P COM INC
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>4
<FILENAME>ex-10_1.txt
<TEXT>

                          SECURITIES PURCHASE AGREEMENT


         This  SECURITIES  PURCHASE  AGREEMENT  (the  "AGREEMENT"),  dated as of
October 3, 2003, is made by and among P-Com, Inc., a corporation organized under
the laws of the  State  of  Delaware  (the  "COMPANY"),  each of the  purchasers
(individually, a "PURCHASER" and collectively the "PURCHASERS") set forth on the
execution  pages  hereof  (each,  an  "EXECUTION   PAGE"  and  collectively  the
"EXECUTION PAGES"), and, solely with respect to Section 8 hereof, Drinker Biddle
& Reath LLP, a Pennsylvania limited liability  partnership ("ESCROW AGENT") with
its principal place of business in Philadelphia, Pennsylvania.

                                   BACKGROUND

         A. The Company and each  Purchaser are executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by the provisions of Regulation D ("REGULATION D"), as promulgated by the United
States  Securities and Exchange  Commission (the "SEC") under the Securities Act
of 1933, as amended (the "SECURITIES ACT").

         B. Upon the terms and conditions stated in this Agreement,  the Company
desires  to issue  and sell to the  Purchasers,  and the  Purchasers  desire  to
purchase,  an aggregate of Ten Thousand (10,000) units (the "UNITS"),  each Unit
consisting  of (i) one share of the  Company's  Series C  Convertible  Preferred
Stock,  par value $0.0001 per share (the  "PREFERRED  STOCK"),  which  Preferred
Stock shall have the rights, preferences and privileges set forth in the form of
Certificate of Designation,  Preferences and Rights attached hereto as Exhibit A
(the  "CERTIFICATE  OF  DESIGNATION")  and shall  initially be convertible  into
17,500  shares of the Company's  common stock,  par value $0.0001 per share (the
"COMMON  STOCK"),  per share of  Preferred  Stock,  (ii) a warrant,  in the form
attached  hereto as Exhibit B (the "SERIES C-1 WARRANT"),  to acquire  initially
7,000 shares of Common Stock,  and (iii) a warrant,  in the form attached hereto
as  Exhibit C (the  "SERIES  C-2  WARRANT,"  and,  together  with the Series C-1
Warrant,  the "WARRANTS") to acquire initially 7,000 shares of Common Stock. The
shares of Common Stock issuable upon conversion of or otherwise  pursuant to the
Preferred Stock are referred to herein as the "CONVERSION SHARES" and the shares
of Common Stock issuable upon exercise of or otherwise  pursuant to the Warrants
are  referred  to herein as the  "WARRANT  SHARES."  The  Preferred  Stock,  the
Warrants,  the  Conversion  Shares  and  the  Warrant  Shares  are  collectively
referenced  herein  as the  "SECURITIES"  and each of them may  individually  be
referred to herein as a "SECURITY."

         C. In  connection  with the  Closing  pursuant to this  Agreement,  the
parties hereto will execute and deliver a Registration Rights Agreement,  in the
form  attached  hereto  as  Exhibit  D (the  "REGISTRATION  RIGHTS  AGREEMENT"),
pursuant to which the Company has agreed to provide certain  registration rights
under the Securities Act and the rules and regulations  promulgated  thereunder,
and  applicable  state  securities  laws.  This  Agreement,  the  Certificate of
Designation, the Warrants and the Registration Rights Agreement are collectively
referred to herein as the "TRANSACTION DOCUMENTS."


<PAGE>

         NOW,  THEREFORE,  in consideration of the premises and mutual covenants
contained  herein and other good and  valuable  consideration,  the  receipt and
sufficiency  of which are hereby  acknowledged,  the Company and the  Purchasers
hereby agree as follows:

1. PURCHASE AND SALE OF SECURITIES.

         (a)  Purchase  and  Sale  of  Securities.  Subject  to  the  terms  and
conditions  hereof,  at the  Closing  (as defined in Section  1(b)  below),  the
Company shall issue and sell to each Purchaser,  and each  Purchaser,  severally
and not jointly, shall purchase from the Company, such number of Units as is set
forth on such  Purchaser's  Execution  Page,  for a  purchase  price (as to each
Purchaser,  the "PURCHASE  PRICE") per Unit equal to One Thousand  Seven Hundred
Fifty Dollars ($1,750).

         (b)  The  Closing.  Subject  to the  satisfaction  (or  waiver)  of the
conditions set forth in Sections 6 and 7 below,  the closing of the transactions
contemplated  hereby (the "CLOSING")  shall take place at the offices of Drinker
Biddle & Reath LLP at One Logan  Square,  18th & Cherry  Streets,  Philadelphia,
Pennsylvania 19103 at 12:00 noon,  Philadelphia,  Pennsylvania time, on the date
hereof,  or such  other  time or place as the  Company  and the  Purchasers  may
mutually  agree (the  "CLOSING  DATE").  In the event that the Company  does not
issue and sell all of the Units at the Closing, the Company shall be entitled to
issue and sell such number of units (the "ADDITIONAL UNITS") equal to the number
of unsold Units to  additional  Purchasers  at one or more  additional  closings
consummated  prior to the filing of the Registration  Statement  pursuant to the
Registration Rights Agreement,  in each case pursuant to terms of this Agreement
and provided  that each such  additional  Purchaser  executes an Execution  Page
hereto  and to each of the  other  Transaction  Documents  to  which  the  other
Purchasers  are a party,  and  thereby  agrees to be bound by and subject to the
terms and conditions  hereof and thereof.  All references  herein to Units shall
include any Additional  Units issued at any additional  closing held pursuant to
this Section 1(b).

2. PURCHASER'S REPRESENTATIONS AND WARRANTIES.

         Each Purchaser severally,  but not jointly,  represents and warrants to
the Company as follows:

         (a) Purchase for Own Account,  Etc. Such  Purchaser is  purchasing  the
Securities for such Purchaser's own account for investment purposes only and not
with a present  view  towards the public sale or  distribution  thereof,  except
pursuant  to sales that are exempt  from the  registration  requirements  of the
Securities Act and/or sales  registered  under the Securities Act. The Purchaser
has  substantial  experience  in evaluating  and investing in private  placement
transactions  of  securities  in companies  similar to the Company so that it is
capable of  evaluating  the merits and risks of its  investment  in the Company.
Such  Purchaser  understands  that such Purchaser must bear the economic risk of
this investment  indefinitely,  unless the Securities are registered pursuant to
the Securities Act and any  applicable  state  securities or blue sky laws or an
exemption  from such  registration  is  available,  and that the  Company has no
present intention of registering the resale of any such Securities other than as
contemplated by the Registration Rights Agreement.  Notwithstanding  anything in
this Section 2(a) to the contrary,  by making the  representations  herein, such
Purchaser  does not  agree  to hold  the  Securities  for any  minimum  or other

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<PAGE>

specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption from the
registration requirements under the Securities Act.

         (b)  Accredited  Investor  Status.  Such  Purchaser  is an  "Accredited
Investor" as that term is defined in Rule 501(a) of Regulation D.

         (c)  Reliance  on  Exemptions.  Such  Purchaser  understands  that  the
Securities  are  being  offered  and sold to such  Purchaser  in  reliance  upon
specific exemptions from the registration  requirements of United States federal
and state  securities  laws and that the  Company is relying  upon the truth and
accuracy  of,  and  such  Purchaser's   compliance  with,  the  representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the  availability  of such exemptions and the
eligibility of such Purchaser to acquire the Securities.

         (d) Information.  All materials relating to the business,  finances and
operations of the Company  (including the Company's most recent Annual Report on
Form 10-K and most recent Quarterly Report on Form 10-Q) and materials  relating
to the offer and sale of the Securities which have been  specifically  requested
by such  Purchaser or its counsel have been made available to such Purchaser and
its  counsel,  if  any.  Neither  such  inquiries  nor any  other  investigation
conducted by such Purchaser or its counsel or any of its  representatives  shall
modify,  amend  or  affect  such  Purchaser's  right  to rely  on the  Company's
representations  and  warranties  contained in Section 3 below.  Such  Purchaser
understands that such Purchaser's  investment in the Securities  involves a high
degree  of risk,  including  the risk of loss of its  entire  investment  in the
Securities.

         (e)  Governmental  Review.  Such Purchaser  understands  that no United
States federal or state agency or any other  government or  governmental  agency
has passed upon or made any recommendation or endorsement of the Securities.

         (f) Transfer or Resale.  Such Purchaser  understands that (i) except as
provided  in the  Registration  Rights  Agreement,  the  sale or  resale  of the
Securities have not been and are not being  registered  under the Securities Act
or any state securities  laws, and the Securities may not be transferred  unless
(A)  the  transfer  is  made  pursuant  to  and  as set  forth  in an  effective
registration statement under the Securities Act covering the Securities;  or (B)
such Purchaser  shall have delivered to the Company an opinion of counsel (which
opinion shall be in form,  substance and scope customary for opinions of counsel
in  comparable  transactions)  to the effect that the  Securities  to be sold or
transferred  may be sold or  transferred  pursuant  to an  exemption  from  such
registration;  or (C) sold  under and in  compliance  with Rule 144  promulgated
under the Securities Act (including any successor rule, "RULE 144"); or (D) sold
or  transferred  to an  affiliate  of  such  Purchaser  that  agrees  to sell or
otherwise transfer the Securities only in accordance with the provisions of this
Section 2(f) and that is an  Accredited  Investor;  and (ii) neither the Company
nor any other person is under any obligation to register such  Securities  under
the  Securities  Act or any state  securities  laws (other than  pursuant to the
terms of the Registration  Rights Agreement).  Notwithstanding  the foregoing or
anything else contained herein to the contrary, the Securities may be pledged as
collateral  in  connection  with a bona fide  margin  account  or other  lending

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<PAGE>

arrangement,  provided such pledge is consistent with applicable laws, rules and
regulations.

         (g) Legends.  Such Purchaser  understands  that the Preferred Stock and
Warrants and, until such time as the  Conversion  Shares and Warrant Shares have
been  registered  under the Securities Act (including  registration  pursuant to
Rule 416  thereunder) as contemplated by the  Registration  Rights  Agreement or
otherwise may be sold by such Purchaser under Rule 144, the certificates for the
Conversion  Shares  and  Warrant  Shares  may  bear  a  restrictive   legend  in
substantially the following form:

                  The securities  represented by this  certificate have not been
                  registered  under the Securities  Act of 1933, as amended,  or
                  the  securities  laws of any state of the United  States or in
                  any other jurisdiction.  The securities represented hereby may
                  not be  offered,  sold or  transferred  in the  absence  of an
                  effective  registration  statement  for the  securities  under
                  applicable securities laws unless offered, sold or transferred
                  pursuant  to an  available  exemption  from  the  registration
                  requirements of those laws.

         The Company shall,  within three  business days after any  registration
statement  covering  the  Securities   (including,   without   limitation,   the
Registration  Statement  contemplated by the Registration  Rights  Agreement) is
declared effective,  deliver to its transfer agent an opinion letter of counsel,
opining that at any time such registration statement is effective,  the transfer
agent shall issue, in connection with the issuance of the Conversion  Shares and
Warrant Shares,  certificates  representing  such Conversion  Shares and Warrant
Shares without the restrictive legend above, provided such Conversion Shares and
Warrant  Shares are to be sold  pursuant  to the  prospectus  contained  in such
registration  statement.  Upon receipt of such opinion,  the Company shall cause
the transfer agent to confirm,  for the benefit of the holders,  that no further
opinion of counsel is  required  at the time of  transfer in order to issue such
shares without such restrictive legend.

         The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by state securities laws, (i) the sale of
such Security is registered  under the Securities  Act  (including  registration
pursuant to Rule 416 thereunder);  (ii) such holder provides the Company with an
opinion of counsel,  in form,  substance  and scope  customary  for  opinions of
counsel in comparable transactions, to the effect that a public sale or transfer
of such Security may be made without  registration  under the Securities Act; or
(iii) such holder  provides the Company  with  reasonable  assurances  that such
Security  can be sold under Rule 144.  In the event the above  legend is removed
from any Security and thereafter the  effectiveness of a registration  statement
covering such Security is suspended or the Company  determines that a supplement
or  amendment  thereto is  required by  applicable  securities  laws,  then upon
reasonable advance written notice to such Purchaser the Company may require that
the  above  legend  be  placed on any such  Security  that  cannot  then be sold
pursuant  to an  effective  registration  statement  or under  Rule 144 and such
Purchaser shall  cooperate in the replacement of such legend.  Such legend shall
thereafter  be  removed  when such  Security  may again be sold  pursuant  to an
effective registration statement or under Rule 144.


                                       4
<PAGE>

         (h)  Authorization;  Enforcement.  This Agreement and the  Registration
Rights Agreement have been duly and validly  authorized,  executed and delivered
on  behalf  of such  Purchaser  and are valid  and  binding  agreements  of such
Purchaser enforceable against such Purchaser in accordance with their terms.

         (i)  Residency.  Such Purchaser is a resident of the  jurisdiction  set
forth under such  Purchaser's name on the Execution Page hereto executed by such
Purchaser.

         Each Purchaser's  representations and warranties made in this Article 2
are  made  solely  for  the  purpose  of  permitting   the  Company  to  make  a
determination  that  the  offer  and  sale of the  Securities  pursuant  to this
Agreement  comply with applicable U.S. federal and state securities laws and not
for  any  other  purpose.   Accordingly,  the  Company  may  not  rely  on  such
representations and warranties for any other purpose.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         Except as set forth on a Disclosure  Schedule executed and delivered by
the  Company  to  each  Purchaser  (the  "DISCLOSURE  SCHEDULE"),   the  Company
represents and warrants to each Purchaser as follows:

         (a) Organization and Qualification.  The Company and each of its direct
and indirect  subsidiaries  (collectively,  the "SUBSIDIARIES") is a corporation
duly organized and existing in good standing under the laws of the  jurisdiction
in which it is incorporated or organized,  and has the requisite corporate power
to own its properties and to carry on its business as now being  conducted.  The
Company and each of its Subsidiaries is duly qualified as a foreign  corporation
to do business and is in good standing in every jurisdiction in which the nature
of the business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect. For purposes of this
Agreement,  "MATERIAL  ADVERSE EFFECT" means any material  adverse effect on (i)
the Securities, (ii) the ability of the Company to perform its obligations under
this  Agreement  or the  other  Transaction  Documents  or (iii)  the  business,
operations,  properties, prospects, financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole.

         (b)  Authorization;  Enforcement.  (i) The  Company  has the  requisite
corporate  power and authority to enter into and perform its  obligations  under
this Agreement and the other Transaction Documents,  to issue and sell the Units
in  accordance  with the terms  hereof,  to issue  the  Conversion  Shares  upon
conversion  of the Preferred  Stock in accordance  with the terms thereof and to
issue the Warrant  Shares upon exercise of the Warrants in  accordance  with the
terms thereof;  (ii) the execution,  delivery and  performance of this Agreement
and the other Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby (including, without limitation,
the issuance of the Units and the issuance and  reservation  for issuance of the
Conversion Shares and Warrant Shares) have been duly authorized by the Company's
Board of Directors and no further consent or authorization  of the Company,  its
Board of Directors,  or any committee of the Board of Directors is required, and
(iii) this  Agreement  constitutes,  and,  upon  execution  and  delivery by the
Company of the other  Transaction  Documents,  such  Transaction  Documents will
constitute, valid and binding obligations of the Company enforceable against the

                                       5
<PAGE>

Company in  accordance  with their  terms.  Neither the  execution,  delivery or
performance by the Company of its obligations  under this Agreement or the other
Transaction   Documents,   nor  the  consummation  by  it  of  the  transactions
contemplated hereby or thereby (including,  without limitation,  the issuance of
the Units or the issuance or reservation  for issuance of the Conversion  Shares
or Warrant  Shares)  requires  any  consent or  authorization  of the  Company's
stockholders.

         (c)  Capitalization.  The  capitalization of the Company as of the date
hereof,  including the authorized capital stock, the number of shares issued and
outstanding, the number of shares issuable and reserved for issuance pursuant to
the Company's stock option plans, the number of shares issuable and reserved for
issuance  pursuant  to  securities  (other  than  the  Preferred  Stock  and the
Warrants)  exercisable or exchangeable  for, or convertible  into, any shares of
capital  stock  and the  number  of  shares to be  reserved  for  issuance  upon
conversion of the  Preferred  Stock and exercise of the Warrants is set forth in
Section  3(c) of the  Disclosure  Schedule.  All of such  outstanding  shares of
capital stock have been,  or upon  issuance in accordance  with the terms of any
such  exercisable,  exchangeable  or  convertible  securities  will be,  validly
issued, fully paid and non-assessable. No shares of capital stock of the Company
(including  the  Conversion  Shares  and the  Warrant  Shares)  are  subject  to
preemptive rights or any other similar rights of the stockholders of the Company
or any liens or  encumbrances.  Except  for the  Securities  and as set forth in
Section 3(c) of the Disclosure  Schedule,  (i) there are no outstanding options,
warrants,  scrip,  rights to subscribe to, calls or commitments of any character
whatsoever  relating to, or securities or rights convertible into or exercisable
or  exchangeable  for, any shares of capital  stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue  additional  shares of capital stock of the Company
or  any of  its  Subsidiaries,  nor  are  any  such  issuances  or  arrangements
contemplated,  (ii) there are no  agreements  or  arrangements  under  which the
Company or any of its  Subsidiaries  is obligated to register the sale of any of
its or their securities under the Securities Act (except the Registration Rights
Agreement);  (iii) there are no  outstanding  securities or  instruments  of the
Company which contain any  redemption  or similar  provisions,  and there are no
contracts,  commitments,  understandings or arrangements by which the Company is
or may become bound to redeem any security of the Company;  and (iv) the Company
does not have any shareholder rights plan, "poison pill" or other  anti-takeover
plans or similar  arrangements.  Section 3(c) of the  Disclosure  Schedule  sets
forth all of the securities or  instruments  issued by the Company or any of its
Subsidiaries  that  contain  anti-dilution  or similar  provisions  that will be
triggered  by, and all of the  resulting  adjustments  that will be made to such
securities  and  instruments  as a result of, the issuance of the  Securities in
accordance  with  the  terms  of this  Agreement,  the  Preferred  Stock  or the
Warrants.  The Company has  furnished to Burnham Hill  Partners  LLC,  placement
agent for the Securities,  true and correct copies of the Company's  Certificate
of   Incorporation   as  in  effect  on  the  date   hereof   ("CERTIFICATE   OF
INCORPORATION"),  the  Company's  Bylaws as in effect  on the date  hereof  (the
"BYLAWS"),  and  all  other  instruments  and  agreements  governing  securities
convertible  into or  exercisable  or  exchangeable  for  capital  stock  of the
Company.  The Company or one of its Subsidiaries  has the unrestricted  right to
vote,  and  (subject  to  limitations  imposed  by  applicable  law) to  receive
dividends and  distributions  on, all capital  securities of its Subsidiaries as
owned by the Company or any such Subsidiary.

         (d) Issuance of  Securities.  The Units are duly  authorized  and, upon
issuance in  accordance  with the terms of this  Agreement,  (i) will be validly
issued  and free from all taxes,  liens,  claims and  encumbrances  (other  than

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<PAGE>

restrictions  on transfer  contained  in this  Agreement or the  Certificate  of
Designation or Warrants),  (ii) will not be subject to preemptive rights, rights
of first refusal or other similar rights of  stockholders  of the Company or any
other person and (iii) will not impose personal liability on the holder thereof.
The Conversion  Shares and Warrant  Shares are duly  authorized and reserved for
issuance,  and,  upon  conversion  of the  Preferred  Stock and  exercise of the
Warrants in accordance with the terms thereof, (I) will be validly issued, fully
paid and non-assessable, and free from all taxes, liens, claims and encumbrances
(other than restrictions on transfer contained in this Agreement), (II) will not
be subject to preemptive rights, rights of first refusal or other similar rights
of  stockholders  of the  Company or any other  person and (III) will not impose
personal liability upon the holder thereof.

         (e) No  Conflicts.  The  execution,  delivery and  performance  of this
Agreement  and  the  other   Transaction   Documents  by  the  Company  and  the
consummation by the Company of the transactions  contemplated hereby and thereby
(including,  without limitation,  the issuance of the Units and the issuance and
reservation  for issuance of the Conversion  Shares and Warrant Shares) will not
(i) result in a violation of the Certificate of  Incorporation  or Bylaws,  (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both  would  become a  default)  under,  or give to others any rights of
termination,  amendment  (including,  without limitation,  the triggering of any
anti-dilution  provisions),  acceleration  or  cancellation  of, any  agreement,
indenture or  instrument  to which the Company or any of its  Subsidiaries  is a
party,  or (iii)  result in a violation  of any law,  rule,  regulation,  order,
judgment or decree  (including  United States federal and state securities laws,
rules  and  regulations  and  rules  and  regulations  of  any   self-regulatory
organizations  to which  either  the  Company  or its  securities  are  subject)
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its  Subsidiaries  is bound or affected  (except,
with  respect  to  clauses  (ii)  and  (iii),  for  such  conflicts,   defaults,
terminations, amendments, accelerations, cancellations and violations that would
not, individually or in the aggregate, have a Material Adverse Effect).

         (f) Compliance.  Neither the Company nor any of its  Subsidiaries is in
violation of its Certificate of  Incorporation,  Bylaws or other  organizational
documents,  and neither the  Company nor any of its  Subsidiaries  is in default
(and no event has  occurred  that with notice or lapse of time or both would put
the Company or any of its Subsidiaries in default) under, nor has there occurred
any event  giving  others  (with  notice or lapse of time or both) any rights of
termination,   amendment,   acceleration  or  cancellation  of,  any  agreement,
indenture or  instrument  to which the Company or any of its  Subsidiaries  is a
party.  The  businesses  of the  Company  and its  Subsidiaries  are  not  being
conducted, and shall not be conducted so long as any Purchasers (or any of their
respective  affiliates)  own any of the  Securities,  in  violation  of any law,
ordinance  or  regulation  of  any  governmental  entity,  except  for  possible
violations  the sanctions  for which either singly or in the aggregate  have not
had and would not have a Material Adverse Effect.  Neither the Company,  nor any
of its Subsidiaries,  nor any director, officer, agent, employee or other person
acting on behalf of the  Company  or any  Subsidiary  has,  in the course of his
actions  for, or on behalf of, the  Company,  used any  corporate  funds for any
unlawful contribution,  gift,  entertainment or other unlawful expenses relating
to  political  activity,  made any direct or  indirect  unlawful  payment to any
foreign or  domestic  government  official  or employee  from  corporate  funds,
violated  or is in  violation  of any  provision  of the  U.S.  Foreign  Corrupt
Practices Act of 1977, or made any bribe,  rebate,  payoff,  influence  payment,
kickback  or other  unlawful  payment  to any  foreign  or  domestic  government
official or employee. The Company and its Subsidiaries possess all certificates,

                                       7
<PAGE>

authorizations and permits issued by the appropriate federal,  state, provincial
or  foreign  regulatory  authorities  that are  material  to the  conduct to its
business,  and neither the Company nor any of its  Subsidiaries has received any
notice of  proceeding  relating to the  revocation or  modification  of any such
certificate, authorization or permit.

         (g) SEC Documents,  Financial Statements.  Since December 31, 1998, the
Company has timely  filed  (within  applicable  extension  periods) all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "EXCHANGE  ACT") (all of the foregoing  filed prior to the
date hereof and all  exhibits  included  therein and  financial  statements  and
schedules  thereto and documents  incorporated  by reference  therein,  the "SEC
Documents").  The Company has delivered or made available to each Purchaser true
and complete copies of the SEC Documents.  As of their respective dates, the SEC
Documents  complied  in all  material  respects  with  the  requirements  of the
Exchange  Act or the  Securities  Act,  as the case may be,  and the  rules  and
regulations of the SEC promulgated  thereunder  applicable to the SEC Documents,
and  none of the SEC  Documents,  at the  time  they  were  filed  with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated  therein or necessary in order to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  None of the  statements  made in any such SEC  Documents is, or has
been,  required to be amended or updated under  applicable  law (except for such
statements as have been amended or updated in  subsequent  filings made prior to
the date hereof). As of their respective dates, the financial  statements of the
Company  included  in the SEC  Documents  complied  as to  form in all  material
respects with  applicable  accounting  requirements  and the published rules and
regulations  of  the  SEC  applicable  with  respect  thereto.   Such  financial
statements  have  been  prepared  in  accordance  with U.S.  generally  accepted
accounting  principles  ("GAAP"),   consistently  applied,  during  the  periods
involved (except as may be otherwise  indicated in such financial  statements or
the notes thereto or, in the case of unaudited interim statements, to the extent
they may not include  footnotes or may be condensed or summary  statements)  and
fairly present in all material respects the consolidated  financial  position of
the Company and its  consolidated  Subsidiaries  as of the dates thereof and the
consolidated  results of their  operations  and cash flows for the periods  then
ended  (subject,  in the case of unaudited  statements,  to immaterial  year-end
audit  adjustments).  Except as set  forth in the  financial  statements  of the
Company included in the Select SEC Documents (as defined below), the Company has
no liabilities,  contingent or otherwise, other than (i) liabilities incurred in
the  ordinary  course  of  business  subsequent  to the  date of such  financial
statements and (ii) obligations under contracts and commitments  incurred in the
ordinary  course of business and not required under GAAP to be reflected in such
financial  statements,  which liabilities and obligations referred to in clauses
(i)  and  (ii),  individually  or in the  aggregate,  are  not  material  to the
financial  condition or operating  results of the Company.  For purposes of this
Agreement,  "SELECT SEC DOCUMENTS"  means the Company's (A) Proxy  Statement for
its 2003  Annual  Meeting,  (B) Annual  Report on Form 10-K for the fiscal  year
ended  December  31,  2002 (C)  Quarterly  Reports  on Form 10-Q for the  fiscal
quarters  ended March 31, 2003 and June 30, 2003 and (D) all Current  Reports on
Form 8-K filed since December 31, 2002.

         (h) Absence of Certain Changes. Since December 31, 2002, there has been
no material adverse change and no material adverse  development in the business,

                                       8
<PAGE>

properties,  operations, prospects, financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole. The Company has not taken
any steps,  and does not currently  expect to take any steps, to seek protection
pursuant to any bankruptcy or  receivership  law, nor does the Company or any of
its  Subsidiaries  have any  knowledge or reason to believe  that its  creditors
intend to  initiate  involuntary  bankruptcy  proceedings  with  respect  to the
Company or any of its Subsidiaries.

         (i) Transactions With Affiliates.  None of the officers,  directors, or
employees of the Company or any of its  Subsidiaries is presently a party to any
transaction with the Company or any of its Subsidiaries (other than for ordinary
course services  solely in their capacity as officers,  directors or employees),
including  any  contract,  agreement  or  other  arrangement  providing  for the
furnishing  of  services  to or by,  providing  for  rental of real or  personal
property  to or  from,  or  otherwise  requiring  payments  to or from  any such
officer,  director or employee or any corporation,  partnership,  trust or other
entity  in which  any such  officer,  director,  or  employee  has an  ownership
interest of five percent or more or is an officer, director, trustee or partner.

         (j)  Absence  of  Litigation.  Except as  disclosed  in the  Select SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board, government agency,  self-regulatory  organization
or body  (including,  without  limitation,  the SEC)  pending or  affecting  the
Company,  any of its  subsidiaries,  or any of  their  respective  directors  or
officers in their capacities as such.. To the knowledge of the Company or any of
its  subsidiaries,  there  are no  actions,  suits,  proceedings,  inquiries  or
investigations  before  or  by  any  court,  public  board,  government  agency,
self-regulatory  organization or body (including,  without limitation,  the SEC)
threatened  against  the  Company,  any of  its  subsidiaries,  or any of  their
respective  directors  or  officers  in  their  capacities  as such,  which,  if
determined  adversely,  could, either  individually or in the aggregate,  have a
Material  Adverse  Effect.  There are no facts  which,  if known by a  potential
claimant or  governmental  authority,  could give rise to a claim or  proceeding
which,  if asserted or conducted with results  unfavorable to the Company or any
of its  subsidiaries,  could  reasonably be expected to have a Material  Adverse
Effect.

         (k)  Intellectual  Property.  Each of the Company and its  Subsidiaries
owns or is duly licensed (and, in such event,  has the unfettered right to grant
sublicenses)  to use all patents,  patent  applications,  trademarks,  trademark
applications,  trade names, service marks,  copyrights,  copyright applications,
licenses, permits, inventions,  discoveries,  processes, scientific,  technical,
engineering and marketing  data,  object and source codes,  know-how  (including
trade  secrets  and  other  unpatented   and/or   unpatentable   proprietary  or
confidential  information,  systems or procedures)  and other similar rights and
proprietary knowledge (collectively,  "INTELLECTUAL PROPERTY") necessary for the
conduct of its business as now being conducted and as presently  contemplated to
be conducted in the future (collectively,  the "COMPANY INTELLECTUAL PROPERTY").
Section  3(k) of the  Disclosure  Schedule  sets  forth  a list of all  material
Company Intellectual  Property owned and/or used by the Company in its business.
Neither  the  Company  nor any  Subsidiary  of the  Company  infringes  or is in
conflict  with any right of any other  person  with  respect to any third  party
Intellectual  Property.  Neither  the Company  nor any of its  Subsidiaries  has
received  written notice of any pending  conflict with or infringement  upon any
third  party  Intellectual  Property.   Neither  the  Company  nor  any  of  its
Subsidiaries has entered into any consent agreement,  indemnification agreement,
forbearance  to sue or settlement  agreement with respect to the validity of the
Company's  or  its  Subsidiaries'  ownership  of or  right  to use  its  Company
Intellectual  Property and there is no reasonable basis for any such claim to be

                                       9
<PAGE>

successful.  The Company Intellectual  Property are valid and enforceable and no
registration relating thereto has lapsed,  expired or been abandoned or canceled
or is the subject of  cancellation  or other  adversarial  proceedings,  and all
applications  therefor  are  pending and in good  standing.  The Company and its
Subsidiaries  have complied,  in all material  respects,  with their  respective
contractual  obligations  relating to the protection of the Company Intellectual
Property used pursuant to licenses.  No person is infringing on or violating the
Company Intellectual Property owned or used by the Company or its Subsidiaries.

         (l) Title.  The Company and its  Subsidiaries  have good and marketable
title in fee simple to all real property and good and merchantable  title to all
personal  property owned by them that is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as do not  materially  affect the value of such property and
do not  materially  interfere  with the use made and proposed to be made of such
property by the Company and its  Subsidiaries.  Any real property and facilities
held under  lease by the  Company  and its  Subsidiaries  are held by them under
valid,  subsisting  and  enforceable  leases  with  such  exceptions  as are not
material and do not  materially  interfere  with the use made and proposed to be
made of such property and buildings by the Company and its Subsidiaries.

         (m) Tax Status.  Except as set forth in the Select SEC  Documents,  the
Company  and  each of its  Subsidiaries  has  made or filed  all  foreign,  U.S.
federal, state,  provincial and local income and all other tax returns,  reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its  Subsidiaries  has set aside
on its books  provisions  reasonably  adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental  assessments and
charges  that are  material  in amount,  shown or  determined  to be due on such
returns,  reports and  declarations,  except those being contested in good faith
and has set aside on its books provisions reasonably adequate for the payment of
all taxes for periods  subsequent to the periods to which such returns,  reports
or declarations  apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any  jurisdiction,  and the officers of the
Company  know of no basis for any such claim.  The  Company  has not  executed a
waiver with respect to any statute of limitations  relating to the assessment or
collection of any foreign,  federal, state, provincial or local tax. None of the
Company's tax returns is presently being audited by any taxing authority.

         (n) Key Employees. Each of the Company's directors and officers and any
Key Employee (as defined below) is currently serving the Company in the capacity
disclosed in the Select SEC Documents. No Key Employee is, or is now expected to
be,  in   violation   of  any  material   term  of  any   employment   contract,
confidentiality,    disclosure    or    proprietary    information    agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each Key Employee does not subject the
Company or any of its Subsidiaries to any material liability with respect to any
of the foregoing  matters.  No Key Employee has, to the knowledge of the Company
and its  Subsidiaries,  any intention to terminate or limit his employment with,
or  services  to, the  Company or any of its  Subsidiaries,  nor is any such Key
Employee subject to any constraints which would cause such employee to be unable
to devote  his full time and  attention  to such  employment  or  services.  For
purposes of this  Agreement,  "KEY EMPLOYEE" means the persons listed in Section
3(n) of the  Disclosure  Schedule and any individual who assumes or performs any
of the duties of a Key Employee.


                                       10
<PAGE>

         (o)   Employee   Relations.   (i)  No   application   or  petition  for
certification  of a  collective  bargaining  agent  is  pending  and none of the
employees of Company or any of its  Subsidiaries are or have been represented by
any  union or other  bargaining  representative  and no union has  attempted  to
organize any group of the  Company's  employees,  and no group of the  Company's
employees has sought to organize themselves into a union or similar organization
for the purpose of  collective  bargaining.  The  Company  and its  Subsidiaries
believe that their  relations with their  employees are good;  (ii) no executive
officer (as  defined in Rule  501(f) of the  Securities  Act) has  notified  the
Company  that such officer  intends to leave the Company or otherwise  terminate
such  officer's  employment  with the  Company;  and (iii) the  Company  and its
Subsidiaries  are in  compliance  with all  federal,  state and  local  laws and
regulations and, to the Company's  knowledge,  all foreign laws and regulations,
in  each  case  respecting  employment  and  employment  practices,   terms  and
conditions  of  employment  and wages and hours,  except where  failure to be in
compliance  would not,  either  individually  or in the  aggregate,  result in a
Material Adverse Effect.

         (p) Insurance.  The Company and each of its  Subsidiaries  has in force
fire,  casualty,  product liability and other insurance policies,  with extended
coverage,  sufficient  in  amount  to allow it to  replace  any of its  material
properties  or assets which might be damaged or destroyed or sufficient to cover
liabilities to which the Company may reasonably  become subject,  and such types
and amounts of other insurance with respect to its business and  properties,  on
both a per  occurrence and an aggregate  basis,  as are  customarily  carried by
persons  engaged in the same or similar  business as the Company.  No default or
event has occurred that could give rise to a default under any such policy.

         (q)  Environmental  Matters.  There is no  environmental  litigation or
other  environmental  proceeding  pending  or  threatened  by  any  governmental
regulatory  authority  or others  with  respect  to the  current  or any  former
business of the Company or any of its  Subsidiaries  or any partnership or joint
venture  currently  or at any time  affiliated  with the  Company  or any of its
Subsidiaries.  No state of facts exists as to environmental matters or Hazardous
Substances  (as defined  below) that  involves the  reasonable  likelihood  of a
material capital  expenditure by the Company or any of its Subsidiaries that may
otherwise have a Material  Adverse  Effect.  No Hazardous  Substances  have been
treated,  stored or disposed of, or otherwise deposited, in or on the properties
owned or leased by the Company or any of its  Subsidiaries or by any partnership
or joint venture  currently or at any time affiliated with the Company or any of
its  Subsidiaries  in  violation  of  any  applicable  environmental  laws.  The
environmental  compliance  programs of the Company and each of its  Subsidiaries
comply in all respects with all environmental  laws,  whether foreign,  federal,
state, provincial or local, currently in effect. For purposes of this Agreement,
"HAZARDOUS  SUBSTANCES" means any substance,  waste,  contaminant,  pollutant or
material that has been determined by any governmental authority to be capable of
posing a risk of injury to health, safety, property or the environment.

         (r)   Listing.   The  Company  is  not  in  violation  of  the  listing
requirements  of the OTC Electronic  Bulletin  Board (the  "BULLETIN  BOARD") on
which it trades,  does not reasonably  anticipate  that the Common Stock will be
delisted by the Bulletin Board for the foreseeable  future, and has not received
any  notice  regarding  the  possible  delisting  of the  Common  Stock from the

                                       11
<PAGE>

Bulletin Board. The Company has secured the listing of the Conversion Shares and
Warrant  Shares upon each  national  securities  exchange,  automated  quotation
system  or  over-the-counter  market  upon  which  shares  of  Common  Stock are
currently listed (subject to official notice of issuance).

         (s) [Intentionally Omitted.]

         (t)  Anti-Takeover  Provisions.  The Company and its board of directors
have taken all necessary  action,  if any, in order to render  inapplicable  any
control share  acquisition,  business  combination,  poison pill  (including any
distribution under a rights agreement) or other similar anti-takeover  provision
under  its  Certificate  of  Incorporation  or  the  laws  of the  state  of its
incorporation  which is or could become  applicable to any Purchaser as a result
of  the  transactions   contemplated  by  this  Agreement,   including   without
limitation, the Company's issuance of the Securities and any and all Purchaser's
ownership  of the  Securities.  Except  as  specifically  contemplated  by  this
Agreement,  the  Company  is not  required  to  obtain  any  consent,  approval,
authorization or order of, or make any filing or registration with, any court or
governmental  agency or any regulatory or self-regulatory  agency or other third
party in order for it to  execute,  deliver  or perform  any of its  obligations
under this Agreement or any of the other Transaction Documents,  in each case in
accordance with the terms hereof or thereof.

         (u)   Acknowledgment   Regarding  Each  Purchaser's   Purchase  of  the
Securities.  The Company  acknowledges  and agrees that each Purchaser is acting
solely in the capacity of arm's length  purchaser with respect to this Agreement
and the other Transaction Documents and the transactions contemplated hereby and
thereby,  and that no  Purchaser  is (i) an officer or director of the  Company,
(ii)  an  "affiliate"  of the  Company  (as  defined  in Rule  144)  or  (iii) a
"beneficial  owner" of more than 5% of the Common Stock (as defined for purposes
of Rule 13d-3 of the Exchange Act).  The Company  further  acknowledges  that no
Purchaser  is acting as a financial  advisor or  fiduciary of the Company (or in
any similar  capacity) with respect to this  Agreement or the other  Transaction
Documents and the transactions  contemplated hereby and thereby,  and any advice
given by a Purchaser or any of its  representatives or agents in connection with
this  Agreement  or  the  other  Transaction   Documents  and  the  transactions
contemplated  hereby  and  thereby  is  merely  incidental  to such  Purchaser's
purchase of the  Securities.  The Company  further  represents to each Purchaser
that  the  Company's  decision  to  enter  into  this  Agreement  and the  other
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.

         (v) No General Solicitation or Integrated Offering. Neither the Company
nor any distributor  participating  on the Company's  behalf in the transactions
contemplated  hereby (if any) nor any person acting for the Company, or any such
distributor,  has conducted any "general  solicitation" (as such term is defined
in Regulation  D) with respect to any of the  Securities  being offered  hereby.
Neither the Company nor any of its  affiliates,  nor any person acting on its or
their  behalf,  has  directly  or  indirectly  made any  offers  or sales of any
security or solicited any offers to buy any security  under  circumstances  that
would require  registration  of the  Securities  being offered  hereby under the
Securities  Act or cause this offering of  Securities to be integrated  with any
prior offering of securities of the Company for purposes of the Securities  Act,
which result of such integration would require registration under the Securities
Act, or any applicable stockholder approval provisions.


                                       12
<PAGE>

         (w) No Brokers. The Company has taken no action that would give rise to
any claim by any  person for  brokerage  commissions,  finder's  fees or similar
payments  by any  Purchaser  relating  to  this  Agreement  or the  transactions
contemplated hereby.

         (x)  Acknowledgment  Regarding  Securities.  The  number of  Conversion
Shares issuable upon conversion of the Preferred Stock and the number of Warrant
Shares   issuable  upon  exercise  of  the  Warrants  may  increase  in  certain
circumstances.  The Company's  directors and executive officers have studied and
fully understand the nature of the Securities being sold hereunder.  The Company
acknowledges  that its obligation to issue Conversion  Shares upon conversion of
the Preferred  Stock in accordance with the terms thereof and the Warrant Shares
upon the  exercise  of the  Warrants  in  accordance  with the terms  thereof is
absolute and  unconditional,  regardless  of the dilution that such issuance may
have on the ownership  interests of other  stockholders  and the availability of
remedies provided for in any of the Transaction  Documents relating to a failure
or refusal to issue  Conversion  Shares or Warrant Shares.  Taking the foregoing
into account,  the Company's Board of Directors has determined in its good faith
business  judgment that the issuance of the Units hereunder and the consummation
of the other transactions  contemplated  hereby are in the best interests of the
Company and its stockholders.

         (y) Disclosure.  All information  relating to or concerning the Company
and/or any of its  Subsidiaries  set forth in this  Agreement or provided to the
Purchasers  pursuant  to Section  2(d)  hereof or  otherwise  by the  Company in
connection with the transactions  contemplated hereby is true and correct in all
material  respects  and the Company has not omitted to state any  material  fact
necessary in order to make the  statements  made herein or therein,  in light of
the  circumstances  under  which they were  made,  not  misleading.  No event or
circumstance  has  occurred  or  exists  with  respect  to  the  Company  or its
Subsidiaries or their respective businesses,  properties,  prospects, operations
or  financial  conditions,  which has not been  publicly  disclosed  but,  under
applicable  law,  rule or  regulation,  would be required to be disclosed by the
Company in a  registration  statement  filed on the date  hereof by the  Company
under the  Securities  Act with respect to a primary  issuance of the  Company's
securities.

4. COVENANTS.

         (a) Best Efforts.  The parties shall use their  respective best efforts
timely to satisfy each of the  conditions  described in Sections 6 and 7 of this
Agreement.

         (b) Form D: Blue Sky Laws. The Company shall file with the SEC a Form D
with respect to the Securities as required under Regulation D and provide a copy
thereof to each Purchaser  promptly after such filing.  The Company shall, on or
before the  Closing  Date,  take such  action as the  Company  shall  reasonably
determine  is  necessary to qualify the  Securities  for sale to each  Purchaser
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United  States or obtain  exemption  therefrom,  and shall provide
evidence  of any  such  action  so taken  to each  Purchaser  on or prior to the
Closing Date.  The Company shall issue a press release  describing  the material
terms of the transactions  contemplated  hereby (the "PRESS RELEASE") as soon as
practicable  after the Closing,  but in no event later than the  commencement of
the first trading day  following  the Closing  Date.  The Press Release shall be
subject to prior review and comment by the Purchasers. Within two days after the
Closing  Date,  the Company shall file a Form 8-K with the SEC  concerning  this
Agreement and the transactions  contemplated hereby, which Form 8-K shall attach

                                       13
<PAGE>

this Agreement and its Exhibits as exhibits to such Form 8-K (the "8-K FILING").
From and after the 8-K Filing, the Company hereby acknowledges that no Purchaser
shall be in possession of any material nonpublic  information  received from the
Company, any of its Subsidiaries or any of its respective  officers,  directors,
employees or agents,  that is not disclosed in the 8-K Filing. The Company shall
not,  and  shall  cause  each of its  Subsidiaries  and its  and  each of  their
respective  officers,  directors,  employees  and  agents  not to,  provide  any
Purchaser with any material nonpublic  information  regarding the Company or any
of its  Subsidiaries  from and after the 8-K Filing without the express  written
consent of such Purchaser;  provided,  however,  that a Purchaser that exercises
its rights under  Section 4(o) hereof shall be deemed to have given such express
written  consent.  In the event of a breach  of the  foregoing  covenant  by the
Company,  any of its  Subsidiaries or any of its or their  respective  officers,
directors, employees and agents, in addition to any other remedy provided herein
or in the other Transaction  Documents, a Purchaser shall have the right to make
a public  disclosure,  in the form of a press release,  public  advertisement or
otherwise,  of such material nonpublic information without the prior approval by
the  Company,  its  Subsidiaries  or any of its or  their  respective  officers,
directors,  employees or agents.  No Purchaser  shall have any  liability to the
Company, its Subsidiaries or any of its or their respective officers, directors,
employees,  shareholders  or  agents  for any such  disclosure.  Subject  to the
foregoing,  neither the Company  nor any  Purchaser  shall issue any other press
releases  or any  other  public  statements  with  respect  to the  transactions
contemplated  hereby;  provided,  however,  that the Company  shall be entitled,
without the prior approval of any Purchaser,  to make any press release or other
public disclosure with respect to such transactions as is required by applicable
law and  regulations  (provided  that any such  press  release  or other  public
disclosure shall be subject to prior review and comment by the Purchasers).

         (c)  Reporting  Status.  So long  as any  Purchasers  (or any of  their
respective affiliates) beneficially own any of the Securities, the Company shall
timely  file all  reports  required  to be filed  with the SEC  pursuant  to the
Exchange  Act,  and the  Company  shall not  terminate  its  status as an issuer
required to file reports  under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would permit such termination. In addition, the
Company shall take all actions  necessary to meet the  "registrant  eligibility"
requirements set forth in the general  instructions to Form S-1 or any successor
form  thereto,  to continue to be eligible to register  the resale of its Common
Stock on a registration statement on Form S-1 under the Securities Act.

         (d) Use of Proceeds.  The Company  shall use the proceeds from the sale
and issuance of the Units for general  corporate  purposes and working  capital.
Such remaining proceeds shall not be used to (i) pay dividends; (ii) pay for any
increase  in  executive  compensation  or make any loan or other  advance to any
officer,  employee,  shareholder,  director or other  affiliate  of the Company,
without the express approval of the Board of Directors acting in accordance with
past practice; (iii) purchase debt or equity securities of any entity (including
redeeming the Company's  own  securities),  except for (A) loans in an aggregate
amount not exceeding $1,000,000 to SPEEDCOM Wireless Corporation,  (B) evidences
of indebtedness  issued or fully  guaranteed by the United States of America and
having a maturity  of not more than one year from the date of  acquisition,  (C)

                                       14
<PAGE>

certificates of deposit,  notes,  acceptances and repurchase agreements having a
maturity of not more than one year from the date of acquisition issued by a bank
organized in the United States having capital,  surplus and undivided profits of
at least $500,000,000,  (D) the highest-rated commercial paper having a maturity
of not more than one year from the date of  acquisition,  and (E) "Money Market"
fund  shares,  or money market  accounts  fully  insured by the Federal  Deposit
Insurance  Corporation and sponsored by banks and other financial  institutions,
provided that the  investments  consist  principally of the types of investments
described in clauses (B),  (C), or (D) above;  or (iv) make any  investment  not
directly related to the current business of the Company.

         (e)  Participation  Right;  Exchange  Right.  Subject  to the terms and
conditions  specified in this Section 4(e), the Purchasers shall have a right to
participate  with respect to the issuance or possible  issuance of (i) equity or
equity-linked  securities,  or (ii) debt which is convertible  into equity or in
which there is an equity component  ("ADDITIONAL  SECURITIES") on the same terms
and  conditions  as  offered  by the  Company  to the other  purchasers  of such
Additional  Securities.  Each time the Company  proposes to offer any Additional
Securities,  the Company shall make an offering of such Additional Securities to
each Purchaser in accordance with the following provisions:

                  (i) the Company shall  deliver a notice (the  "NOTICE") to the
Purchasers  stating  (A) its  bona  fide  intention  to  offer  such  Additional
Securities,  (B) the number of such Additional Securities to be offered, (C) the
price and  terms,  if any,  upon  which it  proposes  to offer  such  Additional
Securities,  and (D) the anticipated closing date of the sale of such Additional
Securities;

                  (ii)  until the first  anniversary  of the  Closing  Date,  by
written notification  received by the Company within five (5) trading days after
giving of the Notice,  any  Purchaser  may elect to  purchase or obtain,  at the
price and on the terms  specified  in the  Notice,  up to that  portion  of such
Additional  Securities that have a total purchase price equal to one half of the
Purchase Price paid by such Purchaser for Preferred Stock in accordance with the
terms hereof. The Company shall promptly, in writing, inform each Purchaser that
elects   to   purchase   all  of  the   Additional   Shares   available   to  it
("FULLY-EXERCISING  PURCHASER") of any other Purchaser's failure to do likewise.
During the five (5)  trading day period  commencing  after such  information  is
given, each Fully-Exercising  Purchaser shall be entitled to obtain that portion
of the Additional Securities for which the Purchasers were entitled to subscribe
but  that  were  not  subscribed  for by the  Purchasers  that is  equal  to the
proportion   that  the  Purchase   Price  paid  for  Preferred   Stock  by  such
Fully-Exercising  Purchaser  in  accordance  with the terms  hereof bears to the
total  Purchase  Price paid for Preferred  Stock by all Purchasers in accordance
with the terms hereof;

                  (iii)  notwithstanding  the provisions of subsection  4(e)(ii)
hereof, at any time after the Closing Date, by written notification  received by
the  Company  within  five (5)  trading  days after  giving of the  Notice,  any
Purchaser  may  elect to  purchase  or  obtain,  at the  price  and on the terms
specified in the Notice,  up to that portion of such Additional  Securities that
have a total  purchase  price equal to the Purchase Price paid by such Purchaser
for Preferred Stock in accordance with the terms hereof; provided, however, that
any  Purchaser  who elects to purchase  Additional  Securities  pursuant to this
Section  4(e)(iii) shall be required to surrender to the Company Preferred Stock
(or  Conversion  Shares issued on the  conversion of such  Preferred  Stock) for
which the  Purchase  Price paid by such  Purchaser  pursuant to the terms hereof

                                       15
<PAGE>

(plus any accrued but unpaid dividends on such Preferred Stock) equals the total
purchase  price of the Additional  Securities to be acquired by such  Purchaser,
and the Company  shall accept such  Preferred  Stock (or  Conversion  Shares) as
payment  in  full  for  such  Additional  Securities.  The  provisions  of  this
subsection   4(e)(iii)  shall  be  of  no  further  force  or  effect  upon  the
consummation of any transaction (other than those  transactions  contemplated by
this  Agreement)  resulting  in the  issuance of the  Company's  Common Stock in
connection  with a bona fide  offering at an offering  price per share (prior to
any underwriter's commissions and discounts) of not less than $0.12 (as adjusted
to reflect any stock dividends, distributions,  combinations,  reclassifications
and other similar transactions  effected by the Company in respect to its Common
Stock) that results in total net proceeds to the Company of at least $5,000,000;

                  (iv) if all  Additional  Securities  which the  Purchasers are
entitled to obtain pursuant to subsection  4(e)(ii) or 4(e)(iii) are not elected
to be obtained  as provided in  subsection  4(e)(ii) or  4(e)(iii)  hereof,  the
Company may,  during the 75-day period  following  the  expiration of the period
provided  in  subsection  4(e)(ii)  or  4(e)(iii)  hereof,  offer the  remaining
unsubscribed portion of such Additional Securities to any person or persons at a
price not less than, and upon terms no more favorable to the offeree than, those
specified  in the Notice.  If the Company does not  consummate  the sale of such
Additional  Securities within such period, the right provided hereunder shall be
deemed to be revived and such Additional Securities shall not be offered or sold
unless first reoffered to the Purchasers in accordance herewith;

                  (v) the participation  right in this Section 4(e) shall not be
applicable  to (A) the  issuance  or sale of shares of Common  Stock (or options
therefor) to employees,  officers,  directors, or consultants of the Company for
the primary  purpose of  soliciting  or retaining  their  employment  or service
pursuant to a stock option plan (or similar equity  incentive  plan) approved in
good  faith by the Board of  Directors,  (B) the  issuance  of  Common  Stock in
connection  with a bona fide  underwritten  public offering at an offering price
per share (prior to  underwriter's  commissions  and discounts) of not less than
$0.20 (as adjusted to reflect any stock dividends, distributions,  combinations,
reclassifications  and other  similar  transactions  effected  by the Company in
respect to its Common Stock) that results in total proceeds to the Company of at
least  $25,000,000,  (C) the issuance or sale of the  Preferred  Stock,  (D) the
issuance of  securities  in connection  with  mergers,  acquisitions,  strategic
business  partnerships or joint ventures  approved by the Board of Directors and
the  primary  purpose  of  which,  in the  reasonable  judgment  of the Board of
Directors,  is not to raise additional capital or (E) any issuance of securities
as to which the holders of a majority of the then  outstanding  Preferred  Stock
shall have  executed a written  waiver of the rights  contained  in this Section
4(e); and

                  (vi) the  participation  right set forth in this  Section 4(e)
may not be assigned or transferred, except that such right is assignable by each
Purchaser to any wholly-owned  subsidiary or parent of, or to any corporation or
entity  that  is,  within  the  meaning  of  the  Securities  Act,  controlling,
controlled by or under common control with, any such Purchaser.

         (f)  Financial  Information.  The  Company  shall send (via  electronic
transmission  or otherwise)  the  following  reports (or  notification  of their
availability  to the public) to the Purchasers  until the  Purchasers  transfer,
assign or sell all of their  Securities:  (i)  within  ten days after the filing
with the SEC, a copy of its Annual Report on Form 10-K, its Quarterly Reports on
Form 10-Q, its proxy  statements  and any Current  Reports on Form 8-K; and (ii)
within one day after release, copies of all press releases issued by the Company
or any of its Subsidiaries.


                                       16
<PAGE>

         (g) Reservation of Shares. The Company shall, at and after such time as
the  Company's   stockholders   have  approved  an  amendment  to  its  Restated
Certificate  of  Incorporation  to increase the number of  authorized  shares of
Common Stock from 69,000,000 to at least 600,000,000  shares (the  "AMENDMENT"),
but in no event later than ninety (90) days  following  the  Closing;  provided,
however,  that in the event the SEC  conducts a full  review of the  preliminary
proxy  statement  filed in  connection  with the Company  soliciting  proxies to
approve the Amendment,  such period may be extended, if reasonably necessary, by
an additional  thirty (30) days (the "AMENDMENT  DATE"),  reserve such number of
shares of its authorized but unissued shares of Common Stock to provide for full
conversion of the Preferred  Stock and the issuance of the Conversion  Shares in
connection therewith,  the full exercise of the Warrants and the issuance of the
Warrant  Shares  in  connection  therewith  and  as  otherwise  required  by the
Preferred   Stock,   the  Warrants  and  the   Registration   Rights   Agreement
(collectively,  the "ISSUANCE  OBLIGATIONS")  that is equal to (i) the aggregate
number of shares  of Common  Stock  issuable  in  satisfaction  of the  Issuance
Obligations   immediately   following  the   consummation  of  the  transactions
contemplated by this Agreement,  as adjusted to provide for Issuance Obligations
relating to any subsequent  issuances of Additional Units after the Closing Date
but  prior  to  the  filing  of  the  Registration  Statement  pursuant  to  the
Registration Rights Agreement, multiplied by (ii) 125%. In the event such number
of shares becomes insufficient to satisfy the Issuance Obligations,  the Company
shall take all necessary action to authorize and reserve such additional  shares
of Common  Stock  necessary  to  satisfy  the  Issuance  Obligations;  provided,
however,  that in the event the Company's  stockholders  shall not have approved
the  Amendment  by the  Amendment  Date,  then  the  Company  shall  pay to each
Purchaser  an  amount  equal to the  product  of (i) the  number  of  shares  of
Preferred Stock then held by such Purchaser multiplied by the per share purchase
price,  multiplied by (ii) two percent (2.0%) for each 30 day period (or portion
thereof)  after the Amendment Date and prior to the approval of the Amendment by
the  Company's  stockholders.  Each  Purchaser  hereby  agrees that it shall not
request any  Optional  Conversion  of the Series C Preferred  Stock  pursuant to
Article  IV of the  Certificate  of  Designation  prior to the  approval  of the
Amendment  by the  Company's  stockholders,  and any  failure of the  Company to
satisfy an Optional Conversion request prior to the approval of the Amendment by
the  Company's  stockholders  shall not be  deemed a  Conversion  Default  under
Article VI of the Certificate of Designation.

         (h) Price Adjustment  Approval.  The Company shall seek the approval of
its  stockholders  of the  anti-dilution  and  other  conversion/exercise  price
adjustments  contained  in the Series C  Preferred  Stock and the  Warrants,  as
required by Article VII, Section 8 of the Company's  Bylaws (such approval,  the
"PRICE ADJUSTMENT APPROVAL").  In the event the Company's stockholders shall not
have given the Price  Adjustment  Approval within ninety (90) days following the
Closing  Date;  provided,  however,  that in the event the SEC  conducts  a full
review of the  preliminary  proxy statement filed in connection with the Company
soliciting proxies to approve the Price Adjustment Approval, the such period may
be extended,  if reasonably  necessary,  by an additional  thirty (30) days (the
"ADJUSTMENT  APPROVAL  DATE"),  then the Company shall pay to each  Purchaser an
amount equal to the product of (i) the number of shares of Preferred  Stock then
held by such Purchaser multiplied by the per share purchase price, multiplied by
(ii) two percent  (2.0%) for each 30 day period (or portion  thereof)  after the
Adjustment  Approval Date and prior to the Company's  stockholders  granting the
Price Adjustment Approval. For the avoidance of doubt, any amounts payable under
this  Section  4(h) shall be in  addition  to,  and not in lieu of, any  amounts
payable under any other Section of this Agreement.


                                       17
<PAGE>

         (i) Listing. The Company shall maintain,  so long as any Purchasers (or
any of their respective affiliates) beneficially own any Securities, the listing
of all  Conversion  Shares and Warrant  Shares from time to time  issuable  upon
conversion of the Preferred  Stock and exercise of the Warrants on each national
securities exchange,  automated quotation system or electronic bulletin board on
which shares of Common Stock are currently listed. The Company will use its best
efforts to continue  the listing and trading of its Common Stock on the Bulletin
Board or the Nasdaq National Market (the "NATIONAL MARKET"),  the New York Stock
Exchange  (the  "NYSE") or the  American  Stock  Exchange  (the "AMEX") and will
comply in all respects with the reporting,  filing and other  obligations  under
the bylaws or rules of the National Association of Securities Dealers, Inc. (the
"NASD"), such exchanges,  or such electronic system, as applicable.  The Company
shall  promptly  provide to each  Purchaser  copies of any  notices it  receives
regarding  the  continued  eligibility  of the Common  Stock for  trading on the
Bulletin Board or on any securities  exchange or automated  quotation  system on
which  securities  of the same class or series  issued by the  Company  are then
listed or quoted, if any.

         (j) Corporate  Existence.  So long as any  Purchasers  (or any of their
respective  affiliates)  beneficially  own any  Securities,  the  Company  shall
maintain its corporate existence, and in the event of a merger, consolidation or
sale of all or  substantially  all of the  Company's  assets,  the Company shall
ensure that the  surviving or successor  entity in such  transaction  and, if an
entity  different  from the  successor  or  acquiring  entity,  the entity whose
securities into which the Common Stock shall become  convertible or exchangeable
in such transaction (i) assumes the Company's  obligations  under this Agreement
and the other Transaction  Documents and the agreements and instruments  entered
into in  connection  herewith  and  therewith  regardless  of whether or not the
Company would have had a sufficient  number of shares of Common Stock authorized
and  available  for  issuance  in  order to  effect  the  conversion  of all the
Preferred Stock and exercise in full of all Warrants  outstanding as of the date
of such  transaction and (ii) except in the event of a merger,  consolidation of
the Company  into any other  corporation,  or the sale or  conveyance  of all or
substantially all of the assets of the Company where the consideration  consists
solely of cash,  the surviving or successor  entity and, if an entity  different
from the successor or acquiring  entity,  the entity whose securities into which
the Common Stock shall become  convertible or exchangeable in such  transaction,
is a publicly traded corporation whose common stock is listed for trading on the
National Market, the NYSE or the AMEX.

         (k) No Integrated  Offerings.  The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
Securities  Act or cause this offering of the  Securities to be integrated  with
any other offering of securities by the Company for purposes of any  stockholder
approval provision applicable to the Company or its securities.

         (l) Legal  Compliance.  The Company  shall conduct its business and the
business  of its  Subsidiaries  in  compliance  with  all  laws,  ordinances  or
regulations of governmental entities applicable to such businesses, except where
the failure to do so would not have a Material Adverse Effect.


                                       18
<PAGE>

         (m)  Redemptions  and  Dividends.  So long as any Purchasers (or any of
their respective affiliates) beneficially own any Securities,  the Company shall
not,  without first obtaining the written  approval of the Purchasers  holding a
majority  of the shares of  Preferred  Stock  then  outstanding,  repurchase  or
redeem,  declare or pay any cash dividend or distribution on, or otherwise repay
or prepay on  account  of,  any  shares of  capital  stock or other  outstanding
indebtedness  of the  Company,  other than the  Preferred  Stock  (collectively,
"RESTRICTED  PAYMENTS").  Notwithstanding the foregoing,  so long as the Company
has not defaulted on its  obligations  to any Purchaser  under this Agreement or
any of the other  Transaction  Documents,  and no default  would result from the
payment of such Restricted  Payments,  the Company may make Restricted  Payments
without the written approval of the Purchasers  holding a majority of the shares
of Preferred  Stock then  outstanding;  provided,  however,  that the  aggregate
amount of Restricted  Payments made without such approval  shall not exceed,  in
the aggregate, $2,500,000

         (n) Information. So long as a Purchaser whose total Purchase Price paid
for Units under this Agreement equals or exceeds $100,000  beneficially owns any
Securities, the Company shall furnish to such Purchaser:

                  (i)  concurrently  with the filing  with the SEC of its annual
reports on Form 10-K, a  certificate  of the  President,  a Vice  President or a
senior  financial   officer  of  the  Company  stating  that,  based  upon  such
examination or  investigation  and review of this Agreement as in the opinion of
the signer is necessary to enable the signer to express an informed opinion with
respect  thereto,  neither  the Company  nor any of its  Subsidiaries  is or has
during such period been in default in the  performance  or  observance of any of
the terms,  covenants  or  conditions  hereof,  or, if the Company or any of its
Subsidiaries  shall  be or  shall  have  been in  default,  specifying  all such
defaults,  and the nature and period of existence  thereof,  and what action the
Company or such Subsidiary has taken, is taking or proposes to take with respect
thereto; and

                  (ii) the information the Company must deliver to any holder or
to any prospective transferee of Securities in order to permit the sale or other
transfer of such Securities pursuant to Rule 144A of the SEC or any similar rule
then in effect.

The Company  shall keep at its  principal  executive  office a true copy of this
Agreement  (as at the time in effect),  and cause the same to be  available  for
inspection  at such  office  during  normal  business  hours  by any  holder  of
Securities or any  prospective  transferee of Securities  designated by a holder
thereof.

         (o)  Inspection  of  Properties  and  Books.  So long as any  Purchaser
beneficially  owns any Securities,  such Purchaser and its  representatives  and
agents   (collectively,   the  "INSPECTORS")  shall  have  the  right,  at  such
Purchaser's  expense,  to visit and inspect any of the properties of the Company
and of its  Subsidiaries,  to examine  the books of account  and  records of the
Company and of its Subsidiaries, to make or be provided with copies and extracts
therefrom,  to discuss the affairs,  finances and accounts of the Company and of
its  Subsidiaries  with,  and to be  advised  as to the same by,  its and  their
officers,  employees and independent  public  accountants (and by this provision
the Company  authorizes such  accountants to discuss such affairs,  finances and
accounts, whether or not a representative of the Company is present) all at such
reasonable  times and intervals and to such reasonable  extent as the Purchasers
may desire; provided,  however, that each Inspector shall hold in confidence and
shall not make any disclosure (except to such Purchaser) of any such information

                                       19
<PAGE>

which the  Company  determines  in good faith to be  confidential,  and of which
determination the Inspectors are so notified,  unless (i) the disclosure of such
information is necessary to avoid or correct a  misstatement  or omission in any
Registration Statement filed pursuant to the Registration Rights Agreement, (ii)
the release of such information is ordered pursuant to a subpoena or other order
from a court  or  government  body of  competent  jurisdiction,  or  (iii)  such
information  has been made  generally  available  to the  public  other  than by
disclosure in violation of this or any other  agreement.  Each Purchaser  agrees
that it shall, upon learning that disclosure of such information is sought in or
by a court or  governmental  body of  competent  jurisdiction  or through  other
means, give prompt notice to the Company and allow the Company,  at its expense,
to  undertake  appropriate  action  to  prevent  disclosure  of,  or to obtain a
protective order for, the information deemed confidential.

         (p) Pledge of Securities.  The Company acknowledges and agrees that the
Securities may be pledged by any Purchaser in connection with a bona fide margin
agreement  or  other  loan  or  financing  arrangement  that is  secured  by the
Securities.  The pledge of Securities shall not be deemed to be a transfer, sale
or assignment of the Securities  hereunder,  and no Purchaser effecting a pledge
of Securities  shall be required to provide the Company with any notice  thereof
or otherwise make any delivery to the Company  pursuant to this Agreement or any
other  Transaction  Document.   The  Company  shall  execute  and  deliver  such
documentation  as  a  pledgee  of  the  Securities  may  reasonably  request  in
connection with a pledge of the Securities to such pledgee by a Purchaser.

         (q) Variable Securities. The Company shall not, in any manner, issue or
sell any rights,  warrants or options to subscribe for or purchase Common Stock,
or any other securities directly or indirectly  convertible into or exchangeable
or  exercisable  for Common  Stock,  at an  effective  conversion,  exchange  or
exercise  price  that  varies or may vary with the  market  price of the  Common
Stock,  including  by way of  one or  more  reset(s)  to any  fixed  price.

         (r)  Expenses.  At the  Closing,  the Company  shall pay to SDS Capital
Partners  ("SDS  CAPITAL"),  as  representative  of the  lead  investors  in the
transactions contemplated by this Agreement, reimbursement for the out-of-pocket
expenses  reasonably  incurred by SDS Capital,  its  affiliates and its or their
advisors in connection with the negotiation, preparation, execution and delivery
of this Agreement and the other  Transaction  Documents and the  consummation of
the transactions contemplated hereby and thereby, including, without limitation,
SDS Capital's and its  affiliates'  and advisors'  reasonable  due diligence and
attorneys' fees and expenses (the "EXPENSES"),  up to an aggregate amount not to
exceed  $90,000;  provided,  however,  that the Purchasers  affiliated  with SDS
Capital shall be permitted,  in their discretion,  to deduct an aggregate amount
equal to such  Expenses  from the  Purchase  Price  payable  by such  Purchasers
hereunder  and use such  amounts so deducted to  reimburse  SDS Capital for such
Expenses. In addition, from time to time thereafter,  upon SDS Capital's written
request  and to the extent  that the  Company  has not  already  reimbursed  SDS
Capital for Expenses  aggregating  $90,000  pursuant to this Section  4(r),  the
Company shall pay to SDS Capital such additional  Expenses,  if any, not covered
by such payment,  in each case to the extent reasonably incurred by SDS Capital,
its  affiliates  or its or their  advisors in connection  with the  negotiation,
preparation,  execution and delivery of this Agreement and the other Transaction
Documents  and the  consummation  of the  transactions  contemplated  hereby and
thereby.


                                       20
<PAGE>

5. TRANSFER AGENT INSTRUCTIONS.

         (a) Upon  conversion of the Preferred Stock or exercise of the Warrants
by any  person,  (i) if the DTC  Transfer  Conditions  (as  defined  below)  are
satisfied, the Company shall cause its transfer agent to electronically transmit
all Conversion Shares and Warrant Shares by crediting the account of such person
or its nominee with the  Depository  Trust Company  ("DTC")  through its Deposit
Withdrawal Agent Commission  system; or (ii) if the DTC Transfer  Conditions are
not  satisfied,  the Company  shall issue and deliver,  or instruct its transfer
agent to issue  and  deliver,  certificates  (subject  to the  legend  and other
applicable  provisions  hereof and the Certificate of Designation and Warrants),
registered  in the  name of  such  person  its  nominee,  physical  certificates
representing the Conversion  Shares and Warrant Shares,  as applicable.  Even if
the DTC Transfer Conditions are satisfied,  any person effecting a conversion of
Preferred  Stock or  exercising  Warrants may instruct the Company to deliver to
such person or its nominee  physical  certificates  representing  the Conversion
Shares and Warrant Shares,  as applicable,  in lieu of delivering such shares by
way of DTC Transfer.  For purposes of this Agreement,  "DTC TRANSFER CONDITIONS"
means that (A) the Company's  transfer  agent is  participating  in the DTC Fast
Automated   Securities  Transfer  program  and  (B)  the  certificates  for  the
Conversion  Shares or Warrant  Shares  required  to be  delivered  do not bear a
legend and the person effecting such conversion or exercise is not then required
to return such certificate for the placement of a legend thereon.

         (b)  The  Company   warrants  that  no  instruction   other  than  such
instructions  referred to in this Section 5, and stop transfer  instructions  to
give effect to Section 2(f) hereof in the case of the transfer of the Conversion
Shares or Warrant  Shares prior to  registration  of the  Conversion  Shares and
Warrant Shares under the Securities Act or without an exemption therefrom, shall
be given by the  Company to its  transfer  agent and that the  Securities  shall
otherwise be freely  transferable on the books and records of the Company as and
to the extent provided in this  Agreement.  Nothing in this Section shall affect
in any way the  Purchasers'  obligations and agreement set forth in Section 2(g)
hereof to resell the Securities pursuant to an effective  registration statement
or  under  an  exemption  from  the  registration   requirements  of  applicable
securities law.

         (c) If any Purchaser  provides the Company and the transfer  agent with
an opinion of counsel,  which opinion of counsel shall be in form, substance and
scope  customary  for  opinions of counsel in  comparable  transactions,  to the
effect that the Securities to be sold or transferred  may be sold or transferred
pursuant to an  exemption  from  registration,  or any  Purchaser  provides  the
Company with  reasonable  assurances that such Securities may be sold under Rule
144, the Company  shall permit the transfer  and, in the case of the  Conversion
Shares and Warrant Shares,  promptly instruct its transfer agent to issue one or
more  certificates  in such name and in such  denominations  as specified by the
Purchasers.

6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

         The obligation of the Company  hereunder to issue and sell the Units to
each  Purchaser  hereunder  is  subject  to the  satisfaction,  at or before the
Closing Date, of each of the following conditions as to such Purchaser, provided
that these  conditions  are for the Company's  sole benefit and may be waived by
the Company at any time in its sole discretion:


                                       21
<PAGE>

         (a) Each Purchaser shall have executed such Purchaser's  Execution Page
to this Agreement and each other Transaction Document to which such Purchaser is
a party and delivered the same to the Company.

         (b)  Each  Purchaser  shall  have  delivered  the full  amount  of such
Purchaser's Purchase Price in accordance with Section 8 hereof.

         (c) The  representations and warranties of each Purchaser shall be true
and correct as of the date when made and as of the  Closing  Date as though made
at that time  (except  for  representations  and  warranties  that speak as of a
specific date, which representations and warranties shall be true and correct as
of such date),  and such Purchaser shall have performed,  satisfied and complied
in all material respects with the covenants,  agreements and conditions required
by this Agreement to be performed,  satisfied or complied with by such Purchaser
at or prior to the Closing Date.

         (d) No statute,  rule,  regulation,  executive order,  decree,  ruling,
injunction,  action or proceeding shall have been enacted, entered,  promulgated
or endorsed by any court or governmental  authority of competent jurisdiction or
any self-regulatory  organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions  contemplated
by this Agreement.


                                       22
<PAGE>

7. CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE.

         The obligation of each Purchaser  hereunder (which obligations shall be
several,  and not joint) to purchase the Units for which it is subscribing  from
the Company hereunder is subject to the  satisfaction,  at or before the Closing
Date, of each of the following conditions, provided that such conditions are for
each Purchaser's  individual and sole benefit and may be waived by any Purchaser
as to such Purchaser at any time in such Purchaser's sole discretion:

         (a) The Company shall have executed such Purchaser's  Execution Page to
this  Agreement  and each other  Transaction  Document to which the Company is a
party and delivered executed originals of the same to such Purchaser.

         (b) The  Certificate of Designation  shall have been filed and accepted
for  filing  with the  Secretary  of State of the State of  Delaware  and a copy
thereof  certified by the Secretary of State of the State of Delaware shall have
been delivered to such Purchaser.

         (c) The Company shall have  delivered to such  Purchaser  duly executed
certificates  representing  the  Preferred  Stock and Warrants for the number of
Units being  purchased by such  Purchaser  (each in such  denominations  as such
Purchaser shall request), registered in such Purchaser's name.

         (d) The Common Stock shall be  authorized  for  quotation and listed on
the Bulletin  Board and trading in the Common  Stock (or on the  Bulletin  Board
generally) shall not have been suspended by the SEC or the Bulletin Board.

         (e) The representations and warranties of the Company shall be true and
correct as of the date when made and as of the  Closing  Date as though  made at
that time (except for representations and warranties that speak as of a specific
date, which  representations and warranties shall be true and correct as of such
date) and the  Company  shall have  performed,  satisfied  and  complied  in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing Date. Such Purchaser shall have received a certificate,  executed
by the Chief Executive  Officer of the Company after  reasonable  investigation,
dated  as of the  Closing  Date to the  foregoing  effect  and as to such  other
matters as may reasonably be requested by such Purchaser.

         (f) No statute,  rule,  regulation,  executive order,  decree,  ruling,
injunction,  action or proceeding shall have been enacted, entered,  promulgated
or endorsed by any court or governmental  authority of competent jurisdiction or
any self-regulatory  organization having authority over the matters contemplated
hereby which questions the validity of, challenges or prohibits the consummation
of, any of the transactions contemplated by this Agreement.

         (g) Such  Purchaser  shall have  received  an opinion of the  Company's
counsel, dated as of the Closing Date, in the form attached hereto as Exhibit E.

         (h) There shall have been no material  adverse  changes and no material
adverse  developments  in  the  business,  properties,   operations,  prospects,
financial   condition  or  results  of   operations   of  the  Company  and  its
Subsidiaries,  taken as a whole,  since the date hereof, and no information that
is  materially  adverse  to the  Company  and of  which  such  Purchaser  is not
currently aware shall come to the attention of such Purchaser.

         (i) Such  Purchaser  shall have  received a copy of  resolutions,  duly
adopted by the Board of Directors  of the Company,  which shall be in full force
and effect at the time of the Closing,  authorizing the execution,  delivery and
performance by the Company of this Agreement and the other Transaction Documents
and the consummation by the Company of the transactions  contemplated hereby and
thereby,  certified  as such by the  Secretary  or  Assistant  Secretary  of the
Company, and such other documents they reasonably request in connection with the
Closing.

8. ESCROW PROVISIONS.

         (a) Appointment of Escrow Agent.  The Company and each Purchaser hereby
jointly  appoint  Escrow  Agent  as  escrow  agent to hold  the  Purchase  Price
deposited into escrow with it pursuant to this Agreement (the "ESCROW DEPOSIT"),
and  Escrow  Agent  hereby  agrees  to hold the  Escrow  Deposit  in  escrow  in
accordance with the terms hereof and to perform its other duties hereunder.  The
Company and each Purchaser acknowledge that Escrow Agent is legal counsel to SDS
Capital and intends to continue to serve in that capacity in connection with any
matter related to this Agreement,  to the  arrangements and dealings between the
Company,  SDS Capital and each other  Purchaser and  otherwise.  The Company and
each Purchaser  hereby consents to such continued  representation,  including in
matters  adverse  to  them,  and  waive  any  claims  they may  have  that  such
representation  will  result in a conflict of  interest  or  otherwise.  Nothing
contained  herein shall in any way require  termination  of or otherwise  affect
Escrow Agent's relationship with SDS Capital or adversely affect, in any manner,
the attorney-client  privilege between Escrow Agent and SDS Capital with respect
to Escrow Agent's representation of SDS Capital.


                                       23
<PAGE>

         (b)  Deposit  of Escrow  Deposit.  On or before the date  hereof,  each
Purchaser  shall  transmit  the Escrow  Deposit to Escrow  Agent by federal wire
transfer of immediately  available U.S.  funds.  Subject to Section 8(d) hereof,
and until all of the Escrow  Deposit  shall have been  disbursed  as provided in
this  Agreement,  Escrow  Agent  shall  hold the Escrow  Deposit in an  interest
bearing  account  entitled  "Drinker  Biddle & Reath LLP as escrow  agent."  All
income earned on and other  proceeds of the Escrow Deposit shall be added to the
amount  thereof  and  distributed  in  accordance  with the terms  hereof.  Upon
distribution  to the  Company,  such  income  shall be  treated as income of the
Company for income tax purposes. Whenever required by this Agreement to disburse
any of the Escrow Deposit,  Escrow Agent shall liquidate sufficient  investments
to permit such disbursement to be made.

         (c)  Disposition of Escrow Deposit.  As soon as reasonably  practicable
following  receipt of written  instructions  from the Company  and Burnham  Hill
Partners LLC,  placement agent for the Securities,  along with duly executed and
delivered copies of each  Purchaser's  Execution Page to this Agreement and each
other  Transaction  Document to which such  Purchaser  is a party,  Escrow Agent
shall (a) deliver the Escrow  Deposit to the Company by federal wire transfer of
immediately  available U.S. funds in accordance with wire instructions  provided
by the Company and (b) subject to payment of Escrow  Agent's  expenses  and fees
pursuant to Section  8(f)  hereof,  deliver all  interest  accrued on the Escrow
Deposit to the Company by federal wire transfer of  immediately  available  U.S.
funds in accordance with wire  instructions  provided by the Company,  and, upon
such  deliveries,  Escrow  Agent  shall  be  fully  discharged  from any and all
obligations hereunder.  If written instructions regarding the disposition of the
Escrow  Deposit  and duly  executed  and  delivered  copies of each  Purchaser's
Execution  Page to this Agreement and each other  Transaction  Document to which
such  Purchaser  is a party are not  received  by Escrow  Agent  within five (5)
business days of the date hereof,  the Escrow Agent shall return the  applicable
portion of the Escrow Deposit to each Purchaser, along with such Purchaser's pro
rata share of any accrued interest thereon and, upon such delivery, Escrow Agent
shall be fully discharged from any and all obligations hereunder.

         (d) Resignation or Removal of Escrow Agent.  Escrow Agent may resign at
any time upon 10 days'  prior  notice to the  Company  and may be removed by the
mutual  consent of the Company and each  Purchaser upon 10 days' prior notice to
Escrow  Agent.  Prior to the  effective  date of the  resignation  or removal of
Escrow Agent or any successor escrow agent, the Company and the Purchasers shall
jointly appoint a successor escrow agent to hold the Escrow Deposit and any such
successor escrow agent shall execute and deliver to the predecessor escrow agent
an  instrument  accepting  such  appointment  and the  terms of this  Agreement.
Thereafter,  upon receipt of the Escrow Deposit from the predecessor agent, such
successor  agent  shall,  without  further  act,  become  vested with all of the
rights, powers and duties of the predecessor escrow agent as if originally named
herein, and such predecessor escrow agent shall be released from all obligations
and liability hereunder.  If no successor escrow agent is appointed prior to the
effective date of the  termination  or  resignation of the Escrow Agent,  Escrow
Agent  may:  (i)  file  an  interpleader   action  in  any  court  of  competent
jurisdiction  and deposit the Escrow  Deposit  with the clerk of such court,  or
(ii) deliver the Escrow Deposit to a bank with capital in excess of $100 million
which  executes  and  delivers to the  predecessor  escrow  agent an  instrument

                                       24
<PAGE>

accepting such  appointment  and the terms of this Agreement.  Thereafter,  upon
receipt of the Escrow Deposit from the predecessor  agent,  such successor agent
shall,  without  further act,  become vested with all of the rights,  powers and
duties of the predecessor  escrow agent as if originally named herein,  and such
predecessor  escrow agent shall be released from all  obligations  and liability
hereunder.

(e) Liability of Escrow Agent.

                  (i)  The  duties  of  Escrow  Agent   hereunder  are  entirely
administrative and not  discretionary.  Escrow Agent is obligated to act only in
accordance with this Agreement,  is authorized hereby to comply with any orders,
judgments  or  decrees of any court or  arbitration  panel  (whether  or not any
appeal  thereof is pending) and shall not incur any liability as a result of its
compliance with such instructions,  orders,  judgments or decrees.  Escrow Agent
may assume the due execution,  validity and  effectiveness of, and the truth and
accuracy of any  information  contained  in, any  instrument  or other  document
presented  to it  and  shall  not  have  any  obligation  to  inquire  into  the
authenticity or authorization thereof.

                  (ii) Escrow  Agent shall have no liability  under,  or duty to
inquire into, the terms and provisions of any other agreement between any of the
parties  hereto.  If any of the terms  and  provisions  of any  other  agreement
conflict  or are  inconsistent  with any of the  terms  and  provisions  of this
Agreement,  the terms and  provisions  of this  Agreement  in  respect of Escrow
Agent's rights and duties shall govern and control in all respects.

                  (iii) If Escrow  Agent shall be  uncertain as to its rights or
duties  hereunder,  it shall be entitled to refrain from taking any action other
than to keep all  property  held in  escrow  pursuant  hereto  until it shall be
directed  otherwise in a writing  signed by the Company and each Purchaser or by
an order of a court of competent jurisdiction. Alternatively, in such situation,
Escrow  Agent may in its sole  discretion,  deliver  and  interplead  the Escrow
Deposit,  together  with  any  interest  thereon,  into  a  court  of  competent
jurisdiction,  and, upon such delivery and interpleading,  Escrow Agent shall be
fully  discharged from any and all obligations and liability  hereunder.  Escrow
Agent may consult  with  counsel of its choice,  and shall not be liable for any
action taken,  suffered,  or omitted by it in accordance with the advice of such
counsel.  Escrow Agent shall not be required to institute  legal  proceedings of
any kind and shall not be required to defend any legal  proceedings which may be
instituted  against it in respect of the subject matter of this Agreement unless
requested to do so by another party hereto and  indemnified to its  satisfaction
against the costs and expenses of such defense.

                  (iv) The Company and each Purchaser hereby  irrevocably  waive
and covenant not to bring any suit, claim, demand or cause of action of any kind
which any or all may have to assert  against  Escrow  Agent (or any  partner  or
employee  of Escrow  Agent)  arising  out of or  relating  to the  execution  or
performance by Escrow Agent of this Agreement now or in the future,  unless such
suit, claim,  demand or cause of action is based upon the willful  misconduct of
Escrow Agent or Escrow  Agent's  gross  negligence  in its failure to perform an
express  obligation  hereunder.  Escrow  Agent  shall  be  indemnified  and held
harmless  against  any and  all  liabilities,  including  judgments,  costs  and
reasonable  counsel  fees,  for anything  done or omitted by Escrow Agent in the
performance  of  this  Escrow  Agreement  except  as a  result  of  its  willful
misconduct or gross  negligence in its failure to perform an express  obligation
hereunder.  All such reimbursements and indemnifications  shall be the joint and
several obligation of the Company and each Purchaser.

                                       25
<PAGE>

         (f) Expenses of Escrow Agent. Escrow Agent's expenses and fees shall be
deducted  from  any  interest  accrued  on  the  Escrow  Deposit  prior  to  the
distribution  of such accrued  interest to the Company in  accordance  with this
Section  8. Any  expenses  and fees of Escrow  Agent in  excess  of the  accrued
interest on the Escrow  Deposit shall be the  responsibility  of the Company and
shall be paid promptly upon receipt of an invoice from Escrow Agent.

9. GOVERNING LAW; MISCELLANEOUS.

         (a) Governing Law;  Jurisdiction.  This Agreement  shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
contracts  made and to be performed  in the State of  Delaware.  The Company and
each Purchaser  irrevocably consent to the exclusive  jurisdiction of the United
States  federal courts and the state courts located in the County of New Castle,
State of  Delaware,  in any suit or  proceeding  based on or arising  under this
Agreement  and  irrevocably  agree  that all  claims in  respect of such suit or
proceeding may be determined in such courts. The Company  irrevocably waives the
defense of an inconvenient  forum to the maintenance of such suit or proceeding.
The Company  further  agrees that service of process upon the Company  mailed by
first class mail shall be deemed in every respect  effective  service of process
upon the Company in any such suit or proceeding. Nothing herein shall affect the
right of any  Purchaser to serve  process in any other manner  permitted by law.
The  Company  agrees  that a final  non-appealable  judgment in any such suit or
proceeding  shall be conclusive  and may be enforced in other  jurisdictions  by
suit on such judgment or in any other lawful manner.

         (b)  Counterparts.  This  Agreement  may be  executed  in  two or  more
counterparts,  all of which shall be considered  one and the same  agreement and
shall  become  effective  when  counterparts  have been signed by each party and
delivered to the other party.  This Agreement,  once executed by a party, may be
delivered to the other  parties  hereto by facsimile  transmission  of a copy of
this Agreement  bearing the signature of the party so delivering this Agreement.
In the event any  signature is delivered  by facsimile  transmission,  the party
using such means of delivery shall cause the manually executed execution page(s)
hereof to be  physically  delivered  to the other party  within five days of the
execution hereof,  provided that the failure to so deliver any manually executed
execution  page  shall  not  affect  the  validity  or  enforceability  of  this
Agreement.

         (c) Construction. Whenever the context requires, the gender of any word
used in this  Agreement  includes  the  masculine,  feminine or neuter,  and the
number of any word includes the singular or plural. Unless the context otherwise
requires, all references to articles and sections refer to articles and sections
of this  Agreement,  and all  references to schedules are to schedules  attached
hereto,  each of which is made a part hereof for all purposes.  The  descriptive
headings of the several articles and sections of this Agreement are inserted for
purposes of reference  only, and shall not affect the meaning or construction of
any of the provisions hereof.

         (d)  Severability.  If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction,  such invalidity or unenforceability shall
not affect the validity or  enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.


                                       26
<PAGE>

         (e)  Entire  Agreement;   Amendments.  This  Agreement  and  the  other
Transaction  Documents (including any schedules and exhibits hereto and thereto)
contain  the  entire  understanding  of  the  Purchasers,   the  Company,  their
affiliates  and  persons  acting on their  behalf  with  respect to the  matters
covered  herein and therein  and,  except as  specifically  set forth  herein or
therein,  neither  the  Company  nor the  Purchasers  make  any  representation,
warranty,  covenant or undertaking with respect to such matters. No provision of
this  Agreement may be waived other than by an  instrument in writing  signed by
the party to be charged with enforcement, and no provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and each
Purchaser.  No  consideration  shall be paid to a  Purchaser  by the  Company in
connection with an amendment hereto unless each Purchaser  similarly affected by
such  amendment  receives a pro rata amount of  consideration  from the Company,
and, unless a Purchaser agrees otherwise,  each amendment hereto shall similarly
affect each Purchaser.

         (f)  Notices.  Any notices  required or permitted to be given under the
terms of this  Agreement  shall be sent by certified or registered  mail (return
receipt requested) or delivered personally,  by responsible overnight carrier or
by confirmed  facsimile,  and shall be effective five days after being placed in
the mail,  if  mailed,  or upon  receipt or refusal  of  receipt,  if  delivered
personally or by responsible  overnight carrier or confirmed facsimile,  in each
case addressed to a party. The initial addresses for such  communications  shall
be as follows,  and each party shall provide  notice to the other parties of any
change in such party's address:

         (i) If to the Company:

                           P-Com, Inc.
                           3175 South Winchester Blvd.
                           Campbell, CA 95008
                           Telephone: (408) 866-3666
                           Facsimile:  (408) 874-4461
                           Attention: Chief Executive Officer

                           with     a copy  simultaneously  transmitted  by like
                                    means   (which    transmittal    shall   not
                                    constitute notice hereunder) to:

                           Sheppard Mullin Richter & Hampton LLP
                           800 Anacapa Street
                           Santa Barbara, CA 93101
                           Telephone: (805) 879-1812
                           Facsimile: (805) 568-1955
                           Attention:  Theodore R. Maloney, Esq.

         (ii)  If to any  Purchasers,  to  the  address  set  forth  under  such
Purchaser's name on the Execution Page hereto executed by such Purchaser.

         (iii) If to Escrow Agent:


                                       27
<PAGE>

                           Drinker Biddle & Reath LLP
                           One Logan Square
                           18th and Cherry Streets
                           Philadelphia, PA  19103-6996
                           (215) 988-2700
                           Fax (215) 988-2757

                           Attention:  Janeanne Subers, Chief Financial Officer
                                        Stephen T. Burdumy, Partner

         (g)  Successors and Assigns.  This Agreement  shall be binding upon and
inure to the benefit of the parties and their successors and assigns.  Except as
provided  herein,  the Company shall not assign this  Agreement or any rights or
obligations  hereunder.  Any  Purchaser  may assign or transfer  the  Securities
pursuant to the terms of this Agreement and of such  Securities,  or assign such
Purchaser's rights hereunder or thereunder to any other person or entity, except
for direct  competitors of the Company or persons or entities that have publicly
announced  plans  to  compete  directly  with  the  Company.  In  addition,  and
notwithstanding  anything to the  contrary  contained  in this  Agreement or the
other Transaction Documents, the Securities may be pledged and all rights of any
Purchaser  under  this  Agreement  or  any  other  Transaction  Document  may be
assigned,  without  further  consent of the  Company,  to a bona fide pledgee in
connection with such Purchaser's margin or brokerage account.

         (h) Third Party  Beneficiaries.  This  Agreement  is  intended  for the
benefit of the parties  hereto and their  respective  permitted  successors  and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person;  provided,  however,  that Section 4(r) may be enforced by
SDS Capital.

         (i) Survival. The representations and warranties of the Company and the
agreements  and  covenants  set  forth in  Sections  3, 4, 5 and 8 hereof  shall
survive the Closing notwithstanding any due diligence investigation conducted by
or on  behalf  of any  Purchaser.  Moreover,  none  of the  representations  and
warranties  made by the  Company  herein  shall act as a waiver of any rights or
remedies  any  Purchaser  may  have  under  applicable  U.S.  federal  or  state
securities laws.

         (j) Publicity.  The Company and each Purchaser  shall have the right to
approve before  issuance any press releases,  SEC or, to the extent  applicable,
NASD filings,  or any other public  statements with respect to the  transactions
contemplated  hereby;  provided,  however,  that the Company  shall be entitled,
without the prior approval of the  Purchasers,  to make any press release or SEC
or, to the extent applicable,  NASD filings with respect to such transactions as
is required by applicable law and regulations  (although the Purchasers shall be
consulted by the Company in  connection  with any such press  release and filing
prior to its release and shall be provided  with a copy thereof and must provide
specific consent to the use of their name in connection therewith).

         (k) Further Assurances. Each party shall do and perform, or cause to be
done and  performed,  all such  further acts and things,  and shall  execute and
deliver all such other agreements,  certificates,  instruments and documents, as
the other  party may  reasonably  request  in order to carry out the  intent and
accomplish  the  purposes  of  this  Agreement  and  the   consummation  of  the
transactions contemplated hereby.


                                       28
<PAGE>

         (l) Indemnification. In consideration of each Purchaser's execution and
delivery of this Agreement and the other  Transaction  Documents and purchase of
the  Securities  hereunder,  and in  addition  to all  of  the  Company's  other
obligations under this Agreement and the other Transaction  Documents,  from and
after the  Closing,  the  Company  shall  defend,  protect,  indemnify  and hold
harmless each Purchaser and each other holder of the Securities and all of their
stockholders,  partners, members, officers,  directors,  employees and direct or
indirect   investors  and  any  of  the  foregoing   persons'  agents  or  other
representatives  (including,  without  limitation,  those retained in connection
with  the  transactions  contemplated  by  this  Agreement,   collectively,  the
"INDEMNITEES")  from and against any and all actions,  causes of action,  suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith  (irrespective of whether any such Indemnitee is a party to
the  action  for which  indemnification  hereunder  is  sought),  and  including
reasonable  attorneys' fees and disbursements  (the "INDEMNIFIED  LIABILITIES"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (i)
any  misrepresentation  or breach of any  representation or warranty made by the
Company  in  this  Agreement,  any  other  Transaction  Document  or  any  other
certificate,  instrument or document  contemplated  hereby or thereby,  (ii) any
breach of any covenant, agreement or obligation of the Company contained in this
Agreement,  any other Transaction Document or any other certificate,  instrument
or document contemplated hereby or thereby or (iii) any cause of action, suit or
claim brought or made against such  Indemnitee by a third party  (including  for
these purposes a derivative action brought on behalf of the Company) and arising
out of or resulting from (A) the execution, delivery, performance or enforcement
of this  Agreement,  any other  Transaction  Document or any other  certificate,
instrument  or  document  contemplated  hereby or thereby,  (B) any  transaction
financed or to be financed in whole or in part, directly or indirectly, with the
proceeds of the issuance and sale of the Securities,  (C) any disclosure made by
such  Purchaser  pursuant to Section 4(b) or 4(o)  hereof,  or (D) the status of
such Purchaser or holder of the Securities as an investor in the Company. To the
extent that the foregoing  undertaking by the Company may be  unenforceable  for
any reason,  the Company shall make the maximum  contribution to the payment and
satisfaction of each of the Indemnified  Liabilities  which is permissible under
applicable  law.  Except  as  otherwise  set forth  herein,  the  mechanics  and
procedures  with respect to the rights and  obligations  under this Section 9(l)
shall be the same as those set forth in Section 6(c) of the Registration  Rights
Agreement.

         (m) Payment Set Aside.  To the extent that the Company  makes a payment
or  payments  to any  Purchaser  hereunder  or  pursuant  to  any  of the  other
Transaction  Documents  or  any  Purchaser  enforces  or  exercises  its  rights
hereunder  or  thereunder,  and such payment or payments or the proceeds of such
enforcement  or  exercise  or any part  thereof  are  subsequently  invalidated,
declared to be fraudulent or preferential,  set aside, recovered from, disgorged
by or are required to be refunded,  repaid or otherwise restored to the Company,
a  trustee,  receiver  or any other  person  under any law  (including,  without
limitation,  any bankruptcy  law, state or federal law,  common law or equitable
cause of action),  then to the extent of any such  restoration the obligation or
part thereof originally  intended to be satisfied shall be revived and continued
in  full  force  and  effect  as if  such  payment  had  not  been  made or such
enforcement or setoff had not occurred.


                                       29
<PAGE>

         (n) Joint  Participation in Drafting.  Each party to this Agreement has
participated  in the  negotiation  and drafting of this  Agreement and the other
Transaction  Documents.  As such,  the language used herein and therein shall be
deemed to be the language  chosen by the parties  hereto to express their mutual
intent, and no rule of strict  construction will be applied against any party to
this Agreement.

         (o) Equitable Relief.  The Company  acknowledges that a breach by it of
its  obligations  hereunder  will cause  irreparable  harm to the  Purchasers by
vitiating  the  intent  and  purpose of the  transactions  contemplated  hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations hereunder  (including,  but not limited to, its obligations pursuant
to Section 5 hereof) will be inadequate and agrees,  in the event of a breach or
threatened breach by the Company of the provisions of this Agreement (including,
but not limited  to, its  obligations  pursuant to Section 5 hereof),  that each
Purchaser shall be entitled,  in addition to all other available remedies, to an
injunction  restraining any breach and requiring immediate issuance and transfer
of the  Securities,  without the necessity of showing  economic loss and without
any bond or other security being required.

         (p) Knowledge.  As used in this Agreement,  the term "knowledge" of any
person or entity  shall  mean and  include  (i) actual  knowledge  of any of the
Company's  officers or  directors  and (ii) that  knowledge  which a  reasonably
prudent  business  person could have  obtained in the  management  of his or her
business  affairs after making due inquiry and exercising due diligence  which a
prudent  business  person should have made or  exercised,  as  applicable,  with
respect thereto.

         (q) Exculpation  Among  Purchasers.  The Company  acknowledges that the
obligations  of each  Purchaser  under  this  Agreement  and  each of the  other
Transaction  Documents  are  several and not joint with the  obligations  of any
other  Purchaser,  and no  Purchaser  shall  be  responsible  in any way for the
performance of the  obligations  of any other  Purchaser  under the  Transaction
Documents.  Each Purchaser acknowledges that it has independently  evaluated the
merits  of the  transactions  contemplated  by  this  Agreement  and  the  other
Transaction  Documents,  that it has independently  determined to enter into the
transactions  contemplated  hereby and  thereby,  that it is not  relying on any
advice from or evaluation by any other  Purchaser,  and that it is not acting in
concert with any other Purchaser in making its purchase of securities  hereunder
or in monitoring  its  investment  in the Company.  The  Purchasers  and, to its
knowledge,  the Company agree that the no action taken by any Purchaser pursuant
hereto or to the other Transaction Documents,  shall be deemed to constitute the
Purchasers as a partnership,  an association,  a joint venture or any other kind
of entity,  or create a presumption that the Purchasers are in any way acting in
concert or would deem such Purchasers to be members of a "group" for purposes of
Section  13(d) of the Exchange  Act, and the  Purchasers  have not agreed to act
together for the purpose of  acquiring,  holding,  voting or disposing of equity
securities  of the  Company.  The Company has elected to provide all  Purchasers
with the same terms and Transaction Documents for the convenience of the Company
and not because it was  required or requested  to do so by the  Purchasers.  The
Company  acknowledges  that  such  procedure  with  respect  to the  Transaction
Documents in no way creates a  presumption  that the  Purchasers  are in any way
acting in concert or as a "group" for purposes of Section  13(d) of the Exchange

                                       30
<PAGE>

Act with respect to the Transaction  Documents or the transactions  contemplated
hereby or thereby.  Each Purchaser  acknowledges that it has been represented by
its  own  separate  legal  counsel  in  their  review  and  negotiation  of  the
Transaction Documents.  Each Purchaser further acknowledges that SDS Capital has
retained Drinker Biddle & Reath LLP to act as its counsel in connection with the
transactions  contemplated by this Agreement and the other Transaction Documents
and that  Drinker  Biddle & Reath  LLP has not acted as  counsel  for any of the
other  Purchasers in connection  therewith and none of the other Purchasers have
the status of a client of Drinker Biddle & Reath LLP for conflict of interest or
other purposes as a result thereof.

         (r) Business Days and Trading Days. For purposes of this Agreement, the
term  "business  day" means any day other than a Saturday  or Sunday or a day on
which banking  institutions in the State of New York are authorized or obligated
by law, regulation or executive order to close, and the term "trading day" means
any day on which the  Bulletin  Board or, if the Common Stock is not then traded
on the Bulletin Board, the principal  national  securities  exchange,  automated
quotation  system or other trading market where the Common Stock is then listed,
quoted or traded, is open for trading.

                  [REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]


                                       31
<PAGE>




         IN WITNESS  WHEREOF,  the  undersigned  Purchaser  and the Company have
caused this Agreement to be duly executed as of the date first above written.

P-COM, INC.


By:
    ----------------------------------------------------------
Name:
Title:

PURCHASER:


               (Print or Type Name of Purchaser)


                                      By:
                                     Name:
                                     Title:

RESIDENCE:
           ------------------------------------------

ADDRESS:
         --------------------------------------------

          Telephone:
                     --------------------------------
          Facsimile:
                     --------------------------------
          Attention:
                     --------------------------------

AGGREGATE SUBSCRIPTION AMOUNT:

Number of Units:
                 ------------------------------------
Purchase Price ($______ per Unit):
                                   ------------------


                [SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]


<PAGE>




ESCROW AGENT:

DRINKER BIDDLE & REATH LLP


By:
   --------------------------------------------------
Stephen T. Burdumy, a Partner


</TEXT>
</DOCUMENT>
