<SUBMISSION>
<ACCESSION-NUMBER>0000936392-03-000478
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20030502
<FILING-DATE>20030416
<EFFECTIVENESS-DATE>20030416
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>NOVATEL WIRELESS INC
<CIK>0001022652
<ASSIGNED-SIC>7370
<IRS-NUMBER>860824673
<STATE-OF-INCORPORATION>DE
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEF 14A
<ACT>34
<FILE-NUMBER>000-31659
<FILM-NUMBER>03652080
</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>DEF 14A
<SEQUENCE>1
<FILENAME>a88864ddef14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>Novatel Wireless, Inc.</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="5">SCHEDULE 14A INFORMATION<BR></FONT>
<FONT size="3">PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES<BR>
EXCHANGE ACT OF 1934</FONT>

<P align="left"><FONT size="2">FILED BY THE REGISTRANT&nbsp;&nbsp; &#091;X&#093;<BR>
FILED BY A PARTY OTHER THAN THE REGISTRANT&nbsp;&nbsp; &#091;&nbsp;&nbsp; &#093;
</FONT>
<P align="left"><FONT size="2">Check the appropriate box:</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#091;&nbsp;&nbsp; &#093;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"> Preliminary proxy statement</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#091;X&#093;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"> Definitive proxy statement</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#091;&nbsp;&nbsp; &#093;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"> Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#091;&nbsp;&nbsp; &#093;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"> Definitive additional materials</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#091;&nbsp;&nbsp; &#093;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"> Soliciting Material Under Rule&nbsp;14a-12</FONT></TD>
</TR>
</TABLE>
<P>
<HR width="26%" align="center" size="1" noshade>
<P>


<P align="center"><FONT size="6">NOVATEL WIRELESS, INC.<BR></FONT>
<FONT size="2">(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)</FONT>

<P>
<HR width="26%" align="center" size="1" noshade>
<P>


<P align="center"><FONT size="2">(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)</FONT>

<P align="left"><FONT size="2">PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#091;X&#093;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"> No fee required.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#091;&nbsp;&nbsp; &#093;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"> Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Title of each class of securities to which transaction applies:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD align="left" valign="top" colspan="3"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Aggregate number of securities to which transaction applies:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD align="left" valign="top" colspan="3"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule&nbsp;0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD align="left" valign="top" colspan="3"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Proposed maximum aggregate value of transaction:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD align="left" valign="top" colspan="3"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">(5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Total fee paid:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD align="left" valign="top" colspan="3"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#091;&nbsp;&nbsp; &#093;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"> Fee paid previously with preliminary materials.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&#091;&nbsp;&nbsp; &#093;&nbsp;&nbsp;&nbsp;&nbsp; Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number or the
form or schedule and the date of its filing.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amount Previously Paid:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD align="left" valign="top" colspan="3"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form, Schedule or Registrant Statement No.:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD align="left" valign="top" colspan="3"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Filing Party:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD align="left" valign="top" colspan="3"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Date Filed:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD align="left" valign="top" colspan="3"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2"></FONT>




<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<IMG src="a88864da8886400.gif" alt="(NOVATEL WIRELESS LOGO)">
</DIV>

<P align="left">
<FONT size="2">April&nbsp;15, 2003
</FONT>

<P align="left">
<FONT size="2">Dear Stockholder:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You are cordially invited to attend a special
meeting of stockholders of Novatel Wireless, Inc., to be held on
May&nbsp;2, 2003, at 2:00 p.m. local time at Hyatt Regency La
Jolla, 3777 La Jolla Village Drive, San Diego, California 92122.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Information about the meeting and the various
matters on which the stockholders will act is included in the
Notice of Special Meeting of Stockholders and Proxy Statement
which follow. Also included is a Proxy Card and postage paid
return envelope.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is important that your shares be represented
at the meeting. Whether or not you plan to attend, in order to
ensure your representation at the special meeting, please
complete and return your Proxy Card in the enclosed envelope as
promptly as possible.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="38%"></TD>
    <TD width="62%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Sincerely,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="a88864da8886401.gif" alt="-s- Mark Ross"></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">MARK ROSSI
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Chairman of the Board of Directors</FONT></I></TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<IMG src="a88864da8886400.gif" alt="(NOVATEL LOGO)">
</DIV>

<P align="center">
<B>NOTICE OF SPECIAL MEETING OF STOCKHOLDERS</B>

<DIV align="center">
<B>To Be Held on May&nbsp;2, 2003</B>
</DIV>

<P align="left">
<FONT size="2">To the Stockholders of Novatel Wireless, Inc.:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">NOTICE IS HEREBY GIVEN that a special meeting of
stockholders (the &#147;Meeting&#148;) of Novatel Wireless,
Inc., a Delaware corporation (the &#147;Company&#148;), will be
held at Hyatt Regency La&nbsp;Jolla, 3777&nbsp;La&nbsp;Jolla
Village Drive, San&nbsp;Diego, California 92122, on May&nbsp;2,
2003, at 2:00&nbsp;p.m., local time for the following purposes:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">To (i)&nbsp;approve and reserve for issuance
    shares of the Company&#146;s common stock issuable (a)&nbsp;upon
    the conversion of shares of the Company&#146;s Series B
    Convertible Preferred Stock to be issued in connection with a
    pending Private Placement Transaction (as defined below),
    (b)&nbsp;in lieu of cash dividends payable on shares of the
    Series&nbsp;B Convertible Preferred Stock, (c)&nbsp;upon the
    conversion of certain secured subordinated convertible
    promissory notes (the &#147;Private Placement Notes&#148;), and
    (d)&nbsp;upon the exercise of related common stock purchase
    warrants issued in connection with the Private Placement Notes,
    and to be issued in connection with the completion of the
    Private Placement Transaction (collectively, the &#147;Private
    Placement Transaction&#148;), and (ii)&nbsp;approve amendments
    to the terms of the Company&#146;s Series&nbsp;A Convertible
    Preferred Stock necessary to complete the authorization and
    issuance of shares of the Company&#146;s Series&nbsp;B
    Convertible Preferred Stock in the Private Placement Transaction.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors of the Company has fixed
the close of business on March&nbsp;25, 2003 as the record date
for determining the stockholders entitled to notice of, and to
vote at, the Meeting or any adjournment or postponement thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY, WHICH RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THE ISSUANCES OF SHARES OF THE COMPANY&#146;S COMMON
STOCK UPON CONVERSION OF THE COMPANY&#146;S SERIES B CONVERTIBLE
PREFERRED STOCK AND THE PRIVATE PLACEMENT NOTES, IN LIEU OF CASH
DIVIDENDS PAYABLE ON SHARES OF THE SERIES B CONVERTIBLE
PREFERRED STOCK AND UPON THE EXERCISE OF RELATED COMMON STOCK
PURCHASE WARRANTS AND THE AMENDMENT OF THE COMPANY&#146;S
CERTIFICATE OF DESIGNATION&nbsp;&#151; SERIES A PREFERRED STOCK.
Please refer to the attached Proxy Statement, which forms a part
of this notice and is incorporated herein by reference, for
further information with respect to the business to be
transacted at the Meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Whether or not you plan to attend the Meeting in
person, it is important that you sign, date and return promptly
the enclosed proxy in the envelope provided to assure that your
shares are represented at the Meeting. If you subsequently
decide to attend the Meeting and wish to vote your shares in
person, you may do so. Your cooperation in giving this matter
your prompt attention will be appreciated.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="38%"></TD>
    <TD width="62%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="a88864da8886402.gif" alt="-s- MELVIN L. FLOWERS"></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">MELVIN L. FLOWERS
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Senior Vice President, Finance,</FONT></I></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Chief Financial Officer and
    Secretary</FONT></I></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">April&nbsp;15, 2003
</FONT>

<DIV align="left">
<FONT size="2">San Diego, California
</FONT>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000"><FONT size="2">PROXY STATEMENT</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#001"><FONT size="2">INTRODUCTION</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#002"><FONT size="2">PROPOSAL 1: APPROVAL OF THE PRIVATE PLACEMENT TRANSACTIONS</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#003"><FONT size="2">EFFECTS OF PRIVATE PLACEMENT TRANSACTIONS AND SERIES A CERTIFICATE AMENDMENTS ON HOLDERS OF COMMON STOCK</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#004"><FONT size="2">BOARD OF DIRECTORS APPROVAL</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#005"><FONT size="2">USE OF PROCEEDS</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#006"><FONT size="2">NO APPRAISAL OR DISSENTERS&#146; RIGHTS; NO PREEMPTIVE RIGHTS</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#007"><FONT size="2">VOTE REQUIRED</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#008"><FONT size="2">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#009"><FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#010"><FONT size="2">STOCKHOLDER PROPOSALS</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#011"><FONT size="2">INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#012"><FONT size="2">AVAILABLE INFORMATION</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#013"><FONT size="2">OTHER MATTERS</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#014"><FONT size="2">ANNEX A</FONT></A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="4">NOVATEL WIRELESS, INC.</FONT></B>

<DIV align="center">
<B><FONT size="2">9360 Towne Centre Drive, Suite 110</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">San Diego, California 92121</FONT></B>
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B>SPECIAL MEETING OF STOCKHOLDERS</B>

<DIV align="center">
<B>To Be Held on May&nbsp;2, 2003</B>
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<DIV>&nbsp;</DIV>

<!-- link1 "<FONT size="2">PROXY STATEMENT</FONT>" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="center">
<B>PROXY STATEMENT</B>
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<DIV>&nbsp;</DIV>

<!-- link1 "<FONT size="2">INTRODUCTION</FONT>" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="center">
<B><FONT size="2">INTRODUCTION</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The enclosed proxy is solicited by and on behalf
of the Board of Directors (the &#147;Board&#148;) of Novatel
Wireless, Inc., a Delaware corporation (the
&#147;Company&#148;), in connection with a special meeting of
stockholders of the Company (the &#147;Meeting&#148;) to be held
at 2:00&nbsp;p.m. local time at the Hyatt Regency La&nbsp;Jolla,
3777&nbsp;La&nbsp;Jolla Village Drive, San&nbsp;Diego,
California 92122, on May&nbsp;2, 2003, and any adjournment or
postponement thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the Meeting, stockholders of the Company will
be asked to consider and vote upon the following proposal
(&#147;Proposal&nbsp;1&#148;):
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">1.</FONT></TD>
    <TD align="left">
    <FONT size="2">To (i)&nbsp;approve and reserve for issuance
    shares of the Company&#146;s common stock, par value $.001 per
    share (the &#147;Common Stock&#148;), issuable (a)&nbsp;upon the
    conversion of shares of the Company&#146;s Series&nbsp;B
    Convertible Preferred Stock (the &#147;Series&nbsp;B
    Stock&#148;) to be issued in connection with the pending Private
    Placement Transactions (as defined under the caption
    &#147;Proposal&nbsp;1: Approval of the Private Placement
    Transactions&nbsp;&#151; Background&#148;), (b)&nbsp;in lieu of
    cash dividends payable on shares of the Series&nbsp;B Stock,
    (c)&nbsp;upon the conversion of secured subordinated convertible
    promissory notes, and (d)&nbsp;upon the exercise of related
    common stock purchase warrants issued in connection with the
    secured subordinated convertible promissory notes, and to be
    issued in connection with the completion of the Private
    Placement Transactions, and (ii)&nbsp;approve amendments (the
    &#147;Series&nbsp;A Certificate Amendments&#148;) to the terms
    of the Company&#146;s Series&nbsp;A Convertible Preferred Stock
    (the &#147;Series&nbsp;A Stock&#148;) necessary to complete the
    authorization and issuance of shares of the Series&nbsp;B Stock
    in the Private Placement Transactions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Only the stockholders of record at the close of
business on March&nbsp;25, 2003 (the &#147;Record Date&#148;)
are entitled to vote at the Meeting. Each holder of the
Company&#146;s issued and outstanding shares of Common Stock is
entitled to one vote per share on all matters submitted to
stockholders for approval at the meeting and each holder of
Series&nbsp;A Stock is entitled to that number of votes per
share on all matters submitted to stockholders for approval at
the meeting as is equal to the number of whole shares of Common
Stock into which each share of Series&nbsp;A Stock held by such
holder could be converted on the Record Date, multiplied by
0.706422. As of the Record Date, 6,984,823&nbsp;shares of Common
Stock and 3,675&nbsp;shares of Series&nbsp;A Stock which are
convertible into 344,949&nbsp;shares of Common Stock and which
carry an aggregate of 344,949&nbsp;votes at the Meeting were
outstanding. It is expected that this Proxy Statement and
accompanying Proxy Card will first be mailed to stockholders on
or about April&nbsp;17, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Representatives of KPMG LLP are expected to be
present at the Meeting and will have the opportunity to make
statements if they desire and to respond to appropriate
questions from stockholders.
</FONT>

<P align="left">
<B><FONT size="2">Voting and Revocation of Proxies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All shares represented by the accompanying proxy,
if the proxy is properly executed, returned and not revoked,
will be voted as specified by the stockholder. If no contrary
instructions are given, such shares will be voted FOR approval
of Proposal&nbsp;1. As of the date of this Proxy Statement, the
Board does not know of any other matter which will be brought
before the Meeting. Under the Company&#146;s bylaws, the Company
must set
</FONT>

<P align="center">
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<DIV align="left">
<FONT size="2">forth the purpose for which a special meeting of
stockholders is called in the related notice of meeting.
Although not expected, if any other matter properly comes before
the Meeting, or any adjournment or postponement thereof, which
may be properly acted upon, the proxies solicited hereby will be
voted on such matter in accordance with the discretion of the
proxy holders named therein unless otherwise indicated.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A majority of the shares outstanding and entitled
to vote at the Meeting must be represented at the Meeting in
person or by proxy to constitute a quorum for the transaction of
business at the Meeting. Shares represented by proxies that
reflect abstentions or &#147;broker non-votes&#148; will be
counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. A broker
&#147;non-vote&#148; reflects shares held of record by a broker
or nominee on behalf of a beneficial owner where the broker or
nominee does not have discretionary voting power with respect to
a particular proposal and has not received instructions from the
beneficial owner. Proposal 1 requires the affirmative vote of
(i)&nbsp;at least a majority of the outstanding shares of Common
Stock and Series&nbsp;A Stock, voting together as a single
class, entitled to vote at the Meeting and (ii)&nbsp;at least a
majority of the outstanding shares of Series&nbsp;A Stock,
voting as a separate class, entitled to vote at the Meeting.
Proxies that reflect abstentions and broker non-votes will have
the effect as a vote &#147;Against&#148; Proposal&nbsp;1.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any stockholder giving a proxy has the right to
revoke it at any time before it is exercised (i)&nbsp;by filing
with the Secretary of the Company a duly signed revocation or a
proxy bearing a later date or (ii)&nbsp;by electing to vote in
person at the Meeting. Mere attendance at the Meeting will not
revoke a proxy.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company will pay all expenses incurred in
this proxy solicitation. We have hired Georgeson Shareholder to
assist us in soliciting proxies for a fee of approximately
$12,000. The directors, officers and employees of the Company
also may make additional solicitations by telephone, facsimile,
e-mail, or other forms of communication, but such persons will
not be specially compensated therefor.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s executive offices are located
at 9360&nbsp;Towne Centre Drive, Suite&nbsp;110, San Diego,
California 92121, and the Company&#146;s telephone number is
(858)&nbsp;320-8800. References herein to the
&#147;Company&#148; refer to Novatel Wireless, Inc. and its
subsidiaries, unless the context otherwise requires.
</FONT>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<FONT size="2">The date of this Proxy Statement is
April&nbsp;15, 2003.
</FONT>

<P align="center"><FONT size="2">2
</FONT>
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<!-- link1 "<FONT size="2">PROPOSAL 1: APPROVAL OF THE PRIVATE PLACEMENT TRANSACTIONS</FONT>" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="center">
<B><FONT size="2">PROPOSAL 1:</FONT></B>

<P align="center">
<B><FONT size="2">APPROVAL OF THE PRIVATE PLACEMENT
TRANSACTIONS</FONT></B>

<P align="left">
<B><FONT size="2">Background</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;12, 2003, the Company entered into
a series of agreements, including the Securities Purchase
Agreement dated as of March&nbsp;12, 2003 (the &#147;Purchase
Agreement&#148;), with a group of investors (the
&#147;Investors&#148;) in connection with the private placement
of $3.25&nbsp;million of debt and equity securities for cash,
and the issuance of up to $3.505 of equity securities in
satisfaction of outstanding third-party obligations. As a result
of these agreements, the Company completed, or agreed to
complete subject to the stockholder approval sought at the
Meeting, the following transactions, which are collectively
referred to as the &#147;Private Placement Transactions&#148;:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company issued for cash (i) $1.2&nbsp;million
    aggregate principal amount of secured subordinated convertible
    promissory notes (the &#147;Initial Convertible Notes&#148;),
    convertible subject to stockholder approval into newly
    authorized Series&nbsp;B Stock and Common Stock, and
    (ii)&nbsp;warrants to purchase an aggregate of
    857,143&nbsp;shares of Common Stock (the &#147;First Issuance
    Warrants&#148;);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company agreed to issue, for
    $2.05&nbsp;million cash, 2,050&nbsp;additional shares of
    Series&nbsp;B Stock and warrants to purchase an aggregate of
    1,983,929 shares of Common Stock (the &#147;Additional Issuance
    Warrants&#148; and, together with the First Issuance Warrants,
    the &#147;Investor Warrants&#148;), subject to stockholder
    approval; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company agreed to issue $3.505 aggregate
    principal amount of secured subordinated convertible promissory
    notes (the &#147;Additional Convertible Notes,&#148; and
    together with the Initial Convertible Notes, the
    &#147;Convertible Notes&#148;) to the Investors in satisfaction
    of presently outstanding third-party obligations to be acquired
    by the Investors from Sanmina-SCI Corporation (the &#147;Sanmina
    Obligations&#148;), and subsequently issue up to
    $3.505&nbsp;million of additional shares of Series&nbsp;B Stock
    in repayment of the Additional Convertible Notes, subject to
    stockholder approval. The purchase of the Sanmina Obligations by
    the Investors is conditioned upon the Company receiving
    stockholder approval for the Private Placement Transactions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Approval of the Private Placement Transactions is
sought in order to satisfy the stockholder approval requirements
contained in the Company&#146;s listing agreement with The
Nasdaq Stock Market (&#147;Nasdaq&#148;). The Company&#146;s
listing agreement with Nasdaq requires stockholder approval for
any issuance of common stock or securities convertible into or
exercisable for shares of common stock when the issuance or
potential issuance (i)&nbsp;may result in a change in control of
the issuer or (ii)&nbsp;will result in the issuance of
securities at a per share price below the then current quoted
bid price or book value per share and which in the aggregate
represent 20% or more of the value, or 20% or more of the voting
power, of the then outstanding common shares. Upon completion of
the Private Placement Transactions alone and assuming exercise
of all of the Investor Warrants and full conversion of the
Convertible Notes, the Investors collectively will hold more
than 50% of the capital stock of the Company and more than 50%
of the voting power of the Company&#146;s capital stock and will
have paid a price per share less than the quoted bid price per
share of the Common Stock as of the date the agreements were
executed. The Investors include Bay Investments Limited, RIT
Capital Partners, plc, Soen Yong Lee, Pan Invest and Trade Inc.,
Peter Leparulo, Cornerstone Equity Investors, LLC, PS Capital
LLC and Mutual Trust Management (Bermuda) Limited, as trustee of
Sofaer Funds/ Global Hedge Fund. As a result, the Company is
soliciting stockholder approval of the Private Placement
Transactions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company currently does not have sufficient
working capital to continue operations through the second
quarter of 2003. Pursuant to the Private Placement Transactions,
the Company expects to raise the essential working capital and
reduce cash debt service necessary for the Company to continue
its operations. If stockholder approval of Proposal&nbsp;1 is
not obtained, the Company will not be able to complete the
Private Placement Transactions, and will not have a source of
working capital for continued operations. In addition, if
stockholder approval of Proposal&nbsp;1 is not obtained, the
holders of the Initial Convertible Note would be entitled to
require that the Company repay the indebtedness evidenced by the
Initial Convertible Notes within
</FONT>

<P align="center"><FONT size="2">3
</FONT>

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<DIV align="left">
<FONT size="2">60&nbsp;days following the termination of the
Purchase Agreement, either in cash or in shares of Common Stock,
subject to Nasdaq&#146;s rules and regulations.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Moreover, the Company does not believe that any
alternative financing transaction could be successfully
completed. Given the quoted market price per share of the Common
Stock as of March&nbsp;28, 2003, the Company believes that
stockholder approval would be required for any issuance of
equity securities that would generate net proceeds sufficient to
maintain operations through the remainder of the calendar year.
Because of the length of time required to negotiate an
alternative transaction with prospective investors and present
it to the Company&#146;s stockholders for approval, in light of
the Company&#146;s current financial condition, it is unlikely
that the Company would be able to continue operations long
enough to pursue an alternative source of financing. For a more
detailed discussion, please see &#147;Proposal&nbsp;1: Approval
of the Private Placement Transactions&nbsp;&#151; Consequences
if Stockholder Approval is Not Obtained&#148; contained
elsewhere in this Proxy Statement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company intends to use substantially all the
proceeds raised in the Private Placement Transactions
principally for sales and marketing, research and development
and for general corporate purposes. See &#147;Use of
Proceeds.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board determined that the continued survival
and growth of the Company required that additional capital be
raised. The Board considered the Company&#146;s on-going
financial condition and the benefits and risks of raising equity
based on future market prices relative to other alternatives.
The Board considered the Private Placement Transactions and
acknowledged that two of the directors representing the
stockholder Cornerstone Equity Investors contemplated investing
in the Private Placement Transactions and that two of the other
directors have a financial interest that may be affected by
approval and consummation of the Private Placement Transactions.
A majority of the Board, including a majority of the
disinterested directors of the Board, determined that the
Private Placement Transactions are in the best interest of the
Company and should be authorized and approved, and recommend to
the Company&#146;s stockholders for approval. In addition, in
order to close the Private Placement Transactions, the Board has
determined that it is in the best interest of the Company to
amend and restate the Certificate of Designation&nbsp;&#151;
Series&nbsp;A Convertible Preferred Stock filed with the
Delaware Secretary of State on December&nbsp;20, 2001, as
amended by the Corrected Certificate of Designation&nbsp;&#151;
Series&nbsp;A Convertible Preferred Stock filed with the
Delaware Secretary of State on December&nbsp;20, 2001 and the
Amendment to the Corrected Certificate of
Designation&nbsp;&#151; Series&nbsp;A Convertible Preferred
Stock filed with the Delaware Secretary of State on May&nbsp;29,
2002, substantially in the form attached to this Proxy Statement
as Annex A, and directed that the Series&nbsp;A Certificate
Amendments be submitted to the Company&#146;s stockholders for
approval. See &#147;Board of Directors Approval.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Steven Sherman, David Oros, Mark Rossi, Robert
Getz, Peng Lim and Daniel Pittard, each a member of the Board,
as well as Peter Leparulo and Melvin L. Flowers, each an
executive officer of the Company, agreed to vote, and upon a
failure to so vote, granted a representative of the Investors an
irrevocable proxy to vote, all shares of Common Stock over which
each such person exercises voting authority in favor of
Proposal&nbsp;1 pursuant to the terms of a voting agreement. As
of the Record Date, such directors and officers held voting
authority over an aggregate of 1,312,479&nbsp;shares of Common
Stock, representing approximately 18.8% of the issued and
outstanding Common Stock as of March&nbsp;28, 2003. Each board
member and officer agreed not to sell or transfer any of the
shares of Common Stock owned by such person prior to the
termination of the voting agreement. In addition, each of
David&nbsp;F. Millet, Ventures West Investments Ltd., Bank of
Montreal Capital Corporation, Michael Mitgang and GMN Investors
II, L.P. agreed to vote, and upon a failure to so vote, granted
a representative of the Investors an irrevocable proxy to vote,
all shares of Series&nbsp;A Stock over which each such person
exercises voting authority in favor of the Series&nbsp;A
Certificate Amendments pursuant to the terms of a voting
agreement. As of the Record Date, such holders of Series&nbsp;A
Stock held voting authority over an aggregate of 2,100 shares of
Series&nbsp;A Stock, representing approximately 57% of the
issued and outstanding Series&nbsp;A Stock as of March&nbsp;28,
2003. Furthermore, each person and entity named above agreed not
to sell or transfer any of the shares of Series&nbsp;A Stock
owned by such person or entity prior to the termination of the
voting agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">THE COMPANY&#146;S BOARD RECOMMENDS THAT
STOCKHOLDERS VOTE FOR PROPOSAL&nbsp;1. See
&#147;&#151;&nbsp;Vote Required.&#148;</FONT></B>

<P align="center"><FONT size="2">4
</FONT>

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<P align="left">
<B><FONT size="2">Summary of Transaction Terms</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Set forth below is a summary of the material
terms of the Private Placement Transactions, which summary is
qualified by reference to the full text of the underlying
documents which have been filed as exhibits to the
Company&#146;s Current Report on Form&nbsp;8-K, dated
March&nbsp;28, 2003. See &#147;Available Information.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Initial Convertible
Notes.</FONT></I><FONT size="2"> Pursuant to the terms of the
Purchase Agreement, the Company issued and sold in a private
placement transaction to the Investors (i)&nbsp;secured
subordinated convertible promissory notes in an aggregate
principal amount of $1.2&nbsp;million and (ii)&nbsp;warrants to
purchase an aggregate of 857,143&nbsp;shares of Common Stock at
an exercise price of $0.70&nbsp;per share. See
&#147;&#151;&nbsp;Investor Warrants.&#148; The Initial
Convertible Notes bear interest at the annual rate of 8% and are
due and payable on March&nbsp;12, 2005 or earlier under certain
circumstances as discussed below. If the Company does not repay
the outstanding amounts under the Initial Convertible Notes when
due and payable, the effective annual interest rate will
increase to 12%. The Company granted the Investors a blanket
security interest in all of the assets of the Company to secure
the timely payment and performance in full of all of the
obligations under the Initial Convertible Notes. The security
interest is subordinated to existing security interests that the
Company granted to each of Silicon Valley Bank and Sanmina-SCI
Corporation (&#147;Sanmina&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On the Third Closing Date (as defined below under
the caption &#147;&#151;&nbsp;Series&nbsp;B Convertible
Preferred Stock&#148;), which is conditioned upon the approval
of Proposal&nbsp;1 sought by this Proxy Statement, the Initial
Convertible Notes, to the extent not already repaid, will
automatically convert into a number of shares of Series&nbsp;B
Stock (the proposed rights, preferences and privileges of which
are discussed below) equal to (i)&nbsp;the total amount of the
principal then outstanding together with accrued but unpaid
interest under the Initial Convertible Notes as of the Third
Closing Date, divided by (ii)&nbsp;$1,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under certain circumstances set forth below, the
Company must repay the amounts due under the Initial Convertible
Notes before the scheduled maturity date. In the event that,
prior to the Third Closing Date, the Company receives funds from
any third party, the Company must concurrently repay the Initial
Convertible Notes in cash or, at the option of the Investors, in
kind with equity securities issued in connection with such
financing from and to the extent of the proceeds from such
financing. In the event that (i)&nbsp;the Purchase Agreement
terminates prior to the Third Closing Date or (ii)&nbsp;the
Third Closing Date does not occur on or before July&nbsp;31,
2003 (or August&nbsp;31, 2003 upon the occurrence of certain
circumstances specified in the Purchase Agreement), in each case
other than by reason of the Investors&#146; material breach, the
Company must repay in cash the Initial Convertible Notes within
sixty days of such termination date. The repayments shall be
made in cash; provided, however, that at the election of the
holders of the Initial Convertible Notes (the &#147;Initial
Convertible Note Holders&#148;), a portion of such payment (in
an amount to be designated by each Initial Convertible Note
Holder) shall be effected by the issuance to each such Initial
Convertible Note Holder of that number of shares of Common Stock
equal to the amount due under such holder&#146;s Initial
Convertible Note divided by $0.70 (as adjusted for any stock
dividends, stock splits or similar transactions), provided that
in the event of such a repayment the total number of shares of
Common Stock issuable pursuant to the Initial Convertible Notes
and upon exercise of the Investor Warrants shall not exceed
1,396,964&nbsp;shares of Common Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Initial Convertible Notes also provide that
upon the occurrence of certain events of default, the
representative designated by the Initial Convertible Note
Holders (the &#147;Agent&#148;) may declare the principal of,
accrued and unpaid interest on, and all other amounts payable
under the Initial Convertible Notes immediately due and payable.
Events of default include, among others, (i)&nbsp;any default or
event of default under the obligations (a)&nbsp;to Silicon
Valley Bank pursuant to the Loan and Security Agreement, dated
November&nbsp;29, 2001, as amended, (b)&nbsp;to Sanmina pursuant
to the Security Agreement, dated January&nbsp;12, 2002,
(c)&nbsp;set forth in the Additional Convertible Notes, if and
when issued, or (d)&nbsp;under any other obligation of the
Company or any of its subsidiaries for borrowed money, which
default is not cured during the applicable cure period or waived
in writing by the lender or obligee, (ii)&nbsp;failure to pay
the Initial Convertible Notes when due, and (iii)&nbsp;the
Company&#146;s filing of a petition to seek relief under any
provision of the Federal Bankruptcy Code.
</FONT>

<P align="center"><FONT size="2">5
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Series&nbsp;B Convertible Preferred
Stock.</FONT></I><FONT size="2"> Pursuant to the terms and
provisions of the Purchase Agreement, the Company has agreed to
issue and sell to the Investors, and the Investors have agreed
to purchase from the Company, up to 2,050&nbsp;shares of
Series&nbsp;B Stock at a purchase price of $1,000&nbsp;per share
(the &#147;Third Issuance Shares&#148;) together with warrants
to purchase up to 1,983,929&nbsp;shares of Common Stock with an
exercise price of $0.70&nbsp;per share. The Company and the
Investors anticipate consummating the issuance and sale of the
Third Issuance Shares and the Additional Issuance Warrants
within two business days following the satisfaction of certain
conditions, the primary condition of which is stockholder
approval of Proposal&nbsp;1 sought by this Proxy Statement (the
&#147;Third Closing Date&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The holders of Series&nbsp;B Stock are entitled
to receive, from funds legally available therefore, a cumulative
dividend at the rate of 8.0%&nbsp;per annum of $1,000&nbsp;per
share of Series&nbsp;B Stock (such per share figure, as adjusted
to reflect appropriately any stock splits, combinations of
Series&nbsp;B Stock, and similar transactions, the &#147;Initial
Purchase Price&#148;) held by such holder, payable (i)&nbsp;upon
any liquidation, dissolution or winding up of the affairs of the
Company, (ii)&nbsp;upon any redemption, or (iii)&nbsp;quarterly
in arrears when and as declared by the Board each
January&nbsp;1, April&nbsp;1, July&nbsp;1 and October&nbsp;1 of
the applicable year, in preference to any payment made on any
shares of Common Stock or Series&nbsp;A Stock (except for
in-kind distributions made in connection with the conversion of
the Series&nbsp;A Stock into shares of Common Stock).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each share of Series&nbsp;B Stock will
participate in any dividends or distribution, other than a
liquidating distribution, declared or paid on the Common Stock,
pro rata, on an as-converted to Common Stock basis. Each share
of Series&nbsp;B Stock is also entitled to a liquidation
preference of $1,500.00, plus any accrued but unpaid dividends,
in preference to any other class or series of capital stock of
the Company (the &#147;Series&nbsp;B Liquidation
Preference&#148;). After payment in full of the Series&nbsp;B
Liquidation Preference to which the holders of the Series&nbsp;B
Stock are entitled, distributions will be made to the holders of
any series of preferred stock having dividend and liquidation
rights junior to the Series&nbsp;B Stock (collectively, the
&#147;Junior Preferred Stock&#148;) until their respective
liquidation preference has been paid in full. Thereafter, any
further distributions in respect of a liquidation, dissolution
or winding up of the affairs of the Company shall be distributed
ratably among the holders of Series&nbsp;B Stock, any Junior
Preferred Stock which participates with the Common Stock upon
liquidation and the Common Stock, on an as-converted to Common
Stock basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Series&nbsp;B Stock will be convertible, at
the option of the holder at any time, into such number of shares
of Common Stock as is determined by dividing the Initial
Purchase Price plus an amount equal to all accrued and unpaid
dividends by the &#147;Series&nbsp;B Conversion Price,&#148;
which is initially $0.70&nbsp;per share of Common Stock, as may
be adjusted from time to time as a result of stock dividends,
distributions payable in Common Stock, stock splits, reverse
stock splits, recapitalizations, reclassifications, combinations
or exchanges of shares, separations, reorganizations,
liquidations or the like. Following any of the events listed in
the previous sentence, the Series&nbsp;B Conversion Price and
the number of shares of Common Stock issuable upon conversion of
the Series&nbsp;B Stock in effect immediately prior to such
events will, concurrently with the effectiveness of such events,
be proportionately decreased or increased, as appropriate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the Company declares or pays a dividend or
other distribution to holders of Common Stock payable in
securities other than Common Stock, the holders of Series&nbsp;B
Stock will receive upon conversion, in addition to the entitled
number of shares of Common Stock, the amount of securities they
would have received had they converted their shares of
Series&nbsp;B Stock into Common Stock prior to such dividend or
distribution. Similarly, if the Common Stock issuable upon
conversion of the Series&nbsp;B Stock is changed into the same
or a different number of shares of any class or classes of stock
by capital reorganization, reclassification, or otherwise, the
holders of the Series&nbsp;B Stock will receive upon conversion
the securities they would have received had they converted the
Series&nbsp;B Stock prior to such reorganization or
reclassification. Further, if the Company sells substantially
all of its assets or merges or consolidates with or into another
entity, the Series&nbsp;B Stock will be convertible into the
kind and amount of shares of stock or other securities or
property to which a holder of the number of shares of Common
Stock deliverable upon conversion of Series&nbsp;B Stock would
have been entitled to receive upon such sale, merger or
consolidation based on the Series&nbsp;B Conversion Price
effective with respect to such sale, merger or consolidation.
</FONT>

<P align="center"><FONT size="2">6
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, if the Company issues additional
shares of Common Stock, other than certain specified exceptions,
without consideration or for a consideration per share less than
the Series&nbsp;B Conversion Price in effect immediately prior
to the issuance of such additional shares of Common Stock, the
Series&nbsp;B Conversion Price will be adjusted to be equal to
the amount of consideration per share received in connection
with such issuance. In addition, if the Company issues more than
500,000&nbsp;shares of Common Stock or options to acquire Common
Stock to officers, directors or employees of, or consultants to,
the Company pursuant to stock option or stock purchase plans or
agreements on terms approved by the Board, without consideration
or for a consideration per share less than the Series&nbsp;B
Conversion Price in effect immediately prior to the issuance of
such additional shares of Common Stock, the Series&nbsp;B
Conversion Price will be adjusted to be equal to a price
determined by multiplying the Series&nbsp;B Conversion Price
then in effect by a fraction (which shall in no event be greater
than one), the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such issuance
plus the number of shares of Common Stock that the aggregate
consideration received by the Company for such issuance would
purchase at the Series&nbsp;B Conversion Price; and the
denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issuance plus the
number of shares of such additional shares of Common Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On or at any time following the earlier of
(i)&nbsp;the acquisition by any person or &#147;group&#148; (as
described in Rule&nbsp;13d-5(b)(1) promulgated under the
Securities Exchange Act of 1934, as amended (the &#147;Exchange
Act&#148;)), of beneficial ownership of securities of the
Company representing more than 50% of the voting power of the
Company, (ii)&nbsp;a merger or consolidation of the Company or a
sale of substantially all of the assets of the Company in one or
a series of related transactions, unless following such
transaction or series of transactions, the holders of the
Company&#146;s securities prior to the first such transaction
continue to hold at least a majority of the voting power of the
surviving entity or acquirer of such assets, or (iii)&nbsp;the
seventh anniversary of the initial issuance of shares of
Series&nbsp;B Stock, then each holder of Series&nbsp;B Stock may
elect to have the Company redeem any outstanding shares of
Series&nbsp;B Stock, to the extent the Company has funds legally
available for such redemption. If funds are then legally
available, the redeeming holder of Series&nbsp;B Stock will
receive an amount equal to (x)&nbsp;the number of shares of
Series&nbsp;B Stock submitted for redemption multiplied by
(y)&nbsp;the Series&nbsp;B Liquidation Preference plus all
accrued but unpaid dividends thereon, to and including the date
of such redemption, whether or not declared.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Notwithstanding the foregoing, a holder of
Series&nbsp;B Stock will not be entitled to redemption pursuant
to clauses (i)&nbsp;and (ii)&nbsp;above if the change of control
results from the acquisition by such holder or such
holder&#146;s affiliates of beneficial ownership of securities
of the Company representing more than 50% of the voting power of
the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On or at any time following the seventh
anniversary of the initial issuance of shares of Series&nbsp;B
Stock, the Company may redeem, in whole or in part, outstanding
shares of the Series&nbsp;B Stock on a pro rata basis among the
holders of the Series&nbsp;B Stock at a redemption price per
share equal to the Series&nbsp;B Liquidation Preference as of
such redemption date, provided that (i)&nbsp;the Series&nbsp;B
Registration Statement (as defined below in
&#147;&#151;&nbsp;Registration Rights With Respect to the Common
Stock Issuable Upon Conversion of the Series&nbsp;B Stock and
the Initial Convertible Notes and Upon the Exercise of the
Investor Warrants&#148;) is then effective, (ii)&nbsp;the
average of the closing prices of the Common Stock as reported by
Nasdaq over the 20 consecutive trading-day period ending not
more than five business days prior to the date of the notice of
redemption is greater than or equal to the product of
(x)&nbsp;the Series&nbsp;B Conversion Price in effect on the
last day of the 20 consecutive trading-day period and
(y)&nbsp;2.50, and (iii)&nbsp;during the period beginning on the
date of the Company&#146;s notice of redemption and ending on
the redemption date (1)&nbsp;the Company shall not have received
any request from the Securities and Exchange Commission (the
&#147;SEC&#148;) or any other federal or state governmental
authority for amendments or supplements to the Series&nbsp;B
Registration Statement or related prospectus or for additional
information, (2)&nbsp;no stop order suspending the effectiveness
of the Series&nbsp;B Registration Statement or the initiation of
any proceedings for that purpose has been issued by the SEC or
any other federal or state governmental authority, (3)&nbsp;the
Company has not received any notification with respect to the
suspension of the qualification or exemption from qualification
of the Common Stock for sale in any jurisdiction or the
initiation of any proceeding for such purpose, and
(4)&nbsp;there has not occurred any event or circumstance which
would necessitate the making of any changes in the Series&nbsp;B
Registration Statement or related prospectus, or
</FONT>

<P align="center"><FONT size="2">7
</FONT>

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<DIV align="left">
<FONT size="2">any document incorporated or deemed to be
incorporated therein by reference, so that, in the case of the
Series&nbsp;B Registration Statement, it will not contain any
untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and that in the case of
the related prospectus, it will not contain any untrue statement
of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading. The right to convert the
Series&nbsp;B Stock will be forfeited unless it is exercised
before the date specified in a notice of redemption.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">So long as any shares of Series&nbsp;B Stock are
outstanding, upon a change in control, the Company will not
redeem any shares of preferred stock that have liquidation or
dividend rights that are subordinate to those of the
Series&nbsp;B Stock; provided, however, the Company will not be
prohibited from redeeming shares of Series&nbsp;A Stock if at
least 80% of the Series&nbsp;B Stock issued in connection with
the Private Placement Transactions have been either redeemed or
converted into Common Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are no redemption fund or sinking fund
provisions applicable to the Series&nbsp;B Stock and there is no
restriction on the repurchase or redemption of shares of
Series&nbsp;B Stock by the Company while there is any arrearage
in the payment of dividends.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The holders of Series&nbsp;B Stock will be
entitled to notice of any meeting of stockholders of the Company
and will vote together with the holders of Series A Stock and
Common Stock as a single class upon any matter submitted to the
stockholders for a vote, on an as-converted basis as of the
record date of such vote or upon the date of such written
consent, as the case may be. The holders of Series&nbsp;B Stock
will also have a right to participate in future issuances by the
Company of any shares of capital stock, or securities
convertible into or exercisable for any shares of any class of
its capital stock, subject to certain limitations and exceptions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Additional Convertible
Notes.</FONT></I><FONT size="2"> On January&nbsp;12, 2002, the
Company settled previously disclosed litigation with its
contract manufacturer, Sanmina, pursuant to which the Company
agreed to make specified payments to Sanmina during the 18-month
period following execution of a settlement agreement with
Sanmina and Sanmina ULC (the &#147;Settlement Agreement&#148;).
On February&nbsp;7, 2003, the Company and Sanmina amended the
Settlement Agreement to extend the time period during which the
Company would be permitted to satisfy its remaining payment
obligations (the &#147;Amendment&#148;). Pursuant to the terms
of the Amendment, the Company agreed that for so long as the
Company owed monies to Sanmina pursuant to the Settlement
Agreement (the &#147;Sanmina Debt&#148;) the Company would make
specified pre-payments on the Sanmina Debt in the event that the
Company failed to meet agreed upon performance targets, met or
exceeded other performance targets, or raised additional working
capital. As of February&nbsp;10, 2003, the Sanmina Debt totaled
approximately $3.505&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;12, 2003, the Investors and Sanmina
entered into an agreement pursuant to which, subject to certain
terms and conditions, Sanmina agreed to sell to the Investors,
and the Investors agreed to purchase from Sanmina, (herein, the
&#147;Sanmina Purchase&#148;) the Sanmina Debt at a substantial
discount. In order to facilitate the Sanmina Purchase, Sanmina
granted the Company a forbearance from its obligation to make
payments to Sanmina until the earlier to occur of the Sanmina
Purchase or August&nbsp;1, 2003. In return for obtaining this
payment forbearance, the Company agreed to continue to observe
the operating covenants contained in the Amendment. The Initial
Convertible Note Holders have the right to extend the
forbearance period beyond August&nbsp;1, 2003 by making payments
to Sanmina at the rate of $150,000 per month of extension. These
extension payments will reduce the Company&#146;s aggregate
obligation to Sanmina under the Settlement Agreement, as
amended, and will increase the principal balance of the Initial
Convertible Notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Sanmina Purchase is subject to, among other
things, the approval by the stockholders of Proposal 1 sought by
this Proxy Statement. The Sanmina Purchase is also subject to
the Company and Sanmina each providing the other with a general
release from any and all claims and liabilities arising out of
the Settlement Agreement, as amended, and the related security
agreement. Upon consummation of the Sanmina Purchase, Sanmina
will no longer be a creditor of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the terms and provisions of the
Purchase Agreement, upon the consummation of the Sanmina
Purchase, the Company will issue to the Investors the Additional
Convertible Notes in the aggregate
</FONT>

<P align="center"><FONT size="2">8
</FONT>

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<DIV align="left">
<FONT size="2">principal amount of $3.505&nbsp;million. The
Additional Convertible Notes will not bear interest; however if
the payment of any portion of the Additional Convertible Notes
is not paid when due (as described below), interest shall accrue
on such unpaid amount at the annual rate of 12% from and after
the date of default to the date of the payment in full of such
unpaid amount. The Company granted the Investors a security
interest in all of the assets of the Company to secure the
timely payment and performance in full of all of the obligations
under the Additional Convertible Notes. The security interest is
subordinated to the security interest granted to Silicon Valley
Bank under the Loan and Security Agreement, dated
November&nbsp;29, 2001, as amended.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Provided that the Additional Convertible Notes
have not been earlier repaid, or required to have been repaid in
cash due to the occurrence of an acceleration event (as
described below), then following the Third Closing Date, the
Company shall repay the Additional Convertible Notes by issuing
to the holders of the Additional Convertible Notes shares of
Series&nbsp;B Stock according to the following schedule. On each
of the three-month, six-month, and nine-month anniversaries of
the Third Closing Date, the Company shall issue, in the
aggregate, 400 shares of Series&nbsp;B Stock. On the first
anniversary of the Third Closing Date, the Company shall issue
such number of shares of Series&nbsp;B Stock equal to all of the
remaining outstanding principal and interest (if any) of the
Additional Convertible Notes, divided by $1,000. In lieu of
observing the foregoing schedule, each Sanmina Holder is
entitled to convert the outstanding principal and interest (if
any) of his, her or its Additional Convertible Note into shares
of Series&nbsp;B Stock at any time following the Third Closing
Date at the conversion price of one share of Series&nbsp;B Stock
for each $1,000 principal amount of indebtedness evidenced by
such Additional Convertible Note.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event, other than by reason of the
Investors&#146; material breach, the Purchase Agreement
terminates prior to the Third Closing Date or the Third Closing
Date does not occur on or before July&nbsp;31, 2003 (or
August&nbsp;31, 2003 upon the occurrence of certain
circumstances specified in the Purchase Agreement), the
Additional Convertible Notes become due and payable in cash
according to a payment schedule based generally upon the payment
schedule originally negotiated under the Settlement Agreement,
as amended, with Sanmina. If the Company breaches any of the
representations or warranties that it made to the Investors in
the Purchase Agreement that results in or could reasonably be
expected to result in a liability of the Company in excess of
$1,000,000 that was not otherwise previously disclosed to the
Investors, then the Agent on behalf of the holders of the
Additional Convertible Notes may require repayment of any
amounts then outstanding under the Additional Convertible Notes,
with such repayment to occur in cash within 60&nbsp;days of
discovery of the applicable breach.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Investor Warrants.</FONT></I><FONT size="2">
Each Investor Warrant issued and to be issued has an initial
exercise price of $0.70 per share (the &#147;Warrant Exercise
Price&#148;), and will be exercisable in whole or in part
commencing six months after its date of issuance, for a period
of five years. The Common Stock issuable upon exercise of the
Investor Warrants will be newly issued shares of the
Company&#146;s capital stock. The Investor Warrants are
initially exercisable only by means of paying the Company in
cash the applicable exercise price per share. However, upon the
first anniversary of issuance and thereafter, the Investor
Warrants may be exercised by means of a cashless or net exercise
provision according to which the holder may from time to time
convert such Investor Warrant, in whole or part, into a number
of shares of Common Stock determined by dividing (a)&nbsp;the
aggregate fair market value of the shares of Common Stock
otherwise issuable upon exercise of the Investor Warrant or
portion thereof minus the aggregate exercise price of such
shares by (b)&nbsp;the fair market value of one share of Common
Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The number of shares of Common Stock issuable
upon exercise of the First Issuance Warrants will be subject to
certain limitations until such time as the Private Placement
Transactions are approved by the stockholders. In compliance
with the Company&#146;s obligations pursuant to its listing
agreement with Nasdaq, the Company, with certain exceptions,
must obtain stockholder approval for any issuance of common
stock or securities convertible into or exercisable for shares
of common stock when the issuance will result in the issuance of
securities at a per share price below the then current quoted
bid price or book value per share and which in the aggregate
represent 20% or more of the value, or 20% or more of the voting
power, of the then outstanding common shares. The number of
shares of Common Stock issuable upon exercise of the First
Issuance Warrants is contractually limited pursuant to the terms
of the First Investor Warrants limited so that the Company will
not violate this provision of its listing agreement with Nasdaq.
</FONT>

<P align="center"><FONT size="2">9
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the number of shares of outstanding Common
Stock changes by reason of stock dividends, distributions
payable in Common Stock, stock splits, reverse stock splits,
recapitalizations, reclassifications, combinations or exchanges
of shares, separations, reorganizations, liquidations or the
like, the Warrant Exercise Price and the number of shares of
Common Stock issuable upon exercise of each Investor Warrant in
effect immediately prior to the deemed issuance will,
concurrently with the effectiveness of the deemed issuance, be
proportionately decreased or increased, as appropriate. The
holders of the Investor Warrants will not be entitled to any
voting rights or any other rights as a stockholder of the
Company until the Investor Warrant is duly exercised for shares
of Common Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the Company issues additional shares of Common
Stock, other than certain specified exceptions, without
consideration or for a consideration per share less than the
Warrant Exercise Price in effect immediately prior to the
issuance of such additional shares of Common Stock, the Warrant
Exercise Price will be adjusted to be equal to the amount of
consideration per share received in connection with such
issuance. In addition, if the Company issues more than 500,000
shares of Common Stock or options to acquire Common Stock to
officers, directors or employees of, or consultants to, the
Company pursuant to stock option or stock purchase plans or
agreements on terms approved by the Board, without consideration
or for a consideration per share less than the Warrant Exercise
Price in effect immediately prior to the issuance of such
additional shares of Common Stock, the Warrant Exercise Price
will be adjusted to be equal to a price determined by
multiplying the Warrant Exercise Price then in effect by a
fraction (which shall in no event be greater than one), the
numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number
of shares of Common Stock that the aggregate consideration
received by the Company for such issuance would purchase at the
Warrant Exercise Price; and the denominator of which shall be
the number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of shares of such
additional shares of Common Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the Company declares or pays a dividend or
other distribution to holders of Common Stock payable in
securities other than Common Stock, the holders of the Investor
Warrants will receive upon exercise, in addition to the entitled
number of shares of Common Stock, the amount of securities they
would have received had they exercised the Investor Warrants
prior to such dividend or distribution. Similarly, if the Common
Stock issuable upon exercise of the Investor Warrants is changed
into the same or a different number of shares of any class or
classes of stock by capital reorganization, reclassification, or
otherwise, the holders of the Investor Warrants will receive
upon exercise the securities they would have received had they
exercised their Investor Warrants prior to such reorganization
or reclassification. Further, if the Company sells substantially
all of its assets or merges or consolidates with or into another
entity, the Investor Warrants will be exercisable into the kind
and amount of shares of stock or other securities or property
into which a holder of the number of shares of Common Stock
deliverable upon exercise of the Investor Warrants would have
been entitled to receive upon such sale, merger or consolidation
based on the applicable Warrant Exercise Price effective with
respect to such sale, merger or consolidation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Registration Rights with Respect to the Common
Stock Issuable upon Conversion of the Series&nbsp;B Stock and
the Initial Convertible Notes and Upon the Exercise of the
Investor Warrants. On March&nbsp;12, 2003, the Company granted
the Investors certain registration rights, pursuant to the terms
and provisions of a registration rights agreement, to enable the
resale of Common Stock issuable upon conversion of the
Series&nbsp;B Stock and the Initial Convertible Notes and
exercise of the Investor Warrants by the holders or any of them.
The foregoing obligation on the part of the Company is
conditioned on, among other things, Investors holding a minimum
number of shares with such rights demanding that the Company
register the underlying Common Stock. The registration statement
that the Company has agreed to prepare and file for the
Investors is referred to herein as the &#147;Series&nbsp;B
Registration Statement.&#148;
</FONT>

<P align="center"><FONT size="2">10
</FONT>

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<P align="left">
<B><FONT size="2">Series A Certificate Amendments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to complete the Private Placement
Transactions on the terms set forth above, the rights,
preferences and privileges of the Series&nbsp;A Stock must be
modified as set forth below. If approved, the Series&nbsp;A
Certificate Amendments will:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reduce the authorized number of shares of
    Series&nbsp;A Stock from 30,000 to 3,700, a number slightly
    higher than the number of currently issued and outstanding
    shares of Series&nbsp;A Stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">subordinate any declaration or payment of
    dividends to the holders of Series&nbsp;A Stock (other than
    in-kind payments in connection with the conversion of the
    Series&nbsp;A Stock to Common Stock) to the prior payment in
    full of all dividends to which the holders of Series&nbsp;B
    Stock and any other series of preferred stock created after the
    issuance of Series&nbsp;B Stock that have preferential dividend
    and liquidation rights vis-a-vis the Series&nbsp;A Stock
    (collectively, the &#147;Senior Preferred Stock&#148;) are
    entitled;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">subordinate the payment of liquidation rights of
    the holders of the Series&nbsp;A Stock to the prior satisfaction
    of all preferential liquidation rights of the Senior Preferred
    Stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">change the conversion price from $0.77 to $11.55
    per share of Common Stock to reflect our historical stock splits
    and reverse stock splits; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">modify the redemption rights of the holders of
    the Series&nbsp;A Stock in two ways. First, the holders of the
    Series&nbsp;A Stock will no longer have the right to cause the
    Company to redeem shares of Series&nbsp;A Stock on or after
    December&nbsp;21, 2008. Second, upon a change of control, the
    holders of Series&nbsp;A Stock will only be entitled to redeem
    shares of Series&nbsp;A Stock, on a pro rata basis, if at least
    80% of the sum of the total number of shares of Series&nbsp;B
    Stock issued or issuable in connection with the Private
    Placement Transactions have been redeemed, submitted for
    redemption in connection with the then change of control or
    converted into Common Stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Series&nbsp;A Certificate Amendments will not
modify arrears in dividends on the Series&nbsp;A Stock other
than as set forth above.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each of David F. Millet, Ventures West
Investments Ltd., Bank of Montreal Capital Corporation, Michael
Mitgang and GMN Investors II, L.P. agreed to vote, and upon a
failure to so vote, granted a representative of the Investors an
irrevocable proxy to vote, all shares of Series&nbsp;A Stock
over which each such person exercises voting authority in favor
of the Series&nbsp;A Certificate Amendments pursuant to the
terms of a voting agreement. As of the Record Date, such holders
of Series&nbsp;A Stock held voting authority over an aggregate
of 2,100 shares of Series&nbsp;A Stock, representing
approximately 57% of the issued and outstanding Series&nbsp;A
Stock as of March&nbsp;28, 2003. In addition, each holder agreed
not to sell or transfer any of the shares of Series&nbsp;A Stock
owned by each such holder prior to the termination of the voting
agreement.
</FONT>

<P align="left">
<B><FONT size="2">Interests of Certain Persons</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth for each person
who has served as an executive officer and/or director of the
Company at any time since the beginning of the last fiscal year
and that participated and plans additionally to participate in
the Private Placement Transactions, and the number of shares of
Series&nbsp;B Stock (assuming conversion of the Initial
Convertible Notes and Additional Convertible Notes into Common
Stock) and Investor Warrants such participant will hold upon
consummation of the Private Placement Transactions.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Shares of</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Common Stock</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Issuable upon</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Shares of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise of the</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Executive Officer/Director</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Series A Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Investor Warrants</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Peter Leparulo(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,228</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert Getz, Director(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">404,547</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mark Rossi, Director(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">404,547</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Peter V. Leparulo is Chief Executive Officer of
    the Company and is and will be both the record and beneficial
    holder of these securities.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">11
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Robert Getz and Mark Rossi, two of the
    Company&#146;s directors, are each a Managing Director of
    Cornerstone Equity Investors, LLC. Cornerstone Equity Investors
    IV, L.P., the record holder of these securities, is an
    investment fund whose managing general partner is Cornerstone
    Equity Investors, LLC. Mr.&nbsp;Getz and Mr.&nbsp;Rossi hold
    voting and investment control over these securities and each
    disclaims beneficial ownership of these securities except to the
    extent of his respective pecuniary interest.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">NASDAQ Listing Obligation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is subject to a listing agreement
with Nasdaq regarding the quotation of the Common Stock on
Nasdaq. Among other things, the listing agreement obligates the
Company to comply with certain &#147;non-quantitative
designation criteria&#148; promulgated by Nasdaq. These criteria
include the requirement that, with certain exceptions, issuers
quoted on Nasdaq obtain stockholder approval for any issuance of
common stock or securities convertible into or exercisable for
shares of common stock (i)&nbsp;when the issuance or potential
issuance will result in a change in control of the issuer and
(ii)&nbsp;when the issuance is for 20% or more of the Common
Stock, or 20% or more of the voting power, outstanding before
the issuance for less than the greater of book or market value
of the stock (the &#147;20% Rule&#148;). Upon completion of the
Private Placement Transactions and assuming exercise of all of
the Investor Warrants and full conversion of the Convertible
Notes, the Investors collectively will hold more than 50% of the
capital stock of the Company and more than 50% of the voting
power of the Company&#146;s capital stock and will have paid a
price per share less than the quoted bid price per share of the
Common Stock as of the date the agreements were executed.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The number of shares of Common Stock issuable
upon (i)&nbsp;conversion of all of the shares of Series&nbsp;B
Stock (assuming the Initial Convertible Notes and Additional
Convertible Notes are converted into Series&nbsp;B Stock), and
(ii)&nbsp;upon the exercise of Investor Warrants against the
payment of additional proceeds to the Company of approximately
$19.9&nbsp;million, is 12,491,072, plus shares of Common Stock
issuable upon conversion for accrued and unpaid dividends on
shares of Series&nbsp;B Stock as of the date of conversion. In
order to assure continued compliance with the applicable Nasdaq
rules, the transaction documents governing the Private Placement
Transactions expressly provide that no more than an aggregate of
1,396,964 shares of Common Stock (approximately 19.99% of the
shares of Common Stock outstanding on March&nbsp;12, 2003) may
be issued upon conversion of the Initial Convertible Notes and
exercise of the Investor Warrants unless and until the approval
sought by this Proxy Statement is obtained. In determining the
outstanding number of shares for this purpose, all outstanding
options, warrants and any other form of Common Stock equivalent
are excluded. As of March&nbsp;12, 2003, such Common Stock
equivalents included (i)&nbsp;employee stock options and
(ii)&nbsp;warrants to purchase 1,908,438 shares of Common Stock
(the exercise prices of which are subject to adjustment upon
dilutive issuances of the Company&#146;s securities, including
with respect to certain warrants, the Private Placement
Transactions). See &#147;Description of Capital Stock.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">By approving Proposal 1, stockholders will be
approving the issuance by the Company of shares of Common Stock
in satisfaction of the Company&#146;s obligations to seek
stockholder approval in connection therewith. No further
stockholder vote or approval related to the Private Placement
Transactions will be sought or required.
</FONT>

<P align="left">
<B><FONT size="2">Consequences If Stockholder Approval Is Not
Obtained</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company currently does not have sufficient
working capital to continue operations through the second
quarter of 2003. Pursuant to the Private Placement Transactions,
the Company expects to raise the essential working capital and
reduce cash debt service necessary for the Company to continue
its operations. If stockholder approval of Proposal&nbsp;1 is
not obtained, the Company will not be able to complete the
Private Placement Transactions, and will not have a source of
working capital for continued operations. In addition, if
stockholder approval of Proposal&nbsp;1 is not obtained, the
holders of the Initial Convertible Note would be entitled to
require that the Company repay the indebtedness evidenced by the
Initial Convertible Notes within 60&nbsp;days following the
termination of the Purchase Agreement, either in cash or in
shares of Common Stock, subject to Nasdaq&#146;s rules and
regulations.
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Moreover, the Company does not believe that any
alternative financing transaction could be successfully
completed. Given the quoted market price per share of the Common
Stock as of March&nbsp;28, 2003, the Company believes that
stockholder approval would be required for any issuance of
equity securities that would generate net proceeds sufficient to
maintain operations through the remainder of the calendar year.
Because of the length of time required to negotiate an
alternative transaction with prospective investors and present
it to the Company&#146;s stockholders for approval, in light of
the Company&#146;s current financial condition, it is unlikely
that the Company would be able to continue operations long
enough to pursue an alternative source of financing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If stockholder approval of Proposal&nbsp;1 is not
obtained on or before July 31, 2003 (or August&nbsp;31, 2003
upon the occurrence of certain circumstances specified in the
Purchase Agreement), the Initial Convertible Note Holders would
be entitled to require that the Company repay the indebtedness
evidenced by the Initial Convertible Notes within 60&nbsp;days
following the termination of the Purchase Agreement either in
cash or in shares of Common Stock, subject to the 20% Rule. If
the Company is required to repay the Initial Convertible Notes
in cash, the Company may not have sufficient funds to do so.
</FONT>

<P align="left">
<B><FONT size="2">Vote Required</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholder approval of Proposal&nbsp;1 requires
the affirmative vote of at least a majority of the outstanding
shares of Common Stock and Series&nbsp;A Stock, voting together
as a single class, entitled to vote at the Meeting. The Board
recommends that stockholders vote FOR Proposal&nbsp;1.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Steven Sherman, David Oros, Mark Rossi, Robert
Getz, Peng Lim and Daniel Pittard, each a member of the Board,
as well as Peter Leparulo and Melvin L. Flowers, each an
executive officer of the Company, agreed to vote, and upon a
failure to so vote, granted a representative of the Investors an
irrevocable proxy to vote, all shares of Common Stock over which
each such person exercises voting authority in favor of
Proposal&nbsp;1 pursuant to the terms of a voting agreement. As
of the Record Date, such directors and officers held voting
authority over an aggregate of 1,312,479 shares of Common Stock,
representing approximately 18.8% of the issued and outstanding
Common Stock as of March&nbsp;28, 2003. In addition, each of
David F. Millet, Ventures West Investments Ltd., Bank of
Montreal Capital Corporation, Michael Mitgang and GMN Investors
II, L.P. agreed to vote, and upon a failure to so vote, granted
a representative of the Investors an irrevocable proxy to vote,
all shares of Series&nbsp;A Stock over which each such person
exercises voting authority in favor of the Series&nbsp;A
Certificate Amendments pursuant to the terms of a voting
agreement. As of the Record Date, such holders of Series&nbsp;A
Stock held voting authority over an aggregate of 2,100 shares of
Series&nbsp;A Stock, representing approximately 57% of the
issued and outstanding Series&nbsp;A Stock as of March&nbsp;28,
2003. Furthermore, each person and entity named above agreed not
to sell or transfer any of the shares of Common Stock or
Series&nbsp;A Stock, as applicable, owned by such person or
entity prior to the termination of the voting agreement.
</FONT>

<P align="left">


<!-- link1 "<FONT size="2">EFFECTS OF PRIVATE PLACEMENT TRANSACTIONS AND SERIES A CERTIFICATE AMENDMENTS ON HOLDERS OF COMMON STOCK</FONT>" -->
<DIV align="left"><A NAME="003"></A></DIV>

<DIV align="center">
<B><FONT size="2">EFFECTS OF PRIVATE PLACEMENT TRANSACTIONS AND
SERIES A</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">CERTIFICATE AMENDMENTS ON HOLDERS OF COMMON
STOCK</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Private Placement Transactions will have no
effect on the rights or privileges of existing holders of Common
Stock except to the extent that the interest of each such
stockholder in the economic results and voting rights of the
Company are diluted pro rata. As discussed elsewhere in this
Proxy Statement, the Private Placement Transactions are dilutive
in several instances. First, the Company has issued warrants to
acquire 857,143 shares of Common Stock and will issue warrants
to acquire an additional 1,983,929 shares of Common Stock at the
Third Closing. Second, the Common Stock issuable upon conversion
of the Series&nbsp;B Stock and upon exercise of the Investor
Warrants will be issued at $0.70 per share, which is below the
quoted bid price or book value per share on the date the
Purchase Agreement was executed. Third, the Series&nbsp;B Stock
and Investor Warrants each have full-ratchet anti-dilution
protection. Lastly, upon completion of the Private Placement
Transactions alone and assuming exercise of all of the Investor
Warrants and full conversion of the Convertible Notes, the
Investors collectively will hold more than 50% of the capital
stock of the Company and more than 50% of the voting power of
the Company&#146;s capital stock. Further, the holders of
Series&nbsp;B Stock to
</FONT>

<P align="center"><FONT size="2">13
</FONT>

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<DIV align="left">
<FONT size="2">be issued in the Private Placement Transactions
will be entitled (i)&nbsp;to receive dividends and distributions
in a liquidation in preference to the claims of the holders of
the Common Stock and (ii)&nbsp;to be redeemed upon a change in
control. See &#147;Proposal&nbsp;1: Approval of the Private
Placement Transactions&nbsp;&#151; Summary of Transaction
Terms.&#148;
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under applicable Delaware law and the
Company&#146;s Amended and Restated Certificate of
Incorporation, as amended, the Board has the authority, without
the need for further action by the stockholders, to issue
additional shares of preferred stock in one or more series and
to fix the rights, preferences, privileges and restrictions
granted to or imposed upon any series of unissued preferred
stock and to fix the number of shares constituting any series
and the designation of such series, without any further vote or
action by the stockholders. The issuance of additional shares of
preferred stock, and shares of Common Stock into which such
preferred stock may be converted, may, among other things, have
the effect of delaying, deferring or preventing a change in
control of the Company, discouraging tender offers for the
Company and inhibiting certain equity issuances until
substantially all such shares of preferred stock are converted,
redeemed or cancelled.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the stockholders approve Proposal&nbsp;1, and
the Private Placement Transactions are consummated, the holders
of Series&nbsp;B Stock will also hold certain other rights,
preferences and privileges. The Company&#146;s obligations to
redeem the Series&nbsp;B Stock under the circumstances outlined
above, along with such other rights, preferences and privileges,
may, among other things, have the effect of delaying, deferring
or preventing a change in control of the Company, discouraging
tender offers for the Company and inhibiting certain equity
issuances until substantially all such shares are converted or
redeemed.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Assuming the Investors and the Company consummate
the Private Placement Transactions, assuming exercise of all the
Investor Warrants and full conversion of the Convertible Notes
and assuming the Company does not thereafter, or in the interim,
issue additional shares of capital stock of a material number,
the Investors together will hold more than 50% of the voting
power of the Company&#146;s capital stock. The Investors, voting
together as a group and without the need to solicit the votes of
any other stockholders, would be able to modify the
Company&#146;s governing documents to the extent that Delaware
law permits such modifications to be made by the affirmative
vote of a majority of the issued and outstanding voting capital
stock of the Company; provided, however, that any stockholder
initiated amendment to the Company&#146;s bylaws, and certain
amendments to the Company&#146;s governing documents, require
the affirmative vote of the holders of at least 66&nbsp;2/3% of
the voting power of all then-outstanding shares of the voting
stock of the Company. In addition, to the extent that certain
decisions affecting the Company are presented to the
stockholders for a decision, the Investors, voting as a group,
would be entitled to determine the outcome of such vote.
</FONT>

<!-- link1 "<FONT size="2">BOARD OF DIRECTORS APPROVAL</FONT>" -->
<DIV align="left"><A NAME="004"></A></DIV>

<P align="center">
<B><FONT size="2">BOARD OF DIRECTORS APPROVAL</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board has determined that the continued
survival and growth of the Company required that additional
capital be raised. The Board considered the Company&#146;s
on-going financial condition and the benefits and risks of
raising equity based on future market prices relative to other
alternatives. The Board considered the Private Placement
Transactions and acknowledged that two of directors representing
the stockholder Cornerstone Equity Investors contemplated
investing in the Private Placement Transactions and that two of
the other directors have a financial interest that may be
affected by approval and consummation of the Private Placement
Transactions. A majority of the Board, including a majority of
the disinterested directors of the Board, determined that the
Private Placement Transactions are in the best interest of the
Company and should be authorized and approved, and recommended
to the Company&#146;s stockholders for approval. In addition,
the Board has determined that it is in the best interest of the
Company to amend and restate the Certificate of
Designation&nbsp;&#151; Series&nbsp;A Convertible Preferred
Stock filed with the Delaware Secretary of State on
December&nbsp;20, 2001, as amended by the Corrected Certificate
of Designation&nbsp;&#151; Series&nbsp;A Convertible Preferred
Stock filed with the Delaware Secretary of State on
December&nbsp;20, 2001 and the Amendment to the Corrected
Certificate of Designation&nbsp;&#151; Series&nbsp;A Convertible
Preferred Stock filed with the Delaware Secretary of State on
May&nbsp;29, 2002, substantially in the form attached to this
Proxy Statement
</FONT>

<P align="center"><FONT size="2">14
</FONT>

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<DIV align="left">
<FONT size="2">as Annex&nbsp;A, and directed that the
Series&nbsp;A Certificate Amendments be submitted to the
Company&#146;s stockholders for approval. See &#147;Interests of
Certain Persons&#148; and &#147;Use of Proceeds.&#148;
</FONT>
</DIV>

<!-- link1 "<FONT size="2">USE OF PROCEEDS</FONT>" -->
<DIV align="left"><A NAME="005"></A></DIV>

<P align="center">
<B><FONT size="2">USE OF PROCEEDS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company expects that the Private Placement
Transactions, when consummated, will yield aggregate net
proceeds to the Company of approximately $2.8&nbsp;million
(after estimated transaction expenses) and will result in the
satisfaction of approximately $3.505&nbsp;million of obligations
currently due pursuant to the terms of the Settlement Agreement,
as amended. The Company intends to use substantially all of such
funds received principally for sales and marketing, research and
development and general corporate purposes.
</FONT>

<!-- link1 "<FONT size="2">NO APPRAISAL OR DISSENTERS&#146; RIGHTS; NO PREEMPTIVE RIGHTS</FONT>" -->
<DIV align="left"><A NAME="006"></A></DIV>

<P align="center">
<B><FONT size="2">NO APPRAISAL OR DISSENTERS&#146; RIGHTS; NO
PREEMPTIVE RIGHTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under applicable Delaware law, stockholders are
not entitled to any statutory dissenters&#146; rights or
appraisal of their shares of Common Stock in connection with the
Private Placement Transactions. Current holders of the
Series&nbsp;A Stock or the Common Stock that the Company issued
on September&nbsp;17, 2002 have contractual rights to receive
notice of and an opportunity to participate in certain of the
Company&#146;s equity issuances. Prior to the issuance of the
Initial Convertible Notes and the First Issuance Warrants,
holders of Series&nbsp;A Stock representing approximately 57% of
the shares of Series&nbsp;A Stock waived their right to
participate in the Private Placement Transactions. The Company
intends to seek a waiver from the remainder of the holders of
Series&nbsp;A Stock and holders of Common Stock issued on
September&nbsp;17, 2002 of any and all participation rights
which such holders may have in the Private Placement
Transactions.
</FONT>

<!-- link1 "<FONT size="2">VOTE REQUIRED</FONT>" -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="center">
<B><FONT size="2">VOTE REQUIRED</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Proposal&nbsp;1 requires the affirmative vote of
(i)&nbsp;at least a majority of the outstanding shares of Common
Stock and Series&nbsp;A Stock, voting together as a single
class, entitled to vote at the Meeting and (ii)&nbsp;at least a
majority of the outstanding shares of Series&nbsp;A Stock,
voting as a separate class, entitled to vote at the Meeting.
Proxies that reflect abstentions and broker non-votes will have
the effect as a vote &#147;Against&#148; the Proposal&nbsp;1.
</FONT>

<!-- link1 "<FONT size="2">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT</FONT>" -->
<DIV align="left"><A NAME="008"></A></DIV>

<P align="center">
<B><FONT size="2">SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL</FONT></B>

<DIV align="center">
<B><FONT size="2">HOLDERS AND MANAGEMENT</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth certain
information as of March&nbsp;28, 2003 with respect to the
beneficial ownership of our Common Stock and Series&nbsp;A
Stock, by (i)&nbsp;each person who, to the knowledge of the
Company, beneficially owned more than 5% of the Common Stock or
the Series&nbsp;A Stock, as applicable, (ii)&nbsp;the chief
executive officer and the five most highly compensated executive
officers, other than the chief executive officer, at the end of
the last fiscal year, and (iii)&nbsp;all executive officers and
directors of the Company as a group.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each stockholder&#146;s percentage ownership in
the following table is based on the number of shares of Common
Stock and Series&nbsp;A Stock issued and outstanding as of
March&nbsp;28, 2003. As of March&nbsp;28, 2003, there were
6,984,823&nbsp;shares of Common Stock and 3,675&nbsp;shares of
Series&nbsp;A Stock issued and outstanding. For purposes of
calculating each stockholder&#146;s percentage ownership, all
options and other securities convertible into Common Stock, and
warrants to acquire Common Stock, convertible or exercisable
within 60&nbsp;days of March&nbsp;28, 2003 held by the
particular stockholder are treated as outstanding shares, but
are not deemed outstanding for purposes of computing the
percentage ownership of any other person. In addition, the table
assumes that such stock options are vested and exercisable as a
consequence of the consummation of the Private Placement
Transactions. Beneficial ownership is determined in accordance
with the rules of the SEC and includes voting and investment
power with respect to such shares. To the Company&#146;s
knowledge, except
</FONT>

<P align="center"><FONT size="2">15
</FONT>

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<DIV align="left">
<FONT size="2">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.
</FONT>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Number of Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Percentage</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Beneficially Owned</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">of Class</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Series A</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Series A</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Common</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Preferred</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Common</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Preferred</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name of Beneficial Owner(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cornerstone Equity Investors, LLC
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">856,994</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.99</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">717 Fifth Avenue, Suite&nbsp;1100<BR>
    New York, NY 10022
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert Getz
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">876,993</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mark Rossi
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">876,993</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Entities affiliated with GSM Capital Limited
    Partnership
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">471,109</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Lynnfield Woods Office Park<BR>
    210 Broadway, Suite&nbsp;101<BR>
    Lynnfield, MA 01949
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Steven Sherman
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">335,119</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Entities affiliated with Ventures West Capital
    Limited
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,742</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(6)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">1285 West Pender Street, Suite&nbsp;280<BR>
    Vancouver, British Columbia<BR>
    CANADA V6E 4B1
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Aether Systems, Inc.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">449,313</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(7)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">11460 Cronridge Drive<BR>
    Owings Mills, MD
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">David S. Oros
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">473,025</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(8)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Entities affiliated with Pequot Capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,961</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40.82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">500 Nyala Farm Road<BR>
    Westport, CT
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">GMN Investors II L.P.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,065</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Gemini Investors<BR>
    20 William Street<BR>
    Wellesley, MA
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Peng K. Lim
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,332</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(11)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John E. Major
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">417,120</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(12)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Daniel Pittard
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(13)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Peter V. Leparulo
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,491</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(14)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Melvin L. Flowers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95,526</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(15)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All directors and named executive officers as a
    group (9&nbsp;persons)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,355,605</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents less than one percent of the
    outstanding shares of Common Stock.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Unless otherwise indicated, the principal address
    for each of the persons listed is c/o Novatel Wireless, Inc.,
    9360&nbsp;Towne Centre Drive, Suite&nbsp;110, San Diego,
    California 92121.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents 695,536&nbsp;shares of Common Stock
    and warrants to purchase 161,458&nbsp;shares of Common Stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents 695,536 shares of Common Stock and
    warrants to purchase 161,458&nbsp;shares of Common Stock. Robert
    Getz and Mark Rossi, two of the Company&#146;s directors, are
    each a Managing Director of Cornerstone Equity Investors, LLC.
    Cornerstone Equity Investors&nbsp;IV, L.P., the record holder of
    these securities, is an investment fund whose managing general
    partner is Cornerstone Equity Investors, LLC. Robert Getz and
    Mark Rossi hold voting and investment control over these
    securities and each disclaims beneficial ownership of these
    securities except to the extent of his respective pecuniary
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">16
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">interest. In addition, each of Messrs.&nbsp;Getz
    and Rossi hold beneficially and of record options to purchase
    19,999&nbsp;shares of Common Stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents 298,839&nbsp;shares of Common Stock
    and warrants to purchase 172,270&nbsp;shares of Common Stock.
    H.H. Haight, one of the Company&#146;s former directors, holds
    voting and investment control over these securities and
    disclaims beneficial ownership of these securities except to the
    extent of his pecuniary interest.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents 228,920 shares of Common Stock,
    warrants to purchase 8,802&nbsp;shares of Common Stock and
    options to purchase 25,999 shares of Common Stock. Also includes
    30,000, 13,333, 7,000, 6,666 and 14,399&nbsp;shares of Common
    Stock held of record respectively by MRM Life Ltd., Southpoint
    Consolidated Limited Partnership, Sherman Capital Group LLC,
    Roberta Sherman and Sherman Family Foundation. Mr.&nbsp;Sherman,
    one of the Company&#146;s directors, holds voting and investment
    control over the securities held by MRM Life Ltd., Southpoint
    Consolidated Limited Partnership, Sherman Capital Group LLC,
    Roberta Sherman and Sherman Family Foundation. Mr.&nbsp;Sherman
    is the sole general partner of Sherman Family Foundation.
    Mr.&nbsp;Sherman disclaims beneficial ownership of these
    securities except to the extent of his pecuniary interest.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents 53,714&nbsp;shares of Common Stock,
    warrants to purchase 115,028&nbsp;shares of Common Stock and
    1,150 shares of Series&nbsp;A Preferred Stock held.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents 325,015&nbsp;shares of Common Stock
    and warrants to purchase 124,298&nbsp;shares of Common Stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents 325,015 shares of Common Stock and
    warrants to purchase 124,298&nbsp;shares of Common Stock held of
    record by Aether Capital LLC. Mr.&nbsp;Oros, one of the
    Company&#146;s directors, serves as Chairman and Chief Executive
    Officer of Aether Systems, Inc., which is the sole member of
    Aether Capital, LLC. The board of directors of Aether Systems,
    Inc. holds voting and investment control over these securities.
    Mr.&nbsp;Oros disclaims beneficial ownership of these securities
    except to the extent of his pecuniary interest. Also represents
    2,444 shares of Common Stock, warrants to purchase
    1,269&nbsp;shares of Common Stock, and options to purchase
    19,999&nbsp;shares of Common Stock in each case held of record
    by Mr.&nbsp;Oros.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(9)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents 1,500&nbsp;shares of Series&nbsp;A
    Preferred Stock and warrants to purchase 38,961&nbsp;shares of
    Common Stock.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(10)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents 750&nbsp;shares of Series&nbsp;A
    Preferred Stock and warrants to purchase 19,065&nbsp;shares of
    Common Stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(11)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents options to purchase 21,332&nbsp;shares
    of Common Stock. Mr.&nbsp;Lim is a director of the Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(12)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents 25,812&nbsp;shares of Common Stock,
    warrants to purchase 6,493&nbsp;shares of Common Stock and
    options to purchase 384,815&nbsp;shares of Common Stock.
    Mr.&nbsp;Major is a director of the Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(13)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents options to purchase 20,000 shares of
    Common Stock. Mr.&nbsp;Pittard is a director of the Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(14)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents 1,103&nbsp;shares of Common Stock,
    warrants to purchase 57&nbsp;shares of Common Stock and options
    to purchase 95,331&nbsp;shares of Common Stock.
    Mr.&nbsp;Leparulo is Chief Executive Officer of the Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(15)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents 196&nbsp;shares of Common Stock and
    options to purchase 95,330&nbsp;shares of Common Stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Flowers is the Senior Vice President,
Finance, Chief Financial Officer and Secretary of the Company.
</FONT>

<!-- link1 "<FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT>" -->
<DIV align="left"><A NAME="009"></A></DIV>

<P align="center">
<B><FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s Amended and Restated
Certificate of Incorporation, as amended, authorizes the
issuance of up to 365,000,000 shares of capital stock, of which
350,000,000 shares are designated as Common Stock, par value
$.001 per share, and 15,000,000 shares are designated as
Preferred Stock, 30,000 of which have been designated as
Series&nbsp;A Stock. As of March&nbsp;28, 2003, 6,984,823 shares
of Common Stock (net of treasury
</FONT>

<P align="center"><FONT size="2">17
</FONT>

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<DIV align="left">
<FONT size="2">shares) were issued and outstanding. As of
March&nbsp;28, 2003, 3,675 shares of Series&nbsp;A Stock were
issued and outstanding.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders of Common Stock are entitled to one vote
for each share held of record on each matter submitted to a vote
of stockholders. Subject to preferences that may be applicable
to any outstanding preferred stock, holders of Common Stock are
entitled to receive ratably such dividends as may be declared by
the Company&#146;s Board from funds legally available for that
purpose. In the event of a liquidation, dissolution or winding
up, the holders of 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. The Company&#146;s Common Stock carries no preemptive or
conversion rights or other subscription rights and there are no
redemption or sinking fund provisions applicable to it.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;2115 of the California Corporations
Code (the &#147;California Law&#148;) provides that a
corporation incorporated in a state other than California (such
as the Company, which is incorporated in Delaware) may
nevertheless be subject to certain of the provisions of the
California Law (as specified in Section&nbsp;2115 of the
California Law) applicable to California corporations (commonly
designated a &#147;Quasi-California Corporation&#148;) if more
than one-half of its outstanding voting securities are owned of
record by persons having addresses in California and more than
half of its business is conducted in California (generally, if
the average of its property factor, payroll factor and sales
factor (as defined in Sections&nbsp;25129, 25132 and 25134 of
the California Revenue and Taxation Code) is more than
50&nbsp;percent during its latest full income year). Such a
foreign corporation will not be treated as a Quasi-California
Corporation if, however, it has outstanding securities
designated as qualified for trading on Nasdaq or any successor
thereto. The Company&#146;s Common Stock is qualified to trade
on Nasdaq, and thus Section&nbsp;2115 is not presently
applicable to the Company.
</FONT>

<P align="left">
<B><FONT size="2">Preferred Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board, without the further approval of the
holders of the Common Stock, is authorized to designate for
issuance up to 15,000,000 shares of Preferred Stock, in such
series and with such rights, privileges and preferences as the
Board may from time to time determine. As of the date of this
Proxy Statement, 30,000 of such shares have been designated as
Series&nbsp;A Stock, 3,675 of which were issued and outstanding
as of March&nbsp;28, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Series&nbsp;A Stock.</FONT></I><FONT size="2">
Each share of Series&nbsp;A Stock is entitled to receive
cumulative dividends, payable commencing as of the date of
issuance and thereafter quarterly on January&nbsp;1,
April&nbsp;1, July 1 and October&nbsp;1 of each year, when and
as declared by the Board at the rate of 8.0% per annum from
December&nbsp;21, 2001 to February&nbsp;1, 2002 and 6.5% per
annum thereafter, compounded quarterly, of the purchase price
paid per share of Series&nbsp;A Stock in preference to any
payment made on any shares of Common Stock. In addition, each
share of Series&nbsp;A Stock shares in all ordinary dividends or
distributions, except for liquidating distributions, declared or
paid on the Common Stock on an as-converted basis. Each share of
Series&nbsp;A Stock is also entitled to a liquidation preference
of $1,000.00 (the &#147;Series&nbsp;A Liquidation
Preference&#148;), plus any accrued but unpaid dividends
thereon, in preference to any other class or series of capital
stock of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Series&nbsp;A Stock is convertible, at the
option of the holder at any time, into such number of shares of
Common Stock as is determined by dividing the Series&nbsp;A
Liquidation Preference plus an amount equal to all accrued and
unpaid dividends by the &#147;Series&nbsp;A Conversion
Price,&#148; which is currently $11.55 per share of Common
Stock, as may be adjusted from time to time. If the number of
shares of outstanding Common Stock changes after
December&nbsp;21, 2001 by reason of stock dividends,
distributions payable in Common Stock, stock splits, reverse
stock splits, recapitalizations, reclassifications, combinations
or exchanges of shares, separations, reorganizations,
liquidations or the like, the Series&nbsp;A Conversion Price and
the number of shares of Common Stock issuable upon conversion of
the Series&nbsp;A Stock in effect immediately prior to such
events are, concurrently with the effectiveness of such events,
proportionately decreased or increased, as appropriate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the Company declares or pays a dividend or
other distribution to holders of Common Stock payable in
securities other than Common Stock, the holders of Series&nbsp;A
Stock receive upon conversion, in addition to the
</FONT>

<P align="center"><FONT size="2">18
</FONT>

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<DIV align="left">
<FONT size="2">entitled number of shares of Common Stock, the
amount of securities they would have received had they converted
their shares of Series&nbsp;A Stock into Common Stock prior to
such dividend or distribution. Similarly, if the Common Stock
issuable upon conversion of the Series&nbsp;A Stock is changed
into the same or a different number of shares of any class or
classes of stock by capital reorganization, reclassification, or
otherwise, the holders of the Series&nbsp;A Stock will receive
upon conversion the securities they would have received had they
converted the Series&nbsp;A Stock prior to such reorganization
or reclassification. Further, if the Company sells substantially
all of its assets or merges or consolidates with or into another
entity, the Series&nbsp;A Stock will be convertible into the
kind and amount of shares of stock or other securities or
property to which a holder of the number of shares of Common
Stock deliverable upon conversion of Series&nbsp;A Stock would
have been entitled to receive upon such sale, merger or
consolidation based on the Series&nbsp;A Conversion Price
effective with respect to such sale, merger or consolidation.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On or at any time following the earliest of
(i)&nbsp;the sale or merger of the Company, wherein a change of
control occurs, and (ii)&nbsp;December&nbsp;21, 2008, then each
holder of Series&nbsp;A Stock may elect to have the Company
redeem any outstanding shares of Series&nbsp;A Stock, to the
extent the Company has funds legally available for such
redemption. If funds are then legally available, the redeeming
holder of Series&nbsp;A Stock will receive an amount equal to
(x)&nbsp;the number of shares of Series&nbsp;A Stock submitted
for redemption multiplied by (y)&nbsp;the Series&nbsp;A
Liquidation Preference plus all accrued but unpaid dividends
thereon, through the date of such redemption, whether or not
declared. However, a holder of Series&nbsp;A Stock is not be
entitled to redemption pursuant to clause (i)&nbsp;above if the
change of control results from the acquisition by such holder of
Series&nbsp;A Stock or such holder&#146;s affiliates of
beneficial ownership of securities of the Company representing
more than 50% of the voting power of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company may elect to redeem, in whole or in
part, outstanding shares of the Series&nbsp;A Stock on a pro
rata basis among the holders of the Series&nbsp;A Stock at a
redemption price per share equal to the Series&nbsp;A
Liquidation Preference plus all accrued but unpaid dividends
thereon, provided that (i)&nbsp;the Series&nbsp;A Registration
Statement (as defined below) is then effective, (ii)&nbsp;the
average of the closing price of the Common Stock as reported by
Nasdaq over the 20&nbsp;consecutive trading-day period ending
not more than five&nbsp;business days prior to the date of the
notice of redemption is greater than or equal to the product of
(x)&nbsp;the Series&nbsp;A Conversion Price in effect on the
last day of the 20&nbsp;consecutive trading-day period and
(y)&nbsp;2.50, and (iii)&nbsp;during the period beginning on the
date of the Company&#146;s notice of redemption and ending on
the redemption date (1)&nbsp;the Company has not received any
request from the SEC or any other federal or state governmental
authority for amendments or supplements to the Series&nbsp;A
Registration Statement or related prospectus or for additional
information, (2)&nbsp;no stop order suspending the effectiveness
of the Series&nbsp;A Registration Statement or the initiation of
any proceedings for that purpose has been issued by the SEC or
any other federal or state governmental authority, (3)&nbsp;the
Company has not received any notification with respect to the
suspension of the qualification or exemption from qualification
of the Common Stock for sale in any jurisdiction or the
initiation of any proceeding for such purpose, and
(4)&nbsp;there has not occurred any event or circumstance which
would necessitate the making of any changes in the Series&nbsp;A
Registration Statement or related prospectus, or any document
incorporated or deemed to be incorporated therein by reference,
so that, in the case of the Series&nbsp;A Registration
Statement, it will not contain any untrue statement of a
material fact or any omission to state a material fact required
to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the related prospectus,
it will not contain any untrue statement of a material fact or
any omission to state a material fact required to be stated
therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The right to convert the Series&nbsp;A Stock will be
forfeited unless it is exercised before the date specified in a
notice of redemption.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are no redemption fund or sinking fund
provisions applicable to the Series&nbsp;A Stock and there is no
restriction on the repurchase or redemption of shares of
Series&nbsp;A Stock by the Company while there is any arrearage
in the payment of dividends.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The holders of Series&nbsp;A Stock are entitled
to notice of any meeting of stockholders of the Company and vote
together with the holders of Common Stock as a single class upon
any matter submitted to the stockholders for a vote, on an
as-converted basis as of the record date of such vote or upon
the date of such
</FONT>

<P align="center"><FONT size="2">19
</FONT>

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<DIV align="left">
<FONT size="2">written consent, as the case may be. The holders
of Series&nbsp;A Stock also have a right to participate in
future issuances by the Company of any shares of capital stock,
or securities convertible into or exercisable for any shares of
any class of its capital stock, subject to certain limitations
and exceptions.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company agreed to register under the federal
securities laws to enable the resale of Common Stock issuable
upon conversion of the Series&nbsp;A Stock and exercise of the
warrants issued in connection with the issuance and sale of the
Series&nbsp;A Stock by the holders or any of them (the
&#147;Series&nbsp;A Registration Statement&#148;). The Company
filed a Registration Statement on Form&nbsp;S-3 (File
No.&nbsp;333-81190), which was declared effective by the SEC on
March&nbsp;11, 2002. The Company has agreed to use its
reasonable efforts to keep the Series&nbsp;A Registration
Statement effective until, at the latest, December&nbsp;21, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to close the Private Placement
Transactions, the Board has determined that it is in the best
interest of the Company to amend and restate the Certificate of
Designation&nbsp;&#151; Series&nbsp;A Convertible Preferred
Stock filed with the Delaware Secretary of State on
December&nbsp;20, 2001, as amended by the Corrected Certificate
of Designation&nbsp;&#151; Series&nbsp;A Convertible Preferred
Stock filed with the Delaware Secretary of State on
December&nbsp;20, 2001 and the Amendment to the Corrected
Certificate of Designation&nbsp;&#151; Series&nbsp;A Convertible
Preferred Stock filed with the Delaware Secretary of State on
May&nbsp;29, 2002, substantially in the form attached to this
Proxy Statement as Annex A, and directed that the Series&nbsp;A
Certificate Amendments be submitted to the Company&#146;s
stockholders for approval. See &#147;Board of Directors
Approval&#148; and &#147;Series&nbsp;A Certificate
Amendments.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Warrants and Options</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of March&nbsp;28, 2003, there were warrants
outstanding to purchase a total of 2,765,581 shares of Common
Stock, comprised of the First Issuance Warrants and warrants
from previous private placement transactions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Investor Warrants.</FONT></I><FONT size="2">
In connection with the Private Placement Transactions, the
Company issued to the holders of the Initial Convertible Notes,
warrants initially exercisable for an aggregate of up to 857,143
shares of Common Stock at the initial exercise price of $0.70
per share, as adjusted from time to time. Each Investor Warrant
will be exercisable in whole or in part commencing six months
after its date of issuance, for a period of five years. The
Investor Warrants are initially exercisable only by means of
paying the Company in cash the applicable exercise price per
share. However, upon the first anniversary of issuance and
thereafter, the Investor Warrants may be exercised by means of a
cashless or net exercise provision according to which the holder
may from time to time convert such Investor Warrant, in whole or
part, into a number of shares of Common Stock determined by
dividing (a)&nbsp;the aggregate fair market value of the shares
of Common Stock otherwise issuable upon exercise of the Investor
Warrant or portion thereof minus the aggregate exercise price of
such shares by (b)&nbsp;the fair market value of one share of
Common Stock. See &#147;Proposal&nbsp;1: Approval of the Private
Placement Transactions&nbsp;&#151; Summary of Transaction
Terms&nbsp;&#151; Investor Warrants.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Warrants from Previous Private
Placements.</FONT></I><FONT size="2"> As of March&nbsp;28, 2003,
there were warrants outstanding to purchase a total of 1,908,438
shares of Common Stock. 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 or consolidation. In addition, each warrant
contains provisions for the adjustment of its exercise price
upon the occurrence of certain dilutive issuances of securities
at prices below the then existing applicable warrant exercise
price and with respect to certain warrants, a stated price. In
addition, the shares of 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. 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 Common Stock
at the time of exercise of the warrant after deduction of the
aggregate exercise price.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Options.</FONT></I><FONT size="2"> As of
March&nbsp;28, 2003, there were options issued under the
Company&#146;s stock option plans outstanding to purchase an
aggregate of 946,245 shares of Common Stock at a weighted
average exercise price of $39.96.
</FONT>

<P align="center"><FONT size="2">20
</FONT>

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<!-- link1 "<FONT size="2">STOCKHOLDER PROPOSALS</FONT>" -->
<DIV align="left"><A NAME="010"></A></DIV>

<P align="center">
<B><FONT size="2">STOCKHOLDER PROPOSALS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A stockholder desiring to have a proposal
included in our proxy statement for the 2003 Annual Meeting of
stockholders must comply with the applicable rules and
regulations of the SEC, including that any such proposal must
have been received by our Secretary at our principal executive
offices by December&nbsp;18, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our bylaws require a stockholder desiring to
present a proposal for a vote at the 2003 Annual Meeting of
stockholders to notify our Secretary in writing. The notice
generally must be delivered to or mailed and received at our
principal executive offices (i)&nbsp;not less than 90&nbsp;days
nor more than 120&nbsp;days prior to the first anniversary date
of the 2002 Annual Meeting or (ii)&nbsp;if the date of the 2003
Annual Meeting is more than 30&nbsp;days prior to or more than
60 days after the first anniversary date of 2002 the Annual
Meeting and we provide fewer than 60&nbsp;days notice or prior
public disclosure of the date of the 2003 Annual Meeting, then
not later than the 10th day following the day on which such
notice of the date of the 2003 Annual Meeting was mailed or such
public disclosure was made for the 2003 Annual Meeting. Other
specifics regarding the notice procedures, including the
required content of the notice, can be found in our bylaws, a
copy of which may be obtained without charge by request to our
Secretary at the Company&#146;s executive offices.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholders who wish to have a proposal included
in our proxy statement for the 2003 Annual Meeting or have a
proposal properly brought before the 2003 Annual Meeting for a
vote must comply with the above requirements, as applicable.
Stockholders that comply with the rules and regulations
promulgated by the SEC to have a proposal included in our proxy
statement for the 2003 Annual Meeting of the stockholders will
be deemed to have complied with the notice requirements
contained in our bylaws. Stockholder proposals submitted to our
Secretary that do not comply with these requirements may be
excluded from our proxy statement and/or may not be brought
before the 2003 Annual Meeting, as applicable.
</FONT>

<P align="left">


<!-- link1 "<FONT size="2">INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE</FONT>" -->
<DIV align="left"><A NAME="011"></A></DIV>

<DIV align="center">
<B><FONT size="2">INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The SEC allows us to &#147;incorporate by
reference&#148; the information we filed with them, which means
that we can disclose important information to you by referring
you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and
information that we file later with the SEC will automatically
update and supersede this information. We incorporate by
reference the documents listed below and any future filings we
will make with the SEC under Sections&nbsp;13(a), 13(c), 14 or
15(d) of the Exchange Act until the selling stockholders sell
all the shares of common stock offered by this prospectus.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our annual report on Form&nbsp;10-K for the
    fiscal year ended December&nbsp;31, 2001;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our quarterly reports on Form&nbsp;10-Q for the
    quarters ended March&nbsp;31, 2002, June&nbsp;30, 2002 and
    September&nbsp;30, 2002; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our current reports on Form&nbsp;8-K, filed on
    January&nbsp;18, 2002, February&nbsp;6, 2002, July&nbsp;19,
    2002, July&nbsp;31, 2002, August&nbsp;14, 2002,
    September&nbsp;12, 2002, October&nbsp;21, 2002 and
    November&nbsp;6, 2002.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will furnish without charge to you, upon
written or oral request, a copy of any or all of the documents
described above, except for exhibits to those documents, unless
the exhibits are specifically incorporated by reference into
those documents. Requests should be addressed to:
</FONT>

<P align="center">
<FONT size="2">Corporate Secretary
</FONT>

<DIV align="center">
<FONT size="2">Novatel Wireless, Inc.
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">9360 Towne Centre Drive, Suite&nbsp;110
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">San Diego, California 92121
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">telephone number (858)&nbsp;320-8800.
</FONT>
</DIV>

<P align="center"><FONT size="2">21
</FONT>
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<!-- link1 "<FONT size="2">AVAILABLE INFORMATION</FONT>" -->
<DIV align="left"><A NAME="012"></A></DIV>

<P align="center">
<B><FONT size="2">AVAILABLE INFORMATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith,
files reports, proxy statements and other information with the
SEC. Reports, proxy statements and other information filed by
the Company may be inspected and copied at the public reference
facilities maintained by the SEC at Room&nbsp;1024, Judiciary
Plaza, 450&nbsp;Fifth Street, N.W., Washington, D.C. 20549, or
by way of the SEC&#146;s Internet address, http://www.sec.gov.
Such reports and other information may also be inspected at the
offices of the National Association of Securities Dealers, Inc.,
1735 K.&nbsp;Street, N.W., Washington, D.C. 20006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has filed with the SEC a Current
Report on Form&nbsp;8-K, dated March&nbsp;28, 2003, relating to
the Private Placement Transactions (the &#147;Current
Report&#148;). The Company will provide without charge to each
person to whom a copy of this proxy is delivered, upon the
written or oral request of any such persons, a copy of the
Current Report. Requests for copies should be addressed to:
Corporate Secretary, Novatel Wireless, Inc., 9360 Towne Centre
Drive, Suite 110, San Diego, California 92121, telephone
(858)&nbsp;320-8800.
</FONT>

<!-- link1 "<FONT size="2">OTHER MATTERS</FONT>" -->
<DIV align="left"><A NAME="013"></A></DIV>

<P align="center">
<B><FONT size="2">OTHER MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of the date of this Proxy Statement, the Board
does not know of any other matter which will be brought before
the Meeting. Under the Company&#146;s bylaws, the Company must
set forth the purpose(s) for which a special meeting of the
stockholders is called in the related notice of meeting.
Although not expected, if any other matter properly comes before
the Meeting, or any adjournment or postponement thereof, which
may properly be acted upon, the proxies solicited hereby will be
voted on such matter in accordance with the discretion of the
proxy holders named therein unless otherwise indicated.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You are urged to sign, date and return the
enclosed proxy in the envelope provided. No further postage is
required if the envelope is mailed within the United States. If
you subsequently decide to attend the Meeting and wish to vote
your shares in person, you may do so. Your cooperation in giving
this matter your prompt attention will be appreciated.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="38%"></TD>
    <TD width="62%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="a88864da8886402.gif" alt="-s- MELVIN L. FLOWERS"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">MELVIN L. FLOWERS
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Senior Vice President, Finance,</FONT></I></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Chief Financial Officer and
    Secretary</FONT></I></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">April&nbsp;15, 2003
</FONT>

<DIV align="left">
<FONT size="2">San Diego, California
</FONT>
</DIV>

<P align="center"><FONT size="2">22
</FONT>
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<!-- link1 "<FONT size="2">ANNEX A</FONT>" -->
<DIV align="left"><A NAME="014"></A></DIV>

<P align="right">
<B><FONT size="2">ANNEX A</FONT></B>

<P align="center">
<B><FONT size="2">NOVATEL WIRELESS, INC.</FONT></B>

<P align="center">
<B><FONT size="2">AMENDED AND RESTATED</FONT></B>

<DIV align="center">
<B><FONT size="2">CERTIFICATE OF DESIGNATION</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">SERIES A CONVERTIBLE PREFERRED STOCK</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">PURSUANT TO SECTION 151 OF THE</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">GENERAL CORPORATION LAW OF THE STATE OF
DELAWARE</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">NOVATEL WIRELESS, INC., a corporation organized
and existing under the General Corporation Law of the State of
Delaware (hereinafter called the &#147;Corporation&#148;), DOES
HEREBY CERTIFY THAT, pursuant to Section&nbsp;151 of the General
Corporation Law of the State of Delaware (the &#147;DGCL&#148;),
the following resolution was duly adopted and approved by a
committee of the Board of Directors of the Corporation, duly
designated pursuant to Section&nbsp;141(c)(2) of the DGCL, at a
meeting duly called and held on March&nbsp;12, 2003:
</FONT>

<P align="center">
<B><FONT size="2">NOVATEL WIRELESS, INC.</FONT></B>

<P align="center">
<B><FONT size="2">SERIES A CONVERTIBLE PREFERRED STOCK</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">RESOLVED, that pursuant to the authority vested
in the Board of Directors of the Corporation by Article&nbsp;IV
of the Corporation&#146;s Amended and Restated Certificate of
Incorporation, a series of Preferred Stock of the Corporation
be, and it hereby is, created out of the authorized but unissued
shares of the capital stock of the Corporation, such series to
be designated Series&nbsp;A Preferred Stock (the
&#147;Series&nbsp;A Preferred Stock&#148;), to consist of 3,700
shares, par value $.001 per share, of which the preferences and
relative and other rights, and the qualifications, limitations
or restrictions thereof, shall be (in addition to those set
forth in the Corporation&#146;s Amended and Restated Certificate
of Incorporation) as follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Section&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dividends.</I></FONT></B><FONT size="2">
The holders of Series&nbsp;A Preferred Stock shall be entitled
to receive, from funds legally available therefor, a cumulative
dividend at the rate per annum of 6.5% of the purchase price
paid per share of Series&nbsp;A Preferred Stock held by such
holder, payable, subject to any applicable contractual
restrictions, upon any liquidation, dissolution or winding up of
the affairs of the Corporation, as described in Section&nbsp;2,
upon any redemption described in Section&nbsp;5, or otherwise
quarterly in arrears when and as declared by the Board of
Directors each January&nbsp;1, April&nbsp;1, July&nbsp;1 and
October&nbsp;1 of the applicable year. Notwithstanding the
foregoing, no dividends shall be declared, or paid to the
holders of the Series&nbsp;A Preferred Stock (other than in-kind
in connection with the conversion of the Series&nbsp;A Preferred
Stock pursuant to Section&nbsp;3 hereof) or any series of
preferred stock having dividend rights pari passu with those of
the Series&nbsp;A Preferred Stock, unless the holders of
Series&nbsp;B Preferred Stock and any other series of preferred
stock created after the date hereof having preferential dividend
and liquidation rights vis-&#224;-vis the Series&nbsp;A
Preferred Stock (such Series&nbsp;B Preferred Stock and any
other series of Preferred Stock with such preferential rights,
the &#147;Senior Preferred Stock&#148;) shall have been paid in
full all of the dividends to which they are entitled. No
dividends shall be declared, or paid to the holders of common
stock, par value $.001 per share, of the Corporation (the
&#147;Common Stock&#148;), unless the holders of Series&nbsp;A
Preferred Stock and any other series of preferred stock having
dividend and liquidation rights pari passu with those of the
Series&nbsp;A Preferred Stock (&#147;Pari Passu Preferred
Stock&#148;) have been paid in full all of the dividends to
which they are entitled. The Series&nbsp;A Preferred Stock shall
also participate in any dividend or distribution, other than a
liquidating distribution, declared or paid on the Common Stock,
pro rata, on the basis of the number of shares of Common Stock
(as determined on an as-converted basis for the Series&nbsp;A
Preferred Stock) into which such Series&nbsp;A Preferred Stock
is then convertible.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to this Section&nbsp;1, dividends may be
declared and paid on Common Stock from funds lawfully available
therefor as and when determined by the Board of Directors of the
Corporation.
</FONT>

<P align="center"><FONT size="2">A-1
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Section&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Liquidation
Rights.</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(a)&nbsp;In the event of any liquidation,
dissolution or winding up of the affairs of the Corporation,
whether voluntary or involuntary, the holders of each share of
Series&nbsp;A Preferred Stock shall be entitled to be paid out
of the assets of the Corporation available for distribution to
holders of the Corporation&#146;s capital stock of all classes,
after satisfaction of all preferential liquidation rights of the
Senior Preferred Stock, and subject to the rights of any Pari
Passu Preferred Stock, an amount equal to $1,000 per share of
Series&nbsp;A Preferred Stock (the <I>&#147;Liquidation
Preference&#148;</I>), plus all dividends accrued but unpaid
thereon, to and including the date full payment shall be
tendered to the holders of the Series&nbsp;A Preferred Stock
with respect to such liquidation, dissolution or winding up.
Neither the consolidation or merger of the Corporation into or
with another corporation or corporations, nor the sale, lease,
transfer or conveyance of all or substantially all of the assets
of the Corporation to another corporation or any other entity
shall be deemed to be a liquidation, dissolution or winding up
of the affairs of the Corporation within the meaning of this
Section&nbsp;2(a).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After payment in full of the Liquidation
Preference to which the holders of the Series&nbsp;A Preferred
Stock are entitled, such holders will not be entitled to any
further participation in the distribution of assets of the
Corporation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon conversion of shares of Series&nbsp;A
Preferred Stock into shares of Common Stock pursuant to
Section&nbsp;3, the holders of such Common Stock shall not be
entitled to any preferential payment or distribution in case of
any liquidation, dissolution or winding up, but shall share
ratably in any distribution of the assets of the Corporation
among the holders of Common Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(b)&nbsp;<I>Distributions Other than Cash.</I>
Whenever the distributions provided for in this Section&nbsp;2
shall be payable in property other than cash, the value of such
distributions shall be the fair market value of such property as
determined in good faith by the Board of Directors of the
Corporation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(c)&nbsp;<I>Notice.</I> Written notice of any
proposed liquidation, dissolution or winding up of the affairs
of the Corporation, stating a payment date, the amount of the
Liquidation Preference and the place where such Liquidation
Preference shall be payable, shall be delivered to the holders
of Series&nbsp;A Preferred Stock not less than 45&nbsp;days
prior to the proposed date of such proposed liquidation,
dissolution or winding up.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Section&nbsp;3. <I>Conversion.
</I></FONT></B><FONT size="2">The holders of Series&nbsp;A
Preferred Stock shall have conversion rights as follows (the
&#147;Conversion Rights&#148;):
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(a)&nbsp;<I>Optional Conversion: Series&nbsp;A
Conversion Price.</I> Subject to Section 3(b), each share of
Series&nbsp;A Preferred Stock shall be convertible, without the
payment of any additional consideration by the holder thereof
and at the option of the holder thereof, at any time after the
date such share was issued, at the office of the Corporation or
any transfer agent for the Series&nbsp;A Preferred Stock, into
such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing the Liquidation Preference
plus an amount equal to all accrued and unpaid dividends by the
Series&nbsp;A Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. From and after
the date of filing of this Amended and Restated Certificate of
Designation <I>(&#147;Filing Date&#148;)</I>, the conversion
price at which shares of Common Stock shall be deliverable upon
conversion of Series&nbsp;A Preferred Stock without the payment
of any additional consideration by the holder thereof (the
<I>&#147;Series&nbsp;A Conversion Price&#148;</I>) shall
initially be $11.55 per share of Common Stock. Such
Series&nbsp;A Conversion Price shall be subject to further
adjustment, in order to adjust the number of shares of Common
Stock into which the Series&nbsp;A Preferred Stock is
convertible, as hereinafter provided.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(b)&nbsp;<I>Mechanics of Optional Conversion.</I>
Before any holder of Series&nbsp;A Preferred Stock shall be
entitled to convert the same into shares of Common Stock, the
holder shall surrender the certificate or certificates therefor
at the office of the Corporation or of any transfer agent for
Series&nbsp;A Preferred Stock, shall give written notice to the
Corporation at such office that the holder elects to convert the
same and shall state therein the holder&#146;s name or the name
or, subject to any legal or contractual restrictions on transfer
thereof, names of the holder&#146;s nominees in which the holder
wishes the certificate or certificates for shares of Common
Stock to be issued and shall pay any transfer or similar tax, if
required. The date on which the holder satisfies all these
requirements is the <I>&#147;Conversion Date&#148;</I>. On the
Conversion Date, all rights with respect to the Series&nbsp;A
Preferred Stock so converted shall terminate, except for any of
the rights of the holder thereof, upon surrender
</FONT>

<P align="center"><FONT size="2">A-2
</FONT>

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<DIV align="left">
<FONT size="2">of the holder&#146;s certificate or certificates
therefor, to receive certificates for the number of shares of
Common Stock into which such Series&nbsp;A Preferred Stock has
been converted. If so required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by
written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered
holder or by the holder&#146;s attorney duly authorized in
writing. No fractional share of Common Stock shall be issued
upon the conversion of Series&nbsp;A Preferred Stock. In lieu of
any fractional share to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction
multiplied by the applicable Series&nbsp;A Conversion Price then
in effect. Within five business days after the Conversion Date,
the Corporation shall issue and deliver to such holder of
Series&nbsp;A Preferred Stock, or, subject to any legal or
contractual restrictions on transfer thereof, to the
holder&#146;s nominee or nominees, a certificate or certificates
for the number of shares of Common Stock to which the holder
shall be entitled as aforesaid. The person or persons entitled
to receive the shares of Common Stock issuable upon conversion
shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on the Conversion Date.
Notwithstanding anything to the contrary contained in
Sections&nbsp;3(a) and 3(b), the holder of any shares of
Series&nbsp;A Preferred Stock which are selected for redemption
by the Corporation in accordance with Section&nbsp;5 shall not
be entitled to convert such shares into Common Stock unless the
Conversion Date with respect to such shares is at least two
business days prior to the Redemption Date (as defined below).
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(c)&nbsp;<I>Adjustments to the Conversion
Price.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(i)&nbsp;<I>Special Definition.</I> For purposes
of this Section&nbsp;3(c), the following definition shall apply:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;<I>&#147;Additional Shares of Common
    Stock&#148;</I> shall mean all shares of Common Stock issued by
    the Corporation after the Filing Date by reason of stock
    dividends, distributions payable in common stock, stock splits,
    reverse stock splits, recapitalizations, reclassifications,
    combinations or exchanges of shares, separations,
    reorganizations, liquidations or other similar event, other than:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;securities issued or issuable as a
    dividend or distribution on the Series&nbsp;A Preferred Stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;any securities issued or issuable as a
    result of an adjustment of the Series&nbsp;A Conversion Price
    made pursuant to this Section&nbsp;3(c);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;any shares of capital stock of the
    Corporation, not to exceed one-half of one percent of the total
    issued and outstanding capital stock of the Corporation on an
    &#147;as converted to Common Stock&#148; basis, the issuance of
    which is approved by vote of a majority of the Board of
    Directors of the Corporation, including the affirmative vote of
    a majority of the directors designated for election by the
    holders of the Series&nbsp;A Preferred Stock; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;not more than ten shares of capital
    stock of the Corporation on an &#147;as converted to Common
    Stock&#148; basis, the issuance of which resulted from
    mathematical or other error or inadvertence, <I>provided that
    </I>the transaction in which such shares were issued was
    approved at the time by vote of a majority of the Board of
    Directors of the Corporation, including the affirmative vote of
    a majority of the directors designated for election by the
    holders of the Series A Preferred Stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(ii)&nbsp;<I>Adjustment of the Series&nbsp;A
Conversion Price for Dividends, Distributions, Subdivisions,
Combinations or Consolidations of Common Stock.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;<I>Stock Dividends, Distributions or
    Subdivisions.</I> In the event the Corporation shall be deemed
    to have issued Additional Shares of Common Stock in a stock
    dividend, stock distribution or subdivision, the Series&nbsp;A
    Conversion Price and the number of shares of Common Stock
    issuable upon conversion of each share of Series&nbsp;A
    Preferred Stock in effect immediately prior to such deemed
    issuance shall, concurrently with the effectiveness of such
    deemed issuance, be proportionately decreased or increased, as
    appropriate.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;<I>Combinations or Consolidations.</I>
    In the event the outstanding shares of Common Stock shall be
    combined, consolidated or otherwise changed, by
    recapitalizations, reclassifications, stock splits, reverse
    stock splits, exchanges of shares, separations, reorganizations,
    liquidations or otherwise, the Series&nbsp;A Conversion Price
    and the number of shares of Common Stock issuable upon
    conversion of each
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-3
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">share of Series&nbsp;A Preferred Stock in effect
    immediately prior to any such combination, consolidation or
    other event shall, concurrently with the effectiveness of such
    event, be proportionately decreased or increased, as appropriate.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(d)&nbsp;<I>Adjustments for Certain Dividends and
Distributions.</I> In the event that at any time or from time to
time after the Filing Date, the Corporation shall make or issue,
or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation other than shares of
Common Stock, then and in each such event provision shall be
made so that the holders of Series&nbsp;A Preferred Stock shall
receive upon conversion thereof, in addition to the number of
shares of Common Stock receivable thereupon, the amount of
securities of the Corporation that they would have received had
their Series&nbsp;A Preferred Stock been converted into Common
Stock on the date of such event and had they thereafter, during
the period from the date of such event to and including the
actual conversion date, retained such securities receivable by
them as aforesaid during such period, giving application during
such period to all adjustments called for herein.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(e)&nbsp;<I>Adjustment for Reclassification,
Exchange or Substitution.</I> In the event that at any time or
from time to time after the Filing Date, the Common Stock
issuable upon the conversion of Series&nbsp;A Preferred Stock
shall be changed into the same or a different number of shares
of any class or classes of stock, whether by capital
reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend provided
for in Section 3(c)(ii) above, or a merger, consolidation, or
sale of assets provided for in Section&nbsp;3(f) below) then and
in each such event the holder of any share or shares of
Series&nbsp;A Preferred Stock shall have the right thereafter to
convert such shares into the kind and amount of shares of stock
and other securities and property receivable upon such
reorganization, reclassification, or other change, by the holder
of a number of shares of Series&nbsp;A Preferred Stock might
have been converted immediately prior to such reorganization,
reclassification, or change, all subject to further adjustment
as provided herein.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(f)&nbsp;<I>Adjustment for Merger, Consolidation
or Sale of Assets.</I> In the event that at any time or from
time to time after the Filing Date, the Corporation shall sell
all or substantially all of its assets or merge or consolidate
with or into another entity, each share of Series&nbsp;A
Preferred Stock shall thereafter be convertible into the kind
and amount of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock of the
Corporation deliverable upon conversion of Series&nbsp;A
Preferred Stock would have been entitled to receive upon such
consolidation, merger or sale; and, in such case, appropriate
adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions
set forth in this Section&nbsp;3 with respect to the rights and
interest thereafter of the holders of Series&nbsp;A Preferred
Stock, to the end that the provisions set forth in this
Section&nbsp;3 (including provisions with respect to changes in
and other adjustments of the Series&nbsp;A Conversion Price)
shall thereafter be applicable, as nearly as reasonably may be,
in relation to any shares of stock or other property thereafter
deliverable upon the conversion of the Series&nbsp;A Preferred
Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(g)&nbsp;<I>No Impairment.</I> The Corporation
shall not, by amendment of its Certificate of Incorporation or
through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other
voluntary action, including, without limitation, voluntary
bankruptcy proceedings, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed
hereunder by the Corporation but shall at all times in good
faith assist in the carrying out of all the provisions of this
Section&nbsp;3 and in the taking of all such actions as may be
necessary or appropriate in order to protect the conversion
rights of the holders of the Series&nbsp;A Preferred Stock under
this Section&nbsp;3 against impairment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(h)&nbsp;<I>Certificate as to Adjustment.</I>
Upon the occurrence of each adjustment or readjustment of the
Series&nbsp;A Conversion Price pursuant to this Section&nbsp;3,
the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof
and furnish to each affected holder of Series&nbsp;A Preferred
Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment is based; provided, however, that the Corporation
shall not be required to provide each holder with such a
certificate more than one time per calendar quarter. The
Corporation shall, upon the written request at any time of any
affected holder of Series&nbsp;A Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting
forth (i)&nbsp;such adjustments and readjustments, (ii)&nbsp;the
</FONT>

<P align="center"><FONT size="2">A-4
</FONT>

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<DIV align="left">
<FONT size="2">Series&nbsp;A Conversion Price in effect at the
time, and (iii)&nbsp;the number of shares of Common Stock and
the amount, if any, of other property which at the time would be
received upon the conversion of each share of Series&nbsp;A
Preferred Stock.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(i)&nbsp;<I>Notices of Record Date.</I> In the
event of any taking by the Corporation of a record date of the
holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash
dividends paid in previous quarters) or other distribution, the
Corporation shall deliver to each holder of Series&nbsp;A
Preferred Stock at least twenty days prior to such record date a
notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(j)&nbsp;<I>Common Stock Reserve.</I> The
Corporation shall reserve and keep available out of its
authorized but unissued Common Stock such number of shares of
Common Stock as shall from time to time be sufficient to effect
conversion of the Series&nbsp;A Preferred Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(k)&nbsp;<I>Certain Taxes.</I> The Corporation
shall pay any issue or transfer taxes payable in connection with
the conversion of Series&nbsp;A Preferred Stock, <I>provided,
however,</I> that the Corporation shall not be required to pay
any tax which may be payable in respect of any transfer to a
name other than that of the holder of the Series&nbsp;A
Preferred Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(l)&nbsp;<I>Closing of Books.</I> The Corporation
shall at no time close its transfer books against the transfer
of any Series&nbsp;A Preferred Stock or of any shares of Common
Stock issued or issuable upon the conversion of any shares of
Series&nbsp;A Preferred Stock in any manner which interferes
with the timely conversion or permitted transfer of such
Series&nbsp;A Preferred Stock or Common Stock.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Section&nbsp;4.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Voting Rights.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(a)&nbsp;Except as otherwise provided herein or
as required by law, the holders of the Series&nbsp;A Preferred
Stock shall be entitled to notice of any meeting of stockholders
and shall vote upon any matter submitted to the stockholders for
a vote as a single class together with the holders of the Common
Stock, Series&nbsp;B Preferred Stock and any other series of
preferred stock entitled to vote generally on matters presented
to the stockholders for a vote. Holders of Series&nbsp;A
Preferred Stock shall have that number of votes per share as is
equal to the number of whole shares of Common Stock into which
each such share of Series&nbsp;A Preferred Stock held by such
holder could be converted on the date for determination of
stockholders entitled to vote at the meeting or on the date of
any written consent.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(b)&nbsp;Notwithstanding any other provision of
this Section&nbsp;4, in the event that it is determined by
Nasdaq (after full process, including any appeal process
available to the Corporation) that the voting provisions set
forth in this Section&nbsp;4 violate or conflict with Nasdaq
Marketplace Rule&nbsp;4351, the number of votes to which each
share of Series&nbsp;A Preferred Stock is entitled shall be
reduced to the extent required to comply with such rule.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(c)&nbsp;Except as required by law, (i)&nbsp;the
holders of the Series&nbsp;A Preferred Stock shall not be
entitled to vote as a separate class upon any matter submitted
to the stockholders for a vote, and (ii)&nbsp;the holders of the
Series&nbsp;A Preferred Stock shall have no right to vote with
respect to the creation or issuance of a series of preferred
stock having rights, preferences and priviliges pari passu with,
or senior to those of the Series&nbsp;A Preferred Stock.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Section&nbsp;5.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Redemption.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(a)&nbsp;<I>Redemption at Option of the
Holder.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;On or at any time following a Change of
    Control (as defined below), each holder of Series&nbsp;A
    Preferred Stock may elect to have the Corporation redeem from
    it, to the extent the Corporation has funds legally available
    for such purpose, and subject to Section&nbsp;5(a)(iii), any or
    all shares of Series&nbsp;A Preferred Stock held by such holder;
    provided, however, if a Change of Control occurs as a result of
    the acquisition by a holder of Series&nbsp;A Preferred Stock or
    such holder&#146;s &#147;affiliates&#148; (as such term is
    defined in
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-5
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Rule&nbsp;405 under the Securities Act of 1933,
    as amended) of beneficial ownership of securities of the
    Corporation representing more than 50% of the voting power of
    the Corporation (whether such acquisition is made by such holder
    or such holder&#146;s affiliates, individually or as a member of
    a &#147;group&#148; (as described in Rule&nbsp;13d-5(b)(1)
    promulgated under the Securities Exchange Act of 1934)), such
    holder shall not be entitled, as a result of such Change of
    Control, to require the Corporation to redeem its Series&nbsp;A
    Preferred Stock pursuant to this Section&nbsp;5(a). Such
    election may be made only by delivering to the Corporation
    (x)&nbsp;a written notice signed by such holder specifying the
    number of shares of Series A Preferred Stock so to be redeemed,
    and (y)&nbsp;certificates for the shares of the Series&nbsp;A
    Preferred Stock so to be redeemed, together with stock powers
    therefor duty executed by such holder in blank (such written
    election, certificates and stock powers being referred to
    collectively as <I>&#147;Redemption Notice&#148;</I>).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;The Corporation shall redeem from
    holders of Series&nbsp;A Preferred Stock from whom the
    Corporation received a Redemption Notice, within 30&nbsp;days of
    its receipt of such Redemption Notice, all the shares of the
    Series&nbsp;A Preferred Stock as to which Redemption Notices
    have been given, to the extent the Corporation has funds legally
    available for such purpose, and subject to
    Section&nbsp;5(a)(iii), by paying to the respective holders the
    amount equal to (x) the number of shares of Series&nbsp;A
    Preferred Stock submitted for redemption multiplied by (y)(i)
    the Liquidation Preference, plus (ii)&nbsp;all accrued but
    unpaid dividends thereon to and including the date of such
    redemption, whether or not declared.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;Notwithstanding anything to the
    contrary in this Section&nbsp;5, (x)&nbsp;in no event shall the
    Corporation redeem any share of Series&nbsp;A Preferred Stock
    pursuant to Section&nbsp;5(a) unless and until (x)&nbsp;a number
    of shares of Series&nbsp;B Preferred Stock equal to or greater
    than 80% of the sum of the total number of shares of
    Series&nbsp;B Preferred Stock (1)&nbsp;issued upon conversion of
    the Tranche I Notes (as defined in that certain Securities
    Purchase Agreement, dated as of March
    [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;],
    2003, by and between the Corporation and certain purchasers
    <I>(&#147;Securities Purchase Agreement&#148;)</I>), and
    (2)&nbsp;issued and, as of the date of such Change of Control,
    issuable under the Sanmina Notes (as defined in the Securities
    Purchase Agreement), and (3)&nbsp;without duplication, any other
    shares of Series&nbsp;B Preferred Stock issued in connection
    with the Third Closing (as defined in the Securities Purchase
    Agreement) and any other shares of Series&nbsp;B Preferred Stock
    issued on the Series&nbsp;B Original Issue Date (as defined in
    the Certificate of Designation of Series&nbsp;B Convertible
    Preferred Stock (the <I>&#147;Series&nbsp;B
    Certificate&#148;</I>)), have been either (1)&nbsp;redeemed,
    (2)&nbsp;submitted for redemption pursuant to a redemption
    notice under Section 5 of the Series&nbsp;B Certificate and/or
    (3)&nbsp;converted into Common Stock pursuant to Section&nbsp;3
    of the Series&nbsp;B Certificate, and (y)&nbsp;the Corporation
    has actually redeemed all shares of Series&nbsp;B Preferred
    Stock as to which a redemption notice has been submitted to the
    Corporation. In addition, notwithstanding anything to the
    contrary in this Section&nbsp;5, any redemption of the
    Series&nbsp;A Preferred Stock pursuant to this Section&nbsp;5(a)
    shall be subject to the redemption rights of any Pari Passu
    Preferred Stock. In addition, if the funds of the Corporation
    legally available for redemption of shares of Series&nbsp;A
    Preferred Stock are insufficient to redeem the total number of
    shares of Series A Preferred Stock submitted for redemption
    pursuant to Redemption Notices, those funds which are legally
    available will be used to redeem (subject to the rights of any
    Pari Passu Preferred Stock) the maximum possible number of whole
    shares ratably among the holders of such shares who have
    submitted Redemption Notices as of such date of determination.
    Any shares of Series&nbsp;A Preferred Stock not redeemed as
    described in this Section&nbsp;5(a)(iii) shall remain
    outstanding and, notwithstanding anything herein to the
    contrary, shall remain entitled to all rights and preferences
    otherwise provided herein.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(b)&nbsp;<I>Redemption at the Option of the
Corporation.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;The Corporation may redeem at any time,
    in whole or in part, the Series&nbsp;A Preferred Stock at a
    redemption price per share equal to the Liquidation Preference
    plus all accrued and unpaid dividends through the Redemption
    Date (the <I>&#147;Redemption Price&#148;</I>); provided,
    however, in no event shall the Corporation redeem any shares of
    Series&nbsp;A Preferred Stock while any shares of Senior
    Preferred Stock are outstanding. Any redemption effected
    pursuant to this Section (5)(b)(i) shall be made on a pro rata
    basis among the holders of the Series&nbsp;A Preferred Stock in
    proportion to the number of shares of Series&nbsp;A Preferred
    Stock then held by them.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-6
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Corporation
    shall provide written notice (the <I>&#147;Corporation
    Notice&#148;</I>) by first class mail postage prepaid, to each
    holder of record (determined at the close of business on the
    business day next preceding the day on which the Corporation
    Notice is given) of the Series&nbsp;A Preferred Stock to be
    redeemed, at the address last shown on the records of this
    Corporation for such holder, notifying such holder of the
    redemption to be effected, specifying the number of shares to be
    redeemed from such holder, specifying the date of redemption
    (the <I>&#147;Redemption Date&#148;</I>), the Redemption Price,
    the place at which payment may be obtained and calling upon such
    holder to surrender to the Corporation, in the manner and at the
    place designated, his, her or its certificate or certificates
    representing the shares to be redeemed; <I>provided that </I>the
    Redemption Date shall be not less than 10&nbsp;days from the
    date of the Corporation Notice. Except as provided in
    Section&nbsp;(5)(b)(iii), on or after the Redemption Date, each
    holder of Series&nbsp;A Preferred Stock to be redeemed shall
    surrender to the Corporation the certificate or certificates
    representing such shares, in the manner and at the place
    designated in the Corporation Notice, and thereupon the
    Redemption Price of such shares shall be payable to the order of
    the person whose name appears on such certificate or
    certificates as the owner thereof and each surrendered
    certificate shall be cancelled. In the event less than all the
    shares represented by any such certificate are redeemed, a new
    certificate shall be issued representing the unredeemed shares.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;From and after the Redemption Date,
    unless there shall have been a default in payment of the
    Redemption Price, all rights of the holders of shares of
    Series&nbsp;A Preferred Stock designated for redemption in the
    Corporation Notice as holders of Series&nbsp;A Preferred Stock
    (except the right to receive the Redemption Price without
    interest upon surrender of their certificate or certificates)
    shall cease with respect to such shares, and such shares shall
    not thereafter be transferred on the books of the Corporation or
    be deemed to be outstanding for any purpose whatsoever. If the
    funds of the Corporation legally available for redemption of
    shares of Series&nbsp;A Preferred Stock on any Redemption Date
    are insufficient to redeem the total number of shares of
    Series&nbsp;A Preferred Stock to be redeemed on such date, those
    funds which are legally available will be used to redeem the
    maximum possible number of such shares ratably among the holders
    of such shares to be redeemed based upon their holdings of
    Series&nbsp;A Preferred Stock. The shares of Series&nbsp;A
    Preferred Stock not redeemed shall remain outstanding and
    entitled to all the rights and preferences provided herein. At
    any time thereafter when additional funds of the Corporation are
    legally available for the redemption of shares of Series&nbsp;A
    Preferred Stock, such funds will immediately be used to redeem
    the balance of the shares which the Corporation has become
    obliged to redeem on any Redemption Date but which it has not
    redeemed.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(iv)&nbsp;<I>&#147;Change of Control&#148;</I>
shall mean: (i)&nbsp;the acquisition by any person or
&#147;group&#148; (as described in Rule&nbsp;13d-5(b)(1)
promulgated under the Securities Exchange Act of 1934), of
beneficial ownership of securities of the Corporation
representing more than 50% of the voting power of the
Corporation; or (ii)&nbsp;a merger or consolidation of the
Corporation or a sale of all or substantially all of the assets
of the Corporation in one or a series of related transactions,
unless following such transaction or series of transactions, the
holders of the Corporation&#146;s securities prior to the first
such transaction continue to hold at least a majority of the
voting power of the surviving entity or acquirer of such assets.
Notwithstanding anything to the contrary herein, in no event
shall the transactions consummated pursuant to the Securities
Purchase Agreement (including without limitation, the issuance
of secured convertible notes, the issuance of warrants and the
issuance of Series&nbsp;B Preferred Stock and the subsequent
exercise of warrants or conversion of convertible notes or
Series&nbsp;B Preferred Stock) constitute a &#147;Change of
Control&#148; for purposes of this Section&nbsp;5.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Section&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Notices.</I></FONT></B><FONT size="2">
All notices, requests, consents, demands and other
communications required or permitted under this Amended and
Restated Series&nbsp;A Preferred Stock Certificate of
Designation shall be in writing and shall be deemed to have been
duly given, made and received (a)&nbsp;when delivered against
receipt, (b)&nbsp;upon transmitter&#146;s confirmation of the
receipt of a facsimile transmission, which shall be followed by
an original sent otherwise in accordance with this
Section&nbsp;6, (c)&nbsp;upon confirmed delivery by a standard
overnight carrier, or (d)&nbsp;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 to the
Corporation at its principal executive office, or at such other
address of which the Corporation may notify the holders of
Series&nbsp;A Preferred Stock from time to time,
</FONT>

<P align="center"><FONT size="2">A-7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">or if to a holder of Series&nbsp;A Preferred
Stock or Common Stock, to such holder&#146;s address as shown by
the records of the Corporation.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Section&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Status
of Reacquired Shares.</I></FONT></B><FONT size="2"> Shares of
Series&nbsp;A Preferred Stock which have been issued and
converted, redeemed or reacquired in any manner shall (upon
compliance with any applicable provisions of the laws of the
State of Delaware) have the status of authorized and unissued
Preferred Stock undesignated as to series and may be
redesignated and reissued.
</FONT>

<P align="center"><FONT size="2">A-8
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>NOVATEL WIRELESS, INC.<BR>
SPECIAL MEETING OF STOCKHOLDERS<BR>
TO BE HELD ON MAY 2, 2003<BR>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned stockholder of Novatel Wireless, Inc., a Delaware
corporation, hereby acknowledges receipt of the Notice of Special Meeting of
Stockholders and Proxy Statement, each dated April&nbsp;15, 2003, and appoints Peter
Leparulo and Melvin Flowers, and each of them, the attorney, agent and proxy of
the undersigned, with full power of substitution, on behalf and in the name of
the undersigned, to represent the undersigned at the Special Meeting of
Stockholders of Novatel Wireless, Inc. to be held May&nbsp;2, 2003, at 2:00 p.m.
(local time) at Hyatt Regency La Jolla located at 3777 La Jolla Village Drive,
San Diego, California 92122 and at any adjournment or postponement thereof, and
to vote all shares of Series&nbsp;A Stock and Common Stock which the undersigned
would be entitled to vote if personally present on the matters set forth on the
reverse side of this Proxy Card:
</FONT>
<P><HR size="1" noshade color="#000000" style="border-style : dashed">






<P align="center"><FONT size="2"><B>APPROVAL OF THE PRIVATE PLACEMENT TRANSACTIONS<BR>
AND THE CHARTER AMENDMENTS:</B>
</FONT>

<P align="center"><FONT size="2">&#091;&nbsp;&nbsp;&nbsp;&#093;
&nbsp;&nbsp;&nbsp;FOR &nbsp;&nbsp;&nbsp;&#091;&nbsp;&nbsp;&nbsp;&#093;
&nbsp;&nbsp;&nbsp;AGAINST &nbsp;&nbsp;&nbsp;&#091;&nbsp;&nbsp;&nbsp;&#093;
&nbsp;&nbsp;&nbsp;ABSTAIN
</FONT>
<P align="left"><FONT size="2">IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT
THEREOF. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
</FONT>
<P align="left"><FONT size="2">THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR PROPOSAL 1.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="100%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">Date: _____________, 2003</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD align="center" valign="top"><HR size="1" color="#000000" noshade></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD valign="top"><HR size="1" color="#000000" noshade></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">NAME (PLEASE PRINT)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD valign="top"><HR size="1" color="#000000" noshade></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">CAPACITY</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">NOTE: If stock is jointly held, each owner should sign. Executors,
administrators, trustees, guardians, attorneys and corporate officers should
indicate their fiduciary capacity or full title when signing.
</FONT>
<P align="left"><FONT size="2">&#091; &#093; Please check if you have had a change of address and print your new address
and phone number below:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD align="center" width="100%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD valign="top"><HR size="1" color="#000000" noshade></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD valign="top"><HR size="1" color="#000000" noshade></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD valign="top"><HR size="1" color="#000000" noshade></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD<BR>
PROMPTLY IN THE ENCLOSED ENVELOPE</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2"></FONT>



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