METAWAVE COMMUNICATIONS CORP
S-1/A, 2000-03-27
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT
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<PAGE>


  As filed with the Securities and Exchange Commission on March 27, 2000

                                                 Registration No. 333-30568
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               ----------------

                              Amendment No. 1

                                    to
                                    FORM S-1
                             REGISTRATION STATEMENT
                                     Under
                           THE SECURITIES ACT OF 1933
                               ----------------
                      METAWAVE COMMUNICATIONS CORPORATION
             (Exact name of Registrant as specified in its charter)
                               ----------------
<TABLE>
<S>                                <C>                           <C>
            Delaware                           3663                          91-1673152
 (State or Other Jurisdiction of   (Primary Standard Industrial           (I.R.S. Employer
 Incorporation or Organization)     Classification Code Number)        Identification Number)
</TABLE>

                             10735 Willows Road NE
                               Redmond, WA 98052
                                 (425) 702-5600
    (Address, including zip code and telephone number, including area code,
                  of Registrant's principal executive offices)
                               ----------------
                              ROBERT H. HUNSBERGER
                     President and Chief Executive Officer
                             10735 Willows Road NE
                               Redmond, WA 98052
                                 (425) 702-5600
 (Name, address including zip code and telephone number including area code, of
                               agent for service)

                                   Copies to:
<TABLE>
<S>                                              <C>
               WILLIAM W. ERICSON                             PATRICK J. SCHULTHEIS
               JOHN W. ROBERTSON                                  ROBERT G. DAY
               KIRK D. SCHUMACHER                                ALLISON L. BERRY
               Venture Law Group                         Wilson Sonsini Goodrich & Rosati
           A Professional Corporation                        Professional Corporation
              4750 Carillon Point                               650 Page Mill Road
            Kirkland, WA 98033-7355                          Palo Alto, CA 94304-1050
                 (425) 739-8700                                   (650) 493-9300
</TABLE>
                               ----------------
        Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
                               ----------------
   If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

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

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

                               ----------------
                        CALCULATION OF REGISTRATION FEE

<TABLE>
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
<CAPTION>
                                       Proposed
                                       Maximum
                                       Offering     Proposed
 Title Of Each Class Of     Amount      Price        Maximum
    Securities To Be         to be       per        Aggregate          Amount Of
       Registered        Registered(1) share(2) Offering Price(2) Registration Fee(3)
- -------------------------------------------------------------------------------------
<S>                      <C>           <C>      <C>               <C>
Common Stock, par value
 $0.0001................   7,187,500    $13.00     $93,437,500          $24,668
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>

(1)  Includes 937,500 shares of common stock issuable upon exercise of the
     underwriters' over-allotment option.

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

(3)  Includes $22,770 previously paid.

   The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

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

                              March 27, 2000

PROSPECTUS

                             6,250,000 Shares

                                [METAWAVE LOGO]

                                  Common Stock

                                  -----------

     This is Metawave Communications Corporation's initial public offering.

     We expect the public offering price to be between $11.00 and $13.00 per
share. Currently, no public market exists for the shares. We have applied to
have our common stock quoted on the Nasdaq National Market under the symbol
"MTWV."

     Investing in the common stock involves risks that are described in the
"Risk Factors" section beginning on page 7 of this prospectus.

                                  -----------

<TABLE>
<CAPTION>
                                                          Per Share Total
                                                          --------- -----
     <S>                                                  <C>       <C>
     Public offering price...............................
     Underwriting discount...............................
     Proceeds, before expenses, to Metawave..............
</TABLE>

     The underwriters may also purchase up to an additional 937,500 shares at
the public offering price, less the underwriting discount, within 30 days from
the date of this prospectus to cover over-allotments.

     Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

     The shares will be ready for delivery on or about       , 2000.

                                  -----------

Merrill Lynch & Co.                                    Salomon Smith Barney

                           U.S. Bancorp Piper Jaffray

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

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

Stylized Metawave logo.
Text on top: Metawave provides spectrum management solutions that
increase the capacity and improve the performance of wireless networks.

Line art depictions of SpotLight 2000 CDMA system and Spotlight GSM
system

Bullet points stating between depictions of systems:

* Add-on capacity enhancement to CDMA and GSM base stations
* Increases efficiency of CDMA or GSM network infrastructure
* Maintains or improves call quality

Graphic of radio frequency spectrum
<PAGE>

Stylized Metawave Logo
Spectrum Management Solutions for Wireless Communications

Left page
Graphic of radio frequency spectrum
Artwork depicting the evolution of wireless technology from analog to CDMA to
spectrum management and graphical depiction of a smart antenna system

Right page
Map of the world depicting the CDMA, GSM and analog wireless standards in
various regions of the world titled "Global Market Opportunity"

Language -- Our current product offerings are for CDMA, GSM and analog
networks.
Graphical depiction of people speaking on wireless phones.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
<S>                                                                       <C>
Prospectus Summary.......................................................   3
Risk Factors.............................................................   7
Forward-Looking Statements...............................................  18
Use of Proceeds..........................................................  18
Dividend Policy..........................................................  18
Capitalization...........................................................  19
Dilution.................................................................  20
Selected Consolidated Financial Data.....................................  21
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  22
Business.................................................................  27
Management...............................................................  40
Certain Relationships and Related Party Transactions.....................  50
Principal Stockholders...................................................  52
Description of Securities................................................  54
Shares Eligible for Future Sale..........................................  57
Underwriting.............................................................  59
Legal Matters............................................................  62
Experts..................................................................  62
Where You Can Find Additional Information................................  62
Index to Financial Statements............................................ F-1
</TABLE>

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

   You should rely only on the information contained in this prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate only as of the date on
the front cover of this prospectus. Our business, financial condition, results
of operations and prospects may have changed since that date.

   Through and including     , 2000 (25 days after commencement of this
offering), all dealers that buy, sell or trade our common stock, whether or not
participating in this offering, may be required to deliver a prospectus. This
delivery requirement is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE>

                               PROSPECTUS SUMMARY

   The summary highlights selected information contained elsewhere in the
prospectus. You should read the entire prospectus, including "Risk Factors" and
the financial data and related notes before making an investment decision.

                      Metawave Communications Corporation

   We provide smart antenna systems to wireless network operators facing
capacity constraints in the wireless communications industry. Our SpotLight
smart antenna systems consist of antennas that improve the reception and
transmission of radio signals dynamically through the use of our proprietary
software. We believe that wireless operators can increase overall network
capacity, improve or maintain network quality, reduce network operating costs
and better manage network infrastructure by implementing our SpotLight systems.
As the demand for wireless services continues to grow, we will develop systems
based on our proprietary technologies that address the associated network
capacity problems faced by wireless network operators.

   The recent increase in demand for wireless services has been driven by an
increased number of subscribers, lower prices and expanded availability of
existing services. In addition to these factors, the emergence of new data and
Internet-oriented wireless services is expected to contribute to the continued
increase in subscriber usage. For example, wireless subscriber usage in the
United States is expected to grow at a compound annual growth rate of 20.9%
through 2003, according to The Strategis Group. The growth rate in wireless
subscriber usage is not necessarily indicative of our growth rate.

   This rapid growth in demand for wireless services and wireless usage has
strained the capacity of wireless networks given the fixed amount of radio
frequency spectrum allocated to wireless network operators. To address the
challenge of increasing capacity while maintaining signal quality, wireless
network operators generally have deployed more efficient digital technologies
or have built additional cell sites, which contain the transmitting and
receiving equipment used by wireless network operators to connect the wireless
network to subscribers' mobile phones. However, the high costs and technical
difficulties associated with building new cell sites, as well as the inherent
capacity limitations of digital technologies, have created the need for a cost-
effective solution to manage available spectrum.

   We have had a history of significant losses and we expect to continue
generate substantial losses in 2000 and beyond, even if our revenues increase.
Our net loss in 1999 was $42.4 million as compared to our revenues of $22.6
million in 1999. Our accumulated deficit was $120.6 million at December 31,
1999. In our limited operating history, we have never achieved profitability.
We anticipate that a significant portion of the proceeds of this offering will
be used to offset our operating losses.

   As of December 31, 1999 we had sold 121 SpotLight systems to a variety of
customers worldwide, including the following customers who accounted for more
that ten percent of our revenues in 1999: ALLTEL Communications Inc., which
accounted for 44.8% of our revenues, Grupo IUSACELL S.A. de C.V. of Mexico,
which accounted for 26.0% of our revenues; and Southwestco Wireless Inc., which
accounted for 20.9% of our revenues.

   We have developed cost-effective smart antenna systems for expanding network
capacity while improving or maintaining overall network performance. These
systems are our primary product and have accounted for substantially all of our
revenues to date. Our SpotLight systems are designed to be compatible with base
station equipment for Code Division Multiple Access, or CDMA, and Global System
for Mobile Communications, or GSM, technologies, as well as analog
technologies. We have not completed any commercial sales of our SpotLight GSM
system. Our SpotLight systems provide solutions to wireless network operators
with the following benefits:

                                       3
<PAGE>


   Cost-Effective Capacity Expansion. Our SpotLight systems enable wireless
network operators to increase the capacity of their existing networks and
therefore reduce the need to build and maintain expensive new cell sites. Our
SpotLight 2000 system has improved CDMA capacity in cell sites from 30% to 50%,
depending on network configuration. In addition, in a recent field trial, our
SpotLight GSM system demonstrated that GSM network capacity can be increased by
up to 100% without increasing the number of GSM cell sites. Adding SpotLight
systems in selected cell sites can increase overall network capacity.

   Improved Network Performance. Our SpotLight systems allow wireless network
operators to increase capacity while maintaining or improving the level of
service and signal quality. Our SpotLight 2000 systems efficiently allocate
existing network resources to better match subscriber usage. We expect our
SpotLight GSM systems to provide better signal reception and reduced
interference.

   Compatibility with Standards and Equipment. We design our SpotLight systems
to be compatible with most of the widely deployed wireless standards operating
at 800 MHz and 900 MHz and related installed base station equipment in order to
allow wireless network operators' to continue to use their existing equipment
and technology.

   Our objective is to provide smart antenna systems to the wireless
communications market worldwide. To accomplish this objective we intend to:

  . Continue to focus on delivering solutions that address the capacity
    constraints of wireless network operators;

  . Expand our presence and penetration of our current CDMA customers by
    leveraging the performance and service of our existing system
    deployments;

  . Target additional large multi-system 800 MHz CDMA and 900 MHz GSM
    wireless network operators around the world that serve substantial
    concentrations of customers and have the greatest market share in their
    respective markets; and

  . Use our technology leadership and intellectual property to develop and
    provide new capacity solutions to the existing and emerging wireless
    communications markets, including Personal Communications System, or PCS,
    operating at 1800 MHz and 1900 MHz.

   Our principal executive offices are located at 10735 Willows Road NE,
Redmond, Washington 98052, and our telephone number is (425) 702-5600. We were
originally incorporated in the state of Washington in January 1995 and
reincorporated in the state of Delaware in July 1995. Our Web site is
www.metawave.com. The information on this Web site does not constitute part of
this prospectus.


                                       4
<PAGE>

                                  The Offering

<TABLE>
   <C>                                         <S>
   Common stock offered by Metawave........... 6,250,000 shares
   Shares outstanding after the offering...... 36,613,817 shares
   Use of proceeds............................ We intend to use the net
                                               proceeds for general corporate
                                               purposes, including working
                                               capital and capital
                                               expenditures. See "Use of
                                               Proceeds."
   Proposed Nasdaq National Market symbol..... MTWV
</TABLE>

   The number of shares of our common stock to be outstanding immediately after
the offering is based on the number of shares outstanding at December 31, 1999.
This number excludes outstanding or available options and outstanding warrants
to purchase an aggregate of 4,133,229 shares. See "Capitalization."

   Unless otherwise indicated, the information in this prospectus, including
the outstanding share information below is based on the number of shares
outstanding as of December 31, 1999 and assumes:

  . the conversion of 32,027,203 outstanding shares of preferred stock into
    an aggregate of 27,972,907 shares of common stock, for further details
    please see "Capitalization";

  .  a 2-for-3 split of our common stock;

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

  . no exercise of outstanding warrants; and

  . no exercise of outstanding options under our stock option plans.

                                       5
<PAGE>


                      Summary Consolidated Financial Data

   The summary consolidated financial data below should be read together with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements of Metawave and related
notes included elsewhere in this prospectus.

<TABLE>
<CAPTION>
                                                   Year ended December 31,
                                                  ----------------------------
                                                    1997      1998      1999
                                                  --------  --------  --------
                                                  (in thousands, except per
                                                         share data)
<S>                                               <C>       <C>       <C>
Consolidated Statement of Operations Data:
Revenues........................................  $  1,450  $ 15,991  $ 22,596
Gross profit (loss).............................      (278)   (2,037)      360
Total operating expenses........................    22,228    35,728    39,599
Loss from operations............................   (22,506)  (37,765)  (39,239)
Other income (expense), net.....................       402    (6,563)   (3,174)
                                                  --------  --------  --------
Net loss........................................  $(22,104) $(44,328) $(42,413)
                                                  ========  ========  ========
Basic and diluted net loss per share............  $ (12.18) $ (21.88) $ (18.98)
Shares used in computation of basic and diluted
 net loss per share.............................     1,815     2,026     2,235
Pro forma basic and diluted net loss per share..                      $  (1.90)
Shares used in computation of pro forma net
 loss per share.................................                        22,375
</TABLE>

   The "pro forma" column below gives effect to the conversion of all
outstanding shares of preferred stock upon completion of this offering.

   The "pro forma as adjusted" column below gives effect to the sale of the
shares of common stock in this offering at an assumed initial public offering
price of $12.00 per share, after deducting estimated underwriting discounts and
commissions and estimated offering expenses. Please see "Use of Proceeds" and
"Capitalization."

<TABLE>
<CAPTION>
                                                    December 31, 1999
                                             ---------------------------------
                                                                    Pro Forma
                                              Actual    Pro Forma  As Adjusted
                                             ---------  ---------  -----------
                                                     (in thousands)
<S>                                          <C>        <C>        <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents................... $  20,165  $  20,165   $  88,915
Working capital.............................    22,759     22,759      91,509
Total assets................................    40,946     40,946     109,696
Long-term obligations, net of current
 portion....................................     2,503      2,503       2,503
Convertible and redeemable preferred stock
 and warrants...............................   144,102         --          --
Common stock and warrants...................     3,573    147,675     216,425
Accumulated deficit.........................  (120,640)  (120,640)   (120,640)
Stockholders' equity (deficit)..............  (117,954)    26,148      94,898
</TABLE>

                                       6
<PAGE>

                                  RISK FACTORS

   You should carefully consider carefully the risks described below, as well
as other information contained in this prospectus, before making a decision to
buy our common stock.

                       Risks Related to Our Business

We have a limited operating history which makes it difficult for you to
evaluate our business and your investment.

   We were incorporated in 1995 and were in the development stage until late
1997, when we commenced shipment for commercial sale of our first SpotLight
smart antenna system. We therefore have a limited operating history upon which
an investor may evaluate our operations and future prospects. The revenue and
profit potential of our business is unproven and our limited operating history
makes our future operating results difficult to predict because the market for
smart antenna systems is so new and wireless technologies change so rapidly.
Because our smart antenna systems were introduced relatively recently, we are
unable to predict with any degree of certainty whether our smart antenna
systems will achieve widespread market acceptance. In view of our limited
operating history, an investment in our common stock must be considered in
light of the risks and uncertainties that may be encountered by early stage
companies in the wireless communications equipment market. In addition, period-
to-period comparisons of operating results may not be meaningful and operating
results from prior periods may not be indicative of future performance.

We have incurred net losses and negative cash flow for our entire history, we
expect to incur future net losses and we may never achieve profitability.

   We have never achieved profitability and as of December 31, 1999, we had an
accumulated net deficit of approximately $120.6 million. We intend to continue
to make significant investments in our operations, particularly to support
product development, to increase manufacturing capacity and to market new smart
antenna systems. Accordingly, we expect to continue to generate substantial
losses in 2000 and beyond, even if revenues increase. To achieve profitability,
we must, among other things:

  . successfully scale our current operations;

  . introduce new smart antenna systems;

  . implement and execute our business and marketing strategies;

  . develop and enhance our brand;

  . adapt to changes in the marketplace;

  . respond to competitive developments in the wireless communications
    industry; and

  . continue to attract, integrate, retain and motivate qualified personnel.

We might not be successful in achieving any or all of these objectives. Failure
to achieve any or all of these objectives could materially and adversely affect
our business, operating results and financial position causing our stock price
to decline. We cannot be certain that we can achieve sufficient revenues to
achieve profitability, or if we do, that we could remain profitable.

                                       7
<PAGE>


We expect our quarterly revenues and operating results to fluctuate and these
fluctuations may cause the price of our stock to decline.

   We base our operating expenses on anticipated revenue trends and a high
percentage of our expenses are fixed in the short term. As a result, any delay
in generating or recognizing revenues could cause our operating results to fall
below the expectations of securities analysts and investors, which would likely
cause our stock price to decline. Factors that may cause our quarterly results
to fluctuate include:

  . gain or loss by us of significant customers;

  . our ability to increase sales to our existing customers;

  . delays in customer orders;

  . delays in installing our smart antenna systems;

  . our ability to reduce manufacturing costs of our smart antenna systems;

  . our ability to introduce new smart antenna systems;

  . market acceptance of any new smart antenna systems;

  . introduction and enhancement of competitive or substitute products by our
    competitors;

  . limitations in our manufacturing capacity; and

  . delays or changes in regulatory environments.


We depend on a limited number of wireless network operators for substantially
all of our revenues, so the loss of a customer or a delay in an order from a
customer could impair our operating results.

   We derive our revenues from sales of our SpotLight 2000 system to a limited
number of wireless network operators. Due to the highly concentrated nature of
the wireless industry and industry consolidation, we believe that the number of
potential customers for future systems will be limited. Five customers have
accounted for substantially all of our system sales to date. The U.S. wireless
operations of three of our customers--AirTouch, Bell Atlantic and GTE--are
expected to be consolidated into one entity in 2000. On July 28, 1998, Bell
Atlantic and GTE announced a merger and on September 21, 1999, Bell Atlantic
and Vodaphone AirTouch plc, the parent company of AirTouch announced an
agreement to merge their U.S. wireless operations. Bell Atlantic owns 47.2% of
IUSACELL and Southwestco is a subsidiary of Bell Atlantic. Failure by us to
capture a significant percentage of the wireless network operators as customers
could cause our operating results to be significantly less than anticipated and
lead to a decline in our stock price. Moreover, due to this customer
concentration, the loss, or reduced demand from, any customer could cause our
sales to fall significantly.

Because our contracts with new customers are subject to satisfying performance
criteria, the timing of purchases is difficult to predict and as a result our
revenue is unpredictable.

   We believe that the purchase of our SpotLight systems is typically a
strategic decision that requires approval at senior levels of customers'
organizations, significant technical evaluation and a substantial commitment of
customers' personnel, financial and other resources. Our contracts with new
customers typically contain conditional acceptance provisions for the initial
system sales and we delay recognition of revenue until all conditions are
satisfied, which causes our sales cycle to last up to 18 months and to vary
substantially from customer to customer. This variability makes predicting our
revenues difficult. Typically, performance of our systems must be accepted in
an initial cell site or cluster of cell sites in a field trial prior to
completing any additional sales to a particular wireless network operator. This
makes the sales process associated with the purchase of our systems complex,
lengthy and subject to a number of significant risks. We may incur substantial
expenses and expend significant management and personnel resources in the
process of a field trial. If we do not satisfy conditions in these contracts or
if satisfaction of these conditions were delayed for any reason, revenues in
any particular period could fall significantly below our expectations.

                                       8
<PAGE>


Any delay in customer acceptance or shipment could delay our recognition of
revenues which could cause our stock price to decline.

   Delays in shipment or customer acceptance of our antenna systems can happen
for a variety of reasons, including:

  . an unanticipated shipment rescheduling;

  . cancellation or deferral by a customer;

  . competitive or economic factors;

  . unexpected manufacturing, installation or other difficulties;

  . unavailability or delays in deliveries of components, subassemblies or
    services by suppliers; or

  . the failure to receive an anticipated order.

Our customers are typically large organizations and make equipment purchases on
their own schedules. We have no influence on their internal budgetary
decisions. Any delay in system shipment could cause revenues and operating
results in a particular period to fall below our expectations as well as below
the expectations of public market analysts or investors. If this occurs, the
trading price of our common stock would likely decline.

Our future revenues depend on the sale of our SpotLight systems and if our
SpotLight systems fail to achieve market acceptance of our SpotLight systems,
our revenues will fail to meet expectations.

   Our future success depends upon the degree to which our smart antenna
systems are accepted. We believe that substantially all of our revenues in the
foreseeable future will be derived from sales of our SpotLight systems. If our
SpotLight systems fail to achieve broad market acceptance among our customers
and potential customers, our revenues could fall below our and analysts'
expectations which could cause our stock price to decline. In light of the
relatively recent introduction of our SpotLight systems, in particular our
SpotLight GSM system which recently completed its first field trial, and the
rapidly evolving nature of the wireless communications industry, we cannot
predict with any degree of assurance whether our current or future smart
antenna systems will achieve broad market acceptance. We have not yet completed
any commercial sales of our SpotLight GSM system. We must demonstrate that our
systems provide a cost-effective spectrum management solution that expands
wireless network operators' capacity within each operator's unique network
configuration and specifications. If our smart antenna systems do not achieve
widespread acceptance with wireless network operators, we will be unable to
increase our revenues as expected.

Our smart antenna systems are complex and may have errors or defects that are
detected only after deployments in complex networks, which may lead to loss of
customers and revenues and increased costs.

   Our smart antenna systems are highly complex and are designed to be deployed
in complex networks. Although our systems are tested during manufacturing and
prior to deployment, they can only be fully tested when deployed in networks.
Consequently, our customers may discover errors after the systems have been
fully deployed. If we are unable to fix errors or other problems that may be
identified in full deployment, we could experience:

  . costs associated with the remediation of any problems;

  . loss of or delay in revenues;

  . loss of customers;

  . failure to achieve market acceptance and loss of market share;

  . diversion of deployment resources;

  . increased service and warranty costs;

                                       9
<PAGE>

  . legal actions by our customers; and

  . increased insurance costs.

Our limited experience in installing our systems may result in excessive costs
and delays which could cause us to lose customers.

   Because we are one of the first companies to sell and deploy smart antenna
systems, there is little, if any, established field service expertise for the
installation of smart antenna systems in general or for the SpotLight systems
in particular. It is difficult to attract and maintain qualified field service
personnel and to train them to install our SpotLight systems. Failure to have
adequate numbers of trained field service personnel would adversely affect our
ability to competently install our systems on a timely basis, which may
adversely affect our customers and their business. In addition to our own
personnel, we have used and will continue to use subcontractors for some
installation and field service tasks. We may not be able to find sufficient
subcontractors with adequate experience and expertise and we may not be able to
retain their services on acceptable terms, if at all.

If we are unable to reduce our installation and optimization costs, we may not
be able to achieve profitability.

   We charge a fixed fee to install and optimize our SpotLight systems. To
date, our costs to install and optimize our systems have significantly exceeded
the revenues associated with this work. Our smart antenna systems must be
installed, integrated and optimized with existing equipment installed in our
customers' cell sites. This process can be lengthy, causing delays in a
customer's commercial deployment of our systems. These delays may be the result
of factors outside of our control, including:

  . zoning restrictions on installing additional equipment in a cell site;

  . difficulties associated with the topography of the intended coverage area
    of a cell site, such as the presence of water and hillsides;

  . inability to easily access cell sites; and

  . lack of experienced field service crews, particularly for international
    deployments.

Failure to perform these field service tasks at a profit would adversely affect
our overall profitability. Additionally, our inability to correct field service
problems, whether or not in our control, may also harm our reputation and
competitive position in the industry.

Our existing stockholders have significant control of our management and
affairs, which they could exercise against your best interests.

   Following the completion of this offering, our officers and directors,
together with entities that may be deemed affiliates of or related to such
persons or entities, will beneficially own approximately 42.50% of our
outstanding common stock. As a result, these stockholders, acting together, may
be able to control our management and affairs and matters requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions. This concentration of ownership may have the effect of
delaying or preventing a change in control of Metawave and might affect the
market price of our common stock.

Our management resources may become strained due to the rapid expansion of our
operations.

   The growth of our operations has placed, and is expected to continue to
place, a significant strain on our financial and management resources as well
as our system design, manufacturing, sales and customer support capabilities.
From January 1, 1997 to December 31, 1999, we expanded from 107 to 248
employees. Most of our executive officers have no prior experience as executive
officers of publicly traded companies. Our new employees include a number of
key managerial, technical and operations personnel who have not yet been fully

                                       10
<PAGE>


integrated into our operations, including our Chief Financial Officer, who was
hired in March 2000, and we expect to add additional key personnel in the near
future. We have sales offices in Redmond, Washington and Allen, Texas, and
overseas locations, including Taipei, Taiwan, Shanghai, China and Sao Paulo,
Brazil. As we expand our operations to multiple domestic and international
locations, management of our operations has become and will continue to become
increasingly complex. In order to manage growth effectively and increase or
maintain profitability, we must implement and improve our operational,
financial and management information systems, procedures and controls on a
timely basis.

We have limited manufacturing experience and facilities which may affect our
ability to expand our business.

   Our manufacturing operations consist primarily of supplier and commodity
management and assembling finished goods from components and subassemblies
purchased from outside suppliers. We configure each SpotLight system to be
compatible with customer equipment, and our ability to achieve manufacturing
efficiencies by assembling systems before orders are received, therefore, is
limited. We intend to expand our manufacturing capacity, but due to our limited
experience with large scale operations, we may not be able to develop
internally the management structure or facilities needed to increase this
capacity.

   Since orders must ordinarily be shipped within 90 days of receipt of a
purchase order, our inability to ship orders on a timely basis because of our
limited capacity could damage relationships with customers and result in
cancellation of orders or lost orders.

   Our current manufacturing facilities consist of a single facility in
Redmond, Washington. If our facilities or the facilities of our suppliers were
incapable of operating, even temporarily, or were unable to operate at or near
full capacity for any extended period, we would be unable to meet customers'
delivery expectations. In connection with our capacity expansion, we intend to
manufacture our SpotLight GSM systems in Taipei, Taiwan and may seek to develop
one or more additional manufacturing facilities. The addition of any facility
will likely increase the complexity of our operations and the risk of
inefficient management of our manufacturing operations. Our manufacturing
facilities are vulnerable to damage or interruption from earthquakes and other
natural disasters, power loss, sabotage, intentional acts of vandalism and
similar events. We do not have a formal disaster recovery plan, and we may not
carry sufficient business interruption insurance to compensate us for losses
that could occur.

Our inability to adequately subcontract our excess manufacturing needs may
cause delays in shipment of our systems and lost revenues.

   We intend, in certain instances, to subcontract additional assembly
processes. If we are not able to successfully identify subcontractors with
adequate experience or fail to control the quality of systems produced by these
subcontractors, it may harm our reputation or cause our customers to decrease
spending on our systems. Additionally, we may not be able to contract with
third parties for additional manufacturing capacity on acceptable terms, which
may cause us to delay shipments of systems and consequently lose revenue.

Our reliance on a limited number of suppliers for our smart antenna systems
could impair our ability to manufacture and deliver our systems on a timely
basis.

   Some parts and components used in our smart antenna systems are presently
available only from sole sources including linear power amplifiers supplied by
Powerwave Technologies, Inc. and integrated duplexer low-noise amplifiers
supplied by Filtronics Comtek, Ltd. Some other parts and components used in our
systems are available from a limited number of sources. Our reliance on these
sole or limited source suppliers involves certain risks and uncertainties,
including the possibility of a shortage or the discontinuation of certain key
components. Any reduced availability of these parts or components when required
could materially impair our ability to manufacture and deliver our systems on a
timely basis and result in the cancellation of orders, which could
significantly harm our business and operating results.

                                       11
<PAGE>


The long lead time of some of our components could impair our ability to timely
deliver our systems if we do not accurately predict future demand or maintain
an inventory.

   The purchase of some key components involves long lead times and, in the
event of unanticipated increases in demand for our smart antenna systems, we
may be unable to obtain such components in sufficient quantities to meet our
customers' requirements. We do not have guaranteed supply arrangements with any
of these suppliers, do not maintain an extensive inventory of parts or
components and customarily purchase sole or limited source parts and components
pursuant to purchase orders. Business disruptions, quality issues, production
shortfalls or financial difficulties of a sole or limited source supplier could
materially and adversely affect us by increasing product costs, or eliminating
or delaying the availability of such parts or components. In such event, our
inability to develop alternative sources of supply quickly and on a cost-
effective basis could materially impair our ability to manufacture and deliver
our systems on a timely basis and could significantly affect our revenues.

Our success is dependent on continuing to hire and retain qualified personnel,
and if we are not successful in attracting and retaining these personnel, we
may not be able to operate our business.

   The success of our business depends upon the continued contributions of each
of our key technical and senior management personnel each of whom would be
difficult to replace. We have not entered into employment agreements with any
of our employees other than severance arrangements with Robert H. Hunsberger,
Richard Henderson, Dr. Douglas O. Reudink, Victor K. Liang, Stuart Fuhlendorf
and Andrew Merrill. Except for Dr. Reudink, our founder and Chief Technical
Officer, we have not entered into any non-competition agreements with any of
our employees. We do not maintain key-man life insurance on any of our key
technical or senior management personnel. In addition, we anticipate that we
will need additional management personnel, if we are to be successful in
increasing production capacity and the scale of our operations as well as
operating as a public company.

   To effectively manage our recent growth as well as any future growth, we
will need to attract and retain qualified engineering, financial,
manufacturing, quality assurance, sales, marketing and customer support
personnel. Competition for such personnel, particularly qualified engineers, is
intense in our market. We have experienced difficulties in recruiting
sufficient numbers of qualified engineers in the past and we expect to continue
to experience difficulties in the future. There may be only a limited number of
persons with the requisite skills to serve in these positions, particularly in
the market where we are located, and it may be increasingly difficult for us to
hire such personnel over time. As our product development efforts relate to
wireless standards that are widely deployed in foreign countries, such as GSM,
we may be required to recruit foreign engineers who have expertise in such
standards. Current U.S. immigration laws restrict our ability to hire foreign
employees, which could impair our product development efforts. The loss of any
key employee, the failure of any key employee to perform in his or her current
position, our inability to attract and retain skilled employees as needed or
the inability of our officers and key employees to expand, train and manage our
employee base could limit our ability to expand and become profitable.

Because we need to expand manufacturing capacity and sales, we require
substantial working capital which we may not be able to acquire.

   We require substantial working capital to fund our business. Our future
capital requirements will depend upon many factors, including the success or
failure of our efforts to expand our production, sales and marketing efforts,
the status of competitive products, and the requirements of our efforts to
develop new smart antenna systems and system enhancements. We believe that
current capital resources, together with the estimated net proceeds from this
offering, are adequate to fund our operations for at least 12 months.
Thereafter, we may be required to raise additional capital to maintain growth
or expand capacity which may not be available to us on acceptable terms, if at
all. We maintain a line of credit with Imperial Bank with customary commercial
rates and restrictions, which we have currently renewed and increased. Any
inability to obtain needed financing by us could constrain our ability to meet
current obligations or continue growing.

                                       12
<PAGE>


Our substantial sales in the international markets subject us to various risks
and costs which may harm our business.

   We anticipate that international sales will continue to account for a
significant portion of our revenues for the foreseeable future. Risks and
associated costs inherent in our international business activities include:

  .  difficulties obtaining foreign regulatory approval for our smart antenna
     systems;

  .  unexpected changes in regulatory requirements;

  .  complying with foreign laws and treaties;

  .  legal uncertainties regarding export trade;

  .  inadequate protection of intellectual property in foreign countries;

  .  greater difficulties collecting delinquent or unpaid accounts;

  .  lack of suitable export financing;

  .  potentially adverse tax consequences;

  .  foreign exchange fluctuations if we accept non-U.S. dollar revenues;

  .  dependence upon independent sales representatives and other indirect
     channels of distribution;

  .  difficulties and costs associated with staffing and managing
     international operations;

  .  political and economic instability; and

  .  enforceability of contracts with foreign customers and distributors
     governed by foreign laws.

As more of our international sales are derived from sales in Asia, an
increasing portion of our revenues could be subject to the economic and
political risks associated with that region.

   We expect to begin to derive revenues from the sale of our SpotLight GSM
systems in 2000 in Asia in general and the greater China market in particular.
Changes in political or economic conditions in the region could adversely
affect our operations, in particular any deterioration of political relations
between the United States and the People's Republic of China or the People's
Republic of China and Taiwan could negatively affect our business. If economic
growth rates decline in Asia in general and the greater China market in
particular, expenditures for telecommunications equipment and infrastructure
improvements could decrease, which would negatively affect our business and our
operating results.

We may engage in future acquisitions that dilute our stockholders, cause us to
incur debt or assume contingent liabilities and subject us to other risks.

   We may make acquisitions of businesses, products or technologies in the
future. Since we have not made any material acquisitions in the past, no
assurance can be given as to our ability to successfully integrate any
businesses, products, technologies or personnel that might be acquired in the
future, and our failure to do so could significantly affect our business and
operating results. Moreover, we may not be able to locate suitable acquisition
opportunities and this inability could impair our ability to grow as quickly as
possible or obtain access to technology that may be important to the
development of our business. Further, acquisitions entail numerous operational
risks, including:

  .  difficulties in assimilating operations;

  .  potential loss of key employees, technologies, products and the
     information systems of the acquired companies;

  .  diversion of management's attention from other business concerns; and

  .  risks of entering geographic and business markets in which we have no or
     limited prior experience.

                                       13
<PAGE>


Our limited ability to protect our intellectual property may affect our ability
to compete and we could lose customers.

   We rely on a combination of patent, trade secret, copyright and trademark
protection, nondisclosure agreements and other measures to protect our
proprietary rights. We also enter into confidentiality or license agreements
with our employees, consultants, and corporate partners, and control access to
and distribution of our proprietary information. Despite our efforts to protect
our proprietary rights, unauthorized parties may attempt to copy or otherwise
obtain and use our intellectual property or technology. If our methods of
protecting our intellectual property are not adequate, our competitors may
misappropriate our technology and we could lose customers to these competitors.

Claims that we infringe third party intellectual property rights could result
in significant expense and restrictions on our ability to sell our systems in
particular markets.

   We may not be aware of all patents or patent applications that may
materially affect our ability to make, use or sell any current or future
products. From time to time, third parties have asserted patents, copyrights
and other intellectual property rights with regard to technologies that are
important to us. We expect that we will increasingly be subject to infringement
claims as the number of products and competitors in the spectrum management
market grows and the functionality of products overlaps. Third parties may
assert infringement claims against us in the future, and such assertions could
result in costly litigation or require us to obtain a license to intellectual
property rights of such parties. There can be no assurance that these licenses
would be available on terms acceptable to us, if at all. Any failure to obtain
a license from any third party asserting claims in the future or defense of any
third party lawsuit could result in costly defenses or restrict our ability to
sell our systems. See "Business--Intellectual Property" for more information
regarding risks relating to protecting our intellectual property rights and
risks relating to claims of infringement of other intellectual property rights.

Our systems and the business our customers are subject to significant
government regulation which may cause uncertainty in the compliance of our
systems and delay in the purchase of our systems.

   Many of our smart antenna systems are required to comply with numerous
domestic and international government regulations and standards, which vary by
market. As standards for products continue to evolve, we will need to modify
our systems or develop and support new versions of our systems to meet emerging
industry standards, comply with government regulations and satisfy the
requirements necessary to obtain approvals. Compliance with government
regulations and industry standards can each be a lengthy process, taking from
several months to longer than a year. It may be difficult for us to obtain
additional necessary regulatory approvals or comply with new industry standards
in a timely manner, if at all. Our inability to obtain regulatory approval and
meet established standards in a timely manner could delay or prevent entrance
into or force our departure from markets, which would harm our sales.

   In addition, our customers' operations are subject to extensive government
regulations. To the extent that our customers are delayed in deploying their
wireless systems as a result of existing or new standards or regulations, we
could experience delays in orders. Any delay could contribute to fluctuations
in our results of operations. See "Business--Government Regulation" for more
information regarding the governmental control and approval of our business.

                  Risks Related to the Wireless Industry

We depend on the capital spending patterns of wireless network operators, and
if capital spending is decreased or delayed it may result in lower than
expected revenues.

   Since we rely on wireless network operators to purchase our smart antenna
systems, any substantial decrease or delay in capital spending patterns in the
industry would negatively affect our revenues which could cause our stock price
to decline. The demand for our smart antenna systems depends to a significant
degree

                                       14
<PAGE>


upon the magnitude and timing of capital spending by these operators for
constructing, rebuilding or upgrading their systems. The capital spending
patterns of wireless network operators depend on a variety of factors outside
our control, including access to financing, the status of federal, local and
foreign government regulation and deregulation, changing standards for wireless
technology, overall demand for analog and digital wireless services,
competitive pressures and general economic conditions. In addition, capital
spending patterns in the wireless industry can be subject to some degree of
seasonality, with lower levels of spending in the first calendar quarter, based
on annual budget cycles.

We must reduce our costs and introduce new systems in order to achieve and
maintain profitability.

   We anticipate that average selling prices for our smart antenna systems will
need to decrease in the future in response to competitive pricing pressures and
new product introductions by competitors. To achieve profitability we will need
to reduce our manufacturing costs. If the price of base station equipment
continues to decrease, the addition of new cell sites may be viewed as a more
cost-effective alternative for wireless network operators seeking increased
capacity. In order to compete, we must lower average selling prices. To lower
average selling prices without adversely affecting gross profits, we will have
to reduce the manufacturing costs of our smart antenna systems through
engineering improvements and economies of scale in production and purchasing.
We may not be able to achieve cost savings at a rate needed to keep pace with
competitive pricing pressures. If we are unable to reduce costs sufficiently to
offset the expected declining average selling prices, we may not achieve
profitability. Further, if we cannot provide our distribution partners with
sufficient financial incentive to distribute our systems without adversely
affecting our profitability, our distribution strategy would be harmed which
could result in the loss of current and potential customers.

If we do not respond quickly to changing customer needs and product
introductions by our competition, our sales will decline and our products may
become obsolete.

   The market for our current smart antenna systems and planned future systems
is subject to rapid technological change, frequent new system introductions and
enhancements, product obsolescence, changes in customer requirements and
evolving industry standards. To be competitive, we must successfully develop,
introduce and sell new smart antenna systems or system enhancements that
respond to changing customer requirements on a timely and cost-effective basis.

   Our future success will depend on our ability to develop new smart antenna
systems and system enhancements designed to:

  .  operate with different digital technologies and in some cases across
     other principal manufacturers' base stations;





  .  achieve market acceptance of our present and future smart antenna
     systems; and

  .  keep pace with the development and introduction of competitive products
     by competitors.

   We have in the past experienced and may in the future experience delays in
development and introduction of smart antenna systems and system enhancements.
We may be required to obtain licenses to intellectual property rights held by
third parties to develop new smart antenna systems or system enhancements and
there can be no assurance that such licenses will be available on acceptable
terms, if at all. If we fail to timely and cost-effectively develop new smart
antenna systems or system enhancements that respond to new technologies and
customer needs, the demand for our smart antenna systems may fall and we could
lose revenues.

If we fail to obtain cooperation from base station manufacturers, our smart
antenna systems may no longer be compatible with customers' equipment and we
may not be able to sell our smart antenna systems.

   Our product strategy relies on ensuring the compatibility of our systems
with base stations sold by wireless equipment manufacturers. If base station
manufacturers change or modify their equipment so that our smart antenna
systems are no longer compatible, we would need to redesign our systems to meet
any changed

                                       15
<PAGE>


technology or modified equipment. This may involve substantial costs and
potentially a prolonged development stage for new systems. Consequently, we may
need to rely on the cooperation of customers or base station manufacturers to
ensure that our smart antenna systems remain compatible if base station
equipment is modified. As our systems are designed to reduce the need to
purchase incremental base stations for capacity expansion of wireless networks,
obtaining cooperation from base station manufacturers may prove difficult. If
we are unable to obtain this cooperation and as a result cannot make our
systems compatible with base station equipment, we may not be able to sell our
smart antenna systems.

Intense competition in the wireless infrastructure equipment market may lead to
reduced prices, revenues and market shares causing the price of our stock to
decline.

   The market for spectrum management solutions is relatively new but we expect
it to become increasingly competitive. This market is part of the broader
market for wireless infrastructure equipment which is dominated by a number of
large companies including Lucent, Motorola, Ericsson, Nortel, Nokia, Siemens,
Alcatel and others. Our smart antenna systems compete with other solutions to
expand network capacity. These alternative solutions include other smart
antenna systems, adding base stations for capacity, deploying efficient digital
technologies and various enhancements to digital technologies. We believe that
the principal competitive factor is the cost-effective delivery of increased
capacity to wireless network operators. If our systems are not the most cost-
effective solution, our ability to attract and retain customers would be
harmed. We believe that base station manufacturers, which provide wireless
network capacity through sales of additional base stations or the development
of competitive technologies, represent the most significant competitive threat
to us. For more information on the competitive risks facing us, please see
"Business--Competition."


The failure of the wireless communications services industry to grow at the
rates currently anticipated would seriously harm our business, results of
operation and financial condition.

   Our future operating results will depend upon the continued growth and
increased availability and acceptance of wireless communications services.
There can be no assurance that the volume and variety of wireless services or
the markets for and acceptance of such services will grow, or that such growth
will create a demand for our systems. If the wireless communications market
fails to grow, or grows more slowly than anticipated, our sales will be lower
than expected, which would seriously harm our business.

   The wireless communications industry has developed different technologies
and standards based on the type of service provided and geographical region.
There is uncertainty as to whether all existing wireless technologies will
continue to achieve market acceptance in the future. If a digital technology
for which we develop a smart antenna system is not widely adopted, the
potential size of the market for this system would be limited, and we may not
recover the cost of development. Further, we may not be able to redirect our
development efforts toward those digital wireless technologies that do sustain
market acceptance in a timely manner, which would impede our ability to achieve
or sustain profitability once achieved.

                      Risks Related to this Offering

Technology company stock prices have been volatile and you may be unable to
sell your shares at or above the offering price.

   The stock markets have experienced extreme price and volume fluctuations
that have affected and continue to affect the market prices of equity
securities of many technology companies. These fluctuations often have been
unrelated or disproportionate to the operating performance of those companies.
Market fluctuations as well as general economic, political and market
conditions such as recessions, interest rate changes or international currency
fluctuations, may negatively impact the market price of our common shares. The
market price of our common stock could be subject to wide fluctuations in
response to many risk factors listed in this section, and others beyond our
control, including:

  .  changes in financial estimates of our operating results by securities
     analysts;

                                       16
<PAGE>

  .  fluctuations in the valuation of companies perceived by investors to be
     comparable to us;

  .  performance of similar companies; and

  .  share price and volume fluctuations attributable to inconsistent trading
     volume levels of our shares.

Because our initial public offering price will be substantially higher than the
book value per share of our outstanding common stock, new investors will incur
immediate and substantial dilution in the amount of $9.41 per share.

   Immediately after this offering, the initial public offering price will be
substantially higher than the book value per share based on the total value of
our assets less our total liabilities. Therefore, if you purchase common stock
in this offering, you will experience immediate and substantial dilution of
approximately $9.41 per share in the price you pay for the common stock as
compared to its book value. Furthermore, investors purchasing common stock in
this offering will own only 17.1% of our shares outstanding even though they
will have contributed 34.7% of the total consideration received by us in
connection with our sales of common stock. To the extent outstanding options to
purchase common stock are exercised, there will be further dilution.

Following this offering, a substantial number of our shares of common stock
will become available for sale in the public market, which could cause the
market price of our stock to decline.

   If our stockholders sell substantial amounts of our common stock (including
shares issued upon the exercise of outstanding options and warrants) in the
public market following this offering, the market price of our common stock
could fall. These sales also might make it more difficult for us to sell equity
or equity-related securities in the future at a time and price acceptable to
us. Upon completion of this offering, we will have 36,613,817 outstanding
shares of common stock based upon shares outstanding as of December 31, 1999,
assuming no exercise of the underwriters' over-allotment option and no exercise
of outstanding options after December 31, 1999. Of these shares, the 6,250,000
shares sold in this offering will be freely transferable without restriction
under the Securities Act, unless held by "affiliates" of Metawave as that term
is used in the Securities Act and the Regulations promulgated thereunder. The
remaining shares of common stock outstanding after this offering will be
available for sale in the public market as follows:

<TABLE>
<CAPTION>
                                                                      Number
                     Date of Availability of Sale                   of Shares
                     ----------------------------                   ----------
   <S>                                                              <C>
   Upon the closing of this offering...............................    469,142
   91 days after the date of this prospectus.......................    411,112
   181 days after the date of this prospectus...................... 29,505,874
   Periodically thereafter upon the expiration of one-year holding
    periods........................................................     22,310
</TABLE>

Antitakeover provisions in Delaware and Washington law and our charter
documents could discourage or prevent a change in control of our company that
our stockholders may consider favorable.

   Certain provisions of our certificate of incorporation and bylaws and the
provisions of Delaware and Washington law could have the effect of delaying,
deferring or preventing an acquisition of Metawave, even if an acquisition
would be beneficial to our stockholders. Please see "Description of Securities"
for a more complete description of these issues.

                                       17
<PAGE>

                           FORWARD-LOOKING STATEMENTS

   This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates," "believes," "plans,"
"expects," "future," "intends" and similar expressions to identify forward-
looking statements. This prospectus also contains forward-looking statements
attributed to third parties relating to their estimates regarding the growth of
the wireless communications industry. You should not place undue reliance on
these forward-looking statements, which apply only as of the date of this
prospectus. Our actual results could differ materially from those anticipated
in these forward-looking statements for many reasons, including the risks faced
by us and described in the preceding pages and elsewhere in this prospectus.

                                USE OF PROCEEDS

   We estimate our net proceeds from the sale of 6,250,000 shares of our common
stock offered in this offering to be approximately $68.8 million, or
approximately $79.2 million if the underwriters' over-allotment option is
exercised in full, based on an assumed initial public offering price of $12.00
per share and after deducting the estimated underwriting discounts and
commissions and estimated offering expenses.

   We intend to use the net proceeds for general corporate purposes, including
working capital to fund anticipated operating losses. We expect to use
approximately $2.8 million of the net proceeds in 2000 for capital expenditures
primarily associated with expanding our manufacturing facilities and acquiring
additional testing equipment. In addition, we plan to use approximately
$22.6 million of the net proceeds in 2000 to fund research and development
activities. We may, when and if the opportunity arises, use a portion of the
proceeds to acquire or invest in complimentary businesses, products or
technologies; however, we currently have no commitments or agreements and are
not involved in any negotiations with respect to any transactions of this
nature. Pending such uses, we intend to invest such funds in short-term,
investment grade, interest-bearing obligations.

                                DIVIDEND POLICY

   We have never declared or paid any cash dividends on our capital stock or
other securities. We currently anticipate that we will retain all of our future
earnings for use in the expansion and operation of our business and do not
anticipate paying cash dividends in the foreseeable future. The terms of our
credit agreement with Imperial Bank restrict our ability to pay dividends and
in the future the terms of other credit agreements may impose restrictions or
limitations on the payment of dividends.

                                       18
<PAGE>

                                 CAPITALIZATION

   The actual column in the following table sets forth our actual
capitalization as of December 31, 1999.

   The pro forma column in the following table gives effect to:

  . The conversion on a 0.66667 to one basis of an aggregate of 8,240,743
    outstanding shares of Series A and Series B preferred stock into
    5,493,821 shares of common stock upon completion of this offering;

  . The conversion on a 0.87190-to-one basis of an aggregate of 2,491,880
    outstanding shares of Series C preferred stock into 2,172,677 shares of
    common stock upon completion of this offering;

  . The conversion on a 0.96096-to-one basis of an aggregate of 3,018,429
    outstanding shares of Series D preferred stock into 2,900,577 shares of
    common stock upon completion of this offering; and

  . The conversion on a 0.95238-to-one basis of an aggregate of 18,276,151
    outstanding shares of Series E preferred stock into 17,405,832 shares of
    common stock upon completion of this offering.

   The pro forma as adjusted column gives effect to the sale by us of the
6,250,000 shares of common stock offered hereby at an assumed initial public
offering price of $12.00 per share, and after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us, and
the change in the authorized number of shares following completion of this
offering.

<TABLE>
<CAPTION>
                                                     December 31, 1999
                                              ---------------------------------
                                                                     Pro Forma
                                               Actual    Pro Forma  As Adjusted
                                              ---------  ---------  -----------
                                                      (in thousands)
<S>                                           <C>        <C>        <C>
Long-term obligations........................ $   2,503  $   2,503   $   2,503
Convertible and redeemable preferred stock...   143,945        --          --
Convertible and redeemable preferred stock
 warrants....................................       157        --          --
Stockholders' equity (deficit):
 Preferred stock, actual--37,000,000 shares
  authorized, 32,027,203 shares which have
  been designated as convertible and
  redeemable; pro forma and pro forma as
  adjusted--10,000,000 shares authorized,
  none outstanding...........................       --         --          --
 Common stock, actual--50,000,000 shares
  authorized, 2,390,910 shares issued and
  outstanding; pro forma--50,000,000 shares
  authorized, 30,363,817 shares issued and
  outstanding; pro forma as adjusted--
  150,000,000 shares authorized, 36,613,817
  shares issued and outstanding..............     3,573    147,675     216,425
Deferred stock compensation..................      (906)      (906)       (906)
Accumulated other comprehensive income.......        19         19          19
Accumulated deficit..........................  (120,640)  (120,640)   (120,640)
                                              ---------  ---------   ---------
  Total stockholders' equity (deficit).......  (117,954)    26,148      94,898
                                              ---------  ---------   ---------
  Total capitalization....................... $  28,651  $  28,651   $  97,401
                                              =========  =========   =========
</TABLE>

   The information in the table excludes as of December 31, 1999:

  . 2,885,294 shares issuable upon exercise of outstanding options at a
    weighted average exercise price of $5.25 per share;

  . 90,870 shares of common stock issuable upon the conversion of preferred
    stock after the exercise of outstanding preferred stock warrants at a
    weighted average exercise price of $6.20 per share on an as if converted
    basis;

  . 20,833 shares issuable upon exercise of an outstanding common stock
    warrant at an exercise price of $6.75 per share; and

  . an aggregate of 1,136,232 shares available for future issuance of stock
    options under our stock plans.

                                       19
<PAGE>

                                    DILUTION

   As of December 31, 1999, we had a pro forma net tangible book value of
approximately $26.1 million, or $0.86 per share of common stock. Pro forma net
tangible book value represents total tangible assets less total liabilities
divided by the pro forma number of shares of common stock outstanding, assuming
the conversion of convertible and redeemable preferred stock to common stock
and the conversion of preferred stock warrants to common stock warrants.
Without taking into account any other changes in the pro forma net tangible
book value after December 31, 1999, other than to give effect to the receipt by
us of the net proceeds from the sale of the 6,250,000 shares of common stock
offered hereby at an assumed initial public offering price of $12.00 per share,
and after deducting estimated underwriting discounts and commissions and
estimated offering expenses payable by us, the pro forma net tangible book
value at December 31, 1999 would have been approximately $94.9 million, or
$2.59 per share. This represents an immediate increase in net tangible book
value of $1.73 per share to existing stockholders and an immediate dilution of
$9.41 per share to new investors purchasing shares in this offering. The
following table illustrates this per share dilution:

<TABLE>
<S>                                                                <C>   <C>
Assumed initial public offering price per share...................       $12.00
 Pro forma net tangible book value per share as of December 31,
  1999............................................................ $0.86
 Increase per share attributable to new investors.................  1.73
                                                                   -----
Pro forma net tangible book value per share after the offering....         2.59
                                                                         ------
Dilution per share to new investors...............................       $ 9.41
                                                                         ======
</TABLE>

   The following table summarizes, on a pro forma basis, as of December 31,
1999, the number of shares of common stock purchased from us, the total
consideration paid and the average price per share paid by existing
stockholders and new investors (before deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us):

<TABLE>
<CAPTION>
                                Shares Purchased  Total Consideration   Average
                               ------------------ --------------------   Price
                                 Number   Percent    Amount    Percent Per Share
                               ---------- ------- ------------ ------- ---------
<S>                            <C>        <C>     <C>          <C>     <C>
Existing stockholders......... 30,363,817   82.9  $141,190,477   65.3   $ 4.65
New investors.................  6,250,000   17.1  $175,000,000   34.7   $12.00
                               ----------  -----  ------------  -----
    Total..................... 36,613,817  100.0% $216,190,477  100.0%
                               ==========  =====  ============  =====
</TABLE>

   The information presented with respect to existing stockholders excludes as
of December 31, 1999:

  . 2,885,294 shares issuable upon exercise of outstanding options at a
    weighted average exercise price of $5.25 per share;

  . 90,870 shares of common stock issuable upon the conversion of preferred
    stock after the exercise of 123,880 outstanding preferred stock warrants
    at a weighted average exercise price of $6.20 per share on an as if
    converted basis;

  . 20,833 shares issuable upon exercise of an outstanding common stock
    warrant at an exercise price of $6.75 per share; and

  . an aggregate of 1,136,232 shares available for future issuance under our
    stock plans.

   To the extent that any of the options or warrants are exercised, or
additional options are issued and exercised, there will be further dilution to
new investors. For additional information about our capitalization and the
options and warrants described above, see "Description of Securities" and notes
4 and 5 of Notes to Consolidated Financial Statements.

                                       20
<PAGE>

                      SELECTED CONSOLIDATED FINANCIAL DATA

   You should read the following selected financial data in conjunction with
our consolidated financial statements and notes to our consolidated financial
statements and with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which are included elsewhere in this
prospectus. The consolidated statements of operations data for the years ended
December 31, 1997, 1998 and 1999, and the balance sheet data at December 31,
1998 and 1999, are derived from audited consolidated financial statements
included elsewhere in this prospectus. The consolidated statement of operations
data for the period from inception to December 31, 1995 and for the year ended
December 31, 1996 and the balance sheet data as of December 31, 1995, 1996 and
1997 are derived from audited consolidated financial statements not included in
this prospectus. See note 1 and 9 of Notes to Consolidated Financial Statements
for an explanation of the number of shares used to compute shares used in
calculation of basic and diluted net loss per share. The "pro forma"
consolidated balance sheet data gives effect to the conversion of all
outstanding shares of preferred stock upon completion of this offering.

<TABLE>
<CAPTION>
                            Period from
                          January 19, 1995
                           (inception) to        Year ended December 31,
                            December 31,   --------------------------------------
                                1995         1996      1997      1998      1999
                          ---------------- --------  --------  --------  --------
                                 (in thousands, except per share data)
<S>                       <C>              <C>       <C>       <C>       <C>
Consolidated Statement
 of Operations Data:
Revenues................      $    --      $  1,291  $  1,450  $ 15,991  $ 22,596
Cost of revenues........           --         1,097     1,728    18,028    22,236
                              -------      --------  --------  --------  --------
Gross profit (loss).....           --           194      (278)   (2,037)      360
Operating expenses:
 Research and
  development...........          883         7,186    13,083    18,495    22,787
 Sales and marketing....           84         1,704     5,383    11,346    11,080
 General and
  administrative........          168         2,434     3,762     5,887     5,732
                              -------      --------  --------  --------  --------
   Total operating
    expenses............        1,135        11,324    22,228    35,728    39,599
                              -------      --------  --------  --------  --------
Loss from operations....       (1,135)      (11,130)  (22,506)  (37,765)  (39,239)
Other income (expense),
 net....................          135           335       402    (6,563)   (3,174)
                              -------      --------  --------  --------  --------
Net loss................      $(1,000)     $(10,795) $(22,104) $(44,328) $(42,413)
                              =======      ========  ========  ========  ========
Basic and diluted net
 loss per share.........      $ (0.55)     $  (5.89) $ (12.18) $ (21.88) $ (18.98)
                              =======      ========  ========  ========  ========
Shares used in
 computation of basic
 and diluted net loss
 per share..............        1,833         1,833     1,815     2,026     2,235
                              =======      ========  ========  ========  ========
Pro forma basic and
 diluted net loss per
 share..................                                                 $  (1.90)
                                                                         ========
Shares used in
 computation of pro
 forma net loss per
 share..................                                                   22,375
                                                                         ========
</TABLE>

<TABLE>
<CAPTION>
                                      December 31,                    December 31,
                         -------------------------------------------      1999
                          1995    1996     1997     1998      1999     Pro forma
                         ------  -------  -------  -------  --------  ------------
                                     (in thousands)
<S>                      <C>     <C>      <C>      <C>      <C>       <C>
Consolidated Balance
 Sheet Data:
Cash and cash
 equivalents............ $1,422  $19,092  $13,334  $10,763  $ 20,165    $ 20,165
Working capital.........  4,280   17,722   15,677  (17,135)   22,759      22,759
Total assets............  6,135   21,747   22,575   32,510    40,946      40,946
Long term obligations,
 net of current
 portion................     96    1,757    2,978    4,413     2,503       2,503
Convertible and
 redeemable preferred
 stock and warrants.....  5,500   30,100   49,410   61,595   144,102          --
Common stock and
 warrants...............     10       10    1,968    2,179     3,573     147,675
Accumulated deficit..... (1,000) (11,795) (33,899) (78,227) (120,640)   (120,640)
Stockholders' equity
 (deficit)..............   (990) (11,785) (33,136) (76,596) (117,954)     26,148
</TABLE>

                                       21
<PAGE>

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

Overview

   We provide smart antenna systems that address the capacity constraints faced
by wireless network operators. From inception in January 1995 through December
31, 1997, our operating activities related primarily to conducting research and
development, building market awareness, recruiting management and technical
personnel and building an operating infrastructure. Shipment for commercial
sale of our initial SpotLight system began late in the fourth quarter of 1997
and we first recognized revenues for the sale of our SpotLight system in the
first quarter of 1998. Since the beginning of 1998, our operating activities
have been focused on increasing sales, new product development and expanding
manufacturing capacity. Since inception, we have incurred significant losses
and as of December 31, 1999, had an accumulated deficit of $120.6 million.

   Our revenues are derived primarily from sales of our SpotLight systems,
which includes the sale of hardware and the licensing of software, and from
related installation and optimization services. We believe that substantially
all of our revenues in the foreseeable future will be derived from sales of our
SpotLight systems. Our sales cycles can be lengthy and the related contracts
typically include performance specifications and customer acceptance conditions
in connection with the sale of each system to a new customer.

   Revenues. We generate revenues through the sale of our smart antenna systems
and related installation and optimization services. Our systems revenues are
recognized when title to the system and risk of loss is transferred to the
customer and all customer acceptance conditions, if any, have been satisfied,
and collection probable. Services revenues, generally for installation and
optimization, are recognized when the services have been performed and all
customer acceptance conditions, if any, have been satisfied. Our maintenance
contract revenues are recognized ratably over the term of the agreement
(typically one year). Any billings in excess of our revenues are classified as
deferred revenue and related systems are recorded as inventory.

   Our contract terms including pricing and acceptance criteria, if any,
typically vary depending upon the order. Consequently, our revenues may vary
from quarter to quarter depending on the length of the sales cycle and the
applicable contract terms. To date, our international sales have been
denominated in U.S. dollars. However, in the future, a portion of our
international sales may be denominated in foreign currencies. Sales to ALLTEL,
IUSACELL, and Southwestco represent substantially all our revenues for the year
ended December 31, 1999, and we expect a limited number of customers will
account for a substantial percentage of revenues for the foreseeable future.

   Cost of Revenues. Our cost of revenues typically consists of material
components, system assembly and testing, and overhead expenses. Our gross
margins are generally higher for hardware revenues than for service revenues.
We anticipate that our overall gross margins will fluctuate from period-to-
period as a result of shifts in product mix, the proportion of direct and
indirect sales, anticipated decreases in average selling prices and our ability
to reduce costs.

   Research and Development. Our research and development expense consists
principally of salaries, related personnel expenses, consultant fees and
prototype expenses related to the design, development, testing and enhancement
of our SpotLight systems. As of December 31, 1999, all of our research and
development costs had been expensed as incurred. We believe that continued
investment in research and development is critical to achieving our strategic
product development and cost reduction objectives and, as a result, expect this
expense to continue to increase significantly in absolute dollars in the
future.

   Sales and Marketing. Our sales and marketing expense consists of salaries,
sales commissions and related expenses for personnel engaged in marketing,
sales and field service support for new installations and installed base, as
well as promotional expenditures. We believe that these expenses will increase
in absolute dollars as the marketing campaigns for our SpotLight 2000 and
SpotLight GSM systems expand and we increase our sales personnel.

                                       22
<PAGE>

   General and Administrative. Our general and administrative expense consists
primarily of salaries and personnel related expenses, recruiting and relocation
expenses, professional and consulting fees, and other general corporate
expenses. We expect this expense to increase as we add personnel and incur
additional costs related to our operation as a public company.

   Stock compensation expense. We have recorded stock-based compensation
expense of $3.0 million related to stock options granted below fair market
value for accounting purposes through December 31, 1999. Of this amount, we
amortized approximately $2.1 million through that same period. This amount
represents the difference between the exercise price of these stock option
grants and the deemed fair value of the common stock at the time of grant. The
remaining $906,000 will be amortized over the remaining vesting period of the
options, generally four years. As a result, the amortization of stock-based
compensation will impact our reported results of operations through fiscal
2002. The stock-based compensation expense has been allocated to research and
development expense, sales and marketing expense and general and administrative
expense, as appropriate.

Results of Operations

Years Ended December 31, 1999 and 1998

   Revenues. Revenues were $22.6 million in 1999 and $16.0 million in 1998, an
increase of 41.3%. This increase was primarily due to increased unit sales of
our SpotLight systems, increased revenues per unit sold and the introduction of
a new version of our SpotLight 2000 CDMA system in July 1999. International
sales of our systems accounted for 26.0% of revenues in 1999 and 23.5% in 1998.

   Cost of Revenues. Our cost of revenues was $22.2 million in 1999 and $18.0
million in 1998, an increase of 23.3%. The increase in cost of revenues was
primarily the result of increased units sold and change in product mix from
analog systems to our SpotLight 2000 CDMA system. Also, in 1999 we began to
include in cost of revenues the personnel expenses related to field
installation and engineering services. This change was made to properly align
direct costs and overhead with revenues.

   Our cost of revenues and gross profit may be affected by the mix of systems
sold, the mix of distribution channels used by us, the mix of services
provided, and the average order size. We expect to realize higher gross margins
on direct channel sales relative to indirect channel sales. If sales through
indirect channels increase as a percentage of total revenues our gross margins
will likely decrease.

   Research and Development. Research and development expense was $22.8 million
in 1999 and $18.5 million in 1998, an increase of 23.2%. The increase was
primarily due to increased personnel related to the development and testing of
our SpotLight GSM system and our SpotLight 2000 CDMA system.

   Sales and Marketing. Sales and marketing expense was $11.1 million in 1999
and $11.3 million in 1998, a decrease of 2.3%. The decrease was primarily due
to including in cost of revenues the personnel of expenses associated with
field installation and engineering services.

   General and Administrative. General and administrative expense was $5.7
million in 1999 and $5.9 million in 1998, a decrease of 2.6%. The decrease was
primarily due to the reduction of administrative personnel and reductions in
outside professional services.

   Other Income (Expense), Net. Our total other income (expense), net amounted
to an expense of $3.2 million in 1999 compared to an expense of $6.6 million in
1998. The decreased expense was primarily the result of reduced interest
expense as a result of the repayment of our $29.0 million Senior Secured Bridge
Notes bearing interest at 13.75% in April 1999. Gross other income increased by
$1.0 million from 1998 to 1999 due to income from short-term investments in
1999 made with the proceeds from the Series E preferred stock financing.

                                       23
<PAGE>

Years Ended December 31, 1998 and 1997

   Revenues. Revenues were $16.0 million in 1998 and $1.5 million in 1997. This
increase reflected our first full year of revenues resulting from the
commercial deployment of our SpotLight systems. Our revenues for 1997 consisted
primarily of services provided by the Network Services division which was
discontinued and sold in March 1998.

   Cost of Revenues. Our cost of revenues was $18.0 million in 1998 and $1.7
million in 1997. The increase was primarily related to costs associated with
introducing our analog system and the first version of our SpotLight CDMA
system.

   Research and Development. Research and development expense was $18.5 in 1998
and $13.1 million in 1997, an increase of 41.4%. The increase was primarily
attributable to increased personnel related to the introduction of our analog
system, development of the first version of our SpotLight CDMA system, and
start up costs related to the development of our GSM system.

   Sales and Marketing. Sales and marketing expense was $11.3 million in 1998
and $5.4 million in 1997, an increase of 110.8%. The increase was primarily
attributable to expansion of our direct sales force, marketing and service
support staff. Also in 1998, we increased expenses associated with initial
field trials, marketing communications, and training and documentation.

   General and Administrative. General and administrative expense was $5.9
million in 1998 and $3.8 million in 1998, an increase of 56.5%. The increase
reflected the addition of administrative staff, new facilities in Redmond,
Washington and Allen, Texas, increased outside professional services associated
with financings and expenses associated with the implementation of our
enterprise resource planning system.

   Other Income (Expense), Net. Our total other income (expense), net amounted
to an expense of $6.6 million in 1998 compared to income of $402,000 in 1997.
The increased interest expense was primarily the result of issuing the $29.0
million Senior Secured Bridge Notes in May 1998, bearing interest at 13.75% per
annum.

Selected Quarterly Results of Operations

   The following table sets forth certain unaudited quarterly consolidated
statement of operations data for the eight quarters ended December 31, 1999.
This unaudited information has been prepared substantially on the same basis as
the annual audited financial statements appearing elsewhere in this prospectus,
and includes all necessary adjustments that we consider necessary to present
fairly the financial information for the periods presented. The quarterly data
should be read in conjunction with the audited consolidated financial
statements and the notes thereto appearing elsewhere in this prospectus.

<TABLE>
<CAPTION>
                                                         Quarter ended
                          --------------------------------------------------------------------------------
                          March 31, June 30,  Sept. 30,  Dec. 31,  March 31,  June 30,  Sept. 30, Dec. 31,
                            1998      1998      1998       1998      1999       1999      1999      1999
                          --------- --------  ---------  --------  ---------  --------  --------- --------
                                                        (in thousands)
<S>                       <C>       <C>       <C>        <C>       <C>        <C>       <C>       <C>
Consolidated Statement of
 Operations Data:
Revenues................   $ 2,538  $ 3,963   $  6,557   $  2,933  $  6,834   $  1,553   $ 5,725  $  8,484
Cost of revenues........     2,910    3,486      6,374      5,258     7,059      1,860     5,768     7,549
                           -------  -------   --------   --------  --------   --------   -------  --------
Gross profit............      (372)     477        183     (2,325)     (225)      (307)      (43)      935
Operating expenses:
 Research and
  development...........     3,575    4,450      5,525      4,945     5,392      5,651     5,301     6,443
 Sales and marketing....     1,996    2,091      3,347      3,912     2,694      2,722     2,434     3,230
 General and
  administrative........     1,044    1,385      1,177      2,281     1,280      1,654     1,360     1,438
                           -------  -------   --------   --------  --------   --------   -------  --------
 Total operating
  expenses..............     6,615    7,926     10,049     11,138     9,366     10,027     9,095    11,111
                           -------  -------   --------   --------  --------   --------   -------  --------
Loss from operations....    (6,987)  (7,449)    (9,866)   (13,463)   (9,591)   (10,334)   (9,138)  (10,176)
Other income (expense),
 net....................        54   (1,719)    (2,202)    (2,696)  (3,108)       (614)      293       255
                           -------  -------   --------   --------  --------   --------   -------  --------
Net loss................   $(6,933) $(9,168)  $(12,068)  $(16,159) $(12,699)  $(10,948)  $(8,845) $ (9,921)
                           =======  =======   ========   ========  ========   ========   =======  ========
</TABLE>

                                       24
<PAGE>

   Our revenues increased significantly over the last two quarters primarily as
a result of increased unit sales of our SpotLight systems and expanding
customer base. Our revenues in the last quarter of 1998 decreased compared to
the previous quarter due to delays in receiving orders from a significant
customer. Our revenues in the second quarter of 1999 declined compared to the
previous quarter primarily due to delays in orders associated with the
transition from analog to CDMA systems.

   Research and development expense has generally remained constant on a
quarterly basis but increased in the last quarter of 1999 due to expenses
associated with costs of prototype systems and write off of certain capital
assets associated with research and development. Sales and marketing expense
has fluctuated with the number of personnel in sales, marketing and customer
support and changes in classifications to cost of revenues in 1999. General and
administrative expense has fluctuated with the number of personnel. The
increase in the fourth quarter of 1998 was the result of the establishment of a
bad debt reserve and expenses associated with the cancellation of a public
offering. As a result of our reduction in force in the third quarter of 1999,
general and administrative expense declined.

   Our limited operating history makes the prediction of future operating
results difficult. Our business prospects must be considered in light of the
risks and uncertainties often encountered by early-stage companies in the
wireless communications market. We may not be successful in addressing these
risks and uncertainties. We have experienced significant percentage growth in
revenues in recent periods; however, we do not believe that prior growth rates
are indicative of future growth rates. It is likely that in some future quarter
our operating results may fall below the expectations of securities analysts
and investors. In this event, the trading price of our common stock may fall
significantly.

Liquidity and Capital Resources

   Since inception, we have financed our operations primarily through private
sales of preferred stock and common stock and the issuance of debt instruments,
and to a lesser extent, capital leases arrangements and borrowings under
various lines of credit. Net proceeds from these transactions totaled $182.2
million as of December 31, 1999.

   For the twelve months ended December 31, 1999, we used net cash in operating
activities of $37.8 million. Our operating activities included major uses of
cash to fund our net loss of $42.4 million. We also used cash by increasing
accounts receivable by $5.8 million and reduced accounts payable and accrued
liabilities by $1.4 million. We partially offset cash uses by lowering
inventories by $3.8 million, increasing deferred revenues by $1.6 million. Our
net cash used in the fourth quarter 1999 amounted to $3.8 million. Our net cash
used in operating activities in 1998 amounted to $34.9 million.

   Our net cash used in investing activities in 1999 was $1.3 million. Our 1998
net cash used in investing activities was $2.5 million.

   Net cash provided by financing activities was $48.5 million for year ended
December 31, 1999. This primarily consisted of net proceeds from the sale of
Series E preferred stock of $82.5 million. In April 1999, we repaid $29.0
million in Senior Secured Bridge Notes plus interest of $4.1 million. Our 1998
net cash from financing activities was $34.8 million consisting of $29.0
million from the sale of Senior Secured Bridge Notes at 13.75% interest and
$7.2 million from the sale of Series E preferred stock.

   As of December 31, 1999, we had $20.2 million in cash and cash equivalents,
$7.5 million under a revolving line of credit with Imperial Bank and $3.0
million under a equipment lease arrangement with Transamerica Business Credit,
of which $1.8 million remained available. On March 23, 2000, we signed a
commitment letter renewing and increasing our line of credit with Imperial Bank
to $10 million, of which no amount is presently outstanding other than a $2.5
million standby letter of credit to support our obligations under the lease for
our Redmond, Washington facility. Borrowings under the Transamerica equipment
lease are

                                       25
<PAGE>


secured by the equipment financed thereunder. The Transamerica equipment lease
terms vary from 24 to 36 months with an effective interest rate of 12.26% per
annum for domestic equipment leases and 12.86% for foreign equipment leases,
and interest is payable monthly. We have several capital leases with terms
ranging from 24 to 48 months. At December 31, 1999, our outstanding capital
lease obligations were $5.2 million, accruing interest at rates ranging from
7.25% to 14.50%. Please see note 5 to the financial statements for a more
complete description of the credit facilities. We anticipate an increase in our
capital expenditures and lease commitments consistent with anticipated growth
in operations, infrastructure and personnel. We expect to use approximately
$2.8 million of the net proceeds from this offering for capital expenditures
primarily associated with expanding our manufacturing facilities and acquiring
additional testing equipment. In addition, we plan to use approximately
$22.6 million of the net proceeds in 2000 to fund research and development
activities.

   We believe that current capital resources, together with the estimated net
proceeds from this offering, are adequate to fund our operations for at least
12 months. Thereafter, we may be required to raise additional capital which may
not be available to us on acceptable terms, if at all. Any inability to obtain
needed financing by us could have a material adverse effect on our business and
operating results.

Market Risk

   We do not use derivative financial instruments. We generally place our
marketable security investments in high credit quality instruments, primarily
U.S. Government obligations and corporate obligations with contractual
maturities of less than one year. We do not expect any material loss from our
marketable security investments and therefore believe that our potential
interest rate exposure is not material; however, these investments are subject
to interest rate risk.

Recent Accounting Pronouncements

   In June 1998, the FASB issued SFAS No. 133, Accounting for Derivatives and
Hedging Activities, which requires that all derivative instruments be recorded
on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designed as part of a hedge
transaction and, if it is, the type of hedge transaction. SFAS No. 133 is
effective for fiscal years beginning after June 15, 2000. We do not anticipate
that the adoption of this new standard will have a material effect on our
earnings or our financial position, but we continue to evaluate the impact of
SFAS No. 133.

   In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin Number 101 ("SAB 101"). This summarized certain areas of
the staff's views in applying generally accepted accounting principles as it
applies to revenue recognition. The Company believes that its revenue
recognition principles comply with SAB 101. The Company will continue to
evaluate interpretations of SAB 101.

                                       26
<PAGE>

                                    BUSINESS

Overview

   We provide smart antenna systems for the wireless communications industry.
We believe that our SpotLight systems enable wireless network operators to
increase overall network capacity, improve or maintain network quality, reduce
network operating costs and better manage their network infrastructure. As the
demand for wireless services has grown in recent years, we have developed
products based on our proprietary technologies that address the associated
network capacity problems faced by wireless network operators.

   Our SpotLight systems can reduce the need for more costly infrastructure
upgrades and additional cell site deployments, allowing wireless network
operators to more cost-effectively keep pace with subscriber growth and
increased demand for digital services. These smart antenna systems utilize
proprietary hardware and software to enable a more efficient utilization of the
finite amount of radio frequency spectrum, or "wireless bandwidth." Our
technology is designed to be implemented in a variety of market segments in the
wireless communications industry and currently supports CDMA, GSM and analog
standards. Our customers include AirTouch Communications, Inc., ALLTEL, Bell
Atlantic Mobile, GTE Wireless Inc., IUSACELL, Southwestco and Telefonica
Servicios Moviles S.A.C. of Peru. As of December 31, 1999, we had sold 121
SpotLight systems worldwide.

Industry Background

 Growth in Wireless Usage

   The demand for wireless communications services has grown significantly in
recent years. According to The Strategis Group, U.S. subscriber usage was
expected to increase from approximately 174 billion minutes of use in 1999 to
approximately 372 billion minutes of use by 2003, representing an expected
compound annual growth rate of 20.9%. This increase in usage has been driven by
an increased number of subscribers, lower prices and expanded availability of
existing services. In addition to these factors, the emergence of new data and
Internet-oriented wireless services is expected to contribute to the increase
in subscriber usage in the future.

   Increased Subscribers. The number of wireless subscribers has increased
significantly in recent years. According to International Data Corporation, or
IDC, there were approximately 303 million wireless subscribers around the world
in 1998 and that number was expected to reach approximately 1.1 billion
subscribers in 2003, representing an expected compound annual growth rate of
28.9%. According to IDC, in 1998, there were approximately 64 million wireless
subscribers in the United States and that number was expected to grow to
approximately 118 million by 2003, representing an expected compound annual
growth rate of 12.9%.

   Lower Price. The price of wireless services has decreased significantly in
recent years. According to data provided by The Strategis Group, the average
price per wireless minute in the United States was expected to decline from
$0.25 per minute in 1999 to $0.12 per minute in 2003. With multiple wireless
network operators competing in most U.S. markets, competitive pricing
strategies, such as discounting and fixed rate plans, have resulted in a
greater number of wireless subscribers, as well as a substantial increase in
subscriber usage. In addition, the greater supply of commercially available
wireless frequency due to increased government allocation of spectrum to
wireless network operators has resulted in increased competition among existing
and new wireless network operators, further reducing costs to subscribers.

   Expanded Availability of Existing Services. Due to the high initial fixed
costs involved, early wireless deployments were limited to urban centers and
major traffic corridors. However, to meet increased demands for ubiquitous
wireless services, wireless network operators accelerated the buildout and
upgrade of their networks. This increased coverage has enabled these wireless
network operators to reach new subscribers and provide a higher level of
service to existing subscribers.

   New Wireless Services. Consumer demand for "any time, anywhere" access to
the Internet and data services, such as email and instant messaging, has
created a demand for delivery of these services over a

                                       27
<PAGE>

wireless network. Devices with wireless access, such as mobile phones, palm
computers and laptop computers with wireless modems, continue to evolve,
providing applications and ease of use that increase wireless data usage.
Additionally, standard protocols such as Wireless Application Protocol, or WAP,
have emerged and are designed to create interoperability of wireless equipment
and Internet-based products. These protocols are expected to further drive
consumer demand for wireless access to the Internet and data services.

 Strains on Wireless Network Capacity

   Increased subscriber usage and the demand for ubiquitous wireless access
place a significant strain on wireless network operators given the fixed amount
of radio frequency spectrum that is available. Wireless spectrum is allocated
to individual wireless network operators in fixed amounts by governments in the
U.S. and foreign markets. Thus, the fundamental challenge for wireless network
operators is to increase capacity, while maintaining signal quality, within a
fixed amount of wireless bandwidth. Wireless network operators generally have
used two alternatives to address capacity problems: building additional cell
sites or deploying more efficient digital technologies.

   Additional cell sites. Operators of wireless networks often address capacity
problems by building new cell sites. This alternative has three major
disadvantages. First, we believe the cost of constructing a new standard 800
MHz CDMA cell site, including land, building and equipment, can be
approximately $500,000. Second, building cell sites closer together increases
signal interference in the network, which can reduce capacity and call quality,
exacerbating the very problems that the additional cell sites were built to
resolve. Third, wireless network operators face significant community
resistance arising from environmental and zoning concerns and objections to the
appearance of additional cell site towers.

   More efficient digital technologies. In addition to building more cell
sites, wireless network operators have deployed more spectrum-efficient digital
technologies such as CDMA, GSM and TDMA to increase capacity. These digital
technologies offer many improvements to wireless network operators and their
customers, including more cost-effective infrastructure, smaller phones with
improved battery life and value-added features, such as the capability to
support data services. According to IDC, 69.2% of subscribers worldwide were
using digital handsets in 1998 and this number was expected to increase to
96.8% by 2003. Despite the improvement offered by digital technologies,
wireless network operators continue to find that portions of their networks
still face capacity limitations. For instance, CDMA lacks the ability to
efficiently add incremental capacity in localized heavy traffic areas of a
network. Consequently, wireless network operators must either deploy new cells,
or dedicate more spectrum to CDMA in significant portions of their network to
resolve isolated capacity constraints. In GSM networks, the capacity is limited
by interference between cell sites within the network. This interference
prevents GSM network operators from adding additional capacity to the network.

   The growing demand for wireless services, coupled with the high costs and
technical difficulties associated with increasing network capacity, create the
need for more cost-effective solutions. As wireless network operators seek to
provide ubiquitous wireless service and support increased subscriber usage,
they must address the fundamental challenge of achieving maximum capacity from
the finite spectrum they have been allocated.

The Metawave Solution

   We provide smart antenna systems to wireless network operators. Our
SpotLight systems are a cost-effective solution to expanding network capacity
while improving or maintaining overall network performance. Our SpotLight
systems are compatible with CDMA, GSM and analog base station equipment. Our
smart antenna systems provide wireless network operators with the following
benefits:

   Cost-Effective Capacity Expansion. Our SpotLight systems enable wireless
network operators to increase the capacity of their existing networks and
reduce the need to build and maintain costly new cell sites. Our SpotLight
systems can be deployed selectively within a network in either a single cell
site or multiple cell sites. Based on customer data, current versions of our
SpotLight 2000 system improved CDMA capacity in cell sites from 30% to 50%,
depending on network configuration. Additionally, in a recent field trial, our
SpotLight GSM

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system demonstrated that, when deployed in a network of cell sites, GSM network
capacity can be increased by 100% without increasing the number of GSM cell
sites. By applying our SpotLight solutions in these targeted capacity
constrained cell sites, overall network capacity can be correspondingly
increased.

   Improved Network Performance. Our SpotLight systems allow wireless network
operators to increase capacity while maintaining or improving the level of
service and signal quality. Our SpotLight 2000 systems increase CDMA network
performance by efficiently distributing existing network resources to better
match subscriber usage. We believe our SpotLight GSM systems will provide
wireless network operators with better signal reception and reduced
interference thereby improving network performance.

   Compatibility with Standards and Equipment. Our SpotLight systems are
designed to be compatible with most existing wireless standards and currently
installed cell site equipment thereby preserving the wireless network
operators' existing investment in equipment and technology. Our smart antenna
systems have been independently developed by us to be compatible with the
Motorola, Lucent and Nortel 800 MHz CDMA base stations, which we believe
represent substantially all of the 800 MHz CDMA base stations deployed in North
America. We believe our SpotLight GSM systems are also compatible with most 900
MHz GSM base stations deployed worldwide.

Strategy

   Our objective is to provide smart antenna systems to the worldwide wireless
communications market. Key elements of our strategy include:

   Deliver Solutions to Capacity Constrained Wireless Network Operators. We
will continue to focus on developing solutions to increase capacity for those
wireless network operators facing capacity constraints. To date, we have
developed SpotLight systems to address the capacity and system quality problems
facing 800 MHz CDMA and 900 MHz GSM wireless network operators. According to
IDC, as of 1998, U.S. wireless network operators at these frequencies serviced
more than 75% of wireless subscribers. As capacity issues emerge in wireless
networks using different frequencies, we intend to develop smart antenna
systems that address capacity problems in these wireless networks.

   Further Penetrate Existing CDMA Customers. We believe that the 800 MHz CDMA
market will continue to represent a significant opportunity for us. Over the
last two years we have sold SpotLight 2000 systems to the four largest 800 MHz
CDMA wireless network operators in North America, as measured by subscriber
market share data provided by the Radio Communications Review. We intend to
leverage the performance and service of our existing system deployments to
expand our presence and penetration within these wireless network operators.

   Target Additional Strategic Customers. With our products today, we are able
to target additional large multi-system 800 MHz CDMA and 900 MHz GSM wireless
network operators around the world that serve substantial concentrations of
customers and have the greatest market share in their respective markets. We
intend to target these markets by expanding our manufacturing, installation,
sales and service capabilities in the regions served by these wireless network
operators.

   Leverage Technology Leadership To Expand Markets. We intend to use our
technology leadership and intellectual property to develop and provide new
capacity solutions to the existing and emerging wireless communications
markets. Our core technology can be used to address spectrum management issues
in many large wireless networks. Currently, the principal areas of our product
development are the following:

  . Integrating our technology into equipment provided by wireless base
    station manufacturers;

  . Developing smart antenna products for use by wireless network operators
    at 1800 MHz and 1900 MHz PCS spectrum;

  . Exploring the development of products for the TDMA wireless standard; and

  . Exploring the development of products for the broadband wireless market.

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<PAGE>

Markets

   In wireless communications networks, there are several wireless standards
that use different technologies to process calls and divide allocated spectrum.
These wireless standards fall into two broad categories, analog and digital.
Advanced Mobile Phone System, or AMPS, is the leading analog standard. Digital
standards are further subdivided into two general schemes, time division and
code division. Time Division Multiple Access, or TDMA, and Global Systems for
Mobile Communications, or GSM, are the leading time division standards. Code
Division Multiple Access, or CDMA, is the leading code division standard. We
have developed smart antenna systems that increase capacity for CDMA, GSM and
analog based networks.

   The terms cellular and PCS are often used interchangeably by the popular
press when discussing wireless communications networks. However, within the
wireless industry the distinction between the two is important. Cellular
describes networks operating in the 800 MHz and 900 MHz frequency bands, using
both analog and digital standards. Analog, CDMA, GSM and TDMA are the most
widely deployed cellular standards across the globe. PCS typically describes
networks operating in the 1800 MHz and 1900 MHz frequency bands. CDMA, GSM and
TDMA the most widely deployed PCS standards.

   CDMA Market. The CDMA wireless market consists of wireless network operators
at both cellular and PCS frequencies. We believe that approximately half of the
cellular networks in North America have adopted CDMA as their digital
technology. Wireless network operators are overlaying CDMA networks on top of
existing analog networks thereby allocating spectrum between CDMA and analog.
We also believe that CDMA is the most widely deployed PCS digital technology in
North America.

   The CDMA Development Group, a trade association, estimated there were 50
million CDMA subscribers worldwide at year end 1999, accessing both the 800 MHz
and 1900 MHz networks. Roughly 90% of these are in North America and Asia.
Frost and Sullivan estimated there were 46,716 CDMA 800 MHz base stations in
operation in 1999, up from 26,200 in 1998. These base stations represent the
target market for our CDMA systems. Frost and Sullivan also estimated 38,082
CDMA PCS base stations were in operation in 1999, up from 20,730 in 1998.

   GSM Market. The GSM market consists of wireless network operators at both
cellular and PCS frequencies. According to the GSM Association, GSM is the most
widely deployed digital standard worldwide and has been deployed in 142
countries, with more than 250 million subscribers, predominantly in Europe and
Asia, at year end 1999. According to Frost and Sullivan, there were 98,133 GSM
base stations in operation at 900 MHz in 1999, up from 46,515 in 1998. These
base stations represent the market for our GSM systems. Frost and Sullivan also
estimated there were 55,711 PCS base stations using GSM were in operation in
1999, up from 31,690 in the prior year.

   TDMA Wireless Market. The TDMA market consists of wireless network operators
at both cellular and PCS frequencies. According to the Universal Wireless
Communication Consortium, there were an estimated 30 million TDMA wireless and
PCS subscribers worldwide as of September 30, 1999.

   Third Generation Standards. Over the next several years, CDMA, GSM and TDMA
wireless network operators may begin to migrate their systems to third
generation, or 3G, standards. Although the specifications for 3G are not
complete, we believe that they will be based on CDMA technologies and that our
smart antenna systems will be applicable to the evolving 3G technologies. We
intend to develop 3G compatible products.

   Broadband Fixed Wireless  In fixed, broadband wireless networks, no
predominant standards currently exist. This market is often described under the
umbrella term, broadband wireless access, or BWA. The BWA market services both
mobile and fixed end users. Services range from high speed internet access, to
combined high capacity data and voice offerings.

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<PAGE>

Metawave Products

   We have developed spectrum management solutions, consisting of smart antenna
systems, applications software and engineering services, that enable wireless
network operators to increase overall network capacity, improve or maintain
network quality, reduce network operating costs and better manage their network
infrastructure.

   SpotLight 2000 Platform. Our SpotLight smart antenna system was initially
designed for use in analog networks and was first shipped for commercial sale
in November 1997. The second generation SpotLight 2000 system was designed to
support both analog and CDMA wireless standards. Our SpotLight 2000 connects to
Motorola HDII, SC2400, SC4812 and SC9600 base stations, Lucent Series II base
stations, and Nortel Metrocell base stations.

   We have analyzed data from numerous CDMA networks and have found that the
distribution of traffic within a network and even within a cell varies
considerably. Thus, wireless network operators are faced with the challenge of
allocating spectrum resources to uneven and varied subscriber traffic. CDMA
lacks the ability to efficiently add incremental capacity in localized areas.
Consequently, to resolve isolated capacity constraints, wireless network
operators must either deploy new cells or dedicate more spectrum to CDMA in
significant portions of their network.

   Cells are most often divided into three sectors. Because of imbalanced
traffic, one sector is often utilized to its maximum capacity, while the
neighboring sectors have unused or excess capacity. When a sector's capacity is
fully utilized, new calls cannot be originated within the sector without
negatively affecting network performance despite call servicing capability
remaining unused in adjacent sectors. In addition, subscriber calls cannot be
transferred into the overloaded sector when moving from an adjacent cell or
sector. This results in either calls being blocked or calls being terminated.

   Our proprietary SpotLight 2000 system balances the traffic load within a
cell, reducing the problem of having one sector overloaded while the other
sectors are underutilized. As traffic varies throughout the day, our SpotLight
System can accommodate these variations and balance the traffic accordingly.
This load balancing increases network efficiency and capacity.

                    Load Balancing Through Sector Synthesis

Load Balancing Through Sector Synthesis
Graphical depiction with 2 cell sites demonstrating the load balancing
capability of the SpotLight 2000 CDMA system through sector synthesis.

Language under the cell site graphic on the left states:
Before SpotLight 2000
Peak traffic loading strains capacity in one sector, while capacity remains
idle in others.

Language under the cell site graphic on the right states:
After SpotLight 2000
Load balancing by reorienting and resizing sectors increases cell site
capacity.

   As illustrated above, our SpotLight 2000 system addresses traffic loading by
controlling the transmission and reception of CDMA radio signals by base
stations through a process called sector synthesis. Our SpotLight 2000 system
adapts the sector coverage of the base stations' CDMA radios to the local
traffic patterns around

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cell sites. The system's phased-array antenna makes it possible to dynamically
adjust sector antenna patterns through a software-driven process. As a result,
wireless network operators can optimize their CDMA networks with increased
flexibility and precision, thereby enhancing network capacity and performance
in response to changing traffic patterns taking into account local terrain and
variable radio frequency conditions.

   The SpotLight 2000 system can be deployed in three different configurations
depending on customer network requirements. The CDMA-only configuration uses
our SpotLight system to support only the CDMA interface. This is the baseline
SpotLight system for customers who are interested in improving the capacity of
their CDMA system without changing their analog network. The second available
configuration is CDMA with Analog Pass Through, or CDMA/APT. This system
provides capacity benefits to the CDMA interface while "passing" the analog
signals through our SpotLight system without changing the analog network. The
CDMA/APT system allows the service provider to support both CDMA and analog
networks with a single antenna and set of power amplifiers. The third system
configuration is the dual mode system which provides capacity improvements to
both the CDMA and analog wireless standards, configuring and optimizing each
wireless standard separately, while using only a single set of antennas.

   Each of the three configurations described above can be deployed in three-
sector cell sites or can be used to increase the sectorization of a CDMA cell
site from three sectors to four, five or six sectors. In cell sites where more
than a single sector is heavily loaded, the wireless network operator may use
the SpotLight 2000 system to increase the sectorization of the cell site and
gain additional capacity over the original three-sector cell site. The
SpotLight system enables wireless network operators to use our software-
controlled antenna patterns to reduce handoff overhead and optimization
problems normally associated with four, five or six sector deployments. At the
same time, the SpotLight system provides an efficient way to increase the
sectorization of the cell site without having to add additional antennas,
cables, duplexers, filters or power amplifiers.

   Our SpotLight 2000 system can be administered and monitored locally or
remotely through our Windows-based software application called SiteSculptor.
SiteSculptor allows real time monitoring of system performance through
graphical displays. Further, we offer networked access to our SpotLight 2000
system with our SiteNet network application. SiteNet utilizes our SiteSculptor
software package to provide a means for remote SpotLight configuration and
centralized collection of performance statistics in analog and CDMA networks.

   SpotLight for GSM. Our SpotLight GSM system is designed to increase GSM
network capacity by reducing cell site and network interference levels using a
beam-switching technology. Currently the capacity of dense urban GSM networks
is limited by interference between cell sites within the network. This
interference prevents wireless network operators from adding additional
capacity to the network.

   Our SpotLight system segments the normal three sector coverage area into
twelve narrow beam patterns. Our SpotLight GSM system tracks the location of
each subscriber within the sector coverage area and then assigns a single
narrow beam to them. As the subscriber moves through the sector coverage area,
our SpotLight GSM system continues to track the position of the subscriber and
switches the correct narrow beam to them. As illustrated below, the
interference received by and transmitted from the host cell site can be
significantly reduced, allowing the wireless network operator to increase
capacity while maintaining signal quality.

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            Interference Reduction Through Switched Beam Technology

Graphical depiction with two cell sites demonstrating the switched beam
capability of the SpotLight GSM system.

Language under the cell site on the left states:
Before SpotLight GSM
Conventional sectors cause interference to be received by and transmitted for
the cell site over a large area

Language under the cell site on the right states:
After SpotLight 2000
Narrow beams reduce the interference received by and transmitted from the cell
site

   Our SpotLight GSM system is designed to be compatible with most existing 900
MHz GSM base station equipment. We intend to develop systems to be compatible
with 1800 MHz base station equipment. Our SpotLight GSM system can be
configured to support one, two or three sectors within the cell site, allowing
the wireless network operator to use our SpotLight GSM system to reduce
interference only in the capacity limited sectors. Based on a recent field
trial, our SpotLight GSM system, when deployed in a network of cell sites, can
increase GSM network capacity by up to 100% without increasing the number of
cell sites. To date, we have not completed any commercial sales of our
SpotLight GSM system.

Core Technology

   We believe that one of our key competitive advantages is our investment and
expertise in the core technologies that enable efficient spectrum management of
wireless networks. Spectrum management encompasses a number of technical
components, including advanced antenna concepts, radiowave propagation models,
network performance monitoring tools, wireless standards knowledge and
communications systems hardware implementations. These core competencies, when
applied in combination, allow wireless network operators to optimize capacity,
coverage and quality across their networks. We have developed, and continue to
expand upon, the following fundamental technical elements:

   Phased-Array Antenna Systems. We have developed phased-array antenna systems
that provide compact beam-forming within a single structure. The antenna
systems make use of uniform linear or cylindrical arrays with a combination of
both ground-based and tower-based feed networks. We have designed antennas to
synthesize multiple narrow fixed-beams, which can be used to track individual
users within a cell site. In addition, we have developed beam-forming
techniques to allow the coverage area of a cell site to be customized. The
phased-array antenna technology can be scaled to a variety of gains and to span
a broad range of frequencies. The basic implementations are wireless standard
independent, and can therefore be applied to many wireless environments,
including cellular, PCS, enhanced specialized mobile radio, two-way paging,
multi-channel multipoint distribution service, or MMDS, other broadband
wireless markets, and emerging satellite-based wireless services. We continue
to develop and focus on improving the functionality and quality of our antenna
systems as well as reducing the costs and time associated with manufacturing
and deploying our antennas in the field.

   Multibeam Hardware Architectures. We have developed cost-effective hardware
implementations of the complex circuitry necessary to support the operation of
multibeam systems on high-traffic cell sites. The hardware architecture can be
organized into several key subsystems: beam switching matrices, ultra-linear
amplification, beam-forming feed structures, array calibration circuitry and
performance measuring receivers.


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   Our beam-switching technology allows us to effectively switch the call from
beam to beam within a cell while maintaining call quality. It is adaptable to
GSM, TDMA and analog wireless standards, where rapid beam switching is
required. Additionally, we have developed proprietary hardware techniques to
dynamically adjust CDMA sector patterns and maintain call quality by
calibrating phased-array antenna configurations. To monitor the radio
environment and adjust the sector coverage patterns for both our CDMA and GSM
systems, we have developed scanning receivers designed to accurately operate
over various channel bandwidths. Our spatial technology allows the simultaneous
operation of multiple wireless standards, currently CDMA/analog, through the
same physical antenna structure, while maintaining independent optimization of
the performance for each wireless standard.

   Real Time Network Control Algorithms. We have developed algorithms to
control beam switching hardware in real world radio environments. These
algorithms make real time decisions about which beams best serve each user, how
often to update beam selections and how to mitigate interference from other
users on the same or adjacent channels. In addition, we have developed
expertise in the optimization of wireless network performance for CDMA, GSM and
analog wireless standards. This expertise allows network control algorithms to
be customized based on the specific wireless standard and network deployment
scenario. We have also developed internal software tools for performance
modeling wireless networks, allowing us to further customize systems for
wireless network operators based on their specific needs.

   Adaptive Beam-Forming Techniques. We design and build antenna systems with a
broad range of standard and custom beam types and shapes using adaptive beam-
forming technology. Adaptive beam-forming systems can monitor traffic loading
and interference levels and then respond by implementing changes designed to
equalize traffic loads and reduce interference. With respect to CDMA, our
system makes use of phased-array antennas to create custom sector antenna
patterns through a software-driven process known as sector synthesis.

   Applications Software. We develop applications software that allow wireless
network operators to analyze network performance and make appropriate
modifications to manage their spectrum more efficiently. We have designed the
SiteSculptor application software to allow users of our SpotLight system to
quickly and easily simulate antenna patterns and implement those patterns
through software configuration of our SpotLight systems. The antenna pattern
editor allows the wireless network operator to load per-sector traffic data
into our SpotLight system for analysis. SiteSculptor analyzes the data and
provides the operator with suggested sectorization patterns. SiteSculptor also
allows the user to modify the antenna pattern as required, view a simulation of
the pattern, and then load the pattern directly into our SpotLight system.

Research and Development

   Our success depends on a number of factors, which include our ability to
identify and respond to emerging technological trends in our target markets,
develop and maintain competitive systems, enhance our existing systems by
adding features and functionality that differentiate them from those of our
direct and indirect competitors and bring systems to market on a timely basis
and at competitive prices. As a result, we have made, and we intend to continue
to make, significant investments in research and product development. Our
research and development expenses were $22.8 million in 1999, and $18.5 million
in 1998. As of December 31, 1999, we had 127 employees engaged in research and
product development, 91 of whom are engineers, and we continue to recruit
additional skilled personnel to enhance our research and development
department.

   Our development efforts in the near term will be focused on using our
technology to develop capacity solutions to the existing and emerging wireless
communications markets. Our core technology can be used to address spectrum
management issues in many large wireless networks. Principal areas of focus
include the following: integrating our technology into wireless base station
equipment; developing smart antenna systems for use by wireless network
operators at 1800 MHz and 1900 MHz PCS spectrum; exploring the development of
systems for TDMA wireless standard technology; and exploring the development of
systems for the broadband wireless market.

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<PAGE>

Customers

   Our customers are wireless network operators worldwide who face network
capacity constraints. As of December 31, 1999, we had sold 121 SpotLight
systems. These sales have been to customers located in the United States,
Mexico, Russia and Paraguay.

   We have master supply agreements with five of the six largest 800 MHz CDMA
wireless network operators in North America, as measured by subscriber market
share. These customers are AirTouch, ALLTEL, Bell Atlantic, GTE, and IUSACELL.
We have also sold systems to Millicom-St. Petersburg Telecom and Millicom-
Telefonica Celular. The wireless operations of three of our customers--
AirTouch, Bell Atlantic and GTE--are expected to be consolidated into one
entity in 2000. On July 28, 1998, Bell Atlantic and GTE announced a merger and
on September 21, 1999, Bell Atlantic and Vodaphone AirTouch plc, the parent
company of AirTouch announced an agreement to merge their U.S. wireless
operations. Bell Atlantic owns 47.2% of IUSACELL and Southwestco is a
subsidiary of Bell Atlantic.

   We completed a field trial of our SpotLight GSM system with Shanghai Telecom
in the fourth quarter of 1999 and we have entered into a conditional sales
agreement with Telefonica Peru, under which the purchase of two SpotLight 2000
systems is subject to the achievement of certain performance criteria.

   During the twelve months ended December 31, 1999, sales to ALLTEL, IUSACELL
and Southwestco accounted for 44.8%, 26.0% and 20.9% of revenues, respectively.
Sales to these customers are expected to continue to account for a significant
amount of our revenues in 2000. During the twelve months ended December 31,
1998, sales to Millicom-St. Petersburg Telecom, Millicom-Telefonica Celular,
ALLTEL and GTE accounted for 13.4%, 10.1%, 61.8% and 13.4% of revenues,
respectively.

   International sales of our systems accounted for 26.0% of revenues for the
fiscal year ended December 31, 1999, and 23.5% for the fiscal year ended
December 31, 1998. We expect sales to foreign customers, such as IUSACELL and
others to continue to account for a significant proportion of our revenues in
fiscal year 2000.

   The terms of our master supply agreements with our customers specify pricing
terms, delivery terms, ordering lead times, invoicing terms and warranty and
extended maintenance terms and procedures. In addition, pursuant to the
agreements, we are generally obligated to indemnify our customers for certain
third party claims and other losses. The agreements generally run for between
one and two years and are generally terminable by either party at any time in
their discretion.

   As of December 31, 1999, our backlog of orders was approximately $12.8
million, compared to backlog of $2.6 million as of December 31, 1998. We only
include in backlog customer commitments which are scheduled to be shipped in
the next six months. System orders in our current backlog are subject to
changes in delivery schedules or to cancellation at the option of the purchaser
without significant penalty. Accordingly, although useful for internal
scheduling of production resources, backlog as of any particular date may not
be a reliable measure of sales for any future period.

Sales, Marketing and Customer Support

   We sell our smart antenna systems in the United States through a direct
sales force supported by systems engineers. Our international sales and
marketing efforts are conducted through distributors, our direct sales force
and agents. Sales personnel are assigned on a customer account basis and are
responsible for generating system sales, providing system and customer support
and soliciting customer feedback for system development. In addition, sales
personnel receive support from our marketing communications organization which
is responsible for the branding and marketing of our products and services.

   Our sales and marketing efforts are primarily focused on establishing and
developing long-term relationships with potential customers. A relationship
with a new customer typically begins with a field trial or conditional sale in
a particular market of a customer. These are designed to satisfy performance
conditions prior

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<PAGE>

to the completion of the sale. We generally only have one field trial or
conditional sale per customer and the results of the field trial or conditional
performance period must be approved at the senior level of our customers'
management. Consequently, the sales process associated with the initial
purchase of our systems is typically complex and lengthy, lasting in some cases
up to 18 months. However, once the system successfully meets the applicable
performance criteria, we typically negotiate and enter into corporate-wide
master supply agreements. After this agreement is in place, purchasing
decisions are generally made on a market-by-market basis pursuant to purchase
orders placed under the master supply agreement which are not subject to the
satisfaction of performance criteria. Consequently, the sales cycle for
subsequent purchases by individual markets or regions is generally much
shorter.

   Our customer support organization performs network design, system
installation, network optimization, training, consulting and repair and
maintenance services to support our SpotLight systems. Recent improvements to
our pre-shipment integration and testing processes at our manufacturing
facility in Redmond, Washington, combined with the integration of experienced
subcontractors into our installation teams, has significantly reduced
installation times for our systems.

   Our customer services organization also offers services to optimize the
network following the installation of a SpotLight system. These services
utilize our expertise in radio frequency network design, knowledge of
individual network configurations and knowledge of our SpotLight system
capabilities.

   We generally warranty our systems for 12 months. Warranty support and
extended maintenance services for our CDMA/analog systems are performed at our
headquarters in Redmond, Washington and will be performed for GSM systems at
our offices in Taipei, Taiwan.

Manufacturing

   We rely to a substantial extent on outside suppliers to manufacture many of
the components and subassemblies used in our SpotLight systems. Our
manufacturing operations at our Redmond, Washington facility consist primarily
of supplier and commodity management and the assembling and testing of finished
systems from the components and subassemblies purchased from these outside
suppliers. We monitor quality at each stage of the production process,
including the selection of component suppliers, the assembly of finished goods
and final testing, packaging and shipping. We have been certified as ISO 9001
compliant since September 1998. We expect to begin manufacturing the SpotLight
GSM systems in Taipei, Taiwan beginning in late fiscal year 2000.

   We rely on detailed sales forecasts to determine our production requirements
and manage our inventory. Our assembly and testing processes have been designed
to facilitate configuration of our systems tailored to the specific needs of
our customers. We have programs focusing on material cost reduction and supply
base management designed to reduce costs and reduce inventory exposures.

   Certain parts and components used in our smart antenna systems, including
linear power amplifiers supplied by Powerwave Technologies, Inc. and integrated
duplexer low noise amplifiers and filters supplied by Filtronic Comtek Ltd.,
are presently only available from a single source. We have a supply agreement
with Powerwave Technologies, Inc. pursuant to which they have agreed to supply
all linear power amplifiers ordered by us. Certain other parts and components
are available from a limited number of sources. For a more detailed discussion
of the risks associated with having a limited source of suppliers see the risk
factor titled "Our reliance on a limited number of suppliers and the long lead
time of our systems could impair our ability to manufacture and deliver our
systems on a timely basis."

Competition

   The market for spectrum management solutions is part of the broader market
for wireless infrastructure equipment which is dominated by a number of large
companies including Lucent, Motorola, Ericsson, Nortel,

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<PAGE>

Nokia, Siemens, Alcatel and others. Our smart antenna systems compete with
other solutions to expand network capacity. These alternative solutions include
other smart antenna systems, additional base stations for capacity, deploying
efficient digital technologies and various enhancements to digital
technologies.

   Other smart antenna systems are offered by various competitors. Alcatel,
Hazeltine, E-Systems, Boeing and Raytheon have offered smart antenna systems
for analog networks. Adaptive Telecom has offered a CDMA smart antenna product
that is integrated into a CDMA base station in cooperation with the base
station manufacturer. Arraycomm has offered a smart antenna product that is
integrated into a Personal Handyphone System standard base station in Japan.
Ericsson has announced a GSM smart antenna system called GSM Capacity Booster
that includes an Ericsson base station as well as the smart antenna system.
Nortel has offered a smart antenna equipped GSM base station in the past. Most
of the large wireless infrastructure equipment providers, including Lucent,
Motorola, Nortel, Ericsson, Nokia, Siemens, Alcatel, Samsung and NEC have large
development organizations and have either announced their intention to examine
smart antenna technologies, or have the core technology competence to do so for
the CDMA, GSM, TDMA and 3G standards. If base station manufacturers
successfully develop and integrate smart antenna solutions into their product
offerings, it may materially and adversely affect our business.

   The addition of more cell sites often will provide more capacity to wireless
networks and therefore is a substitute for our systems and, therefore, the cost
of base station equipment contained in these cell sites has decreased in recent
years and affects our ability to compete effectively. Other related costs for
new cell sites including real estate, towers, and building construction
generally have not declined. Base stations are sold by wireless infrastructure
equipment manufacturers such as the companies listed above.

   Efficient digital technologies and enhancements to these technologies will
provide more capacity to wireless networks and, therefore, are substitutes for
our systems. These digital technologies include existing technologies, such as
CDMA, GSM and TDMA, as well as emerging 3G standards, such as CDMA 2000 and
WCDMA. There are enhancements to the existing CDMA and GSM standards, commonly
referred to as 2.5G standards, which provide additional capacity. There are
also various enhancements, such as improved voice coding for CDMA and various
frequency hopping techniques for GSM, which are designed to increase the
capacity of these standards. These digital technologies and various
enhancements are also offered by the large wireless infrastructure equipment
providers listed above. We believe that our smart antenna technology can be
compatible with these digital technologies and their various enhancements. Our
technology, and its ability to enhance capacity, is additive to the capacity
enhancement provided by these digital technologies. Customers, however, may
delay or cancel deployment of our smart antenna systems while they deploy these
more efficient digital technologies and other enhancements which would harm our
business.

   We believe the principal competitive factors in the spectrum management
solutions market include:

  . expertise in the core technologies needed for radio frequency
    communication systems;

  . system performance, features and reliability;

  . price and performance characteristics;

  . timeliness of new system introductions;

  . customer service and support;

  . established customer relationships; and

  . size of installed customer base.

   We believe we will be competitive with respect to many of these factors;
however most of our existing and potential competitors have longer operating
histories, greater name recognition, larger installed customer bases, greater
financial, technical, sales, marketing and other resources, and more
established customer relationships. To be competitive we must invest
significant resources to address these competitive factors and

                                       37
<PAGE>

achieve customer satisfaction. If we fail to do so our smart antenna systems
will not compete favorably with our competitors which will materially and
adversely affect our business.

Intellectual Property

   We rely on patent, copyright, trademark and trade secret laws and
restrictions on disclosure to protect our intellectual property rights. We
currently have 19 issued U.S. patents, 5 allowed U.S. patents and 32 pending
U.S. patent applications. In addition, we are seeking patent protection for our
inventions in foreign countries. The patent positions of companies in the
worldwide wireless communications industry are generally uncertain and involve
complex legal and factual questions. We cannot be certain that patents will be
issued with respect to pending or future patent applications or that our
patents will be upheld as valid or will be sufficient to prevent the
development of competitive products. While we believe that our patents will
make it more difficult for competitors to develop and market similar products,
our patents may be invalidated, circumvented or challenged. Our patent rights
may fail to provide us with competitive advantages.

   We have received two registered federal copyrights for our software and four
more copyright applications are pending. The source code for our proprietary
software is also protected as a trade secret. In addition, we enter into
confidentiality agreements with our employees, customers, vendors and strategic
partners, and control access to, and the distribution of our software,
documentation and other confidential and proprietary information. Our primary
trademarks are registered with the U.S. Patent and Trademark Office and certain
other foreign jurisdictions. We have applied for trademark protection for a
number of other marks which are pending in the United States and in foreign
countries.

   Despite these efforts, it may be possible for unauthorized third parties to
copy certain portions of our intellectual property contained in our systems,
design around our patents, or to reverse-engineer or otherwise obtain and use
our proprietary information. In addition, the laws of some countries do not
protect our proprietary rights to the same extent as the laws of the United
States. Accordingly, we may not be able to protect our proprietary rights
against unauthorized third-party copying or use, which could significantly harm
our business. We may have to pursue litigation in the future to enforce our
proprietary rights or to defend against claims of infringement. These claims,
regardless of their merits, may require us to enter into license arrangements
or may result in protracted and costly litigation.

   In addition, we cannot be certain that others will not develop substantially
equivalent or superceding proprietary technology, or that equivalent products
will not be marketed in competition with our smart antenna systems, thereby
substantially reducing the value of our proprietary rights.

   Patents and patent applications relating to products used in the wireless
communications industry are numerous. Current and potential competitors and
other third parties may have been issued or in the future may be issued
patents, or may obtain additional proprietary rights relating to products used
or proposed to be used by us. We may not be aware of all patents or patent
applications that may materially affect our ability to make, use or sell any
current or future products. From time to time, third parties have asserted
patent, copyright and other intellectual property rights to technologies that
are important to us. We expect that we will increasingly be subject to
infringement claims as the number of products and competitors in the spectrum
management market grows and the functionality of products overlaps. Third
parties may assert infringement claims against us in the future, and such
assertions could result in costly litigation, the diversion of management and
engineering resources and require us to obtain a license to intellectual
property rights of such parties. There can be no assurance that these licenses
would be available on terms acceptable to us, if at all. Any failure to obtain
a license from any third party asserting claims in the future or defense of any
third party lawsuit could materially and adversely affect our business and
operating results.

Government Regulation

   Our smart antenna systems must obtain regulatory approval to be used. In the
United States, our systems must be certified by the Federal Communications
Commission before sales to customers may commence. Smart

                                       38
<PAGE>


antenna systems must be certified by the FCC to ensure that they will not cause
wireless base stations to exceed the prescribed technical standards. In
addition, these systems are required to comply with electrical safety standards
to ensure that the base station operators will be in compliance with relevant
Occupational Safety and Health Administration's regulations.

   Other countries have similar regulations that must be complied with before
our systems can be used. Foreign countries' regulatory programs are generally
similar to those in the United States. In most jurisdictions, smart antenna
systems must be of a type approved for use with cellular base stations under
national standards specific to each country. Smart antennas are also required
to demonstrate compliance with electrical safety standards that may be national
or international in scope. These governmental approval processes frequently
involve substantial delay, which could result in the cancellation, postponement
or rescheduling of systems by our customers. Any event like this in turn may
adversely affect our ability to sell systems to these customers. Because of the
expenses associated with government approvals of our systems in some countries,
we only plan to seek product approval in those countries once we have a
customer who intends to purchase our systems. This practice may take several
months and may deter customers or contribute to delays in receiving or filling
orders.

   In addition, our customers' operations are subject to extensive government
regulations. To the extent that our customers are delayed in deploying their
wireless networks as a result of existing or new standards or regulations, we
could experience delays in orders. These delays could materially and adversely
affect on our business and operating results.

   We are also subject to U.S. government export controls. Our sales and
distributorship agreements require that the export or resale of our systems to
end users located in other countries must be in compliance with U.S. export
controls.

Employees

   As of December 31, 1999, we had 248 employees, of which, 127 were primarily
engaged in research, development and product management, 33 in manufacturing,
56 in sales, marketing and customer support and 32 in general and
administration. We have no collective bargaining agreement with our employees
and we have never experienced a work stoppage. We believe that our employee
relations are good.

Facilities

   We are headquartered in Redmond, Washington, where we lease an aggregate of
approximately 96,000 square feet, housing our principal administrative, sales
and marketing, customer support and manufacturing facilities. Our lease for
this facility expires on May 31, 2005 and we have an option to renew this lease
for two additional five year terms. We sublease approximately 13,000 square
feet of this space. We have a three-year lease for sales, service and
manufacturing facilities totaling approximately 6,500 square feet in Taipei,
Taiwan and a five-year lease for a sales and engineering support office in
Dallas, Texas. We also have representative offices in Sao Paulo, Brazil and
Shanghai, China that are subject to short-term leases.

Legal Proceedings

   We may become involved in legal proceedings from time to time in the
ordinary course of business. As of the date of this prospectus, we are not
involved in any pending material legal proceedings.

                                       39
<PAGE>

                                   MANAGEMENT

Executive Officers and Directors

   Our executive officers and directors and their ages as of March 24, 1999 are
as follows:

<TABLE>
<CAPTION>
 Name                             Age Position
 ----                             --- --------
 <C>                              <C> <S>
 Douglas O. Reudink..............  60 Chairman of the Board and Chief
                                      Technical Officer

 Robert H. Hunsberger............  53 President, Chief Executive Officer and
                                      Director

 Stuart W. Fuhlendorf............  37 Senior Vice President and Chief
                                      Financial Officer

 Victor K. Liang.................  48 Senior Vice President, GSM Products
                                      Group

 Ray K. Butler...................  41 Vice President, International Operations

 Martin J. Feuerstein............  37 Vice President, Product Development

 Richard Henderson...............  38 Vice President, Sales and Marketing

 Andrew Merrill..................  40 Vice President, Customer Operations

 John R. Schaller................  56 Controller and Treasurer

 Bandel L. Carano(1).............  38 Director

 Bruce C. Edwards................  46 Director

 David R. Hathaway(1)............  55 Director

 Scot B. Jarvis(1)(2)............  38 Director

 Jennifer Gill Roberts(2)........  36 Director

 David A. Twyver(2)..............  53 Director
</TABLE>
- --------
(1) Member of the Compensation Committee.

(2) Member of the Audit Committee.

   Douglas O. Reudink, a co-founder, has served as our chief technical officer
since our inception and as chairman of the board of directors since April 1997.
From 1991 to 1995, Dr. Reudink served as director of wireless planning at US
WEST NewVector Group, Inc., a wireless telecommunications company. From 1986 to
1991, he served as the director of Laboratories of the High Technology Center
at The Boeing Company, an aerospace company. Prior to 1986, Dr. Reudink served
20 years at the Bell Laboratories division of AT&T Corporation, a
telecommunications company, in various research and management positions.
Dr. Reudink holds a B.S. from Linfield College and a Ph.D. from Oregon State
University.

   Robert H. Hunsberger has served as our president and chief executive officer
since July 1997. From 1995 to July 1997, Mr. Hunsberger served as senior vice
president and general manager of Siemens Business Communications Systems, Inc.,
a telecommunications company and a wholly owned subsidiary of Siemens. From
1981 to 1995, Mr. Hunsberger held various executive positions at Nortel, a
telecommunications company, including vice president of sales and marketing of
its wireless networks division from 1993 to 1995 and vice president of market
development of its wireless networks division and vice president of cellular
systems from 1991 to 1993. Mr. Hunsberger holds a B.S. from the University of
Virginia and an M.B.A. from Arizona State University.

   Stuart W. Fuhlendorf has served as our senior vice president and chief
financial officer since March 2000. From 1992 to March 2000, Mr. Fuhlendorf
served as chief financial officer of EFTC Corporation, formerly Electronic Fab
Technology Corporation, an electronic component manufacturing company. Mr.
Fuhlendorf holds a B.A. from the University of Northern Colorado and an M.B.A.
from the University of San Diego.

                                       40
<PAGE>

   Victor K. Liang has served as our senior vice president, GSM products group
since July 1998 and general manager of Metawave Communications Taiwan Ltd., a
subsidiary since October 1998. From 1989 until March 1998, Mr. Liang held
various senior executive positions with Siemens and its subsidiaries, most
recently serving as managing director of two Siemens' joint ventures in China,
Siemens Shanghai Mobile Communications and Siemens Shanghai Communication
Terminals. From 1995 to 1998, Mr. Liang served as vice president of wireless
products group at Siemens Stromberg-Carlson. From 1994 to 1995, he served as
Senior Director at Siemens A.G., Munich, Germany and from 1989 through 1994 he
served as vice president product development of Siemens Telecommunications Ltd.
in Taiwan. Mr. Liang holds a B.S. from Chiao Tung University in Taiwan and a
degree in Business Administration from Cheng Chih University.

   Ray K. Butler has served as our vice president of international operations
since August 1999, vice president of engineering from December 1997 to August
1999 and director of systems engineering and architecture from January 1997 to
December 1997. From 1985 to January 1997, Mr. Butler held various management
positions at the Bell Laboratories division of AT&T (which division became part
of Lucent in 1996), most recently serving as technical manager of the cell site
HW systems engineering group. Mr. Butler holds a B.S. from Brigham Young
University and an M.S. from Polytechnic University.

   Martin J. Feuerstein has served as our vice president of product development
since August 1998 and director of research from March 1997 to July 1998. From
1995 to March 1997, Dr. Feuerstein served as technical manager at Lucent. From
1992 to 1995, he served as a senior member technical staff at US WEST. Mr.
Feuerstein holds a B.E. from Vanderbilt University, an M.S. from Northwestern
University and a Ph.D. from Virginia Polytechnic Institute.

   Richard Henderson has served as our vice president of sales and marketing
since December 1997. From 1984 to 1997, Mr. Henderson held various sales and
marketing positions at Nortel, most recently serving as vice president of
marketing operations from 1996 to 1997 and sales account director from 1992 to
1995. Mr. Henderson holds a B.S. from Texas A&M University and an M.B.A. from
the University of Dallas.

   Andrew Merrill has served as our vice president of customer operations since
August 1999. From 1984 to August 1999, Mr. Merrill worked at Motorola, Inc., an
electronics company, in several positions, most recently serving as engineering
manager from 1994 to 1999, program manager from 1992 to 1994 and international
cellular infrastructure manufacturing manager from 1984 to 1992. Mr. Merrill
studied communications electronics and nuclear power in the U.S. Navy.

   John Schaller has served as our corporate controller and treasurer since
June 1998 and October 1999, respectively. From October 1997 to June 1998, he
served as the chief financial officer of Superconducting Core Technologies,
Inc., a telecommunications equipment company. From May 1996 to October 1997, he
served as vice president and chief financial officer of AirNet Communication
Corp., a telecommunications company. From June 1978 to April 1996, he served in
various senior financial positions, including chief financial officer of a
Motorola-Nortel wireless communications joint venture and director of finance
and administration for the wireless networks division of Nortel. Mr. Schaller
holds a B.S. from Philadelphia College of Textiles and Science and an M.B.A.
from University of Texas.

   Bandel L. Carano has served as one of our directors since 1995. Mr. Carano
has been a general partner of Oak Investment Partners, a venture capital firm,
since 1987. Mr. Carano serves as a member of the Investment advisory board of
the Stanford University Engineering Venture Fund. Mr. Carano also serves as a
member of the board of directors of Netopia, Inc., a telecommunications
equipment provider, Polycom, Inc., a telecommunications equipment provider and
PulsePoint Communications, an information systems company, as well as several
private companies. Mr. Carano holds a B.S. and an M.S. from Stanford
University.

   Bruce C. Edwards has served as one of our directors since May 1998. Mr.
Edwards has served as president, chief executive officer and a director of
Powerwave Technologies, Inc., a telecommunications equipment company, since
February 1996. Mr. Edwards was executive vice president, chief financial
officer and a director of AST Research, Inc., a personal computer company, from
1994 to December 1995 and senior

                                       41
<PAGE>

vice president of finance and chief financial officer of AST from 1988 to 1994.
Mr. Edwards also serves as a director of HMT Technology Corporation, a computer
equipment company. Mr. Edwards holds a B.S. from Rider University and an M.B.A.
from the New York Institute of Technology.

   David R. Hathaway has served as one of our directors since 1995. Mr.
Hathaway has been a general partner of the venture capital firms Venrock
Associates and Venrock Associates II, L.P. since 1980 and 1995, respectively.
Mr. Hathaway serves as a director of several private companies. Mr. Hathaway
holds a B.A. from Yale University.

   Scot B. Jarvis has served as one of our directors since February 1998. Mr.
Jarvis is a co-founder and managing member of Cedar Grove Partners, LLC, a
privately owned investment company. From 1994 to 1997, Mr. Jarvis was co-
founder and executive vice president of NEXTLINK Communications, Inc., a
wireless service operator. Mr. Jarvis serves as a director of Wireless
Facilities, Inc., a wireless telecommunications company, Point.com, Inc., an
internet services company, Leap Wireless International, Inc., a wireless
communications company and Cricket Communications, Inc. a wireless
communications company. Mr. Jarvis holds a B.A. from the University of
Washington.

   Jennifer Gill Roberts has served as one of our directors since 1995. Ms.
Roberts has been a general partner of Sevin Rosen Funds, a venture capital
firm, since 1994. Ms. Roberts serves as a director of several private
companies. Ms. Roberts holds a B.S. and an M.B.A. from Stanford University and
an M.S. from the University of Texas.

   David A. Twyver has served as one of our directors since May 1998. He is
currently chief executive officer of Ensemble Communications Inc, a wireless
communications equipment company. From 1996 to 1997, Mr. Twyver served as chief
executive officer of Teledesic Corporation, a satellite telecommunications
company. From 1974 to 1996, Mr. Twyver served in several management positions
at Nortel, most recently serving as president of the wireless networks group
from 1993 to 1996. Mr. Twyver serves as a director of several private
companies. Mr. Twyver holds a B.S. from the University of Saskatchewan.

Board Composition

   Our bylaws currently provide for a board of directors consisting of nine
members. All directors hold office until the next annual meeting of our
stockholders and until their successors have been duly elected and qualified.
Our officers are appointed annually and serve at the discretion of the board of
directors.

Committees of the Board of Directors

   The members of the audit committee are Scot Jarvis, Jennifer Gill Roberts
and David Twyver. The audit committee reviews the results and scope of the
audit and other services provided by our independent auditors.

   The members of the compensation committee are Bandel Carano, David Hathaway
and Scot Jarvis. The compensation committee reviews and approves the
compensation and benefits for our executive officers, administers our stock
purchase and stock option plans and makes recommendations to the board of
directors regarding such matters.

Board Compensation

   Except for reimbursement for reasonable travel expenses relating to
attendance at board meetings and the grant of stock options, directors are not
compensated for their services as directors, except for Bruce Edwards, Scot
Jarvis and David Twyver who each receive $1,000 for each board meeting attended
and $500 for each committee meeting attended. Directors who are our employees
are eligible to participate in the 1995 Stock Option Plan, the 1998 Stock
Option Plan, the 2000 Stock Option Plan and the 2000 Employee Stock Purchase
Plan. Directors who are not our employees are eligible to participate in the
1998 Amended and Restated Directors' Stock Option Plan. See "Stock Plans."

                                       42
<PAGE>

Compensation Committee Interlocks and Insider Participation

   No member of the compensation committee has at any time been an officer or
employee of ours or any subsidiary of ours. See "Certain Relationships and
Related Transactions" for a description of certain transactions and
relationships between us and Bandel Carano, Bruce Edwards, David Hathaway,
Jennifer Gill Roberts and Scot Jarvis and entities affiliated with them.

Executive Compensation

   The following table sets forth information concerning compensation awarded
to, earned by or paid to our chief executive officer and our four other most
highly compensated executive officers whose total cash compensation exceeded
$100,000 during the year ended December 31, 1999 (collectively, our "Named
Executive Officers").

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                       Annual
                                    Compensation      Long-Term Compensation
                                 ------------------ ---------------------------
                                                    Securities
                                                    Underlying    All Other
Name and Principal Position       Salary  Bonus (1)  Options   Compensation (2)
- ---------------------------      -------- --------- ---------- ----------------
<S>                              <C>      <C>       <C>        <C>
Robert H. Hunsberger, President
 and Chief Executive Officer...  $270,766  $12,150    66,666        $ 912

Richard Henderson, Vice
 President of Sales and
 Marketing.....................   159,539   80,686    10,000          262

Victor K. Liang, Senior Vice
 President, GSM Products
 Group.........................   190,263    4,309    86,666          567

Douglas O. Reudink, Chairman
 and Chief Technology Officer..   175,488    7,875    33,333        2,364

Martin J. Feuerstein, Vice
 President of Product
 Development...................   139,604   21,075    30,000          251
</TABLE>
- --------
(1)  Bonus represents the amount earned by the employee in 1999 and includes
     commissions.

(2)  Consists of life insurance premiums paid by us.

   The following table sets forth information for each of our Named Executive
Officers concerning stock options granted to them during the fiscal year ended
December 31, 1999.

                       Option Grants in Fiscal Year 1999

<TABLE>
<CAPTION>
                                                                        Potential Realizable
                                                                          Value at Assumed
                         Number of  Percentage of                       Annual Rates of Stock  Potential Realizable
                           Shares   Total Options                       Price Appreciation for Value at Midrange of
                         Underlying  Granted to   Exercise                  Option Term(5)       Assumed Initial
                           Options    Employees   Price per Expiration -----------------------    Offering Price
Name                     Granted(1)  in 1999(2)   Share(3)   Date(4)        5%         10%          of $12.00
- ----                     ---------- ------------- --------- ---------- ----------- ----------- --------------------
<S>                      <C>        <C>           <C>       <C>        <C>         <C>         <C>
Robert H. Hunsberger....   66,666        4.8%       $6.75    6/22/09   $   853,107 $   624,978       $349,997

Richard Henderson.......   10,000        0.7%        6.75    6/22/09       127,967     243,749         52,500

Victor K. Liang.........   26,666        1.9%        6.75    6/22/09       341,238     649,981        139,997
                           30,000        2.1%        6.75    5/19/09       383,902     731,247        157,500
                           30,000        2.1%        6.75    5/19/09       383,902     731,247        157,500

Douglas O. Reudink......   33,333        2.4%        6.75    6/22/09       426,554     812,489        174,998

Martin J. Feuerstein....   10,000        0.7%        6.75    5/19/09       127,967     243,749         52,500
                           20,000        1.4%        6.75    6/22/09       255,935     487,498        105,000
</TABLE>
- --------
(1)  Each of the above options was granted pursuant to our 1998 Stock Option
     plan.

(2)  In the last fiscal year, we granted options to employees to purchase an
     aggregate of 1,391,402 shares.

                                       43
<PAGE>

(3)  In determining the fair market value of our common stock, our board of
     directors considered factors such as our financial condition and business
     prospects, our operating results, the absence of a market for our common
     stock and the risks normally associated with companies comparable to us.

(4)  Options granted on June 22, 1999 and expiring on June 22, 2009 vest 50%
     upon the effectiveness of this offering and the remaining 50% vests one
     year from the effective date of this offering. Those options granted on
     May 19, 1999 vest 25% one year from date of grant and the remaining 75%
     vest monthly over three years.

(5)  The 5% and 10% assumed annual rates of compounded stock price appreciation
     are mandated by rules of the Securities and Exchange Commission and do not
     represent our estimate or projection of our future common stock prices.
     These figures are based on an assumed public offering price of $12.00 per
     share.

        Option Exercises in Last Fiscal Year and Year-End Option Values

   There were no option exercises by our Named Executive Officers in 1999. The
following table provides information concerning the number and value of
unexercised options held by each of our Named Executive Officers as of December
31, 1999.

<TABLE>
<CAPTION>
                                    Number of Securities    Value of Unexercised
                                         Underlying         In-the-Money Options
                                   Unexercised Options at      at December 31,
                                    December 31, 1999(1)           1999(2)
                                   ------------------------ ---------------------
Name                                 Vested     Unvested      Vested    Unvested
- ----                               ----------- ------------ ---------- ----------
<S>                                <C>         <C>          <C>        <C>
Robert H. Hunsberger..............     356,500     304,166  $1,871,625 $1,596,872

Richard Henderson.................      55,554      61,112   2,187,439    320,838

Victor K. Liang...................      46,040     240,626   1,812,825  1,263,287

Douglas O. Reudink................          --      33,333          --    174,998

Martin J. Feuerstein..............      35,110      61,556   1,382,456    323,169
</TABLE>
- --------
(1) Certain options granted under the 1998 Stock Option Plan and the 1995 Stock
    Option Plan may be exercised immediately upon grant and prior to full
    vesting, subject to the optionee's entering into a restricted stock
    purchase agreement with us with respect to any unvested shares. The
    unvested shares are subject to a right of first refusal in favor of
    Metawave which lapses over time.

(2) Based on an assumed initial public offering price of $12.00 per share,
    minus the exercise price, multiplied by the number of shares underlying the
    option.

Severance Arrangements

   We have entered into severance arrangements with Douglas O. Reudink, chief
technical officer, Robert H. Hunsberger, president and chief executive officer,
Stuart Fuhlendorf, senior vice president and chief financial officer, Richard
Henderson, vice president of sales and marketing, Victor K. Liang, senior vice
president, GSM products group, and Andrew Merrill, vice president of customer
operations.

   On July 7, 1995, in connection with the Series A preferred stock financing,
we entered into an agreement with Dr. Reudink which provides that if we were to
terminate his employment without cause after July 7, 1996, we would be
obligated to make a lump-sum payment to Dr. Reudink equal to six months of his
then-current base salary and to provide benefits for six months following
termination. In connection with this agreement, Dr. Reudink entered into a one-
year non-competition agreement effective upon the termination of his employment
with us.

   On June 27, 1997, in connection with the employment of Mr. Hunsberger, we
entered into an arrangement with Mr. Hunsberger which provides that if we were
to terminate his employment without cause, we would be obligated to make a
lump-sum payment to Mr. Hunsberger equal to twelve months of his then-current
base salary and provide benefits for twelve months following termination.

                                       44
<PAGE>

   On October 29, 1997, in connection with the employment of Mr. Henderson, we
entered into an arrangement with Mr. Henderson which provides that if we were
to terminate his employment without cause, we would be obligated to make a
lump-sum payment to Mr. Henderson equal to six months of his then-current base
salary.

   On July 23, 1998, in connection with the employment of Mr. Liang, we entered
into an arrangement with Mr. Liang that provides that if we were to terminate
his employment without cause within the first two years of his employment, we
would be obligated to make a lump-sum payment to Mr. Liang equal to six months
of his then-current base salary.

   On July 12, 1999, in connection with the employment of Mr. Merrill, we
entered into an agreement with Mr. Merrill that provides that if we were to
terminate his employment without cause, we would be obligated to pay Mr.
Merrill six months of his then-current base salary.

   On March 10, 2000, in connection with the employment of Mr. Fuhlendorf, we
entered into an agreement with Mr. Fuhlendorf that provides that if we were to
terminate his employment without cause, we would be obligated to make a lump
sum payment to Mr. Fuhlendorf equal to six months of his then-current base
salary.

Stock Plans

   2000 Stock Plan. Our 2000 stock option plan provides for the grant of
incentive stock options to employees, including employee directors, and of
nonstatutory stock options and stock purchase rights to employees, directors
and consultants. The purposes of the 2000 stock plan are to attract and retain
the best available personnel, to provide additional incentives to our employees
and consultants and to promote the success of our business. The 2000 plan was
originally adopted by our board of directors in February 2000 and will be
approved by our stockholders prior to completion of this offering. The 2000
plan provides for this issuance of options and rights to purchase up to
1,333,333 shares of our common stock, plus an automatic annual increase on the
first day of each of our fiscal years beginning in 2001 through 2010 equal to
the lesser of 2,000,000 shares, 5% of our outstanding common stock on the last
day of the immediately preceding fiscal year, or a lesser number of shares as
our board of directors determines. Unless terminated earlier by the board of
directors, the 2000 plan will terminate ten years following its effective date.

   The 2000 plan may be administered by the board of directors or a committee
of the board, each known as the administrator. The administrator determines the
terms of options and stock purchase rights granted under the 2000 plan,
including the number of shares subject to the award, the exercise or purchase
price, and the vesting and/or exercisability of the award and any other
conditions to which the award is subject. No employee may receive awards for
more than 1,333,333 shares under the 2000 plan in any fiscal year. Incentive
stock options granted under the 2000 plan must have an exercise price of at
least 100% of the fair market value of the common stock on the date of grant.
The plan does not impose restrictions on the exercise or purchase price
applicable to nonstatutory stock options and stock purchase rights, although we
expect that nonstatutory stock options and stock purchase rights granted to our
Chief Executive Officer and our four other most highly compensated officers
will generally equal at least 100% of the grant date fair market value. Payment
of the exercise or purchase price may be made in cash or any other
consideration allowed by the administrator.

   With respect to options granted under the 2000 plan, the administrator
determines the term of options, which may not exceed 10 years. Generally, an
option is nontransferable other than by will or the laws of descent and
distribution, and may be exercised during the lifetime of the optionee only by
such optionee. In certain circumstances, the administrator has the discretion
to grant nonstatutory stock options with limited transferability rights. Stock
options are generally subject to vesting, meaning that the optionee earns the
right to exercise the option over a specified period of time only if he or she
continues to provide services to Metawave over that period. Shares of stock
issued pursuant to stock purchase rights granted under the 2000 plan are
generally subject to a repurchase right exercisable by Metawave upon the
termination of the holder's employment or consulting relationship with us for
any reason (which lapses in accordance with the terms of the stock purchase
right determined by the administrator at the time of grant). In addition, the
2000 stock plan

                                       45
<PAGE>

provides that options to purchase vested shares will terminate, and we will
have the right to repurchase vested shares issued under the plan, if we
terminate a participant's employment or consulting relationship with us for
cause.

   If we are acquired, we would expect that options and stock purchase rights
outstanding under the 2000 plan at the time of the transaction would be assumed
or replaced with substitute options by our acquiror. If our acquiror did not
assume or replace outstanding awards, then the vesting of these awards would
accelerate so that the holder of an outstanding award would be able to exercise
and retain the number of shares that he or she would have vested in had he or
she continued working for us for another 12 months (if the holder had been
employed by us for less than 2 years at the time of the acquisition) or for
another 24 months (if the holder had been employed for us for 2 years or more
at the time of the acquisition) from the acquisition date. In addition, if our
acquiror assumed or replaced outstanding awards at the time of the acquisition
and a plan participant holding assumed or replaced awards experienced an
involuntary termination of his or her employment or consulting relationship
within six months following the transaction, then the vesting of outstanding
options or stock held by any such person who is not a Section 16 reporting
person at the time of the acquisition would accelerate as to 12 or 24 months
(depending upon the duration of the person's service relationship with us and
our acquiror as described above), and as to all the shares underlying an award
held by a person who is a Section 16 reporting officer at the time of the
acquisition. Outstanding awards, the number of shares remaining available for
issuance under the 2000 plan, the maximum number of shares subject to awards
that may be granted to an employee during a year and the fixed number in the
plan's evergreen formula will adjust in the event of a stock split, stock
dividend or other similar change in our capital stock. The administrator has
the authority to amend or terminate the 2000 plan, but no action may be taken
that impairs the rights of any holder of an outstanding option or stock
purchase right without the holder's consent. In addition, we must obtain
stockholder approval of amendments to the plan as required by applicable law.

   1995 and 1998 Stock Option Plans. In addition to our 2000 stock plan, we
have two prior employee stock plans, our Third Amended and Restated 1995 Stock
Option Plan and our 1998 Stock Option Plan. These plans provide for the grant
of incentive stock options to employees, including employee directors, and the
grant of nonstatutory stock options to employees, consultants and directors.

   Our 1995 stock plan was originally adopted by our board of directors in
August 1995 and approved by our stockholders in January 1996. It has been
amended several times since its adoption such that there are currently
2,766,666 shares of common stock reserved for issuance under this plan. As of
December 31, 1999, options to purchase 2,029,962 shares of common stock at a
weighted average exercise price of $4.28 were outstanding, 708,104 shares with
a weighted average purchase price of $0.45 have been issued upon exercise of
options and 28,600 shares remain available for issuance under our 1995 plan.
Unless terminated earlier, the 1995 plan will terminate in August 2005.

   Our 1998 stock option plan was originally adopted by our board of directors
in May 1998 and approved by our stockholders in September 1998. An aggregate of
1,763,369 shares of common stock has been reserved for issuance under the 1998
plan. As of December 31, 1999, options to purchase 705,332 shares of common
stock at a weighted average exercise price of $7.82 were outstanding, 406
shares with a weighted average exercise price of $6.75 have been issued upon
exercise of options and 1,057,631 shares remain available for future grant.
Unless terminated earlier, this plan will terminate in May 2008.

   The terms of awards issued under our 1995 and 1998 plans are generally the
same as those that may be issued under our 2000 stock plan, except with respect
to the following features. Neither the 1995 plan nor the 1998 plan provides for
the issuance of stock purchase rights to employees and consultants. The 1998
plan provides that, as of our first stockholders meeting following the third
calendar year after the year in which this offering takes place, the maximum
number of shares that may be granted to any individual employee during a fiscal
year is 566,666 shares. The 1995 plan does not impose an annual limitation on
the number of shares of stock subject to options that may be granted to any
individual employee during a fiscal year. Under both plans, generally an option
is nontransferable other than by will or the laws or descent or distribution.
In addition,

                                       46
<PAGE>


the 1995 Stock Option Plan does not provide for forfeiture of vested options or
stock upon a termination of the holder's service relationship with us for
cause.

   2000 Employee Stock Purchase Plan. Our 2000 employee stock purchase plan was
adopted by the board of directors in February 2000 and will be submitted for
approval by our stockholders prior to completion of this offering. A total of
233,333 shares of common stock has been reserved for issuance under the 2000
purchase plan, none of which have been issued as of the date of this offering.
The number of shares reserved for issuance under the 2000 purchase plan will be
subject to an automatic annual increase on the first day of each of our fiscal
years beginning in 2001 through 2010 equal to the lesser of 266,666 shares, 1%
of our outstanding common stock on the last day of the immediately preceding
fiscal year or a lesser number of shares as the board of directors determines.
The 2000 purchase plan becomes effective upon the date of this offering. Unless
terminated earlier by the board of directors, this plan will terminate in
February 2020.

   The 2000 purchase plan, which is intended to qualify under Section 423 of
the Internal Revenue Code, will be implemented by a series of overlapping
offering periods of approximately 24 months' duration, with new offering
periods (other than the first offering period) commencing on May 1 and November
1 of each year. Each offering period will generally consist of four consecutive
purchase periods of six months' duration, at the end of which an automatic
purchase will be made for participants. The initial offering period is expected
to commence on the date of this offering and end on April 30, 2002; the initial
purchase period is expected to begin on the date of this offering and end on
October 31, 2000, with subsequent purchase periods ending on April 30, 2001,
October 31, 2001 and April 30, 2002. The 2000 purchase plan will be
administered by the board of directors or by a committee appointed by the
board. Our employees (including officers and employee directors), or of any
majority-owned subsidiary designated by the board, are eligible to participate
in the 2000 purchase plan if they are employed by us or a designated subsidiary
for at least 20 hours per week and more than five months per year. The 2000
purchase plan permits eligible employees to purchase common stock through
payroll deductions at a rate of not more than 15% of an employee's
compensation. The purchase price is equal to the lower of 85% of the fair
market value of the common stock at the beginning of each offering period or at
the end of each purchase period, subject to certain adjustments as provided in
the plan. Employees may end their participation in the 2000 purchase plan at
any time during an offering period, and participation ends automatically on
termination of employment. No employee may purchase more than 1,333 shares of
common stock under the 2000 Purchase Plan in any one purchase period.

   If we merge or consolidate with or into another corporation or sell all or
substantially all of our assets, each right to purchase stock under the 2000
purchase plan will be assumed or an equivalent right substituted by our
acquiror. If our acquiror did not agree to assume or substitute stock purchase
rights, any offering period and purchase period then in progress would be
shortened and a new exercise date occurring prior to the closing of the
transaction would be set. Outstanding awards, shares remaining available for
issuance under the plan, the fixed number in the plan's evergreen formula, and
the maximum number of shares that may be purchased during a six-month purchase
period will each adjust in the event of a stock split, stock dividend or other
similar change in our capital stock. Our board of directors has the power to
amend or terminate the 2000 purchase plan and to change or terminate offering
periods as long as such action does not adversely affect any outstanding rights
to purchase stock thereunder. However, the board of directors may amend or
terminate the 2000 purchase plan or an offering period even if it would
adversely affect outstanding options in order to avoid our incurring adverse
accounting charges.

   Amended and Restated 1998 Directors' Stock Option Plan. The 1998 directors'
stock option was adopted by the board of directors in February 1998 and
approved by our stockholders in April 1998. It was amended in February 2000 by
our board of directors to increase the total number of shares of common stock
reserved for issuance under the plan from 200,000 to 466,666 shares. This
amendment will be submitted to our stockholders for approval prior to the date
of this offering. As of December 31, 1999, options to purchase 150,000 shares
of common stock with a weighted average exercise price of $6.50 were
outstanding and no shares had been purchased upon exercise of options issued
under the plan. We expect that a total of 316,666 shares of common stock will
be available for issuance as of the date of this offering.

                                       47
<PAGE>

   The directors' plan provides for the grant of nonstatutory stock options to
our nonemployee directors. Prior to the date of this offering, option grants
made under the 1998 directors' plan were made on a discretionary basis by our
board of directors. Following this offering, the plan provides for automatic
formula grants to our nonemployee directors. The directors' plan is designed to
work after the date of this offering automatically without administration;
however, to the extent administration is necessary, it will be performed by our
board of directors. To the extent they arise, it is expected that conflicts of
interest will be addressed by abstention of any interested director from both
deliberations and voting regarding matters in which a director has a personal
interest. Unless terminated earlier, the directors' plan will terminate in
February 2008.

   The directors' plan provides that each person who becomes a nonemployee
director after the completion of this offering will be granted a nonstatutory
stock option to purchase 16,666 shares of common stock on the date on which
such individual first becomes a member of our board of directors. In addition,
on the date of each annual stockholders meeting, each nonemployee director who
will continue serving on the board following the meeting and who has been a
director of Metawave for at least six months prior to the meeting date will be
granted an option to purchase 6,666 shares of common stock.

   All options granted under the directors' plan will have a term of ten years
and an exercise price equal to the fair market value of on the date of grant
and will be transferable only to members of a directors' immediate family and
to trusts and other entities for the benefit their family members. Options
granted under the directors' plan to new nonemployee directors following this
offering will vest as to 25% of the shares underlying the option on the first
anniversary of the date of the option grant and as to 1/48th of the shares each
month after the first anniversary so that these options will be fully vested on
the fourth anniversary of the grant date. Options granted to our nonemployee
directors at the time of each annual stockholders meeting following this
offering will vest as to 1/36th of the shares underlying the option so that
these options will be fully vested on the third anniversary of the grant date.
If Metawave determines that a director has engaged in fraud, embezzlement or
similar acts against us, or if a director has disclosed information that is
confidential to Metawave or engaged in any conduct constituting unfair
competition against us, we have the right to suspend or terminate that
director's right to exercise an option under the directors' plan.

   If we are acquired by another corporation, we would expect each option
outstanding under our 1998 directors' plan to be assumed or replaced with
equivalent options by our acquiror. If our acquiror did not assume or replace
outstanding options, then the vesting of outstanding awards would accelerate so
that nonemployee directors holding options would be able to exercise and retain
the number of shares that he or she would have vested in had he or she
continued serving as a member of our board of directors for us for another 12
months (if the director had been a member of our board us for less than 2 years
at the time of the acquisition) or for another 24 months (if he or she had been
a member of our board for 2 years or more at the time of the acquisition)
following the acquisition date. Outstanding awards, the number of shares
remaining available for grant under the plan, and the number of shares subject
to the automatic director grants described above will each adjust in the event
of a stock split, stock dividend or other similar change in our capital stock.
Our board of directors may amend or terminate the directors' plan as long as
such action does not adversely affect any outstanding option. We will obtain
stockholder approval for any amendment to the plan to the extent required by
applicable law.

Limitation of Liability and Indemnification Matters

   Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by the Delaware General Corporation Law. Delaware law
provides that a director of a corporation will not be personally liable for
monetary damages for breach of such individual's fiduciary duties as a director
except for liability for:

  . any breach of the director's duty of loyalty to Metawave or to our
    stockholders,

  . acts or omissions not in good faith or that involve intentional
    misconduct or a knowing violation of law,

                                       48
<PAGE>

  . unlawful payments of dividends or unlawful stock repurchases or
    redemptions, or

  . any transaction from which a director derives an improper personal
    benefit.

   Our bylaws provide that we shall indemnify our directors and officers and
may indemnify our other employees and agents to the fullest extent permitted by
law. We believe that indemnification under our bylaws covers at least
negligence and gross negligence on the part of an indemnified party. Our bylaws
also permit us to advance expenses incurred by an indemnified party in
connection with the defense of any action or proceeding arising out of such
party's status or service as a director, officer, employee or other agent of
Metawave upon an undertaking by such party to repay such advances if it is
ultimately determined that such party is not entitled to indemnification. This
advancement of expenses is subject to authorization by the board of directors
in the case of non-executive officers, employees and agents.

   We have entered into separate indemnification agreements with each of our
directors and officers. These agreements require us, among other things, to
indemnify the director or officer against expenses, including attorney's fees,
judgments, fines and settlements paid by the individual in connection with any
action, suit or proceeding arising out of his or her status or service as one
of our directors or officers other than liabilities arising from willful
misconduct or conduct that is knowingly fraudulent or deliberately dishonest
and to advance expenses incurred by such individual in connection with any
proceeding against such individual with respect to which such individual may be
entitled to indemnification by us. We believe that our certificate of
incorporation and bylaw provisions and indemnification agreements are necessary
to attract and retain qualified persons as directors and officers. We also
maintain directors' and officers' liability insurance.

   At present we are not aware of any pending litigation or proceeding
involving any of our directors, officers, employees or agents where
indemnification will be required or permitted. We are not aware of any
threatened litigation or proceeding that might result in a claim for such
indemnification.

                                       49
<PAGE>

             CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Sales of Equity Securities

   Certain stock option grants to our directors and executive officers are
described herein under the caption "Management--Executive Compensation."

   Since July 1995, we have issued, in private placement transactions, shares
of preferred stock as follows:

  . an aggregate of 5,000,000 shares of Series A preferred stock at $1.00 per
    share in July 1995,

  . an aggregate of 2,711,113 shares of Series B preferred stock at $3.375
    per share in May 1996,

  . an aggregate of 2,491,880 shares of Series C preferred stock at $6.16 per
    share in October and November 1996,

  . an aggregate of 2,397,727 shares of Series D preferred stock at $8.00 per
    share in August 1997, and

  . an aggregate of 18,276,151 shares of Series E preferred stock at $5.00
    per share in December 1998, January, April and June 1999.

   Upon completion of this offering, each share of Series A and Series B
preferred stock will convert into 0.66667 shares of our common stock, each
share of Series C preferred stock will convert into 0.87190 shares of our
common stock, each share of Series D preferred stock will convert into 0.96096
shares of our common stock and each share of Series E preferred stock will
convert into 0.95238 shares of our common stock.

   Listed below are those directors, executive officers and five percent
stockholders who have made equity investments in Metawave during the last
three fiscal years. We believe that the shares issued in these transactions
were sold at the then fair market value and that the terms of these
transactions were no less favorable than we could have obtained from
unaffiliated third parties.

<TABLE>
<CAPTION>
                                  Series A  Series B  Series C  Series D  Series E
                          Common  Preferred Preferred Preferred Preferred Preferred
Investor(1)                Stock  Stock(2)  Stock(2)   Stock(2)  Stock(2)  Stock(2)
- -----------               ------- --------- --------- --------- --------- ---------
<S>                       <C>     <C>       <C>       <C>       <C>       <C>
Entities affiliated with
 Venrock Associates(3)..       -- 1,222,222  592,592   283,086   175,654    589,164
Entities affiliated with
 Oak Investment
 Partners(4)............       -- 1,222,222  592,592   283,086   175,654  5,351,064
Entities affiliated with
 The Sevin Rosen
 Funds(5)...............       -- 1,218,888  583,704   283,086   175,654    589,164
Entities affiliated with
 MeriTech Capital
 Partners L.P...........       --        --       --        --        --  4,761,900
General Motors
 Investment Management
 Corporation............       --        --       --        --        --  3,333,330
Entities associated with
 Merrill Lynch, Pierce,
 Fenner & Smith
 Incorporated...........       --        --       --        --        --  2,380,950
Douglas O. Reudink......  906,153        --       --        --        --         --
Jennifer Gill
 Roberts(5).............       --     3,333    4,986        --        --         --
</TABLE>
- --------
(1) Shares held by affiliated persons and entities have been aggregated. See
    "Principal Stockholders."

(2) Shown on an as-converted basis.

(3) David R. Hathaway, a director, is a general partner of Venrock Associates.

(4) Bandel L. Carano, a director, is a general partner of Oak Investment
    Partners.

(5) Jennifer Gill Roberts, a director, is a general partner of the Sevin Rosen
    Funds. In addition to the equity investment made by entities affiliated
    with Sevin Rosen Funds, (i) Ms. Roberts purchased shares of Series A and
    Series B preferred stock for her own account which convert to 3,333 and
    4,986 shares of common stock, respectively, and (ii) Steven L. Domenik, a
    general partner of Sevin Rosen, purchased shares of Series B
    preferred stock for his own account which convert to 3,950 shares of
    common stock.

                                      50
<PAGE>


   On April 3, 1998, Dr. Reudink sold 20,513 shares of common stock at a price
of $9.75 per share to Cedar Grove Investment L.L.C., a limited liability
corporation which is managed by Mr. Scot Jarvis, one of our directors. On April
17, 1998, Dr. Reudink sold 13,333 shares of common stock at a price of $9.75
per share to Spinnaker Offshore Founders Fund, an entity affiliated with Bowman
Capital Management and related entities which are holders of Series D preferred
stock.

   On April 28, 1998, we issued an aggregate principal amount of $29.0 million
13.75% Senior Secured Bridge Notes due April 28, 2000 to certain institutional
investors, including Powerwave Technologies, Inc. of which Bruce Edwards, one
of our directors, is president and chief executive officer. In addition, we
issued warrants to purchase an aggregate of 537,500 shares of our Series D
preferred stock at a purchase price of $0.01 per share. The number of shares of
Series D preferred stock issuable upon exercise of these warrants was adjusted
in December 1998 in connection with our sale of Series E preferred stock. On
April 28, 1999 all outstanding principal and accrued interest on these notes
were repaid in full. On April 26, 1999 all of the warrants issued in connection
with these notes were exercised and 620,702 shares of Series D preferred stock
were issued. Powerwave purchased $2,500,000 in aggregate principal amount of
the 13.75% Senior Secured Bridge Notes and was issued a warrant to purchase up
to an aggregate of 46,336 shares of Series D preferred stock at an exercise
price of $0.01 per share which was exercised in full in April 1999 for 53,509
shares of Series D preferred stock as a result of certain adjustments.

   Powerwave Technologies, Inc. is currently our sole supplier of linear power
amplifiers, a component in our smart antenna systems. From January 1, 1999 to
December 31, 1999, we purchased a total of $6.1 million of linear power
amplifiers and related components from Powerwave. Pursuant to a manufacturing
agreement, Powerwave will manufacture and sell to us 100% of our requirements
for linear power amplifiers that Powerwave manufactures.

                                       51
<PAGE>

                             PRINCIPAL STOCKHOLDERS

   The following table sets forth information known to us regarding beneficial
ownership of our common stock as of December 31, 1999, after giving effect to
the conversion of all outstanding shares of preferred stock, and as adjusted to
reflect the sale of common stock offered by this prospectus, as to:

  . each person, or group of affiliated or associated persons, who owns
    beneficially more than 5% of the outstanding shares of our common stock,

  . each of our directors,

  . each of our Named Executive Officers, and

  . all of our directors and executive officers as a group.

   Unless otherwise indicated, the address of each stockholder is: c/o Metawave
Communications Corporation, 10735 Willows Road NE, P.O. Box 97069, Redmond, WA
98073-9769.

   Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options or warrants held by that person that
are currently exercisable or will become exercisable within 60 days after
December 31, 1999 are deemed outstanding, while such shares are not deemed
outstanding for purposes of computing percentage ownership of any other person.
The percent of beneficial ownership for each stockholder is based on 30,363,817
shares of common stock outstanding prior to this offering, on an as converted
basis, plus an additional 6,250,000 shares of common stock outstanding after
this offering. Unless otherwise indicated in the footnotes below, the persons
and entities named in the table have sole voting and investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable.

<TABLE>
<CAPTION>
                                                           Percent of Shares
                                                              Outstanding
                                                 Shares    -----------------
                                              Beneficially Prior to  After
Name and Address                                 Owned     Offering Offering
- --------------------------------------------- ------------ -------- --------
<S>                                           <C>          <C>      <C>
Oak Investment Partners(1)...................   7,730,725    25.4%    21.1%
  525 University Avenue, Suite 1300
  Palo Alto, CA 94301-1902
Venrock Associates(2)........................   2,937,823     9.7      8.0
  30 Rockefeller Plaza
  New York, NY 10112-0184
The Sevin Rosen Funds(3).....................   2,931,602     9.7      8.0
  550 Lytton Avenue, Suite 200
  Palo Alto, CA 94301-1542
MeriTech Capital Partners(4).................   4,761,899    15.7     13.0
  428 University Avenue, 2nd Floor
  Palo Alto, CA 94301
General Motors Investment Management
 Corporation.................................   3,333,330    11.0      9.1
  767 Fifth Avenue(5)
  New York, New York 10153
Merrill Lynch, Pierce, Fenner & Smith
 Incorporated(6).............................   2,380,948     7.8      6.5
  World Financial Center, South Tower
  New York, New York 10080-6123
Douglas O. Reudink(7)........................     922,818     3.0      2.5
Robert H. Hunsberger(8)......................     600,000     1.9      1.6
Victor K. Liang(9)...........................      66,480      *        *
Richard Henderson(10)........................     106,666      *        *
Martin J. Feuerstein(11).....................      48,777      *        *
Ray Butler(12)...............................      60,388      *        *
Bandel L. Carano(1)..........................   7,730,725    25.4     21.1
Jennifer Gill Roberts(13)....................   2,944,010     9.8      8.0
David R. Hathaway(2).........................   2,937,823     9.7      8.0
Scot B. Jarvis(14)...........................      61,484      *        *
Bruce C. Edwards(15).........................      16,666      *        *
David A. Twyver(16)..........................      16,666      *        *
All directors and executive officers as a
 group (14 persons)(17)......................  16,181,108    51.3     42.5
</TABLE>
- --------
  *  Represents less than 1% ownership.

Footnotes continued on following page.


                                       52
<PAGE>


 (1)  Includes 2,876,710 shares held by Oak Investment Partners VI, L.P.,
      4,671,424 shares held by Oak Investment Partners VIII, L.P., 67,120
      shares held by Oak VI Affiliates Fund, L.P. and 90,476 shares held by
      Oak VIII Affiliates Fund, L.P. Bandel L. Carano, one of our directors,
      is a Managing Member of Oak Associates VI, L.L.C., a general partner of
      Oak Investment Partners VI, L.P., a General Partner of Oak VI Affiliates
      and a general partner of Oak VI Affiliates Fund, and as such may be
      deemed to share voting and investment power with respect to such shares.
      Mr. Carano disclaims beneficial ownership of such shares, except to the
      extent of his pecuniary interest in such shares.

 (2)  Includes 1,715,298 shares held by Venrock Associates and 1,222,531
      shares held by Venrock Associates II, L.P. David R. Hathaway, a
      director, is a general partner of Venrock Associates and Venrock
      Associates II, L.P., and as such, may be deemed to share voting and
      investment power with respect to such shares. Mr. Hathaway disclaims
      beneficial ownership of such shares, except to the extent of his
      pecuniary interest in such shares.

 (3)  Includes 10,146 shares held by Sevin Rosen Bayless Management Co.,
      1,998,944 shares held by Sevin Rosen Fund IV L.P., 884,694 shares held
      by Sevin Rosen Fund V L.P., 37,822 shares held by Sevin Rosen V
      Affiliates Fund L.P.

 (4)  Includes 4,685,709 shares held by MeriTech Capital Partners and 76,190
      shares held by MeriTech Capital Affiliates, L.P.

 (5)  Includes 3,333,330 shares held by Chase Manhattan Bank, as trustee for
      First Plaza Group Trust, General Motors Investment Management
      Corporation.

 (6)  Includes 952,380 shares held by ML IBK Positions, Inc, 599,999 shares
      held by Merrill Lynch KECALP L.P. 1997, 657,142 shares held by Merrill
      Lynch KECALP L.P. 1999, 114,285 shares held by Merrill Lynch KECALP
      International L.P. 1997 and 57,142 shares held by Merrill Lynch KECALP
      International L.P. 1999.

 (7)  Includes 16,666 shares held in trust for Matthew Reudink, Dr. Reudink's
      son.

 (8)  Includes 600,000 shares issuable upon the exercise of immediately
      exercisable options held by Mr. Hunsberger within 60 days of December
      31, 1999, 237,500 shares of which are subject to our right of repurchase
      that lapses over time.

 (9)  Includes 66,480 shares issuable upon the exercise of immediately
      exercisable options held by Mr. Liang within 60 days of December 31,
      1999, 23,147 shares of which are subject to our right of repurchase that
      lapses over time.

(10)  Includes 106,666 shares issuable upon the exercise of immediately
      exercisable options held by Mr. Henderson within 60 days of December 31,
      1999, 51,112 shares of which are subject to our right of repurchase that
      lapses over time.

(11)  Includes 48,777 shares issuable upon the exercise of immediately
      exercisable options held by Mr. Feuerstein within 60 days of December
      31, 1999, 13,666 shares of which are subject to our right of repurchase
      that lapses over time.

(12)  Includes 60,388 shares issuable upon the exercise of immediately
      exercisable options held by Mr. Butler within 60 days of December 31,
      1999.

(13)  Includes the shares referenced in footnote (3) and 8,272 shares held by
      Ms. Roberts. Jennifer Gill Roberts, one of our directors, is a general
      partner of Sevin Rosen Fund IV L.P., Sevin Rosen Fund V L.P. and Sevin
      Rosen V Affiliates Fund L.P., and as such, may be deemed to share voting
      and investment power with respect to such shares. Ms. Roberts disclaims
      beneficial ownership of the shares referenced in footnote (3), except to
      the extent of her pecuniary interest in such shares.

(14)  Includes 53,846 shares owned by Cedar Grove Investments, LLC, Cedar
      Grove, and 16,666 shares issuable upon the exercise of immediately
      exercisable options held by Cedar Grove Investments, LLC within 60 days
      of December 31, 1999. Mr. Jarvis, a managing member of Cedar Grove,
      disclaims beneficial ownership of such shares, except to the extent of
      his pecuniary interest in such shares.

(15)  Includes 16,666 shares issuable upon the exercise of immediately
      exercisable options held by Mr. Edwards within 60 days of December 31,
      1999.

(16)  Includes 16,666 shares issuable upon the exercise of immediately
      exercisable options held by Mr. Twyver within 60 days of December 31,
      1999.

(17)  Includes shares referred to in footnotes (7)-(16) and 102,000 shares
      issuable upon exercise of outstanding options exercisable within 60 days
      of December 31, 1999 held by other officers.


                                      53
<PAGE>

                           DESCRIPTION OF SECURITIES

   Following the closing of this offering, our authorized capital stock will
consist of 150,000,000 shares of common stock, $0.0001 par value, and
10,000,000 shares of preferred stock, $0.0001 par value. As of December 31,
1999, there were 2,390,910 shares of common stock outstanding that were held of
record by approximately 115 stockholders. There will be 36,613,817 shares of
common stock outstanding (assuming no exercise of outstanding options after
December 31, 1999) after giving effect to this offering and conversion of all
outstanding preferred shares.

Common Stock

   The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may
be applicable to any outstanding preferred stock, the holders of common stock
are entitled to receive ratably such dividends, if any, as may be declared from
time to time by the board of directors out of funds legally available therefor.
In the event of a liquidation, dissolution or winding up of Metawave, the
holders of common stock are entitled to share ratably in all assets remaining
after payment of liabilities, subject to prior rights of preferred stock, if
any, then outstanding. The common stock has no preemptive or conversion rights
or other subscription rights. There are no redemption or sinking fund
provisions available to the common stock.

Preferred Stock

   Upon the closing of this offering, the board of directors is authorized to
issue up to 10,000,000 shares of preferred stock in one or more series and to
determine the powers, preferences and rights and the qualifications,
limitations or restrictions granted to or imposed upon any wholly unissued
series of undesignated preferred stock, including dividend rights, dividend
rates, conversion rights, voting rights, terms of redemption, redemption
prices, liquidation preferences and the number of shares constituting any
series or the designation of such series, without any further vote or action by
the stockholders.

   The issuance of preferred stock may have the effect of delaying, deferring
or preventing a change in control of Metawave without further action by the
stockholders and may adversely affect the voting and other rights of the
holders of common stock. In certain circumstances, such issuance could have the
effect of decreasing the market price of the common stock. As of the closing of
this offering, no shares of preferred stock will be outstanding and we
currently have no plans to issue any shares of preferred stock.

Warrants

   As of December 31, 1999, we had warrants outstanding to purchase an
aggregate of 20,833 shares of common stock, 65,416 shares of Series A preferred
stock, convertible into 43,610 shares of common stock, 19,999 shares of Series
B preferred stock, convertible into 13,332 shares of common stock,
34,090 shares of Series C preferred stock, convertible into 29,723 shares of
common stock and 4,375 shares of Series D preferred stock, convertible into
4,204 shares of common stock.

   In connection with a equipment lease line entered into with Transamerica
Business Credit Corporation in May 1999, we issued a warrant to purchase up to
an aggregate of 20,833 shares of common stock at an exercise price of $6.75 per
share. The warrant expires on May 19, 2004.

   In connection with an equipment lease line entered into in December 1995, we
issued a warrant to purchase up to an aggregate of 48,750 shares of Series A
preferred stock to Comdisco, Inc. at an exercise price of $2.1875 per share,
convertible into 32,500 shares of common stock. The warrant expires on December
13, 2002. In connection with a second equipment lease line entered into in
April 1996, we issued a warrant to purchase up to an aggregate of 16,666 shares
of Series A preferred stock to Comdisco at an exercise price of $2.1875 per
share, convertible into 11,110 shares of common stock. The warrant expires on
April 9, 2003. In connection with a third equipment lease line entered into in
August 1996, we issued a warrant to purchase up to an aggregate of 19,999
shares of Series B preferred stock to Comdisco at an exercise price of

                                       54
<PAGE>


$4.7675 per share, convertible into 13,332 shares of common stock. The warrant
and the extension expire on the later of August 20, 2003 or three years
following the effective date of this offering. In connection with a fourth
equipment lease line entered into in June 1997, we issued a warrant to purchase
up to an aggregate of 34,090 shares of Series C preferred stock to Comdisco at
an exercise price of $6.16 per share convertible into 29,723 shares of common
stock. The warrant expires on the later of June 9, 2004 or 18 months following
the effective date of this offering.

   In connection with an equipment lease line entered into with Insight
Investments Corporation in April 1998, we issued a warrant to purchase up to an
aggregate of 4,375 shares of Series D preferred stock at an exercise price of
$8.00 per share, convertible into 4,204 shares of common stock. The warrant
expires on the closing of this offering.

Registration Rights of Certain Holders

   The holders of 28,924,774 shares of common stock or certain of their
transferees are entitled to rights with respect to the registration of such
shares under the Securities Act. These rights are provided under the terms of
an agreement between us and the holders of registrable securities. Subject to
certain limitations in the agreement, certain holders of the registrable
securities may require, on two occasions at any time after six months from the
effective date of this offering, that we use our best efforts to register the
registrable securities for public resale, provided that the proposed aggregate
offering price is at least $7,500,000. No shares of common stock are being
registered on behalf of these holders in this offering. Furthermore, in the
event we elect to register any of our common stock for purposes of effecting
any public offering, the holders of registrable securities are entitled to
include their shares of common stock in the registration. A holder's right to
include shares in an underwritten registration is subject to the ability of the
underwriters to limit the number of shares included in the underwritten public
offering. Subject to certain conditions, all fees, costs and expenses of such
registrations must be borne by us and all selling expenses, including
underwriting discounts, selling commissions and stock transfer taxes, relating
to registrable securities must be borne by the holders of the securities being
registered. In addition, we have agreed to indemnify the holders of
registration rights against liabilities under the Securities Act.

Anti-Takeover Provisions of Delaware and Washington Law and Charter Documents

   We are subject to the provisions of Section 203 of the Delaware General
Corporate Law. In general, the statute prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date that the person became
an interested stockholder unless, with certain exceptions, the business
combination or the transaction in which the person became an interested
stockholder is approved in a prescribed manner. Generally, a "business
combination" includes a merger, asset or stock sale or other transaction
resulting in a financial benefit to the stockholder, and an "interested
stockholder" is a person who, together with affiliates and associates, owns, or
within three years prior, did own, 15% or more of the corporation's outstanding
voting stock. This provision may have the effect of delaying, deferring or
preventing a change in control of Metawave without further action by the
stockholders.

   The laws of the State of Washington, where our principal executive offices
are located, impose restrictions on certain transactions between certain
foreign corporations and significant stockholders. Chapter 23B.19 of the
Washington Business Corporation Act, or the WBCA, prohibits a "target
corporation," with certain exceptions, from engaging in certain "significant
business transactions" with a person or group of persons who beneficially own
10% or more of the voting securities of the target corporation, an "acquiring
person", for a period of five years after such acquisition, unless the
transaction or acquisition of such shares is approved by a majority of the
members of the target corporation's board of directors prior to the time of
acquisition. Such prohibited transactions include, among other things, a merger
or consolidation with, disposition of assets to, or issuance or redemption of
stock to or from, the acquiring person, termination of 5% or more of the
employees of the target corporation as a result of the acquiring person's
acquisition of 10% or more of the shares or allowing the acquiring person to
receive disproportionate benefit as a stockholder. After the five-year period,
a

                                       55
<PAGE>

significant business transaction may take place as long as it complies with
certain fair price provisions of the statute. A target corporation includes a
foreign corporation if:

  . the corporation has a class of voting stock registered pursuant to
    Section 12 or 15 of the Exchange Act,

  . the corporation's principal executive office is located in Washington,
    and

  . any of (a) more than 10% of the corporation's stockholders of record are
    Washington residents, (b) more than 10% of its shares are owned of record
    by Washington residents, (c) 1,000 or more of its stockholders of record
    are Washington residents, (d) a majority of the corporation's employees
    are Washington residents or more than 1,000 Washington residents are
    employees of the corporation, or (e) a majority of the corporation's
    tangible assets are located in Washington or the corporation has more
    than $50.0 million of tangible assets located in Washington.

   A corporation may not "opt out" of this statute and, therefore, we
anticipate this statute will apply to us. Depending upon whether we meet the
definition of a target corporation, Chapter 23B.19 of the WBCA may have the
effect of delaying, deferring or preventing a change in control of Metawave.

   In addition, upon completion of this offering, certain provisions of our
charter documents, including a provision eliminating the ability of
stockholders to take actions by written consent, may have the effect of
delaying or preventing changes in control or management of Metawave, which
could have an adverse effect on the market price of our common stock. Our stock
option and purchase plans generally provide that upon a change in control or
similar event optionees are entitled to accelerated vesting credit equal to
either twelve months or twenty-four months of additional vesting beyond that
otherwise scheduled, based on whether he or she has been employed by Metawave
less than two years, or two years or more, respectively, as of the date of such
event unless in connection with the change in control or similar event,
outstanding options are assumed or substituted for equivalent options of a
successor corporation. The board of directors has authority to issue up to
10,000,000 shares of preferred stock and to fix the rights, preferences,
privileges and restrictions, including voting rights, of these shares without
any further vote or action by the stockholders. The rights of the holders of
the common stock will be subject to, and may be adversely affected by, the
rights of the holders of any preferred stock that may be issued in the future.
The issuance of preferred stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire a majority
of our outstanding voting stock, thereby delaying, deferring or preventing a
change in control of Metawave. Furthermore, such preferred stock may have other
rights, including economic rights senior to the common stock, and, as a result,
the issuance of such preferred stock could have a material adverse effect on
the market value of the common stock. We have no present plan to issue shares
of preferred stock.

Transfer Agent and Registrar

   The transfer agent and registrar for our common stock is ChaseMellon
Shareholder Services L.L.C. and their number is (206) 674-3030.

Listing

   We have applied to list our common stock on the Nasdaq National Market under
the trading symbol "MTWV."

                                       56
<PAGE>

                        SHARES ELIGIBLE FOR FUTURE SALE

   Upon completion of this offering, we will have outstanding 36,613,817 shares
of common stock, assuming no exercise of options after December 31, 1999. Of
these shares, the 6,250,000 shares sold in this offering will be eligible for
resale in transactions on the Nasdaq National Market without restriction
pursuant to exemptions under the Securities Act unless purchased by our
"affiliates" as that term is defined in Rule 144 of the Securities Act.

   The remaining 30,363,817 shares outstanding upon completion of this offering
will be "restricted securities" as that term is defined under Rule 144 and may
not be sold publicly unless they are registered under the Securities Act or are
sold pursuant to Rule 144 or another exemption from registration. All of our
directors and executive officers and certain other stockholders, holding in the
aggregate 16,181,105 of the shares of common stock outstanding prior to this
offering, are contractually obligated not to sell or otherwise dispose of any
shares of common stock for a period of 180 days after the date of this
prospectus without the prior written consent of Merrill Lynch, Pierce, Fenner &
Smith Incorporated or us. The number of shares of common stock available for
sale in the public market is further limited by restrictions under the
Securities Act.

   Because of the restrictions noted above, on the date of this prospectus and
until 180 days after the date of this prospectus, assuming no release of the
lockup period by us or by Merrill Lynch, Pierce, Fenner & Smith Incorporated,
469,142 shares in addition to the 6,250,000 shares offered hereby will be
eligible for sale in the public market. Beginning 90 days after the effective
date of this offering, approximately 411,112 restricted shares will be eligible
for sale in the public market. Beginning 180 days after the effective date of
this offering, approximately 29,505,874 restricted shares, will be eligible for
sale in the public market, subject in some cases to certain volume limitations.
Upon the expiration of one-year minimum holding periods, an additional
22,310 shares will be eligible for sale.

<TABLE>
<CAPTION>
   Days after Date    Shares Eligible
  of this Prospectus     for Sale                      Comment
 -------------------- --------------- -----------------------------------------
 <C>                  <C>             <S>
 Upon effectiveness..    6,250,000    Shares sold in offering
 Upon effectiveness..      469,142    Freely tradable shares salable under Rule
                                      144(k) that are not subject to the lockup
 91 days.............      411,112    Shares salable under Rules 701 and 144
                                      and not subject to the lockup
 181 days............   29,505,874    Lockup released; shares salable under
                                      Rules 144 and 701
</TABLE>

   In general, under Rule 144 as currently in effect, a person, or persons
whose shares are aggregated, who has beneficially owned restricted shares for
at least one year, including persons who may be deemed our "affiliates", would
be entitled to sell within any three-month period a number of shares that does
not exceed the greater of 1% of the number of shares of common stock then
outstanding or the average weekly trading volume of the common stock as
reported through the Nasdaq National Market during the four calendar weeks
preceding the filing of a Form 144 with respect to such sale. Sales under Rule
144 are also subject to certain manner of sale provisions and notice
requirements and to the availability of current public information about us. In
addition, a person who is not deemed to have been an affiliate of us at any
time during the 90 days preceding a sale, and who has beneficially owned for at
least two years the shares proposed to be sold, would be entitled to sell such
shares under Rule 144(k) without regard to the requirements described above.

   In general, Rule 701 permits resales of shares issued pursuant to certain
compensatory benefit plans and contracts commencing 90 days after the issuer
becomes subject to the reporting requirements of the Exchange Act in reliance
upon Rule 144 but without compliance with certain restrictions, including the
holding period requirements, contained in Rule 144. During the lockup period,
we intend to file a registration statement under the Securities Act to register
shares to be issued pursuant to our employee benefit plans. As a result, any
options exercised under the 1995 stock option plan, the 1998 stock option plan,
the 2000 stock option plan, the 2000 director option plan, the 2000 employee
stock purchase plan or any other benefit plan after the effectiveness of such
registration statement will also be freely tradable in the public market,
except that shares

                                       57
<PAGE>


held by affiliates will still be subject to the volume limitation, manner of
sale, notice and public information requirements of Rule 144 unless otherwise
resalable under Rule 701. As of December 31, 1999, there were outstanding
options for the purchase of 2,885,294 shares of our common stock under our
employee benefit plans.

   Prior to this offering, there has been no public market for our securities.
No prediction can be made as to the effect, if any, that market sales of shares
or the availability of shares for sale will have on the market price prevailing
from time to time. Nevertheless, sales of substantial amounts of our common
stock in the public market after the lapse of the restrictions described above
could adversely affect the prevailing market price and our ability to raise
equity capital in the future at a time and price which we deem appropriate. In
addition, after this offering, the holders of the registrable securities will
be entitled to certain demand and piggyback rights with respect to registration
of their shares under the Securities Act. Registration of those shares under
the Securities Act would result in such shares becoming freely tradable without
restriction under the Securities Act (except for shares purchased by our
affiliates) immediately upon the effectiveness of such registration. If such
holders, by exercising their demand registration rights, cause a larger number
of securities to be registered and sold in the public market, such sales could
have an adverse effect on the market price for our common stock. If we were to
include in a registration initiated by us, any registrable securities pursuant
to the exercise of piggyback registration rights, such sales may have an
adverse effect on our ability to raise needed capital.

                                       58
<PAGE>

                                  UNDERWRITING

General

   We intend to offer our common stock through a number of underwriters.
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney and
U.S. Bancorp Piper Jaffray are acting as representatives of the underwriters
named below. Subject to the terms and conditions described in a purchase
agreement among us and the underwriters, we have agreed to sell to the
underwriters, and each of the underwriters severally and not jointly has agreed
to purchase from our company, the number of shares of common stock set forth
opposite its name below.

<TABLE>
<CAPTION>
                                                                       Number of
        Underwriter                                                     Shares
        -----------                                                    ---------
   <S>                                                                 <C>
   Merrill Lynch, Pierce, Fenner & Smith
            Incorporated..............................................
   Salomon Smith Barney...............................................
   U.S. Bancorp Piper Jaffray Inc.....................................
        Total.........................................................
                                                                         ====
</TABLE>

   The underwriters have agreed to purchase all of the shares sold under the
purchase agreement if any of these shares are purchased. If an underwriter
defaults, the purchase agreement provides that the purchase commitments of the
nondefaulting underwriters may be increased or the purchase agreement may be
terminated. The closings for the sales of shares to be purchased by the
underwriters are conditioned on one another.

   We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
the underwriters may be required to make in respect of those liabilities.

   The underwriters are offering the shares, subject to prior sale, when, as
and if issued to and accepted by them, subject to approval of legal matters by
their counsel, including the validity of the shares, and other conditions
contained in the purchase agreements, such as the receipt by the underwriters
of officer's certificates and legal opinions. The underwriters reserve the
right to withdraw, cancel or modify offers to the public and to reject orders
in whole or in part.

Commissions and Discounts

   The representatives have advised us that the underwriters propose initially
to offer the shares of common stock to the public at the initial public
offering price set forth on the cover page of this prospectus, and to certain
dealers at a price less a concession not in excess of $     per share of common
stock. The underwriters may allow, and such dealers may reallow, a discount not
in excess of $     per share of common stock to certain other dealers. After
the initial public offering, the public offering price, concession and discount
may change.

   The following table shows the per share and total public offering price, the
underwriting discount to be paid by us to the underwriters and the proceeds
before expenses to us. The information is presented assuming either no exercise
or full exercise by the underwriters of their over-allotment option.

<TABLE>
<CAPTION>
                                                          Without
                                              Per Share   Option    With Option
                                              --------- ----------- -----------
   <S>                                        <C>       <C>         <C>
   Public offering price.....................  $12.00   $75,000,000 $86,250,000
   Underwriting discount.....................    0.84     5,250,000   6,037,500
   Proceeds, before expenses, to Metawave....   11.16    69,750,000  80,212,500
</TABLE>

   The expenses of the offering, not including the underwriting discount, are
estimated at $1,000,000 and are payable by Metawave.

                                       59
<PAGE>

Over-allotment Option

   We have granted to the underwriters an option, exercisable no later than 30
days after the date of this prospectus, to purchase up to an aggregate of
937,500 additional shares of common stock at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
prospectus. To the extent that the underwriters exercise such option, each of
the underwriters will have a firm commitment to purchase approximately the same
percentage of such additional shares as the number set forth next to such
underwriters name in the above table bears to the total number of shares of
common stock offered hereby, and we will be obligated, pursuant to the option,
to sell shares to the underwriters to the extent the option is exercised. The
underwriters may exercise such option only to cover over-allotments made in
connection with the sale of shares of common stock offered hereby. If
purchased, the underwriters will offer such additional shares on the same terms
as those on which the 6,250,000 shares are being offered.

Reserved Shares

   At our request, the underwriters have reserved for sale, at the initial
public offering price, up to 7% of the shares offered by this prospectus for
sale to some of our employees, distributors, suppliers, business associates and
related persons. If these persons purchase reserved shares, this will reduce
the number of shares available for sale to the general public. Any reserved
shares that are not orally confirmed for purchase within one day of the pricing
of this offering will be offered by the underwriters to the general public on
the same terms as the other shares offered by this prospectus.

No Sales of Similar Securities

   We, our executive officers and directors and most of our existing
stockholders have agreed not to directly or indirectly:

  .  offer, pledge, sell, contract to sell, sell any option or contract to
     purchase, purchase any option or contract to sell, grant any option,
     right or warrant for the sale of, lend or otherwise dispose of or
     transfer any shares of our common stock or securities convertible into
     or exchangeable or exercisable for or repayable with our common stock,
     whether now owned or later acquired by the person executing the
     agreement or with respect to which the person executing the agreement
     later acquires the power of disposition, or file any registration
     statement under the Securities Act relating to any shares of our common
     stock (other than shares sold in this offering or hereafter acquired in
     the public market), or

  .  enter into any swap or other agreement or any other agreement that
     transfers, in whole or in part, the economic consequence of ownership of
     our common stock whether any such swap or transaction is to be settled
     by delivery of our common stock or other securities, in cash or
     otherwise,

without the prior written consent of Merrill Lynch Pierce, Fenner & Smith
Incorporated on behalf of the underwriters for a period of 180 days after the
date of the prospectus. See "Shares Eligible for Future Sale."

Quotation on the Nasdaq National Market

   We have applied to have our common stock listed on the Nasdaq National
Market, subject to notice of issuance, under the symbol "MTWV."

   Before this offering, there has been no public market for our common stock.
The initial public offering price will be determined through negotiations among
us and the representatives and the lead managers. In addition to prevailing
market conditions, the factors to be considered in determining the initial
public offering price are:

  .  the valuation multiples of publicly traded comparisons that the
     representatives and the lead managers believe to be comparable to us,

  .  our financial information,

                                       60
<PAGE>

  .  the history of, and the prospects for, our company and the industry in
     which we compete,

  .  an assessment of our management, its past and present operations, and
     the prospects for, and timing of, our future revenues,

  .  the present state of our development and

  .  the above factors in relation to market values and various valuation
     measures of other companies engaged in activities similar to ours.

Other Relationships

   ML IBK Positions, Inc. and other investment funds which are associated with
Merrill Lynch, Pierce, Fenner & Smith Incorporated purchased an aggregate of
2,380,948 shares of our Series E preferred stock. Merrill Lynch, Pierce, Fenner
& Smith Incorporated has in the past provided and may in the future provide,
investment banking services for which they have received, and may receive,
customary fees.

Price Stabilization and Short Positions

   Until the distribution of our common stock is completed, rules of the
Commission may limit the ability of the underwriters to bid for and purchase
our common stock. As an exception to these rules, the underwriters are
permitted to engage in transactions that stabilize the price of our common
stock. Stock transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of our common stock.

   The underwriters may create a short position in our common stock in
connection with the offering. This means that if they sell more shares of our
common stock than are set forth on the cover page of this prospectus, the
underwriters may reduce that short position by purchasing our common stock in
the open market. The underwriters may also elect to reduce any short position
by exercising all or part of the over-allotment option described above.

   Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our common stock. In addition, neither
we nor any of the underwriters makes any representation that the underwriters
will engage in such transactions or that such transactions, once commenced,
will not be discontinued without notice.

Electronic Distribution of Prospectus

   Merrill Lynch will be facilitating Internet distribution for this offering
to certain of its Internet subscription customers. Merrill Lynch intends to
allocate a limited number of shares for sale to its online brokerage customers.
An electronic prospectus is available on the Website maintained by Merrill
Lynch. Other than the prospectus in electronic format, the information on the
Merrill Lynch Website relating to this offering is not a part of this
prospectus.

                                       61
<PAGE>

                                 LEGAL MATTERS

   The validity of the common stock offered hereby will be passed upon for us
by our counsel, Venture Law Group, a Professional Corporation, Kirkland,
Washington. Certain legal matters will be passed upon for the underwriters by
Wilson Sonsini Goodrich & Rosati, a Professional Corporation, Palo Alto,
California.

                                    EXPERTS

   The financial statements and schedule of Metawave Communications Corporation
as of December 31, 1997, 1998 and 1999 and the related statements of
operations, stockholders' equity (deficit), and cash flows for the years then
ended appearing in this prospectus and registration statement have been audited
by Ernst & Young LLP, independent auditors, as set forth in their reports
thereon appearing elsewhere herein, and are included in reliance upon such
reports, given on the authority of such firm as experts in accounting and
auditing.

                             ADDITIONAL INFORMATION

   We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act. This prospectus, which is a
part of the registration statement, does not contain all of the information set
forth in the registration statement, including items contained in the exhibits
to the registration statement. For further information about our company and
the common stock being offered by this prospectus, you should see the
registration statement and the exhibits, financial statements and notes filed
with the registration statement. Copies of the registration statement,
including exhibits, financial statements and notes, may be inspected without
charge at the SEC principal office in Washington, D.C. or obtained at
prescribed rates from the public reference room of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549. The public may obtain information regarding the
public reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a
World Wide Web site on the Internet at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
companies that file electronically with the SEC. We have filed the registration
statement, including the exhibits and schedules, electronically with the SEC
via the SEC EDGAR system.

                                       62
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
     <S>                                                                    <C>
     Report of Ernst & Young LLP, Independent Auditors..................... F-2

     Consolidated Balance Sheets........................................... F-3

     Consolidated Statements of Operations................................. F-4

     Consolidated Statements of Stockholders' Deficit...................... F-5

     Consolidated Statements of Cash Flows................................. F-6

     Notes to Consolidated Financial Statements............................ F-7
</TABLE>

                                      F-1
<PAGE>

               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Board of Directors
Metawave Communications Corporation

   We have audited the accompanying consolidated balance sheets of Metawave
Communications Corporation as of December 31, 1998 and 1999, and the related
consolidated statements of operations, stockholders' deficit, and cash flows
for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

   In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Metawave
Communications Corporation at December 31, 1998 and 1999, and the consolidated
results of its operations and its cash flows for the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.

                                          ERNST & YOUNG LLP

Seattle, Washington

February 11, 2000, except Note 14,

   as to which the date is March 27, 2000

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

   The foregoing report is in the form that will be signed upon the completion
of the two for three stock split described in Note 14 to the financial
statements.

                                          ERNST & YOUNG LLP

Seattle, Washington

March 27, 2000

                                      F-2
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

                          CONSOLIDATED BALANCE SHEETS
                       (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                    Pro Forma
                                                                  Stockholders'
                                                December 31,        Equity at
                                             -------------------  December 31,
                                               1998      1999         1999
                                             --------  ---------  -------------
                                                                   (Unaudited)
<S>                                          <C>       <C>        <C>
ASSETS
- ------

Current assets:
  Cash and cash equivalents................. $ 10,763   $ 20,165
  Accounts receivable, less allowances of
   $908 ($693 in 1998)......................    4,329     10,127
  Inventories...............................    7,929      4,149
  Debt issuance costs, net of amortization
   of $6,491 ($4,170 in 1998)...............    2,321        --
  Prepaid expenses and other assets.........      621        613
                                             --------  ---------
    Total current assets....................   25,963     35,054
Property and equipment, net.................    6,355      5,701
Other noncurrent assets.....................      192        191
                                             --------  ---------
    Total assets............................ $ 32,510  $  40,946
                                             ========  =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------

Current liabilities:
  Accounts payable.......................... $  5,412  $   3,758
  Accrued liabilities.......................    2,334      2,493
  Accrued compensation......................    1,461      1,511
  Senior secured notes......................   31,704        --
  Current portion of notes payable..........      134         75
  Current portion of capital lease
   obligations..............................    1,908      2,692
  Deferred revenues.........................      145      1,766
                                             --------  ---------
    Total current liabilities...............   43,098     12,295
Capital lease obligations, less current
 portion....................................    4,326      2,479
Notes payable, less current portion.........       87          8
Other long-term liabilities.................      --          16
Commitments:
Convertible and redeemable preferred stock,
 issued and outstanding shares--14,029,088
 in 1998, 32,027,203 in 1999, and none pro
 forma, at liquidation value................   56,472    143,945
Convertible and redeemable preferred stock
 warrants...................................    5,123        157
Stockholders' equity (deficit):
  Preferred stock, $.0001 par value:
   Authorized shares--37,000,000, of which
   32,027,203 have been designated as
   convertible and redeemable at December
   31, 1999.................................
  Common stock, $.0001 par value:
   Authorized shares--50,000,000; issued and
   outstanding shares--2,112,229 in 1998,
   2,390,910 in 1999 and 30,363,817
   pro forma................................    2,179      3,573    $ 147,675
  Deferred stock compensation...............     (554)      (906)        (906)
  Accumulated other comprehensive income ...        6         19           19
  Accumulated deficit.......................  (78,227)  (120,640)    (120,640)
                                             --------  ---------    ---------
    Total stockholders' equity (deficit)....  (76,596)  (117,954)   $  26,148
                                             --------  ---------    =========
    Total liabilities and stockholders'
     equity................................. $ 32,510  $  40,946
                                             ========  =========
</TABLE>

                            See accompanying notes.

                                      F-3
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                (in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                              -------------------------------
                                                1997       1998       1999
                                              ---------  ---------  ---------
<S>                                           <C>        <C>        <C>
Revenues..................................... $   1,450  $  15,991  $  22,596
Cost of revenues.............................     1,728     18,028     22,236
                                              ---------  ---------  ---------
Gross profit (loss)..........................      (278)    (2,037)       360
Operating expenses:
  Research and development...................    13,083     18,495     22,787
  Sales and marketing........................     5,383     11,346     11,080
  General and administrative.................     3,762      5,887      5,732
                                              ---------  ---------  ---------
    Total operating expenses.................    22,228     35,728     39,599
                                              ---------  ---------  ---------
Operating loss...............................   (22,506)   (37,765)   (39,239)
Other income, net............................       851        790      1,165
Interest expense.............................      (449)    (7,353)    (4,339)
                                              ---------  ---------  ---------
    Other income (expense), net..............       402     (6,563)    (3,174)
                                              ---------  ---------  ---------
Net loss..................................... $ (22,104) $ (44,328) $ (42,413)
                                              =========  =========  =========
Basic and diluted net loss per share......... $  (12.18) $  (21.88) $  (18.98)
                                              =========  =========  =========
Shares used in computation of basic and
 diluted net loss per share.................. 1,815,000  2,025,741  2,234,798
                                              =========  =========  =========
</TABLE>



                            See accompanying notes.

                                      F-4
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

              For the Years Ended December 31, 1997, 1998 and 1999
                       (in thousands, except share data)

<TABLE>
<CAPTION>
                                                           Accumulated
                            Common Stock       Deferred       Other                     Total
                          -----------------     Stock     Comprehensive Accumulated Stockholders'
                           Shares    Amount  Compensation    Income       Deficit      Deficit
                          ---------  ------  ------------ ------------- ----------- -------------
<S>                       <C>        <C>     <C>          <C>           <C>         <C>
Balance at January 1,
 1997...................  1,767,335  $   10    $     0         $ 0       $ (11,795)   $ (11,785)
 Exercise of stock
  options...............    188,061      77        --          --              --            77
 Deferred stock
  compensation..........        --    1,881     (1,881)        --              --           --
 Stock compensation
  expense...............        --      --         676         --              --           676
 Net loss for the year
  ended December 31,
  1997..................        --      --         --          --          (22,104)     (22,104)
                          ---------  ------    -------         ---       ---------    ---------
Balance at December 31,
 1997...................  1,955,396   1,968     (1,205)          0         (33,899)     (33,136)
 Repurchased restricted
  stock.................    (92,266)     (5)       --          --              --            (5)
 Exercise of stock
  options...............    241,766     106        --          --              --           106
 Issuance and exercise
  of common stock
  warrants..............      7,333     110        --          --              --           110
 Stock compensation
  expense...............        --      --         651         --              --           651
 Comprehensive income
  (loss):
 Foreign exchange
  translation gain......        --      --         --            6             --             6
 Net loss for the year
  ended December 31,
  1998..................        --      --         --          --         (44,328)      (44,328)
                                                                                      ---------
 Comprehensive loss.....                                                                (44,322)
                          ---------  ------    -------         ---       ---------    ---------
Balance at December 31,
 1998...................  2,112,229   2,179       (554)          6         (78,227)     (76,596)
 Exercise of stock
  options...............    278,681     137        --          --              --           137
 Issuance of common
  stock warrants........        --       88        --          --              --            88
 Deferred stock
  compensation..........        --    1,169     (1,169)        --              --           --
 Stock compensation
  expense...............        --      --         817         --              --           817
 Comprehensive income
  (loss):
 Foreign exchange
  translation gain......        --      --         --           13             --            13
 Net loss for the year
  ended December 31,
  1999..................        --      --         --          --         (42,413)      (42,413)
                                                                                      ---------
 Comprehensive loss.....                                                                (42,400)
                          ---------  ------    -------         ---       ---------    ---------
Balance at December 31,
 1999...................  2,390,910  $3,573    $  (906)        $19       $(120,640)   $(117,954)
                          =========  ======    =======         ===       =========    =========
</TABLE>



                            See accompanying notes.

                                      F-5
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                  Year Ended December 31,
                                                ------------------------------
                                                  1997       1998       1999
                                                ---------  ---------  --------
<S>                                             <C>        <C>        <C>
Operating activities
Net loss....................................... $(22,104)  $(44,328)  $(42,413)
Adjustments to reconcile net loss to net cash
 used in operating activities:
  Depreciation and amortization expense........     1,841      2,623     3,035
  Loss on disposal of assets...................       --           8       208
  Stock compensation expense...................       676        651       817
  Reserve for loss on assets...................       425        --        --
  Accrued interest expense on senior notes.....       --       2,704       --
  Debt financing amortization..................       --       2,673     2,321
Noncash warrant expense........................       --         110        88
  Changes in operating assets and liabilities:
    Decrease in accounts receivable............    (1,323)    (2,885)   (5,798)
    Increase (decrease) in inventories.........    (4,080)    (3,849)    3,780
    Increase (decrease) in other assets........       (34)      (502)        8
    Increase (decrease) in accounts payable,
     accrued liabilities, and other
     liabilities...............................       926      7,915    (1,441)
    Increase in other long-term liabilities....       --          (5)      --
    Increase in deferred revenues..............       114         30     1,621
                                                ---------  ---------  --------
Net cash provided by (used in) operating
 activities....................................   (23,559)   (34,855)  (37,774)
Investing activities
Proceeds on sale of assets.....................       --          78       --
Purchases of equipment.........................      (621)    (2,593)   (1,317)
                                                ---------  ---------  --------
Net cash provided by (used in) investing
 activities....................................      (621)    (2,515)   (1,317)
Financing activities
Proceeds from issuance of preferred stock......    19,182      7,190    82,507
Proceeds from issuance of common stock.........        77        101       138
Proceeds from notes payable....................       --      29,000       --
Payments on notes payable......................      (115)      (182)  (31,841)
Principal payments on capital lease
 obligations...................................      (722)    (1,317)   (2,319)
                                                ---------  ---------  --------
Net cash provided by financing activities......    18,422     34,792    48,485
                                                ---------  ---------  --------
Net increase (decrease)in cash.................    (5,758)    (2,578)    9,394
Effect of exchange rate changes on cash........       --           7         8
Cash and cash equivalents at beginning of
 period........................................    19,092     13,334    10,763
                                                ---------  ---------  --------
Cash and cash equivalents at end of period..... $  13,334  $  10,763  $ 20,165
                                                =========  =========  ========
Noncash transactions and supplemental
 disclosures
Capital lease obligations incurred to purchase
 assets........................................ $   2,665  $   3,104  $  1,256
Inventories reclassified to property and
 equipment.....................................       --         171       --
Interest paid..................................       450        596     1,653
Non cash conversion of warrants to preferred
 stock.........................................       --         --        620
Deferred stock compensation....................     1,881        --      1,169
</TABLE>

                            See accompanying notes.

                                      F-6
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Significant Accounting Policies

Description of Business

   Metawave Communications Corporation (the "Company") designs, develops,
manufactures and markets smart antenna systems for the wireless communications
industry. The Company believes that its spectrum management solutions,
consisting of smart antenna systems, applications software and engineering
services, enable wireless network operators to increase overall network
capacity, improve or maintain network quality and reduce network operating
costs and better manage network infrastructure. Using its proprietary
technologies, the Company has developed systems that address the capacity,
coverage and call quality problems faced by wireless network operators.

   On September 2, 1998, the Company formed Metawave International
Communications Corporation ("MICC"), a wholly owned Delaware subsidiary. On
October 5,1998, the Company formed a Hong Kong subsidiary, Metawave
Communications (Asia) Limited, which is now owned by Metawave Communications
(Cayman Islands). On December 7, 1998, the Company formed Metawave
Communications (Cayman Islands), a wholly owned subsidiary of MICC. On April 2,
1999 Metawave Communications (Cayman Islands) formed a Taiwan subsidiary,
Metawave Communications Taiwan Co. Ltd.

Principles of Consolidation and Basis of Presentation

   The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All intercompany accounts and transactions
have been eliminated in consolidation.

   In 1998, the Company adopted a 52 week fiscal year ending on the Sunday
closest to December 31, 1999. The 1999 fiscal year ends on January 2, 2000,
with each of the fiscal quarters representing a 13-week period. For convenience
of presentation, all fiscal periods in these financial statements are treated
as ending on a calendar month end.

   The Company experienced net losses of $44,328,000 and $42,413,000 for the
years ended December 31, 1998 and 1999, respectively. These losses are the
result of intense product development efforts and the costs associated with the
development of the Company's manufacturing and sales operations. Management
believes that the Company will experience substantial losses in 2000, even if
commercial sales of the Company's systems continue to grow. Management believes
that existing cash, unused credit facilities, and revenues from system sales,
will be sufficient to fund operations through 2000. If necessary, management
would delay and or curtail planned increases in costs and expenses to meet its
liquidity needs.

Foreign Currency Translation

   The functional currency of the Company's foreign subsidiaries is the local
currency in the country in which the subsidiary is located. Assets and
liabilities denominated in foreign currencies are translated to U.S. dollars at
the exchange rate in effect on the balance sheet date. Revenues and expenses
are translated at the average rates of exchange prevailing during the year. The
translation adjustment resulting from this process is shown within accumulated
other comprehensive income (loss) as a component of stockholders' equity. Gains
and losses on foreign currency transactions are included in the consolidated
statement of operations as incurred. To date, gains and losses on foreign
currency transactions have not been significant.

Use of Estimates

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes. Accordingly, actual results may differ from those
estimates. The Company has used estimates in determining certain provisions,
including the allowance for doubtful accounts receivable, inventory reserves,
useful lives for property and equipment, and warranty accruals.

                                      F-7
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


1. Significant Accounting Policies--(continued)

Revenue Recognition

   The Company generates revenues through the sales of smart antenna systems
and related installation and optimization services. System revenues are
recognized when title to the system and risk of loss has been transferred to
the customer and all customer acceptance conditions, if any, have been
satisfied, and when collection is probable.

   Service revenues, generally for installation and optimization, are
recognized when the services have been performed and all customer acceptance
conditions, if any, have been satisfied. Revenues from maintenance contracts
are deferred and recognized ratably over the term of the agreement (which is
typically one year). Any billings in excess of revenues are classified as
deferred revenues and related systems are recorded as inventory.

Concentration of Credit Risk and Major Customers

   Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of cash equivalents and trade receivables.
The carrying value of financial instruments approximates market value.

   The Company's customers are primarily wireless network operators in the
United States and certain international markets. As such, the Company's primary
market is made up of a limited number of customers operating within the same
industry, thereby subjecting the Company to business risks associated with
potential downturns of the industry. Export sales represented 26.0% of revenues
in the year ended December 31, 1999, 23.5% in 1998 and none in 1997. During
1998, one customer, Alltel Communications Inc., represented 88% of the
Company's trade accounts receivable. In 1999, two customers, AirTouch
Communications Inc. and Grupo Iusacell S.A. de C.V., represented 28% and 53% of
the Company's trade accounts receivable, respectively.

   The Company performs ongoing credit evaluations of its customers' financial
condition and generally does not require collateral. The Company maintains
reserves, which to date have not been material, for potential credit losses,
and such losses have been within management's expectations.

Net Loss per Share

   Basic net loss per share is computed by dividing net loss available to
common shareholders by the weighted average number of common shares outstanding
for the period. Diluted net loss per share reflects the potential dilution of
securities by including other common stock equivalents, including stock options
and redeemable convertible preferred stock, in the weighted average number of
common shares outstanding as if such shares were converted to common stock at
the time of issuance. Common stock equivalents, including stock options and
warrants, are excluded from the computation as their effect is anti-dilutive.
For the periods presented, there is no difference between the basic and diluted
net loss per share.

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

Cash Equivalents

   The Company considers all highly liquid investments with a maturity of three
months or less at the date of purchase to be cash equivalents. The Company
invests with various high-quality institutions and, in accordance with Company
policy, limits the amount of credit exposure to any one institution.

                                      F-8
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



1. Significant Accounting Policies--(continued)

   The Company accounts for its marketable securities under the provisions of
Statement of Financial Accounting Standards ("SFAS") Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." All
marketable securities are classified as available-for-sale and are carried at
fair value, with the unrealized gains and losses, net of tax, reported as a
separate component of stockholders' equity. As of December 31, 1998 and 1999
all marketable securities were cash equivalents and unrealized holdings gains
and losses were not significant.

Inventories

   Inventories are stated at the lower of cost (first-in, first-out) or market
and consist of purchased parts, subassemblies and finished goods.

Property and Equipment

   Property, equipment and leasehold improvements are recorded at cost.
Depreciation and amortization is provided using the straight-line method over
the estimated useful lives of the related assets for financial statement
purposes over estimated useful lives of two to seven years. Leasehold
improvements are amortized over the lesser of the lease term or the estimated
useful life.

Warranty

   The Company generally provides a 12 month warranty, which may vary depending
upon specific contractual terms, on all systems and records a related provision
for estimated warranty costs at the date of sale.

Research and Development Costs

   Research and development costs are expensed as incurred.

Advertising Costs

   Advertising costs are charged to expense as incurred. Advertising expense of
$535,000, $692,000 and $1,387,000 was recorded for the years ended December 31,
1997, 1998 and 1999, respectively.

Stock-Based Compensation

   The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB No. 25), and related
interpretations, in accounting for its employee stock options rather than the
alternative fair value accounting allowed by Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation (SFAS No. 123). APB
No. 25 provides that the compensation expense relative to the Company's
employee stock options is measured based on the intrinsic value of the stock
option. SFAS No. 123 requires companies that continue to follow APB No. 25 to
provide a pro forma disclosure of the impact of applying the fair value method
of SFAS No. 123 (refer to Note 6). The Company recognizes compensation expense
for options and warrants granted to non-employees in accordance with the
provisions of SFAS No. 123 and Emerging Issues Task Force Consensus 96-18.

                                      F-9
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


1. Significant Accounting Policies--(continued)

Other Comprehensive Income

   In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income,
which establishes standards for reporting and display of comprehensive income
and its components in the financial statements. The other comprehensive income
(loss) which the Company currently reports is foreign currency translation
adjustments.

Business Segments

   In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, which establishes standards for reporting
information about operating segments in annual financial statements. The
Company operates in one segment as a provider of certain wireless
telecommunication equipment. SFAS No. 131 also establishes standards for
related disclosures about systems and services, geographic areas and major
customers. Information related to segment disclosures is contained in Notes 13
and 14.

New Accounting Pronouncements

   In June 1998, the FASB issued SFAS No. 133, Accounting for Derivatives and
Hedging Activities, which requires that all derivative instruments be recorded
on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designed as part of a hedge
transaction and, if it is, the type of hedge transaction. SFAS No. 133 is
effective for fiscal years beginning after June 15, 2000. The Company does not
anticipate that the adoption of this new standard will have a material effect
on earnings or the financial position of the Company, but continues to evaluate
the impact of SFAS No. 133.

   In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin Number 101 ("SAB 101"). This summarized certain areas of
the staff's views in applying generally accepted accounting principles as it
applies to revenue recognition. The Company believes that its revenue
recognition principles comply with SAB 101. The Company will continue to
evaluate interpretations of SAB 101.

2. Inventories

<TABLE>
<CAPTION>
                                                                   December 31,
                                                                   -------------
                                                                    1998   1999
                                                                   ------ ------
                                                                        (in
                                                                    thousands)
     <S>                                                           <C>    <C>
     Purchased parts.............................................. $4,922 $2,251
     Subassemblies................................................  2,332  1,144
     Finished goods...............................................    675    754
                                                                   ------ ------
                                                                   $7,929 $4,149
                                                                   ====== ======
</TABLE>

   Purchased parts include purchased components and partially assembled units.
Subassemblies primarily represent components that are assembled and ready for
final configuration pending the detailed requirements for the specific
customer. Finished goods are units representing projects-in-process at customer
locations.

                                      F-10
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


3. Property and Equipment

<TABLE>
<CAPTION>
                                                                 December 31,
                                                                ---------------
                                                                 1998    1999
                                                                ------- -------
                                                                (in thousands)
     <S>                                                        <C>     <C>
     Equipment................................................. $ 9,384 $10,100
     Furniture and fixtures....................................     869     976
     Leasehold improvements....................................     920     910
                                                                ------- -------
                                                                 11,173  11,986
                                                                ======= =======
</TABLE>

<TABLE>
     <S>                                                        <C>     <C>
     Accumulated depreciation and amortization................. (4,818)  (6,285)
                                                                ------  -------
                                                                $6,355  $ 5,701
                                                                ======  =======
</TABLE>

   Included in property and equipment are assets acquired under capital lease
obligations with an original cost of $9,591,000 and $8,920,000 as of December
31, 1998 and 1999, respectively. Accumulated amortization on the leased assets
was $3,357,000 and $3,749,000 as of December 31, 1998 and 1999, respectively.

4. Notes Payable

<TABLE>
<CAPTION>
                                                                   December 31,
                                                                   ------------
                                                                    1998   1999
                                                                   ------- ----
                                                                       (in
                                                                    thousands)
<S>                                                                <C>     <C>
Senior Secured Notes, repaid in April 1999........................ $31,704 $--
Note payable to U.S. Bank with monthly payments of $217, maturing
 in July 2000, bearing interest at 11%............................       4  --
Note payable to Comdisco, with monthly payments of $12,126,
 maturing in February 2000, bearing interest at 8%, with a
 residual payment of $50,000 due February 28, 2000, secured by the
 underlying equipment.............................................     202   72
Notes payable to Chrysler Financial with monthly payments
 aggregating $347, bearing interest at 10%........................      15   11
                                                                   ------- ----
                                                                    31,925   83
Less current portion..............................................  31,838   75
                                                                   ------- ----
Long term portion................................................. $    87 $  8
                                                                   ======= ====
</TABLE>

Senior Secured Notes

   On April 28, 1998, the Company issued $29.0 million aggregate principal
amount of Senior Secured Notes ("Senior Notes"), with a maturity date of April
28, 2000. The Senior Notes accrue interest at 13.75%, payable semiannually at
the option of the Company in either additional Senior Notes or cash. In October
1998, the Company issued additional Senior Notes of approximately $2.7 million
in connection with the related accrued interest.

   In connection with the Senior Notes, the noteholders received warrants to
purchase 537,500 shares of Series D Preferred Stock at $.01 per share. The
Company recorded debt issuance fees of approximately $4.3 million related to
the estimated fair value of these warrants. The debt issuance fees were
amortized over the period during which the Senior Notes were outstanding.

                                      F-11
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


4. Notes Payable--(continued)

   On December 21, 1998, the Company issued an additional 83,202 warrants at
$0.01 per share to the Senior Noteholders in connection with certain
antidilution provisions. The fair value of these additional warrants was
estimated to be approximately $671,000 which has been amortized over the
remaining term of the Senior Notes.

   In April 1999, the Company retired all of the principal and accrued interest
on the Senior Notes aggregating $33,124,570. In addition, the warrants issued
in connection with the Senior Notes were exercised by the noteholders for an
aggregate 620,702 shares of Series D Preferred Stock. Amortization of debt
issuance costs, which has been included in interest expense, aggregated
$4,170,000 in 1998 and $2,321,000 in 1999.

Line of Credit Agreement

   The Company has a credit facility with a commercial bank. The facility
provides for a revolving credit line of $7.5 million to support working capital
with a $3.0 million sublimit for issuance of trade-related commercial and
standby letters of credit, and expires on March 14, 2000. Outstanding balances
on the credit line bear interest at the bank's prime rate (8.5% as of December
31, 1998 and 1999), and are secured by the Company's accounts receivable. At
December 31, 1998 and 1999, $2.5 million was outstanding related to the
issuance of a standby letter of credit. The Company is required to comply with
certain covenants set forth in the line of credit agreement. The Company is
currently in compliance with these covenants.

5. Convertible and Redeemable Preferred Stock

   In July 1995, the Company issued 5,500,000 shares of Series A Preferred
Stock ("Series A") through a private offering. Proceeds from the financing
amounted to $5,500,000, or $1.00 per share.

   In May 1996, the Company issued 2,711,113 shares of Series B Preferred Stock
("Series B") through a private offering. Proceeds from the financing amounted
to $9,150,006. An additional 29,630 shares of Series B were issued in November
1996 with proceeds of $100,002, or $3.375 per share.

   In October and November 1996, the Company issued 2,491,880 shares of Series
C Preferred Stock ("Series C") through a private offering. Proceeds from the
financing amounted to $15,349,980, or $6.16 per share.

   In August 1997, the Company issued 2,397,727 shares of Series D Preferred
Stock ("Series D") through a private offering. Proceeds from the financing
amounted to $19,181,816, or $8.00 per share.

   In December 1998, the Company issued 898,738 shares of Series E Preferred
Stock ("Series E") through a private offering. Proceeds from the initial round
of Series E financing amounted to $7,189,904, or $8.00.

   In January 1999, the Company issued 726,264 additional shares of Series E at
$8.00 per share with gross proceeds of $5,810,112. In April and June 1999, the
Company issued 15,676,153 additional shares of Series E at $5.00 per share with
gross proceeds of $78,380,765. In connection with the issuance of the Series E
at $5.00 per share in April, the existing Series E shareholders were issued
974,996 additional Series E shares adjusting the price per share from $8.00 to
$5.00.

   Holders of Series A, B, C, D and E have preferential rights to dividends
($.08, $.27, $.49, $.64 and $.40 per share per annum, respectively) when and if
declared by the Board of Directors. Dividends are not cumulative until January
1, 2002. The holders are entitled to the number of votes equal to the number of
shares of common stock into which the preferred stock could be converted. Every
three shares of Series A and B is convertible into two shares of common stock
at the option of the holder. In July 1999, in accordance with

                                      F-12
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


5. Convertible and Redeemable Preferred Stock--(continued)

certain adjustment provisions of the Amended and Restated Certificate of
Incorporation, the Series C, D, and E conversion rate to common stock was
amended to 1.30786, 1.44144 and 1.42857, respectively. The conversion rate of
the Series A, B, C, D and E Preferred Stock is subject to adjustment in the
event the Company issues shares of capital stock at a price per share below the
original purchase price for each Series, subject to certain exceptions. In
addition, the conversion rate is automatically adjusted in the event of a stock
split, stock dividend, recapitalization or similar event. As a result of the
two for three stock split detailed in Note 14, the Series A, B, C, D and E
conversion rates to common stock were adjusted to 0.66667, 0.66667, 0.87190,
0.96096, and 0.95238, respectively. Each share of preferred stock automatically
converts to common stock upon the vote or written consent of the holders of the
majority of the shares of Series A, B, C, D and E originally issued or upon the
closing of an initial public offering of the Company's common stock at a price
of $10 per share from which the aggregate proceeds are not less than $40
million. The conversion rates are subject to adjustment, pursuant to certain
antidilution provisions as provided by the Company's Amended and Restated
Certificate of Incorporation.

   In the event of liquidation, the holders of Series A, B, C, D and E have
preferential rights to liquidation payments of $1.00, $3.375, $6.16, $8.00 and
$5.00 per share, respectively, plus any declared but unpaid dividends. The
preferred stock has redemption rights for a six-month period beginning on
December 31, 2002 upon the election of at least 50% of the holders. The
redemption price is equal to the original purchase price plus any declared but
unpaid dividends.

Convertible and Redeemable Preferred Stock Warrants

   In connection with certain leasing agreements, the Company has issued
warrants providing for the purchase of 48,750 shares and 16,666 shares of
Series A at an exercise price of $2.1875 per share, subject to adjustment as
provided in the Warrant Agreements. The Warrant Agreements expire after seven
years or 18 months to three years from the effective date of an initial public
offering, whichever comes later. During 1996, the Company entered into an
additional lease line to the Master Lease Agreement. The new lease included the
issuance of a warrant to purchase 19,999 shares of Series B with an exercise
price of $4.77. During 1997, the Company entered into an additional lease line
to this Master Lease Agreement. The new lease included the issuance of a
warrant to purchase 34,090 shares of Series C with an exercise price of $6.16.
The value of the warrants was recorded as additional debt issuance cost and is
being amortized using the interest method over the term of the related Master
Lease Agreement. The warrants were valued using the Black-Scholes valuation
model based upon the exercise prices described above, a risk free rate of 4.5%-
6.0%, a dividend yield rate of 0%, volatility of .6 and an expected life of 2-5
years. In connection with lease agreements entered into 1998, the Company
issued warrants to purchase 4,375 shares of Series D Preferred Stock with an
exercise price of $8.00.

6. Stockholders' Equity

Initial Public Offering

   In February 2000, the Board of Directors authorized management to file a
registration statement with the Securities and Exchange Commission to permit
the Company to offer up to 12,000,000 shares of common stock to the public. In
February 2000, the Board of Directors authorized an increase in the
capitalization of the Company to 160,000,000 authorized shares with 150,000,000
shares of common stock, par value $.001 per share and 10,000,000 shares
designated as preferred stock, par value $.001 per share upon the effective
date of the Company's public offering. If the offering is consummated under
terms presently anticipated, all outstanding shares of redeemable convertible
preferred stock will convert into 27,972,908 shares of common stock. Unaudited
pro forma stockholders' equity reflects the assumed conversion of the
redeemable convertible preferred stock outstanding at December 31, 1999 into
common stock.

                                      F-13
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


6. Stockholders' Equity--(continued)

Stock Repurchases

   On January 10, 1998, the Company repurchased 91,850 shares of common stock
from one of its founders for $501 pursuant to the terms of a stock repurchase
agreement with the founder. In addition, the Company caused one of its founders
to surrender 66,666 shares of common stock in 1996 for no consideration.

   In December 1998, the Company also repurchased 416 shares from one of its
employees for $ 5,000.

Stock Option Plans

   The Company's 1995 Stock Option Plan (the "1995 Plan") provides for the
granting of incentive stock options and nonqualified stock options to
employees, officers, directors and consultants. Options under the 1995 Plan
have been granted at fair market value on the date of grant and expire ten
years after the date of the grant. Options granted under the 1995 Plan
generally become exercisable at the rate of 25% of the total number of shares
subject to the option after the first anniversary following the date of grant,
with 2.083% vesting monthly thereafter, with all shares becoming fully vested
on the fourth anniversary date of the date of grant. The Company has reserved
2,766,666 shares of common stock for issuance under the 1995 Plan.

   In May 1998, the Board of Directors approved the 1998 Stock Option Plan (the
"1998 Plan"). Options granted under the 1998 Plan generally vest on the same
terms as the 1995 Plan and are exercisable for a period of ten years. On the
first trading day of each of the five calendar years beginning in 1999 and
ending in 2003, the number of shares reserved for issuance under the 1998 Plan
automatically increase by an amount equal to three percent of the Company's
outstanding common stock, up to a maximum of 666,666 shares in any calendar
year, or such lower amount as approved by the Board of Directors. The Company
initially reserved 566,666 shares under the 1998 Plan, and was increased to
1,763,369 shares in April 1999 by the Board of Directors.

   In June 1999, the Board of Directors approved the adoption of the Employee
Option Incentive Program (the "Incentive Program") under the 1998 Plan. Options
granted under the Incentive Program vest five years from the date of grant,
however, vesting shall accelerate for 50% of such options upon the effective
date of an initial public offering ("IPO") of the Company's shares, and the
remaining 50% of the options shall vest upon the twelve-month anniversary of
the effective date of the IPO. Options under the Incentive Program were granted
at estimated fair value on the date of grant and expire ten years after the
date of the grant. The Board of Directors issued 336,666 shares under this
program.

   In February 2000, the Board approved the 2000 Employee Stock Purchase Plan
(ESSP), subject to shareholder approval. The Company will implement the ESSP
upon the effective date of the Registration Statement on Form S-1 for the
initial public offering and continue until April 30, 2020. The ESSP, subject to
certain limitations, permits eligible employees of the Company to purchase
common stock through payroll deductions of up to 15% of their compensation. The
Company has authorized the issuance of up to 233,333 shares of common stock
under the ESSP, plus an automatic annual increase, to be added on the first day
of the fiscal year beginning in 2001, equal to the lesser of 266,666 shares, 1%
of the common stock outstanding on the last day of the preceding fiscal year,
or a lesser number of shares as determined by the Board of Directors.

   The 1998 Directors' Stock Option Plan (Directors' Plan) was adopted by the
Board of Directors in February 1998 and approved by the stockholders on April
20, 1998. A total of 200,000 shares of common stock have been reserved for
issuance under the Directors' Plan. The Directors' Plan provides for
discretionary grants of nonstatutory stock options to nonemployee directors of
the Company. Following the effectiveness of an

                                      F-14
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


6. Stockholders' Equity--(continued)

initial public offering of the Company's common stock, the Plan provides
automatic formula based grants to the nonemployee directors. In February 2000,
the Board of Directors amended the Directors' Plan, subject to shareholders
approval. The amended plan becomes effective upon the effectiveness of the
initial public offering. An automatic grant is made to each non-employee
director who joins the Board after the closing of the initial public offering
for an option to purchase 16,666 shares of common stock. Additionally, at each
annual shareholder meeting, each non-employee director is granted an additional
option to purchase 6,666 shares of common stock provided that the director
continues serving on the Board and has served as a director six months prior to
grant date. The amended Directors' Plan increases the issuance of options under
the plan to 466,666. Initial options granted under the directors' plan to new
nonemployee directors following the IPO will vest as to 25% of the shares
underlying the option on the first anniversary of the date of the option grant
and as to 1/48th of the shares each month after the first anniversary so that
these options will be fully vested on the fourth anniversary of the grant date.
Options granted to our nonemployee directors at the time of each annual
stockholders meeting following this offering will vest as to 1/36th of the
shares underlying the option so that these options will be fully vested on the
third anniversary of the grant date. The exercise price of all stock options
granted under the Directors' Plan shall be equal to the estimated fair value of
a share of the Company's common stock on the date of grant of the option.
Options granted under the Directors' Plan have a term of ten years.

   Deferred stock compensation is calculated as the difference between the
exercise price and the deemed fair value of the Company's common stock at the
date of grant. The deferred stock compensation is amortized over the vesting
period of the related options. In 1997 and 1999, deferred stock compensation of
$1,881,282 and $1,168,848 was recorded for options granted under the various
stock option plans. Amortized stock compensation of $676,000, $651,000 and
$817,000 was recorded during each of the years ended December 31, 1997, 1998
and 1999, respectively.

   In January and February 2000, the Company granted 495,793 additional stock
options for common stock. In connection with these grants, the Company has
recorded approximately, $2,095,000 of additional deferred stock compensation in
the first quarter of year 2000.

   Had the stock compensation expense for the Company's stock option plan been
determined based on the estimated fair value using the minimum value option
pricing model at the date of grant, the Company's net loss would have been
increased to these pro forma amounts (in thousands):

<TABLE>
<CAPTION>
                                                     1997      1998      1999
                                                   --------  --------  --------
   <S>                                             <C>       <C>       <C>
   Net loss:
     As reported.................................. $(22,104) $(44,328) $(42,413)
     Pro forma....................................  (22,109)  (44,728)  (43,231)

   Basic and diluted net loss per share:
     As reported..................................   (12.18)   (21.88)   (18.98)
     Pro forma....................................   (12.18)   (22.08)   (12.82)
</TABLE>

   The fair value for these options was estimated at the date of grant using
minimum value option pricing models that take into account: (1) the estimated
fair value of the common stock at the grant date, (2) the exercise prices, (3)
a one-year expected life beyond the vest date, (4) no dividends, and (5) a
risk-free interest rate of between 5.42% and 6.43% during 1996 through 1999
over the expected life of the options. Compensation expense recognized in
providing pro forma disclosures may not be representative of the effects on pro
forma net income for future years because the amounts above include only the
amortization for the fair value of 1997, 1998 and 1999 grants.

                                      F-15
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


6. Stockholders' Equity--(continued)

   A summary of the Company's stock option activity and related information
follows:

<TABLE>
<CAPTION>
                           December 31, 1997    December 31, 1998    December 31, 1999
                          -------------------- -------------------- --------------------
                                     Weighted-            Weighted-            Weighted-
                                      Average              Average              Average
                                     Exercise             Exercise             Exercise
                           Options     Price    Options     Price    Options     Price
                          ---------  --------- ---------  --------- ---------  ---------
<S>                       <C>        <C>       <C>        <C>       <C>        <C>
Outstanding at beginning
 of period..............  1,295,236    $ .36   2,099,196    $1.19   2,531,996    $4.59
  Granted at deemed fair
   value................    447,988     2.93   1,478,547    13.02     914,820     6.96
  Granted at above
   deemed fair value....        --       --          --       --       16,666     6.75
  Granted at below
   deemed fair value....    906,190     1.02         --       --      455,250     4.61
  Canceled..............   (362,157)     .44    (803,981)   12.56    (764,757)    6.53
  Exercised.............   (188,061)     .41    (241,766)     .44    (278,681)     .50
                          ---------            ---------            ---------
Outstanding at end of
 period.................  2,009,196     1.19   2,531,996     4.56   2,885,294     5.25
                          =========            =========            =========
Exercisable at end of
 period.................  1,426,668     1.46   2,213,954     5.13   2,837,236     5.33
                          =========            =========            =========
Weighted-average fair
 value of options
 granted during the
 period:
    Granted at value....                2.93                12.84                12.71
    Granted at below
     value..............                2.84                  --                  4.54
</TABLE>

   The following information is provided for options outstanding and
exercisable at December 31, 1999:

<TABLE>
<CAPTION>
                          Outstanding                          Exercisable
              -----------------------------------------   -------------------------
                                            Average
                            Weighted-      Remaining                    Weighted-
 Range of                    Average      Contractual                    Average
 Exercise     Number of     Exercise         Life         Number of     Exercise
  Price        Options        Price         (Years)        Options        Price
- ----------    ---------     ---------     -----------     ---------     ---------
<S>           <C>           <C>           <C>             <C>           <C>
$0.15-0.53      228,411       $0.26          6.12           214,441       $0.24
 0.93-1.80      777,695        0.96          7.48           743,606        0.96
 3.00-5.04      561,950        4.23          9.02           561,950        4.23
 5.25-6.75      655,174        6.62          8.96           655,174        6.62
7.50-12.00      662,064       11.54          8.06           662,065       11.54
              ---------                                   ---------
              2,885,294        5.25          8.47         2,837,236        5.33
              =========                                   =========
</TABLE>

   Stock options available for future grants under the Company's stock option
plans total 1,136,232 as of December 31, 1999.

Common Stock Warrants

   During 1999, the Company entered into an additional leasing agreement. The
new lease included the issuance of a warrant to purchase 20,833 shares of
common stock with an exercise price of $6.75. The value of the warrants,
determined using the Black-Scholes valuation model, was recorded as additional
interest expense over the term of the lease agreement.

                                      F-16
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


6. Stockholders' Equity--(continued)

Common Shares Reserved for Future Issuance

   The Company has reserved shares of common stock as follows:

<TABLE>
<CAPTION>
                                                                    December 31,
                                                                        1999
                                                                    ------------
     <S>                                                            <C>
     Stock options outstanding.....................................   2,885,294
     Stock option available for future grant.......................   1,136,232
                                                                     ----------
                                                                      4,021,526
     Conversion of:
       Series A Preferred Stock....................................   3,666,664
       Series B Preferred Stock....................................   1,827,157
       Series C Preferred Stock....................................   2,172,677
       Series D Preferred Stock....................................   2,900,577
       Series E Preferred Stock....................................  17,405,832
                                                                     ----------
                                                                     27,972,907
     Convertible redeemable preferred stock warrants...............      90,870
     Common stock warrants.........................................      20,833
                                                                     ----------
                                                                     32,106,136
                                                                     ==========
</TABLE>

7. Income Taxes

   As of December 31, 1999, the Company had federal net operating loss
carryforwards (NOL) of approximately $108.4 million and research and
development tax credit carryforwards of approximately $1.9 million. The federal
net operating loss carryforwards will begin to expire in the year 2009 if not
utilized. As a result of changes in ownership coincident with the recent equity
financing, the utilization of a portion of the net operating loss carryforward
will be limited, pursuant to Section 382 of the Internal Revenue Code of 1986,
as amended. Approximately $83.1 million of the NOL is limited to approximately
$4.0 million per year. The remaining NOL is not subject to limitation as of
December 31, 1999.

                                      F-17
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


7. Income Taxes--(continued)

   Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The Company has
recognized a valuation allowance equal to the deferred tax assets due to the
uncertainty of realizing the benefits of the assets. Significant components of
the Company's deferred tax assets are as follows:

<TABLE>
<CAPTION>
                                                              December 31,
                                                            ------------------
                                                              1998      1999
                                                            --------  --------
                                                             (in thousands)
     <S>                                                    <C>       <C>
     Deferred tax liabilities:
     Prepaid assets........................................ $     47  $     57

     Deferred tax assets:
       Net operating loss carryforwards....................   22,664    36,880
       Research and development tax credit carryforwards...      --      1,872
       Accrued compensation................................      380       335
       Fixed assets........................................       90       175
       Accrued expenses and reserves.......................    1,146     2,195
       Deferred revenues...................................      --        564
       Stock compensation..................................       80        82
                                                            --------  --------
     Total deferred tax assets.............................   24,360    42,103
                                                            --------  --------
                                                              24,313    42,046
     Less valuation reserve................................  (24,313)  (42,046)
                                                            --------  --------
     Net deferred taxes.................................... $    --   $    --
                                                            ========  ========
</TABLE>

8. Commitments

   The Company leases its facilities under noncancelable operating lease
agreements that expire on various dates through 2005. The Company leases
certain equipment under noncancelable capital leases that expire on various
dates through 2002.

   In June 1998, the Company moved into a new building. The lease on this
building expires on May 31, 2005. The Company, at its option, may extend the
term of this lease for two successive periods of five years each. The option
must be elected 12 months prior to the expiration of the initial lease term. In
connection with this arrangement, the Company has issued letters of credit to
the landlord aggregating $2.5 million.

                                      F-18
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


8. Commitments--(continued)

   Following is a summary of future minimum payments under capital leases and
operating leases, including the principal facility, that have initial or
remaining noncancelable lease terms in excess of one year at December 31, 1999
(in thousands):

<TABLE>
<CAPTION>
                                                               Capital Operating
                                                               Leases   Leases
                                                               ------- ---------
     <S>                                                       <C>     <C>
     2000..................................................... $3,015   $ 2,001
     2001.....................................................  2,238     2,089
     2002.....................................................    620     1,969
     2003.....................................................    --      2,108
     2004 and thereafter......................................    --      2,867
                                                               ------   -------
                                                                5,873   $11,034
                                                                        =======
     Less interest............................................    645
                                                               ------
                                                                5,228
     Less current portion.....................................  2,322
                                                               $2,906
                                                               ======
</TABLE>

   Rental expense for operating leases was $667,939, $1,304,007 and $2,041,328
for the years ended December 31, 1997, 1998 and 1999, respectively.

   The Company entered into agreements with certain leasing companies to
provide up to $3.0 million in 1997, $3.5 million in December 31, 1998 and $3.0
million at December 31, 1999 of financing to allow the Company to lease
additional equipment. Pursuant to these agreements, equipment leases would
generally have a term of three years and an implicit interest rate of 7.25% in
1997, 14.5% at December 31, 1998 and 12.25% at December 31, 1999. The leases
are secured by the underlying equipment. In connection with these lease
agreements, warrants were issued to purchase preferred stock (see Note 5).

9. Net Loss Per Share

   Basic and diluted loss per share is calculated using the average number of
shares of common stock outstanding. The effect of stock options, warrants and
convertible and redeemable preferred stock have not been included in the
calculation of diluted net loss per share as their effect is antidilutive. Pro
forma basic and diluted loss per share is computed on the basis of the average
number of shares of common stock outstanding plus the effect of convertible
preferred shares as if such shares were converted to common stock at the time
of issuance as follows:

<TABLE>
<CAPTION>
                                                   Year ended December 31,
                                                  ----------------------------
                                                    1997      1998      1999
                                                  --------  --------  --------
                                                  (In thousands, except per
                                                         share data)
   <S>                                            <C>       <C>       <C>
   Net loss (A).................................  $(22,104) $(44,328) $(42,413)
                                                  ========  ========  ========
   Weighted average outstanding:
     Common stock (B)...........................     1,815     2,026     2,235
     Convertible and redeemable preferred
      stock.....................................     7,773     8,804    20,140
                                                  --------  --------  --------
   Pro forma weighted average shares outstanding
    (C) ........................................     9,588    10,830    22,375
                                                  ========  ========  ========
   Basic and diluted net loss per share (A/B)...  $ (12.18) $ (21.88) $ (18.98)
                                                  ========  ========  ========
   Pro forma net loss per share (A/C)...........  $  (2.31) $  (4.09) $  (1.90)
                                                  ========  ========  ========
</TABLE>


                                      F-19
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

10. Retirement Plans

   The Company has a salary deferral 401(k) plan for its employees. The plan
allows employees to contribute a percentage of their pretax earnings annually,
subject to limitations imposed by the Internal Revenue Service. The plan also
allows the Company to make a matching contribution, subject to certain
limitations. To date, the Company has made no contributions to the plan.

11. Related-Party Transactions

   In October 1997, the Board authorized a secured loan of $162,500 and an
unsecured loan of $75,000 to the Company's former Chief Financial Officer
("CFO"). Both loans bear interest at 5.5%. The secured loan was payable in full
on October 28, 2002, or earlier, based upon certain events specified in the
agreement. Under the original terms of the unsecured loan, $50,000 of the
principal amount of the loan was to be forgiven over a three-year period
provided that the CFO remained employed with the Company, with the remaining
balance of $25,000 plus interest due on the earlier of October 22, 2000 or the
date on which his employment terminated. In accordance with the loan agreement,
a total of $16,665 was forgiven in 1998 and was expensed as compensation.

   The CFO resigned from the Company in January 1999. The Board authorized an
extension of due dates on the secured loan of $162,500 and the unsecured loan
and accrued interest balance of $62,460 to the earlier of January 30, 2000, or
190 days after an IPO of the Company. The Board authorized an amendment to the
Security Agreement securing the obligations of the former CFO under the secured
and unsecured promissory notes that provide for an acceleration of the notes
based upon certain events specified in the Agreement. These notes were repaid
in full in February 2000.

   Powerwave Technologies, Inc. ("Powerwave"), whose chief executive officer is
a director of the Company, is the Company's sole supplier of linear power
amplifiers, a component in the Company's systems. Pursuant to a manufacturing
agreement with Powerwave (which agreement was approved by a majority of the
Company's disinterested directors), Powerwave will manufacture and sell to the
Company 100% of the Company's requirements for linear power amplifiers that
Powerwave manufactures. The initial term of the agreement is 18 months with an
automatic 18-month extension, unless either party otherwise terminates the
agreement. The Company's purchases from Powerwave totaled $2,203,217,
$8,047,401 and $6,427,026 in 1997, 1998, and 1999, respectively.

   In December 1997, the Company determined that it would discontinue the
Company's Network Services division. In March 1998, the Company sold the assets
of this division for an aggregate purchase price of $78,000 to Advanced
Wireless Engineering ("AWE"), a company that was majority-owned by an
individual who at that time was the Company's Vice President, Network Services.
This individual resigned from the Company in March 1998 to run AWE on a full-
time basis.

12. Revenues and Operations

   In December 1997, the Company determined that it would discontinue the
Network Services division. Accordingly, the carrying value of these fixed
assets were adjusted to net realizable value, thereby resulting in an
impairment loss of $200,000, which is included in other expenses in the
accompanying 1997 Statement of Operations. These assets were sold in March
1998. Included in revenues for the year ended December 31, 1997 and 1998 were
revenues of $1,450,000 and $200,000 respectively, relating to the Network
Services division and the cost of revenues were $1,728,000 and $242,000,
respectively.

   In June 1998, in connection with certain patent licenses, the Company paid
$250,000 in cash and issued 7,333 common stock warrants for an aggregate amount
of $360,000. The common stock warrants had an

                                      F-20
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


12. Revenues and Operations--(continued)

exercise price of $.015 per share and were immediately exercised. The value of
these warrants, using the Black-Scholes valuation model, of $110,000 and cash
of $250,000 was recorded as research and development expense in 1998.

   Revenues from customers representing more than 10% of annual sales in each
year were as follows:

<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                                         -----------------------
                                                          1997    1998    1999
                                                         ------- ------- -------
     <S>                                                 <C>     <C>     <C>
     AirTouch Communications, Inc.......................   27.0%     --      --
     Alltel Communications Inc. ........................     --    61.8%   44.8%
     Cox Communications Inc. ...........................   63.0%     --      --
     GTE Wireless.......................................     --    13.4%     --
     Grupo Iusacell S.A. de C.V. .......................     --      --    26.0%
     OJSC St. Petersburg Telecom........................     --    13.4%     --
     Southwestco Wireless...............................     --      --    20.9%
     Telfonica Servicios Moveles S.A. ..................     --    10.1%     --
</TABLE>

13. International Operations

   Metawave sells its smart antenna systems and services throughout the world,
and operates in a single industry segment. While certain expenses for sales and
marketing activities are incurred in various geographical regions,
substantially all of Metawave's assets are located and the majority of its
operating expenses are incurred at its corporate headquarters. Revenue
information by geographic region is the only segment information presented as
follows:

<TABLE>
<CAPTION>
                                                           Year Ended December
                                                                   31,
                                                          ----------------------
                                                           1997   1998    1999
                                                          ------ ------- -------
                                                              (in thousands)
     <S>                                                  <C>    <C>     <C>
     United States....................................... $1,450 $12,233 $16,717
     Paraguay............................................    --    1,615     --
     Russia..............................................    --    2,143     --
     Mexico..............................................    --      --    5,879
                                                          ------ ------- -------
     Total............................................... $1,450 $15,991 $22,596
                                                          ====== ======= =======
</TABLE>

14. Subsequent Event--Reverse Stock Split

   On March 27, 2000 the Board of Directors authorized a two for three stock
split of Metawave's common stock that will be effective immediately before the
effective date of the initial public offering discussed in Note 6. Also, as a
result of the split the conversion rate of each series of preferred stock was
adjusted to reflect the split. All share and per share data and all conversion
rate disclosures in the accompanying financial statements have been
retroactively adjusted to reflect this split.

                                      F-21
<PAGE>

Map of the world depicting customer deployments by commercial sales and field
trials
<PAGE>


                                [METAWAVE LOGO]




<PAGE>

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

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

<TABLE>
<CAPTION>
                                                                       Amount
                                                                     ----------
                                                                     To Be Paid
                                                                     ----------
   <S>                                                               <C>
   SEC Registration Fee............................................. $   24,668
   NASD Filing Fee..................................................      9,125
   Nasdaq National Market Listing Fee...............................      1,000
   Printing Fees and Expenses.......................................    200,000
   Legal Fees and Expenses..........................................    300,000
   Accounting Fees and Expenses.....................................    200,000
   Blue Sky Fees and Expenses.......................................      5,000
   Transfer Agent and Registrar Fees................................     10,000
   Miscellaneous....................................................    250,207
                                                                     ----------
     Total.......................................................... $1,000,000
                                                                     ==========
</TABLE>

Item 14. Indemnification of Directors and Officers

   Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended. Article IX of
Metawave's certificate of incorporation and sections 6.1 and 6.2 of Article VI
of Metawave's bylaws provide for indemnification of its directors, officers,
employees and other agents to the maximum extent permitted by the Delaware
General Corporation Law. In addition, Metawave has entered into indemnification
agreements with its directors and officers. The indemnification agreements may
require Metawave, among other things, to indemnify its directors against
certain liabilities that may arise by reason of their status or service as
directors (other than liabilities arising from willful misconduct of culpable
nature), to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified, and to obtain directors'
insurance if available on reasonable terms. The underwriting agreement (Exhibit
1.1 hereto) also provides for cross indemnification among Metawave and the
underwriters with respect to certain matters, including matters arising under
the Securities Act of 1933.

Item 15. Recent Sales of Unregistered Securities

   (a) Since January 1, 1997, we have issued and sold (without payment of any
selling commission to any person except as noted below) the following
unregistered securities (as adjusted to reflect the automatic conversion of our
outstanding preferred stock into common stock upon completion of this
offering):

     (1) In August 1997, we issued and sold shares of Series D preferred
  stock convertible into an aggregate of 2,304,120 shares of common stock to
  22 investors for an aggregate purchase price of $19,181,865.

     (2) In December 1998 and April and June 1999, we issued and sold shares
  of Series E Preferred Stock convertible into an aggregate of 17,405,832
  shares of common stock to 25 investors for an aggregate purchase price of
  $91,380,781. We paid an aggregate of $1,650,322 in commissions in
  connection with the sale of Series E preferred stock.

                                      II-1
<PAGE>


     (3) We issued to an equipment lease provider in June 1997, a warrant to
  purchase shares of Series C preferred stock convertible into 29,722 shares
  of common stock for an aggregate purchase price of $209,994.

     (4) In April 1998, we issued an aggregate principal amount of $29.0
  million 13.75% Senior Secured Bridge Notes due April 28, 2000 to certain
  institutional investors. In connection with the issuance of such notes, we
  issued warrants to purchase shares of Series D preferred stock convertible
  into 596,470 shares of common stock for an aggregate purchase price of
  $5,375. We paid an aggregate of $1,450,000 in commissions in connection
  with the issuance of the Senior Secured Bridge Notes.

     (5) In May 1998, we issued to an equipment lease provider a warrant to
  purchase shares of Series D preferred stock convertible into 4,204 shares
  of common stock for an aggregate purchase price of $35,000.

     (6) In June 1998, in connection with certain patent licenses, we issued
  the licensor a warrant to purchase 7,333 shares of common stock for an
  aggregate purchase price of $110. Such licensor subsequently exercised the
  warrant and purchased 7,333 shares of common stock for an aggregate
  purchase price of $110.

     (7) In May 1999, we issued to an equipment lease provider a warrant to
  purchase 20,833 shares of common stock for an aggregate purchase price of
  $140,625.

     (8) As of December 31, 1999, an aggregate of 708,508 shares of common
  stock had been issued upon exercise of options under our stock option
  plans.

   (b) There were no underwritten offerings employed in connection with any of
the transactions set forth in Item 15(a).

   The issuances described in Items 15(a)(1) through 15(a)(7) were deemed to be
exempt from registration under the Securities Act in reliance upon Section 4(2)
thereof as transactions by an issuer not involving any public offering. The
recipients of securities in each such transaction represented their intentions
to acquire the securities for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate legends where
affixed to the securities issued in such transactions. All recipients had
adequate access, through their relationships with us, to information about the
Registrant. The issuances described in Items 15(a)(8) were deemed to be exempt
from registration under the Securities Act in reliance upon Rule 701
promulgated thereunder in that they were offered and sold either pursuant to
written compensatory benefit plans or pursuant to a written contract relating
to compensation, as provided by Rule 701. In addition, such issuances were
deemed to be exempt from registration under Section 4(2) of the Securities Act
as transactions by an issuer not involving any public offering.

Item 16. Exhibits and Financial Statement Schedules

   (a) Exhibits

<TABLE>
 <C>   <S>
  1.1   Form of Underwriting Agreement.

  3.1*  Certificate of Incorporation of the Registrant.

  3.2*  Bylaws of the Registrant.

  3.3   Sixth Amended and Restated Certificate of Incorporation of the
        Registrant, to be effected prior to the effective date of the
        offering.

  3.4   Seventh Amended and Restated Certificate of Incorporation of the
        Registrant, to be filed and effective upon completion of this
        offering.

  5.1   Opinion of Venture Law Group, A Professional Corporation.

 10.1*  Form of Indemnification Agreement.
</TABLE>

                                      II-2
<PAGE>

<TABLE>
 <C>     <S>
 10.2     1995 Stock Option Plan, as amended.

 10.3     1998 Stock Option Plan, as amended.

 10.4     2000 Employee Stock Purchase Plan.

 10.5     1998 Amended and Restated Directors' Stock Option Plan.

 10.6*    Series E Preferred Stock Purchase Agreement dated April 28, 1999.

 10.7*    Fifth Amended and Restated Investors Rights Agreement dated April
          28, 1999 by and among the Registrant and certain holders of the
          Registrant's capital stock.

 10.8+*   Lease for Willow Creek Corporate Center dated September 29, 1997 by
          and between the Registrant and Carr America Realty Corporation.

 10.9+*   Purchase Agreement dated March 4, 1998 by and between the Registrant
          and ALLTEL Supply Inc.

 10.10+   Loan Agreement dated October 14, 1997 by and between Registrant and
          Imperial Bank, and amendments thereto.

 10.11+*  Manufacturing Agreement between the Registrant and Powerwave
          Technologies, Inc. dated as of September 3, 1998.

 10.12+*  Purchase Agreement between the Registrant and GTE Wireless
          Incorporated dated as of September 8, 1998.

 10.13+*  Technical Cooperation Agreement between the Registrant and Shanghai
          Telecom dated as of December 17, 1998.

 10.14+   Purchase Agreement between the Registrant and Southwestco Wireless,
          L.P. dated as of February 24, 1999.

 10.15+*  Value Added Reseller Agreement between the Registrant and CommVerge
          Solutions (Asia), Inc. dated as of December 4, 1999.

 10.16+*  Distribution Agreement between the Registrant and SeeNode Co., Ltd.
          dated as of February 10, 2000.

 10.17+*  Purchase Agreement between the Registrant and AirTouch Support
          Services, Inc. dated as of January 1, 2000.

 10.18+   Purchase Agreement between the Registrant and Grupo IUSACELL S.A.,
          de C.V. dated as of December 17, 1999.

 10.19+*  Purchase Agreement between the Registrant and Cellco, L.P., dba Bell
          Atlantic dated as of December 20, 1999.

 10.20*   Employment Agreement with Mr. Douglas O. Reudink dated July 7, 1995.

 10.21*   Employment Agreement with Mr. Robert H. Hunsberger dated July 27,
          1997.

 10.22+*  Employment Agreement with Mr. Andy Merrill dated July 12, 1999.

 10.23*   Employment Agreement with Mr. Richard Henderson dated October 29,
          1997.

 10.24*   Employment Agreement with Mr. Victor K. Liang dated July 23, 1998.

 10.25+   Employment Agreement with Mr. Stuart Fuhlendorf dated March 10,
          2000.

 10.26    2000 Stock Plan.

 21.1*    Subsidiaries of the Registrant.

 23.1     Consent of Ernst & Young LLP, Independent Auditors.
</TABLE>

                                      II-3
<PAGE>

<TABLE>
<S>    <C>
23.2    Consent of Counsel (included in Exhibit 5.1).

24.1    Power of Attorney (see page II-5).

27.1*   Financial Data Schedule.

99.1*   Report of Ernst & Young LLP, Independent Auditors on Financial Statement Schedule.

99.2*   Financial Statement Schedule.
</TABLE>
- --------

* Previously filed.
+ Certain information in these exhibits has been omitted and filed separately
  with the Securities and Exchange Commission pursuant to a confidential
  treatment request under 17 C.F.R. Sections 200.80(b)(4), 200.83 and 230.406.

   (b) Financial Statement Schedules

   The following financial statement schedule is filed herewith:

   Schedule II--Valuation and Qualifying Accounts (see Exhibit 99.2).

   Other financial statement schedules are omitted because the information
called for is not required or is shown either in the financial statements or
the notes thereto.

Item 17. Undertakings

   The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

   Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

   The undersigned Registrant hereby undertakes that:

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

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

                                      II-4
<PAGE>

                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Amendment No. 1 to Registration Statement on
Form S-1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Redmond, State of Washington, on March 27, 2000.

                                        METAWAVE COMMUNICATIONS CORPORATION

                                              /s/ Robert H. Hunsberger
                                          By: _________________________________
                                              Robert H. Hunsberger
                                              President and Chief Executive
                                              Officer

   Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to Registration Statement on Form S-1 has been signed by the
following persons in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
             Signature                            Title                      Date
             ---------                            -----                      ----

 <S>                                <C>                                <C>
 /s/ Robert H. Hunsberger           President, Chief Executive          March 27, 2000
 _________________________________   Officer and Director (Principal
 Robert H. Hunsberger                Executive Officer)

 /s/ John R. Schaller               Controller (Principal Financial     March 27, 2000
 _________________________________   and Accounting Officer)
 John R. Schaller

 /s/ Douglas O. Reudink             Chief Technical Officer and         March 27, 2000
 _________________________________   Chairman of the Board of
 Douglas O. Reudink                  Directors

 /s/ Bandel L. Carano               Director                            March 27, 2000
 _________________________________
 Bandel L. Carano

 /s/ Bruce C. Edwards               Director                            March 27, 2000
 _________________________________
 Bruce C. Edwards

 /s/ David R. Hathaway              Director                            March 27, 2000
 _________________________________
 David R. Hathaway

 /s/ Scot B. Jarvis                 Director                            March 27, 2000
 _________________________________
 Scot B. Jarvis

 /s/ Jennifer Gill Roberts          Director                            March 27, 2000
 _________________________________
 Jennifer Gill Roberts

 /s/ David A. Twyver                Director                            March 27, 2000
 _________________________________
 David A. Twyver
</TABLE>

                                      II-5
<PAGE>

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
 Exhibit
   No.                                Description
 -------                              -----------
 <C>     <S>
  1.1     Form of Underwriting Agreement.

  3.1*    Certificate of Incorporation of the Registrant.

  3.2*    Bylaws of the Registrant.

  3.3     Sixth Amended and Restated Certificate of Incorporation of the
          Registrant, to be effected prior to the effective date of the
          offering.

  3.4     Seventh Amended and Restated Certificate of Incorporation of the
          Registrant, to be filed and effective upon completion of this
          offering.

  5.1     Opinion of Venture Law Group, A Professional Corporation.

 10.1*    Form of Indemnification Agreement.

 10.2     1995 Stock Option Plan, as amended.

 10.3     1998 Stock Option Plan, as amended.

 10.4     2000 Employee Stock Purchase Plan.

 10.5     1998 Amended and Restated Directors' Stock Option Plan.

 10.6*    Series E Preferred Stock Purchase Agreement dated April 28, 1999.

 10.7*    Fifth Amended and Restated Investors Rights Agreement dated April
          28, 1999 by and among the Registrant and certain holders of the
          Registrant's capital stock.

 10.8+*   Lease for Willow Creek Corporate Center dated September 29, 1997 by
          and between the Registrant and Carr America Realty Corporation.

 10.9+*   Purchase Agreement dated March 4, 1998 by and between the Registrant
          and ALLTEL Supply Inc.

 10.10+   Loan Agreement dated October 14, 1997 by and between Registrant and
          Imperial Bank, and amendments thereto.

 10.11+*  Manufacturing Agreement between the Registrant and Powerwave
          Technologies, Inc. dated as of September 3, 1998.

 10.12+*  Purchase Agreement between the Registrant and GTE Wireless
          Incorporated dated as of September 8, 1998.

 10.13+*  Technical Cooperation Agreement between the Registrant and Shanghai
          Telecom dated as of December 17, 1998.

 10.14+   Purchase Agreement between the Registrant and Southwestco Wireless,
          L.P. dated as of February 24, 1999.

 10.15+*  Value Added Reseller Agreement between the Registrant and CommVerge
          Solutions (Asia), Inc. dated as of December 4, 1999.

 10.16+*  Distribution Agreement between the Registrant and SeeNode Co., Ltd.
          dated as of February 10, 2000.

 10.17+*  Purchase Agreement between the Registrant and AirTouch Support
          Services, Inc. dated as of January 1, 2000.

 10.18+   Purchase Agreement between the Registrant and Grupo IUSACELL S.A.,
          de C.V. dated as of December 17, 1999.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
   No.                                Description
 -------                              -----------
 <C>     <S>
 10.19+*  Purchase Agreement between the Registrant and Cellco, L.P., dba Bell
          Atlantic dated as of December 20, 1999.

 10.20*   Employment Agreement with Mr. Douglas O. Reudink dated July 7, 1995.

 10.21*   Employment Agreement with Mr. Robert H. Hunsberger dated July 27,
          1997.

 10.22+*  Employment Agreement with Mr. Andy Merrill dated July 12, 1999.

 10.23*   Employment Agreement with Mr. Richard Henderson dated October 29,
          1997.

 10.24*   Employment Agreement with Mr. Victor K. Liang dated July 23, 1998.

 10.25+   Employment Agreement with Mr. Stuart Fuhlendorf dated March 10,
          2000.

 10.26    2000 Stock Option Plan.

 21.1*    Subsidiaries of the Registrant.

 23.1     Consent of Ernst & Young LLP, Independent Auditors.

 23.2     Consent of Counsel (included in Exhibit 5.1).

 24.1     Power of Attorney (see page II-4).

 27.1*    Financial Data Schedule.

 99.1*    Report of Ernst & Young LLP, Independent Auditors on Financial
          Statement Schedule.

 99.2*    Financial Statement Schedule.
</TABLE>
- --------

* Previously filed.
+ Certain information in these exhibits has been omitted and filed separately
  with the Securities and Exchange Commission pursuant to a confidential
  treatment request under 17 C.F.R. Sections 200.80(b)(4), 200.83 and 230.406.

<PAGE>

                                                                     EXHIBIT 1.1
 ______________________________________________________________________________
 ______________________________________________________________________________



                      METAWAVE COMMUNICATIONS CORPORATION
                            (a Delaware corporation)

                       [________] Shares of Common Stock

                               PURCHASE AGREEMENT
                               ------------------



     Dated: _________ ___, 2000



  ___________________________________________________________________________
  ___________________________________________________________________________
<PAGE>

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                  Page
                                                                                  ----
<S>                                                                               <C>
SECTION 1. Representations and Warranties.........................................  3
     (a)  Representations and Warranties by the Company...........................  3
          (i)       Compliance with Registration Requirements.....................  3
          (ii)      Independent Accountants.......................................  4
          (iii)     Financial Statements..........................................  4
          (iv)      No Material Adverse Change in Business........................  4
          (v)       Good Standing of the Company..................................  4
          (vi)      Good Standing of Subsidiaries.................................  4
          (vii)     Capitalization................................................  5
          (viii)    Authorization of Agreement....................................  5
          (ix)      Authorization and Description of Securities...................  5
          (x)       Absence of Defaults and Conflicts.............................  5
          (xi)      Absence of Labor Dispute......................................  6
          (xii)     Absence of Proceedings........................................  6
          (xiii)    Accuracy of Exhibits..........................................  6
          (xiv)     Possession of Intellectual Property...........................  6
          (xv)      Absence of Further Requirements...............................  7
          (xvi)     Possession of Licenses and Permits............................  7
          (xvii)    Title to Property.............................................  7
          (xviii)   Compliance with Cuba Act......................................  8
          (xix)     Investment Company Act........................................  8
          (xx)      Environmental Laws............................................  8
          (xxi)     Registration Rights...........................................  8
          (xxii)    International Trade...........................................  9
          (xxviii)  Accounting Controls...........................................  9
          (xxix)    Lock-up Agreements............................................  9
          (xxx)     Option Plan...................................................  9
     (b)  Officer's Certificates.................................................. 10

SECTION 2. Sale and Delivery to Underwriters; Closing............................. 10
     (a)  Initial Securities...................................................... 10
     (b)  Option Securities....................................................... 10
     (c)  Payment................................................................. 10
     (d)  Denominations; Registration............................................. 11

SECTION 3. Covenants of the Company............................................... 11
     (a)  Compliance with Securities Regulations and Commission Requests.......... 11
     (b)  Filing of Amendments.................................................... 12
     (c)  Delivery of Registration Statements..................................... 12
     (d)  Delivery of Prospectuses................................................ 12
     (e)  Continued Compliance with Securities Laws............................... 12
</TABLE>

                                      -i-
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
                                                                                  Page
<S>                                                                               <C>
     (f)  Blue Sky Qualifications................................................. 13
     (g)  Rule 158................................................................ 13
     (h)  Use of Proceeds......................................................... 13
     (i)  Listing................................................................. 13
     (j)  Restriction on Sale of Securities....................................... 13
     (k)  Reporting Requirements.................................................. 14
     (l)  Compliance with NASD Rules.............................................. 14
     (m)  Compliance with Rule 463................................................ 14

SECTION 4. Payment of Expenses.................................................... 14
     (a)  Expenses................................................................ 14
     (b)  Termination of Agreement................................................ 15

SECTION 5. Conditions of Underwriters' Obligations................................ 15
     (a)  Effectiveness of Registration Statement................................. 15
     (b)  Opinion of Counsel for Company.......................................... 15
     (c)  Opinion of Counsel for Underwriters..................................... 15
     (d)  Officers' Certificate................................................... 16
     (e)  Accountant's Comfort Letter............................................. 16
     (f)  Bring-down Comfort Letter............................................... 16
     (g)  Approval of Listing..................................................... 16
     (h)  No Objection............................................................ 16
     (i)  Lock-up Agreements...................................................... 16
     (j)  Conditions to Purchase of Option Securities............................. 16
     (k)  Additional Documents.................................................... 17
     (l)  Termination of Agreement................................................ 17

SECTION 6. Indemnification........................................................ 17
     (a)  Indemnification of Underwriters......................................... 18
     (b)  Indemnification of Company, Directors and Officers...................... 19
     (c)  Actions against Parties; Notification................................... 19
     (d)  Settlement without Consent if Failure to Reimburse...................... 20
     (e)  Indemnification for Reserved Securities................................. 20

SECTION 7. Contribution........................................................... 20

SECTION 8. Representations, Warranties and Agreements to Survive
           Delivery............................................................... 21

SECTION 9. Termination of Agreement............................................... 21
     (a)  Termination; General.................................................... 22
     (b)  Liabilities............................................................. 22
</TABLE>
<PAGE>

                              TABLE OF CONTENTS

<TABLE>
                                                                                  Page
                                                                                  ----
<S>                                                                               <C>
SECTION 10. Default by One or More of the Underwriters............................ 22

SECTION 11. Notices............................................................... 23

SECTION 12. Parties............................................................... 23

SECTION 13. GOVERNING LAW AND TIME................................................ 23

SECTION 14. Effect of Headings.................................................... 23
</TABLE>
<PAGE>



                      METAWAVE COMMUNICATIONS CORPORATION

                           (a Delaware corporation)

                         [___] Shares of Common Stock

                         (Par Value $0.0001 Per Share)

                              PURCHASE AGREEMENT

                                                          ____________ ___, 2000

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
     Incorporated
U.S. Bancorp Piper Jaffray, Inc.
Solomon Smith Barney
  as Representative(s) of the several Underwriters
c/o Merrill Lynch & Co.
  Merrill Lynch, Pierce, Fenner & Smith
     Incorporated
North Tower
World Financial Center
New York, New York  10281-1209

Ladies and Gentlemen:

     Metawave Communications Corporation, a Delaware corporation (the
"Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the other
Underwriters named in Schedule A hereto (collectively, the "Underwriters", which
term shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom Merrill Lynch, U.S. Bancorp Piper Jaffray, Inc.,
and Solomon Smith Barney are acting as representatives (in such capacity, the
"Representatives"), with respect to the issue and sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $0.0001 per share, of
the Company ("Common Stock") set forth in said Schedule A, and with respect to
the grant by the Company to the Underwriters, acting severally and not jointly,
of the option described in Section 2(b) hereof to purchase all or any part of
[______] additional shares of Common Stock to cover over-allotments, if any.
The aforesaid [______] shares of Common Stock (the "Initial Securities") to be
purchased by the Underwriters and all or any part of the [______] shares of
Common Stock subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities".
<PAGE>

     The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.

     The Company and the Underwriters agree that up to _______ shares of the
Securities to be purchased by the Underwriters (the "Reserved Securities") shall
be reserved for sale by the Underwriters to certain eligible employees and
persons having business relationships with the Company, as part of the
distribution of the Securities by the Underwriters, subject to the terms of this
Agreement, the applicable rules, regulations and interpretations of the National
Association of Securities Dealers, Inc. and all other applicable laws, rules and
regulations.  To the extent that such Reserved Securities are not orally
confirmed for purchase by such eligible employees and persons having business
relationships (collectively, the "Reserved Securities Purchasers") with the
Company by the end of the first business day after the date of this Agreement,
such Reserved Securities may be offered to the public as part of the public
offering contemplated hereby.

     The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No.  333-30568) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet
("Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b).
The information included in such prospectus or in such Term Sheet, as the case
may be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information".  Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A or the Rule 434 Information that was used after such
effectiveness and prior to the execution and delivery of this Agreement, is
herein called a "preliminary prospectus."  Such registration statement,
including the exhibits thereto and schedules thereto at the time it became
effective and including the Rule 430A Information and the Rule 434 Information,
as applicable, is herein called the "Registration Statement."  Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement.  The final prospectus in the form first furnished to the Underwriters
for use in connection with the offering of the Securities is herein called the
"Prospectus."  If Rule 434 is relied on, the term "Prospectus" shall refer to
the preliminary prospectus dated _____, 2000 together with the Term Sheet and
all references in this Agreement to the date of the Prospectus shall mean the
date of the Term Sheet.  For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").

                                      -2-
<PAGE>

     SECTION 1.  Representations and Warranties.

          (a)  Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof, and agrees with each Underwriter,
as follows:

               (i)  Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the Commission for additional
information has been complied with.

     At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are purchased,
at the Date of Delivery), the Registration Statement, the Rule 462(b)
Registration Statement and any amendments and supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and did not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading and the Prospectus,
any preliminary prospectus and any supplement thereto or prospectus wrapper
prepared in connection therewith, at their respective times of issuance and at
the Closing Time, complied and will comply in all material respects with any
applicable laws or regulations of foreign jurisdictions in which the Prospectus
and such preliminary prospectus, as amended or supplemented, if applicable, are
distributed in connection with the offer and sale of Reserved Securities.
Neither the Prospectus nor any amendments or supplements thereto (including any
prospectus wrapper), at the time the Prospectus or any such amendment or
supplement was issued and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), included or will include an untrue
statement of a material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.  If Rule 434 is used,
the Company will comply with the requirements of Rule 434 and the Prospectus
shall not be "materially different", as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective.  The representations and warranties in this subsection shall not
apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information furnished to
the Company in writing by any Underwriter through Merrill Lynch expressly for
use in the Registration Statement or Prospectus.

     Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.

                                      -3-
<PAGE>

               (ii)  Independent Accountants. To the Company's knowledge after
reasonable investigation, Ernst & Young LLP, which certified the financial
statements and supporting schedules included in the Registration Statement, are
independent public accountants as required by the 1933 Act and the 1933 Act
Regulations.

               (iii)  Financial Statements. The financial statements included in
the Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the Company and
its consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial statements
have been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved. The
supporting schedules included in the Registration Statement present fairly in
accordance with GAAP the information required to be stated therein. The selected
financial data and the summary financial information included in the Prospectus
present fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement. The pro forma financial statements and the related notes
thereto included in the Registration Statement and the Prospectus present fairly
the information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein.

               (iv)  No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have been
no transactions entered into by the Company or any of its subsidiaries, other
than those in the ordinary course of business, which are material with respect
to the Company and its subsidiaries considered as one enterprise, and (C) there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.

               (v)  Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the state of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.

               (vi)  Good Standing of Subsidiaries. Each subsidiary of the
Company (each a "Subsidiary" and, collectively, the "Subsidiaries") has been
duly organized and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its business
as

                                      -4-
<PAGE>

described in the Prospectus and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each such Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such Subsidiary. The only
subsidiaries of the Company are (a) the subsidiaries listed on Exhibit 21 to the
Registration Statement and (b) certain other subsidiaries which do not
constitute "significant subsidiaries" as defined in Rule 1-02 of Regulation S-X.

               (vii)  Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus or pursuant
to the exercise of convertible securities or options referred to in the
Prospectus). The shares of issued and outstanding capital stock of the Company
have been duly authorized and validly issued and are fully paid and non-
assessable; none of the outstanding shares of capital stock of the Company was
issued in violation of the preemptive or other similar rights of any
securityholder of the Company.

               (viii)  Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.

               (ix)  Authorization and Description of Securities. The Securities
have been duly authorized for issuance and sale to the Underwriters pursuant to
this Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth herein, will be validly
issued and fully paid and non-assessable; upon the filing of the Amended and
Restated Certificate of Incorportaion of the Company attached as Exhibit 3.4 to
the Registration Statement, which filing will be made immediately upon the
Closing Time, the Common Stock will conform to all statements relating thereto
contained in the Prospectus and such description will conform to the rights set
forth in the instruments defining the same; no holder of the Securities will be
subject to personal liability by reason of being such a holder; and the issuance
of the Securities is not subject to the preemptive or other similar rights of
any securityholder of the Company.


               (x)  Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments") except for
such defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein and in the Registration Statement
(including the issuance and sale

                                      -5-
<PAGE>

of the Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use of Proceeds") and compliance
by the Company with its obligations hereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any subsidiary pursuant to, the Agreements and
Instruments (except for such conflicts, breaches, Repayment Events, or defaults
or liens, charges or encumbrances that would not result in a Material Adverse
Effect), nor will such action result in any violation of the provisions of the
charter or by-laws of the Company or any subsidiary, nor will such action result
in any violation of the provisions of any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any subsidiary or any of their assets, properties or operations
(except for such violations that would not materially and adversely affect the
Company's obligations hereunder and that would not result in a Material Adverse
Effect). As used herein, a "Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the Company
or any subsidiary.

               (xi)  Absence of Labor Dispute. No material labor dispute with
the employees of the Company or any of its subsidiaries exists, except as
described in the Prospectus, or, to the knowledge of the Company, is imminent;
and the Company is not aware of any existing, overtly threatened or imminent
labor disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could have Material Adverse Effect.

               (xii)  Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement or the
performance by the Company of its obligations hereunder; the aggregate of all
pending legal or governmental proceedings to which the Company or any subsidiary
is a party or of which any of their respective property or assets is the subject
which are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, could not reasonably be expected
to result in a Material Adverse Effect.

               (xiii)  Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so described
and filed as required.

               (xiv)  Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade

                                      -6-
<PAGE>

names or other intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them, and neither the Company
nor any of its subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein, and which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material Adverse
Effect.

          (xv)  Absence of Further Requirements.  No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities hereunder or
the consummation of the transactions contemplated by this Agreement, except (i)
such as have been already obtained or as may be required under the 1933 Act or
the 1933 Act Regulations or state securities laws and (ii) such as have been
obtained under the laws and regulations of jurisdictions outside the United
States in which the Reserved Securities are offered.

          (xvi)  Possession of Licenses and Permits.  The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them; the Company and its subsidiaries are
in compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to comply would not, singly or in the aggregate,
have a Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force and
effect would not have a Material Adverse Effect; and neither the Company nor any
of its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.

          (xvii)  Title to Property.  The Company and its subsidiaries have good
and marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each case,
free and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are described in the
Prospectus or (b) do not, singly or in the aggregate, materially affect the
value of such property and do not interfere with the use made and proposed to be
made of such property by the Company or any of its subsidiaries; and all of the
leases and subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the Company or any
of its subsidiaries holds properties described in the Prospectus, are in full
force and effect, and neither the Company nor any subsidiary has any notice of
any material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or such
subsidiary to the continued possession of the leased or subleased premises under
any such lease or sublease.

                                      -7-
<PAGE>

          (xviii)  Compliance with Cuba Act.  The Company has complied with, and
is and will be in compliance with, the provisions of that certain Florida act
relating to disclosure of doing business with Cuba, codified as Section 517.075
of the Florida statutes, and the rules and regulations thereunder (collectively,
the "Cuba Act") or is exempt therefrom.

          (xix)  Investment Company Act.  The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended (the
"1940 Act").

          (xx)  Environmental Laws.  Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of its subsidiaries is
in violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending or
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (D) there are no events or circumstances
that might reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental Laws.

          (xxi)  Registration Rights.  There are no persons with registration
rights or other similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the 1933
Act, except as described in the Prospectus and which rights have been duly
waived in connection with the offering of the Securities. The Company (A) has
notified certain shareholders who are parties to the Fifth Amended and Restated
Investors' Rights Agreement dated April 28, 1999 (the "Registration Rights
Agreement"), that pursuant to the terms of the Registration Rights Agreement,
none of the shares of the Company's capital stock held by such shareholders may
be sold or otherwise transferred or disposed of for a period of 180 days after
the date of the Prospectus and (B) has imposed a stop-transfer instruction with
the Company's transfer agent in order to enforce the 180 day lock-up provision
imposed pursuant to the Registration Rights Agreement with respect to each
shareholder subject to the Registration Rights Agreement.

          (xxvi)  Insurance.  The Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are

                                      -8-
<PAGE>

prudent and customary in the businesses in which they are engaged; neither the
Company nor any of its Subsidiaries has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse
Effect.

          (xxvii)  International Trade.  The Company and its Subsidiaries have
complied and are in material compliance with all federal, state, local and
foreign statutes, executive orders, proclamations, regulations, rules,
directives, decrees, ordinances and similar provisions having the force or
effect of law and all judicial and administrative orders, rulings,
determinations and common law concerning the importation of merchandise, the
export or reexport of products, services and technology, and the terms and
conduct of international transactions applicable to the Company and its
Subsidiaries in connection with the conduct of the Company's or any Subsidiary's
business (including as the same relates to record keeping requirements)
("International Trade Laws and Regulations"); neither the Company nor any of its
Subsidiaries has made or provided any material false statement or material
omission to any agency of any federal, state or local government, purchasers of
products, or foreign government or foreign agency, in connection with the
exportation of merchandise (including with respect to export licenses,
exceptions and other export authorizations and any filings required for or
related to exportation of any item), the importation of merchandise or other
approvals required by a foreign government or agency or any other requirement
relating to any International Trade Laws and Regulations; neither the Company
nor any of its Subsidiaries has made any payment, offer, gift, promise to give,
or authorized or otherwise participated in, assisted or facilitated any payment
or gift related to the Company's or any Subsidiary's business that is prohibited
by the United States Foreign Corrupt Practices Act.

          (xxviii)  Accounting Controls.  The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (A) transactions are executed in accordance
with management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (C) access to assets is permitted only in accordance with
management's general or specific authorization; and (D) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

          (xxix)  Lock-up Agreements.  Except for the Securities, at least [9_%]
of all outstanding shares of Common Stock, and all securities convertible into
or exercisable or exchangeable for Common Stock, are subject to valid and
binding agreements (collectively, the "Lock-up Agreements") that restrict the
holders thereof from selling, making any short sale of, granting any option for
the purchase of, or otherwise transferring or disposing of, any of such shares
of Common Stock, or any such securities convertible into or exercisable or
exchangeable for Common Stock, for a period of 180 days after the date of the
Prospectus without the prior written consent of Merrill Lynch & Co.
Incorporated.

          (xxx)  Option Plan.  The Company (i) has notified each holder of a
currently outstanding option issued under the Third Amended and Restated 1995
Option Plan (the "Option Plan") and each person who has acquired shares of
Common Stock pursuant to the exercise of any option granted under the Option
Plan that pursuant to the terms of the Option Plan, that none of such

                                      -9-
<PAGE>

options or shares may be sold or otherwise transferred or disposed of for a
period of 180 days after the date of the Prospectus and (ii) has imposed a stop-
transfer instruction with the Company's transfer agent in order to enforce the
foregoing lock-up provision imposed pursuant to the Option Plan.

          (b)  Officer's Certificates.  Any certificate signed by any officer of
the Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.

     SECTION 2.   Sale and Delivery to Underwriters; Closing.

          (a)  Initial Securities.  On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule B, the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.

          (b)  Option Securities.  In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional
[_______] shares of Common Stock at the price per share set forth in Schedule B,
less an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial Securities but not payable on the Option
Securities. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the offering
and distribution of the Initial Securities upon notice by the Representatives to
the Company setting forth the number of Option Securities as to which the
several Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Representatives, but
shall not be later than seven full business days after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Securities, each
of the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being purchased which
the number of Initial Securities set forth in Schedule A opposite the name of
such Underwriter bears to the total number of Initial Securities, subject in
each case to such adjustments as the Representatives in their discretion shall
make to eliminate any sales or purchases of fractional shares.

          (c)  Payment.  Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Venture
Law Group, A Professional Corporation, 4750 Carillon Point, Kirkland, Washington
98033, or at such other place as shall be agreed upon by the Representatives and
the Company, 7:00 A.M. (California time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section 10),
or such other time not later than

                                     -10-
<PAGE>

ten business days after such date as shall be agreed upon by the Representatives
and the Company (such time and date of payment and delivery being herein called
"Closing Time").

     In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company.

     Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them.  It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase.  Merrill Lynch, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.

          (d)  Denominations; Registration.  Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
one full business day before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in the City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.

     SECTION 3.   Covenants of the Company.  The Company covenants with each
Underwriter as follows:

          (a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of Rule
430A or Rule 434, as applicable, and will notify the Representatives
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company will
promptly effect the filings necessary pursuant to Rule 424(b) and will take such
steps as it deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent the

                                     -11-
<PAGE>

issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.

          (b)  Filing of Amendments.  The Company will give the Representatives
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectus will
furnish the Representatives with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file or use any such document to which the Representatives or counsel
for the Underwriters shall reasonably object.

          (c)  Delivery of Registration Statements.  The Company has furnished
or will deliver to the Representatives and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.

          (d)  Delivery of Prospectuses.  The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the Securities
Exchange Act of 1934 (the "1934 Act"), such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably request. The
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.

          (e)  Continued Compliance with Securities Laws.  The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is necessary,
in the opinion of counsel for the Underwriters or for the Company, to amend the
Registration Statement or amend or supplement the Prospectus in order that the
Prospectus will not include any untrue statements of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements,

                                     -12-
<PAGE>

and the Company will furnish to the Underwriters such number of copies of such
amendment or supplement as the Underwriters may reasonably request.

          (f)  Blue Sky Qualifications. The Company will use its best efforts,
in cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Representatives may designate and to maintain such
qualifications in effect for so long as may be necessary to complete the
distribution of the Securities or, if longer, as applicable securities laws may
require; provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation or
as a dealer in securities in any jurisdiction in which it is not so qualified or
to subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject. In each jurisdiction in which the
Securities have been so qualified, the Company will file such statements and
reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be necessary to complete the
distribution of the Securities or, if longer, as applicable securities laws may
require.

          (g)  Rule 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.

          (h)  Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds".

          (i)  Listing. The Company will use its best efforts to effect and
maintain the quotation of the Common Stock (including the Securities) on the
Nasdaq National Market and will file with the Nasdaq National Market all
documents and notices required by the Nasdaq National Market of companies that
have securities that are traded in the over-the-counter market and quotations
for which are reported by the Nasdaq National Market.

          (j)  Restriction on Sale of Securities. During a period of 180 days
from the date of the Prospectus, the Company will not, without the prior written
consent of Merrill Lynch, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Securities to be sold hereunder, (B) any shares of Common Stock issued by
the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectus, (C)
any shares of Common Stock issued or options to purchase Common Stock granted
pursuant to existing employee benefit plans of the Company referred to in the
Prospectus or (D) any shares of Common Stock issued pursuant to any non-employee
director stock plan.

                                     -13-
<PAGE>

          (k)  Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission
thereunder.

          (l)  Compliance with NASD Rules. The Company hereby agrees that it
will ensure that the Reserved Securities will be restricted as required by the
National Association of Securities Dealers, Inc. (the "NASD") or the NASD rules
from sale, transfer, assignment, pledge or hypothecation for a period of three
months following the date of this Agreement. The Underwriters will notify the
Company in writing as to which persons will need to be so restricted. At the
request of the Underwriters, the Company will direct the transfer agent to place
a stop transfer restriction upon such securities for such period of time. Should
the Company release, or seek to release, from such restrictions any of the
Reserved Securities sold to the Restricted Persons, the Company agrees to
reimburse the Underwriters for any reasonable expenses (including, without
limitation, legal expenses) they incur in connection with such release.

          (m)  Compliance with Rule 463. The Company will report to the use of
proceed from the sale of the Securities pursuant to Item 701 of Regulation S-K
on its periodic reports filed with the Commission pursuant to Sections 13(a) and
15(d) of the Securities Exchange Act as may be required pursuant to Rule 463 of
the 1933 Act Regulations.

     SECTION 4.   Payment of Expenses.

          (a)  Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectus and any amendments
or supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii)
the fees and expenses of any transfer agent or registrar for the Securities and
(ix) the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriters in connection with, the review by the NASD of the
terms of the sale of the Securities and (x) the fees and expenses incurred in
connection with the inclusion of the Securities in the Nasdaq National Market
and (xi) all costs and expenses of the Underwriters, including the fees and
disbursements of counsel for the Underwriters, in connection with matters
related to the Reserved Securities which are designated by the Company for sale
to employees and others having a business relationship with the Company.

                                     -14-
<PAGE>

          (b)  Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.

     SECTION 5.   Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:

          (a)  Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).

          (b)  Opinion of Counsel for Company

               (i)  At Closing Time, the Representatives shall have received the
favorable opinion, dated as of Closing Time, of Venture Law Group, A
Professional Corporation, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or reproduced
copies of such letter for each of the other Underwriters to the effect set forth
in Exhibit A hereto and to such further effect as counsel to the Underwriters
may reasonably request. In giving such opinion, such counsel may rely, as to
matters governed by the laws of jurisdictions other than the law of the State of
Washington and the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinion of counsel satisfactory to the
Representatives.

               (ii)  At Closing Time, the Representatives shall have received
the favorable opinion, dated as of Closing Time, of Fulbright & Jaworski,
intellectual property counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or reproduced
copies of such letter for each of the other Underwriters to the effect set forth
in Exhibit B hereto and to such further effect as counsel to the Underwriters
may reasonably request.

          (c)  Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for
the Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters with respect to the matters set forth in Exhibit
A in clauses (i), (ii), (v), (vi) (solely as to preemptive or other similar
rights arising by operation of law or under the charter or by-laws of the
Company), (viii) through (x), inclusive, (xiv)

                                     -15-
<PAGE>

(solely as to the information in the Prospectus under "Description of
Securities-Common Stock") and the penultimate paragraph of Exhibit A hereto.
Such counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon certificates of
officers of the Company and its subsidiaries and certificates of public
officials.

          (d)  Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or are contemplated by the
Commission.

          (e)  Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Ernst & Young, LLP a
letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.

          (f)  Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from Ernst & Young, LLP a letter, dated as of Closing Time,
to the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (e) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to Closing
Time.

          (g)  Approval of Listing. At Closing Time, the Securities shall have
been approved for inclusion in the Nasdaq National Market, subject only to
official notice of issuance.

          (h)  No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.

          (i)  Lock-up Agreements. At the date of this Agreement, the
Representatives shall have received an agreement substantially in the form of
Exhibit C hereto signed by the persons listed on Schedule C hereto.

          (j)  Conditions to Purchase of Option Securities. In the event that
the Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company or any subsidiary of the Company here-

                                     -16-
<PAGE>

under shall be true and correct as of each Date of Delivery and, at
the relevant Date of Delivery, the Representatives shall have received:

               (i)   Officers' Certificate.  A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section 5(d) hereof
remains true and correct as of such Date of Delivery.

               (ii)  Opinion of Counsel for Company.  The favorable opinion of
Venture Law Group, Professional Corporation, counsel for the Company, in form
and substance satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by Section
5(b) hereof.

               (iii) Opinion of Counsel for Underwriters.  The favorable opinion
of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the
Underwriters, dated such Date of Delivery, relating to the Option Securities to
be purchased on such Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(c) hereof.

               (iv)  Bring-down Comfort Letter.  A letter from Ernst & Young,
LLP, in form and substance satisfactory to the Representatives and dated such
Date of Delivery, substantially in the same form and substance as the letter
furnished to the Representatives pursuant to Section 5(f) hereof, except that
the "specified date" in the letter furnished pursuant to this paragraph shall be
a date not more than five days prior to such Date of Delivery.

          (k)  Additional Documents.  At Closing Time and at each Date of
Delivery, counsel for the Underwriters shall have been furnished with such
documents and opinions as they may require for the purpose of enabling them to
pass upon the issuance and sale of the Securities as herein contemplated, or in
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.

          (l)  Termination of Agreement.  If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.

     SECTION 6.  Indemnification.

                                     -17-
<PAGE>

          (a)  Indemnification of Underwriters.  The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:

               (i)   against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;

               (ii)  against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of (A) the violation of any
applicable laws or regulations of foreign jurisdictions where Reserved
Securities have been offered and (B) any untrue statement or alleged untrue
statement of a material fact included in the supplement or prospectus wrapper
material distributed in foreign jurisdictions in connection with the reservation
and sale of the Reserved Securities to eligible employees of the Company and
persons having business relationships with the Company or the omission or
alleged omission therefrom of a material fact necessary to make the statements
therein, when considered in conjunction with the Prospectus or preliminary
prospectus, and in light of the circumstances under which they were made, not
misleading;

               (iii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission or in connection with any violation of the nature referred
to in Section 6(a)(ii)(A) hereof; provided that (subject to Section 6(d) below)
any such settlement is effected with the written consent of the Company; and

               (iv)  against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill Lynch),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission
or in connection with any violation of the nature referred to in Section
6(a)(ii)(A) hereof, to the extent that any such expense is not paid under (i),
(ii) or (iii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or

                                     -18-
<PAGE>

supplement thereto); provided further, that the Company will not be liable to
any Underwriter with respect to any preliminary prospectus to the extent that
the Company shall sustain the burden of proving that any such loss, liability,
claim, damage or expense resulted from the fact that such Underwriter, in
contravention of a requirement of applicable law, sold Securities to a person to
whom such Underwriter failed to send or give, at or prior to the written
confirmation of the sale of such Securities (the "Confirmation"), a copy of the
Prospectus, as then amended or supplemented if: (i) the Company has previously
furnished copies thereof to the Underwriters (sufficiently in advance of the
Confirmation and in sufficient quantity to allow for distribution by the
Confirmation) and the loss, liability, claim, damage or expense of such
Underwriter resulted from an untrue statement or omission of a material fact
contained in or omitted from the preliminary prospectus that was corrected in
the Prospectus as, if applicable, amended or supplemented prior to the
Confirmation and such Prospectus was required by law to be delivered at or prior
to the Confirmation to such person and (ii) such failure to give or send such
Prospectus by the Confirmation to the party or parties asserting such loss,
liability, claim, damage or expense would have constituted the sole defense to
the claim asserted by such person.

          (b)  Indemnification of Company, Directors and Officers.  Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Merrill Lynch expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).

          (c)  Actions against Parties; Notification.  Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section 6(a)
above, counsel to the indemnified parties shall be selected by Merrill Lynch,
and, in the case of parties indemnified pursuant to Section 6(b) above, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or

                                     -19-
<PAGE>

proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 6 or Section 7 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.

          (d)  Settlement without Consent if Failure to Reimburse.  If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) Section 6(a)(iii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.

          (e)  Indemnification for Reserved Securities.  In connection with the
offer and sale of the Reserved Securities, the Company agrees, promptly upon a
request in writing, to indemnify and hold harmless the Underwriters from and
against any and all losses, liabilities, claims, damages and expenses incurred
by them as a result of the failure of any of the Reserved Securities Purchasers
to pay for and accept delivery of Reserved Securities which, by the end of the
first business day following the date of this Agreement, were subject to a
properly confirmed agreement to purchase.

     SECTION 7.  Contribution.  If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions, or in connection with
any violation of the nature referred to in Section 6(a)(ii)(A) hereof, which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.

     The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of the Securities as set forth on such cover.

                                     -20-
<PAGE>

     The relative fault of the Company on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission or any violation of the nature referred to in Section 6(a)(ii)(A)
hereof.

     The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7.  The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

     Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.

     No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

     For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company.  The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.

     SECTION 8.  Representations, Warranties and Agreements to Survive
Delivery.  All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.

     SECTION 9.  Termination of Agreement.

                                     -21-
<PAGE>

          (a)  Termination; General.  The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the Nasdaq National Market, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.

          (b)  Liabilities.  If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.

     SECTION 10.  Default by One or More of the Underwriters.  If one or more of
the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:

          (a)  if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or

          (b)  if the number of Defaulted Securities exceeds 10% of the number
of Securities to be purchased on such date, this Agreement or, with respect to
any Date of Delivery which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Company to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without liability on
the part of any non-defaulting Underwriter.

                                     -22-
<PAGE>

     No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.

     In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the Representatives or the Company shall have the
right to postpone Closing Time or the relevant Date of Delivery, as the case may
be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements.  As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.

     SECTION 11.  Notices.  All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at 3300 Hillview Avenue,
Suite 150, Palo Alto, California 94304-1203, attention of Matt Pendo and notices
to the Company shall be directed to Metawave Communications Corporation at 10735
Willows Road NE, Redmond, Washington 98052, attention of Robert Hunsberger.

    SECTION 12.  Parties.  This Agreement shall each inure to the benefit of and
be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.

     SECTION 13.  GOVERNING LAW AND TIME.  THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

     SECTION 14.  Effect of Headings.  The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.

                                     -23-
<PAGE>

     If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.

                                    Very truly yours,

                                    METAWAVE COMMUNICATIONS CORPORATION

                                    By
                                       -------------------------------------
                                       Robert H. Hunsberger,
                                       President and Chief Executive Officer

CONFIRMED AND ACCEPTED,
 as of the date first above written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
          INCORPORATED

U.S. BANCORP PIPER JAFFRAY, INC.
SOLOMON SMITH BARNEY

By: MERRILL LYNCH, PIERCE, FENNER & SMITH
          INCORPORATED

By:
   -------------------------------
   Authorized Signatory

Name:
     -----------------------------

Title:
      ----------------------------


For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.

                                     -24-
<PAGE>

                                   SCHEDULE A
<TABLE>
<CAPTION>
                                                                                  Number of
                                                                                   Initial
                             Name of Underwriter                                  Securities
- ------------------------------------------------------------------------------    ----------
<S>                                                                             <C>
Merrill Lynch, Pierce, Fenner & Smith
     Incorporated.............................................................
Salomon Smith Barney..........................................................
U.S. Bancorp Piper Jaffray, Inc...............................................







Total.........................................................................
                                                                                  ==========
</TABLE>


                                    Sch A-1
<PAGE>

                                   SCHEDULE B

                      Metawave Communications Corporation
                          [___] Shares of Common Stock
                         (Par Value $0.0001 Per Share)

     1.  The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $[______].

     2.  The purchase price per share for the Securities to be paid by the
several Underwriters shall be $[______], being an amount equal to the initial
public offering price set forth above less $[______] per share; provided that
the purchase price per share for any Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial Securities but not payable on the Option
Securities.



                                    Sch B-1
<PAGE>

                                  SCHEDULE C

                         List of persons and entities
                              subject to lock-up


[All securityholders, as set forth in the Prospectus.]





                                    Sch C-1
<PAGE>

                                                                       Exhibit A

                     FORM OF OPINION OF COMPANY'S COUNSEL
                          TO BE DELIVERED PURSUANT TO
                                SECTION 5(b)(i)

     (i)  The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.

     (ii)  The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.

     (iii)  The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.

     (iv)  The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus in the column entitled "Actual" under the
caption "Capitalization" (except for subsequent issuances, if any, pursuant to
the Purchase Agreement or pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectus or pursuant to the exercise of
convertible securities or options referred to in the Prospectus); the shares of
issued and outstanding capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock of the Company was issued in violation of
the preemptive or other similar rights continued in the Certificate of
Incorporation, as amended, or by-laws of the Company; and, to our knowledge,
none of the outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any securityholder of the
Company.

     (v)  The Securities have been duly authorized for issuance and sale to the
Underwriters pursuant to the Purchase Agreement and, when issued and delivered
by the Company pursuant to the Purchase Agreement against payment of the
consideration set forth in the Purchase Agreement, will be validly issued and
fully paid and non-assessable and no holder of the Securities is or will be
subject to personal liability by reason of being such a holder.

     (vi)  To our knowledge, the issuance of the Securities is not subject to
preemptive or other similar rights of any securityholder of the Company.

     (vii)  Each Subsidiary has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or

                                      A-1
<PAGE>

leasing of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse Effect;
except as otherwise disclosed in the Registration Statement, all of the issued
and outstanding capital stock of each Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and, to the best of our
knowledge, is owned by the Company, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; to our knowledge, none of the outstanding shares of capital stock of any
Subsidiary was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary.

     (viii)  The Purchase Agreement has been duly authorized, executed and
delivered by the Company.

     (ix)  The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the Prospectus pursuant to Rule 424(b) has been made in the manner and within
the time period required by Rule 424(b); and, to the best of our knowledge, no
stop order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or threatened
by the Commission.

     (x)  The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectus and each amendment or supplement to the Registration
Statement and Prospectus as of their respective effective or issue dates (other
than the financial statements and supporting schedules included therein or
omitted therefrom, as to which we need express no opinion) complied as to form
in all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.

     (xii)  The form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the charter and by-laws of the Company and the
requirements of the Nasdaq National Market.

     (xiii)  To our knowledge, there is not pending or threatened any action,
suit, proceeding, inquiry or investigation, to which the Company or any
subsidiary is a party, or to which the property of the Company or any subsidiary
is subject, before or brought by any court or governmental agency or body,
domestic or foreign, which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets of the Company or any subsidiary or
the consummation of the transactions contemplated in the Purchase Agreement or
the performance by the Company of its obligations thereunder.

     (xiv)  The information in the Prospectus under "Management-Limitation of
Liability and Indemnification Matters;" "-Severance Arrangements;" "Description
of Securities;" "Shares Eligible" and "Certain Relationships and Related Party
Transactions" and "Underwriting" and in the Registration Statement under Items
14 and 15, to the extent that it constitutes matters of law, summaries of legal
matters, the Company's charter and by-laws or legal proceedings, or legal
conclusions, has been reviewed by us and is correct in all material respects.

                                      A-2
<PAGE>

     (xv)  To our knowledge, there are no statutes or regulations that are
required to be described in the Prospectus that are not described as required.

     (xvi)  All descriptions in the Registration Statement of contracts and
other documents to which the Company or its subsidiaries are a party are
accurate in all material respects; to the best of our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects.

     (xvii)  To the best of our knowledge, neither the Company nor any
subsidiary is in violation of its charter or by-laws and, to our knowledge, no
default by the Company or any subsidiary exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated by reference
as an exhibit to the Registration Statement.

     (xviii)  No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act and the
1933 Act Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states, as to which we need express
no opinion) is necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement or for the offering, issuance
or sale of the Securities.

     (xix)  The execution, delivery and performance of the Purchase Agreement
and the consummation of the transactions contemplated in the Purchase Agreement
and in the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use Of Proceeds") and compliance
by the Company with its obligations under the Purchase Agreement do not and will
not, whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(x) of the Purchase Agreement) under or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary pursuant to any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, known to us, to which the Company or any subsidiary is
a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any subsidiary is subject (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that would not
have a Material Adverse Effect), nor will such action result in any violation of
the provisions of the charter or by-laws of the Company or any subsidiary, or
any applicable law, statute, rule, regulation, judgment, order, writ or decree,
known to us, of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any subsidiary or any of their
respective properties, assets or operations.

                                      A-3
<PAGE>

     (xx) To our knowledge, there are no persons with registration rights or
other similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the 1933
Act, except as described in the Prospectus and which rights have not been duly
waived.

     (xxi)  The Company is not an "investment company" or an entity "controlled"
by an "investment company," as such terms are defined in the 1940 Act.

     Nothing has come to our attention that would lead us to believe that the
Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable), (except for financial
statements and schedules and other financial data included therein or omitted
therefrom, as to which we need make no statement), at the time such Registration
Statement or any such amendment became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included therein or omitted
therefrom, as to which we need make no statement), at the time the Prospectus
was issued, at the time any such amended or supplemented prospectus was issued
or at the Closing Time, included or includes an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

     In rendering such opinion, such counsel may rely as to matters of fact (but
not as to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.  Such opinion shall
not state that it is to be governed or qualified by, or that it is otherwise
subject to, any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).

                                      A-4
<PAGE>

                                                                       Exhibit B

                      FORM OF OPINION OF COMPANY'S COUNSEL


                          TO BE DELIVERED PURSUANT TO
                                SECTION 5(b)(ii)

     (i)  The Company owns all patents, trademarks, trademark registrations,
service marks, service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights described in the Prospectus as being owned
by it or necessary for the conduct of its business, and such counsel is not
aware of any claim to the contrary or any challenge by any other person to the
rights of the Company with respect to the foregoing other than those identified
in the Prospectus;

     (ii)  Such counsel is not aware of any legal actions, claims or proceedings
pending or threatened against the Company, its manufacturers, suppliers or
customers other than those identified in the Prospectus alleging that the
Company is infringing or otherwise violating any patents, trademarks, trademark
registrations, service marks, service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets or rights owned by others;

     (iii)  Such counsel has reviewed the descriptions of patents and patent
applications under the captions "Risk Factors--[Intellectual Property]" and
"Business--Intellectual Property" in the Registration Statement and Prospectus,
and, to the extent they constitute matters of law or legal conclusions, these
descriptions are accurate and fairly and completely present the patent situation
of the Company;

     (iv)  For each copyrightable product described in the Prospectus, the
Company either (i) has registered all copyrights for such product and has
obtained and properly recorded written assignments of all rights and title
therein to the Company from all authors and owners of such copyrights other than
the Company, including, without limitation, any and all independent contractors;
or (ii) was vested with original title to all copyrights for such product and no
written assignments for such copyrights are required to perfect Company's rights
and title thereto;

     (v)  After review of the file history and patent attorneys' file with
respect to the security of patent protection on the Company's technology for
each patent or patent application described or referred to in the Prospectus as
being owned by the Company or necessary for the conduct of its business, such
counsel is aware of nothing that causes such counsel to believe that, as of the
date of the Registration Statement became effective and as of the date of such
opinion, the description of patents and patent applications under the captions
"Risk Factors--[Intellectual Property]" and "Business--Intellectual Property" in
the Registration Statement and Prospectus contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading,

                                      B-1
<PAGE>

including, without limitation, any undisclosed material issue with respect to
the subsequent validity or enforceability of such patent or patent issuing
from any such pending patent application; and

     (vi)  [Additional opinions to follow pending due diligence investigation.]

                                      B-2
<PAGE>

                                                                       Exhibit C

                              February ___, 2000

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
     Incorporated,
U.S. Bancorp Piper Jaffray, Inc.
Solomon Smith Barney
  as Representatives of the several
  Underwriters to be named in the
  within-mentioned Purchase Agreement
c/oMerrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
     Incorporated
North Tower
World Financial Center
New York, New York  10281-1209

     Re:  Proposed Public Offering by Metawave Communications Corporation
          ---------------------------------------------------------------

Dear Sirs:

     The undersigned, a stockholder [and an officer and/or director]/2/ of
Metawave Communications Corporation, a Delaware corporation (the "Company"),
understands that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), U.S. Bancorp Piper Jaffray, Inc. and Solomon
Smith Barney proposes to enter into a Purchase Agreement (the "Purchase
Agreement") with the Company providing for the public offering of shares (the
"Securities") of the Company's common stock, par value $0.0001 per share (the
"Common Stock").  In recognition of the benefit that such an offering will
confer upon the undersigned as a stockholder [and an officer and/or director]/1/
of the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
underwriter to be named in the Purchase Agreement that, during a period of 180
days from the date of the Purchase Agreement, the undersigned will not, without
the prior written consent of Merrill Lynch, directly or indirectly, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant for
the sale of, or otherwise dispose of or transfer any shares of the Company's
Common Stock or any securities convertible into or exchangeable or exercisable
for Common Stock, whether now owned or hereafter acquired by the undersigned or
with respect to which the undersigned has or hereafter acquires the

- ---------------
/1/ Delete or revise bracketed language as appropriate.

                                      C-1
<PAGE>

power of disposition, or file any registration statement under the Securities
Act of 1933, as amended, with respect to any of the foregoing or (ii) enter into
any swap or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap transaction is to be settled by delivery of
Common Stock or other securities, in cash or otherwise.


                                       Very truly yours,

                                       Signature:
                                                  ------------------------------
                                       Print Name:
                                                   -----------------------------

                                      C-2
<PAGE>

                                                                         Annex A

         FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(e)

We are independent public accountants with respect to the Company within the
meaning of the 1933 Act and the applicable published 1933 Act Regulations

     (i)  in our opinion, the audited financial statements and the related
financial statement schedules included in the Registration Statement and the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the published rules and regulations
thereunder;

     (ii) on the basis of procedures (but not an examination in accordance with
generally accepted auditing standards) consisting of a reading of the unaudited
interim [consolidated] financial statements of the Company for the [three month
periods ended _________, 19___ and _________, 19___ , the three and six month
periods ended _________, 19___ and _________, 19___ and the three and nine month
periods ended _________, 19___ and _________, 19___, included in the
Registration Statement and the Prospectus (collectively, the "Quarterly
Financials")]/1/ [, a reading of the unaudited interim [consolidated] financial
statements of the Company for the _____-month periods ended _________, 19___ and
_________, 19___, included in the Registration Statement and the Prospectus (the
"____-month financials")]/2/ [, a reading of the latest available unaudited
interim [consolidated] financial statements of the Company],/3/ a reading of the
minutes of all meetings of the stockholders and directors of the Company and its
subsidiaries and the _________________ and __________________ Committees of the
Company's Board of Directors and any subsidiary committees since January 1,
2000, inquiries of certain officials of the Company and its subsidiaries
responsible for financial and accounting matters, a review of interim financial
information in accordance with standards established by the American Institute
of Certified Public Accountants in Statement on Auditing Standards No. 71,
Interim Financial Information ("SAS 71"), with respect to the [description of
relevant periods]/4/ and such other inquiries and procedures as may be specified
in such letter, nothing came to our attention that caused us to believe that:

     (A) the Quarterly Financials included in the Registration Statement and the
Prospectus do not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act Regulations or any
material modifications should be made to the


- -------------------
1    Include the appropriate dates of the Quarterly Financials.
2    Include if non-Quarterly unaudited interim financial statements are
     included in the Registration Statement.
3    Include if the most recent unaudited interim financial statements are not
     included in the Registration Statement.
4    The relevant periods include all interim unaudited condensed consolidated
     financial statements included or incorporated by reference in the
     Registration Statement.



                                   Annex A-1
<PAGE>

unaudited [consolidated] financial statements included in the Registration
Statement and the Prospectus for them to be in conformity with generally
accepted accounting principles;

     ( )  at [_________, 19___ and at] a specified date not more than five days
prior to the date of this Agreement, there was any change in the ___________ of
the Company [and its subsidiaries] or any decrease in the __________ of the
Company [and its subsidiaries] or any increase in the __________ of the Company
[and its subsidiaries,]/5/ in each case as compared with amounts shown in the
latest balance sheet included in the Registration Statement, except in each case
for changes, decreases or increases that the Registration Statement discloses
have occurred or may occur; or

     ( )  [for the period from _________, 19___ to _________, 19___ and ]/6/ for
the period from _________, 19___ to a specified date not more than five days
prior to the date of this Agreement, there was any decrease in _________,
__________ or ___________,/7/ in each case as compared with the comparable
period in the preceding year, except in each case for any decreases that the
Registration Statement discloses have occurred or may occur;

     (iii)  based upon the procedures set forth in clause (ii) above and a
reading of the [Selected Financial Data] included in the Registration Statement
nothing came to our attention that caused us to believe that the Selected
Financial Data included in the Registration Statement do not comply as to form
in all material respects with the disclosure requirements of Item 301 of
Regulation S-K of the 1933 Act [, that the amounts included in the [Selected
Financial Data] are not in agreement with the corresponding amounts in the
audited [consolidated] financial statements for the respective periods or that
the financial statements not included in the Registration Statement from which
certain of such data were derived are not in conformity with generally accepted
accounting principles];/8/

- ---------------
/5/  The blanks should be fined in with significant balance sheet items,
     selected by the banker and tailored to the issuer's industry in general and
     operations in particular. While the ultimate decision of which items should
     be included rests with the banker, comfort is routinely requested for
     certain balance sheet items, including long-term debt, stockholders'
     equity, capital stock and net current assets.

/6/  Include, and insert dates to describe the period from the date of the most
     recent financial statements in the Registration Statement to the date of
     the most recent unaudited interim financial statements of the Company, if
     those dates are different. Regardless of whether this language is inserted
     or not, the period including five days prior to the date of the
     Underwriting Agreement should run from the date of the last financial
     statement included in the Registration Statement, not from the later one
     that is not included in the Registration Statement.

/7/  The blanks should be filled in with significant income statement items,
     selected by the banker and tailored to the issuer's industry in general and
     operations in particular. While the ultimate decision of which items should
     be included rests with the banker, comfort is routinely requested for
     certain income statement items, including net sales, total and per share
     amounts of income before extraordinary items and of net income.

/8/  In unusual circumstances, the accountants may report on "Selected Financial
     Data" as described in SAS No. 42, Reporting on Condensed Financial
     Statements and Selected Financial Data, and include in their report in the
     Registration Statement the paragraph contemplated by SAS No. 42.9. This
     situation may arise only if the Selected Financial Data do not include
     interim period data and the five-year selected data are derived entirely
     from financial statements audited by the auditors whose report is included
     in the Registration Statement. If the guidelines set forth in SAS No. 42
     are followed and the accountant's report as included in the Registration
     Statement includes the additional language prescribed by SAS No. 42.9, the
     bracketed language may be eliminated.

                                   Annex A-2
<PAGE>

     (iv) we have compared the information in the Registration Statement under
selected captions with the disclosure requirements of Regulation S-K of the 1933
Act and on the basis of limited procedures specified herein.  nothing came to
our attention that caused us to believe that this information does not comply as
to form in all material respects with the disclosure requirements of Items 302,
402 and 503(d), respectively, of Regulation S-K;

     [(viii)]  in addition to the procedures referred to in clause (ii) above,
we have performed other procedures, not constituting an audit, with respect to
certain amounts, percentages, numerical data and financial information appearing
in the Registration Statement, which are specified herein, and have compared
certain of such items with, and have found such items to be in agreement with,
the accounting and financial records of the Company.



                                   Annex A-3

<PAGE>

                                                                     EXHIBIT 3.3

                          SIXTH AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                      METAWAVE COMMUNICATIONS CORPORATION,
                             a Delaware Corporation


     The undersigned, Robert Hunsberger, hereby certifies that:

     1.   He is the duly elected President and Chief Executive Officer of
Metawave Communications Corporation, a Delaware corporation.

     2.   The Certificate of Incorporation of this corporation was originally
filed with the Secretary of State of Delaware on July 11, 1995.

     3.   The Certificate of Incorporation of this corporation shall be amended
and restated to read in full as follows:

                                   ARTICLE I

     The name of this Corporation is Metawave Communications Corporation.

                                   ARTICLE II

     The address of the registered office of this Corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.

                                  ARTICLE III

     The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.

                                   ARTICLE IV

     A.   Classes of Stock.  This Corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred Stock"
The total number of shares that this Corporation is authorized to issue is
eighty-seven million (87,000,000) shares.  Fifty million (50,000,000) shares
shall be Common Stock, par value $.0001 per share, and thirty-seven million
(37,000,000) shares shall be Preferred Stock, par value $.0001 per share.

     Immediately upon the filing of this Amended and Restated Certificate of
Incorporation, each 3 outstanding shares of the Corporation's Common Stock,
$0.0001 par value per share, will
<PAGE>

be exchanged and combined, automatically, without further action, into 2 shares
of Common Stock, $0.0001 par value per share.

     B.   Rights, Preferences and Restrictions of Preferred Stock.  The
Preferred Stock authorized by this Sixth Amended and Restated Certificate of
Incorporation may be issued from time to time in one or more series.  The
rights, preferences, privileges, and restrictions granted to and imposed on the
Series A Preferred Stock, which series shall consist of 5,565,416 shares, and
the Series B Preferred Stock, which series shall consist of 2,760,742 shares,
and the Series C Preferred Stock, which series shall consist of 2,700,000
shares, the Series D Preferred Stock, which series shall consist of 4,000,000
shares and the Series E Preferred Stock, which series shall consist of
20,500,000 shares, are as set forth below in this Article IV(B).  The Board of
Directors is hereby authorized to fix or alter the rights, preferences,
privileges and restrictions granted to or imposed upon additional series of
Preferred Stock, and the number of shares constituting any such series and the
designation thereof, or of any of them.  Subject to compliance with applicable
protective voting rights that have been or may be granted to the Preferred Stock
or series thereof in Certificates of Determination or this Corporation's Sixth
Amended and Restated Certificate of Incorporation ("Protective Provisions"), but
notwithstanding any other rights of the Preferred Stock or any series thereof,
the rights, privileges, preferences and restrictions of any such additional
series may be subordinated to, pari passu with (including, without limitation,
inclusion in provisions with respect to dividends, liquidation and acquisition
preferences, redemption and/or approval of matters by vote or written consent),
or senior to any of those of any present or future class or series of Preferred
or Common Stock.  Subject to compliance with applicable Protective Provisions
and unless otherwise specifically provided in the resolution establishing any
series, the Board of Directors shall further have the authority, after the
issuance of shares of a series whose number it has designated, to amend the
resolution establishing such series to decrease the number of shares of that
series, but not below the number of shares of such series then outstanding.  In
case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status that they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.

          1.  Dividend Provisions.  Subject to the rights of other series of
Preferred Stock that may from time to time come into existence, the holders of
shares of Series A, Series B, Series C, Series D and Series E Preferred Stock
shall be entitled to receive dividends, when, as and if declared by the Board of
Directors, out of any assets legally available therefor, prior and in preference
to any declaration or payment of any dividend (payable other than in Common
Stock or other securities and rights convertible into or entitling the holder
thereof to receive, directly or indirectly, additional shares of Common Stock of
this Corporation) on the Common Stock of this Corporation, (a) at the rate of
$.08 per share of Series A Preferred Stock, $.27 per share of Series B Preferred
Stock, $.49 per share of Series C Preferred Stock, $.64 per share of Series D
Preferred Stock and $.40 per share of Series E Preferred Stock, per annum (each
of such amounts being subject to equitable adjustment to reflect the effects of
any stock dividends, stock splits, combinations, reverse splits,
reclassifications or recapitalizations (herein referred to as "Adjustment
Events")), or (b) if a dividend is paid on the Common Stock in an amount per
share which, when multiplied by the respective numbers of shares of Common Stock
into which shares of the Series A, Series B, Series C, Series D or Series E
Preferred Stock are
<PAGE>

then convertible (the "Alternate Rate"), exceeds the preferential dividend per
share which holders of shares of such series would otherwise be entitled to
receive under clause (a) of this Section 1, then holders of shares of such
series shall be entitled to receive the Alternate Rate per share of such series
in lieu of the preferential dividend set forth in clause (a) of this Section 1.
Such dividends shall not be cumulative until the calendar quarter beginning
January 1, 2002. Such dividends shall accrue on each share from January 1, 2002,
if declared by the Board of Directors. Such dividends shall be cumulative so
that, if such dividends in respect of any previous or current annual dividend
period, at the annual rate specified above, shall have been declared but not
paid, the deficiency shall first be fully paid before any dividend or other
distribution shall be paid on or declared and set apart for the Common Stock.
Any accumulation of dividends on the Series A, Series B, Series C, Series D and
Series E Preferred Stock shall not bear interest. Cumulative dividends with
respect to a share of Series A, Series B, Series C, Series D or Series E
Preferred Stock that are accrued, payable and/or in arrears shall, upon
conversion of such share to Common Stock, subject to the rights of other series
of Preferred Stock that may from time to time come into existence, be paid to
the extent assets are legally available therefor either in cash or in Common
Stock (valued at the fair market value on the date of payment as determined by
the Board of Directors of this Corporation). Any amounts for which assets are
not legally available shall be paid promptly as assets become legally available
therefor. Any partial payment will be made pro rata among the holders of such
shares.

          2.  Liquidation Preference

          (a) In the event of any liquidation, dissolution or winding up of this
Corporation, either voluntary or involuntary, subject to the rights of other
series of Preferred Stock that may from time to time come into existence, the
holders of Series E Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets of this Corporation to the
holders of Series A, Series B, Series C and Series D Preferred Stock and Common
Stock by reason of their ownership thereof, an amount per share equal to the sum
of (i) $5.00 for each outstanding share of  Series E Preferred Stock (the
"Original Series E Issue Price") (such amount being subject to adjustment for
Adjustment Events), and (ii)  an amount equal to declared but unpaid dividends
and accrued cumulative dividends on the Series E Preferred Stock (collectively,
the "Initial Payment").  After the Initial Payment has been made, the holders of
Series A, Series B, Series C and Series D Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any of the assets of
this Corporation to the holders of Common Stock by reason of their ownership
thereof, an amount per share equal to the sum of (i) $1.00 for each outstanding
share of Series A Preferred Stock (the "Original Series A Issue Price"), $3.375
for each outstanding share of Series B Preferred Stock (the "Original Series B
Issue Price"), $6.16 for each outstanding share of Series C Preferred Stock (the
"Original Series C Issue Price") and $8.00 for each outstanding share of Series
D Preferred Stock (the "Original Series D Issue Price") (each such amount being
subject to adjustment for Adjustment Events), and (ii) an amount equal to
declared but unpaid dividends and accrued cumulative dividends on each such
share of Series A, Series B, Series C and Series D Preferred Stock.  If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A, Series B, Series C, Series D and Series E Preferred
Stock shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then, subject to the rights of other series
<PAGE>

of Preferred Stock that may from time to time come into existence, the entire
assets and funds of this Corporation legally available for distribution shall be
distributed first to the holders of the Series E Preferred Stock an amount equal
to the Initial Payment per share and then ratably among the holders of the
Series A, Series B, Series C and Series D Preferred Stock in proportion to the
preferential amount each such holder is otherwise entitled to receive.

          (b) For purposes of subsections (b), (c), (d), (e), (f) and (g) of
this Section 2, the following definitions shall apply:

          "Series A Investment Amount" shall mean the Original Series A Issue
Price multiplied by the number of shares of Series A Preferred Stock
outstanding.

          "Series B Investment Amount" shall mean the Original Series B Issue
Price multiplied by the number of shares of Series B Preferred Stock
outstanding.

          "Series C Investment Amount" shall mean the Original Series C Issue
Price multiplied by the number of shares of Series C Preferred Stock
outstanding.

          "Series D Investment Amount" shall mean the Original Series D Issue
Price multiplied by the number of shares of Series D Preferred Stock
outstanding.

          "Series E Investment Amount" shall mean the Original Series E Issue
Price multiplied by the number of shares of Series E Preferred Stock
outstanding.

          "Total Preferred Stock Investment Amount" shall mean the sum of the
Series A Investment Amount, Series B Investment Amount, Series C Investment
Amount, Series D Investment Amount and Series E Investment Amount.

          "Series A Percentage" shall mean the Series A Investment Amount
divided by the Total Preferred Stock Investment Amount.

          "Series B Percentage" shall mean the Series B Investment Amount
divided by the Total Preferred Stock Investment Amount.

          "Series C Percentage" shall mean the Series C Investment Amount
divided by the Total Preferred Stock Investment Amount.

          "Series D Percentage" shall mean the Series D Investment Amount
divided by the Total Preferred Stock Investment Amount.

          "Series E Percentage" shall mean the Series E Investment Amount
divided by the Total Preferred Stock Investment Amount.

          (c) Upon the completion of the distributions required by subsection
(a) of this Section 2 and any other distribution that may be required with
respect to other series of Preferred Stock that may from time to time come into
existence, the remaining assets of this
<PAGE>

Corporation available for distribution to stockholders shall be distributed as
follows: (i) an aggregate amount (the "First Distribution Amount") equal to the
product of $1.50 multiplied by the number of shares of Series A, Series B,
Series C, Series D and Series E Preferred Stock then outstanding (as adjusted
for Adjustment Events) shall be distributed, on a pari passu basis, in an amount
equal to the Series A Percentage multiplied by the First Distribution Amount,
ratably among the holders of Series A Preferred Stock, the Series B Percentage
multiplied by the First Distribution Amount, ratably among the holders of Series
B Preferred Stock, the Series C Percentage multiplied by the First Distribution
Amount, ratably among the holders of Series C Preferred Stock, the Series D
Percentage multiplied by the First Distribution Amount, ratably among the
holders of Series D Preferred Stock, and the Series E Percentage multiplied by
the First Distribution Amount, ratably among the holders of Series E Preferred
Stock, and (ii) an amount per share equal to $1.50 for each outstanding share of
Common Stock (as adjusted for Adjustment Events) shall be distributed ratably
among the holders of Common Stock. If the assets and funds thus distributed
among the holders of the Series A, Series B, Series C, Series D and Series E
Preferred Stock and the holders of the Common Stock shall be insufficient to
permit the payment to such holders of the full aforesaid preferential amounts,
then, subject to the rights of other series of Preferred Stock that may from
time to time come into existence, the entire assets and funds of this
Corporation legally available for distribution pursuant to this subsection (c)
shall be distributed ratably among the holders of the Series A, Series B, Series
C, Series D and Series E Preferred Stock and the holders of the Common Stock in
proportion to the preferential amount each such holder is otherwise entitled to
receive under this subsection (c).

          (d) Upon the completion of the distributions required by subsections
(a) and (c) of this Section 2 and any other distribution that may be required
with respect to other series of Preferred Stock that may from time to time come
into existence, the remaining assets of this Corporation available for
distribution to stockholders shall be distributed as follows: (i) an aggregate
amount (the "Second Distribution Amount") equal to the product of $3.5625
multiplied by the number of shares of Series B, Series C, Series D and Series E
Preferred Stock then outstanding (as adjusted for Adjustment Events) shall be
distributed, on a pari passu basis, in an amount equal to the Series A
Percentage multiplied by the Second Distribution Amount, ratably among the
holders of Series A Preferred Stock, the Series B Percentage multiplied by the
Second Distribution Amount, ratably among the holders of Series B Preferred
Stock, the Series C Percentage multiplied by the Second Distribution Amount,
ratably among the holders of Series C Preferred Stock, the Series D Percentage
multiplied by the Second Distribution Amount, ratably among the holders of
Series D Preferred Stock, and the Series E Percentage multiplied by the Second
Distribution Amount, ratably among the holders of Series E Preferred Stock, and
(ii) an amount per share equal to $3.5625 for each outstanding share of Common
Stock (as adjusted for Adjustment Events), in addition to the amounts paid
pursuant to subsection (c) of this Section 2, shall be distributed ratably among
the holders of Common Stock.  If the assets and funds thus distributed among the
holders of the Series A, Series B, Series C, Series D and Series E Preferred
Stock and the holders of the Common Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then,
subject to the rights of other series of Preferred Stock that may from time to
time come into existence, the entire assets and funds of this Corporation
legally available for distribution pursuant to this
<PAGE>

subsection (d) shall be distributed ratably among the holders of the Series A,
Series B, Series C, Series D and Series E Preferred Stock and the holders of the
Common Stock in proportion to the preferential amount each such holder is
otherwise entitled to receive under this subsection (d).

          (e) Upon the completion of the distributions required by subsections
(a), (c) and (d) of this Section 2 and any other distribution that may be
required with respect to other series of Preferred Stock that may from time to
time come into existence, the remaining assets of this Corporation available for
distribution to stockholders shall be distributed as follows: (i) an aggregate
amount (the "Third Distribution Amount") equal to the product of $2.4375
multiplied by the number of shares of Series C, Series D and Series E Preferred
Stock then outstanding (as adjusted for Adjustment Events) shall be distributed,
on a pari passu basis, in an amount equal to the Series A Percentage multiplied
by the Third Distribution Amount, ratably among the holders of Series A
Preferred Stock, the Series B Percentage multiplied by the Third Distribution
Amount, ratably among the holders of Series B Preferred Stock, the Series C
Percentage multiplied by the Third Distribution Amount, ratably among the
holders of Series C Preferred Stock, the Series D Percentage multiplied by the
Third Distribution Amount, ratably among the holders of Series D Preferred
Stock, and the Series E Percentage multiplied by the Third Distribution Amount,
ratably among the holders of Series E Preferred Stock, and (ii) an amount per
share equal to $2.4375 for each outstanding share of Common Stock (as adjusted
for Adjustment Events), in addition to the amounts paid pursuant to subsections
(c) and (d) of this Section 2, shall be distributed ratably among the holders of
Common Stock.  If the assets and funds thus distributed among the holders of the
Series A, Series B, Series C, Series D and Series E Preferred Stock and the
holders of the Common Stock shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amounts, then, subject to the rights
of other series of Preferred Stock that may from time to time come into
existence, the entire assets and funds of this Corporation legally available for
distribution pursuant to this subsection (e) shall be distributed ratably among
the holders of the Series A, Series B, Series C, Series D and Series E Preferred
Stock and the holders of the Common Stock in proportion to the preferential
amount each such holder is otherwise entitled to receive under this subsection
(e).

          (f) Upon the completion of the distributions required by subsections
(a), (c), (d) and (e) of this Section 2 and any other distribution that may be
required with respect to other series of Preferred Stock that may from time to
time come into existence, the remaining assets of this Corporation available for
distribution to stockholders shall be distributed as follows: (i) an aggregate
amount (the "Fourth Distribution Amount") equal to the product of $1.74
multiplied by the number of shares of Series C and Series D Preferred Stock then
outstanding (as adjusted for Adjustment Events) shall be distributed, on a pari
passu basis, in an amount equal to the Series A Percentage multiplied by the
Fourth Distribution Amount, ratably among the holders of Series A Preferred
Stock, the Series B Percentage multiplied by the Fourth Distribution Amount,
ratably among the holders of Series B Preferred Stock, the Series C Percentage
multiplied by the Fourth Distribution Amount, ratably among the holders of
Series C Preferred Stock, the Series D Percentage multiplied by the Fourth
Distribution Amount, ratably among the holders of Series D Preferred Stock, and
the Series E Percentage multiplied by the Fourth Distribution Amount, ratably
among the holders of Series E Preferred Stock, and (ii) an amount per share
equal to $1.74 for each outstanding share of Common Stock (as adjusted for
<PAGE>

Adjustment Events), in addition to the amounts paid pursuant to subsections (c),
(d) and (e) of this Section 2, shall be distributed ratably among the holders of
Common Stock.  If the assets and funds thus distributed among the holders of the
Series A, Series B, Series C, Series D and Series E Preferred Stock and the
holders of the Common Stock shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amounts, then, subject to the rights
of other series of Preferred Stock that may from time to time come into
existence, the entire assets and funds of this Corporation legally available for
distribution pursuant to this subsection (f) shall be distributed ratably among
the holders of the Series A, Series B, Series C, Series D and Series E Preferred
Stock and the holders of the Common Stock in proportion to the preferential
amount each such holder is otherwise entitled to receive under this subsection
(f).

          (g) Upon the completion of the distributions required by subsections
(a), (c), (d), (e) and (f) of this Section 2 and any other distribution that may
be required with respect to other series of Preferred Stock that may from time
to time come into existence, the remaining assets of this Corporation available
for distribution to stockholders shall be distributed as follows: (i) an
aggregate amount (the "Fifth Distribution Amount") equal to the product of $2.76
multiplied by the number of shares of Series D Preferred Stock then outstanding
(as adjusted for Adjustment Events) shall be distributed, on a pari passu basis,
in an amount equal to the Series A Percentage multiplied by the Sixth
Distribution Amount, ratably among the holders of Series A Preferred Stock, the
Series B Percentage multiplied by the Fifth Distribution Amount, ratably among
the holders of Series B Preferred Stock, the Series C Percentage multiplied by
the Fifth Distribution Amount, ratably among the holders of Series C Preferred
Stock, the Series D Percentage multiplied by the Fifth Distribution Amount,
ratably among the holders of Series D Preferred Stock, and the Series E
Percentage multiplied by the Fifth Distribution Amount, ratably among the
holders of Series E Preferred Stock, and (ii) an amount per share equal to $2.76
for each outstanding share of Common Stock (as adjusted for Adjustment Events),
in addition to the amounts paid pursuant to subsections (c), (d), (e) and (f) of
this Section 2, shall be distributed ratably among the holders of Common Stock.
If the assets and funds thus distributed among the holders of the Series A,
Series B, Series C, Series D and Series E Preferred Stock and the holders of the
Common Stock shall be insufficient to permit the payment to such holders of the
full aforesaid preferential amounts, then, subject to the rights of other series
of Preferred Stock that may from time to time come into existence, the entire
assets and funds of this Corporation legally available for distribution pursuant
to this subsection (g) shall be distributed ratably among the holders of the
Series A, Series B, Series C, Series D and Series E Preferred Stock and the
holders of the Common Stock in proportion to the preferential amount each such
holder is otherwise entitled to receive under this subsection (g).

          (h) Upon the completion of the distributions required by subsections
(a), (c), (d), (e), (f) and (g) of this Section 2 and any other distribution
that may be required with respect to other series of Preferred Stock that may
from time to time come into existence, if assets remain in this Corporation, the
holders of Series A, Series B, Series C, Series D and Series E Preferred Stock
shall receive no further distributions and the holders of the Common Stock of
this Corporation shall receive all of the remaining assets of this Corporation
pro rata based on the number of shares of Common Stock held by each.
<PAGE>

          (i)  (i)  For purposes of this Section 2, a liquidation, dissolution
or winding up of this Corporation shall be deemed to be occasioned by, or to
include, (A) the acquisition of this Corporation by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) that results in the
transfer of fifty percent (50%) or more of the outstanding voting power of this
Corporation; or (B) a sale of all or substantially all of the assets of this
Corporation.

               (ii) In any of such events, if the consideration received by this
Corporation  is other than cash, the value of such consideration will be deemed
its fair market value.  Any securities shall be valued as follows:

                    (A) Securities not subject to investment letter or other
similar restrictions on free marketability covered by (B) below:

                         (1) If traded on a securities exchange or through the
NASDAQ National Market, the value shall be deemed to be the average of the
closing prices of the securities on such quotation system over the thirty (30)
day period ending three (3) days prior to the closing;

                         (2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the thirty (30) day period ending three (3) days prior to
the closing; and

                         (3) If there is no active public market, the value
shall be the fair market value thereof, as mutually determined by this
Corporation and the holders of at least a majority of the voting power of all
then outstanding shares of Series A, Series B, Series C, Series D and Series E
Preferred Stock.

                    (B) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a stockholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A)(1), (2) or (3) to reflect the approximate fair
market value thereof as mutually determined by this Corporation and the holders
of at least a majority of the voting power of all then outstanding shares of
Series A, Series B, Series C, Series D and Series E Preferred Stock.

               (iii) In the event the requirements of this subsection 2(i) are
not complied with, this Corporation shall forthwith either:

                     (A) cause such closing to be postponed until such time as
the requirements of this Section 2(i) have been complied with; or

                     (B) cancel such transaction, in which event the rights,
preferences and privileges of the holders of the Series A, Series B, Series C,
Series D and Series E Preferred Stock shall revert to and be the same as such
rights, preferences and privileges existing immediately prior to the date of the
first notice referred to in subsection 2(i)(iv) hereof.
<PAGE>

               (iv) This Corporation shall give each holder of record of Series
A, Series B, Series C, Series D and Series E Preferred Stock written notice of
such impending transaction not later than twenty (20) days prior to the
stockholders' meeting called to approve such transaction, if any, or twenty (20)
days prior to the closing of such transaction, whichever is earlier, and shall
also notify such holders in writing of the final approval of such transaction.
The first of such notices shall describe the material terms and conditions of
the impending transaction and the provisions of this Section 2, and this
Corporation shall thereafter give such holders prompt notice of any material
changes. The transaction shall in no event take place sooner than twenty (20)
days after this Corporation has given the first notice provided for herein or
sooner than ten (10) days after this Corporation has given notice of any
material changes provided for herein; provided, however, that such periods may
be shortened upon the written consent of the holders of Preferred Stock that are
entitled to such notice rights or similar notice rights and that represent at
least a majority of the voting power of all then outstanding shares of Series A,
Series B, Series C, Series D and Series E Preferred Stock.

          3.  Redemption

          (a) Subject to the rights of other series of Preferred Stock that may
from time to time come into existence, upon receipt by this Corporation, within
the six (6) month period commencing December 31, 2002, of a written request (the
"Redemption Request") from the holders of not less than fifty percent (50%) of
the then outstanding shares of Series A, Series B, Series C, Series D and Series
E Preferred Stock (voting together as a single class and not as a separate
series, and on an as converted basis) that all or, if less than all, a specified
percentage of such holders' shares of such series (which percentage shall be the
same for the Series A, Series B, Series C, Series D and Series E Preferred
Stock) be redeemed, and concurrently with surrender by such holders of the
certificates representing such shares, this Corporation shall, to the extent it
may lawfully do so, redeem (i) in four (4) equal annual installments commencing
no later than the first anniversary of the receipt of the Redemption Request
(each such payment date being referred to herein as a "Redemption Date"), or
(ii) at the Corporation's election, in fewer annual installments, including
without limitation, a single lump sum payment, the shares specified in such
request by paying in cash therefor a sum per share equal to $1.00 per share of
Series A Preferred Stock (as adjusted for Adjustment Events) to be redeemed plus
all declared but unpaid dividends and accrued cumulative dividends on such share
(the "Series A Redemption Price"), a sum per share equal to $3.375 per share of
Series B Preferred Stock (as adjusted for Adjustment Events) to be redeemed plus
all declared but unpaid dividends and accrued cumulative dividends on such share
(the "Series B Redemption Price"), a sum per share equal to $6.16 per share of
Series C Preferred Stock (as adjusted for Adjustment Events) to be redeemed plus
all declared but unpaid dividends and accrued cumulative dividends on such share
(the "Series C Redemption Price"), a sum per share equal to $8.00 per share of
Series D Preferred Stock (as adjusted for Adjustment Events) to be redeemed plus
all declared but unpaid dividends and accrued cumulative dividends on such share
(the "Series D Redemption Price") and a sum per share equal to $5.00 per share
of Series E Preferred Stock (as adjusted for Adjustment Events) to be redeemed
plus all declared but unpaid dividends and accrued cumulative dividends on such
share (the "Series E Redemption Price").  The holders of the Series A, Series B,
Series C, Series D and Series E Preferred Stock may exercise their
<PAGE>

redemption rights pursuant to this subsection 3(a) only during the six (6) month
period commencing December 31, 2002, and any redemption payments shall be made
on a pro rata basis among the holders of all shares of Series A, Series B,
Series C, Series D and Series E Preferred Stock to be redeemed in proportion to
the aggregate redemption payments due to each such holder.

          (b) Subject to the rights of other series of Preferred Stock that may
from time to time come into existence, at least fifteen (15) but no more than
thirty (30) days prior to each Redemption Date, written notice shall be mailed,
first class postage prepaid, to each holder of record (at the close of business
on the business day next preceding the day on which notice is given) of the
Series A, Series B, Series C, Series D and Series E Preferred Stock to be
redeemed on the Redemption Date, at the address last shown on the records of
this Corporation for such holder, notifying such holder of the redemption to be
effected, specifying the number of shares to be redeemed from such holder, the
Redemption Date or Dates, the Redemption Price (as applicable), the place at
which payment may be obtained and calling upon such holder to surrender to this
Corporation, in the manner and at the place designated, his, her or its
certificate or certificates representing the shares to be redeemed (the
"Redemption Notice") on such Redemption Date or Dates.  Except as provided in
subsection 3(c), on or after each Redemption Date, each holder of Series A,
Series B, Series C, Series D and Series E Preferred Stock to be redeemed shall
surrender to this Corporation the certificate or certificates representing such
shares, in the manner and at the place designated in the Redemption Notice, and
thereupon the applicable Redemption Price of such shares shall be payable to the
order of the person whose name appears on such certificate or certificates as
the owner thereof and each surrendered certificate shall be canceled.  In the
event less than all the shares represented by any such certificate are redeemed
on a Redemption Date, a new certificate shall be issued representing the
unredeemed shares.  Any certificate issued after the date of the Redemption
Request shall bear a legend indicating that such shares are subject to
redemption by the Company pursuant to the Redemption Request.  Shares subject to
redemption by the Company pursuant to the Redemption Request shall be
transferable (subject to redemption by the Company) but shall not be convertible
into Common Stock except as provided in subsection 4(a) of Division B of this
Article IV.

          (c) From and after each Redemption Date, unless there shall have been
a default in payment of the Redemption Price, all rights of the holders of
shares of Series A, Series B, Series C, Series D or Series E Preferred Stock
designated for redemption on such Redemption Date, as holders of Series A,
Series B, Series C, Series D or Series E Preferred Stock (except the right to
receive the applicable Redemption Price without interest upon surrender of their
certificate or certificates), shall cease with respect to such shares, and such
shares shall not thereafter be transferred on the books of this Corporation or
be deemed to be outstanding for any purpose whatsoever.  Subject to the rights
of other series of Preferred Stock that may from time to time come into
existence, if the funds of this Corporation legally available for redemption of
shares of Series A, Series B, Series C, Series D and Series E Preferred Stock on
any Redemption Date are insufficient to redeem the total number of shares of
Series A, Series B, Series C, Series D and Series E Preferred Stock to be
redeemed on such date, those funds that are legally available will be used to
redeem the maximum possible number of such shares ratably among the holders of
such shares to be redeemed such that each holder of a share
<PAGE>

of Series A, Series B, Series C, Series D and Series E Preferred Stock receives
the same percentage of the applicable Series A Redemption Price, Series B
Redemption Price, Series C Redemption Price, Series D Redemption Price or Series
E Redemption Price. The shares of Series A, Series B, Series C, Series D and
Series E Preferred Stock not redeemed shall remain outstanding and entitled to
all the rights and preferences provided herein. Subject to the rights of other
series of Preferred Stock that may from time to time come into existence, at any
time thereafter when additional funds of this Corporation are legally available
for the redemption of such shares of Series A, Series B, Series C, Series D and
Series E Preferred Stock, such funds will immediately be used to redeem the
balance of the shares that this Corporation has become obligated but has failed
to redeem on any Redemption Date.

          (d) On or prior to each Redemption Date, this Corporation shall
deposit the Redemption Price of all shares of Series A, Series B, Series C,
Series D and Series E Preferred Stock designated for redemption in the
Redemption Notice and not yet redeemed or converted with a bank or trust
corporation having aggregate capital and surplus in excess of $100,000,000 as a
trust fund for the benefit of the respective holders of the shares designated
for redemption and not yet redeemed, with irrevocable instructions and authority
to the bank or trust corporation to publish the notice of redemption thereof and
pay the Redemption Price for such shares to their respective holders on or after
the Redemption Date, upon receipt of notification from this Corporation that
such holder has surrendered his, her or its share certificate to this
Corporation pursuant to subsection 3(b) above.  As of the date of such deposit
(even if prior to the Redemption Date), the deposit shall constitute full
payment of the shares to their holders, and from and after the date of the
deposit the shares so called for redemption shall be redeemed and shall be
deemed to be no longer outstanding, and the holders thereof shall cease to be
stockholders with respect to such shares and shall have no rights with respect
thereto except the rights to receive from the bank or trust corporation payment
of the Redemption Price of the shares, without interest, upon surrender of their
certificates therefor, and the right to convert such shares as provided in
Article IV(B)(4) hereof.  Such instructions shall also provide that any moneys
deposited by this Corporation pursuant to this subsection 3(d) for the
redemption of shares thereafter converted into shares of this Corporation's
Common Stock pursuant to Article IV(B)(4) hereof prior to the Redemption Date
shall be returned to this Corporation forthwith upon such conversion.  The
balance of any money deposited by this Corporation pursuant to this subsection
3(d) remaining unclaimed at the expiration of two (2) years following each
Redemption Date shall thereafter be returned to this Corporation upon its
request expressed in a resolution of its Board of Directors.

          4.  Conversion.  The shares of Series A, Series B, Series C, Series D
and Series E Preferred Stock shall be subject to conversion as follows (the
"Conversion Rights"):

          (a) Right to Convert.  Each share of Series A, Series B, Series C,
Series D and Series E Preferred Stock shall be convertible, at the option of the
holder thereof, at any time after the date of issuance of such share and on or
prior to the fifth day prior to the first Redemption Date, if any, as may have
been fixed in any Redemption Notice with respect to such share, at the office of
this Corporation or any transfer agent for such stock, into such number of fully
paid and nonassessable shares of Common Stock as is determined by dividing the
Original
<PAGE>

Series A Issue Price, Original Series B Issue Price, Original Series C Issue
Price, Original Series D Issue Price or Original Series E Issue Price, as the
case may be, by the respective Conversion Price applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion. The initial Conversion Price per share for shares of
Series A Preferred Stock shall be the Original Series A Issue Price, the initial
Conversion Price per share for shares of Series B Preferred Stock shall be the
Original Series B Issue Price, the initial Conversion Price per share for shares
of Series C Preferred Stock shall be the Original Series C Issue Price, the
initial Conversion Price per share for shares of Series D Preferred Stock shall
be the Original Series D Issue Price and the initial Conversion Price per share
for shares of Series E Preferred Stock shall be the Original Series E Issue
Price; provided, however, that the Conversion Price for the Series A, Series B,
Series C, Series D and Series E Preferred Stock shall be subject to adjustment
as set forth in subsection 4(d).

          (b) Automatic Conversion.  Each share of the Series A, Series B,
Series C, Series D and Series E Preferred Stock shall automatically be converted
into shares of Common Stock at the respective Conversion Price at the time in
effect for such Series A, Series B, Series C, Series D or Series E Preferred
Stock immediately upon the earlier of (i) the closing of a sale of the
Corporation's Common Stock in a firm commitment underwritten public offering
pursuant to a registration statement under the Securities Act of 1933, as
amended, the public offering price of which was not less than $10.00 per share
(adjusted to reflect Adjustment Events) and $40,000,000 in the aggregate (the
"Initial Public Offering"), or (ii) the date specified by written consent or
agreement of the holders of two-thirds (2/3) of the aggregate number of shares
of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock then outstanding (voting
together as a single class and not as a separate series, and on an as converted
basis).

          (c) Mechanics of Conversion.  Before any holder of Series A, Series B,
Series C, Series D or Series E Preferred Stock shall be entitled to convert the
same into shares of Common Stock, he or she shall surrender the certificate or
certificates therefor, duly endorsed, at the office of this Corporation or of
any transfer agent for the Series A, Series B, Series C, Series D or Series E
Preferred Stock, and shall give written notice to this Corporation at its
principal corporate office of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for shares of
Common Stock are to be issued.  This Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A, Series
B, Series C, Series D or Series E Preferred Stock, or to the nominee or nominees
of such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid.  Such conversion
shall be deemed to have been made immediately prior to the close of business on
the date of such surrender of the shares of Series A, Series B, Series C, Series
D or Series E Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock as of such date.  If the conversion is in connection with an
underwritten offering of securities registered pursuant to the Securities Act of
1933, as amended, the conversion may, at the option of any holder tendering
Series A, Series B, Series C, Series D or Series E Preferred Stock for
conversion, be conditioned upon the closing with the underwriters of the sale of
securities
<PAGE>

pursuant to such offering, in which event the person(s) entitled to receive the
Common Stock upon conversion of the Series A, Series B, Series C, Series D or
Series E Preferred Stock shall not be deemed to have converted such Series A,
Series B, Series C, Series D or Series E Preferred Stock until immediately prior
to the closing of such sale of securities.

          (d) Conversion Price Adjustments of Preferred Stock for Certain
Dilutive Issuances, Splits and Combinations.  The Conversion Price of the Series
A, Series B, Series C, Series D and Series E Preferred Stock shall be subject to
adjustment from time to time as follows:

               (i)  (A)  If this Corporation shall issue, after the date upon
which any shares of Series A, Series B, Series C, Series D or Series E Preferred
Stock were first issued (the "Purchase Date" with respect to such series), any
Additional Stock (as defined below) without consideration or for a consideration
per share less than the respective Conversion Price for the Series A, Series B,
Series C, Series D or Series E Preferred Stock in effect immediately prior to
the issuance of such Additional Stock, the Conversion Price for such series in
effect immediately prior to the issuance shall forthwith (except as otherwise
provided in this clause (i)) be adjusted to a price determined by multiplying
the Conversion Price of such series in effect immediately prior to such issuance
by a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issuance (including shares of Common
Stock deemed to be issued pursuant to subsection 4(d)(i)(E)) plus the number of
shares of Common Stock that the aggregate consideration received by this
Corporation for such issuance would purchase at such Conversion Price; and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance (including shares of Common Stock deemed to
be issued pursuant to subsection 4(d)(i)(E)) plus the number of shares of such
Additional Stock. Notwithstanding the foregoing, no such Conversion Price
adjustment shall occur pursuant to this subsection 4(d)(i) if prior to the
issuance of the Additional Stock this Corporation shall have obtained a written
waiver of the adjustment provided for in this subsection, which waiver shall
have been approved by the holders of not less than sixty-five percent (65%) of
each series of Preferred Stock that would otherwise be entitled to adjustment of
its Conversion Price hereunder.

                    (B) No adjustment of the Conversion Price for the Series A,
Series B, Series C, Series D or Series E Preferred Stock shall be made in an
amount less than one cent per share, provided that any adjustments that are not
required to be made by reason of this sentence shall be carried forward and
shall be either taken into account in any subsequent adjustment made prior to
three (3) years from the date of the event giving rise to the adjustment being
carried forward, or shall be made at the end of the three (3) years from the
date of the event giving rise to the adjustment being carried forward. Except to
the limited extent provided for in subsections 4(d)(i)(E)(3), (E)(4) and (E)(5),
no adjustment of such Conversion Price pursuant to this subsection 4(d)(i) shall
have the effect of increasing the Conversion Price above the Conversion Price in
effect immediately prior to such adjustment.

                    (C) In the case of the issuance of Common Stock for cash,
the consideration shall be deemed to be the amount of cash paid therefor before
deducting
<PAGE>

any reasonable discounts, commissions or other expenses allowed, paid or
incurred by this Corporation for any underwriting or otherwise in connection
with the issuance and sale thereof.

                    (D) In the case of the issuance of the Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined by the Board of
Directors irrespective of any accounting treatment.

                    (E) In the case of the issuance (whether before, on or after
the Purchase Date) of options to purchase or rights to subscribe for Common
Stock, securities by their terms convertible into or exchangeable for Common
Stock or options to purchase or rights to subscribe for such convertible or
exchangeable securities, the following provisions shall apply for all purposes
of this subsection 4(d)(i) and subsection 4(d)(ii):

                         (1) The aggregate maximum number of shares of Common
Stock deliverable upon exercise (assuming the satisfaction of any conditions to
exercisability, including without limitation, the passage of time, but without
taking into account potential antidilution adjustments) of such options to
purchase or rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued and for a consideration
equal to the consideration (determined in the manner provided in subsections
4(d)(i)(C) and 4(d)(i)(D)), if any, received by this Corporation upon the
issuance of such options or rights plus the minimum exercise price provided in
such options or rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.

                         (2) The aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange (assuming the satisfaction
of any conditions to convertibility or exchangeability, including, without
limitation, the passage of time, but without taking into account potential
antidilution adjustments) for any such convertible or exchangeable securities or
upon the exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such securities were
issued or such options or rights were issued and for a consideration equal to
the consideration, if any, received by this Corporation for any such securities
and related options or rights, plus the minimum additional consideration, if
any, to be received by this Corporation (without taking into account potential
antidilution adjustments) upon the conversion or exchange of such securities or
the exercise of any related options or rights (the consideration in each case to
be determined in the manner provided in subsections 4(d)(i)(C) and 4(d)(i)(D)).

                         (3) In the event of any change in the number of shares
of Common Stock deliverable or in the consideration payable to this Corporation
upon exercise of such options or rights or upon conversion of or in exchange for
such convertible or exchangeable securities (excluding a change pursuant to
subsection 4(d)(i) in the number of shares of Common Stock issuable upon
conversion of shares of Preferred Stock) (unless such options or rights or
convertible or exchangeable securities were merely deemed to be included in
<PAGE>

the numerator and denominator for purposes of determining the number of shares
of Common Stock outstanding for purposes of subsection 4(d)(i)(A)), the
Conversion Price of the Series A, Series B, Series C, Series D or Series E
Preferred Stock, to the extent in any way affected by or computed using such
options, rights or securities, shall be recomputed to reflect such change, but
no further adjustment shall be made for the actual issuance of Common Stock or
any payment of such consideration upon the exercise of any such options or
rights or the conversion or exchange of such securities.

                         (4) Upon the expiration of any such options or rights,
the termination of any such rights to convert or exchange, or the expiration of
any options or rights related to such convertible or exchangeable securities,
the Conversion Price of the Series A, Series B, Series C, Series D or Series E
Preferred Stock, to the extent in any way affected by or computed using such
options, rights or securities or options or rights related to such securities
(unless such options or rights were merely deemed to be included in the
numerator and denominator for purposes of determining the number of shares of
Common Stock outstanding for purposes of subsection 4(d)(i)(A)) shall be
recomputed to reflect the issuance of only the number of shares of Common Stock
(and convertible or exchangeable securities that remain in effect) actually
issued upon the exercise of such options or rights, upon the conversion or
exchange of such securities, or upon the exercise of the options or rights
related to such securities.

                         (5) The number of shares of Common Stock deemed issued
and the consideration deemed paid therefor pursuant to subsections 4(d)(i)(E)(1)
and (2) shall be appropriately adjusted to reflect any change, termination or
expiration of the type described in either subsection 4(d)(i)(E)(3) or (4).

               (ii) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to subsection 4(d)(i)(E)) by this
Corporation after the Purchase Date other than:

                    (A) shares of Common Stock issued pursuant to a transaction
described in subsection 4(d)(iii) hereof;

                    (B) shares of Common Stock issuable or issued to employees,
consultants or directors of this Corporation, or affiliates of any such persons,
pursuant to a stock option plan, restricted stock plan or grant approved by the
Board of Directors of this Corporation;

                    (C) shares of Common Stock issuable or issued to vendors,
suppliers, equipment lessors or lenders to this Corporation, or affiliates of
any such persons, where such issuance is not principally for the purpose of
raising additional equity capital for this Corporation;
<PAGE>

                    (D) shares of Common Stock issuable or issued upon
conversion or exercise of convertible or exercisable securities of this
Corporation outstanding as of the date of this Sixth Amended and Restated
Certificate of Incorporation;

                    (E) shares of Common Stock issued pursuant to the
acquisition of another corporation or entity, or any product line, intellectual
property or technology, by this Corporation or any subsidiary of this
Corporation by means of merger, consolidation, purchase of assets or other
transaction of series of related transactions approved by the Board of Directors
of this Corporation and, in the case of an acquisition of another corporation or
entity, whereby this Corporation or its shareholders own a majority of the
voting power of such other corporation or entity following such acquisition; and

                    (F) shares of Common Stock issued to corporate partners or
in connection with other strategic alliances approved by the Board of Directors
of this Corporation.

               (iii) In the event this Corporation should at any time or from
time to time after the Purchase Date fix a record date for the effectuation of a
split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the respective
Conversion Prices of the Series A, Series B, Series C, Series D and Series E
Preferred Stock shall be appropriately decreased so that the number of shares of
Common Stock issuable on conversion of each share of each such series shall be
increased in proportion to such increase of the aggregate of shares of Common
Stock outstanding and those issuable with respect to such Common Stock
Equivalents with the number of shares issuable with respect to Common Stock
Equivalents determined from time to time in the manner provided for deemed
issuances in subsection 4(d)(i)(E).

               (iv) If the number of shares of Common Stock outstanding at any
time after the Purchase Date is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the
respective Conversion Prices for the Series A, Series B, Series C, Series D and
Series E Preferred Stock shall be appropriately increased so that the number of
shares of Common Stock issuable on conversion of each share of each such series
shall be decreased in proportion to such decrease in outstanding shares.

          (e)  Performance-Based Conversion Price Adjustments.   Unless waived
in writing by holders of seventy-five percent (75%) of the then-outstanding
Series E Preferred Stock, if the Corporation does not recognize (in accordance
with the Corporation's existing
<PAGE>

revenue recognition policy, which is in accordance with GAAP) net revenue of at
least $8 million for the second quarter of the calendar year 1999 or net revenue
of at least $14 million for third quarter of the calendar year 1999, as the case
may be, the Series E Conversion Price will be automatically adjusted down ten
days following the end of such quarter, if necessary, so that the Series E
Conversion Price shall be $3.50 per share.

          (f)  Other Distributions.  In the event this Corporation shall declare
a distribution payable in securities of other persons, evidences of indebtedness
issued by this Corporation or other persons, assets (excluding cash dividends)
or options or rights not referred to in subsection 4(d)(iii), then, in each such
case for the purpose of this subsection 4(f), the holders of the Series A,
Series B, Series C, Series D and Series E Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of shares of Common Stock of this Corporation into which their shares
of Series A, Series B, Series C, Series D and Series E Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of this Corporation entitled to receive such distribution.

          (g)  Recapitalization.  If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 4 or in Section 2) provision shall be made so that the holders of
the Series A, Series B, Series C, Series D and Series E Preferred Stock shall
thereafter be entitled to receive upon conversion of the Series A, Series B,
Series C, Series D and Series E Preferred Stock the number of shares of stock or
other securities or property of this Corporation or otherwise to which a holder
of Common Stock deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
the holders of the Series A, Series B, Series C, Series D and Series E Preferred
Stock after the recapitalization to the end that the provisions of this Section
4 (including adjustment of the Conversion Price then in effect and the number of
shares purchasable upon conversion of the Series A, Series B, Series C, Series D
and Series E Preferred Stock) shall be applicable after that event as nearly
equivalent as may be practicable.

          (h)  No Impairment.  This Corporation will not, by amendment of its
Sixth Amended and Restated Certificate of Incorporation or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by this Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 4 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of the Series A, Series B, Series C and
Series D Preferred Stock against impairment.

          (i)  No Fractional Shares and Certificate as to Adjustments

               (i) No fractional shares shall be issued upon the conversion of
any share or shares of the Series A, Series B, Series C, Series D or Series E
Preferred Stock, and
<PAGE>

the number of shares of Common Stock to be issued shall be rounded to the
nearest whole share. Whether or not fractional shares are issuable upon such
conversion shall be determined on the basis of the total number of shares of
Series A, Series B, Series C, Series D or Series E Preferred Stock the holder is
at the time converting into Common Stock and the number of shares of Common
Stock issuable upon such aggregate conversion.

               (ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Series A, Series B, Series C, Series D or Series E
Preferred Stock pursuant to this Section 4, this Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series A, Series B,
Series C, Series D and Series E Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. This Corporation shall, upon the written
request at any time of any holder of Series A, Series B, Series C, Series D or
Series E Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price for such series of Preferred Stock at the time in effect, and
(C) the number of shares of Common Stock and the amount, if any, of other
property that at the time would be received upon the conversion of a share of
such series of Preferred Stock.

          (j)  Notices of Record Date.  In the event of any taking by this
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
Corporation shall mail to each holder of Series A, Series B, Series C, Series D
or Series E Preferred Stock, at least 20 days prior to the date specified
therein, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right.

          (k)  Reservation of Stock Issuable Upon Conversion.  This Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A, Series B, Series C, Series D and Series E Preferred
Stock, such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Series A,
Series B, Series C, Series D and Series E Preferred Stock; and if at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the Series
A, Series B, Series C, Series D and Series E Preferred Stock, in addition to
such other remedies as shall be available to the holder of such Preferred Stock,
this Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to this Sixth Amended and
Restated Certificate of Incorporation.
<PAGE>

          (l) Notices.  Any notice required by the provisions of this Section 4
to be given to the holders of shares of Series A, Series B, Series C, Series D
and Series E Preferred Stock shall be deemed given if deposited in the United
States mail, postage prepaid, and addressed to each holder of record at his
address appearing on the books of this Corporation.

          5.  Voting Rights

          (a) General Voting Rights.  The holder of each share of Series A,
Series B, Series C, Series D and Series E Preferred Stock shall have the right
to one vote for each share of Common Stock into which such Series A, Series B,
Series C, Series D and Series E Preferred Stock could then be converted, and
with respect to such vote, such holder shall have full voting rights and powers
equal to the voting rights and powers of the holders of Common Stock, and shall
be entitled, notwithstanding any provision hereof, to notice of any
stockholders' meeting in accordance with the bylaws of this Corporation, and
shall be entitled to vote, together with holders of Common Stock, with respect
to any question upon which holders of Common Stock have the right to vote.
Fractional votes shall not, however, be permitted and any fractional voting
rights available on an as converted basis (after aggregating all shares into
which shares of Series A, Series B, Series C, Series D and Series E Preferred
Stock held by each holder could be converted) shall be rounded to the nearest
whole number (with one-half being rounded upward).

          (b) Voting for the Election of Directors.  As long as an aggregate of
at least seventy-five percent (75%)  of the shares of Series A, Series B, Series
C, Series D and Series E Preferred Stock (which number of shares reflecting this
percentage shall be equitably adjusted to reflect Adjustment Events) remain
outstanding, the holders of shares of Series A, Series B, Series C, Series D and
Series E Preferred Stock (voting together as a single class and not as a
separate series, and on an as converted basis), shall be entitled to elect three
(3) directors of this Corporation at each annual election of directors.  If the
aggregate number of shares of Series A, Series B, Series C, Series D and Series
E Preferred Stock that remain outstanding shall be between  fifty percent (50%)
and seventy-five percent (75%), inclusive, of all of the outstanding Series A,
Series B, Series C, Series D and Series E Preferred Stock (which number of
shares reflecting this percentage shall be equitably adjusted to reflect
Adjustment Events), the holders of shares of Series A, Series B, Series C,
Series D and Series E Preferred Stock (voting together as a single class and not
as a separate series, and on an as converted basis), shall be entitled to elect
two (2) directors of this Corporation at each annual election of directors.  If
the aggregate number of shares of Series A, Series B, Series C, Series D and
Series E Preferred Stock that remain outstanding shall be between fifty percent
(50%) and twenty-five percent (25%), inclusive, of all of the outstanding Series
A, Series B, Series C, Series D and Series E Preferred Stock (which number of
shares reflecting this percentage shall be equitably adjusted to reflect
Adjustment Events), the holders of shares of Series A, Series B, Series C,
Series D and Series E Preferred Stock(voting together as a single class and not
as a separate series, and on an as converted basis), shall be entitled to elect
one (1) director of this Corporation at each annual election of directors. The
holders of outstanding Common Stock shall be entitled to elect two (2) directors
of this Corporation at each annual election of directors.  The holders of Series
A, Series B, Series C, Series D and Series E Preferred Stock and Common Stock
(voting together as
<PAGE>

a single class and not as separate classes, and on an as-converted basis) shall
be entitled to elect any remaining directors of this Corporation.

     In the case of any vacancy (other than a vacancy caused by removal) in the
office of a director occurring among the directors elected by the holders of a
class or series of stock pursuant to this Section 5(b), the remaining directors
so elected by that class or series may by affirmative vote of a majority thereof
(or the remaining director so elected if there be but one, or if there are no
such directors remaining, by the affirmative vote of the holders of a majority
of the shares of that class or series), elect a successor or successors to hold
office for the unexpired term of the director or directors whose place or places
shall be vacant.  Any director who shall have been elected by the holders of a
class or series of stock or by any directors so elected as provided in the
immediately preceding sentence hereof may be removed during the aforesaid term
of office, either with or without cause, by, and only by, the affirmative vote
of the holders of the shares of the class or series of stock entitled to elect
such director or directors, given either at a special meeting of such
stockholders duly called for that purpose or pursuant to a written consent of
stockholders, and any vacancy thereby created may be filled by the holders of
that class or series of stock represented at the meeting or pursuant to
unanimous written consent.

          6.  Protective Provisions.  Subject to the rights of other series of
Preferred Stock that may from time to time come into existence, this Corporation
shall not take any of the following actions without first obtaining the approval
(by vote or written consent, as provided by law) of the holders of at least a
majority of the shares of Series A, Series B, Series C, Series D and Series E
Preferred Stock then outstanding, voting together as a single class and not as
separate series on an as converted basis, provided, however, that in the event
that the aggregate number of shares of Series A, Series B, Series C, Series D
and Series E Preferred Stock then outstanding represent less than twenty percent
(20%) of the sum of the aggregate number of all shares of Preferred Stock then
outstanding on an as-converted basis (i.e., after aggregating all shares into
which shares of Preferred Stock could be converted) plus Common Stock then
outstanding, then the protective provisions of this Section 6 shall cease to be
of any force or effect and shall not bind this Corporation:

          (a) sell, convey, or otherwise dispose of all or substantially all of
its property or business or merge into or consolidate with any other corporation
(other than a wholly-owned subsidiary corporation) or effect any transaction or
series of related transactions in which more than fifty percent (50%) of the
voting power of this Corporation is disposed of;

          (b) dissolve, wind-up or liquidate this Corporation;

          (c) alter, change or reclassify the rights, preferences or privileges
of the shares of Series A, Series B, Series C, Series D or Series E Preferred
Stock so as to affect adversely the shares;

          (d) increase or decrease (other than by redemption or conversion) the
total number of authorized shares of Series A, Series B, Series C, Series D or
Series E Preferred Stock provided, however, that the Board of Directors may
amend the terms of any series to
<PAGE>

decrease the number of shares of that series (but not below the number of shares
of such series then outstanding), and the number of shares constituting the
decrease shall thereafter constitute authorized but undesignated shares;

          (e) authorize or issue, or obligate itself to issue, any other equity
security, including any other security convertible into or exercisable for any
equity security having a preference over or being on a parity with the Series A,
Series B, Series C, Series D or Series E Preferred Stock with respect to voting,
dividends or upon liquidation;

          (f) enter into any transaction or series of related transactions in
which this Corporation borrows more than $5,000,000;

          (g) amend this Corporation's Sixth Amended and Restated Certificate of
Incorporation or Bylaws (excluding an amendment to this Corporation's Sixth
Amended and Restated Certificate of Incorporation, which amendment does no more
than authorize for issuance an equity security not covered by subsection 6(e)
above);

          (h) change the authorized number of directors of this Corporation;

          (i) pay any dividends on its Common Stock; or

          (j) redeem, purchase or otherwise acquire (or pay into or set funds
aside for a sinking fund for such purpose) any share or shares of Preferred
Stock or Common Stock; provided, however, that this restriction shall not apply
to the repurchase of shares of Common Stock (up to a maximum of $500,000) from
employees, officers, directors, consultants or other persons performing services
for the Company or any subsidiary.

          7.  Additional Series C Preferred Stock Protective Provisions.
Subject to the rights of other series of Preferred Stock that may from time to
time come into existence, this Corporation shall not take any of the following
actions without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of at least a majority of the voting power of
all then outstanding shares of Series C Preferred Stock:

          (a) alter or change the rights, preferences or privileges of the
shares of Series C Preferred Stock so as to affect adversely the shares; or

          (b) amend the automatic conversion provisions applicable to the
Preferred Stock as set forth in subsection (4)(b) of Division B of this Article
IV.

          8.  Additional Series D Preferred Stock Protective Provisions.
Subject to the rights of other series of Preferred Stock that may from time to
time come into existence, this Corporation shall not take any action, without
first obtaining the approval (by vote or written consent, as provided by law) of
the holders of at least a majority of the voting power of all then outstanding
shares of Series D Preferred Stock, that would alter, change or reclassify the
rights, preferences or privileges of the shares of Series D Preferred Stock so
as to affect adversely the shares in a manner different from the Series A,
Series B and Series C Preferred Stock.
<PAGE>

          9.  Additional Series E Preferred Stock Protective Provisions.
Subject to the rights of other series of Preferred Stock that may from time to
time come into existence, this Corporation shall not take any action, without
first obtaining the approval (by vote or written consent, as provided by law) of
the holders of at least a majority of the voting power of all then outstanding
shares of Series E Preferred Stock, that would alter, change or reclassify the
rights, preferences or privileges of the shares of Series E Preferred Stock so
as to affect adversely the shares in a manner different from the Series A,
Series B, Series C and D Preferred Stock.

          10.  Status of Converted or Redeemed Stock.  In the event any shares
of Series A, Series B, Series C, Series D or Series E Preferred Stock shall be
redeemed or converted pursuant to Section 3 or Section 4 hereof, the shares so
converted or redeemed shall be canceled and shall not be issuable by this
Corporation.  The Sixth Amended and Restated Certificate of Incorporation of
this Corporation shall be appropriately amended to effect the corresponding
reduction in this Corporation's authorized capital stock.

     C.   Common Stock

          1.  Dividend Rights.  Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of this Corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.

          2.  Liquidation Rights.  Upon the liquidation, dissolution or winding
up of this Corporation, the assets of this Corporation shall be distributed as
provided in Section 2 of Division B of this Article IV.

          3.  Voting Rights.  The holder of each share of Common Stock shall
have the right to one vote, and shall be entitled to notice of any stockholders'
meeting in accordance with the bylaws of this Corporation, and shall be entitled
to vote upon such matters in such manner as may be provided by law.

                                   ARTICLE V

     Except as otherwise provided in this Sixth Amended and Restated Certificate
of Incorporation, in furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, repeal,
alter, amend and rescind any or all of the Bylaws of this corporation.

                                   ARTICLE VI

     The number of directors of this Corporation shall be fixed from time to
time by a bylaw or amendment thereof duly adopted by the Board of Directors or
by the stockholders.

                                  ARTICLE VII
<PAGE>

     Elections of directors need not be by written ballot unless the Bylaws of
this Corporation shall so provide.

                                  ARTICLE VIII

     Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide.  The books of this Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of this Corporation.

                                   ARTICLE IX

     Each director and each officer of this Corporation shall, to the full
extent permitted by the Delaware General Corporation Law as it now exists or as
it may hereafter be amended, not be liable to this Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director or
officer.  Neither any amendment or repeal of this Article IX, nor the adoption
of any provision of this Sixth Amended and Restated Certificate of Incorporation
inconsistent with this Article IX, shall eliminate or reduce the effect of this
Article IX in respect of any matter occurring, or any cause of action, suit or
claim that, but for this Article IX, would accrue or arise, prior to such
amendment, repeal or adoption of any inconsistent provision.

                                   ARTICLE X

     This Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Sixth Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.

                                   ARTICLE XI

     This Corporation shall not take any of the following actions without first
obtaining the approval (by vote or written consent, as provided by law) of at
least sixty-six and two-thirds percent (66 2/3%) of the directors of this
Corporation;

     (a) sell, convey, or otherwise dispose of all or substantially all of its
property or business or merge into or consolidate with any other corporation
(other than a wholly-owned subsidiary corporation) or effect any transaction or
series of related transactions in which more than fifty percent (50%) of the
voting power of this Corporation is disposed of;

     (b) change the authorized number of directors of this Corporation; or

     (c) consummate any financing pursuant to which the holders of Series A,
Series B, Series C, Series D and Series E Preferred Stock are entitled to
exercise the right of first offer set forth in Section 2.4 of the Fifth Amended
and Restated Investors' Rights Agreement, dated on or about April __, 1999, by
and among this Corporation and certain investors and founders, as
<PAGE>

amended from time to time, unless the existing stockholders of this Corporation
purchase less than sixty-six and two-thirds percent (66 2/3%) of the shares sold
in such financing.

                                      ***

     The foregoing Sixth Amended and Restated Certificate of Incorporation has
been duly adopted by this Corporation's Board of Directors and stockholders in
accordance with the applicable provisions of Sections 228, 242 and 245 of the
General Corporation Law of the State of Delaware.



                            [signature page follows]
<PAGE>

     IN WITNESS WHEREOF, the undersigned has executed this certificate on March
__, 2000.



                                       -----------------------------------------
                                       Robert Hunsberger
                                       President and Chief Executive Officer

<PAGE>

                                                                     EXHIBIT 3.4

                         SEVENTH AMENDED AND RESTATED
                         CERTIFICATE OF INCORPORATION
                                      OF
                      METAWAVE COMMUNICATIONS CORPORATION

     The undersigned, Robert H. Hunsberger and Kathy Surace-Smith, hereby
certify that:

     1.   They are the duly elected and acting President and Secretary,
respectively, of Metawave Communications Corporation, a Delaware corporation.

     2.   The Certificate of Incorporation of this corporation was originally
filed with the Secretary of State of Delaware on July 7, 1995.

     3.   The Certificate of  Incorporation of this corporation shall be amended
and restated to read in full as follows:

                                  "ARTICLE I

     The name of this corporation is Metawave Communications Corporation (the
"Corporation").

                                  ARTICLE II

     The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, in the City of Wilmington, County of New Castle.  The
name of its registered agent at such address is The Corporation Trust Company.

                                  ARTICLE III

     The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.

                                  ARTICLE IV

     (A)  Classes of Stock.  The Corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the Corporation is authorized to issue is One
Hundred Sixty Million (160,000,000) shares, each with a par value of $0.0001 per
share. One Hundred Fifty Million (150,000,000) shares shall be Common Stock and
Ten Million (10,000,000) shares shall be Preferred Stock.

     (B)  The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate
pursuant to the applicable law of the state of Delaware and within the
limitations and restrictions stated in this Certificate of Incorporation, to
determine or alter the rights, preferences, privileges and restrictions granted

                                      -1-
<PAGE>

to or imposed upon any wholly unissued series of Preferred Stock and the number
of shares constituting any such series and the designation thereof, or any of
them; and to increase or decrease the number of shares of any series subsequent
to the issuance of shares of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be so decreased, the shares constituting such decrease shall resume the status
which they had prior to the adoption of the resolution originally fixing the
number of shares of such series.

                                   ARTICLE V

     The number of directors of the Corporation shall be fixed from time to time
by a bylaw or amendment thereof duly adopted by at least 66 2/3% of the Board of
Directors.

                                  ARTICLE VI

     All directors shall be elected at each annual meeting of stockholders or
any special meeting in lieu thereof to hold office until the next annual meeting
or special meeting in lieu thereof.  Notwithstanding the foregoing provisions of
this Article VI, each director shall serve until his or her successor is duly
elected and qualified or until his or her death, resignation, or removal.  No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.  In the event of a vacancy in the
Board of Directors, the remaining directors, except as otherwise provided by
law, may exercise the powers of the full Board of Directors until the vacancy is
filled.

     Any vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal, or other causes shall be filled by either (i) the
affirmative vote of the holders of a majority of the voting power of the then-
outstanding shares of voting stock of the Corporation entitled to vote generally
in the election of directors (the "Voting Stock") voting together as a single
class; or (ii) by the affirmative vote of a majority of the remaining directors
then in office, even though less than a quorum of the Board of Directors.
Subject to the rights of any series of Preferred Stock then outstanding, newly
created directorships resulting from any increase in the number of directors
shall, unless the Board of Directors determines by resolution that any such
newly created directorship shall be filled by the stockholders, be filled only
by the affirmative vote of the directors then in office, even though less than a
quorum of the Board of Directors, or by a sole remaining director.  Any director
elected in accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such director's
successor shall have been elected and qualified.  Any director, or the entire
Board of Directors, may be removed from office, with or without cause, by the
holders of a majority of the Voting Stock.

                                  ARTICLE VII

     In the election of directors, each holder of shares of any class or series
of capital stock of the Corporation shall be entitled to one vote for each share
held. No stockholder will be permitted to cumulate votes at any election of
directors.

                                      -2-
<PAGE>

                                 ARTICLE VIII

     No action shall be taken by the stockholders of the Corporation other than
at an annual or special meeting of the stockholders, upon due notice and in
accordance with the provisions of the Corporation's bylaws.

                                  ARTICLE IX

     The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.

                                   ARTICLE X

     The Board of Directors of the Corporation is expressly authorized to make,
alter or repeal Bylaws of the Corporation.  In addition to any requirements of
law and any other provisions hereof (and notwithstanding the fact that approval
by a lesser vote may be permitted by law or any other provision hereof), the
affirmative vote of the holders of at least 66 2/3% of the voting power of the
then outstanding shares of stock of all classes and all series of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to amend, alter, repeal, or adopt
any provision inconsistent with, this Article X or Article V hereof.

                                  ARTICLE XI

     Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.

                                  ARTICLE XII

     The Corporation shall have perpetual existence.

                                 ARTICLE XIII

     (A)  To the fullest extent permitted by the General Corporation Law of
Delaware, as the same may be amended from time to time, a director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
If the General Corporation Law of Delaware is hereafter amended to authorize,
with the approval of a corporation's stockholders, further reductions in the
liability of the Corporation's directors for breach of fiduciary duty, then a
director of the Corporation shall not be liable for any such breach to the
fullest extent permitted by the General Corporation Law of Delaware, as so
amended.

                                      -3-
<PAGE>

     (B)  Any repeal or modification of the foregoing provisions of this Article
XIII shall not adversely affect any right or protection of a director of the
Corporation with respect to any acts or omissions of such director occurring
prior to such repeal or modification.

                                  ARTICLE XIV

     (A)  To the fullest extent permitted by applicable law, the Corporation is
also authorized to provide indemnification of (and advancement of expenses to)
such agents (and any other persons to which Delaware law permits the Corporation
to provide indemnification) though bylaw provisions, agreements with such agents
or other persons, vote of stockholders or disinterested directors or otherwise,
in excess of the indemnification and advancement otherwise permitted by Section
145 of the Delaware General Corporation Law, subject only to limits created by
applicable Delaware law (statutory or non-statutory), with respect to actions
for breach of duty to a corporation, its stockholders, and others.

     (B)  Any repeal or modification of any of the foregoing provisions of this
Article XIV shall not adversely affect any right or protection of a director,
officer, agent or other person existing at the time of, or increase the
liability of any director of the Corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to such repeal or
modification."

                                  *    *    *

                                      -4-

<PAGE>

     The foregoing Amended and Restated Certificate of Incorporation has been
duly adopted by this Corporation's Board of Directors and stockholders in
accordance with the applicable provisions of Section 228, 242 and 245 of the
General Corporation Law of the State of Delaware.

     Executed at Redmond, Washington, on __________ __, 2000.





                                        ----------------------------------------
                                        Robert H. Hunsberger, President




                                        ---------------------------------------
                                        Kathy Surace-Smith, Secretary


<PAGE>

                                                                     EXHIBIT 5.1

                                March 24, 2000

Metawave Communications Corporation
10735 Willows Road NE
Redmond, WA  98052


     Registration Statement on Form S-1 (File No. 333-30568)
     -------------------------------------------------------

Ladies and Gentlemen:

     We have examined the Registration Statement on Form S-1 (File No. 333-
30568) (the "Registration Statement") to be filed by you with the Securities and
Exchange Commission on  March 24, 2000, in connection with the registration
under the Securities Act of 1933 of shares of your Common Stock (the "Shares").
As your legal counsel in connection with this transaction, we have examined the
proceedings taken and we are familiar with the proceedings proposed to be taken
by you in connection with the sale and issuance of the Shares.

     It is our opinion that the Shares, when issued and sold in the manner
described in the Registration Statement, will be legally and validly issued,
fully paid and nonassessable.

     We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever it appears in the
Registration Statement and in any amendment to it.

                                       Sincerely,

                                       VENTURE LAW GROUP
                                       A Professional Corporation


                                      /s/ VENTURE LAW GROUP

WWE

<PAGE>

                                                                    EXHIBIT 10.2

                      METAWAVE COMMUNICATIONS CORPORATION

               THIRD AMENDED AND RESTATED 1995 STOCK OPTION PLAN

     1.   Purposes of the Plan.  This Third Amended and Restated 1995 Stock
Option Plan amends and restates the Second Amended and Restated 1995 Stock
Option Plan.  The purposes of this Third Amended and Restated 1995 Stock Option
Plan are to attract and retain the best available personnel, to provide
additional incentive to Employees and Consultants of the Company and its
Subsidiaries and to promote the success of the Company's business.  Options
granted under the Plan may be incentive stock options (as defined under Section
422 of the Code) or nonstatutory stock options, as determined by the
Administrator at the time of grant of an option and subject to the applicable
provisions of Section 422 of the Code, as amended, and the regulations
promulgated thereunder.

     2.   Definitions.  As used herein, the following definitions shall apply:

          (a)  "Administrator" means the Board or its Committee appointed
pursuant to Section 4 of the Plan.

          (b)  "Board" means the Board of Directors of the Company.

          (c)  "Cause" for termination of an Optionee's Continuous Status as an
Employee or Consultant will exist if the Optionee is terminated for any of the
following reasons:  (i) Optionee's willful failure substantially to perform his
or her duties and responsibilities to the Company or deliberate violation of a
Company policy; (ii) Optionee's commission of any act of fraud, embezzlement,
dishonesty or any other willful misconduct that has caused or is reasonably
expected to result in material injury to the Company; (iii) unauthorized use or
disclosure by Optionee of any proprietary information or trade secrets of the
Company or any other party to whom the Optionee owes an obligation of
nondisclosure as a result of his or her relationship with the Company; or (iv)
Optionee's willful breach of any of his or her obligations under any written
agreement or covenant with the Company.  The determination as to whether an
Optionee is being terminated for Cause shall be made in good faith by the
Company and shall be final and binding on the Optionee.  The foregoing
definition does not in any way limit the Company's ability to terminate a
Optionee's employment or consulting relationship at any time as provided in
Section 5(c) below, and the term "Company" will be interpreted to include any
Subsidiary, Parent, or successor thereto, if appropriate.

          (d)  "Code" means the Internal Revenue Code of 1986, as amended.

          (e)  "Committee" means one or more committees or subcommittees of the
Board appointed by the Board in accordance with Section 4 below.

          (f)  "Common Stock" means the Common Stock of the Company.


<PAGE>

          (g)  "Company" means Metawave Communications Corporation, a Delaware
corporation.

          (h)  "Consultant" means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any Director of the Company whether
compensated for such services or not.

          (i)  "Continuous Status as an Employee or Consultant" means the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Administrator, provided that
such leave is for a period of not more than ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the Company
or between the Company, its Subsidiaries or their respective successors. For
purposes of this Plan, a change in status from an Employee to a Consultant or
from a Consultant to an Employee will not constitute an interruption of
Continuous Status as an Employee or Consultant.

          (j)  "Control Transaction" means:

               (a)  any merger, consolidation, or statutory or contractual share
exchange in which there is no group of persons who held a majority of the
outstanding Common Stock immediately prior to the transaction who continue to
hold, immediately following the transaction, at least a majority of the combined
voting power of the outstanding shares of that class of capital stock (herein,
"Voting Stock") which ordinarily (and apart from rights accruing under special
circumstances) has the right to vote in the election of Directors of the Company
(or of any other corporation or entity whose securities are issued in such
transaction wholly or partially in exchange for Common Stock);

               (b)  any liquidation or dissolution of the Company;

               (c)  any transaction (or series of related transactions)
involving the sale, lease, exchange or other transfer not in the ordinary course
of business of all, or substantially all, of the assets of the Company; or

               (d)  any transaction (or series of related transactions) in which
any person (including, without limitation, any natural person, any corporation
or other legal entity, and any person as defined in Sections 13(d)(3) and
14(d)(2) of the Exchange Act, other than the Company or any employee benefit
plan sponsored by the Company):

                    (i)  purchases any Common Stock (or securities convertible
into Common Stock) for cash, securities or any other consideration pursuant to a
tender offer or exchange offer subject to the requirements of the Exchange Act,
or

                    (ii) directly or indirectly becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act) of securities of the Company
which, when


<PAGE>

aggregated with such person's beneficial ownership prior to such transaction,
either (x) represent 30% or more (50% or more if the Company is not then subject
to the requirements of the Exchange Act) (the "Control Percentage") of the
combined voting power of the then outstanding Voting Stock of the Company, or
(y) if such person's beneficial ownership prior to such transaction already
exceeded the applicable Control Percentage, result in an increase in such
holder's beneficial ownership percentage (all such percentages being calculated
as provided in Rule 13d-3(d) under the Exchange Act with respect to rights to
acquire the Company's securities).

          All references in this definition to specific sections of or rules
promulgated under the Exchange Act shall apply whether or not the Company is
then subject to the requirements of the Exchange Act.

          (k)  "Director" means a member of the Board.

          (l)  "Employee" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company, with the
status of employment determined based upon such minimum number of hours or
periods worked as shall be determined by the Administrator in its discretion,
subject to any requirements of the Code.  The payment of a director's fee to a
Director shall not be sufficient to constitute "employment" of such Director by
the Company.

          (m)  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          (n)  "Fair Market Value" means, as of any date, the fair market value
of the Common Stock, as determined by the Administrator in good faith on such
basis as it deems appropriate and applied consistently with respect to Plan
participants.  Whenever possible, the determination of Fair Market Value shall
be based upon the closing price for the Shares as reported in the Wall Street
Journal for the applicable date.

          (o)  "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable written option agreement.

          (p)  "Involuntary Termination" means termination of an Optionee's
Continuous Status as an Employee or Consultant under the following
circumstances:  (i) termination without Cause by the Company or a Subsidiary,
Parent, or successor thereto, as appropriate; or (ii) voluntary termination by
the Optionee within 60 days following (A) a material reduction in the Optionee's
job responsibilities, provided that neither a mere change in title alone nor
reassignment following a Control Transaction to a position that is substantially
similar to the position held prior to the Control Transaction shall constitute a
material reduction in job responsibilities; (B) relocation by the Company or a
Subsidiary, Parent, or successor thereto, as appropriate, of the Optionee's work
site to a facility or location more than 50 miles from the Optionee's principal
work site for the Company at the time of the Control Transaction; or (C) a
reduction in Optionee's then-current total compensation by at least 15%,
provided that an across-the-board reduction in the salary level of all other
employees or consultants in positions similar


<PAGE>

to the Optionee's by the same percentage amount as part of a general salary
level reduction shall not constitute such a salary reduction.

          (q)  "Listed Security" means any security of the Company that is
listed or approved for listing on a national securities exchange or designated
or approved for designation as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc.

          (r)  "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable written
option agreement.

          (s)  "Option" means a stock option granted pursuant to the Plan.

          (t)  "Optioned Stock" means the Common Stock subject to an Option.

          (u)  "Optionee" means an Employee or Consultant who receives an
Option.

          (v)  "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code, or any successor provision.

          (w)  "Plan" means this Third Amended and Restated 1995 Stock Option
Plan.

          (x)  "Reporting Person" means an officer, Director, or greater than
ten percent stockholder of the Company within the meaning of Rule 16a-2 under
the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under
the Exchange Act.

          (y)  "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act,
as the same may be amended from time to time, or any successor provision.

          (z)  "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.

          (aa) "Stock Exchange" means any stock exchange or consolidated stock
price reporting system on which prices for the Common Stock are quoted at any
given time.

          (bb) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code, or any successor
provision.

          (cc) "Ten Percent Holder" means a person who owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary.

     3.   Stock Subject to the Plan.  Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of shares that may be optioned and sold
under the Plan is 2,766,666 shares of Common Stock.  The shares may be
authorized, but unissued, or reacquired Common Stock.  If an Option should
expire or become unexercisable for any reason without having been exercised in
full, the unpurchased Shares that were subject thereto shall, unless the


<PAGE>

Plan shall have been terminated, become available for future grant under the
Plan. In addition, any shares of Common Stock which are retained by the Company
upon exercise of an Option in order to satisfy any withholding taxes due with
respect to such exercise shall be treated as not issued and shall continue to be
available under the Plan. Shares repurchased by the Company pursuant to any
repurchase right which the Company may have shall not be available for future
grant under the Plan.

     4.   Administration of the Plan.

          (a)  General.  The Plan shall be administered by the Board or a
Committee, or a combination thereof, as determined by the Board.  The Plan may
be administered by different administrative bodies with respect to different
classes of participants and, if permitted by the Applicable Laws, the Board may
authorize one or more officers to make awards under the Plan.

          (b)  Committee Composition.  If a Committee has been appointed
pursuant to this Section 4, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time the
Board may increase the size of any Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies (however caused) and remove all members of
a Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws and, in the case of a Committee administering
the Plan in accordance with the requirements of Rule 16b-3 or Section 162(m) of
the Code, to the extent permitted or required by such provisions.

          (c)  Powers of the Administrator.  Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any Stock Exchange, the Administrator
shall have the authority, in its discretion:

               (i)   to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;

               (ii)  to select the Consultants and Employees to whom Options may
from time to time be granted hereunder;

               (iii) to determine whether and to what extent Options or any
combination thereof are granted hereunder;

               (iv)  to determine the number of shares of Common Stock to be
covered by each such option granted hereunder;

               (v)   to approve forms of agreement for use under the Plan;

               (vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any option granted hereunder;


<PAGE>

               (vii)  to determine whether and under what circumstances an
Option may be settled in cash under Section 9(f) instead of Common Stock;

               (viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;

               (ix)   to construe and interpret the terms of the Plan and
Options granted under the Plan; and

               (x)    in order to fulfill the purposes of the Plan and without
amending the Plan, to modify grants of Options to participants who are foreign
nationals or employed outside of the United States in order to recognize
differences in local law, tax policies or customs.

          (d)  Effect of Administrator's Decision.  All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all holders of Options.

     5.   Eligibility.

          (a)  Recipients of Grants.  Nonstatutory Stock Options may be granted
to Employees and Consultants.  Incentive Stock Options may be granted only to
Employees.  An Employee or Consultant who has been granted an Option may, if he
or she is otherwise eligible, be granted additional Options.

          (b)  Type of Option.  Each Option shall be designated in the written
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option.  However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of the Shares with respect to which Options
designated as Incentive Stock Options are exercisable for the first time by any
Optionee during any calendar year (under all plans of the Company or any Parent
or Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options.  For purposes of this Section 5(b), Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares subject to an Incentive Stock Option shall
be determined as of the date of the grant of such Option.

          (c)  Employment Relationship.  The Plan shall not confer upon any
Optionee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with such
Optionee's right or the Company's right to terminate his or her employment or
consulting relationship at any time, with or without cause.

     6.   Term of Plan.  The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company as described in Section 18 of the Plan.  It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 14 of the Plan.

     7.   Term of Option.  The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date


<PAGE>

of grant thereof or such shorter term as may be provided in the Option
Agreement. However, in the case of an Incentive Stock Option granted to an
Optionee who, at the time the Option is granted, is a Ten Percent Holder, the
term of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.

     8.   Option Exercise Price and Consideration.

          (a)  The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:

               (i)  In the case of an Incentive Stock Option that is:

                    (A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, is a Ten Percent Holder, the per Share exercise
price shall be no less than 110% of the Fair Market Value per Share on the date
of grant.

                    (B) granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.

               (ii) In the case of a Nonstatutory Stock Option that is granted
prior to the date, if any, on which the Common Stock becomes a Listed Security:

                    (A) to a person who, at the time of the grant of such
Option, is a Ten Percent Holder, the per Share exercise price shall be no less
than 110% of the Fair Market Value per Share on the date of the grant.

                    (B) to any other person, the per Share exercise price shall
be at least 85% of the Fair Market Value as of the date of grant.

               (iii) In the case of a Nonstatutory Stock Option that is granted
on or after the date, if any, on which the Common Stock becomes a Listed
Security to any person the per Share exercise price shall be such price as is
determined by the Administrator.

          (b)  The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash; (2)
check; (3) promissory note (subject to the provisions of Section 153 of the
Delaware General Corporation Law); (4) other Shares that (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six months on the date of surrender or such other period as may be
required to avoid a charge to the Company's earnings, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which such Option shall be exercised; (5) delivery of a properly
executed exercise notice together with such other documentation as the
Administrator and the broker, if applicable, shall require to effect an exercise
of the Option and delivery to the Company of the sale or loan proceeds required
to pay the exercise price and any applicable income or employment taxes; (6)
delivery of an irrevocable subscription agreement for the


<PAGE>

Shares that irrevocably obligates the option holder to take and pay for the
Shares not more than twelve months after the date of delivery of the
subscription agreement; or (7) any combination of the foregoing methods of
payment. In making its determination as to the type of consideration to accept,
the Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.

     9.   Exercise of Option.

          (a)  Procedure for Exercise; Rights as a Stockholder.  Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including vesting requirements and/or
performance criteria with respect to the Company and/or the Optionee, and as
shall be permissible under the terms of the Plan; provided that prior to the
date, if any, on which the Common Stock becomes a Listed Security, Options
granted to California residents shall become exercisable at the rate of at least
twenty-five percent (25%) per year over four (4) years from the date the Option
is granted.  In the event that any of the Shares issued upon exercise of an
Option granted to a California resident prior to the date, if any, on which the
Common Stock becomes a Listed Security should be subject to a right of
repurchase in the Company's favor, such repurchase right shall lapse at the rate
of at least twenty-five percent (25%) per year over four (4) years from the date
the Option is granted.

     An Option may not be exercised for a fraction of a Share.

     An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and the Company has
received full payment for the Shares with respect to which the Option is
exercised.  Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the Shares, no
right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to the Optioned Stock, not withstanding the exercise of the
Option.  The Company shall issue (or cause to be issued) such stock certificate
promptly upon exercise of the Option.  No adjustment will be made for a dividend
or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan.

     Exercise of an Option in any manner shall result in a decrease in the
number of Shares that thereafter may be available, both for purposes of the Plan
and for sale under the Option, by the number of Shares as to which the Option is
exercised.

          (b)  Termination of Employment or Consulting Relationship.  Subject to
Section 9(c), in the event of termination of an Optionee's Continuous Status as
an Employee or Consultant with the Company, such Optionee may, but only within
three (3) months (or such other period of time not less than thirty (30) days as
is determined by the Administrator, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option and not
exceeding three (3) months) after the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement),


<PAGE>

exercise his or her Option to the extent that the Optionee was entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of such termination, or if Optionee
does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate. No termination shall be deemed to
occur and this Section 9(b) shall not apply if (i) the Optionee is a Consultant
who becomes an Employee; or (ii) the Optionee is an Employee who becomes a
Consultant.

          (c)  Disability of Optionee.

               (i)  Notwithstanding Section 9(b) above, in the event of
termination of an Optionee's Continuous Status as an Employee or Consultant as a
result of his or her total and permanent disability (within the meaning of
Section 22(e)(3) of the Code), Optionee may, but only within twelve (12) months
from the date of such termination (but in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement), exercise
the Option to the extent otherwise entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise the Option
at the date of termination, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall terminate.

               (ii) In the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of a disability which does not
fall within the meaning of total and permanent disability (as set forth in
Section 22(e)(3) of the Code), Optionee may, but only within six (6) months from
the date of such termination (but in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement), exercise the
Option to the extent otherwise entitled to exercise it at the date of such
termination. However, to the extent that such Optionee fails to exercise an
Option which is an Incentive Stock Option ("ISO") (within the meaning of Section
422 of the Code) within three (3) months of the date of such termination, the
Option will not qualify for ISO treatment under the Code. To the extent that
Optionee was not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option to the extent so entitled within six
months (6) from the date of termination, the Option shall terminate.

          (d)  Death of Optionee.  In the event of the death of an Optionee
during the period of Continuous Status as an Employee or Consultant since the
date of grant of the Option, or within thirty (30) days following termination of
Optionee's Continuous Status as an Employee or Consultant, the Option may be
exercised, at any time within six (6) months following the date of death (but in
no event later than the expiration date of the term of such Option as set forth
in the Option Agreement), by Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of death or, if earlier,
the date of termination of Optionee's Continuous Status as an Employee or
Consultant.  To the extent that Optionee was not entitled to exercise the Option
at the date of death or termination, as the case may be, or if Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate.

          (e)  Extension of Exercise Period.  The Administrator shall have full
power and authority to extend the period of time for which an Option is to
remain exercisable following


<PAGE>

termination of an Optionee's Continuous Status as an Employee or Consultant from
the periods set forth in Sections 9(b), 9(c) and 9(d) above or in written option
agreement to such greater time as the Administrator shall deem appropriate,
provided that in no event shall such Option be exercisable later than the date
of expiration of the term of such Option as set forth in the written option
agreement.

          (f)  Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

     10.  Stock Withholding to Satisfy Withholding Tax Obligations.  At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph.  When an Optionee incurs tax liability in
connection with an Option, which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may
satisfy the withholding tax obligation by one or some combination of the
following methods:  (a) by cash payment, or (b) out of Optionee's current
compensation, (c) if permitted by the Administrator, in its discretion, by
surrendering to the Company Shares that (i) in the case of Shares previously
acquired from the Company, have been owned by the Optionee for more than six
months on the date of surrender, and (ii) have a fair market value on the date
of surrender equal to or less than the amount required to be withheld in
connection with Optionee's exercise of the Option, or (d) by electing to have
the Company withhold from the Shares to be issued upon exercise of the Option,
if any, that number of Shares having a fair market value equal to the amount
required to be withheld.  If the Administrator allows the withholding or
surrender of Shares to satisfy an Optionee's withholding obligations under this
Section 10, the Administrator shall not allow Shares to be withheld or
surrendered in an amount that exceeds the minimum statutory withholding rates
for federal and state tax purposes, including payroll taxes.  For this purpose,
the Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined (the "Tax Date").

     Any surrender by a Reporting Person of previously owned Shares to satisfy
tax withholding obligations arising upon exercise of this Option must comply
with the applicable provisions of Rule 16b-3.

     All elections by an Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:

          (a)  the election must be made on or prior to the applicable Tax Date;

          (b)  once made, the election shall be irrevocable as to the particular
Shares of the Option as to which the election is made; and

          (c)  all elections shall be subject to the consent or disapproval of
the Administrator.


<PAGE>

     In the event the election to have Shares withheld is made by an Optionee
and the Tax Date is deferred under Section 83 of the Code because no election is
filed under Section 83(b) of the Code, the Optionee shall receive the full
number of Shares with respect to which the Option is exercised but such Optionee
shall be unconditionally obligated to tender back to the Company the proper
number of Shares on the Tax Date.

     11.  Adjustments Upon Changes in Capitalization, Merger or Certain Other
Transactions.

          (a)  Changes in Capitalization.  Subject to any required action by the
stockholders of the Company, the number of Shares of Common Stock covered by
each outstanding Option, and the number of Shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or that have been returned to the Plan upon cancellation or expiration
of an Option, as well as the price per Share of Common Stock covered by each
such outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination, recapitalization or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued Shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration."  Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive.  Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares of Common Stock subject to an Option.

          (b)  Dissolution or Liquidation.  In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the Optionee
at least fifteen (15) days prior to such proposed action.  To the extent it has
not been previously exercised, the Option will terminate immediately prior to
the consummation of such proposed action.

          (c)  Control Transaction.

               (i)  The Company shall provide each Optionee with notice of the
pendency of any Control Transaction (i) at least thirty (30) days prior to the
expected date of consummation of a Control Transaction that has been approved or
recommended by the Board, or (ii) promptly after the Board becomes aware of the
pendency or occurrence of a proposed or completed Control Transaction that has
not been approved or recommended by the Board.

               (ii) Each Optionee shall be entitled to exercise the vested
portion of the Option at any time prior to consummation of a Control
Transaction. If the terms of the Option prescribe a time-based vesting schedule,
the Optionee shall, conditioned upon consummation of the Control Transaction and
upon the Optionee's remaining employed by the Company through the date of such
consummation, be entitled to accelerated vesting credit equal to either twelve
months or twenty-four months of additional vesting beyond that otherwise
scheduled, based on


<PAGE>

whether he or she has been employed by the Company less than two years, or two
years or more, respectively, as of the date of such consummation; provided,
however, that the acceleration provided for above shall not apply with respect
to any Option which is assumed by or as to which the acquiring person or the
surviving corporation, as the case may be (the "Successor"), provides for the
substitution of a new option on terms which are, as nearly as practicable, the
financial equivalent of the Option (taking into account the consideration for
which the Common Stock is to be exchanged in the Control Transaction).

               (iii) Any exercise may be made contingent upon consummation of a
Control Transaction if so elected by the Optionee in his or her notice of
exercise, and must be made contingent upon such consummation with respect to the
exercise of any portion of an Option entitled to accelerated vesting under the
second sentence of Section 11(c)(ii) above.

               (iv)  Upon consummation of a Control Transaction that has been
approved or recommended by the Board, all unexercised Options shall expire,
except to the extent that they are assumed or replaced with equivalent awards
pursuant to the second sentence of Section 11(c)(ii) above.

               (v)   Following a Control Transaction in which outstanding awards
were assumed or substituted with equivalent awards by the Successor, in the
event an Optionee's service relationship with the Company and or the Successor
is involuntarily terminated without Cause in connection with, or within 6 months
following consummation of, the transaction, then the vesting and exercisability
(or lapse of any applicable repurchase right) applicable to any assumed or
substituted Option held by such Optionee at the time of termination shall
accelerate as to the number of Shares that would otherwise have vested and been
exercisable (or as to which the repurchase right would have lapsed) as of the
date 12 months, in the case of an Optionee who has been in a service
relationship with the Company and/or the Successor for less than 2 years from
the date of termination of that relationship, or 24 months, in the case of an
Optionee who has been in a service relationship with the Company and/or the
Successor for at least 2 years as of such date, in each case assuming the
Optionee had remained in Continuous Status as an Employee or Consultant for such
12 or 24 month period; provided that the vesting and exercisability (or lapse of
any repurchase right) of assumed or substituted awards held by a person who was
a Reporting Person immediately prior to consummation of the Control Transaction
shall accelerate in full without regard to the length of such person's service
relationship with the Company and/or the Successor if that relationship is
Involuntarily Terminated in connection with, or within 6 months following
consummation of, the Control Transaction. The acceleration of vesting and lapse
of repurchase rights provided for in the previous sentence shall occur
immediately prior to the effective date of the Optionee's termination.

               (vi)  For purposes of this Section 11(c), an Option shall be
considered assumed, without limitation, if, at the time of issuance of the stock
or other consideration upon a Control Transaction, each Optionee would be
entitled to receive upon exercise of an Option the same number and kind of
shares of stock or the same amount of property, cash or securities as such
Optionee would have been entitled to receive upon the occurrence of the
transaction if the Optionee had been, immediately prior to such transaction, the
holder of the number of Shares of


<PAGE>

Common Stock covered by the Option at such time (after giving effect to any
adjustments in the number of Shares covered by the Option as provided for in
this Section 11); provided that if such consideration received in the
transaction is not solely common stock of the Successor, the Administrator may,
with the consent of the Successor, provide for the consideration to be received
upon exercise of the Option to be solely common stock of the Successor equal to
the Fair Market Value of the per Share consideration received by holders of
Common Stock in the transaction.

          (d)  Certain Distributions.  In the event of any distribution to the
Company's stockholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.

     12.  Non-Transferability of Options.  Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised or purchased
during the lifetime of the Optionee only by the Optionee.

     13.  Time of Granting Options.  The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board; provided
however that in the case of any Incentive Stock Option, the grant date shall be
the later of the date on which the Administrator makes the determination
granting such Incentive Stock Option or the date of commencement of the
Optionee's employment relationship with the Company.  Notice of the
determination shall be given to each Employee or Consultant to whom an Option is
so granted within a reasonable time after the date of such grant.

     14.  Amendment and Termination of the Plan.

          (a)  Authority to Amend or Terminate. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made that would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 or with Section 422
of the Code (or any other applicable law or regulation, including the
requirements of any Stock Exchange), the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as
required.

          (b)  Effect of Amendment or Termination.  No amendment or termination
of the Plan shall adversely affect Options already granted, unless mutually
agreed otherwise between the Optionee and the Board, which agreement must be in
writing and signed by the Optionee and the Company.

     15.  Conditions Upon Issuance of Shares.  Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without


<PAGE>

limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any Stock
Exchange.

     As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by law.

     16.  Reservation of Shares.  The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.  The inability of the
Company to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

     17.  Agreements.  Options shall be evidenced by written agreements in such
form as the Administrator shall approve from time to time.

     18.  Stockholder Approval.  Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted.  Such stockholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any Stock Exchange upon which the Common Stock is listed.  All Options
issued under the Plan shall become void in the event such approval is not
obtained.

     19.  Information and Documents to Optionees.  Until such date, if any, upon
which the Common Stock becomes a Listed Security, the Company shall provide
financial statements at least annually to each Optionee during the period such
Optionee has one or more Options outstanding, and in the case of an individual
who acquired Shares pursuant to the Plan, during the period such individual owns
such Shares.  The Company shall not be required to provide such information if
the issuance of Options under the Plan is limited to key employees whose duties
in connection with the Company assure their access to equivalent information.
In addition, at the time of issuance of any securities under the Plan, the
Company shall provide to the Optionee a copy of the Plan and a copy of any
agreement(s) pursuant to which securities granted under the Plan are issued.



<PAGE>

                                                                    EXHIBIT 10.3

                      METAWAVE COMMUNICATIONS CORPORATION

                            1998 STOCK OPTION PLAN

     1.   Purposes of the Plan.  The purposes of this 1998 Stock Option Plan are
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business.  Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or nonstatutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder.

     2.   Definitions.  As used herein, the following definitions shall apply:

          (a)  "Administrator" means the Board or its Committee appointed
pursuant to Section 4 of the Plan.

          (b)  "Affiliate" means an entity other than a Subsidiary (as defined
below) in which the Company owns an equity interest.

          (c)  "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under applicable U.S. state corporate laws,
U.S. federal and applicable state securities laws, the Code, any Stock Exchange
rules or regulations and the applicable laws of any other country or
jurisdiction where Options are granted under the Plan, as such laws, rules,
regulations and requirements shall be in place from time to time.

          (d)  "Board" means the Board of Directors of the Company.

          (e)  "Cause" means the commission of any act of fraud, embezzlement or
dishonesty by the Optionee, any unauthorized use or disclosure by such person of
confidential information or trade secrets of the Company or any Parent or
Subsidiary, or any other intentional misconduct by such person adversely
affecting the business or affairs of the Company or any Parent or Subsidiary in
a material manner. The determination as to whether an Optionee is being
terminated for Cause shall be made in good faith by the Company and shall be
final and binding on the Optionee. The foregoing definition does not in any way
limit the Company's ability to terminate an Optionee's service relationship at
any time as provided in Section 5(c) below, and the term Company shall include
any Subsidiary, Parent, Affiliate or successor thereto, if appropriate.

          (f)  "Code" means the Internal Revenue Code of 1986, as amended.

          (g)  "Committee" means one or more committees or subcommittees of the
Board appointed by the Board to administer the Plan in accordance with Section 4
below.

          (h)  "Common Stock" means the Common Stock of the Company.

          (i)  "Company" means Metawave Communications Corporation, a Delaware
corporation.
<PAGE>

          (j)  "Consultant" means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any Director of the Company whether
compensated for such services or not.

          (k)  "Continuous Status as an Employee or Consultant" means the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Administrator, provided that
such leave is for a period of not more than ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the Company
or between the Company, its Subsidiaries or their respective successors. For
purposes of this Plan, a change in status from an Employee to a Consultant or
from a Consultant to an Employee will not constitute an interruption of
Continuous Status as an Employee or Consultant.

          (l)  "Control Transaction" means:

          (i)  any merger, consolidation, or statutory or contractual share
exchange in which there is no group of persons who held a majority of the
outstanding Common Stock immediately prior to the transaction who continue to
hold, immediately following the transaction, at least a majority of the combined
voting power of the outstanding shares of that class of capital stock (herein,
"Voting Stock") which ordinarily (and apart from rights accruing under special
circumstances) has the right to vote in the election of Directors of the Company
(or of any other corporation or entity whose securities are issued in such
transaction wholly or partially in exchange for Common Stock);

               (ii) any liquidation or dissolution of the Company;

               (iii) any transaction (or series of related transactions)
involving the sale, lease, exchange or other transfer not in the ordinary course
of business of all, or substantially all, of the assets of the Company; or

          (iv) any transaction (or series of related transactions) in which any
person (including, without limitation, any natural person, any corporation or
other legal entity, and any person as defined in Sections 13(d)(3) and 14(d)(2)
of the Exchange Act, other than the Company or any employee benefit plan
sponsored by the Company):

               (A)  purchases any Common Stock (or securities convertible into
Common Stock) for cash, securities or any other consideration pursuant to a
tender offer or exchange offer subject to the requirements of the Exchange Act,
or

               (B)  directly or indirectly becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of securities of the Company
which, when aggregated with such person's beneficial ownership prior to such
transaction, either (x) represent 30% or more (50% or more if the Company is not
then subject to the requirements of the

                                       2
<PAGE>

Exchange Act) (the "Control Percentage") of the combined voting power of the
then outstanding Voting Stock of the Company, or (y) if such person's beneficial
ownership prior to such transaction already exceeded the applicable Control
Percentage, result in an increase in such holder's beneficial ownership
percentage (all such percentages being calculated as provided in Rule 13d-3(d)
under the Exchange Act with respect to rights to acquire the Company's
securities).

               All references in this definition to specific sections of or
rules promulgated under the Exchange Act shall apply whether or not the Company
is then subject to the requirements of the Exchange Act.

          (m)  "Director" means a member of the Board.

          (n)  "Employee" means any person, including Officers, Named Executives
and Directors, employed by the Company or any Parent or Subsidiary of the
Company, with the status of employment determined based upon such minimum number
of hours or periods worked as shall be determined by the Administrator in its
discretion, subject to any requirements of the Code.  The payment of a
director's fee to a Director shall not be sufficient to constitute "employment"
of such Director by the Company.

          (o)  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          (p)  "Fair Market Value" means, as of any date, the fair market value
of the Common Stock, as determined by the Administrator in good faith on such
basis as it deems appropriate and applied consistently with respect to
Participants.  Whenever possible, the determination of Fair Market Value shall
be based upon the closing price for the Shares as reported in the Wall Street
Journal for the applicable date.

          (q)  "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable written option agreement.

          (r)  "Involuntary Termination" means termination of an Optionee's
Continuous Status as an Employee or Consultant under the following
circumstances:  (i) termination without Cause by the Company or a Subsidiary,
Parent, Affiliate or successor thereto, as appropriate; or (ii) voluntary
termination by the Optionee within 60 days following (A) a material reduction in
the Optionee's job responsibilities, provided that neither a mere change in
title alone nor reassignment following a Control Transaction to a position that
is substantially similar to the position held prior to the Control Transaction
shall constitute a material reduction in job responsibilities; (B) relocation by
the Company or a Subsidiary, Parent, Affiliate or successor thereto, as
appropriate, of the Optionee's work site to a facility or location more than 50
miles from the Optionee's principal work site for the Company at the time of the
Control Transaction; or (C) a reduction in Optionee's then-current total
compensation by at least 15%, provided that an across-the-board reduction in the
salary level of all other employees or consultants in positions similar to the
Optionee's by the same percentage amount as part of a general salary level
reduction shall not constitute such a salary reduction.

                                       3
<PAGE>

          (s)  "Listed Security" means any security of the Company that is
listed or approved for listing on a national securities exchange or designated
or approved for designation as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc.

          (t)  "Named Executive" means any individual who, on the last day of
the Company's fiscal year, is the chief executive officer of the Company (or is
acting in such capacity) or among the four highest compensated officers of the
Company (other than the chief executive officer). Such officer status shall be
determined pursuant to the executive compensation disclosure rules under the
Exchange Act.

          (u)  "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable written
option agreement.

          (v)  "Option" means a stock option granted pursuant to the Plan.

          (w)  "Optioned Stock" means the Common Stock subject to an Option.

          (x)  "Optionee" means an Employee or Consultant who receives an
Option.

          (y)  "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code, or any successor provision.

          (z)  "Plan" means this 1998 Stock Option Plan.

          (aa) "Reporting Person" means an officer, Director, or greater than
ten percent stockholder of the Company within the meaning of Rule 16a-2 under
the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under
the Exchange Act.

          (bb) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act,
as the same may be amended from time to time, or any successor provision.

          (cc) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.

          (dd) "Stock Exchange" means any stock exchange or consolidated stock
price reporting system on which prices for the Common Stock are quoted at any
given time.

          (ee) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code, or any successor
provision.

          (ff) "Ten Percent Holder" means a person who owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary.

     3.   Stock Subject to the Plan.  Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of shares that may be optioned and sold
under the Plan is

                                       4
<PAGE>

1,763,369 shares of Common Stock. The shares may be authorized, but unissued, or
reacquired Common Stock. If an Option should expire or become unexercisable for
any reason without having been exercised in full, the unpurchased Shares that
were subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan. In addition, any shares of Common
Stock which are retained by the Company upon exercise of an Option in order to
satisfy any withholding taxes due with respect to such exercise shall be treated
as not issued and shall continue to be available under the Plan. Shares
repurchased by the Company pursuant to any repurchase right which the Company
may have shall not be available for future grant under the Plan.

     4.   Administration of the Plan.

          (a)  General.  The Plan shall be administered by the Board or a
Committee, or a combination thereof, as determined by the Board.  The Plan may
be administered by different administrative bodies with respect to different
classes of Participants and, if permitted by the Applicable Laws, the Board may
authorize one or more officers to make awards under the Plan.

          (b)  Committee Composition.  If a Committee has been appointed
pursuant to this Section 4, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time the
Board may increase the size of any Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies (however caused) and remove all members of
a Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws and, in the case of a Committee administering
the Plan in accordance with the requirements of Rule 16b-3 or Section 162(m) of
the Code, to the extent permitted or required by such provisions.

          (c)  Powers of the Administrator.  Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any Stock Exchange, the Administrator
shall have the authority, in its discretion:

               (i)   to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(p) of the Plan;

               (ii)  to select the Consultants and Employees to whom Options
may from time to time be granted hereunder;

               (iii) to determine whether and to what extent Options or any
combination thereof are granted hereunder;

               (iv)  to determine the number of shares of Common Stock to be
covered by each such option granted hereunder;

               (v)   to approve forms of agreement for use under the Plan;

                                       5
<PAGE>

               (vi)  to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any option granted hereunder;

               (vii) to determine whether and under what circumstances an Option
may be settled in cash under Section 10(h) instead of Common Stock;

               (viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;

               (ix)  to construe and interpret the terms of the Plan and
Options granted under the Plan; and

               (x)  in order to fulfill the purposes of the Plan and without
amending the Plan, to modify grants of Options to participants who are foreign
nationals or employed outside of the United States in order to recognize
differences in local law, tax policies or customs.

          (d)  Effect of Administrator's Decision.  All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all holders of Options.

     5.   Eligibility.

          (a)  Recipients of Grants.  Nonstatutory Stock Options may be granted
to Employees and Consultants. Incentive Stock Options may be granted only to
Employees; provided, however, that Employees of an Affiliate shall not be
eligible to receive Incentive Stock Options. An Employee or Consultant who has
been granted an Option may, if he or she is otherwise eligible, be granted
additional Options.

          (b)  Type of Option.  Each Option shall be designated in the written
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option.  However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of the Shares with respect to which Options
designated as Incentive Stock Options are exercisable for the first time by any
Optionee during any calendar year (under all plans of the Company or any Parent
or Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options.  For purposes of this Section 5(b), Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares subject to an Incentive Stock Option shall
be determined as of the date of the grant of such Option.

          (c)  Employment Relationship.  The Plan shall not confer upon any
Optionee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with such
Optionee's right or the Company's right to terminate his or her employment or
consulting relationship at any time, with or without cause.

     6.   Term of Plan.  The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company as

                                       6
<PAGE>

described in Section 19 of the Plan. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 15 of the Plan.

     7.   Term of Option.  The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement.  However, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Option is granted, is a Ten
Percent Holder, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.

     8.   Limitation on Grants to Employees.  Subject to adjustment as provided
in this Plan, the maximum number of Shares which may be subject to options
granted to any one Employee under this Plan for any fiscal year of the Company
shall be 566,666. This Section 8 shall not apply prior to the date upon which
the Company becomes subject to the Exchange Act and following such date, shall
not apply until the (i) earliest of:  (A) the first material modification of the
Plan (including any increase to the number of shares reserved for issuance under
the Plan in accordance with Section 3); (B) the issuance of all of the shares of
Common Stock reserved for issuance under the Plan; (C) the expiration of the
Plan; or (D) the first meeting of stockholders at which Directors are to be
elected that occurs after the close of the third calendar year following the
calendar year in which occurred the first registration of any equity security
under Section 12 of the Exchange Act; or (ii) such other date required by
Section 162(m) of the Code and the rules and regulations promulgated thereunder.

     9.   Option Exercise Price and Consideration.

          (a)  The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:

               (i)  In the case of an Incentive Stock Option that is:

                    (A)  granted to an Employee who, at the time of the grant of
such Incentive Stock Option, is a Ten Percent Holder, the per Share exercise
price shall be no less than 110% of the Fair Market Value per Share on the date
of grant.

                    (B)  granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.

               (ii) In the case of a Nonstatutory Stock Option that is granted
prior to the date, if any, on which the Common Stock becomes a Listed Security:

                    (A)  to a person who, at the time of the grant of such
Option, is a Named Executive Officer the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of the grant.

                                       7
<PAGE>

                    (B)  to any person other than a Named Executive Officer, the
per Share exercise price shall be no less than 85% of the Fair Market Value per
Share on the date of grant.

               (iii) In the case of a Nonstatutory Stock Option that is granted
on or after the date, if any, on which the Common Stock becomes a Listed
Security to any person the per Share exercise price shall be such price as is
determined by the Administrator; provided that if such eligible person is a
Named Executive of the Company at the time of the Option grant, the per share
Exercise Price shall be no less than 100% of the Fair Market Value on the grant
date if the Option is intended to qualify as performance-based compensation
under Section 162(m) of the Code.

          (b)  The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash; (2)
check; (3) promissory note (subject to the provisions of Section 153 of the
Delaware General Corporation Law); (4) other Shares that (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six months on the date of surrender or such other period as may be
required to avoid a charge to the Company's earnings [were not acquired,
directly or indirectly from the Company], and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised; (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price and any applicable income or employment taxes; or (7) any
combination of the foregoing methods of payment.  In making its determination as
to the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company.

     10.  Exercise of Option.

          (a)  Procedure for Exercise; Rights as a Stockholder.  Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan.

               An Option may not be exercised for a fraction of a Share.

               An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and the Company has
received full payment for the Shares with respect to which the Option is
exercised. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 9(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect

                                       8
<PAGE>

to the Optioned Stock, not withstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 12 of the Plan.

               Exercise of an Option in any manner shall result in a decrease in
the number of Shares that thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

          (b)  Termination of Employment or Consulting Relationship.  Subject to
Sections 10(c) and (d), in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant with the Company, such Optionee may, but
only within three (3) months (or such other period of time not less than thirty
(30) days as is determined by the Administrator, with such determination in the
case of an Incentive Stock Option being made at the time of grant of the Option
and not exceeding three (3) months) after the date of such termination (but in
no event later than the expiration date of the term of such Option as set forth
in the Option Agreement), exercise his or her Option to the extent that the
Optionee was entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of such
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate. No
termination shall be deemed to occur and this Section 10(b) shall not apply if
(i) the Optionee is a Consultant who becomes an Employee; or (ii) the Optionee
is an Employee who becomes a Consultant.

          (c)  Disability of Optionee. Notwithstanding Section 10(b) above,

               (i)  In the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of his or her total and
permanent disability (within the meaning of Section 22(e)(3) of the Code),
Optionee may, but only within twelve (12) months from the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise the Option to the extent
otherwise entitled to exercise it at the date of such termination. To the extent
that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.

               (ii) In the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of a disability which does not
fall within the meaning of total and permanent disability (as set forth in
Section 22(e)(3) of the Code), Optionee may, but only within six (6) months from
the date of such termination (but in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement), exercise the
Option to the extent otherwise entitled to exercise it at the date of such
termination. However, to the extent that such Optionee fails to exercise an
Option which is an Incentive Stock Option ("ISO") (within the meaning of Section
422 of the Code) within three (3) months of the date of such termination, the
Option will not qualify for ISO treatment under the Code. To the extent that
Optionee was not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option to the extent so entitled within six
months (6) from the date of termination, the Option shall terminate.

                                       9
<PAGE>

          (d)  Death of Optionee.  Notwithstanding Section 10(b) above, in the
event of the death of an Optionee during the period of Continuous Status as an
Employee or Consultant since the date of grant of the Option, or within thirty
(30) days following termination of Optionee's Continuous Status as an Employee
or Consultant, the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement), by Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent of the right to exercise that had accrued
at the date of death or, if earlier, the date of termination of Optionee's
Continuous Status as an Employee or Consultant. To the extent that Optionee was
not entitled to exercise the Option at the date of death or termination, as the
case may be, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.

          (e)  Extension of Exercise Period.  The Administrator shall have full
power and authority to extend the period of time for which an option is to
remain exercisable following termination of an Optionee's Continuous Status as
an Employee or Consultant from the periods set forth in Sections 10(b), 10(c)
and 10(d) above or in the Option Agreement to such greater time as the Board
shall deem appropriate, provided, that in no event shall such option be
exercisable later than the date of expiration of the term of such Option as set
forth in the Option Agreement.

          (f)  Termination for Cause.  Notwithstanding Sections 10(b), (c), (d)
and (e) above, in the event of termination of an Optionee's Continuous Status as
an Employee or Consultant for Cause, all outstanding Options held by the
Optionee shall terminate immediately and cease to be outstanding.

          (g)  Rule 16b-3.  Options granted to Reporting Persons shall comply
with Rule 16b-3 and shall contain such additional conditions or restrictions as
may be required thereunder to qualify for the maximum exemption for Plan
transactions.

          (h)  Buyout Provisions.  The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

     11.  Withholding Taxes.  As a condition to the exercise of Options granted
hereunder, the Optionee shall make such arrangements as the Administrator may
require for the satisfaction of any federal, state, local or foreign withholding
tax obligations that may arise in connection with the exercise, receipt or
vesting of such Option.  The Company shall not be required to issue any Shares
under the Plan until such obligations are satisfied.

     12.  Stock Withholding to Satisfy Withholding Tax Obligations.  At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph.  When an Optionee incurs tax liability in
connection with an Option, which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may

                                       10
<PAGE>

satisfy the withholding tax obligation by one or some combination of the
following methods: (a) by cash payment, or (b) out of Optionee's current
compensation, (c) if permitted by the Administrator, in its discretion, by
surrendering to the Company Shares that (i) in the case of Shares previously
acquired from the Company, have been owned by the Optionee for more than six
months on the date of surrender, and (ii) have a fair market value on the date
of surrender equal to or less than the amount required to be withheld in
connection with Optionee's exercise of the Option, or (d) by electing to have
the Company withhold from the Shares to be issued upon exercise of the Option,
if any, that number of Shares having a fair market value equal to the amount
required to be withheld. If the Administrator allows the withholding or
surrender of Shares to satisfy an Optionee's withholding obligations under this
Section 12, the Administrator shall not allow Shares to be withheld or
surrendered in an amount that exceeds the minimum statutory withholding rates
for federal and state tax purposes, including payroll taxes. For this purpose,
the fair market value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined (the "Tax Date").

          Any surrender by a Reporting Person of previously owned Shares to
satisfy tax withholding obligations arising upon exercise of this Option must
comply with the applicable provisions of Rule 16b-3.

          All elections by an Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:

          (a)  the election must be made on or prior to the applicable Tax Date;

          (b)  once made, the election shall be irrevocable as to the particular
Shares of the Option as to which the election is made; and

          (c)  all elections shall be subject to the consent or disapproval of
the Administrator.

          In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option is exercised but such
Optionee shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.

     13.  Adjustments Upon Changes in Capitalization, Merger or Certain Other
Transactions.

          (a)  Changes in Capitalization.  Subject to any required action by the
stockholders of the Company, the number of Shares of Common Stock covered by
each outstanding Option, and the number of Shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or that have been returned to the Plan upon cancellation or expiration
of an Option, the maximum number of Shares of Common Stock for which Options may
be granted to any employee under Section 8 of

                                       11
<PAGE>

the Plan, as well as the price per Share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination, recapitalization or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.

          (b)  Dissolution or Liquidation.  In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the Optionee
at least fifteen (15) days prior to such proposed action.  To the extent it has
not been previously exercised, the Option will terminate immediately prior to
the consummation of such proposed action.

          (c)  Control Transaction.

               (i)   The Company shall provide each Optionee with notice of the
pendency of any Control Transaction (i) at least thirty (30) days prior to the
expected date of consummation of a Control Transaction that has been approved or
recommended by the Board, or (ii) promptly after the Board becomes aware of the
pendency or occurrence of a proposed or completed Control Transaction that has
not been approved or recommended by the Board.

               (ii)  Each Optionee shall be entitled to exercise the vested
portion of the Option at any time prior to consummation of a Control
Transaction. If the terms of the Option prescribe a time-based vesting schedule,
the Optionee shall, conditioned upon consummation of the Control Transaction and
upon the Optionee's remaining employed by the Company through the date of such
consummation, be entitled to accelerated vesting credit equal to either twelve
months or twenty-four months of additional vesting beyond that otherwise
scheduled, based on whether he or she has been employed by the Company less than
two years, or two years or more, respectively, as of the date of such
consummation; provided, however, that the acceleration provided for above shall
not apply with respect to any Option which is assumed by or as to which the
acquiring person or the surviving corporation, as the case may be (the
"Successor"), provides for the substitution of a new option on terms which are,
as nearly as practicable, the financial equivalent of the Option (taking into
account the consideration for which the Common Stock is to be exchanged in the
Control Transaction).

               (iii) Any exercise may be made contingent upon consummation of a
Control Transaction if so elected by the Optionee in his or her notice of
exercise, and must be made contingent upon such consummation with respect to the
exercise of any portion of an Option entitled to accelerated vesting under the
second sentence of Section 13(c)(ii) above.

                                       12
<PAGE>

               (iv)  Upon consummation of a Control Transaction that has been
approved or recommended by the Board, all unexercised Options shall expire,
except to the extent that they are assumed or replaced with equivalent awards
pursuant to the second sentence of Section 13(c)(ii) above.

               (v)   Following a Control Transaction in which outstanding awards
were assumed or substituted with equivalent awards by the Successor, in the
event an Optionee's service relationship with the Company and or the Successor
is involuntarily terminated without Cause in connection with, or within 6 months
following consummation of, the transaction, then the vesting and exercisability
(or lapse of any applicable repurchase right) applicable to any assumed or
substituted Option held by such Optionee at the time of termination shall
accelerate as to the number of Shares that would otherwise have vested and been
exercisable (or as to which the repurchase right would have lapsed) as of the
date 12 months, in the case of an Optionee who has been in a service
relationship with the Company and/or the Successor for less than 2 years from
the date of termination of that relationship, or 24 months, in the case of an
Optionee who has been in a service relationship with the Company and/or the
Successor for at least 2 years as of such date, in each case assuming the
Optionee had remained in Continuous Status as an Employee or Consultant for such
12 or 24 month period; provided that the vesting and exercisability (or lapse of
any repurchase right) of assumed or substituted awards held by a person who was
a Reporting Person immediately prior to consummation of the Control Transaction
shall accelerate in full without regard to the length of such person's service
relationship with the Company and/or the Successor if that relationship is
Involuntarily Terminated in connection with, or within 6 months following
consummation of, the Control Transaction. The acceleration of vesting and lapse
of repurchase rights provided for in the previous sentence shall occur
immediately prior to the effective date of the Optionee's termination.

               (vi)  For purposes of this Section 13(c), an Option shall be
considered assumed, without limitation, if, at the time of issuance of the stock
or other consideration upon a Control Transaction, each Optionee would be
entitled to receive upon exercise of an Option the same number and kind of
shares of stock or the same amount of property, cash or securities as such
Optionee would have been entitled to receive upon the occurrence of the
transaction if the Optionee had been, immediately prior to such transaction, the
holder of the number of Shares of Common Stock covered by the Option at such
time (after giving effect to any adjustments in the number of Shares covered by
the Option as provided for in this Section 13); provided that if such
consideration received in the transaction is not solely common stock of the
Successor, the Administrator may, with the consent of the Successor, provide for
the consideration to be received upon exercise of the Option to be solely common
stock of the Successor equal to the Fair Market Value of the per Share
consideration received by holders of Common Stock in the transaction.

          (d)  Certain Distributions.  In the event of any distribution to the
Company's stockholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.

                                       13
<PAGE>

     14.  Non-Transferability of Options.

          (a)  General.  Except as set forth in this Section 14, Options may not
be sold, pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by will or by the laws of descent or distribution.  The
designation of a beneficiary by an Optionee will not constitute a transfer.

          (b)  Limited Transferability Rights.  Notwithstanding anything else in
this Section 14, prior to the date, if any, on which the Common Stock becomes a
Listed Security, the Administrator may in its discretion grant Nonstatutory
Stock Options that may be transferred by instrument to an inter vivos or
testamentary trust in which the Options are to be passed to beneficiaries upon
the death of the trustor (settlor) or by gift to "Immediate Family" (as defined
below), on such terms and conditions as the Administrator deems appropriate.
Following the date, if any, on which the Common Stock becomes a Listed Security,
the Administrator may in its discretion grant transferable Nonstatutory Stock
Options pursuant to Option Agreements specifying the manner in which such
Nonstatutory Stock Options are transferable.  "Immediate Family" means any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, and shall include adoptive relationships.

     15.  Time of Granting Options.  The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board; provided
however that in the case of any Incentive Stock Option, the grant date shall be
the later of the date on which the Administrator makes the determination
granting such Incentive Stock Option or the date of commencement of the
Optionee's employment relationship with the Company.  Notice of the
determination shall be given to each Employee or Consultant to whom an Option is
so granted within a reasonable time after the date of such grant.

     16.  Amendment and Termination of the Plan.

          (a)  Authority to Amend or Terminate.  The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made that would impair the rights of any
Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 or
with Sections 162(m) and 422 of the Code (or any other applicable law or
regulation, including the requirements of any Stock Exchange), the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.

          (b)  Effect of Amendment or Termination.  No amendment or termination
of the Plan shall adversely affect Options already granted, unless mutually
agreed otherwise between the Optionee and the Board, which agreement must be in
writing and signed by the Optionee and the Company.

     17.  Conditions Upon Issuance of Shares.  Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such

                                       14
<PAGE>

Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any Stock Exchange and shall be further subject to the approval
of counsel to the Company with respect to such compliance.

          As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by law.

     18.  Reservation of Shares.  The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.  The inability of the
Company to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

     19.  Agreements.  Options shall be evidenced by written agreements in such
form as the Administrator shall approve from time to time.

     20.  Stockholder Approval.

          (a)  Continuance of the Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months before or after the date
the Plan is adopted.  Such stockholder approval shall be obtained in the degree
and manner required under the Applicable Laws.  All Options issued under the
Plan shall become void in the event such approval is not obtained.

          (b)  In the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval of
the stockholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.

                                       15

<PAGE>

                                                                    EXHIBIT 10.4

                      METAWAVE COMMUNICATIONS CORPORATION

                       2000 EMPLOYEE STOCK PURCHASE PLAN

     The following constitute the provisions of the 2000 Employee Stock Purchase
Plan of Metawave Communications Corporation.

     1.   Purpose.  The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company.  It is the intention of the Company to have the Plan
qualify as an "Employee Stock Purchase Plan" under Section 423 of the Code.  The
provisions of the Plan shall, accordingly, be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.

     2.   Definitions.

          (a)  "Board" means the Board of Directors of the Company.

          (b)  "Code" means the Internal Revenue Code of 1986, as amended.

          (c)  "Common Stock" means the Common Stock of the Company.

          (d)  "Company" means Metawave Communications Corporation, a Delaware
corporation.

          (e)  "Compensation" means total cash compensation received by an
Employee from the Company or a Designated Subsidiary.  By way of illustration,
but not limitation, Compensation includes regular compensation such as salary,
wages, overtime, shift differentials, bonuses (other than bonuses offered in
connection with, and as an inducement for, the commencement of employment),
commissions and incentive compensation, but excludes relocation, expense
reimbursements, tuition or other reimbursements, cash payments in lieu of sick
or vacation time benefits and income realized as a result of participation in
any stock option, stock purchase, or similar plan of the Company or any
Designated Subsidiary.

          (f)  "Continuous Status as an Employee" means the absence of any
interruption or termination of service as an Employee.  Continuous Status as an
Employee shall not be considered interrupted in the case of (i) sick leave; (ii)
military leave; (iii) any other leave of absence approved by the Administrator,
provided that such leave is for a period of not more than 90 days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the Company
or between the Company and its Designated Subsidiaries.

          (g)  "Contributions" means all amounts credited to the account of a
participant pursuant to the Plan.
<PAGE>

          (h)  "Corporate Transaction" means a sale of all or substantially all
of the Company's assets, or a merger, consolidation or other capital
reorganization of the Company with or into another corporation.

          (i)  "Designated Subsidiaries" means the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan; provided however that the Board shall only have the
discretion to designate Subsidiaries if the issuance of options to such
Subsidiary's Employees pursuant to the Plan would not cause the Company to incur
adverse accounting charges.

          (j)  "Employee" means any person, including an Officer, who is
customarily employed for at least twenty (20) hours per week and more than five
(5) months in a calendar year by the Company or one of its Designated
Subsidiaries.

          (k)  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          (l)  "Offering Date" means the first business day of each Offering
Period of the Plan.

          (m)  "Offering Period" means a period of twenty-four (24) months
commencing on May 1 and November 1 of each year, except for the first Offering
Period and as otherwise as set forth in Section 4(a).

          (n)  "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

          (o)  "Plan" means this Employee Stock Purchase Plan.

          (p)  "Purchase Date" means the last day of each Purchase Period of the
Plan.

          (q)  "Purchase Period" means a period of six (6) months within an
Offering Period, except for the first Purchase Period as set forth in Section
4(b).

          (r)  "Purchase Price" means with respect to a Purchase Period an
amount equal to 85% of the Fair Market Value (as defined in Section 7(b) below)
of a Share of Common Stock on the Offering Date or on the Purchase Date,
whichever is lower; provided, however, that in the event (i) of any increase in
the number of Shares available for issuance under the Plan as a result of a
stockholder-approved amendment to the Plan, and (ii) all or a portion of such
additional Shares are to be issued with respect to one or more Offering Periods
that are underway at the time of such increase ("Additional Shares"), and (iii)
the Fair Market Value of a Share of Common Stock on the date of such increase
(the "Approval Date Fair Market Value") is higher than the Fair Market Value on
the Offering Date for any such Offering Period, then in such instance the
Purchase Price with respect to Additional Shares shall be 85% of the Approval
Date Fair Market Value or the Fair Market Value of a Share of Common Stock on
the Purchase Date, whichever is lower.

                                      -2-
<PAGE>

          (s)  "Share" means a share of Common Stock, as adjusted in accordance
with Section 19 of the Plan.

          (t)  "Subsidiary" means a corporation, domestic or foreign, of which
not less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.

     3.   Eligibility.

          (a)  Any person who is an Employee as of the Offering Date of a given
Offering Period shall be eligible to participate in such Offering Period under
the Plan, subject to the requirements of Section 5(a) and the limitations
imposed by Section 423(b) of the Code.

          (b)  Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own capital stock of
the Company and/or hold outstanding options to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or of any subsidiary of the Company, or (ii) if such
option would permit his or her rights to purchase stock under all employee stock
purchase plans (described in Section 423 of the Code) of the Company and its
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) of the Fair Market Value (as defined in Section 7(b) below) of such
stock (determined at the time such option is granted) for each calendar year in
which such option is outstanding at any time.

     4.   Offering Periods and Purchase Periods.

          (a)  Offering Periods.  The Plan shall be implemented by a series of
Offering Periods of approximately twenty-four (24) months duration, with new
Offering Periods commencing on or about May 1 and November 1 of each year (or at
such other time or times as may be determined by the Board of Directors). The
first Offering Period shall commence on the effective date of the Registration
Statement on Form S-1 for the initial public offering of the Company's Common
Stock (the "IPO Date") and continue until April 30, 2002 (unless the IPO date
occurs after May 1, 2000, in which case "May 1" wherever used in this Plan shall
be replaced with "August 1" and "November 1" wherever used in this Plan shall be
replaced with "February 1" of the following year). The Plan shall continue until
terminated in accordance with Section 20 hereof. The Board of Directors of the
Company shall have the power to change the duration and/or the frequency of
Offering Periods with respect to future offerings without stockholder approval
if such change is announced at least five (5) days prior to the scheduled
beginning of the first Offering Period to be affected.

          (b)  Purchase Periods.  Each Offering Period shall consist of four (4)
consecutive Purchase Periods of approximately six (6) months' duration. The last
day of each Purchase Period shall be the "Purchase Date" for such Purchase
Period. A Purchase Period commencing on May 1 shall end on the next October 31
and a Purchase Period commencing on November 1 shall end on the next April 30
(unless the IPO date occurs after May 1, 2000, in which case "May 1"

                                      -3-
<PAGE>

wherever used in this Plan shall be replaced with "August 1," "November 1"
wherever used in this Plan shall be replaced with "February 1" of the following
year, "October 31" wherever used in this Plan shall be replaced with "January
31" of the following year and "April 30" wherever used in this Plan shall be
replaced with "July 31"). The first Purchase Period shall commence on the IPO
Date and shall end on October 31, 2000. The Board of Directors of the Company
shall have the power to change the duration and/or frequency of Purchase Periods
with respect to future purchases without stockholder approval if such change is
announced at least five (5) days prior to the scheduled beginning of the first
Purchase Period to be affected.

     5.   Participation.

          (a)  An eligible Employee may become a participant in the Plan by
completing an enrollment agreement on the form provided by the Company and
delivering it to the Company prior to the applicable Offering Date.  The
enrollment agreement shall set forth the percentage of the participant's
Compensation (subject to Section 6(a) below) to be paid as Contributions
pursuant to the Plan.

          (b)  Payroll deductions shall commence on the first payroll paid
following the Offering Date and shall end on the last payroll paid on or prior
to the last Purchase Period of the Offering Period to which the enrollment
agreement is applicable, unless sooner terminated by the participant as provided
in Section 10.

     6.   Method of Payment of Contributions.

          (a)  A participant shall elect to have payroll deductions made on each
payday during the Offering Period in an amount not less than one percent (1%)
and not more than fifteen percent (15%) (or such greater percentage as the Board
may establish from time to time before an Offering Date) of such participant's
Compensation on each payday during an Offering Period; provided that to the
extent a participant is participating in more than one Offering Period, the
maximum aggregate percentage of Compensation that he or she may contribute under
the Plan shall be fifteen percent (15%) (or such greater percentage as the Board
may establish from time to time before an Offering Date). All payroll deductions
made by a participant shall be credited to his or her account under the Plan. A
participant may not make any additional payments into such account.

          (b)  A participant may discontinue his or her participation in the
Plan as provided in Section 10, or, may notify the Administrator that he or she
wishes to increase or decrease the rate of his or her Contributions with respect
to the Offering Period by completing and filing with the Company a new
enrollment agreement authorizing a change in the payroll deduction rate. Any
change in rate of Contributions pursuant to the preceding sentence shall be
effective as of the next succeeding May 1 or November 1, as applicable, provided
the agreement indicating such change is filed at least ten (10) business days
prior to such date and, if not, then such change shall be effective as of the
next following May 1 or November 1, as the case may be.

          (c)  Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b), a participant's payroll
deductions may be decreased by the Company to 0% at any time during a Purchase
Period.  Payroll deductions shall

                                      -4-
<PAGE>

re-commence at the rate provided in such participant's enrollment agreement at
the beginning of the first Purchase Period which is scheduled to end in the
following calendar year, unless terminated by the participant as provided in
Section 10. In addition, a participant's payroll deductions may be decreased by
the Company to 0% at any time during a Purchase Period in order to avoid
unnecessary payroll contributions as a result of application of the maximum
share limit set forth in Section 7(a), in which case payroll deductions shall
re-commence at the rate provided in such participant's enrollment agreement at
the beginning of the next Purchase Period, unless terminated by the participant
as provided in Section 10.

     7.   Grant of Option.

          (a)  On the Offering Date of each Offering Period, each eligible
Employee participating in such Offering Period shall be granted an option to
purchase on each Purchase Date a number of Shares of the Company's Common Stock
determined by dividing such Employee's Contributions accumulated prior to such
Purchase Date and retained in the participant's account as of the Purchase Date
by the applicable Purchase Price; provided however that the maximum number of
Shares an Employee may purchase during each Purchase Period shall be 1,333
Shares (subject to any adjustment pursuant to Section 19 below), and provided
further that such purchase shall be subject to the limitations set forth in
Sections 3(b) and 13.

          (b)  The fair market value of the Company's Common Stock on a given
date (the "Fair Market Value") shall be determined by the Board in its
discretion; provided that (i) the Fair Market Value as of an Offering Date shall
be the closing sales price of the Common Stock as reported by the Nasdaq
National Market for the last trading day immediately preceding the Offering
Date, and (ii) the Fair Market Value of the Common Stock as of a Purchase Date
shall be the closing sales price of the Common Stock as reported by the Nasdaq
National Market for the Purchase Date, in each case as reported in The Wall
Street Journal. For purposes of the Offering Date under the first Offering
Period under the Plan, the Fair Market Value of a share of the Common Stock of
the Company shall be the Price to Public as set forth in the final prospectus
filed with the Securities and Exchange Commission pursuant to Rule 424 under the
Securities Act of 1933, as amended.

     8.   Exercise of Option.  Unless a participant withdraws from the Plan as
provided in Section 10, his or her option for the purchase of Shares will be
exercised automatically on each Purchase Date of an Offering Period, and the
maximum number of full Shares subject to the option will be purchased at the
applicable Purchase Price with the accumulated Contributions in his or her
account. No fractional Shares shall be issued.  The Shares purchased upon
exercise of an option hereunder shall be deemed to be transferred to the
participant on the Purchase Date.  During his or her lifetime, a participant's
option to purchase Shares hereunder is exercisable only by him or her.

     9.   Delivery.  As promptly as practicable after each Purchase Date of each
Offering Period, the Company shall arrange the delivery to each participant, as
appropriate, the Shares purchased upon exercise of his or her option.  No
fractional Shares shall be purchased; any

                                      -5-
<PAGE>

payroll deductions accumulated in a participant's account which are not
sufficient to purchase a full Share shall be retained in the participant's
account for the subsequent Purchase Period or Offering Period, subject to
earlier withdrawal by the participant as provided in Section 10 below. Any other
amounts left over in a participant's account after a Purchase Date shall be
returned to the participant.

     10.  Voluntary Withdrawal; Termination of Employment.

          (a)  A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any time prior to
each Purchase Date by giving written notice to the Company.  All of the
participant's Contributions credited to his or her account will be paid to him
or her promptly after receipt of his or her notice of withdrawal and his or her
option for the current period will be automatically terminated, and no further
Contributions for the purchase of Shares will be made during the Offering
Period.

          (b)  Upon termination of the participant's Continuous Status as an
Employee prior to the Purchase Date of an Offering Period for any reason,
including retirement or death, the Contributions credited to his or her account
will be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under Section 14, and his or her option will
be automatically terminated.

          (c)  In the event an Employee fails to remain in Continuous Status as
an Employee of the Company for at least twenty (20) hours per week during the
Offering Period in which the employee is a participant, he or she will be deemed
to have elected to withdraw from the Plan and the Contributions credited to his
or her account will be returned to him or her and his or her option terminated.

          (d)  A participant's withdrawal from an offering will not have any
effect upon his or her eligibility to participate in a succeeding offering or in
any similar plan which may hereafter be adopted by the Company.

     11.  Automatic Withdrawal.  To the extent permitted by any applicable laws,
regulations or stock exchange rules, if the Fair Market Value of the Shares on
an Offering Date for an Offering Period (the "New Offering Period") commencing
within an Offering Period (The "Ongoing Offering Period") then in progress is
lower than was the Fair Market Value of the Shares on the Offering Date for the
Ongoing Offering Period, then every participant in the Ongoing Offering Period
shall automatically be deemed to have (i) withdrawn from the Ongoing Offering
Period at the close of the Purchase Period immediately preceding the New
Offering Period, and (ii) enrolled in such New Offering Period. In addition,
participants shall automatically be withdrawn as of April 30, 2000 from the
Offering Period beginning on the IPO Date and re-enrolled in the Offering Period
beginning on May 1, 2000 if the Fair Market Value of the Shares on the IPO Date
is greater than the Fair Market Value of the Shares for the May 1, 2000 Offering
Date unless a participant notifies the Administrator prior to April 30, 2000
that he or she does not wish to be withdrawn and re-enrolled under these
circumstances.

                                      -6-
<PAGE>

All payroll deductions accumulated in a participant's account as of any
withdrawal date pursuant to this Section 11 shall be returned to the
participant.

     12.  Interest.  No interest shall accrue on the Contributions of a
participant in the Plan.

     13.  Stock.

          (a)  Subject to adjustment as provided in Section 19, the maximum
number of Shares which shall be made available for sale under the Plan shall be
233,333 Shares, plus an annual increase on the first day of each of the
Company's fiscal years beginning in 2001 through 2010 equal to the lesser of (i)
266,666 Shares (before giving effect to a stock split effected in connection
with the Company's initial public offering), (ii) one percent (1%) of the Shares
outstanding on the last day of the immediately preceding fiscal year, or (iii)
such lesser number of Shares as is determined by the Board.  If the Board
determines that, on a given Purchase Date, the number of shares with respect to
which options are to be exercised may exceed (i) the number of shares of Common
Stock that were available for sale under the Plan on the Offering Date of the
applicable Offering Period, or (ii) the number of shares available for sale
under the Plan on such Purchase Date, the Board may in its sole discretion
provide (x) that the Company shall make a pro rata allocation of the Shares of
Common Stock available for purchase on such Offering Date or Purchase Date, as
applicable, in as uniform a manner as shall be practicable and as it shall
determine in its sole discretion to be equitable among all participants
exercising options to purchase Common Stock on such Purchase Date, and continue
all Offering Periods then in effect, or (y) that the Company shall make a pro
rata allocation of the shares available for purchase on such Offering Date or
Purchase Date, as applicable, in as uniform a manner as shall be practicable and
as it shall determine in its sole discretion to be equitable among all
participants exercising options to purchase Common Stock on such Purchase Date,
and terminate any or all Offering Periods then in effect pursuant to Section 20
below.  The Company may make pro rata allocation of the Shares available on the
Offering Date of any applicable Offering Period pursuant to the preceding
sentence, notwithstanding any authorization of additional Shares for issuance
under the Plan by the Company's stockholders subsequent to such Offering Date.

          (b)  The participant shall have no interest or voting right in Shares
covered by his or her option until such option has been exercised.

          (c)  Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.

     14.  Administration.  The Board, or a committee named by the Board, shall
supervise and administer the Plan and shall have full power to adopt, amend and
rescind any rules deemed desirable and appropriate for the administration of the
Plan and not inconsistent with the Plan, to construe and interpret the Plan, and
to make all other determinations necessary or advisable for the administration
of the Plan.

                                      -7-
<PAGE>

     15.  Designation of Beneficiary.

          (a)  A participant may file a written designation of a beneficiary who
is to receive any Shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end of a
Purchase Period but prior to delivery to him or her of such Shares and cash.  In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to the Purchase Date of an Offering Period.
If a participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.

          (b)  Such designation of beneficiary may be changed by the participant
(and his or her spouse, if any) at any time by written notice.  In the event of
the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant's death,
the Company shall deliver such Shares and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company,
in its discretion, may deliver such Shares and/or cash to the spouse or to any
one or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.

     16.  Transferability.  Neither Contributions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
Shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 15) by the participant.  Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds in accordance with Section 10.

     17.  Use of Funds.  All Contributions received or held by the Company under
the Plan may be used by the Company for any corporate purpose, and the Company
shall not be obligated to segregate such Contributions.

     18.  Reports.  Individual accounts will be maintained for each participant
in the Plan.  Statements of account will be given to participating Employees at
least annually, which statements will set forth the amounts of Contributions,
the per Share Purchase Price, the number of Shares purchased and the remaining
cash balance, if any.

     19.  Adjustments Upon Changes in Capitalization; Corporate Transactions.

          (a)  Adjustment.  Subject to any required action by the stockholders
of the Company, the number of Shares covered by each option under the Plan which
has not yet been exercised and the number of Shares which have been authorized
for issuance under the Plan but have not yet been placed under option
(collectively, the "Reserves"), as well as the maximum number of shares of
Common Stock which may be purchased by a participant in a Purchase Period, the
number of shares of Common Stock set forth in Section 13(a) above, and the price
per Share of Common Stock covered by each option under the Plan which has not
yet been

                                      -8-
<PAGE>

exercised, shall be proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock (including any
such change in the number of Shares of Common Stock effected in connection with
a change in domicile of the Company), or any other increase or decrease in the
number of Shares effected without receipt of consideration by the Company;
provided however that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of Shares subject to
an option.

          (b)  Corporate Transactions.  In the event of a dissolution or
liquidation of the Company, any Purchase Period and Offering Period then in
progress will terminate immediately prior to the consummation of such action,
unless otherwise provided by the Board. In the event of a Corporate Transaction,
each option outstanding under the Plan shall be assumed or an equivalent option
shall be substituted by the successor corporation or a parent or Subsidiary of
such successor corporation.  In the event that the successor corporation refuses
to assume or substitute for outstanding options, each Purchase Period and
Offering Period then in progress shall be shortened and a new Purchase Date
shall be set (the "New Purchase Date"), as of which date any Purchase Period and
Offering Period then in progress will terminate.  The New Purchase Date shall be
on or before the date of consummation of the transaction and the Board shall
notify each participant in writing, at least ten (10) days prior to the New
Purchase Date, that the Purchase Date for his or her option has been changed to
the New Purchase Date and that his or her option will be exercised automatically
on the New Purchase Date, unless prior to such date he or she has withdrawn from
the Offering Period as provided in Section 10.  For purposes of this Section 19,
an option granted under the Plan shall be deemed to be assumed, without
limitation, if, at the time of issuance of the stock or other consideration upon
a Corporate Transaction, each holder of an option under the Plan would be
entitled to receive upon exercise of the option the same number and kind of
shares of stock or the same amount of property, cash or securities as such
holder would have been entitled to receive upon the occurrence of the
transaction if the holder had been, immediately prior to the transaction, the
holder of the number of Shares of Common Stock covered by the option at such
time (after giving effect to any adjustments in the number of Shares covered by
the option as provided for in this Section 19); provided however that if the
consideration received in the transaction is not solely common stock of the
successor corporation or its parent (as defined in Section 424(e) of the Code),
the Board may, with the consent of the successor corporation, provide for the
consideration to be received upon exercise of the option to be solely common
stock of the successor corporation or its parent equal in Fair Market Value to
the per Share consideration received by holders of Common Stock in the
transaction.

     The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per Share
of Common Stock covered by each outstanding option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of Shares of its outstanding

                                      -9-
<PAGE>

Common Stock, and in the event of the Company's being consolidated with or
merged into any other corporation.

     20.  Amendment or Termination.

          (a)  The Board may at any time and for any reason terminate or amend
the Plan.  Except as provided in Section 19, no such termination of the Plan may
affect options previously granted, provided that the Plan or an Offering Period
may be terminated by the Board on a Purchase Date or by the Board's setting a
new Purchase Date with respect to an Offering Period and Purchase Period then in
progress if the Board determines that termination of the Plan and/or the
Offering Period is in the best interests of the Company and the stockholders or
if continuation of the Plan and/or the Offering Period would cause the Company
to incur adverse accounting charges as a result of a change after the effective
date of the Plan in the generally accepted accounting rules applicable to the
Plan.  Except as provided in Section 19 and in this Section 20, no amendment to
the Plan shall make any change in any option previously granted which adversely
affects the rights of any participant.  In addition, to the extent necessary to
comply with Rule 16b-3 under the Exchange Act, or under Section 423 of the Code
(or any successor rule or provision or any applicable law or regulation), the
Company shall obtain stockholder approval in such a manner and to such a degree
as so required.

          (b)  Without stockholder consent and without regard to whether any
participant rights may be considered to have been adversely affected, the Board
(or its committee) shall be entitled to change the Offering Periods and Purchase
Periods, limit the frequency and/or number of changes in the amount withheld
during an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in
excess of the amount designated by a participant in order to adjust for delays
or mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from
the participant's Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion
advisable which are consistent with the Plan.

     21.  Notices.  All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

     22.  Conditions Upon Issuance of Shares.  Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such Shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, applicable state securities laws and the requirements of
any stock exchange upon which the Shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

                                      -10-

<PAGE>

     As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.

     23.  Term of Plan; Effective Date.  The Plan shall become effective upon
the IPO Date.  It shall continue in effect for a term of twenty (20) years
unless sooner terminated under Section 20.

                                      -11-
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

                       2000 EMPLOYEE STOCK PURCHASE PLAN
                              ENROLLMENT AGREEMENT



                                                             New Election ______
                                                       Change of Election ______


     1.   I, ________________________, hereby elect to participate in the
Metawave Communications Corporation 2000 Employee Stock Purchase Plan (the
"Plan") for the Offering Period ______________, ____ to _______________, ____,
and subscribe to purchase shares of the Company's Common Stock in accordance
with this Enrollment Agreement and the Plan.

     2.   I elect to have Contributions in the amount of ____% of my
Compensation, as those terms are defined in the Plan, applied to this purchase.
I understand that this amount (together with any other amounts I am contributing
under the Plan) must not be less than 1% and not more than 15% of my
Compensation during the Offering Period. (Please note that no fractional
percentages are permitted).

     3.   I hereby authorize payroll deductions from each paycheck during the
Offering Period at the rate stated in Item 2 of this Enrollment Agreement.  I
understand that all payroll deductions made by me shall be credited to my
account under the Plan and that I may not make any additional payments into such
account.  I understand that all payments made by me shall be accumulated for the
purchase of shares of Common Stock at the applicable purchase price determined
in accordance with the Plan.  I further understand that, except as otherwise set
forth in the Plan, shares will be purchased for me automatically on the Purchase
Date of each Offering Period unless I otherwise withdraw from the Plan by giving
written notice to the Company for such purpose.

     4.   I understand that I may discontinue at any time prior to the Purchase
Date my participation in the Plan as provided in Section 10 of the Plan.  I also
understand that I can increase or decrease the rate of my Contributions during
an Offering Period by completing and filing with the Company a new Enrollment
Agreement with such increase or decrease taking effect as of the next following
May 1 or November 1, as applicable, within the Offering Period, if filed at
least ten (10) business days prior to the beginning of such month.  Further, I
may change the rate of deductions for future Offering Periods by filing a new
Enrollment Agreement, and any such change will be effective as of the beginning
of the next Offering Period.  In addition, I acknowledge that, unless I
discontinue my participation in the Plan as provided in Section 10 of the Plan,
my election will continue to be effective for each successive Offering Period.

     5.   I have received a copy of the Company's most recent description of the
Plan and a copy of the complete "Metawave Communications Corporation 2000
Employee Stock Purchase

<PAGE>

Plan." I understand that my participation in the Plan is in all respects subject
to the terms of the Plan.

     6.   Shares purchased for me under the Plan should be issued in the name(s)
of (name of employee or employee and spouse only):

                                       ____________________________________

                                       ____________________________________

     7.   In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due to me under the Plan:


NAME:  (Please print)                  ____________________________________
                                       (First)       (Middle)        (Last)

__________________________________     ____________________________________
(Relationship)                         (Address)


Social Security #:________________     ____________________________________

     8.   I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Offering Date (the first day of the
Offering Period during which I purchased such shares) or within 1 year after the
Purchase Date, I will be treated for federal income tax purposes as having
received ordinary compensation income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares on the
Purchase Date over the price which I paid for the shares, regardless of whether
I disposed of the shares at a price less than their fair market value at the
Purchase Date. The remainder of the gain or loss, if any, recognized on such
disposition will be treated as capital gain or loss.

     I hereby agree to notify the Company in writing within 30 days after the
date of any such disposition, and I will make adequate provision for federal,
state or other tax withholding obligations, if any, which arise upon the
disposition of the Common Stock. The Company shall be entitled, to the extent
required by applicable law, to withhold from my Compensation any amount
necessary to comply with applicable tax withholding requirements with respect to
the purchase or sale of shares under the Plan.

     9.   If I dispose of such shares at any time after expiration of the 2-year
and 1-year holding periods, I understand that I will be treated for federal
income tax purposes as having received compensation income only to the extent of
an amount equal to the lesser of (1) the excess of the fair market value of the
shares at the time of such disposition over the purchase price which I paid for
the shares under the option, or (2) 15% of the fair market value of the shares
on the Offering Date. The remainder of the gain or loss, if any, recognized on
such disposition will be treated as capital gain or loss.

                                      -2-
<PAGE>

     I understand that this tax summary is only a summary and is subject to
change.  I further understand that I should consult a tax advisor concerning the
tax implications of the purchase and sale of stock under the Plan.

     10.  In connection with the initial public offering of the Company's
securities and upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities, I agree not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose
of any securities of the Company, however or whenever I acquired them, without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed 180 days) from the effective date of
such registration as may be requested by the Company or such managing
underwriters and to execute an agreement reflecting the foregoing as may be
requested by the underwriters at the time of the public offering.

     11.  I hereby agree to be bound by the terms of the Plan. The effectiveness
of this Enrollment Agreement is dependent upon my eligibility to participate in
the Plan.


NAME (print):
             -----------------------------

SIGNATURE:
          --------------------------------

SOCIAL SECURITY #:
                  ------------------------

DATE:
     -------------------------------------


SPOUSE'S SIGNATURE (necessary
if beneficiary is not spouse):


- ------------------------------------------
(Signature)


- ------------------------------------------
(Print name)


                                      -3-
<PAGE>

                      METAWAVE COMMUNICATIONS CORPORATION

                       2000 EMPLOYEE STOCK PURCHASE PLAN

                              NOTICE OF WITHDRAWAL


     I, __________________________, hereby elect to withdraw my participation in
the Metawave Communications Corporation 2000 Employee Stock Purchase Plan (the
"Plan") for the Offering Period that began on _________ ___, _____.  This
withdrawal covers all Contributions credited to my account and is effective on
the date designated below.

     I understand that all Contributions credited to my account will be paid to
me within ten (10) business days of receipt by the Company of this Notice of
Withdrawal and that my option for the current period will automatically
terminate, and that no further Contributions for the purchase of shares can be
made by me during the Offering Period.

     The undersigned further understands and agrees that he or she shall be
eligible to participate in succeeding offering periods only by delivering to the
Company a new Enrollment Agreement.


Dated:___________________           _______________________________________
                                    Signature of Employee


                                    _______________________________________
                                    Social Security Number


<PAGE>

                                                                    EXHIBIT 10.5

                      METAWAVE COMMUNICATIONS CORPORATION

                       1998 DIRECTORS' STOCK OPTION PLAN

                        (as amended February 10, 2000)


     1.   Purposes of the Plan.  The purposes of this Directors' Stock Option
Plan are to attract and retain the best available personnel for service as
Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their continued
service on the Board.

          All options granted hereunder shall be nonstatutory stock options.

     2.   Definitions.  As used herein, the following definitions shall apply:

          (a)  "Board" shall mean the Board of Directors of the Company.

          (b)  "Code" shall mean the Internal Revenue Code of 1986, as amended.

          (c)  "Common Stock" shall mean the Common Stock of the Company.

          (d)  "Company" shall mean Metawave Communications Corporation, a
Delaware corporation.

          (e)  "Continuous Status as a Director" shall mean the absence of any
interruption or termination of service as a Director.

          (f)  "Control Transaction" means:

          (i)  any merger, consolidation, or statutory or contractual share
exchange in which there is no group of persons who held a majority of the
outstanding Common Stock immediately prior to the transaction who continue to
hold, immediately following the transaction, at least a majority of the combined
voting power of the outstanding shares of that class of capital stock (herein,
"Voting Stock") which ordinarily (and apart from rights accruing under special
circumstances) has the right to vote in the election of directors of the Company
(or of any other corporation or entity whose securities are issued in such
transaction wholly or partially in exchange for Common Stock);

               (ii)  any liquidation or dissolution of the Company;

               (iii) any transaction (or series of related transactions)
involving the sale, lease, exchange or other transfer not in the ordinary course
of business of all, or substantially all, of the assets of the Company; or

               (iv)  any transaction (or series of related transactions) in
which any person (including, without limitation, any natural person, any
corporation or other legal entity,
<PAGE>

and any person as defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act,
other than the Company or any employee benefit plan sponsored by the Company):

                    (A)  purchases any Common Stock (or securities convertible
into Common Stock) for cash, securities or any other consideration pursuant to a
tender offer or exchange offer subject to the requirements of the Exchange Act,
or

                    (B)  directly or indirectly becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act) of securities of the Company
which, when aggregated with such person's beneficial ownership prior to such
transaction, either (x) represent 30% or more (50% or more if the Company is not
then subject to the requirements of the Exchange Act) (the "Control Percentage")
of the combined voting power of the then outstanding Voting Stock of the
Company, or (y) if such person's beneficial ownership prior to such transaction
already exceeded the applicable Control Percentage, result in an increase in
such holder's beneficial ownership percentage (all such percentages being
calculated as provided in Rule 13d-3(d) under the Exchange Act with respect to
rights to acquire the Company's securities).

          All references in this definition to specific sections of or rules
promulgated under the Exchange Act shall apply whether or not the Company is
then subject to the requirements of the Exchange Act.

          (g)  "Director" shall mean a member of the Board.

          (h)  "Employee" shall mean any person, including any officer or
director, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.

          (i)  "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

          (j)  "Option" shall mean a stock option granted pursuant to the Plan.
All options shall be nonstatutory stock options (i.e., options that are not
intended to qualify as incentive stock options under Section 422 of the Code).

          (k)  "Optioned Stock" shall mean the Common Stock subject to an
Option.

          (l)  "Optionee" shall mean an Outside Director who receives an Option.

          (m)  "Outside Director" shall mean a Director who is not an Employee.

          (n)  "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

          (o)  "Plan" shall mean this 1998 Directors' Stock Option Plan.
<PAGE>

          (p)  "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.

          (q)  "Stock Exchange" means any stock exchange or consolidated stock
price reporting system on which prices for the Common Stock are quoted at any
given time.

          (r)  "Subsidiary" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.

     3.   Stock Subject to the Plan.  Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 466,666 Shares (the "Pool") of Common Stock.  The Shares may
be authorized, but unissued, or reacquired Common Stock.

          If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.  If Shares which were acquired upon exercise of an
Option are subsequently repurchased by the Company, such Shares shall not in any
event be returned to the Plan and shall not become available for future grant
under the Plan.

     4.   Administration of and Grants of Options under the Plan.

          (a)  Administrator.  Except as otherwise required herein, the Plan
shall be administered by the Board.

          (b)  Procedure for Grants Effective following Initial Public Offering.
All grants of Options hereunder after the effectiveness date of a registration
statement under the Securities Act of 1933 relating to the Company's initial
public offering of securities ("IPO Effective Date") shall be automatic and
nondiscretionary and shall be made strictly in accordance with the following
provisions:

               (i)   No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.

               (ii)  Each Outside Director who first becomes an Outside Director
after the IPO Effective Date shall automatically be granted an Option to
purchase 25,000 Shares (before giving effect to a stock split effected in
connection with the Company's initial public offering) (the "First Option") on
the date on which such person first becomes an Outside Director, whether through
election by the stockholders of the Company or appointment by the Board of
Directors to fill a vacancy.

               (iii) Each Outside Director shall automatically be granted an
Option to purchase 10,000 Shares (before giving effect to a stock split effected
in connection with the Company's initial public offering) (a "Subsequent
Option") on the date of each Annual Meeting of the Company's stockholders
immediately following which such Outside Director is serving on
<PAGE>

the Board, provided that, on such date, the IPO Effective Date shall have
occurred and he or she shall have served on the Board for at least six (6)
months prior to the date of such Annual Meeting.

               (iv)  Notwithstanding the provisions of subsections (b) and (c)
hereof, in the event that a grant would cause the number of Shares subject to
outstanding Options plus the number of Shares previously purchased upon exercise
of Options to exceed the Pool, then each such automatic grant shall be for that
number of Shares determined by dividing the total number of Shares remaining
available for grant by the number of Outside Directors receiving an Option on
such date on the automatic grant date. Any further grants shall then be deferred
until such time, if any, as additional Shares become available for grant under
the Plan through action of the stockholders to increase the number of Shares
which may be issued under the Plan or through cancellation or expiration of
Options previously granted hereunder.

               (v)   Notwithstanding the provisions of subsections (ii) and
(iii) hereof, any grant of an Option made before the Company has obtained
stockholder approval of the Plan in accordance with Section 17 hereof shall be
conditioned upon obtaining such stockholder approval of the Plan in accordance
with Section 17 hereof.

               (vi)  The terms of each First Option granted hereunder shall be
as follows:

                     (A) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Section 9 hereof;

                     (B) the exercise price per Share shall be 100% of the fair
market value per Share on the date of grant of the First Option, determined in
accordance with Section 8 hereof; and

                     (C) the First Option shall become exercisable in
installments cumulatively as to 25% of the Shares subject to the First Option on
the first anniversary of the date of grant of the Option and one-forty-eighth
(1/48th) of the total number of Shares subject to the Option shall vest ratably
at the end of each month thereafter upon Optionee's completion of each month of
Continuous Status as a Director.

               (vii) The terms of each Subsequent Option granted hereunder
shall be as follows:

                     (A) the Subsequent Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in
Section 9 hereof;

                     (B) the exercise price per Share shall be 100% of the fair
market value per Share on the date of grant of the Subsequent Option, determined
in accordance with Section 8 hereof; and

                     (C) the Subsequent Option shall become exercisable in
installments cumulatively as to one-thirty-sixth (1/36th) of the Shares subject
to the Subsequent
<PAGE>

Option at the end of each month following the date of grant upon Optionee's
completion of each month of Continuous Status as a Director.

          (c)  Procedure for Grants prior to Initial Public Offering.  Prior to
the IPO Effective Date, the Board (or one or more committees of the Board) shall
administer the Plan and may grant options to Directors on such terms and
conditions, not inconsistent with the terms of the Plan, as it determines.

          (d)  Powers of the Board.  Subject to the provisions and restrictions
of the Plan, the Board shall have the authority, in its discretion:  (i) to
determine, upon review of relevant information and in accordance with Section
8(b) of the Plan, the fair market value of the Common Stock; (ii) to determine
the exercise price per Share of Options to be granted, which exercise price
shall be determined in accordance with Section 8(a) of the Plan; (iii) to
interpret the Plan; (iv) to prescribe, amend and rescind rules and regulations
relating to the Plan; (v) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option previously
granted hereunder; and (vi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.

          (e)  Effect of Board's Decision.  All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.

          (f)  Suspension or Termination of Option.  If the President or his or
her designee reasonably believes that an Optionee has committed an act of
misconduct, the President may suspend the Optionee's right to exercise any
option pending a determination by the Board of Directors (excluding the Outside
Director accused of such misconduct).  If the Board of Directors (excluding the
Outside Director accused of such misconduct) determines an Optionee has
committed an act of embezzlement, fraud, dishonesty, nonpayment of an obligation
owed to the Company, breach of fiduciary duty or deliberate disregard of the
Company rules resulting in loss, damage or injury to the Company, or if an
Optionee makes an unauthorized disclosure of any Company trade secret or
confidential information, engages in any conduct constituting unfair
competition, induces any Company customer to breach a contract with the Company
or induces any principal for whom the Company acts as agent to terminate such
agency relationship, neither the Optionee nor his or her estate shall be
entitled to exercise any option whatsoever.  In making such determination, the
Board of Directors (excluding the Outside Director accused of such misconduct)
shall act fairly and shall give the Optionee an opportunity to appear and
present evidence on Optionee's behalf at a hearing before the Board or a
committee of the Board.

     5.   Eligibility.  Options may be granted only to Outside Directors.  After
the IPO Effective Date, all Options shall be automatically granted in accordance
with the terms set forth in Section 4(b) hereof.  An Outside Director who has
been granted an Option may, if he or she is otherwise eligible, be granted an
additional Option or Options in accordance with such provisions.

          The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in
<PAGE>

any way with any rights which the Director or the Company may have to terminate
his or her directorship at any time.

     6.   Term of Plan; Effective Date.  The Plan shall become effective on the
date of its adoption by the Board of Directors.  It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 13 of the Plan.

     7.   Term of Options.  The term of each Option shall be ten (10) years from
the date of grant thereof.

     8.   Exercise Price and Consideration

          (a)  Exercise Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be 100% of the fair market value
per Share on the date of grant of the Option.

          (b)  Fair Market Value.  The fair market value shall be determined by
the Board; provided, however, that where there is a public market for the Common
Stock, the fair market value per Share shall be the mean of the bid and asked
prices of the Common Stock in the over-the-counter market on the date of grant,
as reported in The Wall Street Journal (or, if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated Quotation
("Nasdaq") System) or, in the event the Common Stock is traded on the Nasdaq
National Market or listed on a stock exchange, the fair market value per Share
shall be the closing price on such system or exchange on the date of grant of
the Option (or, in the event that the Common Stock is not traded on such date,
on the immediately preceding trading date), as reported in The Wall Street
Journal.  With respect to any Options granted hereunder concurrently with the
initial effectiveness of the Plan, the fair market value shall be the Price to
Public as set forth in the final prospectus relating to such initial public
offering.

          (c)  Form of Consideration.  The consideration to be paid for the
Shares to be issued upon exercise of an Option shall consist entirely of cash,
check, other Shares of Common Stock having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised (which, if acquired from the Company, shall have been
held for at least six months), or any combination of such methods of payment
and/or any other consideration or method of payment as shall be permitted under
applicable corporate law.

     9.   Exercise of Option

          (a)  Procedure for Exercise; Rights as a Stockholder.  Any Option
granted hereunder shall be exercisable at such times as are set forth by (i) the
Administrator with respect to Options granted prior to the IPO Effective Date
and (ii) by 4(b) hereof with respect to Options granted after the IPO Effective
Date; provided, however, that after the IPO Effective Date, no Options shall be
exercisable prior to stockholder approval of the Plan in accordance with Section
17 hereof.

               An Option may not be exercised for a fraction of a Share.
<PAGE>

               An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 8(c) of the Plan. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. A share certificate for the number of Shares so acquired shall be issued
to the Optionee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.

               Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

          (b)  Termination of Status as a Director.  If an Outside Director
ceases to serve as a Director, he or she may, but only within ninety (90) days
after the date he or she ceases to be a Director of the Company, exercise his or
her Option to the extent that he or she was entitled to exercise it at the date
of such termination.  Notwithstanding the foregoing, in no event may the Option
be exercised after its term set forth in Section 7 has expired.  To the extent
that such Outside Director was not entitled to exercise an Option at the date of
such termination, or does not exercise such Option (which he or she was entitled
to exercise) within the time specified herein, the Option shall terminate.

          (c)  Disability of Optionee.  Notwithstanding Section 9(b) above, in
the event a Director is unable to continue his or her service as a Director with
the Company as a result of his or her total and permanent disability (as defined
in Section 22(e)(3) of the Code), he or she may, but only within six (6) months
(or such other period of time not exceeding twelve (12) months as is determined
by the Board) from the date of such termination, exercise his or her Option to
the extent he or she was entitled to exercise it at the date of such
termination.  Notwithstanding the foregoing, in no event may the Option be
exercised after its term set forth in Section 7 has expired.  To the extent that
he or she was not entitled to exercise the Option at the date of termination, or
if he or she does not exercise such Option (which he or she was entitled to
exercise) within the time specified herein, the Option shall terminate.

          (d)  Death of Optionee.  In the event of the death of an Optionee
during the period of Continuous Status as a Director since the date of grant of
the Option, or within thirty (30) days following termination of Optionee's
Continuous Status as a Director, the Option may be exercised, at any time within
six (6) months following the date of death (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), by Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise Shares that are not subject to repurchase that had accrued at
the date of death or, if earlier, the date of termination of Optionee's
Continuous Status as a Director.  To the extent that Optionee was not entitled
to exercise the
<PAGE>

Option at the date of death or termination, as the case may be, or if Optionee
does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.

     10.  Transferability of Options.   Options may not be sold, pledged,
assigned, hypothecated, or disposed of in any manner other than by will or by
the laws of descent or distribution or pursuant to a qualified domestic
relations order;  provided, however, that Options shall be transferable under
the terms and conditions established by the Administrator to the following
recipients: a family trust established by the Optionee, a family limited
partnership established by the Optionee, a member of Optionee's immediate family
or to a partnership or other entity of which Optionee is a general partner or in
which Optionee plays a similar managerial role.  Any such transfer shall be
subject to the applicable laws.  An Option may be exercised, during the lifetime
of the Optionee, only by the Optionee or a transferee permitted by this Section
10.

     11.  Adjustments Upon Changes in Capitalization, Merger or Certain Other
Transactions.

          (a)  Changes in Capitalization.  Subject to any required action by the
stockholders of the Company, the number of Shares of Common Stock covered by
each outstanding Option, the number of Shares specified in Section 4(b) above,
and the number of Shares of Common Stock that have been authorized for issuance
under the Plan but as to which no Options have yet been granted or that have
been returned to the Plan upon cancellation or expiration of an Option, as well
as the price per Share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination, recapitalization or reclassification of the Common
Stock, or any other increase or decrease in the number of issued Shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration."  Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive.  Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
of Common Stock subject to an Option.

          (b)  Dissolution or Liquidation.  In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the Optionee
at least fifteen (15) days prior to such proposed action.  To the extent it has
not been previously exercised, the Option will terminate immediately prior to
the consummation of such proposed action.

          (c)  Control Transaction.

          (i)  Following Initial Public Offering. With respect to Options issued
under this Plan following the Company's initial public offering, this Section
11(c)(i) shall govern. In the event of a Control Transaction, each such
outstanding Option shall be assumed or an equivalent option or right shall be
substituted by the Company's successor corporation or a
<PAGE>

parent or subsidiary of such successor corporation (the "Successor
Corporation"), unless the Successor Corporation does not agree to assume the
award or to substitute an equivalent option, in which case the vesting and
exercisability of each such Option shall accelerate as to that number of Shares
that would otherwise have vested and been exercisable as of the date 12 months
or 24 months from the date of consummation of the transaction (assuming the
Optionee had remained in Continuous Status as a Director for such 12 or 24 month
period), depending upon whether as of the date of such consummation the Optionee
has been in Continuous Status as a Director less than two years, or two years or
more, respectively. To the extent that an Option is not exercised prior to
consummation of a Control Transaction in which the Option is not being assumed
or substituted, such Option shall terminate upon the consummation. Any exercise
may be made contingent upon consummation of a Control Transaction if so elected
by the Optionee in his or her notice of exercise, and must be made contingent
upon such consummation with respect to any portion of an Option entitled to
accelerated vesting under this Section 11(c)(i).

               (ii)  Prior to Initial Public Offering. With respect to Options
issued under the Plan prior to the Company's initial public offering, in the
event of a Control Transaction, this Section 11(c)(ii) shall govern:

                     (A) The Company shall provide each Optionee with notice of
the pendency of any Control Transaction (i) at least thirty (30) days prior to
the expected date of consummation of a Control Transaction that has been
approved or recommended by the Board, or (ii) promptly after the Board becomes
aware of the pendency or occurrence of a proposed or completed Control
Transaction that has not been approved or recommended by the Board.

                     (B) Each Optionee shall be entitled to exercise the vested
portion of the Option at any time prior to consummation of a Control
Transaction. If the terms of the Option prescribe a time-based vesting schedule,
the Optionee shall, conditioned upon consummation of the Control Transaction and
upon the Optionee's continuing to serve as a Director through the date of such
consummation, be entitled to accelerated vesting credit equal to either twelve
months or twenty-four months of additional vesting beyond that otherwise
scheduled, based on whether he or she has been in Continuous Status as a
Director less than two years, or two years or more, respectively, as of the date
of such consummation; provided, however, that the acceleration provided for
above shall not apply with respect to any Option which is assumed by or as to
which the acquiring person or the surviving corporation, as the case may be,
provides for the substitution of a new option for the Option on terms which are,
as nearly as practicable, the financial equivalent of the Option (taking into
account the consideration for which the Common Stock is to be exchanged in the
Control Transaction).

                     (C) Any exercise may be made contingent upon consummation
of a Control Transaction if so elected by the Optionee in his or her notice of
exercise, and must be made contingent upon such consummation with respect to any
portion of an Option entitled to accelerated vesting under the second sentence
of Section 11(c)(ii)(B) above.

                     (D) Upon consummation of a Control Transaction that has
been approved or recommended by the Board, all unexercised Options shall expire,
except to the
<PAGE>

extent that they are assumed or replaced with equivalent awards pursuant to the
second sentence of Section 11(c)(ii)(B) above.

               (iii) Definition of Assumption. For purposes of this Section
11(c), an Option shall be considered assumed, without limitation, if, at the
time of issuance of the stock or other consideration upon a Control Transaction,
each holder of an Option would be entitled to receive upon exercise of the award
the same number and kind of shares of stock or the same amount of property, cash
or securities as such holder would have been entitled to receive upon the
occurrence of the transaction if the holder had been, immediately prior to such
transaction, the holder of the number of Shares of Common Stock covered by the
award at such time (after giving effect to any adjustments in the number of
Shares covered by the Option as provided for in this Section 11); provided that
if such consideration received in the transaction is not solely common stock of
the Successor Corporation, the Administrator may, with the consent of the
Successor Corporation, provide for the consideration to be received upon
exercise of the award to be solely common stock of the Successor Corporation
equal to the Fair Market Value of the per Share consideration received by
holders of Common Stock in the transaction.

          (d)  Certain Distributions.  In the event of any distribution to the
Company's stockholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.

     12.  Time of Granting Options.  With respect to Options granted after the
IPO Effective Date, the date of grant of an Option shall, for all purposes, be
the date determined in accordance with Section 4(b) hereof.  Notice of the
determination shall be given to each Outside Director to whom an Option is so
granted within a reasonable time after the date of such grant.

     13.  Amendment and Termination of the Plan

          (a)  Amendment and Termination.  The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that, to the extent necessary and desirable to comply with Rule 16b-3
under the Exchange Act (or any other applicable law or regulation), the Company
shall obtain approval of the stockholders of the Company to Plan amendments to
the extent and in the manner required by such law or regulation.
Notwithstanding the foregoing, the provisions set forth in Section 4 of this
Plan (and any other Sections of this Plan that affect the formula award terms
required to be specified in this Plan by Rule 16b-3) shall not be amended more
than once every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder.

          (b)  Effect of Amendment or Termination.  Any such amendment or
termination of the Plan that would impair the rights of any Optionee shall not
affect Options already granted to such Optionee and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the
<PAGE>

Optionee and the Board, which agreement must be in writing and signed by the
Optionee and the Company.

     14.  Conditions Upon Issuance of Shares.  Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. As a
condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares, if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.

     15.  Reservation of Shares.  The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.  Inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

     16.  Option Agreement.  Options shall be evidenced by written option
agreements in such form as the Board shall approve.

     17.  Stockholder Approval.  Continuance of the Plan shall be subject to
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the granting of an Option hereunder.
If such stockholder approval is obtained at a duly held stockholders' meeting,
it may be obtained by the affirmative vote of the holders of a majority of the
outstanding Shares of the Company present or represented and entitled to vote
thereon.

<PAGE>

                                                                   EXHIBIT 10.10
                                LOAN AGREEMENT



THIS LOAN AGREEMENT is entered into as of October 14, 1997 (this "Loan
Agreement") between METAWAVE COMMUNICATIONS CORPORATION, a Delaware corporation
(herein called "Borrower"), and IMPERIAL BANK (herein called "Bank").

     1.   COMMITMENT.

          A.   FACILITY-A COMMITMENT.  Subject to all the terms and conditions
of this Loan Agreement and prior to the termination of its commitment as
hereinafter provided, Bank hereby agrees to make loans (each a "Facility-A
Loan") to Borrower, from time to time and in such amounts as Borrower shall
request pursuant to this SECTION 1.A., up to an aggregate principal amount
outstanding under the Facility-A Loan Account (as hereinafter defined) not to
exceed the least of:  (a) Eighty percent (80%) of Eligible Accounts (the
"Borrowing Base") or (b) $5,000,000.00 (the "Facility-A Commitment").  If at any
time or for any reason, the outstanding principal amount of the Facility-A Loan
Account is greater than the least of:  (x) the Borrowing Base or (y) the
Facility-A Commitment, Borrower shall immediately pay to Bank, in cash, the
amount of such excess.  Any commitment of Bank, pursuant to the terms of this
Loan Agreement, to make Facility-A Loans shall expire on the Facility-A Maturity
Date (as hereinafter defined), subject to Bank's right to renew said commitment
in its sole and absolute discretion at Borrower's request.  Any such renewal of
said commitment shall not be binding upon Bank unless it is in writing and
signed by an officer of Bank.  Provided that no Event of Default (as hereinafter
defined) has occurred and is continuing, all or any portion of the Facility-A
Loans advanced by Bank which are repaid by Borrower shall be available for
reborrowing in accordance with the terms hereof.  Borrower promises to pay to
Bank the entire outstanding unpaid principal balance (and all accrued unpaid
interest thereon) of the Facility-A Loan Account on October 14, 1999 ("Facility-
A Maturity Date").

               (1)  FACILITY-A LOANS. The amount of each Facility-A Loan made by
Bank to Borrower hereunder shall be debited to the loan ledger account of
Borrower maintained by Bank for the Facility-A Commitment (herein called the
"Facility-A Loan Account") and Bank shall credit the Facility-A Loan Account
with all loan repayments in respect thereof made by Borrower. When Borrower
desires to obtain a Facility-A Loan, Borrower shall notify Bank (which notice
shall be signed by an officer of Borrower and shall be irrevocable) in
accordance with SECTION 2 hereof, to be received no later than 3:00 p.m. Pacific
time one (1) Banking Day (as hereinafter defined) before the day on which the
Facility-A Loan is to be made. Facility-A Loans may only be used for working
capital purposes and the issuance of letters of credits.

                    (a)  LETTER OF CREDIT USAGE AND SUBLIMIT. Subject to the
availability of the Facility-A Commitment and in reliance on the representations
and warranties of Borrower set forth herein, at any time and from time to time
from the date hereof through the Banking Day immediately prior to the Facility-A
Maturity Date, Bank shall issue for the account of Borrower such standby and
commercial letters of credit ("Letters of Credit") as Borrower may request,
which request shall be made by delivering to Bank a duly executed letter of
credit application on Bank's standard form; provided, however, that the
outstanding and undrawn amounts under all such Letters of Credit (i) shall not
at any time exceed $3,000,000.00 and (ii) shall be deemed to constitute
Facility-A Loans for the purpose of calculating availability under the
Facility-A Commitment. Unless Borrower shall have deposited with Bank cash
collateral in an amount sufficient to cover all undrawn amounts under each such
Letter of Credit and Bank shall have agreed in writing, no Letter of Credit
shall have an expiration date that is later than the Facility-A Maturity Date.
All Letters of Credit shall be in form and substance acceptable to Bank in its
sole discretion and shall be subject to the terms and conditions of Bank's
application and letter of credit agreement, in the form of EXHIBIT B attached
hereto and incorporated herein by this reference. Borrower will pay any standard
issuance and other fees that Bank notifies Borrower will be charged for issuing
and processing Letters of Credit for Borrower.

               (2)  LIMITATION ON ADVANCE OF ANY FACILITY-A LOAN.
Notwithstanding any of the provisions contained in SECTION 1.A hereof, prior to
any advance of a Facility-A Loan, a representative of Bank shall have conducted
an audit of Borrower's books and records relating to the Collateral and made
extracts therefrom, and arranged for verification of the Accounts, directly with
the account debtors or otherwise, all with results reasonably satisfactory to
Bank, the cost of such audit of which shall be at Borrower's sole expense. Based
on Bank's review of such audit, and prior to the advance of a

[***]  CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.


<PAGE>

Facility-A Loan in accordance with the terms of SECTION 1.A hereof, Bank may
adjust the Borrowing Base percentage, in its sole and reasonable discretion, as
provided for under SECTION 9.B. hereof.

               (3)  NON-FORMULA AVAILABILITY. Provided that no Event of Default
has occurred and is continuing, and subject to the availability of the Facility-
A Commitment and in reliance on the representations and warranties of Borrower
set forth herein, at any time from the date hereof through April 30, 1998, Bank
hereby agrees to make Facility-A Loans to Borrower in such amounts as Borrower
shall request pursuant to this SECTION 1.A.(3), in an aggregate principal amount
not to exceed $2,500,000.00 (the "Non-Formula Availability"); provided, however,
that the outstanding amounts under this Non-Formula Availability shall be deemed
to constitute Facility-A Loans for the purpose of calculating availability under
the Facility-A Commitment.

               (4)  INTEREST PAYMENTS ON FACILITY-A LOANS. Borrower further
promises to pay to Bank from the date of the advance of the initial Facility-A
Loan through the Facility-A Maturity Date, on or before the tenth (10th) day of
each month, interest on the average daily unpaid balance of the Facility-A Loan
Account during the immediately preceding month at a rate of interest equal to
the rate of interest per annum which Bank has announced as its prime lending
rate (the "Prime Rate"), which shall vary concurrently with any change in the
Prime Rate. Interest shall be computed at the above rate on the basis of the
actual number of days during which the principal balance of the Facility-A Loan
Account is outstanding divided by 360, which shall for interest computation
purposes be considered one (1) year.

     2.   LOAN REQUESTS.  Requests for Loans hereunder shall be in writing duly
executed by Borrower in the form of EXHIBIT C attached hereto and incorporated
herein by this reference and shall contain a certification setting forth the
matters referred to in SECTION 1, which shall disclose that Borrower is entitled
to the amount and type of Loan being requested.  Bank is hereby authorized to
charge Borrower's deposit account with Bank for all principal and interest due
Bank under this Loan Agreement.

     3.   DELIVERY OF PAYMENTS.  Payment to Bank of all amounts due hereunder
shall be made at its Santa Clara Valley Regional office, or at such other place
as may be designated in writing by Bank from time to time.  If any payment date
fall on a day that is not a day that Bank is open for the transaction of
business ("Banking Day"), the payment due date shall be extended to the next
Banking Day.

     4.   LATE CHARGE.  If any interest payment, principal payment or principal
balance payment required hereunder is not received by Bank on or before ten (10)
days from the date in which such payment becomes due, Borrower shall pay to
Bank, a late charge equal to the lesser of (a) five percent (5.0%) of the amount
of such unpaid payment, in addition to said unpaid payment or (b) the maximum
amount permitted to be charged by applicable law, until remitted to Bank;
provided; however, nothing contained in this SECTION 4, shall be construed as
any obligation on the part of Bank to accept payment of any past due payment or
less than the total unpaid principal balance of the Facility-A Loan Account
following the FacilityA Maturity Date.  All payments shall be applied first to
any late charges due hereunder, next to accrued interest then payable and the
remainder, if any, to reduce any unpaid principal due under the Facility-A Loan
Account.

     5.   DEFAULT INTEREST.  From and after the Facility-A Maturity Date, or
such earlier date as all sums owing under the Facility-A Loan Account becomes
due and payable by acceleration or otherwise, or upon the occurrence of an Event
of Default, at the option of Bank all sums owing under the Facility-A Loan
Account shall bear interest until paid in full at a rate equal to the lesser of
(a) five percent (5.0%) per annum in excess of the then applicable interest rate
provided for in SECTION 1.A.(3) hereof or (b) the maximum amount permitted to be
charged by applicable law, until all obligations hereunder are repaid in full or
the Event of Default is waived or cured to the satisfaction of Bank, as
applicable.

     6.   DEFINITIONS.  As used in this Loan Agreement and unless otherwise
defined herein, all initially capitalized terms shall have the meanings set
forth on EXHIBIT A attached hereto and incorporated herein by this reference.

     7.   REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants to
Bank:  (a) That Borrower is a corporation, duly organized and existing in the
State of its incorporation and the execution, delivery and performance of each
of the Loan Documents are within Borrower's corporate powers, have been duly
authorized and are not in conflict with law or the terms of any charter, by-law
or other incorporation papers, or of any indenture, agreement or undertaking to
which Borrower is a party or by which Borrower is bound or affected; (b)
Borrower is, and at the time the Collateral becomes

                                      -2-
<PAGE>

subject to Bank's security interest will be, the true and lawful owner of and
has, and at the time the Collateral becomes subject to Bank's security interest
will have, good and clear title to the Collateral, subject only to Bank's rights
therein and to Permitted Liens; (c) Each Account is, and at the time the Account
comes into existence will be, a true and correct statement of a bona fide
indebtedness incurred by the debtor named therein in the amount of the Account
for either merchandise sold or delivered (or being held subject to Borrower's
delivery instructions) to, or services rendered, performed and accepted by, the
account debtor; (d) That there are and will be no defenses, counterclaims, or
setoffs which may be asserted against the Accounts from time to time represented
by Borrower to be Eligible Accounts, except as permitted in the definition
thereof; (e) Any and all financial information, including information relating
to the Collateral, submitted by Borrower to Bank, whether previously or in the
future, is and will be true and correct in all material respects; (f) There is
no material litigation or other proceeding pending or threatened against or
affecting Borrower, and Borrower is not in default with respect to any order,
writ, injunction, decree or demand of any court or other governmental or
regulatory authority; (g) (i) The consolidated balance sheets of Borrower dated
as of September, 1997, and the related consolidated profit and loss statements
for the fiscal year then ended, copies of which have heretofore been delivered
to Bank by Borrower, and all other statements and data submitted in writing by
Borrower to Bank in connection with Borrower's request for credit are true and
correct, and said balance sheet and profit and loss statement accurately present
the financial condition of Borrower as of the date thereof and the results of
the operations of Borrower for the period covered thereby, and have been
prepared in accordance with GAAP, (ii) since such date, there have been no
material adverse changes in the financial condition of Borrower, and (iii)
Borrower has no knowledge of any material liabilities, contingent or otherwise,
which are not reflected in said balance sheet, and Borrower has not entered into
any special commitments or substantial contracts which are not reflected in said
balance sheet, other than in the ordinary and normal course of its business,
which may have a Material Adverse Effect upon its financial condition,
operations or business as now conducted; (h) Borrower has no material liability
for any delinquent local, state or federal taxes, and, if Borrower has
contracted with any government agency, it has no liability for renegotiation of
profits; and (i) to the best of its knowledge, Borrower, as of the date hereof,
possesses all necessary trademarks, trade names, copyrights, patents, patent
rights, and licenses to conduct its business as now operated, without any known
conflict with valid trademarks, trade names, copyrights, patents, patent rights
and license rights of others.

     8.   NEGATIVE COVENANTS.  Borrower agrees that so long as any loans,
obligations or liabilities remain outstanding or unpaid to Bank or the
commitment of Bank hereunder is in effect, neither Borrower, nor any of its
subsidiaries ("Subsidiaries") will, without the prior written consent of Bank,
which will not be unreasonably withheld:

          A.   Make any substantial change in the character of its business as
now conducted;

          B.   Create, incur, assume or permit to exist any Indebtedness other
than loans from Bank except obligations now existing as shown in the financial
statements referenced in SECTION 7.(G)(I), excluding those being refinanced by
Bank, Subordinated Debt and Permitted Indebtedness; or sell or transfer, either
with or without recourse, any accounts or notes receivable or any monies due or
to become due;

          C.   Create, incur, assume or permit to exist any mortgage, pledge,
encumbrance, lien or charge of any kind (including the charge upon property at
any time purchased or acquired under conditional sale or other title retention
agreement) upon any asset now owned or hereafter acquired by it, other than
Permitted Liens and liens in favor of Bank;

          D.   Sell, dispose of or grant a security interest in any of the
Collateral other than to Bank (other than the disposing of such Collateral in
the ordinary and normal course of its business as now conducted, such Collateral
which is disposed in connection with the sale of Network Services Division or
other assets which are obsolete or otherwise considered surplus), or execute any
financing statements covering the Collateral in favor of any secured party or
Person other than Bank;

          E.   Sell, transfer, assign, mortgage, pledge, license (except in the
ordinary and normal course of its business as it is now conducted), lease, grant
a security interest in, or otherwise encumber any of its Intellectual Property;

          F.   Make any loans or advances to any Person or other entity other
than in the ordinary and normal course of its business as now conducted
(provided that such loans or advances are not made to any Person or entity which
is controlled by or under common control with Borrower);

                                      -3-
<PAGE>

          G.   Purchase or otherwise acquire all or substantially all of the
assets or business of any Person or other entity; or liquidate, dissolve, merge
or consolidate, or commence any proceedings therefore; or, except in the
ordinary and normal course of its business as now conducted, sell (including,
without limitation, the selling of any property or other asset accompanied by
the leasing back of the same) any assets including any fixed assets, any
property, or other assets necessary for the continuance of its business as now
conducted; and

          H.   Declare or pay any dividend or make any other distribution on any
of its capital stock now outstanding or hereafter issued or purchase, redeem or
retire any of such stock other than in dividends or distributions payable in
Borrower's or any such Subsidiary's capital stock, except for the repurchase of
Borrower's capital stock from officers, directors, employees or consultants of
Borrower upon termination of their employment with or rendering of services to
Borrower.

     9.   AFFIRMATIVE COVENANTS.  Borrower affirmatively covenants that so long
as any loans, obligations or liabilities remain outstanding or unpaid to Bank or
the commitment of Bank hereunder is in effect, it will:

          A.   Furnish Bank from time to time such financial statements and
information as Bank may reasonably request and inform Bank immediately upon the
occurrence of a material adverse change therein;

          B.   Notwithstanding the provisions contained in SECTION 1.A.(2)
hereof, permit representatives of Bank to conduct annual audits of Borrower's
books and records relating to the Collateral and make extracts therefrom, with
results satisfactory to Bank, provided that Bank shall use its best efforts to
not interfere with the conduct of Borrower's business, and to the extent
possible to arrange for verification of the Accounts directly with the account
debtors obligated thereon or otherwise, all under reasonable procedures
acceptable to Bank and at Borrower's sole expense.  Borrower hereby acknowledges
and agrees that upon completion of any such audit, including any such audit
conducted in accordance with the provisions of SECTION 1.A.(2) hereof, Bank
shall have the right to adjust the Borrowing Base percentage based on its review
of the results of such Collateral audit, if in its reasonable discretion the
Accounts have a lower likelihood of collection than Bank previously believed
prior to such Collateral audit;

          C.   Promptly notify Bank of any attachment or other material legal
process levied against any of the Collateral and any information received by
Borrower relative to the Collateral, including the Accounts, the account debtors
or other Persons obligated in connection therewith, which may in any way affect
the value of the Collateral or the rights and remedies of Bank in respect
thereto;

          D.   Reimburse Bank upon demand for any and all legal costs, including
reasonable attorneys' fees, and other expense incurred in collecting any sums
payable by Borrower under the Facility-A Loan Account or any other obligation
secured hereby, enforcing any term or provision of this Loan Agreement or
otherwise or in the checking, handling and collection of the Collateral and the
preparation and enforcement of any agreement relating thereto;

          E.   Notify Bank of each location and of each office of Borrower at
which records of Borrower relating to the Accounts are kept;

          F.   Provide, maintain and deliver to Bank policies insuring the
Collateral against loss or damage by such risks and in such amounts, forms and
companies as Bank may require (to the extent customarily maintained by
businesses similar to Borrower) and with loss payable to Bank, and, in the event
Bank takes possession of the Collateral, the insurance policy or policies and
any unearned or returned premium thereon, to the extent necessary to repay any
indebtedness owed to Bank, shall at the option of Bank become the sole property
of Bank, such policies and the proceeds of any other insurance covering or in
any way relating to the Collateral, whether now in existence or hereafter
obtained, being hereby assigned to Bank;

          G.   In the event the unpaid balance of the Facility-A Loan Account
shall exceed the maximum amount of outstanding loans to which Borrower is
entitled under SECTION 1 hereof, as applicable, Borrower shall immediately pay
to Bank for credit to the Facility-A Loan Account the amount of such excess;

                                      -4-
<PAGE>

          H.   Maintain and preserve all rights, franchises and other authority
adequate and necessary for the conduct of its business and maintain and preserve
its existence in the State of its incorporation and any other state(s) in which
Borrower conducts its business, except with respect to such other state(s), as
the failure to do so would not have a Material Adverse Effect;

          I.   Maintain public liability, property damage and workers
compensation insurance and insurance on all its insurable property against fire
and other hazards with responsible insurance carriers to the extent usually
maintained by similar businesses.  Borrower shall provide evidence of property
insurance in amounts and types acceptable to Bank, and certificates naming Bank
as a loss payee;

          J.   Pay and discharge, before the same becomes delinquent and
penalties accrue thereon, all taxes, assessments and governmental charges upon
or against it or any of its properties, and any of its other liabilities at any
time existing, except to the extent and so long as: (1) the same are being
contested in good faith and by appropriate proceedings in such manner as not to
cause any Material Adverse Effect or the loss of any right of redemption from
any sale thereunder; and (2) it shall have set aside on its books reserves
(segregated to the extent required by GAAP);

          K.   Maintain a standard and modern system of accounting in accordance
with GAAP on a basis consistently maintained; permit Bank's representatives to
have access to, and to examine its properties, books and records at all
reasonable times; provided that Bank shall use its best efforts to not interfere
with the conduct of Borrower's business;

          L.   Maintain its properties, equipment and facilities in good order
and repair;

          M.   Prior to allowing any of Borrower's raw materials, work in
process, finished goods inventory and property, plant and equipment to be
transported to or be held at any contract manufacturer, warehouse or other
location (other than with bona fide distributors and retail accounts), Borrower
shall provide notice to Bank and Borrower shall have complied with such filing
and notice requirements as shall, in Bank's opinion, assure Borrower's and
Bank's priority in such property over creditors of such contract manufacturer,
warehouseman or operator of such other location, including, without limitation,
making filings under California Commercial Code (S)2326, providing notice under
California Commercial Code (S)9114 and making filings and publications as
required under California Civil Code (S)3440.1 and (S)3440.5  All such filings,
notices and publications shall be in form and substance satisfactory to Bank.

     10.  FINANCIAL COVENANTS AND INFORMATION.  All financial covenants and
financial information referenced herein shall be interpreted and prepared in
accordance with GAAP as used in the United States of America applied on a basis
consistent with previous years.  Compliance with the financial covenants shall
be calculated and monitored on a monthly basis, except as shall be expressly
stated to the contrary.  Borrower affirmatively covenants that so long as any
loans, obligations or liabilities remain outstanding or unpaid to Bank or any
commitment is outstanding hereunder, it will, on a consolidated basis:

          A.   At all times, maintain a Minimum Tangible Net Worth (meaning all
assets, excluding any value for goodwill, trademarks, patents, copyrights,
organization expense and other similar intangible items, less all liabilities,
plus Subordinated Debt) of not less than $6,000,000.00.

          B.   At all times maintain a Maximum Ratio of Total Liabilities
(meaning all liabilities, excluding Subordinated Debt) to Tangible Net Worth (as
defined in SECTION 10.A. hereof) not to exceed 1.50:1.00;

          C.   At all times maintain a Minimum Quick Ratio (meaning all cash
plus Accounts divided by current liabilities) of not less than 1.00:1.00;

          D.   As soon as it is available, but not later than twenty-five (25)
days after and as of the end of each month, deliver to Bank an internally-
prepared financial statement consisting of a balance sheet and profit and loss
statement, in form satisfactory to Bank, and a Compliance Certificate in the
form of EXHIBIT D attached hereto and incorporated herein by this reference,
certified by an officer of Borrower;

                                      -5-
<PAGE>

          E.   As soon as it is available, but not later than one hundred twenty
(120) days after the end of Borrower's fiscal year, deliver to Bank unqualified
copies of Borrower's consolidated financial statements together with changes in
financial position audited by an independent certified public accountant
selected by Borrower but acceptable to Bank;

          F.   So long as the Facility-A Commitment shall be outstanding or any
amounts remain outstanding and unpaid under the Facility-A Loan Account, as soon
as it is available, but not later than twenty-five (25) days after and as of the
end of each month, deliver to Bank, in such form and detail as Bank may require,
statements showing aging of the Accounts and Borrower's accounts payable,
together with a Borrowing Base Certificate in the form of EXHIBIT E attached
hereto and incorporated herein by this reference, certified by an officer of
Borrower.  Notwithstanding the foregoing, as a condition to any request for a
FacilityA Loan, Borrower shall have delivered to Bank said aging statements as
well as a Borrowing Base Certificate covering the most recent month then ended
prior to the date of Borrower's request for an advance for a FacilityA Loan;

          G.   Upon the reasonable request of Bank, deliver to Bank current
budgets, sales projections, operating plans and other financial exhibits and
information in form and substance satisfactory to Bank; and

          H.   Upon any officer becoming aware, deliver immediately to Bank
written notice of any pending or threatened litigation claiming, or reasonably
likely to result in, damages against Borrower in an amount in excess of
$150,000.00.

     11.  LOAN FEE.  Borrower has paid, and Bank hereby acknowledges receipt of
a loan fee in the amount of Twenty-five Thousand Dollars ($25,000.00).

     12.  DEFAULT AND REMEDIES.  The occurrence of any one or more of the
following shall constitute an "Event of Default":  (a) Default be made in the
payment of any obligation by Borrower under any Loan Document; (b) Except for
any failure to pay as described in clause (a) above, material breach be made in
any warranty, statement, promise, term or condition, contained herein or in any
other Loan Document and the same shall not have been cured to the satisfaction
of Bank within fifteen (15) days after Borrower shall have become aware thereof,
whether by written notice from Bank, or otherwise, (except that no cure period
shall exist for breaches in respect of Borrower's obligations under SECTION 8,
SUBSECTIONS 9.A., 9.B., 9.C., 9.F., 9.G. and 9.H., SUBSECTIONS 10.A., 10.B. and
10.C. of this Loan Agreement, and SECTIONS 1 and 2 of the General Security
Agreement and a cure period of five (5) days shall exist for SUBSECTIONS 9.I.,
10.D., 10.E. and 10.F.); (c) Any statement, warranty or representation made by
Borrower at any time proves materially false; (d) Borrower defaults in the
repayment of any principal of or the payment of any interest on any indebtedness
exceeding in the aggregate principal amount $100K or breaches or violates any
term or provision of any promissory note, loan agreement, mortgage, indenture or
other evidence of such indebtedness pursuant to which amounts outstanding in the
aggregate exceed $2.0M if the effect of such breach is to permit the
acceleration of such indebtedness, whether or not waived by the note holder or
obligee, and such failure shall not have been cured to Bank's satisfaction
within fifteen (15) calendar days after Borrower shall become aware thereof,
whether by written notice from Bank or otherwise, or there has in fact been an
acceleration of such indebtedness; (e) Borrower becomes insolvent or makes an
assignment for the benefit of creditors; (f) Any proceeding be commenced by
Borrower under any bankruptcy, reorganization, arrangement, readjustment of debt
or moratorium law or statute or, any such a proceeding is commenced against
Borrower and is not dismissed or stayed within ten (10) days (provided that no
Loans will be made prior to the dismissal of such proceeding); (g) Any money
judgment, writ of attachment, garnishment, execution or other legal process be
entered against Borrower or issued against any material property of Borrower
which is not fully covered by insurance (subject to reasonable deductibles) and
remains unvacated, unbonded, unstayed or unpaid or undischarged for more than
fifteen (15) days (whether or not consecutive) or in any event later than five
(5) days prior to the date of any proposed sale thereunder, or if any assessment
for taxes against Borrower other than against any of its real property, is made
by the Federal or State government or any department thereof; or (h) Any change
in Borrower's financial condition, prospects or operations which has a Material
Adverse Effect.  Upon the occurrence and during the continuance of an Event of
Default, Bank may, at its option and without demand first made and without
notice to Borrower, do any one or more of the following:  (i) Terminate its
obligation to make loans to Borrower as provided in SECTION 1 hereof; (ii)
Declare all sums secured hereby immediately due and payable; (iii) Immediately
take possession of the Collateral wherever it may be found, using all legally
permissible means to do so, or require Borrower to assemble the Collateral and
make it available to Bank at a place designated by Bank which is reasonably
convenient to Borrower and

                                      -6-
<PAGE>

Bank, and Borrower waives all claims for damages due to or arising from or
connected with any such taking; (iv) Proceed in the foreclosure of Bank's
security interest and sale of the Collateral in any manner permitted by law, or
provided for herein; (v) Sell, lease or otherwise dispose of the Collateral at
public or private sale, with or without having the Collateral at the place of
sale, and upon terms and in such manner as Bank may determine, and Bank may
purchase same at any such sale; (vi) Retain the Collateral in full satisfaction
of the obligations secured thereby to the extent permitted under the Uniform
Commercial Code; (vii) Exercise any remedies of a secured party under the
Uniform Commercial Code; or (viii) Immediately record the IP Security Agreement
with the United States Patent and Trademark Office, the Register of Copyrights
and/or the UCC Division of the California Secretary of State, to perfect Bank's
security interests created and assignment granted in the Intellectual Property
thereunder. Prior to any such disposition, Bank may, at its option, cause any of
the Collateral to be repaired or reconditioned in such manner and to such extent
as Bank may deem advisable, and any sums expended therefor by Bank shall be
repaid by Borrower and secured hereby. Bank shall have the right to enforce one
or more remedies hereunder successively or concurrently, and any such action
shall not estop or prevent Bank from pursuing any further remedy which it may
have hereunder or by law. If a sufficient sum is not realized from any such
disposition of the Collateral to pay all obligations secured by this Loan
Agreement, Borrower hereby promises and agrees to pay Bank any deficiency.

     13.  RECORDS RETENTION.  Borrower authorizes Bank to destroy all invoices,
delivery receipts, reports and other types of documents and records submitted to
Bank in connection with the transactions contemplated herein at any time
subsequent to four (4) months from the time such items are delivered to Bank.

     14.  ATTORNEYS' FEES.  Borrower agrees to reimburse Bank for its reasonable
attorneys' fees and expenses incurred in connection with the negotiation,
preparation, execution and delivery of the Loan Documents.

     15.  GOVERNING LAW; JUDICIAL REFERENCE.

          A.   GOVERNING LAW.  This Agreement shall be deemed to have been made
in the State of California and the validity, construction, interpretation, and
enforcement hereof, and the rights of the parties hereto, shall be determined
under, governed by, and construed in accordance with the internal laws of the
State of California, without regard to principles of conflicts of law.

          B.   JUDICIAL REFERENCE.

               (1)  Other than (a) nonjudicial foreclosure and all matters in
connection therewith regarding security interests in real or personal property;
or (b) the appointment of a receiver, or the exercise of other provisional
remedies (any and all of which may be initiated pursuant to applicable law),
each controversy, dispute or claim between the parties arising out of or
relating to this Loan Agreement or the other Loan Documents, which controversy,
dispute or claim is not settled in writing within thirty (30) days after the
"Claim Date" (defined as the date on which a party subject to this Loan
Agreement gives written notice to all other parties that a controversy, dispute
or claim exists), will be settled by a reference proceeding in California in
accordance with the provisions of Section 638 et seq. of the California Code of
Civil Procedure, or their successor section ("CCP"), which shall constitute the
exclusive remedy for the settlement of any controversy, dispute or claim
concerning this Loan Agreement, including whether such controversy, dispute or
claim is subject to the reference proceeding and except as set forth above, the
parties waive their rights to initiate any legal proceedings against each other
in any court or jurisdiction other than the Superior Court in the County where
the real property, if any, is located or Santa Clara County, if none (the
"Court").  The referee shall be a retired Judge of the Court selected by mutual
agreement of the parties, and if they cannot so agree within forty-five (45)
days after the Claim Date, the referee shall be promptly selected by the
Presiding Judge of the Court (or his/her representative).  The referee shall be
appointed to sit as a temporary judge, with all of the powers for a temporary
judge, as authorized by law, and upon selection should take and subscribe to the
oath of office as provided for in Rule 244 of the California Rules of Court (or
any subsequently enacted Rule). Each party shall have one peremptory challenge
pursuant to CCP (S) 170.6.  The referee shall (x) be requested to set the matter
for hearing within sixty (60) days after the date of selection of the referee
and (y) try any and all issues of law or fact and report a statement of decision
upon them, if possible, within ninety (90) days of the Claim Date.  Any decision
rendered by the referee will be final, binding and conclusive and judgement
shall be entered pursuant to CCP (S) 644 in any court in the State of California
having jurisdiction.  Any party may apply for a reference proceeding at any time
after thirty (30) days following notice to any other party of the nature of the
controversy, dispute or claim, by filing a petition for a hearing and/or trial.
All discovery

                                      -7-
<PAGE>

permitted by this Loan Agreement shall be completed no later than fifteen (15)
days before the first hearing date established by the referee. The referee may
extend such period in the event of a party's refusal to provide requested
discovery for any reason whatsoever, including, without limitation, legal
objections raised to such discovery or unavailability of a witness due to
absence or illness. No party shall be entitled to "priority" in conducting
discovery. Depositions may be taken by either party upon seven (7) days written
notice, and request for production or inspection of documents shall be responded
to within ten (10) days after service. All disputes relating to discovery which
cannot be resolved by the parties shall be submitted to the referee whose
decision shall be final and binding upon the parties. Pending appointment of the
referee as provided herein, the Superior Court is empowered to issue temporary
and/or provisional remedies, as appropriate.

               (2)  Except as expressly set forth in this Loan Agreement, the
referee shall determine the manner in which the reference proceeding is
conducted including the time and place of all hearings, the order of
presentation of evidence, and all other questions that arise with respect to the
course of the reference proceeding. All proceedings and hearings conducted
before the referee, except for trial, shall be conducted without a court
reporter except that when any party so requests, a court reporter will be used
at any hearing conducted before the referee. The party making such a request
shall have the obligation to arrange for and pay for the court reporter. The
costs of the court reporter at the trial shall be borne equally by the parties.

               (3)  The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State of
California.  The rules of evidence applicable to proceedings at law in the State
of California will be applicable to the reference proceeding.  The referee shall
be empowered to enter equitable as well as legal relief, to provide all
temporary and/or provisional remedies and to enter equitable orders that will be
binding upon the parties.  The referee shall issue a single judgment at the
close of the reference proceeding which shall dispose of all of the claims of
the parties that are the subject of the reference.  The parties hereto expressly
reserve the right to contest or appeal from the final judgment or any appealable
order or appealable judgment entered by the referee.  The parties hereto
expressly reserve the right to findings of fact, conclusions of laws, a written
statement of decision, and the right to move for a new trial or a different
judgment, which new trial, if granted,  is also to be a reference proceeding
under this provision.

               (4)  In the event that the enabling legislation which provides
for appointment of a referee is repealed (and no successor statute is enacted),
any dispute between the parties that would otherwise be determined by the
reference procedure herein described will be resolved and determined by
arbitration. The arbitration will be conducted by a retired judge of the Court,
in accordance with the California Arbitration Act, (S) 1280 through (S) 1294.2
of the CCP as amended from time to time. The limitations with respect to
discovery as set forth hereinabove shall apply to any such arbitration
proceeding.

     16.  MISCELLANEOUS PROVISIONS.

          A.   Borrower agrees that it will review the products and services
offered by Bank and use its best efforts to establish its primary banking
accounts with Bank, provided, that the products and services offered by Bank are
satisfactory to Borrower.

          B.   Nothing herein shall in any way limit the effect of the
conditions set forth in any other security or other agreement executed by
Borrower, but each and every condition hereof shall be in addition thereto.

          C.   No failure or delay on the part of Bank, in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof.

          D.   All rights and remedies existing under this Loan Agreement or any
other Loan Document are cumulative to, and not exclusive of, any rights or
remedies otherwise available.

          E.   All headings and captions in this Loan Agreement and any related
documents are for convenience only and shall not have any substantive effect.

          F.   This Loan Agreement may be executed in any number of
counterparts, each of which when so delivered shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.  Each
such

                                      -8-
<PAGE>

agreement shall become effective upon the execution of a counterpart hereof or
thereof by each of the parties hereto and telephonic notification that such
executed counterparts has been received by Borrower and Bank.

BANK:                                    BORROWER:

IMPERIAL BANK                            METAWAVE COMMUNICATIONS CORPORATION,
                                                       A DELAWARE CORPORATION

By:  /s/ James E. Ellison                /s/ Vito Palermo
   --------------------------------      -------------------------------------
   Senior Vice President/Manager         Chief Financial Officer and Secretary



LIST OF EXHIBITS AND SCHEDULES
- ------------------------------

EXHIBIT A:  Definitions
 SCHEDULE 1 TO EXHIBIT A:  List of Specific Permitted Indebtedness
 SCHEDULE 2 TO EXHIBIT A:  List of Specific Permitted Liens

EXHIBIT B:  Form of Application and Letter of Credit Agreement

EXHIBIT C:  Loan Request Form

EXHIBIT D:  Compliance Certificate

EXHIBIT E:  Borrowing Base Certificate

                                      -9-
<PAGE>

________________________________________________________________________________

________________________________________________________________________________

                                   EXHIBIT A

                                  DEFINITIONS


     "ACCOUNTS" means any right to payment for goods sold or leased, or to be
sold or to be leased, or for services rendered or to be rendered no matter how
evidenced, including accounts receivable, contract rights, chattel paper,
instruments, purchase orders, notes, drafts, acceptances, general intangibles
and other forms of obligations and receivables.

     "CAPITAL LEASE" means, as to any Person, any lease of any Property by such
Person as lessee that is, or should be in accordance with Financing Accounting
Standards Board Statement No. 13, classified and accounted for as a "capital
lease" on the balance sheet of such Person prepared in accordance with GAAP.

     "CAPITAL LEASE OBLIGATION" means, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP,
would appear on a balance sheet of such lessee in respect of such Capital Lease
or otherwise be disclosed in a note to such balance sheet.

     "COLLATERAL" means any and all personal property of Borrower which is
assigned or hereafter is assigned to Bank as security or in which Bank now has
or hereafter acquires a security interest hereunder (including, without
limitation, the Accounts), or pursuant to the terms of the General Security
Agreement, the Intellectual Property Security Agreement (upon its recordation in
accordance with SECTION 12(VIII) hereof) or otherwise.

     "CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), comade or discounted or sold with recourse by that Person,
or in respect of which that Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation for which that Person is in
effect liable through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, capital stock purchases, capital contributions or
otherwise), or to maintain the solvency of the obligor of such obligation, or to
make payment for any products, materials or supplies or for any transportation,
services or lease regardless of the nondelivery or nonfurnishing thereof, in any
such case if the purpose or intent of such agreement is to provide assurance
that such obligation will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof.  The amount of
any Contingent Obligation of any Person shall be deemed to be an amount equal to
the maximum amount of such Person's liability with respect to the stated or
determinable amount of the primary obligation for which such Contingent
Obligation is incurred or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder).

     "ELIGIBLE ACCOUNTS" means such of Borrower's Accounts as Bank in its sole
reasonable discretion shall determine are eligible from time to time; provided,
however, that in no event shall Eligible Accounts include the following:

          (1) all domestic and pre-approved international (foreign) Accounts
     under which payment is not received within the earlier of (a) 90 days from
     the applicable invoice date and (b) 60 days from the applicable payment due
     date;

          (2) all Accounts against which the account debtor or any other Person
     obligated to make payment thereon asserts any defense, offset, counterclaim
     or other right to avoid or reduce the liability represented by the
     Accounts;

          (3) any Accounts if the account debtor or any other Person liable in
     connection therewith is insolvent, subject to bankruptcy or receivership
     proceedings or has made an assignment for the benefit of creditors or whose
     credit standing is unacceptable to Bank and Bank has so notified Borrower;

          (4) Accounts with respect to which the account debtor is an officer,
     director, shareholder, employee or Subsidiary;

                                      -10-
<PAGE>

          (5)  Accounts due from an account debtor if more than twenty-five
     percent (25%) of the aggregate amount of Accounts of such account debtor
     have at that time remained unpaid for more than the earlier of (a) ninety
     (90) days from the applicable invoice date and (b) sixty (60) days from the
     applicable payment due date;

          (6)  Accounts with respect to international (foreign) transactions
     unless (a) such Accounts are insured or covered by a letter of credit in a
     manner and form acceptable to the Bank, (b) the account debtors of such
     Accounts are foreign companies with sales greater than Five Hundred Million
     Dollars ($500,000,000) per year, or (c) Bank shall have otherwise permitted
     in writing in its sole and absolute direction;

          (7)  salesperson's accounts for promotional purposes;

          (8)  the amount by which the aggregate of all Accounts of an account
     debtor exceeds thirty-five percent (35%) of the total accounts receivable
     balance;

          (9)  Accounts where the account debtor is a seller to borrower, to the
     extent that a potential offset exists; and

          (10) Accounts where the account debtor is a federal governmental
     entity, federal agency or instrumentality thereof.

     "EVENT OF DEFAULT" has the meaning set forth in SECTION 12.

     "FACILITY-A MATURITY DATE" has the meaning set forth in SECTION 1.A.

     "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Person as may be approved by the significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.

     "GENERAL SECURITY AGREEMENT" means that certain General Security Agreement
(Tangible and Intangible Personal Property) dated of even date herewith, made by
Borrower in favor of Bank.

     "INDEBTEDNESS" means, as to any Person, without duplication, (a) all
indebtedness of such Person for borrowed money, including, without limitation,
all of such indebtedness outstanding under this Loan Agreement and any of the
other Loan Documents, (b) all Capital Lease Obligations of such Person, (c) to
the extent of the outstanding indebtedness thereunder, any obligation of such
Person representing an extension of credit to such Person, whether or not for
borrowed money, (d) any obligation of such Person for the deferred purchase
price of Property or services (other than (i) trade or other accounts payable in
the ordinary course of business in accordance with customary industry terms and
(ii) deferred franchise fees), (e) all Contingent Obligations, (f) any
obligation of such Person of the nature described in clauses (a), (b), (c), (d)
or (e) above, that is secured by a Lien on assets of such Person and which is
nonrecourse to the credit of such Person, but only to the extent of the fair
market value of the assets so subject to the Lien, (g) obligations of such
Person arising under acceptance facilities or under facilities for the discount
of accounts receivable of such Person, (h) any obligation of such Person to
reimburse the issuer of any letter of credit issued for the account of such
Person upon which a draw has been made, and (i) any lease having the effect of
indebtedness, whether or not the same shall be treated as such on the balance
sheet of Borrower under GAAP.

     "IP SECURITY AGREEMENT" means that certain Collateral Assignment, Patent
Mortgage and Security Agreement executed in blank by Borrower in favor of Bank
to be filed by Bank in accordance with SECTION 12(VIII) hereof.

     "INTELLECTUAL PROPERTY" means collectively, all of Borrower's intellectual
property, including, without limitation, the following:

          (1)  Any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret (collectively, the "Copyrights");

                                       11
<PAGE>

          (2)  Any and all trade secrets, and any and all intellectual property
rights in computer software and computer software products;
          (3)  Any and all design rights which may be available to Borrower;
          (4)  All patents, patent applications and like protections including,
without limitation, improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same (collectively, the "Patents");
          (5)  Any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like protections, and
the entire goodwill of the business of Borrower connected with and symbolized by
such trademarks (collectively, the "Trademarks");
          (6)  Any and all claims for damages by way of past, present and future
infringement of any of the rights included above, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of
the intellectual property rights identified above;
          (7)  All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights;
          (8)  All amendments, renewals and extensions of any of the Copyrights,
Patents or Trademarks; and
          (9)  All proceeds and products of the foregoing, including, without
limitation, all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.
     "LIEN" means any mortgage, pledge, security interest, lien or other charge
or encumbrance, including the lien or retained security title of a conditional
vendor, upon or with respect to any property or assets.

     "LOAN DOCUMENTS" means this Loan Agreement, the General Security Agreement
and that certain Agreement to Provide Insurance (Real or Personal Property)
dated of even date herewith, each as executed by Borrower in favor of Bank,
together with all other documents entered into or delivered pursuant to any of
the foregoing (including, without limitation, the IP Security Agreement upon its
recordation in accordance with SECTION 12(VIII) hereof), in each case as
originally executed or as the same may from time to time be modified, amended,
supplemented or restated.

     "LOANS"  means the Facility-A Loans advanced pursuant to SECTION 1.

     "MATERIAL ADVERSE EFFECT" means any set of circumstances or events which
(a) has or could reasonably be expected to have any material adverse effect upon
the validity or enforceability of any material provision of any Loan Document,
(b) is or could reasonably be expected to be material and adverse to the
condition (financial or otherwise) or business operations of Borrower, (c)
materially impairs or could reasonably be expected to materially impair the
ability of Borrower, to perform its material Obligations, (d) materially impairs
or could reasonably be expected to materially impair the value or priority of
Bank's security interest in any Collateral or (e) materially impairs or could
reasonably be expected to materially impair the ability of Bank to enforce any
of its legal remedies pursuant to the Loan Documents.

     "PERMITTED INDEBTEDNESS" means the following:

          (1)  indebtedness of Borrower or Indebtedness and Contingent
     Obligations of its Subsidiaries in favor of Bank arising under this Loan
     Agreement and the other Loan Documents;

          (2)  the existing Indebtedness and Contingent Obligations disclosed on
     SCHEDULE 1 attached hereto and incorporated herein by this reference;
     provided that the principal amount thereof is not increased and the terms
     thereof are not modified to impose more burdensome terms upon Borrower or
     any of its Subsidiaries;

          (3)  the Subordinated Debt;

          (4)  extensions, renewals or refinancings of Indebtedness permitted
     under this Loan Agreement, other than clause (3) immediately above;

          (5)  accrued dividends on the preferred stock of Borrower;

          (6)  interest rate and currency hedging agreements;

          (7)  guaranties of any Subsidiary's suppliers in connection with the
     purchase of supplies in the ordinary course of business;

                                       12
<PAGE>

          (8)  guaranties of lease obligations incurred in the ordinary course
     of business and to the extent otherwise permitted hereunder;

          (9)  Contingent Obligations constituting Permitted Liens; and

          (10) the indebtedness referred to in clause (3)(a) of the definition
     of Permitted Liens.
     "PERMITTED LIENS" means the following:

          (1)  liens and security interests existing as of this date and
disclosed in SCHEDULE 2 attached hereto and incorporated herein by this
reference;
          (2)  liens for taxes, fees, assessments or other governmental charges
or levies, either not delinquent or being contested in good faith by appropriate
proceedings;
          (3)  liens and security interests (a) upon or in any equipment
acquired or held by Borrower to secure the purchase price of such equipment or
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment and in an amount not greater than the purchase price thereof or
(b) existing on such equipment at the time of its acquisition, provided that the
lien and security interest is confined solely to the property so acquired and
improvements thereon, and the proceeds of such equipment;
          (4)  liens consisting of leases or subleases and licenses and
sublicenses granted to others in the ordinary course of Borrower's business not
interfering in any material respect with the business of Borrower and any
interest or title of a lessor or licensor under any lease or license, as
applicable;
          (5)  liens securing claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like persons or entities imposed
without action of such parties;
          (6)  liens incurred or deposits made in the ordinary course of
Borrower's business in connection with worker's compensation, unemployment
insurance, social security and other like laws;
          (7)  liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default;
          (8)  easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
affecting real property not interfering in any material respect with the
ordinary conduct of Borrower's business;
          (9)  liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
          (10) liens that are not prior to Bank's security interest which
constitute rights of set-off of a customary nature;
          (11) any interest or title of a lessor in equipment subject to any
Capitalized Lease otherwise permitted hereunder; and
          (12) any liens arising from the filing of any financing statements
relating to true leases otherwise permitted hereunder.
     "PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, firm, joint stock
company, estate, entity or governmental agency.

     "PROPERTY" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.

     "SUBORDINATED DEBT" means indebtedness of Borrower, the repayment of
principal of which is fully subordinated in time and right of payment to the
Loans, and has been approved in Bank's sole and absolute discretion and in
writing.

                                       13
<PAGE>

                            SCHEDULE 1 TO EXHIBIT A

                        SPECIFIC PERMITTED INDEBTEDNESS

                                       14
<PAGE>

                            SCHEDULE 2 TO EXHIBIT A

                           SPECIFIC PERMITTED LIENS

                                       15
<PAGE>

                                   EXHIBIT B

              FORM OF APPLICATION AND LETTER OF CREDIT AGREEMENT

                     [TO BE PROVIDED AND ATTACHED BY BANK]

                                       16
<PAGE>

                                   EXHIBIT C

                               LOAN REQUEST FORM

                     [TO BE PROVIDED AND ATTACHED BY BANK]

                                       17
<PAGE>

                                   EXHIBIT D

                            COMPLIANCE CERTIFICATE


The consolidated financial statements dated as of __________________________ of
METAWAVE COMMUNICATIONS CORPORATION, a Delaware corporation ("Borrower")
attached hereto and submitted to IMPERIAL BANK ("Bank") pursuant to that certain
Loan Agreement dated as of October __, 1997, entered into between Borrower and
Bank (the "Loan Agreement"), are in compliance with all financial covenants
(unless otherwise noted below) as specified in SECTION 10 therein, as follows:

     COVENANT:                                               ACTUAL:

     A.   Minimum Tangible Net Worth of:
          -----------------------------
                                                                   $6,000,000.00

     B.   Maximum Liabilities to Tangible Net Worth Ratio:
          -----------------------------------
          1.50 : 1.00                                        ___________________

     C.   Minimum Quick Ratio:
          -------------------
          1.00 : 1.00                                        ___________________

Exceptions: (if none, so state):



The undersigned authorized officer of Borrower hereby certifies that Borrower is
in complete compliance with the terms and conditions of the Loan Agreement for
the period ending _____________________, ____, and as of the date of this
Compliance Certificate the representations and warranties stated therein are
true, accurate and complete as of the date hereof (except as to those
representations and warranties which specifically reference a particular date
and except as noted above).

The undersigned further certifies that s/he knows of no pending conditions which
may cause an Event of Default (as defined in the Loan Agreement) to exist in the
next thirty (30) days.  The required support documents for this certification
are attached and prepared in accordance with GAAP consistently applied.


Date:____________________                 METAWAVE COMMUNICATIONS CORPORATION,
                                          a Delaware corporation

                                       18
<PAGE>

                                   EXHIBIT E

                           BORROWING BASE CERTIFICATE



                     (To be provided and attached by Bank)

                                       19
<PAGE>


Imperial Bank Exhibit 10.10

5330 Carillon Point
Kirkland, WA  98033
(425) 832-1233
(425) 576-2810

     February 11, 2000

     VIA FACSIMILE AND US MAIL
     -------------------------

     METAWAVE COMMUNICATIONS CORPORATION
     8700 148th AVENUE NE
     REDMOND, WA  98052

     Re:  LOAN EXTENSION
          Borrower Name:  METAWAVE COMMUNICATIONS CORPORATION
          Loan Number:  736000021
          Note Number:  3

Gentlemen:

Imperial Bank has approved an extension of Facility-A Maturity Date to March 14,
2000 from its current maturity as evidenced by that certain Loan Agreement dated
October 14, 1997.

Except as modified and extended hereby, the existing loan documentation as
amended concerning your obligation remains in full force and effect.

Very truly yours,

/s/ Christopher Fenner

Christopher Fenner
Vice President
<PAGE>

March 23, 2000



John Schaller
Corporate Controller
Metawave Communications Corp
10735 Willows Rd NE
Redmond, Washington  98052

Dear John:

This letter sets forth a commitment from Imperial Bank ("Bank") to provide
Metawave Communications Corp ("Borrower") the credit described below.  The
credit facility will be subject to the terms and conditions of the Bank's
definitive loan documents which will include (but not be limited to) the
following in detail:

I.    CREDIT FACILITY

      A $10,000,000 Revolving Line of Credit ("Line") to support working capital
      with a $2,500,000 sublimit for issuance of Trade-Related Commercial and
      Standby Letters of Credit ("Letters of Credit").

II.   MATURITY

      364 days from completion of definitive loan documents.

III.  TERMS

      Interest will be payable monthly with principal due at Maturity.

IV.   COLLATERAL

      Bank to have a blanket first priority security interest perfected by UCC
      filings and related Security Agreements on all assets of Borrower
      including all present and future inventory, chattel paper, accounts,
      contract rights, unencumbered equipment, general intangibles, and fixtures
      and the product thereof, including specific filings on the Company's
      intellectual property with the US Patent and Trademark Office and the US
      Copyright Office.

V.    GUARANTORS

      Before Borrower may loan any amounts to or enter into any guaranties of
      amounts owing by its Taiwanese subsidiary as otherwise permitted
      hereunder, Borrower shall provide a subsidiary guarantee from such
      Taiwanese subsidiary in form acceptable to Bank.

[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>

VI.   BORROWING FORMULA

      Advances will be limited to the lesser of: (i) [***]% of Eligible Accounts
      or (ii) the amount available under the Line. Notwithstanding, non-formula
      based non-cash advances of up to $2,500,000 will be allowed for Letters of
      Credit as long as Borrower maintains a Quick Ratio of [***], as
      outlined in Section VIII.A.1.

      In the case that the Borrowing Base availability is above the outstanding
      Letters of Credit, cash advances will be allowed against the Borrower
      Base, over and above the outstanding Letters of Credit, and Borrower will
      be required to maintain a Quick Ratio of [***], as outlined in
      Section VIII.A.1.

      As used herein, "Eligible Accounts" will include those domestic and pre-
      approved foreign accounts receivable of Borrower which are outstanding
      less than 90 days from invoice date subject to certain exclusions for
      contra, US government and inter-company accounts. Approved foreign
      accounts receivable include the following:

          i.   Foreign accounts receivable that are fully insured.

          ii.  Foreign accounts receivable that are backed by a site Letter of
Credit whose documents have been reviewed and found acceptable to Imperial and
where the issuing bank has been found acceptable to Imperial.

          iii. Foreign accounts receivable that are backed by a usance Letter of
Credit whereby the issuing bank and related credit risk has been found
acceptable by Imperial.

      Additional foreign accounts receivable will be eligible to the extent they
      are approved in writing by Bank.

      Any account which alone exceeds 35% of total accounts will have the amount
      in excess of 35% excluded unless approved in writing by Bank.
      Notwithstanding, [***] will have no concentration limit.

      Any account 25% or more of which is outstanding over 90 days from invoice
      date will be excluded in its entirety.

VII.  PRICING

      Interest Rate:  Bank's Prime Rate per annum.

      Facility Fee:  $[***], due and payable upon acceptance.

VIII. COVENANTS

      A.  Financial Covenants:

          1)   Upon closing, Borrower to maintain on a monthly basis unless
               otherwise noted:

               a)   Minimum Quick Ratio of [***].  Notwithstanding,
                    Borrower shall maintain a Minimum Quick Ratio of [***]
                    as long as Borrowing Base supports cash advances over
                    and above the outstanding Letters of Credit.

               b)   Minimum Tangible Net Worth of [***] plus 50% of any
                    equity or subordinated debt raised by Borrower.


[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>

               c)   Maximum Total Liabilities to Tangible Net Worth of [***].

               1    "Adjusted Quick Ratio" is defined as cash plus accounts
                    receivable divided by current liabilities less deferred
                    revenue and current portion of indebtedness fully
                    subordinated to the debt due to Bank.

               2    "Tangible Net Worth" is defined as the financial statement
                    net worth of the Borrower prepared in accordance with GAAP
                    less intangible assets plus indebtedness fully subordinated
                    to the debt due to Bank.

               3    "Total Liabilities" is defined as all the Borrower's
                   liabilities except for the indebtedness fully subordinated to
                   the debt due to the Bank

      B.  Borrower to provide Bank prior to a Initial Public Offering:

          1)   Unqualified audited financial statements within 120 days
               after each fiscal year.

          2)   Company prepared monthly financial statements and Compliance
               Certificate within 30 days after the end of each month.

          3)   Monthly aging of accounts receivable and accounts payable with
               Borrowing Base Certificate within 30 days after the end of each
               month.

          4)   Operating budgets, annual budgets and forecast within 30 days of
               fiscal year end.

          5)   Other financial information that the Bank may reasonably request

      C.  Borrower to provide Bank after the Initial Public Offering:

          1)   Unqualified audited financial statements and 10-K within 5 days
               of standard SEC filing date of 10-K.

          2)   10-Q and Compliance Certificate within 5 days of standard SEC
               filing date of 10-Q.

          3)   Company prepared monthly financial statements and Compliance
               Certificate within 30 days after the end of each month.

          4)   Monthly aging of accounts receivable and accounts payable with
               Borrowing Base Certificate within 30 days after the end of each
               month.

          5)   Operating budgets, annual budgets and forecast within 30 days of
               fiscal year end.

          6)   Other financial information that the Bank may reasonably request.

      D.  Other Covenants:

          1)   [***].

          2)   [***];

               a.   [***].

               b.   [***];


[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>

                    i.   [***].
                    ii.  [***].
                    iii. [***].
                    iv.  [***].
                    v.   [***].

               c.   [***].
               d.   [***].
               e.   [***].

          3)   Borrower shall provide Bank proof of insurance on all tangible
               corporate assets and a Lender's Loss Payable Clause with Bank as
               loss payee.

          4)   Borrower shall notify Bank in writing of any legal action
               commenced against it which may result in damages over $[***].
               Borrower shall provide Bank with such notice immediately upon
               Borrower's receipt of notice of such legal action.

          5)   Borrower shall pay Bank a $[***] documentation fee at the
               closing of transaction.

IX.   OTHER CONDITIONS

      A.  Prior to cash advances over $500,000 against the Line, Bank shall
          conduct an initial collateral audit by Bank's designated agent at
          Borrower's expense, with results satisfactory to Bank. Thereafter,
          Bank shall conduct annual collateral audits by Bank's designated agent
          at Borrower's expense, with results satisfactory to Bank.

      B.  All reasonable expenses of Bank for legal fees, documentation fees,
          UCC searches and filing fees, and all other costs involved with
          documenting and enforcing the loans, including the expenses of Bank's
          outside counsel, shall be borne by the Borrower, whether or not the
          Credit Facilities close.

This letter is provided solely for your information and is delivered to you with
the understanding that neither it nor its substance shall be disclosed to any
third person, except those who are in confidential relationship with you, or
where the same is required by law.

If the terms set forth above are acceptable to you, please so indicate by
signing and returning the original of this letter to us.  The loan fees of
$[***] and the documentation fee of $[***], all referred to above, will be
payable at the signing of definitive loan documents.   Unless a signed copy of
this letter indicating your acceptance has been returned by no later than April
15, 2000, the terms herein will expire and be of no further affect.  Upon return
of this letter and the payment, the Bank will prepare drafts of definitive loan
documents for your review.  If you and the Bank do not enter into definitive
loan documents, the Bank will refund to you the any amount of the loan fees
collected, less any amount for the Bank's expenses for the foregoing.

This letter is intended to set forth the terms of the credit facility currently
under discussion between us.  It is intended that all legal rights and
obligations of the Bank and you would be set forth in the signed definitive loan
documents.


[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>

On behalf of the Senior Management of the Bank, we are delighted to propose
making this credit facility available to Borrower and look forward to a long and
mutually rewarding relationship.  Please don't hesitate to call if you have any
questions or problems.


Sincerely,                             Sincerely,

/s/ Julia Doke                         /s/ James Ellison

Julia Doke                             James Ellison
Assistant Vice President               Senior Vice President & Manager
Imperial Bank                          Imperial Bank
Emerging Growth Industries             Emerging Growth Industries


Accepted and agreed to:

Metawave Communications Corp

By: /s/ John Schaller
   ----------------------------

Title: Controller and Treasurer
      -------------------------

Date: March 23, 2000
     --------------------------

<PAGE>

                                                                   EXHIBIT 10.14

                                                                        ORIGINAL

                         GENERAL PURCHASING AGREEMENT

                      BETWEEN SOUTHWESTCO WIRELESS, L.P.

                                      AND

                      Metawave Communications Corporation


                          Contract No. 880-9810-1020





                          CONFIDENTIAL & PROPRIETARY
                        General Purchase Agreement 3/98

                                      -1-

                                 CONFIDENTIAL
[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

SECTION    TITLE                                                            PAGE
- -------    -----                                                            ----
<C>        <S>                                                              <C>

ARTICLE I...................................................................  5
TERMS AND CONDITIONS APPLICABLE TO..........................................  5
     1.   DEFINITIONS.......................................................  5
     2.   TERM OF AGREEMENT.................................................  6
     3.   ORDERS............................................................  6
     4.   TERMINATION OF ORDERS.............................................  7
     5.   PRICING AND DELIVERY..............................................  7
     6.   INVOICES AND PAYMENT..............................................  7
     7.   PRICE PROTECTION..................................................  8
     8.   MOST FAVORED CUSTOMER.............................................  9
     9.   AUDIT.............................................................  9
    10.   TERMINATION.......................................................  9
    11.   TRAINING.......................................................... 10
    12.   MANUALS AND DOCUMENTATION......................................... 10
    13.   WARRANTIES........................................................ 11
    14.   BENCHMARK TESTING, PRODUCT AND SOFTWARE TRIAL..................... 12
    15.   FORCE MAJEURE..................................................... 13
    16.   TAXES............................................................. 13
    17.   NOTICE............................................................ 14
    18.   INDEPENDENT CONTRACTORS........................................... 14
    19.   INDEMNIFICATION................................................... 14
    20.   INFRINGEMENT...................................................... 15
    21.   USE AND PROTECTION OF INFORMATION................................. 16
    22.   SUPPLIER'S INFORMATION............................................ 17
    23.   AVAILABILITY...................................................... 17
    24.   LICENSES.......................................................... 17
    25.   ASSIGNMENT........................................................ 17
    26.   SUBCONTRACTING.................................................... 18
    27.   PUBLICITY AND ADVERTISING......................................... 18
    28.   CHOICE OF LAW..................................................... 18
    29.   WAIVER AND ESTOPPEL............................................... 18
    30.   SEVERABILITY...................................................... 18
    31.   HEADINGS.......................................................... 19
    32.   INSURANCE......................................................... 19
    33.   RELEASES VOID..................................................... 20
    34.   OCCUPATIONAL SAFETY AND HEALTH ACT (OSHA)......................... 20
    35.   NON-DISCRIMINATION COMPLIANCE..................................... 20
    36.   SUCCESSORS AND ASSIGNS............................................ 20
    37.   SWCO'S PROPERTY................................................... 20
    38.   LAWS, RULES AND REGULATIONS....................................... 20
    39.   ATTORNEYS' FEES AND COSTS......................................... 21
    40.   COUNTERPARTS...................................................... 21
</TABLE>



                          CONFIDENTIAL & PROPRIETARY
                        General Purchase Agreement 3/98

                                      -2-

                                 CONFIDENTIAL
[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

                               TABLE OF CONTENTS


ARTICLE II.................................................................. 22
TERMS AND CONDITIONS APPLICABLE TO.......................................... 22
     1.   SCOPE............................................................. 22
     2.   FORM OF ORDER..................................................... 22
     3.   SITE PREPARATION.................................................. 22
     4.   TRANSPORTATION.................................................... 23
     5.   TITLE AND RISK OF LOSS............................................ 23
     6.   INSTALLATION AND COMMISSIONING.................................... 23
     7.   SELF INSTALLATION................................................. 24
     8.   INSTALLATION, ASSISTANCE AND TECHNICAL SUPPORT.................... 24
     9.   STANDARD OF PERFORMANCE FOR ACCEPTANCE............................ 25
    10.   CABLES AND RELATED ITEMS.......................................... 25
    11.   ENGINEERING CHANGES............................................... 25
    12.   TRADE-IN.......................................................... 25
    13.   RELOCATION OF EQUIPMENT........................................... 25
    14.   SUPPLIES AND/OR REPLACEMENT PARTS................................. 26
    15.   CONVERSION OF FINANCIAL ARRANGEMENT............................... 26
    16.   TRANSFER OF TITLE TO A THIRD PARTY................................ 26
    17.   NEW EQUIPMENT..................................................... 26
    18.   REMOVAL OF EQUIPMENT.............................................. 26
ARTICLE III................................................................. 28
TERMS AND CONDITIONS APPLICABLE TO THE SUPPLIER'S HARDWARE.................. 28
     1.   SCOPE............................................................. 28
     2.   FORM OF ORDER..................................................... 28
     3.   AVAILABILITY OF MAINTENANCE AND SPARE PARTS....................... 29
     4.   SUPPLIER RESPONSIBILITIES FOR TYPE 1 EMERGENCY.................... 30
     5.   SUPPLIER RESPONSIBILITIES FOR TYPE 2 EMERGENCY.................... 30
     6.   SWCO's RESPONSIBILITIES........................................... 30
     7.   ON-SITE MAINTENANCE............................................... 31
     8.   NOTIFICATION AND RESPONSE......................................... 31
     9.   MAINTENANCE TERM AND MAINTENANCE CHARGES.......................... 31
    10.   ENGINEERING COMPLAINTS............................................ 32
    11.   ENGINEERING CHANGES............................................... 32
    12.   EQUIPMENT NON-PERFORMANCE CREDIT.................................. 33
    13.   REMEDIES FOR EQUIPMENT FOR FAILURE TO MEET OPERATIONAL LEVEL...... 33
    14.   WARRANTY.......................................................... 33
    15.   ESCALATION GUIDELINES............................................. 33
    16.   PROCEDURES FOR SUPPLIER'S HMP..................................... 34
ARTICLE IV.................................................................. 37
TERMS AND CONDITIONS APPLICABLE TO.......................................... 37
     1.   SCOPE............................................................. 37
     2.   DEFINITIONS....................................................... 37
     3.   FORM OF ORDER..................................................... 37
     4.   LICENSE........................................................... 38
     5.   LICENSE TERM...................................................... 39
     6.   LICENSE FEE....................................................... 39
     7.   SOFTWARE DELIVERY................................................. 39
     8.   RISK OF LOSS...................................................... 40
     9.   INSTALLATION...................................................... 40
    10.   STANDARD OF PERFORMANCE FOR ACCEPTANCE............................ 40
    11.   NEW RELEASES...................................................... 40



                          CONFIDENTIAL & PROPRIETARY
                        General Purchase Agreement 3/98

                                      -3-

                                 CONFIDENTIAL
[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

<TABLE>

   <C>   <S>                                                                 <C>
    12.  SOFTWARE MAINTENANCE............................................... 41
    13.  SOFTWARE MAINTENANCE CHARGE........................................ 42
    14.  TERMINATION OF MAINTENANCE......................................... 43
    15.  OBJECT CODE AND TECHNICAL DOCUMENTATION............................ 43
    16.  RELOCATION OF SOFTWARE............................................. 43
    17.  ENHANCEMENT OF SERVICES............................................ 43
    18.  SOFTWARE EVALUATION................................................ 43
    19.  SOFTWARE VIRUS PROTECTION.......................................... 44
ARTICLE V................................................................... 45
TERMS AND CONDITIONS APPLICABLE TO THE PERFORMANCE ACCEPTANCE............... 45
     1.   INTRODUCTION...................................................... 45
     2.   PRODUCT CONFIGURATION PLANNING PHASE.............................. 45
     3.   MEASUREMENT PROCESS............................................... 45
     4.   BASELINE PERFORMANCE COLLECTION PHASE............................. 45
     5.   INSTALLATION AND COMMISSIONING PHASE.............................. 45
     6.   PRODUCT OPTIMIZATION PHASE........................................ 45
     7.   PERFORMANCE COLLECTION, EVALUATION AND
          ACCEPTANCE PHASE.................................................. 45
     8.   RESPONSIBILITIES.................................................. 45
ARTICLE VI.................................................................. 46
ENTIRE AGREEMENT............................................................ 46
     1.   ENTIRE AGREEMENT ENTIRE AGREEMENT................................. 46
     2.   SIGNATURES........................................................ 46
SCHEDULE A.................................................................. 47
PRODUCTS AND RELATED SERVICES............................................... 47
     1.   PRICING SUMMARY................................................... 47
     2.   EQUIPMENT DISCOUNTS............................................... 47
     3.   EQUIPMENT PRICING................................................. 47
     4.   MAINTENANCE FEES.................................................. 47
     5.   GENERAL CONDITIONS FOR ORDER...................................... 48
</TABLE>



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                                   ARTICLE I

                      TERMS AND CONDITIONS APPLICABLE TO
                             THE ENTIRE AGREEMENT

     THIS GENERAL PURCHASE AGREEMENT is between SOUTHWESTCO WIRELESS, L.P., a
Delaware Limited Partnership, doing business as Cellular One, (hereinafter
called "SWCO") having an office and place of business at 11333 N. Scottsdale
Rd., Suite 200, Scottsdale, Arizona 85254 and Metawave Communications
Corporation, a Delaware Corporation, having its principal office and place of
business at 10735 Willows Road NE, Redmond, Washington 98073 (hereinafter called
"Supplier").

     WHEREAS, SWCO may place Orders for the purchase of Product, Software and/or
Related Services from Supplier for use in the United States; and

     WHEREAS, SWCO and Supplier each desire that the terms and conditions
controlling all such purchases be consistent, uniform, and agreed to by both
parties in advance of the -placement of any such Orders; and

     WHEREAS, this Agreement is intended to establish consistent and uniform
terms and conditions for all purchases that SWCO may make from Supplier;

     NOW, THEREFORE, in consideration of the mutual promises, covenants, and
conditions herein contained, SWCO and Supplier agree as follows:

1.   DEFINITIONS

     1.1  "Agreement" refers to this General Purchase Agreement.

     1.2  "Commissioning" refers to the procedures described in Supplier's
Product system manual to place the Equipment into commercial service at a
particular site which is documented by SWCO's signature on the Commissioning
Certificate attached hereto as Exhibit

     1.3  "Equipment" refers to goods, including software necessary for the
operation of the equipment, available from Supplier hereunder.

     1.4  "Initial Order" refers to the first Order for Equipment and associated
Services purchased by SWCO as defined in Schedule A.

     1.5  "Order" refers to a written order from SWCO for the purchase, lease or
license from Supplier of a Product and/or Related Services.

     1.6  "Outstanding Order" refers to an Order for which title/lease/license
to the Product and/or license to Software described therein has not passed to
SWCO or for which any Related Services described therein have not been accepted.

     1.7  "Party" refers to either SWCO or Supplier, as the context requires;
both SWCO and Supplier may be collectively referred to as the "Parties."

     1.8  "Product" refers to the Equipment and Software described on Schedule A
hereto.

     1.9  "Related Services" means those services such as installation,
technical support, Software development, maintenance, and training, which
Supplier will provide to SWCO




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hereunder. Those Related Services which will be provided by Supplier, and the
charges therefore, if any, are set forth on Schedule A.

     1.10  "Software" refers to software purchased by or provided to SWCO
including (i) computer programs embedded in the Equipment or Product which
control and monitor the operation of the Equipment ("Embedded System Software"),
as described in Schedule A; and (ii) the LampLighter(TM) PC-based graphical user
interface computer program for the Equipment, and all Features, Major Releases,
Point Releases, Software Patches (as defined in Article IV), and other updates
and modifications to such Software and any documentation in support thereof.

     1.11  "Subcontractor" means any person who or entity which enters into a
contract with Supplier but with whom SWCO has no contractual relationship, and
all employees, agents and representatives of that person or entity.

2.   TERM OF AGREEMENT

     This Agreement shall be effective on 2/24, 1999 (the "Effective Date").
Unless terminated in accordance with Section 10 of this Article (Termination),
this Agreement shall continue in effect for [***] and will be automatically
renewed for subsequent one-year terms at each annual anniversary of the
"Effective Date" (a "Renewal Term").

3.   ORDERS

     3.1  All Orders made by SWCO from Supplier shall be in the form of a SWCO
purchase order document that contains the items in the Section " Form of Order"
located in each Article of this Agreement. Each Order shall reference and be
deemed to incorporate the specifications applicable to the Product or Related
Services being ordered and any special terms, in addition to those set forth in
this Agreement made in writing by Supplier in SWCO and accepted by SWCO.

     3.2  If notice of rejection of an Order is not received by SWCO within
[***] from the date of the Order, such Order shall be deemed to have been
accepted by Supplier.

     3.3  Whenever the provisions of an Order conflict with the provisions of
this Agreement, the provisions of the Order which are not preprinted as part of
a form shall control. Printed provisions on the reverse side of SWCO's Orders
and all provisions on Supplier's forms whether in Supplier's notice of
acceptance, catalogue, invoice, confirmation, or otherwise, shall be deemed
deleted and of no force or effect. An Order may be modified only by a written
instrument signed by SWCO and Supplier.

     3.4  It is expressly understood and agreed that this Agreement is intended
solely to establish uniform and consistent terms and conditions for any Orders
SWCO may choose to place with Supplier, that SWCO is not obligated to place any
Orders with Supplier, except for the Initial Order, that this Agreement does not
grant Supplier an exclusive privilege to sell to SWCO any or all Products,
Software and/or Related Services which SWCO may require by contract with other
manufacturers and suppliers for the procurement of comparable products, software
and/or services.




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     3.5  SWCO assumes no liability for Product produced, processed or shipped
in excess of the amount specified in the Order placed with Supplier.

     3.6  If following the completion of the site survey, Supplier reasonably
determines that Equipment configuration or the Related Services set forth in the
Order must be changed, Supplier shall notify SWCO with a written proposal for
changes to the purchase Order. Upon receipt, SWCO shall have [***] business days
to accept or reject the written proposal for changes. If accepted, SWCO shall
execute a written change Order to reflect the required changes identified by the
site survey. If SWCO rejects the written proposal for changes, SWCO may
terminate the purchase Order subject to Section 4 of Article I.

4.   TERMINATION OF ORDERS

     SWCO, prior to delivery, may terminate any Order, or portion thereof,
except for the Initial Order. In the event SWCO terminates an Order or portion
thereof, the following table will determine termination charges for undelivered
Product. No termination charge shall apply to Software not delivered or Related
Services not performed.

Time of Cancellation Prior to             Maximum Termination Charge
Requested Delivery Date                   (% of Price)

[***]


     Before Supplier applies these cancellation charges it will take into
consideration Supplier's ability to recommit such Product toward the fulfillment
of order(s) from other customers; and Supplier agrees to use every reasonable
effort to recommit such equipment.

5.   PRICING AND DELIVERY

     5.1  Upon placement by SWCO of an Order, Supplier agrees to sell to SWCO
those Products and/or Software specified on the Order for the applicable price
set forth on Schedule A. The price in Schedule A is exclusive of such taxes as
may be applicable pursuant to Section 16 of Article 1 (Taxes).

     5.2  Supplier shall arrange for the delivery, and, if applicable,
installation of the Product or Provision of the Related Services on the date(s)
specified in the Order. Time is of the essence as to all dates for provision,
delivery and installation, unless mutually agreed to by both Parties.

6.   INVOICES AND PAYMENT

     6.1  For the Initial Order only, Supplier shall render invoices following
the date of acceptance of the Equipment, Software or Related Service as
indicated by SWCO's execution of the Certificate of Acceptance attached as a
part of Article V. Such invoices shall be sent to the billing address noted on
the Order and shall contain a detailed list of charges which shall include,
where applicable, type, description, and serial number of Equipment, Software,
description of Related Services, basic charge for the Equipment, Software, or
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applicable charges. Any taxes, transportation costs or other associated costs
billable hereunder are to be stated separately. Applicable sales/use taxes shall
be paid to the state in which taxable items are delivered, based on final
destination as noted in the Order for each item. If Order requires shipment to
multiple states, than each item invoiced must indicate final shipping
destination. Supplier shall attach to the invoices a copy of bills of lading and
shipping notice showing through routing and weight. Each invoice shall be paid
within thirty (30) days of receipt unless it is disputed by SWCO.

     For all other Orders, Suppler shall render invoices as follows: for
Equipment to be installed by Supplier [***] for Equipment to be installed by
SWCO [***] on shipment; and for Related Services, [***] on completion unless
otherwise agreed to by both Parties.

     6.2  The following detailed information is required on each invoice in
order to assure prompt remittance:

          (1)  SWCO's Order number.

          (2)  Supplier's invoice number.

          (3)  Quantity and price of each item shipped.

          (4)  Applicable sales/use tax:

               i)    the value of the taxable Product/Related Service by
                     individual taxing jurisdiction;

               ii)   the sales/use tax for each such Product/Related Service by
                     individual taxing jurisdiction;

               iii)  the value of nontaxable Product/Related Services; and

               iv)   Supplier's sales/use tax registration number for each
                     applicable taxing jurisdiction.

          (5)  Other charges (if applicable).

          (6)  Final total cost.

          (7)  Contract number.

     6.3  Charges payable by SWCO will apply and shall be calculated from the
date of acceptance for Equipment or Software and the commencement date for a
Service. For any period of less than a calendar month, the charges shall be
prorated on the basis of a thirty (30) day month.

7.   PRICE PROTECTION

     Supplier shall not increase the prices for any Equipment, Software and/or
Related Services set forth on Schedule A during the Term. During a Renewal Term,
if any, Supplier may increase the price of Product, Software and/or Related
Service not more than [***]






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in any annual Renewal Term effective upon sixty (60) days prior written notice
and such increased price shall apply only to Orders placed after the effective
date of such price increase.

8.   [***]

     8.1  For the Term and each Renewal Term of this Agreement, Supplier shall
[***] as [***].  Supplier represents that all of the [***] by Supplier hereunder
are [***].  If during the Term or any Renewal Term of this Agreement Supplier
[***], then:

          (1)  Supplier shall, within thirty (30) calendar days after the
               effective date of such [***];

          (2)  This Agreement and all applicable Orders shall [***]; and

          (3)  [***].

[***]

     8.2  If during the Term of this Agreement, or during any Renewal Term of
this Agreement, Supplier [***]

9.   AUDIT

     Supplier shall prepare and maintain complete, legible, and accurate records
relating to this Agreement during the Term and maintain such for two (2) years
from the date of termination. SWCO shall have the right, through its designated
representatives, to examine and audit, at all reasonable times, all such records
and such other records and accounts as may, under recognized accounting
practices, contain information bearing upon this Agreement.

10.  TERMINATION

     This Agreement may be terminated b written notice only, as follows:

     (a)  By either Party, [***] with such termination being effective as of the
end of the Term or Renewal Term. SWCO shall have the right to place Purchase
Orders up until the effective date of the termination, and termination of this
Agreement pursuant to this subsection (a) shall not affect any Outstanding
Purchase Order as of the effective date of the termination.





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     (b)  By either Party, in the Event of Default or breach of this Agreement
and/or Order by Supplier, when the breach or Default has not been cured after
thirty (30) day written notice by the non-breaching Party. Any of the following
shall be considered an "Event of Default":

          i)    Either Party is judged bankrupt or insolvent; or

          ii)   Either Party makes a general assignment for the benefit of its
                creditors; or

          iii)  A trustee or receiver is appointed for either Party or for any
                of its property; or

          iv)   Any petition by or on behalf of either Party is filed to take
                advantage of any debtor's act or to reorganize under the
                bankruptcy or similar laws; or

          v)    Either Party disregards laws, ordinances, rules, regulations or
                orders of any public authority.

     In the event of termination pursuant to this subsection (b), SWCO shall
have the right, at its option, to confirm in whole or in part any Outstanding
Order, in which case Supplier shall be obligated to fulfill the Order to the
extent it is confirmed, or to cancel, in whole or in part, any outstanding Order
without any liability to SWCO. The foregoing right is in addition to, and not in
limitation of, any other remedy SWCO may have at law or equity.

11.  TRAINING

     11.1  Supplier shall, at Supplier's published rates, provide sufficient
training, training materials and technical support to SWCO to enable SWCO to
properly and effectively use the Product. Such training shall be conducted at a
site selected by SWCO, or at Supplier's offices located in Redmond, Washington,
and on dates that are mutually agreed to.

     11.2  Supplier shall provide a training class on site in each SWCO MSA
where Equipment is installed. Additionally, Supplier shall provide a Refresher
course annually at a site selected by SWCO. The content of each course shall
include, but not be limited to site preparation, installation, remedial
maintenance, failure recovery/backup, failure repair techniques, test equipment,
diagnostic software use, and full documentation requirements, and may be changed
by Supplier when, in its judgment, such change is warranted. Supplier shall
provide sufficient personnel to conduct said course and shall furnish, at no
additional cost, instructional aids appropriate for each course, including
books, pamphlets and diagrams.

     11.3  SWCO may reproduce any training materials originated by Supplier for
the purpose of training SWCO personnel. Any such reproductions shall include any
copyright 6r similar proprietary notices contained in the items being
reproduced.

12.  MANUALS AND DOCUMENTATION

     12.1  Supplier shall provide, on or before the installation date for
Product and at no additional charge, an updated CD Rom covering the
installation, maintenance and operation of the Equipment and Software for every
Spotlight ordered. Supplier shall provide all future updates of such CD Rom at
Supplier's then published rates.

     12.2  SWCO may reproduce any manuals for the purpose of installing,
maintaining and operating the Equipment and Software. Any such reproductions
shall include copyright or






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similar proprietary notices contained in the items being reproduced. SWCO may
purchase additional sets of manuals at Supplier's published rates.

13.  WARRANTIES

     13.1  Supplier warrants to SWCO that the Equipment and Software furnished
will be free from defects in design (except to the extent designed by SWCO),
material and workmanship and will conform to and perform in accordance with the
specifications and documentation. Supplier also warrants to SWCO that Services
will be performed in a fully workmanlike manner to SWCO's reasonable
satisfaction. In addition, if Equipment or Software furnished contains one or
more manufacturers' warranties, Supplier hereby assigns such warranties to SWCO.
All warranties shall survive inspection, acceptance and payment. Equipment or
Software not meeting the warranties will, at SWCO's option, be repaired,
adjusted or replaced by Supplier at no cost to SWCO.

     13.2  Except as otherwise stated herein, the warranty period for purchased
Equipment, Software or Related Services will be in effect for [***] after the
date of acceptance of such Equipment, Software or Related Services; provided;
however, that such warranty period for Equipment or Software shall be extended
by a period equal to the time during which such Equipment or Software is not
operational as a result of such Equipment or Software not meeting its
warranties. The warranty period for replacement Product shall be the remaining
warranty period of the replaced Product or ninety (90) days, whichever is the
greater.

     13.3  If any breach of warranty occurs with respect to Equipment or
Software and if such breach has not been corrected within a reasonable time (not
to exceed thirty (30) days from SWCO notice to Supplier of the breach), SWCO may
cancel any Outstanding Orders covering such defective Equipment or Software and
any other Outstanding Orders for Equipment or Software affected by such breach.
In the event a breach occurs during the warranty period on accepted Equipment or
Software, and Supplier is unable to correct such breach through the procedures
set forth in Articles III and IV within [***] from SWCO notice to Supplier of
the breach, Supplier shall promptly remove such defective portion of Equipment
or Software and refund to SWCO all monies previously paid to Supplier for such
defective portion of Equipment or Software affected by the uncorrected breach.

     13.4  Supplier warrants that SWCO shall acquire good and clear title to any
Product purchased hereunder, free and clear of all liens and encumbrances And
with respect to Software which is licensed, Supplier warrants SWCO shall acquire
all rights and interests to use such Software.

     13.5  Supplier represents and warrants to SWCO that at the time of
delivery, all Products and Software delivered hereunder shall be "CALEA
Compliant," meaning that they shall not adversely affect SWCO' s ability to
comply with the provisions of Pub L. 103-414, Title 1, October 25, 1994, 108
Stat 4279 as it may be amended from time to time as well as any regulations or
industry standards implementing the provisions of the law.

     13.6  This warranty does not apply to any claim which arises out of any of
the following: (1) the Equipment has been subject to unreasonable misuse,
neglect, damage by SWCO or a third party; (ii) only in the event the
installation was provided by someone other than Supplier and the Equipment has
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guidelines, or parts have been used in the Equipment which are not designed to
be used with the Equipment; (iii) the Equipment is not maintained pursuant to
Supplier's Maintenance Program only in the event the maintenance was provided by
someone other than Supplier; (iv) an event of Force Majeure has occurred; and
(v) the Equipment is non-performing as a result of the failure of third party
equipment or services including but not limited to antennas, antenna lines or
interconnection facilities not provided by Supplier at the site.

     13.7  THE WARRANTIES IN THIS AGREEMENT ARE GIVEN IN LIEU OF ALL OTHER
WARRANTIES EXPRESS OR IMPLIED WHICH ARE SPECIFICALLY EXCLUDED, 1NCLIJDING,
WITHOUT LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.

14.  BENCHMARK TESTING, PRODUCT AND SOFTWARE TRIAL

     14.1  Upon SWCO's request, and subject to availability, Supplier shall
[***] be incorporated into the Order.

     14.2  Upon SWCO's request, and subject to availability, Supplier shall, at
no additional charge, provide SWCO with the use of products similar to Equipment
and Software ordered by SWCO, but not yet installed, for purposes of program
testing, conversion, compiling and other activities if Supplier normally
provides similar use of such products to its other customers.

     14.3  Supplier and SWCO may agree to an Equipment and Software trial(s) to
demonstrate additional functionality which shall be governed by the following
provisions:

           (1)  Supplier shall bear all expenses related to the trial of the
                Equipment and Software, including the cost of transportation,
                installation, deinstallation, modification, repair, maintenance,
                packing, and unpacking, unless otherwise agreed to by the
                Parties.

           (2)  The trial period will begin the day following SWCO's receipt of
                Supplier's notice that all Equipment and Software subject to the
                trial have been installed and are ready for testing. The trial
                will continue for the period agreed to by Supplier and SWCO.

           (3)  At the end of the trial period, SWCO shall notify Supplier
                whether or not SWCO will order the trialed Equipment and
                Software. For any Equipment and Software not ordered by SWCO,
                Supplier shall remove such Equipment or Software within seven
                (7) days after Supplier's receipt of the notice, and SWCO will
                promptly return any Software to Supplier.

           (4)  If, during the [***]





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15.  FORCE MAJEURE

     Neither SWCO nor Supplier shall be liable or deemed in default for any
delay or failure in performance of an Order or any part of this Agreement to the
extent that such delay or failure is caused by accident, fire, industry-wide
strike, embargo, act of the government, war or national emergency requirement,
act of God, or act of the public enemy ("Force Majeure Conditions"). If any
Force Majeure Condition occurs, the Party delayed or unable to perform shall
promptly give notice to the other Party. The Party affected by the other Party's
delay or inability to perform may elect to:

     (1)  Terminate the Order or part thereof as to Product or Related Services
          not already received; or

     (2)  Suspend the Order for the duration of the Force Majeure Condition, and
          resume performance once the Force Majeure Condition ceases.

     Until notice is given otherwise, option (2) shall be deemed selected.

16.  TAXES

     16.1  Supplier shall bear the cost of all taxes, including but not limited
to gross receipt taxes, imposed upon Supplier. Supplier shall be responsible to
invoice SWCO and remit to the appropriate government authorities all applicable
sales and use taxes imposed by law. SWCO shall be responsible to reimburse
Supplier for applicable sales and use taxes billed and remitted as required
hereunder.

     16.2  Supplier shall provide to SWCO a sales and use tax registration
number for each state in which Related Services are performed or that is the
final destination, as set forth on the Order, of Product provided under this
Agreement. The registration number for each applicable state will be added to
every invoice issued by Supplier to SWCO hereunder. Supplier shall remit the
sales/use tax to the state of final destination of Product, or the state in
which the Related Services are performed. Supplier shall notify SWCO of any
state for which Supplier does not bill and remit sales/use taxes because
Supplier does not have nexus with that state.

     16.3  If any of the Related Services include contractor services, Supplier
shall comply with any applicable state's resident and non-resident contractor
laws. Supplier will be responsible for its subcontractors compliance with such
laws. Supplier shall provide SWCO with documentation of such compliance
(including subcontractor documentation), which, at minimum, shall include a copy
of the non-resident compliance certificate issued by each applicable state.

     16.4  Each invoice issued by Supplier hereunder shall separately set forth;
(i) the value of the taxable Product/Related Service by individual taxing
jurisdiction, (ii) the sales/use tax for each such Product/Related Service by
individual taxing jurisdiction, and (iii) the value of nontaxable
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     16.5  Supplier agrees to pay, and hold SWCO harmless from and against, any
penalty, interest, tax or other charge that may be levied or assessed as a
result of the delay or failure of Supplier for any reason to pay any tax or file
any return or information required by law, rule or regulation or by contract. If
SWCO believes that Supplier has failed to comply with any of the terms of this
Section 16, SWCO shall discuss such failure with Supplier, and upon the
presentation of evidence that such failure has in fact occurred, SWCO may
withhold up to ten percent (10%) of any invoice affected by such noncompliance.

17.  NOTICE

     All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed given when either personally served or mailed by
certified, registered mail, return receipt requested, or delivered by a
reputable overnight delivery service, or by facsimile transmission confirmed by
another form of delivery within one (1) business day, to:

     SWCO:      Cellular One
                11333 North Scottsdale Road, #200
                Scottsdale, Arizona 85254
                Attention: Contract Manager

     Supplier:  Metawave                    Copy to:  Metawave 1
                10735 Willows Road NE                 10735 Willows Road NE
                Redmond, Washington 98073             Redmond, Washington 98073
                Attention:                            V.P. of Sales & Marketing
                                                      Attention: General Counsel

     If either Party changes its address during the term hereof, it shall so
advise the other Party in writing, and all notices thereafter required to be
given shall be sent to such new address.

18.  INDEPENDENT CONTRACTORS

     Neither Supplier nor its officers and directors and its associated
personnel and employees shall be deemed to be employees or agents of SWCO, it
being understood that Supplier is an independent contractor for all purposes and
at all times. Supplier shall be solely responsible for the safety and
supervision of its employees as well as for the withholding or payment of all
federal, state and local personal income taxes, social security, unemployment
and sickness disability insurance and other payroll taxes with respect to its
employees, including contributions from them as required by law.

19.  INDEMNIFICATION

     19.1  Supplier shall defend, indemnify, and hold harmless SWCO, its
parents, subsidiaries and affiliates, and their directors, officers, agents and
employees from any and all liabilities, claims or demands whatsoever, (including
the costs, expenses and reasonable attorney's fees incurred on account thereof)
that may be made: (i) by any person, specifically including, but not limited to,
Supplier, its agents or subcontractors, for injuries including bodily injury
(including death to persons) or damage to property (including theft) occasioned
by or alleged to have been occasioned by the acts or omissions of the Supplier
its agents or subcontractors whether negligent or otherwise; or (ii) by persons
furnished by Supplier or any





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subcontractors under Worker's Compensation or similar acts, except to the extent
such liability, claim, or demand arises in whole or in part from the negligence
or willful misconduct of SWCO, its agents or employees.

     19.2  Supplier shall defend SWCO against any such liability, claim or
demand and control the litigation, settlement and defense thereof. The foregoing
indemnification shall apply whether the death, injury or property damage is
caused by the sole acts or omissions of Supplier or by the concurrent acts or
omissions of SWCO or Supplier hereunder, except Supplier shall not be
responsible for that portion of any liability, claim or demand to the extent
that it arises from the negligence or willful misconduct of SWCO, its employees
or agents SWCO agrees to notify Supplier promptly of any written claim or
demands against SWCO for which Supplier is responsible hereunder.

     19.3  The supplied Equipment, Hardware, Software, Product and Related
Services provided hereunder (i) shall perform on and after January 1, 2000 in as
good a manner as before such date, and (ii) shall at all times manage,
manipulate and report data involving dates (including the year 2000, dates
before and after the year 2000, and single-century and multicentury formulas)
without generating incorrect values or dates or causing an abnormally-ending
scenario within an application. Supplier shall provide SWCO with evidence of
successful completion of laboratory testing, that the supplied Equipment,
Hardware, Software, Product and Related Services provided hereunder properly
performs all internal and external time and date processing. Such certification
shall be provided no later than thirty (30) days after the execution of this
Agreement. In addition, Supplier agrees to cooperate with SWCO in conducting
Year 2000 interoperability tests to ensure that the supplied Equipment,
Hardware, Software, Product and Related Services do not adversely `affect the
operation, output, functionality or other elements of SWCO's operation. Further,
Supplier agrees to cooperate with SWCO in providing information to third
parties, such as customers, regulatory bodies, and auditors, regarding
Supplier's Year 2000 compliance as it relates to the supplied Equipment,
Hardware, Software, Product and Related Services. Supplier shall indemnify SWCO
and for any loss, cost, or damages (including attorney's fees) sustained because
of Supplier's Year 2000 noncompliance.

20.  INFRINGEMENT

     20.1  The following terms apply to any infringement, suit for or claim or
allegation of infringement of any United States patent, trademark, copyright,
trade secret or other proprietary interest (collectively referred to as "IP
Claim") based on the manufacture, use, sale, resale, or importation into the
United States of any Equipment, Software, Related Service, documentation or
other item furnished to SWCO under or in contemplation of this Agreement.
Supplier shall indemnify and hold harmless SWCO and any of its affiliates,
customers, officers, directors, employees, assigns and successors for any loss,
damage, expense, cost (including, but not limited to, any attorney's fees
incurred in the enforcement of this indemnity) or liability that may result by
reason of any such IP Claim, and Supplier shall defend or settle, at its own
expense, any such IP Claim against SWCO.

     20.2  SWCO shall provide Supplier with prompt written notice of any IP
Claim that identifies Equipment, Software or Related Service provided to SWCO
hereunder and tender to Supplier control of any such action or settlement
negotiations to the extent covered by the indemnification provided herein.
Supplier shall keep SWCO advised of the status of any such IP Claim and of its
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opportunity to review and comment on significant actions planned to be taken by
Supplier on behalf of SWCO. If any such IP Claim involves other vendors of SWCO,
Supplier shall cooperate as reasonably necessary to effectively defend SWCO.
SWCO shall, at Supplier's expense, reasonably cooperate with Supplier in the
defense of SWCO.

     20.3  If the use, manufacture, sale, or importation in the United States of
any Equipment, Software, or Related Service furnished hereunder becomes subject
to an IP Claim, Supplier shall, at SWCO's option and at no expense to SWCO, (i)
by license or other release from claim of infringement obtain for SWCO and
SWCO's customers the right to make, use, sell and/or import into the United
States the Product, Software or Related Service, as appropriate; or (ii)
substitute an equivalent non-infringing Product, Software or Related Service
reasonably acceptable to SWCO, which meets the specifications for the Product,
Software or Related Service, and extend this indemnity thereto; or (iii) modify
such Product, Software, or Related Service to make it non-infringing but
continue to meet the specifications therefore, and extend this indemnity
thereto.

     20.4  Supplier shall have no obligation to SWCO with respect to any claim
of patent or copyright infringement which is based upon (i) adherence to
specifications, designs, or -instructions furnished by SWCO, unless such
specifications, designs, or instructions are incorporated into Product made
generally available to Supplier's customers, (ii) the combination, operation or
use of any Equipment supplied hereunder with products, software, or data with
which the Equipment is not intended to be used or for which the Equipment is not
designed, unless at Supplier's direction, (iii) the alteration of the Equipment
or modification of any Software made by any party other than Supplier, unless at
Supplier's direction, or (iv) SWCO's use of a superseded or altered release of
some or all of the Software if infringement would be avoided by the use of a
subsequent, unaltered release of the Software that is provided to SWCO by
Supplier.

21.  USE AND PROTECTION OF INFORMATION

     21.1  The Parties shall, both during the Term of this Agreement and for a
period of [***] after termination of this Agreement, hold in strictest
confidence information which is confidential and/or proprietary to the other
("Confidential Information", as more fully described below). The Parties shall
not disclose or make each other's Confidential Information available, in any
form, to any third party or use each other's Confidential Information for any
purpose other than as specified in this Agreement. Each Party shall take all
reasonable steps to ensure that Confidential Information is not disclosed or
distributed by its employees or agents (who have access to same because of and
only on a need-to-know basis) in violation of any provision of this Agreement,
but in no event less than reasonable means. If in the course of performance of
this Agreement Supplier needs to disclose SWCO Confidential Information to a
subcontractor or agent, the agent/contractor must sign a Non-Disclosure
Agreement substantially in the form of Schedule B.

     21.2  SWCO's and Supplier's Confidential Information shall include all
information clearly marked as confidential.

     21.3  The foregoing shall not prevent either Party from disclosing
Confidential Information which: (i) is or becomes a part of the public domain
through no act or omission of the other Party; (ii) was in the other Party's
lawful possession prior to such access to or the





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disclosure of same and had not been obtained by such other Party either directly
or indirectly from the Party hereto granting such access or making such
disclosure, all of which is so documented by such other party; (iii) is lawfully
disclosed to the other Party by a third party without restriction on such
disclosure; (iv) is required to be disclosed pursuant to subpoena, law,
regulation, or other legal process, provided, however, that the Party responding
to such request first provides written notice to the other Party of the request;
(v) is approved by the other Party for disclosure; or (vi) with respect to
information that is the same as or substantially identical to the Confidential
Information, is independently developed and is so documented by the other Party.

     21.4  Each Party acknowledges that the other would suffer irreparable
damage in the event of any material breach of the provisions of this Section 21.
Accordingly, in such event, a Party would be entitled to seek preliminary and
final injunctive relief, as well as any other applicable remedies at law or in
equity against the Party who has breached or threatened to breach this Section
21 and that Party hereby waives the defense that money damages would be
adequate.

22.  SUPPLIER'S INFORMATION

     No specifications, drawings, sketches, models, samples, tools, computer
programs, technical information, business information, or data, other than that
specified in Section 21 of this Article, written, oral or otherwise, furnished
by Supplier to SWCO hereunder or in contemplation hereof shall be considered by
SWCO to be confidential or proprietary unless so agreed to by SWCO in writing at
the time an Order is placed.

23.  AVAILABILITY

     Supplier represents and warrants that the Equipment and Software listed on
Schedule A or its equivalent shall be available for purchase by SWCO from
Supplier for a minimum of five (5) years following the initial acquisition of
the Product pursuant to this Agreement.

24.  LICENSES

     No licenses, express or implied, under any patents, trademarks or copyright
are granted by SWCO to Supplier. No licenses, express or implied, under any
patents, trademarks or copyright are granted by Supplier to SWCO except for
Software licenses contained in Article IV.

25.  ASSIGNMENT

     25.1  Any assignment of the work to be performed, in whole or in part, or
of any other interest hereunder by Supplier without the prior written consent of
SWCO, except an assignment confined solely to monies due or to become due, shall
be void. It is expressly agreed that any such assignment of monies shall be void
to the extent that it attempts to impose upon SWCO obligations to the assignee
additional to the payment of such monies, or to preclude SWCO from dealing
solely and directly with Supplier in all matters pertaining hereto, including
the negotiation of amendments or settlements of amounts due. SWCO, upon five (5)
days prior written notice to Supplier, may assign all its rights, duties and
obligations under this Agreement to an affiliate or affiliates of SWCO or to a
partnership or partnerships to which SWCO or its affiliate has an ownership
interest.





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     25.2  SWCO shall not (i) assign, sublicense or otherwise transfer the
Software license set forth in Article IV, to any third party without the prior
consent of the Supplier, except as permitted in Section 25.1, (ii) purchase the
Equipment solely for the purpose of reselling or distributing it to a third
party (third party does not include SWCO's affiliates); or (iii) permit its
directors, officers, employees, agents or any other third person to reverse
engineer the Equipment or the Software.

26.  SUBCONTRACTING

     Supplier shall not, without SWCO's prior written approval, subcontract any
portion of the work to be performed on SWCO property hereunder, except for the
purchase of standard commercial supplies and materials.

27.  PUBLICITY AND ADVERTISING

     Supplier shall submit to SWCO all advertising, sales promotion, press
releases and other publicity matters relating to the Equipment or Software
furnished or the Related Services performed by Supplier under this Agreement
wherein SWCO's name, marks or the name or mark of any Bell Atlantic Company is
mentioned or language from which the connection of said names or marks therewith
may be inferred or implied. Supplier shall not publish or use such advertising,
sales promotion, press releases, or publicity matters without SWCO's prior
written approval. Supplier shall post no signs at any site at which Equipment or
Software is being installed or serviced except those required by local, state or
federal law.

28.  CHOICE OF LAW

     This Agreement shall be governed by the laws of the State of New York
without reference to its conflicts of law provisions and the Software shall have
the definition of goods under the U.C.C. The exclusive jurisdiction for any
legal proceeding regarding this Agreement shall be the state or federal courts
in New York and the Parties expressly submit to the jurisdiction of said courts.

29.  WAIVER AND ESTOPPEL

     Either Party's failure at any time to enforce any of the provisions of this
Agreement or any right with respect thereto, or to exercise any option herein
provided, will in no way be construed to be a waiver of such provisions, rights,
or options or in any way to affect the validity or enforcement of this
Agreement. The exercise by either Party of any right or options under the terms
or covenants herein shall not preclude or prejudice the exercising thereafter of
the same or any other right under this Agreement.

30.  SEVERABILITY

     If any provision or portion of a provision of this Agreement is invalid
under applicable statute or rule of law, it is only to that extent to be deemed
omitted, and such unenforceability shall not affect any other provision of this
Agreement, but this Agreement shall then be construed as if such unenforceable
provision(s) had never been contained herein.




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31.  HEADINGS

     The headings in this Agreement are for convenience only and shall not be
construed to define or limit any of the terms herein.

32.  INSURANCE

     32.1  Supplier shall maintain, during each Term and Renewal Term of this
Agreement, at its own expense, the following insurance:

           a.   Worker's Compensation insurance as prescribed by the law of the
                state in which the work is performed;

           b.   Employer's liability insurance with limits of at least
                $1,000,000 each occurrence:

           c.   Comprehensive general liability insurance (including products
                liability insurance) and, if the use of automobiles is required,
                comprehensive -automobile liability insurance, each with limits
                of at least $1,000,000 for bodily injury, including death, to
                any one person, and $1,000,000 on account of any occurrence, and
                $1,000,000 for each occurrence of property damage; and

           d.   Excess liability insurance with a combined single limit of
                $5,000,000.

     32.2  The insuring carriers and the form of the insurance policies shall be
subject to approval by SWCO. SWCO shall be named as an additional insured on all
such policies. Supplier shall furnish to SWCO certificates of such insurance
within ten (10) days of the execution of this Agreement. The certificates shall
provide that ten (10) days prior written notice of cancellation or material
change of the insurance to which the certificates relate shall be given to SWCO.
The fulfillment of the obligations hereunder in no way modify Supplier's
obligations to indemnify SWCO.

     32.3  Supplier shall also require Supplier's subcontractors, if any, who
may enter upon SWCO's premises to maintain similar insurance and to agree to
furnish SWCO, if requested, certificates or adequate proof of such insurance.
Certificates furnished by Supplier's subcontractors shall contain a clause
stating that SWCO is to be notified in writing at least ten (10) days prior to
cancellation of, or any material change in, the policy.

     32.4  SWCO may reasonably require Supplier at any time, and from time to
time, subject to Supplier's ability to obtain such additional insurance, to
obtain and maintain in force additional insurance with coverage or limits in
addition to those above described. However, the additional premium costs of any
such additional insurance required by SWCO shall be borne by SWCO, and Supplier
shall arrange to have such costs billed separately and directly to SWCO by the
insuring carrier(s). SWCO shall be authorized by the Supplier to confer directly
with the agent or agents of the insuring carrier(s) concerning the extent and
limits of Supplier's insurance coverage in order to assure the sufficiency
thereof.




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33.  RELEASES VOID

     Neither Party shall require waivers or releases of any personal rights from
representatives or customers of the other in connection with visits to its
premises and both Parties agree that such releases or waivers shall not be
pleaded by them or by third persons in any action or proceeding.

34.  OCCUPATIONAL SAFETY AND HEALTH ACT (OSHA)

     Supplier shall be responsible for the safety of its work and shall maintain
all lights, guards, signs, temporary passages, and any other necessary
protection and precautions for that purpose. Supplier and its Subcontractors
shall give access to the authorized representatives of the Secretary of Labor or
any state or local official for the purpose of inspecting or investigating or
carrying out of any of the duties under the Occupational Safety and Health Act
of 1970, and any amendments thereto, or any applicable state, or local laws,
rules, or regulations affecting safety and health. Supplier shall be responsible
for any violation by it or its subcontractors of any safety or health standards
issued thereunder, shall immediately remedy any citation giving rise to such
violations, and Supplier shall defend, indemnify, and hold harmless SWCO from
any penalty, fine or liability in connection therewith.

35.  NON-DISCRIMINATION COMPLIANCE

     The applicable provisions in Schedule C, entitled "Non-Discrimination
Compliance Agreement" shall form a part of this Agreement and any amendments
thereto.

36.  SUCCESSORS AND ASSIGNS

     This Agreement shall inure to the benefit of, and shall be binding upon the
Parties hereto and their respective successors and permitted assigns.

37.  SWCO'S PROPERTY

     37.1  Title to all property owned by SWCO and furnished to Supplier shall
remain in SWCO

     37.2  Any property to which SWCO has title and which is in Supplier's
possession or control shall be used only in the performance of this Agreement
unless authorized in writing by SWCO. Supplier shall adequately protect such
property, and shall deliver or return it to SWCO or otherwise dispose of it as
directed by SWCO.

38.  LAWS, RULES AND REGULATIONS

     38.1  Supplier shall comply, at its own expense, with the applicable
provisions of the EEO, Fair Labor Standards Act of 1938, as amended, The
Occupational Safety and Health Act, and all other applicable federal, state and
local laws, ordinances, regulations and codes including identification and
procurement of required permits, certificates, approvals and inspections in
performance under this Agreement.





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     38.2  The employee and agents of each Party shall, while on the premises of
the other, comply with all governmental rules and regulations in effect at such
premises, including security requirements. Supplier's right of entry shall be
subject to applicable governmental security laws.

     38.3  Both Parties agrees to indemnify and hold the other Party harmless
for any loss or damage that may be sustained by reason of any failure to comply
with this Section 38.

39.  ATTORNEYS' FEES AND COSTS

     In the event that this Agreement or any Order is breached by Supplier,
then, in addition to all other rights and remedies SWCO may have, at equity and
in law, Supplier shall be liable for SWCO's reasonable attorneys' fees and costs
incurred in collecting any sums that are due and owing under this Agreement or
in taking any legal action that is necessary in order to enforce the terms and
conditions of this Agreement.

40.  COUNTERPARTS

This Agreement may be executed in counterparts, all of which shall be considered
an original and together they shall constitute one (1) agreement.





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                                  ARTICLE II

                      TERMS AND CONDITIONS APPLICABLE TO
                             EQUIPMENT ACQUISITION

1.   SCOPE

     Supplier shall provide to SWCO the Equipment and Related Services as
described in the Orders SWCO may from time to time place hereunder.

2.   FORM OF ORDER

     Each Order for Equipment and Related Services shall contain the following:

     (1)  Date of Order and Order Number,

     (2)  The incorporation by reference of this Agreement:

     (3)  The incorporation by reference of specifications which differ from
          those in published guides;

     (4)  A detailed list of the Equipment or Related Services that are
          required. Such list is to include where applicable quantities, model
          numbers, features, descriptions, specifications, prices, charges,
          purchase option-credits, and discounts. The last will indicate which
          equipment is purchased and which is leased;

     (5)  The billing and delivery addresses;

     (6)  The required dates for delivery and installation of Equipment or
          Related Services;

     (7)  The name and telephone number of the SWCO person to contact regarding
          delivery and the coordination of other activities; and

     (8)  Any other special terms and conditions that are not provided for
          elsewhere in the Order or this Agreement.

3.   SITE PREPARATION

     Supplier shall promptly perform a site survey and shall promptly furnish to
SWCO site preparation specifications in such detail as to ensure that the
Equipment to be installed shall operate efficiently from an environmental point
of view. SWCO shall prepare the site at its own expense and in accordance with
the site specifications. Supplier shall reimburse SWCO for any site preparation
expenses needlessly incurred because of inaccurate site preparation
specifications, or because the site was prepared for Equipment which was
returned for failure to conform to the provisions of this Agreement.





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4.   TRANSPORTATION

     4.1   Supplier shall deliver the Equipment complete and in accordance with
SWCO instructions, if any, with transportation charges prepaid by Supplier.
Supplier shall deliver the Equipment in sufficient time to meet the required
installation date. SWCO may delay the delivery of the Equipment by giving the
Supplier notice prior to shipment.

     4.2   Supplier shall, at no additional charge, properly pack the Equipment
in connection with the shipment of such Equipment to the delivery location and
in connection with the removal of such Equipment, if such Equipment is returned
to Supplier pursuant to this Agreement.

     4.3   Unless SWCO provides special shipping instructions, transportation
charges shall not exceed the cost of shipment via surface common carrier between
the delivery location and Supplier's facility. SWCO shall reimburse Supplier for
such transportation charges for the shipment of the Equipment to the delivery
location. SWCO shall reimburse Supplier for rigging and drayage costs incurred
at the delivery location.

     4.4  If Supplier removes or replaces any Equipment because such Equipment
is nonconforming with the provisions of this Agreement, Supplier shall bear all
transportation charges including rigging and drayage costs. If SWCO has already
paid Supplier for such charges, Supplier shall promptly refund such payment.

     4.5  Supplier shall be responsible for dealing with carriers to ensure
delivery of shipments, locating missing or late shipments, resolving billing for
transportation charges, and submitting and resolving all claims arising from
loss of or damage to such shipments.

     4.6  Claims for transportation damage shall be filed and processed by
Supplier. Without cost to SWCO, and at SWCO's option, damaged Product, Software
shall be promptly repaired to the satisfaction of SWCO or replaced, with all
replacement parts to be handled on an expedited shipping basis.

5.   TITLE AND RISK OF LOSS

     For the Initial Order only, title shall not vest nor shall risk of loss
pass until installation has been fully performed and the equipment has been
accepted by SWCO in accordance with Article V. On all subsequent Orders for
Equipment title shall vest in SWCO and risk of loss pass to SWCO only when
Equipment has been delivered at the F.O.B. point of destination.

6.   INSTALLATION AND COMMISSIONING

     6.1  Supplier shall install the Equipment, perform its standard test
procedures and prepare the Equipment for Commissioning, all on or before the
ordered Commissioning date and Supplier shall certify to SWCO that such
Equipment is ready for the Commissioning. There shall be no installation or
Commissioning charges associated with any Equipment except those charges that
are listed in the Order. Supplier shall remove and dispose of all packing
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     6.2  No Equipment shall be deemed to be installed until all Equipment and
all Software required by the Order has been installed. However, the Parties may
agree that Commissioning can be certified on a site by site basis.

     6.3  If Supplier fails to complete such Commissioning and deliver to SWCO
its certification of Commissioning on or before the ordered Commissioning date,
SWCO may either cancel the Order or extend such ordered Commissioning date to a
subsequent date. If SWCO elects to extend the ordered Commissioning date, the
Parties agree that SWCO will be damaged in an amount which will be difficult to
determine with certainty. Therefore, Supplier agrees to pay SWCO as a late
Commissioning-charge, and not as a penalty, an amount equal to one percent (1%)
of the purchase price for each week or part thereof of delay occurring after the
ordered Commissioning date originally specified on the Order until either the
Commissioning date or the date on which SWCO cancels the Order, whichever first
occurs. Such late Commissioning-charge shall not accrue beyond twelve (12) weeks
of delay and shall take the form of a credit against the purchase price of the
Equipment in favor of SWCO.

     6.4  The foregoing not withstanding, in the event that construction delays
or other causes not covered by Section 15 of Article I (Force Majeure) and not
within the reasonable -control of Supplier, force postponement of the
installation of a Product, the Product, shall be stored until installation can
be resumed. Transfer and storage charges incurred shall be paid by SWCO. Labor
costs for loading and unloading shall be based upon an hourly rate to be
determined by agreement between SWCO and Supplier. The cost of special services,
such as design, warehousing, inventory, etc., shall be negotiated between SWCO
and Supplier prior to placement of the Order.

7.   SELF INSTALLATION

     7.1  SWCO may, at its option, install the Equipment. Such election shall be
stated in the Order or anytime prior to delivery. If SWCO so elects to install
the Equipment, Supplier shall, if requested by SWCO, provide services relating
to installing, Commissioning, and optimizing, at a mutually agreed upon rate.

     7.2  If SWCO elects to install the Equipment and Supplier fails to deliver
the Equipment by the ordered delivery date, Supplier shall be subject to a late
delivery charge in the form of a credit against the purchase price of the
Equipment as provided for in Section 6 of this Article (Installation and
Commissioning), except that the calculation of damages will be based on the
delay occurring after the ordered delivery date until the actual delivery date
rather than after the  ordered Commissioning date. In addition, SWCO may cancel
the Order.

8.   INSTALLATION, ASSISTANCE AND TECHNICAL SUPPORT

     8.1  During the Warranty period, such technical support shall be provided
without charge to SWCO, unless otherwise specified in Schedule A. The
availability or performance of this technical support service shall not be
construed as altering or affecting Supplier's warranties or any other obligation
of Supplier under this Agreement.

     8.2  Supplier shall provide SWCO with ongoing technical support, including,
field service and assistance.  During the Warranty period, such technical
support shall be provided without charge to SWCO, unless otherwise specified in
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performance of this technical support service shall not be construed as altering
or affecting Supplier's warranties or any other obligation of Supplier under
this Agreement.

9.   STANDARD OF PERFORMANCE FOR ACCEPTANCE

     For the Initial Order only, SWCO shall certify to Supplier that the
Equipment has been accepted upon the successful achievement of the Performance
Acceptance Procedure as specified in Article V. Within ten (10) days after
Supplier has certified that the Equipment has been installed and ready for use,
SWCO, with Supplier's advice and assistance, shall commence the acceptance
tests.

10.  CABLES AND RELATED ITEMS

     An Order shall be deemed to include all items necessary for the proper
operation of the Equipment as ordered by SWCO, provided by Supplier, and
includes any other components or materials necessary to enable the operation of
the Equipment in accordance with the specifications.

11.  ENGINEERING CHANGES

     11.1  Engineering changes which are (i) generally made available by
Supplier to customers on the same Equipment provided hereunder and (ii) are
intended to correct defects in the Equipment, shall, with the consent of SWCO,
be made by Supplier to the Equipment at no charge. The administration and
installation of engineering changes shall be accomplished by Supplier, unless
otherwise agreed to by the Parties.

     11.2  Engineering changes which correct a safety defect shall be made as
soon as possible at no charge. Supplier shall notify SWCO of any such safety
defect and recommended interim safety measure to be taken.

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13.  RELOCATION OF EQUIPMENT

     SWCO may move Equipment from one location to another. At SWCO's request,
Supplier shall arrange for and supervise the dismantling, packing and moving of
any purchased Equipment and shall inspect and reinstall such Equipment at the
new location. In addition, Supplier shall specify to SWCO, prior to any move,
which of the existing cables and ancillary equipment associated with the
Equipment to be moved are reusable at the new site. SWCO shall pay Supplier for
such Related Services at Supplier's published rates.





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14.  SUPPLIES AND/OR REPLACEMENT PARTS

     Supplier shall provide SWCO with specifications for all replacement parts
which are used or required to operate any Equipment. The relevant supplies shall
be available from Supplier upon SWCO request for a minimum of seven (7) years
following the acquisition of the Equipment.

15.  CONVERSION OF FINANCIAL ARRANGEMENT

     SWCO may elect to convert any part or all of an Order for purchase
Equipment, any time prior to shipment to a third party lease, or, subject to
availability by Supplier, to any of Supplier's purchase, installment sale,
lease, rental plan, or other marketing pricing policy and may do so with no
liability.

16.  TRANSFER OF TITLE TO A THIRD PARTY

     In connection with the financing of Equipment, SWCO may request Supplier to
pass title to the Equipment directly to an assignee designated by SWCO. If SWCO
requests, Supplier shall execute a bill of sale conveying title to the Equipment
to the assignee. In such event, the assignee shall succeed to all of SWCO's
rights under the Order with respect to the Equipment, although SWCO shall
continue to exercise such rights on behalf of the assignee until Supplier is
otherwise notified. Notwithstanding the foregoing, SWCO guarantees payment of
the purchase price for the Equipment to Supplier. The right of SWCO to request
Supplier to pass title to the Equipment to the assignee shall include the right
to sublicense any licensed Software relating to the Equipment without the
payment of any additional license fees to Supplier.

17.  NEW EQUIPMENT

Supplier warrants that the Equipment shall be new and of original manufacture in
the United States.

18.  REMOVAL OF EQUIPMENT

     18.1  Promptly after the cancellation of an Order, pursuant to this
Agreement Supplier shall, at its expense, pack and remove the Equipment affected
thereby. In addition, Supplier shall make all necessary transportation
arrangements to ship the Equipment away from SWCO premises.

     18.2  If Supplier for any reason does not remove the Equipment within ten
(10) days after the cancellation of an Order or the termination of a lease, SWCO
may, at Supplier's expense and risk, arrange to have the Equipment packed and
shipped to Supplier. In such event, Supplier shall promptly, after receipt of
SWCO invoices, reimburse SWCO for any costs which may thereby be incurred.







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                                  ARTICLE III

          TERMS AND CONDITIONS APPLICABLE TO THE SUPPLIER'S HARDWARE
                              MAINTENANCE PROGRAM

1.   SCOPE

     1.1  Supplier shall provide to SWCO Supplier's Hardware Maintenance Program
("HMP") which is necessary to maintain the Equipment in accordance with its
specifications and to keep the same in good working order and operating
condition as described in the Orders SWCO may from time to time place hereunder.

     1.2  Equipment maintained hereunder shall include Equipment ordered under
this Agreement, and Supplier's equipment acquired from other sources which has
been maintained to Supplier's specifications, inspected by Supplier and
refurbished, as necessary, to specifications by Supplier at Supplier's published
rates.

     1.3  Supplier shall make available to SWCO, prior to commencement of HIvIP,
at Supplier's published rates, documentation to facilitate installation,
operation and preventive and remedial maintenance. If the originally produced
documentation is changed as a result of the application of an engineering change
to a field installation, SWCO shall be provided with the updated documentation
at no charge.

     1.4  Pursuant to the terms of this Agreement, Supplier shall provide SWCO
with Supplier owned or licensed diagnostic software which is made available by
Supplier for commercial use and which is necessary for SWCO's maintenance of the
Equipment.

2.   FORM OF ORDER

     Each Order for maintenance Related Services or HMP shall contain the
following:

     (1)  Date of Order and Order Number;

     (2)  The incorporation by reference of this Agreement;

     (3)  The billing and Equipment location addresses;

     (4)  The required commencement dates for maintenance Related Services, and
          the length of term for such Related Services;

     (5)  The name and telephone number of the SWCO contact person regarding the
          coordination of the activities; and

     (6)  Any other special terms and conditions that are not provided for
          elsewhere in the Order or this Agreement.





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3.   AVAILABILITY OF MAINTENANCE AND SPARE PARTS

     3.1  Supplier shall assist SWCO in determining SWCO's requirements for an
inventory of spare parts by providing SWCO with a standard spare parts list and
the current usage statistics for such parts.

     3.2  Supplier shall make available to SWCO spare parts and HMP for a period
of not less than [***] years from the date of the each Order. The price for such
spare parts and HMP will be listed in Supplier's published rates. If subsequent
to such [***] year period Supplier no longer makes available a spare part,
Supplier shall notify SWCO [***] year in advance of its decision to discontinue
the spare part. If during the [***] year period, Supplier fails to provide such
HMP or spare parts or is unable to obtain an~1iterna~iource acceptable to SWCO,
then such inability shall be deemed noncompliance with this Agreement. In
addition to the other rights and remedies SWCO may have at law and equity under
this Agreement, SWCO shall have the right to require Supplier, without charge,
to provide technical information and any other rights to allow SWCO to obtain
such HMP and spare parts through its own manufacture or contracts with other
vendors.

     3.3  The technical information noted above shall include, but is not
limited to: (a) manufacturing drawings and specifications of raw materials and
components comprising such parts; (b) manufacturing drawings and specifications
covering special tooling and the operation thereof; (c) a detailed list of all
commercially available parts and components purchased by Supplier on the open
market disclosing the part number, and name and location for the purchase
thereof; and (d) one (1) complete set of equipment diagrams and maintenance
procedures.

     3.4  Supplier shall provide spare parts on an emergency basis from
Supplier's local office. Emergency spare parts which are unavailable from
Supplier's local office shall be made available to SWCO through Supplier's field
service channels upon request on an overnight basis. Such parts may be new or
refurbished parts and may be exchanged at Supplier's standard exchange rates.

     3.5  Supplier shall repair or replace, and return to SWCO within thirty
(30) days defective parts which are shipped to Supplier. The estimated cost of
repair shall be specified at the time the request for repair is made by SWCO. If
during the repair of the part Supplier determines that the cost of repair will
deviate by ten percent (10%) or more from the estimate, Supplier shall notify
SWCO. If a part is deemed irreparable, Supplier shall notify SWCO.

     3.6  The Party shipping any part under this Section 3 shall bear the cost
of transportation and risk of loss.

     3.7  Supplier shall use only new parts or parts of equal quality and
operating specifications in performing maintenance. Parts that are removed and
replaced shall become the property of Supplier. All parts placed into operation
shall become the property of the owner of the Equipment.





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4.   SUPPLIER RESPONSIBILITIES FOR TYPE 1 EMERGENCY

     4.1  During the warranty period or subsequent HMP, Supplier shall provide
telephone support for Type 1 Emergencies during Supplier's normal hours of
operation. Type I Emergencies are defined as those incidences that are non-
Service affecting. Response time shall be within one (1) hour from the time SWCO
makes contact with Supplier. Telephone support shall include, but not be limited
to: engineering change information, diagnostic error interpretation, diagnostic
updates information, etc. Supplier shall provide SWCO with the procedure and
name of the responsible contact for providing requested telephone support.

     4.2  If required, Supplier shall respond to an emergency repair request for
Type 1 Emergency by dispatching qualified personnel within twenty-four (24)
hours of the time the request is placed with Supplier. Supplier shall make
available such technical support for Type 1 Emergencies during Supplier's normal
hours of operation.

5.   SUPPLIER RESPONSIBILITIES FOR TYPE 2 EMERGENCY

     5.1  During the warranty period or subsequent HMP, Supplier shall provide
telephone support for Type 2 Emergency on a twenty-four (24) hour per day basis,
seven (7) days a week. Type 2 Emergencies are defined as those incidences that
prohibit or severely limit SWCO's ability to provide services. Response time
shall be within one (1) hour from the time SWCO makes contact with Supplier.
Telephone support may include, but not be limited to: engineering change
information, diagnostic error interpretation, diagnostic updates information,
etc. Supplier shall provide SWCO with the procedure and name of the contact
responsible for providing requested telephone support.

     5.2  If required, Supplier shall respond to an emergency repair request for
Type 2 Emergencies by dispatching qualified personnel within eight (8) hours of
the time the request is placed with Supplier. Supplier shall make available
technical support for Type 2 Emergencies twenty-four (24) hours per day, seven
(7) days a week.

     5.3  On all requests for Type 2 Emergencies, Supplier shall provide
continuous effort until the Equipment is restored to operational condition.
Supplier's escalation guidelines as specified in Section 15 of this Article 3
(Escalation Guidelines) shall apply from the time the Supplier's representative
arrives at SWCO's site.

6.   SWCO's RESPONSIBILITIES

     6.1  Unless otherwise requested of Supplier by SWCO, SWCO shall perform all
preventive and remedial maintenance.

     6.2  SWCO shall maintain, at SWCO's site or within a convenient distance,
an inventory of spare parts including tools, documentation, diagnostics, and
test equipment for all Equipment covered hereunder and shall continually
replenish the inventory based upon, but not necessarily in conformity with,
Supplier's recommended level. Access to and use of the parts shall be provided
to Supplier when providing HMP hereunder.




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7.   ON-SITE MAINTENANCE

     7.1  SWCO may order dedicated On-Site field engineers at Supplier's
published rates. These rates shall be provided to SWCO upon request.

     7.2  On-Site maintenance coverage shall include for the charge specified in
the Order, any time during a consecutive ten (10) hour period, daily, Mondays
through Fridays, excluding New Year's Day, Washington's Birthday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Unless
otherwise specified in that Order, such ten (10) hour period shall be from 7:00
a.m. to 5:00 p.m. local time, with one (1) hour for lunch normally taken between
12:00 noon and 1:00 p.m.

     7.3  On-Site maintenance coverage may be extended to include additional
time periods and weekends at an additional charge and may be increased to
twenty-four (24) hours a day seven (7) days a week for three hundred sixty-five
365 days a year.

     7.4  Any absences from the shift described herein shall be by mutual
agreement prior to such absences with credit on invoices for such absences. For
any extended absences such as during vacation periods, Supplier agrees to assign
an alternate resident field engineer for the duration of such absences.

     7.5  Additional temporary support personnel shall be sent to support the
resident field engineer when this requirement is deemed necessary to assure
continued efficient operation.

     7.6  On-Site maintenance coverage shall be at the direction of SWCO.

     7.7  The coverage period for On-Site maintenance may be changed by SWCO
upon thirty (30) days prior notice to Supplier, subject to the terms of Section
7.2 of this Article.

8.  NOTIFICATION AND RESPONSE

     8.1  Supplier shall furnish its designated point of contact to enable SWCO
to promptly notify Supplier of the need for maintenance.

     8.2  Supplier shall provide continuously updated charts on its maintenance
organization up to and including the national support level. Such charts shall
include twenty-four (24) hour contact information.

9.  MAINTENANCE TERM AND MAINTENANCE CHARGES

     9.1  Supplier's HMP is included in the purchase Price of each piece of
Equipment purchased by SWCO and shall extend throughout the duration of the
Warranty Period, as set forth in Section 13.2 of Article 1 ("Initial HMP").
Following the expiration of the Initial HMP, SWCO has a choice of (i)
subscribing to Supplier's HMP on an annual basis pursuant to the terms herein
and at the HMP fees set forth in Schedule A ("Extended HMP") for the duration
of the term of the Agreement and thereafter at Supplier's then current HMP fees,
or (ii) having defective Field Replaceable Units ("FRUs") repaired or replaced
with refurbished FRUs at Supplier's then current repair rates.




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     9.2  The I-IMP charge set forth in Schedule A is not subject to increase
during the initial maintenance term. Thereafter the I-IMP charge is subject to
change by Supplier upon ninety (90) days prior written notice to SWCO; provided,
however, that such I-IMP unit charge shall not be increased more than once in
any twelve (12) month period and in no event shall any increase exceed five
percent (5%) of the HMP unit charge applicable to the preceding year.

     9.3  Supplier shall have no responsibility to repair or replace FRUs which
have been repaired or altered in an unauthorized manner not in accordance with
Supplier's Maintenance Program, or which have had the bar code, serial number,
or other identifying mark modified, removed or obliterated through an
intentional action by SWCO. In the event that SWCO sends a FRU to Supplier for
which no defects or failures can be found, Supplier may invoice SWCO at the then
current fee for the services rendered during the evaluation process. Such
charges shall only be rendered after three (3) such occurrences within a sixty
(60) day period.

10.  ENGINEERING COMPLAINTS

     10.1  Receipt of an engineering complaint from SWCO shall be acknowledged
by Supplier within fifteen (15) days. Such acknowledgment shall include the
proposed resolution of the stated problem, or the date by when a solution might
be expected. In the event that Supplier anticipates that the solution to the
engineering complaint will exceed thirty (30) days, then Supplier shall issue
biweekly progress reports to SWCO, reporting actions taken and progress made
during the reporting period. In addition, such reports will indicate the
approximate date by which Supplier anticipates that the ongoing engineering
complaint may be successfully resolved.

     10.2  In the event that the engineering complaint is marked service
emergency, then Supplier agrees to exert effort which goes beyond that which is
customarily provided to resolve engineering complaints. Supplier further agrees
to provide status reports to SWCO's Manager, Engineering/ Inspection
Coordination, as frequently as may be mutually determined.

     10.3  SWCO's point of contact for all engineering complaint information and
correspondence shall be SWCO Manager, Engineering Equipment 2125 East Adams,
Phoenix, Arizona 85034. All such engineering complaints should be directed to
the numbers identified in 16.1 of this Article.

11.  ENGINEERING CHANGES

     11.1  Engineering changes which are (i) generally made available by
Supplier to customers on the same Equipment provided hereunder and (ii) are
intended to correct defects in the Equipment shall, with the consent of SWCO, be
made by Supplier to the Equipment at no charge. The administration and
installation of engineering changes shall be accomplished by Supplier, unless
otherwise agreed to by the Parties.

     11.2  Engineering changes which correct a safety defect shall be made as
soon as possible at no charge. Supplier shall notify SWCO of any such safety
defect and recommended interim safety measure to be taken.




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12.  EQUIPMENT NON-PERFORMANCE CREDIT

     If any Equipment furnished by Supplier hereunder for commercial service
experiences Equipment non-performance period(s) due to malfunction of Equipment
as specified below, the credits contained in this Article 3, Section 12, shall
apply to SWCO's I-IMP monthly maintenance charge. If the Equipment is operating
at less than fifty percent (50%) call processing capacity, (as measured by
traffic usage over the previous thirty (30) day period) (i) for any eight (8)
consecutive hour period or (ii) for a more than twenty-four (24) total hours in
any thirty (30) day period, then Supplier shall grant SWCO a credit against the
HMP monthly maintenance charge for each such hour in the amount of one-half
(1/2) of one percent (1%) of the monthly maintenance charge for such defective
Equipment. An Equipment non-performance period shall begin upon SWCO's
notification to Supplier and shall end when the Equipment has achieved ninety
percent (90%) call processing capacity. SWCO shall issue a debit memorandum and
associated documentation to Supplier reflecting the amount of such credit. The
Equipment non-operational periods shall be for periods of time directly caused
by the non-performance of the Equipment. Any non-performance caused by third
party equipment, force majeure or other events outside the control of Supplier
shall not be counted toward non-operational periods. If SWCO receives a credit
under this Article III, Section 12, for a particular non-performance -period,
then SWCO shall not be eligible to receive a credit under Article IV, Section
12.7. If the non-performance is caused by both Equipment nonperformance and
Software nonperformance, SWCO shall receive the higher credit.

13.  REMEDIES FOR EQUIPMENT FOR FAILURE TO MEET OPERATIONAL LEVEL

     If any Equipment maintained hereunder fails to perform at an operational
level of as defined in Article III, Section 12, during two (2) consecutive
calendar months, SWCO may, at its option, require Supplier to within thirty (30)
days after notification to Supplier, replace such Equipment at no additional
cost to SWCO. Any Equipment that cannot be restored to good working order and
operating condition shall be removed at Supplier's expense.

14.  WARRANTY

     14.1  In lieu of the warranty period specified in Section 13 of Article I
(Warranties), the warranty period for spare parts under this Article III shall
be for ninety (90) days from the date shipment to SWCO.

     14.2  Supplier's responsibility under this warranty shall be to either
replace or repair the defective spare part.

15.  ESCALATION GUIDELINES

     Supplier shall endeavor to initiate support within the specified response
time. If the trouble has not been corrected within twenty-four (24) hours after
the request for support, the trouble shall be escalated to Supplier's
engineering laboratories. No charge will be made for any escalation.




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16.  PROCEDURES FOR SUPPLIER'S HMP

     16.1  Metawave's Customer Support
           Customer Support can be reached by call the following numbers:
           Domestic phone:.......  888-642-2455
           International phone:..  425-702-6550

     16.2  Return Material Authorization (RMA)

     SWCO must contact Customer Support via telephone, e-mail or fax to obtain a
Return Material Authorization (RMA) number. Supplier may return shipments
without a RMA number to the SWCO unrepaired and at SWCO's expense. The RMA
number must be clearly written on the outside of the package. A RMA number will
not be issued until an Order is provided for the repair price for those items
not covered under warranty.

     16.3  Return Address

           All Field Replaceable Units (FRUs) must be shipped to:
           Metawave Communications Corporation
           10735 Willows Road N.E.
           Redmond, WA 98073-9769 USA
           c/o SWCO Returns

     16.4  Packing Instructions

     SWCO must pack all returned equipment in a manner no less protective to
such Equipment than the manner in which Supplier packages similar equipment.

     16.5  Repair Purchase Orders

     Repair purchase orders are required in the following instances:

     When SWCO returns out of warranty FRUs for repair; or

     When Supplier sends pre-exchange FRU to SWCO prior to the defective FRU
being received by Supplier, and if defective FRU is not received within five (5)
days of shipment of replacement FRU.

     Under these circumstances, a facsimile copy of the purchase order may be
transmitted to Supplier and followed up by a confirming hard copy in the mail.

     16.6  Expedite Service

     In an emergency situation that requires an expedited shipment, Supplier
offers Expedite Services upon SWCO's request at no additional charge except that
SWCO shall pay for additional expedite freight charges, if any. If the HMP has
expired, such expedite service will carry an additional fee of $300 plus freight
charges (plus the price of FRU if out of warranty) per FRU.



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     16.7  Invoices and Payment

     Invoices are payable in accordance with the terms of the Agreement between
Supplier and SWCO. In the event pre-exchanged FRU's are not returned by SWCO to
Supplier within five (5) days then Supplier shall invoice SWCO for the amount of
the exchanged FRU's.

     16.8 Duties and Taxes

     All duties, customs clearance fees and any and all taxes will be the
responsibility of the Customer.

     16.9 Non-compliance

     Failure to comply with any of the procedures may result in delay or non-
delivery of the FRUs.





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                                  ARTICLE IV

                      TERMS AND CONDITIONS APPLICABLE TO
                 ANY PURCHASE THAT INCLUDES LICENSED SOFTWARE
                      AND/OR SOFTWARE MAINTENANCE SERVICE

1.   SCOPE

     Supplier shall provide to SWCO Supplier's Software and Related Services as
described in Orders SWCO may from time to time place hereunder.

2.   DEFINITIONS

     Terms which are capitalized have the meanings set forth below or, absent
definition herein, as contained in the Agreement.

     2.1  "Feature" refers to an innovation or performance improvement to
Software that is made available to all users of the current Software release.
Features are licensed to SWCO individually and may be at additional cost.

     2.2  "Major Release" indicates a new version of Software that adds new
Features (excluding Optional Features) or major enhancements to the currently
existing release of Software.

     2.3  "Point Release" indicates a modification to Software resulting from
planned revisions to the current release, or corrections and/or fixes to the
current release of Software.

     2.4  "Software Patch" refers to software that corrects or removes a
reproducible anomaly or "bug" in an existing Major Release.

3.   FORM OF ORDER

Each Order for Software and Related Services shall contain the following:

     (1)  Date of Order and Order Number,

     (2)  The incorporation by reference of this Agreement;

     (3)  The incorporation by reference of additional specifications;

     (4)  If, applicable, a detailed list of the Software or Related Services
          that are required. Such list is to include quantities, descriptions,
          specifications, prices, charges, and discounts;

     (5)  The billing and delivery addresses;




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     (6)  The required dates for delivery and installation of the Software,
          commencement dates for licenses or Related Services, and the length of
          term for licenses or Related Services;

     (7)  The name and telephone number of the SWCO person to contact regarding
          the coordination of activities; and

     (8)  Any other special terms and conditions that are not provided for
          elsewhere in the Order or this Agreement.

4.   LICENSE

     4.1  Supplier grants to SWCO a non-exclusive, nontransferable license,
except as otherwise provided herein, for the use including remote access usage
of Supplier's Software ordered hereunder, to routinely operate and monitor the
Equipment with which the Software was delivered. During the warranty period, all
purchased future releases, patches, fixes, corrections, enhancements,
improvements and updates relating to such Software are included. Thereafter, all
such fixes and enhancements shall be made available to SWCO under Supplier's
Software -Maintenance Program as described herein. Remote access functionality
requires the purchase of the Remote LampLighter(TM) Software option.

     4.2  With each license of Software ordered hereunder, Supplier shall
provide SWCO documentation which either is provided by Supplier to any of its
other customers for the Software or is reasonably necessary to enable SWCO to
adequately use such Software. Documentation shall comply with commonly accepted
industry standards with respect to content, size, legibility and
reproducibility.

     4.3  SWCO shall have the right to reproduce all documentation including all
machine-readable documentation for the Software, provided that such reproduction
is made solely for SWCO's permitted use hereunder. Any such reproductions shall
include any copyright or similar proprietary notices contained on the items
being reproduced.

     4.4  Supplier warrants that it has the sole and exclusive right to grant
the licenses ordered thereunder.

     4.5  No title or ownership rights to the Software or any of its parts,
including documentation, except as provided herein, is transferred to SWCO.

     4.6  SWCO acknowledges that it is the responsibility of SWCO to take
reasonable measures to safeguard Software and to prevent its unauthorized use,
distribution, or duplication.

     4.7  SWCO shall not reverse engineer, decompile, disassemble, or modify the
Software or any portion thereof.





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5.   LICENSE TERM

     5.1  The license term for Software shall commence on the date of acceptance
for the Initial Order and upon shipment for all other Orders of the Equipment
and Software and shall continue perpetually or until canceled or terminated as
provided herein.

     5.2  SWCO may terminate the license term of any Software by giving Supplier
thirty (30) days prior written notice. Termination of such license term shall
also automatically terminate any maintenance Related Services for such Software.

     5.3  Supplier may terminate the license granted hereunder if SWCO is in
material default of any of the terms and conditions of this License Agreement
and such termination shall be effective if SWCO fails to correct such default
within sixty (60) days after written notice thereof by Supplier.

     5.4  In the event that SWCO is required to return the Software, pursuant to
the Agreement or in the event that SWCO returns the Equipment, this license
shall terminate immediately upon such return of the Software or Equipment to
Supplier.

     5.5  Within one (1) month after termination of the license granted
hereunder, SWCO shall furnish to Supplier a document certifying that through its
best efforts and to the best of its knowledge, the original and all copies in
whole or in part of all Software, in any form, including any copy in an updated
work, have been returned to Supplier or destroyed.

6.   LICENSE FEE

     6.1  The Software licensing fees for the most current versions of the
Embedded System Software and LampLighter Software (available at the time of
purchase of Equipment) are included in the purchase price of the Equipment.
Software Updates are available under the Software Maintenance Program described
herein for additional licensing fees.

     6.2  If the license term is not perpetual, the license fee set forth in the
Order is not subject to increase during the first year.  Thereafter, the license
fee may be changed by Supplier following the end of the initial license term
upon ninety (90) days prior written notice to SWCO; provided, however, that such
license fee shall not be increased more than once in any twelve (12) month
period and in no event shall any increase exceed [***] of the license fee
applicable to the preceding year.

7.  SOFTWARE DELIVERY

     7.1  Supplier shall deliver the Software complete and in accordance with
SWCO's instructions, if any, with transportation charges paid by Supplier.
Supplier shall deliver the Software in sufficient time to meet the required
delivery date. SWCO may delay the delivery of the Software by giving the
Supplier notice prior to shipment. SWCO shall arrange and pay for transportation
for Software required to be returned to Supplier under this Agreement.





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     7.2  If Supplier fails to complete such delivery of Software ordered by
SWCO on or before the ordered delivery date, SWCO may either cancel the Order or
extend such ordered installation date to a subsequent date. If SWCO elects to
extend the ordered installation date, the Parties agree that SWCO will be
damaged in an amount difficult to determine with certainty.  Therefore, Supplier
agrees to pay SWCO as a late delivery charge, and not as a penalty, an amount
equal to [*] of the purchase price for that Software Feature for each week, or
part thereof, of delay occurring after the ordered delivery date originally
specified. Such late delivery charge shall not accrue beyond twelve (12) weeks
of delay and shall take the form of a credit against the purchase price of the
Software or any future Software in favor of SWCO.

8.   RISK OF LOSS

     8.1  Supplier shall bear the risk of loss of or damage to the Software
during shipment. Supplier shall promptly replace such Software when lost or
damaged at no additional charge.

     8.2  SWCO shall bear the risk of loss or damage to the Software media or
documentation in its possession. Supplier shall promptly replace the Software,
Software media or documentation when lost or damaged at the charge for the media
or documentation. No -additional license fee will be charged for replacement of
the Software.

9.   INSTALLATION

     Supplier shall install the embedded Software on the Equipment specified on
the Order, perform its standard test procedures and prepare the Software
required for Commissioning. With respect to the Initial Order, when Supplier
certifies that the Software has passed all of Supplier's acceptance testing, the
Software shall be certified as ready for SWCO's acceptance testing, in
accordance with Article V.

10.  STANDARD OF PERFORMANCE FOR ACCEPTANCE

     For the Initial Order, Software acceptance shall be performed in
conjunction with the Equipment it was Ordered with and as specified in Article
V, Performance Acceptance Procedure.  For all other Orders acceptance shall
occur upon Commissioning of the Equipment.

11.  NEW RELEASES

     11.1  During the warranty period and if SWCO elects to purchase Software
Maintenance, new versions of any Software to be provided as a generic release
common to all licensees of such Software, shall be supplied at the prices
specified in Schedule A or at Supplier's then current published rates.

     11.2  Supplier shall support the current Major Release and associated Point
Releases and Features for a minimum period of two (2) years after the issuance
of such Software. However, any support provided for Software older than two (2)
years from the issue date may be on a time and material basis. An Order is
required to render such service.




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12.  SOFTWARE MAINTENANCE

     During the warranty period and if SWCO elects to purchase Software
Maintenance the following shall apply:

     12.1  Supplier shall provide maintenance described herein including error
corrections, upgrades and modifications to keep the Software in good working
order and operating condition or to restore such Software to good working order
and operation condition.

     12.2  SWCO will be responsible for problem identification of reproducible
Software malfunctions. In the event of any such Software malfunction, SWCO shall
notify Supplier promptly of the failure through calling Supplier's Customer
Support.

     12.3  Supplier shall provide a telephone contact point to which SWCO can
notify Supplier of the need for maintenance Related Services twenty-four (24)
hours per day, seven days (7) per week. Within one (1) hour of notification, a
trained, knowledgeable, technically qualified Supplier representative will
respond. Such response will serve to acknowledge receipt of notification and to
obtain a verbal description of the nature of the need for maintenance Related
Services.

     12.4  Supplier shall correct any and all errors in the Software in
accordance with this Section 12. For major errors substantially effecting
Equipment performance, Supplier shall continue error correction activity on a
twenty-four (24) hour basis until a permanent correction is made. If Supplier
determines that such errors cannot be corrected within twenty-four (24) hours,
Supplier shall immediately initiate an escalation procedure to:

           (1)  Immediately assign sufficient skilled personnel to correct the
                error; and

           (2)  Immediately notify Supplier management personnel that such error
                has not been corrected and that the escalation procedure has
                been activated; and

           (3)  Supplier will provide verbal status reports on errors at
                intervals of not less that twice per day to SWCO on the status
                of each error correction.

     12.5  SWCO shall provide Supplier, at the time of the notification, data
required by Supplier to properly analyze the error condition and to provide the
proper resolution.

     12.6  Supplier shall give notice, on each error reported, to all SWCO
locations of Software upon receipt by Supplier and error corrections will be
transmitted to all such locations.

     12.7  If any Equipment furnished by Supplier hereunder experiences non-
performance periods due to malfunction of the Software, as specified below, the
credits contained herein shall apply to SWCO's Software monthly maintenance
charge. If the Equipment is operating at less than fifty percent (50%) call
processing capacity (as measured by traffic usage over the previous thirty (30)
day period), (i) for any eight (8) consecutive hour period or (ii) for a period
more than twenty-four (24) hours in any thirty (30) day period, then Supplier
shall grant SWCO a credit




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against the Software monthly maintenance charge for each such hour in an amount
of one-half (1/2) of one percent (1%) of the monthly Software maintenance charge
for such defective Equipment. A non-performance period shall begin upon SWCO's
notification to Supplier and shall end when the Equipment has achieved ninety
percent (90%) call processing capacity. SWCO shall issue a debit memorandum and
associated documentation to Supplier reflecting the amount of such credit. The
Equipment non-operational periods shall be for periods of time directly caused
by the non-performance of the Software on the Equipment. Any non-performance
caused by third-party equipment or software, force majeure or other events
outside the control of Supplier shall not be counted toward non-performance
periods. If SWCO receives a credit under this section, for a particular non-
performance period, then SWCO is not able to receive a credit under Article HI,
Section 12.

     12.8  Unless requested by SWCO or necessary to correct performance failures
or degradation, Supplier shall introduce maintenance releases no more than once
per calendar quarter. Such maintenance releases shall include program code
changes and revised documentation necessitated by correction of such error
condition. Maintenance releases shall include improvements and updates relating
to the Software which are developed by Supplier. Supplier shall notify SWCO the
expected date of release and the error corrections or -improvements to be
included.

13.  SOFTWARE MAINTENANCE CHARGE

     13.1  The annual charge for Software Maintenance is specified in the Price
List attached hereto as Schedule A. Supplier's Software Maintenance is included
in the purchase Price of each piece of Equipment purchased by SWCO and shall
extend throughout the duration of the Warranty Period, as set forth in the
Warranty section of the Agreement. Thereafter, Software Maintenance is provided
by Supplier to SWCO pursuant to the terms herein and is included in the Software
Maintenance charges set forth in Schedule A for a period of 12 months. Any
Software provided to SWCO during the term of the Software Maintenance will be
provided pursuant to this Software License Agreement.

     13.2  The Software maintenance charge is not subject to increase during the
first twelve months following the commencement of such charge. The Software
maintenance charge is subject to change by Supplier following the end of such
twelve (12) month period upon ninety (90) days prior written notice; provided,
however, that such Software maintenance charge shall not be increased more than
once in any twelve (12) month period and in no event shall any increase exceed
five percent (5%) of the Software maintenance charge applicable to the preceding
year, for like volumes of Equipment.  The total increase for Software
Maintenance charges shall not exceed ten percent (10%) for the term plus any
subsequent renewal term for like volumes not to exceed fifty-five thousand, one
hundred, twenty five dollars ($55,125.00) per market system per year as defined
in Schedule A.

     13.3  During the term of Software Maintenance, all Major Releases, Point
Releases, Software Patches and standard Features made generally available by
Supplier shall be available to SWCO at no additional charge. SWCO shall promptly
install such Software.

     13.4  Optional Features and certain significant enhancements shall be made
available to SWCO at an additional charge and are not include in the price of
Software Maintenance.





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     13.5  Certain optional Features shall be sold on a per-unit basis and may
have price levels that reflect unit capacity.

14.  TERMINATION OF MAINTENANCE

     14.1  SWCO may terminate maintenance for Software by giving Supplier thirty
(30) days prior written notice.

     14.2  Supplier may terminate maintenance for Software by providing one (1)
year prior notice of its intent to terminate. In such event, Supplier shall
furnish the latest version of Software object code, operating and design
documentation, training material and any other necessary information to enable
SWCO to maintain and enhance such Software or to contract with others for such
work.

15.  OBJECT CODE AND TECHNICAL DOCUMENTATION

     In the event Supplier becomes insolvent, ceases to carry on business on a
regular basis or fails to perform its maintenance obligations herein, Supplier
shall furnish the latest version of Software object code, operating and design
documentation, training material and any other necessary information to enable
SWCO to maintain and enhance such Software or to contract with others for such
work.

16.  RELOCATION OF SOFTWARE

     SWCO may redesignate the location at which the Software will be used, and
shall notify Supplier of the new location and the effective date of the
relocation. Concurrent operation of the Software at a second location for a
period not to exceed ninety (90) days to achieve uninterrupted operation and
orderly cut over shall not require an additional license.

17.  ENHANCEMENT OF SERVICES

     17.1  SWCO may request Supplier to make changes to the Software. Such
requests will describe in detail the changes to the Software desired by SWCO.

     17.2  Supplier will respond within sixty (60) days of receipt of such
request, and if the response indicates a development cost to SWCO, such response
shall provide estimates of time and costs to develop the change described in the
request.

     17.3  SWCO, at its option, may provide Supplier authorization to proceed
with the work described in Supplier's response by placing an Order.

18.  SOFTWARE EVALUATION

     18.1  Supplier, at no charge, will provide new Software features and
functionality on a trial basis to allow SWCO to evaluate the applicability of
such Software to its business needs and purposes.





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<PAGE>

           (1)  SWCO shall issue an Order to Supplier in accordance with this
                Agreement.

           (2)  The term of the evaluation shall be thirty (30) days unless
                otherwise stated in the Order.

           (3)  SWCO shall use the Software provided under this Section 18 for
                the sole purpose of evaluation. Use of the Software for
                evaluation shall not obligate SWCO to license Software for
                future use.

     18.2  SWCO shall promptly return the Software and accompanying
documentation to Supplier upon completion of the evaluation period or shall
notify Supplier of its intent to license the Software. If SWCO intends to
license such Software, SWCO shall issue an Order.

     18.3  SWCO shall not duplicate the Software, any portion thereof, or any
associated documentation, unless necessary for the evaluation.

19.  SOFTWARE VIRUS PROTECTION

     19.1  Supplier represents and warrants to SWCO that the Software provided
to SWCO by Supplier does not contain or will not contain any Self-Help Code or
any Unauthorized Code (defined below).

     19.2  As used in this Agreement, "Self-Help Code" means any back door,
"time bomb", drop dead device, or other software routine designed to disable a
computer program automatically with the passage of time or under the positive
control of a person other than a licensee of the program. Self-Help Code does
not include software routines in a computer program, if any, designed to permit
the licenser of the computer program (or other person acting by authority of the
licensor) to obtain access to a licensee's computer system(s) (e.g., remote
access via modem) for purposes of maintenance or technical support.

     19.3  As used in this Agreement, "Unauthorized Code" means any virus,
Trojan horse, worm, or any other software routines or hardware components
designed to permit unauthorized access to disable, erase, or otherwise harm
software, hardware, or data or to perform any other such actions. The term
Unauthorized Code does not include Self-Help Code.

     19.4  Supplier shall remove promptly any such Self-Help Code or
Unauthorized Code in the Software of which it is notified or may discover.

     19.5  Supplier shall indemnify SWCO against any loss or expense arising out
of any breach of this warranty.





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<PAGE>

                                   ARTICLE V

         TERMS AND CONDITIONS APPLICABLE TO THE PERFORMANCE ACCEPTANCE
                          PROCEDURE FOR INITIAL ORDER

1.   INTRODUCTION

     The Performance Acceptance Procedure consists of a comparison of test
results from a baseline period prior to commercial operation of Products
(Baseline Performance Collection Phase) with results from a period of time in
which the Products are installed and have been optimized in the SWCO's network
(Performance Collection, Evaluation and Acceptance Phase) The Performance
Acceptance Procedure consists of separate tests for Analog and CDMA. [***]

[***]ARTICLE VI



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<PAGE>

                               ENTIRE AGREEMENT

1.   ENTIRE AGREEMENT ENTIRE AGREEMENT

     1.1  This Agreement, together with all Orders, Articles, and subordinate
          documents incorporated by reference and all descriptions, drawings,
          specifications, and other literature published by Supplier in
          connection with or in contemplation of any Order or of this Agreement
          shall constitute the entire agreement between the Parties with respect
          to the subject matter.

     1.2  This Agreement may not be modified except by an instrument in writing
          signed by a duly authorized representative of each of the Parties.

2.   SIGNATURES

     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized officers or representatives.

<TABLE>
<CAPTION>
Metawave Communications Corporation              Southwestco Wireless, L.P.
                                                 by Southwestco Wireless, Inc.
                                                 its managing general partner
<S>                                             <C>

By:  /s/ W. David McCarley                       By:  /s/ Robert Hunsberger
    -------------------------------------            ------------------------------------
                (Signature)                                       (Signature)

Name:       W. David McCarley                    Name:       Robert Hunsberger
     ------------------------------------              ----------------------------------
                (Please Print)                                   (Please Print)

Title:  VP-Network                               Title:    President & CEO
      -----------------------------------              ----------------------------------
                (Please Print)                                   (Please Print)

Date:        2/18/99                             Date:    Feb. 17, 1999
     ------------------------------------             -----------------------------------
                (Please Print)                                   (Please Print)
</TABLE>



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<PAGE>

                                  SCHEDULE A

                         PRODUCTS AND RELATED SERVICES

                          DESCRIPTION AND PRICE LIST

For the purposes of uniformity and brevity, references to Agreement, Articles or
Schedules shall refer to the Agreement to which this document is Schedule A and
to the other Articles and Schedules to that Agreement. All definitions set forth
in the Agreement shall apply hereto unless otherwise expressly defined herein.
The prices included herein are for equipment installed and services performed in
the U.S.A.

1.   PRICING SUMMARY

[***]



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5.   GENERAL CONDITIONS FOR ORDER

     5.1.  SWCO shall provide air time with local phone numbers at no charge and
           test mobiles at no charge, if required by Supplier.

     5.2.  If Supplier's Services are delayed for reasons beyond the control of
           Supplier, or if additional Related Services are required by SWCO, the
           Related Services shown herein shall be adjusted accordingly.

     5.3.  Towers and transmission lines to the towers, or any costs associated
           with the preparation of towers and the Site including adequate
           electrical power, are not included in the prices shown herein and are
           the responsibility of SWCO.

     5.4.  SpotLight multibeam antenna panels are included in the SpotLight
           system pricing given in Section 3 above. The mounting and physical
           and electrical connection of these antennas is the responsibility of
           the SWCO. The installation and connection of - these antennas to the
           transmission lines is not included in the system price in Section 3
           above, nor is it included in the Engineering Related Services pricing
           contained in Section 3 above.

     5.5.  Performance of the Services set forth herein is dependent upon SWCO
           and/or Supplier obtaining any and all necessary licenses, permits and
           governmental approvals required to perform the Related Services set
           forth herein. Supplier shall not be held liable for any non-
           performance due to delays in obtaining any of the above documentation
           and or approvals.





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<PAGE>

                                  SCHEDULE B

                            NONDISCLOSURE AGREEMENT

                          SOUTHWESTCO WIRELESS MUTUAL

                           NON-DISCLOSURE AGREEMENT
                           ------------------------



     THIS AGREEMENT is entered into this 24th day of February, 1999 between
Southwestco Wireless Limited Partnership, a Delaware limited partnership, doing
business as Cellular One, (hereinafter "Cellular One"), having an office at
11333 North Scottsdale Road, #200, Scottsdale, Arizona 85254 and Metawave
Communications Corporation a Washington corporation, having an office at 10735
Willows Road NE, Redmond, Washington 98073.
     WHEREAS, the above parties contemplate discussions and analyses concerning
the Agreement; and
     WHEREAS, in order to facilitate such discussions and analyses, certain
confidential and proprietary, technical, financial or business information may
be disclosed between the parties;
     NOW, THEREFORE, the parties agree to the following:
     1.   The term "Information," as used in this Agreement, includes all
specifications, drawings, sketches, models, samples, reports, forecasts, current
or historical data, computer programs or documentation and all other technical,
financial or business data.
     2.  "Proprietary Information" is defined as Information which is in the
possession of the disclosing party, is not generally available to the public,
and which the disclosing party desires to protect against unrestricted
disclosure or competitive use.
     3.  All Information which is disclosed by one Party to the other Party and
which is to be protected hereunder as Proprietary Information of the disclosing
Party shall:
          (a)  if in writing or other tangible form, be conspicuously labeled as
     Proprietary, Confidential or the like at the time of delivery; and
          (b)  if oral, be identified as Proprietary prior to disclosure and be
     reduced to a writing labeled as indicated in (a) above within fifteen (15)
     business days after its disclosure.
     Either Party shall have the right to correct any inadvertent failure to
designate information as Proprietary Information by written notification as soon
as practical (but in no event later than three (3) business days) after such
error is determined. The Party receiving said notification shall, from that time
forward treat such information as Proprietary.
     4.  Subject to the provisions of paragraph 6 with respect to any
Proprietary Information, provided hereunder, the receiving Party shall, for a
period of [*] from the date of disclosure, use the same care and discretion to
limit disclosure of such Proprietary Information as it uses with similar
Proprietary Information of its own which it does not desire to disclose or
disseminate including taking steps to:






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<PAGE>

          (a)  restrict disclosure of Proprietary Information solely to its
employees, agents, advisors, consultants, contractors and/or subcontractors with
a need to know and not disclose such Proprietary Information to any other
parties; and
          (b)  advise all receiving Party employees with access to the
Proprietary Information of the obligation to protect Proprietary Information
provided hereunder and obtain the agent's, advisor's, contractor's and/or
consultant's agreement to be so bound as evidenced by their signature on the
form attached hereto as Exhibit B; and
          (c) use the Proprietary Information provided hereunder only for
purposes directly related to the Agreement and for no other purposes.
     5.  The obligations imposed upon either Party herein shall not apply to
Information whether or not designated as Proprietary:
          (a) already known by the receiving Party without an obligation of
confidentiality;
          (b) publicly known or becomes publicly known through no unauthorized
act of the receiving Party;
          (c) rightfully received from a third party without restriction and
without breach of this Agreement;
          (d) independently developed by the receiving Party without use of the
other Party's Proprietary Information and so documented;
          (e) disclosed without similar restrictions to a third party by the
Party owning the Proprietary Information;
          (f) approved in writing by the disclosing Party for disclosure;
          (g) which the receiving Party is required to disclose pursuant to a
valid order of a court or other governmental body or any political subdivision
thereof; provided, however, that the recipient of the Proprietary Information
shall first have given notice to the disclosing Party and made a reasonable
effort to obtain a protective order requiring that the Proprietary Information
and/or documents so disclosed be used only for the purposes for which the order
was issued.
     6.  Nothing contained in this Agreement shall be construed as granting or
conferring any rights by license or otherwise in any Proprietary Information
disclosed to the receiving Party.  All Proprietary Information shall remain the
property of the disclosing Party and shall be returned by the receiving Party to
the disclosing Party upon written request. If the Parties hereto decide to enter
into any licensing arrangement regarding any Proprietary Information or present
or future patent claims disclosed hereunder, it shall only be done on the basis
of a separate written agreement between them. No disclosure of any Proprietary
Information hereunder shall be construed to be a public disclosure of such
Proprietary Information by either Party for any purpose whatsoever.
     7.  The furnishing of Proprietary Information hereunder shall not obligate
either -Party to enter into any further agreement or negotiation with the other
or to refrain from entering into an agreement or negotiation with any other
Party.
     8.  In the event either Party discloses, disseminates or releases any
Proprietary Information received from the other Party, except as provided above,
such disclosure, dissemination or release will be deemed a material breach of
this Agreement and the other Party may demand prompt return of all Proprietary
Information previously provided to such Party. The provisions of this paragraph
are in addition to any other legal right or remedies the Party whose Proprietary
Information has been disclosed, disseminated or released may have under federal
or state law.
     9.  Each Party acknowledges that the unauthorized use or disclosure of a
disclosing Party's Proprietary Information would cause irreparable harm and
significant injury, the degree





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of which may be difficult to ascertain.  Accordingly, each Party agrees that the
disclosing Party will have the right to obtain an immediate injunction enjoining
any breach, or threatened breach, of this Agreement, as well as the right to
pursue any and all other rights at law or equity for such a breach.
     10.  This Agreement constitutes the entire agreement between the Parties
and supersedes any prior or contemporaneous oral or written representation with
regard to the subject matter hereof. This Agreement may not be modified except
by a writing signed by both Parties.
     11.  This Agreement shall be governed by the law of the State of New York
without reference to its conflict of law rules. All actions under this Agreement
shall be brought in a court of competent subject matter jurisdiction in New York
and both Parties agree to accept the personal jurisdiction of such court.

     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives as of the date on the first page.

<TABLE>
<CAPTION>
Metawave Communications Corporation             Southwestco Wireless, L.P.
                                                by Southwestco Wireless, Inc.
                                                its managing general partner
<S>                                             <C>

By:  /s/ W. David McCarley                       By: /s/ Robert H. Hunsberger
   -----------------------------------------        ----------------------------------------
                (Signature)                                       (Signature)

Name:  W. David McCarley                         Name:  Robert H. Hunsberger
     ---------------------------------------          --------------------------------------
                (Please Print)                                    (Please Print)

Title:  VP-Network                               Title:  President & CEO
      --------------------------------------           -------------------------------------
                 (Please Print)                                    (Please Print)

Date:           2/18/99                          Date:      Feb. 17, 1999
     ---------------------------------------          --------------------------------------
                 (Please Print)                                   (Please Print)
</TABLE>





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<PAGE>

                                   EXHIBIT A
                                   ---------

                 ACKNOWLEDGMENT OF NON-DISCLOSURE OBLIGATIONS
                 --------------------------------------------



I have read the Non-Disclosure Agreement


dated _____________________________



between __________________________



and _______________________________

and agree to be bound by the terms and conditions therein.



___________________________________
Signature


___________________________________
Name


___________________________________
Title


___________________________________
Company





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                                  SCHEDULE C

                    NON-DISCRIMINATION COMPLIANCE AGREEMENT

     To the extent that this contract is subject to them, Contractor shall
comply with the applicable provisions of the following Exec. Order No. 11246,
Exec. Order No. 11625, Exec. Order No. 12138, Exec. Order No. 11701, Exec. Order
No. 11758, Section 503 of the Rehabilitation Act of 1973, Section 402 of the
Vietnam Era Veterans' Readjustment Assistance Act of 1974 and the rules,
regulation and relevant Orders of the Secretary of Labor pertaining to the
Executive Orders and Statutes listed above. The following table describes the
clauses which are included in the contract.

<TABLE>
<CAPTION>
         ANNUAL CONTRACT VALUE        CLAUSES
         <S>                          <C>
         Under $2,500......           5*
         $2,500-$10,000....           5*8
         $10,000-$50,000...           1,2,5*,6,7,8,9
         $50,000-$500,000..           1,2,3**,4**,5,6,7,8,9
         Over $500,000.....           l,2,3**,4**,5,6,7,8,9***
</TABLE>

1.   Equal Employment Opportunity Provisions

     In accordance with executive Order 11246, dated September 24, 1965, and
Subpart 22.8 of Subchapter D of Chapter 1 of Title 48 of the Code of Federal
Regulations as may be amended from time to time, the Parties incorporate herein
by this reference the regulations and contract clauses required by those
provisions to be made a pan of government contracts and subcontracts.

2.   Certification of Non-Segregated Facilities

     The Contractor certifies that it does not and will not maintain any
facilities it provides for its employees in a segregated manner; or permit its
employees to perform their services at any location under its control where
segregated facilities are maintained and that it will obtain a similar
certification prior to the award of any nonexempt subcontract.

3.   Certification of Affirmative Action Program

     The Contractor affirms that it has developed and is maintaining an
Affirmative Action Plan as required by Subpart 22.8 of Subchapter D of Chapter I
of Title 48 of the Code of Federal Regulations.

4.   Certification of Filing of Employer Information Reports

     The Contractor agrees to file annually on or before the 31st day of March
complete and accurate reports on Standard Form 100 (EEO-l) or such forms as may
be promulgated in its place.

5.   Utilization of Small Business Concerns and Small Disadvantaged Business
     Concerns

     (a)  it is the policy of the United States that small business concerns and
small business concerns owned and controlled by socially and economically
disadvantaged individuals shall have the maximum practicable opportunity to
participate in performing contracts let by any Federal agency.

     (b)  The Contractor hereby agrees to carry out this policy in the awarding
of subcontracts to the fullest extent consistent with efficient contract
performance. The Contractor further agrees to cooperate in studies or surveys as
may be conducted by the United States Small Business Administration or the
awarding agency of the United States as may be necessary to determine the extent
of the Contractor's compliance with this clause.

     (c)  As used in this contract, the term "small business concern" shall mean
a small business as defined pursuant to section 3 of the Small Business Act and
relevant regulations promulgated pursuant thereto. The term "small business
concern owned and controlled by socially and economically disadvantaged
individuals" shall mean a small business concern.

          (1)  Which is at least 51 percent owned by one or more socially and
     economically disadvantaged individuals; or, in the case of any publicly
     owned business, at least 51 percent of the stock of which is owned by one
     or more socially and economically disadvantaged individuals; and

          (2)  Whose management and daily business operations are controlled by
     one or more of such individuals.

The Contractor shall presume that socially and economically disadvantaged
individuals include Black Americans, Hispanic Americans, Native Americans,
Asian-Pacific Americans, Asian-Indian Americans and other minorities, or any
other individual found to be disadvantaged by the Administration pursuant to
section 8(a) of the Small Business Act.





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     (d)  Contractors acting in good faith may rely on written representations
by their subcontractors regarding their status as either a small business
concern or a small business concern owned and controlled by socially and
economically disadvantaged individuals.

6.   Utilization of Women-Owned Small Businesses

     (a)  "Women-owned small business," as used in this clause, means businesses
that are at least 51 percent owned by women who are United States citizens and
who also control and operate the business.

     "Control," as used in this clause, means exercising the power to make
policy decisions.

     "Operate," as used in this clause, means being actively involved in the
day-to-day management of the business.

     (b)  it is the policy of the United States that women-owned small
businesses shall have the maximum practicable opportunity to participate in
performing contracts awarded by any Federal agency.

     (c)  The Contractor agrees to use its best efforts to give women-owned
small businesses the maximum practicable opportunity to participate in the
subcontracts it awards to the fullest extent consistent with the efficient
performance of its contract.

7.   Affirmative Action for Special Disabled Veterans and Veterans of the
Vietnam Era

     In accordance with Exec. Order 11701, dated January 24, 1973, and Subpart
22.13 of Subchapter D of Chapter 1 of Title 48 of the Code of Federal
Regulations, as may be amended from time to time, the Parties incorporate herein
by this reference the regulations and contract clauses required by those
provisions to be made a part of Government contracts and subcontracts.

8.   Affirmative Action for Handicapped Workers

     In accordance with Exec. Order 11758, dated January 15, 1974, and Subpart
22.14 of Subchapter D of Chapter I of Title 48 of the Code of Federal
Regulations, as may be amended from time to time, the Parties incorporate herein
by this reference the regulations and contract clauses required by those
provisions to be made a part of Government contracts and subcontracts.

9.   Employment Reports on Special Disabled Veterans and Veterans of the Vietnam
     Era

     (a)  The contractor agrees to report at least annually, as required by the
Secretary of Labor, on:

          (1)  The number of special disable veterans and the number of veterans
     of the Vietnam era in the workforce of the contractor by job category and
     hiring location; and

          (2)  The total number of new employees hired during the period covered
     by the report, and of that total, the number of special disabled veterans,
     and the number of veterans of the Vietnam era.

     (b)  The above items shall be reported by completing the form entitled
"Federal Contractor Veterans' Employment Report VETS-100."

     (c)  Reports shall be submitted no later than March31 of each year
beginning March 31, 1988.

     (d)  The employment activity report required by paragraph (a) (2) of this
section shall reflect total hues during the most recent 12-month period as of
the ending date selected for the employment profile report required by paragraph
(a) (1) of this section.  Contractors may select an ending date: (1) as of the
end of any pay period during the period January through March 1st of the year
the report is due, or (2) as of December 31, if the contractor has previous
written approval from the Equal Employment Opportunity Commission to do so for
purposes of submitting the Employer Information Report EEO-1 (Standard Form
100).

     (e)  The count of veterans reported according to paragraph (a) above shall
be based on voluntary disclosure.  Each contractor subject to the reporting
requirements at 38 U.S.C. 2012(d) shall invite all special disabled veterans and
veterans of the Vietnam era who wish to benefit under the affirmative action
program at 38 U.S.C. 2012 to identify themselves to the contractor.  The
invitation shall state that the information is voluntarily provided, that the
information will be kept confidential, that disclosure or refusal to provide the
information will not subject the applicant or employee to any adverse treatment,
and that the information will be used only in accordance with the regulations
promulgated under 38 U.S.C. 2012.  Nothing in this paragraph (e) shall preclude
an employee from informing a contractor at a future time of his or her desire to
benefit from this program.  Nothing in this paragraph (e) shall relieve a
contractor from liability for discrimination under 38 U.S.C. 2012.

     *    Applies only if contract has further subcontracting opportunities.

     **   Applies only to businesses with 50 or more employees.

     ***  Contractor must also adopt and comply with a small business and small
disadvantaged business subcontracting plan pursuant to Title 48 of the Code of
Federal Regulations.





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                                                                   EXHIBIT 10.18

                     Metawave Communications Corporation/

                          GRUPO IUSACELL S.A. DE C.V.

                               Supply Agreement

                           Document Number # ______




                      Metawave Communications Corporation
                            10735 Willows Road N.E.
                             Redmond, WA 98052 USA
                               Tel. 425.702.5600
                               Fax 425.702.5970
                            http://www.metawave.com






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                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                      TITLE                    PAGE
- ---------  -----------------------------------------  ----
<C>        <S>                                        <C>
1.         AGREEMENT................................     1
2.         DEFINITIONS..............................     1
3.         PURCHASE ORDERS / CANCELLATIONS..........     3
4.         SHIPPING / TITLE / RISK OF LOSS..........     4
5.         INSTALLATION / TRAINING / DOCUMENTATION..     5
6.         INVOICES AND PAYMENT.....................     5
7.         WARRANTY.................................     6
8.         INFRINGEMENT INDEMNITY...................     7
9.         INDEMNIFICATION..........................     8
10.        TERM AND TERMINATION.....................     9
11.        ASSIGNMENT/LIMITATIONS ON TRANSFERS......     9
12.        NOTICES..................................     9
13.        INSURANCE................................    10
14.        COMPLIANCE WITH LAWS.....................    10
15.        FORCE MAJEURE............................    12
16.        GOVERNING LAW / DISPUTE RESOLUTION.......    12
17.        CONFIDENTIALITY..........................    12
18.        INTELLECTUAL PROPERTY....................    12
19.        GENERAL PROVISIONS.......................    13
</TABLE>





Exhibit A - Products and Services Price List
Exhibit B - Commissioning Certificate
Exhibit C - Product Maintenance Program
Exhibit D - Software License

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Exhibit E - Engineering and Optimization Services Certificate

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                      METAWAVE COMMUNICATIONS CORPORATION
                               SUPPLY AGREEMENT

THIS SUPPLY AGREEMENT (this "Agreement") is made as of this 17th day of
December, 1999 (the "Effective Date") between Metawave Communications
Corporation, a Delaware corporation ("Seller"), and Grupo IUSACELL S.A. de C.V.,
a Mexican corporation ("Customer").

The parties, in consideration of the mutual covenants, agreements and promises
of the other set forth in this Agreement and intending to be legally bound,
agree as follows:

1.   AGREEMENT

     Seller agrees to sell to Customer, and Customer agrees to purchase by
     submitting a Purchase Order(s) to Seller, the Products and Services
     identified on Exhibit A to this Agreement in accordance with the terms and
     conditions hereof and at the Purchase Prices set forth in Exhibit A. Except
     for the Initial Order Commitment contained in Exhibit A, it is expressly
     understood and agreed that this Agreement is intended solely to establish
     uniform and consistent terms and conditions for any Purchase Orders
     Customer may choose to place with Seller and that Customer is not obligated
     to place any Purchase Orders with Seller.

     Notwithstanding any other provision of this Agreement or any other contract
     between the parties to the contrary, the provisions of this Agreement shall
     apply to all Purchase Orders for the Products and Services during the term
     of this Agreement unless the parties expressly agree by written
     modification to this Agreement that the provisions of this Agreement shall
     not apply. Any additional or different terms in any acknowledgment,
     confirmation, invoice, Purchase Order or other communication from one party
     to the other shall be deemed objected to without need of further notice of
     objection and shall be of no effect and not in any circumstance binding
     upon either party unless expressly accepted by both parties in writing.

2.   DEFINITIONS

     As used in this Agreement, the following terms shall have the meanings set
     forth below:

     "Change Order" shall mean any subsequent change to a Purchase Order
     initiated by either party and mutually agreed to by both parties in
     writing, including but not limited to, changes due to Site configuration
     and Products and Services needed at the Site.

     "Commissioning" shall mean the procedures described in Seller's Product
     system manual to place the Product into commercial service at a particular
     Site. The completion of Commissioning is documented by Customer's signature
     on the Commissioning Certificate attached hereto as Exhibit B. Both parties
     agree to fulfill their respective




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     obligations defined in this Agreement to complete Commissioning at each
     Site when Seller installs such Products.

     "Engineering and Optimization Services" shall mean the engineering and
     optimization services provided by Seller to optimize the Product at a Site
     as described in Exhibit A. The completion of Engineering and Optimization
     Services is documented by Customer's signature on the Engineering and
     Optimization Services Certificate attached hereto as Exhibit E which shall
     be signed by Customer no later than two weeks following completion of the
     Engineering and Optimization Services.

     [***]

     "Product" or "Products" shall mean the SpotLight(R) 2000 spectrum
     management system(s) or component(s) consisting of hardware and Software as
     listed in Exhibit A or any additional product(s) set forth in any
     amendments thereto as may be subsequently agreed to from time to time by
     Seller and Customer.

     "Purchase Order" shall mean any Purchase Order Customer may submit to
     Seller for the purchase of the Products or Services which shall be subject
     to the terms and conditions of this Agreement and which has been accepted
     by Seller.

     "Purchase Price" shall mean the price of the Products and the price of the
     Services shown in Exhibit A or any other amount set forth in any amendments
     to Exhibit A as may be subsequently agreed to from time to time by Seller
     and Customer. All prices shown herein are in U.S. dollars.

     "Services" shall mean installation, optimization, engineering or other
     additional services set forth in Exhibit A or in any amendments to Exhibit
     A as may be subsequently agreed to from time to time by Seller and
     Customer.

     "Site" shall mean each of the Customer cell site locations that Seller's
     Products are installed.

     "Site Survey" shall mean the survey of a Site performed by Seller to
     determine the Product configuration and scope of Services required for the
     proper installation and Commissioning of the Products.

     "Software" shall mean the (i) object-code computer programs embedded in the
     Products which control and monitor the operation of the Products ("Embedded
     System Software"), and (ii) the PC-based graphical user interface computer
     program for the Products, and all

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     Features, Major Releases, Point Releases, and Software Patches (as such
     terms are defined in "Product Maintenance Program" attached hereto as
     Exhibit C), other updates and modifications to such Software (the "Software
     Updates") and any documentation in support thereof.

     "Software License" shall mean the licensing of the Software set forth in
     Exhibit D, the terms of which shall apply to any Software purchased by
     Customer from Seller pursuant to this Agreement.

3.   PURCHASE ORDERS / CANCELLATIONS

     a.   Customer shall order Products and Services pursuant to this Agreement
          by submitting a Purchase Order that provides the information specific
          to the order, including but not limited to the quantity of Products
          and Services to be ordered, delivery destination, the name and address
          of the Customer's representative to whom the Products are to be
          shipped at the delivery destination, the price of each Product and
          Service per Exhibit A, the desired delivery date(s) and whether
          partial shipments are acceptable. Purchase orders should be submitted
          by Customer to Seller at least [***] prior to date of delivery of
          Products or the rendering of Services.

     b.   Upon receipt of the Purchase Order, Seller shall have [***] business
          days to accept or reject the Purchase Order in writing. Any
          acceptances further subject to completion of Site Survey.

     c.   If following the completion of the Site Survey, Seller determines that
          Product configurations or the Services set forth in the Purchase Order
          must be changed, Seller shall notify Customer with a written proposal
          for changes to the Purchase Order. Upon receipt, Customer shall have
          [***] business days to accept or reject the written proposal for
          changes.  If accepted, Customer shall execute a written Change Order
          to reflect the required changes identified by the Site Survey. If
          Customer rejects the written proposal for changes Customer may cancel
          the Purchase Order subject to Section 3(e) below.

     d.   At its sole option, Seller may decline to fulfill an Order if Seller
          determines that (i) the costs associated with the sale of the Products
          for the Sites are prohibitive or the conditions at such Sites are
          unacceptable; (ii) the sale and delivery of the Products would
          contravene Section 14(e) (export restrictions) of this Agreement; or
          (iii) Seller's personnel may be exposed to unsafe conditions.

     e.   Customer may cancel or delay delivery of Products contained in any
          Purchase Order or Change Order prior to Seller's shipment of the
          Products subject to the terms herein. Any such cancellation or delay
          must be made by written notification to Seller. Customer may delay the
          delivery date for any Products on any purchase Order or Change Order
          once, and such delay shall not exceed [***] days.  If Customer directs
          such cancellation or delay with less than

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          [***] written notice from the delivery date specified in Purchase
          Order or Change Order, Customer shall pay to Seller reasonable and
          documented nonrecurring costs, if any, associated with such
          cancellation or delay provide however, that any such costs shall not
          exceed in the [***] of the Purchase Price of each canceled or delayed
          Products.

     f.   During the period of time commencing on or before the effective date
          of this Agreement and [***], Customer agrees to order from Seller
          [***]

4.   SHIPPING / TITLE / RISK OF LOSS

     a.   Subject to Section 3, Seller shall ship in accordance with Seller's
          standard shipping practices all Products to Customer's designated
          representative at the designated delivery destination on or before the
          delivery date(s) specified in a Purchase Order.  [***]

     b.   Seller shall arrange, on behalf of Customer the following items: [***]
          Customer shall reimburse Seller at cost for [***]  Seller shall
          separately invoice Customer for such charges in accordance with
          Section 6 herein.

     c.   Products shall be packed by Seller in containers adequate to prevent
          damage during reasonable shipping, handling and storage. Customer
          shall be responsible for payment of any warehousing. or storage
          charges for the Products following delivery of the Products to
          Customer, except as noted in paragraph 4(a), above.

     d.   Title to and risk of loss or damage to Products sold by Seller to
          Customer hereunder shall pass to Customer upon delivery to Customer's
          representative at the delivery destination specified on the Purchase
          Order. Title to Software shall remain with Seller in all cases
          pursuant to the terms of the Software License attached as Exhibit D
          hereto.

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5.   INSTALLATION / TRAINING / DOCUMENTATION

     a.   Seller shall install and commission each Product in accordance with a
          mutually agreed upon deployment schedule. Customer agrees to furnish
          reasonable access to the cell sites and the necessary resources to
          assist Seller during installation and optimization. Such deployment
          schedule shall be agreed to in writing by Seller and Customer.

     b.   If Seller fails to complete installation and commissioning of a
          Product within the specified deadline (or any extension agreed to in
          writing by the parties), and such failure is due to delays or causes
          within the reasonable control of Seller, then Seller will not charge
          Customer for the installation and commissioning of that Product at the
          designated site. In the event of any delay beyond the reasonable
          control of Seller, the date(s) of installation and commissioning shall
          be extended for as many days as are reasonably required due to the
          delay.

     c.   Product training courses will be offered at Seller's offices in
          Redmond, WA or on site in Mexico by mutual agreement the prices listed
          in Exhibit A. If Seller conducts training on site in Mexico, [***]
          The course schedule and availability will be coordinated with Seller's
          training organization. Seller will provide at no cost to Customer one
          set of manuals and documentation with each Product.

6.   INVOICES AND PAYMENT

     a.   For Product to be installed by Seller, Seller shall render invoices to
          Customer as follows: [***]

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     b.   All invoices shall be computed on the basis of the prices set forth in
          Exhibit A [***] and shall separately identify categories of charges,
          including but not limited o quantities of Products, type of Services,
          total amounts for each item, shipping charges, applicable sales or use
          taxes and total amount due in U.S. dollars. Customer shall promptly
          pay Seller the amount due within thirty (30) days of the date of
          invoice. Customer shall pay a late fee at the rate of one and one-half
          percent (1.5%) of the amount due for each month or portion thereof
          that the amount remains unpaid.

     c.   The prices specified in Exhibit A do not include any taxes. Customer
          shall pay all local and government sales, excise, or any other taxes,
          fees, duties, tariffs, or other governmental charges or customs
          processing fees which may be levied upon the use, sale, transfer of
          ownership, or installation of Product or Services purchased hereunder
          or the import, movement, delivery, possession of Products, including
          the replacement and repair of Products, excluding, however, any taxes
          on the income, business or licenses of Seller. Any such taxes or fees
          required to be paid or collected by Seller shall be added to the
          invoice as separate charges and paid by Customer to Seller unless
          Customer provides Seller with proof of exemption acceptable to the
          appropriate authority.

     d.   Payment shall be made by wire transfer in U.S. dollars to the
          following account:

          Imperial Bank
          2015 Manhattan Beach Blvd.
          Redondo Beach, CA 90278
          Attn:  Merchant Banking Group
          ABA:  122201444
          Swift:  1MPUS66
          Account Number: 36-001348
          Account Name: Metawave Communications Corporation

7.   WARRANTY

     a.   Seller warrants the Products for a period of [***]  ("Warranty
          Period"). During the Warranty Period, Seller warrants that (i) all
          Products furnished hereunder will be free from defects in materials,
          workmanship and title; (ii) all Products as delivered and properly
          installed and operated will function substantially as described in the
          user documentation and specifications provided by Seller; and (iii)
          the media on which the Software is contained will be free from defects
          in material and workmanship under normal use.  THE WARRANTIES IN THIS
          AGREEMENT ARE GIVEN IN LIEU OF

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     ALL OTHER WARRANTIES EXPRESS OR IMPLIED WHICH ARE
     SPECIFICALLY EXCLUDED, INCLUDING, WITHOUT LIMITATION,
     IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
     PARTICULAR PURPOSE.

     b.   Customer and Seller shall handle all warranty claims in accordance
          with the procedures set forth in Exhibit C, the Product Maintenance
          Program. The actions taken by Seller under the Product Maintenance
          Program procedures shall be the full extent of Seller's liability and
          Customer's exclusive remedy with respect to a claim under this Section
          7. The supplied Products provided hereunder by Seller to Customer (i)
          shall perform on and after January 1, 2000 in as good a manner as
          before such date, and (ii) shall at all times manage, manipulate and
          report data involving dates (including the year 2000, dates before and
          after the year 2000, and single-century and multi-century formulas)
          without generating incorrect values or dates or causing an abnormally-
          ending scenario within an application.

     c.   This warranty does not apply to any claim which arises out of any of
          the following: (i) the Product is used in other than its normal and
          customary manner; (ii) the Product has been subject to misuse,
          accident, neglect or damage by Customer; (iii) the Product has been
          installed, optimized or moved from its original installation site by
          any person other than Seller or a person who has been certified by
          Seller through completion of a Seller-sponsored training course to
          provide such services; (iv) unauthorized alterations or repairs have
          been made to the Product, or parts have been used in the Product which
          are not approved by Seller; (v) the Product is not maintained pursuant
          to Seller's Maintenance Programs or under the supervision of a person
          who has been certified by Seller to provide such maintenance service
          through completion of a Seller-sponsored training course; (vi) an
          event of Force Majeure has occurred; (vii) the failure of third party
          antennas, antenna lines or interconnection facilities not provided by
          Seller at the Site.

8.   INFRINGEMENT INDEMNITY

     a.   Seller shall indemnify and hold harmless Customer against any and all
          liabilities, losses, costs, damages and expenses, including reasonable
          attorney's fees, associated with any claim or action for actual or
          alleged infringement by any Product or Software supplied in accordance
          with this Agreement of any United States patent, trademark, copyright,
          trade secret or other intellectual property right incurred by Customer
          as a result of Customer's use of such Products or Software in
          accordance with this Agreement provided that (i) Customer promptly
          notifies Seller in writing of the claim; (ii) Customer gives Seller
          full opportunity and authority to assume sole control of the defense
          and all related settlement negotiations; and (iii) Customer gives
          Seller information and assistance for the defense (Customer will be
          reimbursed for reasonable costs and expenses incurred in rendering
          such assistance, against receipt of invoices therefor). Subject to the
          conditions and limitations of liability stated in section 9(b) of this
          Agreement,

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          Seller shall indemnify and hold harmless Customer from all payments,
          which by final judgments in such claims, may be assessed against
          Customer on account of such alleged infringement and shall pay
          resulting settlements, costs and damages finally awarded against
          Customer by a court of law, arbitration or other adjudication of the
          claim.

     b.   Customer agrees that if the Products or Software become, or in
          Seller's opinion are likely to become, the subject of such a claim,
          Customer will permit Seller, at Seller's option and expense, either to
          procure the right for Customer to continue using such Products or
          Software or to replace or modify same so that they become non-
          infringing as long as they continue to conform in all material
          respects to the Product specifications, and, if neither of the
          foregoing alternatives is available on terms that are acceptable to
          Seller, Customer shall at the written request of Seller, return the
          infringing or potentially infringing Products or Software and all the
          rights thereto at Seller's expense. Customer shall receive a refund of
          the prorated undepreciated portion of the Purchase Price actually paid
          by Customer to Seller for the returned portion of the Products. The
          Purchase Price shall be depreciated over a five (5) year period.

     c.   Seller shall have no obligation to Customer with respect to any claim
          of patent or copyright infringement which is based upon (i) adherence
          to specifications, designs or instructions furnished by Customer; (ii)
          the combination, operation or use of any Products supplied hereunder
          with products, software or data with which the Products are not
          intended to be used or for which the Products are not designed; (iii)
          the alteration of the Products or modification of any Software made by
          any party other than Seller; or (iv) the Customer's use of a
          superseded or altered release of some or all of the Software if
          infringement would have been avoided by the use of a subsequent
          unaltered release of the Software that is provided to the Customer.

9.   INDEMNIFICATION

     a.   Seller, shall indemnify Customer, its employees and directors, and
          each -of them, against any loss, damage, claim, or liability, arising
          out of, as a result of, or in connection with the use of the Product
          in accordance with this Agreement or the acts or omissions, negligent
          or otherwise, of Seller in the performance of this Agreement, or a
          contractor or an agent of Seller or an employee of anyone of them,
          except where such loss, damage, claim, or liability arises from the
          negligence or willful misconduct of Customer, agents or its employees.
          Seller shall, at its own expense, defend any suit asserting a claim
          for any loss, damage or liability specified above, and Seller shall
          pay. any costs, expenses and attorneys' fees that may be incurred by
          Customer in connection with any such claim or suit or in enforcing the
          indemnity granted above, provided that Seller is given (i) prompt
          notice of any such claim or suit and (ii) full opportunity to assume
          control of the defense or settlement.

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     b.   In no event will either party or their respective suppliers be liable
          under this Agreement for (i) the cost. of substitute procurement,
          special, indirect, incidental, or consequential damages, or (ii) any
          damages resulting from the loss of use or profits arising out of or in
          connection with this Agreement, the furnishing of Services, or the use
          or performance of Products even if informed of the possibility of such
          damages. Except for damages resulting from bodily injury or death to
          persons, in no event will Seller's total liability for (i) any damages
          in any action based on or arising out of or in connection with this
          Agreement exceed the total amount paid to Seller for such Products
          under this Agreement, or (ii) claims based upon Seller's obligations
          for Services exceed the total amount paid to Seller for such Services.

10.  TERM AND TERMINATION

     The term of this Agreement shall be [***] from the Effective Date. Either
     party may terminate this Agreement at any time with thirty (30) days'
     notice in which case Customer shall have the right to place Purchase Orders
     up until the effective date of the termination and such termination shall
     not affect any purchase order outstanding as of the effective date of the
     termination. If either party is in material default of any of its
     obligations under this Agreement and such default continues for thirty (30)
     days after written notice thereof by the party not in default, the
     nondefaulting party may terminate this Agreement. In addition, a party may
     terminate this Agreement if a petition in bankruptcy or a petition under
     any insolvency law is filed by or against the other party and is not
     dismissed within sixty (60) days of the commencement thereof. Any notice of
     termination under this section 10 shall be in writing.

11.  ASSIGNMENT/LIMITATIONS ON TRANSFERS

     a.   Any assignment by either party to this Agreement or any other interest
          hereunder without the other party's prior written consent, shall be
          void, except assignment to a parent company, subsidiary or person or
          entity who acquires all or substantially all of the assets, business
          or stock of either party, whether by sale, merger or otherwise.

     b.   Customer shall not purchase a Product solely for the purpose of
          reselling or distributing it to another party.

     c.   Subject to the provisions of paragraphs a and b above, this Agreement
          shall inure to the benefit of and be binding upon the respective
          successors and assigns, if any, of the parties hereto.

12.  NOTICES

     Except as otherwise specified in this Agreement, all notices or other
     communications hereunder shall be deemed to have been duly given when made
     in writing and delivered in person or deposited in the United States mail,
     postage prepaid, certified mail, return

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     receipt requested, or by a reputable overnight courier service providing
     proof of delivery, or by confirmed facsimile transmission and addressed as
     follows:

     To Seller:                             To Customer:
     Metawave Communications Corporation    Grupo Iusacell S.A. de C.V.
     10735 Willows Road NE                  Avenida Prolongacion, Paseo de la
     Redmond, WA 98052                      Reforma Colonia Sante Fe 05348
                                            Mexico D.F.
     Attn: Richard Henderson, VP, Sales     Attn: Thomas A. Burgos
     Fax: 425 702 5976                      Fax: 52-5-109-5407
     Copy to: Kathy Surace-Smith            Copy to: Ruben Perlmutter
     General Counsel                        General Counsel
     Fax: 425-702-5978                      Fax: 52-5-109-5791

     The address to which notices or communications may be given to either party
     may be changed by written notice given by such party to the other pursuant
     to this Section 11.

13.  INSURANCE

     Seller agrees at its expense to maintain adequate insurance coverage to
     protect against its liabilities under this Agreement. Insurance coverage
     will include (a) worker's compensation insurance; (b) comprehensive general
     liability insurance, including coverage for product liability, bodily
     injury and property damage; and (c) automobile liability insurance.

14.  COMPLIANCE WITH LAWS

     a.   Each party shall comply with all applicable federal, state and local
          laws, regulations and codes, including the procurement of permits and
          licenses relating to the purchase or sale of Product and Services
          pursuant to this Agreement.

     b.   Seller agrees to obtain all necessary Mexican telecommunication
          authorizations, certifications, permits or licenses as required for
          the installation and operation of the Products and for which Seller is
          responsible for under Mexican. law or regulations(the "Licenses").
          Customer shall provide consultation or upon request from Seller,
          reasonable assistance in the form of personnel, expertise and contacts
          to Seller (other than financial assistance) in obtaining the Licenses,
          customs clearances (subject to section 4(c)), visas, permits, work
          permits, temporary import/export permits for tools and test equipment,
          and any other required documentation required for the importation,
          installation and operation of the Products in Mexico.


     c.   When Customer imports the Products into Mexico, Customer shall comply
          with all importation formalities and obtain any customs or regulatory
          permits required to import the Products into Mexico, including but not
          limited to, NOM certificates

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          issued by NYCE relating to compliance with electrical safety standards
          (the "NYCE Certificate"). Seller agrees to indemnify Customer, its
          employees and directors, and each of them, against any loss, damage,
          claim, or liability, arising out of, as a result of, or in connection
          with the issuance of the NYCE Certificate to, and the holding or
          maintenance of the NYCE Certificate by, Customer except where such
          loss, damage, claim, or liability arises from the negligence or
          willful misconduct of Customer, agents or its employees. Seller shall,
          at its own expense, defend any suit asserting a claim for any loss,
          damage or liability specified above, and Seller shall pay any costs,
          expenses and attorneys' fees that may be incurred by Customer in
          connection with any such claim or suit or in enforcing the indemnity
          granted above, provided that Seller is given (i) prompt notice of any
          such claim or suit and (ii) full opportunity to assume control of the
          defense or settlement.

          In addition, Seller shall be responsible for maintaining the Products'
          compliance with applicable NOM standards and for conducting additional
          testing if needed `to maintain the NYCE Certificate. Customer and
          Seller agree that the NYCE certificate shall only be used by Customer
          as the importer of Products for its own use, and that Seller shall not
          rely on the NYCE certificate issued to Customer for importation on
          behalf of Seller or any other purchaser of the Products in Mexico.

     d.   Customer agrees that Seller may conduct testing for purposes of
          obtaining any Licenses for the Products at the Sites where they are
          installed and will allow Seller access to the Sites at times
          acceptable to Customer for such purposes during installation and
          afterwards if requested by Seller.

     e.   The parties agree to comply with all applicable U.S. and Mexican
          export control laws and regulations and shall not export or re-export
          any technical data or products except in compliance with the
          applicable export control laws and regulations of the U.S. and Mexico.

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15.  FORCE MAJEURE

     Except for payment of moneys due, neither party shall be liable for delays
     in delivery or performance or for failure to manufacture, deliver or
     perform resulting from acts beyond the reasonable control of the party
     responsible for performance. Such acts shall include, but not be limited to
     (a) acts of God, acts of a public enemy, acts or failures to act by the
     other party, acts of civil or military authority, governmental priorities,
     strikes or other labor disturbances, hurricanes, earthquakes, fires,
     floods, epidemics, embargoes, war, riots, and loss or damage to goods in
     transit; (b) inability to obtain necessary products, components, services
     or facilities on account of causes beyond the reasonable control of the
     delayed party or its suppliers; or (c) delay in obtaining or the failure to
     obtain the necessary customs clearances, equipment authorizations,
     licenses, permits, governmental approvals and any other documentation
     required for the delivery, installation and operation of the Products at
     the Sites, including visas and work permits for Seller's personnel. In the
     event of any such delay, the date(s) of delivery or performance shall be
     extended for as many days are reasonably required due to the delay. If such
     delay continues for forty-five (45) days, either party may terminate the
     Purchase Order affected by the event by providing written notice.

16.  GOVERNING LAW / DISPUTE RESOLUTION

     a.   This Agreement and each Purchase Order shall be construed in
          accordance with the internal laws of the State of New York, without
          regard to its choice of law provisions. The terms and conditions of
          the United Nations Convention CISG are excluded from application under
          this Agreement.

     b.   Any dispute, controversy, or claim arising out of or relating to this
          Agreement shall first be settled by non-binding mediation to be
          conducted in English by a mutually agreed non-affiliated neutral
          party. In the event mediation is unsuccessful, the matter shall be
          settled by binding arbitration in New York, New York, under the rules
          of the International Chamber of Commerce in effect at the time of the
          arbitration to be conducted in English. The arbitration decision shall
          be final and binding upon the parties and judgment upon the award
          rendered by the arbitrator may be entered in any court having
          jurisdiction thereof. Notwithstanding the above, regarding
          intellectual property claims, Metawave reserves the right to initiate
          and conduct litigation proceedings in any court it deems appropriate.

17.  CONFIDENTIALITY

     All information, data and materials provided by either party pursuant to
     this Supply Agreement will be subject to the terms and conditions of the
     Non-disclosure Agreement between Metawave and IUSACELL, dated May 19, 1999.

18.       INTELLECTUAL PROPERTY

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     All concepts, designs, ideas, techniques, software programs, inventions,
     discoveries, data, business processes, business procedures and any other
     intellectual property developed by Seller in connection with this
     Agreement, or arising out of its performance of this Agreement, shall be
     the exclusive property of Seller. The performance by Seller of its
     obligations under this Agreement shall not be deemed work-for-hire but
     shall instead be subject to this section.

19.  GENERAL PROVISIONS

     a.   Seller and Customer may agree to issue a joint press release
          concerning the execution of this Agreement. Such press release shall
          be subject to prior review and written approval by both parties, such
          approval not to be unreasonably withheld.

     b.   Any waiver by any party of any breach or failure to comply with any
          provision of this Agreement by the other party must be in writing and
          shall not be construed as, or constitute, a continuing waiver of such
          provision, or a waiver of any other provision of this Agreement.

     c.   If any of the provisions of this Agreement shall be invalid or
          unenforceable, such invalidity or unenforceability shall not
          invalidate or render unenforceable the entire Agreement, but rather
          the entire Agreement shall be construed as if not containing the
          particular invalid or unenforceable provisions, and the rights and
          obligations of Seller and Customer shall be construed and enforced
          accordingly.

     d.   Except the Non-Disclosure Agreement dated May 19, 1999 which shall
          remain in full force and effect, this Agreement, including all
          Exhibits that are attached to and hereby incorporated into this
          Agreement, shall constitute the entire agreement between Customer and
          Seller with respect to the subject matter hereof and supersedes all
          prior agreements, covenants, arrangements, communications,
          representations or warranties, whether oral or written, by any party
          or any officer, employee or representative of any party with respect
          to the subject matter hereof. Upon certification by Customer of
          performance acceptance of the Products purchased pursuant to the
          Letter Agreement between Seller and Customer dated June 29, 1999 (the
          "Initial Order"), such Letter Agreement shall be terminated and the
          terms and conditions of this Agreement shall apply to the Initial
          Order as if the Initial Order were a Purchase Order under this
          Agreement. In addition, all outstanding Purchase Orders from Customer
          and all Products sold to Customer by Seller as of the Effective Date
          of this Agreement shall be subject to this Agreement, which shall
          supersede and replace any additional or different terms of those
          Purchase Orders or other order documentation.

     e.   Any amendment or modification of this Agreement or any Exhibit must be
          in writing and signed by a duly authorized representative of each of
          the parties.

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     f.   This Agreement applies only to sales of Products and Services to be
          installed at Customer Sites in Mexico.'


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized representatives.

Metawave Communications Corporation    Grupo IUSACELL S.A. de C.V.

By:     /s/: Richard Henderson         By:  /s/: Thomas Burgos
        ------------------------           ------------------
Name:   Richard Henderson              Name:    Thomas Burgos
        ------------------------           ------------------
Title:  VP Sales and Marketing         Title:   VP Network
        ------------------------           ------------------

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                                   Exhibit A

1.   Product Pricing Summary

     All Product prices shown are list prices and unless other wise indicated do
     not include Services, taxes, shipping and duties. Services prices shown are
     for Product installed and services performed in the Mexico.

[***]



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2.   Optional Software Pricing Summary

[***]

3.   Services Pricing Summary

[***]

4. Maintenance Pricing

[***]

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5.   Training

     Supplier offers SpotLight training courses designed for the cellular
     technician. The content of the courses shall include but not be limited to
     site preparation, installation, remedial maintenance, failure
     recovery/backup, failure repair techniques, operation of test equipment and
     diagnostic software use. The content of said courses may be changed by
     Supplier when, in its judgement, such change is warranted, the current
     course offered is three (3) days in length. The courses assume no prior
     knowledge of SpotLight systems but do require a proficient level of
     understanding of cellular system operation, installation and optimization.
     Supplier shall provide sufficient personnel to conduct each course and
     shall furnish instructional aids including manuals.

     The training courses will be conducted at Supplier's offices located in
     Redmond, Washington [***]. The price for attending the training course is
     [***]. Course schedules and availability will vary and shall be coordinated
     through Supplier's training organization.

6.   General Conditions for Order

     6.1  Towers and transmission lines to the towers, or any costs associated
          with the preparation of towers and the cell site including adequate
          electrical power and HVAC are not included in the prices shown herein
          and are the responsibility of Customer.

     6.2  The mounting, physical and electrical connection of the SpotLight
          panel antennas is not included in the prices shown herein and is the
          responsibility of Customer.

     6.3  Customer shall provide air time with local phone numbers at no charge
          and/or a reasonable number of test mobiles at no charge if required by
          Supplier for completion of services including Installation,
          Commissioning and Optimization of the Product.

     6.4  Site surveys must be completed to determine the final Product
          configurations and to complete the scope of work. If upon completion
          of the site survey and scope of work, it is determined that the
          Product requirements have changed, Supplier shall notify Customer with
          a written proposal for changes to the Purchase Order.

     6.5  Customer shall provide safe and secure access to the sites for
          Supplier's employees during the performance of Services. Customer
          shall make each site available to Supplier during a mutually agreed
          upon period of time.

     6.6  Customer is responsible for maintaining proper site environmental
          conditions and proper grounding of Supplier's equipment including
          proper lightening protection.

     6.7  Customer shall provide, at Supplier's reasonable request, cell site
          data necessary for the performance of Services including database
          information, baseline network statistics, call traffic and performance
          levels and revisions levels of cell site infrastructure hardware and
          software. All such information provided by Customer shall be treated
          as confidential Information in accordance with this Agreement.

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     6.8  If performance of Services by Supplier is delayed for reasons beyond
          the control of Supplier, or if additional Services are required by
          Customer, the prices for Services shown herein may be adjusted
          accordingly.

     6.9  Performance of the Services set forth herein is dependent on Customer
          and/or Supplier obtaining any and all necessary licenses, permits and
          governmental approvals required to perform the Service. Supplier shall
          not be held liable for any non-performance due to delays in obtaining
          any of the above documentation and/or approvals.


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7.   [***]

     The prices shown in this Exhibit A are given in consideration of Customer's
[*] set forth in this Section 7.

[***]

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Region #9

[***]

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                                   Exhibit B

                           Commissioning Certificate


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                                   Exhibit C


                          Product Maintenance Program












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1.   INTRODUCTION

     Seller's product maintenance program includes both a Hardware Maintenance
     Program (HMP) and a Software Maintenance Program (SMP). This document
     describes each of the two programs.

2.   HARDWARE MAINTENANCE PROGRAM (HMP)

     Seller repairs its Product(s) down to the Field Replaceable Unit (FRU).  In
     this Exhibit C, the term hardware refers to the non-Software components
     making up a FRU. The following describes Seller's Hardware Maintenance
     Program ("HMP"):

     2.1. Term

          21.1.  Seller's HMP is included in the Purchase Price of each Product
                 purchased by Customer and shall extend throughout the duration
                 of the Warranty Period, as set forth in the Warranty Section of
                 the Agreement (the "Initial HMP"). Hardware repair services are
                 made available to Customer for a period of [***] from the date
                 Product is shipped from Seller's factory to Customer. Following
                 the expiration of the Initial HMP, Customer has a choice of (i)
                 subscribing to Seller's HMP on an annual basis pursuant to the
                 terms herein and at the HMP fees set forth in Exhibit A
                 ("Extended HMP") for the duration of the term of the Agreement
                 and thereafter at Seller's then current HMP fees, or (ii)
                 having defective FRUs repaired or replaced with refurbished
                 FRUs at Seller's then current repair rates.

     2.2. Seller shall:

          2.2.1.  If a defect occurs, either (i) repair the defective FRU or
                  (ii) replace said FRU with a new or refurbished FRU. Any item
                  replaced will be deemed to be on an exchange basis, and any
                  item retained by Seller through replacement will become the
                  property of Seller.

          2.2.2.  FRUs that have been repaired or replaced will be warranted for
                  a period of time which is the longer of (i) [***] from the
                  date of shipment of FRU to Customer or (ii) [***].

          2.2.3.  At the request of Customer and if an emergency situation
                  exists and requires an expedited shipment, Seller shall ship a
                  replacement FRU in advance of Customer returning the defective
                  FRU to Seller.

          2.2.4.  In a non-emergency situation, Seller shall ship a repaired or
                  replacement FRU to Customer within [***] days of receipt of a
                  defective FRU from Customer. Equipment not manufactured by
                  Seller will be repaired or replaced as promptly as
                  arrangements with the manufacturers or vendors thereof permit.

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          2.2.5.  Issue a Return Material Authorization ("RMA") number to
                  Customer prior to Customer's return of the defective FRU.

          2.2.6.  Pay all transportation charges for the return of the repaired
                  or replacement FRU to Customer.

          2.2.7.  Provide telephone technical support 24 hours a day, 7 days a
                  week with a telephone call-back response time to Customer not
                  to exceed one hour from Customer's call to Customer Support.

     2.3. Customer shall:

          2.3.1.  Contact Seller via telephone, e-mail or fax to obtain an RMA
                  prior to returning a defective FRU.

          2.3.2.  Package FRU in a manner to prevent damage during shipment and
                  clearly identify RMA number on outside of package.

          2.3.3.  Ship the defective FRU to the address shown in Annex A to this
                  exhibit.

          2.3.4.  Pay all costs of transportation for sending the defective FRU
                  to Seller.

          2.3.5.  If Seller has shipped a replacement FRU in advance of Customer
                  returning a defective FRU to Seller, as a result of an
                  emergency situation that required an expedited shipment,
                  Customer agrees to provide confirmation of shipment of such
                  defective FRU, freight prepaid, to Seller (at address shown in
                  Annex A to this exhibit) within 5 days of Seller's shipment of
                  replacement FRU. Customer agrees to promptly pay Seller's
                  invoice for the replacement FRU (billed at the then current
                  FRU price) shipped to Customer if the defective FRU is not
                  returned to Seller within the specified 5 day period.

          2.3.6.  Be responsible for the initial identification of Product
                  problems down to the FRU level and for the removal, shipment
                  and re-installation of the malfunctioning FRU.

     2.4. On-Site Repair

          On-Site Repair can be performed at an additional charge. Such charge
          will be quoted to Customer and agreed upon in writing prior to
          dispatch of service personnel.

     2.5. Service Limitations

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          2.5.1.  Seller shall have no responsibility to repair or replace FRUs
                  which have been repaired or altered in an unauthorized manner
                  or which have had the bar code, serial number, or other
                  identifying mark modified, removed or obliterated through
                  action or inaction of Customer.

          2.5.2.  In the event that Customer sends a FRU to Seller for which no
                  defects or failures can be found, Seller may invoice Customer
                  at the then current fee for the services rendered during the
                  evaluation process.

3.   SOFTWARE MAINTENANCE PROGRAM (SMP)

     The following describes Seller's SMP:

     3.1. Definitions Terms which are capitalized have the meanings set forth
          below or, absent definition herein, as contained in the Agreement.

     Feature          An innovation or performance improvement to Software that
                      is made available to all users of the current Software
                      release. Features are licensed to Customer individually
                      and may be at additional cost.

     Major Release    Indicates a new version of Software that adds new Features
                      (excluding Optional Features) or major enhancements to the
                      currently existing release of Software.

     Point Release    Indicates a modification to Software resulting from
                      planned revisions to the current release, or corrections
                      and/or fixes to the current release of Software.

     Software Patch   Software that corrects or removes a reproducible anomaly
                      or "bug" in an existing Major Release.

     3.2. Term

          3.2.1.  Seller's SMP is included in the Purchase Price of each Product
                  purchased by Customer and shall extend throughout the duration
                  of the Warranty Period, as set forth in the Warranty Section
                  of the Agreement (the "Initial SMP Term"). Thereafter, SMP is
                  provided by Seller to Customer pursuant to the terms herein
                  and is included in the SMP fees set forth in Exhibit A for a
                  period of 12 months. Any Software provided to Customer during
                  the term of the SMP will be provided pursuant to Seller's
                  Software License as set forth in the Software License exhibit
                  of the Purchase Agreement.

     3.3. Scope

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          3.3.1.  During the term of SMP, all Major Releases, Point Releases,
                  Software Patches and standard Features made generally
                  available by Seller shall be available to Customer at no
                  additional charge. Customer shall install such Software
                  promptly upon receipt.

          3.3.2.  Optional Features and certain significant enhancements shall
                  be made available to Customer at an additional charge.

          3.3.3   Certain optional Features shall be sold on a per-unit basis
                  and may have price levels that reflect unit capacity.

          3.3.4   Customer will be responsible for problem identification of
                  reproducible Software malfunctions. In the event of any such
                  Software malfunction, Customer shall notify Seller promptly of
                  the failure through calling Seller's Customer Support.

          3.3.5   Seller shall provide, at a Seller authorized repair depot,
                  such service as is necessary to correct Software defects. Such
                  service will be provided by Seller as soon as is possible and
                  on a priority basis according to the severity of the problem.

          3.3.6.  Seller shall provide telephone technical support 24-hour a
                  day, 7 days a week with a telephone call-back response time to
                  Customer not to exceed one hour from Customer's call to
                  Customer Support. Additionally, Seller shall provide telephone
                  assistance and guidance during the installation of new
                  Software.

          3.3.7.  Seller shall support the current Major Release and associated
                  Point Releases and Features as well as the immediately
                  preceding Major Release and associated Point Releases and
                  Features.

          3.3.8.  Seller shall have no obligation to support any Software that
                  is older than the immediately preceding Major Release.
                  However, any support provided by Seller for Software older
                  than the immediately preceding Major Release and associated
                  Point Releases and Features shall be on a time and material
                  basis. An open purchase order will be required before any such
                  services are rendered.

          3.3.9.  Seller shall perform its services hereunder in a good
                  workmanlike manner and in accordance with industry standards
                  where applicable.

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          Annex A: Procedures for Metawave's Hardware Maintenance Program

A.   Metawave's Customer Support Customer Support

     Customer Support can be reached by call the following numbers:

     Domestic phone:         888-642-2455

     International phone:    425-702-6550

     Fax:                    425 702 5975

     Email:                  [email protected]

B.   Return Material Authorization (RMA)

     Customer must contact Customer Support via telephone, e-mail or fax to
     obtain a Return Material Authorization (RMA) number.  Seller may return
     shipments without a RMA number to the Customer unrepaired and at Customer's
     expense.

     The RMA number must be clearly written on the outside of the package.

     A RMA number will not be issued until a purchase order is provided for the
     repair price for those items not covered under warranty.

C.   Return Address

     All Field Replaceable Units (FRUs) must be shipped to:

     Metawave Communications Corporation

     10735 Willows Road N.E.

     Redmond, WA 98073-9769 USA

D.   Packing Instructions

     Customer must pack all returned equipment in a manner no less protective to
     such equipment than the manner in which Seller packages similar equipment.

E.   Repair Purchase Orders

     Repair purchase orders are required in the following instances:

     1.   When Customer returns out of warranty FRUs for repair.

     2.   When Seller sends pre-exchange FRU to Customer prior to the defective
          FRU being received by Seller, and if defective FRU is not received
          within five (5) days of shipment of replacement FRU.

     Under these circumstances, a facsimile copy of the purchase order may be
     transmitted to Seller and followed-up by a confirming hard copy in the
     mail.

F.   Expedited Service

     In an emergency situation that requires an expedited shipment, Seller
     offers Expedite Services upon Customer's request at no additional charge
     except that Customer shall pay for additional expedited freight charges, if
     any. If the HMP




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     has expired, such expedite service will carry an additional fee of $300
     plus freight charges (plus the price of FRU if out of warranty) per FRU.

G.   Invoices and Payment

     Invoices are payable in accordance with the terms of the Agreement.  If
     pre-exchanged FRU's are not returned by Customer to Seller within five (5)
     days then Seller shall invoice Customer for the amount of the exchanged
     FRU's.

H.   Freight

     FRUs covered under Initial HMP or Extended HMP:

     Customer shall ship the FRU to Seller on a prepaid basis and Seller will
     return the FRU to Customer on a prepaid basis, not billing Customer for
     return freight.

     FRUs out of Warranty:

     Customer shall ship the FRU to Seller on a prepaid basis and Seller will
     utilize the  freight carrier number furnished by Customer for return
     freight.

I.   Duties and Taxes

     All duties, customs clearance fees and any and all taxes will be the
     responsibility of the Customer.

J.   Non-compliance

Failure to comply with any of the procedures may result in delay or non-delivery
of the FRUs.

                                      -2-

                                 CONFIDENTIAL

[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

                                   Exhibit D


                               Software License









                                 CONFIDENTIAL

[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

1.   DEFINITIONS

     For the purposes of uniformity and brevity, references to Agreement or to
     an Exhibit shall refer to the Agreement that this document is attached as
     Exhibit D and to the other Exhibits to that Agreement. All definitions set
     forth in the Agreement shall apply hereto unless otherwise expressly
     defined herein.

2.   SCOPE

     Pursuant to the Agreement, Software will be delivered by Seller to Customer
     for use with a Product according to the terms of the Agreement and this
     Exhibit. Customer shall then become a licensee with respect to such
     Software.

3.   LICENSING GRANT

     3.1. Concurrent with execution of the Agreement, and subject to the terms
          and conditions set forth herein, Seller grants to Customer a
          revocable, non-exclusive and non-transferable license under Seller's
          applicable proprietary rights to use Software delivered to Customer
          hereunder to routinely operate and monitor the Product with which the
          Software was delivered.

     3.2. The Software licensing fees for the most current versions of the
          Software including the Embedded System Software and LampLighter
          Software (available at the time of purchase of a Product) are included
          in the Purchase Price of a Product.  Software Updates are available
          under the Software Maintenance Program described in Exhibit C or for
          additional licensing fees.

4.   LIMITATIONS ON USE OF SOFTWARE

     4.1. Without the prior written consent of Seller, Customer shall only use
          the Software in conjunction with a single Product delivered to
          Customer under the terms of the Agreement.

     4.2. The license granted to Customer in Section 3 may not be transferred to
          another Product or Site or another entity without the written consent
          of Seller.

     4.3. The Software is subject to laws protecting patents, trade secrets,
          know-how, confidentiality and copyright.

     4.4. Customer shall not translate, modify, adapt, decompile, disassemble,
          or reverse engineer the Software or any portion thereof.

     4.5. Unless otherwise expressly agreed to by Seller, Customer shall not
          permit its directors, officers, employees or any other person under
          its direct or indirect control, to write, develop, produce, sell, or
          license any software that performs the same functions as the Software
          by means directly attributable to access to the Software (e.g. reverse
          engineering or copying).


                                      -2-

                                 CONFIDENTIAL

[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

     4.6. Customer shall not export the Software from the United States without
          the written permission of Seller. If written permission is granted for
          export of the Software, then Customer shall comply with all U.S. laws
          and regulations for such exports and shall hold Seller harmless,
          including legal fees and expenses for any violation or attempted
          violation of the U.S. export laws.

     4.7. Customer acknowledges that Seller owns the Software and that any
          rights therein not specifically granted in this License are the
          exclusive property of Seller.

5.   RIGHT TO COPY, PROTECTION AND SECURITY

     5.1. Software provided hereunder may be copied (for back-up purposes and
          disaster recovery only) in whole or in part, in printed or machine-
          readable form for Customer's internal use only, provided, however,
          that no more than two (2) printed copies and two (2) machine-readable
          copies (other than copies electronically resident in Products) shall
          be in existence at any one time `Without the prior written consent of
          Seller.

     5.2. With reference to any copyright notice of Seller associated with
          Software, Customer agrees to include the same on all copies it makes
          in whole or in part. Seller's copyright notice may appear in any of
          several forms, including machine-readable form. Use of a copyright
          notice on the Software does not imply that such has been published or
          otherwise made generally available to the public.

     5.3. Customer agrees to keep confidential, in accordance with the terms of
          the Agreement or a non-disclosure agreement signed by the parties, and
          not provide or otherwise make available in any form any Software or
          its contents, or any portion thereof, or any documentation pertaining
          to the Software, to any person other than employees of Customer or
          Seller.

     5.4. Software is the sole and exclusive property of Seller and no title or
          ownership rights to the Software or any of its parts, including
          documentation, is transferred to Customer.

     5.5. Customer acknowledges that it is the responsibility of Customer to
          take all reasonable measures to safeguard Software and to prevent its
          unauthorized use or duplication.

6.   REMEDIES

     Customer acknowledges that violation of the terms of this License Agreement
     or the Agreement shall cause Seller irreparable harm for which monetary
     damages may be inadequate, and Customer agrees that Seller may, in addition
     to any other legal or equitable remedy, seek temporary or permanent
     injunctive relief without the need to prove actual harm in order to protect
     Seller's interests.

                                    -3-

                                 CONFIDENTIAL

[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

7.   TERM

     Unless otherwise terminated, pursuant to Section 8 hereof, the term of the
     license granted pursuant to Section 3 herein shall be perpetual.

8.   TERMINATION

     8.1. The license granted hereunder may be terminated by Customer upon one
          (1) month's prior written notice.

     8.2. Seller may terminate the license granted hereunder if Customer is in
          material default of any of the terms and conditions of this Software
          License and such termination shall be effective if Customer fails to
          correct such default within thirty (30) days after written notice
          thereof by Seller. The provisions of Sections 4 and 5 herein shall
          survive termination of any such license.

     8.3. Within one (1) month after termination of the license granted
          hereunder, Customer shall furnish to Seller a document certifying that
          through its best efforts and to the best of its knowledge, the
          original and all copies in whole or in part of all Software, in any
          form, including any copy in an updated work, have been returned to
          Seller or destroyed. With prior written consent from Seller, Customer
          may retain one (1) copy for archival purposes only.

9.   RIGHTS OF THE PARTIES

     9.1. Nothing contained herein shall be deemed to grant, either directly or
          by implication, estoppel, or otherwise, any license under any patents,
          patent applications or copyrights of Seller except as expressly
          granted herein.

     9.2. Rights in programs or operating systems of third parties, if any, are
          further limited by their license agreements with such third parties,
          which agreements are hereby incorporated by reference thereto and made
          a part hereof as if fully set forth herein. Customer agrees to abide
          thereby.

     9.3. During the term of the license granted pursuant to Section 3 herein
          and for a period of one (1) year after expiration or termination,
          Seller, and where applicable, its licenser(s), or their
          representatives may, upon prior notice to Customer, a) inspect the
          files, computer processors, equipment, facilities and premises of
          Customer during normal working hours to verify Customer's compliance
          with this Software License, and b) while conducting such inspection,
          copy and/or retain all Software, including the medium on which it is
          stored and all documentation that Customer may possess in violation of
          the license or the Agreement.

     9.4. Customer acknowledges that the provisions of this Exhibit D are
          intended to inure to the benefit of Seller and its licensors and their
          respective successors in interest.

                                      -4-

                                 CONFIDENTIAL

[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

          Customer acknowledges that Seller or its licensers have the right to
          enforce these provisions against Customer, whether in Seller's or its
          licenser's name.







                                      -5-


                                 CONFIDENTIAL

[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

10.  LIMITATIONS ON SOFTWARE

     Customer understands that errors occur in Software and Seller makes no
     warranty that the Software will perform without error. Customer accepts the
     Software "as is" subject to the warranty set forth in Section 7 of the
     Agreement.

11.  YEAR 2000 WARRANTY

     In addition to the warranties contained in Section 7 of the Agreement,
     Seller warrants, covenants and agrees that the Software will perform,
     operate and function when used in accordance with its associated
     documentation, and will be capable upon Commissioning to accurately
     process, provide and/or receive date data from, into and between the
     twentieth and twenty-first centuries, including the years 1999 and 2000,
     and leap year calculations, provided that all other products (e.g.
     hardware, software and firmware) used in combination with the Products(s)
     properly exchanges date data with it.

12.  ENTIRE UNDERSTANDING

     12.1.  This Exhibit D is a part of, and is to be read together with, the
            Agreement which contains additional terms and conditions, warranties
            and indemnities applicable to the Software.

     12.2.  Notwithstanding anything to the contrary in other agreements,
            purchase orders or order acknowledgments, the Agreement, the
            Software specifications set forth in the Products specifications and
            this Exhibit D set forth the entire understanding and obligations
            regarding use of Software, implied or expressed.

                                      -6-

                                 CONFIDENTIAL

[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

                                   Exhibit E


                         Engineering and Optimization

                                   Procedure












                                 CONFIDENTIAL

[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

Introduction

This exhibit establishes the Performance Criteria and Procedure to be used for
the Engineering and Optimization for the Products ("Product" shall mean Seller's
SpotLight 2000 product). The Engineering and Optimization Procedure consists of
[***].  The Engineering and Optimization Procedure consists of separate
activities for analog and CDMA consisting of:

[***]

Comp1etion of the Engineering and Optimization of a SpotLight shall be indicated
by [***] found at the end of this Exhibit E.

[***]

In order for Customer and Seller to configure the Product, Customer must provide
the following specific cell site information for all current and planned sites
in the area of Customer's network where Product is to be installed. The
information is required for all sites regardless of whether the SpotLight
Product is to be installed in that particular site, unless specifically
designated as "Required for Product sites only" in the list below, which
indicates that the information is required only for sites where Product is to be
installed.

[***]

                                      -2-


                                 CONFIDENTIAL

[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

[***]

The collection and measurement process described in this section will be
followed during both the Baseline Performance Collection and the Performance
Collection and Evaluation.  Drive test route(s), drive test equipment, data to
be collected during drive tests, number of runs per drive test route and
frequency of data sampling all must be agreed to by Customer and Seller prior to
beginning the Measurement Process.

Information discovered in the drive tests and information that must be provided
by customer and included in both the Baseline Performance Collection and the
Performance Collection and Evaluation include but are not limited to:

[***]

In addition to collecting the above information, switch statistics from the
previous year must be analyzed to determine if adjustments due to seasonal
variation between the baseline data collection phase and the Product data
collection phase need to be made.  Customer must provide either the actual
switch statistics or summaries of seasonal statistical traffic trends.

Customer must provide a log of all system changes during both the Baseline
Performance Collection phase and the Performance Collection and Evaluation
phase, recording the occurrences of such events as cell site additions,
frequency re-tunes, outages, etc.  Customer must collect the switch statistics
and provide them to Metawave on a daily basis.

The calculation for Lost Calls Percentage and Ineffective Attempts Percentage
will be calculated using the following equations unless otherwise agreed to by
Seller and Customer:

[***]

[***]


                                      -3-


                                 CONFIDENTIAL

[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

[***]

Using the procedure set forth in the Measurement Process section of this
exhibit, Customer and Seller will perform drive tests to determine the current
performance characteristics of the existing CDMA and analog networks.  Customer
and Seller must agree in writing as to the validity of baseline switch statistic
data and drive test data.

The duration of the baseline sampling time period shall be mutually agreed upon.
[***].  Switch statistics collected during the baseline sampling time period
will include both daily summaries (excluding maintenance windows) and system
busy hour summaries.

[***]

[***]

                                      -4-



                                 CONFIDENTIAL

[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

[***]

[***]

[***]

[***]


                                      -5-


                                 CONFIDENTIAL

[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

[***]

Cell Site Name & Identification ______________________  Date:_________________

Purchase Order:___________________________________

Metawave Communications Corporation    Grupo IUSACELL S.A. de C.V.

By:____________________________        By:____________________________________

Name:__________________________        Name:__________________________________

Title:_________________________        Title:_________________________________

Date:__________________________        Date:__________________________________

                                    Comments
                                    --------

______________________________________________________________________________


______________________________________________________________________________


                                      -6-

                                 CONFIDENTIAL

[***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                                                   EXHIBIT 10.25

March 10,  2000



Mr. Stuart Fuhlendorf
1396 Gold Mine Lane
Evergreen, CO  80439

Dear Stuart:

On behalf of Metawave Communications Corporation, it is my pleasure to offer you
the position of Senior Vice President and Chief Financial Officer, as detailed
in this letter.  You will report to Bob Hunsberger, Chief Executive Officer and
President, with a start date to be mutually agreed upon.

Base compensation for your duties will be [***] per year, to be earned and paid
monthly, equivalent to [***] per pay period, subject to federal income tax and
other normal withholding. Metawave has a bi-weekly payroll schedule where
paydays occur every other Thursday. You will also be eligible for Metawave's
bonus program in effect at the time, appropriate for your grade.

You are eligible for our Medical, Dental and Life insurance starting on the
first day of the month following or equivalent to your hire date.   You are also
eligible to participate in our 401(k) program.  You will be eligible to enroll
on the first of the quarter following your employment date.  These programs are,
of course, subject to change.  A summary outlining the Metawave benefit package
is enclosed.

Your performance and salary will be reviewed once per year.  Your first
performance review will occur on or around January 2001.  Any salary adjustment
will be determined based on performance, and will be set by your manager on an
annual basis.

A recommendation will be made to the Board of Directors that you be granted an
option to purchase [***] shares of Metawave common stock (subject to any stock
splits or other changes in capitalization that may be effected in connection
with Metawave's initial public offering).  The price will be determined by the
board of directors at the board meeting following your hire date.  One quarter
of the shares vest after one year of employment with the remaining three
quarters progressively vesting on a monthly basis over the next three (3)
subsequent years. [***].

In the event that the Company terminates your employment without cause, you will
receive a lump sum severance payment within 30 days of such termination equal to
six months' base salary, in exchange for executing the normal severance release
agreement.

                                 CONFIDENTIAL
  [***] CONFIDENTIAL TREATEMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY
                 WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

Page 2
Stuart Fuhlendorf
March 10, 2000



Metawave is prepared to assist you in your move to the Seattle-area by paying
the costs of moving your household goods from Evergreen, CO  to Washington.
These costs include packing, transporting, insurance and unloading of your
household goods.  This includes moving two automobiles.  Relocation costs
include 30 days of storage for your household goods upon arrival in Washington.
Metawave will also pay for temporary living  upon your arrival in the Seattle
area.  Temporary living will be paid through  June 2000, if needed.
(Temporary living is defined as reasonable apartment rent.  Costs for food will
be your expense.)

Additionally, Metawave is prepared to pay for expenses associated with the sale
of your home in Colorado and the purchase of a new residence in the Seattle
area, as follows:

Closing costs for sale of Colorado home
- ---------------------------------------
 .  Appraisal fees
 .  Lawyer fees
 .  Title insurance
 .  Revenue stamps
 .  Recording fees
 .  Brokerage fees
 .  Unique closing costs

Closing costs for purchase of home in Seattle area
- --------------------------------------------------
 .  Appraisal fees
 .  Lawyer fees
 .  Title insurance
 .  Revenue stamps
 .  Recording fees
 .  Unique closing costs including county fees
 .  Inspection fees
 .  Buyers points/origination fees not to exceed $6,000.  This will not be
   grossed up.

Any fees or costs that are not tax deductible will be grossed up, otherwise
actual expenses will be reimbursed.  This represents Metawaves complete
commitment to relocation expenses.  Should you leave the company prior to
completing 12 months of employment, you will be required to repay Metawave (on a
prorated basis).

It is the policy of Metawave that employees not disclose nor use any
confidential information from prior employment while employed by Metawave.  If
you have entered into specific Non-Disclosure agreements, non-competitive
agreements, or any other agreements with any previous employer that might affect
or restrict your employment with us, please provide us with a copy so that we
can ensure that both you and Metawave abide by the terms thereof.

                                 CONFIDENTIAL
  [***] CONFIDENTIAL TREATEMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY
                 WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

Page 3
Stuart Fuhlendorf
March 10, 2000



Employment with Metawave is at the mutual consent of each employee and the
company.  Accordingly, while Metawave has every expectation that employment
relationships will be mutually beneficial and rewarding, both you and Metawave
retain the right to terminate the employment relationship at will, at any time,
with or without cause.  In addition, you will be required to read and comply
with the policies and procedures as outlined in the Metawave Employee Handbook
during your employment with the company.

This offer represents the entire offer of Metawave and supersedes any prior
verbal or written agreements. This offer will remain open until 5:00 p.m. on
Monday, March 13, 2000. As a condition of your employment, you are required to
sign a copy of the enclosed Confidentiality Agreement (which should be returned
to Human Resources). You will be required to provide your proof of
identification and your proof of your right to work in the United States to
Human Resources by your third day of employment.

Stuart, we are excited about you joining our team, and we hope you will be able
to achieve both your personal and professional objectives here at Metawave.  If
we can answer any questions, please feel free to call Bob Hunsberger at 425-702-
5623.

Please sign your acceptance below and return the original to me.  The copy is
for your records.

Sincerely,

METAWAVE COMMUNICATIONS CORPORATION

/s/ Monica Chester-Bristow
- --------------------------------------
Monica Chester-Bristow
Director, Human Resources

This will acknowledge my acceptance of this offer of employment.

/s/ Stuart Fuhlendorf
- --------------------------------------
Stuart Fuhlendorf

March 10, 2000
- --------------------------------------
Date

                                 CONFIDENTIAL
  [***] CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS FILED SEPARATELY
                 WITH THE SECURITIES AND EXCHANGE COMMISSION.


<PAGE>

                                                                   EXHIBIT 10.26

                      METAWAVE COMMUNICATIONS CORPORATION

                                2000 STOCK PLAN

     1.   Purposes of the Plan.  The purposes of this 2000 Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants and
to promote the success of the Company's business. Options granted under the Plan
may be Incentive Stock Options or Nonstatutory Stock Options, as determined by
the Administrator at the time of grant of an option and subject to the
applicable provisions of Section 422 of the Code and the regulations promulgated
thereunder. Stock purchase rights may also be granted under the Plan.

     2.   Definitions.  As used herein, the following definitions shall apply:

          (a)  "Administrator" means the Board or its Committee appointed
pursuant to Section 4 of the Plan.

          (b)  "Affiliate" means an entity other than a Subsidiary (as defined
below) which, together with the Company, is under common control of a third
person or entity.

          (c)  "Applicable Laws" means the legal requirements relating to the
administration of stock option and restricted stock purchase plans under
applicable U.S. state corporate laws, U.S. federal and applicable state
securities laws, the Code, any Stock Exchange rules or regulations and the
applicable laws of any other country or jurisdiction where Options or Stock
Purchase Rights are granted under the Plan, as such laws, rules, regulations and
requirements shall be in place from time to time.

          (d)  "Board" means the Board of Directors of the Company.

          (e)  "Cause" for termination of a Participant's Continuous Service
Status will exist if the Participant is terminated for any of the following
reasons:  (i) Participant's willful failure substantially to perform his or her
duties and responsibilities to the Company or deliberate violation of a Company
policy; (ii) Participant's commission of any act of fraud, embezzlement,
dishonesty or any other willful misconduct that has caused or is reasonably
expected to result in material injury to the Company; (iii) unauthorized use or
disclosure by Participant of any proprietary information or trade secrets of the
Company or any other party to whom the Participant owes an obligation of
nondisclosure as a result of his or her relationship with the Company; or (iv)
Participant's willful breach of any of his or her obligations under any written
agreement or covenant with the Company.  The determination as to whether a
Participant is being terminated for Cause shall be made in good faith by the
Company and shall be final and binding on the Participant.  The foregoing
definition does not in any way limit the Company's ability to terminate a
Participant's employment or consulting relationship at any time as provided in
Section 5(d) below, and the term "Company" will be interpreted to include any
Subsidiary, Parent, Affiliate or successor thereto, if appropriate.

          (f)  "Code" means the Internal Revenue Code of 1986, as amended.
<PAGE>

          (g)  "Committee" means one or more committees or subcommittees of the
Board appointed by the Board to administer the Plan in accordance with Section 4
below.

          (h)  "Common Stock" means the Common Stock of the Company.

          (i)  "Company" means Metawave Communications Corporation, a Delaware
corporation.

          (j)  "Consultant" means any person, including an advisor, who is
engaged by the Company or any Parent, Subsidiary or Affiliate to render services
and is compensated for such services, and any Director of the Company whether
compensated for such services or not.

          (k)  "Continuous Service Status" means the absence of any interruption
or termination of service as an Employee or Consultant.  Continuous Service
Status as an Employee or Consultant shall not be considered interrupted in the
case of:  (i) sick leave; (ii) military leave; (iii) any other leave of absence
approved by the Administrator, provided that such leave is for a period of not
more than ninety (90) days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) in the case of
transfers between locations of the Company or between the Company, its Parents,
Subsidiaries, Affiliates or their respective successors.  A change in status
from an Employee to a Consultant or from a Consultant to an Employee will not
constitute an interruption of Continuous Service Status.

          (l)  "Control Transaction" means:

               (i)   any merger, consolidation, or statutory or contractual
share exchange in which there is no group of persons who held a majority of the
outstanding Common Stock immediately prior to the transaction who continue to
hold, immediately following the transaction, at least a majority of the combined
voting power of the outstanding shares of that class of capital stock (herein,
"Voting Stock") which ordinarily (and apart from rights accruing under special
circumstances) has the right to vote in the election of directors of the Company
(or of any other corporation or entity whose securities are issued in such
transaction wholly or partially in exchange for Common Stock);

               (ii)  any liquidation or dissolution of the Company;

               (iii)  any transaction (or series of related transactions)
involving the sale, lease, exchange or other transfer not in the ordinary course
of business of all, or substantially all, of the assets of the Company; or

               (iv)  any transaction (or series of related transactions) in
which any person (including, without limitation, any natural person, any
corporation or other legal entity, and any person as defined in Sections
13(d)(3) and 14(d)(2) of the Exchange Act, other than the Company or any
employee benefit plan sponsored by the Company):

                     (A)  purchases any Common Stock (or securities convertible
into Common Stock) for cash, securities or any other consideration pursuant to a
tender offer or exchange offer subject to the requirements of the Exchange Act,
or

                                      -2-
<PAGE>

                     (B)  directly or indirectly becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act) of securities of the Company
which, when aggregated with such person's beneficial ownership prior to such
transaction, either (x) represent 30% or more (50% or more if the Company is not
then subject to the requirements of the Exchange Act) (the "Control Percentage")
of the combined voting power of the then outstanding Voting Stock of the
Company, or (y) if such person's beneficial ownership prior to such transaction
already exceeded the applicable Control Percentage, result in an increase in
such holder's beneficial ownership percentage (all such percentages being
calculated as provided in Rule 13d-3(d) under the Exchange Act with respect to
rights to acquire the Company's securities).

          All references in this definition to specific sections of or rules
promulgated under the Exchange Act shall apply whether or not the Company is
then subject to the requirements of the Exchange Act.

          (m)  "Director" means a member of the Board.

          (n)  "Employee" means any person employed by the Company or any
Parent, Subsidiary or Affiliate, with the status of employment determined based
upon such factors as are deemed appropriate by the Administrator in its
discretion, subject to any requirements of the Code or the Applicable Laws. The
payment by the Company of a director's fee to a Director shall not be sufficient
to constitute "employment" of such Director by the Company.

          (o)  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          (p)  "Fair Market Value" means, as of any date, the fair market value
of the Common Stock, as determined by the Administrator in good faith on such
basis as it deems appropriate and applied consistently with respect to
Participants. Whenever possible, the determination of Fair Market Value shall be
based upon the closing price for the Shares as reported in the Wall Street
Journal for the applicable date.

          (q)  "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable Option Agreement.

          (r)  "Involuntary Termination" means termination of a Participant's
Continuous Service Status under the following circumstances: (i) termination
without Cause by the Company or a Subsidiary, Parent, Affiliate or successor
thereto, as appropriate; or (ii) voluntary termination by the Participant within
60 days following (A) a material reduction in the Participant's job
responsibilities, provided that neither a mere change in title alone nor
reassignment following a Control Transaction to a position that is substantially
similar to the position held prior to the Control Transaction shall constitute a
material reduction in job responsibilities; (B) relocation by the Company or a
Subsidiary, Parent, Affiliate or successor thereto, as appropriate, of the
Participant's work site to a facility or location more than 50 miles from the
Participant's principal work site for the Company at the time of the Control
Transaction; or (C) a reduction in Participant's then-current total compensation
by at least 15%, provided that an across-the-board reduction in the salary level
of all other employees or consultants in positions
                                      -3-
<PAGE>

similar to the Participant's by the same percentage amount as part of a general
salary level reduction shall not constitute such a salary reduction.

          (s)  "Listed Security" means any security of the Company that is
listed or approved for listing on a national securities exchange or designated
or approved for designation as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc.

          (t)  "Named Executive" means any individual who, on the last day of
the Company's fiscal year, is the chief executive officer of the Company (or is
acting in such capacity) or among the four most highly compensated officers of
the Company (other than the chief executive officer). Such officer status shall
be determined pursuant to the executive compensation disclosure rules under the
Exchange Act.

          (u)  "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable Option
Agreement.

          (v)  "Option" means a stock option granted pursuant to the Plan.

          (w)  "Option Agreement" means a written document, the form(s) of which
shall be approved from time to time by the Administrator, reflecting the terms
of an Option granted under the Plan and includes any documents attached to or
incorporated into such Option Agreement, including, but not limited to, a notice
of stock option grant and a form of exercise notice.

          (x)  "Option Exchange Program" means a program approved by the
Administrator whereby outstanding Options are exchanged for Options with a lower
exercise price or are amended to decrease the exercise price as a result of a
decline in the Fair Market Value of the Common Stock.

          (y)  "Optioned Stock" means the Common Stock subject to an Option.

          (z)  "Optionee" means an Employee or Consultant who receives an
Option.

          (aa) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code, or any successor provision.

          (bb) "Participant" means any holder of one or more Options or Stock
Purchase Rights, or the Shares issuable or issued upon exercise of such awards,
under the Plan.

          (cc) "Plan" means this 2000 Stock Plan.

          (dd) "Reporting Person" means an officer, Director, or greater than
ten percent stockholder of the Company within the meaning of Rule 16a-2 under
the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under
the Exchange Act.

          (ee) "Restricted Stock" means Shares of Common Stock acquired pursuant
to a grant of a Stock Purchase Right under Section 11 below.

                                      -4-
<PAGE>

          (ff) "Restricted Stock Purchase Agreement" means a written document,
the form(s) of which shall be approved from time to time by the Administrator,
reflecting the terms of a Stock Purchase Right granted under the Plan and
includes any documents attached to such agreement.

          (gg) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act,
as amended from time to time, or any successor provision.

          (hh) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.

          (ii) "Stock Exchange" means any stock exchange or consolidated stock
price reporting system on which prices for the Common Stock are quoted at any
given time.

          (jj) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 below.

          (kk) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code, or any successor
provision.

          (ll) "Ten Percent Holder" means a person who owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary.

     3.   Stock Subject to the Plan.  Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of Shares that may be sold under the Plan
is 1,333,333 Shares of Common Stock plus an annual increase on the first day of
each of the Company's fiscal years beginning in 2001 through 2009 equal to the
lesser of (i) 2,000,000 Shares (ii) five percent (5%) of the Shares outstanding
on the last day of the immediately preceding fiscal year, or (iii) such lesser
number of Shares as the Board shall determine. The Shares may be authorized, but
unissued, or reacquired Common Stock. If an award should expire or become
unexercisable for any reason without having been exercised in full, or is
surrendered pursuant to an Option Exchange Program, the unpurchased Shares that
were subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan. In addition, any Shares of Common
Stock which are retained by the Company upon exercise of an award in order to
satisfy any withholding taxes due with respect to such exercise or purchase
shall be treated as not issued and shall continue to be available under the
Plan. Shares issued under the Plan and later repurchased by the Company pursuant
to any repurchase right which the Company may have shall not be available for
future grant under the Plan.

     4.   Administration of the Plan.

          (a)  General.  The Plan shall be administered by the Board or a
Committee, or a combination thereof, as determined by the Board.  The Plan may
be administered by different administrative bodies with respect to different
classes of Participants and, if permitted by the Applicable Laws, the Board may
authorize one or more officers to make awards under the Plan.

                                      -5-
<PAGE>

          (b)  Committee Composition.  If a Committee has been appointed
pursuant to this Section 4, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time the
Board may increase the size of any Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies (however caused) and remove all members of
a Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws and, in the case of a Committee administering
the Plan in accordance with the requirements of Rule 16b-3 or Section 162(m) of
the Code, to the extent permitted or required by such provisions.

          (c)  Powers of the Administrator.  Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:

               (i)   to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(p) of the Plan;

               (ii)  to select the Employees and Consultants to whom Options and
Stock Purchase Rights may from time to time be granted;

               (iii) to determine whether and to what extent Options and Stock
Purchase Rights are granted;

               (iv)  to determine the number of Shares of Common Stock to be
covered by each award granted;

               (v)   to approve the form(s) of agreement(s) used under the Plan;

               (vi)  to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder, which terms and
conditions include but are not limited to the exercise or purchase price, the
time or times when awards may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option, Optioned Stock, Stock
Purchase Right or Restricted Stock, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;

               (vii) to determine whether and under what circumstances an Option
may be settled in cash under Section 10(c) instead of Common Stock;

               (viii) to implement an Option Exchange Program on such terms and
conditions as the Administrator in its discretion deems appropriate, provided
that no amendment or adjustment to an Option that would materially and adversely
affect the rights of any Optionee shall be made without the prior written
consent of the Optionee;

               (ix)  to adjust the vesting of an Option held by an Employee or
Consultant as a result of a change in the terms or conditions under which such
person is providing services to the Company;

                                      -6-
<PAGE>

               (x)   to construe and interpret the terms of the Plan and awards
granted under the Plan, which constructions, interpretations and decisions shall
be final and binding on all Participants; and

               (xi)  in order to fulfill the purposes of the Plan and without
amending the Plan, to modify grants of Options or Stock Purchase Rights to
Participants who are foreign nationals or employed outside of the United States
in order to recognize differences in local law, tax policies or customs.

     5.   Eligibility.

          (a)  Recipients of Grants.  Nonstatutory Stock Options and Stock
Purchase Rights may be granted to Employees and Consultants. Incentive Stock
Options may be granted only to Employees, provided that Employees of Affiliates
shall not be eligible to receive Incentive Stock Options.

          (b)  Type of Option.  Each Option shall be designated in the Option
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.

          (c)  ISO $100,000 Limitation.  Notwithstanding any designation under
Section 5(b), to the extent that the aggregate Fair Market Value of Shares with
respect to which Options designated as Incentive Stock Options are exercisable
for the first time by any Optionee during any calendar year (under all plans of
the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options
shall be treated as Nonstatutory Stock Options. For purposes of this Section
5(c), Incentive Stock Options shall be taken into account in the order in which
they were granted, and the Fair Market Value of the Shares subject to an
Incentive Stock Option shall be determined as of the grant date of such Option.

          (d)  No Employment Rights.  The Plan shall not confer upon any
Participant any right with respect to continuation of an employment or
consulting relationship with the Company, nor shall it interfere in any way with
such Participant's right or the Company's right to terminate his or her
employment or consulting relationship at any time, with or without Cause.

     6.   Term of Plan.  The Plan shall become effective upon the effective date
of the registration statement on Form S-1 for the initial public offering of the
Company's Common Stock. It shall continue in effect for a term of ten (10) years
thereafter unless sooner terminated under Section 16 of the Plan.

     7.   Term of Option.  The term of each Option shall be the term stated in
the Option Agreement; provided that the term shall be no more than ten years
from the date of grant thereof or such shorter term as may be provided in the
Option Agreement and provided further that, in the case of an Incentive Stock
Option granted to a person who at the time of such grant is a Ten Percent
Holder, the term of the Option shall be five years from the grant date thereof
or such shorter term as may be provided in the Option Agreement.

                                      -7-
<PAGE>

     8.   Limitation on Grants to Employees.  Subject to adjustment as provided
in Section 14 below, the maximum number of Shares that may be subject to Options
and Stock Purchase Rights granted to any one Employee under this Plan for any
fiscal year of the Company shall be 2,000,000 (before giving effect to a stock
split effected in connection with the Company's initial public offering),
provided that this Section 8 shall apply only after such time, if any, as the
Common Stock becomes a Listed Security.

     9.   Option Exercise Price and Consideration.

          (a)  Exercise Price.  The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be such price as is determined
by the Administrator and set forth in the Option Agreement, but shall be subject
to the following:

               (i)   In the case of an Incentive Stock Option

                     (A)  granted to an Employee who at the time of grant is a
Ten Percent Holder, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant; or

                     (B)  granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.

               (ii)  In the case of a Nonstatutory Stock Option, the per share
Exercise Price shall be such price as determined by the Administrator, provided
that if such eligible person is a Named Executive of the Company at the time of
the Option grant, the per share Exercise Price shall be no less than 100% of the
Fair Market Value on the grant date if the Option is intended to qualify as
performance-based compensation under Section 162(m) of the Code.

               (iii) Notwithstanding the foregoing, Options may be granted with
a per Share exercise price other than as required above pursuant to a merger or
other corporate transaction.

          (b)  Permissible Consideration.  The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant) and may consist entirely of
(1) cash; (2) check; (3) delivery of Optionee's promissory note with such
recourse, interest, security and redemption provisions as the Administrator
determines to be appropriate (subject to the provisions of Section 153 of the
Delaware General Corporation Law); (4) cancellation of indebtedness; (5) other
Shares that have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which the Option is exercised,
provided that in the case of Shares acquired, directly or indirectly, from the
Company, such Shares must have been owned by the Optionee for more than six
months on the date of surrender (or such other period as may be required to
avoid the Company's incurring an adverse accounting charge); (6) delivery of a
properly executed exercise notice together with such other documentation as the
Administrator and a securities broker approved by the Company shall require to
effect exercise of the Option and prompt delivery to the Company of the sale or
loan proceeds required to pay the exercise price and any applicable

                                      -8-
<PAGE>

withholding taxes; (7) any combination of the foregoing methods of payment; or
(8) such other consideration and method of payment for the issuance of Shares to
the extent permitted under the Applicable Laws. In making its determination as
to the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company and the Administrator may, in its sole discretion, refuse to accept a
particular form of consideration at the time of any Option exercise.

     10.  Exercise of Option.

          (a)  General.

               (i)   Exercisability.  Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the
Administrator, consistent with the term of the Plan and reflected in the Option
Agreement, including vesting requirements and/or performance criteria with
respect to the Company and/or the Optionee.

               (ii)  Minimum Exercise Requirements.  An Option may not be
exercised for a fraction of a Share. The Administrator may require that an
Option be exercised as to a minimum number of Shares, provided that such
requirement shall not prevent an Optionee from exercising the full number of
Shares as to which the Option is then exercisable.

               (iii) Procedures for and Results of Exercise.  An Option shall be
deemed exercised when written notice of such exercise has been given to the
Company in accordance with the terms of the Option by the person entitled to
exercise the Option and the Company has received full payment for the Shares
with respect to which the Option is exercised. Full payment may, as authorized
by the Administrator, consist of any consideration and method of payment
allowable under Section 9(b) of the Plan, provided that the Administrator may,
in its sole discretion, refuse to accept any form of consideration at the time
of exercise.

     Exercise of an Option in any manner shall result in a decrease in the
number of Shares that thereafter may be available, both for purposes of the Plan
and for sale under the Option, by the number of Shares as to which the Option is
exercised.

               (iv)  Rights as Stockholder.  Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the Shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 14 of the
Plan.

          (b)  Termination of Employment or Consulting Relationship.  Except as
otherwise set forth in this Section 10(b), the Administrator shall establish and
set forth in the applicable Option Agreement the terms and conditions upon which
an Option shall remain exercisable, if at all, following termination of an
Optionee's Continuous Service Status, which provisions may be waived or modified
by the Administrator at any time.  To the extent that the Optionee is not
entitled to exercise an Option at the date of his or her termination of
Continuous Service Status, or if the Optionee (or other person entitled to
exercise the Option) does not

                                      -9-
<PAGE>

exercise the Option to the extent so entitled within the time specified in the
Option Agreement or below (as applicable), the Option shall terminate and the
Optioned Stock underlying the unexercised portion of the Option shall revert to
the Plan. In no event may any Option be exercised after the expiration of the
Option term as set forth in the Option Agreement (and subject to Section 7).

     The following provisions shall apply to the extent an Option Agreement does
not specify the terms and conditions upon which an Option shall terminate upon
termination of an Optionee's Continuous Service Status:

               (i)   Termination other than Upon Disability or Death or for
Cause.  In the event of termination of an Optionee's Continuous Service Status,
such Optionee may exercise an Option for three months following such termination
to the extent the Optionee was entitled to exercise it at the date of such
termination. No termination shall be deemed to occur and this Section 10(b)(i)
shall not apply if (i) the Optionee is a Consultant who becomes an Employee, or
(ii) the Optionee is an Employee who becomes a Consultant.

               (ii)  Disability of Optionee.  In the event of termination of an
Optionee's Continuous Service Status as a result of his or her disability
(including a disability within the meaning of Section 22(e)(3) of the Code),
such Optionee may exercise an Option at any time within 12 months following such
termination to the extent the Optionee was entitled to exercise it at the date
of such termination.

               (iii) Death of Optionee.  In the event of the death of an
Optionee during the period of Continuous Service Status since the date of grant
of the Option, or within 30 days following termination of Optionee's Continuous
Service Status, the Option may be exercised by Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance at any
time within 12 months following the date of death, but only to the extent of the
right to exercise that had accrued at the date of death or, if earlier, the date
the Optionee's Continuous Service Status terminated.

               (iv)  Termination for Cause.  In the event of termination of an
Optionee's Continuous Service Status for Cause, any Option (including any
exercisable portion thereof) held by such Optionee shall immediately terminate
in its entirety upon first notification to the Optionee of termination of the
Optionee's Continuous Service Status. If an Optionee's employment or consulting
relationship with the Company is suspended pending an investigation of whether
the Optionee shall be terminated for Cause, all the Optionee's rights under any
Option likewise shall be suspended during the investigation period and the
Optionee shall have no right to exercise any Option. This Section 10(b)(iv)
shall apply with equal effect to vested Shares acquired upon exercise of an
Option, in that the Company shall have the right to repurchase such Shares from
the Participant at the Participant's original cost for the Shares within 90 days
following termination of Optionee's Continuous Service Status for Cause. Nothing
in this Section 10(b)(iv) shall in any way limit the Company's right to purchase
unvested Shares issued upon exercise of an Option as set forth in the applicable
Option Agreement.

          (c)  Buyout Provisions.  The Administrator may at any time offer to
buy out for a payment in cash or Shares an Option previously granted under the
Plan based on such terms

                                      -10-
<PAGE>

and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

     11.  Stock Purchase Rights.

          (a)  Rights to Purchase.  When the Administrator determines that it
will offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid, and the time within which such person must accept such
offer. The purchase price of Shares subject to Stock Purchase Rights shall be as
determined by the Administrator. The offer to purchase Shares subject to Stock
Purchase Rights shall be accepted by execution of a Restricted Stock Purchase
Agreement in the form determined by the Administrator.

          (b)  Repurchase Option.

               (i)  General. Unless the Administrator determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment with the Company for any reason (including death or disability). The
purchase price for Shares repurchased pursuant to the Restricted Stock Purchase
Agreement shall be the original purchase price paid by the purchaser and may be
paid by cancellation of any indebtedness of the purchaser to the Company. The
repurchase option shall lapse at such rate as the Administrator may determine.

               (ii) Termination for Cause.  In the event of termination of a
Participant's Continuous Service Status for Cause, the Company shall have the
right to repurchase from the Participant vested Shares issued upon exercise of a
Stock Purchase Right at the Participant's original cost for the Shares within 90
days of termination of the Optionee's Continuous Service Status for Cause.
Nothing in this Section 11(b)(ii) shall in any way limit the Company's right to
purchase unvested Shares as set forth in the applicable Restricted Stock
Purchase Agreement.

          (c)  Other Provisions.  The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.  In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.

          (d)  Rights as a Stockholder.  Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company.  No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 14
of the Plan.

     12.  Taxes.

          (a)  As a condition of the exercise of an Option or Stock Purchase
Right granted under the Plan, the Participant (or in the case of the
Participant's death, the person

                                      -11-
<PAGE>

exercising the Option or Stock Purchase Right) shall make such arrangements as
the Administrator may require for the satisfaction of any applicable federal,
state, local or foreign withholding tax obligations that may arise in connection
with the exercise of the Option or Stock Purchase Right and the issuance of
Shares. The Company shall not be required to issue any Shares under the Plan
until such obligations are satisfied. If the Administrator allows the
withholding or surrender of Shares to satisfy a Participant's tax withholding
obligations under this Section 12 (whether pursuant to Section 12(c), (d) or
(f), or otherwise), the Administrator shall not allow Shares to be withheld in
an amount that exceeds the minimum statutory withholding rates for federal and
state tax purposes, including payroll taxes.

          (b)  In the case of an Employee and in the absence of any other
arrangement, the Employee shall be deemed to have directed the Company to
withhold or collect from his or her compensation an amount sufficient to satisfy
such tax obligations from the next payroll payment otherwise payable after the
date of an exercise of the Option or Stock Purchase Right.

          (c)  This Section 12(c) shall apply only after the date, if any, upon
which the Common Stock becomes a Listed Security.  In the case of Participant
other than an Employee (or in the case of an Employee where the next payroll
payment is not sufficient to satisfy such tax obligations, with respect to any
remaining tax obligations), in the absence of any other arrangement and to the
extent permitted under the Applicable Laws, the Participant shall be deemed to
have elected to have the Company withhold from the Shares to be issued upon
exercise of the Option or Stock Purchase Right that number of Shares having a
Fair Market Value determined as of the applicable Tax Date (as defined below)
equal to the amount required to be withheld.  For purposes of this Section 12,
the Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined under the
Applicable Laws (the "Tax Date").

          (d)  If permitted by the Administrator, in its discretion, a
Participant may satisfy his or her tax withholding obligations upon exercise of
an Option or Stock Purchase Right by surrendering to the Company Shares that
have a Fair Market Value determined as of the applicable Tax Date equal to the
amount required to be withheld. In the case of shares previously acquired from
the Company that are surrendered under this Section 12(d), such Shares must have
been owned by the Participant for more than six (6) months on the date of
surrender (or such other period of time as is required for the Company to avoid
adverse accounting charges).

          (e)  Any election or deemed election by a Participant to have Shares
withheld to satisfy tax withholding obligations under Section 12(c) or (d) above
shall be irrevocable as to the particular Shares as to which the election is
made and shall be subject to the consent or disapproval of the Administrator.
Any election by a Participant under Section 12(d) above must be made on or prior
to the applicable Tax Date.

          (f)  In the event an election to have Shares withheld is made by a
Participant and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Participant shall receive
the full number of Shares with respect to which the Option or Stock Purchase
Right is exercised but such Participant shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.

                                      -12-
<PAGE>

     13.   Non-Transferability of Options and Stock Purchase Rights.  Except as
set forth in this Section 13, Options and Stock Purchase Rights may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent or distribution; provided that the
Administrator may in its discretion grant transferable Nonstatutory Stock
Options pursuant to Option Agreements specifying the manner in which such
Nonstatutory Stock Options are transferable. The designation of a beneficiary by
an Optionee will not constitute a transfer. An Option or Stock Purchase Right
may be exercised, during the lifetime of the holder of Option or Stock Purchase
Right, only by such holder or a transferee permitted by this Section 13.

     14.   Adjustments Upon Changes in Capitalization, Merger or Certain Other
Transactions.

           (a)  Changes in Capitalization.  Subject to any required action by
the stockholders of the Company, the number of Shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, the numbers of Shares set forth
in Sections 3(a)(i) and 8 above, and the number of Shares of Common Stock that
have been authorized for issuance under the Plan but as to which no Options or
Stock Purchase Rights have yet been granted or that have been returned to the
Plan upon cancellation or expiration of an Option or Stock Purchase Right, as
well as the price per Share of Common Stock covered by each such outstanding
Option or Stock Purchase Right, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination,
recapitalization or reclassification of the Common Stock, or any other increase
or decrease in the number of issued Shares of Common Stock effected without
receipt of consideration by the Company; provided that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares of Common Stock subject to an Option
or Stock Purchase Right.

          (b)  Dissolution or Liquidation.  In the event of the dissolution or
liquidation of the Company, the Board shall notify each Optionee or holder of
Stock Purchase Rights at least fifteen (15) days prior to such proposed action.
To the extent it has not been previously exercised, each outstanding award will
terminate immediately prior to consummation of the transaction.

          (c)  Corporate Transaction.

               (i)  Corporate Transaction.  In the event of a Corporate
Transaction, each outstanding Option or Stock Purchase Right shall be assumed or
an equivalent option or right shall be substituted by such successor corporation
or a parent or subsidiary of such successor corporation (the "Successor
Corporation"), unless the Successor Corporation does not agree to assume the
award or to substitute an equivalent option or right, in which case such Option
or Stock Purchase Right shall terminate upon the consummation of the
transaction.

                                      -13-
<PAGE>

               (ii)  Control Transaction.  Notwithstanding Section 14(c)(i)
above, the following shall apply under the circumstances described below:

                     (A)  In the event of a Control Transaction in which the
Successor Corporation does not agree to assume or substitute outstanding awards,
the vesting and exercisability of each outstanding Option and Stock Purchase
Right, and the lapsing of any repurchase right in favor of the Company
applicable to Shares issued upon exercise of an award, shall accelerate as to
the number of Shares that would otherwise have vested and been exercisable, or
as to which the Company repurchase right would have lapsed, as of the date 12
months, in the case of a Participant who has been in a service relationship with
the Company for less than 2 years as of the date of consummation of the
transaction, or 24 months, in the case of a Participant who has been in a
service relationship with the Company for at least 2 years as of such date, in
each case assuming the Participant had remained in Continuous Service Status for
such 12 or 24 month period. Such acceleration shall be effective as of
immediately prior to consummation of the transaction. To the extent that an
award is not exercised prior to consummation of a transaction in which the award
is not being assumed or substituted, such award shall terminate upon such
consummation and the Administrator shall notify the Optionee or holder of such
fact at least five (5) days prior to the date on which the Option or Stock
Purchase Right terminates.

                     (B)  Following a Control Transaction in which outstanding
awards were assumed or substituted with equivalent awards by the Successor
Corporation, in the event a Participant's service relationship with the Company
and/or the Successor Corporation is involuntarily terminated without Cause in
connection with, or within 6 months following consummation of, the transaction,
then the vesting and exercisability (or lapse of a repurchase right) applicable
to any assumed or substituted Option or Stock Purchase Right held by the
terminated Participant at the time of termination shall accelerate as to the
number of Shares that would otherwise have vested and been exercisable (or as to
which the repurchase right would have lapsed) as of the date 12 months, in the
case of a Participant who has been in a service relationship with the Company
and/or the Successor Company for less than 2 years from the date of termination
of that relationship, or 24 months, in the case of a Participant who has been in
a service relationship with the Company and/or the Successor Company for at
least 2 years as of such date, in each case assuming the Participant had
remained in Continuous Service Status for such 12 or 24 month period; provided
that the vesting and exercisability (or lapse of any repurchase right) of
assumed or substituted awards held by a person who was a Reporting Person
immediately prior to consummation of the Control Transaction shall accelerate in
full without regard to the length of such person's service relationship with the
Company and/or the Successor Corporation if that relationship is Involuntarily
Terminated in connection with, or within 6 months following consummation of, the
Control Transaction. The acceleration of vesting and lapse of repurchase rights
provided for in the previous sentence shall occur immediately prior to the
effective date of the Participant's termination.

               (iii) For purposes of this Section 14(c), an award shall be
considered assumed, without limitation, if, at the time of issuance of the stock
or other consideration upon a Corporate Transaction or a Control Transaction, as
the case may be, each holder of an award would be entitled to receive upon
exercise of the award the same number and kind of shares of stock or the same
amount of property, cash or securities as such holder would have been entitled

                                      -14-
<PAGE>

to receive upon the occurrence of the transaction if the holder had been,
immediately prior to such transaction, the holder of the number of Shares of
Common Stock covered by the award at such time (after giving effect to any
adjustments in the number of Shares covered by the Option or Stock Purchase
Right as provided for in this Section 14); provided that if such consideration
received in the transaction is not solely common stock of the Successor
Corporation, the Administrator may, with the consent of the Successor
Corporation, provide for the consideration to be received upon exercise of the
award to be solely common stock of the Successor Corporation equal to the Fair
Market Value of the per Share consideration received by holders of Common Stock
in the transaction.

          (d)  Certain Distributions.  In the event of any distribution to the
Company's stockholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option or Stock Purchase Right to reflect the effect of such
distribution.

     15.  Time of Granting Options and Stock Purchase Rights.  The date of grant
of an Option or Stock Purchase Right shall, for all purposes, be the date on
which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator,
provided that in the case of any Incentive Stock Option, the grant date shall be
the later of the date on which the Administrator makes the determination
granting such Incentive Stock Option or the date of commencement of the
Optionee's employment relationship with the Company. Notice of the determination
shall be given to each Employee or Consultant to whom an Option or Stock
Purchase Right is so granted within a reasonable time after the date of such
grant.

     16.  Amendment and Termination of the Plan.

          (a)  Authority to Amend or Terminate.  The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation (other than an adjustment pursuant to Section 14
above) shall be made that would materially and adversely affect the rights of
any Optionee or holder of Stock Purchase Rights under any outstanding grant,
without his or her consent. In addition, to the extent necessary and desirable
to comply with the Applicable Laws, the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as
required.

          (b)  Effect of Amendment or Termination.  No amendment or termination
of the Plan shall materially and adversely affect Options or Stock Purchase
Rights already granted, unless mutually agreed otherwise between the Optionee or
holder of the Stock Purchase Rights and the Administrator, which agreement must
be in writing and signed by the Optionee or holder and the Company.

          (c)  Accounting Issues.  Notwithstanding anything else to the contrary
in this Section 16, the Administrator may at any time amend or adjust the Plan
or an outstanding award issued under the Plan without the consent of the
affected Participant if such amendment or adjustment is necessary to avoid the
Company's incurring adverse accounting charges.

                                      -15-
<PAGE>

     17.  Conditions Upon Issuance of Shares.  Notwithstanding any other
provision of the Plan or any agreement entered into by the Company pursuant to
the Plan, the Company shall not be obligated, and shall have no liability for
failure, to issue or deliver any Shares under the Plan unless such issuance or
delivery would comply with the Applicable Laws, with such compliance determined
by the Company in consultation with its legal counsel.  As a condition to the
exercise of an Option or Stock Purchase Right, the Company may require the
person exercising the award to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by law.

     18.  Reservation of Shares.  The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     19.  Agreements.  Options and Stock Purchase Rights shall be evidenced by
Option Agreements and Restricted Stock Purchase Agreements, respectively, in
such form(s) as the Administrator shall from time to time approve.

     20.  Stockholder Approval.  If required by the Applicable Laws, continuance
of the Plan shall be subject to approval by the stockholders of the Company
within twelve (12) months before or after the date the Plan is adopted.  Such
stockholder approval shall be obtained in the manner and to the degree required
under the Applicable Laws.

                                      -16-

<PAGE>

                                                                    EXHIBIT 23.1

               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

   We consent to the reference to our firm under the captions "Selected
Financial Data" and "Experts" and to the use of our reports dated February 11,
2000, except for Note 14 as to which the date is March 27, 2000, in the
Registration Statement (Form S-1 No. 333-30568) and related Prospectus of
Metawave Communications Corporation.

                                          ERNST & YOUNG LLP

Seattle, Washington
March   , 2000

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

   The foregoing consent is in the form that will be signed upon the completion
of the two for three stock split described in Note 14 to the financial
statements.

                                          ERNST & YOUNG LLP

Seattle, Washington
March 27, 2000


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