EX-4.1






CERTIFICATE OF DESIGNATION OF THE RELATIVE RIGHTS AND PREFERENCES




OF THE




SERIES J CONVERTIBLE PREFERRED STOCK




OF




WAVE WIRELESS CORPORATION




The undersigned officer of Wave Wireless Corporation, a Delaware corporation (the “Company”),
in accordance with the provisions of Section 151(g) of the Delaware General Corporation Law, does
hereby certify that, pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Company, the following resolution creating a series of
preferred stock designated as “Series J Convertible Preferred Stock” was duly adopted on March 30,
2006:



RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of
Directors of the Company by Article IV of the Company’s Certificate of Incorporation (the
“Certificate of Incorporation”), there hereby is created out of the authorized shares of preferred
stock, par value $.0001 per share (the “Preferred Stock”), of the Company, a series of Preferred
Stock designated as “Series J Convertible Preferred Stock,” consisting of One Thousand Two Hundred
and Fifty (1,250) shares, which series shall have the following designations, powers, preferences
and relative and other special rights and the following qualifications, limitations and
restrictions:



1. Designation and Rank. Such series of Preferred Stock shall be designated as
“Series J Convertible Preferred Stock” (the “Series J Preferred Stock”). The maximum number of
shares of Series J Preferred Stock shall be One Thousand Two Hundred and Fifty (1,250) shares.
Upon the liquidation, dissolution or winding up of the affairs of the Company, the Series J
Preferred Stock shall rank (a) prior to the Company’s common stock, par value $.0001 per share (the
“Common Stock”), Series A Junior Participating Preferred Stock, Series F Convertible Preferred
Stock, Series I Convertible Preferred Stock, and all other classes and series of the Company’s
capital stock hereafter created that, by their terms, rank junior to the Series J Preferred Stock
(the “Junior Stock”); (b) pari passu with the Company’s Series G Convertible Preferred Stock,
Series H Convertible Preferred Stock, and all classes and series of the Company’s capital stock
hereafter created that, by their terms, rank on parity with the Series J Preferred Stock (the “Pari
Passu Stock”); and (c) junior to the Company’s Series E Convertible Preferred Stock, and all other
classes and series of the Company’s capital stock hereafter created that, by their terms, rank
senior to the Series J Preferred Stock (the “Senior Stock”); provided, however, so long as at least
Two Hundred (200) shares of the Series J Preferred Stock remain issued and outstanding, the Company
shall not issue any Senior Stock that rank senior to the Series J Preferred Stock without the
written consent of at least three-quarters (3/4) of the Series J Preferred Stock issued and
outstanding. The Series J Preferred Stock shall be subordinate to and rank junior to all
indebtedness of the Company now or hereafter outstanding.



2. Dividends. Whenever the Board of Directors declares a dividend on the Common Stock
each holder of record of a share of Series J Preferred Stock, or any fraction of a share of Series
J Preferred Stock, on the date set by the Board of Directors to determine the owners of the Common
Stock of record entitled to receive such dividend (the “Record Date”) shall be entitled to receive,
out of any assets at the time legally available therefor, an amount equal to such dividend declared
on one share of Common Stock multiplied by the number of shares of Common Stock into which such
share, or such fraction of a share, of Series J Preferred Stock could be converted on the Record
Date.



3. Voting Rights



(a) Class Voting Rights. The Series J Preferred Stock shall have the following class
voting rights. So long as any shares of the Series J Preferred Stock remain outstanding, the
Company shall not, without the affirmative vote or consent of the holders of at least three-fourths
(3/4) of the shares of the Series J Preferred Stock outstanding at the time, given in person or by
proxy, either in writing or at a meeting, in which the holders of the Series J Preferred Stock vote
separately as a class: (i) amend, alter or repeal the provisions of the Series J Preferred Stock so
as to adversely affect any right, preference, privilege or voting power of the Series J Preferred
Stock; or (ii) effect any distribution with respect to Junior Stock except that the Company may
effect a distribution on the Common stock if the Company makes a like kind distribution on each
share, or fraction of a share, of Series J Preferred Stock in an amount equal to the distribution
on one share of Common Stock multiplied by the number of shares of Common Stock into which such one
share, or such fraction of a share, of Series J Preferred Stock can be converted at the time of
such distribution.



(b) General Voting Rights. Except with respect to transactions upon which the Series
J Preferred Stock shall be entitled to vote separately as a class pursuant to Section 3(a) above
and except as otherwise required by the Delaware General Corporation Law, the Series J Preferred
Stock shall have no voting rights. The Common Stock into which the Series J Preferred Stock is
convertible shall, upon issuance, have all of the same voting rights as other issued and
outstanding Common Stock of the Company.



4. Liquidation Preference



(a) In the event of the liquidation, dissolution or winding up of the affairs of the Company,
whether voluntary or involuntary, after payment or provision for payment of the debts and other
liabilities of the Company and after payment or provision for payment of all amounts due to the
holders of any Senior Stock, the holders of shares of the Series J Preferred Stock then outstanding
shall be entitled to receive, out of the assets of the Company, whether such assets are capital or
surplus of any nature, an amount equal to $7,500.00 per share (the “Liquidation Preference Amount”)
of the Series J Preferred Stock before any payment shall be made or any assets distributed to the
holders of the Common Stock or any other Junior Stock. If the assets of the Company are sufficient
to pay in part, but are not sufficient to pay in full, the Liquidation Preference Amount payable to
the holders of outstanding shares of the Series J Preferred Stock and any Pari Passu Stock, then
all of said assets available to pay a part of the Liquidation Preference Amount to the holders of
the outstanding shares of Series J Preferred Stock and any Pari Passu Stock will be distributed
among the holders of the Series J Preferred Stock and the holders of any Pari Passu Stock, ratably
in accordance with the respective amounts that would be payable on such shares if all amounts
payable thereon were paid in full. The Liquidation Preference Amount to be paid with respect to
any fractional share of Series J Preferred Stock shall be equal to the Liquidation Preference
Amount multiplied by such fraction. All payments for which this Section 4(a) provides shall be in
cash, property (valued at its fair market value as determined by an independent appraiser
reasonably acceptable to the holders of a majority of the Series J Preferred Stock), or a
combination thereof; provided, however, that no cash shall be paid to holders of Junior Stock
unless each holder of the outstanding shares of Series J Preferred Stock has been paid in cash the
full Liquidation Preference Amount to which such holder is entitled as provided herein. After
payment of the full Liquidation Preference Amount to which each holder is entitled, such holders of
shares of Series J Preferred Stock will not be entitled to any further participation as such in any
distribution of the assets of the Company.



(b) A consolidation or merger of the Company with or into any other corporation or
corporations or any other entity, or a sale of all or substantially all of the assets of the
Company, or the effectuation by the Company of a transaction or series of transactions in which all
or any portion of the voting shares of the Company are disposed of or conveyed, shall not be deemed
to be a liquidation, dissolution, or winding up within the meaning of this Section 4. The Company
shall not, without the consent of three-fourths (3/4) of the then outstanding Series J Preferred
Stock, merge or consolidate with or into another corporation, unless the securities of such other
corporation issued in exchange for the Series J Preferred Stock have substantially the same
relative rights, preferences and privileges as the Series J Preferred Stock provided for herein and
such securities shall not result in an adverse effect on the rights, preferences and privileges of
the holders of Series J Preferred Stock.



(c) Written notice of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, stating a payment date and the place where the distributable amounts
shall be payable, shall be given by mail, postage prepaid, no less than forty-five (45) days prior
to the payment date stated therein, to the holders of record of the Series J Preferred Stock at
their respective addresses as the same shall appear on the books of the Company.



5. Conversion. The holders of Series J Preferred Stock shall have the following
conversion rights (the “Conversion Rights”):



(a) Right to Convert. At any time on or after the date on which shares of Series J
Preferred Stock are first issued (the “Issuance Date”), the holder of shares of Series J Preferred
Stock may, at such holder’s option, subject to the limitations set forth in Section 7 herein, elect
to convert (a “Voluntary Conversion”) all or any portion of the shares of Series J Preferred Stock
held by such holder into a number of fully paid and nonassessable shares of Common Stock equal to
the quotient obtained by dividing (i) the Liquidation Preference Amount of the shares of Series J
Preferred Stock being converted by (ii) the Conversion Price (as defined in Section 5(d) below)
then in effect as of the date of the delivery by such holder of its notice of election to convert.
The Company shall keep written records of the conversion of the shares of Series J Preferred Stock
converted by each holder. A holder shall be required to deliver the original certificates
representing the shares of Series J Preferred Stock upon any conversion of the Series J Preferred
Stock as provided in Section 5(b) below.



(b) Mechanics of Voluntary Conversion. The Voluntary Conversion of Series J Preferred
Stock shall be conducted in the following manner:



(i) Holder’s Delivery Requirements. To convert Series J Preferred Stock into full
shares of Common Stock on any date (the “Voluntary Conversion Date”), the holder thereof shall (A)
transmit by facsimile (or otherwise deliver), for receipt on or prior to 5:00 p.m., New York time
on such date, a copy of a fully executed notice of conversion in the form attached hereto as
Exhibit I (the “Conversion Notice”), to the Company, and (B) with respect to the conversion of
shares of Series J Preferred Stock held by any holder, such holder shall surrender to a common
carrier for delivery to the Company as soon as practicable following such Voluntary Conversion
Date, but in no event later than six (6) business days after such date, the original certificates
representing the shares of Series J Preferred Stock being converted (or a signed undertaking to
indemnify the Company with respect to such shares in the case of loss, theft or destruction of
such certificates) (the “Preferred Stock Certificates”).



(ii) Company’s Response. Upon receipt by the Company of a Conversion Notice (or a
facsimile copy thereof), the Company shall immediately send, via facsimile, a confirmation of
receipt of such Conversion Notice to the holder that sent such Conversion Notice (the “Converting
Holder”) and the Company or its designated transfer agent (the “Transfer Agent”), as applicable,
shall, within three (3) business days following the date of receipt by the Company of the
Converting Holder’s Preferred Stock Certificates, (x) issue and deliver to the Depository Trust
Company (“DTC”) account on the Converting Holder’s behalf via the Deposit Withdrawal Agent
Commission System (“DWAC”) as specified in the Conversion Notice, registered in the name of the
Converting Holder or its designee, for the number of shares of Common Stock to which the Converting
Holder shall be entitled, and (y) if the Preferred Stock Certificates so surrendered represent more
shares of Series J Preferred Stock than the number being converted, issue and deliver to the
Converting Holder a new certificate for such number of shares of Series J Preferred Stock
represented by the surrendered certificate that are not converted.



(iii) Dispute Resolution. In the case of a dispute as to the arithmetic calculation
of the number of shares of Common Stock to be issued upon conversion, the Company shall promptly
issue to the holder the number of shares of Common Stock that is not disputed and shall submit the
arithmetic calculations to the holder via facsimile as soon as possible, but in no event later than
two (2) business days after receipt of such holder’s Conversion Notice. If such holder and the
Company are unable to agree upon the arithmetic calculation of the number of shares of Common Stock
to be issued upon such conversion within one (1) business day of such disputed arithmetic
calculation being submitted to the holder, then the Company shall within one (1) business day
submit via facsimile the disputed arithmetic calculation of the number of shares of Common Stock to
be issued upon such conversion to the Company’s independent, outside accountant. The Company shall
cause the accountant to perform the calculations and notify the Company and the holder of the
results no later than seventy-two (72) hours from the time it receives the disputed calculations.
Such accountant’s calculation shall be binding upon all parties absent manifest error. The
reasonable expenses of such accountant in making such determination shall be paid by the Company,
in the event the holder’s calculation was correct, or by the holder, in the event the Company’s
calculation was correct, or equally by the Company and the holder in the event that neither the
Company’s or the holder’s calculation was correct. The period of time in which the Company is
required to effect conversions under this Certificate of Designation shall be tolled with respect
to the subject conversion pending resolution of any dispute by the Company made in good faith and
in accordance with this Section 5(b)(iii).



(iv) Record Holder. The person or persons entitled to receive the shares of Common
Stock issuable upon a conversion of the Series J Preferred Stock shall be treated for all purposes
as the record holder or holders of such shares of Common Stock on the Voluntary Conversion Date.



(v) Company’s Failure to Timely Convert. If within five (5) business days of the
Company’s receipt of an executed copy of the Conversion Notice (so long as the applicable Preferred
Stock Certificates and original Conversion Notice are received by the Company on or before such
third business day) (the “Share Delivery Period”), the Transfer Agent shall fail to issue and
deliver to a holder the number of shares of Common Stock to which such holder is entitled upon such
holder’s conversion of the Series J Preferred Stock or to issue a new Preferred Stock Certificate
representing the number of shares of Series J Preferred Stock to which such holder is entitled
pursuant to Section 5(b)(ii) (a “Conversion Failure”), in addition to all other available remedies
which such holder may pursue hereunder and under the Securities Purchase Agreement (the “Securities
Purchase Agreement”) among the Company and the initial holders of the Series J Preferred Stock
(including indemnification pursuant to Section 9(l) thereof), the Company shall pay additional
damages to such holder on each business day after such third (3rd) business day that
such conversion is not timely effected in an amount equal 0.5% of the product of (A) the sum of the
number of shares of Common Stock not issued to the holder on a timely basis pursuant to Section
5(b)(ii) and to which such holder is entitled and, in the event the Company has failed to deliver a
Preferred Stock Certificate to the holder on a timely basis pursuant to Section 5(b)(ii), the
number of shares of Common Stock issuable upon conversion of the shares of Series J Preferred Stock
represented by such Preferred Stock Certificate, as of the last possible date which the Company
could have issued such Preferred Stock Certificate to such holder without violating Section
5(b)(ii) and (B) the Closing Bid Price (as defined below) of the Common Stock on the last possible
date which the Company could have issued such Common Stock and such Preferred Stock Certificate, as
the case may be, to such holder without violating Section 5(b)(ii). If the Company fails to pay
the additional damages set forth in this Section 5(b)(v) within five (5) business days of the date
incurred, then such payment shall bear interest at the rate of 2.0% per month (pro-rated for
partial months) until such payments are made.



(vi) The term “Closing Bid Price” shall mean, for any security as of any date, the last
closing bid price of such security on the OTC Bulletin Board, Nasdaq SmallCap Market or other
principal exchange on which such security is traded as reported by Bloomberg, or, if no closing bid
price is reported for such security by Bloomberg, the last closing trade price of such security as
reported by Bloomberg, or, if no last closing trade price is reported for such security by
Bloomberg, the average of the bid prices of any market makers for such security as reported in the
“pink sheets” by the National Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated
for such security on such date on any of the foregoing bases, the Closing Bid Price of such
security on such date shall be the fair market value as mutually determined by the Company and the
holders of a majority of the outstanding shares of Series J Preferred Stock.



(c) Mandatory Conversion



(i) At any time after one hundred eighty (180) days from the effective date of the
registration statement (the “Registration Statement”) required to be filed by the Company pursuant
to Section 2(a) of the Registration Rights Agreement (as defined in the Securities Purchase
Agreement), and provided that all of the Required Conditions (as defined below) have been
satisfied, the Company may deliver a written notice (a “Mandatory Conversion Notice”) to all
holders of the shares of Series J Preferred Stock mandatorily causing the Series J Preferred Stock
to convert into Common Stock pursuant to the applicable conversion procedures in Section 5(b).



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



(1) the Closing Bid Price of the Common Stock for the ten (10) consecutive trading days prior
to delivery of the Mandatory Conversion Notice equals or exceeds $0.20 (as adjusted for stock
splits, stock dividends or similar events);



(2) the Registration Statement is effective on the date of the Mandatory Conversion and has
been effective, without lapse or suspension of any kind, for a period of sixty (60) consecutive
calendar days, or the shares of Common Stock into which the Series J Preferred Stock can be
converted may be offered for sale to the public pursuant to Rule 144(k) (“Rule 144(k)”) under the
Securities Act of 1933, as amended;



(3) trading in the Common Stock shall not have been suspended by the Securities and Exchange
Commission, the OTC Bulletin Board or the Nasdaq SmallCap Market (or other exchange or market on
which the Common Stock is trading);



(4) the Company is in material compliance with the terms and conditions of this Certificate of
Designation and the other Transaction Documents (as defined in the Securities Purchase Agreement);
and



(5) all shares of Common Stock issuable upon conversion of the Series J Preferred Stock 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) listed or traded on the OTC Bulletin Board,
the Nasdaq Small Cap Market or any other national exchange.



(iii) In the event any holder of Series J Preferred Stock is unable to convert all of the
outstanding Series J Preferred Stock that it holds due to the limitations set forth in Section 7(b)
hereof, such unconverted Series J Preferred Stock shall remain outstanding with all of the right
and privileges set forth herein.



(iv) Upon the Company’s written request, a holder of Series J Preferred Stock shall advise the
Company in writing the number of shares of Common Stock that are beneficially owned by such holder,
not counting shares of Common Stock issuable upon conversion of any Series J Preferred Stock held
by such holder. Beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder. If the shares
of Common Stock beneficially owned by such holder (excluding shares of Common Stock issuable upon
conversion of the Series J Preferred Stock) amount to less than 9.99% of the shares of Common Stock
outstanding at such time, the Company may, at its option, compel such holder, by delivery of a
Mandatory Conversion Notice, to convert such portion of the Series J Preferred Stock owned by such
holder into shares of Common Stock such that the total number of shares of Common Stock
beneficially owned by such holder after such conversion shall equal up to 9.99% but not more, of
the shares of Common Stock outstanding after such conversion. In the event that a holder of Series
J Preferred Stock may not convert all of its shares of Series J Preferred Stock upon a Mandatory
Conversion because of restrictions in Section 7, such number of shares of Series J Preferred Stock
that may not be converted because of the restrictions contained in Section 7 hereof shall remain
outstanding and shall automatically convert into Common Stock when such holder’s beneficial
ownership falls below 9.99%



(v) As used herein, a “Mandatory Conversion Date” shall be the date when the Mandatory
Conversion Notice shall be deemed delivered pursuant to Section 5(i).



(vi) Each share of Series J Preferred Stock outstanding on the Mandatory Conversion Date
shall, automatically and without any action on the part of the holder thereof, convert into a
number of fully paid and nonassessable shares of Common Stock equal to the quotient obtained by
dividing (x) the Liquidation Preference Amount of the shares of Series J Preferred Stock
outstanding on the Mandatory Conversion Date by (y) the Conversion Price in effect on the Mandatory
Conversion Date; provided, however, that the Company shall not be obligated to issue the shares of
Common Stock issuable upon conversion of any shares of Series J Preferred Stock unless the
Preferred Stock Certificates representing such shares of Series J Preferred Stock are either
delivered to the Company or the holder notifies the Company that such Preferred Stock Certificates
have been lost, stolen, or destroyed, and executes an agreement satisfactory to the Company to
indemnify the Company from any loss incurred by it in connection therewith. Upon the occurrence of
any mandatory conversion of the Series J Preferred Stock pursuant to this Section 5(c), each
affected holder of Series J Preferred Stock shall surrender the Preferred Stock Certificates
representing the Series J Preferred Stock for which the Mandatory Conversion Date has occurred to
the Company and the Company shall deliver the shares of Common Stock issuable upon such conversion
(in the same manner set forth in Section 5(b)(ii)) to such holder within three (3) business days of
such holder’s delivery of the applicable Preferred Stock Certificates. If the Preferred Stock
Certificates so surrendered represent more shares of Series J Preferred Stock than those being
converted, the Company shall issue to such holder a new certificate for such number of Series J
Preferred Stock represented by the surrendered certificates which were not converted.



(d) Conversion Price. The term “Conversion Price” shall mean $.075, subject to
adjustment pursuant to Section 5(e) hereof.



(e) Adjustments of Conversion Price



(i) Adjustments for Stock Splits and Combinations. If the Company shall at any time
or from time to time after the Issuance Date, effect a stock split of the outstanding Common Stock,
the Conversion Price shall be proportionately decreased. If the Company shall at any time or from
time to time after the Issuance Date, combine the outstanding shares of Common Stock, the
Conversion Price shall be proportionately increased. Any adjustments under this Section 5(e)(i)
shall be effective at the close of business on the date the stock split or combination occurs.



(ii) Adjustments for Certain Dividends and Distributions. If the Company shall at any
time or from time to time after the Issuance Date, make or issue or set a record date for the
determination of holders of Common Stock entitled to receive a dividend or other distribution
payable in shares of Common Stock, then, and in each such event, the Conversion Price shall be
decreased as of the time of such issuance or, in the event such record date shall have been fixed,
as of the close of business on such record date, by multiplying the Conversion Price then in effect
by a fraction:



(1) the numerator of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of business on such record
date; and



(2) the denominator of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of business on such record
date plus the number of shares of Common Stock issuable in payment of such dividend or
distribution.



(iii) Adjustment for Other Dividends and Distributions. If the Company shall at any
time or from time to time after the Issuance Date, make or issue or set a record date for the
determination of holders of Common Stock entitled to receive a dividend or other distribution
payable in securities of the Company other than shares of Common Stock, then, and in each such
event, an appropriate adjustment to the Conversion Price shall be made and provision shall be made
(by adjustments of the Conversion Price or otherwise) so that the holders of Series J Preferred
Stock shall receive upon conversions thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company which they would have received had
their Series J Preferred Stock been converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and including the Mandatory Conversion
Date or Voluntary Conversion Date (as the case may be), retained such securities (together with any
distributions payable thereon during such period), giving application to all adjustments called for
during such period under this Section 5(e)(iii) with respect to the rights of the holders of the
Series J Preferred Stock.



(iv) Adjustments for Reclassification, Exchange or Substitution. If the Common Stock
issuable upon conversion of the Series J Preferred Stock at any time or from time to time after the
Issuance Date shall be changed to the same or different number of shares of any class or classes of
stock, whether by reclassification, exchange, substitution or otherwise (other than by way of a
stock split or combination of shares or stock dividends provided for in Sections 5(e)(i), (ii) and
(iii), or a reorganization, merger, consolidation, or sale of assets provided for in Section
5(e)(v)), then, and in each such event, an appropriate adjustment to the Conversion Price shall be
made and provisions shall be made so that the holder of each share of Series J Preferred Stock
shall have the right thereafter to convert such share of Series J Preferred Stock into the kind and
amount of shares of stock and other securities receivable upon such reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock into which such
share of Series J Preferred Stock might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all subject to further adjustment as
provided herein.



(v) Adjustments for Reorganization, Merger, Consolidation or Sales of Assets. If at
any time or from time to time after the Issuance Date there shall be a capital reorganization of
the Company (other than by way of a stock split or combination of shares or stock dividends or
distributions provided for in Section 5(e)(i), (ii) and (iii), or a reclassification, exchange or
substitution of shares provided for in Section 5(e)(iv)), or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially all of the Company’s
properties or assets to any other person (an “Organic Change”), then as a part of such Organic
Change an adjustment to the Conversion Price shall be made and provision shall be made so that the
holder of each share of Series J Preferred Stock shall have the right thereafter to convert such
share of Series J Preferred Stock into the kind and amount of shares of stock and other securities
or property of the Company or any successor corporation resulting from the Organic Change. In any
such case, appropriate adjustment shall be made in the application of the provisions of this
Section 5(e)(v) with respect to the rights of the holders of the Series J Preferred Stock after the
Organic Change to the end that the provisions of this Section 5(e)(v) (including any adjustment in
the Conversion Price then in effect and the number of shares of stock or other securities
deliverable upon conversion of the Series J Preferred Stock) shall be applied after that event in
as nearly an equivalent manner as may be practicable.



(vi) Record Date. In case the Company shall take record of the holders of its Common
Stock or any other Preferred Stock for the purpose of entitling them to subscribe for or purchase
Common Stock or other securities convertible into Common Stock (“Convertible Securities”), then the
date of the issue or sale of the shares of Common Stock shall be deemed to be such record date.



(vii) Dilutive Issuances.



If the Company issues or sells (A) any shares of Common Stock for no consideration or for a
consideration per share less than the Conversion Price in effect on the date of such issuance or
sale (or deemed issuance or sale) or (B) any Convertible Securities which may be exercised,
converted or exchanged into shares of Common Stock at a price per share less than the Conversion
Price in effect on the date of such issuance of sale (or deemed issuance or sale) (each, a
“Dilutive Issuance”), then effective immediately upon the Dilutive Issuance, the Conversion Price
shall be adjusted in accordance with the following formula:



	 	 	 	 	 
	ACP=

	 	C x
	 	O+P/C
	 
	 	 	 	 
	
 
	 	 	 	CSDO






where:



	 	 	 
	ACP

C

	 	= the adjusted Conversion Price;

= the Conversion Price;







	 	 	 	O = the number of shares of Common Stock outstanding immediately prior to the
Dilutive Issuance;






	 	 	 	P = the aggregate consideration received by the Company upon such Dilutive
Issuance; and






	 	 	 	CSDO = the total number of shares of Common Stock actually outstanding (after giving
effect to the Dilutive Issuance, and not including shares of Common Stock held in the
treasury of the Company), plus, in the case of any adjustment required by this Section
5(e)(vii) due to the issuance of Convertible Securities, the maximum total number of
 shares of Common Stock issuable upon the exercise, conversion or exchange of the
Convertible Securities for which the adjustment is required, as of the date of issuance
of such Convertible Securities, if any.





Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 5(e)(vii) if
such adjustment (i) is caused by any issuances of Convertible Securities or Common Stock to
employees of the Company under any stock incentive or similar plan of the Company, (ii) is caused
by an issuance of Convertible Securities in connection with any amortization or other payments on
indebtedness of the Company outstanding on the date hereof, or (iii) would result in an increase in
the Conversion Price.



(f) No Impairment. The Company shall not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed hereunder by the Company,
but will at all times in good faith, assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or appropriate in order to
protect the conversion rights of the holders of the Series J Preferred Stock against impairment.
In the event a holder shall elect to convert any shares of Series J Preferred Stock as provided
herein, the Company shall not refuse conversion based on any claim that such holder or any one
associated or affiliated with such holder has been engaged in any violation of law, unless, an
injunction from a court, on notice, restraining and/or adjoining conversion of all or of said
shares of Series J Preferred Stock shall have been issued and the Company posts a surety bond for
the benefit of such holder in an amount equal to 130% of the Liquidation Preference Amount of the
Series J Preferred Stock such holder has elected to convert, which bond shall remain in effect
until the completion of arbitration/litigation of the dispute and the proceeds of which shall be
payable to such holder in the event it obtains judgment.



(g) Certificates as to Adjustments. Upon occurrence of each adjustment or
readjustment of the Conversion Price or number of shares of Common Stock issuable upon conversion
of the Series J Preferred Stock pursuant to this Section 5, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of Series J Preferred Stock a certificate setting forth such adjustment and
readjustment, showing in detail the facts upon which such adjustment or readjustment is based. The
Company shall, upon written request of a holder of Series J Preferred Stock, at any time, furnish
or cause to be furnished to such holder a like certificate setting forth such adjustments and
readjustments, the Conversion Price in effect at the time, and 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
the conversion of a share of such Series J Preferred Stock. Notwithstanding the foregoing, the
Company shall not be obligated to deliver a certificate unless such certificate would reflect an
increase or decrease of at least one percent of such adjusted amount.



(h) Issue Taxes. The Company shall pay any and all issue and other taxes, excluding
federal, state or local income taxes, that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of shares of Series J Preferred Stock pursuant thereto;
provided, however, that the Company shall not be obligated to pay any transfer taxes resulting from
any transfer requested by any holder in connection with any such conversion.



(i) Notices. All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed given or delivered (i) on the date given, if delivered
personally or sent by facsimile transmission with confirmation of receipt, (ii) three (3) business
days after mailing, if sent by certified or registered mail, postage prepaid, return-receipt
requested, or (iii) on the date of delivery if delivered by a recognized express mail delivery
service such as Federal Express, in either case addressed to the holder of record at its address
appearing on the books of the Company. The Company will give written notice to each holder of
Series J Preferred Stock at least twenty (20) days prior to the date on which the Company closes
its books or takes a record (I) with respect to any dividend or distribution upon the Common Stock,
(II) with respect to any pro rata subscription offer to holders of Common Stock or (III) for
determining rights to vote with respect to any Organic Change, dissolution, liquidation or
winding-up and in no event shall such notice be provided to such holder prior to such information
being made known to the public. The Company will also give written notice to each holder of Series
J Preferred Stock at least twenty (20) days prior to the date on which any Organic Change,
dissolution, liquidation or winding-up will take place and in no event shall such notice be
provided to such holder prior to such information being made known to the public.



(j) Fractional Shares. No fractional shares of Common Stock shall be issued upon
conversion of the Series J Preferred Stock. In lieu of any fractional shares to which the holder
would otherwise be entitled, the Company shall pay cash equal to the product of such fraction
multiplied by the average of the Closing Bid Prices of the Common Stock for the five (5)
consecutive trading days immediately preceding the Voluntary Conversion Date or Mandatory
Conversion Date, as applicable.



(k) Reservation of Common Stock. The Company shall, so long as any shares of Series J
Preferred Stock are outstanding, reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the conversion of the Series J Preferred Stock,
such number of shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the Series J Preferred Stock then outstanding. The initial number of shares
of Common Stock reserved for conversions of the Series J Preferred Stock and any increase in the
number of shares so reserved shall be allocated pro rata among the holders of the Series J
Preferred Stock based on the number of shares of Series J Preferred Stock held by each holder of
record at the time of issuance of the Series J Preferred Stock or increase in the number of
reserved shares, as the case may be. In the event a holder shall sell or otherwise transfer any of
such holder’s shares of Series J Preferred Stock, each transferee shall be allocated a pro rata
portion of the number of reserved shares of Common Stock reserved for such transferor. Any shares
of Common Stock reserved and which remain allocated to any person or entity which does not hold any
shares of Series J Preferred Stock shall be allocated to the remaining holders of Series J
Preferred Stock, pro rata based on the number of shares of Series J Preferred Stock then held by
such holder.



(l) Retirement of Series J Preferred Stock. Conversion of Series J Preferred Stock
shall be deemed to have been effected on the applicable Voluntary Conversion Date or Mandatory
Conversion Date. The Company shall keep written records of the conversion of the shares of Series
J Preferred Stock converted by each holder. A holder shall be required to deliver the original
certificates representing the shares of Series J Preferred Stock upon any conversion of the Series
J Preferred Stock represented by such certificates. Upon conversion of only a portion of the
number of shares of Series J Preferred Stock represented by a certificate surrendered for
conversion, the Company shall issue and deliver to such holder at the expense of the Company, a new
certificate covering the number of shares of Series J Preferred Stock representing the unconverted
portion of the certificate so surrendered as required by Section 5(b)(ii).



(m) Regulatory Compliance. If any shares of Common Stock to be reserved for the
purpose of conversion of Series J Preferred Stock require registration or listing with or approval
of any governmental authority, stock exchange or other regulatory body under any federal or state
law or regulation or otherwise before such shares may be validly issued or delivered upon
conversion, the Company shall, at its sole cost and expense, in good faith and as expeditiously as
possible, endeavor to secure such registration, listing or approval, as the case may be.



6. Participation Right; Exchange Rights. Subject to the terms and conditions specified
in this Section 6, for a period of one year calculated from the Issuance Date, the holders of
Series J Preferred Stock shall have a right to participate with respect to the issuance or possible
issuance of (i) equity or equity-linked securities, or (ii) debt which is convertible into equity
or in which there is an equity component (“Additional Securities”) on the same terms and conditions
as offered by the Company to the other purchasers of such Additional Securities. Each time the
Company proposes to offer any Additional Securities, the Company shall make an offering of such
Additional Securities to each Purchaser in accordance with the following provisions:



(a) The Company shall deliver a notice (the “Notice”) to the holders of Series J Preferred
Stock stating (i) its bona fide intention to offer such Additional Securities, (ii) the number of
such Additional Securities to be offered, (iii) the price and terms, if any, upon which it
proposes to offer such Additional Securities, and (iv) the anticipated closing date of the sale of
such Additional Securities.



(b) By written notification received by the Company within five (5) trading days after giving
of the Notice, any holder of Series J Preferred Stock may elect to purchase or obtain, at the price
and on the terms specified in the Notice, up to that portion of such Additional Securities that
have a total purchase price equal to one half of the Liquidation Preference Amount of the Series J
Preferred Stock held by such holder (including any shares of Series J Preferred Stock that have
been converted into Common Stock). The Company shall promptly, in writing, inform each holder of
Series J Preferred Stock that elects to purchase all of the Additional Shares available to it
(“Fully-Exercising Holder”) of any other holder of Series J Preferred Stock’s failure to do
likewise. During the five (5) trading day period commencing after such information is given, each
Fully-Exercising Holder shall be entitled to obtain that portion of the Additional Securities for
which the holders of Series J Preferred Stock were entitled to subscribe but that were not
subscribed for by the holders of Series J Preferred Stock that is equal to the proportion that the
Liquidation Preference Amount of the Series J Preferred Stock held by such Fully-Exercising Holder
(including any shares of Series J Preferred Stock that have been converted into Common Stock)
bears to the total Liquidation Preference Amount of the Series J Preferred Stock held by all
holders of Series J Preferred Stock (including any shares of Series J Preferred Stock that have
been converted into Common Stock).



(c) Notwithstanding the provisions of Section 6(b), for a period of one year calculated from
the effective date of the Registration Statement, by written notification delivered by the Company
within five (5) trading days after delivery of the Notice, any holder of Series J Preferred Stock
may elect to purchase or obtain, at the price and on the terms specified in the Notice, up to that
portion of such Additional Securities that have a total purchase price equal to the Liquidation
Preference Amount of the Series J Preferred Stock held by such holder (including any shares of
Series J Preferred Stock that have been converted into Common Stock); provided, however, that any
holder of Series J Preferred Stock who elects to purchase Additional Securities pursuant to this
Section 6(c) shall be required to surrender to the Company Series J Preferred Stock (or Common
Stock issued on the conversion of such Series J Preferred Stock) for which the Liquidation
Preference Amount (plus all accrued but unpaid dividends) equals the total purchase price of the
Additional Securities to be acquired by such holder of Series J Preferred Stock, and the Company
shall accept such Series J Preferred Stock (or Common Stock issued on the conversion of such
Series J Preferred Stock) as payment in full for such Additional Securities. The provisions of
this Section 6(c) shall be of no further force or effect upon the consummation of any transaction
(other than those transactions contemplated by the Securities Purchase Agreement) resulting in the
issuance of the Company’s Common Stock in connection with a bona fide offering at an offering price
per share (prior to any underwriter’s commissions and discounts) of not less than $0.075 (as
adjusted to reflect any stock dividends, distributions, combinations, reclassifications and other
similar transactions effected by the Company in respect to its Common Stock) that results in
total net proceeds to the Company of at least $2,500,000.



(d) If all Additional Securities which the holders of Series J Preferred Stock are entitled to
acquire pursuant to Section 6(b) or Section 6(c) are not elected to be acquired as provided in
subsection Section 6(b) or Section 6(c) hereof, the Company may, during the 75-day period following
the expiration of the period provided in subsection Section 6(b) or Section 6(c) hereof, offer the
remaining unsubscribed portion of such Additional Securities to any person or persons at a price
not less than, and upon terms no more favorable to the offeree than, those specified in the Notice.
If the Company does not consummate the sale of such Additional Securities within such period, the
right provided hereunder shall be deemed to be revived and such Additional Securities shall not be
offered or sold unless first reoffered to the holders of Series J Preferred Stock in accordance
herewith.



(e) The participation right in this Section 6 shall not be applicable to (i) the issuance or
sale of shares of Common Stock (or options therefor) to employees, officers, directors, or
consultants of the Company for the primary purpose of soliciting or retaining their employment or
service pursuant to a stock option plan (or similar equity incentive plan) approved in good faith
by the Board of Directors, (ii) the issuance of Common Stock in connection with a bona fide
underwritten public offering at an offering price per share (prior to underwriter’s commissions
and discounts) of not less than 200% of the Conversion Price (as adjusted to reflect any stock
dividends, distributions, combinations, reclassifications and other similar transactions effected
by the Company in respect to its Common Stock) that results in total proceeds to the Company of
at least $10,000,000, (iii) the issuance or sale of the Series J Preferred Stock, (iv) the issuance
of securities in connection with mergers, acquisitions, strategic business partnerships or
joint ventures approved by the Board of Directors and the primary purpose of which, in the
reasonable judgment of the Board of Directors, is not to raise additional capital, (v) any
issuance of Convertible Securities in connection with any amortization or other payments on
indebtedness of the Company outstanding on the date hereof and (vi) any issuance of securities as
to which the majority holders shall have executed a written waiver of the rights contained in this
Section 6.



(f) The participation right set forth in this Section 6 may not be assigned or transferred,
except that such right is assignable by each holder of Series J Preferred Stock to any wholly-owned
subsidiary or parent of, or to any corporation or entity that is, within the meaning of the
Securities Act, controlling, controlled by or under common control with, any such holder of Series
J Preferred Stock.



7. Conversion Restriction.



(a) Subject to the terms and provisions of Section 5(c) hereof, at no time may a holder of
shares of Series J Preferred Stock convert shares of the Series J Preferred Stock if the number of
shares of Common Stock to be issued pursuant to such conversion, when aggregated with all other
shares of Common Stock owned by such holder at such time, would result in such holder beneficially
owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules thereunder) in excess of 4.9% of the total shares of Common Stock
outstanding at such time; provided, however, that upon a holder of Series J
Preferred Stock providing the Company with sixty-one (61) days notice (pursuant to Section 5(i)
hereof) (the “Waiver Notice”) that such holder would like to waive Section 7(a) of this Certificate
of Designation with regard to any or all shares of Common Stock issuable upon conversion of Series
J Preferred Stock, this Section 7(a) shall be of no force or effect with regard to those shares of
Series J Preferred Stock referenced in the Waiver Notice.



(b) Notwithstanding anything to the contrary set forth in Section 5 hereof, at no time may a
holder of shares of Series J Preferred Stock convert any shares of the Series J Preferred Stock if
the number of shares of Common Stock to be issued pursuant to such conversion would exceed, when
aggregated with all other shares of Common Stock beneficially owned by such holder at such time,
9.99% of all of the Common Stock outstanding at such time; provided, however, that upon a holder of
Series J Preferred Stock providing the Company with sixty-one (61) days notice (pursuant to
Section 5(i) hereof) (the “Waiver Notice”) that such holder desires to waive the application of
this Section 7 with regard to any or all shares of Common Stock issuable upon conversion of the
Series J Preferred Stock held by such holder, this Section 7 shall be of no further force or effect
with regard to those shares of Series J Preferred Stock referenced in the Waiver Notice.



8. Inability to Fully Convert



(a) Holder’s Option if Company Cannot Fully Convert. If, upon the Company’s receipt
of a Conversion Notice the Company cannot issue shares of Common Stock for any reason, including,
without limitation, because the Company (x) does not have a sufficient number of shares of Common
Stock authorized and available for issuance or (y) is otherwise prohibited by applicable law or by
the rules or regulations of any stock exchange, interdealer quotation system or other
self-regulatory organization with jurisdiction over the Company or its securities, from issuing all
of the Common Stock which is to be issued to a holder of Series J Preferred Stock pursuant to a
Conversion Notice, then the Company shall issue as many shares of Common Stock as it is able to
issue in accordance with such holder’s Conversion Notice and, with respect to the unconverted
Series J Preferred Stock (the “Unconverted Preferred Stock”), the holder, solely at such holder’s
option, may elect, at any time after receipt of notice from the Company that there is Unconverted
Preferred Stock, to void the holder’s Conversion Notice as to the number of shares of Common Stock
the Company is unable to issue (the “Unissued Shares of Common Stock”) and retain or have returned,
as the case may be, the certificates for the shares of the Unconverted Preferred Stock.



(b) Mechanics of Fulfilling Holder’s Election. The Company shall immediately send via
facsimile to a holder of Series J Preferred Stock, upon receipt of a facsimile copy of a Conversion
Notice from such holder which cannot be fully satisfied as described in Section 8(a) above, a
notice of the Company’s inability to fully satisfy such holder’s Conversion Notice (the “Inability
to Fully Convert Notice”). Such Inability to Fully Convert Notice shall indicate (i) the reason
why the Company is unable to fully satisfy such holder’s Conversion Notice and (ii) the number of
shares of Series J Preferred Stock which cannot be converted.



(c) Pro-Rata Conversion. In the event the Company within a period of ten days
receives Conversion Notices from more than one holder of Series J Preferred Stock and the Company
can convert some, but not all, of the Series J Preferred Stock required to be converted as a result
of such Conversion Notices, the Company shall convert from each holder of Series J Preferred Stock
electing to have Series J Preferred Stock converted within such ten day period, an amount equal to
the number of shares of Series J Preferred Stock such holder elected to have converted in such ten
day period multiplied by a fraction, the numerator of which shall be the number of shares of Series
J Preferred Stock such holder elected to have converted in such ten day period and the denominator
of which shall be the total number of shares of Series J Preferred Stock all holders elected to
have converted in such ten day period. The Company shall not convert any Series J Preferred Stock
pursuant to a Mandatory Conversion Notice until it shall have converted all Series J Preferred
Stock pursuant to any Voluntary Conversion Notice.



9. Vote to Change the Terms of or Issue Preferred Stock. The affirmative vote at a
meeting duly called for such purpose, or the written consent without a meeting, of the holders of
not less than three-fourths (3/4) of the then outstanding shares of Series J Preferred Stock, shall
be required to approve any change to this Certificate of Designation which would amend, alter,
change or repeal any of the powers, designations, preferences and rights of the Series J Preferred
Stock.



10. Lost or Stolen Certificates. Upon receipt by the Company of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of any Preferred Stock Certificates
representing the shares of Series J Preferred Stock, and, in the case of loss, theft or
destruction, of an indemnity satisfactory to the Company and, in the case of mutilation, upon
surrender and cancellation of the Preferred Stock Certificate(s), the Company shall execute and
deliver new Preferred Stock Certificate(s) of like tenor and date.



11. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief.
The remedies provided in this Certificate of Designation shall be cumulative and in addition to all
other remedies available under this Certificate of Designation, at law or in equity (including a
decree of specific performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein
shall limit a holder’s right to pursue actual damages for any failure by the Company to comply with
the terms of this Certificate of Designation. Amounts set forth or provided for herein with
respect to payment, conversion and the like (and the computation thereof) shall be the amounts to
be received by the holder thereof and shall not, except as expressly provided herein, be subject to
any other obligation of the Company (or the performance thereof). The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the holders of the Series
J Preferred Stock and that the remedy at law for any such breach may be inadequate. The Company
therefore agrees that, in the event of any such breach or threatened breach, the holders of the
Series J Preferred Stock 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.



12. Specific Shall Not Limit General; Construction. No specific provision contained
in this Certificate of Designation shall limit or modify any more general provision contained
herein. This Certificate of Designation shall be deemed to be jointly drafted by the Company and
all initial holders of the Series J Preferred Stock and shall not be construed against any person
as the drafter hereof.



13. Failure or Indulgence Not Waiver. No failure or delay on the part of a holder of
Series J Preferred Stock 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.



1



IN WITNESS WHEREOF, the undersigned has executed this Certificate and does affirm the
foregoing as true on this 31st day of March, 2006.




WAVE WIRELESS CORPORATION




By:

Name:

Title:




2




EXHIBIT I




WAVE WIRELESS CORPORATION




CONVERSION NOTICE




Reference is made to the Certificate of Designation of the Relative Rights and Preferences of the
Series J Convertible Preferred Stock of Wave Wireless Corporation (the “Certificate of
Designation”). In accordance with and pursuant to the Certificate of Designation, the undersigned
hereby elects to convert the number of shares of Series J Convertible Preferred Stock (the
“Preferred Shares”) of Wave Wireless Corporation, a Delaware corporation (the “Company”), indicated
below into shares of Common Stock, par value $.0001 per share (the “Common Stock”), of the Company,
by tendering the stock certificate(s) representing the Preferred Shares specified below as of the
date specified below.



	 	 	 	 	 
	Date of Conversion:

	 	

	 	

	 

	 	 
	 	 
	Number of Preferred Shares to be converted:

	 	

	 	

	 
	 	 	 	 
	 
	 	 
	 
	 	 	 	 
	Stock certificate no(s). of Preferred Shares to be converted:
	 	 
	 
	 	 	 	 
	 

	 
	 	 	 	 
	The Common Stock have been sold:

Please confirm the following information:

	 	YES      



	 	NO      



	Conversion Price:

	 	

	 	

	 

	 	 
	 	 
	Number of shares of

Common Stock to be issued:

	 	



	 	



	 

	 	 
	 	 







Number of shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the Date of Conversion determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended:



Please issue the Common Stock into which the Preferred Shares are being converted and, if
applicable, any check drawn on an account of the Company in the following name and to the following
address:




	 	 	 	Issue to:






	 	 	 	Facsimile Number:






	 	 	 	Authorization:






By:

Title:





	 	 	 	Dated:






3