THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR WAVE WIRELESS CORPORATION SHALL
HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
WAVE WIRELESS
CORPORATION
Senior Convertible Promissory Bridge Note
U.S. $ 180,000 Issuance Date: December 7, 2005
No.: 9-2005-WV-04 Maturity Date: March 31, 2006
FOR VALUE RECEIVED , the undersigned, Wave Wireless Corporation, a
Delaware corporation (the “ Company ”), hereby
promises to pay to the order of North Sound Legacy International
Ltd. or any future permitted holder of this secured convertible
bridge note (the “ Payee ”), at the principal
office of the Payee set forth herein, or at such other place as the
holder may designate in writing to the Company, the principal sum
of One Hundred Eighty Thousand Dollars ($180,000) or such other
amount as may be outstanding hereunder, together with all accrued
but unpaid interest, in such coin or currency of the United States
of America as at the time shall be legal tender for the payment of
public and private debts and in immediately available funds, as
provided in this secured convertible bridge note (the “
Note ”).
1. Exchange of Principal and Interest into
Qualified Financing . The
outstanding principal amount of this Note together with all accrued
but unpaid interest hereunder (the “ Outstanding
Balance ”), shall automatically be exchanged into shares
issued in an equity or equity based financing or a combination of
equity financings following the Issuance Date with gross proceeds
totaling at least $2,500,000 (the “ Qualified
Financing ”); provided , however ,
that for purposes of determining the number of equity securities
(including warrants) to be received by the Payee upon such
exchange, the Payee shall be deemed to have tendered 120% of the
Outstanding Balance of the Note as payment of the purchase price in
the Qualified Financing. Upon such exchange pursuant to a Qualified
Financing, the Payee shall be deemed a purchaser in such Qualified
Financing and shall be granted all rights afforded a purchaser in
the Qualified Financing. Notwithstanding anything to the contrary
set forth herein, if the number of shares of common stock of the
Company (“Common Stock”) to be issued upon any payment
of principal or interest hereunder, or upon any conversion pursuant
to a Qualified Financing, would cause the number of shares of
Common Stock owned by the Payee, together with its affiliates, at
such time to exceed, when aggregated with all other shares of
Common Stock owned by the Payee and its affiliates at such time,
the number of shares of Common Stock which would result in such
Payee and its affiliates beneficially owning (as determined in
accordance with Section 13(d) of the Securities Exchange Act of
1934 and the rules thereunder) in excess of 9.9% of all of the
Common Stock outstanding at such time; provided, however, that upon
the Payee providing the Company with sixty-one (61) days
notice (the “Waiver Notice”) that Payee would like to
waive this restriction with regard to any or all shares of Common
Stock issuable upon such payment, this provision will be of no
force or effect with regard to all or a portion of the interest
payment amount referenced in the Waiver Notice. The Company
covenants and agrees that the securities issued in any Qualified
Financing shall reflect the foregoing restrictions on the
Payee’s ownership of Common Stock.
2. In
consideration for the loan evidenced by this Note, the Payee shall
be issued Bridge Warrants in the form attached as
Exhibit A for the issuance of two hundred fifty
thousand (250,000) shares of Common Stock at an exercise price of
$.20 per $100,000 of Note principal amount.
3. Voluntary Conversion of Principal and
Interest . At the option
of the Payee, but subject to Section 1 hereof, the Outstanding
Balance of this Note may be converted into Common Stock at a price
per share of $0.15 at any time the Note remains
outstanding.
4. Seniority and Ranking . Except for the amounts outstanding under the
Credit Facility dated September 17, 2004 from Silicon Valley
Bank, which amounts shall not exceed $1,500,000 without the consent
of the Payee, this Note shall rank senior to the Maker’s
currently issued and outstanding indebtedness and equity
securities; provided, however, this Note shall rank pari-passu with
respect to (i) certain other secured promissory notes of the
Company of like tenor herewith, in an aggregate principal amount
not to exceed $1,250,000, inclusive of this Note, to be issued
between September 1, 2005 and January 15, 2006; and
(ii) a secured promissory note of the Company in a principal
amount of $4,153,649.92, dated October 1, 2005. The parties
agree and acknowledge that all amounts due under the terms of this
Note are subordinate to all amounts due under the terms of the
Credit Facility from Silicon Valley Bank.
5. Principal and Interest Payments
.
(a) In the event the Company does not
complete the Qualified Financing, the Company shall repay the
entire principal balance then outstanding on March 31, 2006
(the “ Maturity Date ”).
(b) Interest on the outstanding principal
balance of this Note shall accrue at a rate of ten percent (10%)
per annum. Interest on the outstanding principal balance of the
Note shall be computed on the basis of the actual number of days
elapsed and a year of three hundred and sixty-five (365) days
and shall be payable on the Maturity Date by the Company in cash or
in shares of the Company’s equity securities. Furthermore,
upon the occurrence of an Event of Default, then to the extent
permitted by law, the Company will pay interest to the Payee,
payable on demand, on the outstanding principal balance of the Note
from the date of the Event of Default until payment in full at the
rate of twelve percent (12%) per annum.
(c) At the Company’s sole option, the
Company may prepay the outstanding principal amount of this Note
plus all accrued and unpaid interest in cash at any time without
penalty prior to maturity. All payments made on account of the
indebtedness evidenced by this Note shall be applied first to
accrued but unpaid interest, if any, and the remainder shall be
applied to principal.
6. Non-Business Days . Whenever any payment to be made shall be due
on a Saturday, Sunday or a public holiday under the laws of the
State of New York, such payment may be due on the next succeeding
business day and such next succeeding day shall be included in the
calculation of the amount of accrued interest payable on such
date.
7. Representations and Warranties of the
Company . The Company
represents and warrants to the Payee as follows:
(a) The Company has been duly incorporated and is
validly existing and in good standing under the laws of the state
of Delaware, with full corporate power and authority to own, lease
and operate its properties and to conduct its business as currently
conducted.
(b) This Note has been duly authorized, validly
executed and delivered on behalf of the Company and is a valid and
binding obligation of the Company enforceable against the Company
in accordance with its terms, subject to limitations on enforcement
by general principles of equity and by bankruptcy or other laws
affecting the enforcement of creditors’ rights generally, and
the Company has full power and authority to execute and deliver
this Note and to perform its obligations hereunder.
(c) The execution, delivery and performance of this
Note will not (i) conflict with or result in a breach of or a
default under any of the terms or provisions of, (A) the
Company’s certificate of incorporation or by-laws, or
(B) any material provision of any indenture, mortgage, deed of
trust or other material agreement or instrument to which the
Company is a party or by which it or any of its material properties
or assets is bound, (ii) result in a violation of any material
provision of any law, statute, rule, regulation, or any existing
applicable decree, judgment or order by any court, Federal or state
regulatory body, administrative agency, or other governmental body
having jurisdiction over the Company, or any of its material
properties or assets or (iii) result in the creation or imposition
of any material lien, charge or encumbrance upon any material
property or assets of the Company or any of its subsidiaries
pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which
any of their property or any of them is subject.
(d) No consent, approval or authorization of or
designation, declaration or filing with any governmental authority
on the part of the Company is required in connection with the valid
execution and delivery of this Note.
8. Events of Default . The occurrence of any of the following events
shall be an “ Event of Default ” under this
Note:
(a) the Company shall fail to make the payment of
any amount of any principal outstanding for a period of three
(3) business days after the date such payment shall become due
and payable hereunder; or
(b) the Company shall fail to make any payment of
interest for a period of three (3) business days after the date
such interest shall become due and payable hereunder; or
(c) any representation, warranty or certification
made by the Company herein or in any certificate or financial
statement shall prove to have been false or incorrect or breached
in a material respect on the date as of which made; or
(d) the holder of any indebtedness of the Company or
any of
