Document:

Exhibit 10.3

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

Original Issue Date: April 23, 2004

Original Conversion Price (subject to adjustment herein): $0.2175

                                                               $---------------

                              CONVERTIBLE DEBENTURE

                               DUE APRIL 23, 2007

           THIS DEBENTURE is one of a series of duly authorized and issued
Debentures of WaveRider Communications Inc., a Nevada corporation, having a
principal place of business at 255 Consumers Road, Suite 500, Toronto, Ontario
M2J 1R4 (the "Company"), designated as its Convertible Debenture, due April 23,
2007 (the "Debentures").

         FOR VALUE RECEIVED, the Company promises to pay to
________________________ or its registered assigns (the "Holder"), the principal
sum of $_______________ on April 23, 2007 or such earlier date as the Debentures
are required or permitted to be repaid as provided hereunder (the "Maturity
Date"). Except as set forth in Section 5, the Company may not prepay any portion
of the principal amount of this Debenture without the prior written consent of
the Holder.

         This Debenture is subject to the following additional provisions:

         Section 1. This Debenture is exchangeable for an equal aggregate
principal amount of Debentures of different authorized denominations, as
requested by the Holder surrendering the same. No service charge will be made
for such registration of transfer or exchange.

         Section 2. This Debenture has been issued subject to certain investment
representations of the original Holder set forth in the Purchase Agreement and
may be transferred or exchanged only in compliance with the Purchase Agreement
and applicable federal and state securities laws and regulations. Prior to due
presentment to the Company for transfer of this Debenture, the Company and any
agent of the Company may treat the Person in whose name this Debenture is duly
registered on the Debenture Register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or not
this Debenture is overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.
<PAGE>

         Section 3.    Events of Default.
         --------      -----------------

                  (a) "Event of Default", wherever used herein, means any one of
         the following events (whatever the reason and whether it shall be
         voluntary or involuntary or effected by operation of law or pursuant to
         any judgment, decree or order of any court, or any order, rule or
         regulation of any administrative or governmental body):

                           (i) any default in the payment of the principal of,
                  or liquidated damages in respect of, any Debentures, free of
                  any claim of subordination, as and when the same shall become
                  due and payable (whether on a Conversion Date or the Maturity
                  Date or by acceleration or otherwise) which default is not
                  cured, if possible to cure, within 3 days of notice of such
                  default sent by the Holder;

                           (ii) the Company shall materially fail to observe or
                  perform any other covenant, agreement or warranty contained
                  in, or otherwise commit any material breach of any of the
                  Transaction Documents (other than a breach by the Company of
                  its obligations to deliver shares of Common Stock to the
                  Holder upon conversion which breach is addressed in clause (x)
                  below) which is not cured, if possible to cure, within 5 days
                  of notice of such default sent by the Holder;

                           (iii) the Company or any of its subsidiaries shall
                  commence, or there shall be commenced against the Company or
                  any such subsidiary a case under any applicable bankruptcy or
                  insolvency laws as now or hereafter in effect or any successor
                  thereto, or the Company commences any other proceeding under
                  any reorganization, arrangement, adjustment of debt, relief of
                  debtors, dissolution, insolvency or liquidation or similar law
                  of any jurisdiction whether now or hereafter in effect
                  relating to the Company or any subsidiary thereof or there is
                  commenced against the Company or any subsidiary thereof any
                  such bankruptcy, insolvency or other proceeding which remains
                  undismissed for a period of 60 days; or the Company or any
                  subsidiary thereof is adjudicated insolvent or bankrupt; or
                  any order of relief or other order approving any such case or
                  proceeding is entered; or the Company or any subsidiary
                  thereof suffers any appointment of any custodian or the like
                  for it or any substantial part of its property which continues
                  undischarged or unstayed for a period of 60 days; or the
                  Company or any subsidiary thereof makes a general assignment
                  for the benefit of creditors; or the Company shall fail to
                  pay, or shall state that it is unable to pay, or shall be
                  unable to pay, its debts generally as they become due; or the
                  Company or any subsidiary thereof shall call a meeting of its
                  creditors with a view to arranging a composition, adjustment
                  or restructuring of its debts; or the Company or any
                  subsidiary thereof shall by any act or failure to act
                  expressly indicate its consent to, approval of or acquiescence
                  in any of the foregoing; or any corporate or other action is
                  taken by the Company or any subsidiary thereof for the purpose
                  of effecting any of the foregoing;

                           (iv) the Company shall default in any of its
                  obligations under any other Debenture or any mortgage, credit
                  agreement or other facility, indenture agreement, factoring
                  agreement or other instrument under which there may be issued,
                  or by which there may be secured or evidenced any indebtedness
                  for borrowed money or money due under any long term leasing or
                  factoring arrangement of the Company in an amount exceeding
                  $150,000, whether such indebtedness now exists or shall
                  hereafter be created and such default shall result in such
                  indebtedness becoming or being declared due and payable prior
                  to the date on which it would otherwise become due and
                  payable;
<PAGE>

                           (v) the Common Stock shall not be eligible for
                  quotation on or quoted for trading on a Principal Market and
                  shall not again be eligible for and quoted or listed for
                  trading thereon within five Trading Days;

                           (vi) the Company shall be a party to any Change of
                  Control Transaction , shall agree to sell or dispose of all or
                  in excess of 40% of its assets in one or more transactions
                  (whether or not such sale would constitute a Change of Control
                  Transaction) or shall redeem or repurchase more than a de
                  minimis number of its outstanding shares of Common Stock or
                  other equity securities of the Company (other than redemptions
                  of Underlying Shares and repurchases of shares of Common Stock
                  or other equity securities of departing officers and directors
                  of the Company; provided no repurchase shall exceed $100,000
                  for any officer or director);

                           (vii) a Registration Statement shall not have been
                  declared effective by the Commission on or prior to the 180th
                  calendar day after the Original Issue Date (210th calendar day
                  in the event of a "full review" by the Commission);

                           (viii) if, during the Effectiveness Period (as
                  defined in the Registration Rights Agreement), the
                  effectiveness of the Registration Statement lapses for any
                  reason or the Holder shall not be permitted to resell
                  Registrable Securities (as defined in the Registration Rights
                  Agreement) under the Registration Statement, in either case,
                  for more than 15 consecutive Trading Days or 25
                  non-consecutive Trading Days during any 12 month period;
<PAGE>

                           (ix) an Event (as defined in the Registration Rights
                  Agreement) shall not have been cured to the reasonable
                  satisfaction of the Holder prior to the expiration of thirty
                  days from the Event Date (as defined in the Registration
                  Rights Agreement) relating thereto (other than an Event
                  resulting from a failure of a Registration Statement to be
                  declared effective by the Commission on or prior to the
                  Effectiveness Date (as defined in the Registration Rights
                  Agreement), which shall be covered by Section 3(a)(vii));

                           (x) the Company shall fail for any reason to deliver
                  certificates to a Holder prior to the fifth Trading Day after
                  a Conversion Date pursuant to and in accordance with Section
                  4(b) or the Company shall provide notice to the Holder,
                  including by way of public announcement, at any time, of its
                  intention not to comply with requests for conversions of any
                  Debentures in accordance with the terms hereof; or

                           (xi) the Company shall fail for any reason to deliver
                  the payment in cash pursuant to a Buy-In (as defined herein)
                  within five days after notice thereof is delivered hereunder.

                  (b) If any Event of Default occurs and is continuing, the full
         principal amount of this Debenture, together with other amounts owing
         in respect thereof, to the date of acceleration shall become at the
         Holder's election, immediately due and payable in cash. The aggregate
         amount payable upon an Event of Default shall be equal to the Mandatory
         Prepayment Amount. All Debentures for which the full Mandatory
         Prepayment Amount hereunder shall have been paid in accordance herewith
         shall promptly be surrendered to or as directed by the Company. The
         Holder need not provide and the Company hereby waives any presentment,
         demand, protest or other notice of any kind, and the Holder may
         immediately and without expiration of any grace period enforce any and
         all of its rights and remedies hereunder and all other remedies
         available to it under applicable law. Such declaration may be rescinded
         and annulled by Holder at any time prior to payment hereunder and the
         Holder shall have all rights as a Debenture holder until such time, if
         any, as the full payment under this Section shall have been received by
         it. No such rescission or annulment shall affect any subsequent Event
         of Default or impair any right consequent thereon.
<PAGE>

         Section 4.    Conversion.
         --------      ----------

                  (a) (i) At any time after the Closing Date, this Debenture
                  shall be convertible into shares of Common Stock at the option
                  of the Holder, in whole or in part at any time and from time
                  to time (subject to the limitations on conversion set forth in
                  Section 4(a)(ii) hereof). The Holder shall effect conversions
                  by delivering to the Company the form of Notice of Conversion
                  attached hereto as Annex A (a "Notice of Conversion"),
                  specifying therein the principal amount of Debentures to be
                  converted and the date on which such conversion is to be
                  effected (a "Conversion Date"). If no Conversion Date is
                  specified in a Notice of Conversion, the Conversion Date shall
                  be the date that such Notice of Conversion is provided
                  hereunder. To effect conversions hereunder, the Holder shall
                  not be required to physically surrender Debentures to the
                  Company unless the entire principal amount of this Debenture
                  has been so converted. Conversions hereunder shall have the
                  effect of lowering the outstanding principal amount of this
                  Debenture in an amount equal to the applicable conversion. The
                  Holder and the Company shall maintain records showing the
                  principal amount converted and the date of such conversions.
                  The Company shall deliver any objection to the figures
                  represented in the Conversion Schedules within 1 Business Day
                  of receipt of such notice. In the event of any dispute or
                  discrepancy, the records of the Holder shall be controlling
                  and determinative in the absence of manifest error. The Holder
                  and any assignee, by acceptance of this Debenture, acknowledge
                  and agree that, by reason of the provisions of this paragraph,
                  following conversion of a portion of this Debenture, the
                  unpaid and unconverted principal amount of this Debenture may
                  be less than the amount stated on the face hereof.
<PAGE>

                           (ii) The Company shall not effect any conversion of
                  this Debenture, and the Holder shall not have the right to
                  convert any portion of this Debenture, pursuant to Section
                  4(a)(i), Section 5(b) or otherwise, to the extent that after
                  giving effect to such conversion, the Holder (together with
                  the Holder's affiliates), as set forth on the applicable
                  Notice of Conversion, would beneficially own in excess of
                  [4.999% or 9.999%], to be determined by each investor prior to
                  execution] of the number of shares of the Common Stock
                  outstanding immediately after giving effect to such
                  conversion. For purposes of the foregoing sentence, the number
                  of shares of Common Stock beneficially owned by the Holder and
                  its affiliates shall include the number of shares of Common
                  Stock issuable upon conversion of this Debenture with respect
                  to which the determination of such sentence is being made, but
                  shall exclude the number of shares of Common Stock which would
                  be issuable upon (A) conversion of the remaining, nonconverted
                  portion of this Debenture beneficially owned by the Holder or
                  any of its affiliates and (B) exercise or conversion of the
                  unexercised or nonconverted portion of any other securities of
                  the Company (including, without limitation, any other
                  Debentures or the Warrants) subject to a limitation on
                  conversion or exercise analogous to the limitation contained
                  herein beneficially owned by the Holder or any of its
                  affiliates. Except as set forth in the preceding sentence, for
                  purposes of this Section 4(a)(ii), beneficial ownership shall
                  be calculated in accordance with Section 13(d) of the Exchange
                  Act. To the extent that the limitation contained in this
                  section applies, the determination of whether this Debenture
                  is convertible (in relation to other securities owned by the
                  Holder) and of which a portion of this Debenture is
                  convertible shall be in the sole discretion of such Holder. To
                  ensure compliance with this restriction, the Holder will be
                  deemed to represent to the Company each time it delivers a
                  Notice of Conversion that such Notice of Conversion has not
                  violated the restrictions set forth in this paragraph and the
                  Company shall have no obligation to verify or confirm the
                  accuracy of such determination. For purposes of this Section
                  4(a)(ii), in determining the number of outstanding shares of
                  Common Stock, the Holder may rely on the number of outstanding
                  shares of Common Stock as reflected in (x) the Company's most
                  recent Form 10-Q or Form 10-K, as the case may be, (y) a more
                  recent public announcement by the Company or (z) any other
                  notice by the Company or the Company's Transfer Agent setting
                  forth the number of shares of Common Stock outstanding. Upon
                  the written or oral request of the Holder, the Company shall
                  within two Trading Days confirm orally and in writing to the
                  Holder the number of shares of Common Stock then outstanding.
                  In any case, the number of outstanding shares of Common Stock
                  shall be determined after giving effect to the conversion or
                  exercise of securities of the Company, including this
                  Debenture, by the Holder or its affiliates since the date as
                  of which such number of outstanding shares of Common Stock was
                  reported. The provisions of this Section 4(a)(ii) may be
                  waived by the Holder upon, at the election of the Holder, not
                  less than 61 days' prior notice to the Company, and the
                  provisions of this Section 4(a)(i) shall continue to apply
                  until such 61st day (or such later date, as determined by the
                  Holder, as may be specified in such notice of waiver).
<PAGE>

                           (iii) Underlying Shares Issuable Upon Conversion and
                  Pursuant to the Conversion of Principal Amount. The number of
                  shares of Common Stock issuable upon a conversion shall be
                  determined by the quotient obtained by dividing (x) the
                  outstanding principal amount of this Debenture to be converted
                  by (y) the Set Price.

                  (b) (i) Not later than three Trading Days after any Conversion
                  Date, the Company will deliver to the Holder a certificate or
                  certificates representing the Underlying Shares which shall be
                  free of restrictive legends and trading restrictions (other
                  than those required by the Purchase Agreement) representing
                  the number of shares of Common Stock being acquired upon the
                  conversion of Debentures. The Company shall, if available and
                  if allowed under applicable securities laws, use its best
                  efforts to deliver any certificate or certificates required to
                  be delivered by the Company under this Section electronically
                  through the Depository Trust Corporation or another
                  established clearing corporation performing similar functions.
                  If in the case of any Notice of Conversion such certificate or
                  certificates are not delivered to or as directed by the
                  applicable Holder by the fifth Trading Day after a Conversion
                  Date, the Holder shall be entitled by written notice to the
                  Company at any time on or before its receipt of such
                  certificate or certificates thereafter, to rescind such
                  conversion, in which event the Company shall immediately
                  return the certificates representing the principal amount of
                  Debentures tendered for conversion.

                           (ii) If the Company fails for any reason to deliver
                  to the Holder such certificate or certificates pursuant to
                  Section 4(b)(i) by the third Trading Day after the Conversion
                  Date, the Company shall pay to such Holder, in cash, as
                  liquidated damages and not as a penalty, for each $5,000 of
                  principal amount being converted, $50 per Trading Day
                  (increasing to $100 per Trading Day after 3 Trading Days after
                  such damages begin to accrue) for each Trading Day after such
                  third Trading Day until such certificates are delivered.
                  Nothing herein shall limit a Holder's right to pursue actual
                  damages or declare an Event of Default pursuant to Section 3
                  herein for the Company's failure to deliver certificates
                  representing shares of Common Stock upon conversion within the
                  period specified herein and such Holder shall have the right
                  to pursue all remedies available to it at law or in equity
                  including, without limitation, a decree of specific
                  performance and/or injunctive relief. The exercise of any such
                  rights shall not prohibit the Holders from seeking to enforce
                  damages pursuant to any other Section hereof or under
                  applicable law.
<PAGE>

                           (iii) In addition to any other rights available to
                  the Holder, if the Company fails for any reason to deliver to
                  the Holder such certificate or certificates pursuant to
                  Section 4(b)(i) by the third Trading Day after the Conversion
                  Date, and if after such third Trading Day the Holder is
                  required by its brokerage firm to purchase (in an open market
                  transaction or otherwise) Common Stock to deliver in
                  satisfaction of a sale by such Holder of the Underlying Shares
                  which the Holder anticipated receiving upon such conversion (a
                  "Buy-In"), then the Company shall (A) pay in cash to the
                  Holder (in addition to any remedies available to or elected by
                  the Holder) the amount by which (x) the Holder's total
                  purchase price (including brokerage commissions, if any) for
                  the Common Stock so purchased exceeds (y) the product of (1)
                  the aggregate number of shares of Common Stock that such
                  Holder anticipated receiving from the conversion at issue
                  multiplied by (2) the actual sale price of the Common Stock at
                  the time of the sale (including brokerage commissions, if any)
                  giving rise to such purchase obligation and (B) at the option
                  of the Holder, either reissue Debentures in principal amount
                  equal to the principal amount of the attempted conversion or
                  deliver to the Holder the number of shares of Common Stock
                  that would have been issued had the Company timely complied
                  with its delivery requirements under Section 4(b)(i). For
                  example, if the Holder purchases Common Stock having a total
                  purchase price of $11,000 to cover a Buy-In with respect to an
                  attempted conversion of Debentures with respect to which the
                  actual sale price of the Underlying Shares at the time of the
                  sale (including brokerage commissions, if any) giving rise to
                  such purchase obligation was a total of $10,000 under clause
                  (A) of the immediately preceding sentence, the Company shall
                  be required to pay the Holder $1,000. The Holder shall provide
                  the Company written notice indicating the amounts payable to
                  the Holder in respect of the Buy-In. Notwithstanding anything
                  contained herein to the contrary, if a Holder requires the
                  Company to make payment in respect of a Buy-In for the failure
                  to timely deliver certificates hereunder and the Company
                  timely pays in full such payment, the Company shall not be
                  required to pay such Holder liquidated damages under Section
                  4(b)(ii) in respect of the certificates resulting in such
                  Buy-In.

                  (c) (i) The conversion price in effect on any Conversion Date
                  shall be equal to $0.2175 (subject to adjustment herein)(the
                  "Set Price").

                               (ii) If the Company, at any time while the
                  Debentures are outstanding: (A) shall pay a stock dividend or
                  otherwise make a distribution or distributions on shares of
                  its Common Stock or any other equity or equity equivalent
                  securities payable in shares of Common Stock (which, for
                  avoidance of doubt, shall not include any shares of Common
                  Stock issued by the Company pursuant to this Debenture), (B)
                  subdivide outstanding shares of Common Stock into a larger
                  number of shares, (C) combine (including by way of reverse
                  stock split) outstanding shares of Common Stock into a smaller
                  number of shares, or (D) issue by reclassification of shares
                  of the Common Stock any shares of capital stock of the
                  Company, then the Set Price shall be multiplied by a fraction
                  of which the numerator shall be the number of shares of Common
                  Stock (excluding treasury shares, if any) outstanding before
                  such event and of which the denominator shall be the number of
                  shares of Common Stock outstanding after such event. Any
                  adjustment made pursuant to this Section shall become
                  effective immediately after the record date for the
                  determination of stockholders entitled to receive such
                  dividend or distribution and shall become effective
                  immediately after the effective date in the case of a
                  subdivision, combination or re-classification.
<PAGE>

                               (iii) If the Company, at any time while
                  Debentures are outstanding, shall issue rights, options or
                  warrants to all holders of Common Stock (and not to Holders)
                  entitling them to subscribe for or purchase shares of Common
                  Stock or other securities exercisable, convertible into or
                  exchangeable for Common Stock (the "Common Stock Equivalents")
                  at a price per share less than the Closing Price at the record
                  date mentioned below, then the Set Price shall be adjusted by
                  multiplying the Set Price in effect immediately prior to such
                  record date by a fraction, of which the denominator shall be
                  the number of shares of the Common Stock (excluding treasury
                  shares, if any) outstanding on the date of issuance of such
                  rights or warrants plus the number of additional shares of
                  Common Stock offered for subscription or purchase, and of
                  which the numerator shall be the number of shares of the
                  Common Stock (excluding treasury shares, if any) outstanding
                  on the date of issuance of such rights or warrants plus the
                  number of shares which the aggregate offering price of the
                  total number of shares so offered would purchase at the
                  Closing Price on the record date. For purposes of this clause
                  (iii), the purchase price for the rights, options or warrants
                  includes the total amount, if any, received or receivable by
                  the Company as consideration for the issuance or granting of
                  all such rights, options or warrants, plus the minimum
                  aggregate amount of additional consideration, if any, payable
                  to the Company upon the exercise of all such rights, options
                  or warrants, plus in the case of Common Stock Equivalents
                  issuable upon the exercise of such rights, options or
                  warrants, the minimum aggregate additional consideration
                  payable upon the exercise, conversion or exchange thereof at
                  the time such Common Stock Equivalents first become
                  exercisable, convertible or exchangeable. Such adjustment
                  shall be made whenever such rights, options or warrants are
                  issued, and shall become effective immediately after the
                  record date for the determination of stockholders entitled to
                  receive such rights, options or warrants.

                           (iv) If the Company or any subsidiary thereof, as
                  applicable, at any time while Debentures are outstanding,
                  shall offer, sell, grant any option to purchase or offer, sell
                  or grant any right to reprice its securities, or otherwise
                  dispose of or issue (or announce any offer, sale, grant or any
                  option to purchase or other disposition) any Common Stock or
                  Common Stock Equivalent entitling any Person to acquire shares
                  of Common Stock, at an effective price per share less than the
                  then Set Price ("Dilutive Issuance"), as adjusted hereunder
                  (if the holder of the Common Stock or Common Stock Equivalent
                  so issued shall at any time, whether by operation of purchase
                  price adjustments, reset provisions, floating conversion,
                  exercise or exchange prices or otherwise, or due to warrants,
                  options or rights per share which is issued in connection with
                  such issuance, be entitled to receive shares of Common Stock
                  at an effective price per share which is less than the Set
                  Price, such issuance shall be deemed to have occurred for less
                  than the Set Price), then the Set Price shall be reduced to
                  equal the effective conversion, exchange or purchase price for
                  such Common Stock or Common Stock Equivalents (including any
                  reset provisions thereof) at issue. Such adjustment shall be
                  made whenever such Common Stock or Common Stock Equivalents
                  are issued. The Company shall notify the Holder in writing, no
                  later than the business day following the issuance of any
                  Common Stock or Common Stock Equivalent subject to this
                  section, indicating therein the applicable issuance price, or
                  of applicable reset price, exchange price, conversion price
                  and other pricing terms.
<PAGE>

                           (v) If the Company, at any time while Debentures are
                  outstanding, shall distribute to all holders of Common Stock
                  (and not to Holders) evidences of its indebtedness or assets
                  or rights or warrants to subscribe for or purchase any
                  security, then in each such case the Set Price shall be
                  determined by multiplying such price in effect immediately
                  prior to the record date fixed for determination of
                  stockholders entitled to receive such distribution by a
                  fraction of which the denominator shall be the Closing Price
                  determined as of the record date mentioned above, and of which
                  the numerator shall be such Closing Price on such record date
                  less the then fair market value at such record date of the
                  portion of such assets or evidence of indebtedness so
                  distributed applicable to one outstanding share of the Common
                  Stock as determined by the Board of Directors in good faith.
                  In either case the adjustments shall be described in a
                  statement provided to the Holders of the portion of assets or
                  evidences of indebtedness so distributed or such subscription
                  rights applicable to one share of Common Stock. Such
                  adjustment shall be made whenever any such distribution is
                  made and shall become effective immediately after the record
                  date mentioned above.

                           (vi) All calculations under this Section 4 shall be
                  made to the nearest cent or the nearest 1/100th of a share, as
                  the case may be. For purposes of this Section 4, the number of
                  shares of Common Stock deemed to be outstanding as of a given
                  date shall be the sum of the number of shares of Common Stock
                  (excluding treasury shares, if any) outstanding.

                           (vii) Whenever the Set Price is adjusted pursuant to
                  any of Section 4(c)(ii) - (v), the Company shall promptly mail
                  to each Holder a notice setting forth the Set Price after such
                  adjustment and setting forth a brief statement of the facts
                  requiring such adjustment. If the Company issues a variable
                  rate security, the Company shall be deemed to have issued
                  Common Stock or Common Stock Equivalents at the lowest
                  possible conversion or exercise price at which such securities
                  may be converted or exercised in the case of a Variable Rate
                  Transaction (as defined in the Purchase Agreement), or the
                  lowest possible adjustment price in the case of an MFN
                  Transaction (as defined in the Purchase Agreement). The term
                  "Variable Rate Transaction" shall mean a transaction in which
                  the Company issues or sells (i) any debt or equity securities
                  that are convertible into, exchangeable or exercisable for, or
                  include the right to receive additional shares of Common Stock
                  either (A) at a conversion, exercise or exchange rate or other
                  price that is based upon and/or varies with the trading prices
                  of or quotations for the shares of Common Stock at any time
                  after the initial issuance of such debt or equity securities,
                  or (B) with a conversion, exercise or exchange price that is
                  subject to being reset at some future date after the initial
                  issuance of such debt or equity security or upon the
                  occurrence of specified or contingent events directly or
                  indirectly related to the business of the Company or the
                  market for the Common Stock. The term "MFN Transaction" shall
                  mean a transaction in which the Company issues or sells any
                  securities in a capital raising transaction or series of
                  related transactions which grants to an investor the right to
                  receive additional shares based upon future transactions of
                  the Company on terms more favorable than those granted to such
                  investor in such offering.

<PAGE>

                           (viii) If (A) the Company shall declare a dividend
                  (or any other distribution) on the Common Stock; (B) the
                  Company shall declare a special nonrecurring cash dividend on
                  or a redemption of the Common Stock; (C) the Company shall
                  authorize the granting to all holders of the Common Stock
                  rights or warrants to subscribe for or purchase any shares of
                  capital stock of any class or of any rights; (D) the approval
                  of any stockholders of the Company shall be required in
                  connection with any reclassification of the Common Stock, any
                  consolidation or merger to which the Company is a party, any
                  sale or transfer of all or substantially all of the assets of
                  the Company, of any compulsory share exchange whereby the
                  Common Stock is converted into other securities, cash or
                  property; (E) the Company shall authorize the voluntary or
                  involuntary dissolution, liquidation or winding up of the
                  affairs of the Company; then, in each case, the Company shall
                  cause to be filed at each office or agency maintained for the
                  purpose of conversion of the Debentures, and shall cause to be
                  mailed to the Holders at their last addresses as they shall
                  appear upon the stock books of the Company, at least 20
                  calendar days prior to the applicable record or effective date
                  hereinafter specified, a notice stating (x) the date on which
                  a record is to be taken for the purpose of such dividend,
                  distribution, redemption, rights or warrants, or if a record
                  is not to be taken, the date as of which the holders of the
                  Common Stock of record to be entitled to such dividend,
                  distributions, redemption, rights or warrants are to be
                  determined or (y) the date on which such reclassification,
                  consolidation, merger, sale, transfer or share exchange is
                  expected to become effective or close, and the date as of
                  which it is expected that holders of the Common Stock of
                  record shall be entitled to exchange their shares of the
                  Common Stock for securities, cash or other property
                  deliverable upon such reclassification, consolidation, merger,
                  sale, transfer or share exchange; provided, that the failure
                  to mail such notice or any defect therein or in the mailing
                  thereof shall not affect the validity of the corporate action
                  required to be specified in such notice. Holders are entitled
                  to convert Debentures during the 20-day period commencing the
                  date of such notice to the effective date of the event
                  triggering such notice.

                           (ix) If, at any time while this Debenture is
                  outstanding, (A) the Company effects any merger or
                  consolidation of the Company with or into another Person, (B)
                  the Company effects any sale of all or substantially all of
                  its assets in one or a series of related transactions, (C) any
                  tender offer or exchange offer (whether by the Company or
                  another Person) is completed pursuant to which holders of
                  Common Stock are permitted to tender or exchange their shares
                  for other securities, cash or property, or (D) the Company
                  effects any reclassification of the Common Stock or any
                  compulsory share exchange pursuant to which the Common Stock
                  is effectively converted into or exchanged for other
                  securities, cash or property (in any such case, a "Fundamental
                  Transaction"), then upon any subsequent conversion of this
                  Debenture, the Holder shall have the right to receive, for
                  each Underlying Share that would have been issuable upon such
                  conversion absent such Fundamental Transaction, the same kind
                  and amount of securities, cash or property as it would have
                  been entitled to receive upon the occurrence of such
                  Fundamental Transaction if it had been, immediately prior to
                  such Fundamental Transaction, the holder of one share of
                  Common Stock (the "Alternate Consideration"). For purposes of
                  any such conversion, the determination of the Set Price shall
                  be appropriately adjusted to apply to such Alternate
                  Consideration based on the amount of Alternate Consideration
                  issuable in respect of one share of Common Stock in such
                  Fundamental Transaction, and the Company shall apportion the
                  Set Price among the Alternate Consideration in a reasonable
                  manner reflecting the relative value of any different
                  components of the Alternate Consideration. If holders of
                  Common Stock are given any choice as to the securities, cash
                  or property to be received in a Fundamental Transaction, then
                  the Holder shall be given the same choice as to the Alternate
                  Consideration it receives upon any conversion of this
                  Debenture following such Fundamental Transaction. To the
                  extent necessary to effectuate the foregoing provisions, any
                  successor to the Company or surviving entity in such
                  Fundamental Transaction shall issue to the Holder a new
                  debenture consistent with the foregoing provisions and
                  evidencing the Holder's right to convert such debenture into
                  Alternate Consideration. The terms of any agreement pursuant
                  to which a Fundamental Transaction is effected shall include
                  terms requiring any such successor or surviving entity to
                  comply with the provisions of this paragraph (c) and insuring
                  that this Debenture (or any such replacement security) will be
                  similarly adjusted upon any subsequent transaction analogous
                  to a Fundamental Transaction.
<PAGE>

                           (x) Notwithstanding the foregoing, no adjustment will
                  be made under this paragraph (c) in respect of an Exempt
                  Issuance.

                           (xi) If the Set Price has been adjusted based on the
                  issuance of a right, option, warrant and/or Common Stock
                  Equivalent and all of such right, option, warrant and/or
                  Common Stock Equivalent expires pursuant to its own terms
                  before it is exercised, exchanged and/or converted, an upward
                  adjustment will be made such that the Set Price will no longer
                  reflect the issuance of such right, option, warrant and/or
                  Common Stock Equivalent.

                  (d) The Company covenants that it will at all times reserve
         and keep available out of its authorized and unissued shares of Common
         Stock solely for the purpose of issuance upon conversion of the
         Debentures, each as herein provided, free from preemptive rights or any
         other actual contingent purchase rights of persons other than the
         Holders, not less than such number of shares of the Common Stock as
         shall (subject to any additional requirements of the Company as to
         reservation of such shares set forth in the Purchase Agreement) be
         issuable (taking into account the adjustments and restrictions of
         Section 4(b)) upon the conversion of the outstanding principal amount
         of the Debentures hereunder. The Company covenants that all shares of
         Common Stock that shall be so issuable shall, upon issue, be duly and
         validly authorized, issued and fully paid, nonassessable and, if the
         Registration Statement has been declared effective under the Securities
         Act, registered for public sale in accordance with such Registration
         Statement.

                  (e) Upon a conversion hereunder the Company shall not be
         required to issue stock certificates representing fractions of shares
         of the Common Stock, but may if otherwise permitted, make a cash
         payment in respect of any final fraction of a share based on the
         Closing Price at such time. If the Company elects not, or is unable, to
         make such a cash payment, the Holder shall be entitled to receive, in
         lieu of the final fraction of a share, one whole share of Common Stock.

                  (f) The issuance of certificates for shares of the Common
         Stock on conversion of the Debentures shall be made without charge to
         the Holders thereof for any documentary stamp or similar taxes that may
         be payable in respect of the issue or delivery of such certificate,
         provided that the Company shall not be required to pay any tax that may
         be payable in respect of any transfer involved in the issuance and
         delivery of any such certificate upon conversion in a name other than
         that of the Holder of such Debentures so converted and the Company
         shall not be required to issue or deliver such certificates unless or
         until the person or persons requesting the issuance thereof shall have
         paid to the Company the amount of such tax or shall have established to
         the satisfaction of the Company that such tax has been paid.

<PAGE>

                  (g) Any and all notices or other communications or deliveries
         to be provided by the Holders hereunder, including, without limitation,
         any Notice of Conversion, shall be in writing and delivered personally,
         by facsimile, sent by a nationally recognized overnight courier
         service, addressed to the Company, at the address set forth above,
         facsimile number (416) 502-2968, Attn: T. Scott Worthington or such
         other address or facsimile number as the Company may specify for such
         purposes by notice to the Holders delivered in accordance with this
         Section. Any and all notices or other communications or deliveries to
         be provided by the Company hereunder shall be in writing and delivered
         personally, by facsimile, sent by a nationally recognized overnight
         courier service addressed to each Holder at the facsimile telephone
         number or address of such Holder appearing on the books of the Company,
         or if no such facsimile telephone number or address appears, at the
         principal place of business of the Holder. Any notice or other
         communication or deliveries hereunder shall be deemed given and
         effective on the earliest of (i) the date of transmission, if such
         notice or communication is delivered via facsimile at the facsimile
         telephone number specified in this Section prior to 5:30 p.m. (New York
         City time), (ii) the date after the date of transmission, if such
         notice or communication is delivered via facsimile at the facsimile
         telephone number specified in this Section later than 5:30 p.m. (New
         York City time) on any date and earlier than 11:59 p.m. (New York City
         time) on such date, (iii) the Business Day following the date of
         mailing, if sent by nationally recognized overnight courier service, or
         (iv) upon actual receipt by the party to whom such notice is required
         to be given.

         Section 5.        Redemption.

                  (a) Optional Redemption by the Company. The Company shall have
         the right, at any time after the Effective Date if the Closing Price on
         each of the 20 Trading Days (which Trading Days shall only commence
         after the Effective Date) immediately prior to the Notice Date (as
         defined below) is greater than 200% of the then Set Price, upon 10
         Trading Days' prior written notice to the Holder (an "Optional
         Redemption Notice" (the date such notice is received by the Holder is
         the "Notice Date"), to redeem no less than the entire principal amount
         of this Debenture then held by the Holder, at a cash price equal to the
         120% of the principal amount outstanding plus any fees owing thereon
         (the "Optional Redemption Price"). The Company may only effect an
         Optional Redemption Notice if each of the Equity Conditions shall be
         true. If any of the Equity Conditions shall cease to be in effect
         during the period between the Notice Date and the date the Optional
         Redemption Price is paid in full, then the Holders subject to such
         redemption may elect, by written notice to the Company given at any
         time after any of the foregoing conditions shall cease to be in effect,
         to invalidate ab initio such redemption, notwithstanding anything
         herein contained to the contrary. In any case, the Holders may convert
         any portion of the outstanding principal amount of the Debentures
         subject to an Optional Redemption Notice prior to the date that the
         Optional Redemption Price is due and paid in full.

                  (b) Conditional Redemption at Election of Holder. On any
         Conversion Date after the earlier of the Effective Date or the 150th
         day after the Closing Date ("Conditional Redemption Commencement
         Date"), if the Closing Price for each of the 20 consecutive Trading Day
         period prior to such date is less than 120% of the Set Price then in
         effect, the Holder shall have the right ("Conditional Redemption
         Right") to cause the Company to either (i) redeem the portion of this
         Debenture then subject to the Notice of Conversion applicable to such
         Conversion Date based on a redemption price equal to 120% of the
         principal amount of such portion of the Debenture (the "Conditional
         Redemption Price") or (ii) issue Conversion Shares based on a
         conversion price equal to 93% of the average of the lowest 3 Closing
         Prices during such 20 day period. The determination of whether to honor
         a Conditional Redemption Right in cash or shares shall be at the
         election of the Company subject to at least 10 prior Trading Days'
         notice to the Holder. The notice requirement for the Company's election
         to honor a Conditional Redemption Right in cash or shares shall operate
         as follows: Prior to the 10th Trading Day prior to the Conditional
         Redemption Commencement Date, the Company shall notify the Holder of
         its election to issue shares or cash upon the Holder's future exercise
         of its Conditional Redemption Right. Failure to so notify the Holder
         prior to such date shall be deemed an election to pay shares until
         further notified hereunder. The Company may notify the Holder that it
         changes its election any time thereafter provided any such change in
         election shall not be effective until the 11th Trading Day following
         such duly delivered notice. All conversions hereunder shall be made as
         if pursuant to Section 4 and the other sub-sections relating thereto,
         including but not limited to, liquidated damages and fees for late
         delivery of Conversion Shares. Nothing herein shall preclude the Holder
         from converting this Debenture to the extent this Debenture remains
         unpaid and unconverted after the redemption date as set forth in
         sub-section (c) below.
<PAGE>

                           (c) Redemption Procedure. The Optional Redemption
         Price is due on the 20th Trading Day following the Notice Date and the
         Conditional Redemption Price is due on the 5th Trading Day following
         the applicable Conversion Date unless otherwise paid in shares of
         Common Stock, in which case the delivery of such shares shall be
         otherwise subject to Section 4. If any portion of the Optional
         Redemption Price or Conditional Redemption Price shall not be paid by
         the Company by the date such payment is due, interest shall accrue
         thereon at the rate of 18% per annum (or the maximum rate permitted by
         applicable law, whichever is less) until such redemption price plus all
         such interest is paid in full. In addition, if any portion of the
         Optional Redemption Price or Conditional Redemption Price remains
         unpaid after such date, the Holders subject to such redemption may
         elect, by written notice to the Company given at any time thereafter,
         to invalidate ab initio such redemption, notwithstanding anything
         herein contained to the contrary. If a Holder elects to invalidate such
         redemption the Company shall promptly, and, in any event, not later
         than 3 Trading Days from receipt of such Holder's notice of such
         election, return to such Holder all of the Debentures for which the
         Optional Redemption Price or Conditional Redemption Price shall not
         have been paid in full.

         Section 6.  Definitions.
         ---------   -----------

         For the purposes hereof, in addition to the terms defined elsewhere in
this Debenture: (a) capitalized terms not otherwise defined herein have the
meanings given to such terms in the Purchase Agreement, and (b) the following
terms shall have the following meanings:

                  "Business Day" means any day except Saturday, Sunday and any
         day which shall be a federal legal holiday in the United States or a
         day on which banking institutions in the State of New York are
         authorized or required by law or other government action to close.

                  "Change of Control Transaction" means the occurrence after the
         date hereof of any of (i) an acquisition after the date hereof by an
         individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
         promulgated under the Exchange Act) of effective control (whether
         through legal or beneficial ownership of capital stock of the Company,
         by contract or otherwise) of in excess of 33% of the voting securities
         of the Company, or (ii) a replacement at one time or within a three
         year period of more than one-half of the members of the Company's board
         of directors which is not approved by a majority of those individuals
         who are members of the board of directors on the date hereof (or by
         those individuals who are serving as members of the board of directors
         on any date whose nomination to the board of directors was approved by
         a majority of the members of the board of directors who are members on
         the date hereof), or (iii) the execution by the Company of an agreement
         to which the Company is a party or by which it is bound, providing for
         any of the events set forth above in (i) or (ii).

                  "Commission" means the Securities and Exchange Commission.

                  "Common Stock" means the common stock, $0.001 par value per
         share, of the Company and stock of any other class into which such
         shares may hereafter have been reclassified or changed.

                  "Conditional Redemption Price" shall have the meaning set
         forth in Section 5(b).

                  "Conditional Redemption Right" shall have the meaning set
         forth in Section 5(b).
<PAGE>

                  "Conversion Date" shall have the meaning set forth in Section
         4(a)(i) hereof.

                  "Equity Conditions" shall mean, during the period in question,
         (i) the Company shall have duly honored all conversions and redemptions
         scheduled to occur or occurring by virtue of one or more Conversion
         Notices, if any, (ii) all liquidated damages and other amounts owing in
         respect of the Debentures shall have been paid; (iii) there is an
         effective Registration Statement pursuant to which the Holder is
         permitted to utilize the prospectus thereunder to resell all of the
         shares issuable pursuant to the Transaction Documents (and the Company
         believes, in good faith, that such effectiveness will continue
         uninterrupted for the foreseeable future), (iv) the Common Stock is
         trading on the Principal Market and all of the shares issuable pursuant
         to the Transaction Documents are listed for trading on a Principal
         Market (and the Company believes, in good faith, that trading of the
         Common Stock on a Principal Market will continue uninterrupted for the
         foreseeable future), (v) there is a sufficient number of authorized but
         unissued and otherwise unreserved shares of Common Stock for the
         issuance of all of the shares issuable pursuant to the Transaction
         Documents, (vi) there is then existing no Event of Default or event
         which, with the passage of time or the giving of notice, would
         constitute and Event of Default and (vii) all of the shares issued or
         issuable pursuant to the transaction documents in full, ignoring for
         such purposes any conversion or exercise limitation therein, would not
         violate the limitations set forth in Section 4(a)(ii) and (ix) no
         public announcement of a pending or proposed Fundamental Transaction or
         acquisition transaction has occurred that has not been consummated.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
         amended.

                  "Mandatory Prepayment Amount" for any Debentures shall equal
         the sum of (i) the greater of: (A) 120% of the principal amount of
         Debentures to be prepaid, plus all other accrued and unpaid amounts due
         hereunder, or (B) the principal amount of Debentures to be prepaid,
         plus all other accrued and unpaid amounts due hereunder, divided by the
         Set Price on (x) the date the Mandatory Prepayment Amount is demanded
         or otherwise due or (y) the date the Mandatory Prepayment Amount is
         paid in full, whichever is less, multiplied by the Closing Price on (x)
         the date the Mandatory Prepayment Amount is demanded or otherwise due
         or (y) the date the Mandatory Prepayment Amount is paid in full,
         whichever is greater, and (ii) all other amounts, costs, expenses and
         liquidated damages due in respect of such Debentures.

                  "Notice Date" shall have the meaning set forth in Section
         5(a).

                  "Optional Redemption Notice" shall have the meaning set forth
         in Section 5(a).

                  "Optional Redemption Price" shall have the meaning set forth
         in Section 5(a).

                  "Original Issue Date" shall mean the date of the first
         issuance of the Debentures regardless of the number of transfers of any
         Debenture and regardless of the number of instruments which may be
         issued to evidence such Debenture.

                  "Person" means a corporation, an association, a partnership,
         organization, a business, an individual, a government or political
         subdivision thereof or a governmental agency.

                  "Purchase Agreement" means the Securities Purchase Agreement,
         dated as of April 23, 2004, to which the Company and the original
         Holder are parties, as amended, modified or supplemented from time to
         time in accordance with its terms.
<PAGE>

                  "Registration Rights Agreement" means the Registration Rights
         Agreement, dated as of the date of the Purchase Agreement, to which the
         Company and the original Holder are parties, as amended, modified or
         supplemented from time to time in accordance with its terms.

                  "Registration Statement" means a registration statement
         meeting the requirements set forth in the Registration Rights
         Agreement, covering among other things the resale of the Underlying
         Shares and naming the Holder as a "selling stockholder" thereunder.

                  "Securities Act" means the Securities Act of 1933, as amended,
         and the rules and regulations promulgated thereunder.

                  "Set Price" shall have the meaning set forth in Section
         4(c)(i).

                  "Trading Day" means (a) a day on which the shares of Common
         Stock are traded on a Principal Market on which the shares of Common
         Stock are then listed or quoted, or (b) if the shares of Common Stock
         are not quoted on a Principal Market, a day on which the shares of
         Common Stock are quoted in the over-the-counter market as reported by
         the National Quotation Bureau Incorporated (or any similar organization
         or agency succeeding its functions of reporting prices); provided, that
         in the event that the shares of Common Stock are not listed or quoted
         as set forth in (a), (b) and (c) hereof, then Trading Day shall mean a
         Business Day.

                  "Transaction Documents" shall have the meaning set forth in
         the Purchase Agreement.

                  "Underlying Shares" means the shares of Common Stock issuable
         upon conversion of Debentures in accordance with the terms hereof.

      Section 7. Except as expressly provided herein, no provision of this
Debenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, and liquidated damages (if any) on,
this Debenture at the time, place, and rate, and in the coin or currency, herein
prescribed. This Debenture is a direct debt obligation of the Company and was
issued at an original issue discount to the principal amount. This Debenture
ranks pari passu with all other Debentures now or hereafter issued under the
terms set forth herein. As long as there are Debentures outstanding, the Company
shall not and shall cause it subsidiaries not to, without the consent of the
Holders, (a) amend its certificate of incorporation, bylaws or other charter
documents so as to adversely affect any rights of the Holders; (b) repay,
repurchase or offer to repay, repurchase or otherwise acquire shares of its
Common Stock or other equity securities other than as to the Underlying Shares
to the extent permitted or required under the Transaction Documents or as
otherwise permitted by the Transaction Documents; or (c) enter into any
agreement with respect to any of the foregoing.

      Section 8. If this Debenture shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Debenture, or in lieu of or in
substitution for a lost, stolen or destroyed Debenture, a new Debenture for the
principal amount of this Debenture so mutilated, lost, stolen or destroyed but
only upon receipt of evidence of such loss, theft or destruction of such
Debenture, and of the ownership hereof, and indemnity, if requested, all
reasonably satisfactory to the Company.
<PAGE>

      Section 9. So long as any portion of this Debenture is outstanding, the
Company will not and will not permit any of its subsidiaries to, directly or
indirectly, enter into, create, incur, assume or suffer to exist any
indebtedness or liens of any kind, on or with respect to any of its property or
assets now owned or hereafter acquired or any interest therein or any income or
profits therefrom that is senior to, or pari passu with, in any respect, the
Company's obligations under the Debentures without the prior consent of the
Holder, which consent shall not be unreasonably withheld.

      Section 10. All questions concerning the construction, validity,
enforcement and interpretation of this Debenture shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by any of the Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the "New
York Courts"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, or such New York Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Debenture and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Debenture or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Debenture,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

      Section 11. Any waiver by the Company or the Holder of a breach of any
provision of this Debenture shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Debenture. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Debenture. Any waiver
must be in writing.
<PAGE>

      Section 12. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any amount deemed interest due hereunder violates applicable laws governing
usury, the applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum permitted rate of interest. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal or deemed
interest on the Debentures as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this indenture, and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefits or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impeded
the execution of any power herein granted to the Holder, but will suffer and
permit the execution of every such as though no such law has been enacted.

      Section 13. Whenever any payment or other obligation hereunder shall be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.

                              *********************

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Convertible Debenture
to be duly executed by a duly authorized officer as of the date first above
indicated.

                              WAVERIDER COMMUNICATIONS INC.

                              By:_________________________________________

                            Name: T. Scott Worthington

                           Title: Vice President and Chief Financial Officer

<PAGE>
                                     ANNEX A
                              NOTICE OF CONVERSION

The undersigned hereby elects to convert $_________________ of the Convertible
Debenture of WaveRider Communications Inc. (the "Company"), due on April 23,
2007, into shares of common stock, $0.001 par value per share (the "Common
Stock"), of the Company according to the conditions hereof, as of the date
written below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any. By the
delivery of this Notice of Conversion the undersigned represents and warrants to
the Company that its ownership of the Company's Common Stock does not exceed the
amounts determined in accordance with Section 13(d) of the Exchange Act,
specified under Section 4 of this Debenture. The undersigned agrees to comply
with the prospectus delivery requirements under the applicable securities laws
in connection with any transfer of the aforesaid shares of Common Stock.

Holder

Holder is exercising Conditional Redemption Right ________(yes/no)

Conditional Redemption Price (in accordance with current Company Election):
$ ________

And/or Conversion Shares to be issued:  ________ at a conversion price of:
$ ________

Conversion Date: ________

The Shares are to be issued in the name of _______________________., and stock
certificates representing such Shares are to be delivered to:

in accordance with the Transfer Agent Instructions, dated April ____, 2004,
delivered by the Company to Corporate Stock Transfer Inc.

Holder Signature:     ________________________________________________________

Company

The Company confirms acceptance of this Notice of Conversion
(To be faxed to _______________________________________________within 1 Trading
Day of receipt by the Company).

Company Signature:  ___________________________________        Date:  _________
                                Name:
                                Title:

                                Tel:

<PAGE>

                                   Schedule 1

                               CONVERSION SCHEDULE

Convertible Debenture due on April 23, 2007, in the aggregate principal amount
of $____________ issued by WaveRider Communications Inc. This Conversion
Schedule reflects conversions made under Section 4 of the above referenced
Debenture.

                                          Dated:

<TABLE>
<CAPTION>
------------------------------- ------------------------- ----------------------- ------------------------------
                                                            Aggregate Principal
                                                             Amount Remaining
      Date of Conversion                                      Subsequent to
(or for first entry, Original                                   Conversion
         Issue Date)              Amount of Conversion         (or original              Company Attest
                                                             Principal Amount)
<S>                             <C>                       <C>                     <C>
------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------
</TABLE>Exhibit 10.4

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES

                             STOCK PURCHASE WARRANT

                                Series S Warrant

                To Purchase __________ Shares of Common Stock of

                          WaveRider Communications Inc.

         THIS STOCK PURCHASE WARRANT CERTIFIES that, for value received,
_____________ (the "Holder"), is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on
or after the date of the Purchase Agreement (the "Initial Exercise Date") and on
or prior to the close of business on April 23, 2009 (the "Termination Date") but
not thereafter, to subscribe for and purchase from WaveRider Communications
Inc., a corporation incorporated in Nevada (the "Company"), up to ____________
shares (the "Warrant Shares") of Common Stock, par value $0.001 per share, of
the Company (the "Common Stock"). The purchase price of one share of Common
Stock (the "Exercise Price") under this Warrant shall be $0.2076, subject to
adjustment hereunder. Capitalized terms used and not otherwise defined herein
shall have the meanings set forth in that certain Securities Purchase Agreement
(the "Purchase Agreement"), dated April 23, 2004, between the Company and the
investors signatory thereto.

<PAGE>

         1. Title to warrant. Prior to the termination date and subject to
compliance with applicable laws and section 7 of this warrant, this warrant and
all rights hereunder are transferable, in whole or in part, at the office or
agency of the company by the holder in person or by duly authorized attorney,
upon surrender of this warrant together with the assignment form annexed hereto
properly endorsed. The transferee shall sign an investment letter in form and
substance reasonably satisfactory to the company.

         2. Authorization of shares. The company represents and warrants that
all warrant shares which may be issued upon the exercise of the purchase rights
represented by this warrant will, upon exercise of the purchase rights
represented by this warrant, be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).

         3. Exercise of warrant.

                  (a) Exercise of the purchase rights represented by this
         Warrant may be made at any time or times on or after the Initial
         Exercise Date and on or before the Termination Date by delivery to the
         Company of a duly executed facsimile copy of the Notice of Exercise
         Form annexed hereto (or such other office or agency of the Company as
         it may designate by notice in writing to the registered Holder at the
         address of such Holder appearing on the books of the Company);
         provided, however, within 5 Trading Days of the date said Notice of
         Exercise is delivered to the Company, the Holder shall have surrendered
         this Warrant to the Company and the Company shall have received payment
         of the aggregate Exercise Price of the shares thereby purchased by wire
         transfer or cashier's check drawn on a United States bank. Certificates
         for shares purchased hereunder shall be delivered to the Holder within
         the earlier of (i) 5 Trading Days after the date on which the Notice of
         Exercise shall have been delivered by facsimile copy or (ii) 3 Trading
         Days from the delivery to the Company of the Notice of Exercise Form by
         facsimile copy, surrender of this Warrant and payment of the aggregate
         Exercise Price as set forth above ("Warrant Share Delivery Date");
         provided, however, in the event the Warrant is not surrendered or the
         aggregate Exercise Price is not received by the Company within 5
         Trading Days after the date on which the Notice of Exercise shall be
         delivered by facsimile copy, the Warrant Share Delivery Date shall be
         extended to the extent such 5 Trading Day period is exceeded. This
         Warrant shall be deemed to have been exercised on the date the Notice
         of Exercise is delivered to the Company by facsimile copy. The Warrant
         Shares shall be deemed to have been issued, and Holder or any other
         person so designated to be named therein shall be deemed to have become
         a holder of record of such shares for all purposes, as of the date the
         Warrant has been exercised by payment to the Company of the Exercise
         Price and all taxes required to be paid by the Holder, if any, pursuant
         to Section 5 prior to the issuance of such shares, have been paid. If
         the Company fails to deliver to the Holder a certificate or
         certificates representing the Warrant Shares pursuant to this Section
         3(a) by the Warrant Share Delivery Date, then the Holder will have the
         right to rescind such exercise. In addition to any other rights
         available to the Holder, if the Company fails to deliver to the Holder
         a certificate or certificates representing the Warrant Shares pursuant
         to an exercise by the second Trading Day after the Warrant Share
         Delivery Date, and if after such third Trading Day the Holder is
         required by its broker to purchase (in an open market transaction or
         otherwise) shares of Common Stock to deliver in satisfaction of a sale
         by the Holder of the Warrant Shares which the Holder anticipated
         receiving upon such exercise (a "Buy-In"), then the Company shall (1)
         pay in cash to the Holder the amount by which (x) the Holder's total
         purchase price (including brokerage commissions, if any) for the shares
         of Common Stock so purchased exceeds (y) the amount obtained by
         multiplying (A) the number of Warrant Shares that the Company was
         required to deliver to the Holder in connection with the exercise at
         issue times (B) the price at which the sell order giving rise to such
         purchase obligation was executed, and (2) at the option of the Holder,
         either reinstate the portion of the Warrant and equivalent number of
         Warrant Shares for which such exercise was not honored or deliver to
         the Holder the number of shares of Common Stock that would have been
         issued had the Company timely complied with its exercise and delivery
         obligations hereunder. For example, if the Holder purchases Common
         Stock having a total purchase price of $11,000 to cover a Buy-In with
         respect to an attempted exercise of shares of Common Stock with an
         aggregate sale price giving rise to such purchase obligation of
         $10,000, under clause (1) of the immediately preceding sentence the
         Company shall be required to pay the Holder $1,000. The Holder shall
         provide the Company written notice indicating the amounts payable to
         the Holder in respect of the Buy-In, together with applicable
         confirmations and other evidence reasonably requested by the Company.
         Nothing herein shall limit a Holder's right to pursue any other
         remedies available to it hereunder, at law or in equity including,
         without limitation, a decree of specific performance and/or injunctive
         relief with respect to the Company's failure to timely deliver
         certificates representing shares of Common Stock upon exercise of the
         Warrant as required pursuant to the terms hereof.
<PAGE>

                  (b) If this Warrant shall have been exercised in part, the
         Company shall, at the time of delivery of the certificate or
         certificates representing Warrant Shares, deliver to Holder a new
         Warrant evidencing the rights of Holder to purchase the unpurchased
         Warrant Shares called for by this Warrant, which new Warrant shall in
         all other respects be identical with this Warrant.

                  (c) The Company shall not effect any exercise of this Warrant,
         and the Holder shall not have the right to exercise any portion of this
         Warrant, pursuant to Section 3(a) or otherwise, to the extent that
         after giving effect to such issuance after exercise, the Holder
         (together with the Holder's affiliates), as set forth on the applicable
         Notice of Exercise, would beneficially own in excess of 4.99% of the
         number of shares of the Common Stock outstanding immediately after
         giving effect to such issuance. For purposes of the foregoing sentence,
         the number of shares of Common Stock beneficially owned by the Holder
         and its affiliates shall include the number of shares of Common Stock
         issuable upon exercise of this Warrant with respect to which the
         determination of such sentence is being made, but shall exclude the
         number of shares of Common Stock which would be issuable upon (A)
         exercise of the remaining, nonexercised portion of this Warrant
         beneficially owned by the Holder or any of its affiliates and (B)
         exercise or conversion of the unexercised or nonconverted portion of
         any other securities of the Company (including, without limitation, any
         other Debentures or Warrants) subject to a limitation on conversion or
         exercise analogous to the limitation contained herein beneficially
         owned by the Holder or any of its affiliates. Except as set forth in
         the preceding sentence, for purposes of this Section 3(c), beneficial
         ownership shall be calculated in accordance with Section 13(d) of the
         Exchange Act. To the extent that the limitation contained in this
         Section 3(c) applies, the determination of whether this Warrant is
         exercisable (in relation to other securities owned by the Holder) and
         of which a portion of this Warrant is exercisable shall be in the sole
         discretion of such Holder, and the submission of a Notice of Exercise
         shall be deemed to be such Holder's determination of whether this
         Warrant is exercisable (in relation to other securities owned by such
         Holder) and of which portion of this Warrant is exercisable, in each
         case subject to such aggregate percentage limitation, and the Company
         shall have no obligation to verify or confirm the accuracy of such
         determination. For purposes of this Section 3(c), in determining the
         number of outstanding shares of Common Stock, the Holder may rely on
         the number of outstanding shares of Common Stock as reflected in (x)
         the Company's most recent Form 10-Q or Form 10-K, as the case may be,
         (y) a more recent public announcement by the Company or (z) any other
         notice by the Company or the Company's Transfer Agent setting forth the
         number of shares of Common Stock outstanding. Upon the written or oral
         request of the Holder, the Company shall within two Trading Days
         confirm orally and in writing to the Holder the number of shares of
         Common Stock then outstanding. In any case, the number of outstanding
         shares of Common Stock shall be determined after giving effect to the
         conversion or exercise of securities of the Company, including this
         Warrant, by the Holder or its affiliates since the date as of which
         such number of outstanding shares of Common Stock was reported. The
         provisions of this Section 3(c) may be waived by the Holder upon, at
         the election of the Holder, not less than 61 days' prior notice to the
         Company, and the provisions of this Section 3(c) shall continue to
         apply until such 61st day (or such later date, as determined by the
         Holder, as may be specified in such notice of waiver).
<PAGE>

                           (d) if at any time after one year from the date of
         issuance of this warrant there is no effective registration statement
         registering the resale of the warrant shares by the holder, this
         warrant may also be exercised at such time by means of a "cashless
         exercise" in which the holder shall be entitled to receive a
         certificate for the number of warrant shares equal to the quotient
         obtained by dividing [(A-B) (X)] by (A), where:

                  (A)     = the Closing Price on the Trading Day immediately
                          preceding the date of such election;

                  (B)     = the Exercise Price of this Warrant, as adjusted; and

                  (X)     = the number of Warrant Shares issuable upon exercise
                          of this Warrant in accordance with the terms of this
                          Warrant by means of a cash exercise rather than a
                          cashless exercise.

         4. No fractional shares or scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
warrant. As to any fraction of a share which holder would otherwise be entitled
to purchase upon such exercise, the company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the exercise price.

         5. Charges, taxes and expenses. Issuance of certificates for warrant
shares shall be made without charge to the holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the company, and such certificates
shall be issued in the name of the holder or in such name or names as may be
directed by the holder; provided, however, that in the event certificates for
warrant shares are to be issued in a name other than the name of the holder,
this warrant when surrendered for exercise shall be accompanied by the
assignment form attached hereto duly executed by the holder; and the company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.

         6. Closing of books. The company will not close its stockholder books
or records in any manner which prevents the timely exercise of this warrant,
pursuant to the terms hereof.

         7. Transfer, division and combination.

                  (a) Subject to compliance with any applicable securities laws
         and the conditions set forth in Sections 1 and 7(e) hereof and to the
         provisions of Section 4.1 of the Purchase Agreement, this Warrant and
         all rights hereunder are transferable, in whole or in part, upon
         surrender of this Warrant at the principal office of the Company,
         together with a written assignment of this Warrant substantially in the
         form attached hereto duly executed by the Holder or its agent or
         attorney and funds sufficient to pay any transfer taxes payable upon
         the making of such transfer. Upon such surrender and, if required, such
         payment, the Company shall execute and deliver a new Warrant or
         Warrants in the name of the assignee or assignees and in the
         denomination or denominations specified in such instrument of
         assignment, and shall issue to the assignor a new Warrant evidencing
         the portion of this Warrant not so assigned, and this Warrant shall
         promptly be cancelled. A Warrant, if properly assigned, may be
         exercised by a new holder for the purchase of Warrant Shares without
         having a new Warrant issued.
<PAGE>

                  (b) This Warrant may be divided or combined with other
         Warrants upon presentation hereof at the aforesaid office of the
         Company, together with a written notice specifying the names and
         denominations in which new Warrants are to be issued, signed by the
         Holder or its agent or attorney. Subject to compliance with Section
         7(a), as to any transfer which may be involved in such division or
         combination, the Company shall execute and deliver a new Warrant or
         Warrants in exchange for the Warrant or Warrants to be divided or
         combined in accordance with such notice.

                  (c) The Company shall prepare, issue and deliver at its own
         expense (other than transfer taxes) the new Warrant or Warrants under
         this Section 7.

                  (d) The Company agrees to maintain, at its aforesaid office,
         books for the registration and the registration of transfer of the
         Warrants.

                  (e) If, at the time of the surrender of this Warrant in
         connection with any transfer of this Warrant, the transfer of this
         Warrant shall not be registered pursuant to an effective registration
         statement under the Securities Act and under applicable state
         securities or blue sky laws, the Company may require, as a condition of
         allowing such transfer (i) that the Holder or transferee of this
         Warrant, as the case may be, furnish to the Company a written opinion
         of counsel (which opinion shall be in form, substance and scope
         customary for opinions of counsel in comparable transactions) to the
         effect that such transfer may be made without registration under the
         Securities Act and under applicable state securities or blue sky laws,
         (ii) that the holder or transferee execute and deliver to the Company
         an investment letter in form and substance acceptable to the Company
         and (iii) that the transferee be an "accredited investor" as defined in
         Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the
         Securities Act or a qualified institutional buyer as defined in Rule
         144A(a) under the Securities Act.

         8. No rights as shareholder until exercise. This warrant does not
entitle the holder to any voting rights or other rights as a shareholder of the
company prior to the exercise hereof. Upon the surrender of this warrant and the
payment of the aggregate exercise price (or by means of a cashless exercise),
the warrant shares so purchased shall be and be deemed to be issued to such
holder as the record owner of such shares as of the close of business on the
later of the date of such surrender or payment.

         9. Loss, theft, destruction or mutilation of warrant. The company
covenants that upon receipt by the company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this warrant or any stock
certificate relating to the warrant shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such warrant or stock certificate, if mutilated,
the company will make and deliver a new warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such warrant or stock
certificate.

         10. Saturdays, sundays, holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a saturday, sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a saturday,
sunday or legal holiday.
<PAGE>

         11. Adjustments of exercise price and number of warrant shares.

                  (a) Stock Splits, etc. The number and kind of securities
         purchasable upon the exercise of this Warrant and the Exercise Price
         shall be subject to adjustment from time to time upon the happening of
         any of the following. In case the Company shall (i) pay a dividend in
         shares of Common Stock or make a distribution in shares of Common Stock
         to holders of its outstanding Common Stock, (ii) subdivide its
         outstanding shares of Common Stock into a greater number of shares,
         (iii) combine its outstanding shares of Common Stock into a smaller
         number of shares of Common Stock, or (iv) issue any shares of its
         capital stock in a reclassification of the Common Stock, then the
         number of Warrant Shares purchasable upon exercise of this Warrant
         immediately prior thereto shall be adjusted so that the Holder shall be
         entitled to receive the kind and number of Warrant Shares or other
         securities of the Company which it would have owned or have been
         entitled to receive had such Warrant been exercised in advance thereof.
         Upon each such adjustment of the kind and number of Warrant Shares or
         other securities of the Company which are purchasable hereunder, the
         Holder shall thereafter be entitled to purchase the number of Warrant
         Shares or other securities resulting from such adjustment at an
         Exercise Price per Warrant Share or other security obtained by
         multiplying the Exercise Price in effect immediately prior to such
         adjustment by the number of Warrant Shares purchasable pursuant hereto
         immediately prior to such adjustment and dividing by the number of
         Warrant Shares or other securities of the Company that are purchasable
         pursuant hereto immediately thereafter resulting from such adjustment.
         An adjustment made pursuant to this paragraph shall become effective
         immediately after the effective date of such event retroactive to the
         record date, if any, for such event.

                  (b) Anti-Dilution Provisions. During the Exercise Period, the
         Exercise Price shall be subject to adjustment from time to time as
         provided in this Section 11(b). In the event that any adjustment of the
         Exercise Price as required herein results in a fraction of a cent, such
         Exercise Price shall be rounded up or down to the nearest cent.

                           (i) Adjustment of Exercise Price. If and whenever the
                  Company issues or sells, or in accordance with Section
                  11(b)(ii) hereof is deemed to have issued or sold, any shares
                  of Common Stock for a consideration per share of less than the
                  then Exercise Price or for no consideration (such lower price,
                  the "Base Share Price" and such issuances collectively, a
                  "Dilutive Issuance"), then, the Exercise Price shall be
                  reduced to equal the Base Share Price, provided, that for
                  purposes hereof, all securities exercisable, convertible into
                  or exchangeable for Common Stock ("Convertible Securities")
                  shall be deemed outstanding immediately after the issuance of
                  such Common Stock. Such adjustment shall be made whenever such
                  shares of Common Stock or Convertible Securities are issued.
<PAGE>

                           (ii) Effect on Exercise Price of Certain Events. For
                  purposes of determining the adjusted Exercise Price under
                  Section 11(b) hereof, the following will be applicable:

                                     (A) Issuance of Rights or Options. If the
                           Company in any manner issues or grants any warrants,
                           rights or options, whether or not immediately
                           exercisable, to subscribe for or to purchase Common
                           Stock or Convertible Securities (such warrants,
                           rights and options to purchase Common Stock or
                           Convertible Securities are hereinafter referred to as
                           "Options") and the effective price per share for
                           which Common Stock is issuable upon the exercise of
                           such Options is less than the Exercise Price ("Below
                           Base Price Options"), then the maximum total number
                           of shares of Common Stock issuable upon the exercise
                           of all such Below Base Price Options (assuming full
                           exercise, conversion or exchange of Convertible
                           Securities, if applicable) will, as of the date of
                           the issuance or grant of such Below Base Price
                           Options, be deemed to be outstanding and to have been
                           issued and sold by the Company for such price per
                           share and the maximum consideration payable to the
                           Company upon such exercise (assuming full exercise,
                           conversion or exchange of Convertible Securities, if
                           applicable) will be deemed to have been received by
                           the Company. For purposes of the preceding sentence,
                           the "effective price per share for which Common Stock
                           is issuable upon the exercise of such Below Base
                           Price Options" is determined by dividing (i) the
                           total amount, if any, received or receivable by the
                           Company as consideration for the issuance or granting
                           of all such Below Base Price Options, plus the
                           minimum aggregate amount of additional consideration,
                           if any, payable to the Company upon the exercise of
                           all such Below Base Price Options, plus, in the case
                           of Convertible Securities issuable upon the exercise
                           of such Below Base Price Options, the minimum
                           aggregate amount of additional consideration payable
                           upon the exercise, conversion or exchange thereof at
                           the time such Convertible Securities first become
                           exercisable, convertible or exchangeable, by (ii) the
                           maximum total number of shares of Common Stock
                           issuable upon the exercise of all such Below Base
                           Price Options (assuming full conversion of
                           Convertible Securities, if applicable). No further
                           adjustment to the Exercise Price will be made upon
                           the actual issuance of such Common Stock upon the
                           exercise of such Below Base Price Options or upon the
                           exercise, conversion or exchange of Convertible
                           Securities issuable upon exercise of such Below Base
                           Price Options.

                                    (B) Issuance of Convertible Securities. If
                           the Company in any manner issues or sells any
                           Convertible Securities, whether or not immediately
                           convertible (other than where the same are issuable
                           upon the exercise of Options) and the effective price
                           per share for which Common Stock is issuable upon
                           such exercise, conversion or exchange is less than
                           the Exercise Price, then the maximum total number of
                           shares of Common Stock issuable upon the exercise,
                           conversion or exchange of all such Convertible
                           Securities will, as of the date of the issuance of
                           such Convertible Securities, be deemed to be
                           outstanding and to have been issued and sold by the
                           Company for such price per share and the maximum
                           consideration payable to the Company upon such
                           exercise (assuming full exercise, conversion or
                           exchange of Convertible Securities, if applicable)
                           will be deemed to have been received by the Company.
                           For the purposes of the preceding sentence, the
                           "effective price per share for which Common Stock is
                           issuable upon such exercise, conversion or exchange"
                           is determined by dividing (i) the total amount, if
                           any, received or receivable by the Company as
                           consideration for the issuance or sale of all such
                           Convertible Securities, plus the minimum aggregate
                           amount of additional consideration, if any, payable
                           to the Company upon the exercise, conversion or
                           exchange thereof at the time such Convertible
                           Securities first become exercisable, convertible or
                           exchangeable, by (ii) the maximum total number of
                           shares of Common Stock issuable upon the exercise,
                           conversion or exchange of all such Convertible
                           Securities. No further adjustment to the Exercise
                           Price will be made upon the actual issuance of such
                           Common Stock upon exercise, conversion or exchange of
                           such Convertible Securities.
<PAGE>

                                    (C) Change in Option Price or Conversion
                           Rate. If there is a change at any time in (i) the
                           amount of additional consideration payable to the
                           Company upon the exercise of any Options; (ii) the
                           amount of additional consideration, if any, payable
                           to the Company upon the exercise, conversion or
                           exchange of any Convertible Securities; or (iii) the
                           rate at which any Convertible Securities are
                           convertible into or exchangeable for Common Stock (in
                           each such case, other than under or by reason of
                           provisions designed to protect against dilution), the
                           Exercise Price in effect at the time of such change
                           will be readjusted to the Exercise Price which would
                           have been in effect at such time had such Options or
                           Convertible Securities still outstanding provided for
                           such changed additional consideration or changed
                           conversion rate, as the case may be, at the time
                           initially granted, issued or sold.

                                    (D) Calculation of Consideration Received.
                           If any Common Stock, Options or Convertible
                           Securities are issued, granted or sold for cash, the
                           consideration received therefor for purposes of this
                           Warrant will be the amount received by the Company
                           therefor, before deduction of reasonable commissions,
                           underwriting discounts or allowances or other
                           reasonable expenses paid or incurred by the Company
                           in connection with such issuance, grant or sale. In
                           case any Common Stock, Options or Convertible
                           Securities are issued or sold for a consideration
                           part or all of which shall be other than cash, the
                           amount of the consideration other than cash received
                           by the Company will be the fair market value of such
                           consideration, except where such consideration
                           consists of securities, in which case the amount of
                           consideration received by the Company will be the
                           fair market value (closing bid price, if traded on
                           any market) thereof as of the date of receipt. In
                           case any Common Stock, Options or Convertible
                           Securities are issued in connection with any merger
                           or consolidation in which the Company is the
                           surviving corporation, the amount of consideration
                           therefor will be deemed to be the fair market value
                           of such portion of the net assets and business of the
                           non-surviving corporation as is attributable to such
                           Common Stock, Options or Convertible Securities, as
                           the case may be. The fair market value of any
                           consideration other than cash or securities will be
                           determined in good faith by an investment banker or
                           other appropriate expert of national reputation
                           selected by the Company and reasonably acceptable to
                           the holder hereof, with the costs of such appraisal
                           to be borne by the Company.

                                    (E) Exceptions to Adjustment of Exercise
                           Price. Notwithstanding the foregoing, no adjustment
                           will be made under this Section 11(b) in respect of
                           an Exempt Issuance.
<PAGE>

                                    (F) Readjustment of Exercise Price. If the
                           Exercise Price is adjusted due to the issuance of an
                           Option and/or Convertible Security and all of such
                           Option and/or Convertible Security expires pursuant
                           to its own terms before it is exercised, exchanged
                           and/or converted, an upward adjustment will be made
                           such that the Exercise Price will no longer reflect
                           the issuance of such Option and/or Convertible
                           Security.

                           (iii) Minimum Adjustment of Exercise Price. No
                  adjustment of the Exercise Price shall be made in an amount of
                  less than 1% of the Exercise Price in effect at the time such
                  adjustment is otherwise required to be made, but any such
                  lesser adjustment shall be carried forward and shall be made
                  at the time and together with the next subsequent adjustment
                  which, together with any adjustments so carried forward, shall
                  amount to not less than 1% of such Exercise Price.

         12. Reorganization, reclassification, merger, consolidation or
disposition of assets. In case the company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the company is not the surviving corporation or where there
is a change in or distribution with respect to the common stock of the company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("other
property"), are to be received by or distributed to the holders of common stock
of the company, then the holder shall have the right thereafter to receive, upon
exercise of this warrant, the number of shares of common stock of the successor
or acquiring corporation or of the company, if it is the surviving corporation,
and other property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of common stock for which this warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this warrant to be performed and observed by the company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the board of
directors of the company) in order to provide for adjustments of warrant shares
for which this warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this section 12. For purposes of
this section 12, "common stock of the successor or acquiring corporation" shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this section 12 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
<PAGE>

         13. Voluntary adjustment by the company. The company may at any time
during the term of this warrant reduce the then current exercise price to any
amount and for any period of time deemed appropriate by the board of directors
of the company.

         14. Notice of adjustment. Whenever the number of warrant shares or
number or kind of securities or other property purchasable upon the exercise of
this warrant or the exercise price is adjusted, as herein provided, the company
shall give notice thereof to the holder, which notice shall state the number of
warrant shares (and other securities or property) purchasable upon the exercise
of this warrant and the exercise price of such warrant shares (and other
securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made.

         15. Notice of corporate action. If at any time:

                           (a) the Company shall take a record of the holders of
         its Common Stock for the purpose of entitling them to receive a
         dividend or other distribution, or any right to subscribe for or
         purchase any evidences of its indebtedness, any shares of stock of any
         class or any other securities or property, or to receive any other
         right, or

                           (b) there shall be any capital reorganization of the
         Company, any reclassification or recapitalization of the capital stock
         of the Company or any consolidation or merger of the Company with, or
         any sale, transfer or other disposition of all or substantially all the
         property, assets or business of the Company to, another corporation or,

                           (c) there shall be a voluntary or involuntary
         dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their Warrant Shares for securities or other property
deliverable upon such disposition, dissolution, liquidation or winding up. Each
such written notice shall be sufficiently given if addressed to Holder at the
last address of Holder appearing on the books of the Company and delivered in
accordance with Section 17(d).

         16. Authorized shares. The company covenants that during the period the
warrant is outstanding, it will reserve from its authorized and unissued common
stock a sufficient number of shares to provide for the issuance of the warrant
shares upon the exercise of any purchase rights under this warrant. The company
further covenants that its issuance of this warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the warrant
shares upon the exercise of the purchase rights under this warrant. The company
will take all such reasonable action as may be necessary to assure that such
warrant shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the principal market
upon which the common stock may be listed.
<PAGE>

         Except and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation, amending 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 of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.

         Before taking any action which would result in an adjustment in the
number of Warrant Shares for which this

         Warrant is exercisable or in the Exercise Price, the Company shall
obtain all such authorizations or exemptions thereof, or consents thereto, as
may be necessary from any public regulatory body or bodies having jurisdiction
thereof.

         17. Miscellaneous.

                  (a) Jurisdiction. This Warrant shall constitute a contract
         under the laws of New York, without regard to its conflict of law,
         principles or rules.

                  (b) Restrictions. The Holder acknowledges that the Warrant
         Shares acquired upon the exercise of this Warrant, if not registered,
         will have restrictions upon resale imposed by state and federal
         securities laws.

                  (c) Nonwaiver and Expenses. No course of dealing or any delay
         or failure to exercise any right hereunder on the part of Holder shall
         operate as a waiver of such right or otherwise prejudice Holder's
         rights, powers or remedies, notwithstanding all rights hereunder
         terminate on the Termination Date. If the Company willfully and
         knowingly fails to comply with any provision of this Warrant, which
         results in any material damages to the Holder, the Company shall pay to
         Holder such amounts as shall be sufficient to cover any costs and
         expenses including, but not limited to, reasonable attorneys' fees,
         including those of appellate proceedings, incurred by Holder in
         collecting any amounts due pursuant hereto or in otherwise enforcing
         any of its rights, powers or remedies hereunder.

                  (d) Notices. Any notice, request or other document required or
         permitted to be given or delivered to the Holder by the Company shall
         be delivered in accordance with the notice provisions of the Purchase
         Agreement.

                  (e) Limitation of Liability. No provision hereof, in the
         absence of any affirmative action by Holder to exercise this Warrant or
         purchase Warrant Shares, and no enumeration herein of the rights or
         privileges of Holder, shall give rise to any liability of Holder for
         the purchase price of any Common Stock or as a stockholder of the
         Company, whether such liability is asserted by the Company or by
         creditors of the Company.

                  (f) Remedies. Holder, in addition to being entitled to
         exercise all rights granted by law, including recovery of damages, will
         be entitled to specific performance of its rights under this Warrant.
         The Company agrees that monetary damages would not be adequate
         compensation for any loss incurred by reason of a breach by it of the
         provisions of this Warrant and hereby agrees to waive the defense in
         any action for specific performance that a remedy at law would be
         adequate.
<PAGE>

                  (g) Successors and Assigns. Subject to applicable securities
         laws, this Warrant and the rights and obligations evidenced hereby
         shall inure to the benefit of and be binding upon the successors of the
         Company and the successors and permitted assigns of Holder. The
         provisions of this Warrant are intended to be for the benefit of all
         Holders from time to time of this Warrant and shall be enforceable by
         any such Holder or holder of Warrant Shares.

                  (h) Amendment. This Warrant may be modified or amended or the
         provisions hereof waived with the written consent of the Company and
         the Holder.

                  (i) Severability. Wherever possible, each provision of this
         Warrant shall be interpreted in such manner as to be effective and
         valid under applicable law, but if any provision of this Warrant shall
         be prohibited by or invalid under applicable law, such provision shall
         be ineffective to the extent of such prohibition or invalidity, without
         invalidating the remainder of such provisions or the remaining
         provisions of this Warrant.

                  (j) Headings. The headings used in this Warrant are for the
         convenience of reference only and shall not, for any purpose, be deemed
         a part of this Warrant.

                              ********************

<PAGE>

       IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.

Dated:  April 23, 2004

                                 WAVERIDER COMMUNICATIONS INC.

                             By:
                                 -----------------------------------------------
                           Name: T. Scott Worthington
                          Title:  Vice President and Chief Financial Officer

<PAGE>

                               NOTICE OF EXERCISE

To: WaveRider Communications Inc.

         (1) The undersigned hereby elects to purchase ________ Warrant Shares
of WaveRider Communications Inc. pursuant to the terms of the attached Warrant
(only if exercised in full), and tenders herewith payment of the exercise price
in full, together with all applicable transfer taxes, if any.

         (2) Payment shall take the form of (check applicable box):

                           [  ] in lawful money of the United States; or

                           [ ] the cancellation of such number of Warrant Shares
                           as is necessary, in accordance with the formula set
                           forth in subsection 3(d), to exercise this Warrant
                           with respect to the maximum number of Warrant Shares
                           purchasable pursuant to the cashless exercise
                           procedure set forth in subsection 3(d).

         (3) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:

                                -------------------------------

The Warrant Shares shall be delivered to the following:

                                -------------------------------

                                -------------------------------

                                -------------------------------

         (4) Accredited Investor. The undersigned is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

                                               [PURCHASER]

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

                                               Dated:
                                                       ------------------------
<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.

                 Do not use this form to exercise the warrant.)

       FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

_______________________________________________ whose address is

---------------------------------------------------------------.

---------------------------------------------------------------

                                             Dated:  ______________, _______

                                Holder's Signature:  ___________________________

                                  Holder's Address:  ___________________________

                                                     ___________________________

Signature Guaranteed:  ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

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