whether
               Buyer has been notified of Seller's inability to meet a Specified
               Shipping Date, should Seller fail to ship Products within
               fourteen (14) days of the Specified Shipping Date, Buyer shall
               have the option, which shall not be unreasonably invoked, to
               exercise any one or more of the remedies defined below:

               8.10.1 Cancel the Purchase Order, in whole or in part, with no
                      obligation to pay for the Products specified in the
                      Purchase Order.

               8.10.2 Reschedule the delivery date for all or any part of the
                      late shipment.

               8.10.3 If delivery is not complete by the Specified Shipping
                      Date, then Seller shall be liable for the following late
                      delivery damages: ***

               8.10.4 If Seller fails to make a full delivery within 30 days of
                      the Specified Shipping Date, in addition to the foregoing
                      remedies, ***

        8.11   RIGHT TO COVER. Except as otherwise limited in the manner
               described in this Section 8.11, in addition to any other rights
               that Buyer might have elsewhere in this Agreement, including
               specifically section 8.10, should Seller fail to meet its
               Specified Shipping Date for any Product, at its sole option and
               after providing Seller with written notice no less than thirty
               (30) days prior to seeking alternative supplies, Buyer may seek
               alternative supplies from other manufacturers or distributors.
               However, if within such thirty (30) day period, Seller resolves
               the delivery problems that have caused Buyer to seek such
               alternative supplies, Buyer shall renew purchasing Products from
               Seller on the terms and conditions set forth in this Agreement.


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                                       18
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               Should Buyer exercise its option to seek alternative supplies
               after the thirty (30) day period described above, Buyer's Minimum
               Purchase Quantity shall be reduced by the number of units that
               Buyer obtains from its alternative source. The number of units
               that Buyer obtains from its alternative source shall also count
               toward Buyer's ***, as set forth in Section 4.2. For example, in
               the event that Seller fails to meet a Specified Delivery Date for
               *** units, and after 30 days, Buyer exercises its option to
               purchase those *** units from an alternative source, then those
               *** units shall count as purchased in determining when Buyer
               shall begin to recoup the Product Development Fee. If Buyer has
               already begun to ***, then those units shall be eligible for ***
               in accordance with Section 4.2.

               Should Buyer exercise its option to seek alternative supplies
               after the thirty (30) day period described above, Seller shall be
               liable to Buyer for Buyer's increased costs, including
               differences in unit prices, expedited shipping charges and
               related operating costs related acquiring comparable Products
               from an alternative source. Notwithstanding anything to the
               contrary in the immediately preceding sentence, Buyer agrees that
               it shall take reasonable steps to mitigate the level of such
               increased costs and the resultant impact on Buyer's operations.

        8.12   DISCREPANCIES. Buyer shall report to Seller any discrepancies
               concerning the quantity of Products shipped or drop-shipped
               within either five (5) days following delivery or three (3) days
               of discovery of the discrepancy, whichever comes later.

        8.13   MODIFICATIONS TO PURCHASE ORDER. Except to the extent restricted
               by this Agreement, Buyer retains the right to modify or cancel,
               in whole or in part, any Purchase Order prior to complete
               performance thereof by Seller. Any such modification or
               cancellation shall be subject to the provisions set forth below
               and to this Agreement.

               8.13.1 MODIFIED OR CANCELED PURCHASE ORDER. Notwithstanding the
                      foregoing, Buyer may modify or cancel any Purchase Order
                      through notice to Seller. In the event of modification or
                      cancellation of a Purchase Order by Buyer, Seller may be
                      entitled to claim compensation as provided in Section
                      8.13.2.

               8.13.2 CHANGE IN COSTS. If Seller has performed work that is not
                      reusable in fulfilling its obligations under other
                      Purchase Orders issued by Buyer, or that such non-reusable
                      work cannot reasonably be restocked or otherwise used by
                      Seller in fulfillment of its obligations to other
                      customers without increased cost to Seller, then the
                      purchase price to be charged by Seller shall be equitably
                      adjusted. Seller shall inform Buyer of its intention to
                      demand a price increase due to the variation within two
                      (2) weeks after the receipt by the Seller of the modified
                      or canceled Purchase Order. Buyer need not give notice to
                      Seller of Buyer's intention to claim a


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                                       19
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                      payment reduction due to any cancellation or reduction in
                      quantity of Products. In such instances, Seller shall
                      reduce appropriately and automatically the invoice amount
                      to reflect the reduced quantity of Product ordered. The
                      determination of any price adjustment shall in no event
                      delay any performance by Seller under this Agreement.

9       QUALITY ASSURANCE

        9.1    ACCEPTANCE TEST PROCEDURE TO BE DEFINED. Buyer and Seller will
               jointly establish the appropriate Acceptance Test Procedures that
               will be added to this Agreement subsequent to the date hereof as
               Attachment E not later than the dates set forth in Attachment B.
               Notwithstanding the preceding sentence, Seller is expected to
               plan other tests, generate test procedures, incorporate Buyer
               input, to the extent Seller believes such input is reasonably
               appropriate, execute tests, report results and rectify test
               failures, before testing a Product for Acceptance.

        9.2    REGULATORY. Seller shall be responsible at its sole cost for
               obtaining any and all approvals and certifications required by
               governing bodies, including, but not limited to, FCC approvals,
               Underwriter's Laboratory approval, etc. Seller is deemed to be an
               expert in obtaining any regulatory approvals and delays in
               obtaining regulatory approval shall not constitute an excusable
               delay, unless such delay is the result of system simulator
               failure or similar problems, or such delay results from an event
               deemed to be Force Majeure, unless Seller can clearly demonstrate
               such, where requests are timely filed. Seller represents and
               warrants that all Products delivered hereunder will have received
               all necessary regulatory approvals. By illustration and not
               limitation of the foregoing, Seller warrants that, upon delivery,
               Products will comply with all FCC rules or other regulations
               including, without limitation, compatibility with disabled or
               handicapped End-Users, including hearing impaired End-Users using
               hearing aids, blind End-Users, etc., applicable as of the date of
               such delivery. Seller also warrants that, to the extent
               applicable to Seller or Buyer, Seller's Products comply with the
               requirements of the Americans With Disabilities Act, 42 U.S.C.
               Section 12101. Seller shall add to its instruction manuals
               information concerning use of Products by disabled or handicapped
               persons. Buyer agrees to provide Seller at Seller's expense with
               reasonable assistance and backup support when so requested by
               Seller and where necessary in obtaining such approvals.

        9.3    ISO 9000 COMPLIANCE; AUDITS. Seller shall endeavor to produce
               Products in accordance with a quality system meeting the
               requirements established in ISO Standard 9001. Seller shall work
               to gain ISO 9001 certification and shall, upon request by Buyer,
               furnish Buyer a copy of Seller's ISO certification plans and
               timetable. Buyer may conduct quality audits of Seller's
               manufacturing facilities up to four times a year, with advance
               notice of five (5) working days.



                                       20
<PAGE>   27

        9.4    MARKET VERIFICATION TEST; COMMERCIAL TEST PROCEDURES. For each
               Prototype model of Product, within five (5) days of the first day
               on which Alpha units are available (as set forth in Attachment
               J), Seller will provide Buyer, at no charge, two (2) such
               Prototypes for testing. Buyer shall test the units according to
               any protocols submitted by Seller and may additionally test the
               units as Buyer deems appropriate. In addition, for each new model
               of Product, within five (5) days of the first (1st) day of Beta
               testing (generally, about thirty (30) days before launch), Seller
               will provide Buyer, at no charge, one hundred (100) units for
               Beta testing in accordance with Seller's protocols. Buyer shall
               conduct all such testing in good faith and shall submit the
               results to Seller within ten (10) days of completion of testing.
               In addition, if Seller so requests, all test units on loan to
               Buyer shall be (i) returned to Seller, or (ii) destroyed by
               Buyer, either at Seller's expense.

        9.5    FIELD TRIALS. Where Buyer and Seller agree to conduct field
               trials using Buyer's network and Prototype Products, should FCC
               type acceptance or other regulatory approval not have been
               granted for the Prototype or Pre-production Products, Seller, at
               its cost and with appropriate support from Buyer in Buyer's
               discretion, shall promptly seek and diligently prosecute, a
               request for expedited approval or an interim waiver to meet
               regulatory requirements. In connection with such field trials, at
               no charge to Seller, Buyer shall provide Seller with a
               commercially reasonable number of SIMs for the purpose of
               conducting such field trials. The SIMs to be provided to Seller
               shall be enabled for use in Buyer's home network and for roaming
               in other networks. The reasonable and customary expenses incurred
               by Seller in performing such tests shall be borne by Seller.

        9.6    SAMPLE TESTING. Seller may at its sole option, but is not
               obligated to, perform adequate testing to assure that shipped
               Products meet Buyer's sample testing criteria established in
               Attachment D. Notwithstanding the foregoing, prior to Seller
               initiating the volume manufacture of Products, Buyer shall have
               the right at its sole option, but is not obligated to, conduct
               sample testing of incoming Products and to reject lots that fail
               to meet the applicable product specifications and quality levels
               set forth in this Agreement and Attachments hereto (including the
               quality levels set forth in Attachment D), and/or US regulatory
               requirements and US law. Buyer shall have the right to conduct
               such testing either at Seller's manufacturing facility ("on-site
               testing") or Buyer's facility ("off-site testing"). Neither
               Buyer's waiver of its right to conduct sample testing nor Buyer's
               conducting sample testing in any way other than as set forth in
               Attachment D shall derogate from or otherwise affect in any way
               Buyer's other rights or remedies under this Agreement, including
               by illustration and not limitation its rights and remedies under
               sections 13, 14, or 17.

               9.6.1  ON-SITE TESTING. Buyer shall have the right to conduct at
                      Seller's site acceptance tests of manufactured Products in
                      such time frames as are



                                       21
<PAGE>   28

                      mutually agreed upon by the parties. Buyer's acceptance
                      tests shall not unreasonably interfere with Seller's
                      normal business operations, and Buyer may not require
                      Seller to provide test equipment for such tests beyond
                      that which Seller normally uses to perform such tests.
                      This testing in no way relieves Seller of any other
                      responsibilities under this Agreement. Seller shall make
                      available such test equipment to Buyer at Seller's
                      location to perform such tests. In the event Buyer
                      requests tests that are not normally performed by Seller,
                      Buyer and Seller shall work together to implement Buyer
                      specific end of process tests. Any increases in cost to
                      Seller to perform such Buyer tests will be negotiated in
                      good faith by both parties prior to Seller initiating such
                      tests.

               9.6.2  OFF-SITE TESTING. Seller acknowledges and agrees that, in
                      addition to the testing described in Section 9.6.1 or in
                      lieu thereof, Buyer shall have the right to conduct
                      off-site sample testing of incoming Products and to reject
                      lots that fail to meet the quality levels set forth in
                      Attachment D. In connection with such off-site testing,
                      Buyer shall bear the cost of any additional test equipment
                      required to perform such test(s); however, Seller shall
                      provide Buyer, without charge, all upgrade(s) to any
                      Seller owned software used in the test equipment so that
                      Buyer is able to test and confirm the quality of the
                      various releases of Products provided hereunder. Buyer
                      shall be solely responsible for any additional testing
                      required to qualify Products for sale in any market other
                      than the U.S. Seller shall perform adequate testing to
                      assure that shipped Products meet Buyer's sample testing
                      criteria set forth in Attachment D.

        9.7    INCOMING INSPECTION. In addition to the sample testing described
               in Section 9.6, Buyer shall have the right to conduct up to one
               hundred percent (100%) inspection of all incoming products
               ("Incoming Inspection"). Any Incoming Inspection shall be
               completed within thirty (30) days of receipt of the Product
               undergoing inspection. The Incoming Inspection shall determine
               completeness of shipment, physical and electrical condition of
               Products, and otherwise verify conformance of the Products with
               the specifications thereof. Buyer shall have the right to reject
               any such shipment as having failed Incoming Inspection. In such
               event, at the Seller's discretion either (i) Buyer may reject the
               shipment and return it to Seller at Seller's expense or (ii)
               Buyer may reject the shipment, and, as soon as commercially
               feasible but no later than seventy-two (72) hours after receiving
               Buyer's notice of rejection, Seller will fly one or more of its
               personnel to the location of such rejected shipment for the
               purpose of examining the same and rectifying the cause for
               Buyer's rejection. Buyer, however, shall not have the right to
               delay payment, where payment to Seller is otherwise due, by
               virtue of Buyer's failure to complete Incoming Inspection within
               thirty (30) days. Buyer's performance of Incoming Inspection,
               however, shall not prevent Buyer from making claims under other
               provisions of this Agreement for defective, misdelivered or
               otherwise incorrect Products.



                                       22
<PAGE>   29

        9.8    RETURN OF DEFECTIVE PRODUCTS OTHER THAN IN WHOLE SHIPMENTS. With
               respect to Products failing Buyer's acceptance tests, where such
               failures are random in nature and type and are not common
               failures (e.g., a software program bug that affects every unit
               shipped in the same or a similar manner), Seller shall compensate
               Buyer in liquidated damages for Buyer's efforts in identifying
               Defective Products and returning them to Seller for credit
               against Buyer's account. A Product Defect shall include, but not
               be limited to, a damaged, mislabeled or mis-packaged Product, an
               incorrect Product model or improperly operating Product, or a
               Product not in compliance with the specifications as set forth in
               Attachments A-1 through A-3 of this Agreement or such subsequent
               Attachment (a "Defect" or "Defective Product"). The liquidated
               damages shall be in the form of additional like Products shipped
               at Seller's expense, provided without additional charge to Buyer,
               and shall be in addition to any other remedies for Defective
               equipment as provided elsewhere in this Agreement. The liquidated
               damages shall be determined as follows:

               9.8.1  ***

               9.8.2  ***

10.     EXTENDED TERM FOR CERTAIN PROVISIONS. Except as may be more specifically
        set forth in an individual section, sections 1, 2, 7, 10, 12, 13, 14,
        15, 17, 18, 19, 25, and 32 shall survive the termination of other
        portions of this Agreement.


11.     TITLE AND RISK OF LOSS

               Title and risk of loss shall pass to Buyer upon delivery of the
               Products to the location specified in the Purchase Order. Seller
               shall pay for all freight charges from Seller's configuration
               center to Seller's warehouse in San Diego, California. Seller
               shall bill all additional freight charges to Buyer's Delivery
               Points at the amounts set forth in Attachment C. Delivery of the
               Products shall convey to Buyer all rights and title therein by
               appropriate documents with warranty of title, free and clear of
               all liens and encumbrances. Title to Seller's intellectual
               property, including software, patents, copyrights, trademarks and
               trade names, shall not be conveyed to Buyer at any time.


12      PRODUCT SUPPORT

        12.1   TRAINING SUPPORT. Seller shall provide, without charge, training
               support to Buyer as provided below:

               12.1.1 TECHNICAL TRAINING. Seller will train Buyer's personnel in
                      connection with the installation, re-programming, use, and
                      maintenance of the Products. Consistent with the
                      requirements of Section 12.3, Seller shall


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                                       23
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                      give Buyer a reasonable number of copies of Product
                      documentation, including, but not limited to,
                      re-programming and installation instructions, standards
                      and specifications, maintenance procedures and usage
                      instructions, except as Seller reasonably considers to be
                      proprietary or confidential.

               12.1.2 SALES TRAINING. Seller shall train Buyer's sales personnel
                      on the Products, including training materials for on-site
                      sales personnel training, providing detailed feature and
                      benefits summaries, configuration drawings, accessory
                      descriptions, programming instructions and the like.

               12.1.3 CUSTOMER SERVICE TRAINING. Seller shall train Buyer's
                      customer operations personnel, including training
                      materials for on-site customer service training, providing
                      detailed feature, configuration drawings, trouble shooting
                      Q&A, and programming instructions.

               12.1.4 REPRODUCTION RIGHTS; UPDATED TRAINING MATERIAL. Buyer has
                      the right to video tape all training classes conducted by
                      Seller for Buyer's employees and to use the video tapes as
                      training tools for new hires. Seller will provide Buyer
                      with training documentation in both paper and electronic
                      formats and for on-line documentation to be shared by
                      multiple users. Seller will provide Buyer with updates to
                      training manuals and training equipment and software at no
                      charge to Buyer. Buyer will work with Seller to establish
                      the training guidelines and modules. Seller will conduct
                      training at Buyer's sites of choice with no more than five
                      (5) sites in each MTA or BTA for each category of training
                      defined in Sections 12.1.1 through 12.1.3. Seller will
                      provide Buyer with a training support line, during normal
                      business hours, at no charge to Buyer. Buyer will provide
                      Seller with a single point of contact for updates and
                      resolutions.

        12.2   TECHNICAL SUPPORT. Seller shall provide, without charge,
               technical support to Buyer and End Users as described on Exhibit
               K.

        12.3   DOCUMENTATION. Seller shall supply Buyer with the documentation
               described below in both printed format and on magnetic storage
               medium. Where documentation exists in draft or preliminary form,
               it shall be supplied to Buyer in such draft or preliminary form,
               and updated as described in Section 12.4. All documentation
               supplied shall be in accordance with the best standards for
               similar Products, whether from Seller or other suppliers.

               12.3.1 TECHNICAL DOCUMENTATION. Except as Seller reasonably
                      considers to be proprietary or confidential, technical
                      documents to be supplied include, but are not limited to:
                      block diagrams; service manual (including theory



                                       24
<PAGE>   31

                      of operation); installation and preventive maintenance
                      procedures; training manual; configuration guide;
                      installation and planning guide; commercial/sales training
                      instructions.

               12.3.2 FIRMWARE. Except as Seller reasonably considers to be
                      proprietary or confidential, Seller shall provide to Buyer
                      a firmware manual, including general description of
                      firmware architecture, to the extent appropriate for the
                      level of maintenance performed by Buyer.

               12.3.3 DELIVERY DATES AND REPRODUCTION. Complete sets of the
                      documents described in Sections 12.3.1 and 12.3.2,
                      inclusive, shall be delivered within a mutually agreed and
                      established time schedule and in correspondence with any
                      addition or modification to Products or the addition of
                      new Products to this Agreement. Buyer is authorized to
                      modify, reproduce and distribute such documents, whether
                      in whole or in part, as Buyer sees fit, for purposes
                      related to the operation, maintenance or business
                      activities of its PCS business.

               12.3.4 TECHNICAL BULLETINS AND NOTES. Except as Seller reasonably
                      considers to be proprietary or confidential, Seller shall
                      provide to Buyer, without charge, all technical bulletins
                      and notes related to Products, whether issued periodically
                      or aperiodically.

               12.3.5 TEST AND DIAGNOSTIC MODE INFORMATION. Except as Seller
                      reasonably considers to be proprietary or confidential,
                      Seller shall provide the information specified at Section
                      2.2 concerning the technical interface to Products,
                      including test and diagnostic mode information.

               12.3.6 CUSTOMER SERVICE. Seller shall provide customer service to
                      the extent and in the manner described in Attachment K.
                      Further, Seller shall make a good faith effort to
                      coordinate customer service efforts with Buyer's
                      contractor, Wireless Data Services.

        12.4   SURVIVAL AND EXTENDED TERM. Seller shall be responsible for
               revising and issuing its documentation and for providing Buyer
               with complete and up-to-date documentation as provided in Section
               12.3 and for providing Buyer with technical support as provided
               in Section 12.2. Seller's obligations under Sections 12.2 and
               12.3 and this Section 12.4 shall survive the term of this
               Agreement and shall end three (3) years after the delivery of the
               last unit of any Product under this Agreement.



                                       25
<PAGE>   32

13      WARRANTY AND SERVICE REPAIR

        13.1   PRODUCT WARRANTY. Without reducing the scope of warranties
               provided by Seller elsewhere in this Agreement or that may be
               imposed upon Seller at law or in equity, Seller hereby represents
               and warrants to Buyer as follows:

               13.1.1 INTER-OPERABILITY TESTING. Seller shall warrant and
                      certify that it has tested its PCS 1900 Products with PCS
                      1900 network infrastructure manufactured by Northern
                      Telecom, Ericsson, Siemens, Motorola, Nokia and Lucent, to
                      the extent these manufacturers have a functioning PCS 1900
                      test system and are willing to cooperate with Seller in
                      such compatibility testing, and that the results of such
                      tests demonstrate proper inter-operability as of the date
                      of testing. Seller shall periodically inform Buyer of the
                      status of its compatibility testing and shall provide such
                      information to Buyer when Seller introduces a new
                      configuration Product.

               13.1.2 REGULATORY APPROVALS. Seller warrants that all Products
                      have received all necessary regulatory approvals and
                      comply with all applicable federal and state laws, rules,
                      regulations, and codes in existence during the term hereof
                      (including without limitation FCC rules, regulations and
                      requirements),.

               13.1.3 COMPLIANCE. Seller warrants that all Products will work on
                      the full PCS spectrum, Bands A through F, inclusive,
                      except as may be specifically excluded on a
                      product-by-product basis in Buyer's sole discretion.
                      Seller further warrants that the Products comply with all
                      EIA/TIA, GSM, GSM NA, PTCRB, and ETSI standards and all
                      other mutually agreed industry specifications and
                      standards. Seller further warrants that the Products are
                      and will be fully Year 2000 compliant, meaning that the
                      advent of the Year 2000 shall not adversely affect the
                      performance, operation, or networking of any Products,
                      with respect to date or date-dependent data or functions.

               13.1.4 GOOD TITLE. Seller warrants that it has good title to the
                      Products and the right to sell them to Buyer free of any
                      proprietary rights of any other party, security interest,
                      lien or any other encumbrance whatsoever.

               13.1.5 OPERATIONS WARRANTY. Seller warrants that Products
                      furnished by Seller hereunder shall be free from defects
                      in manufacture, material, design, workmanship and title,
                      and shall conform to published specifications at the time
                      of original purchase. This warranty shall not apply to any
                      Product, or part thereof, which (i) has been modified or
                      otherwise altered other than pursuant to Seller's written
                      instructions or written approval, (ii) is in the normal
                      course consumed or depleted in operation or, (iii) is not
                      properly stored, installed, used, maintained or repaired
                      other than by



                                       26
<PAGE>   33

                      Seller-authorized repair, or, (iv) has been subjected to
                      any other type of misuse or detrimental exposure, or has
                      been involved in an accident.

               13.1.6 If a Product fails to meet the foregoing Warranties during
                      the warranty period, Seller shall promptly correct the
                      failure. Any repaired or replacement part furnished
                      hereunder shall be warranted for either the longer of (a)
                      the remainder of the warranty period of the Products in
                      which it is installed or (b) ninety (90) days after the
                      repair or replacement. In the event that Seller is unable
                      to correct the failure through either repair or
                      replacement, Buyer shall return the Product and Seller
                      shall refund the purchase price of the Product.

        13.2   LIMITATION. SUBJECT TO SECTIONS 4, 9, 11, AND 12, THE WARRANTIES
               SET FORTH IN THIS SECTION 13 ARE THE ONLY WARRANTIES, EITHER
               EXPRESS OR IMPLIED, THAT ARE MADE BY SELLER TO BUYER AS TO THE
               PRODUCTS, AND ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, STATUTORY
               OR COMMON LAW, ARE HEREBY EXPRESSLY DISCLAIMED, INCLUDING, BUT
               NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTIBILITY AND
               FITNESS FOR A PARTICULAR PURPOSE.

        13.3   END-USER WARRANTY. In addition, each Product shall come with such
               warranty to the End-User, as Seller shall establish as its
               standard End-User warranty for the Products from time to time,
               the current such standard warranty to the End-User being
               substantially in the form attached hereto as Attachment F. Under
               no circumstances shall the warranty period under the End-User
               warranty be for less than the longer of either (a) one year from
               the purchase of the Product or (b) ninety (90) days from the date
               of repair of the Product.

        13.4   SERVICE REPAIR AND REPLACEMENT. Seller shall maintain one or more
               authorized service centers as may be necessary to provide
               warranty service for the Products. The authorized service centers
               shall be equipped to repair or exchange, at no cost to the owner
               of the Product, defective Products that are within the warranty
               period, as described above. For products requiring repair or
               replacement after expiration of the applicable warranty period,
               Seller's authorized service center shall implement an exchange
               and repaid policy at reasonable rates.

        13.5   EXCHANGE PROGRAM. In order to minimize end-user time without
               Handsets in the event of warranty repairs, Seller shall support a
               Handset exchange program to be administered by PCS Partners or
               other servicer authorized by Seller and selected by Buyer (PCSP).
               Such support shall consist of (a) supplying an appropriate number
               of handsets and standard accessories to PCSP as seed stock
               sufficient to meet warranty replacement needs, and (b) the
               payment of fees to PCSP to cover repairs, refurbishing and one
               way standard ground freight for in-warranty



                                       27
<PAGE>   34

               defective Seller products received from end-users. PCSP shall use
               all in-warranty repaired and refurbished units as replacements
               under the exchange program.

        13.6   CONSISTENT FAILURES. Notwithstanding any disclaimer of warranties
               herein, where delivered Products repeatedly exhibit Defect
               failure rates during the warranty period with regard to any
               particular model of Product (i.e. any lot, batch, or other
               separately distinguishable group of Product sold or delivered to
               the End-user or remaining in inventory has more than ***of the
               same or similar Defect, or *** failure due to cumulative
               Defects), Seller and Buyer shall immediately initiate a joint
               program for appropriate countermeasures and, in addition to any
               other remedy ultimately available to Buyer under this Agreement
               or otherwise, Buyer shall have the option to exercise any of the
               following rights, individually or cumulatively:

               13.6.1 COVER. Buyer may purchase substitute products from another
                      supplier, in which case Seller shall be liable to Buyer
                      for Buyer's increased costs, including increased operating
                      costs, resulting from the substitute products

               13.6.2 TERMINATE FOR CAUSE. Buyer may terminate this Agreement
                      for cause; provided, however, Buyer shall deliver notice
                      to Seller of its intent to terminate this Agreement for
                      cause pursuant to this Section 13.6 and Seller shall be
                      given thirty (30) days in which to completely remedy to
                      Buyer's reasonable satisfaction the problem or problems
                      creating the unacceptable consistent defective failure
                      rate.

               13.6.3 RETURN OF DEFECTIVE PRODUCTS. Upon notice from Buyer of a
                      Product Defect, Seller shall issue a return authorization
                      to Buyer within 48 hours of receipt of notice. A Defective
                      Product may be returned directly by any Permitted
                      Purchaser or by Buyer's distributors or retailers at
                      Seller's expense. Seller shall accept returns even though
                      the Product is no longer in its original point-of-sale
                      packaging. Buyer agrees that each Defective Product is to
                      be returned to Seller without its associated SIM. Buyer's
                      distributors and retailers may return Defective Products
                      for a period starting upon receipt of such Product and
                      ending one (1) year after the last date the particular
                      model of Product has been purchased and received by an
                      End-User. Where Buyer elects to proceed under this Section
                      13.6.3, Seller shall issue an open credit memo to Buyer in
                      the amount of the full invoice purchase price for all
                      returned Products within thirty (30) days of return. Once
                      repaired or replaced, the Products will be delivered with
                      new invoices. This return policy shall continue to apply
                      notwithstanding that Seller has discontinued the model of
                      the Defective Products.


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                                       28
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               13.6.4 CANCELLATION OF PURCHASE ORDER. Cancel the Purchase Order,
                      in whole or in part, and return Defective and
                      non-Defective Products to Seller. Should Buyer exercise
                      its option under this section, Buyer's Minimum Purchase
                      Quantity shall be reduced by the number of units returned.
                      That number of units returned shall also count toward
                      Buyer's recoupment of the Product Development Fee, as set
                      forth in Section 4.2.

               13.6.5 RESHIPMENT. Require Seller to ship within 48 hours a
                      comparable non-Defective Product to the location requested
                      by Buyer, at Seller's expense; provided, however, such
                      right shall be exercised by Buyer only for returns of
                      twenty-five (25) or few units of Product.

               13.6.6 DURATION OF RIGHTS. Buyer shall be entitled to exercise
                      its rights under Section 13.6 until such time as Seller
                      establishes to Buyer's reasonable satisfaction that it has
                      cured the consistent failures. Provided, however, that
                      should Buyer have exercised its rights to terminate under
                      Section 13.6.2, Buyer shall be under no obligation to
                      reinstate this Agreement and provided that should Buyer
                      have exercised the remedies identified in Sections 13.6.1,
                      Seller shall be obligated to supply alternative Products
                      and cover Buyer's reasonable expenses, respectively, until
                      Seller has demonstrated, through delivery of Products to
                      Buyer, a period of three (3) consecutive months'
                      compliance with a failure rate of *** in each delivery
                      lot. Where Buyer elects to terminate this Agreement under
                      Section 13.6.2 during the Minimum Purchase Term, Seller
                      shall be liable to Buyer for Buyer's increased costs for
                      the remainder of the Minimum Purchase Term. Where Buyer
                      elects the right of cover under section 13.6.1, for a
                      period of forty-five (45) days following receipt by Seller
                      of notice of Buyer's remedy, Buyer shall provide Seller
                      the opportunity to negotiate the supply contract necessary
                      to effect such cover.

        13.7   SURVIVAL AND TERM. The rights and warranties granted in this
               Section 13 shall survive the term of this Agreement and shall
               remain valid for the periods during which the right or warranty
               is provided as described in this Section 13.


14      TERMINATION; LIMITATION OF LIABILITY

        14.1   DEFAULT. In the event of a material breach of this Agreement, the
               non-breaching party shall have the right to terminate this
               Agreement upon thirty (30) days prior written notice of
               termination to the other party, unless such breach and any
               intervening breaches have been cured.

        14.2   BANKRUPTCY. Either party may terminate this Agreement by written
               notice in the event that the other party (i) applies for or
               consents to the appointment of, or the


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                                       29
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               taking of possession by a receiver, custodian, trustee, or
               liquidator of itself or of all or a substantial part of its
               property, (ii) makes a general assignment for the benefit of its
               creditors, (iii) commences a voluntary proceeding under the
               Federal Bankruptcy code or under any other law relating to relief
               from creditors generally, or (iv) fails to contest in a timely or
               appropriate manner, or acquiesces in writing to, any petition
               filed against it in an involuntary proceeding under the Federal
               Bankruptcy Code or under any other law relating to relief from
               creditors generally, or any application for the appointment of a
               receiver, custodian, trustee, or liquidator of itself or of all
               or a substantial part of its property, or its liquidation,
               reorganization, dissolution, or winding-up.

        14.3   LIMITATION OF LIABILITY.

               14.3.1 EXCEPT FOR SELLER'S LIABILITY UNDER SECTIONS 9, 12, 13,
               15, 17, AND 18, AND EXCEPT FOR SELLER'S GROSSLY NEGLIGENT OR
               INTENTIONALLY WRONGFUL ACTS OR OMISSIONS, THE TOTAL LIABILITY OF
               SELLER, ON ANY AND ALL CLAIMS, WHETHER IN CONTRACT, WARRANTY,
               TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, ARISING OUT OF,
               CONNECTED WITH, OR RESULTING FROM THE PERFORMANCE OR
               NON-PERFORMANCE OF ANY AGREEMENT RESULTING HEREFROM OR FROM THE
               MANUFACTURE, SALE, DELIVERY, RESALE, REPAIR, REPLACEMENT OR USE
               OF THE PRODUCTS OR THE FURNISHING OF ANY SERVICE, SHALL NOT
               EXCEED THE PRICE ALLOCABLE TO THE PRODUCT OR SERVICE WHICH GIVES
               RISE TO THE CLAIM.

               14.3.2 Where a remedy, including a series of optional remedies or
               multiple remedies, is set forth in the Agreement, those remedies
               shall be the sole and exclusive remedies for the breach or event
               for which it is specified, unless such section states that the
               series of remedies are not exclusive of other remedies. Where no
               specific remedy is provided, the non-defaulting party shall have
               the right to recover from the defaulting party only its direct
               damages arising out of that breach or event. NOTWITHSTANDING
               ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, IN NO
               EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT
               (INCLUDING BUT NOT LIMITED TO NEGLIGENCE OR INFRINGEMENT) SHALL
               SELLER OR BUYER BE LIABLE UNDER THIS AGREEMENT FOR ANY
               CONSEQUENTIAL OR INCIDENTAL DAMAGES OF ANY NATURE WHATSOEVER,
               INCLUDING LOST PROFITS, OF THE OTHER PARTY, REGARDLESS OF WHETHER
               SUCH DAMAGES ARE FORESEEABLE OR WHETHER A PARTY HAS BEEN ADVISED
               OF THE POSSIBILITY OF DAMAGES.



                                       30
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        14.4   RIGHTS OF PARTIES UPON TERMINATION BY EITHER PARTY. In the event
               of a termination by Buyer or Seller pursuant to the terms hereof,
               the parties shall make an equitable accounting of any sums due
               Seller for partial deliveries, such accounting to be completed
               within sixty (60) days following the effective date of
               termination, with payment by Buyer to be completed within thirty
               (30) days following the completion of such accounting.

               Seller acknowledges and agrees that the Minimum Purchase Quantity
               commitment of Section 2.8 imposed upon Buyer shall be terminated
               in the event of any termination hereunder due to the Seller's
               breach of this Agreement.

         14.5  OTHER GROUNDS FOR TERMINATION. Notwithstanding anything to the
               contrary contained elsewhere in this Agreement, this Agreement
               may be terminated and the obligations of the parties hereunder
               shall be ended under the following circumstances:

                      (a) Buyer and Seller mutually agree in writing to
                      terminate this Agreement;

                      (b) Buyer determines that the development of Products is
                      more than 6 months behind the development schedule set
                      forth in Attachment J; or

                      (c) Buyer determines that key performance requirements
                      (e.g., dataspeeds, etc.) are beyond the deviation or
                      tolerance standards set forth in this Agreement or in any
                      Attachments hereto.


15      CONFIDENTIALITY

        15.1   CONFIDENTIAL INFORMATION DEFINED. During the term of this
               Agreement and thereafter it may be necessary for the parties to
               mutually exchange certain information, data and material of a
               proprietary nature whether relating to marketing, technical,
               financial and other matters. To be treated as confidential
               hereunder ("Confidential Information"), information disclosed in
               writing shall be marked as confidential or proprietary, and the
               disclosing party shall indicate the confidential nature of verbal
               information at the time of disclosure. All Confidential
               Information shall:

               15.1.1 BE HELD IN CONFIDENCE. Be received and retained in the
                      strictest confidence by the parties and will be deemed to
                      be proprietary information of the disclosing party and the
                      recipient(s) of such Confidential Information agree(s)
                      that it (or they) will not disclose it to third parties
                      and further, will treat such information, data or material
                      as proprietary using the same degree of care that it (or
                      they) would normally use in protecting its (or their) own
                      proprietary information.



                                       31
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               15.1.2 LIMITED USE. Be used by the parties hereto solely for the
                      purpose of implementing this Agreement.

        15.2   EXCEPTIONS. The provisions of Section 15.1 above shall not apply
               to any Confidential Information which:

                      (a) Is known by the receiving party prior to the date
                      hereof, and is not subject to or in violation of an
                      obligation of confidentiality;

                      (b) Is or becomes public knowledge other than by default
                      of the receiving party;

                      (c) Is obtained by the receiving party from a bona-fide
                      third party having free right of disposal of such
                      information;

                      (d) Is wholly and independently developed by receiving
                      party without reference to the Confidential Information;
                      or

                      (e) The receiving party is required to disclose pursuant
                      to a valid order of a court or other governmental body or
                      any political subdivision thereof, provided, however, that
                      the recipient of the information shall first have given
                      notice to the disclosing party and made a reasonable
                      effort to obtain a protective order requiring that the
                      information and/or documents so disclosed be used only for
                      the purposes for which the order was issued.

        15.3   SURVIVAL. This Section 15 shall survive any termination of this
               Agreement for a period of two (2) years.


16      FORCE MAJEURE

        16.1   FORCE MAJEURE. Neither of the parties hereto shall be liable for
               any damages or penalty for delay in performance of its
               obligations under this Agreement when such delay is due to acts
               of God, acts of civil or military authority, fires, floods,
               epidemics, war or riots, industry-wide strikes, lockouts or other
               labor disputes, , or any other causes beyond the reasonable
               control of such party. The party so affected shall, upon giving
               prompt written notice to the other party of the delay and the
               cause therefore, be excused from performance to the extent of the
               prevention, restriction or interference; provided, however, that
               the party so affected shall use reasonable efforts to avoid or
               remove such causes of nonperformance and shall continue
               performance hereunder with the utmost dispatch whenever such
               causes are removed. In the event of Force Majeure delays, the
               time for performance shall be extended by mutual agreement of the
               parties as



                                       32
<PAGE>   39

               provided above, but in no case shall the extension exceed a
               day-for-day extension based upon the duration of the act of Force
               Majeure.

        16.2   BUYER'S RIGHT TO TERMINATE FOR FORCE MAJEURE. Should Force
               Majeure prevent Seller from timely performing under this
               Agreement, where the Force Majeure delays Seller's performance by
               such time that, in Buyer's reasonable judgment, Buyer has lost
               the benefit of the bargain or where the delay is such that Buyer
               must reasonably look to substitute supplies to protect Buyer's
               position, Buyer has the right to terminate this Agreement,
               notwithstanding the provisions of Section 18.1.

        16.3   SELLER'S RIGHT TO TERMINATE FOR FORCE MAJEURE. Should Force
               Majeure prevent Buyer's performance under this Agreement for a
               period of more than six (6) months, Seller has the right to
               terminate this Agreement, notwithstanding the provisions of
               Section 16.1.


17      PRODUCT LIABILITY INDEMNIFICATION

        Notwithstanding anything to the contrary contained herein, Seller agrees
        to defend, hold harmless and indemnify Buyer, its subsidiaries and
        Affiliates, and its and their officers, agents and employees, from and
        against any damages, claims, demands, liabilities and expenses
        (including reasonable attorneys' fees) that arise out of, or result
        from, the death or bodily injury to, or damage to tangible property of
        any third party resulting (including Seller's employees) from the
        design, manufacture, or use of a Product, whether or not resulting from
        a Defect, produced by Seller or Seller's affiliate. Seller shall pay all
        costs, damages and reasonable attorneys' fees that a court awards as a
        result of such claim provided that: (i) Seller has sole control of the
        defense and related settlement negotiations; (ii) Buyer provides Seller
        with assistance, information and authority reasonably necessary for
        Seller to perform its obligations under this Section 17; and (iii) Buyer
        notifies Seller in writing within thirty (30) days of the discovery of
        the claim. Seller shall not be responsible for any settlement made
        without its consent. Buyer shall not be required to admit any liability
        either to obtain Seller's compliance with the indemnification provisions
        of this Section or for any other reason.


18      INTELLECTUAL PROPERTY INDEMNIFICATION

        18.1   Seller warrants that the Products furnished hereunder shall be
               delivered free of any rightful claim of any third party for
               infringement of any patent, copyright, trademark, trade secret,
               or other intellectual property right. If Buyer notifies Seller
               with thirty (30) days of the receipt of any claim that the
               Products infringes a patent, copyright, trademark, trade secret,
               or other intellectual property right, and gives Seller
               information assistance and exclusive authority to settle and
               defend such claim, Seller at its own expense shall indemnify,
               defend, and hold harmless



                                       33
<PAGE>   40

               Buyer, or may settle, any suit or proceeding against Buyer so far
               as based on a claimed infringement which breaches this warranty.
               If, in any such suit arising from such claim, the continued use
               of the Products for the purpose intended is enjoined by any court
               of competent jurisdiction, Seller shall, at its expense and
               option, either: (i) procure for Buyer the right to continue using
               the Products, or (ii) modify the Products so that they become
               non-infringing, or (iii) replace the Products or portions thereof
               so that they become non-infringing, or (iv) if none of (i), (ii),
               or (iii) can be accomplished within a reasonable period, accept
               the return of the Products and refund the purchase price. The
               foregoing states the entire liability of Seller for patent,
               copyright, trademark, trade secret or other intellectual property
               right infringement by the Products and is subject to any
               limitation of total liability set forth in this Contract. Buyer
               shall not be required to admit any liability either to obtain
               Seller's compliance with the indemnification provisions of this
               Section or for any other reason.

        18.2   The preceding subsection 18.1 shall not apply to: (i) any portion
               of the Products that is manufactured to Buyer's design, provided
               that the claim of infringement arose out of Buyer's design or
               (ii) the use of the Products for a purpose not intended or in
               conjunction with any other apparatus or material not supplied by
               Seller to the extent that such conjoined use causes the alleged
               infringement. As to any portion of the Products or use described
               in the preceding sentence, Seller assumes no liability whatsoever
               for patent, copyright, trademark, trade secrets, or intellectual
               property rights infringement.

        18.3   Seller will not be responsible for any compromise or settlement
               made without its written consent.

19      DISPUTE RESOLUTION

        19.1   INTERNAL ESCALATION. In the event that a dispute arises over the
               interpretation or application of any provision of this Agreement
               or the grounds for termination hereof, any party may request that
               the parties meet within ten (10) days of such request and seek to
               resolve the dispute by negotiation of the appropriate officers of
               each party, with the request for resolution being passed to each
               officer at the next higher level of authority, in turn. Such
               meetings shall be attended by individuals with decision-making
               authority, to attempt in good faith to negotiate a resolution of
               the dispute prior to pursuing other available remedies. If,
               within ten (10) days after the first such meeting, the parties
               have not succeeded in negotiating a resolution of the dispute, or
               if it has not been possible to schedule a meeting within ten (10)
               days following request thereof by a party, a party may request
               that such dispute be mediated in accordance with Subsection 19.2.
               Notwithstanding anything to the contrary contained in the
               foregoing, any disputes with respect to intellectual property
               rights shall be submitted to the courts and not



                                       34
<PAGE>   41

               subject to the provisions of Subsection 19.2, unless otherwise
               agreed by both Buyer and Seller.

        19.2   MEDIATION. If the attempts to resolve a dispute described in
               Subsection 19.1 fail, then such dispute will be mediated by a
               mutually acceptable mediator to be chosen by Seller and Buyer
               within twenty (20) days after written notice by either party
               demanding mediation. A party may not unreasonably withhold
               consent to the selection of a mediator, and Seller and Buyer
               shall share the costs of mediation equally. Each party shall pay
               its own attorneys' fees. By mutual agreement, however, Seller and
               Buyer may postpone mediation until each has completed some
               specified but limited discovery regarding the dispute. The
               parties may also agree to replace mediation with some other form
               of alternate dispute resolution, such as neutral fact-finding or
               mini-trial.

        19.3   ARBITRATION OF DISPUTES. Any controversy or claim arising out of
               or relating to this Agreement for the breach hereof which cannot
               be settled by the parties pursuant to Section 19.1 and 19.2,
               shall be settled by arbitration in accordance with the commercial
               arbitration rules of the American Arbitration Association as set
               forth herein.

               19.3.1 SELECTION OF ARBITRATORS. Each party may select one
                      arbitrator. Selection shall be completed within ten (10)
                      days of the receipt of a demand for arbitration. If either
                      party fails to select an arbitrator within such ten (10)
                      day period, the one selected shall act as sole arbitrator.
                      If two (2) arbitrators have been selected, the two
                      arbitrators selected shall select a third within fifteen
                      (15) days after their selection. If they fail to do so,
                      the third arbitrator shall be selected by the American
                      Arbitration Association. The arbitrators shall set a date
                      of hearing no later than sixty (60) days from the date all
                      arbitrators have been selected and shall enter a decision
                      within thirty (30) days at the end of the proceeding

               19.3.2 LANGUAGE. All proceedings shall be conducted in the
                      English language.

               19.3.3 LOCATION. The arbitration shall take place at a location
                      to be agreed upon by the parties. If the parties are
                      unable to agree, the arbitration shall be in Bellevue, or
                      Seattle, Washington, as designated by Buyer.

               19.3.4 FRCP TO APPLY. In any such arbitration proceeding the
                      arbitrators shall adopt and apply the provisions of the
                      Federal Rules of Civil Procedure relating to discovery so
                      that each party shall allow and may obtain discovery of
                      any matter not privileged which is relevant to the subject
                      matter involved in the arbitration to the same extent as
                      if such arbitration were a civil action pending in a
                      United States District Court; provided, however, that each
                      party shall be entitled to no more than four (4)



                                       35
<PAGE>   42

                      depositions upon oral examination of no more than one (1)
                      day in length each.

               19.3.5 FINAL AWARD. The award of any arbitration shall be final,
                      conclusive and binding on the parties hereto.

               19.3.6 REMEDY. The arbitrators may award any legal or equitable
                      remedy. The arbitration award shall include an award of
                      reasonable attorney's fees, in the amount of such fees, to
                      the prevailing party. Judgment upon any arbitration award
                      may be entered and enforced in any court of competent
                      jurisdiction.

               19.3.7 INJUNCTIVE RELIEF. Either party to an arbitration
                      hereunder may bring an action for injunctive relief
                      against the other party if such action is necessary to
                      preserve jurisdiction of the arbitrators or to maintain
                      status quo pending the arbitrators' decision. Any such
                      action called pursuant to this paragraph shall be
                      discontinued upon assumption of jurisdiction by the
                      arbitrators and their opportunity to consider the request
                      for equitable relief pending final decision in the
                      arbitration.

        19.4   CONTINUE TO PERFORM. The parties shall continue to perform all
               obligations under the Agreement pending the above-described
               dispute resolution proceedings, subject to full reservation of
               rights at law or under this Agreement.

        19.5   CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
               ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
               WASHINGTON, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
               LAW THEREOF.


20      NON-EXCLUSIVE AGREEMENT

        This Agreement is a nonexclusive agreement. Buyer expressly reserves the
        right to contract with others for any of the goods or services it may
        require, including those that may duplicate Products.


21      INSURANCE

        21.1   SELLER TO MAINTAIN. Seller shall maintain and keep in force all
               risk insurance, in form and substance and with insurers
               reasonably satisfactory to Buyer, covering all Products delivered
               to Buyer the risk of loss to which has not passed to Buyer, and
               shall furnish Buyer with proof that such insurance has been
               obtained and is in force.



                                       36
<PAGE>   43

        21.2   LEVEL OF INSURANCE. Seller shall at all times while performing
               services on Buyer's premises carry insurance with limits not less
               than the limits described as follows:

                      (a) Employer's General Liability: Limits ***.

                      (b) Comprehensive General Public Liability: *** single
                      limit bodily injury and property damage combined; such
                      coverage shall include a broad form liability rider,
                      completed operations coverage rider and contractual
                      liability rider.

                      (c) An umbrella policy: with *** single limit bodily
                      injury and property damage combined.

                      (d) Workmen's Compensation: maintained at least at the
                      level required by statute in the states in which Seller is
                      to perform work under this Agreement.

        21.3   CERTIFICATES OF INSURANCE. Seller shall provide Buyer with
               certificates of insurance (i) evidencing the insurance to be
               carried under this Article 21, naming the Buyer as an additional
               insured and (ii) including provisions that such insurance policy
               shall not be subject to cancellation, expiration or reduction
               without thirty (30) days written notice to Buyer.

        21.4   NO WAIVER. Notwithstanding the requirements as to insurance to be
               carried, the insolvency, bankruptcy or failure of any insurance
               company carrying insurance for either party, or failure of any
               such insurance company to pay claims accruing, shall not be held
               to waive any of the provisions of this Agreement or relieve
               either party from any obligations under this Agreement.

22      ASSIGNMENT

        22.1   CONSENT REQUIRED. Except as otherwise expressly provided in this
               Agreement, no party shall have the right to assign its rights or
               delegate its duties under this Agreement or any Purchase Order
               hereunder, without the prior written consent of the other party
               hereto, which consent shall not be unreasonably withheld.
               Notwithstanding the foregoing, Buyer may assign its rights and
               obligations hereunder to (1) any corporation resulting from any
               merger or other reorganization to which Buyer is a party, (2) any
               corporation, partnership, association, or other person or entity
               to which Buyer may transfer all or substantially all of its
               assets or business existing at such time, or (3) any entity which
               controls, is controlled by, or under common control with Buyer.

        22.2   INVALID WITHOUT COMPLIANCE. Any attempted assignment or
               delegation in contravention of this Section 22 shall be void and
               of no effect and shall be


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       37
<PAGE>   44

               grounds for immediate termination by the non-breaching party, for
               cause, as provided in Section 12 hereof.

        22.3   ASSIGNS. Subject to the provisions of Section 22.1 above, this
               Agreement shall inure to the benefit of and be binding upon the
               respective successors and assigns, if any, of the parties hereto.


23      NOTICES

        Except as otherwise provided in this Agreement, or applicable Purchase
        Order, all notices or other communications hereunder shall be deemed to
        have been duly given when made in writing and mailed by certified mail,
        return receipt request, facsimile transmission upon confirmation of
        receipt, overnight courier or hand delivery to the parties at the
        addresses set forth below or at such other addresses as may be
        designated by the parties in writing:

To:     Seller:

               NOVATEL INC.
               Attn: Greg Robins
               9360 Towne Center Drive, Suite 110
               San Diego, CA 92122
               Phone: 858-320-8813
               Fax: 858-784-0626

To:     Buyer:

               VoiceStream Wireless Corporation
               Attn:  David A. Miller
               Vice President of Legal Affairs
               3650 131st Ave. SE, Suite 200
               Bellevue WA  98006

               with a copy, which shall not constitute notice, to:

               Attn:  Stuart Funk
               Director of Contracts and Supplier Relations
               3650 131st Ave. SE, Suite 200
               Bellevue WA  98006

24      PUBLICITY

        Except with respect to Co-Op Advertising (for which Buyer is allowed to
        use Seller's name in accordance with Buyer's guidelines), Seller shall
        submit to Buyer and Buyer



                                       38
<PAGE>   45

        shall submit to Seller, as the case may be, all advertising, sales
        promotion, press releases and other publicity relating to the subject
        matter of this Agreement wherein Buyer's or Seller's name or names
        (including the names of Affiliates) are mentioned or language, signs,
        markings or symbols are used from which the connection of a Buyer's or
        Seller's name or names therewith may, in Buyer's or Seller's judgment,
        as applicable, be reasonably inferred or implied. Seller or Buyer, as
        applicable, shall not publish or use such advertising, sales promotion,
        press release or publicity matter without Buyer's Seller's, as
        applicable, prior written approval, which approval may be withheld or
        delayed for any or no reason.


25      COMPLIANCE WITH LAWS; GOVERNING LAW

        Each party shall comply with all applicable federal, state and local
        laws, regulations and codes, including the procurement of permits and
        licenses when needed, in the performance of this Agreement. Each party
        shall indemnify the other party against any loss or damage that may be
        sustained by reason of such party's failure to comply with such federal,
        state and local laws, regulations and codes. This Agreement shall be
        construed and enforced in accordance with the laws of the State of
        Washington, without regard to the conflict of laws of Washington or any
        other state.


26      WAIVERS OF DEFAULT

        Waiver by a party of any default by another party shall not be deemed a
        waiver by the non-defaulting party of any other default. Failure of a
        party to exercise a right or remedy shall not be deemed a waiver of that
        right or remedy.


27      AMENDMENTS

        No provisions of this Agreement or any Purchase Order shall be deemed
        waived, amended or modified by a party, unless such waiver, amendment or
        modification is in writing and signed by the authorized representative
        of the party against whom it is sought to enforce such waiver, amendment
        or modification.


28      ORDER OF PRECEDENCE

        During the Term, Buyer's purchase of Products from Seller shall be
        deemed to be purchased under the terms and conditions of this Agreement.
        The terms and conditions of Buyer's Purchase Order, Seller's
        acknowledgments, invoices or any other writings by either party which
        differ from the terms hereunder shall not be effective unless
        specifically accepted in writing by amendment to this Agreement made
        separate and apart from said terms and conditions and signed by all of
        the parties to this Agreement. In the event of any conflict or
        inconsistency among the provisions of this Agreement and the



                                       39
<PAGE>   46

        documents attached and incorporated herein, such conflict or
        inconsistency shall be resolved, by giving precedence to this Agreement
        and thereafter to the Attachments.


29      HEADINGS

        The section headings contained in this Agreement are for reference
        purposes only and shall not affect in any way the meaning or
        interpretation of this Agreement.


30      SEVERABILITY

        If any provision or any part of a provision of this Agreement shall be
        invalid or unenforceable, such invalidity or unenforceability shall not
        invalidate or render unenforceable the entire Agreement, but rather the
        entire provision or the Agreement shall be construed as if not
        containing the particular invalid or unenforceable provision or
        provisions, and the rights and obligations of the parties shall be
        construed and enforced accordingly, provided, that the deletion of such
        provision does not change the intent of the Agreement.


31      SURVIVAL

        The provisions contained in this Agreement that by their sense and
        context are intended to survive the cancellation or termination of this
        Agreement or any Purchase Order hereunder shall survive such
        Cancellation and termination.


32      LICENSE

        Except as specifically provided in Section 2 hereof, no licenses,
        express or implied, under any patents, copyrights, trademarks or trade
        secrets are granted by Buyer or Seller to the other hereunder.


33      PARTY RELATIONSHIP

        It is expressly understood that the parties intend by this Agreement to
        establish the relationship of independent contractors. No party shall
        have any authority to create or assume in the name of or on behalf of
        the other party any obligation, express or implied, nor to act or to
        purport to act as the agent or legally empowered representative of the
        other party hereto for any purpose whatsoever.

34      CONTRACT/TARGET DATES



                                       40
<PAGE>   47

        Performance of this Agreement will also be subject to Seller working
        towards completion of tasks subject to agreed target and contract
        completion dates, set out in Attachment J.


35      COUNTERPARTS

        This Agreement may be executed in two (2) separate counterparts, each of
        which shall be deemed an original and both of which taken together shall
        constitute one and the same instrument.



36      ATTACHMENTS AND INCORPORATION

        36.1   INCORPORATION. The following documents attached hereto are
               incorporated herein by reference and made a part of this
               Agreement with the same force and effect as though set forth in
               their entirety herein (such documents together with this
               Agreement are herein referred to as the "Agreement").

<TABLE>
<CAPTION>
               ATTACHMENT          DESCRIPTION
<S>                                <C>
               Attachment A-1      Description of Product 1 (specifications)
               Attachment A-2      Description of Product 2 (specifications)
               Attachment A-3      Description of Product 3 (specifications)
               Attachment B        Dates for Completion of Attachments
               Attachment C        Prices
               Attachment D        Sample Testing Protocol
               Attachment E        Acceptance Test Procedures
               Attachment F        End-user warranty
               Attachment G        Database Format
               Attachment H        Advertising Display Material
               Attachment I        Return Policy
               Attachment J        GPRS Development Schedule
               Attachment K        Technical Support
</TABLE>


37      ENTIRE AGREEMENT

        This Agreement constitutes the entire agreement between the parties with
        respect to the subject matter thereof. All prior agreements,
        representations, statements, negotiations, understandings and
        undertakings are superseded hereby.



                                       41
<PAGE>   48

IN WITNESS HEREOF, THE PARTIES HEREBY EXECUTE THIS AGREEMENT BELOW.

SELLER:                                      BUYER:

Novatel Wireless Inc.,                       VoiceStream Wireless Corporation
a Delaware Corporation                       a Delaware Corporation


/s/                                          /s/
-----------------------------------          -----------------------------------
By:                                          By:


                                                       Cole Brodman
-----------------------------------          -----------------------------------
Name: [Print]                                Name: [Print]


Title:                                       Title:
      -----------------------------                -----------------------------



                                       42
<PAGE>   49

   ATTACHMENTS



                                       43
<PAGE>   50

Attachment A-1
VoiceStream Wireless Corporation/Novatel Inc.


ATTACHMENT A-1 PRODUCT 1 - GPRS - PCS PC CARD

Overview:

***

Features:

***

Specifications:

***




*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       44
<PAGE>   51
                                      ***

*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

                                       45
<PAGE>   52

Attachment A-2
VoiceStream Wireless Corporation/Novatel Inc.


ATTACHMENT A-2 PRODUCT 2 - GPRS - PCS PC CARD 8-SLOT

Overview:

                                      ***

Features:

                                      ***

Specifications:

                                      ***

*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.


                                       46
<PAGE>   53
                                      ***

*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

                                       47
<PAGE>   54

Attachment A-3
VoiceStream Wireless Corporation/Novatel Inc.


ATTACHMENT A-3 PRODUCT 3 -- GPRS  - GSM/PCS PC CARD 900/1900

Overview:

         ***
Features:

         ***

Specifications:

         ***



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.


                                       48
<PAGE>   55

        ***


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

                                       49
<PAGE>   56

Attachment B
VoiceStream Wireless Corporation/Novatel Inc.


ATTACHMENT B DATES FOR COMPLETION OF ATTACHMENTS

<TABLE>
<CAPTION>
ATTACHMENT            DESCRIPTION                                 Completion Date
----------            -----------                                 ---------------
<S>                   <C>                                         <C>
 Attachment A-1       Description of Product 1 (specifications)      ***
 Attachment A-2       Description of Product 2 (specifications)      ***
 Attachment A-3       Description of Product 3 (specifications)      ***
 Attachment B         Dates for Completion of Attachments            ***
 Attachment C         Prices                                         ***
 Attachment D         Sample Testing Protocol                        ***
 Attachment E         Acceptance Test Procedures                     ***
 Attachment F         End-user warranty                              ***
 Attachment G         Database Format                                ***
 Attachment H         Advertising Display Material                   ***
 Attachment I         Return Policy                                  ***
 Attachment J         GPRS Development Schedule                      ***
 Attachment K         Technical Support                              ***

</TABLE>


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

                                       50
<PAGE>   57

Attachment C
VoiceStream Wireless Corporation/Novatel Inc.



ATTACHMENT C PRICES

Net Price* to Buyer shall be determined by adding the Base Price plus all
applicable adjustments as set forth below:


BASE PRICE

THE NOT-TO-EXCEED PRICE FOR PRODUCTS 1 THROUGH 3 AS DEFINED IN ATTACHMENTS A-1
THROUGH A-3 SHALL BE ***.

Prices charged in the future may be adjusted downward to the best prevailing
market price at the time of shipment in accordance with the *** section of this
agreement.

ADJUSTMENTS TO PRICE

<TABLE>
<CAPTION>
                                                UPCHARGE    UPCHARGE
                                                APPLIED     APPLIED TO
SECTION                                         TO ALL      AFFECTED
NUMBER              SUBJECT                     PRODUCTS    PRODUCTS
-------             -------                     --------    --------
<S>                 <C>                         <C>         <C>
2.6.4               ***                                     ***
2.7                 ***                         ***


2.11.1              ***                         ***
2.15.2              ***                                     ***
2.20                ***                         ***
4.3                 ***                         ***
5.5                 ***                         ***

9.6                 ***                                     ***
12.1.2              ***                         ***
12.1.3              ***                         ***
12.2.1              ***                         ***
12.3.1              ***                         ***
12.3.2              ***                         ***
12.3.4              ***                         ***
12.3.5              ***                         ***
</TABLE>


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       51
<PAGE>   58

<TABLE>
<S>                 <C>                         <C>         <C>
12.3.6              ***                         ***
Attachments A-1     ***                         ***
through A-3

****
</TABLE>

ACCESSORY PRICES

No accessories are currently contemplated.


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       52
<PAGE>   59

Attachment D
VoiceStream Wireless Corporation/Novatel Inc.

ATTACHMENT D SAMPLE TESTING PROTOCOL

                                      ***



*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

                                       53
<PAGE>   60

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------

                                 ACCEPTANCE SAMPLE TESTING

------------------------------------------------------------------------------------------
                                                        NUMBER OF PRODUCTS FOUND
                                                 IN SAMPLE QUANTITY WITH A MAJOR DEFECT
------------------------------------------------------------------------------------------
                                                  ACCEPT IF THIS        REJECT IF THIS
                                               NUMBER OR FEWER ARE    NUMBER OR MORE ARE
LOT SIZE                   SAMPLE QUANTITY            FOUND                 FOUND
------------------------------------------------------------------------------------------
<S>                      <C>                   <C>                    <C>
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
***                              ***                   ***                   ***
------------------------------------------------------------------------------------------
</TABLE>

Notwithstanding anything to the contrary set forth herein below, three Minor
Defects (as defined in the Defect Categorization for AQL Testing table set forth
herein below) of Handset Products shall also be deemed to constitute a Major
Defect and contribute to the acceptance or rejection of a lot as provided in the
table, rounded downward (i.e., five (5) Minor Defects should be counted as one
(1) Major Defect, while six (6) Minor Defects shall be counted as two (2) Major
Defects).

Major and Minor Defects are determined on a per-Product basis (i.e., a single
unit of Product with two (2) Major Defects is counted only as a single Major
Defect for the purpose of acceptance or rejection of a lot).

Should Buyer reject a lot based upon sample testing in accordance with this
Attachment E, Seller shall have the option to perform 100% testing of the lot,
at Seller's sole expense, at Buyer's premises or elsewhere with Buyer having the
right of observation of the tests and may re-submit the lot (less any defective
units) to Buyer. Seller agrees that Buyer may then re-sample test the
re-submitted lot, and Buyer may accept or reject such lot based on the testing
criteria set forth above.

Seller shall provide Buyer with Product specifications, including pass/fail
limits on parameters.


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       54
<PAGE>   61

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------

                      DEFECT CATEGORIZATION FOR AQL TESTING

------------------------------------------------------------------------------------------
                   DEFECT TYPE                        MAJOR DEFECT        MINOR DEFECT
------------------------------------------------------------------------------------------
<S>                                                   <C>                 <C>
ESN does not match declared ESN                             X
------------------------------------------------------------------------------------------
Shipping container seriously damaged                                           X
------------------------------------------------------------------------------------------
Shipping list inconsistent with Purchase Order                                 X
------------------------------------------------------------------------------------------
Visual assembly defect, not repaired, per
Seller's workmanship standards                                                 X
------------------------------------------------------------------------------------------
Mechanical part missing, damaged or broken, but
not restricting product integration                                            X
------------------------------------------------------------------------------------------
Connectors damaged or not functional                        X
------------------------------------------------------------------------------------------
Failure to pass Seller's Product test program               X
------------------------------------------------------------------------------------------
Foreign material on the Product                             X
------------------------------------------------------------------------------------------
Display damaged or inoperable                               X
------------------------------------------------------------------------------------------
Failure to conform with the PCS 1900
specifications or Seller's Product tolerances               X
------------------------------------------------------------------------------------------
</TABLE>



                                       55
<PAGE>   62

Attachment E
VoiceStream Wireless Corporation/Novatel Inc.


ATTACHMENT E  ACCEPTANCE TEST PROCEDURE

Pending
                    (To be jointly developed by the Parties)



                                       56
<PAGE>   63

Attachment F
VoiceStream Wireless Corporation/Novatel Inc.


ATTACHMENT F WARRANTY

Novatel warrants for a period either of the longer of 1 year from delivery at
the customer's location or ninety days after repair or replacement that its
Products are free from defects in material and workmanship, conform to Novatel
specifications and that the software shall be free from errors which materially
affect performance. THESE WARRANTIES ARE EXPRESSLY IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ALL IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. NOVATEL
WIRELESS SHALL IN NO EVENT BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES, OF ANY KIND OR NATURE DUE TO ANY CAUSE.



Novatel's obligations are limited to correction of such failure, repair or
replacement and are conditioned upon the Product having been maintained in
accordance with Novatel specifications and the Product not having been modified
by any party other than Novatel except as expressly permitted in writing.


The foregoing warranties do not extend to (i) nonconformities, defects or errors
in the Product due to accident, abuse, misuse or negligent use of the Product or
use in other than a normal and customary manner, environmental conditions not
conforming to Novatel's specifications, or failure to follow prescribed
operating maintenance procedures, (ii) defects, errors or nonconformities in the
Product due to modifications, alterations, additions or Product changes not made
or authorized to be made by Novatel, (iii) normal wear and tear, or (iv) damage
caused by force of nature or act of any third party.



                                       57
<PAGE>   64

Attachment G
VoiceStream Wireless Corporation/Novatel Inc.


ATTACHMENT G DATABASE FORMAT

                           (To be supplied by Novatel)



                                       58
<PAGE>   65

Attachment H
VoiceStream Wireless Corporation/Novatel Inc.


ATTACHMENT H ADVERTISING DISPLAY MATERIAL

                           (To be supplied by Novatel)



                                       59
<PAGE>   66

Attachment I
VoiceStream Wireless Corporation/Novatel Inc.


ATTACHMENT I RETURN POLICY


Recognizing that product sold to our customers is done so in good faith, the
return of stock is considered contrary to the original purchase terms. However,
at your request, Seller will consider the return of customer's inventory under
certain market conditions. Seller will only consider credit returns if our
customer has demonstrated active promotion and proper positioning of our
product.

This agreement is necessitated by the cost prohibitive nature of stock returns
and covers the blanket guidelines for processing a return. As a partner with
Seller interested in growing our relationship and respective businesses,
customers are asked to share the cost of this burden.

Note that each request for return must be specifically agreed to by the Seller
customer representative and Seller management. To obtain approval for a specific
restock return for credit, a customer signed agreement in accordance with the
following return guidelines is required:

        The product must be in current production and directly purchased by
        Buyer within the last 90 days. If product is determined to been
        purchased from other suppliers, product will be returned to customer.

        The product must be in new, immediate resoluble condition including
        original packaging and master cartons.

        ***

        A return authorization will be provided by your sales representative. It
        will be valid for 30 days from issuance.

        Stock is to be returned to the Seller San Diego, California, facility.

        No custom products are returnable under this policy.

        Buyer shall pay freight on returns.

Credit will be provided to customer's account within thirty (30) days.


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       60
<PAGE>   67

Attachment J
VoiceStream Wireless Corporation/Novatel Inc.


ATTACHMENT J  GPRS DEVELOPMENT SCHEDULE

THE FOLLOWING SCHEDULE IS CONTINGENT UPON THE OPERABILITY AND COMMERCIAL
AVAILABILITY OF A NORTH AMERICAN GSM 1900 NETWORK.

GPRS DEVELOPMENT SCHEDULE:

<TABLE>
<CAPTION>
  -------------------------------------------------------------------------------------
                        14.4KBPS                43.3KBPS                56KBPS
  -------------------------------------------------------------------------------------
    PROTOTYPE
    QUANTITY               10                      20                     100
  -------------------------------------------------------------------------------------
<S>                     <C>                     <C>                    <C>
       ***                ***                     ***                     ***
  -------------------------------------------------------------------------------------
       ***                ***                     ***                     ***
  -------------------------------------------------------------------------------------
       ***                ***                     ***                     ***
  -------------------------------------------------------------------------------------
       ***                ***                     ***                     ***
  -------------------------------------------------------------------------------------
       ***                ***                     ***                     ***
  -------------------------------------------------------------------------------------
       ***                ***                     ***                     ***
  -------------------------------------------------------------------------------------
       ***                ***                     ***                     ***
  -------------------------------------------------------------------------------------
       ***                ***                     ***                     ***
  -------------------------------------------------------------------------------------
</TABLE>

GPRS PC CARD PRODUCT DEVELOPMENT MILESTONES:

FIRST 1 SLOT ENGINEERING SAMPLES:  ***
INDUSTRIAL DESIGN COMPLETE:  ***
ALPHA TEST BEGINS IN PC CARD FORM FACTOR:  ***
FCC CERTIFICATION BEGINS:  ***
PILOT RUN:  ***
BETA TEST BEGINS :  ***
CARRIER CERTIFICATION BEGINS:  ***
RELEASE TO MANUFACTURING:  ***
FIRST PRODUCTION UNITS:  ***

TARGET DEVELOPMENT SCHEDULE FOR 115KBPS GPRS*:

                ----------------------------------------------
                                          115KBPS
                ----------------------------------------------
                 SCHEDULE         PROTOTYPE-12 MONTHS ARO
                ----------------------------------------------
                                    VOLUME-14 MONTHS ARO
                ----------------------------------------------
                                  CONTINGENT ON SOURCE OF
                ----------------------------------------------
                                          SILICON
                ----------------------------------------------

                ----------------------------------------------


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       61
<PAGE>   68

               ----------------------------------------------
               CONFIGURATION      8 RECEIVE, 2 TRANSMIT
               ----------------------------------------------

               ----------------------------------------------
                  SPEED              115KBPS DOWNLOAD
               ----------------------------------------------
                                     28.8KBPS UPLOAD
               ----------------------------------------------

* Project totally dependent on delivery of silicon capable of this
configuration.



                                       62
<PAGE>   69

Attachment K
VoiceStream Wireless Corporation/Novatel

ATTACHMENT K  TECHNICAL SUPPORT

                                TECHNICAL SUPPORT

Technical Support for the Novatel GSM/GPRS 900/1900 Mhz PC Card delivered to
Voicestream or a Voicestream Designated Channel Partner will be managed via a
three-tier Technical Support infrastructure and process as follows:


LEVEL ONE TECHNICAL SUPPORT

        Level one Technical Support will be provided by Voicestream or
        Voicestream Designated Channel Partner to their direct and indirect
        customers. Level one support is defined as calls* originating from
        Voicestream or Voicestream Designated Channel Partner customers,
        resellers or distributors regarding Voicestream or Voicestream
        Designated Channel Partner Service, Wireless Service Providers, Novatel
        GPRS PC Card products including but not limited to pre and post sale
        inquiries concerning the basic operation of the hardware and software,
        functionality, interoperability and capabilities of those products and
        services.

        For calls regarding the Novatel GPRS PC Card products, Voicestream or
        Voicestream Designated Channel Partner will make every attempt to answer
        customer questions and resolve issues using available tools,
        documentation, test equipment and other materials used to support the
        Novatel GPRS PC Card products (see training section below). If the
        customer question/issue regarding the Novatel GPRS PC Card product
        cannot be resolved by Voicestream or Voicestream Designated Channel
        Partner support personnel to the customers' satisfaction, the issue will
        be forwarded to Novatel level two Technical Support for further
        investigation and resolution.

        *Calls include phone calls, e-mail, web-based inquiries, faxes and
        letters.


LEVEL TWO TECHNICAL SUPPORT

    Level two Technical Support will be provided by Novatel Wireless support
    staff directly to Voicestream or Voicestream Designated Channel Partner
    level one support personnel to assist in the resolution of open customer
    issues that have not been resolved to Voicestream or Voicestream Designated
    Channel Partner customers satisfaction during a level one support call.
    Voicestream or Voicestream Designated Channel Partner will have direct
    access to designated support staff within the Novatel Wireless support
    organization for this purpose. A direct line of communication between the
    two organizations will be established and Novatel



                                       63
<PAGE>   70

    Wireless support technicians will be available during normal Voicestream or
    Voicestream Designated Channel Partner Technical Support operation hours to
    assist in resolution of customer problems. Novatel Wireless support
    engineering will work directly with Voicestream or Voicestream Designated
    Channel Partner support staff to resolve issues and answer questions, this
    may require Voicestream or Voicestream Designated Channel Partner support
    staff to gather additional information and provide system information or
    test results back to Novatel support staff to aid in the definition and
    resolution of the problem. It will be Voicestream or Voicestream Designated
    Channel Partner support staff's responsibility to communicate directly with
    the end-user customer. Problems that are not resolved *** or problems that
    are flagged as sensitive/mission critical will be escalated to level three
    Technical Support for final resolution.

LEVEL THREE TECHNICAL SUPPORT (ESCALATION)

        Level three Technical Support will be provided by Novatel support and
        system engineering staff to resolve issues that cannot be satisfactorily
        resolved by level one and level two support personnel. Level three
        support will handle all Voicestream or Voicestream Designated Channel
        Partner product escalations issues including unresolved support calls
        and will work directly with Novatel engineering staff to resolve those
        issues.

TECHNICAL SUPPORT TRAINING

        Technical Support training and documentation for the Novatel GPRS PC
        Card Product will be provided to Voicestream or Voicestream Designated
        Channel Partner level one support staff by Novatel Wireless. Voicestream
        or Voicestream Designated Channel Partner support staff will receive
        training on the general use, functionality, operation and compatibility
        of the Novatel GPRS PC Card products. In addition all support related
        documentation, training materials, notes, FAQ's, and web based support
        materials will be made available to Voicestream or Voicestream
        Designated Channel Partner for their use in supporting these products.


*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.



                                       64
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>12
<FILENAME>ex21.txt
<DESCRIPTION>EXHIBIT 21
<TEXT>

<PAGE>   1
                                                                      Exhibit 21


NOVATEL WIRELESS, INC.

Subsidiaries of the Registrant


<TABLE>
<CAPTION>
Subsidiary Name                               Jurisdiction
-------------------------------------------------------------
<S>                                           <C>
Novatel Wireless Solutions, Inc.              Delaware

Novatel Wireless Technologies, Ltd.           Alberta, Canada
</TABLE>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>13
<FILENAME>ex23.txt
<DESCRIPTION>EXHIBIT 23
<TEXT>

<PAGE>   1
                                                                      EXHIBIT 23


                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in or made a part of this
registration statement.




/s/  Arthur Andersen LLP

San Diego, California
July 26, 2000

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.1
<SEQUENCE>14
<FILENAME>ex27-1.txt
<DESCRIPTION>EXHIBIT 27.1
<TEXT>

<TABLE> <S> <C>

<ARTICLE> 5

<S>                             <C>               <C>                    <C>               <C>               <C>
<PERIOD-TYPE>                   YEAR              YEAR              YEAR              3-MOS             3-MOS
<FISCAL-YEAR-END>               DEC-31-1997       DEC-31-1998       DEC-31-1999       DEC-31-1999       DEC-31-2000
<PERIOD-START>                  JAN-01-1997       JAN-01-1998       JAN-01-1999       JAN-01-1999       JAN-01-2000
<PERIOD-END>                    DEC-31-1997       DEC-31-1998       DEC-31-1999       MAR-31-1999       MAR-31-2000
<CASH>                                    0             3,497            25,455                 0            14,065
<SECURITIES>                              0               296                 0                 0                 0
<RECEIVABLES>                             0               607             1,345                 0             2,753
<ALLOWANCES>                              0               (44)             (181)                0              (212)
<INVENTORY>                               0               656             4,706                 0             6,758
<CURRENT-ASSETS>                          0             5,280            36,718                 0            29,030
<PP&E>                                    0               904             1,346                 0             2,280
<DEPRECIATION>                            0                 0                 0                 0                 0
<TOTAL-ASSETS>                            0             6,184            38,118                 0            31,673
<CURRENT-LIABILITIES>                     0             1,897            20,949                 0            20,635
<BONDS>                                   0                 0                 0                 0                 0
<PREFERRED-MANDATORY>                     0                 0                 0                 0                 0
<PREFERRED>                               0            14,812            43,805                 0            44,833
<COMMON>                                  0                 3                 3                 0                 3
<OTHER-SE>                                0                 0                 0                 0                 0
<TOTAL-LIABILITY-AND-EQUITY>              0             6,184            38,118                 0            31,673
<SALES>                               3,354             5,378             9,556             1,273             6,837
<TOTAL-REVENUES>                      3,354             5,378             9,556             1,273             6,837
<CGS>                                 1,136             3,433            11,955             1,076             7,865
<TOTAL-COSTS>                         6,717             7,629            12,860             1,726             5,461
<OTHER-EXPENSES>                          0                 0                10                (1)               17
<LOSS-PROVISION>                          0                 0                 0                 0                 0
<INTEREST-EXPENSE>                        0                 0             3,267                 0                11
<INCOME-PRETAX>                           0                 0                 0                 0                 0
<INCOME-TAX>                              0                 0                 0                 0                 0
<INCOME-CONTINUING>                       0                 0                 0                 0                 0
<DISCONTINUED>                            0                 0                 0                 0                 0
<EXTRAORDINARY>                           0                 0                 0                 0                 0
<CHANGES>                                 0                 0                 0                 0                 0
<NET-INCOME>                         (4,476)           (5,506)          (18,469)           (1,513)           (6,268)
<EPS-BASIC>                         (1.54)            (2.06)            (6.13)             (.58)            (2.21)
<EPS-DILUTED>                         (1.54)            (2.06)            (6.13)             (.58)            (2.21)


</TABLE>
</TEXT>
</DOCUMENT>
</SUBMISSION>
