WAVERIDER COMMUNICATIONS INC
CONVERTIBLE NOTE
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>CONVERTIBLE NOTE
<TEXT>



                                                                    EXHIBIT 10.3

THIS  CONVERTIBLE NOTE AND THE SECURITIES  ISSUABLE UPON CONVERSION  HEREOF 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 NOTE

Date:    __________, 2001           $__________


         FOR  VALUE  RECEIVED,  WAVERIDER  COMMUNICATIONS  INC.,  a  corporation
organized  under  the laws of the State of Nevada  (the  "Corporation"),  hereby
promises  to pay to the order of CAPITAL  VENTURES  INTERNATIONAL  or any assign
registered  on the books  and  records  of the  Corporation  (individually,  the
"Holder," and collectively  with the holders of all other notes of same like and
tenor, the "Holders") the sum of __________ Dollars  ($__________) on the second
anniversary  of the date  hereof (the  "Scheduled  Maturity  Date"),  and to pay
interest  on the  unpaid  principal  balance  hereof  for each year (or  portion
thereof) that this Note is outstanding  prior to the Effective Date of Mandatory
Conversion  (as defined  herein) in an amount equal to 6% per annum,  compounded
annually.  Interest shall accrue on the unpaid principal balance hereof from the
date hereof  (the  "Issue  Date")  until the  earlier of the  Effective  Date of
Mandatory  Conversion and the date the same becomes due and payable,  whether at
maturity or upon  prepayment,  repayment or otherwise.  Any amounts on this Note
which are not paid when due shall bear  interest  at the rate equal to the lower
of 18% per annum and the highest rate permitted by law from the due date thereof
until the same is paid. Interest shall be calculated based on a 360-day year and
shall  commence  accruing on the Issue Date and, to the extent not  converted in
accordance with the provisions hereof,  shall be payable in arrears at such time
as the outstanding  principal balance hereof with respect to which such interest
has accrued  becomes due and payable  hereunder.  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
Corporation by written notice in accordance with the provisions of this Note.

         This  Note is  being  issued  by the  Corporation  along  with  similar
convertible  term  notes,  some of which are dated  December 8, 2000 and some of
which are dated the date hereof (the "Other Notes" and, together with this Note,
the "Notes"),  pursuant to that certain Securities Purchase Agreement,  dated as
of December 8, 2000,  by and between  the  Corporation  and the other  signatory
thereto (the "Securities Purchase Agreement").

                                       1
<PAGE>

                                    ARTICLE I
                                   PREPAYMENT

         Upon the  occurrence of an Event of Default (as defined  below) and the
election by the Holder to require prepayment,  this Note shall be prepaid by the
Corporation in accordance with the provisions of Article VIII hereof.  This Note
may not be prepaid at the option of the  Corporation  without the prior  written
consent of the Holder.

                                   ARTICLE II
                               CERTAIN DEFINITIONS

         The following terms shall have the following meanings:

         A.  "Closing Bid Price"  means,  for any  security as of any date,  the
closing bid price of such  security on the principal  United  States  securities
exchange or trading  market where such  security is listed or traded as reported
by Bloomberg  Financial  Markets (or a comparable  reporting service of national
reputation selected by the Corporation and reasonably acceptable to Holders of a
majority of the aggregate  principal amount  represented by the then outstanding
Notes ("Majority  Holders") if Bloomberg Financial Markets is not then reporting
closing  bid prices of such  security)  (collectively,  "Bloomberg"),  or if the
foregoing  does not apply,  the last reported sale price of such security in the
over-the-counter  market on the  electronic  bulletin board for such security as
reported by  Bloomberg,  or, if no sale price is reported  for such  security by
Bloomberg,  the average of the bid prices of all market makers for such security
as reported in the "pink sheets" by the National Quotation Bureau, Inc., in each
case for such date or, if such date was not a trading date for such security, on
the next  preceding  date which was a trading  date.  If the  Closing  Bid Price
cannot be calculated  for such security as of either of such dates on any of the
foregoing  bases,  the Closing Bid Price of such  security on such date shall be
the fair market value as reasonably  determined  by an  investment  banking firm
selected by the Corporation and reasonably  acceptable to the Majority  Holders,
with the costs of such appraisal to be borne by the Corporation.

         B.  "Conversion  Amount" means the portion of the  principal  amount of
this Note being converted plus any accrued and unpaid  interest  thereon through
the  Conversion  Date and, at the option of the Holder,  any penalties due under
Article V and any Default Amounts due under Article VI hereof, each as specified
in the  notice  of  conversion  in the form  attached  hereto  (the  "Notice  of
Conversion").

         C.  "Conversion  Date" means,  for any Optional  Conversion (as defined
below),  the date  specified in the Notice of  Conversion so long as the copy of
the Notice of  Conversion  is faxed (or  delivered  by other means  resulting in
notice) to the  Corporation  at or before 11:59 p.m., New York City time, on the
Conversion Date indicated in the Notice of Conversion;  provided,  however, that
if the Notice of Conversion is not so faxed or otherwise  delivered  before such
time,  then the Conversion  Date shall be the date the Holder faxes or otherwise
delivers the Notice of Conversion to the Corporation.

         D.  "Conversion  Price" shall initially be $2.64 on the Issue Date and,
upon the Effective Date of Mandatory Conversion,  shall be reduced (if lower) to
90% of the Market Price of the  Corporation's  common stock, par value $.001 per
share ("Common Stock") on the Effective Date of Mandatory Conversion,  and shall
be subject to further adjustment as provided herein. For the avoidance of doubt,
no adjustment  to the  Conversion  Price shall be made on the Effective  Date of
Mandatory Conversion pursuant to this definition if such adjustment would result
in an increase to the Conversion Price then in effect.

                                       2
<PAGE>

         E. "Market  Price"  shall mean,  as of any date of  determination,  the
average Closing Bid Price during the twenty (20) trading days immediately  prior
to such date,  but in no event greater than the Closing Bid Price on the trading
day immediately prior to such date.

         F. "Warrants"  shall mean all warrants issued by the Corporation to the
initial Holder pursuant to the Securities Purchase Agreement.

                                   ARTICLE III

                                   CONVERSION

         A.  Conversion at the Option of the Holder.  Subject to the limitations
on conversions  contained in Paragraph D of this Article III, the Holder may, at
any time and from time to time,  convert (an "Optional  Conversion")  all or any
part of the outstanding principal amount of this Note, plus all accrued interest
thereon  through  the  Conversion   Date,  into  a  number  of  fully  paid  and
nonassessable shares of Common Stock determined in accordance with the following
formula:

                                Conversion Amount

                                Conversion Price

         B. Mechanics of Conversion.  In order to effect an Optional Conversion,
a Holder  shall:  (x) fax (or  otherwise  deliver) a copy of the fully  executed
Notice of  Conversion  (in the form of  Exhibit  1) to the  Corporation  and (y)
surrender or cause to be surrendered this Note, duly endorsed, along with a copy
of  the  Notice  of  Conversion  as  soon  as  practicable   thereafter  to  the
Corporation.  Upon receipt by the Corporation of a facsimile copy of a Notice of
Conversion from a Holder, the Corporation shall immediately send, via facsimile,
a  confirmation  to such Holder  stating that the Notice of Conversion  has been
received,  the date upon which the  Corporation  expects  to deliver  the Common
Stock  issuable  upon such  conversion  and the name and  telephone  number of a
contact person at the  Corporation  regarding the  conversion.  The  Corporation
shall not be obligated to issue shares of Common Stock upon a conversion  unless
either this Note is  delivered  to the  Corporation  as provided  above,  or the
Holder  notifies the  Corporation  or the transfer agent that this Note has been
lost,  stolen or destroyed  and delivers the  documentation  to the  Corporation
required by Article IX.H hereof.

                  (i)  Delivery  of  Common  Stock  Upon  Conversion.  Upon  the
surrender of this Note  accompanied by a Notice of Conversion,  the  Corporation
shall,  no later  than the later of (a) the third  business  day  following  the
Conversion  Date and (b) the business day following  the date of such  surrender
(or, in the case of lost,  stolen or destroyed  certificates,  after delivery of
the documentation  required by Article IX.H) (the "Delivery Period"),  issue and
deliver to the Holder or its nominee  (x) that number of shares of Common  Stock
issuable upon  conversion of the portion of this Note being  converted and (y) a
new Note in the form hereof  representing  the balance of the  principal  amount
hereof not being  converted,  if any.  If the  Corporation's  transfer  agent is
participating in the Depository Trust Company ("DTC") Fast Automated  Securities
Transfer program, and so long as the certificates  therefor do not bear a legend
and the Holder thereof is not then required to return such  certificate  for the
placement of a legend thereon, the Corporation shall cause its transfer agent to
electronically  transmit the Common Stock issuable upon conversion to the Holder
by  crediting  the  account of the Holder or its  nominee  with DTC  through its
Deposit   Withdrawal  Agent   Commission   system  ("DTC   Transfer").   If  the
aforementioned  conditions to a DTC Transfer are not satisfied,  the Corporation
shall deliver to the Holder physical certificates  representing the Common Stock
issuable upon  conversion.  Further,  a Holder may instruct the  Corporation  to
deliver to the  Holder  physical  certificates  representing  the  Common  Stock
issuable  upon  conversion  in  lieu of  delivering  such  shares  by way of DTC
Transfer.

                                       3
<PAGE>

                  (ii) Taxes.  The Corporation  shall pay any and all taxes that
may be imposed  upon it with  respect to the issuance and delivery of the shares
of Common Stock upon the conversion of this Note.

                  (iii) No  Fractional  Shares.  If any  conversion of this Note
would  result  in the  issuance  of a  fractional  share of Common  Stock,  such
fractional  share shall be disregarded  and the number of shares of Common Stock
issuable  upon  conversion  of the Notes  shall be the nearest  whole  number of
shares.

         (iv) Conversion Disputes.  In the case of any dispute with respect to a
conversion, the Corporation shall promptly issue such number of shares of Common
Stock as are not disputed in accordance with subparagraph (i) above.

         C.       Mandatory Conversion

                  (i) If at any time all of the Required  Conditions (as defined
in subparagraph (ii) below) are satisfied,  subject to the limitations set forth
in Article  III.D,  the  outstanding  principal  amount of this  Note,  plus all
accrued  interest  thereon,  shall  be  automatically  converted  (a  "Mandatory
Conversion")  into a number  of fully  paid and  nonassessable  shares of Common
Stock at the Conversion  Price.  The Holder shall have the right to waive any or
all of the Required Conditions,  and upon such waiver the Required  Condition(s)
so waived shall be deemed to be satisfied. The date on which all of the Required
Conditions  are  satisfied  is referred to as the  "Effective  Date of Mandatory
Conversion." The Corporation shall use its best efforts to provide the Holder at
least three  business  days' advance  written  notice of the  Effective  Date of
Mandatory  Conversion and shall, in any event, provide the Holder written notice
that the Required Conditions have been satisfied and a Mandatory  Conversion has
occurred  within  two  business  days  after  the  Effective  Date of  Mandatory
Conversion.  Thereafter,  the  Corporation  and the  Holders  shall  follow  the
applicable  conversion  procedures  set forth in Article  III.B  (including  the
requirement  that the Holder  deliver this Note to the  Corporation);  provided,
however, that the Holder shall not be required to deliver a Notice of Conversion
to the Corporation.

         (ii) The "Required Conditions" shall consist of the following:

         (1) the Registration  Statement required to be filed by the Corporation
pursuant to Section 2(a) of the Registration  Rights Agreement,  dated as of the
date  hereof,  by and  between  the  Corporation  and the  initial  Holder  (the
"Registration  Rights  Agreement")  shall have been  declared  effective  by the
Securities and Exchange  Commission (the date of such effectiveness  hereinafter
referred  to  as,  the  "Registration   Statement  Effective  Date")  (it  being
understood that the Corporation  shall comply with its obligations under Article
3 of the  Registration  Rights  Agreement  relating to the  effectiveness of the
Registration Statement);

         (2) all shares of Common Stock  issuable  upon  conversion of the Notes
and exercise of the Warrants are then (a)  authorized and reserved for issuance,
(b)  registered  under the  Securities  Act for  resale by the  Holders  and (c)
eligible to be listed or traded on any of the New York Stock Exchange  ("NYSE"),
the American Stock  Exchange  ("AMEX") or the NASDAQ (or the successor to any of
them);

         (3) no Event of Default  (as  defined  in Article VI below)  shall have
occurred  without  having  been  cured,  and no Event of Default  (as defined in
Article VI of the  Convertible  Notes,  dated  December  8, 2000,  issued by the
Corporation to the initial Holder pursuant to the Securities  Purchase Agreement
(the "First Notes"), shall have occurred without having been cured; and

                                       4
<PAGE>

         (4) all amounts, if any, then accrued or payable under this Note or the
First Notes  (other than  principal  and accrued  interest  that is  convertible
pursuant to the terms hereof or thereof) or the  Registration  Rights  Agreement
shall have been paid.

         (iii) On the  first  anniversary  of the  Effective  Date of  Mandatory
Conversion,   if  all  of  the  Required  Conditions  are  then  satisfied,  the
outstanding  principal  amount of this Note, if any,  plus all interest  accrued
thereon   through  the  Effective  Date  of  Mandatory   Conversion,   shall  be
automatically  converted  (without giving effect to the limitations set forth in
Article  III.D(ii))  into a number  of fully  paid and  nonassessable  shares of
Common Stock at the Conversion Price.

         D.  Limitations  on  Conversions.  The conversion of this Note shall be
subject to the following limitations (each of which limitations shall be applied
independently):

         (i) Cap Amount. If the Corporation is prohibited by Rule 4460(i) of the
National Association of Securities Dealers,  Inc. ("NASD"),  or any successor or
similar rule, or the rules or  regulations of any other  securities  exchange on
which the Common Stock is then listed or traded, from issuing a number of shares
of Common  Stock upon  conversion  of this Note and  exercise of the Warrants in
excess of a prescribed amount (the "Cap Amount"), then the Corporation shall not
issue shares upon  conversion of this Note or exercise of the Warrants in excess
of the Cap Amount; provided, however, that this limitation in this Article III.D
(i) shall not apply and shall be of no further  force and effect  after the date
of the  effectiveness  of the shareholder  approval (the  "Shareholder  Approval
Date") referred to in Section 4(q) of the Securities Purchase Agreement.  In the
event the  Corporation  is prohibited  from issuing  shares of Common Stock as a
result of the operation of this  subparagraph  (i), the Corporation shall comply
with Article V.

                  (ii) No Five  Percent  Holders.  In no event shall a Holder of
the Notes or the Corporation  have the right to convert any portion of this Note
(whether in an Optional Conversion or a Mandatory  Conversion or otherwise) into
shares of Common  Stock or to dispose of any  portion of this Note to the extent
that such right to effect such  conversion  or  disposition  would result in the
Holder or any of its  affiliates  beneficially  owning  more  than  4.99% of the
outstanding   shares  of  Common  Stock.  For  purposes  of  this  subparagraph,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities  Exchange Act of 1934, as amended,  and Regulation 13 D-G thereunder.
To the extent that the  limitation  contained  in this  paragraph  applies,  the
Corporation  may  request a  certification  from the  Holder  setting  forth the
Holder's  determination  that the  Conversion  specified  will not violate  this
limitation.  The  restriction  contained  in this  subparagraph  D shall  not be
altered, amended, deleted or changed in any manner whatsoever unless the holders
of a majority  of the  outstanding  shares of Common  Stock,  the Holder and the
Holders of a majority  of the  outstanding  principal  amount of the Notes shall
approve, in writing, such alteration, amendment, deletion or change.

                                   ARTICLE IV
                      RESERVATION OF SHARES OF COMMON STOCK

         Reserved  Amount.  On the Issue Date,  the  Corporation  shall  reserve
_______________  [200% of Second Closing  Conversion  Shares plus 100% of Second
Closing  Warrant  Shares] shares of its authorized but unissued shares of Common
Stock for issuance  upon  conversion  of the Notes and exercise of the Warrants,
and thereafter  the number of authorized but unissued  shares of Common Stock so
reserved (the "Reserved Amount") shall at all times be sufficient to provide for
the conversion of the Notes in their entirety  (including an amount equal to the
interest  that would  accrue over a two-year  period on the  original  principal
balance  of  this  Note)  at the  Conversion  Price,  taking  into  account  any
adjustments  pursuant to Article  VII  hereof,  and to provide for any shares of
Common  Stock  issued  or then  issuable  as a result  of a  Conversion  Default
hereunder,  the occurrence of an Event of Default hereunder, the exercise of the
Warrants or any other payment  convertible  into shares of Common Stock pursuant
to the terms hereof or the Registration Rights Agreement.

                                       5
<PAGE>

                                    ARTICLE V
                         FAILURE TO SATISFY CONVERSIONS

         A. Conversion Defaults;  Adjustments to Conversion Price. The following
shall  constitute a "Conversion  Default":  (i)  following  the  submission by a
Holder of a Notice of Conversion,  the Corporation  fails for any reason (except
for the reasons  contemplated in Article III.D.) to deliver,  in accordance with
the delivery instructions contained in the Notice of Conversion,  on or prior to
the fifth trading day following the  expiration of the Delivery  Period for such
conversion,  such  number  of shares of  Common  Stock to which  such  Holder is
entitled  upon such  conversion  or (ii) the  Corporation  provides  notice  (or
otherwise  indicates)  to any Holder at any time of its  intention  not to issue
shares of Common Stock upon exercise by any Holder of its  conversion  rights in
accordance  with the terms of the Notes, or (iii) the Corporation is prohibited,
at any time, from issuing shares of Common Stock upon conversion of the Notes to
any Holder  because (a) the  Corporation  does not have  available a  sufficient
number of  authorized  and  unissued  shares of Common Stock or (b) if after the
Shareholder  Approval  Date,  such  issuance  would  exceed the Cap  Amount,  if
applicable. In the case of a Conversion Default described in clauses (i) or (ii)
above,  the  Corporation  shall pay to such  Holder  an amount  equal to (A) the
outstanding  principal  amount  of the  Notes  to be  converted  by such  Holder
multiplied by (B) .18  multiplied  by (C) a fraction,  the numerator of which is
the number of days after such Conversion Default until the Default Cure Date and
the  denominator  of which is 365.  In the event the Holder  elects to take such
payment  in cash,  cash  payment  shall be made to the Holder  within  five days
following any demand for payment by the Holder. In addition, upon the occurrence
of a  Conversion  Default and until the Default  Cure Date,  the Holder shall be
entitled to the remedies set forth in Article VI;  provided,  however,  that the
Holder  shall not be entitled to exercise  the  remedies set forth in Article VI
hereof for a Conversion Default of the type enumerated in Article V(A)(i) hereof
until the tenth trading day after the date that such Conversion  Default remains
uncured.

         "Default  Cure Date"  means (i) with  respect to a  Conversion  Default
described in clause (i) of its definition,  the date the Corporation effects the
conversion of all of the outstanding  Notes subject to the applicable  Notice of
Conversion,  (ii) with respect to a Conversion  Default described in clause (ii)
of its definition,  the date the Corporation  issues freely  tradeable shares of
Common Stock in  satisfaction of all conversions of the Notes in accordance with
Article  III.A,  and (iii) with  respect to a  Conversion  Default  described in
clause (iii) of its definition, the date the prohibition ceases.

                                   ARTICLE VI

                                EVENTS OF DEFAULT

                  A.  Events  of  Default.  In the  event  (each  of the  events
described in clauses  (i)-(x)  below after  expiration  of the  applicable  cure
period (if any) being an "Event of Default"):

                  (i) the Corporation  fails to pay the principal  hereof or any
accrued  and  unpaid  interest  hereon  when  due,  whether  at  maturity,  upon
acceleration  or  otherwise  and such  failure  continues  for a period  of five
trading days after the due date thereof;

                  (ii) the Corporation, prior to the Effective Date of Mandatory
Conversion,  either (a) fails to pay, when due, or within any  applicable  grace
period,  any payment  with respect to any  indebtedness  of the  Corporation  in
excess of $100,000 due to any third party (including, without limitation, any of
the Other  Notes),  other than  payments  contested by the  Corporation  in good
faith,  or otherwise is in breach or violation of any  agreement for monies owed
or owing in an amount in excess of $100,000  which breach or  violation  permits


                                       6
<PAGE>

the other party thereto to declare a default or otherwise accelerate amounts due
thereunder,  or (b) suffers to exist any other default or event of default under
any agreement binding the Corporation which default or event of default would or
is  likely  to have a  material  adverse  effect  on the  business,  operations,
properties,  prospects or financial condition of the Corporation,  other than as
set forth in Article VI.A(vii);

                  (iii) the Common Stock  (including any of the shares of Common
Stock  issuable  upon  conversion  of the Notes or exercise of the  Warrants) is
suspended from trading on any of, or is not listed (and  authorized) for trading
on at least one of, the NYSE, the AMEX or NASDAQ for an aggregate of ten trading
days in any nine month period;

                  (iv) the Registration Statement referred to in Section 2(a) of
the Registration  Rights Agreement has not been declared  effective by the first
anniversary  of the  Issue  Date or such  Registration  Statement,  after  being
declared  effective,  cannot be  utilized  by the  Holders  of the Notes for the
resale of all of their  Registrable  Securities (as defined in the  Registration
Rights  Agreement),  provided,  however,  that if the Registration  Statement is
declared effective by the first anniversary of the Issue Date then within any 12
month  period  thereafter  there  may  be two  distinct  periods,  such  periods
aggregating a total of 30 days or less, during which the Registration  Statement
cannot  be  utilized  by the  Holders  of the  Notes  for the  resale  of  their
Registrable Securities;

                  (v) the Corporation fails to remove any restrictive  legend on
any certificate or any shares of Common Stock issued to the Holders of the Notes
upon  conversion  of any of the Notes as and when  required  by this  Note,  the
Securities  Purchase  Agreement or the Registration  Rights Agreement (a "Legend
Removal  Failure"),  and any such failure continues uncured for ten trading days
after the Corporation has been notified thereof in writing by the Holder;

                  (vi) the Corporation  provides notice (or otherwise indicates)
to any  Holder of the Notes,  including  by way of public  announcement,  at any
time, of its intention not to issue,  or otherwise  refuses to issue,  shares of
Common Stock to any Holder of the Notes upon  conversion in accordance  with the
terms of the Notes;

                  (vii) the Corporation otherwise shall breach any material term
hereunder  (other than as set forth in Article  VI.A(i) and  including,  without
limitation,  Article IV hereof) or under the Securities Purchase Agreement,  the
Registration  Rights Agreement or the Warrants,  including,  without limitation,
the  representations  and  warranties  contained  therein  and if such breach if
curable,  remains  uncured for more than 20 days after the  Corporation has been
notified thereof in writing by the Holder or the Corporation fails to diligently
pursue the cure of such breach during such 20-day period;

                  (viii) the  Corporation or any  subsidiary of the  Corporation
shall make an assignment  for the benefit of creditors,  or apply for or consent
to the appointment of a receiver or trustee for it or for a substantial  part of
its  property or  business,  or such a receiver or trustee  shall  otherwise  be
appointed;

                  (ix)  bankruptcy,  insolvency,  reorganization  or liquidation
proceedings or other  proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the  Corporation  or
any subsidiary of the Corporation and if instituted against the Corporation by a
third party, shall not be dismissed within 60 days of their initiation; or

                  (x) if applicable,  the minimum vote specified in Rule 4460(i)
of the NASD with respect to the approval  and  ratification  of the terms of the
Securities   Purchase   Agreement  and  the  consummation  of  the  transactions
contemplated  thereby  by the  Corporation  shall not have been  obtained  on or
before the 90th day after the Registration Statement Effective Date;

                                       7
<PAGE>

then,  upon the  occurrence of any such Event of Default,  at the option of each
Holder,  exercisable  in whole  or in part at any time and from  time to time by
delivery of a Default  Notice (as defined below) to the  Corporation  while such
Event of Default continues,  the Corporation shall pay such Holder (and upon the
occurrence of an Event of Default specified in subparagraphs  (viii) and (ix) of
this  Paragraph A, the  Corporation  shall be required to pay the  Holders),  in
satisfaction  of its obligation to pay the outstanding  principal  amount of the
Notes and accrued and unpaid  interest  thereon,  an amount equal to the Default
Amount and such Default  Amount shall become due and payable  immediately  after
the  three  day  period  following  the  Corporation's  delivery  of  a  Default
Announcement  (as  defined  below)  to all of the  Holders  in  response  to the
Corporation's  initial  receipt of a Default  Notice from a Holder of the Notes,
all without  demand,  presentment or notice,  all of which are hereby  expressly
waived, together with all costs, including,  without limitation,  legal fees and
expenses of  collection,  and the Holder shall be entitled to exercise all other
rights and remedies  available at law or in equity.  For the avoidance of doubt,
the  occurrence  of any event  described in clauses  (vi),  (viii) or (ix) above
shall  immediately  constitute  an Event of Default  and there  shall be no cure
period.

                  Following the  submission of a Default  Notice,  the Holder of
this Note shall have the right to continue to submit  Notices of Conversion  and
to convert  this Note until  such time (if any) as the  Corporation  pays to the
Holder the Default Amount.

                  Upon  the   occurrence   of  an  Event  of   Default   or  the
Corporation's  receipt of any Default  Notice  hereunder  (other than during the
three  trading  day period  following  the  Corporation's  delivery of a Default
Announcement  (as  defined  below)  to all of the  Holders  in  response  to the
Corporation's  initial  receipt of a Default Notice from a Holder of the Notes),
the  Corporation  shall  immediately  (and in any event  within one  trading day
following such receipt) deliver a written notice (a "Default  Announcement")  to
all Holders of the Notes  stating the date upon which the  Corporation  received
such Default Notice and the amount of the Notes covered thereby. The Corporation
shall not redeem any Notes  during the three  trading day period  following  the
delivery of a required Default Announcement hereunder. At any time and from time
to time  during  such three  trading  day  period,  each Holder of the Notes may
request  (either orally or in writing)  information  from the  Corporation  with
respect to the instant  default  (including,  but not limited to, the  aggregate
principal amount outstanding of Notes covered by Default Notices received by the
Corporation) and the Corporation  shall furnish (either orally or in writing) as
soon as practicable such requested information to such requesting Holder. In the
event the Corporation is not able to repay all of the  outstanding  Notes within
five  trading  days after its  receipt  of a notice  requiring  such  payment (a
"Default  Notice") the  Corporation  shall repay the  outstanding  Notes to each
Holder pro rata,  based on the total  amounts due under the Notes at the time of
repayment  included by such Holder in all Default Notices delivered prior to the
date upon which such  repayment is to be effected  relative to the total amounts
due under  all Notes at the time of  repayment  included  in all of the  Default
Notices delivered prior to the date upon which such repayment is to be effected;
provided,  however, the foregoing shall not constitute a waiver by any Holder of
its rights to payment  in full of the total  Default  Amount due under each such
Holder's Notes.

         B. Definition of Default Amount. The "Default Amount" with respect to a
Note means an amount equal to the greater of:

                  (i)               V                   X   M (if determinable)
                           --------------------
                                  C P

         and      (ii)     V   x   115%

                                       8
<PAGE>

where:

         "V" means the aggregate  principal  amount of the Notes being paid plus
all accrued and unpaid interest thereon through the payment date;

         "CP" means the Conversion Price; and

         "M" means with respect to all repayments  other than  redemptions,  the
highest  Closing Bid Price of the  Corporation's  Common Stock during the period
beginning on the date on which the  Corporation  receives the Default Notice and
ending on the date  immediately  preceding  the date of payment  of the  Default
Amount.

                                   ARTICLE VII
                       ADJUSTMENTS TO THE CONVERSION PRICE

         The Conversion  Price shall be subject to adjustment  from time to time
as follows:

         A. Stock Splits, Stock Dividends,  Etc. If, at any time on or after the
Issue Date, the number of  outstanding  shares of Common Stock is increased by a
stock split, stock dividend, combination, or other similar event, the Conversion
Price shall be proportionately  reduced,  or if the number of outstanding shares
of  Common  Stock  is  decreased  by  a  reverse  stock  split,  combination  or
reclassification  of shares,  or other similar event, the Conversion Price shall
be  proportionately  increased.  In such event, the Corporation shall notify the
Corporation's  transfer  agent of such  change on or before the  effective  date
thereof.

         B. Adjustment Due to Merger, Consolidation,  Etc. If there shall be (i)
any  reclassification or change of the outstanding shares of Common Stock (other
than a change in par value,  or from par value to no par  value,  or from no par
value to par value,  or as a result of a subdivision or  combination),  (ii) any
consolidation  or merger of the Corporation  with any other entity (other than a
merger in which the  Corporation  is the surviving or continuing  entity and its
capital stock is unchanged),  (iii) any sale or transfer of all or substantially
all of the assets of the  Corporation  or (iv) any share  exchange  pursuant  to
which all of the  outstanding  shares of Common Stock are  converted  into other
securities  or property  (each of (i) - (iv) above being a "Corporate  Change"),
then the Holders of the Notes shall  thereafter  have the right to receive  upon
conversion,  in lieu of the  shares of Common  Stock  otherwise  issuable,  such
shares of stock,  securities  and/or other property as would have been issued or
payable in such  Corporate  Change with respect to or in exchange for the number
of shares of Common Stock which would have been  issuable  upon  conversion  had
such  Corporate  Change  not  taken  place,  and in any such  case,  appropriate
provisions (in form and substance  reasonably  satisfactory  to the Holders of a
majority of the principal  amount of the Notes then  outstanding)  shall be made
with respect to the rights and  interests of the Holders of the Notes to the end
that the economic  value of the Notes are in no way diminished by such Corporate
Change and that the provisions hereof  (including,  without  limitation,  in the
case of any such consolidation,  merger or sale in which the successor entity or
purchasing  entity  is not  the  Corporation,  an  immediate  adjustment  to the
Conversion  Price so that the Conversion Price  immediately  after the Corporate
Change  reflects  the  same  relative  value  as  compared  to the  value of the
surviving  entity's common stock that existed  between the Conversion  Price and
the value of the Corporation's  Common Stock immediately prior to such Corporate
Change)  shall  thereafter be  applicable,  as nearly as may be  practicable  in
relation to any shares of stock or securities  thereafter  deliverable  upon the
conversion thereof. The Corporation shall not effect any Corporate Change unless
(i) each Holder of the Notes has received  written notice of such transaction at
least 30 days  prior  thereto,  but in no event  later than 20 days prior to the
record date for the determination of shareholders  entitled to vote with respect
thereto  and  (ii) the  resulting  successor  or  acquiring  entity  (if not the
Corporation)  assumes by written  instrument  (in form and substance  reasonably


                                       9
<PAGE>

satisfactory to the Majority  Holders) the  obligations of the Notes.  The above
provisions  shall  apply  regardless  of whether or not there  would have been a
sufficient  number of  shares  of Common  Stock  authorized  and  available  for
issuance  upon  conversion  of the  Notes  outstanding  as of the  date  of such
transaction,   and  shall  similarly  apply  to  successive   reclassifications,
consolidations, mergers, sales, transfers or share exchanges.

         C.  Adjustment  Due to  Distribution.  If, at any time  after the Issue
Date, the Corporation  shall declare or make any  distribution of its assets (or
rights  to  acquire  its  assets)  to  holders  of  Common  Stock  as a  partial
liquidating  dividend,  by way of return of capital or otherwise  (including any
dividend or distribution to the Corporation's shareholders in cash or shares (or
rights to acquire shares) of capital stock of a subsidiary  (i.e. a spin-off) (a
"Distribution"),  then the  Holders  of the Notes  shall be  entitled,  upon any
conversion  of the Notes after the date of record for  determining  shareholders
entitled to such Distribution,  to receive the amount of such assets which would
have been  payable to the  Holder  with  respect  to the shares of Common  Stock
issuable upon such  conversion had such Holder been the holder of such shares of
Common Stock on the record date for the  determination of shareholders  entitled
to such Distribution.  If the Distribution involves rights, warrants, options or
any other form of  convertible  securities  and the right to exercise or convert
such  securities  would  expire  in  accordance  with  its  terms  prior  to the
conversion of this Note,  then the terms of such  securities  shall provide that
such exercise or convertibility right shall remain in effect until 30 days after
the date the  Holder  of the  Notes  receive  such  securities  pursuant  to the
conversion hereof.

         D. Issuance of Other Securities. If, at any time prior to the Effective
Date of Mandatory Conversion,  the Corporation shall issue (other than issuances
to  employees,  consultants,  officers and  directors  pursuant to the Company's
stock  option  plans,  to  the  extent  consistent  with  past  practices),  any
securities   which  are  convertible  into  or  exchangeable  for  Common  Stock
("Convertible  Securities") at a conversion price or exchange rate which is more
favorable  to the holders of such  Convertible  Securities  than the  Conversion
Price  mechanism  provided for herein,  then, at the option of the Holder,  such
conversion price or exchange rate shall be applicable hereto.

         E.  Purchase  Rights.  If,  at any  time  after  the  Issue  Date,  the
Corporation  issues any  Convertible  Securities  or rights to  purchase  stock,
warrants,  securities  or other  property  ("Purchase  Rights")  pro rata to the
record holders of any class of Common Stock,  then the Holders of the Notes will
be entitled to acquire,  upon the terms applicable to such Purchase Rights,  the
aggregate  Purchase  Rights which such Holder could have acquired if such Holder
had held  the  number  of  shares  of  Common  Stock  acquirable  upon  complete
conversion of the Notes (without giving effect to the  limitations  contained in
Article  III.D)  immediately  before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.

         F. Adjustment For Below Market Issuances.  Except as otherwise provided
in Paragraphs A and B of this Article VII, if, at any time after the Issue Date,
the Corporation  issues or sells any shares of Common Stock for no consideration
or for a  consideration  per share less than the Market Price (as defined in the
Warrant)  on the date of  issuance  (a  "Dilutive  Issuance"),  then,  effective
immediately upon the Dilutive Issuance the Conversion Price shall be adjusted in
the same manner as the Exercise  Price of the  Warrants is adjusted  pursuant to
Sections 4(a) and 4(b) of the Warrants,  which Sections are incorporated  herein
by reference. All determinations of the number of shares of Common Stock sold by
the  Corporation  and the  consideration  per share received by the  Corporation
therefore shall be made in the manner set forth in Sections 4(a) and 4(b) of the
Warrants.

                                       10
<PAGE>

         G. Notice of  Adjustments.  Upon the  occurrence of each  adjustment or
readjustment  of  the  Conversion  Price  pursuant  to  this  Article  VII,  the
Corporation,   at  its  expense,  shall  promptly  compute  such  adjustment  or
readjustment  and prepare and furnish to each Holder of the Notes a  certificate
setting forth such  adjustment or  readjustment  and showing in detail the facts
upon which such adjustment or readjustment is based. The Corporation shall, upon
the  written  request at any time of any  Holder of the  Notes,  furnish to such
Holder a like  certificate  setting forth (i) such  adjustment or  readjustment,
(ii) the  Conversion  Price at the time in effect and (iii) the number of shares
of Common Stock and the amount, if any, of other securities or property which at
the time would be received upon conversion of any Note.

         H. Other Action Affecting  Conversion  Price. If the Corporation  takes
any  action  affecting  the Common  Stock  after the date  hereof  that would be
covered by Article  VII.A  through G, but for the manner in which such action is
taken or  structured,  which would in any way  diminish  the value of this Note,
then the  Conversion  Price  shall be  adjusted  in such  manner as the Board of
Directors of the Company shall in good faith determine to be equitable under the
circumstances.

                                  ARTICLE VIII

                               OPTIONAL REDEMPTION

                  A.  Redemption  Events.  In the  event  (each  of  the  events
described  in  clauses  (i) - (iii)  below  being  a  "Redemption  Event"),  the
Corporation shall:

                  (i) sell, convey or dispose of all or substantially all of its
assets (the presentation of any such transaction for shareholder  approval being
conclusive  evidence  that  such  transaction   involves  the  sale  of  all  or
substantially all of the assets of the Corporation);

                  (ii)  merge,  consolidate  or  engage  in any  other  business
combination  with any other entity  (other than  pursuant to a migratory  merger
effected solely for the purpose of changing the jurisdiction of incorporation of
the  Corporation and other than pursuant to a merger in which the Corporation is
the surviving or continuing entity and its capital stock is unchanged); or

                  (iii)  have 50% or more of the  voting  power  of its  capital
stock owned beneficially by one person,  entity or "group" (as such term is used
under Section 13(d) of the Securities Exchange Act of 1934, as amended);

then,  upon the occurrence of any such  Redemption  Event, at the option of each
Holder,  exercisable  in whole  or in part at any time and from  time to time by
delivery of a  Redemption  Notice (as  defined  below) to the  Corporation,  the
Corporation shall redeem the Notes for a redemption  price,  payable in cash, in
an amount  equal to the  Redemption  Amount (as defined  below),  plus all other
ancillary amounts payable hereunder, together with all costs, including, without
limitation, legal fees and expenses.

                  Upon  the  Corporation's  receipt  of  any  Redemption  Notice
hereunder  (other  than  during  the three  trading  day  period  following  the
Corporation's delivery of a Redemption Announcement (as defined below) to all of
the Holders in response to the  Corporation's  initial  receipt of a  Redemption
Notice from a Holder of the Notes),  the Corporation  shall  immediately (and in
any event  within one  trading day  following  such  receipt)  deliver a written
notice (a  "Redemption  Announcement")  to all Holders of the Notes  stating the
date upon which the Corporation  received such Redemption  Notice and the amount
of the Notes  covered  thereby.  At any time and from time to time  during  such
three trading day period, each Holder of the Notes may request (either orally or
in writing)  information  from the  Corporation  with respect to the  applicable
Redemption Event (including,  but not limited to, the aggregate principal amount
outstanding of Notes covered by Redemption  Notices received by the Corporation)
and the  Corporation  shall  furnish  (either  orally or in  writing) as soon as
practicable such requested  information to such requesting  Holder. In the event
the Corporation is not able to redeem all of the  outstanding  Notes within five
trading  days  after  its  receipt  of a notice  of  redemption  (a  "Redemption


                                       11
<PAGE>

Notice"),  the Corporation  shall redeem the outstanding  Notes from each Holder
pro  rata,  based  on the  total  amounts  due  under  the  Notes at the time of
redemption  included by such Holder in all Redemption Notices delivered prior to
the date upon which such redemption is to be effected  relative to the aggregate
amount  due  under all Notes at the time of  redemption  included  in all of the
Redemption  Notices delivered prior to the date upon which such redemption is to
be effected;  provided,  however, the foregoing shall not constitute a waiver by
any Holder of its rights to payment in full of the total  Redemption  Amount due
under each such Holder's Notes pursuant to this Article VIII.

         B.  Definition  of  Redemption  Amount.  The  "Redemption  Amount" with
respect to a Note means an amount equal to the greater of:

                  (i)               V                         X        M
                           --------------------
                                  C P

         and      (ii)     V   x   115%

where:

         "V" means the aggregate  principal  amount of the Notes being  redeemed
plus all accrued and unpaid interest thereon through the redemption date;

         "CP" means the Conversion Price; and

         "M" means  the  greater  of (i) the  highest  Closing  Bid Price of the
Corporation's  Common Stock during the period beginning on the date on which the
Corporation  receives the Redemption  Notice and ending on the date  immediately
preceding the date of payment of the Redemption  Amount and (ii) the fair market
value, as of the date on which the Corporation  receives the Redemption  Notice,
of the  consideration  payable to the holder of a share of Common Stock pursuant
to the  transaction  which triggers the redemption  obligation.  For purposes of
this definition, "fair market value" shall be determined by the mutual agreement
of the Corporation and Holders of a majority-in-interest of the then outstanding
principal  amount of the Notes to be redeemed,  or if such  agreement  cannot be
reached  within  five  trading  days  prior  to the  date of  redemption,  by an
investment banking firm selected by the Corporation and reasonably acceptable to
Holders of a  majority-in-interest  of the then outstanding  principal amount of
the Notes to be  redeemed,  with the costs of such  appraisal to be borne by the
Corporation.

                                   ARTICLE IX
                                  MISCELLANEOUS

         A. Failure or Indulgency Not Waiver. No failure or delay on the part of
any 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:

                                       12
<PAGE>

                  If to the Corporation:

                  WaveRider Communications Inc.
                  255 Consumers Road, Suite 500
                  Toronto, Ontario, Canada MJ21R4
                  Facsimile:       (416) 502-2968
                  Attention:       Scott Worthington

                  with a copy simultaneously transmitted by like means to:

                  Foley, Hoag & Eliot LLP
                  One Post Office Square
                  Boston, MA  02109-2170
                  Facsimile:       (617) 832-7000
                  Attention:       David Broadwin, Esquire

         If to the Holder,  to the address set forth under such Holder's name on
the signature page to the Securities Purchase Agreement executed by such Holder.
Each party shall provide notice to the other parties of any change in address.

         C. Amendment Provision. Except as set forth in Article III.D, this Note
and any provision  hereof may only be amended by an instrument in writing signed
by the  Corporation  and all of the Holders.  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.

         D. Assignability; Selling Restrictions. 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.  Until the Holder  provides  written
notice to the  Corporation of a transfer of this Note, the Corporation may treat
the registered Holder as the owner and holder of this Note for all purposes, and
the  Corporation  shall not be  affected  by any  notice to the  contrary.  Each
transferee  of this Note or any  portion  hereof  shall be bound by the  selling
restrictions  set forth in Section 4(n) of the  Securities  Purchase  Agreement,
which Section is incorporated herein by reference.

         E. Cost of Collection.  If default is made in the payment of this Note,
the  Corporation  shall pay the Holder  hereof  costs of  collection,  including
reasonable attorneys' fees.

         F.  Governing  Law;  Jurisdiction.  This Note shall be  governed by and
construed in accordance  with the laws of the State of New York. The Corporation
irrevocably consents to the jurisdiction of the United States federal courts and
the state  courts  located  in the  State of New York 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 any 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.

                                       13
<PAGE>

         G.  Denominations.  At the request of Holder,  upon  surrender  of this
Note,  the  Corporation   shall  promptly  issue  new  Notes  in  the  aggregate
outstanding  principal amount hereof, in the form hereof, in such  denominations
of at least $100,000 as Holder shall request.

         H. Lost or Stolen Notes.  Upon receipt by the Corporation from a Holder
of (i) evidence of the loss,  theft,  destruction  or mutilation of any 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 any  Note,  the
Corporation  shall  execute  and  deliver  a new Note of like  tenor  and  date.
However,  the Corporation  shall not be obligated to reissue such lost or stolen
Note if the Holder  contemporaneously  requests the  Corporation to convert such
Note.

         I.  Restrictions  on Shares.  The shares of Common Stock  issuable upon
conversion  of this Note may not be sold or  transferred  unless  (i) they first
shall  have  been  registered  under the  Securities  Act and  applicable  state
securities laws, (ii) the Corporation  shall have been furnished with an opinion
of legal counsel (in form,  substance  and scope  customary for opinions in such
circumstances)  to the  effect  that such sale or  transfer  is exempt  from the
registration  requirements  of the  Securities  Act or (iii) they are sold under
Rule 144 under the Act. Except as otherwise provided in the Securities  Purchase
Agreement,  each certificate for shares of Common Stock issuable upon conversion
of this Note that have not been so registered  and that have not been sold under
an  exemption  that  permits  removal  of  the  legend,   shall  bear  a  legend
substantially in the following form, as appropriate:

                  THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE HAVE NOT BEEN
                  REGISTERED  UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  OR
                  THE  SECURITIES  LAWS OF ANY STATE OF THE UNITED  STATES OR IN
                  ANY OTHER JURISDICTION.  THE SECURITIES REPRESENTED HEREBY MAY
                  NOT BE  OFFERED,  SOLD OR  TRANSFERRED  IN THE  ABSENCE  OF AN
                  EFFECTIVE  REGISTRATION  STATEMENT  FOR THE  SECURITIES  UNDER
                  APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED
                  PURSUANT  TO AN  AVAILABLE  EXEMPTION  FROM  THE  REGISTRATION
                  REQUIREMENTS OF THOSE LAWS.

Upon the request of a holder of a certificate  representing any shares of Common
Stock issuable upon  conversion of this Note, the  Corporation  shall remove the
foregoing legend from the certificate and issue to such holder a new certificate
therefor free of any transfer legend, if (i) with such request,  the Corporation
shall have  received  either (A) an opinion of counsel,  in form,  substance and
scope customary for opinions in such circumstances,  to the effect that any such
legend may be removed from such certificate, or (B) satisfactory representations
from the  Holder  and from  brokers  that the  Holder is  eligible  to sell such
security  under Rule 144 or (ii) a registration  statement  under the Securities
Act covering the resale of such  securities  is in effect.  Nothing in this Note
shall (i) limit  the  Corporation's  obligation  under the  Registration  Rights
Agreement,  or (ii) affect in any way the  Holder's  obligations  to comply with
applicable securities laws upon the resale of the securities referred to herein.

         J. Status as Note Holder. On the Effective Date of Mandatory Conversion
and upon the Conversion Date immediately following the submission of a Notice of
Conversion by a Holder of the Notes, as applicable,  (i) the principal amount of
the Notes and the interest  thereon  covered  thereby (other than any portion of
the Notes, if any, which cannot be converted due to the limitations set forth in
Article  III.D.) shall be deemed  converted into shares of Common Stock and (ii)
the  Holder's  rights as a holder of such Notes shall cease and  terminate  (but
only with  respect  to that  portion of the Notes  covered by such  conversion),
excepting only the right to receive certificates for such shares of Common Stock
and to any remedies  provided herein or otherwise  available at law or in equity
to such Holder because of a failure by the  Corporation to comply with the terms


                                       14
<PAGE>

of the  Notes.  Notwithstanding  the  foregoing,  if a Holder  has not  received
certificates for all shares of Common Stock prior to the tenth trading day after
the expiration of the Delivery  Period with respect to a conversion of Notes for
any reason,  then (unless the Holder  otherwise elects to retain its status as a
holder of Common Stock by so notifying the Corporation  within five trading days
after  the  expiration  of such ten  trading  day  period)  the  portion  of the
principal amount and interest thereon subject to such conversion shall be deemed
outstanding  under the Notes and the Corporation  shall, as soon as practicable,
return the Notes to the Holder. In all cases, the Holder shall retain all of its
rights and remedies for the Corporation's failure to convert the Notes.

         K.  Obligation to Cure. If the  Corporation is prohibited  from issuing
shares  of  Common  Stock to a Holder  for any  reason,  the  Corporation  shall
immediately  notify  the  Holders  of Notes of such  occurrence  and shall  take
immediate  action  (including,  if  necessary,   seeking  the  approval  of  its
shareholders) to eliminate any prohibitions under applicable law or the rules or
regulations  of any  stock  exchange,  interdealer  quotation  system  or  other
self-regulatory  organization  with  jurisdiction over the Corporation or any of
its securities on the Corporation's ability to issue shares of Common Stock.

         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. Trading  Days.  For purposes of this Note,  the term  "trading  day"
means any day on which  NASDAQ  or, if the  Common  Stock is not then  traded on
NASDAQ, the principal United States securities  exchange or trading market where
the Common Stock is then listed or traded, is open for trading.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]















                                       15
<PAGE>


         IN WITNESS WHEREOF, the Corporation has caused this Convertible Note to
be executed by its duly authorized officer.

                                         WAVERIDER COMMUNICATIONS INC.


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



























                                       16
<PAGE>


                                                                      Exhibit 1

                              NOTICE OF CONVERSION

To:      WaveRider Communications Inc.
         255 Consumers Road, Suite 500
         Toronto, Ontario
         Canada
         Attention:
         Telecopy:

The undersigned hereby elects to convert  $____________  principal amount of the
Note (the  "Conversion"),  into  shares  of common  stock  ("Common  Stock")  of
WaveRider  Communications,  Inc. (the "Corporation") according to the conditions
of the  Convertible  Note dated  __________,  2001 (the "Note"),  as of the date
written below. If securities are to be issued in the name of a person other than
the  undersigned,  the  undersigned  will pay all  transfer  taxes  payable with
respect thereto. No fee will be charged to the Holder for any conversion, except
for transfer taxes, if any.

The Corporation shall electronically transmit the Common Stock issuable pursuant
to this Notice of  Conversion to the account of the  undersigned  or its nominee
(which is  ________________)  with DTC  through  its  Deposit  Withdrawal  Agent
Commission System ("DTC Transfer") to the extent the Corporation participates in
the Deposit Withdrawal Agent Commission System.

In the event of partial exercise,  please reissue an appropriate Note(s) for the
principal balance which shall not have been converted.

Check Box if Applicable:

         |_|      In lieu of  receiving  the  shares  of Common  Stock  issuable
                  pursuant to this Notice of  Conversion by way of DTC Transfer,
                  the undersigned hereby requests that the Corporation issue and
                  deliver to the  undersigned  or its  nominee  (if  applicable)
                  physical  certificates  representing  such  shares  of  Common
                  Stock.

                           Date of Conversion:__________________________________

                           Applicable Conversion Price:_________________________

                           Amount  of  Accrued   and  Unpaid   Interest  on  the
                           Principal Amount to be converted, if any:____________

                           Default Amount and penalties to be converted, if any:
                           _____________________________________________________

                           Number of Shares of
                           Common Stock to be Issued:___________________________

                           Signature:___________________________________________

                           Name:________________________________________________

                           Address:_____________________________________________




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