THIS NOTE AND THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR IN ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY
NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE
LAWS.
CONVERTIBLE
PROMISSORY NOTE AGREEMENT
Date: December 7, 2005 $250,000.00
FOR VALUE RECEIVED, WAVERIDER
COMMUNICATIONS INC., a corporation organized under the laws of the
State of Nevada (hereinafter called the “ Borrower
” or the “ Corporation ”), hereby promises
to pay to the order of WAVE WIRELESS CORPORATION or its registered
assigns (the “ Holder ”), the sum of TWO HUNDRED
FIFTY THOUSAND DOLLARS ($250,000.00) on June 7, 2006 (the
“ Scheduled Maturity Date ”), and to pay
interest on the unpaid principal balance hereof at a rate of eight
percent (8%) per annum (except as otherwise provided herein).
Interest shall accrue on the unpaid principal balance hereof
commencing on the date hereof (the “ Issue Date
”), until the same is paid, whether at maturity, or upon
prepayment, repayment, or otherwise. Interest shall be calculated
based on a 365 day year and the principal amount hereof, together
with all accrued and unpaid interest thereon, shall be due and
payable on the Scheduled Maturity Date. All payments of principal
and interest (to the extent not converted in accordance with the
terms hereof) shall be made in, and all references herein to
monetary denominations shall refer to, lawful money of the United
States of America. All payments shall be made at such address as
the Holder shall have given or shall hereafter give to the Borrower
by written notice made in accordance with the provisions of this
Note.
The term “ Note ”
and all references thereto, as used throughout this instrument,
shall mean this instrument as originally executed, or if later
amended or supplemented, then as so amended or supplemented.
ARTICLE I
CERTAIN
DEFINITIONS
The following terms shall have the
following meanings:
A. " Common Stock”
means the Common Stock, par value $0.0001 per share, of the
Corporation.
B. “Conversion
Amount ” means the outstanding principal amount of this
Note, together with all accrued and unpaid interest thereon, on the
Conversion Date.
C. " Conversion Date
” means the date on which this Note is converted into
Conversion Securities.
D. " Conversion
Securities ” means shares of Common Stock.
E. " Conversion Price
” means $0.11815.
F. " Strategic
Transaction ” means the proposed merger between a wholly
owned subsidiary of the Holder and the Borrower.
ARTICLE II
MECHANISM FOR NOTE
EXCHANGE INTO STRATEGIC TRANSACTION
A. Strategic Transaction
Purchase Price Credit . In the event the Strategic Transaction
is consummated, the Note shall be cancelled and the number of
shares of Holder common stock to be issued to the stockholders of
Borrower in the Strategic Transaction shall be reduced by that
number of shares determined by dividing the principal value of the
Note by the Transaction Conversion Price, which shall equal
eighty-five (85%) percent of the per share purchase price for the
Corporation’s common stock implied by the final exchange
ratio in the Strategic Transaction.
ARTICLE III
CONVERSION
A. Optional Conversion .
This Note may be convertible at any time by Holder, at its sole
election, into shares of the Corporation’s common stock at
the Conversion Price.
B. Mechanics of
Conversion .
(i) On the Conversion Date, the
Holder shall surrender or cause to be surrendered this Note, duly
endorsed to the Corporation or the Corporation’s transfer
agent.
(ii) The Corporation shall pay
any and all taxes that may be imposed upon it with respect to the
issuance and delivery of the Conversion Securities upon the
conversion of this Note.
(iii) If the number of
Conversion Securities issuable upon conversion of this Note would
result in fractional shares, in lieu of the fractional shares, the
Corporation shall make a cash payment based upon the Conversion
Price then in effect.
ARTICLE IV
RESERVATION OF
SHARES
A. Reserved Amount . The
Corporation shall reserve 2,500,000 authorized and unissued
shares of Common Stock for issuance upon conversion of this Note
pursuant to Article III.A hereof, and thereafter the number of
authorized but unissued shares of Common Stock so reserved shall
not be decreased and shall at all times be sufficient to provide
for the conversion of this Note pursuant to Article III.A
hereof at the then current Conversion Price (the number of shares
of Common Stock so reserved pursuant to this Article IV.A
being referred to herein as the “ Reserved Amount
”).
ARTICLE V
MISCELLANEOUS
A. Failure or Indulgency Not
Waiver . No failure or delay on the part of the Holder in the
exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
B. Notices . Any notices
required or permitted to be given under the terms of this Note
shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in
the mail, if mailed, or upon receipt or refusal of receipt, if
delivered personally or by courier or confirmed telecopy, in each
case addressed to a party. The addresses for such communications
shall be:
If to the Corporation:
WaveRider Communications, Inc.
255 Consumers Road
Suite 500
Toronto, Ontario
Canada M2J 1R4
Telephone: 1 416 502 3200
Facsimile: 1 416 502 2968
Attention: Chief Executive
Officer
If to the Holder:
Wave Wireless Corporation
1996 Lundy Ave.
San Jose, CA 95131
Telephone: (408) 943-4200
Facsimile: (408) 943-4305
Attention: Dan Rumsey
Each party shall provide notice to
the other parties of any change in address or the address of any
transferee of the Note.
C. Amendment Provision .
This Note and any provision hereof may be amended only by an
instrument in writing signed by the Corporation and the Holder.
D. Assignability . This
Note shall be binding upon the Corporation and its successors and
assigns and shall inure to the benefit of the Holder and its
successors and assigns. Notwithstanding anything to the contrary
contained in this Note, this Note may be pledged and all rights of
the Holder under this Note may be assigned to any affiliate or to
any other person or entity without the consent of the
Corporation.
E. Governing Law;
Jurisdiction . This Note shall be governed by and construed in
accordance with the laws of the State of Nevada applicable to
contracts made and to be performed in the State of Nevada. The
Corporation irrevocably consents to the jurisdiction of the United
States federal courts and the state courts located in the State of
Nevada in any suit or proceeding based on or arising under this
Note and irrevocably agrees that all claims in respect of such suit
or proceeding may be determined in such courts. The Corporation
irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit
