Document:

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                                                                 EXHIBIT 10.10

                               PROGRAM AGREEMENT
                               -----------------

     THIS AGREEMENT is made and entered into this 27th day of January, 2000
by and between SYLVAN LEARNING SYSTEMS, INC., a Maryland corporation ("Sylvan"),
and SLC FRANCHISE OWNERS ASSOCIATION, INC., a Delaware corporation ("FOA").

                                R E C I T A L S:
                                ----------------

     A. Sylvan is the franchisor of a franchise system pursuant to which it
licenses to each franchisee (individually a "Franchisee" and collectively, the
"Franchisees") the right to offer the Sylvan-proprietary system of programs,
systems, teaching and management techniques, individualized diagnostic tests and
academic and educational courses and programs designed to be personally taught,
supervised or administered to students who come to the Franchisees' locations
(individually a "Franchisee Center" and collectively the "Franchisees Centers")
for in-person instruction, and such other rights as are specifically described
in the various license agreements between Sylvan and the Franchisees (such
system of licensed centers, Sylvan-owned Centers ("Sylvan Centers") and the
services Franchisees Centers and Sylvan Centers (collectively, the "Centers")
offer being sometimes referred to herein as the "Sylvan Learning Center System",
and the license agreements between Sylvan and the Franchisees being herein
sometimes referred to individually as a "License Agreement" and collectively as
the "License Agreements").

     B. Sylvan has determined that to respond to the actual and anticipated
actions of its competitors and take advantage of new means of making educational
services available to the public, Sylvan must and should develop, in addition to
the Sylvan Learning Center System, an internet version of Sylvan's proprietary
programs, systems and teaching and management techniques (the "Sylvan On-line
System").

     C. Sylvan has concluded that the most effective way to develop and roll-
out the Sylvan On-line System is to establish a separate entity ("eSylvan").  In
that connection, Sylvan and eSylvan intend to enter into a license agreement
(the "eSylvan License Agreement") pursuant to which Sylvan will license to
eSylvan the exclusive right to develop and offer the Sylvan On-line System.

     D. Sylvan desires that Franchisees support the development of the Sylvan
On-line System and desires to facilitate the support of the Franchisees, and to
do so, will be offering Franchisees certain rights and benefits, to be set forth
in a document known as a "Participation Agreement," a form of which is attached
hereto as Exhibit A.

     E. The FOA is a non-profit trade association heretofore established whose
members include Franchisees and which was established for, among other reasons,
to represent its Franchisees in discussions with Sylvan of issues pertinent to
their relationships with Sylvan.
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     F. Sylvan has asked the FOA to support the development and marketing of
the eSylvan On-Line System and have developed a program therefor, as set forth
in the Participation Agreement (the "eSylvan Program").

     G. Sylvan and representatives of the FOA, as listed on Exhibit B hereto,
which is hereby incorporated herein by reference (the "FOA Negotiating Team")
have had extensive negotiations concerning the eSylvan Program, including
without limitation the terms of the Participation Agreement.

     H. Sylvan and the FOA believe that there are additional covenants and
agreements relating to the establishment of eSylvan and the eSylvan Program that
need to be set forth in writing and that such covenants and agreements would be
best set forth in a separate agreement between Sylvan and the FOA.

     NOW, THEREFORE, for and in consideration of the covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sylvan and the FOA hereby agree as
follows:

     1.  Franchisee Director. During the term of the eSylvan License Agreement
         -------------------
and any renewals thereof, the FOA shall have the right to designate one member
for election to the board of directors of eSylvan.  Sylvan shall take all
necessary steps to cause such designee to be elected to the eSylvan board.  The
designee shall be subject to Sylvan's approval, which shall not be unreasonably
withheld.

     2.  eSylvan Committee.  (a) Sylvan agrees to create a committee, to be
         -----------------
known as the "eSylvan Committee," to be comprised of two officers of Sylvan, at
the level of vice president or higher, and two representatives of the FOA Board.
Each representative of the FOA Board shall be a Franchisee, or the President of
a Franchisee, in good standing (i.e., such nominee is not in default under any
of its License Agreements with Sylvan).

         (b) The purposes of the eSylvan Committee shall be:

             (1) To negotiate with eSylvan on service fees and other
     modifications to the eSylvan Program benefits;

             (2) To review with Sylvan the exploitation of technology and
     contents developed by eSylvan and which are now or hereafter licensed to
     Sylvan, pursuant to the eSylvan License Agreement, and to review schedule
     and priorities for internet technology transfer to Franchisees, either
     through direct marketing by eSylvan (i.e., wholesaling) or through
     acquisition from eSylvan and distribution of technology products;

             (3) To review and approve proposed modifications to the eSylvan
     License Agreement which may have a material effect on Franchisees;

             (4) To review methodology for population analysis by territory for
     purposes of distributing eSylvan stock, as contemplated in the
     Participation Agreements,

                                      -2-
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     or for payments of Reverse Royalties, also as contemplated in the
     Participation Agreements;

             (5) To analyze Franchisee participation levels in the eSylvan
     Program and to develop strategies for increasing participation and benefits
     to Franchisees;

             (6) To analyze efficacy data on eSylvan programs and determine
     areas where the SYLVAN brand may be negatively impacted, and to propose
     strategies to deal with any related areas of concern;

             (7) To review audit data and verify proper payments have been made
     to Franchisee and other relevant financial matters; and

             (8) To provide such other guidance to Sylvan as the eSylvan
     Committee deems appropriate.

In fulfilling its purposes, the eSylvan Committee shall take into account the
interests, needs, business objectives and impact of its decisions on Sylvan and
its Franchisees and eSylvan.

         (c) Except as provided in Section 5 below, a vote of a majority of the
members of the eSylvan Committee shall be necessary for it to take any action or
to grant any approval or consent.  The eSylvan Committee shall establish its own
rules and regulations relating to decision-making and the conduct of its affairs
generally.  If the eSylvan Committee is unable to reach agreement on any matter,
such matter will be resolved by referring the matter to Doug Becker (or if he is
no longer the chief executive officer, chairman or other executive officer of
Sylvan, then his successor as chief executive officer of Sylvan), for review,
and such officer shall assist the eSylvan Committee in reaching agreement; and
if he is not able to do so, then he will have the right to cast the deciding
vote, after taking into account the provisions of subsection (b) above.

         (d) The eSylvan Committee shall meet with Sylvan immediately before or
after FOA Board meetings, but in no event less than three times annually.
Sylvan shall reimburse the  members of the eSylvan Committee with respect to the
reasonable incremental costs and expenses they incur in performing their
obligations under this Program Agreement, as members of the eSylvan Committee,
beyond the costs and expenses incurred to attend the FOA Board meetings.

     3.  Support of Sylvan Program.  Since September 1999, Sylvan and
         -------------------------
representatives of the FOA have engaged in extensive negotiations regarding the
eSylvan Program, including without limitation the structure of the eSylvan
Program, the relationship between Sylvan, eSylvan and the Franchisees, and the
terms and conditions set forth in the Participation Agreement and this Program
Agreement.  The FOA Negotiating Team has reviewed with Sylvan the programs of
competitors and trends in the market place, and believe in good faith that,
although the eSylvan Program presents certain risks to the Franchisees and the
Sylvan Learning Center System, the eSylvan Program is, nevertheless, in the best
interest of the Franchisees collectively.  The Negotiating Team therefore
recommended to the Board of Directors of the

                                      -3-
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FOA that it endorse the eSylvan Program as so structured and that it encourage
Franchisees to execute Participation Agreements, and the Board of Directors of
the FOA has adopted resolutions to that effect. In coordination with Sylvan, the
FOA Board will take such actions as it deems necessary or appropriate to
encourage Franchisees to execute Participation Agreements, subject in all
instances to its fiduciary obligations to its members. The FOA shall have no
liability to Sylvan or eSylvan if the specified number of Franchisees fails to
execute and deliver Participation Agreements as therein required.

     4.  Reimbursement of Certain Costs and Expenses.  (a)(i) Sylvan shall
         -------------------------------------------
reimburse the FOA for certain expenses incurred by the FOA in connection with
negotiation of the eSylvan Program, as may be mutually agreed by the parties.
After the effective date of this Agreement, Sylvan shall reimburse the FOA
Negotiating Team and FOA Board members for actual, reasonable expenses incurred
at the request of Sylvan in connection with the presentation of the eSylvan
Program to Sylvan Franchisees.

             (ii)  All reimbursements shall be made within 30 days after
requests for reimbursement, which shall include appropriate documentation, are
submitted.

             (iii) Sylvan acknowledges that Kilpatrick Stockton, LLP and Michael
H. Seid & Associates have been retained by the FOA; neither Sylvan nor eSylvan
is their client; and their professional and other ethical responsibilities are
solely to the FOA.

         (b) Sylvan shall defend, indemnify and hold harmless the FOA (but not
the individual members of the FOA except as provided herein), the FOA
Negotiating Team and the FOA Board members identified on Schedule B
(collectively, the "FOA Indemnitees"), of and from any and all claims, actions,
causes of actions, suits, proceedings, costs, expenses, liabilities, damages and
other losses (including without limitation the costs and expenses incurred in
defending or settling any claims), based upon or arising out of or in any way
relating to their participation in the negotiation of the eSylvan Program or its
presentation to the Franchisees in accordance with Sylvan guidelines; provided,
however, that Sylvan shall have no obligation to indemnify any of the FOA
Indemnitees with respect to any liability resulting from willful malfeasance.
Except as provided below, Sylvan shall have the right in its sole discretion to
control the defense and settlement of any such action and the FOA Indemnitees
shall have the right to participate in the defense of any such action using
counsel of their own choosing, at their own expense. In the event either Sylvan
or a court of competent jurisdiction determines that a conflict exists in the
representation of both Sylvan and the FOA Indemnitees with respect to a third-
party claim, Sylvan shall, at its expense, retain counsel of its choosing for
the FOA Indemnitees, which counsel shall be reasonably acceptable to the FOA.
Sylvan may not settle any claim against any FOA Indemnitee without such FOA
Indemnitee's written consent, unless such settlement provides a complete release
from all liability without the payment of any consideration by such FOA
Indemnitee and such settlement shall not impose any limitation on the future
conduct of such FOA Indemnitee, other than limitations on representations
related to the eSylvan Program.

         (c) Sylvan represents and warrants that except for the payments and
reimbursements described in subparagraphs (a) and (b) above, it has not made any
payments to, or any other financial or other inducements to, the FOA Indemnitees
in connection with the negotiation of

                                      -4-
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eSylvan Program and its presentation to the Franchisees, other than the rights
they may have as Franchisees under the Participation Agreements.

     5.  eSylvan License Agreement.
         -------------------------

         (a) Sylvan agrees that it will not amend the following sections of the
eSylvan License Agreement without the affirmative vote of at least three-
quarters of the members of the eSylvan Committee.

             (i)   The definition of Net Revenues, as set forth in Section 4(b).
             (ii)  The first sentence of Section 9(b) relating to the
                   tarnishment of Sylvan's marks.
             (iii) Section 10 (a), relating to the maintenance of the quality of
                   Sylvan's marks.
             (iv)  The percentage of eSylvan's Gross Revenues to be spent on
                   advertising, as set forth in Section 11.
             (v)   Sylvan's right to obtain future technology from eSylvan as
                   specified in Section 12.
             (vi)  The non-competition provisions contained in Section 22(a).

         (b) Sylvan shall use reasonable efforts to enforce its rights under the
eSylvan License Agreement, if the failure of which to enforce would have a
material adverse effect on the Sylvan System.  Such provisions include without
limitation the items specified in Sections 9(b), 10(a), Section 11, Section 12
(as it relates to Sylvan's right to obtain future technology from eSylvan), and
Section 22(a).

     6.  Miscellaneous.
         -------------

         (a) This Program Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland, not including its provisions
concerning conflicts of law.  No Franchisee shall be deemed an intended third
party beneficiary of this Agreement; provided, however, in the event Sylvan
breaches its obligations under Paragraph 5 of this Agreement, the FOA may,
solely in conjunction with claims asserted on its own behalf, assert an action
against Sylvan for damages on behalf of any and all Franchisees who suffer
damage as a result of such breach.  The parties agree that jurisdiction and
venue shall lie in any court of competent jurisdiction.  In the event a court
determines that the FOA lacks standing to assert claims on behalf of its member
Franchisees, and the FOA is precluded from bringing such claims in that
tribunal, the parties agree to arbitrate such claims through the American
Arbitration Association ("AAA") under its rules.  The arbitration shall be held
in Baltimore, Maryland.  The arbitration panel shall consist of one arbitrator
who shall be a retired judge of the U.S. Federal District Court, and who shall
be appointed by the AAA.  Each party shall bear its own arbitration expenses.
In any judicial or arbitration proceeding brought in connection with this
Agreement, Sylvan waives the defense of lack of standing of the FOA to, or any
other defense that Sylvan may have, or otherwise claim, that the FOA may not, or
lacks authority to, assert damage claims on behalf of its member Franchisees for
breach by Sylvan of its obligations under Paragraph 5 of this Agreement.  In any
such arbitration proceeding, Sylvan further agrees that it shall not challenge
or contest, on the basis of res judicata, collateral estoppel or otherwise, the
FOA's right to bring an action for damages on behalf of its member Franchisees.

                                      -5-
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         (b) This Program Agreement and the Participation Agreements constitute
the entire understanding and agreement between the parties with respect to the
matters contained herein and supersede all prior understandings and agreements
with respect to such matters.

         (c) If any provision of this Program Agreement is for any reason held
invalid, illegal or unenforceable by a court of competent jurisdiction, such
provision shall be deemed restricted in application to the extent required to
render it valid, and the remainder of this Program Agreement shall in no way be
affected and shall remain valid and enforceable for all purposes.

         (d) This Program Agreement shall be binding upon, and shall inure to
the benefit of, the parties and their respective successors and assigns;
provided, however, that if at any time there shall be another association of
Franchisees whose members own or control more than 50% of the Franchisee
Centers, and such association shall request in writing an assignment of the
FOA's rights and obligations hereunder, then the FOA shall assign such rights
and obligations under this Program Agreement to such successor upon receipt of
(1) a document, duly executed by such successor and in form and substance
satisfactory to FOA, assigning such rights and obligations to such successor;
and (2) a general release, executed by Sylvan and in form and substance
satisfactory to the FOA, of any obligation or liability the FOA may have under
or in connection with this Program Agreement and the eSylvan Agreement, and (3)
proof that such successor has the requisite number of members as described
above. Any such assignment shall not relieve Sylvan of its indemnification
obligations as set forth in Section 4 above.

         (e) In the event Minimum Participant Enrollment (as such term is
defined in the Participation Agreement) is not achieved, and Sylvan elects not
to proceed with the eSylvan Program, this Agreement shall terminate
automatically on the date of such election and be of no further force or effect;
provided, however, that the provisions of Section 4(a) and (b) shall survive any
such termination.

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

                                      SYLVAN LEARNING SYSTEMS, INC.

                                      By: /s/ Peter Cohen
                                          _______________________________
                                          Division President

                                      SLC FRANCHISE OWNERS ASSOCIATION, INC.

                                      By: /s/ Barry E. Miller
                                          _______________________________
                                          President

                                      -6-EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

         SECURITIES PURCHASE AGREEMENT (this "Agreement"),  dated as of December
8, 2000, between WaveRider  Communications  Inc., a corporation  organized under
the  laws  of  the  State  of  Nevada  (the  "Company"),  and  Capital  Ventures
International,   a  Cayman  Islands   unlimited   liability   corporation   (the
"Purchaser").

         WHEREAS:

         A. The Company and the  Purchaser are  executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States  Securities and Exchange  Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").

         B. The Company desires to sell, and the Purchaser  desires to purchase,
upon the terms and conditions stated in this Agreement, (i) convertible notes of
the Company (the  "Notes"),  in the form  attached  hereto as Exhibit A-1 in the
aggregate  principal  amount of Five Million  Dollars  ($5,000,000)  (the "First
Notes"),  and in the  form  attached  hereto  as  Exhibit  A-2 in the  aggregate
principal  amount of Seven Million  Dollars  ($7,000,000)  (the "Second  Notes")
convertible into shares of the Company's common stock, par value $.001 per share
(the "Common Stock"),  and (ii) warrants (the "Warrants"),  in the form attached
hereto as Exhibit  B-1 to acquire an  aggregate  of  2,461,538  shares of Common
Stock,  in the form  attached  hereto as Exhibit B-2 to acquire an  aggregate of
5,907,692 shares of Common Stock, and in the form attached hereto as Exhibit B-3
to acquire an aggregate  of a number of shares of Common Stock to be  determined
on the Second  Closing  Date (as  defined  below).  The  shares of Common  Stock
issuable upon  conversion of or otherwise  pursuant to the Notes are referred to
herein as the  "Conversion  Shares" and the shares of Common Stock issuable upon
exercise of or otherwise  pursuant to the Warrants are referred to herein as the
"Warrant Shares." The Notes, the Warrants, the Conversion Shares and the Warrant
Shares are collectively  referred to herein as the "Securities" and each of them
may individually be referred to herein as a "Security."

         C.  Contemporaneous  with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
in the form  attached  hereto as Exhibit  C-1 (the  "First  Registration  Rights
Agreement"),  pursuant  to which  the  Company  has  agreed to  provide  certain
registration  rights  under the  Securities  Act and the  rules and  regulations
promulgated thereunder, and applicable state securities laws.

         D All references herein to monetary denominations shall refer to lawful
money of the United States of America.

         NOW, THEREFORE, the Company and the Purchaser hereby agree as follows:

1.       PURCHASE AND SALE OF NOTES AND WARRANTS.

         (a) Purchase of Notes and Warrants. The issuance,  sale and purchase of
the Notes and the Warrants shall take place in two separate closings,  the first
of which is referred to herein as the "First Closing" and the second of which is
referred to herein as the "Second Closing".

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                  (i) On the First Closing Date (as defined  below),  subject to
the  satisfaction  (or  waiver)  of the  conditions  set forth in  Section 6 and
Section 7 below,  the  Company  shall issue and sell to the  Purchaser,  and the
Purchaser  agrees to purchase  from the Company,  the First Notes and  2,461,538
Warrants in the form attached  hereto as Exhibit B-1, and 5,907,692  Warrants in
the form attached hereto as Exhibit B-2 (collectively, the "First Warrants") for
an aggregate  purchase price of Five Million  Dollars  ($5,000,000)  (the "First
Purchase Price").

                  (ii) On the Second Closing Date (as defined below), subject to
the  satisfaction  (or  waiver)  of the  conditions  set forth in  Section 6 and
Section 7 below,  the  Company  shall  issue and sell to the  Purchaser  and the
Purchaser agrees to purchase from the Company,  the Second Notes and a number of
Warrants to be determined on the Second Closing Date in the form attached hereto
as Exhibit B-3 (the "Second  Warrants") for an aggregate purchase price of Seven
Million Dollars ($7,000,000) (the "Second Purchase Price").

         (b) Form of Payment. On the First Closing Date, the Purchaser shall pay
the First Purchase Price by wire transfer to the Company, in accordance with the
Company's  written wiring  instructions,  against  delivery of the duly executed
First Notes and First  Warrants,  and the Company  shall deliver the First Notes
and First  Warrants  against  delivery  of the First  Purchase  Price;  and,  if
applicable,  on the Second  Closing  Date,  the  Purchaser  shall pay the Second
Purchase Price, by wire transfer to the Company in accordance with the Company's
written wiring instructions,  against delivery of the duly executed Second Notes
and Second  Warrants,  and the Company shall deliver the Second Notes and Second
Warrants against delivery of the Second Purchase Price.

         (c)  Closing  Date.  Subject  to the  satisfaction  (or  waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the First Notes and First Warrants  pursuant to this
Agreement  (the "First  Closing")  shall be 12:00 noon,  New York City time,  on
December 8, 2000,  subject to a two business day grace period at either  party's
option, but in any event not later than December 12, 2000, or such other time as
may be mutually agreed upon by the Company and the Purchaser (the "First Closing
Date"),  and the date and time of the  issuance and sale of the Second Notes and
the Second Warrants  pursuant to this Agreement (the "Second  Closing") shall be
12:00 noon, New York City time, on the later of (i) the 90th day after the First
Closing Date or (ii) the 30th day after the  Registration  Statement (as defined
in the First  Registration  Rights  Agreement) is declared  effective by the SEC
(the "Second Closing Date").  Notwithstanding anything to the contrary contained
in this  Agreement,  if any of the conditions to the Second Closing set forth in
Section 7(b) below shall not have been  satisfied as of the Second Closing Date,
the Purchaser, in its sole discretion, shall have the option, exercisable at any
time prior to the 60th day after the Second Closing Date, upon three days' prior
written notice to the Company,  to waive any such conditions and to purchase the
Second Notes and the Second Warrants,  on the terms specified herein.  The First
Closing and the Second  Closing  shall  occur at the offices of Heights  Capital
Management, Inc., 401 City Avenue, Suite 220, Bala Cynwyd, Pennsylvania 19004.

2.       PURCHASER'S REPRESENTATIONS AND WARRANTIES

         The Purchaser represents and warrants to the Company as follows:

         (a) Purchase for Own Account,  Etc..  The Purchaser is  purchasing  the
Securities for the Purchaser's own account for investment  purposes only and not
with a present  view  towards the public sale or  distribution  thereof,  except
pursuant  to sales that are exempt  from the  registration  requirements  of the
Securities Act and/or sales  registered  under the Securities Act. The Purchaser
understands  that the Purchaser  must bear the economic risk of this  investment
indefinitely,  unless the Securities  are registered  pursuant to the Securities
Act and any  applicable  state  securities or blue sky laws or an exemption from

                                       2
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such registration is available, and that the Company has no present intention of
registering the resale of any such Securities  other than as contemplated by the
First Registration Rights Agreement and the Second Registration Rights Agreement
(as  defined  below)  (collectively,   the  "Registration  Rights  Agreements").
Notwithstanding  anything in this  Section 2(a) to the  contrary,  by making the
representations  herein, the Purchaser does not agree to hold the Securities for
any  minimum or other  specific  term and  reserves  the right to dispose of the
Securities  at any  time  in  accordance  with  or  pursuant  to a  registration
statement  or  an  exemption  from  the  registration   requirements  under  the
Securities Act.

         (b)  Accredited  Investor  Status.  The  Purchaser  is  an  "Accredited
Investor" as that term is defined in Rule 501(a) of Regulation D.

         (c) Reliance on Exemptions.  The Purchaser  understands  that the Notes
and  Warrants  are being  offered and sold to the  Purchaser  in  reliance  upon
specific exemptions from the registration  requirements of United States federal
and state  securities  laws and that the  Company is relying  upon the truth and
accuracy  of,  and  the  Purchaser's   compliance  with,  the   representations,
warranties, agreements,  acknowledgments and understandings of the Purchaser set
forth herein in order to determine the  availability  of such exemptions and the
eligibility of the Purchaser to acquire the Securities.

         (d)  Information.  The  Purchaser  and its counsel,  if any,  have been
furnished all materials relating to the business, finances and operations of the
Company and  materials  relating to the offer and sale of the  Securities  which
have been specifically  requested by the Purchaser or its counsel. The Purchaser
and its counsel  have been  afforded  the  opportunity  to ask  questions of the
Company and have received what the Purchaser believes to be satisfactory answers
to any such  inquiries.  Neither  such  inquiries  nor any  other  investigation
conducted by the  Purchaser or its counsel or any of its  representatives  shall
modify,  amend  or  affect  the  Purchaser's  right  to  rely  on the  Company's
representations  and  warranties  contained  in Section 3 below.  The  Purchaser
understands  that the Purchaser's  investment in the Securities  involves a high
degree of risk.

         (e)  Governmental  Review.  The  Purchaser  understands  that no United
States federal or state agency or any other  government or  governmental  agency
has passed upon or made any recommendation or endorsement of the Securities.

         (f) Transfer or Resale.  The Purchaser  understands  that (i) except as
provided  in the  Registration  Rights  Agreements,  the sale or  resale  of the
Securities have not been and are not being  registered  under the Securities Act
or any state securities  laws, and the Securities may not be transferred  unless
(a) the resale of the  Securities  has been  registered  thereunder;  or (b) the
Purchaser  shall have  delivered  to the  Company  an opinion of counsel  (which
opinion shall be in form,  substance and scope customary for opinions of counsel
in  comparable  transactions)  to the effect that the  Securities  to be sold or
transferred  may be sold or  transferred  pursuant  to an  exemption  from  such
registration;  or (c) sold  under and in  compliance  with Rule 144  promulgated
under the  Securities  Act (or a successor  rule) ("Rule  144");  or (d) sold or
transferred  to an  affiliate of the  Purchaser  who agrees to sell or otherwise
transfer the Securities  only in accordance  with the provisions of this Section
2(f) and who is an  Accredited  Investor;  and (ii)  neither the Company nor any
other  person is under any  obligation  to register  such  Securities  under the
Securities  Act or  any  state  securities  laws  (other  than  pursuant  to the
Registration Rights Agreements).  Notwithstanding the foregoing or anything else
contained herein to the contrary, the Securities may be pledged as collateral in
connection  with a bona  fide  margin  account  or  other  lending  arrangement,
provided such pledge is consistent with applicable laws, rules and regulations.

         (g) Legends. The Purchaser understands that the Notes and Warrants and,
until such time as the Conversion Shares and Warrant Shares have been registered
under  the  Securities  Act  (including   registration   pursuant  to  Rule  416
thereunder) as contemplated by the applicable  Registration  Rights Agreement or

                                       3
<PAGE>

otherwise may be sold by the Purchaser under Rule 144, the  certificates for the
Conversion  Shares  and  Warrant  Shares  may  bear  a  restrictive   legend  in
substantially the following form:

                  The securities  represented by this  certificate have not been
                  registered  under the Securities  Act of 1933, as amended,  or
                  the  securities  laws of any state of the United  States or in
                  any other jurisdiction.  The securities represented hereby may
                  not be  offered,  sold or  transferred  in the  absence  of an
                  effective  registration  statement  for the  securities  under
                  applicable securities laws unless offered, sold or transferred
                  pursuant  to an  available  exemption  from  the  registration
                  requirements of those laws.

                  The  Company  agrees that it shall,  immediately  prior to the
Registration  Statement  (as  defined  in  the  applicable  Registration  Rights
Agreement)  being declared  effective,  instruct its transfer agent to accept an
opinion  letter  of  counsel  to the  Purchaser,  opining  that at any  time the
Registration  Statement  is  effective,  the  transfer  agent  shall  issue,  in
connection  with the  issuance  of the  Conversion  Shares and  Warrant  Shares,
certificates  representing such Conversion Shares and Warrant Shares without the
restrictive legend above, provided such Conversion Shares and Warrant Shares are
to be sold pursuant to the prospectus  contained in the Registration  Statement.
Upon receipt of such  opinion,  the Company  shall cause the  transfer  agent to
confirm,  for the benefit of the holders,  that no further opinion of counsel is
required  at the time of transfer  in order to issue such  shares  without  such
restrictive legend.

                  The legend set forth  above  shall be removed  and the Company
shall issue a certificate without such legend to the holder of any Security upon
which it is stamped, if, unless otherwise required by state securities laws, (i)
the sale of such  Security is registered  under the  Securities  Act  (including
registration   pursuant  to  Rule  416   thereunder)  as   contemplated  by  the
Registration  Rights  Agreements;  (ii) such holder provides the Company with an
opinion of counsel,  in form,  substance  and scope  customary  for  opinions of
counsel in comparable transactions, to the effect that a public sale or transfer
of such Security may be made without  registration  under the Securities Act; or
(iii) such holder provides the Company with usual and customary  representations
of the holder  that such  Security  can be sold under Rule 144. In the event the
above legend is removed from any Security and thereafter the  effectiveness of a
registration  statement  covering  such  Security  is  suspended  or the Company
determines  that a  supplement  or amendment  thereto is required by  applicable
securities  laws, then upon  reasonable  advance written notice to the Purchaser
the  Company may require  that the above  legend be placed on any such  Security
that cannot then be sold  pursuant to an  effective  registration  statement  or
under Rule 144 and the  Purchaser  shall  cooperate in the  replacement  of such
legend.  Such legend shall thereafter be removed when such Security may again be
sold pursuant to an effective registration statement or under Rule 144.

         (h)   Authorization;   Enforcement.   This   Agreement  and  the  First
Registration  Rights Agreement have been duly and validly  authorized,  executed
and delivered on behalf of the Purchaser and are valid and binding agreements of
the Purchaser, enforceable against the Purchaser in accordance with their terms,
and the Second Registration Rights Agreement, when executed and delivered by the
Purchaser,  will  constitute  a valid and binding  agreement  of the  Purchaser,
enforceable against the Purchaser in accordance with its terms.

         (i)  Residency.  The  Purchaser is a resident of the  jurisdiction  set
forth under the Purchaser's name on the execution page hereto.

         (j) Short Sales.  The Purchaser and affiliates over which the Purchaser
may exercise investment  discretion do not presently maintain a "short" position
in the Company's Common Stock.

                                       4
<PAGE>

         The Purchaser's  representations  and warranties made in this Article 2
are  made  solely  for  the  purpose  of  permitting   the  Company  to  make  a
determination that the offer and sale of the Notes and Warrants pursuant to this
Agreement  complies with applicable U.S.  federal and state  securities laws and
not for any other  purpose.  Accordingly,  the  Company  should not rely on such
representations and warranties for any other purpose.

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to Purchaser as follows:

         (a)  Organization  and  Qualification.  The  Company  and  each  of its
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated,  and has the requisite
corporate  power to own its properties and to carry on its business as now being
conducted.  The  Company and each of its  subsidiaries  is duly  qualified  as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the  business  conducted  by it makes such  qualification
necessary  and where the  failure  so to qualify  would have a Material  Adverse
Effect.  "Material  Adverse Effect" means any material adverse effect on (i) the
Securities, (ii) the ability of the Company to perform its obligations hereunder
or under the Notes, the Warrants or the Registration  Rights Agreements or (iii)
the business,  operations,  properties,  prospects or financial condition of the
Company and its subsidiaries.

         (b)  Authorization;  Enforcement.  (i) The  Company  has the  requisite
corporate  power and authority to enter into and perform its  obligations  under
this Agreement,  the Notes, the Warrants and the Registration Rights Agreements,
to issue  and sell the  Notes  and the  Warrants  in  accordance  with the terms
hereof,  to  issue  the  Conversion  Shares  upon  conversion  of the  Notes  in
accordance  with the terms thereof and to issue the Warrant Shares upon exercise
of the  Warrants  in  accordance  with the terms  thereof;  (ii) the  execution,
delivery and  performance  of this  Agreement,  the Notes,  the Warrants and the
Registration  Rights Agreements by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Notes and the  Warrants and the  issuance  and  reservation  for
issuance of the Conversion  Shares and Warrant Shares) have been duly authorized
by the Company's Board of Directors and no further consent or  authorization  of
the Company, its Board of Directors,  any or committee of the Board of Directors
is required,  and (iii) this  Agreement  constitutes,  and,  upon  execution and
delivery by the Company of the Registration Rights Agreements, the Notes and the
Warrants,  such  agreements or instruments  will  constitute,  valid and binding
obligations of the Company  enforceable  against the Company in accordance  with
their terms.

         (c)  Stockholder  Authorization.  Except as  provided  in Section  4(p)
hereof,  neither the  execution,  delivery or  performance by the Company of its
obligations  under this Agreement,  the Notes,  the Warrants or the Registration
Rights Agreements,  nor the consummation by it of the transactions  contemplated
hereby or thereby (including,  without limitation,  the issuance of the Notes or
the  Warrants or the  issuance or  reservation  for  issuance of the  Conversion
Shares or Warrant Shares) requires any consent or authorization of the Company's
stockholders,   including   but  not  limited  to  consent  under  Rule  4460(i)
promulgated by the National Association of Securities Dealers, Inc. (the "NASD")
or any similar rule.

         (d)  Capitalization.  The  capitalization of the Company as of the date
hereof,  including the authorized capital stock, the number of shares issued and
outstanding, the number of shares issuable and reserved for issuance pursuant to
the Company's stock option plans, the number of shares issuable and reserved for
issuance  pursuant  to  securities  (other  than  the  Notes  and the  Warrants)
exercisable  or  exchangeable  for, or  convertible  into, any shares of capital
stock and the number of shares to be reserved for issuance  upon  conversion  of
the Notes and  exercise of the  Warrants is set forth on Schedule  3(d).  All of

                                       5
<PAGE>

such outstanding  shares of capital stock have been, or upon issuance,  will be,
validly issued, fully paid and non-assessable. No shares of capital stock of the
Company  (including the Conversion Shares and the Warrant Shares) are subject to
preemptive rights or any other similar rights of the stockholders of the Company
or any liens or  encumbrances.  Except  for the  Securities  and as set forth on
Schedule  3(d), as of the date of this  Agreement,  (i) there are no outstanding
options,  warrants,  scrip,  rights to subscribe to, calls or commitments of any
character  whatsoever  relating to, or securities or rights  convertible into or
exercisable or  exchangeable  for, any shares of capital stock of the Company or
any of its  subsidiaries,  or  arrangements  by which the  Company or any of its
subsidiaries is or may become bound to issue additional  shares of capital stock
of the  Company  or any of its  subsidiaries,  nor are  any  such  issuances  or
arrangements  contemplated,  and (ii) there are no  agreements  or  arrangements
under which the Company or any of its subsidiaries is or may become obligated to
register the sale of any of its or their  securities  under the  Securities  Act
(except the Registration Rights Agreements). Schedule 3(d) sets forth all of the
Company's issued  securities or instruments  containing  antidilution or similar
provisions that will be triggered by, and all of the resulting  adjustments that
will be made to such  securities and instruments as a result of, the issuance of
the Securities in accordance with the terms of this Agreement,  the Notes or the
Warrants.  The Company has furnished to the Purchaser true and correct copies of
the  Company's  Articles  of  Incorporation  as in  effect  on the  date  hereof
("Articles of  Incorporation"),  the Company's  By-laws as in effect on the date
hereof (the  "By-laws"),  and all other  instruments  and  agreements  governing
securities  convertible into or exercisable or exchangeable for capital stock of
the Company.

         (e) Issuance of Shares.  The  Conversion  Shares and Warrant Shares are
duly authorized and reserved for issuance, and, upon conversion of the Notes and
exercise of the Warrants in accordance  with the terms thereof,  will be validly
issued,  fully paid and  non-assessable,  and free from all taxes, liens, claims
and encumbrances and will not be subject to preemptive  rights,  rights of first
refusal or other  similar  rights of  stockholders  of the  Company and will not
impose personal liability upon the holder thereof.

         (f) No  Conflicts.  The  execution,  delivery and  performance  of this
Agreement, the Registration Rights Agreements, the Notes and the Warrants by the
Company,  and the consummation by the Company of the  transactions  contemplated
hereby and thereby (including,  without limitation, the issuance and reservation
for issuance, as applicable,  of the Notes, the Warrants,  the Conversion Shares
and  Warrant  Shares)  will not (i) result in a  violation  of the  Articles  of
Incorporation  or By-laws or (ii) conflict  with, or constitute a default (or an
event that with notice or lapse of time or both would  become a default)  under,
or give to others  any  rights of  termination,  amendment  (including,  without
limitation,  the triggering of any  anti-dilution  provisions),  acceleration or
cancellation of, any agreement,  indenture or instrument to which the Company or
any of its  subsidiaries  is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including United States federal and state
securities laws and regulations and rules or regulations of any  self-regulatory
organizations  to which  either  the  Company  or its  securities  are  subject)
applicable to the Company or any of its subsidiaries or by which any property or
asset of the Company or any of its  subsidiaries  is bound or affected  (except,
with  respect  to  clause  (ii),  for such  conflicts,  defaults,  terminations,
amendments,   accelerations,   cancellations  and  violations  that  would  not,
individually or in the aggregate,  have a Material Adverse Effect).  Neither the
Company  nor  any  of its  subsidiaries  is in  violation  of  its  Articles  of
Incorporation, By-laws or other organizational documents and neither the Company
nor any of its subsidiaries is in default (and no event has occurred which, with
notice  or  lapse  of  time  or  both,  would  put  the  Company  or  any of its
subsidiaries in default)  under,  nor has there occurred any event giving others
(with  notice or lapse of time or both) any  rights of  termination,  amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, except for actual or possible
violations, defaults or rights that would not, individually or in the aggregate,
have  a  Material  Adverse  Effect.  The  businesses  of  the  Company  and  its
subsidiaries are not being conducted,  and shall not be conducted so long as the
Purchaser  owns any of the  Securities,  in violation  of any law,  ordinance or
regulation  of any  governmental  entity,  except for  possible  violations  the
sanctions for which either singly or in the aggregate  would not have a Material
Adverse Effect.  Except as  specifically  contemplated by this Agreement and the
Registration  Rights  Agreements,  the  Company  is not  required  to obtain any

                                       6
<PAGE>

consent, approval, authorization or order of, or make any filing or registration
with,  any court or  governmental  agency or any  regulatory or self  regulatory
agency or other third  party in order for it to execute,  deliver or perform any
of its obligations under this Agreement, the Registration Rights Agreements, the
Notes or the  Warrants,  in each case in  accordance  with the  terms  hereof or
thereof.  The Company is not in  violation  of the listing  requirements  of the
NASDAQ  National Market  ("NASDAQ") and does not reasonably  anticipate that the
Common Stock will be delisted by NASDAQ for the foreseeable future.

         (g) SEC  Documents,  Financial  Statements.  Since January 1, 1999, the
Company has timely  filed  (within  applicable  extension  periods) all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting  requirements  of Sections 13, 14 and 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (all of the
foregoing filed prior to the date hereof and all exhibits  included  therein and
financial  statements  and  schedules  thereto  and  documents  incorporated  by
reference therein, being hereinafter referred to herein as the "SEC Documents").
The Company has delivered to the Purchaser  true and complete  copies of the SEC
Documents.  As of their  respective  dates,  the SEC  Documents  complied in all
material  respects with the  requirements  of the Exchange Act or the Securities
Act, as the case may be, and the rules and  regulations  of the SEC  promulgated
thereunder  applicable to the SEC Documents,  and none of the SEC Documents,  at
the time they were  filed with the SEC,  contained  any  untrue  statement  of a
material fact or omitted to state a material fact required to be stated  therein
or  necessary  in  order  to  make  the  statements  therein,  in  light  of the
circumstances under which they were made, not misleading. None of the statements
made in any such SEC  Documents  is,  or has been,  required  to be  amended  or
updated under applicable law (except for such statements as have been amended or
updated  in  subsequent  filings  made  prior to the date  hereof).  As of their
respective  dates,  the financial  statements of the Company included in the SEC
Documents  complied  as  to  form  in  all  material  respects  with  applicable
accounting  requirements  and the  published  rules and  regulations  of the SEC
applicable with respect thereto. Such financial statements have been prepared in
accordance  with  U.S.  generally  accepted  accounting   principles   ("GAAP"),
consistently  applied,  during  the  periods  involved  (except  (i)  as  may be
otherwise  indicated in such financial  statements or the notes thereto, or (ii)
in the case of unaudited interim statements,  to the extent they may not include
footnotes or may be condensed or summary  statements)  and fairly present in all
material  respects the  consolidated  financial  position of the Company and its
consolidated  subsidiaries as of the dates thereof and the consolidated  results
of their  operations and cash flows for the periods then ended (subject,  in the
case of unaudited statements, to immaterial year-end audit adjustments).  Except
as set forth in the  financial  statements  of the  Company  included in the SEC
Documents  filed  prior to the date  hereof,  the  Company  has no  liabilities,
contingent or  otherwise,  other than (i)  liabilities  incurred in the ordinary
course of business subsequent to the date of such financial  statements and (ii)
obligations  under contracts and commitments  incurred in the ordinary course of
business  and  not  required  under  GAAP  to be  reflected  in  such  financial
statements,  which  liabilities and  obligations  referred to in clauses (i) and
(ii),  individually  or in the  aggregate,  are not  material  to the  financial
condition or operating results of the Company.

         (h) Absence of Certain  Changes.  Since  September 30, 2000,  there has
been no material  adverse  change and no  material  adverse  development  in the
business, properties,  operations,  prospects, financial condition or results of
operations  of the Company  and its  subsidiaries,  taken as a whole,  except as
disclosed in the SEC Documents filed prior to the date hereof.

         (i) Absence of  Litigation.  Except as disclosed  in the SEC  Documents
filed prior to the date hereof, there is no action, suit, proceeding, inquiry or
investigation  before  or  by  any  court,  public  board,   government  agency,
self-regulatory  organization or body, including, without limitation, the SEC or

                                       7
<PAGE>

NASDAQ,  pending or, to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company, any of its subsidiaries,  or any of
their  respective  directors or officers in their capacities as such which could
reasonably be expected to have a Material Adverse Effect.  To the best knowledge
of the Company,  after  reasonable  investigation,  there are no facts which, if
known by a potential  claimant or governmental  authority,  could give rise to a
claim or proceeding which, if asserted or conducted with results  unfavorable to
the Company or any of its  subsidiaries,  could reasonably be expected to have a
Material Adverse Effect.

         (j)  Intellectual  Property.  Each of the Company and its  subsidiaries
owns  or is  licensed  to use  all  patents,  patent  applications,  trademarks,
trademark  applications,  trade  names,  service  marks,  copyrights,  copyright
applications, licenses, permits, inventions, discoveries, processes, scientific,
technical,  engineering  and marketing data,  object and source codes,  know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information,  systems or procedures) or other similar rights and/or
proprietary  knowledge  necessary  for the conduct of its  business as now being
conducted (collectively,  "Intangibles").  To the best knowledge of the Company,
neither  the  Company  nor any  subsidiary  of the  Company  infringes  or is in
conflict  with any right of any other  person  with  respect to any  Intangibles
which, if the subject of an unfavorable decision,  ruling or finding, would have
a Material  Adverse Effect.  Neither the Company nor any of its subsidiaries has
received written notice of any pending  conflict with or infringement  upon such
third party  Intangibles.  Neither the Company nor any of its  subsidiaries  has
entered into any consent agreement,  indemnification  agreement,  forbearance to
sue or settlement agreement with respect to the validity of the Company's or its
subsidiaries'  ownership  or  right  to use its  Intangibles  and,  to the  best
knowledge of the Company,  there is no reasonable basis for any such claim to be
successful.  The  Intangibles  are valid  and  enforceable  and no  registration
relating  thereto has lapsed,  expired or been  abandoned  or canceled or is the
subject of cancellation or other adversarial  proceedings,  and all applications
therefor are pending and in good standing except for such failures to be in good
standing  that would not cause a Material  Adverse  Effect.  The Company and its
subsidiaries  have complied,  in all material  respects,  with their  respective
contractual  obligations  relating to the  protection  of the  Intangibles  used
pursuant  to  licenses.  To the best  knowledge  of the  Company,  no  person is
infringing on or violating the  Intangibles  owned or used by the Company or its
subsidiaries.

         (k) Foreign  Corrupt  Practices.  Neither the  Company,  nor any of its
subsidiaries,  nor any director, officer, agent, employee or other person acting
on behalf of the  Company or any  subsidiary  has,  in the course of his actions
for, or on behalf of, the  Company,  used any  corporate  funds for any unlawful
contribution,  gift,  entertainment  or  other  unlawful  expenses  relating  to
political activity;  made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977;
or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.

         (l) Disclosure.  All information  relating to or concerning the Company
set forth in this  Agreement  or provided to the  Purchaser  pursuant to Section
2(d) hereof or otherwise in connection with the transactions contemplated hereby
is true and correct in all material  respects and the Company has not omitted to
state any material fact necessary in order to make the statements made herein or
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  No event or circumstance has occurred or exists with respect to the
Company  or  its  subsidiaries  or  their  respective  businesses,   properties,
prospects,  operations  or  financial  conditions,  which has not been  publicly
disclosed but, under applicable law, rule or regulation, would be required to be
disclosed by the Company in a registration statement filed on the date hereof by
the Company under the Securities  Act with respect to a primary  issuance of the
Company's securities.

                                       8
<PAGE>

         (m) Acknowledgment  Regarding  Purchaser's  Purchase of the Securities.
The  Company  acknowledges  and  agrees  that the  Purchaser  is not acting as a
financial  advisor or fiduciary of the Company (or in any similar capacity) with
respect  to  this  Agreement  or  the  transactions   contemplated  hereby,  the
relationship  between the Company and the  Purchaser  is  "arms-length"  and any
statement  made by the  Purchaser  or any of its  representatives  or  agents in
connection  with this  Agreement  and the  transactions  contemplated  hereby is
merely incidental to the Purchaser's purchase of the Securities and has not been
relied upon by the  Company,  its  officers or directors in any way. The Company
further  acknowledges  that the Company's  decision to enter into this Agreement
has been  based  solely on an  independent  evaluation  by the  Company  and its
representatives.

         (n)  Listing.  The Company  has  secured the listing of the  Conversion
Shares and Warrant  Shares upon each national  securities  exchange or automated
quotation system upon which shares of Common Stock are currently listed (subject
to official notice of issuance).

         (o) Form S-3  Eligibility.  The Company is  eligible  to  register  the
resale of its Common  Stock on a  registration  statement  on Form S-3 under the
Securities  Act.  There exist no facts or  circumstances  that would prohibit or
delay the  preparation  and filing of a registration  statement on Form S-3 with
respect to the  Registrable  Securities (as defined in the  Registration  Rights
Agreements).  The  Company  has no basis  to  believe  that its past or  present
independent  public  auditors will withhold their consent to the  inclusion,  or
incorporation  by  reference,  of their audit opinion  concerning  the Company's
financial  statements  which will be  included  in the  Registration  Statements
required to be filed pursuant to the Registration Rights Agreements.

         (p) No General  Solicitation.  Neither the Company nor any  distributor
participating on the Company's behalf in the  transactions  contemplated  hereby
(if any) nor any person  acting for the Company,  or any such  distributor,  has
conducted any "general  solicitation,"  as such term is defined in Regulation D,
with respect to any of the Securities being offered hereby.

         (q)  No  Integrated  Offering.  Neither  the  Company,  nor  any of its
affiliates,  nor any  person  acting on its or their  behalf,  has  directly  or
indirectly  made any offers or sales of any security or solicited  any offers to
buy any security  under  circumstances  that would require  registration  of the
Securities  being offered hereby under the Securities Act or cause this offering
of  Securities  to be  integrated  with any prior  offering of securities of the
Company for purposes of the Securities Act, the result of such integration which
would  require   registration  under  the  Securities  Act,  or  any  applicable
stockholder approval provisions,  including, without limitation, Rule 4460(i) of
the NASD or any similar rule.

         (r) No Brokers. The Company has taken no action that would give rise to
any claim by any  person for  brokerage  commissions,  finder's  fees or similar
payments  by the  Purchaser  relating  to  this  Agreement  or the  transactions
contemplated hereby.

         (s)  Acknowledgment  Regarding  Securities.  The  number of  Conversion
Shares   issuable  upon   conversion  of  the  Notes  may  increase  in  certain
circumstances,  including  if the bid price of the Common  Stock  declines.  The
Company's executive officers have studied and fully understand the nature of the
Securities being sold hereunder. The Company acknowledges that its obligation to
issue  Conversion  Shares upon  conversion of the Notes in  accordance  with the
terms of the Notes is absolute  and  unconditional,  regardless  of the dilution
that such  issuance may have on the ownership  interests of other  stockholders.
Taking  the  foregoing  into  account,  the  Company's  Board of  Directors  has
determined  in its good faith  business  judgment that the issuance of the Notes
and  Warrants   hereunder  and  the  consummation  of  the  other   transactions
contemplated   hereby  are  in  the  best  interests  of  the  Company  and  its
stockholders.

                                       9
<PAGE>

         (t) Title. Except as set forth on Schedule 3(t) hereto, the Company and
its  subsidiaries  have  good and  marketable  title in fee  simple  to all real
property and good and merchantable  title to all personal property owned by them
that is material to the  business of the Company and its  subsidiaries,  in each
case free and clear of all liens, encumbrances and defects except such as do not
materially  affect the value of such  property and do not  materially  interfere
with the use made and  proposed  to be made of such  property by the Company and
its  subsidiaries.  Any real  property  and  facilities  held under lease by the
Company  and its  subsidiaries  are held by them  under  valid,  subsisting  and
enforceable  leases  with  such  exceptions  as  are  not  material  and  do not
materially  interfere with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries.

         (u) Tax Status. Except as set forth in the SEC Documents or in Schedule
3(u),  the Company and each of its  subsidiaries  has made or filed all foreign,
U.S.  federal,  state and local  income and all other tax  returns,  reports and
declarations  required by any  jurisdiction  to which it is subject  (unless and
only to the extent that the Company and each of its  subsidiaries  has set aside
on its books  provisions  reasonably  adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental  assessments and
charges  that are  material  in amount,  shown or  determined  to be due on such
returns,  reports and  declarations,  except those being contested in good faith
and has set aside on its books provisions reasonably adequate for the payment of
all taxes for periods  subsequent to the periods to which such returns,  reports
or declarations  apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any  jurisdiction,  and the officers of the
Company  know of no basis for any such claim.  The  Company  has not  executed a
waiver with respect to any statute of limitations  relating to the assessment or
collection of any federal, state or local tax. None of the Company's tax returns
is presently being audited by any taxing authority.

         (v) Key Employees.  Each of the Company's  directors,  officers and any
Key Employee (as defined below) is currently serving the Company in the capacity
disclosed in the SEC Documents. No Key Employee, to the best of the knowledge of
the Company and its subsidiaries,  is, or is now expected to be, in violation of
any material term of any  employment  contract,  confidentiality,  disclosure or
proprietary  information  agreement,  non-competition  agreement,  or any  other
contract or agreement or any restrictive covenant,  and the continued employment
of each Key Employee does not subject the Company or any of its  subsidiaries to
any material  liability  with respect to any of the  foregoing  matters.  No Key
Employee has, to the best of the knowledge of the Company and its  subsidiaries,
any  intention to terminate or limit his  employment  with,  or services to, the
Company or any of its subsidiaries,  nor is any such Key Employee subject to any
constraints which would cause such employee to be unable to devote his full time
and attention to such  employment or services.  "Key Employee" means the persons
listed on Schedule  3(v) and any  individual  who assumes or performs any of the
duties of a Key Employee.

         (w) Insurance. Except as set forth in Schedule 3(w), The Company has in
force fire,  casualty,  product  liability and other  insurance  policies,  with
extended  coverage,  sufficient  in  amount  to allow it to  replace  any of its
material  properties or assets which might be damaged or destroyed or sufficient
to cover  liabilities to which the Company may reasonably  become  subject,  and
such types and  amounts of other  insurance  with  respect to its  business  and
properties,  on both a per occurrence and an aggregate basis, as are customarily
carried by persons  engaged in the same or similar  business as the Company.  No
default or event has occurred  that could give rise to a default  under any such
policy.

         (x)  Environmental  Matters.  There is no  environmental  litigation or
other  environmental  proceeding  pending  or  threatened  by  any  governmental
regulatory  authority  or others  with  respect  to the  current  or any  former
business of the Company or any partnership or joint venture  currently or at any
time affiliated with the Company.  No state of facts exists as to  environmental
matters or Hazardous  Substances (as defined below) that involves the reasonable
likelihood  of a  material  capital  expenditure  by the  Company  or  that  may
otherwise have a Material  Adverse  Effect.  No Hazardous  Substances  have been
treated,  stored or disposed of, or otherwise deposited, in or on the properties

                                       10
<PAGE>

owned or leased by the Company or by any partnership or joint venture  currently
or at any time  affiliated  with the  Company  in  violation  of any  applicable
environmental laws. The environmental  compliance programs of the Company comply
in all respects with all environmental  laws,  whether federal,  state or local,
currently in effect. As used herein, "Hazardous Substances" means any substance,
waste,  contaminant,  pollutant  or  material  that has been  determined  by any
governmental  authority  to be  capable  of posing a risk of  injury to  health,
safety, property or the environment.

         (y) VoIP  International S.A. de C.V. The Company has terminated any and
all obligations of the Company and all rights of VoIP International S.A. de C.V.
("VoIP") under that certain  Strategic Partner  Agreement,  dated as of March 9,
2000 by and  between the Company  and VOIP,  as well as all  obligations  of the
Company and all rights of VoIP under the  warrants  to acquire  shares of Common
Stock issued by the Company to VoIP pursuant to said Strategic Partner Agreement
and all  obligations  of the Company and all rights of any sales  agent(s) under
the  warrants  to  acquire  shares of Common  Stock  issued  by the  Company  in
connection with said Strategic Partner Agreement.

4.       COVENANTS.

         (a) Best Efforts.  The parties  shall use their best efforts  timely to
satisfy  each of the  conditions  described  in Section 6 and  Section 7 of this
Agreement.

         (b) Form D: Blue Sky Laws. The Company shall file with the SEC a Form D
with respect to the Securities as required under Regulation D and provide a copy
thereof to the Purchaser  promptly after such filing.  The Company shall,  on or
before the First Closing Date, take such action as the Company shall  reasonably
determine  is  necessary  to qualify the  Securities  for sale to the  Purchaser
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United  States or obtain  exemption  therefrom,  and shall provide
evidence of any such action so taken to the  Purchaser  on or prior to the First
Closing Date.  Within five (5) trading days after the First  Closing  Date,  the
Company shall file a Current Report on Form 8-K (the "Form 8-K") concerning this
Agreement and the transactions  contemplated hereby, which Form 8-K shall attach
this Agreement and its Exhibits as exhibits to such Form 8-K.

         (c) Reporting Status. So long as any Purchaser beneficially owns any of
the Securities,  the Company shall timely file all reports  required to be filed
with the SEC pursuant to the Exchange  Act, and the Company  shall not terminate
its status as an issuer  required to file reports under the Exchange Act even if
the  Exchange  Act or the rules and  regulations  thereunder  would  permit such
termination.  In addition,  the Company shall take all actions necessary to meet
the "registrant eligibility"  requirements set forth in the general instructions
to Form S-3 or any  successor  form  thereto,  to  continue  to be  eligible  to
register the resale of its Common Stock on a registration  statement on Form S-3
under the Securities Act.

         (d) Use of Proceeds.  The Company  shall use the proceeds from the sale
of the Notes and Warrants as set forth in Schedule 4(d).

         (e) Additional Equity Capital.  During the period beginning on the date
hereof and ending 180 days  following  the  effective  date of the  Registration
Statement  required to be filed by the Company  pursuant to Section  2(a) of the
First  Registration  Rights Agreement (the "First Lock-Up  Period"),  as well as
during  the period  beginning  on the  Second  Closing  Date and ending 120 days
following the effective date of the Registration  Statement required to be filed
by the  Company  pursuant  to  Section  2(a) of the Second  Registration  Rights
Agreement (the "Second Lock-Up Period"), the Company will not, without the prior
written consent of the Purchaser,  contract with any party to obtain  additional
financing in which any equity or equity-linked  securities,  having common stock
registration  rights and/or public resale rights effective within one year after

                                       11
<PAGE>

the closing date of such additional  financing,  are issued  (including any debt
financing  with an equity  component) (a "Future  Offering").  In addition,  the
Company will not conduct any Future Offering during the period  beginning on the
date hereof and ending 180 days  following  the  expiration of the First Lock-Up
Period,  as well as during the period  beginning on the Second  Closing Date and
ending 120 days following the expiration of the Second Lock-Up Period, unless it
shall have first  delivered to the  Purchaser,  at least ten (10)  business days
prior to the closing of such Future  Offering,  written  notice  describing  the
proposed  Future  Offering,  including  the terms and  conditions  thereof,  and
providing  the  Purchaser  and its  affiliates  an  option  during  the ten (10)
business day period following delivery of such notice to purchase the securities
being offered in the Future  Offering on the same terms as  contemplated by such
Future  Offering  (the  limitations  referred  to in this  and  the  immediately
preceding  sentence  are  collectively  referred  to  as  the  "Capital  Raising
Limitations").   The  Capital  Raising   Limitations  shall  not  apply  to  any
transaction  involving  issuances of  securities as  consideration  in a merger,
consolidation  or  acquisition  of assets,  or in connection  with any strategic
partnership  or joint  venture  (the  primary  purpose  of which is not to raise
equity capital), or as consideration for the acquisition of a business,  product
or license by the Company.  The Capital Raising Limitations also shall not apply
to (i) the issuance of securities  pursuant to an underwritten  public offering,
(ii) the issuance of  securities  upon  exercise or  conversion of the Company's
options,  warrants or other  convertible  securities  outstanding as of the date
hereof or (iii) the grant of additional options or warrants,  or the issuance of
additional securities,  under any Company stock option, bonus plan or restricted
stock plan for the benefit of the Company's employees or directors.

         (f) Expenses. The Company shall pay to Heights Capital Management, Inc.
("Heights") at the First Closing,  reimbursement for the out-of-pocket  expenses
reasonably  incurred by Heights and its  affiliates  and advisors in  connection
with the negotiation,  preparation, execution and delivery of this Agreement and
the other agreements to be executed in connection herewith,  including,  without
limitation,  Heights' and its affiliates and advisors'  reasonable due diligence
and  attorneys'  fees and expenses (the  "Expenses");  provided,  however,  that
Heights  shall be  permitted  to deduct all  Expenses  (subject to such  maximum
amount) from the Purchase Price payable by Heights hereunder.  In addition, from
time to time thereafter (including,  without limitation,  at the Second Closing,
if any), upon Heights'  written  request,  the Company shall pay to Heights such
additional  Expenses,  if any, not covered by such payment,  in each case to the
extent reasonably  incurred by Heights or its affiliates or agents in connection
with the negotiation,  preparation, execution and delivery of this Agreement and
the other  agreements  executed  in  connection  herewith.  Notwithstanding  the
foregoing, the Company shall not be obligated to reimburse Heights for more than
$50,000 pursuant to this Section 4(f).

         (g) Financial  Information.  So long as the Purchaser  holds any of the
Notes,  the Company shall send (via  electronic  transmission  or otherwise) the
following  reports to the Purchaser  until the Purchaser  transfers,  assigns or
sells all of its Securities:  (i) within five (5) days after the filing with the
SEC, a copy of its Annual  Report on Form 10-K,  its  Quarterly  Reports on Form
10-Q, its proxy  statements and any Current Reports on Form 8-K; and (ii) within
one (1) day after release, copies of all press releases issued by the Company or
any of its subsidiaries.

         (h)  Reservation  of  Shares.  The  Company  shall  at all  times  have
authorized  and  reserved  for the  purpose of issuance a  sufficient  number of
shares of  Common  Stock to  provide  for the full  conversion  of the Notes and
issuance of the Conversion Shares in connection therewith,  the full exercise of
the Warrants and the issuance of the Warrant Shares in connection  therewith and
as otherwise required by the Notes and the Warrants.

         (i) Listing.  The Company shall maintain,  so long as the Purchaser (or
any of its affiliates) owns any Securities, the listing of all Conversion Shares
and Warrant  Shares from time to time issuable upon  conversion of the Notes and
exercise  of the  Warrants on each  national  securities  exchange or  automated

                                       12
<PAGE>

quotation  system on which  shares of Common  Stock are  currently  listed.  The
Company  will use its best  efforts to  continue  the listing and trading of its
Common  Stock on NASDAQ,  the New York Stock  Exchange  ("NYSE") or the American
Stock  Exchange  ("AMEX")  and will comply in all respects  with the  reporting,
filing  and other  obligations  under  the  bylaws or rules of the NASD and such
exchanges,  as applicable.  The Company shall promptly  provide to the Purchaser
copies of any notices it receives  regarding  the continued  eligibility  of the
Common  Stock for  trading  on the  NASDAQ  or, if  applicable,  any  securities
exchange or automated  quotation system on which securities of the same class or
series issued by the Company are then listed or quoted, if any.

         (j) Corporate Existence. So long as the Purchaser beneficially owns any
Securities, the Company shall maintain its corporate existence, and in the event
of a merger,  consolidation or sale of all or substantially all of the Company's
assets,  the Company shall ensure that the surviving or successor entity in such
transaction  (i)  assumes  the  Company's  obligations  hereunder  and under the
Registration  Rights  Agreements,  the Notes and the Warrants and the agreements
and instruments entered into in connection herewith and therewith  regardless of
whether  or not the  Company  would  have had a  sufficient  number of shares of
Common  Stock  authorized  and  available  for  issuance  in order to effect the
conversion of all the Notes and exercise in full of all Warrants  outstanding as
of the date of such transaction and (ii) is a publicly traded  corporation whose
common stock is listed for trading on the NASDAQ, NYSE or AMEX.  Notwithstanding
the foregoing,  the Company  covenants and agrees that it will not engage in any
merger,  consolidation or sale of all or substantially  all of its assets at any
time prior to the  effectiveness  of the Registration  Statement  required to be
filed pursuant to the Second Registration Rights Agreement without (A) providing
the Purchaser with written notice of such  transaction at least 60 days prior to
the  consummation  of such  transaction and (B) obtaining the written consent of
the Purchaser on or before the 10th day after the delivery of such notice by the
Company.

         (k) No Integrated  Offerings.  The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
Securities  Act or cause this offering of the  Securities to be integrated  with
any other offering of securities by the Company for purposes of any  stockholder
approval provision applicable to the Company or its securities.

         (l) Legal  Compliance.  The Company  shall conduct its business and the
business  of its  subsidiaries  in  compliance  with  all  laws,  ordinances  or
regulations of governmental entities applicable to such businesses, except where
the failure to do so would not have a Material Adverse Effect.

         (m)  Redemptions and Dividends.  So long as the Purchaser  beneficially
owns any Notes,  the Company  shall not,  without  first  obtaining  the written
approval  of the  Purchaser,  repurchase,  redeem,  or  declare  or pay any cash
dividend or distribution on, any shares of capital stock of the Company.

         (n) Trading Restrictions. The Purchaser shall be not permitted to sell,
transfer or otherwise  dispose of,  during any 45 trading day period,  more than
4.99% of the least  number of shares of  Common  Stock  issued  and  outstanding
during such 45 trading day period (other than dispositions to the Company).

         (o) Inspection of Properties and Books.  So long as the Purchaser shall
hold Notes in the aggregate  principal  amount of $1,000,000,  the Purchaser and
its representatives and agents  (collectively,  the "Inspectors") shall have the
right, at the Purchaser's expense, to visit and inspect any of the properties of
the Company and of its subsidiaries, to examine the books of account and records
of the Company and of its  subsidiaries,  to make or be provided with copies and
extracts therefrom, to discuss the affairs, finances and accounts of the Company
and of its subsidiaries with, and to be advised as to the same by, its and their
officers,  employees and independent  public  accountants (and by this provision

                                       13
<PAGE>

the Company  authorizes such  accountants to discuss such affairs,  finances and
accounts, whether or not a representative of the Company is present) all at such
reasonable  times and intervals and to such  reasonable  extent as the Purchaser
may desire; provided,  however, that each Inspector shall hold in confidence and
shall not make any disclosure  (except to the Purchaser) of any such information
which the  Company  determines  in good faith to be  confidential,  and of which
determination the Inspectors are so notified,  unless (a) the disclosure of such
information is necessary to avoid or correct a  misstatement  or omission in any
Registration Statement filed pursuant to the Registration Rights Agreements, (b)
the release of such information is ordered pursuant to a subpoena or other order
from a  court  or  government  body  of  competent  jurisdiction,  or  (c)  such
information  has been made  generally  available  to the  public  other  than by
disclosure in violation of this or any other agreement. The Company shall not be
required to disclose any  confidential  information  to any Inspector  until and
unless such  Inspector  shall have entered into  confidentiality  agreements (in
form and  substance  satisfactory  to the Company) with the Company with respect
thereto,  substantially  in the form of this Section 4(o). The Purchaser  agrees
that it shall, upon learning that disclosure of such information is sought in or
by a court or  governmental  body of  competent  jurisdiction  or through  other
means, give prompt notice to the Company and allow the Company,  at its expense,
to  undertake  appropriate  action  to  prevent  disclosure  of,  or to obtain a
protective order for, the information deemed confidential.

         (p) Stockholder Approval. If, on the effective date of the Registration
Statement  filed  pursuant to the First  Registration  Rights  Agreement  or the
Second Registration Rights Agreement,  the Company is prohibited by Rule 4460(i)
of the  NASD or any  successor  or  similar  rule,  or the  rules  of any  other
securities  exchange  on which the Common  Stock is then  listed or traded  from
issuing all of the shares of Common Stock  issuable upon complete  conversion of
the Notes and complete  exercise of the Warrants  (without  giving effect to the
limitations on conversion and exercise  contained in Article III.D. of the Notes
and  Section  7(g) of the  Warrants),  the  Company  shall call a meeting of its
stockholders  to be held as  promptly as  practicable  and in any event no later
than 90 days after the effective date of the applicable  Registration  Statement
for the purpose of voting upon and  approving  this  Agreement,  the Notes,  the
Warrants and the Registration Rights Agreements,  the authorization and issuance
of the Notes and the Warrants,  and the issuance of the  Conversion  Shares upon
conversion  of or  otherwise  pursuant to the Notes and the Warrant  Shares upon
exercise of or otherwise  pursuant to the Warrants.  The Company shall,  through
its Board of Directors,  recommend to its stockholders approval of such matters.
The Company shall use its best efforts to solicit from its stockholders  proxies
in  favor  of  such  matters  sufficient  to  comply  with  all  relevant  legal
requirements,  including,  without  limitation,  Rule 4460(i) promulgated by the
NASD, and shall vote such proxies in favor of such matters.

5.       TRANSFER AGENT INSTRUCTIONS.

         (a)  The  Company   shall   instruct  its   transfer   agent  to  issue
certificates,  registered in the name of the  Purchaser or its nominee,  for the
Conversion  Shares and the Warrant Shares in such amounts as specified from time
to time by the Purchaser to the Company upon conversion of the Notes or exercise
of the Warrants, as applicable. To the extent and during the periods provided in
Sections 2(f) and 2(g) of this Agreement,  all such certificates  shall bear the
restrictive legend specified in Section 2(g) of this Agreement.

         (b)  The  Company   warrants  that  no  instruction   other  than  such
instructions  referred to in this Section 5, and stop transfer  instructions  to
give effect to Section 2(f) hereof in the case of the transfer of the Conversion
Shares or Warrant  Shares prior to  registration  of the  Conversion  Shares and
Warrant Shares under the Securities Act or without an exemption therefrom,  will
be given by the  Company to its  transfer  agent and that the  Securities  shall
otherwise be freely  transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Registration Rights Agreements.
Nothing in this Section shall affect in any way the Purchaser's  obligations and

                                       14
<PAGE>

agreement set forth in Section 2(g) hereof to resell the Securities  pursuant to
an effective  registration statement or under an exemption from the registration
requirements of applicable securities law.

         (c) If the Purchaser  provides the Company and the transfer  agent with
an opinion of counsel,  which opinion of counsel shall be in form, substance and
scope  customary  for  opinions of counsel in  comparable  transactions,  to the
effect that the Securities to be sold or transferred  may be sold or transferred
pursuant to an  exemption  from  registration,  or the  Purchaser  provides  the
Company with  reasonable  assurances that such Securities may be sold under Rule
144, the Company  shall permit the transfer  and, in the case of the  Conversion
Shares and Warrant Shares,  promptly instruct its transfer agent to issue one or
more  certificates  in such name and in such  denominations  as specified by the
Purchaser.

6.       CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

         The obligation of the Company hereunder to issue and sell the Notes and
Warrants to the Purchaser hereunder is subject to the satisfaction, at or before
the  First  Closing  and  the  Second  Closing,  as  applicable,  of each of the
following conditions,  provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion.

         (a)      With respect to the First Closing and the Second Closing:

                  (i) The  Purchaser  shall have  delivered  the First  Purchase
Price or the Second Purchase  Price,  as applicable,  in accordance with Section
1(b) above.

                  (ii) The representations and warranties of the Purchaser shall
be true and  correct as of the date when made and as of the First  Closing  Date
and the Second Closing Date, as applicable,  as though made at that time (except
for  representations  and  warranties  that speak as of a specific  date,  which
representations  and warranties  shall be true and correct as of such date), and
the  Purchaser  shall have  performed,  satisfied  and  complied in all material
respects  with  the  covenants,  agreements  and  conditions  required  by  this
Agreement to be  performed,  satisfied or complied  with by the  Purchaser at or
prior to the First Closing Date and the Second Closing Date, as applicable.

                  (iii) No statute, rule,  regulation,  executive order, decree,
ruling or injunction shall have been enacted,  entered,  promulgated or endorsed
by  any  court  or  governmental  authority  of  competent  jurisdiction  or any
self-regulatory  organization  having  authority  over the matters  contemplated
hereby which prohibits the consummation of any of the transactions  contemplated
by this Agreement.

7.       CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE.

         The  obligation  of the  Purchaser  hereunder to purchase the Notes and
Warrants from the Company hereunder is subject to the satisfaction, at or before
the  First  Closing  and  the  Second  Closing,  as  applicable,  of each of the
following conditions, provided that such conditions are for the Purchaser's sole
benefit and may be waived by the Purchaser at any time in the  Purchaser's  sole
discretion:

         (a)      With respect to the First Closing:

                  (i) The Company shall have executed this Agreement,  the First
Notes,  the First  Warrants and the First  Registration  Rights  Agreement,  and
delivered executed original copies of the same to the Purchaser.

                                       15
<PAGE>

                  (ii) The Company shall have  delivered to the  Purchaser  duly
executed  First  Notes and First  Warrants  (each in such  denominations  as the
Purchaser shall request) in accordance with Section 1(b) above.

                  (iii) The Common  Stock  shall be listed on NASDAQ and trading
in the Common Stock (or NASDAQ  generally)  shall not have been suspended by the
SEC or NASDAQ.

                  (iv) The  representations  and warranties of the Company shall
be true and correct as of the date when made and as of the First Closing Date as
though made at that time (except for  representations  and warranties that speak
as of a specific date,  which  representations  and warranties shall be true and
correct as of such date) and the Company  shall have  performed,  satisfied  and
complied in all material respects with the covenants,  agreements and conditions
required by this  Agreement to be  performed,  satisfied or complied with by the
Company at or prior to the First Closing Date. The Purchaser shall have received
a  certificate,  executed by the Chief  Executive  Officer of the Company  after
reasonable  investigation,  dated as of the First Closing Date, to the foregoing
effect  and as to such other  matters  as may  reasonably  be  requested  by the
Purchaser.

                  (v) No statute,  rule,  regulation,  executive order,  decree,
ruling,  injunction,  action or  proceeding  shall have been  enacted,  entered,
promulgated  or endorsed by any court or  governmental  authority  of  competent
jurisdiction  or any  self-regulatory  organization  having  authority  over the
matters  contemplated  hereby which  questions  the validity of,  challenges  or
prohibits the  consummation  of, any of the  transactions  contemplated  by this
Agreement.

                  (vi) The  Purchaser  shall  have  received  an  opinion of the
Company's  counsel,  dated as of the  First  Closing  Date,  in form,  scope and
substance reasonably satisfactory to the Purchaser and in substantially the form
of Exhibit D attached hereto.

                  (vii) There shall have been no material adverse changes and no
material  adverse   developments  in  the  business,   properties,   operations,
prospects,  financial  condition or results of operations of the Company and its
subsidiaries,  since the date hereof, and no information, of which the Purchaser
is not currently  aware,  shall come to the  attention of the Purchaser  that is
materially adverse to the Company.

                  (viii) The Purchaser shall have received a certificate,  dated
as of the  First  Closing  Date,  executed  by  the  Secretary  of the  Company,
certifying as to: (A) the Company's  articles of  incorporation,  (B) by-laws or
other  governing  documents,  (C)  resolutions,  duly  adopted  by the  Board of
Directors of the Company, which shall be in full force and effect at the time of
the First Closing,  authorizing  the execution,  delivery and performance by the
Company of this Agreement, the Registration Rights Agreements, the Notes and the
Warrants and the  consummation by the Company of the  transactions  contemplated
hereby and thereby,  and (D)  incumbency  and signatures of the persons who have
executed this Agreement,  the First  Registration  Rights  Agreement,  the First
Notes  and  the  First  Warrants  and  any  other  documents,  certificates  and
agreements  to be executed  and  delivered  at the First  Closing by the Company
pursuant to this Agreement.

         (b)      With respect to the Second Closing:

                  (i) The  Company  shall have  executed a  Registration  Rights
Agreement,  in the form attached hereto a Exhibit C-2 (the "Second  Registration
Rights  Agreement")  and delivered an executed  original copy of the same to the
Purchaser.

                                       16
<PAGE>

                  (ii) The Company shall have  delivered to the  Purchaser  duly
executed  Second Notes and Second  Warrants (each in such  denominations  as the
Purchaser shall request) in accordance with Section 1(b) above.

                  (iii) The Common  Stock  shall be listed on NASDAQ and trading
in the Common Stock (or NASDAQ  generally)  shall not have been suspended by the
SEC or NASDAQ.

                  (iv) The  representations  and warranties of the Company shall
be true and correct as of the date when made and as of the Second  Closing  Date
as though made at that time  (except for  representations  and  warranties  that
speak as of a specific date, which  representations and warranties shall be true
and correct as of such date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants,  agreements and conditions
required by this  Agreement to be  performed,  satisfied or complied with by the
Company  at or prior to the  Second  Closing  Date.  The  Purchaser  shall  have
received a certificate,  executed by the Chief Executive  Officer of the Company
after  reasonable  investigation,  dated as of the Second  Closing  Date, to the
foregoing  effect and as to such other matters as may reasonably be requested by
the Purchaser.

                  (v) No statute,  rule,  regulation,  executive order,  decree,
ruling,  injunction,  action or  proceeding  shall have been  enacted,  entered,
promulgated  or endorsed by any court or  governmental  authority  of  competent
jurisdiction  or any  self-regulatory  organization  having  authority  over the
matters  contemplated  hereby which  questions  the validity of,  challenges  or
prohibits the  consummation  of, any of the  transactions  contemplated  by this
Agreement.

                  (vi) The  Purchaser  shall  have  received  an  opinion of the
Company's  counsel,  dated as of the Second  Closing  Date,  in form,  scope and
substance reasonably satisfactory to the Purchaser and in substantially the form
of Exhibit D attached hereto.

                  (vii) There shall have been no material adverse changes and no
material  adverse   developments  in  the  business,   properties,   operations,
prospects,  financial  condition or results of operations of the Company and its
subsidiaries,  since the date hereof, and no information, of which the Purchaser
is not currently  aware,  shall come to the  attention of the Purchaser  that is
materially adverse to the Company.

                  (viii) The Purchaser shall have received a certificate,  dated
as of the  Second  Closing  Date,  executed  by the  Secretary  of the  Company,
certifying as to: (A) the Company's  articles of  incorporation,  (B) by-laws or
other  governing  documents,  (C)  resolutions,  duly  adopted  by the  Board of
Directors of the Company, which shall be in full force and effect at the time of
the Second Closing,  authorizing the execution,  delivery and performance by the
Company of this Agreement, the Registration Rights Agreements, the Notes and the
Warrants and the  consummation by the Company of the  transactions  contemplated
hereby and thereby,  and (D)  incumbency  and signatures of the persons who have
executed  the Second  Registration  Rights  Agreement,  the Second Notes and the
Second  Warrants and any other  documents,  certificates  and  agreements  to be
executed  and  delivered at the Second  Closing by the Company  pursuant to this
Agreement.

                  (ix) The  Registration  Statement  required to be filed by the
Company  pursuant to Section  2(a) of the First  Registration  Rights  Agreement
shall have been declared  effective by the SEC no later than the 120th day after
the First  Closing Date and shall be  effective  and  available  for use by such
Purchaser as of the Second Closing Date.

                                       17
<PAGE>

                  (x) The  average of the  Closing Bid Prices (as defined in the
Notes) of the Common  Stock for the 20 trading  days  ending on the  trading day
immediately  prior to the Second  Closing Date shall be greater than or equal to
$1.75.

                  (xi)  The  Company  shall  not  be in  default  of  any of its
obligations under this Agreement,  the First Registration Rights Agreement,  the
First Notes, the First Warrants or any other agreement with the Purchaser.

8.       GOVERNING LAW; MISCELLANEOUS.

         (a) Governing Law;  Jurisdiction.  This Agreement  shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York. The Company and the
Purchaser  irrevocably  consent to the jurisdiction of the United States federal
courts  and the  state  courts  located  in the State of New York in any suit or
proceeding  based on or arising under this Agreement and irrevocably  agree that
all claims in  respect  of such suit or  proceeding  may be  determined  in such
courts.  The Company  irrevocably waives the defense of an inconvenient forum to
the  maintenance  of such suit or  proceeding.  The Company  further agrees that
service of process  upon the Company  mailed by first class mail shall be deemed
in every respect  effective service of process upon the Company in any such suit
or  proceeding.  Nothing herein shall affect the right of the Purchaser to serve
process in any other manner  permitted  by law. The Company  agrees that a final
non-appealable  judgment in any such suit or proceeding  shall be conclusive and
may be enforced in other  jurisdictions by suit on such judgment or in any other
lawful manner.

         (b)  Counterparts.  This  Agreement  may be  executed  in  two or  more
counterparts,  all of which shall be considered  one and the same  agreement and
shall  become  effective  when  counterparts  have been signed by each party and
delivered to the other party.  This Agreement,  once executed by a party, may be
delivered to the other  parties  hereto by facsimile  transmission  of a copy of
this Agreement  bearing the signature of the party so delivering this Agreement.
In the event any  signature is delivered  by facsimile  transmission,  the party
using such means of delivery shall cause the manually executed Execution Page(s)
hereof to be physically delivered to the other party within five (5) days of the
execution hereof,  provided that the failure to so deliver any manually executed
Execution  Page  shall  not  affect  the  validity  or  enforceability  of  this
Agreement.

         (c) Headings.  The headings of this  Agreement are for  convenience  of
reference  and shall not form part of, or affect  the  interpretation  of,  this
Agreement.

         (d)  Severability.  If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction,  such invalidity or unenforceability shall
not affect the validity or  enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.

         (e) Entire  Agreement;  Amendments.  This Agreement and the instruments
referenced  herein  contain  the  entire  understanding  of the  Purchaser,  the
Company, their affiliates and persons acting on their behalf with respect to the
matters covered herein and therein and, except as specifically  set forth herein
or therein,  neither the Company  nor the  Purchaser  makes any  representation,
warranty,  covenant or undertaking with respect to such matters. No provision of
this  Agreement may be waived other than by an  instrument in writing  signed by
the party to be charged with  enforcement and no provision of this Agreement may
be amended other than by an instrument in writing  signed by the Company and the
Purchaser.

         (f)  Notices.  Any notices  required or permitted to be given under the
terms of this  Agreement  shall be sent by certified or registered  mail (return
receipt requested) or delivered personally,  by responsible overnight carrier or

                                       18
<PAGE>

by confirmed facsimile,  and shall be effective five (5) days after being placed
in the mail,  if mailed,  or upon  receipt or refusal of receipt,  if  delivered
personally or by responsible  overnight carrier or confirmed facsimile,  in each
case addressed to a party. The addresses for such communications shall be:

            If to the Company:

            WaveRider Communications Inc.
            255 Consumers Road, Suite 500
            Toronto, Ontario, Canada M2J1R4
            Facsimile:       (416) 502-2968
            Attn:            Scott Worthington
            with a copy simultaneously transmitted by like means to:

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

                  If to the  Purchaser,  to the  address  set  forth  under  the
Purchaser's name on the execution page hereto.

                  Each  party  shall  provide  notice to the other  party of any
change in address.

         (g)  Successors and Assigns.  This Agreement  shall be binding upon and
inure to the benefit of the parties and their successors and assigns.  Except as
provided  herein or therein,  neither the Company nor the Purchaser shall assign
this  Agreement  or any rights or  obligations  hereunder.  Notwithstanding  the
foregoing,  the  Purchaser  may  assign  its  rights  hereunder  to  any  of its
"affiliates,"  as that term is  defined  under the  Exchange  Act,  without  the
consent of the Company or to any other  person or entity with the consent of the
Company, which consent shall not be unreasonably withheld.  This provision shall
not limit the Purchaser's right to transfer the Securities pursuant to the terms
of the Notes,  the  Warrants  and this  Agreement  or to assign the  Purchaser's
rights  hereunder  or  thereunder  to any  such  transferee.  In  addition,  and
notwithstanding  anything  to the  contrary  contained  in this  Agreement,  the
Registration Rights Agreements, the Notes or the Warrants, the Securities may be
pledged  and all  rights of the  Purchaser  under  this  Agreement  or any other
agreement or document  related to the  transactions  contemplated  hereby may be
assigned,  without  further  consent of the  Company,  to a bona fide pledgee in
connection with the Purchaser's margin or brokerage account.

         (h) Third Party  Beneficiaries.  This  Agreement  is  intended  for the
benefit of the parties  hereto and their  respective  permitted  successors  and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person; provided that Section 4(f) may be enforced by Heights.

         (i) Survival. The representations and warranties of the Company and the
agreements  and  covenants  set  forth in  Sections  3, 4, 5 and 8 hereof  shall
survive the Closing notwithstanding any due diligence investigation conducted by
or on  behalf  of the  Purchaser.  Moreover,  none  of the  representations  and
warranties  made by the  Company  herein  shall act as a waiver of any rights or
remedies  the  Purchaser  may  have  under  applicable  U.S.  federal  or  state
securities laws. The Company shall indemnify and hold harmless the Purchaser and
each of the  Purchaser's  officers,  directors,  employees,  partners,  members,
agents  and  affiliates  for all  losses or  damages  arising  as a result of or

                                       19
<PAGE>

related  to  any  breach  or  alleged  breach  by  the  Company  of  any  of its
representations or covenants set forth herein, including advancement of expenses
as they are incurred.

         (j)  Publicity.  The Company and the Purchaser  shall have the right to
approve before  issuance any press releases,  SEC or NASD filings,  or any other
public  statements  with  respect  to  the  transactions   contemplated  hereby;
provided,  however,  that the  Company  shall be  entitled,  without  the  prior
approval of the Purchaser, to make any press release or SEC or NASD filings with
respect to such  transactions  as is required by applicable law and  regulations
(although the Purchaser shall be consulted by the Company in connection with any
such press  release and filing prior to its release and shall be provided with a
copy thereof).

         (k) Further Assurances. Each party shall do and perform, or cause to be
done and  performed,  all such  further acts and things,  and shall  execute and
deliver all such other agreements,  certificates,  instruments and documents, as
the other  party may  reasonably  request  in order to carry out the  intent and
accomplish  the  purposes  of  this  Agreement  and  the   consummation  of  the
transactions contemplated hereby.

         (l) Termination.  In the event that the Closing shall not have occurred
on or before  December  12,  2000,  unless the  parties  agree  otherwise,  this
Agreement shall terminate at the close of business on such date. Notwithstanding
any  termination  of this  Agreement,  any party not in breach of this Agreement
shall preserve all rights and remedies it may have against  another party hereto
for a breach of this Agreement prior to or relating to the termination hereof.

         (m) Joint  Participation in Drafting.  Each party to this Agreement has
participated in the negotiation and drafting of this Agreement,  the Notes,  the
Warrants and the  Registration  Rights  Agreements.  As such,  the language used
herein and  therein  shall be deemed to be the  language  chosen by the  parties
hereto to express their mutual intent,  and no rule of strict  construction will
be applied against any party to this Agreement.

         (n) Equitable Relief.  The Company  acknowledges that a breach by it of
its  obligations  hereunder  will cause  irreparable  harm to the  Purchaser  by
vitiating  the  intent  and  purpose of the  transactions  contemplated  hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations hereunder  (including,  but not limited to, its obligations pursuant
to Section 5 hereof) will be inadequate and agrees,  in the event of a breach or
threatened breach by the Company of the provisions of this Agreement (including,
but not limited  to, its  obligations  pursuant  to Section 5 hereof),  that the
Purchaser shall be entitled,  in addition to all other available remedies, to an
injunction  restraining any breach and requiring immediate issuance and transfer
of the  Securities,  without the necessity of showing  economic loss and without
any bond or other security being required.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       20
<PAGE>

         IN WITNESS  WHEREOF,  the  undersigned  Purchaser  and the Company have
caused this Agreement to be duly executed as of the date first above written.

WAVERIDER COMMUNICATIONS INC.

    By:
        ----------------------------

    Name:
          --------------------------

    Title:
           -------------------------

PURCHASER:

CAPITAL VENTURES INTERNATIONAL

By:      Heights Capital Management, Inc.
           its authorized agent

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

RESIDENCE:        Cayman Islands

ADDRESS:          c/o      Heights Capital Management, Inc.
                           425 California Street, Suite 1100
                           San Francisco, California 94104
                           Telecopy: (415) 403-6525
                           Attention:  Andrew Frost

                           With a copy to:

                           Heights Capital Management, Inc.
                           401 City Avenue, Suite 220
                           Bala Cynwyd, Pennsylvania 19004
                           Telecopy: (610) 617-3020
                           Attention:  Todd L. Silverberg

                                       21
<PAGE>

                          WaveRider Communications Inc.

                                  SCHEDULE 3(d)

Capitalization Table

See attached Capital Stock Dilution table as at November 30, 2000

List of Options and Warrants

See attached schedules to the Capital Stock Dilution table.

The Company has three stock option plans and one stock  purchase plan  available
for awards.  Included in the documentation are the Company's proxy circulars for
the annual  meetings held May 28, 1999 and July 7, 2000. In these  documents are
the full descriptions of the 1999 Incentive and Nonqualified  Stock Option Plan,
the Employee Stock Option (1997) Plan, the Employee Stock Option (2000) Plan and
the Employee Stock Purchase (2000) Plan.

The  following is a summary of the number of shares  authorized  under each plan
and the number awarded:

<TABLE>
<CAPTION>

Plan                                                          Authorized        Awarded
--------------------------------                              ----------        ---------
<S>                                                           <C>               <C>
Employee Stock Option (1997) Plan ........................... 6,250,000         6,142,992
1999 Incentive and Nonqualified Stock Option Plan ........... 3,000,000         2,984,860
Employee Stock Option (2000) Plan ........................... 6,000,000         2,242,562

Employee Stock Purchase (2000) Plan ......................... 3,000,000         First Plan Open

</TABLE>

Registration statements have been filed with the SEC for all of these plans.

Agreements or Arrangements to Register Shares

Avondale Capital Partners, Inc.

As part of the  transaction  with Heights  Capital  Management,  the Company has
committed  to pay a finder's fee in a maximum  amount of $400,000.  In addition,
the Company  will issue up to 50,000  warrants to the finder as part of the fee.
25,000 of the warrants  will be issued upon the first closing and 25,000 will be
issued upon the second closing.

The  warrants  will be for a 5 year  period  and will be  priced  at 150% of the
market price at the closing date. In connection  with the offering,  the Company
has  committed  to register  the  warrants  as part of the Heights  registration
statement.

ADE Network Technology Pty. Ltd. ("ADE")

In  conjunction  with the  acquisition  of ADE on October 1, 2000,  the  Company
committed to paying the former  shareholders a minimum of $4,000,000  Australian
(approximately $2.13 Million US) in four equal installments.  The first of these
installments  was paid in cash at closing but the remaining three  installments,
payable quarterly, may be paid, at the Company's discretion, in cash, stock or a
combination of each.

In  addition,  the Company has  committed to pay the former  shareholders  up to
$900,000  Australian  (approximately  $480,000 US) in  additional  compensation,
calculated  at 40% of revenues,  for the 12 months ended  September 31, 2001, in
excess of $7.5 Million Australian. This compensation,  payable prior to December
2001,  can be paid in cash,  stock or a  combination  of each,  at the Company's
discretion.

                                       22
<PAGE>

Finally,  as part of the  acquisition,  the Company has  committed to paying the
Managing Director of ADE, who remained with the Company after the acquisition, a
special  bonus  of up  to  $1,100,000  Australian  (approximately  $600,000  US)
calculated  at 40% of revenues,  for the 12 months ended  September 31, 2001, in
excess of $9,750,000  Australian.  This compensation,  payable prior to December
2001,  can be paid in cash,  stock or a  combination  of each,  at the Company's
discretion.

In order to provide  flexibility in how the payment may be made, the Company has
filed a S-3 registration statement, registering 1,000,000 shares of common stock
for this purpose.  The  registration  statement has been reviewed by the SEC and
will be declared effective upon the completion of certain amendments.

Warrants

Included  with  the  capitalization  table  is a  schedule  of  all  outstanding
warrants.  Each of these  warrants  has  been  registered  under a  registration
statement,  in the form of S-3.  Copies of the  warrants or form of warrants for
each type have been attached to the schedule.

The Warrants from private  placement  #5,  500,000 @ $1.50,  have  anti-dilution
provisions  which only  takes  effect if the  Company  were to reduce the shares
outstanding through a reverse split (consolidation) of the common stock. It does
not provide  for any  adjustment  due to new issues of common  stock in a market
transaction  or due to an  increase  in  shares  through  a share  split,  stock
dividend or any other means.

The Warrants from private  placement #6, 33,751 @ $4.00,  have an  anti-dilution
provision  related to any change in the capital stock through a stock  dividend,
subdivision or  combination  of stock or issue of shares in a  reclassification.
There is no  provision  for  adjustment  due to new issues of common  stock in a
market transaction.

The Groome Warrants, 600,268 @ $2.00, have an anti-dilution provision related to
any  change in the  capital  stock  through  a stock  dividend,  subdivision  or
combination  of  stock or issue of  shares  in a  reclassification.  There is no
provision  for  adjustment  due  to new  issues  of  common  stock  in a  market
transaction.

The VoIP Warrants,  4,500,000 @ $3.15 and 55,000 @ $6.81,  have an anti-dilution
provision  related to any change in the capital stock through a stock  dividend,
subdivision or  combination  of stock or issue of shares in a  reclassification.
There is no  provision  for  adjustment  due to new issues of common  stock in a
market transaction.

                                       23
<PAGE>

                        WaveRider Communications Inc.
                           Capital Stock Dilution
                           As at November 30, 2000

Authorized

       Common stock, $0.001 par value                                200,000,000
       Preferred stock, $0.001 par value                               5,000,000

Issued and Outstanding

       Common Shares Outstanding for Accounting Purposes              55,121,898
       Common Shares held in Escrow
         (See Performance Milestones)                                  7,650,000
                                                                     ===========
Total Common Shares Outstanding                                       62,771,898

       Warrants Outstanding (See attached)
       Vested                                             1,134,019
       Unvested (Note - Cancelled in December 2000)       4,555,000    5,689,019
                                                          ---------
                                                                       4,555,000
                                                                     ===========
       Options Outstanding
       Vested                                             3,038,137
       Unvested                                           4,811,430    7,849,567
                                                          ----------------------
                                                                       4,811,430
                                                                     ===========
Fully Diluted as of November 30, 2000                                 76,310,484
                                                                     ===========

             Performance Milestones for Release of Escrow Shares

"Prototype"  refers to the LMS system  enabling  wireless  transmission.  "Gross
Revenue" includes all cumulative revenue generated by WaveRider whether from the
lease or sale of equipment or otherwise, but does not include any taxes required
to be collected by WaveRider with respect to same.

<TABLE>
<CAPTION>

                 Milestone                                                  Percent Released     Status
------------------------------------------------------------                 ----------------    ---------
<S>                                                                     <C>               <C>
 1   Prototype development for the LMS system completed ....................         5%          completed

 2   Prototype for the LMS system operational in one community .............        10%           completed

 3   At least 25 purchase orders for LMS systems have been received from ...        15%
     qualified purchasers having a minimum total value of CDN$5 Million

 4   At least 25 LMS systems representing a minimum total revenue of CDN$5..        15%
     Million have been installed and are operational

 5   Gross revenue exceeds CDN$10 Million ..................................        25%

 6   Gross revenue exceeds CDN$25 Million ..................................        30%

</TABLE>

                                       24
<PAGE>

                  WaveRider Communications
                  Outstanding Warrants
                  As at November 30, 2000
<TABLE>
<CAPTION>

                        Total                                       Exercise         Potential            10-K
Placement              Number         Exercised      Balance          Price            Cash            Reference
-----------------------------------------------------------------------------------------------------------------
<S>                  <C>               <C>           <C>            <C>              <C>               <C>
PP5                   250,000                        250,000       $ 1.50         $   375,000
PP5                   250,000                        250,000       $ 1.50         $   375,000
                  ---------------------------------------------------------------------------------

PP5 Total             500,000               -        500,000                      $   750,000  Note 12(B)(vii)
                  ---------------------------------------------------------------------------------

PP6                    25,313                         25,313       $ 4.00          $   101,252
PP6                     8,438                          8,438       $ 4.00          $    33,752
                  ---------------------------------------------------------------------------------

PP6 Total           1,050,000       1,016,249        33,751                        $   135,004  Note 12(B)(v)
                  ---------------------------------------------------------------------------------

Groome                 37,778          32,278         5,500       $ 2.00         $    11,000
Groome                 75,556           5,000        70,556       $ 2.00         $   141,112
Groome                 37,778                        37,778       $ 2.00         $    75,556
Groome                130,277          75,277        55,000       $ 2.00         $   110,000
Groome                 37,778          31,900         5,878       $ 2.00         $    11,756
Groome                250,000                       250,000       $ 2.00         $   500,000
Groome                 37,778          10,000        27,778       $ 2.00         $    55,556
Groome                 75,000          25,000        50,000       $ 2.00         $   100,000
Groome                 37,778          27,778        10,000       $ 2.00         $    20,000
Groome                 37,778                        37,778       $ 2.00         $    75,556
Groome                 50,000                        50,000       $ 2.00         $   100,000
                  ---------------------------------------------------------------------------

Groome Total        2,222,222       1,621,954       600,268                      $  1,200,536  Note 12(B)(xii)
                  ---------------------------------------------------------------------------

See Note 1          4,500,000                     4,500,000       $ 3.15         $ 14,175,000
Below                  55,000                        55,000       $ 6.81         $    374,688
                  ------------------------------------------             --------------------

VoIP Total          4,555,000                     4,555,000                      $ 14,549,688  Note 20
                                            -
                  ------------------------------------------             --------------------

                   12,155,369       6,466,350     5,689,019                      $ 16,635,228
                  ==========================================             ====================

</TABLE>

Note     1 These warrants were issued in connection  with the VoIP  Distribution
         Agreement and were to be  exerciseable  in stages upon  achievement  of
         certain  revenue  milestones.  None of the milestones were achieved and
         the agreement has subsequently been cancelled.

                                       25
<PAGE>

                          WaveRider Communications Inc.
                      Extracts of Notes from the Company's
                    10-K for the Year ended December 31, 1999
                        (Copy of Annual Report Attached)

12.  SHARE CAPITAL

B        Issued share capital

v)       Common  share  purchase  agreement  - Under  a  Common  Share  Purchase
         Agreement  dated  December  29,  1998,  the  Company  entered  into  an
         arrangement to sell up to an aggregate  amount of $10,000,000 of common
         stock in three tranches and to issue four groups of warrants.

         On December 29th,  1998 the Company issued  1,167,860  common shares in
         the First Tranche at $2.57 per share for cash  proceeds of  $3,000,000.
         On June 4, 1999,  the  Company  issued  1,660,945  common  share in the
         Second Tranche at $1.81 per share for cash proceeds of $3,000,000.

         During the third  quarter of 1999,  the Company  informed the investors
         that it would not be  taking up its  option to sell the Third and Final
         Tranche of shares to the investors.

         In 1998, as part of the agreement,  the Company issued to the investors
         four groups of warrants as follows:  225,000 with an exercise  price of
         $2.00,  225,000  with an  exercise  price  of  $2.61,  225,000  with an
         exercise  price of $3.00 and 225,000 with and exercise  price of $4.00.
         Each  warrant  entitles  the holder to acquire one common  share at the
         specified exercise price. The warrants expire on December 29, 2003.

vii)     Series G  Warrants - As a  commitment  fee for the right to issue up to
         $2,000,000 in convertible debentures to certain investors,  the Company
         issued the investors  warrants to purchase  500,000 common shares at an
         exercise price of $1.50 per share.  The warrants expire on December 15,
         2003.  The warrants  have been recorded at their fair value of $313,325
         with the costs charged to the  consolidated  statement of loss in 1998.
         The  Company  terminated  the  debenture  agreement  on January 8, 1999
         without drawing any funds.

xii)     Public Underwriting - On December 20, 1999, the Company entered into an
         Underwriting  Agreement with Groome Capital.com Inc. ("Groome").  Under
         the terms of the  agreement,  the Company sold  4,444,444  common stock
         units,  consisting  of one  common  share  and  one-half  common  share
         purchase  warrant,  for $1.35 per unit. The sale of units was completed
         on  December  23,  1999  and the  Company  received  cash  proceeds  of
         $6,000,000  less fees of $607,500.  In addition,  the Company issued to
         Groome with 444,444 Underwriter  warrants which provide Groome with the
         right to purchase  444,444  common share units at $1.35 per unit for up
         to 2  years  after  the  offering.  Based  on  the  fair  value  of the
         underlying  instruments within the common share unit, $4,069,664 of the
         total proceeds was allocated to common  shares,  $898,792 was allocated
         to the  share  purchase  warrants  and  the  balance  of  $424,044  was
         allocated to the Underwriter warrants

20.      SUBSEQUENT EVENTS

         Memorandum of Understanding

         On  February  2,  2000,  the  Company  entered  into  a  memorandum  of
         understanding  (MOU) with VoIP International  S.A. de C.V. ("VoIP"),  a
         company  incorporated in Mexico,  pending a formal agreement.  When the
         terms of the MOU are  ratified  by formal  agreement,  WaveRider  would
         grant VoIP exclusive rights to market  WaveRider  products in Mexico in
         exchange  for  commitments  to  procure a  minimum  of  $28,000,000  of
         WaveRider  products.  As an  incentive,  WaveRider  would issue to VoIP
         4,500,000 Common Stock Purchase  Warrants which VoIP will earn based on
         achievement of the minimum commitments.

                                       26
<PAGE>

                                  SCHEDULE 3(t)

Title to Assets

The Company has clear title to all assets owned by it and its subsidiaries, with
the exception of a registered mortgage debenture over the whole of the assets of
ADE Network  Technology  Pty.  Ltd.  The  Debenture is security for an overdraft
facility and a Business Combination Loan provided by the National Australia Bank
Limited.

In  addition,  the Company and its  subsidiaries  have  entered into a number of
lease agreements for the acquisition of capital assets.  All of these leases are
current and there are no outstanding nor anticipated default conditions.

                                  SCHEDULE 3(u)

Tax Returns

The Company has been working with its legal and accounting advisors to determine
the best method of handling the ownership of  intellectual  property  within the
Corporate  group.  As a result,  a number of the Company's tax returns have been
delayed.  In all cases the returns will be filed with a loss for the  respective
periods and we do not anticipate any tax  liabilities or penalties to accrue due
to the delays. The following is the status of filing by Company:

WaveRider Communications Inc.               - 1998 & 1999 outstanding
WaveRider Communications (Canada) Inc.      - 1998 & 1999 outstanding
WaveRider Communications (USA) Inc.         - 1999 outstanding
JetStream Internet Services Inc.            - current on all filings
ADE Network Technology Pty. Ltd.            - current on all filings

                                  SCHEDULE 3(v)

NONE

                                  SCHEDULE 3(w)

See SEC filings regarding sufficiency of insurance coverage.

                                  SCHEDULE 4(d)

Use of Proceeds

Proceeds  from the sale of the  convertible  notes and the  exercise of warrants
will be used for working  capital and the general  operations of the Company and
its subsidiaries.

                                       27
<PAGE>

                          WAVERIDER COMMUNICATIONS INC.

                    Exhibits to Securities Purchase Agreement

                             Dated December 8, 2000

The following Exhibits  referenced in the Securities Purchase Agreement ("SPA"),
dated  December  8, 2000,  between  WaveRider  Communications  Inc.  and Capital
Ventures International have been included in this document as 8-K exhibits:

Document Description                    SPA Exhibit No.          8K Exhibit No.

Convertible Note (First)                      A-1                      10.2
Convertible Note (Second)                     A-2                      10.3
Class J Warrant                               B-1                      10.4
Class K Warrant                               B-2                      10.5
Class L Warrant                               B-3                      10.6
Registration Rights Agreement (First)         C-1                      10.7
Registration Rights Agreement (Second)        C-2                      10.8

                                       28

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