Exhibit 10.1
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 9, 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.
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Telephone: ▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Facsimile: 1 416 502 2968
Attention: Chief Executive Officer
If to the Holder:
Wave Wireless Corporation
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
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 or
proceeding. The Corporation further agrees that service of process upon the
Corporation mailed by first class mail shall be deemed in every respect
effective service of process upon the Corporation in any such suit or
proceeding. Nothing herein shall affect the right of the Holder to serve process
in any other manner permitted by law. The Corporation agrees that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
F. Lost or Stolen Notes. Upon receipt by the Corporation of (i) evidence of the
loss, theft, destruction or mutilation of the Note and (ii) (y) in the case of
loss, theft or destruction, of indemnity (without any bond or other security)
reasonably satisfactory to the Corporation, or (z) in the case of mutilation,
upon surrender and cancellation of the Note, the Corporation shall execute and
deliver a new Note of like tenor and date.
G. Payment of Cash. Whenever the Corporation is required to make any cash
payment to the Holder hereunder (whether a upon prepayment, repayment or
otherwise), such cash payment shall be made in U.S. dollars to the Holder within
five business days after delivery by such Holder of a notice specifying that the
Holder elects to receive such payment in cash and the method (e.g., by check,
wire transfer) in which such payment should be made. If such payment is not
delivered within such five business day period, the Holder shall thereafter be
entitled to interest on the unpaid amount at a per annum rate equal to the lower
of twenty-four percent (24%) and the highest interest rate permitted by
applicable law until such amount is paid in full to the Holder.
H. Status as Note Holder. Upon an optional conversion pursuant to Article III
hereof, (i) the principal amount of this Note (including the accrued and unpaid
interest thereon) shall be deemed converted into Conversion Securities as of the
Conversion Date and (ii) the Holder's rights as a Holder of this Note shall
cease and terminate, excepting only the right (A) to receive certificates for
such Conversion Securities and (B) to exercise any remedies provided herein or
otherwise available at law or in equity to the Holder because of a failure by
the Corporation to comply with the terms of this Note.
I. Events of Default. The occurrence of any of the following events
shall be an "Event of Default" under this Note:
1. the Corporation 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
2. the Corporation 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
3. the holder of any indebtedness of the Corporation or any of its
subsidiaries shall accelerate any payment of any amount or amounts of principal
or interest on any indebtedness (the "Indebtedness") (other than the
Indebtedness hereunder) prior to its stated maturity or payment date the
aggregate principal amount of which Indebtedness of all such persons is in
excess of $1,000,000, whether such Indebtedness now exists or shall hereinafter
be created, and such accelerated payment entitles the holder thereof to
immediate payment of such Indebtedness which is due and owing and such
indebtedness has not been discharged in full or such acceleration has not been
stayed, rescinded or annulled within ten (10) business days of such
acceleration; or
4. A judgment or order for the payment of money shall be rendered against
the Corporation or any of its subsidiaries in excess of $250,000 in the
aggregate (net of any applicable insurance coverage) for all such judgments or
orders against all such persons (treating any deductibles, self insurance or
retention as not so covered) that shall not be discharged, and all such
judgments and orders remain outstanding, and there shall be any period of sixty
(60) consecutive days following entry of the judgment or order in excess of
$250,000 or the judgment or order which causes the aggregate amount described
above to exceed $250,000 during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
5. the Corporation shall (i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property or assets, (ii) make a
general assignment for the benefit of its creditors, (iii) commence a voluntary
case under the Bankruptcy Code or under the comparable laws of any jurisdiction
(foreign or domestic), (iv) file a petition seeking to take advantage of any
bankruptcy, insolvency, moratorium, reorganization or other similar law
affecting the enforcement of creditors' rights generally, (v) acquiesce in
writing to any petition filed against it in an involuntary case under the
Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or
domestic), or (vi) take any action under the laws of any jurisdiction (foreign
or domestic) analogous to any of the foregoing; or
6. a proceeding or case shall be commenced in respect of the Corporation or
any of its subsidiaries without its application or consent, in any court of
competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium,
dissolution, winding up, or composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of it or
of all or any substantial part of its assets or (iii) similar relief in respect
of it under any law providing for the relief of debtors, and such proceeding or
case described in clause (i), (ii) or (iii) shall continue undismissed, or
unstayed and in effect, for a period of ninety (90) consecutive days or any
order for relief shall be entered in an involuntary case under the Bankruptcy
Code or under the comparable laws of any jurisdiction (foreign or domestic)
against the Corporation or any of its subsidiaries or action under the laws of
any jurisdiction (foreign or domestic) analogous to any of the foregoing shall
be taken with respect to the Corporation or any of its subsidiaries and shall
continue undismissed, or unstayed and in effect for a period of ninety (90)
consecutive days; or
7. the suspension from listing or the failure of the Common Stock to be
listed on the OTC Bulletin Board for a period of five (5) consecutive trading
days.
K. Remedies Upon An Event of Default. If an Event of Default shall have
occurred and shall be continuing, the Holder of this Note may at any time at its
option declare the entire unpaid principal balance of this Note, together with
all interest accrued hereon, due and payable, and thereupon, the same shall be
accelerated and so due and payable, without presentment, demand, protest, or
notice, all of which are hereby expressly unconditionally and irrevocably waived
by the Corporation. Holder may exercise or otherwise enforce any one or more of
the Holder's rights, powers, privileges, remedies and interests under this Note
or applicable law. No course of delay on the part of the Holder shall operate as
a waiver thereof or otherwise prejudice the right of the Holder. No remedy
conferred hereby shall be exclusive of any other remedy referred to herein or
now or hereafter available at law, in equity, by statute or otherwise.
Notwithstanding the foregoing, Holder agrees that its rights and remedies
hereunder are limited to receipt of cash or shares of the Corporation's equity
securities in the amounts described herein.
L. Remedies Cumulative. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note, at law or in
equity (including a decree of specific performance and/or other injunctive
relief), and nothing herein shall limit a Holder's right to pursue actual
damages for any failure by the Corporation to comply with the terms of this
Note. The Corporation acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holders of the Notes and that the
remedy at law for any such breach may be inadequate. The Corporation therefore
agrees, in the event of any such breach or threatened breach, that the Holders
of the Notes shall be entitled, in addition to all other available remedies, to
an injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.
M. Business Day. For purposes of this Note, the term "business day" means any
day, other than a Saturday or Sunday or a day on which banking institutions in
the State of New York are authorized or obligated by law, regulation or
executive order to close. If any payment to be made hereunder shall be stated to
be or become due on a day which is not a business day, such payment shall be
made on the next following business day and such extension of time shall be
included in computing interest in connection with such payment.
M. Certain Waivers. Borrower and each endorser hereby waive presentment, notice
of nonpayment or dishonor, protest, notice of protest and all other notices in
connection with the delivery, acceptance, performance, default or enforcement of
payment of this Note, and hereby waive all notice or right of approval of any
extensions, renewals, modifications or forbearances which may be allowed.
N. JURY TRIAL WAIVER. BORROWER HEREBY WAIVES, AND HOLDER BY ITS ACCEPTANCE
HEREOF WAIVES, TRIAL BY JURY IN ANY LEGAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF OR RELATED TO THIS NOTE OR THE RELATIONSHIP EVIDENCED HEREBY.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER TO ACCEPT AND RELY UPON THIS
NOTE.
O. Severability. If any provision of this Note shall be prohibited or invalid,
under applicable law, it shall be ineffective only to such extent, without
invalidating the remainder of this Note.
P. Maximum Interest Rate. If the effective interest rate on this Note would
otherwise violate any applicable usury law, then the interest rate shall be
reduced to the maximum permissible rate and any payment received by the Holder
in excess of the maximum permissible rate shall be treated as a prepayment of
the principal of this Note.
Q. Parties In Interest. This Note is binding upon and shall inure to
the benefit of the Corporation and Wave Wireless Corporation, and, except where
prohibited, their successors, representatives and assigns. Unless expressly
stated to the contrary, no other person is intended to have any benefits, rights
or remedies under this Note.
IN WITNESS WHEREOF, the undersigned Wave Wireless Corporation and the
Corporation have caused this Agreement to be duly executed as of the date first
above written.
WAVERIDER COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
WAVE WIRELESS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
