SECURITY AGREEMENT

SECURITY AGREEMENT (as amended, restated, supplemented or otherwise modified
from time to time in accordance herewith and including all attachments, exhibits
and schedules hereto, the “Agreement”), dated as of December 7, 2005, made by
Wave Wireless Corporation, a Delaware corporation (the “Grantor”), in favor of
North Sound Legacy Institutional Fund LLC (the “Secured Party”).

WHEREAS, the Grantor has issued or will issue separate promissory notes to the
Secured Party (the “Notes”); and

WHEREAS, the Secured Party and the Grantor agree that the Grantor execute and
deliver to the Secured Party a security agreement providing for the grant to the
Secured Party of a continuing security interest in all personal property and
assets of the Grantor, all in substantially the form hereof to secure all
Obligations (hereinafter defined).

      NOW, THEREFORE, the parties agree as follows:

 
   
ARTICLE I.
  Definitions

Section 1.1. Definition of Terms Used Herein. All capitalized terms used herein
and not defined herein have the meanings provided therefor in the Notes. All
terms defined in the Uniform Commercial Code (hereinafter defined) as in effect
from time to time and used herein and not otherwise defined herein (whether or
not such terms are capitalized) have the same definitions herein as specified
therein.

Section 1.2. Definition of Certain Terms Used Herein. As used herein, the
following terms have the following meanings:

"Collateral” means all accounts receivable of the Grantor and all personal and
fixture property of every kind and nature, including, without limitation, all
furniture, fixtures, equipment, raw materials, inventory, or other goods,
accounts, contract rights, rights to the payment of money, insurance refund
claims and all other insurance claims and proceeds, tort claims, chattel paper,
documents, instruments, securities and other investment property, deposit
accounts, rights to proceeds of letters of credit and all general intangibles
including, without limitation, all tax refund claims, license fees, patents,
patent licenses, patent applications, trademarks, trademark licenses, trademark
applications, trade names, copyrights, copyright licenses, copyright
applications, rights to sue and recover for past infringement of patents,
trademarks and copyrights, computer programs, computer software, engineering
drawings, service marks, customer lists, goodwill, and all licenses, permits,
agreements of any kind or nature pursuant to which the Grantor possesses, uses
or has authority to possess or use property (whether tangible or intangible) of
others or others possess, use or have authority to possess or use property
(whether tangible or intangible) of the Grantor, and all recorded data of any
kind or nature, regardless of the medium of recording including, without
limitation, all books and records, software, writings, plans, specifications and
schematics; and all proceeds and products of each of the foregoing.

“Default” means any event or circumstance which, with the giving of notice, the
lapse of time, or both, would (if not cured, waived, or otherwise remedied
during such time) constitute an Event of Default.

“Event of Default” has the meaning specified in the Notes.

“Indemnitees” has the meaning specified in Section 7.5(b).

“Lien” means: (i) any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute, or contract, and including a security
interest, charge, claim, or lien arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes; (ii) to the extent not included under clause
(i), any reservation, exception, encroachment, easement, right-of-way, covenant,
condition, restriction, lease or other title exception or encumbrance affecting
property; and (iii) any contingent or other agreement to provide any of the
foregoing.

"Notes” has the meaning assigned to such term in the first recital of this
Agreement.

"Obligations” means all indebtedness, liabilities, obligations, covenants and
duties of the Grantor to the Secured Party of every kind, nature and
description, direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, arising by operation of law
or otherwise, now existing of hereafter arising under or in connection with the
Notes.

“Registered Organization” means an entity formed by filing a registration
document with a United States Governmental Authority, such as a corporation,
limited partnership or limited liability company.

"Security Interest” has the meaning specified in Section 2.1 of this Agreement.

“Uniform Commercial Code” means the Uniform Commercial Code from time to time in
effect in the State of New York.

ARTICLE II. Security Interest

Section 2.1. Security Interest. As security for the payment and performance, in
full of the Obligations, and any extensions, renewals, modifications or
refinancings of the Obligations, the Grantor hereby bargains, sells, conveys,
assigns, sets over, mortgages, pledges, hypothecates and transfers to the
Secured Party, and hereby grants to the Secured Party, their successors and
assigns, a security interest in, all of such Grantor’s right, title and interest
in, to and under the Collateral (the "Security Interest"). The parties agree and
acknowledge that the Security Interest granted hereunder to the Secured Party in
and to the Collateral shall at all times be subordinate in all respects to the
secured interest of Silicon Valley Bank, and shall rank pari passu in all
respects to the secured interest of holders of certain promissory notes of the
Company issued between September 1, 2005 and January 15, 2006, in an amount not
to exceed $5,403,649.90.

Section 2.2. No Assumption of Liability. The Security Interest is granted as
security only and shall not subject the Secured Party to, or in any way alter or
modify, any obligation or liability of the Grantor with respect to or arising
out of the Collateral.

ARTICLE III. Representations and Warranties

The Grantor represents and warrants to the Secured Party that:

Section 3.1. Title and Authority. The Grantor has good and valid rights in and
title to the Collateral with respect to which it has purported to grant a
security interest hereunder and has full power and authority to grant to the
Secured Party the Security Interest and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the consent
or approval of any other Person other than any consent or approval which has
been obtained.

Section 3.2. Filings; Actions to Achieve Perfection. Fully executed Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations containing a
description of the Collateral have been delivered to the Secured Party for
filing in each United States governmental, municipal or other office specified
in Schedule A, which are all the filings, recordings and registrations that are
necessary to publish notice of and protect the validity of and to establish a
legal, valid and perfected security interest in favor of the Secured Party in
respect of all Collateral in which the Security Interest may be perfected by
filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements or with
respect to the filing of amendments or new filings to reflect the change of the
Grantor’s name, location, identity or corporate structure. The Grantor’s name is
listed in the preamble of this Agreement identically to how it appears on its
articles of incorporation or other organizational documents.

Section 3.3. Validity and Priority of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject only to the
filings described in Section 3.2 above and other previously perfected security
interests in the Collateral listed on Schedule 3.3 to this Agreement (“Existing
Liens”), a perfected security interest in all Collateral in which a security
interest may be perfected by filing, recording or registration in the United
States pursuant to the Uniform Commercial Code or other applicable law in the
United States (or any political subdivision thereof) and its territories and
possessions or any other country, state or nation (or any political subdivision
thereof). The Security Interest is and shall be subordinate to any other
Existing Lien on any of the Collateral. Without limiting the generality of the
foregoing, the parties agree and acknowledge that the Security Interest granted
hereunder to the Secured Party in and to the Collateral shall at all times be
subordinate in all respects to the secured interest of Silicon Valley Bank, and
shall rank pari passu in all respects to the secured interest of holders of
certain promissory notes of the Company issued between September 1, 2005 and
January 15, 2006, in an amount not to exceed $5,403,649.90 (together, “Permitted
Liens”).

Section 3.4. Absence of Other Liens. The Grantor’s Collateral is owned by the
Grantor free and clear of any Lien other than Existing Liens. Without limiting
the foregoing and except as set forth on Schedule 3.4 to this Agreement, the
Grantor has not filed or consented to any filing described in Schedule A in
favor of any Person other than the Secured Party, nor permitted the granting or
assignment of a security interest or permitted perfection of any security
interest in the Collateral in favor of any Person other than the Secured Party;
provided, however, Grantor may create additional security interests in and to
the Collateral that rank pari passu with the interests of Secured Party
hereunder in an amount not to exceed $650,000, and such additional interests
shall constitute Permitted Liens hereunder. The Grantor’s having possession of
all instruments and cash constituting Collateral from time to time and the
filing of financing statements in the offices referred to in Schedule A hereto
results in the perfection of such security interest. Such security interest is,
or in the case of Collateral in which the Grantor obtain rights after the date
hereof, will be, a perfected, first priority security interest. Such notices,
filings and all other action necessary or desirable to perfect and protect such
security interest have been duly taken.

Section 3.5. Valid and Binding Obligation. This Agreement constitutes the legal,
valid and binding obligation of the Grantor, enforceable against the Grantor in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (iii) to the extent the indemnification provisions
contained in this Agreement may be limited by applicable federal or state
securities laws.

ARTICLE IV. Covenants

Section 4.1. Change of Name; Location of Collateral; Place of Business, State of
Formation or Organization.

(a) The Grantor shall notify the Secured Party in writing promptly of any change
(i) in its corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of its chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral owned by it
(including the establishment of any such new office or facility), (iii) in its
identity or corporate structure such that a filed filing made under the Uniform
Commercial Code becomes misleading or (iv) in its Federal Taxpayer
Identification Number. In extension of the foregoing, the Grantor shall not
effect or permit any change referred to in the preceding sentence unless all
filings have been made under the Uniform Commercial Code or otherwise that are
required in order for the Secured Party to continue at all times following such
change to have a valid, legal and perfected first priority security interest in
all the Collateral.

(b) Without limiting Section 4.1(a), without the prior written consent of the
Secured Party in each instance, the Grantor shall not change its (i) principal
residence, if it is an individual, (ii) place of business, if it has only one
place of business and is not a Registered Organization, (iii) principal place of
business, if it has more than one place of business and is not a Registered
Organization, or (iv) state of incorporation, formation or organization, if it
is a Registered Organization.

Section 4.2. Records. The Grantor shall maintain, at its own cost and expense,
such complete and accurate records with respect to the Collateral owned by it as
is consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which the Grantor is engaged, but in any event to include complete accounting
records indicating all payments and proceeds received with respect to any part
of the Collateral, and, at such time or times as the Secured Party may
reasonably request, promptly to prepare and deliver to the Secured Party a duly
certified schedule or schedules in form and detail satisfactory to the Secured
Party showing the identity, amount and location of any and all Collateral.

Section 4.3. Periodic Certification; Notice of Changes. In the event there
should at any time be any change in the information represented and warranted
herein or in the documents and instruments executed and delivered in connection
herewith, the Grantor shall immediately notify the Secured Party in writing of
such change (this notice requirement shall be in extension of and shall not
limit or relieve the Grantor of any other covenants hereunder).

Section 4.4. Protection of Security. The Grantor shall, at its own cost and
expense, take any and all actions necessary to defend title to the Collateral
against all persons and to defend the Security Interest of the Secured Party in
the Collateral and the priority thereof against any Lien.

Section 4.5. Inspection and Verification. The Secured Party and such persons as
the Secured Party may reasonably designate shall have the right to inspect the
Collateral, all records related thereto (and to make extracts and copies from
such records) and the premises upon which any of the Collateral is located, to
discuss the Grantor’s affairs with the officers of the Grantor and its
independent accountants and to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of, or any other matter
relating to, the Collateral, including, in the case of collateral in the
possession of any third Person, by contacting any account debtor or third Person
possessing such Collateral for the purpose of making such a verification.
Out-of-pocket expenses in connection with any inspections by representatives of
the Secured Party shall be (a) the obligations of the Grantor with respect to
any inspection after the Secured Party’ demand payment of the Notes or (b) the
obligation of the Secured Party in any other case.

Section 4.6. Taxes; Encumbrances. At their option, the Secured Party may
discharge, Liens other than Existing Liens at any time levied or placed on the
Collateral and may pay for the maintenance and preservation of the Collateral to
the extent the Grantor fails to do so and the Grantor shall reimburse the
Secured Party on demand for any payment made or any expense incurred by the
Secured Party pursuant to the foregoing authorization; provided, however, that
nothing in this Section shall be interpreted as excusing the Grantor from the
performance of, or imposing any obligation on the Secured Party to cure or
perform, any covenants or other obligation of the Grantor with respect to any
Lien or maintenance or preservation of Collateral as set forth herein.

Section 4.7. Use and Disposition of Collateral. The Grantor shall not make or
permit to be made an assignment, pledge or hypothecation of any Collateral or
shall grant any other Lien in respect of the Collateral without the prior
written consent of the Secured Party. The Grantor shall not make or permit to be
made any transfer of any Collateral and the Grantor shall remain at all times in
possession of the Collateral owned by it, other than with respect to Existing
Liens and other liens approved by the Secured Party.

Section 4.8. Insurance/Notice of Loss. Within a reasonable period of time
following the date of this Agreement, Grantor, at its own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Collateral. In extension of the foregoing and without limitation, such
insurance shall be payable to the Secured Party as loss payee under a “standard”
loss payee clause, and the Secured Party shall be listed as an “additional
insured” on Grantor’s general liability insurance. Such insurance shall not be
terminated, cancelled or not renewed for any reason, including non-payment of
insurance premiums, unless the insurer shall have provided the Secured Party at
least 30 days prior written notice. Grantor irrevocably makes, constitutes and
appoints the Secured Party (and all officers, employees or agents designated by
the Secured Party) as its true and lawful agent and attorney-in-fact for the
purpose, at any time following the Secured Party’ demand for payment of the
Notes, of making, settling and adjusting claims in respect of Collateral under
policies of insurance, endorsing the name of Grantor on any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect thereto.
In the event that Grantor at any time or times shall fail to obtain or maintain
any of the policies of insurance required hereby or to pay any premium in whole
or part relating thereto, the Secured Party may, without waiving or releasing
any obligation or liability of Grantor hereunder, in their sole discretion,
obtain and maintain such policies of insurance and pay such premium and take any
other actions with respect thereto as the Secured Party deem advisable. All sums
disbursed by the Secured Party in connection and in accordance with this
Section, including reasonable attorneys’ fees, court costs, expenses and other
charges relating thereto, shall be payable upon demand, by Grantor to the
Secured Party and shall be additional Obligations secured hereby. Grantor shall
promptly notify the Secured Party if any material portion of the Collateral
owned or held by Grantor is damaged or destroyed. The proceeds of any casualty
insurance in respect of any casualty loss of any of the Collateral shall (i) so
long as the Secured Party have not demanded payment of the Notes, be disbursed
to Grantor for direct application by Grantor solely to the repair or replacement
of Grantor’s property so damaged or destroyed, and (ii) in all other
circumstances, be held by the Secured Party as cash collateral for the
Obligations. The Secured Party may, at their sole option, disburse from time to
time all or any part of such proceeds so held as cash collateral, upon such
terms and conditions as the Secured Party may reasonably prescribe, for direct
application by the Secured Party solely to the repair or replacement of
Grantor’s property so damaged or destroyed, or Grantor may apply all or any part
of such proceeds to the Obligations.

Section 4.9. Legend. Grantor shall legend, in form and manner satisfactory to
the Secured Party, its accounts and its books, records and documents evidencing
or pertaining thereto with an appropriate reference to the fact that such
accounts have been assigned to the Secured Party and that the Secured Party have
a security interest therein.

ARTICLE V. Further Assurances; Power of Attorney

Section 5.1. Further Assurances. Grantor shall, at its own expense, execute,
acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Secured Party may from time to time
reasonably request to better assure, preserve, protect and perfect the Security
Interest and the rights and remedies created hereby, including the payment of
any fees and taxes required in connection with the execution and delivery of
this Agreement, the granting of the Security Interest and the filing of any
financing statements (including fixture filings) or other documents in
connection herewith or therewith. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note
or other instrument, such note or instrument shall be immediately pledged and
delivered to the Secured Party, duly endorsed in a manner satisfactory to the
Secured Party.

Section 5.2. Power of Attorney.

(a) Grantor hereby irrevocably (as a power coupled with an interest) constitutes
and appoints the Secured Party (and all officers, employees or agents designated
by the Secured Party), its attorney-in-fact with full power of substitution, for
the benefit of the Secured Party,

(i) to take all appropriate action and to execute all documents and instruments
that may be necessary or desirable to accomplish the purposes of this Agreement,
and without limiting the generality of the foregoing, Grantor hereby grants the
power to file one or more financing statements (including fixture filings),
continuation statements, filings with the United States Patent and Trademark
Office or United States Copyright Office (or any successor office or any similar
office in any other country) or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Security Interest granted by
Grantor, without the signature of Grantor, and naming Grantor as debtor and the
Secured Party as secured party; and

(ii) at any time following the Secured Party’ demand for payment of the Notes
(i) to receive, endorse, assign and/or deliver any and all notes, acceptances,
checks, drafts, money orders or other evidences of payment relating to the
Collateral or any part thereof; (ii) to demand, collect, receive payment of,
give receipt for and give discharges and releases of all or any of the
Collateral; (iii) to sign the name of Grantor on any invoice or bill of lading
relating to any of the Collateral; (iv) to send verifications of accounts to any
account debtor or any other Person liable for an account; (v) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral; (vi) to
settle, compromise, compound, adjust or defend any actions, suits or proceeding
relating to all or any of the Collateral; and (vii) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with all
or any of the Collateral, and to do all other acts and things necessary to carry
out the purposes of this Agreement, as fully and completely as though the
Secured Party were the absolute owner of the Collateral for all purposes;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Secured Party to make any commitment or to make any inquiry as
to the nature or sufficiency of any payment received by the Secured Party, or to
present or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby, and no action taken or omitted to be
taken by the Secured Party with respect to the Collateral or any part thereof
shall give rise to any defense, counterclaim or offset in favor of Grantor or to
any claim or action against the Secured Party.

(b) The provisions of this Article shall in no event relieve Grantor of any of
its obligations hereunder with respect to the Collateral or any part thereof or
impose any obligation on the Secured Party to proceed in any particular manner
with respect to the Collateral or any part thereof, or in any way limit the
exercise by the Secured Party of any other or further right which it may have on
the date of this Agreement or hereafter, whether hereunder, by law or otherwise.

     
ARTICLE VI.
Section 6.1.
  Remedies
Remedies upon Default.
 
   

(a) Upon the occurrence and during the continuance of an Event of Default,
Grantor agrees to deliver each item of its Collateral to the Secured Party on
demand, and it is agreed that the Secured Party shall have the right to take any
of or all the following actions at the same or different times (but at all times
subject to any Existing Liens): with or without legal process and with or
without prior notice or demand for performance, to take possession of the
Collateral and without liability for trespass to enter any premises where the
Collateral may be located for the purpose of taking possession of or removing
the Collateral, exercise Grantor’s right to bill and receive payment for
completed work and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, Grantor agrees that the Secured Party
shall have the right, subject to the mandatory requirements of applicable law,
to sell or otherwise dispose of all or any part of the Collateral, at public or
private sale or at any broker’s board or on any securities exchange, for cash,
upon credit or for future delivery as the Secured Party shall deem appropriate.
The Secured Party shall be authorized at any such sale (if it deems it advisable
to do so) to restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Collateral for their own
account for investment and not with a view to the distribution or sale thereof,
and upon consummation of any such sale the Secured Party shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of Grantor, and
Grantor hereby waives (to the extent permitted by law) all rights of redemption,
stay and appraisal which Grantor now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted.

(b) The Secured Party shall give Grantor ten (10) days’ written notice (which
Grantor agrees is reasonable notice within the meaning of Section 9-504(3) of
the Uniform Commercial Code) of the Secured Party’ intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker’s board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Secured Party may fix and state in the notice (if any) of such sale. At
any such sale, the Collateral, or portion thereof, to be sold may be sold in one
lot as an entirety or in separate parcels, as the Secured Party may (in their
sole and absolute discretion) determine. The Secured Party shall not be
obligated to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given. The Secured Party may, without notice or publication, adjourn any public
or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Secured Party until the sale price is paid by the purchaser or purchasers
thereof, but the Secured Party shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by law, private) sale made
pursuant to this Section, the Secured Party may bid for or purchase, free (to
the extent permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of Grantor (all said rights being also hereby waived and
released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim then
due and payable to the Secured Party from Grantor as a credit against the
purchase price, and the Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to Grantor therefor. For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the
Secured Party shall be free to carry out such sale pursuant to such agreement
and Grantor shall not be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Secured Party
shall have entered into such an agreement all Obligations have been paid in
full. As an alternative to exercising the power of sale herein conferred upon
it, the Secured Party may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.

Section 6.2. Application of Proceeds. The Secured Party shall apply the proceeds
of any collection or sale of the Collateral, as well as any Collateral
consisting of cash, as follows:

(a) FIRST, to the payment of all costs and expenses incurred by the Secured
Party in connection with such collection or sale or otherwise in connection with
this Agreement or any of the Obligations, including all court costs and the fees
and expenses of its agents and legal counsel, and any other costs or expenses
incurred in connection with the exercise of any right or remedy hereunder, under
the Notes;

(b) SECOND, to the payment in full of the Obligations; and

(c) THIRD, to Grantor, its successors or assigns, or to whomsoever may be
lawfully entitled to receive the same, or as a court of competent jurisdiction
may otherwise direct.

Subject to the foregoing, the Secured Party shall have absolute discretion as to
the time of application of such proceeds, moneys or balances in accordance with
this Agreement. Upon any sale of the Collateral by the Secured Party (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of any such proceeds, moneys or balances by the Secured Party or of
the officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Secured Party or such officer or be answerable in any way for the
misapplication thereof.

Section 6.3. Grant of License to Use Intellectual Property. For the purpose of
enabling the Secured Party to exercise rights and remedies under this Article at
such time as the Secured Party shall be lawfully entitled to exercise such
rights and remedies, Grantor hereby grants to the Secured Party an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to Grantor) to use, license or sub-license any of the Collateral
consisting of intellectual property now owned or hereafter acquired by Grantor,
and wherever the same may be located, and including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof. The use of such license by the Secured Party may be exercised, at the
option of the Secured Party, only following the Secured Party’ demand for
payment of the Notes.

ARTICLE VII. Miscellaneous

Section 7.1. Notices. All communications and notices hereunder to the Grantor
and to the Secured Party shall (except as otherwise expressly permitted herein)
be in writing and delivered to the Grantor or the Secured Party, as the case may
be, as provided in the Notes.

Section 7.2. Security Interest Absolute. All rights of the Secured Party
hereunder, the Security Interest and all obligations of Grantor hereunder shall
be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Notes or any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Notes or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, Grantor in respect of the Obligations
or this Agreement.

Section 7.3. Survival of Agreement. All covenants, agreements, representations
and warranties made by Grantor herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement shall be considered to have been relied upon by the Secured Party and
shall survive the making of the loan and the execution and delivery to the
Secured Party of the Notes, regardless of any investigation made by the Secured
Party or on their behalf; and shall continue in full force and effect until this
Agreement shall terminate.

Section 7.4. Binding Effect; Several Agreement; Successors and Assigns. This
Agreement shall become effective as to Grantor when a counterpart hereof
executed on behalf of Grantor shall have been delivered to the Secured Party and
a counterpart hereof shall have been executed on behalf of the Secured Party,
and thereafter shall be binding upon Grantor and the Secured Party and their
respective successors and assigns, and shall inure to the benefit of Grantor,
the Secured Party and their respective successors and assigns, except that
Grantor shall not have the right to assign or transfer its rights or obligations
hereunder or any interest herein or in the Collateral (and any such assignment
or transfer shall be void) except as expressly contemplated by this Agreement,
or the Notes.

Section 7.5. Secured Party’ Fees and Expense; Indemnification.

(a) Grantor agrees to pay upon demand to the Secured Party the amount of any and
all reasonable expenses, including all reasonable fees, disbursements and other
charges of its counsel and of any experts or agents, which the Secured Party may
incur in connection with (i) the administration of this Agreement (including the
customary fees and charges of the Secured Party for any audits conducted by them
or on their behalf with respect to the accounts inventory), (ii) the custody or
preservation of, or the sale of, collection from or other realization upon any
of the Collateral, (iii) the exercise, enforcement or protection of any of the
rights of the Secured Party hereunder or (iv) the failure of Grantor to perform
or observe any of the provisions hereof.

(b) Grantor agrees to indemnify the Secured Party and the agent, contractors and
employees of the Secured Party (collectively, the “Indemnitees”) against, and
hold each of them harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable fees, disbursements and
other charges of counsel, incurred by or asserted against any of them arising
out of, in any way connected with, or as a result of, the execution, delivery,
or performance of this Agreement or any agreement or instrument contemplated
hereby or any claim, litigation, investigation or proceeding relating hereto or
to the Collateral, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.

(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby. The provisions of this Section shall remain
operative and in full force and effect regardless of the termination of this
Agreement, the Notes or the consummation of the transactions contemplated
hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement, the Notes, or any
investigation made by or on behalf of the Secured Party. All amounts due under
this Section shall be payable on written demand therefor.

Section 7.6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY OF THE CONFLICTS OF LAW PRINCIPLES WHICH WOULD RESULT IN THE
APPLICATION OF THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION. THIS AGREEMENT SHALL
NOT BE INTERPRETED OR CONSTRUED WITH ANY PRESUMPTION AGAINST THE PARTY CAUSING
THIS AGREEMENT TO BE DRAFTED.

Section 7.7. Waivers; Amendment.

(a) No failure or delay of the Secured Party in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Secured Party hereunder are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provisions of this
Agreement, the Notes or or consent to any departure by Grantor therefrom shall
in any event be effective unless the same shall be permitted by paragraph
(b) below, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on
Grantor in any case shall entitle Grantor to any other or further notice or
demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements, in writing entered into
by the Secured Party and Grantor.

Section 7.8. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT, OR THE NOTES. EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, AND THE NOTES, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 7.9. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.

Section 7.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract. Each party shall be entitled
to rely on a facsimile signature of any other party hereunder as if it were an
original.

Section 7.11. Jurisdiction; Consent to Service of Process.

(a) Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or the Notes, or for recognition or enforcement of
any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Secured Party may otherwise have to bring any action or proceeding relating to
this Agreement, the Notes against Grantor or its properties in the courts of any
jurisdiction.

(b) Grantor hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement, or the Notes, in any New York State or
Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 7.1. Nothing in this Agreement will
affect the right of any party to this Agreement to process in any other manner
permitted by law.

Section 7.12. Termination. This Agreement and the Security Interest shall
terminate when all the Obligations have been paid in full, at which time the
Secured Party shall execute and deliver to Grantor, at Grantor’s expense, all
Uniform Commercial Code termination statements and similar documents which
Grantor shall reasonably request to evidence such termination. Any execution and
delivery of termination statements or documents pursuant to this Section shall
be without recourse to or warranty by the Secured Party.

Section 7.13. Prejudgment Remedy Waiver. Grantor acknowledges that this
Agreement, and the Notes evidence a commercial transaction and that it could,
under certain circumstances have the right, to notice of and hearing on the
right of the Secured Party to obtain a prejudgment remedy, such as attachment,
garnishment and/or replevin, upon commencing any litigation against Grantor.
Notwithstanding, Grantor hereby waives all rights to notice, judicial hearing or
prior court order to which it might otherwise have the right under any state or
federal statute or constitution in connection with the obtaining by the Secured
Party of any prejudgment remedy by reason of this Agreement, the Notes, or by
reason of the Obligations or any renewals or extensions of the same. Grantor
also waives any and all objection which it might otherwise assert, now or in the
future, to the exercise or use by the Secured Party of any right of setoff,
repossession or self help as may presently exist under statute or common law.

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IN WITNESS WHEREOF, the parties have duly executed this Security Agreement as of
the day and year first written above.

WAVE WIRELESS CORPORATION

By:      
Name:
Title:

NORTH SOUND LEGACY INSTITUTIONAL FUND LLC

 
By: ____
 
Name:
Title:

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SCHEDULE A
Places of Business; Chief Executive Office; Filing Locations

State of Incorporation:
Delaware

Chief Executive Office:
Wave Wireless Corporation
1996 Lundy Avenue
San Jose, CA 95131

Filing Locations:
Secretary of State of the State of Delaware

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SCHEDULE 3.3
Existing Liens

Silicon Valley Bank has a blanket lien on all of the Grantor’s assets pursuant
to a Credit Facility dated September 17, 2004 between the Grantor and Silicon
Valley Bank. Certain other holders of promissory notes of Grantor have a blanket
lien on all of the Grantor’s assets pursuant to security agreements of Grantor
securing obligations of Grantor totaling $4,753,649.90.

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SCHEDULE 3.4
Absence of Other Liens

Silicon Valley Bank has a blanket lien on all of the Grantor’s assets pursuant
to a Credit Facility dated September 17, 2004 between the Grantor and Silicon
Valley Bank. Certain other holders of promissory notes of Grantor have a blanket
lien on all of the Grantor’s assets pursuant to security agreements of Grantor
securing obligations of Grantor totaling $4,753,649.90.

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