UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

Pursuant to Sections 13 or 15(d) of the Securities and Exchange Act of 1934

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         Date of Report (Date of earliest event reported): June 1, 2001
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                          WAVERIDER COMMUNICATIONS INC.
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               (Exact name of registrant as specified in charter)


                                     NEVADA
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         (State or other jurisdiction of incorporation or organization)



               0-25680                                 33-0264030
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      (Commission File Number            (I.R.S. Employer Identification Number)



         255 Consumers Road, Suite 500, Toronto, Ontario, Canada M2J 1R4
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               (Address of principal executive offices) (Zip Code)



                                 (416) 502-3200
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              (Registrant's telephone number, including area code)



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          (Former name or former address, if changed since last report)




<PAGE>


Item 5.    Sale of convertible preferred stock and establishment of equity line

On June 4, WaveRider Communications Inc. entered into a financing agreement,
arranged by its investment banker, Gruntal & Co., with Crescent International
Ltd. through their investment management firm GreenLight (Switzerland) SA. The
agreement includes an initial investment of $3 Million, for the purchase of
convertible preferred shares, followed by the ability of WaveRider to sell up to
$7 Million in common shares from time to time for a period of two years. In
addition, in consideration of entering the agreement, WaveRider has provided
Crescent with 877,193 common stock purchase warrants, which are exercisable for
up to 5 years at $1.71 per share.

The preferred shares are initially convertible to common shares at the lower of
(i) $1.3772 or (ii) 95% of the average of the lowest three consecutive Closing
Bid Prices during the 22 Trading Day period immediately preceding the Conversion
Date. The agreement provides a limiting factor or "Floor" for the conversion
price by providing the Company with the ability, under certain terms and
conditions, to refuse to allow the conversion of the preferred shares if the
average of the Closing Bid Prices of the common stock is less than $0.60 for the
7 days prior to a request for conversion. In addition, should the average
Closing Bid Price of the common stock exceed $3.86 for a period of 30 days, and
certain other conditions, including availability of freely tradeable common
stock and minimum trading volumes, are met, the Company has the ability to
require the preferred shares be converted.

Future sales of common stock can be made, subject to certain terms and
conditions, in amounts of up to $500,000 per sale and will be priced at the
average of the 3 lowest consecutive Closing Bid Prices for the Company's common
stock over the 22 days prior to the sale. Each sale must be a minimum of 22 days
apart.

The agreement allows for the sale of either registered or unregistered common
shares, however, the Company intends to register a number of shares, which would
cover any future sales in order to avoid certain price protection clauses of the
agreement.

As part of completion of the agreement, WaveRider has received from CVI
International Inc. a waiver of certain rights from the Company's December 2000
financing, including a waiver of CVI's right to purchase additional convertible
notes and warrants. In consideration of this waiver and as part of the terms of
the December 2000 financing, the Company has reduced the conversion rate for the
remaining convertible notes from approximately $1.49 to approximately $1.455,
the exercise price of the one year Series K warrants from $2.539 to
approximately $2.48 and the exercise price of the five year Series J warrants
form $3.35 to $2.80.

In conjunction with the transaction, the Company paid Gruntal & Co. fees of
$315,000, GreenLight fees of $60,000 and legal and due diligence costs of
Crescent in the amount of $48,285. In addition, the Company will pay Gruntal and
GreenLight fees of 5% and 2%, respectively, for each future sale of common stock
and the Company has committed to providing Gruntal with 350,000 common stock
purchase warrants, exercisable for 3 years at an exercise price which will be
set at the lessor of $2.00 or 125% of the average closing bid price of the
Company's common stock over the fifteen trading day period immediately preceding
the date that the registration statement to be filed in conjunction with this
agreement is declared effective.


<PAGE>


Item 9.  Regulation FD Disclosure

This document contains forward-looking statements that involve risks and
uncertainties, including the risks associated with the effect of changing
economic conditions, trends in the development of the Internet as a commercial
medium, market acceptance risks, technological development risks, seasonality
and other risk factors detailed in the Company's filings with the Securities and
Exchange Commission

The following disclosures appear on our website.

Q -  Can you provide information on the $25 Million supply agreement that
you recently announced with Emaar Properties PJSC

A - The agreement with Emaar Properties PJSC ("Emaar")  establishes Emaar as our
Exclusive Authorized Wireless Service Provider and Reseller within a significant
portion of the Middle East and surrounding area, including:

1.       GCC Countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia & United Arab
         Emirates

2.       Middle East: Jordan, Lebanon, Syria, Turkey & Yemen

3.       Northern Africa: Algeria, Egypt, Morocco, Nigeria, Sudan & Tunisia

4.       CIS  Countries:  Armenia,  Azerbaijan,  Belarus,  Georgia,  Kazakhstan,
         Kyrghyzstan,  Moldova, Mongolia, Tadjikistan,  Turkmenistan,  Ukraine &
         Uzbekistan

5.       Indian Subcontinent: India & Pakistan

6.       Restricted  Countries:  At the time of this Agreement  WaveRider is not
         legally  permitted  to allow the export of  Products  to Iran,  Iraq or
         Libya.  These  countries  will be added to Territory  when WaveRider is
         legally permitted to allow the export of Products to them.

These are markets where Emaar has an established capability for sales and
support of high technology products. We believe that Emaar's financial strength
and established sales channels will provide WaveRider with a broad reaching
sales organization to sell and deploy products in these markets.

In order to maintain their exclusivity in the territories covered by the
agreement Emaar must purchase a minimum of $25 million of WaveRider product in
the first three years of the agreement (ending April 30, 2004). This
expenditure level includes annual targets of $5 million by the end of the first
year and $13 million by the end of the second year.

As part of the agreement, Emaar has already purchased and is deploying over
$500,000 in equipment and services.


Q -  Can you provide details of the $10 Million financing which you
announced?

A - The new agreement is to replace the second half of the funding that
was arranged in December 2000, which has not and will not proceed. Under the new
arrangement, the Company will be drawing a lower amount of funds at the current
time than it would under the original financing, while arranging for the
flexibility to obtain ongoing investment.

The financing, arranged by our investment banker, Gruntal & Co., is with
Crescent International Ltd. The arrangement basically comes in two parts.
There is an initial investment of $3 Million for the purchase of convertible
preferred shares followed by the ability of WaveRider to sell up to $7 Million
in common shares from time to time for a period of two years. In addition, in
consideration of entering the agreement, WaveRider has provided Crescent with
877,193 common stock purchase warrants, which are exercisable at $1.71 per
share.
<PAGE>

The agreement provides a limiting factor or "Floor" for the conversion price by
providing the Company with the ability, under certain terms and conditions, to
refuse to allow the conversion of the preferred shares. In addition, should the
average Closing Bid Price of the common stock exceed $3.86 for a period of 30
days, and certain other conditions are met, including availability of freely
tradeable common stock and minimum trading volumes, the Company has the ability
to require the preferred shares be converted.

The agreement allows for the sale of either registered or unregistered common
shares, however, the Company intends to register a number of shares which would
cover any future sales in order to avoid certain price protection clauses of the
agreement.

Complete details of the transaction are included in a Form 8-K filed by the
Company and available at the Security and Exchange Commissions' EDGAR website.



Exhibits

10.1     Stock Purchase  Agreement  between  WaveRider  Communications  Inc. and
         Crescent International Inc. dated June 4, 2001.
10.2     Class N Warrant,  for the right to  purchase  877,193  Shares of Common
         Stock at an exercise  price of $1.71 per common share,  for a period of
         five years, ending June 4, 2006
10.3     Class O Warrant, for the right to purchase a number of Shares of Common
         Stock at an  exercise  price to be  determined  for a five  years,  the
         number and price to be  determined at such time as the Company may sell
         unregistered shares of Common Stock under the Stock Purchase Agreement.
10.4     Registration Rights Agreement
10.5     Certificate  of  Designation  for the  Company's  Class  D  Convertible
         Preferred Stock.




Signatures:

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this current report on Form 8-K to be signed on its
behalf by the undersigned thereunto duly authorized.

Dated:  June 14, 2001

                          WaveRider Communications Inc.

                                        Per: /s/ D. Bruce Sinclair
                                        ------------------------------
                                        D. Bruce Sinclair, President & CEO


<PAGE>


                                   EXHIBIT 10.1

                            STOCK PURCHASE AGREEMENT

                                 by and between

                           Crescent International Ltd.

                                       and

                          WaveRider Communications Inc.

                            dated as of June 4, 2001

This STOCK PURCHASE AGREEMENT is entered into as of the 4th day of June, 2001
(this "Agreement"), by and between Crescent International Ltd. (the "Investor"),
an entity organized and existing under the laws of Bermuda, and WaveRider
Communications Inc., a corporation organized and existing under the laws of the
State of Nevada (the "Company").

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Investor, from time to
time as provided herein, and the Investor shall purchase, up to $10,000,000
worth of securities including (i) shares of Common Stock (as defined below) and
(ii) shares of Preferred Stock (as defined below);

WHEREAS, pursuant to the terms of and in partial consideration for the Investor
entering into this Agreement, the Company is required to issue to the Investor
an Incentive Warrant (as defined below), exercisable from time to time within
five years following the date of issuance, for the purchase of a number of
shares of Common Stock at a price to be determined as described in such
Incentive Warrant;

WHEREAS, pursuant to the terms of and in partial consideration for the Investor
entering into this Agreement, the Company may be required to issue Protective
Warrants (as defined below) to the Investor, each of which may become
exercisable from time to time, for the purchase of a number of shares of Common
Stock at a price to be determined as described in each such Protective Warrant;
and

WHEREAS, such investments will be made in reliance upon the provisions of
Section 4(2) ("Section 4(2)") and Regulation D ("Regulation D") of the U.S.
Securities Act of 1933, as amended and the rules and regulations promulgated
thereunder (the "Securities Act"), and/or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect
to any or all of the investments in Common Stock to be made hereunder.

         NOW, THEREFORE, in consideration of the premises, representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as
follows:


                                   ARTICLE I

                               CERTAIN DEFINITIONS

Section 1.1. "Affiliate" shall mean any Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by, or
is under direct or indirect common control with any other Person. For the
purposes of this definition, "control," when used with respect to any Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise, and the term "controls" and "controlled" have meanings correlative
to the foregoing.
<PAGE>

Section 1.2.  "Bid Price" shall mean, with respect to the Common Stock,
the per share closing bid price for such Common Stock as reported by Bloomberg
L.P. in accordance with Section 10.2 of this Agreement.

Section 1.3.  "Capital Shares" shall mean the Common Stock and any shares
of any other class of common stock whether now or hereafter authorized, having
the right to participate in the distribution of dividends (as and when declared)
or assets (upon liquidation of the Company).

Section 1.4.  "Certificate of Designation" shall mean the certificate of
designation of the Preferred Stock, filed by the Company with the Secretary of
State of the State of Nevada prior to the Closing Date of the First Sale.

Section 1.5.  "Closing" shall mean one of the closings of a purchase and
sale of the Preferred Stock or the Common Stock and the issuance of the Warrants
pursuant to Section 2.1 of this Agreement.

Section 1.6. "Closing Date" shall mean, with respect to a Closing, the
second Trading Day following the Sale Date related to such Closing, provided all
conditions to such Closing have been satisfied on or before such Trading Day.

Section 1.7.  "Closing Statement" shall mean the closing statement in the
form of Exhibit A attached hereto, executed by the Company and the Investor on
the Subscription Date and on each Sale Date, setting forth the actions taken by
the Company and the Investor on the Subscription Date and on such Sale Date, as
applicable, and setting forth the actions to be taken by the Company and the
Investor on the applicable Closing Date, and the amounts due on such Closing
Date to the payee entities set forth on Schedule 10.1 hereto.

Section 1.8.  "Commitment Period" shall mean the period commencing on the
Subscription Date and expiring on the earlier to occur of (i) the date on which
the Investor shall have purchased Commitment Shares and Preferred Stock pursuant
to this Agreement for an aggregate Purchase Price of the Maximum Commitment
Amount, (ii) the date this Agreement is terminated pursuant to Section 2.5
hereof, or (iii) the date occurring 24 months from the Subscription Date.

Section  1.9.  "Commitment  Shares"  shall  mean the  Conversion  Shares and the
Subsequent Sale Shares, collectively.


Section 1.10.  "Common Stock" shall mean the Company's common stock,  $0.001 par
value per share.

Section 1.11. "Condition  Satisfaction Date" shall have the meaning set forth in
Section 7.2 of this Agreement.

Section  1.12.  "Conversion  Shares"  shall mean all shares of Common Stock into
which shares of Preferred Stock are or may be converted.

Section  1.13.  "Daily  Trading  Value" shall mean,  on any Trading Day, the Bid
Price multiplied by the trading volume of the Common Stock.

Section  1.14.  "Damages"  shall  mean  any and  all  losses,  claims,  damages,
liabilities,  costs and expenses  (including,  without  limitation,  any and all
investigative,  legal and other expenses reasonably incurred in connection with,
and any and all amounts paid in defense or  settlement  of, any action,  suit or
proceeding  between any indemnified party and any indemnifying  party or between
any indemnified party and any third party, or otherwise, or any claim asserted).

Section  1.15.  "Effective  Date"  with  respect  to each  Sale  of  Registrable
Securities  or  Preferred  Stock  shall  mean the  earlier  to occur of: (i) the
applicable date on which the SEC has declared effective a Registration Statement
registering  resale of Registrable  Securities as set forth in the  Registration
Rights  Agreement and (ii) the date on which such  Registrable  Securities first
become eligible for resale pursuant to Rule 144 of the Securities Act.
<PAGE>

Section  1.16.  "Exchange  Act" shall mean the U.S.  Securities  Exchange Act of
1934, as amended and the rules and regulations promulgated thereunder.

Section 1.17. "First Sale" shall have the meaning set forth in Section 2.1(a) of
this Agreement.

Section 1.18.  "Incentive  Warrant" shall mean the Incentive Warrant in the form
of  Exhibit B hereto  issued  pursuant  to  Section  2.1(d)  of this  Agreement,
together with any new or replacement warrant issued in accordance with the terms
of the Incentive Warrant.

Section 1.19.  "Incentive  Warrant Shares" shall mean all shares of Common Stock
issued or issuable pursuant to exercise of the Incentive Warrant.

Section 1.20. "Investment Amount" shall mean the dollar amount to be invested by
the Investor to purchase (i) Preferred  Stock  pursuant to Section 2.1(a) hereof
or (ii)  Subsequent Sale Shares with respect to any Sale Date as notified by the
Company to the Investor in accordance  with Section 2.3 hereof.  With respect to
any Subsequent  Sale,  the Investment  Amount (A) shall not exceed the lesser of
(i) twice the  average of the Daily  Trading  Values  during the 22 Trading  Day
period  immediately  preceding  the  applicable  Sale  Notice  Date and (ii) the
Maximum  Sale  Amount,  and (B) shall not be less than the Minimum  Sale Amount;
provided,  however,  that if the Bid Price on each  Trading  Day during any Sale
Notice Period is less than $0.60 or the Investment Amount as calculated pursuant
to clause (A) above would be less than the Minimum Sale Amount,  the  Investment
Amount shall be $25,000.

Section 1.21.  "Legend" shall have the meaning  specified in Section 8.1 of this
Agreement.

Section 1.22.  "Material  Adverse Effect" shall mean any effect on the business,
operations, properties, prospects, or financial condition of the Company that is
material  and adverse to the  Company or to the Company and such other  entities
controlling  or  controlled  by  the  Company,  taken  as a  whole,  and/or  any
condition, circumstance, or situation that would prohibit or otherwise interfere
with the ability of the Company to enter into and perform its obligations  under
any of (i) this Agreement,  (ii) the Registration Rights Agreement and (iii) the
Warrants.

Section 1.23. "Maximum Commitment Amount" shall mean $10,000,000.

Section 1.24. "Maximum Sale Amount" shall mean $500,000,  unless a higher amount
is agreed to by the Investor;  provided,  however,  that the aggregate amount of
all Sales shall not exceed the Maximum Commitment Amount.

Section 1.25. "Minimum Sale Amount" shall mean $200,000,  unless a lesser amount
is agreed to by the Investor.

Section 1.26.  "Minimum Time  Interval"  shall mean (i) 22 Trading Days from the
Effective Date relating to the First Sale,  (ii) if the previous Sale related to
the sale of  unregistered  Common Stock, 22 Trading Days from the Effective Date
relating  to such  Sale or (iii) if the  previous  Sale  related  to the sale of
registered Common Stock, 22 Trading Days from the previous Sale Date.

Section 1.27. "NASD" shall mean the National  Association of Securities Dealers,
Inc.

Section 1.28.  "Outstanding" when used with reference to Common Stock or Capital
Shares  (collectively  the  "Shares"),  shall mean,  at any date as of which the
number of such Shares is to be determined,  all issued and  outstanding  Shares,
and shall include all such Shares  issuable in respect of  outstanding  scrip or
any certificates  representing  fractional  interests in such Shares;  provided,
however,  that "Outstanding" shall not refer to any such Shares then directly or
indirectly owned or held by or for the account of the Company.
<PAGE>

Section 1.29. "Person" shall mean an individual,  a corporation,  a partnership,
an association, a trust or other entity or organization,  including a government
or political subdivision or an agency or instrumentality thereof.

Section 1.30.  "Preferred  Stock" shall mean the Company's  series D convertible
preferred stock, $0.01 par value per share.

Section 1.31.  "Principal  Market" shall mean the Nasdaq  National  Market,  the
Nasdaq SmallCap  Market,  the American Stock Exchange,  the Electronic  Bulletin
Board or the New York Stock  Exchange,  whichever  is at the time the  principal
trading exchange or market for the Common Stock.

Section 1.32.  "Protective Warrant" or "Protective Warrants" shall mean any
and all Protective Warrant(s) in the form of Exhibit C hereto issued pursuant to
Section 2.1(c) of this Agreement.

Section 1.33.  "Protective Warrant Shares" shall mean all shares of Common Stock
issued or issuable pursuant to exercise of the Protective Warrants.

Section  1.34.  "Purchase  Price" shall mean (i) with respect to the First Sale,
$100.00 per share of Preferred Stock and (ii) with respect to a Subsequent Sale,
the average of the lowest three consecutive Bid Prices during the 22 Trading Day
period immediately  preceding the applicable Sale Date and (iii) with respect to
an Effective Date, the average of the lowest three consecutive Bid Prices during
the 22 Trading Day period immediately preceding such Effective Date.

Section 1.35.  "Registrable  Securities"  shall mean (i) the Commitment  Shares,
(ii) the  Warrant  Shares,  and (iii) any  securities  issued or  issuable  with
respect to any of the  foregoing  by way of  exchange,  stock  dividend or stock
split or in connection with a combination of shares,  recapitalization,  merger,
consolidation  or  other  reorganization  or  otherwise.  As to  any  particular
Registrable   Securities,   once  issued  such  securities  shall  cease  to  be
Registrable  Securities when (w) the applicable  Registration Statement has been
declared  effective  by the SEC and all such  Registrable  Securities  have been
disposed of  pursuant to the  applicable  Registration  Statement,  (x) all such
Registrable Securities have been sold under circumstances under which all of the
applicable conditions of Rule 144 (or any similar provision then in force) under
the Securities  Act ("Rule 144") are met, (y) such time as all such  Registrable
Securities have been otherwise  transferred to holders who may trade such shares
without  restriction  under the Securities  Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive  legend or (z) in the  opinion  of  counsel  to the  Company,  which
counsel shall be reasonably  acceptable  to the Investor,  all such  Registrable
Securities  may be sold by the  Investor  without  registration  and without any
time,  volume or manner  limitations  pursuant  to Rule  144(k) (or any  similar
provision then in effect) under the Securities Act.

Section 1.36. "Registration Rights Agreement" shall mean the registration rights
agreement by and between the Company and the Investor,  in the form of Exhibit D
hereto.

Section 1.37. "Registration  Statement" or "Registration  Statements" shall have
the meaning set forth in the Registration Rights Agreement.

Section 1.38. "Regulation D" shall have the meaning set forth in the recitals of
this Agreement.

Section  1.39.  "Representative"  of a party shall mean any  officer,  director,
employee,  agent, counsel,  accountant,  financial advisor,  consultant or other
representative of such party.

Section  1.40.  "Sale"  shall  mean the First  Sale,  together  with any and all
Subsequent Sales.

Section  1.41.  "Sale  Date"  shall  mean with  respect to the First  Sale,  the
Subscription  Date,  and with respect to  Subsequent  Sales,  the Trading Day on
which a Sale Notice Period expires.

Section 1.42.  "Sale Fees" shall have the meaning  specified in Section  10.1(b)
hereof.
<PAGE>

Section 1.43.  "Sale Notice" shall mean a written  notice to the Investor in the
form of Exhibit E hereto,  setting forth, inter alia, the intended Closing Date,
the Investment  Amount and the number of shares of Common Stock that the Company
intends  to require  the  Investor  to  purchase  pursuant  to the terms of this
Agreement.

Section  1.44.  "Sale  Notice  Date"  shall  mean the  Trading  Day  during  the
Commitment  Period upon which a Sale Notice to sell Common Stock to the Investor
is deemed delivered pursuant to Section 2.3(b) hereof.

Section  1.45.  "Sale  Notice  Period"  shall mean a period  beginning on a Sale
Notice Date and ending 7 Trading Days after a Sale Notice Date.

Section 1.46. "SEC" shall mean the U.S. Securities and Exchange Commission.

Section 1.47.  "SEC Documents"  shall mean the Company's  latest Form 10-K as of
the time in  question,  all Forms 10-Q and 8-K filed  thereafter,  and the Proxy
Statement for its latest fiscal year as of the time in question  until such time
the Company no longer has an  obligation  to  maintain  the  effectiveness  of a
Registration Statement as set forth in the Registration Rights Agreement.

Section 1.48. "Section 4(2)" shall have the meaning set forth in the recitals of
this Agreement.

Section 1.49.  "Securities Act" shall have the meaning set forth in the recitals
of this Agreement.

Section 1.50.  "Short Sale" shall have the meaning specified in Rule 3b-3 of the
Exchange Act.

Section 1.51. "Subscription Date" shall mean the date on which this
Agreement is executed and delivered by the parties hereto.

Section  1.52.  "Subscription  Fee" shall have the  meaning set forth in Section
10.1(a) hereof.

Section  1.53.  "Subsequent  Sale"  shall have the  meaning set forth in Section
2.1(b) of this Agreement.

Section  1.54.  "Subsequent  Sale  Shares"  shall have the  meaning set forth in
Section 2.1(b) of this Agreement.

Section 1.55. "Subsidiary" shall mean any Person in which the Company,  directly
or indirectly through Subsidiaries or otherwise, beneficially owns more than 50%
of either the equity interests in, or the voting control of, such Person.

Section 1.56. "Trading Day" shall mean any day during which the Principal Market
shall be open for business.

Section 1.57.  "Transfer Agent Instructions" shall have the meaning set forth in
Section 2.4(a) of this Agreement.

Section 1.58.  "Underwriter"  shall mean any  underwriter  participating  in any
disposition of the Registrable  Securities on behalf of the Investor pursuant to
a Registration Statement.

Section  1.59.  "Warrants"  shall mean the  Protective  Warrants  and  Incentive
Warrant.

Section 1.60.  "Warrant Shares" shall mean the Protective Warrant Shares and the
Incentive Warrant Shares.

                                   ARTICLE II

            SALE AND PURCHASE OF COMMON STOCK, WARRANTS AND PREFERRED STOCK
                           TERMINATION OF OBLIGATIONS

Section 2.1.      Sales.
                  -----

         (a) First Sale. In accordance  with the terms and  conditions set forth
herein (including without limitation the provisions of Article VII hereof),  the
Sale Date of the First Sale shall occur on the Subscription Date. On the Closing
Date  relating  to the First Sale,  the Company  shall issue and sell and, if so
issued and sold, the Investor shall  purchase,  30,000 shares of Preferred Stock
at a Purchase  Price of $100 per share for an  Investment  Amount of  $3,000,000
(such transaction is referred to herein as the "First Sale").

         (b) Subsequent  Sales.  In accordance with the terms and conditions set
forth herein  (including,  without  limitation,  the  provisions  of Article VII
hereof), on any Sale Notice Date the Company shall exercise a Subsequent Sale by
the delivery of a Sale Notice.  On the Closing Date relating to each  Subsequent
Sale,  the Company  shall issue and sell and the Investor  shall  purchase  such
number of shares of Common Stock that are  determined by dividing the Investment
Amount stated in the  applicable  Sale Notice by the  applicable  Purchase Price
(each such  transaction  is referred to herein as a  "Subsequent  Sale," and all
such shares are referred to herein as the "Subsequent Sale Shares").

         (c)  Protective  Warrants.  In partial  consideration  for the Investor
entering into this  Agreement,  if the Company elects to exercise its right with
respect to any Sale to require the  Investor to purchase  shares of Common Stock
that, at the time of the Closing Date, have not been  previously  registered and
are not  covered  by a  Registration  Statement  that  has been  filed  with and
declared  effective by the SEC, on each Closing Date relating to each such Sale,
the Company shall issue and deliver to the Investor a Protective Warrant with an
exercise price of $0.01 for each share of Common Stock, for the purchase of such
number of shares of Common Stock as described in such Protective Warrant.

         (d)  Incentive  Warrant.  In  partial  consideration  for the  Investor
entering into this Agreement, on the Closing Date of the First Sale, the Company
shall issue and deliver to the Investor the  Incentive  Warrant for the purchase
of such number of shares of Common Stock and with an exercise price as described
in such Incentive Warrant.

Section 2.2.      Sale Notice.
                  -----------

         (a) Timing. At any time during the Commitment  Period,  the Company may
deliver a Sale Notice to the Investor,  subject to the  conditions  set forth in
Section 7.2.

         (b) Date of Delivery  of Sale  Notice.  A Sale  Notice  shall be deemed
delivered on (i) the Trading Day it is received by facsimile or otherwise by the
Investor if such notice is received  prior to 12:00 noon New York time,  or (ii)
the  immediately  succeeding  Trading  Day if it is  received  by  facsimile  or
otherwise  after  12:00 noon New York time on a Trading  Day or at any time on a
day which is not a Trading  Day. No Sale Notice will be deemed  delivered,  on a
day that is not a Trading Day.

Section 2.3.      Closings.
                  --------

         Subscription  Date.  On the  Subscription  Date (i) the Company and the
Investor shall execute the  Registration  Rights  Agreement and (ii) the Company
shall execute and deliver irrevocable instructions to the transfer agent, in the
form of  Exhibit F attached  hereto  (the  "Transfer  Agent  Instructions"),  to
prepare  and  deliver to the  Investor,  following  each Sale or  conversion  of
Preferred  Stock,  a share  certificate  in the name of the  Investor and in the
amount of the applicable Commitment Shares, the transfer agent shall confirm and
accept such instructions,  and a copy of such instructions shall be delivered to
the Investor's legal counsel. In addition, on or prior to the Subscription Date,
each of the Company and the Investor  shall deliver to the other all  documents,
instruments  and writings  required to be delivered or  reasonably  requested by
either of them  pursuant to this  Agreement in order to implement and effect the
transactions contemplated herein.
<PAGE>

         Closing  Date.  On each  Closing  Date (i) the Company  shall issue and
deliver to the  Investor a  Protective  Warrant,  if required by Section  2.1(c)
hereof, (ii) with respect to the First Sale, the Company shall issue and deliver
to the Investor the  Incentive  Warrant,  (iii) the Company  shall  instruct the
transfer agent to prepare and deliver to the Investor a share certificate in the
name of the  Investor  and in the  amount  of the  applicable  Common  Stock  in
accordance with the Transfer Agent Instructions,  and the Company shall take all
other actions  necessary to ensure the prompt delivery of such share certificate
to the Investor,  (iv) with respect to the First Sale, the Company shall prepare
and deliver to the Investor a share  certificate in the name of the Investor and
in the amount of the shares of Preferred  Stock,  (v) the Investor shall deliver
to the Company and the Company  shall  execute a Closing  Statement and (vi) the
Investor  shall deliver to the Company the  Investment  Amount  specified in the
Closing Statement,  less applicable fees and costs determined in accordance with
Section  10.1, by wire transfer of  immediately  available  funds to the account
designated  in  writing in the Sale  Notice.  In  addition,  on or prior to each
Closing  Date,  each of the Company and the Investor  shall deliver to the other
all documents,  instruments and writings  required to be delivered or reasonably
requested by either of them pursuant to this Agreement in order to implement and
effect the transactions contemplated herein.

         Section 2.4.  Termination of Agreement and Investment  Obligation.  The
Company  shall have the right to  terminate  this  Agreement at any time upon 30
days'  written  notice to the  Investor.  The  Investor  shall have the right to
immediately terminate this Agreement (including with respect to any Sale, notice
of which has been given but the applicable Closing Date has not yet occurred) in
accordance  with  Section  6.12  or in the  event  that:  (i)  any  Registration
Statement has not been declared  effective by the SEC within the applicable time
periods  set forth in Section 1.1 of the  Registration  Rights  Agreement,  (ii)
there  shall  occur any stop order or  suspension  of the  effectiveness  of any
Registration Statement for an aggregate of 30 Trading Days during the Commitment
Period,  or  (iii)  the  Company  shall  at any  time  fail to  comply  with the
requirements of Section 6.2, 6.3, 6.4, 6.5, 6.6, 6.8 or 6.9.

                                  ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

The Investor represents and warrants to the Company that:

Section 3.1.  Intent.  The Investor is entering into this  Agreement for its own
account,  and the Investor has no view to the  distribution  of the  Registrable
Securities,  Preferred Stock or Warrants and has no present arrangement (whether
or not legally binding) at any time to sell, assign, transfer, pledge, encumber,
hypothecate or otherwise dispose of the Registrable Securities,  Preferred Stock
or  Warrants  to or through  any person or entity;  provided,  however,  that by
making  the  representations  herein,  the  Investor  does not agree to hold the
Registrable  Securities,  Preferred  Stock or Warrants  for any minimum or other
specific term and reserves the right to dispose of the  Registrable  Securities,
Preferred Stock or Warrants at any time pursuant to the  Registration  Statement
and in  accordance  with federal and state  securities  laws  applicable to such
disposition.

Section 3.2.  Sophisticated  Investor.  The Investor is a sophisticated investor
(as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited  investor
(as defined in Rule 501 of Regulation  D), and the Investor has such  experience
in business and financial  matters that it is capable of  evaluating  the merits
and risks of an  investment  in the Common Stock and the  Preferred  Stock.  The
Investor  acknowledges  that an investment in the Common Stock and the Preferred
Stock is speculative and involves a high degree of risk.
<PAGE>

Section 3.3.  Authority.  Each of this  Agreement  and the  Registration  Rights
Agreement  has been duly  authorized by all  necessary  corporate  action and no
further consent or authorization  of the Investor,  or its Board of Directors or
stockholders  is required.  Each of this Agreement and the  Registration  Rights
Agreement was validly executed and delivered by the Investor and each is a valid
and binding agreement of the Investor  enforceable against it in accordance with
its terms,  subject  to  applicable  bankruptcy,  insolvency,  or  similar  laws
relating to, or affecting  generally the enforcement of,  creditors'  rights and
remedies or by other equitable principles of general application.

Section  3.4.  Not an  Affiliate.  The  Investor is not an officer,  director or
"affiliate"  (as that term is defined in Rule 405 of the Securities  Act) of the
Company.

Section 3.5. Organization and Standing. The Investor is duly organized,  validly
existing, and in good standing under the laws of Bermuda.

Section 3.6. Absence of Conflicts.  The execution and delivery of this Agreement
and any other document or instrument  contemplated  hereby, and the consummation
of the transactions  contemplated  thereby, and compliance with the requirements
thereof,  will not to the  Investor's  knowledge  (a)  violate  any  law,  rule,
regulation,  order, writ, judgment,  injunction,  decree or award binding on the
Investor, (b) violate any provision of any indenture, instrument or agreement to
which the Investor is a party or is subject,  or by which the Investor or any of
its  assets is  bound,  (c)  conflict  with or  constitute  a  material  default
thereunder, (d) result in the creation or imposition of any lien pursuant to the
terms of any such indenture,  instrument or agreement, or constitute a breach of
any fiduciary  duty owed by the Investor to any third party,  or (e) require the
approval  of any  third-party  (that  has not  been  obtained)  pursuant  to any
material  contract  to which  the  Investor  is  subject  or to which any of its
assets, operations or management may be subject.

Section 3.7. Disclosure; Access to Information. The Investor has received or had
access to all  documents,  records,  books and other  information  pertaining to
Investor's  investment in the Company that have been requested by Investor.  The
Investor  has received and  reviewed  copies of the SEC  Documents.  Neither the
receipt by the Investor of such  information,  nor the access of the Investor to
such information shall modify, amend or affect the Investor's right to rely upon
the representations and warranties made by the Company pursuant to Article IV of
this Agreement.

Section 3.8. Manner of Sale. At no time was Investor presented with or solicited
by or through any leaflet, public promotional meeting,  television advertisement
or any other form of general solicitation or advertising.

Section 3.9. Resale  Restrictions.  Investor  acknowledges  that any Registrable
Securities,  Preferred  Stock and  Warrants to be acquired by Investor  have not
been  registered  under the  federal  securities  laws or any  applicable  state
securities laws in reliance upon exemptions  available for non-public or limited
offerings.  Investor  understands  that it must  bear the  economic  risk of the
investment in the Registrable  Securities,  Preferred Stock and Warrants because
the  Registrable  Securities,  Preferred  Stock  and  Warrants  have not been so
registered  and  therefore are subject to  restrictions  upon transfer such that
they  may not be sold or  otherwise  transferred  unless  registered  under  the
applicable  securities laws or an exemption from such registration is available.
The  Investor  will not  reoffer,  sell,  assign,  transfer,  pledge,  encumber,
hypothecate or otherwise dispose of any Registrable Securities,  Preferred Stock
or  the  Warrants  in  the  absence  of  an  effective  registration  statement,
qualification  or  authorization  relating  thereto under federal and applicable
state  securities  laws or an opinion of qualified  counsel  satisfactory to the
Company  to  the  effect  that  the  proposed  transaction  in  the  Registrable
Securities, Preferred Stock or the Warrants will neither constitute or result in
any violation of the federal or state securities laws. Subject to Section 8.1 of
this   Agreement,   any  certificate  or  other  document  that  may  be  issued
representing  any  shares  of  Registrable  Securities,  Preferred  Stock or the
Warrants may be endorsed with a legend to this effect.
<PAGE>

                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Investor that on the Subscription
Date, each Effective Date and each Closing Date:

Section 4.1.  Organization  of the Company.  The Company is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Nevada and has all requisite  power and authority to own,  lease and operate its
properties  and to carry on its business as now being  conducted.  Except as set
forth in the SEC  Documents,  the  Company  does  not own  more  than 50% of the
outstanding  capital stock of or control any other  Person.  The Company 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 or property
owned by it makes such  qualification  necessary,  other than those in which the
failure so to qualify would not have a Material Adverse Effect.

Section 4.2.  Authority.  (i) The Company has the requisite  corporate power and
authority to enter into and perform its obligations  under this  Agreement,  the
Registration  Rights  Agreement  and the  Warrants  and to issue the  Commitment
Shares,  the  Preferred  Stock,  the Warrants and the Warrant  Shares;  (ii) the
execution and delivery of this Agreement and the Registration  Rights Agreement,
and the execution, issuance and delivery of the Warrants, by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly  authorized by all necessary  corporate  action,  and no further consent or
authorization  of the  Company  or its Board of  Directors  or  stockholders  is
required; and (iii) each of this Agreement and the Registration Rights Agreement
has been duly executed and delivered,  and the Warrants have been duly executed,
issued  and  delivered,   by  the  Company  and  constitute  valid  and  binding
obligations of the Company  enforceable  against the Company in accordance  with
their  respective  terms,  except  as  such  enforceability  may be  limited  by
applicable  bankruptcy,  insolvency,  or similar laws  relating to, or affecting
generally  the  enforcement  of,  creditors'  rights  and  remedies  or by other
equitable principles of general  application.  Section 4.3. Corporate Documents.
The Company has  furnished or made  available  to the Investor  true and correct
copies of the Company's  Articles of Incorporation,  as amended and in effect on
the date hereof (the "Articles"),  and the Company's By-Laws,  as amended and in
effect on the date hereof (the "By-Laws").

Section 4.4.  Books and Records.  The minute books and other similar  records of
the Company and its  subsidiaries  as made  available  to Investor  prior to the
execution of this Agreement  contain a true and complete record, in all material
respects,  of all action taken at all  meetings  and by all written  consents in
lieu of meetings of the stockholders,  the boards of directors and committees of
the boards of directors of the Company and the subsidiaries. Neither the Company
nor any subsidiary has any of its books or records recorded, stored, maintained,
operated  or  otherwise  wholly  or partly  dependent  upon or held by any means
(including  any  electronic,   mechanical  or  photographic   process,   whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the  exclusive  ownership  and direct  control of the Company or a
subsidiary.

Section 4.5.      Capitalization.

         (a) The  authorized  capital  stock of the  Company  is as set forth on
Schedule 4.5 hereto.  All shares of the Company's  preferred stock designated as
Series A, Series B, and Series C have been  retired and shall not be reissued by
the Company.  Except as set forth on Schedule 4.5 hereto,  there are no options,
warrants,  preemptive rights for, or rights to subscribe to, securities,  rights
or  obligations  convertible  into or  exchangeable  for or giving  any right to
subscribe  for, any shares of capital stock of the Company.  Except as set forth
on  Schedule  4.5  hereto,  there  are  no  anti-dilution  or  price  adjustment
provisions  contained in any security issued by the Company (or in any agreement
providing rights to security  holders) that will be triggered by the issuance of
Common  Stock  or  Preferred  Stock  pursuant  to  this  Agreement.  All  of the
outstanding  shares of Common Stock and preferred stock of the Company have been
duly and validly authorized and issued and are fully paid and nonassessable.
<PAGE>

         (b) Attached  hereto as Exhibit K is a true,  correct and complete copy
of a waiver and consent  agreement  entered into between the Company and Capital
Ventures  International  ("CVI)  concerning  that  certain  Securities  Purchase
Agreement, dated as of December 8, 2000, by and between the Company and CVI (the
"CVI Agreement").  Without limitation of the representations made by the Company
in paragraph (a) above,  the Company has no obligations to issue to CVI, and CVI
has no right to purchase,  Common Stock, options,  warrants, notes, or any other
securities,  pursuant  to the CVI  Agreement  other than the  issuance of Common
Stock  issuable upon  conversion of the Notes (as defined in the CVI  Agreement)
and Warrants (as defined in the CVI Agreement)  beneficially owned by CVI on the
date hereof.

Section  4.6.  Registration  and  Listing  of  Common  Stock.  The  Company  has
registered  its Common Stock  pursuant to Section 12(b) or 12(g) of the Exchange
Act and is in full  compliance  with all reporting  requirements of the Exchange
Act, and the Company has maintained all requirements  for the continued  listing
or quotation of its Common Stock,  and such Common Stock is currently  listed or
quoted on the Principal Market.  As of the date hereof,  the Principal Market is
the Nasdaq National Market.

Section 4.7. Financial Statements. Prior to the execution of this Agreement, the
Company has delivered to the Investor true and complete  copies of the following
financial statements:

         (a) the audited  balance  sheets of the  Company  and its  consolidated
subsidiaries  as of December  31,  2000,  and the related  audited  consolidated
statements of  operations,  stockholders'  equity and cash flows for each of the
fiscal years then ended,  together with a true and correct copy of the report on
such audited  information  by  PricewaterhouseCoopers  LLP, and all letters from
such accountants with respect to the results of such audits; and

         (b) the unaudited  balance  sheets of the Company and its  consolidated
subsidiaries  as of March  31,  2001,  and the  related  unaudited  consolidated
statements of operations and stockholders'  equity for the portion of the fiscal
year then ended.

The  financial  statements  of the Company  delivered to the Investor  have been
prepared in accordance with generally accepted accounting  principles applied on
a consistent  basis 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  financial  position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).

Section 4.8. SEC  Documents.  The Company has timely filed all SEC Documents and
has delivered or made available to the Investor true and complete  copies of the
SEC Documents  (including,  without  limitation,  audited financial  statements,
proxy information and solicitation  materials).  The Company has not provided to
the  Investor  any  information  that,  according  to  applicable  law,  rule or
regulation,  should have been disclosed publicly prior to the date hereof by the
Company, but which has not been so disclosed.  As of their respective dates, the
SEC Documents  complied as to form and  substance in all material  respects with
the  requirements of the Securities Act or the Exchange Act, as the case may be,
and other federal,  state and local laws,  rules and  regulations  applicable to
such SEC Documents, and none of the SEC Documents 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  prior  to  the  date  hereof).  The  financial
statements of the Company  included in the SEC  Documents  comply as to form and
substance in all material respects with applicable  accounting  requirements and
the published  rules and  regulations of the SEC or other  applicable  rules and
regulations with respect thereto.  Such financial  statements have been prepared
in  accordance  with  generally  accepted  accounting  principles  applied  on a
consistent  basis  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 include summary notes
and may be condensed or summary  statements)  and fairly present in all material
respects the  financial  position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
<PAGE>

Section 4.9. Exemption from Registration;  Valid Issuances;  New Issuances.  The
sale and issuance of the Warrants,  the Warrant Shares,  the Preferred Stock and
the  Commitment  Shares  in  accordance  with the  terms and on the basis of the
representations  and  warranties  set forth in this  Agreement,  may and will be
properly  issued  pursuant to Section 4(2),  Regulation D and/or any  applicable
state law. When issued and paid for as provided herein and in the Warrants,  the
Warrant Shares,  the Commitment  Shares and the Preferred Stock will be duly and
validly  issued,  fully  paid,  and  nonassessable.  Neither  the  sales  of the
Commitment  Shares,  the  Preferred  Stock,  the Warrants or the Warrant  Shares
pursuant  to, nor the  Company's  performance  of its  obligations  under,  this
Agreement,  the Registration Rights Agreement or the Warrants will (i) result in
the creation or imposition of any liens,  charges,  claims or other encumbrances
upon the Commitment  Shares,  the Preferred Stock, the Warrant Shares, or any of
the assets of the Company,  or (ii) entitle the holders of  Outstanding  Capital
Shares or holders of  preferred  stock of the  Company  to  preemptive  or other
rights to subscribe to or acquire the Capital  Shares,  such preferred  stock or
other securities of the Company.  The Commitment Shares, the Preferred Stock and
the Warrant Shares will not subject the Investor to personal liability by reason
of the ownership  thereof.  The  Commitment  Shares and Warrant Shares have been
duly  authorized  by the  Company,  but  have not been  issued  (whether  or not
subsequently  repurchased by the Company) to any Person,  and when issued to the
Investor in accordance  with this  Agreement and the Warrants will not have been
issued  (whether or not  subsequently  repurchased by the Company) to any Person
other than the Investor.

Section  4.10.  No  General  Solicitation  or  Advertising.  In  regard  to  the
transactions  contemplated hereby, neither the Company nor any of its Affiliates
nor  any  distributor  or any  person  acting  on its or  their  behalf  (i) has
conducted or will conduct any general solicitation (as that term is used in Rule
502(c) of  Regulation  D) or  general  advertising  with  respect  to any of the
Commitment Shares, the Preferred Stock, the Warrants,  or the Warrant Shares, or
(ii) made any offers or sales of any security or solicited any offers to buy any
security under any circumstances  that would require  registration of the Common
Stock under the Securities Act.

Section 4.11. No Conflicts.  The  execution,  delivery and  performance  of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including without limitation the issuance of the Commitment
Shares, the Preferred Stock, the Warrants and the Warrant Shares do not and will
not (i) result in a violation of the Articles or By-Laws or (ii) conflict  with,
or constitute a material  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, acceleration or cancellation of, any material agreement,
indenture,  instrument or any "lock-up" or similar provision of any underwriting
or  similar  agreement  to which the  Company is a party,  or (iii)  result in a
violation of any federal, state, local or foreign law, rule, regulation,  order,
judgment or decree (including federal and state securities laws and regulations,
or any rule,  regulation,  order,  judgment  or  decree  of any  self-regulatory
organization having authority over the matters contemplated  hereby,  applicable
to the  Company  or by which any  property  or asset of the  Company is bound or
affected  (except  for  such  conflicts,  defaults,  terminations,   amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate,  have a Material  Adverse  Effect)  nor is the Company  otherwise  in
violation of, conflict with or in default under any of the foregoing;  provided,
however, that for purposes of the Company's representations and warranties as to
violations of foreign law, rule or regulation  referenced in clause (iii),  such
representations  and  warranties  are  made  only to the  best of the  Company's
knowledge  insofar as the execution,  delivery and performance of this Agreement
by the  Company  and  the  consummation  by  the  Company  of  the  transactions
contemplated  hereby are or may be affected by the status of the Investor  under
or pursuant to any such foreign  law,  rule or  regulation.
<PAGE>

The  business of the Company is not being  conducted  in  violation  of any law,
ordinance or regulation of any governmental or  self-regulatory  entity,  except
for possible  violations  that either singly or in the aggregate do not and will
not have a  Material  Adverse  Effect.  The  Company is not  required  under any
federal,  state or local law,  rule or  regulation,  order,  judgment  or decree
(including  federal and state  securities  laws and  regulations),  or any rule,
regulation, order, judgment or decree of any self-regulatory organization having
authority  over  the  matters   contemplated  hereby,  to  obtain  any  consent,
authorization or order of, or make any filing or registration with, any court or
governmental  agency in order for it to  execute,  deliver or perform any of its
obligations  under this Agreement or issue and sell the Commitment  Shares,  the
Preferred  Stock,  the Warrants,  or the Warrant  Shares in accordance  with the
terms hereof (other than any SEC, NASD or state  securities  filings that may be
required to be made by the Company  subsequent to any Closing,  any registration
statement  that may be  filed  pursuant  hereto,  and any  shareholder  approval
required by the rules  applicable to companies  whose common stock trades on the
Nasdaq National Market);  provided that, for purposes of the representation made
in this  sentence,  the Company is assuming and relying upon the accuracy of the
relevant representations and agreements of the Investor herein.

Section 4.12. No Material Adverse Change.  Since December 31, 2000, no event has
occurred that would have a Material Adverse Effect on the Company.

Section 4.13. No  Undisclosed  Liabilities.  The Company has no  liabilities  or
obligations  that are material,  individually  or in the  aggregate,  other than
those incurred in the ordinary course of the Company's businesses since December
31, 2000 and which, individually or in the aggregate, do not or would not have a
Material Adverse Effect on the Company.

Section 4.14.No Undisclosed Events or Circumstances. Since December 31, 2000, no
event or circumstance  has occurred or exists with respect to the Company or its
businesses,  properties,  prospects,  operations or financial  condition,  that,
under  applicable  law,  rule  or  regulation,  requires  public  disclosure  or
announcement  prior to the date  hereof by the Company but which has not been so
publicly disclosed or announced.

Section  4.15.  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
Commitment Shares, the Preferred Stock, the Warrants or the Warrant Shares under
the Securities Act.

Section 4.16.  Litigation and Other Proceedings.  Except as set forth in the SEC
Documents, there are no lawsuits or proceedings pending or to the best knowledge
of the Company threatened, against the Company, nor has the Company received any
written or oral notice of any such action,  suit,  proceeding or  investigation,
which have had or might have a Material  Adverse Effect.  Except as set forth in
the SEC Documents,  no judgment,  order, writ, injunction or decree or award has
been issued by or, so far as is known by the  Company,  requested  of any court,
arbitrator  or  governmental  agency  which has resulted in or might result in a
Material Adverse Effect.

Section 4.17. No Misleading  or Untrue  Communication.  The Company,  any Person
representing the Company, and, to the knowledge of the Company, any other Person
selling or offering to sell the  Commitment  Shares,  the Preferred  Stock,  the
Warrants or the Warrant Shares in connection with the transactions  contemplated
by this  Agreement,  have not  made,  at any  time,  any oral  communication  in
connection  with the  offer  or sale of the  same  which  contained  any  untrue
statement of a material fact or omitted to state any material fact  necessary in
order to make the statements, in the light of the circumstances under which they
were made, not misleading.

Section 4.18. Material Non-Public Information.  The Company is not in possession
of, nor has the Company or its agents  disclosed to the  Investor,  any material
non-public  information  that (i) if disclosed,  would,  or could  reasonably be
expected to have,  an effect on the price of the Common Stock or (ii)  according
to applicable  law, rule or regulation,  should have been disclosed  publicly by
the Company prior to the date hereof but which has not been so disclosed.
<PAGE>

                                   ARTICLE V

                            COVENANTS OF THE INVESTOR

         Section 5.1. Compliance. The Investor's trading activities with respect
to  shares  of the  Company's  Common  Stock  will  be in  compliance  with  all
applicable  state and federal  securities  laws,  rules and  regulations and the
rules and  regulations  of the Principal  Market on which the  Company's  Common
Stock is listed.

         Section 5.2. Short Sale. Neither the Investor nor any of its Affiliates
will directly or indirectly engage in any Short Sale of the Commitment Shares or
the Warrant Shares during the Commitment Period.

                                   ARTICLE VI

                            COVENANTS OF THE COMPANY

Section  6.1.  Registration  Rights.  The Company  shall cause the  Registration
Rights  Agreement  to remain in full force and  effect,  and the  Company  shall
comply in all respects with the terms thereof.

Section 6.2. Reservation of Common Stock. As of the date hereof, the Company has
available and the Company shall reserve and keep available at all times, free of
preemptive  rights,  shares of Common  Stock for the  purpose  of  enabling  the
Company to satisfy any obligation to issue the Commitment Shares and the Warrant
Shares, such amount of shares of Common Stock to be reserved shall be calculated
based  upon the Floor  Price  (as such term is  defined  in the  Certificate  of
Designation)  of the  Preferred  Stock,  the Minimum Bid Price and the  Exercise
Price of the  Incentive  Warrant and the maximum  number of  Protective  Warrant
Shares  issuable  pursuant to the Protective  Warrants.  The number of shares so
reserved from time to time, as  theretofore  increased or reduced as hereinafter
provided, may be reduced by the number of shares actually delivered.

Section 6.3. Listing of Common Stock. The Company shall exercise best efforts to
maintain the listing or quotation of the Common Stock on a Principal Market, and
as soon as practicable (but in any event prior to the Closing Date for any Sale)
will  cause the  Commitment  Shares and the  Warrant  Shares to be listed on the
Principal Market.  The Company further shall, if the Company applies to have the
Common Stock traded on any other Principal  Market,  include in such application
the Commitment  Shares and the Warrant Shares,  and shall take such other action
as is  necessary or desirable in the opinion of the Investor to cause the Common
Stock to be listed on such other Principal  Market as promptly as possible.  The
Company shall use  commercially  reasonable  efforts to continue the listing and
trading  of  its  Common  Stock  on the  Principal  Market  (including,  without
limitation,  maintaining  sufficient net tangible assets) and will comply in all
respects with the Company's  reporting,  filing and other  obligations under the
bylaws or rules of the NASD and the Principal Market.

Section  6.4.  Exchange  Act  Registration.  The Company  shall  comply with all
applicable   requirements  set  forth  in  the  Registration  Rights  Agreement,
including without limitation its obligation to file each Registration  Statement
with the SEC within the  applicable  time periods set forth in the  Registration
Rights Agreement.  After each  Registration  Statement  becomes  effective,  the
Company shall cause the Common Stock covered by such  Registration  Statement to
continue to be registered under Section 12(g) or 12(b) of the Exchange Act, will
comply in all  respects  with its  reporting  and filing  obligations  under the
Exchange Act, and will not take any action or file any document  (whether or not
permitted by the Exchange Act or the rules  thereunder)  to terminate or suspend
such   registration  or  to  terminate  or  suspend  its  reporting  and  filing
obligations under the Exchange Act.
<PAGE>

Section 6.5. Legends. The certificates  evidencing the Warrants,  the Commitment
Shares,  the  Preferred  Stock and the Warrant  Shares shall be free of legends,
except as provided for in Article VIII.

Section 6.6. Corporate Existence.  The Company shall take all steps necessary to
preserve and continue the corporate existence of the Company.

Section 6.7. Additional SEC Documents.  Until all Registrable  Securities issued
or  issuable  to the  Investor  pursuant  to this  Agreement  may be sold by the
Investor without registration and without any time, volume or manner limitations
pursuant  to Rule  144(k) (or any similar  provision  then in effect)  under the
Securities  Act,  the  Company  shall,  as and when the  originals  thereof  are
submitted  to the SEC for  filing,  notify  the  Investor  in writing of any SEC
Documents  furnished  or  submitted  to the SEC,  and upon  the  request  of the
Investor the Company shall  deliver to the Investor  copies of all SEC Documents
so furnished or submitted to the SEC.

Section 6.8.  Notice of Certain  Events  Affecting  Registration;  Suspension of
Right to Make a  Subsequent  Sale.  The  Company  shall  immediately  notify the
Investor  upon the  occurrence  of any of the  following  events in respect of a
Registration  Statement  or related  prospectus  in respect  of an  offering  of
Registrable Securities: (i) receipt of any request for additional information by
the SEC or any other federal or state  governmental  authority during the period
of effectiveness of the Registration  Statement for amendments or supplements to
the Registration  Statement or related prospectus;  (ii) the issuance by the SEC
or  any  other  federal  or  state  governmental  authority  of any  stop  order
suspending the  effectiveness  of a Registration  Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the  Registrable  Securities for sale in any  jurisdiction  or the initiation or
threatening of any proceeding for such purpose;  (iv) the happening of any event
that  makes  any  statement  made  in such  Registration  Statement  or  related
prospectus or any document  incorporated or deemed to be incorporated therein by
reference  untrue in any  material  respect or that  requires  the making of any
changes in the Registration Statement,  related prospectus or documents so that,
in the  case  of a  Registration  Statement,  it will  not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein not misleading,  and
that in the case of the  related  prospectus,  it will not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein, in the light of the
circumstances under which they were made, not misleading; (v) the declaration by
the SEC of the effectiveness of a Registration Statement; and (vi) the Company's
reasonable  determination  that a  post-effective  amendment to the Registration
Statement would be appropriate, and the Company shall promptly make available to
the Investor any such  supplement  or amendment to the related  prospectus.  The
Company   shall  not  deliver  to  the  Investor  any  Sale  Notice  during  the
continuation of any of the foregoing events, except for (v) above.

Section 6.9. Consolidation; Merger. The Company shall not, at any time after the
date hereof,  effect any merger or consolidation of the Company with or into, or
a transfer of all or substantially  all of the assets of the Company to, another
entity unless the resulting  successor or acquiring  entity (if not the Company)
executes a written instrument acknowledging and assuming the obligation to issue
to the Investor,  upon any Sale,  upon conversion of the Preferred Stock or upon
the exercise of any Warrant,  in lieu of each share of Common Stock  theretofore
issuable upon such Sale,  upon such  conversion  of the Preferred  Stock or upon
exercise of any such Warrant,  other  securities,  money or property  receivable
upon such  merger,  consolidation  or transfer had the Sale,  conversion  of the
Preferred Stock or exercise of such Warrant occurred  immediately  prior to such
merger, consolidation or transfer.

Section 6.10.  Issuance of Shares.  The issuance and sale of the Preferred Stock
and the Subsequent  Sale Shares,  the issuance of the Warrants,  the issuance of
the Warrant Shares pursuant to exercise of the Warrants, and the issuance of the
Conversion  Shares upon  conversion  of the  Preferred  Stock,  shall be made in
accordance  with  the  provisions  and  requirements  of  Regulation  D and  any
applicable state law. Issuance of the Warrant Shares pursuant to exercise of the
Warrants  through  a  cashless  exercise  shall be made in  accordance  with the
provisions and  requirements of Section 3(a)(9) under the Securities Act and any
applicable state law.
<PAGE>

Section 6.11. Legal Opinions. The Company's independent counsel shall deliver to
the  Investor  on the Closing  Date  related to the First Sale an opinion in the
form of Exhibit G, except for  paragraph 7 thereof.  The  Company's  independent
counsel  shall  deliver  to  the  Investor,   on  the  effective  date  of  each
Registration  Statement,  an opinion in the form of Exhibit G hereto,  including
paragraph 7 thereof.

Section 6.12. No Similar Arrangement;  Right of First Refusal. The Company shall
refrain from entering into any other agreements,  arrangements or understandings
granting to the Company  the right to sell  shares of its  securities  to one or
more investors,  other than agreements entered into by the Company in connection
with  acquisitions  of businesses  related to the business of the Company at the
time of such acquisition  (whether such  acquisitions are structured as mergers,
stock  purchases,  asset  purchases  or as  other  forms  of  acquisitions)  (an
"Acquisition")  and  other  than to the  Investor,  in  placements  exempt  from
registration  under  the  Securities  Act  until 60  calendar  days  after  this
Agreement  is  terminated  pursuant  to  Section  2.5 hereof  (the  "Exclusivity
Period"). If the Company, for the purpose of obtaining any additional financing,
wishes to sell shares of its securities in placements  exempt from  registration
under the  Securities Act during the  Exclusivity  Period to a party (the "Third
Party") other than pursuant to an Acquisition  and other than to the Investor (a
"Third  Party  Sale"),  the  Company  shall  first  offer (the  "Offer")  to the
Investor,  in writing,  the right to purchase such shares (the "Offered Shares")
at the bona fide price offered by the Third Party (the "Offer Price"). The Offer
shall  grant the  Investor  the right  during  the 5  Trading  Days  immediately
following  the date of the Offer to elect to purchase  any or all of the Offered
Shares.  The Company,  in connection with such a Third Party Sale, shall refrain
from  circumventing  or attempting to circumvent the  Investor's  right of first
refusal  by way of  making  such a Third  Party  Sale  to any of its  Affiliates
without first making an Offer to the Investor.  If the Investor so exercises its
right to purchase any or all of the Offered Shares, the purchase will be treated
as a Subsequent Sale except that the purchase price for the Offered Shares shall
be the Offer Price.  The closing and method of payment  shall be as provided for
in  Sections  2.3 and 2.4 hereof and the  Closing  Date shall be 7 Trading  Days
after the Investor  exercises such right.  If the Investor fails to exercise its
right to purchase any or all of the Offered Shares,  then during the 60 calendar
days  immediately  following the expiration of such right,  the Company shall be
free to sell any or all of the  Offered  Shares to a  purchaser  for a  purchase
price not lower than the Offer Price  payable on terms and  conditions  that are
not more favorable to such purchaser than those  contained in the Offer.  In the
event that the Company  effects a Third Party Sale, the Investor may immediately
terminate this Agreement.

Section 6.13. Public  Announcements.  The Company, its Representatives and legal
advisors,  and the Investor  will not issue or make any reports,  statements  or
releases to the public or to any third party with  respect to this  Agreement or
the transactions contemplated hereby without the consent of both the Company and
the Investor,  which consent shall not be unreasonably  withheld or delayed. The
Company,  its  Representatives  and legal  advisers,  and the Investor also will
obtain  the other  party's  prior  approval  of any press  release  to be issued
announcing the consummation of the  transactions  contemplated by this Agreement
or in any way referring to the other party or affiliates of the other party.  If
either party is unable to obtain the approval of its public  report,  statement,
or press or other  release from the other party and such report,  statement,  or
press or other  release  is, in the  opinion  of legal  counsel  to such  party,
required by applicable law or by any rule or regulation of the Principal  Market
in order to discharge such party's disclosure  obligations,  then such party may
make or issue the legally required report,  statement, or press or other release
and promptly furnish the other party with a copy thereof.
<PAGE>

                                  ARTICLE VII

                            CONDITIONS TO DELIVERY OF
                     SALE NOTICES AND CONDITIONS TO CLOSING

Section 7.1. Conditions  Precedent to the Obligation of the Company to Issue and
Sell Preferred Stock and Common Stock.  The obligation  hereunder of the Company
to issue and sell the Preferred  Stock or Common Stock,  as  applicable,  to the
Investor incident to each Closing is subject to the  satisfaction,  at or before
each such Closing, of each of the conditions set forth below.

         (a)  Accuracy of the  Investor's  Representation  and  Warranties.  The
representations  and warranties of the Investor shall be true and correct in all
material  respects as of the date of this  Agreement  and as of the date of each
such Closing as though made at each such time.

         (b)  Performance by the Investor.  The Investor  shall have  performed,
satisfied  and  complied in all  respects  with all  covenants,  agreements  and
conditions  required by this  Agreement to be  performed,  satisfied or complied
with by the Investor at or prior to such Closing.

Section 7.2. Conditions  Precedent to the Right of the Company to deliver a Sale
Notice and the Obligation of the Investor to Purchase Preferred Stock and Common
Stock . The right of the  Company  to deliver a Sale  Notice,  in the event of a
Subsequent Sale, and the obligation of the Investor hereunder to acquire and pay
for the  Preferred  Stock or Common  Stock,  as  applicable,  with  respect to a
Closing is subject to the satisfaction,  on (i) the Subscription  Date, (ii) the
applicable  Sale  Notice  Date and (iii) the  applicable  Closing  Date  (each a
"Condition  Satisfaction Date"), of each of the following conditions;  provided,
however,  that with respect to the Subscription Date and the Closing relating to
the First Sale only, the Investor  waives the conditions set forth in paragraphs
(a),  (b) and  (j) of this  Section  7.2:

         (a) Filing of Registration  Statements with the SEC. In accordance with
the provisions set forth in the Registration Rights Agreement, the Company shall
have  filed  with  the  SEC  Registration  Statements  covering  the  resale  of
Registrable Securities relating to all prior Sales.

         (b)  Effective  Registration  Statements.  (1) The  Company  shall have
notified  the  Investor  in  accordance  with  Section 6.8 hereof that all prior
Registration  Statements covering  Registrable  Securities relating to the First
Sale and any  Subsequent  Sales have been declared  effective by the SEC. (2) In
accordance  with  the  Registration  Rights  Agreement,  all  such  Registration
Statements  shall remain  effective on each  Condition  Satisfaction  Date.  (3)
Neither the Company nor the Investor shall have received notice that the SEC has
issued or intends to issue a stop order with respect to a Registration Statement
or that the SEC  otherwise has  suspended or withdrawn  the  effectiveness  of a
Registration  Statement,  either  temporarily or permanently,  or intends or has
threatened  to do so (unless  the SEC's  concerns  have been  addressed  and the
Investor  is  reasonably  satisfied  that the SEC no  longer is  considering  or
intends to take such action).  (4) No other  suspension of the use or withdrawal
of the effectiveness of such Registration  Statement or related prospectus shall
exist.

         (c)  Accuracy of the  Company's  Representations  and  Warranties.  The
representations  and  warranties  of the Company shall be true and correct as of
each  Condition  Satisfaction  Date as though made at each such time (except for
representations and warranties specifically made as of a particular date).

         (d)  Performance  by the  Company.  The Company  shall have  performed,
satisfied  and  complied in all  respects  with all  covenants,  agreements  and
conditions required by this Agreement, the Registration Rights Agreement and the
Warrants to be performed,  satisfied or complied with by the Company at or prior
to each Condition Satisfaction Date.
<PAGE>

         (e) No  Injunction.  No statute,  rule,  regulation,  executive  order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
adopted by any court or governmental  authority of competent  jurisdiction  that
prohibits the  transactions  contemplated  by this  Agreement or otherwise has a
Material  Adverse  Effect,  and no  actions,  suits or  proceedings  shall be in
progress,  pending or threatened by any Person,  that seek to enjoin or prohibit
the transactions contemplated by this Agreement or otherwise could reasonably be
expected to have a Material Adverse Effect.  For purposes of this paragraph (e),
no proceeding  shall be deemed  pending or threatened  unless one of the parties
has  received  written  or oral  notification  thereof  prior to the  applicable
Closing Date.

         (f) No  Suspension  of Trading in or  Delisting  of Common  Stock.  The
trading  of the  Common  Stock  shall not have been  suspended  by the SEC,  the
Principal  Market or the NASD, and the Common Stock shall have been approved for
listing or  quotation  on and shall not have been  delisted  from the  Principal
Market.  The issuance of shares of Common  Stock with respect to the  applicable
Closing shall not violate the shareholder approval requirements of the Principal
Market.

         (g) Due  Diligence.  No dispute  between the  Company and the  Investor
shall  exist  pursuant  to  Section  7.3 as to the  adequacy  of the  disclosure
contained in the Registration Statement.

         (h) Ten  Percent  Limitation.  On each  Closing  Date,  the  number  of
Commitment  Shares then to be  purchased  by the  Investor  shall not exceed the
number of such shares  that,  when  aggregated  with all other  shares of Common
Stock and  Registrable  Securities  then owned by the Investor  beneficially  or
deemed beneficially owned by the Investor,  as determined in accordance with the
definition of beneficial  ownership in Rule 13d-3 promulgated under the Exchange
Act, would result in the Investor owning no more than 9.9% of all of such Common
Stock as would be  outstanding on such Closing Date, as determined in accordance
with  Section  13(d)  of  the  Exchange  Act  and  the  regulations  promulgated
thereunder. For purposes of this Section, in the event that the amount of Common
Stock outstanding as determined in accordance with Section 13(d) of the Exchange
Act and the regulations promulgated thereunder is greater on a Closing Date than
on the Sale Notice Date  associated with such Closing Date, the amount of Common
Stock  outstanding on such Closing Date shall govern for purposes of determining
whether the  Investor,  when  aggregating  all  purchases  of Common  Stock made
pursuant to this Agreement and, if any,  Warrant Shares would own more than 9.9%
of the Common Stock following such Closing Date.

         (i) No Knowledge. The Company shall have no knowledge of any event more
likely than not to have the effect of causing any  Registration  Statement to be
suspended or otherwise ineffective (which event is more likely than not to occur
within the fifteen  Trading Days  following the Trading Day on which such notice
is deemed delivered).

         (j)  Minimum  Time  Interval.  The  Minimum  Time  Interval  shall have
elapsed.

         (k) Shareholder Vote. The issuance of Commitment Shares with respect to
the  applicable  Closing,  if any,  shall not violate the  shareholder  approval
requirements  of the  Principal  Market.  Each Sale  Notice  shall  provide  the
Investor with the following  information as of the applicable  Sale Notice Date:
(i) the total number of shares of Outstanding  Common Stock,  (ii) the number of
Subsequent  Sale Shares issuable with respect to the applicable  Closing,  (iii)
the number of Protective  Warrant Shares  issuable,  if any, with respect to the
applicable  Closing,  (iv) the  number  of shares of  Commitment  Shares  issued
pursuant to previous Sales,  (v) the number of Incentive  Warrant Shares issued,
(vi) the number of  Protective  Warrant  Shares  previously  issued  pursuant to
previous  Sales (vii) the number of  Conversion  Shares  previously  issued upon
conversion of the Preferred  Stock,  and (viii) the number of Conversion  Shares
issuable upon future conversions.  If the issuance by the Company of a number of
shares of  Commitment  Shares equal to the sum of the amounts  stated in clauses
(ii) through (vi), inclusive,  hereof would result in a violation by the Company
of the shareholder approval requirements of the Principal Market, the applicable
Sale Notice shall be deemed null and void.

         (l) Certificate of Designation.  The Company, prior to the Closing Date
relating  to the First Sale  only,  shall  have duly  filed the  Certificate  of
Designation  with, and the  Certificate of Designation  shall have been approved
by, the Secretary of State of the State of Nevada.
<PAGE>

         (m) Other. On each Condition Satisfaction Date, the Investor shall have
received  and  been  reasonably  satisfied  with  such  other  certificates  and
documents as shall have been  reasonably  requested by the Investor in order for
the Investor to confirm the Company's  satisfaction  of the conditions set forth
in  this  Section  7.2.,  including,   without  limitation,   a  certificate  in
substantially  the form and  substance  of Exhibit H hereto,  executed in either
case by an  executive  officer of the  Company  and to the  effect  that all the
conditions to such Closing shall have been satisfied as at the date of each such
certificate.

         (n) Certain  Events.  The Company  shall not be  permitted to deliver a
Sale  Notice  during any period in which the events  described  in Section  6.8,
except for clause (v) thereof, continue to occur.

Section 7.3. Due Diligence Review; Non-Disclosure of Non-Public Information.

         (a) The Company shall make  available for  inspection and review by the
Investor, advisors to and representatives of the Investor (who may or may not be
affiliated with the Investor and who are reasonably  acceptable to the Company),
and any  Underwriter,  any  Registration  Statement or  amendment or  supplement
thereto or any blue sky, NASD or other filing,  all financial and other records,
all SEC  Documents  and other  filings  with the SEC,  and all  other  corporate
documents and  properties of the Company as may be reasonably  necessary for the
purpose  of such  review,  and  cause  the  Company's  officers,  directors  and
employees to supply all such information reasonably requested by the Investor or
any  such  representative,  advisor  or  Underwriter  in  connection  with  such
Registration  Statement  (including,  without  limitation,  in  response  to all
questions  and other  inquiries  reasonably  made or  submitted by any of them),
prior to and from  time to time  after  the  filing  and  effectiveness  of such
Registration  Statement  for the sole  purpose of enabling the Investor and such
representatives,  advisors and Underwriters and their respective accountants and
attorneys  to conduct  initial  and ongoing due  diligence  with  respect to the
Company and the accuracy of such Registration Statement.

         (b) None of the Company, its officers, directors,  employees and agents
shall in any event disclose non-public information to the Investor,  advisors to
or   representatives  of  the  Investor  unless  prior  to  disclosure  of  such
information  the  Company   identifies  such  information  as  being  non-public
information and provides the Investor,  such advisors and  representatives  with
the  opportunity to accept or refuse to accept such  non-public  information for
review. As a condition to disclosing any non-public information  hereunder,  the
Company may require the Investor's  advisors and representatives to enter into a
confidentiality agreement in form reasonably satisfactory to the Company and the
Investor.

         (c) Nothing  herein  shall  require the Company to disclose  non-public
information to the Investor or its advisors or representatives,  and the Company
represents that it does not disseminate  non-public information to any investors
who purchase stock in the Company in a public offering,  to money managers or to
securities analysts;  provided, however, that notwithstanding anything herein to
the contrary, the Company shall, as hereinabove provided, immediately notify the
advisors and  representatives  of the Investor and any Underwriters of any event
or the  existence of any  circumstance  (without any  obligation to disclose the
specific  event  or  circumstance)  of  which  it  becomes  aware,  constituting
non-public  information (whether or not requested of the Company specifically or
generally  during  the course of due  diligence  by such  persons or  entities),
which,   if  not  disclosed  in  the  prospectus   included  in  the  applicable
Registration  Statement  would  cause  such  prospectus  to  include a  material
misstatement  or to omit a material fact required to be stated  therein in order
to make the statements,  therein,  in light of the  circumstances  in which they
were made,  not  misleading.  Nothing  contained  in this  Section  7.3 shall be
construed to mean that such persons or entities other than the Investor (without
the written consent of the Investor prior to disclosure of such information) may
not obtain  non-public  information in the course of conducting due diligence in
accordance  with the terms and  conditions of this  Agreement and nothing herein
shall prevent any such persons or entities  from  notifying the Company of their
opinion that based on such due diligence by such persons or entities,  that such
Registration  Statement contains an untrue statement of a material fact or omits
a  material  fact  required  to be  stated  in such  Registration  Statement  or
necessary  to  make  the  statements   contained   therein,   in  light  of  the
circumstances in which they were made, not misleading.
<PAGE>


                                  ARTICLE VIII

                                     LEGENDS

         Section 8.1.  Legends.  Each of the Warrants,  the Preferred Stock and,
unless  otherwise  provided below,  each  certificate  representing  Registrable
Securities will bear the following legend (the "Legend"):

         "THE SECURITIES  EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE U.S.  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
         ACT"), OR ANY OTHER APPLICABLE  SECURITIES LAWS AND HAVE BEEN ISSUED IN
         RELIANCE UPON AN EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS  OF THE
         SECURITIES ACT AND SUCH OTHER  SECURITIES  LAWS.  NEITHER THIS SECURITY
         NOR ANY  INTEREST  OR  PARTICIPATION  HEREIN  MAY BE  REOFFERED,  SOLD,
         ASSIGNED, TRANSFERRED,  PLEDGED, ENCUMBERED,  HYPOTHECATED OR OTHERWISE
         DISPOSED OF,  EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT
         UNDER THE  SECURITIES  ACT OR PURSUANT TO A TRANSACTION  THAT IS EXEMPT
         FROM,  OR NOT  SUBJECT  TO,  SUCH  REGISTRATION.  THE  HOLDER  OF  THIS
         CERTIFICATE IS THE  BENEFICIARY  OF CERTAIN  OBLIGATIONS OF THE COMPANY
         SET FORTH IN A STOCK PURCHASE  AGREEMENT,  DATED AS OF [DATE],  BETWEEN
         WAVERIDER COMMUNICATIONS INC. AND CRESCENT INTERNATIONAL LTD. A COPY OF
         THE PORTION OF THE AFORESAID AGREEMENT  EVIDENCING SUCH OBLIGATIONS MAY
         BE OBTAINED FROM WAVERIDER COMMUNICATION INC.'S EXECUTIVE OFFICES."

         On the Subscription  Date the Company shall issue to the transfer agent
for its Common Stock (and to any  substitute or  replacement  transfer agent for
its Common  Stock  upon the  Company's  appointment  of any such  substitute  or
replacement  transfer  agent)  Transfer Agent  Instructions,  with a copy to the
Investor. Other than as required as a result of change in law, such instructions
shall be  irrevocable  by the Company from and after the date hereof or from and
after the issuance thereof to any such substitute or replacement transfer agent,
as the case may be, except as otherwise  expressly  provided in the Registration
Rights Agreement. It is the intent and purpose of such instructions, as provided
therein,  to require the  transfer  agent for the Common Stock from time to time
upon transfer of  Registrable  Securities by the Investor to issue  certificates
evidencing such  Registrable  Securities free of the Legend during the following
periods and under the following  circumstances  and without  consultation by the
transfer  agent with the  Company or its  counsel  and  without the need for any
further advice or instruction or  documentation to the transfer agent by or from
the Company or its counsel or the Investor, and the Company agrees that it will,
and will cause its  counsel  to,  provide  the  transfer  agent with any and all
documentation requested or required by the transfer agent, the Investor or their
respective   counsel,   including  without   limitation  the  documentation  and
confirmations referenced in the Transfer Agent Instructions:

         (a) At any time after the applicable  Effective Date, upon surrender of
one or more certificates evidencing Registrable Securities that bear the Legend,
to  the  extent   accompanied  by  a  notice  requesting  the  issuance  of  new
certificates free of the Legend to replace those surrendered;  provided that (i)
the  applicable  Registration  Statement  shall  then be  effective  and (ii) if
reasonably requested by the transfer agent the Investor confirms to the transfer
agent that the Investor has transferred the Registrable  Securities  pursuant to
such  Registration  Statement  and has  complied  with the  prospectus  delivery
requirement; or

         (b) At any  time  upon  any  surrender  of  one  or  more  certificates
evidencing   Registrable   Securities  that  bear  the  Legend,  to  the  extent
accompanied by a notice  requesting the issuance of new certificates free of the
Legend to replace those  surrendered  and  containing  representations  that the
Investor  is  permitted  to  dispose  of  such  Registrable  Securities  without
limitation  as to amount or manner of sale  pursuant  to Rule  144(k)  under the
Securities Act.
<PAGE>

Section 8.2. No Other  Legend or Stock  Transfer  Restrictions.  No legend other
than the one  specified  in Section 8.1 has been or shall be placed on the share
certificates  representing  the Registrable  Securities and the Preferred Stock,
and no  instructions  or "stop  transfer  orders,"  so called,  "stock  transfer
restrictions,"  or  other  restrictions  have  been or  shall  be  given  to the
Company's  transfer agent with respect thereto other than as expressly set forth
in this Article VIII.

Section 8.3. Investor's Compliance. Nothing in this Article VIII shall affect in
any way the  Investor's  obligations  to comply with all  applicable  securities
laws.


                                   ARTICLE IX

                          INDEMNIFICATION; ARBITRATION


Section 9.1. Indemnification.

         (a) The Company agrees to indemnify and hold harmless the Investor, its
partners,  Affiliates,  officers,  directors,  employees,  and  duly  authorized
agents,  and each Person or entity, if any, who controls the Investor within the
meaning of Section 15 of the  Securities  Act or Section 20 of the Exchange Act,
together  with its  controlling  persons from and against any Damages,  joint or
several, and any action in respect thereof to which the Investor,  its partners,
Affiliates,  officers, directors, employees, and duly authorized agents, and any
such controlling  person becomes subject to,  resulting from,  arising out of or
relating to any  misrepresentation,  breach of warranty or  nonfulfillment of or
failure to perform any covenant or agreement on the part of Company contained in
this  Agreement,  as such  Damages  are  incurred,  unless such  Damages  result
primarily from the Investor's  gross  negligence,  recklessness  or bad faith in
performing its obligations  under this Agreement;  provided,  however,  that the
maximum  aggregate  liability  of the  Company  shall be  limited  to the amount
actually invested by the Investor under this Agreement,  and provided,  further,
that in no event  shall  this  provision  be  deemed  to  limit  any  rights  to
indemnification arising under the Registration Rights Agreement.

         The Investor  agrees to indemnify  and hold  harmless the Company,  its
Affiliates,  officers, directors, employees, and duly authorized agents from and
against  any  Damages,  joint or several,  and any action in respect  thereof to
which the Company,  its Affiliates,  officers,  directors,  employees,  and duly
authorized agents, and any such controlling person becomes subject to, resulting
from, arising out of or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
the Investor contained in this Agreement,  as such Damages are incurred,  unless
such Damages result primarily from the Company's gross negligence,  recklessness
or bad faith in  performing  its  obligations  under this  Agreement;  provided,
however,  that the maximum aggregate  liability of the Investor shall be limited
to the amount by which the total price at which the Registrable  Securities held
by the Investor were sold to the public exceeds the amount  actually paid by the
Investor  under  this  Agreement  for such  Registrable  Securities  sold to the
public, and provided,  further,  that in no event shall this provision be deemed
to limit any rights to  indemnification  arising under the  Registration  Rights
Agreement.

Section  9.2.  Method  of  Asserting  Indemnification  Claims.  All  claims  for
indemnification  by any  Indemnified  Party (as defined below) under Section 9.1
shall be asserted and resolved as follows:

         (a) In the event any claim or  demand in  respect  of which any  person
claiming  indemnification  under any  provision of Section 9.1 (an  "Indemnified
Party") might seek indemnity under Section 9.1 is asserted  against or sought to
be collected from such Indemnified Party by a person other than the Company, the
Investor  or  any  Affiliate  of  the  Company  (a  "Third  Party  Claim"),  the
Indemnified Party shall deliver a written notification,  enclosing a copy of all
papers  served,  if any, and  specifying  the nature of and basis for such Third
Party Claim and for the Indemnified  Party's claim for  indemnification  that is
being  asserted  under any  provision  of Section  9.1  against  any person (the
"Indemnifying  Party"),  together  with the  amount  or, if not then  reasonably
ascertainable,  the estimated  amount,  determined in good faith,  of such Third
Party Claim (a "Claim  Notice") with reasonable  promptness to the  Indemnifying
Party.

<PAGE>

If the  Indemnified  Party  fails to provide the Claim  Notice  with  reasonable
promptness  after the  Indemnified  Party  receives  notice of such Third  Party
Claim,  the  Indemnifying   Party  shall  not  be  obligated  to  indemnify  the
Indemnified  Party with respect to such Third Party Claim to the extent that the
Indemnifying  Party's ability to defend has been irreparably  prejudiced by such
failure of the  Indemnified  Party.  The  Indemnifying  Party  shall  notify the
Indemnified  Party as soon as  practicable  within the period ending 30 calendar
days following receipt by the Indemnifying  Party of either a Claim Notice or an
Indemnity  Notice  (as  defined  below)  (the  "Dispute   Period")  whether  the
Indemnifying  Party disputes its liability or the amount of its liability to the
Indemnified Party under Section 9.1 and whether the Indemnifying  Party desires,
at its sole cost and expense, to defend the Indemnified Party against such Third
Party Claim.

         (i)      If the  Indemnifying  Party  notifies  the  Indemnified  Party
                  within the Dispute Period that the Indemnifying  Party desires
                  to defend  the  Indemnified  Party  with  respect to the Third
                  Party  Claim  pursuant  to  this  Section  9.2(a),   then  the
                  Indemnifying  Party  shall  have  the  right to  defend,  with
                  counsel  reasonably  satisfactory to the Indemnified Party, at
                  the sole cost and  expense  of the  Indemnifying  Party,  such
                  Third  Party  Claim  by  all  appropriate  proceedings,  which
                  proceedings  shall be vigorously and diligently  prosecuted by
                  the  Indemnifying  Party  to a  final  conclusion  or  will be
                  settled at the discretion of the Indemnifying  Party (but only
                  with the consent of the  Indemnified  Party in the case of any
                  settlement that provides for any relief other than the payment
                  of  monetary  damages  or that  provides  for the  payment  of
                  monetary  damages as to which the Indemnified  Party shall not
                  be   indemnified   in  full  pursuant  to  Section  9.1).  The
                  Indemnifying Party shall have full control of such defense and
                  proceedings,  including any compromise or settlement  thereof;
                  provided, however, that the Indemnified Party may, at the sole
                  cost and expense of the  Indemnified  Party, at any time prior
                  to the Indemnifying Party's delivery of the notice referred to
                  in the first  sentence of this  clause  (i),  file any motion,
                  answer or other  pleadings  or take any other  action that the
                  Indemnified  Party  reasonably  believes  to be  necessary  or
                  appropriate  to protect its interests;  and provided  further,
                  that if requested by the  Indemnifying  Party, the Indemnified
                  Party will,  at the sole cost and expense of the  Indemnifying
                  Party,  provide  reasonable  cooperation  to the  Indemnifying
                  Party  in   contesting   any  Third   Party   Claim  that  the
                  Indemnifying  Party elects to contest.  The Indemnified  Party
                  may participate in, but not control, any defense or settlement
                  of any Third Party Claim controlled by the Indemnifying  Party
                  pursuant  to this  clause  (i),  and except as provided in the
                  preceding  sentence,  the Indemnified Party shall bear its own
                  costs  and  expenses  with  respect  to  such   participation.
                  Notwithstanding the foregoing,  the Indemnified Party may take
                  over the control of the defense or settlement of a Third Party
                  Claim  at any  time if it  irrevocably  waives  its  right  to
                  indemnity  under  Section 9.1 with respect to such Third Party
                  Claim.

         (ii)     If the  Indemnifying  Party  fails to notify  the  Indemnified
                  Party within the Dispute  Period that the  Indemnifying  Party
                  desires to defend the Third  Party  Claim  pursuant to Section
                  9.2(a),  or if the  Indemnifying  Party  gives such notice but
                  fails to prosecute  vigorously  and  diligently  or settle the
                  Third Party Claim, or if the Indemnifying  Party fails to give
                  any notice  whatsoever  within the  Dispute  Period,  then the
                  Indemnified  Party shall have the right to defend, at the sole
                  cost and expense of the  Indemnifying  Party,  the Third Party
                  Claim by all appropriate proceedings,  which proceedings shall
                  be prosecuted by the Indemnified  Party in a reasonable manner
                  and in good faith or will be settled at the  discretion of the
                  Indemnified Party (with the consent of the Indemnifying Party,
                  which  consent  will  not  be  unreasonably   withheld).
<PAGE>

                  The  Indemnified  Party will have full control of such defense
                  and  proceedings,   including  any  compromise  or  settlement
                  thereof;   provided,   however,   that  if  requested  by  the
                  Indemnified  Party, the  Indemnifying  Party will, at the sole
                  cost and expense of the Indemnifying Party, provide reasonable
                  cooperation  to the  Indemnified  Party  and  its  counsel  in
                  contesting any Third Party Claim which the  Indemnified  Party
                  is  contesting.  Notwithstanding  the foregoing  provisions of
                  this clause (ii), if the  Indemnifying  Party has notified the
                  Indemnified   Party   within  the  Dispute   Period  that  the
                  Indemnifying Party disputes its liability or the amount of its
                  liability  hereunder to the Indemnified  Party with respect to
                  such Third  Party  Claim,  and if such  dispute is resolved in
                  favor of the  Indemnifying  Party in the  manner  provided  in
                  clause  (iii)  below,  the  Indemnifying  Party  will  not  be
                  required  to bear the costs and  expenses  of the  Indemnified
                  Party's  defense  pursuant  to  this  clause  (ii)  or of  the
                  Indemnifying Party's  participation therein at the Indemnified
                  Party's request, and the Indemnified Party shall reimburse the
                  Indemnifying  Party  in full  for  all  reasonable  costs  and
                  expenses incurred by the Indemnifying Party in connection with
                  such litigation.  The  Indemnifying  Party may participate in,
                  but not control,  any defense or settlement  controlled by the
                  Indemnified  Party  pursuant  to  this  clause  (ii),  and the
                  Indemnifying  Party shall bear its own costs and expenses with
                  respect to such participation.

         (iii)    If the Indemnifying  Party notifies the Indemnified Party that
                  it  does  not  dispute  its  liability  or the  amount  of its
                  liability to the  Indemnified  Party with respect to the Third
                  Party  Claim  under   Section  9.1  or  fails  to  notify  the
                  Indemnified  Party  within  the  Dispute  Period  whether  the
                  Indemnifying Party disputes its liability or the amount of its
                  liability to the Indemnified  Party with respect to such Third
                  Party Claim,  the Damages in the amount specified in the Claim
                  Notice  shall  be  conclusively  deemed  a  liability  of  the
                  Indemnifying  Party  under  Section  9.1 and the  Indemnifying
                  Party shall pay the amount of such Damages to the  Indemnified
                  Party on demand. If the Indemnifying Party has timely disputed
                  its liability or the amount of its  liability  with respect to
                  such claim, the Indemnifying  Party and the Indemnified  Party
                  shall  proceed in good faith to negotiate a resolution of such
                  dispute,  and if not resolved through  negotiations within the
                  period of 30 calendar days  immediately  following the Dispute
                  Period,  such  dispute  shall be  resolved by  arbitration  in
                  accordance with Section 9.3.

         (b) In the  event  any  Indemnified  Party  should  have a claim  under
Section 9.1 against the  Indemnifying  Party that does not involve a Third Party
Claim, the Indemnified Party shall deliver a written notification of a claim for
indemnity  under Section 9.1  specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably ascertainable, the estimated
amount,  determined in good faith,  of such claim (an  "Indemnity  Notice") with
reasonable  promptness to the Indemnifying Party. The failure by any Indemnified
Party  to give the  Indemnity  Notice  shall  not  impair  such  party's  rights
hereunder except to the extent that the Indemnifying  Party demonstrates that it
has been irreparably  prejudiced thereby. If the Indemnifying Party notifies the
Indemnified  Party that it does not dispute the claim or the amount of the claim
described  in such  Indemnity  Notice or fails to notify the  Indemnified  Party
within the Dispute Period whether the  Indemnifying  Party disputes the claim or
the amount of the claim described in such Indemnity  Notice,  the Damages in the
amount specified in the Indemnity Notice will be conclusively deemed a liability
of the Indemnifying Party under Section 9.1 and the Indemnifying Party shall pay
the  amount  of  such  Damages  to  the  Indemnified  Party  on  demand.  If the
Indemnifying  Party has  timely  disputed  its  liability  or the  amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute, and
if not  resolved  through  negotiations  within the period of 30  calendar  days
immediately  following  the Dispute  Period,  such dispute  shall be resolved by
arbitration in accordance with Section 9.3.

Section 9.3. Arbitration. Any controversy, claim or dispute arising out of or in
connection  with  this  Agreement,  the  Registration  Rights  Agreement  or the
Warrants,   including   any  question   regarding   its   existence,   validity,
interpretation,  breach,  or  termination,  shall  be  referred  to and  finally
resolved in accordance with the International  Arbitration Rules of the American
Arbitration  Association,  and judgment upon the award  rendered by the arbitral
tribunal  may be  entered  by any court  having  jurisdiction  thereof or having
jurisdiction over any party or any party's assets.
<PAGE>

         (a) The tribunal shall consist of three arbitrators,  two of whom shall
be  appointed  by the  respective  parties  and  the  third,  who  shall  be the
chairperson of the tribunal,  by the two  party-appointed  arbitrators within 30
days of the last of their  appointments.  Save that, if either party should fail
to appoint  an  arbitrator  within 30 days of  receiving  written  notice of the
appointment of an arbitrator by the other party, the second arbitrator shall, at
the  written  request of the party  which has already  made an  appointment,  be
appointed forthwith by the American Arbitration  Association.  Likewise,  if the
party-appointed   arbitrators  fail  to  make  an  agreed  appointment  for  the
chairperson  within 30 days of the last of their  appointments,  the chairperson
shall,  at the written  request of either party,  be appointed  forthwith by the
American Arbitration Association.

         The place of arbitration shall be New York, New York.

         This  arbitration  clause and the conduct of the  arbitral  proceedings
shall be governed by the Federal Arbitration Act, 9 U.S.C.A. sec. 1 et seq.

         The language of the arbitration shall be English.

         Nothing in these dispute  resolution  provisions  shall be construed as
preventing  either party from seeking  conservatory or similar interim relief in
any court of competent jurisdiction.

         To the extent practicable, the arbitral tribunal shall render its award
no more than 60 calendar  days from the date that the three  member  tribunal is
constituted.  The arbitral  tribunal shall not lose jurisdiction over the matter
based on a failure to render an award within this time period.

                                   ARTICLE X

                                  MISCELLANEOUS


Section 10.1.  Fees and  Transaction  Costs. In connection with the execution of
this  agreement the following  Sale Fees,  Investor Legal Fees and Due Diligence
Costs (as defined below and in Schedule  10.1) are payable by the Company to the
payee  entities  listed in Schedule  10.1.  The  Investor is  authorized  by the
Company  to  deduct  such  amounts  from  any  sums  due to the  Company  on the
applicable Closing Date.

         (a) Sale Fees.  On each  Closing  Date,  the  Company  shall pay to the
Investor an amount calculated in accordance with Schedule 10.1 (the "Sale Fee").

         (b) Transaction  Costs.  The fees,  expenses and  disbursements  of the
Investor's counsel (the "Investor Legal Fees") shall be paid as follows: (i) the
Investor  shall pay the  initial  $10,000  of  Investor  Legal Fees and (ii) the
Company  shall pay all  Investor  Legal Fees in excess of  $10,000.  The Company
shall pay the Investor due diligence costs in connection  with the  consummation
of this Agreement and the transactions  contemplated  hereby (the "Due Diligence
Costs") up to a maximum amount of $10,000. The Company shall pay to the Investor
the Company's  share of the Investor  Legal Fees and Due Diligence  Costs on the
Subscription  Date, to the extent such share of the Investor  Legal Fees and Due
Diligence  Costs can be determined on the  Subscription  Date. The Company shall
pay its share of the remaining  Investor  Legal Fees and Due Diligence  Costs to
the  Investor  not later than 10 days after  receipt of notice from the Investor
that such amount is due. The Company agrees to pay its own expenses  incident to
the performance of its obligations hereunder.

Section 10.2. Reporting Entity for the Common Stock. The reporting entity relied
upon for the  determination  of the Bid Price or  trading  volume of the  Common
Stock on the Principal  Market on any given Trading Day for the purposes of this
Agreement shall be the Bloomberg L.P. The written mutual consent of the Investor
and the Company shall be required to employ any other reporting entity.
<PAGE>

Section  10.3.  Brokerage.  Except as  disclosed  in Section  10.1,  each of the
parties hereto  represents  that it has had no dealings in connection  with this
transaction  with any finder or broker which would impose a legal  obligation to
pay any fee or commission. The Company on the one hand, and the Investor, on the
other hand,  agree to indemnify  the other  against and hold the other  harmless
from any and all liabilities to any persons  claiming  brokerage  commissions or
finder's  fees on account of services  purported to have been rendered on behalf
of the indemnifying  party in connection with this Agreement or the transactions
contemplated hereby.

Section 10.4. Conversion Notices. Any conversion of the Preferred Stock shall be
effected in accordance with the  Certificate of Designation,  (i) any conversion
notice delivered  thereunder by the Investor to the Company shall be in the form
of Exhibit I hereto, and (ii) any conversion notice delivered  thereunder by the
Company to the Investor shall be in the form of Exhibit J hereto.

Section 10.5. Notices. All notices, demands, requests, consents,  approvals, and
other  communications  required or permitted  hereunder shall be in writing and,
unless  otherwise  specified  herein,  shall  be  (i)  personally  served,  (ii)
deposited  in the mail,  registered  or  certified,  return  receipt  requested,
postage  prepaid,  (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other  address as such party shall have  specified
most  recently by written  notice given in  accordance  herewith.  Any notice or
other communication  required or permitted to be given hereunder shall be deemed
effective  (a) upon hand  delivery or delivery  by  facsimile  at the address or
number  designated  below (if delivered on a Trading Day during normal  business
hours where such notice is to be  received),  or the first Trading Day following
such delivery (if delivered  other than on a Trading Day during normal  business
hours  where such  notice is to be  received)  or (b) on the third  Trading  Day
following  the date of  mailing  by  express  courier  service,  fully  prepaid,
addressed to such address,  or upon actual  receipt of such  mailing,  whichever
shall first occur. The addresses for such communications shall be:

         If to the Company:

                           WaveRider Communications Inc.
                           255 Consumers Road, Suite 500
                           Toronto, Ontario
                           Canada M2J 1R4
                           Attention:       T. Scott Worthington
                           Telephone:       (416) 502-3200
                           Facsimile:       (416) 502-2968

         with a copy (which shall not constitute notice) to:

                           Foley, Hoag & Eliot LLP
                           One Post Office Square
                           Boston, MA 02109
                           Attention:       David A. Broadwin, Esq.
                           Telephone:       (617) 832-1259
                           Facsimile:       (617) 832-7000


         if to the Investor:

                           Crescent International Ltd.
                           c/o GreenLight (Switzerland) SA
                           84, av Louis-Casai
                           1216 Geneva, Cointrin
                           Switzerland
                           Attention:       Mel Craw/Maxi Brezzi
                           Telephone:       +41 22 791 71 69
                           Facsimile:       +41 22 929 53 94
<PAGE>

         with a copy (which shall not constitute notice) to:

                           Clifford Chance Rogers & Wells LLP
                           200 Park Avenue
                           New York, NY  10166
                           Attention:       Earl S. Zimmerman, Esq.
                           Telephone:       (212) 878-8000
                           Facsimile:       (212) 878-8375

Either party hereto from time to time may change its address or facsimile number
for notices under this Section by giving at least ten (10) calendar  days' prior
written  notice of such changed  address or facsimile  number to the other party
hereto.

Section 10.6. Assignment.  Neither this Agreement nor any rights of the Investor
or the Company  hereunder  may be assigned by either party to any other  Person.
Notwithstanding the foregoing,  the Investor's interest in this Agreement may be
assigned at any time, in whole or in part, to any Affiliate of the Investor upon
the  prior  written  consent  of the  Company,  which  consent  shall  not to be
unreasonably  withheld provided,  however,  that any such assignment or transfer
shall  relieve  the  Investor  of its  duties  under  this  Agreement  only upon
performance thereof by any such assignee or transferee.

Section  10.7.  Amendment;  No Waiver.  No party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as  specifically  set forth in this Agreement.  Except as expressly  provided in
this  Agreement,  neither  this  Agreement  nor any term  hereof may be amended,
waived,  discharged or terminated other than by a written  instrument  signed by
both  parties  hereto.  The  failure  of the  either  party to  insist on strict
compliance  with this  Agreement,  or to exercise any right or remedy under this
Agreement,  shall not  constitute  a waiver of any  rights  provided  under this
Agreement,  nor estop the parties from  thereafter  demanding  full and complete
compliance nor prevent the parties from exercising such a right or remedy in the
future.

Section 10.8. Annexes and Exhibits;  Entire Agreement.  All annexes and exhibits
to this Agreement are incorporated herein by reference and shall constitute part
of this Agreement.  This  Agreement,  the Warrants and the  Registration  Rights
Agreement  set forth the  entire  agreement  and  understanding  of the  parties
relating to the subject  matter  hereof and thereof and  supersede all prior and
contemporaneous agreements, negotiations and understandings between the parties,
both oral and written, relating to the subject matter hereof.

Section 10.9.  Survival.  The  provisions of Articles VI, VIII, IX and X, and of
Section 7.3, shall survive the termination of this Agreement.

Section 10.10.  Severability.  In the event that any provision of this Agreement
becomes or is  declared  by a court of  competent  jurisdiction  to be  illegal,
unenforceable  or void,  this Agreement  shall continue in full force and effect
without said provision;  provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party.

Section  10.11.  Title and  Subtitles.  The  titles and  subtitles  used in this
Agreement are used for the convenience of reference and are not to be considered
in construing or interpreting this Agreement.

Section 10.12. Counterparts. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument.

Section 10.13.  Choice of Law. This Agreement  shall be construed under the laws
of the State of New York.
<PAGE>

Section 10.14.  Other Expenses.  In the event that a dispute between the parties
is not determined by a Board of  Arbitration,  the  non-prevailing  party in any
action,  suit or  proceeding  shall  bear all  investigative,  legal  and  other
expenses reasonably incurred in connection with, and any and all amounts paid in
defense or settlement of such action, suit or proceeding.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by the undersigned, thereunto duly authorized, as of the date first set forth
above.



                                        CRESCENT INTERNATIONAL LTD.


                                        By: /s/ Mel Craw & Maxi Brezzi
                                           -------------------------------------
                                             Name: Mel Craw & Maxi Breezi
                                             Title:


                                        WAVERIDER COMMUNICATIONS INC.


                                        By:          /s/ D.B. Sinclair
                                           -------------------------------------
                                             Name: D.B. Sinclair
                                             Title: President & CEO


<PAGE>



                                  SCHEDULE 10.1

                           FEES AND TRANSACTION COSTS

The Company shall pay to the Investor the following fees and costs, which the
Investor shall pay on behalf of the Company to the following payee entities:
<TABLE>
<CAPTION>

   Events Triggering the      Fees / Transaction            Calculation                     Payee Entity                 Amount
          payment                    Costs
----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------

<S>                           <C>                  <C>                            <C>                                <C>
Closing Date for the First    Legal Fees           Investor Legal Fees less       Crescent International Ltd.        $43,139
Sale                                               $10,000
----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Closing Date for the First    Due Diligence Costs  Due Diligence Costs with a     GreenLight (Switzerland) S.A.      $5,146
Sale                                               maximum amount of $ 10,000
----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Closing Date for the First    Sale Fee             2% of the applicable           GreenLight (Switzerland) S.A.      $60,000
Sale                                               Investment Amount
----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Closing Date for a            Sale Fee             2% of the applicable           GreenLight (Switzerland) S.A.      To be
Subsequent Sale                                    Investment Amount                                                 determined at
                                                                                                                  Closing.
----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
</TABLE>




<PAGE>





                                    EXHIBIT A
                            FORM OF CLOSING STATEMENT


                                CLOSING STATEMENT


<TABLE>
<CAPTION>


======================================================== ===========================================================
<S>                                                             <C>
Closing Date........................................     [Date] ("Closing Date")
-------------------------------------------------------- -----------------------------------------------------------
Investor............................................     Crescent International Ltd. ("Investor")
-------------------------------------------------------- -----------------------------------------------------------
Company.............................................     WaveRider Communications Inc. ("Company")
-------------------------------------------------------- -----------------------------------------------------------
Transaction.........................................     This closing represents the closing of the sale by the
                                                         Company to Investor of shares of the Company's [Common
                                                         Stock], [Preferred Stock] pursuant to the Stock Purchase
                                                         Agreement dated [Date] (the "Stock Purchase Agreement").
                                                         Capitalized terms not otherwise defined herein shall have
                                                         the meaning assigned by the Stock Purchase Agreement.
-------------------------------------------------------- -----------------------------------------------------------
Maximum Commitment Amount...........................     $10,000,000
-------------------------------------------------------- -----------------------------------------------------------
Purchase Price for Common Stock.....................     $[determined at applicable Closing of a Subsequent Sale]
-------------------------------------------------------- -----------------------------------------------------------
Shares of Common Stock Sold.........................      [Subsequent Sale Only]
-------------------------------------------------------- -----------------------------------------------------------
Purchase Price for Preferred Stock..................     $100.00 [First Closing Only]
-------------------------------------------------------- -----------------------------------------------------------
Shares of Preferred Stock Sold......................     30,000 [First Closing Only]
-------------------------------------------------------- -----------------------------------------------------------
Closing Disbursements:
-------------------------------------------------------- -----------------------------------------------------------
1.  Investment Amount...............................     $
2.  Less: Sale Fee (2.0%) (Schedule 10.1)...........     $
3.  Less:  Legal Fees...............................     $
4.  Less:  Due Diligence Costs......................     $
5.  Net Amount......................................     $
                                                          ==========
-------------------------------------------------------- -----------------------------------------------------------
Actions on Subscription Date:
-------------------------------------------------------- -----------------------------------------------------------
1.  Stock Purchase Agreement........................     The Investor and the Company executed the Stock Purchase
                                                         Agreement.
-------------------------------------------------------- -----------------------------------------------------------
2.  Registration Rights Agreement...................     The Investor and the Company executed the Registration
                                                         Rights Agreement.
-------------------------------------------------------- -----------------------------------------------------------
3.  Instructions to Transfer Agent..................     The Company executed and delivered irrevocable
                                                         Instructions to the
                                                         Transfer Agent and the
                                                         Transfer Agent
                                                         confirmed and accepted
                                                         such instructions. A
                                                         copy of such
                                                         instructions and
                                                         acceptance was received
                                                         by the Investor's legal
                                                         counsel.
<PAGE>

-------------------------------------------------------- -----------------------------------------------------------
Actions at Closing:
--------------------------------------------------------------------------------------------------------------------
1.  Incentive Warrant...............................     The Company executed and delivered the Incentive Warrant
                                                         to the Investor.
-------------------------------------------------------- -----------------------------------------------------------
2.  Protective Warrant..............................     [The Company executed and delivered a Protective Warrant
                                                         to the Investor].
-------------------------------------------------------- -----------------------------------------------------------
3. Legal Opinion....................................     Foley Hoag & Eliot LLP delivered its legal opinion.
-------------------------------------------------------- -----------------------------------------------------------
4. Wire Transfer....................................     Upon confirmation of above actions by Investor's legal
                                                         counsel, Investor will wire to the Company the Net Amount
                                                         indicated on the front page hereof, and thereafter
                                                         deliver to the Transfer Agent a Wire Transfer Notice
                                                         indicating completion of delivery by wire transfer to the
                                                         Company the Net Amount.
-------------------------------------------------------- -----------------------------------------------------------
Acknowledged and Agreed:
Crescent International Ltd.                              WaveRider Communications Inc.

By:                                                      By:
      ----------------------------------------------
======================================================== ===========================================================




================================================================ ===================================================
Total Pursuant to the Stock Purchase Agreement                                                          $10,000,000
---------------------------------------------------------------- ---------------------------------------------------
Sale of Preferred Stock                                                                                <$3,000,000>
---------------------------------------------------------------- ---------------------------------------------------
Sale of Common Stock                                                                                       [<$.00>]
---------------------------------------------------------------- ---------------------------------------------------
Remaining Balance                                                                                      [$7,000,000]
================================================================ ===================================================

</TABLE>



<PAGE>



                                    EXHIBIT B
                            FORM OF INCENTIVE WARRANT

                         (SEE EXHIBIT 10.2 TO FORM 8-K)







                                    EXHIBIT C
                           FORM OF PROTECTIVE WARRANT

                         (SEE EXHIBIT 10.3 TO FORM 8-K)





                                    EXHIBIT D
                      FORM OF REGISTRATION RIGHTS AGREEMENT

                         (SEE EXHIBIT 10.4 TO FORM 8-K)

<PAGE>



                                    EXHIBIT E
                               FORM OF SALE NOTICE

Company                                            WaveRider Communications Inc.
Sale Notice Date
Proposed Closing Date
Investment Amount                                              $
Purchase Price per Share                                       $
Number of Shares to be Issued on Closing Date

The following information as of the Sale Notice Date is provided in accordance
with Section 7.2(k) of the Stock Purchase Agreement, dated June 4, 2001 between
WaveRider Communications Inc. and Crescent International Ltd. (the "Agreement")
(Capitalized terms used shall have the respective meanings ascribed to such
terms in the Agreement):

1.   Shares of Outstanding Common Stock
2.   Shares to be issued on proposed Closing Date
3.   Protective Warrant Shares to be registered with respect
     to the proposed Closing
4.   Shares issued pursuant to previous Sales
5.   Incentive Warrant Shares issued
6.   Protective Warrant Shares issued pursuant to previous
     Sales
7.   Conversion Shares issued pursuant to the conversion of
     Preferred Stock
8.   Conversion Shares issuable upon future conversions
9.   Total (2) through (8) above
                                                                ==============
10.  Total as a percentage of Outstanding Common Stock (1)      %



                  WAVERIDER COMMUNICATIONS INC.

                  By:
                        Name:
                        Title:



<PAGE>



                                    EXHIBIT F
                           TRANSFER AGENT INSTRUCTIONS

                  [Letterhead of WaveRider Communications Inc.]

                                                          [DATE]

[TRANSFER AGENT][ADDRESS]
Attention:

Dear :

Reference is made to the Stock Purchase Agreement (the "Agreement"), dated as of
[DATE] between Crescent International Limited (the "Investor") and WaveRider
Communications Inc. (the "Company"). Pursuant to the Agreement, the Investor has
agreed to purchase from the Company and the Company has agreed to sell to the
Investor (i) shares of Preferred Stock of the Company which are convertible into
shares of Common Stock of the Company and (ii) shares of Common Stock of the
Company, from time to time. As a condition to the effectiveness of the
Agreement, the Company has agreed to issue to you, as the transfer agent for the
Common Stock (the "Transfer Agent"), these instructions (the "Irrevocable
Instructions") relating to the Common Stock to be issued to the Investor (or a
permitted assignee) pursuant to the Agreement and upon conversion of the
Preferred Stock. Any term used herein and not otherwise defined shall have the
meaning set forth in the Agreement, if defined therein, or in the Certificate of
Designation, if defined therein.

1. MECHANICS OF DELIVERY OF CERTIFICATES REPRESENTING COMMON STOCK

a. Conversion. Upon confirmation by the Company of the conversion of shares of
Preferred Stock, the Transfer Agent shall deliver to the Investor by overnight
courier certificates representing Common Stock as promptly as practicable, but
in no event later than three Trading Days after the applicable Conversion Date.

b. Subsequent Sales. Upon receipt of the Closing Statement duly signed by both
the Company and the Investor agreeing to the transfer of the funds due to the
Company pursuant to a Subsequent Sale and specifying the number of shares of
Common Stock to be issued to the Investor in respect of such funds, the Transfer
Agent shall deliver to the Investor by overnight courier certificates
representing Common Stock as promptly as practicable, but in no event later than
three Trading Days after the Closing Date relating to such Subsequent Sale.

c.  Address.   Unless  otherwise  notified  in  writing  by  the  Investor,  the
certificates delivered to the Investor pursuant to the Agreement
and the preceding two paragraphs shall be delivered at the following address:

[ADDRESS]

With notice to:

[ADDRESS]


2. ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND

a. Pursuant to the  Agreement,  the Company is required to prepare and file with
the Commission,  and maintain the effectiveness of, a registration  statement or
registration  statements  registering the resale of the Common Stock acquired or
to be acquired by the  Investor.  The Company will advise the Transfer  Agent in
writing of the  effectiveness of any such  registration  statement and provide a
copy of the  effective  registration  statement  and the legal  opinion filed as
Exhibit 5 thereto,  promptly  upon its being  declared  effective.
<PAGE>

The  Transfer  Agent shall be  entitled to rely on such advice and shall  assume
that such registration  statement remains effective unless the Transfer Agent is
otherwise  advised  in  writing  by the  Company  and shall not be  required  to
independently   confirm  the  continued   effectiveness  of  such   registration
statement.  In the  circumstances set forth in paragraph (b) below, the Transfer
Agent shall deliver to the Investor  certificates  representing Common Stock not
bearing the Legend without requiring further advice or instruction or additional
documentation  from the Company or its counsel or the Investor or its counsel or
any other party (other than as described in such paragraphs).

b. At any time after the effective date of the applicable registration statement
(provided  that the Company has not informed the Transfer  Agent in writing that
such registration  statement is not effective) upon any surrender of one or more
certificates  evidencing  Common Stock which bear the Legend,  accompanied  by a
notice from the Investor, its broker, custodian or permitted assignee requesting
the issuance of new certificates free of the Legend to replace those surrendered
and setting  forth whether a transfer is pursuant to a  registration  statement,
Rule 144 or Rule  144(k),  the  Transfer  Agent  shall  promptly  deliver to the
Investor  certificates  representing the Common Stock not bearing the Legend, in
such names and denominations as requested, provided that:

         i.       if pursuant to a registration statement,  the Investor (or its
                  broker,  custodian or  permitted  assignee)  shall  confirm in
                  writing to the  Transfer  Agent that the Investor has complied
                  with the prospectus delivery requirements under the Securities
                  Act;

         ii.      if  pursuant  to Rule  144(k)  the  Investor  (or its  broker,
                  custodian or permitted assignee) shall deliver to the Transfer
                  Agent an opinion of counsel  satisfactory  to the Company,  to
                  the effect that the  Investor is  permitted to dispose of such
                  Common Stock without limitation as to amount or manner of sale
                  pursuant to Rule 144(k) under the  Securities  Act as amended,
                  and the Company shall provide the Transfer  Agent with written
                  confirmation that such opinion is satisfactory; or

         iii.     if  pursuant  to  Rule  144,  the  Investor  (or  its  broker,
                  custodian or permitted assignee) shall deliver to the Transfer
                  Agent an opinion of counsel  satisfactory  to the Company,  to
                  the effect that the Investor  has complied  with the manner of
                  sale and notice  requirements of Rule 144 under the Securities
                  Act, as amended,  and the Company  shall  provide the Transfer
                  Agent  with   written   confirmation   that  such  opinion  is
                  satisfactory.

Any advice,  notice or  instructions to the Transfer Agent required or permitted
to be given hereunder may be transmitted  via facsimile to the Transfer  Agent's
facsimile number of () -.


The certificates bearing the Legend shall be surrendered and delivered to the
Transfer Agent at the following address:

[TRANSFER AGENT]
[ADDRESS]
Attention:
Tel: ()  -

3. FEES OF TRANSFER AGENT; INDEMNIFICATION

The Company agrees to pay the Transfer Agent for all fees and expenses incurred
in connection with these Irrevocable Instructions. The Company agrees to
indemnify the Transfer Agent and its officers, employees and agents, against any
losses, claims, damages or liabilities, joint or several, to which it or they
become subject based upon the performance by the Transfer Agent of its duties in
accordance with the Irrevocable Instructions.
<PAGE>

4. THIRD PARTY BENEFICIARY

The Company and the Transfer Agent acknowledge and agree that the Investor is an
express third party beneficiary of these Irrevocable Instructions and shall be
entitled to rely upon, and enforce, the provisions hereof.

                                                 WAVERIDER COMMUNICATIONS INC.


                                                 By:
                                                 Name:
                                                 Title:


AGREED:

[TRANSFER AGENT]


By:
         Name:
         Title:

<PAGE>



                                    EXHIBIT G

              FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL

[Date]

Crescent International Ltd.
c/o GreenLight (Switzerland) SA
84, av Louis-Casai, P.O. Box 42
1216 Geneva, Cointrin
Switzerland

Re: Stock Purchase Agreement Between Crescent International Ltd. and [COMPANY]

Ladies and Gentlemen:

This opinion is furnished to you pursuant to Section [6.11] of the Stock
Purchase Agreement by and between Crescent International Ltd., a Bermuda entity
(the "Investor") and WaveRider Communications Inc. (the "Company"), dated [DATE]
(the "Stock Purchase Agreement"), which provides for the issuance and sale by
the Company of up to $10,000,000 worth of securities consisting of (i) shares of
Series D Convertible Preferred Stock of the Company (the "Preferred Stock") and
(ii) Common Stock of the Company (the "Common Stock"), a warrant to purchase up
to  shares of Common Stock of the Company (the "Incentive Warrant") and
warrants to purchase a number of shares to be determined in accordance with the
terms of such warrants (the "Protective Warrants", and together with the
Incentive Warrant, the "Warrants") (the shares of Common Stock issued or
issuable pursuant to exercise of the Warrants are referred to herein as the
"Warrant Shares"). All terms used herein have the meanings defined for them in
the Stock Purchase Agreement unless otherwise defined herein.

We have acted as counsel for the Company in connection with the negotiation of
the Stock Purchase Agreement, the Warrants, and the Registration Rights
Agreement between the Investor and the Company, dated [DATE] (the "Registration
Rights Agreement" and together with the Stock Purchase Agreement, the
"Agreements"). As counsel, we have made such legal and factual examinations and
inquiries as we have deemed advisable or necessary for the purpose of rendering
this opinion. In addition, we have examined, among other things, originals or
copies of such corporate records of the Company, certificates of public
officials and such other documents and questions of law that we consider
necessary or advisable for the purpose of rendering this opinion. In such
examination we have assumed the genuineness of all signatures on original
documents, the authenticity and completeness of all documents submitted to us as
originals, the conformity to original documents of all copies submitted to us as
copies thereof, the legal capacity of natural persons, and the due execution and
delivery of all documents (except as to due execution and delivery by the
Company) where due execution and delivery are a prerequisite to the
effectiveness thereof.
As used in this opinion, the expression "to our knowledge" refers to the current
actual knowledge of the attorneys of this firm who have worked on matters for
the Company solely in connection with the Agreements and the Warrants and the
transactions contemplated thereby.


         For purposes of this opinion, we have assumed that you have all
requisite power and authority, and have taken any and all necessary corporate
action, to execute and deliver the Agreements, and we are assuming that the
representations and warranties made by the Investor in the Agreements and
pursuant thereto are true and correct.

         Based upon and subject to the foregoing, we are of the opinion that:

1.  The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada and has all requisite power
and authority (corporate and other) to carry on its business and to own, lease
and operate its properties and assets as described in the Company's SEC
Documents. To our knowledge, the Company does not own more than fifty percent
(50%) of the outstanding capital stock of or control any other business entity.
The Company is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in the United States of America in which the
Company owns or leases property, other than those in which the failure so to
qualify would not have a Material Adverse Effect.


2.  The Company has the requisite corporate power and authority to enter
into and perform its obligations under the Agreements and the Warrants and to
issue the Commitment Shares, the Preferred Stock, the Warrants and the Warrant
Shares. The execution and delivery of the Agreements, and the execution,
issuance and delivery of the Warrants, by the Company and the consummation by it
of the transactions contemplated thereby have been duly authorized by all
necessary corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required. Each of the
Agreements has been duly executed and delivered, and the Warrants have been, and
upon issuance will be, duly executed, issued and delivered, by the Company and
each of the Agreements and the Warrants constitutes, and upon issuance will
constitute, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws relating
to, or affecting generally the enforcement of, creditors' rights and remedies or
by other equitable principles of general application. Furthermore, we express no
opinion concerning the enforceability of provisions of any agreement purporting
to indemnify any person for violations of applicable securities law.


3.  The execution, delivery and performance of the Agreements and the
Warrants by the Company and the consummation by the Company of the transactions
contemplated thereby, including without limitation the issuance of the
Commitment Shares, the Preferred Stock, the Warrant and the Warrant Shares, do
not and will not (i) result in a violation of the Company's Articles or By-Laws;
(ii) to our knowledge, conflict with, or constitute a material 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, acceleration or
cancellation of, any material agreement, indenture, instrument or any "lock-up"
or similar provision of any underwriting or similar agreement to which the
Company is a party, except for such conflicts, defaults, terminations,
amendments, accelerations and cancellations as would not, individually or in the
aggregate, have a Material Adverse Effect or for which a consent and waiver have
been obtained; or (iii) result in a violation of any federal or state law, rule
or regulation applicable to the Company or by which any property or asset of the
Company is bound or affected, except for such violations as would not,
individually or in the aggregate, have a Material Adverse Effect. To our
knowledge, the Company is not in violation of any terms of its Articles or
Bylaws.


4.  The issuance of the Subsequent Sale Shares, the Preferred Stock and
the Warrants in accordance with the Stock Purchase Agreement, the issuance of
the Conversions Shares upon conversion of the Preferred Stock, and the issuance
of the Warrant Shares in accordance with the Warrants, will be exempt from
registration under the Securities Act of 1933 and will be in compliance with
Nevada state securities laws. When so issued, the Subsequent Sale Shares, the
Preferred Stock, the Conversion Shares and the Warrant Shares will be duly and
validly issued, fully paid and nonassessable, and free of any liens,
encumbrances and preemptive or similar rights contained in the Articles or
Bylaws or, to our knowledge, in any agreement to which the Company is party.


5.  To our knowledge, except as disclosed in the SEC Documents, there are
no claims, actions, suits, proceedings or investigations that are pending
against the Company or its properties, or against any officer or director of the
Company in his or her capacity as such, nor has the Company received any written
threat of any such claims, actions, suits, proceedings, or investigations which
are required to be and have not been disclosed in the SEC Documents.


6.  To our knowledge, there are no outstanding options, warrants, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any right to
subscribe for or acquire any shares of Common Stock or Preferred Stock or
contracts, commitments, understandings, or arrangements by which the Company is
or may become bound to issue additional shares of Common Stock or Preferred
Stock, or securities or rights convertible or exchangeable into shares of Common
Stock or Preferred Stock, except as described in the SEC Documents.
<PAGE>


7.  The statements in (i) the Company's Registration Statement on Form
S-3[/A], filed by the Company with the Commission on  and deemed effective
by the Commission on (the "Registration Statement"), and the Prospectus
included therein, at the time the Registration Statement became effective, under
the headings titled "Risk Factors", "Description of Securities", and "Legal
Matters" [Investor to decide additional sections after review of S-3] (ii) the
Company's Annual Report on Form 10K for the year ended December 31, 2000 under
the captions "Description of Property", "Legal Proceedings", "Risk Factors",
"Executive Compensation", and "Certain Relationships and Related Transactions"
and (iii) in the Company's Quarterly Report on Form 10Q for the period ended
[March 31, 2001] [June 30, 2001] under the captions "Legal Proceedings" and
"Risk Factors", insofar as such statements constitute matters of law, summaries
of legal matters, contracts, the Company's charter or by-law provisions,
documents or legal proceedings, or legal conclusions, have been reviewed by us
and fairly present and summarize, in all material respects, the matters referred
to therein.] [For Opinion pursuant to the second sentence of Section 6.11.]


This opinion is furnished to the Investor solely for its benefit in connection
with the transactions described above and may not be relied upon by any other
person or for any other purpose without our prior written consent.


                                                              Very truly yours,


<PAGE>



                                    EXHIBIT H
                             COMPLIANCE CERTIFICATE



         The undersigned,_______ hereby certifies, with respect to shares
of [Series D Preferred Stock] [Common Stock] of WaveRider Communications Inc.
(the "Company") issuable pursuant to Article II of the Stock Purchase Agreement,
dated [DATE], by and between the Company and Crescent International Ltd. (the
"Agreement"), as follows:

         1. The undersigned is the duly elected [Office] of the Company.

         2. The  representations  and  warranties  of the  Company  set forth in
Article IV of the Agreement are true and correct as though made on and as of the
date hereof.

         3. The  Company  has  performed  all  covenants  and  agreements  to be
performed by the Company on or prior to the Closing Date and has complied in all
material  respects with all obligations and conditions  contained in Article VII
of the Agreement.

The undersigned has executed this Certificate this ____ day of _____, _____


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


<PAGE>


                                    EXHIBIT I
                      [FORM OF INVESTOR CONVERSION NOTICE]

                            CONVERSION NOTICE No.

To: WaveRider Communications Inc.

         The undersigned holder of [TOTAL] shares of Series D Convertible
Preferred Stock, par value $0.01 per share (the "Preferred Stock") of WaveRider
Communications Inc. (the "Company") hereby irrevocably exercises the option to
convert_______ shares of Preferred Stock into common stock, par value $0.001
per share, of the Company (the "Common Stock"), in accordance with the terms of
the Preferred Stock. The applicable conversion price is US$_________ and the
number of shares of Common Stock issuable upon conversion is__________  (the
"Conversion Shares").

         The undersigned directs that:

         (i) the Conversion Shares be issued in the name of Crescent
         International Ltd., and stock certificates representing such Conversion
         Shares be delivered to ________  in accordance with the Transfer
         Agent Instructions, dated _______, 2001, delivered by the Company to
         [NAME/ADDRESS]; and

         (ii) a new  stock  certificate  in the name of  Crescent  International
         Ltd.,  representing  the number of shares of Preferred  Stock,  if any,
         held by the undersigned immediately following the conversion of _______
         shares of Preferred Stock in accordance with this Conversion Notice, be
         delivered to GreenLight (Switzerland) S.A. at _________.

         Shares of Common Stock held (excluding shares issuable upon conversion
         of Preferred Stock or exercise of Warrants) on the date hereof:_____

Dated:

-------------------------
Signature of Registered Holder
Name of Registered Holder


Please confirm acceptance of this Conversion Notice (which confirmation shall
constitute a waiver of the Company's option to refuse a conversion pursuant to
and subject to Section 8(a) of the Certificate of Designation of the Preferred
Stock) by faxing a duly executed copy of this Conversion Notice within 24 hours
of receipt to GreenLight (Switzerland) S.A. at facsimile number +11 41 22 929 53
94.


Acknowledged:    _________________                          Date: ____________
Contact Person:  _________________                          Phone: ___________

                   WaveRider Communications, Inc.


<PAGE>


                                    EXHIBIT J
                       [FORM OF COMPANY CONVERSION NOTICE]

                            CONVERSION NOTICE No.

To: [Registered Holder]


         WaveRider Communications Inc. (the "Company") hereby irrevocably
exercises the option to convert ______shares of Series D Convertible
Preferred Stock, par value $0.01 per share, of the Company (the "Preferred
Stock") into common stock, par value $0.001 per share, of the Company (the
"Common Stock"), in accordance with the terms of the Preferred Stock. The
applicable conversion price is US$ _________and the number of shares of
Common Stock issuable upon conversion is _________  (the "Conversion
Shares").



Dated:

WAVERIDER COMMUNICATIONS INC.

By:
     Name:
     Title:

Please acknowledge receipt by faxing a duly executed copy of this Conversion
Notice within 24 hours of receipt to WaveRider Communications Inc. at facsimile
number ____________ .


The undersigned acknowledges receipt of this Conversion Notice and directs that:

         (i) the Conversion Shares be issued in the name of Crescent
         International Ltd., and stock certificates representing such Conversion
         Shares be delivered to  _________ in accordance with the Transfer
         Agent Instructions, dated ________, 2001, delivered by the Company to
         [NAME/ADDRESS]; and

         (ii) a new  stock  certificate  in the name of  Crescent  International
         Ltd.,  representing  the number of shares of Preferred  Stock,  if any,
         held  by  the  undersigned  immediately  following  the  conversion  of
         ________shares  of Preferred  Stock in accordance  with this Conversion
         Notice, be delivered to GreenLight (Switzerland) S.A. at _______.


Acknowledged:     _____________________                       Date: _______
                  Name of Registered Holder                   Phone:_______




<PAGE>





                            STOCK PURCHASE AGREEMENT

                                 by and between

                           Crescent International Ltd.

                                       and

                          WAVERIDER COMMUNICATIONS INC.

                            dated as of June 4, 2001


                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                              Page

<S>                                                                                                             <C>
ARTICLE I             CERTAIN DEFINITIONS........................................................................2

         Section 1.1.      "Affiliate"...........................................................................2

         Section 1.2.      "Bid Price"...........................................................................2

         Section 1.3.      "Capital Shares"......................................................................2

         Section 1.4.      "Certificate of Designation"..........................................................2

         Section 1.5.      "Closing".............................................................................2

         Section 1.6.      "Closing Date"........................................................................2

         Section 1.7.      "Closing Statement"...................................................................2

         Section 1.8.      "Commitment Period"...................................................................2

         Section 1.9.      "Commitment Shares"...................................................................2

         Section 1.10.     "Common Stock"........................................................................3

         Section 1.11.     "Condition Satisfaction Date".........................................................3

         Section 1.12.     "Conversion Shares"...................................................................3

         Section 1.13.     "Daily Trading Value".................................................................3

         Section 1.14.     "Damages".............................................................................3

         Section 1.15.     "Effective Date"......................................................................3

         Section 1.16.     "Exchange Act"........................................................................3

         Section 1.17.     "First Sale"..........................................................................3

         Section 1.18.     "Incentive Warrant"...................................................................3
<PAGE>

         Section 1.19.     "Incentive Warrant Shares"............................................................3

         Section 1.20.     "Investment Amount"...................................................................3

         Section 1.21.     "Legend"..............................................................................4

         Section 1.22.     "Material Adverse Effect".............................................................4

         Section 1.23.     "Maximum Commitment Amount"...........................................................4

         Section 1.24.     "Maximum Sale Amount".................................................................4

         Section 1.25.     "Minimum Sale Amount".................................................................4

         Section 1.26.     "Minimum Time Interval"...............................................................4

         Section 1.27.     "NASD"................................................................................4

         Section 1.28.     "Outstanding".........................................................................4

         Section 1.29.     "Person"..............................................................................4

         Section 1.30.     "Preferred Stock".....................................................................4

         Section 1.31.     "Principal Market"....................................................................4

         Section 1.32.     "Protective Warrant"..................................................................5

         Section 1.33.     "Protective Warrant Shares"...........................................................5

         Section 1.34.     "Purchase Price"......................................................................5

         Section 1.35.     "Registrable Securities"..............................................................5

         Section 1.36.     "Registration Rights Agreement".......................................................5

         Section 1.37.     "Registration Statement"..............................................................5

         Section 1.38.     "Regulation D"........................................................................5

         Section 1.39.     "Representative"......................................................................5

         Section 1.40.     "Sale"................................................................................5

         Section 1.41.     "Sale Date"...........................................................................6

         Section 1.42.     "Sale Fees"...........................................................................6

         Section 1.43.     "Sale Notice".........................................................................6

         Section 1.44.     "Sale Notice Date"....................................................................6

         Section 1.45.     "Sale Notice Period"..................................................................6

         Section 1.46.     "SEC".................................................................................6

         Section 1.47.     "SEC Documents".......................................................................6

         Section 1.48.     "Section 4(2)"........................................................................6

         Section 1.49.     "Securities Act"......................................................................6

         Section 1.50.     "Short Sale"..........................................................................6

         Section 1.51.     "Subscription Date"...................................................................6

         Section 1.52.     "Subscription Fee"....................................................................6

         Section 1.53.     "Subsequent Sale".....................................................................6
<PAGE>

         Section 1.54.     "Subsequent Sale Shares"..............................................................6

         Section 1.55.     "Subsidiary"..........................................................................7

         Section 1.56.     "Trading Day".........................................................................7

         Section 1.57.     "Transfer Agent Instructions".........................................................7

         Section 1.58.     "Underwriter".........................................................................7

         Section 1.59.     "Warrants"............................................................................7

         Section 1.60.     "Warrant Shares"......................................................................7



ARTICLE II            SALE AND PURCHASE OF COMMON STOCK, WARRANTS
                      AND PREFERRED STOCK TERMINATION OF OBLIGATIONS.............................................7

         Section 2.1.      Sales.................................................................................7

         Section 2.2.      Twenty Percent Limitation.............................................................8

         Section 2.3.      Sale Notice...........................................................................8

         Section 2.4.      Closings..............................................................................8

         Section 2.5.      Termination of Agreement and Investment Obligation....................................9

ARTICLE III           REPRESENTATIONS AND WARRANTIES OF INVESTOR.................................................9

         Section 3.1.      Intent................................................................................9

         Section 3.2.      Sophisticated Investor...............................................................10

         Section 3.3.      Authority............................................................................10

         Section 3.4.      Not an Affiliate.....................................................................10

         Section 3.5.      Organization and Standing............................................................10

         Section 3.6.      Absence of Conflicts.................................................................10

         Section 3.7.      Disclosure; Access to Information....................................................10

         Section 3.8.      Manner of Sale.......................................................................11

         Section 3.9.      Resale Restrictions..................................................................11

ARTICLE IV            REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................11

         Section 4.1.      Organization of the Company..........................................................11

         Section 4.2.      Authority............................................................................11

         Section 4.3.      Corporate Documents..................................................................12

         Section 4.4.      Books and Records....................................................................12

         Section 4.5.      Capitalization.......................................................................12

         Section 4.6.      Registration and Listing of Common Stock.............................................13

         Section 4.7.      Financial Statements.................................................................13

         Section 4.8.      SEC Documents........................................................................13

         Section 4.9.      Exemption from Registration; Valid Issuances;
                           New Issuances........................................................................14

         Section 4.10.     No General Solicitation or Advertising...............................................14
<PAGE>

         Section 4.11.     No Conflicts.........................................................................14

         Section 4.12.     No Material Adverse Change...........................................................15

         Section 4.13.     No Undisclosed Liabilities...........................................................15

         Section 4.14.     No Undisclosed Events or Circumstances...............................................15

         Section 4.15.     No Integrated Offering...............................................................16

         Section 4.16.     Litigation and Other Proceedings.....................................................16

         Section 4.17.     No Misleading or Untrue Communication................................................16

         Section 4.18.     Material Non-Public Information......................................................16

ARTICLE V             COVENANTS OF THE INVESTOR.................................................................16

         Section 5.1.      Compliance...........................................................................16

         Section 5.2.      Short Sale...........................................................................16

ARTICLE VI            COVENANTS OF THE COMPANY..................................................................17

         Section 6.1.      Registration Rights..................................................................17

         Section 6.2.      Reservation of Common Stock..........................................................17

         Section 6.3.      Listing of Common Stock..............................................................17

         Section 6.4.      Exchange Act Registration............................................................17

         Section 6.5.      Legends..............................................................................17

         Section 6.6.      Corporate Existence..................................................................18

         Section 6.7.      Additional SEC Documents.............................................................18

         Section 6.8.      Notice of Certain Events Affecting Registration;
                           Suspension of Right to Make a Subsequent Sale. ......................................18

         Section 6.9.      Consolidation; Merger................................................................18

         Section 6.10.     Issuance of Shares...................................................................19

         Section 6.11.     Legal Opinions.......................................................................19

         Section 6.12.     No Similar Arrangement; Right of First Refusal.......................................19

         Section 6.13.     Public Announcements.................................................................20

ARTICLE VII           CONDITIONS TO DELIVERY OF SALE NOTICES AND
                      CONDITIONS TO CLOSING.....................................................................20

         Section 7.1.      Conditions Precedent to the Obligation of the Company to Issue and Sell Preferred Stock and Common
                           Stock................................................................................20

         Section 7.2.      Conditions Precedent to the Right of the Company to deliver a Sale Notice and the Obligation of
                           the Investor to Purchase Preferred Stock and Common Stock ...........................20

         Section 7.3.      Due Diligence Review; Non-Disclosure of Non-Public Information.......................23

ARTICLE VIII          LEGENDS...................................................................................24

         Section 8.1.      Legends..............................................................................24

<PAGE>

         Section 8.2.      No Other Legend or Stock Transfer Restrictions.......................................26

         Section 8.3.      Investor's Compliance................................................................26

ARTICLE IX            INDEMNIFICATION; ARBITRATION..............................................................26

         Section 9.1.      Indemnification......................................................................26

         Section 9.2.      Method of Asserting Indemnification Claims...........................................27

         Section 9.3.      Arbitration..........................................................................30

ARTICLE X             MISCELLANEOUS.............................................................................30

         Section 10.1.     Fees and Transaction Costs...........................................................30

         Section 10.2.     Reporting Entity for the Common Stock................................................31

         Section 10.3.     Brokerage............................................................................31

         Section 10.4.     Conversion Notices...................................................................31

         Section 10.5.     Notices..............................................................................31

         Section 10.6.     Assignment...........................................................................33

         Section 10.7.     Amendment; No Waiver.................................................................33

         Section 10.8.     Annexes and Exhibits; Entire Agreement...............................................33

         Section 10.9.     Survival.............................................................................33

         Section 10.10.    Severability.........................................................................33

         Section 10.11.    Title and Subtitles..................................................................33

         Section 10.12.    Counterparts.........................................................................33

         Section 10.13.    Choice of Law........................................................................34

         Section 10.14.    Other Expenses.......................................................................34

</TABLE>


<PAGE>

                                                                    EXHIBIT 10.2

                                INCENTIVE WARRANT

                      CLASS N COMMON STOCK PURCHASE WARRANT

THE SECURITIES  EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S.  SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"),  OR ANY OTHER
APPLICABLE  SECURITIES  LAWS AND HAVE BEEN ISSUED IN RELIANCE  UPON AN EXEMPTION
FROM  THE  REGISTRATION  REQUIREMENTS  OF THE  SECURITIES  ACT  AND  SUCH  OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION  HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED
OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES  ACT OR PURSUANT TO A TRANSACTION  WHICH IS EXEMPT FROM, OR
NOT  SUBJECT  TO,  SUCH  REGISTRATION.  THE  HOLDER OF THIS  CERTIFICATE  IS THE
BENEFICIARY OF CERTAIN  OBLIGATIONS OF THE COMPANY SET FORTH IN A STOCK PURCHASE
AGREEMENT,  DATED AS OF JUNE 4, 2001, BETWEEN WAVERIDER  COMMUNICATIONS INC. AND
CRESCENT  INTERNATIONAL  LTD. A COPY OF THE PORTION OF THE  AFORESAID  AGREEMENT
EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM WAVERIDER COMMUNICATIONS INC.'S
EXECUTIVE OFFICES. June 4, 2001

      Warrant to Purchase up to 877,193 shares of Common Stock of WaveRider
                              Communications Inc.
                     (hereinafter, the "Incentive Warrant").
                        -----------------

         WaveRider  Communications  Inc., an entity organized and existing under
the laws of the State of Nevada (the  "Company"),  hereby  agrees that  Crescent
International Ltd. (the "Investor") or any other Warrant Holder is entitled,  on
the terms and  conditions  set forth below,  to purchase from the Company at any
time during the Exercise  Period (as defined below) up to 877,193 fully paid and
nonassessable shares of Common Stock, par value $0.001 per share, of the Company
(the "Common Stock"),  as the same may be adjusted from time to time pursuant to
Section 6 hereof,  at the Exercise Price (as defined below),  as the same may be
adjusted pursuant to Section 6 hereof.  The resale of the shares of Common Stock
or other securities issuable upon exercise or exchange of this Incentive Warrant
is subject to the provisions of the  Registration  Rights  Agreement (as defined
below).

Section 1.        Definitions.

         "Aggregate Exercise Price" shall mean, with respect to any exercise (in
whole or in part) of this Incentive Warrant the Exercise Price multiplied by the
total number of shares of Common Stock for which this Incentive Warrant is being
exercised.

         "Agreement" shall mean the Stock Purchase  Agreement,  dated as of June
4, 2001, between the Company and the Investor.

         "Exercise  Date" shall mean,  with respect to any exercise (in whole or
in part) of this  Incentive  Warrant  the date the  Exercise  Notice  is sent by
facsimile to the Company.

         "Exercise Notice" shall mean, with respect to any exercise (in whole or
in part) of this Incentive  Warrant the exercise form attached hereto as Exhibit
A, duly executed by the Warrant Holder.


<PAGE>

         "Exercise  Period"  shall mean the period  beginning on the date hereof
and continuing until the expiration of the five-year period thereafter; provided
that such period  shall be extended  one day for each day after the date hereof,
that the Registration  Statement covering (i) Commitment Shares purchased by the
Investor,  (ii) the Protective  Warrant Shares, if any, related to any Sales and
(iii)  the  Incentive  Warrant  Shares  purchasable  through  exercise  of  this
Incentive  Warrant,  is  not  effective  during  the  period  such  Registration
Statement  is  required to be  effective  pursuant  to the  Registration  Rights
Agreement.

         "Exercise  Price" as of the date  hereof  shall mean $1.71 per share of
Common  Stock,  subject  to the  adjustments  provided  for in Section 6 of this
Incentive Warrant.

         "Per Share Warrant Value" shall mean,  with respect to any exercise (in
whole  or in part) of this  Incentive  Warrant  the  difference  resulting  from
subtracting  the Exercise  Price from the Bid Price of one share of Common Stock
on the Trading Day immediately preceding the Exercise Date.

         "Registration  Rights  Agreement"  shall mean the  registration  rights
agreement, dated June 4, 2001 between the Company and the Investor.

         "Warrant  Holder" shall mean the Investor or any assignee or transferee
of all or any portion of this Incentive Warrant.

         Other  capitalized  terms used but not defined  herein shall have their
respective meanings set forth in the Agreement.

Section 2.        Exercise; Cashless Exercise.

         (a) Method of  Exercise.  This  Incentive  Warrant may be  exercised in
whole or in part (but not as to a fractional share of Common Stock), at any time
and from time to time during the Exercise  Period,  by the Warrant Holder by the
delivery  by  facsimile  of an executed  and  completed  Exercise  Notice to the
Company and delivery to the Company within five Trading Days  thereafter of this
Incentive  Warrant,  the original  Exercise  Notice and the  Aggregate  Exercise
Price.

         (b) Payment of  Aggregate  Exercise  Price.  Subject to  paragraph  (c)
below, payment of the Aggregate Exercise Price shall be made by wire transfer to
an account  designated by the Company.  If the amount of the payment received by
the Company is less than the Aggregate  Exercise Price,  the Warrant Holder will
be notified of the  deficiency  and shall make  payment in that amount  within 5
Trading  Days of such  notice.  In the event the payment  exceeds the  Aggregate
Exercise Price,  the Company will refund the excess to the Warrant Holder within
3 Trading  Days of both the receipt of such  payment and the  knowledge  of such
excess.

         (c) Cashless  Exercise.  As an  alternative to payment of the Aggregate
Exercise  Price in accordance  with Section 2(b) above,  the Warrant  Holder may
elect to effect a cashless  exercise by so indicating on the Exercise Notice and
including  a  calculation  of the number of shares of Common  Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless  Exercise").
In the event of a Cashless  Exercise,  the Warrant  Holder shall  surrender this
Incentive  Warrant for that number of shares of Common Stock  determined  by (i)
multiplying  the number of  Incentive  Warrant  Shares for which this  Incentive
Warrant is being  exercised by the Per Share Warrant Value and (ii) dividing the
product by the Bid Price of one share of the  Common  Stock on the  Trading  Day
immediately preceding the Exercise Date.

         (d) Replacement Warrant. In the event that the Incentive Warrant is not
exercised in full,  the number of Incentive  Warrant  Shares shall be reduced by
the number of such Incentive  Warrant Shares for which this Incentive Warrant is
exercised, and the Company, at its expense, shall forthwith issue and deliver to
the  Warrant  Holder a new  Incentive  Warrant  of like tenor in the name of the
Warrant  Holder or as the Warrant Holder may request,  reflecting  such adjusted
number of Incentive Warrant Shares.
<PAGE>

Section 3. Ten Percent  Limitation.  At no time may the Warrant Holder  exercise
this  Incentive  Warrant such that the number of Incentive  Warrant Shares to be
received  pursuant to such exercise  aggregated  with all other shares of Common
Stock then owned by the Warrant Holder beneficially or deemed beneficially owned
(as such term is defined in Rule 13(d)  under the  Exchange  Act) by the Warrant
Holder and its affiliates  would result in the Warrant Holder and its affiliates
owning more than 9.9% of all of such  Common  Stock as would be  outstanding  on
such  Exercise  Date,  as  determined  in  accordance  with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.

Section 4. Delivery of Stock Certificates.

         (a) Subject to the terms and conditions of this Incentive  Warrant,  as
soon as practicable  after the exercise of this Incentive  Warrant in full or in
part, and in any event within five (5) Trading Days  thereafter,  the Company at
its expense (including,  without limitation, the payment by it of any applicable
issue taxes) will cause to be issued in the name of and delivered to the Warrant
Holder,  or as  the  Warrant  Holder  lawfully  may  direct,  a  certificate  or
certificates  for the number of validly  issued,  fully paid and  non-assessable
Incentive  Warrant  Shares to which the Warrant Holder shall be entitled on such
exercise,  together  with  any  other  stock  or other  securities  or  property
(including cash, where  applicable) to which the Warrant Holder is entitled upon
such exercise in accordance with the provisions hereof; provided,  however, that
any such delivery to a location  outside of the United States also shall be made
within five Trading Days after the exercise of this Incentive Warrant in full or
in part.

         (b) This Incentive Warrant may not be exercised as to fractional shares
of Common Stock.  In the event that the exercise of this Incentive  Warrant,  in
full or in part,  would result in the right to acquire any  fractional  share of
Common  Stock,  then in such event such  fractional  share shall be considered a
whole  share of  Common  Stock and  shall be added to the  number  of  Incentive
Warrant Shares issuable to the Investor upon exercise of this Incentive Warrant.

Section 5. Representations, Warranties and Covenants of the Company.

         (a) The Company shall take all necessary  action and proceedings as may
be required and permitted by applicable  law, rule and  regulation for the legal
and valid issuance of this Incentive Warrant and the Incentive Warrant Shares to
the Warrant Holder.

         (b) At all times during the Exercise Period, the Company shall take all
steps  reasonably  necessary  and within its  control to insure  that the Common
Stock remains listed or quoted on the Principal Market.

         (c) The Incentive  Warrant  Shares,  when issued in accordance with the
terms hereof, will be duly authorized and, when paid for or issued in accordance
with the terms hereof, shall be validly issued, fully paid and non-assessable.

         (d) The Company has authorized and reserved for issuance to the Warrant
Holder the requisite  number of shares of Common Stock to be issued  pursuant to
this  Incentive  Warrant.  The  Company  at all  times  shall  reserve  and keep
available,  solely  for  issuance  and  delivery  as  Incentive  Warrant  Shares
hereunder, such shares of Common Stock as from time to time shall be issuable as
Incentive Warrant Shares, and accordingly shall adjust the number of such shares
of Common Stock promptly upon the  occurrence of any of the events  specified in
Section 6 hereof.
<PAGE>

Section  6.  Adjustment  of  the  Exercise   Price.   The  Exercise  Price  and,
accordingly,  the number of Incentive  Warrant Shares  issuable upon exercise of
the Incentive Warrant, shall be subject to adjustment from time to time upon the
happening of certain events as follows:

         (a) Reclassification,  Consolidation, Merger; Mandatory Share Exchange;
Sale  Transfer  or Lease of  Assets.  If the  Company,  at any time  while  this
Incentive  Warrant is unexpired and not exercised in full, (i)  reclassifies  or
changes its  Outstanding  Capital  Shares (other than a change in par value,  or
from par value to no par value per share,  or from no par value per share to par
value or as a result of a subdivision or  combination of outstanding  securities
issuable upon exercise of this Incentive Warrant) or (ii)  consolidates,  merges
or effects a  mandatory  share  exchange  (x) with or into  another  corporation
(other than a merger or mandatory  share  exchange with another  corporation  in
which the Company is a  continuing  corporation  and that does not result in any
reclassification or change,  other than a change in par value, or from par value
to no par value per share,  or from no par value per share to par value,  or (y)
as a result of a  subdivision  or  combination  of  Outstanding  Capital  Shares
issuable upon exercise of the  Incentive  Warrant) or (iii) sells,  transfers or
leases  all or  substantially  all of its  assets,  then in any such  event  the
Company, or such successor or purchasing corporation, as the case may be, shall,
without payment by the Warrant Holder of any additional  consideration therefor,
amend this Incentive  Warrant or issue a new warrant  providing that the Warrant
Holder  shall have rights not less  favorable  to the Warrant  Holder than those
then  applicable to this  Incentive  Warrant and to receive upon exercise  under
such amendment of this Incentive  Warrant or new warrant,  in lieu of each share
of Common Stock  theretofore  issuable upon exercise of this  Incentive  Warrant
hereunder,  the kind and amount of shares of stock,  other securities,  money or
property receivable upon such reclassification,  change, consolidation,  merger,
mandatory share exchange,  lease, sale or transfer by the holder of one share of
Common Stock issuable upon exercise of the Incentive  Warrant had this Incentive
Warrant  been  exercised  immediately  prior to such  reclassification,  change,
consolidation,  merger,  mandatory  share exchange or sale or transfer  (without
giving effect to the limitation on ownership set forth in Section 3 hereof), and
an appropriate  provision for the foregoing shall be made by the Company as part
of any such event.  Such amended  Incentive Warrant or new warrant shall provide
for adjustments that shall be as nearly  equivalent as may be practicable to the
adjustments  provided for in this Section 6. The provisions of this Section 6(a)
shall similarly apply to successive reclassifications,  changes, consolidations,
mergers, mandatory share exchanges, sales, transfers and leases.

         (b)  Subdivision  or  Combination of Shares;  Stock  Dividends.  If the
Company, at any time while this Incentive Warrant is unexpired and not exercised
in full,  shall  subdivide  its Common Stock,  combine its Common  Stock,  pay a
dividend in its Capital  Shares,  or make any other  distribution of its Capital
Shares,  then the Exercise  Price shall be adjusted,  as of the date the Company
shall take a record of the  holders  of its  Capital  Shares for the  purpose of
effecting such subdivision, combination or dividend or other distribution (or if
no  such  record  is  taken,  as of the  effective  date  of  such  subdivision,
combination,  dividend  or other  distribution),  to that  price  determined  by
multiplying the Exercise Price in effect  immediately prior to such subdivision,
combination, dividend or other distribution by a fraction:

           (i) the  numerator of which shall be the total number of  Outstanding
Capital Shares immediately prior to such subdivision,  combination,  dividend or
other distribution, and

           (ii)  the   denominator  of  which  shall  be  the  total  number  of
Outstanding  Capital Shares  immediately  after such  subdivision,  combination,
dividend or other  distribution.  The  provisions of this Section 6(b) shall not
apply under any of the circumstances for which an adjustment is made pursuant to
Section 6(a).
<PAGE>

         (c) Liquidating Dividends,  Etc. If the Company, at any time while this
Incentive  Warrant is unexpired and not exercised in full,  makes a distribution
of its assets or evidences of  indebtedness to the holders of its Capital Shares
as a dividend in  liquidation  or by way of return of capital or other than as a
dividend  payable out of earnings or surplus  legally  available  for  dividends
under  applicable law or any distribution to such holders made in respect of the
sale of all or substantially all of the Company's assets, or any spin-off of any
of the Company's lines of business,  divisions or subsidiaries (other than under
the circumstances  provided for in the foregoing  subsections (a) and (b)), then
the  Warrant  Holder  shall be  entitled  to receive  upon such  exercise of the
Incentive  Warrant in addition to the  Incentive  Warrant  Shares  receivable in
connection  therewith,  and without payment of any consideration  other than the
Exercise  Price, an amount in cash equal to the value of such  distribution  per
Capital Share multiplied by the number of Incentive  Warrant Shares that, on the
record  date for such  distribution,  are  issuable  upon such  exercise  of the
Incentive  Warrant  (without  giving  effect to the  limitation on ownership set
forth in Section 3 hereof), and an appropriate  provision therefor shall be made
by the  Company as part of any such  distribution.  The value of a  distribution
that is paid in other than cash shall be  determined  in good faith by the Board
of Directors of the Company.

         (d)  Adjustment  of  Number of  Shares.  Upon  each  adjustment  of the
Exercise  Price  pursuant  to any  provisions  of this  Section 6, the number of
Incentive Warrant Shares issuable  hereunder at the option of the Warrant Holder
shall be calculated,  to the nearest one hundredth of a whole share, multiplying
the number of Incentive  Warrant  Shares  issuable  prior to an  adjustment by a
fraction:

           (i) the  numerator  of which shall be the  Exercise  Price before any
adjustment pursuant to this Section 6; and

           (ii) the  denominator of which shall be the Exercise Price after such
adjustment.

         (e) Other Action Affecting  Capital Shares. In the event after the date
hereof the Company  shall take any action  affecting  the number of  Outstanding
Capital  Shares,  other  than an  action  specifically  described  in any of the
foregoing  subsections  (a) through (c) hereof,  inclusive  (including,  without
limitation,  a subdivision or  combination of Common Stock,  or the payment of a
dividend  in  its  Capital  Shares  or  any  other  distribution),  that  in the
reasonable  opinion of the Warrant Holder would have a materially adverse effect
upon the rights of the Warrant  Holder at the time of exercise of the  Incentive
Warrant, the Exercise Price shall be adjusted in such manner and at such time as
the  Board of  Directors  on the  advice  of the  Company's  independent  public
accountants shall in good faith determine to be equitable in the circumstances.

         (f) Notice of Certain  Actions.  In the event the Company  shall,  at a
time while the Incentive  Warrant is unexpired and outstanding,  take any action
pursuant to subsections  (a) through (e) of this Section 6 that may result in an
adjustment of the Exercise Price, the Company shall notify the Warrant Holder of
such action 10 days in advance of its  effective  date in order to afford to the
Warrant Holder an  opportunity  to exercise the Incentive  Warrant prior to such
action becoming effective.

         (g) Notice of  Adjustments.  Whenever the  Exercise  Price or number of
Incentive  Warrant  Shares shall be adjusted  pursuant to Section 6 hereof,  the
Company  shall  promptly  deliver by facsimile,  with the original  delivered by
express  courier  service in accordance  with Section 11 hereof,  a certificate,
which shall be signed by the Company's  President or a Vice President and by its
Treasurer or  Assistant  Treasurer  or its  Secretary  or  Assistant  Secretary,
setting  forth in reasonable  detail the event  requiring  the  adjustment,  the
amount of the  adjustment,  the method by which such  adjustment  was calculated
(including a description of the basis on which the Company's  Board of Directors
made  any  determination  hereunder),  and the  Exercise  Price  and  number  of
Incentive Warrant Shares  purchasable at that Exercise Price after giving effect
to such adjustment.
<PAGE>

Section 7. No Impairment.  The Company will not, by amendment of its Certificate
or By-Laws or through any  reorganization,  transfer  of assets,  consolidation,
merger, dissolution,  issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Incentive  Warrant,  but will at all times in good faith  assist in the carrying
out of all such terms and in the taking of all such  action as may be  necessary
or  appropriate  in order to protect  the rights of the Warrant  Holder  against
impairment.  Without  limiting the generality of the foregoing,  the Company (a)
will not increase the par value of any Incentive Warrant Shares above the amount
payable  therefor on such exercise,  and (b) will take all such action as may be
reasonably  necessary or  appropriate  in order that the Company may validly and
legally  issue  fully paid and  nonassessable  Incentive  Warrant  Shares on the
exercise of this Incentive Warrant.

Section 8. Rights As  Stockholder.  Prior to exercise of this Incentive  Warrant
and except as provided  in Section 6 hereof,  the  Warrant  Holder  shall not be
entitled  to any rights as a  stockholder  of the  Company  with  respect to the
Incentive Warrant Shares,  including (without limitation) the right to vote such
shares,  receive  dividends  or other  distributions  thereon or be  notified of
stockholder  meetings.  However,  in the event of any taking by the Company of a
record of the holders of any class of securities  for the purpose of determining
the holders  thereof who are entitled to receive any dividend (other than a cash
dividend)  or other  distribution,  any  right to  subscribe  for,  purchase  or
otherwise  acquire any shares of stock of any class or any other  securities  or
property,  or to receive any other right, the Company shall mail to each Warrant
Holder,  at  least  10 days  prior  to the  date  specified  therein,  a  notice
specifying  the date on which any such  record is to be taken for the purpose of
such  dividend,  distribution  or right,  and the amount and  character  of such
dividend, distribution or right.

Section 9. Replacement of Incentive Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of the
Incentive Warrant and, in the case of any such loss, theft or destruction of the
Incentive  Warrant,   upon  delivery  of  an  indemnity  agreement  or  security
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation,  on surrender and cancellation of such Incentive  Warrant,  the
Company  at its  expense  will  execute  and  deliver,  in lieu  thereof,  a new
Incentive Warrant of like tenor.

Section 10. Restricted Securities.

         (a) Registration or Exemption Required. This Incentive Warrant has been
issued  in a  transaction  exempt  from  the  registration  requirements  of the
Securities  Act in  reliance  upon  Section  4(2) of the  Securities  Act.  This
Incentive  Warrant and the Incentive  Warrant  Shares  issuable upon exercise of
this  Incentive  Warrant  may not be  resold  except  pursuant  to an  effective
registration  statement or an exemption to the registration  requirements of the
Securities Act and applicable state laws.

         (b) Legend.  Any  replacement  Incentive  Warrants  issued  pursuant to
Section 2 hereof and any Incentive  Warrant Shares issued upon exercise  hereof,
shall bear the following legend:

         "THE SECURITIES  EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE U.S.  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
         ACT"), OR ANY OTHER APPLICABLE  SECURITIES LAWS AND HAVE BEEN ISSUED IN
         RELIANCE UPON AN EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS  OF THE
         SECURITIES ACT AND SUCH OTHER  SECURITIES  LAWS.  NEITHER THIS SECURITY
         NOR ANY  INTEREST  OR  PARTICIPATION  HEREIN  MAY BE  REOFFERED,  SOLD,
         ASSIGNED, TRANSFERRED,  PLEDGED, ENCUMBERED,  HYPOTHECATED OR OTHERWISE
         DISPOSED OF,  EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT
         UNDER THE SECURITIES  ACT OR PURSUANT TO A TRANSACTION  WHICH IS EXEMPT
         FROM,  OR NOT  SUBJECT  TO,  SUCH  REGISTRATION.  THE  HOLDER  OF  THIS
         CERTIFICATE IS THE  BENEFICIARY  OF CERTAIN  OBLIGATIONS OF THE COMPANY
         SET  FORTH IN A STOCK  PURCHASE  AGREEMENT,  DATED AS OF JUNE 4,  2001,
         BETWEEN WAVERIDER COMMUNICATIONS INC. AND CRESCENT INTERNATIONAL LTD. A
         COPY  OF  THE  PORTION  OF  THE  AFORESAID  AGREEMENT  EVIDENCING  SUCH
         OBLIGATIONS  MAY  BE  OBTAINED  FROM  WAVERIDER   COMMUNICATION  INC.'S
         EXECUTIVE OFFICES."
<PAGE>

Removal of such legend shall be in accordance with the legend removal provisions
in the Agreement.

         (c) No Other  Legend or Stock  Transfer  Restrictions.  No legend other
than the one  specified in paragraph (b) of this Section 10 has been or shall be
placed on the share  certificates  representing the Incentive Warrant Shares and
no  instructions  or  "stop  transfer   orders,"  so  called,   "stock  transfer
restrictions" or other restrictions have been or shall be given to the Company's
transfer  agent with respect  thereto  other than as expressly set forth in this
Section 10.

         (d)  Assignment.   Assuming  the  conditions  of  Section  10(a)  above
regarding registration or exemption have been satisfied,  the Warrant Holder may
sell, transfer,  assign,  pledge or otherwise dispose of this Incentive Warrant,
in whole or in part.  The Warrant  Holder shall deliver a written  notice to the
Company  substantially  in the form of the  assignment  form attached  hereto as
Exhibit B (the  "Assignment  Notice")  indicating  the person or persons to whom
this Incentive  Warrant shall be assigned and the respective  number of warrants
to be assigned to each assignee.  The Company shall effect the assignment within
ten  days of  receipt  of such  Assignment  Notice,  and  shall  deliver  to the
assignee(s)  designated by the Warrant  Holder a Incentive  Warrant or Incentive
Warrants of like tenor and terms for the specified number of shares.

         (e) Investor's  Compliance.  Nothing in this Section 10 shall affect in
any way the  Investor's  obligations  under any  agreement  to  comply  with all
applicable securities laws upon resale of the Common Stock.

Section 11. Notices. All notices, demands,  requests,  consents,  approvals, and
other  communications  required or permitted  hereunder  shall be in writing and
shall be deemed duly given (i) upon  delivery if hand  delivered  at the address
designated  below (if delivered on a business day during normal  business  hours
where such notice is to be received),  or the first  business day following such
delivery (if delivered other than on a business day during normal business hours
where  such  notice is to be  received),  (ii) on the fifth  business  day after
deposit into the mail, if deposited in the mail, registered or certified, return
receipt requested,  postage prepaid,  addressed to the address designated below,
(iii) upon  delivery if delivered by reputable  express  courier  service to the
address   designated  below,  or  (iv)  upon  confirmation  of  transmission  if
transmitted by facsimile to the facsimile number  designated below (if delivered
on a business  day  during  normal  business  hours  where such  notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal  business  hours where such notice is to be
received). The addresses and facsimile numbers for such communications shall be:

         if to the Company:

                WaveRider Communications Inc.
                255 Consumers Road, Suite 500
                Toronto, Ontario, Canada M2J 1R4
                Attention:     T. Scott Worthington
                Telephone:     (416) 502-3200   Facsimile:  (416) 502-2968
<PAGE>

         with a copy (which shall not constitute notice) to:

                Foley, Hoag & Eliot
                One Post Office Square, Boston, MA 02109
                Attention:     David A. Broadwin, Esq.
                Telephone:     (617) 832-1259   Facsimile:  (617) 832-7000

         if to the Investor:

                 Crescent International Ltd.
                 c/o GreenLight (Switzerland) SA
                 84, av Louis-Casai, P.O. Box 42
                 1216 Geneva, Cointrin, Switzerland
                 Attention:     Mel Craw/Maxi Brezzi
                 Telephone:     +41 22 791 71 69  Facsimile: +41 22 929 53 94


         with a copy (which shall not constitute notice) to:

                   Clifford Chance Rogers & Wells LLP
                   200 Park Avenue, New York, NY  10166
                   Attention:     Earl S. Zimmerman, Esq.
                   Telephone:     (212) 878-8000  Facsimile:   (212) 878-8375

Either party hereto may from time to time change its address or facsimile number
for  notices  under  this  Section  11 by giving at least ten (10)  days'  prior
written  notice of such changed  address or facsimile  number to the other party
hereto.

Section 12.  Miscellaneous.  This  Incentive  Warrant and any term hereof may be
changed,  waived,  discharged  or  terminated  only by an  instrument in writing
signed by the party against which enforcement of such change, waiver,  discharge
or  termination  is sought.  The  headings  in this  Incentive  Warrant  are for
purposes of reference  only, and shall not limit or otherwise  affect any of the
terms hereof. The invalidity or  unenforceability  of any provision hereof shall
in no way affect the validity or enforceability of any other provision.

         IN WITNESS  WHEREOF,  this  Incentive  Warrant was duly executed by the
undersigned, thereunto duly authorized, as of the date first set forth above.



WAVERIDER COMMUNICATIONS INC.


By:               /s/ D.B. Sinclair
      --------------------------------------
      Name:       D.B. Sinclair
      Title:      President & CEO

Attested:


By:               /s/ Sophie Tome
      ------------------------------
      Name:       Sophie Tome
      Title:      Assistant Secretary




<PAGE>



                       EXHIBIT A TO THE INCENTIVE WARRANT

                                  EXERCISE FORM

                          WaveRider Communications Inc.

The undersigned (the "Registered Holder") hereby irrevocably exercises the right
to purchase  _________shares of Common Stock of WaveRider
Communications Inc., an entity organized and existing under the laws of the
State of Nevada (the "Company"), evidenced by the attached Incentive Warrant,
and herewith makes payment of the Exercise Price with respect to such shares in
full in the form of (check the appropriate box) (i) wire transfer to the
Company's account at _________, _________,_________  (Account
No.: _________); or (ii)_________  Incentive Warrant Shares, which represent the
amount of Incentive Warrant Shares as provided in the attached Incentive Warrant
to be canceled in connection with such exercise, all in accordance with the
conditions and provisions of said Incentive Warrant. The undersigned requests
that stock certificates for such Incentive Warrant Shares be issued, and an
Incentive Warrant representing any unexercised portion hereof be issued,
pursuant to this Incentive Warrant in the name of the Registered Holder and
delivered to the undersigned at the address set forth below.

Dated:
         --------------------------------------------------------------



______________________________
Signature of Registered Holder

______________________________
Name of Registered Holder (Print)



______________________________
Address
                                     NOTICE


The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Incentive Warrant in every particular,
without alteration or enlargement or any change whatsoever.


<PAGE>






                       EXHIBIT B TO THE INCENTIVE WARRANT

                                   ASSIGNMENT


(To be executed by the  registered  Warrant  Holder  (the  "Registered  Holder")
desiring to transfer the Incentive Warrant, in whole or in part.)

FOR VALUED RECEIVED,  the undersigned  Warrant Holder of the attached  Incentive
Warrant hereby sells,  assigns or transfers unto the person(s)  named below (the
"Assignee")  the right to  purchase  shares  of the  Common  Stock of  WaveRider
Communications  Inc. evidenced by the attached Incentive Warrant and does hereby
irrevocably  constitute and appoint  (attorney) to transfer the number of shares
specified of the said Incentive  Warrant on the books of the Company,  with full
power of substitution in the premises.

The undersigned requests that such Incentive Warrant be issued, and an Incentive
Warrant representing any unsold, unassigned or non-transferred portion hereof be
issued,  pursuant to this Incentive Warrant in the name of the Registered Holder
and delivered to the undersigned at the address set forth below.

Dated:
         --------------------------------------------------------------

______________________________
Signature of Registered Holder

______________________________
Name of Registered Holder (Print)

______________________________
Address of Registered Holder

______________________________
Name of Assignee (Print)

______________________________
Address of Assignee (including zip code number)

______________________________
Fill in for new Registration of Incentive Warrant:

______________________________
Name

______________________________
Address

______________________________
Please print name and address of assignee (including zip code number)

                                     NOTICE

The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached  Incentive  Warrant in every  particular,  without
alteration or enlargement or any change whatsoever.

<PAGE>


                                                                   EXHIBIT 10.3
                               PROTECTIVE WARRANT

                      CLASS O COMMON STOCK PURCHASE WARRANT

THE SECURITIES  EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S.  SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"),  OR ANY OTHER
APPLICABLE  SECURITIES  LAWS AND HAVE BEEN ISSUED IN RELIANCE  UPON AN EXEMPTION
FROM  THE  REGISTRATION  REQUIREMENTS  OF THE  SECURITIES  ACT  AND  SUCH  OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION  HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED
OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES  ACT OR PURSUANT TO A TRANSACTION  WHICH IS EXEMPT FROM, OR
NOT  SUBJECT  TO,  SUCH  REGISTRATION.  THE  HOLDER OF THIS  CERTIFICATE  IS THE
BENEFICIARY OF CERTAIN  OBLIGATIONS OF THE COMPANY SET FORTH IN A STOCK PURCHASE
AGREEMENT,  DATED AS OF JUNE 4, 2001, BETWEEN WAVERIDER  COMMUNICATIONS INC. AND
CRESCENT  INTERNATIONAL  LTD. A COPY OF THE PORTION OF THE  AFORESAID  AGREEMENT
EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM WAVERIDER  COMMUNICATION INC.'S
EXECUTIVE OFFICES. [DATE]

         Warrant to Purchase Shares of Common Stock of WaveRider  Communications
Inc.  (hereinafter a "Protective  Warrant"),  up to a total number determined in
accordance with Section 2(b) hereof.

         WaveRider  Communications  Inc., an entity organized and existing under
the laws of the State of Nevada (the  "Company"),  hereby  agrees that  Crescent
International Ltd. (the "Investor") or any other Warrant Holder is entitled,  on
the terms and  conditions  set forth below,  to purchase from the Company at any
time  during  the  Exercise  Period  (as  defined  below) up to a total  number,
determined  in  accordance   with  Section  2(b)  hereof,   of  fully  paid  and
nonassessable shares of Common Stock, par value $0.001 per share, of the Company
(the "Common Stock"),  as the same may be adjusted from time to time pursuant to
Section 7 hereof,  at the Exercise Price (as defined below),  as the same may be
adjusted pursuant to Section 7 hereof.  The resale of the shares of Common Stock
or other  securities  issuable  upon  exercise or  exchange  of this  Protective
Warrant is subject to the provisions of the  Registration  Rights  Agreement (as
defined below).

Section 1. Definitions.

         "Aggregate Exercise Price" shall mean, with respect to any exercise (in
whole or in part) of this Protective  Warrant,  the Exercise Price multiplied by
the total number of shares of Common Stock for which this Protective  Warrant is
being exercised.

         "Agreement" shall mean the Stock Purchase  Agreement,  dated as of June
4, 2001, between the Company and the Investor.

         "Cash-Out  Price" shall mean, with respect to any exercise (in whole or
in part) of this  Protective  Warrant,  the  product of (x) the Bid Price of one
share of Common Stock on the Trading Day immediately preceding the Exercise Date
multiplied  by (y) the  number of shares of Common  Stock for which the  Company
elects the Cash-Out Option.

         "Exercise Date" shall mean with respect to any exercise (in whole or in
part)  of this  Protective  Warrant  the  date the  Exercise  Notice  is sent by
facsimile to the Company.
<PAGE>

         "Exercise  Notice" shall mean with respect to any exercise (in whole or
in part) of this Protective Warrant the exercise form attached hereto as Exhibit
A, duly executed by the Warrant Holder.

         "Exercise Period" shall mean the period beginning on the Effective Date
applicable to the  corresponding  Sale and continuing  until the two-year period
thereafter;  provided  that such period  shall be extended  one day for each day
after such  Effective  Date,  that any  Registration  Statement is not effective
during  the  period the  Registration  Statement  is  required  to be  effective
pursuant to the Registration Rights Agreement.

         "Exercise  Price" as of the date  hereof  shall mean $0.01 per share of
Common  Stock,  subject  to the  adjustments  provided  for in Section 7 of this
Protective Warrant.

         "Per Share  Protective  Warrant Value" shall mean,  with respect to any
exercise  (in  whole or in  part) of this  Protective  Warrant,  the  difference
resulting from subtracting the Exercise Price from the Bid Price of one share of
Common Stock on the Trading Day immediately preceding the Exercise Date.

         "Registration  Rights  Agreement"  shall mean the  registration  rights
agreement, dated as of June 4, 2001 between the Company and the Investor.

         "Warrant  Holder" shall mean the Investor or any assignee or transferee
of all or any portion of this Protective Warrant.

Other capitalized terms used but not defined herein shall have their respective
meanings set forth in the Agreement.

Section 2. Exercisability.

         (a) Timing.  If the Purchase Price on the Effective Date  applicable to
the  corresponding  Sale is lower than the Purchase  Price on the Sale Date with
respect  to  such  Sale,  this  Protective   Warrant  shall  become  immediately
exercisable, subject to clause (c) below.

         (b)  Number of Shares.  The number of shares of Common  Stock for which
this Protective  Warrant is exercisable (the "Protective  Warrant Shares") shall
be  determined  by  subtracting  (x) the  Investment  Amount with respect to the
applicable  Sale  divided  by the  Purchase  Price on the Sale Date from (y) the
Investment  Amount with respect to the  applicable  Sale divided by the Purchase
Price on the Effective Date applicable to the Sale Date.

         (c) Cash  Payment in Lieu of Issuance of Shares.  In the event that the
Warrant  Holder  exercises  this  Protective  Warrant  (in  whole or in part) in
accordance  with  Section 3 hereof,  then the  Company  may,  in lieu of issuing
shares of Common  Stock  pursuant  to such  exercise,  pay to the  Investor  the
Cash-Out  Price for any or all of the shares of Common Stock  purchasable by the
Investor  through the exercise of this  Protective  Warrant (such  payment,  the
"Cash-Out Option").  For avoidance of doubt, the Company may elect such Cash-Out
Option in the event that,  inter alia,  the number of Protective  Warrant Shares
plus the number of First Sale  Shares and  Subsequent  Sale  Shares  exceeds the
number of shares  registered  pursuant  to  Section  1.1(a) of the  Registration
Rights Agreement.

         (d) Notice of Cash Payment in Lieu of Issuance of Shares.  In the event
that the Company  elects the Cash-Out  Option the Company  shall  promptly  give
notice to the Investor of such election on the Trading Day following delivery by
facsimile of the Exercise Notice described in Section 3(a). Such notice from the
Company  shall  set forth  the  number  of shares of Common  Stock for which the
Company elects the Cash-Out Option.
<PAGE>

         (e)  Method of  Cash-Out;  Effect of  Cash-Out.  In the event  that the
Company  elects  the  Cash-Out   Option,   then  in  lieu  of  delivering  stock
certificates as provided in Section 5 hereof,  the Company shall deliver by wire
transfer of immediately available funds to an account designated by the Investor
as soon as  practicable  after delivery by the Company of notice of its election
of the Cash-Out Option and in any event within two Trading Days thereafter,  the
Cash-Out  Price for any and all  shares of  Common  Stock for which the  Company
elects the Cash-Out Option.

Section 3. Exercise; Cashless Exercise.

         (a) Method of  Exercise.  This  Protective  Warrant may be exercised in
whole or in part (but not as to a fractional share of Common Stock), at any time
and from time to time during the Exercise  Period,  by the Warrant Holder by the
delivery  by  facsimile  of an executed  and  completed  Exercise  Notice to the
Company and delivery to the Company within five Trading Days  thereafter of this
Protective  Warrant,  the original  Exercise  Notice and the Aggregate  Exercise
Price.

         (b) Payment of  Aggregate  Exercise  Price.  Subject to  paragraph  (c)
below, payment of the Aggregate Exercise Price shall be made by wire transfer to
an account  designated by the Company.  If the amount of the payment received by
the Company is less than the Aggregate  Exercise Price,  the Warrant Holder will
be notified of the  deficiency and shall make payment in that amount within five
Trading  Days of such  notice.  In the event the payment  exceeds the  Aggregate
Exercise Price,  the Company will refund the excess to the Warrant Holder within
three Trading Days of both the receipt of such payment and the knowledge of such
excess.

         (c) Cashless  Exercise.  As an  alternative to payment of the Aggregate
Exercise  Price in accordance  with Section 3(b) above,  the Warrant  Holder may
elect to effect a cashless  exercise by so indicating on the Exercise Notice and
including  a  calculation  of the number of shares of Common  Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless  Exercise").
In the event of a Cashless  Exercise,  the Warrant  Holder shall  surrender this
Protective  Warrant for that number of shares of Common Stock  determined by (i)
multiplying  the number of Protective  Warrant Shares for which this  Protective
Warrant is being  exercised by the Per Share  Protective  Warrant Value and (ii)
dividing  the  product by the Bid Price of one share of the Common  Stock on the
Trading Day immediately preceding the Exercise Date.

         (d) Replacement  Protective  Warrant.  In the event that the Protective
Warrant is not exercised in full, the number of Protective  Warrant Shares shall
be  reduced  by the  number of such  Protective  Warrant  Shares  for which this
Protective  Warrant  is  exercised,  and  the  Company,  at its  expense,  shall
forthwith  issue and deliver to the Warrant Holder a new  Protective  Warrant of
like  tenor in the name of the  Warrant  Holder  or as the  Warrant  Holder  may
request, reflecting such adjusted number of Protective Warrant Shares.

Section 4. Ten Percent  Limitation.  At no time may the Warrant Holder  exercise
this Protective  Warrant such that the number of Protective Warrant Shares to be
received  pursuant to such exercise  aggregated  with all other shares of Common
Stock then owned by the Warrant Holder beneficially or deemed beneficially owned
(as such term is defined in  Rule13(d)  under the  Exchange  Act) by the Warrant
Holder and its affiliates  would result in the Warrant Holder and its affiliates
owning more than 9.9% of all of such  Common  Stock as would be  outstanding  on
such  Exercise  Date,  as  determined  in  accordance  with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
<PAGE>

Section 5. Delivery of Stock Certificates.

         (a) Subject to the terms and conditions of this Protective  Warrant, as
soon as practicable after the exercise of this Protective  Warrant in full or in
part, and in any event within five Trading Days  thereafter,  the Company at its
expense  (including,  without  limitation,  the payment by it of any  applicable
issue taxes) will cause to be issued in the name of and delivered to the Warrant
Holder,  or as  the  Warrant  Holder  lawfully  may  direct,  a  certificate  or
certificates  for the number of validly  issued,  fully paid and  non-assessable
Protective  Warrant Shares to which the Warrant Holder shall be entitled on such
exercise,  together  with  any  other  stock  or other  securities  or  property
(including cash, where  applicable) to which the Warrant Holder is entitled upon
such exercise in accordance with the provisions hereof; provided,  however, that
any such delivery to a location  outside of the United States also shall be made
within five Trading Days after the exercise of this  Protective  Warrant in full
or in part.

         (b) This  Protective  Warrant  may not be  exercised  as to  fractional
shares of  Common  Stock.  In the event  that the  exercise  of this  Protective
Warrant, in full or in part, would result in the right to acquire any fractional
share of  Common  Stock,  then in such  event  such  fractional  share  shall be
considered  a whole  share of Common  Stock and shall be added to the  number of
Protective  Warrant  Shares  issuable  to the  Investor  upon  exercise  of this
Protective Warrant.

Section 6. Representations, Warranties and Covenants of the Company.

         (a) The Company shall take all necessary  action and proceedings as may
be required and permitted by applicable  law, rule and  regulation for the legal
and valid issuance of this Protective  Warrant and the Protective Warrant Shares
to the Warrant Holder.

         (b) At all times during the Exercise Period, the Company shall take all
steps  reasonably  necessary  and within its  control to insure  that the Common
Stock remains listed or quoted on the Principal Market.

         (c) The Protective  Warrant Shares,  when issued in accordance with the
terms hereof, will be duly authorized and, when paid for or issued in accordance
with the terms hereof, shall be validly issued, fully paid and non-assessable.

         (d) The Company has authorized and reserved for issuance to the Warrant
Holder the requisite  number of shares of Common Stock to be issued  pursuant to
this  Protective  Warrant.  The  Company  at all times  shall  reserve  and keep
available,  solely for  issuance  and  delivery  as  Protective  Warrant  Shares
hereunder, such shares of Common Stock as from time to time shall be issuable as
Protective  Warrant  Shares,  and  accordingly  shall  adjust the number of such
shares  of  Common  Stock  promptly  upon the  occurrence  of any of the  events
specified in Section 7 hereof.

Section  7.  Adjustment  of  the  Exercise   Price.   The  Exercise  Price  and,
accordingly,  the number of Protective  Warrant Shares issuable upon exercise of
the Protective  Warrant,  shall be subject to adjustment  from time to time upon
the happening of certain events as follows:

         (a)   Reclassification,   Consolidation,   Merger  or  Mandatory  Share
Exchange,  Sale,  Transfer or Lease of Assets. If the Company, at any time while
this Protective Warrant is unexpired and not exercised in full, (i) reclassifies
or changes its Outstanding  Capital Shares (other than a change in par value, or
from par value to no par value per share,  or from no par value per share to par
value, or as a result of a subdivision or combination of outstanding  securities
issuable upon exercise of this Protective Warrant) or (ii) consolidates,  merges
or effects a  mandatory  share  exchange  (x) with or into  another  corporation
(other than a merger or mandatory  share  exchange with another  corporation  in
which the Company is a  continuing  corporation  and that does not result in any
reclassification or change,  other than a change in par value, or from par value
to no par value per  share,  or from no par value per share to par value) or (y)
as a result of a  subdivision  or  combination  of  Outstanding  Capital  Shares
issuable upon exercise of this Protective Warrant) or (iii) sells,  transfers or
leases  all or  substantially  all of its  assets,  then in any such  event  the

<PAGE>

Company, or such successor or purchasing corporation, as the case may be, shall,
without payment by the Warrant Holder of any additional  consideration  therefor
amend this Protective  Warrant or issue a new warrant providing that the Warrant
Holder  shall have rights not less  favorable  to the Warrant  Holder than those
then  applicable to this  Protective  Warrant and to receive upon exercise under
such amendment of this Protective Warrant or new warrant,  in lieu of each share
of Common Stock  theretofore  issuable upon exercise of this Protective  Warrant
hereunder,  the kind and amount of shares of stock,  other securities,  money or
property receivable upon such reclassification,  change, consolidation,  merger,
mandatory share exchange,  lease, sale or transfer by the holder of one share of
Common  Stock  issuable  upon  exercise  of this  Protective  Warrant  had  this
Protective  Warrant been exercised  immediately prior to such  reclassification,
change,  consolidation,  merger,  mandatory  share  exchange or sale or transfer
(without  giving  effect to the  limitation  on ownership set forth in Section 4
hereof) and an  appropriate  provision  for the  foregoing  shall be made by the
Company  as part of any such  event.  Such  amended  Protective  Warrant  or new
warrant shall provide for adjustments that shall be as nearly  equivalent as may
be practicable to the adjustments provided for in this Section 7. The provisions
of this  Section 7(a) shall  similarly  apply to  successive  reclassifications,
changes,  consolidations,  mergers, mandatory share exchanges,  sales, transfers
and leases.

         (b)  Subdivision  or  Combination of Shares;  Stock  Dividends.  If the
Company,  at any  time  while  this  Protective  Warrant  is  unexpired  and not
exercised in full,  shall subdivide its Common Stock,  combine its Common Stock,
pay a dividend  in its Capital  Shares,  or make any other  distribution  of its
Capital  Shares,  then the Exercise Price shall be adjusted,  as of the date the
Company shall take a record of the holders of its Capital Shares for the purpose
of effecting such subdivision, combination or dividend or other distribution (or
if no such  record  is  taken,  as of the  effective  date of such  subdivision,
combination,  dividend  or other  distribution),  to that  price  determined  by
multiplying the Exercise Price in effect  immediately prior to such subdivision,
combination, dividend or other distribution by a fraction:

           (i) the numerator of which shall be the total number of Outstanding
Capital Shares immediately prior to such subdivision,  combination,  dividend or
other distribution, and

           (ii)  the   denominator  of  which  shall  be  the  total  number  of
Outstanding  Capital Shares  immediately  after such  subdivision,  combination,
dividend or other  distribution.  The  provisions of this Section 7(b) shall not
apply under any of the circumstances for which an adjustment is made pursuant to
Section 7(a).

         (c) Liquidating Dividends,  Etc. If the Company, at any time while this
Protective  Warrant is unexpired and not exercised in full, makes a distribution
of its assets or evidences of  indebtedness to the holders of its Capital Shares
as a dividend in  liquidation  or by way of return of capital or other than as a
dividend  payable out of earnings or surplus  legally  available  for  dividends
under  applicable law or any distribution to such holders made in respect of the
sale of all or substantially all of the Company's assets, or any spin-off of any
of the Company's lines of business,  divisions or subsidiaries (other than under
the circumstances  provided for in the foregoing  subsections (a) and (b)), then
the  Warrant  Holder  shall be  entitled  to receive  upon such  exercise of the
Protective  Warrant in addition to the Protective  Warrant Shares  receivable in
connection  therewith,  and without payment of any consideration  other than the
Exercise  Price, an amount in cash equal to the value of such  distribution  per
Capital Share multiplied by the number of Protective Warrant Shares that, on the
record  date for such  distribution,  are  issuable  upon such  exercise  of the
Protective  Warrant  (without  giving effect to the  limitation on ownership set
forth in Section 4 hereof), and an appropriate  provision therefor shall be made
by the Company as a part of any such  distribution.  The value of a distribution
that is paid in other than cash shall be  determined  in good faith by the Board
of Directors of the Company.
<PAGE>

         (d)  Adjustment  of  Number of  Shares.  Upon  each  adjustment  of the
Exercise  Price  pursuant  to any  provisions  of this  Section 7, the number of
Protective Warrant Shares issuable hereunder at the option of the Warrant Holder
shall be calculated,  to the nearest one hundredth of a whole share, multiplying
the number of Protective  Warrant  Shares  issuable  prior to an adjustment by a
fraction:

           (i) the  numerator  of which shall be the  Exercise  Price before any
adjustment pursuant to this Section 7; and

           (ii) the  denominator of which shall be the Exercise Price after such
adjustment.

         (e) Other Action Affecting  Capital Shares. In the event after the date
hereof the Company  shall take any action  affecting  the number of  Outstanding
Capital  Shares,  other  than an  action  specifically  described  in any of the
foregoing  subsections  (a) through (c) hereof,  inclusive,  (including  without
limitation a subdivision  or  combination  of Common Stock,  or the payment of a
dividend  in  its  Capital  Shares  or  any  other  distribution),  that  in the
reasonable  opinion of the Warrant Holder would have a materially adverse effect
upon the rights of the Warrant  Holder at the time of exercise of the Protective
Warrant, the Exercise Price shall be adjusted in such manner and at such time as
the  Board of  Directors  on the  advice  of the  Company's  independent  public
accountants shall in good faith determine to be equitable in the circumstances.

         (f) Notice of Certain  Actions.  In the event the Company  shall,  at a
time while the Protective Warrant is unexpired and outstanding,  take any action
pursuant to subsections  (a) through (e) of this Section 7 that may result in an
adjustment of the Exercise Price, the Company shall notify the Warrant Holder of
such action 10 days in advance of its  effective  date in order to afford to the
Warrant Holder an  opportunity to exercise the Protective  Warrant prior to such
action becoming effective.

         (g) Notice of  Adjustments.  Whenever the  Exercise  Price or number of
Protective  Warrant Shares shall be adjusted  pursuant to Section 7 hereof,  the
Company  shall  promptly  deliver by facsimile  with the  original  delivered by
express  courier  service in accordance  with Section 12 hereof;  a certificate,
which shall be signed by the Company's  President or a Vice President and by its
Treasurer or  Assistant  Treasurer  or its  Secretary  or  Assistant  Secretary,
setting  forth in reasonable  detail the event  requiring  the  adjustment,  the
amount of the  adjustment,  the method by which such  adjustment  was calculated
(including a description of the basis on which the Company's  Board of Directors
made  any  determination  hereunder),  and the  Exercise  Price  and  number  of
Protective Warrant Shares purchasable at that Exercise Price after giving effect
to such adjustment.

Section 8. No Impairment.  The Company will not, by amendment of its Certificate
or By-Laws or through any  reorganization,  transfer  of assets,  consolidation,
merger, dissolution,  issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Protective  Warrant,  but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such  action as may be  necessary
or  appropriate  in order to protect  the rights of the Warrant  Holder  against
impairment.  Without  limiting the generality of the foregoing,  the Company (a)
will not  increase  the par value of any  Protective  Warrant  Shares  above the
amount payable  therefor on such exercise,  and (b) will take all such action as
may be reasonably necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable  Protective Warrant Shares on the
exercise of this Protective Warrant.
<PAGE>

Section 9. Rights As Stockholder.  Prior to exercise of this Protective  Warrant
and except as provided  in Section 7 hereof,  the  Warrant  Holder  shall not be
entitled  to any rights as a  stockholder  of the  Company  with  respect to the
Protective Warrant Shares, including (without limitation) the right to vote such
shares,  receive  dividends  or other  distributions  thereon or be  notified of
stockholder  meetings.  However,  in the event of any taking by the Company of a
record of the holders of any class of securities  for the purpose of determining
the holders  thereof who are entitled to receive any dividend (other than a cash
dividend)  or other  distribution,  any  right to  subscribe  for,  purchase  or
otherwise  acquire any shares of stock of any class or any other  securities  or
property,  or to receive any other right, the Company shall mail to each Warrant
Holder,  at least ten (10) days prior to the date  specified  therein,  a notice
specifying  the date on which any such  record is to be taken for the purpose of
such  dividend,  distribution  or right,  and the amount and  character  of such
dividend, distribution or right.

Section  10.  Replacement  of  Protective  Warrant.  Upon  receipt  of  evidence
reasonably  satisfactory  to the  Company  of the loss,  theft,  destruction  or
mutilation of the Protective Warrant and, in the case of any such loss, theft or
destruction of the Protective  Warrant,  upon delivery of an indemnity agreement
or security reasonably satisfactory in form and amount to the Company or, in the
case of any such  mutilation,  on surrender and  cancellation of such Protective
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Protective Warrant of like tenor.

Section 11. Restricted Securities.

         (a)  Registration or Exemption  Required.  This Protective  Warrant has
been issued in a transaction  exempt from the  registration  requirements of the
Securities  Act in  reliance  upon  Section  4(2) of the  Securities  Act.  This
Protective  Warrant and the Protective  Warrant Shares issuable upon exercise of
this  Protective  Warrant  may not be resold  except  pursuant  to an  effective
registration  statement or an exemption to the registration  requirements of the
Securities Act and applicable state laws.

         (b) Legend.  Any  replacement  Protective  Warrants  issued pursuant to
Section 2 hereof and any Protective  Warrant Shares issued upon exercise hereof,
shall bear the following legend:

         "THE SECURITIES  EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE U.S.  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
         ACT"), OR ANY OTHER APPLICABLE  SECURITIES LAWS AND HAVE BEEN ISSUED IN
         RELIANCE UPON AN EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS  OF THE
         SECURITIES ACT AND SUCH OTHER  SECURITIES  LAWS.  NEITHER THIS SECURITY
         NOR ANY  INTEREST  OR  PARTICIPATION  HEREIN  MAY BE  REOFFERED,  SOLD,
         ASSIGNED, TRANSFERRED,  PLEDGED, ENCUMBERED,  HYPOTHECATED OR OTHERWISE
         DISPOSED OF,  EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT
         UNDER THE SECURITIES  ACT OR PURSUANT TO A TRANSACTION  WHICH IS EXEMPT
         FROM,  OR NOT  SUBJECT  TO,  SUCH  REGISTRATION.  THE  HOLDER  OF  THIS
         CERTIFICATE IS THE  BENEFICIARY  OF CERTAIN  OBLIGATIONS OF THE COMPANY
         SET  FORTH IN A STOCK  PURCHASE  AGREEMENT,  DATED AS OF JUNE 4,  2001,
         BETWEEN WAVERIDER COMMUNICATIONS INC. AND CRESCENT INTERNATIONAL LTD. A
         COPY  OF  THE  PORTION  OF  THE  AFORESAID  AGREEMENT  EVIDENCING  SUCH
         OBLIGATIONS  MAY  BE  OBTAINED  FROM  WAVERIDER  COMMUNICATIONS  INC.'S
         EXECUTIVE OFFICES."

Removal of such legend shall be in accordance with the legend removal provisions
in the Agreement.
<PAGE>

         (c) No Other  Legend or Stock  Transfer  Restrictions.  No legend other
than the one  specified in paragraph (b) of this Section 11 has been or shall be
placed on the share certificates  representing the Protective Warrant Shares and
no  instructions  or  "stop  transfer   orders,"  so  called,   "stock  transfer
restrictions" or other restrictions have been or shall be given to the Company's
transfer  agent with respect  thereto  other than as expressly set forth in this
Section 11.

         (d)  Assignment.   Assuming  the  conditions  of  Section  11(a)  above
regarding registration or exemption have been satisfied,  the Warrant Holder may
sell, transfer,  assign, pledge or otherwise dispose of this Protective Warrant,
in whole or in part.  The Warrant  Holder shall deliver a written  notice to the
Company  substantially  in the form of the  assignment  form attached  hereto as
Exhibit B (the  "Assignment  Notice"),  indicating the person or persons to whom
this Protective  Warrant shall be assigned and the respective number of warrants
to be assigned to each assignee.  The Company shall effect the assignment within
ten (10) days of receipt of such  Assignment  Notice,  and shall  deliver to the
assignee(s)  designated by the Warrant Holder a Protective Warrant or Protective
Warrants of like tenor and terms for the specified number of shares.

         (e) Investor's  Compliance.  Nothing in this Section 11 shall affect in
any way the  Investor's  obligations  under any  agreement  to  comply  with all
applicable securities laws upon resale of the Common Stock.

Section 12. Notices. All notices, demands,  requests,  consents,  approvals, and
other  communications  required or permitted  hereunder  shall be in writing and
shall be deemed duly given (i) upon  delivery if hand  delivered  at the address
designated  below (if delivered on a business day during normal  business  hours
where such notice is to be received) or the first  business day  following  such
delivery (if delivered other than on a business day during normal business hours
where  such  notice is to be  received),  (ii) on the fifth  business  day after
deposit into the mail, if deposited in the mail, registered or certified, return
receipt requested,  postage prepaid,  addressed to the address designated below,
(iii) upon  delivery  delivered  by  reputable  express  courier  service to the
address   designated  below,  or  (iv)  upon  confirmation  of  transmission  if
transmitted by facsimile to the facsimile number  designated below (if delivered
on a business  day  during  normal  business  hours  where such  notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal  business  hours where such notice is to be
received). The addresses and facsimile numbers for such communications shall be:

         if to the Company:

                           WaveRider Communications Inc.
                           255 Consumers Road, Suite 500
                           Toronto, Ontario
                           Canada M2J 1R4
                           Attention:     T. Scott Worthington
                           Telephone:     (416) 502-3200
                           Facsimile:     (416) 502-2968

         with a copy (which shall not constitute notice) to:

                           Foley, Hoag & Eliot
                           One Post Office Square
                           Boston, MA 02109
                           Attention:     David A. Broadwin, Esq.
                           Telephone:     (617) 832-1259
                           Facsimile:     (617) 832-7000
<PAGE>

         if to the Investor:

                           Crescent International Ltd.
                           c/o GreenLight (Switzerland) SA
                           84, av Louis-Casai
                           P.O. Box 42
                           1216 Geneva, Cointrin
                           Switzerland
                           Attention:     Mel Craw/Maxi Brezzi
                           Telephone:     +41 22 791 71 69
                           Facsimile:     +41 22 929 53 94

         with a copy (which shall not constitute notice) to:

                           Clifford Chance Rogers & Wells LLP
                           200 Park Avenue
                           New York, NY  10166
                           Attention:     Earl S. Zimmerman, Esq.
                           Telephone:     (212) 878-8000
                           Facsimile:     (212) 878-8375

Either party hereto may from time to time change its address or facsimile number
for notices under this Section 12 by giving at least ten (10) days' prior
written notice of such changed address or facsimile number to the other party
hereto.

Section 13.  Miscellaneous.  This Protective  Warrant and any term hereof may be
changed,  waived,  discharged  or  terminated  only by an  instrument in writing
signed by the party against which enforcement of such change, waiver,  discharge
or  termination  is sought.  The  headings  in this  Protective  Warrant are for
purposes of reference  only, and shall not limit or otherwise  affect any of the
terms hereof. The invalidity or  unenforceability  of any provision hereof shall
in no way affect the validity or enforceability of any other provision.

IN WITNESS WHEREOF, this Protective Warrant was duly executed by the
undersigned, thereunto duly authorized, as of the date first set forth above.



WAVERIDER COMMUNICATIONS INC.


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



Attested:


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




<PAGE>




                       EXHIBIT A TO THE PROTECTIVE WARRANT

                                  EXERCISE FORM

                          WaveRider Communications Inc.

The undersigned (the "Registered Holder") hereby irrevocably exercises the right
to purchase  __________shares of Common Stock of WaveRider  Communications Inc.,
an entity  organized  and  existing  under the laws of the State of Nevada  (the
"Company"),  evidenced by the attached  Protective  Warrant,  and herewith makes
payment of the Exercise Price with respect to such shares in full in the form of
(check  the  appropriate  box) (i) wire  transfer  to the  Company's  account at
_______,  _______, _______ (Account No.:________);  or (ii) _________ Protective
Warrant  Shares,  which  represent  the amount of Protective  Warrant  Shares as
provided in the attached  Protective  Warrant to be canceled in connection  with
such  exercise,  all in accordance  with the  conditions  and provisions of said
Protective  Warrant.  The undersigned  requests that stock certificates for such
Protective Warrant Shares be issued,  and a Protective Warrant  representing any
unexercised portion hereof be issued, pursuant to this Protective Warrant in the
name of the registered Registered Holder and delivered to the undersigned at the
address set forth below.

Dated:    ______________________________




______________________________
Signature of Registered Holder

______________________________
Name of Registered Holder (Print)



______________________________
Address



                                     NOTICE


         The signature to the foregoing Exercise Form must correspond to the
name as written upon the face of the attached Protective Warrant in every
particular, without alteration or enlargement or any change whatsoever.


<PAGE>






                       EXHIBIT B TO THE PROTECTIVE WARRANT

                                   ASSIGNMENT

         (To be executed by the registered Warrant Holder (the "Registered
Holder") desiring to transfer the Protective Warrant, in whole or in part.)

         FOR VALUED  RECEIVED,  the  undersigned  Warrant Holder of the attached
Protective  Warrant hereby sells,  assigns or transfers unto the person(s) named
below (the  "Assignee") the right to purchase _______ shares of the Common Stock
of WaveRider  Communications  Inc. evidenced by the attached  Protective Warrant
and  does  hereby  irrevocably  constitute  and  appoint  ________(attorney)  to
transfer the number of shares  specified of the said  Protective  Warrant on the
books of the Company, with full power of substitution in the premises.

         The undersigned  requests that such Protective Warrant be issued, and a
Protective  Warrant  representing  any  unsold,  unassigned  or  non-transferred
portion hereof be issued, pursuant to this Protective Warrant in the name of the
Registered  Holder and  delivered  to the  undersigned  at the address set forth
below.

Dated: ______________________________


______________________________
Signature of Registered Holder

______________________________
Name of Registered Holder (Print)

______________________________
Address of Registered Holder

______________________________
Name of Assignee (Print)

______________________________
Address of Assignee (including zip code number)

Fill in for new Registration of Protective Warrant:

______________________________
Name

______________________________
Address

______________________________
Please print name and address of assignee (including zip code number)

                                     NOTICE

         The signature to the foregoing Assignment must correspond to the name
as written upon the face of the attached Protective Warrant in every particular,
without alteration or enlargement or any change whatsoever.

<PAGE>


                                                                   EXHIBIT 10.4



                          REGISTRATION RIGHTS AGREEMENT


This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 4, 2001,
is made and entered into by and between WaveRider Communications Inc., a Nevada
corporation (the "Company"), and Crescent International Ltd., an entity
organized and existing under the laws of Bermuda (the "Investor").

WHEREAS, the Company and the Investor have entered into that certain Stock
Purchase Agreement, dated as of June 4, 2001 (the "Stock Purchase Agreement"),
pursuant to which the Company will issue, from time to time, to the Investor and
the Investor shall purchase up to $10,000,000 worth of securities of the Company
including (i) common stock, par value $0.001 per share, of the Company (the
"Common Stock") and (ii) 30,000 shares of series D convertible preferred stock,
par value $0.01 per share, of the Company (the "Preferred Stock");

WHEREAS, pursuant to the terms of and in partial consideration for the Investor
entering into the Stock Purchase Agreement, the Company is required to issue to
the Investor an incentive warrant, exercisable from time to time within five
years following the date of issuance (the "Incentive Warrant") for the purchase
of a number of shares of Common Stock at a price to be determined as described
in such Incentive Warrant;

WHEREAS, pursuant to the terms of and in partial consideration for the Investor
entering into the Stock Purchase Agreement, the Company may be required to issue
protective warrants to the Investor, each of which may become exercisable from
time to time as described in such warrants and in the Stock Purchase Agreement
(collectively, the "Protective Warrants" and together with the Incentive Warrant
and any new or replacement warrants issued in accordance with the terms of the
Protective Warrants and the Incentive Warrant, the "Warrants") for the purchase
of a number of shares of Common Stock at a price to be determined as described
in each such Protective Warrant;

WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investor's agreement to enter into the Stock Purchase Agreement, the Company has
agreed to provide the Investor with certain registration rights as described
herein;

NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, in the Warrants, and in
the Stock Purchase Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, intending to be legally
bound hereby, the parties hereto agree as follows (capitalized terms used herein
and not defined herein shall have the respective meanings ascribed to them in
the Stock Purchase Agreement):
<PAGE>

                                    ARTICLE I
                               REGISTRATION RIGHTS

         Section 1.1       REGISTRATION STATEMENTS.

         (a) Filing of Registration  Statements.  The Company shall register for
resale all Commitment  Shares issued or issuable to the Investor pursuant to the
Stock  Purchase  Agreement  and all Warrant  Shares issued or issuable upon full
exercise of the Warrants. Subject to the terms and conditions of this Agreement,
the Company shall effect such registration in the manner provided below:

           (i) First  Registration  Statement.  On or  before  the end of the 20
calendar day period immediately following the First Sale, the Company shall file
with the SEC a registration  statement (the "First  Registration  Statement") on
Form S-3 if such form is then available to the Company and, if not, on such form
promulgated  by the SEC for which the Company  qualifies,  that  counsel for the
Company shall deem appropriate and which form shall be available for the sale of
all Conversion  Shares,  the Incentive Warrant Shares and any Protective Warrant
Shares,  in  accordance  with  the  intended  method  of  distribution  of  such
securities.  The  aggregate  number of shares of Common  Stock to be  registered
under the First Registration Statement shall be 12,000,000;

           (ii) Subsequent Registration Statements.

             (1) If the Company shall,  pursuant to any Subsequent Sale, require
the Investor to purchase  shares of Common Stock not  previously  registered and
not covered by an effective  Registration  Statement filed with the SEC which is
not a Failed Registration  Statement (as hereinafter  defined) (an "Unregistered
Sale"),  then on or  before  the end of a 20  calendar  day  period  immediately
following each Closing Date relating to each such  Subsequent  Sale, the Company
shall  file  with  the  SEC  a  registration   statement   (each  a  "Subsequent
Registration  Statement," and together with the First Registration Statement and
any other registration  statement covering  Registrable  Securities or otherwise
required to be filed by the Company with the SEC as provided in this  Agreement,
the "Registration  Statements" or each, a "Registration  Statement") on Form S-3
if such  form  is then  available  to the  Company  and,  if not,  on such  form
promulgated  by the SEC for which the Company  qualifies,  that  counsel for the
Company shall deem appropriate and which form shall be available for the sale of
the Subsequent Sale Shares  purchased by the Investor and any Conversion  Shares
and Warrant Shares that have not been previously registered,  in accordance with
the intended method of distribution of such securities.  The aggregate number of
shares to be registered  under each Subsequent  Registration  Statement shall be
equal to (w) the number of Subsequent  Sale Shares  purchased by the Investor on
the applicable Closing Date plus (x) a number of Protective Warrant Shares equal
to the  number of  Subsequent  Sale  Shares  purchased  by the  Investor  on the
applicable Closing Date plus (y) any Conversion Shares not previously registered
plus (z) any Warrant Shares not previously registered;

             (2) Prior to any Subsequent Sale which is not an Unregistered Sale,
the Company shall file with the SEC a Registration Statement on Form S-3 if such
form is then  available to the Company and, if not, on such form  promulgated by
the SEC for which the Company qualifies, that counsel for the Company shall deem
appropriate  and which  form  shall be  available  for the sale of the shares of
Common Stock to be  purchased by the Investor and any Warrant  Shares which have
not  previously  been  registered,  in  accordance  with the intended  method of
distribution of such securities. The aggregate number of shares to be registered
under such Registration Statement shall be determined by the Company.
<PAGE>

         (b)  Effectiveness  of  the  Registration  Statements.   The  following
conditions for effectiveness shall apply to the Registration Statements required
to be filed by the Company with the SEC pursuant to paragraph (a) above, without
limiting the Company's  obligation  to file such  Registration  Statements.  The
Company shall use its best efforts: (i) to have the First Registration Statement
declared  effective by the SEC in no event later than 90 calendar days after the
Closing  Date  relating  to the First  Sale,  and (ii) to have  each  Subsequent
Registration  Statement  declared effective by the SEC in no event later than 60
calendar days after the Closing Date relating to each Unregistered  Sale, and in
any event prior to any further  Subsequent  Sales. The Company shall ensure that
each  Registration  Statement and any amendments  thereto remain in effect until
the later of (1) a period  ending 1 day  following the date of expiration of the
Incentive  Warrant  Exercise  Period (as such term is  defined in the  Incentive
Warrant) if the  Incentive  Warrant has not been  exercised  in full and if such
Registration  Statement  covers the Warrant Shares issuable under such Incentive
Warrant and (2) the date the Registrable Securities covered by such Registration
Statement and issued or issuable to the Investor  pursuant to the Stock Purchase
Agreement may be sold by the Investor without registration and without any time,
volume or manner  limitations  pursuant to Rule 144(k) (or any similar provision
then in effect) under the Securities  Act or have otherwise been sold;  provided
that such  period  shall be extended  one day for each day after the  applicable
Effective Date that any Registration  Statement covering Registrable  Securities
is not effective during the period such Registration Statement is required to be
effective pursuant to this Agreement.

         (c)  Failure  to  Obtain  or  Maintain  Effectiveness  of  Registration
Statements.

           (i) In the  event the  Company  fails  for any  reason to obtain  the
effectiveness of any Registration Statement within the time periods set forth in
Section  1.1(b)  (a "Tardy  Registration  Statement")  or in the event  that the
Company fails for any reason to maintain the  effectiveness  of any Registration
Statement (or the underlying prospectus) covering Registrable Securities for the
time period set forth in Section 1.1(b) (an "Ineffective Registration Statement"
together with a Tardy Registration Statement, a "Failed Registration Statement")
or upon the occurrence of any event of the kind described in Section  2.1(g)(iv)
hereof (unless the Registrable Securities covered by such Registration Statement
shall have become freely tradable  pursuant to Rule 144(k) of the Securities Act
or have been  otherwise  sold),  then,  in either  event an amount  equal to two
percent  (2.0%)  of the  aggregate  Purchase  Price  of  all of the  Registrable
Securities  covered by any such Failed  Registration  Statement then held by the
Investor for each calendar month and for each portion of a calendar  month,  pro
rata,  (the  "Failed  Registration  Statement  Fee")  during  any period of such
ineffectiveness  or,  in the  case of the  occurrence  of an  event  of the kind
described in Section 2.1(g)(iv)  hereof,  until the Investor shall have received
copies  of the  supplemental  or  amended  prospectus  contemplated  by  Section
2.1(g)(iv)  hereof (an  "Ineffective  Period"),  shall become due and payable to
Investor.

           (ii) If Failed Registration Statement Fees accrue with respect to any
Ineffective   Registration  Statement,   payment  of  such  Failed  Registration
Statement Fees shall be made on the first Trading Day after the earlier to occur
of (1) the expiration of the applicable  Ineffective Period and (2) the last day
of each calendar month during an Ineffective Period.
<PAGE>

         (d)  Restricted  Period.  While in  possession  of material  non-public
information  received  from the Company (a  "Restricted  Period"),  the Investor
shall not  dispose  of any  Registrable  Securities  until such  information  is
disclosed  to the public;  provided  that,  if such  Restricted  Period is for a
period  of up to 30 days  during  any 360 day  period,  the  liquidated  damages
described  in  Section  1.1(c)  hereof  shall not apply  until and  unless  such
Restricted  Period  exceeds 30 days  during  such 360 day period  and;  provided
further that, if such Restricted Period exceeds 120 days, the liquidated damages
described in Section  1.1(c) hereof shall be increased to three  percent  (3.0%)
until such Restricted Period shall have elapsed.

         (e) Failure to Register  Sufficient  Number of Shares. If the number of
Protective Warrant Shares included in the First  Registration  Statement or each
Subsequent  Registration  Statement is less than the total number of  Protective
Warrant  Shares  issuable upon  exercise at the Exercise  Price (as such term is
defined in each  Protective  Warrant)  (such  deficit in the number of shares is
referred  to  herein  as the  "Deficit  Shares"),  then  (i) the  Company  shall
immediately  amend  such  Registration  Statement  (or  file a new  Registration
Statement)  to cover  the  Deficit  Shares  (such  amended  or new  Registration
Statement is referred to herein as a "Deficit  Shares  Registration  Statement")
and (ii) the Company shall pay to the Investor in  immediately  available  funds
into an  account  designated  by the  Investor  an  amount  equal to 2.0% of the
product of (x) the number of Deficit  Shares  multiplied by (y) the Bid Price of
the Common Stock on the applicable  Effective  Date, for each calendar month and
for each  portion  of a calendar  month,  pro rata,  during the period  from the
Effective Date of the applicable Registration Statement to the Effective Date of
the applicable Deficit Shares Registration Statement.

         (f) Liquidated Damages. The Company and the Investor hereby acknowledge
and agree that the sums  payable  under  subsections  1.1(c),  1.1(d) and 1.1(e)
hereof  shall  constitute  liquidated  damages  and not  penalties.  The parties
further acknowledge that (i) the amount of loss or damages likely to be incurred
is incapable or is difficult to estimate  precisely,  (ii) the amounts specified
in such subsections bear a reasonable  proportion and are not plainly or grossly
disproportionate  to the probable loss likely to be incurred in connection  with
any  failure  by the  Company  to  obtain or  maintain  the  effectiveness  of a
Registration  Statement,  (iii)  one of the  reasons  for  the  Company  and the
Investor  reaching an agreement as to such amounts was the  uncertainty and cost
of litigation regarding the question of actual damages, and (iv) the Company and
the Investor are  sophisticated  business  parties and have been  represented by
sophisticated and able legal and financial counsel and negotiated this Agreement
at arm's length.

                                   ARTICLE II
                             REGISTRATION PROCEDURES

         Section  2.1  FILINGS;   INFORMATION.   The  Company  will  effect  the
registration  of the  Registrable  Securities  in  accordance  with the intended
methods of  disposition  thereof as  furnished  to the  Company by any  proposed
seller of such  Registrable  Securities  prior to the  filing of a  Registration
Statement  therefor.  Without  limiting the foregoing,  the Company in each such
case will do the following as expeditiously  as possible,  but in no event later
than the deadline, if any, prescribed therefor in this Agreement:
<PAGE>

         (a)  The  Company   shall  (i)  prepare  and  file  with  the  SEC  the
Registration  Statement(s) covering the shares as described in subsection 1.1(a)
above; (ii) use its best efforts to cause such filed  Registration  Statement(s)
to become and remain effective (pursuant to Rule 415 under the Securities Act or
otherwise) for the period  prescribed by Section 1.1(b);  (iii) prepare and file
with the SEC such amendments and supplements to each Registration  Statement and
the  prospectus  used in  connection  therewith as may be necessary to keep each
Registration  Statement  effective  for the time  period  prescribed  by Section
1.1(b);  and (iv) comply with the  provisions of the Securities Act with respect
to the  disposition of all  securities  covered by each  Registration  Statement
during such period in accordance with the intended methods of disposition by the
Investor set forth in each Registration Statement.

         (b)  The  Company   shall  file  all   necessary   amendments  to  each
Registration Statement in order to effectuate the purpose of this Agreement, the
Stock Purchase Agreement, and the Warrants.

         (c) Five  Trading Days prior to filing each  Registration  Statement or
prospectus,  or any amendment or supplement thereto (excluding amendments deemed
to result from the filing of documents  incorporated by reference therein),  the
Company shall deliver to the Investor and one firm of counsel  representing  the
Investor,  in accordance  with the notice  provisions of Section 4.8,  copies of
such  Registration  Statement as proposed to be filed,  together  with  exhibits
thereto,  which  documents will be subject to review and comment by the Investor
and such counsel,  and thereafter  deliver to the Investor and such counsel,  in
accordance  with the notice  provisions of Section 4.8, such number of copies of
such Registration Statement, each amendment and supplement thereto (in each case
including all exhibits  thereto),  the prospectus  included in such Registration
Statement  (including each  preliminary  prospectus) and such other documents or
information  as the  Investor  or  counsel  may  reasonably  request in order to
facilitate the disposition of the Registrable Securities.

         (d) The Company shall deliver, in accordance with the notice provisions
of Section  4.8,  to each  broker as  directed  by the  Investor  such number of
conformed  copies  of such  Registration  Statement  and of each  amendment  and
supplement   thereto  (in  each  case   including  all  exhibits  and  documents
incorporated by reference), such number of copies of the prospectus contained in
such  Registration  Statement  (including  each  preliminary  prospectus and any
summary  prospectus) and any other  prospectus  filed under Rule 424 promulgated
under the Securities Act relating to the Registrable Securities,  and such other
documents,  as may be reasonably  requested to facilitate the disposition of the
Registrable Securities.

         (e) After the filing of each Registration Statement,  the Company shall
promptly  notify the Investor of any stop order issued or  threatened by the SEC
in connection therewith and take all commercially reasonable actions required to
prevent the entry of such stop order or to remove it if entered.

         (f) The Company  shall use its best  efforts to (i) register or qualify
the Registrable  Securities under such other securities or blue sky laws of such
jurisdictions  in the United States as the Investor may  reasonably (in light of
its  intended  plan of  distribution)  request,  and (ii) cause the  Registrable
Securities to be registered with or approved by such other governmental agencies
or  authorities  in the  United  States  as may be  necessary  by  virtue of the
business and  operations of the Company and do any and all other acts and things
that may be  reasonably  necessary  or  advisable  to  enable  the  Investor  to
consummate the disposition of the  Registrable  Securities;  provided,  however,
that the Company will not be required to qualify generally to do business in any
jurisdiction  where it would not  otherwise  be required to qualify but for this
paragraph (f), subject itself to taxation in any such  jurisdiction,  or consent
or subject itself to general service of process in any such jurisdiction.
<PAGE>

         (g)  The  Company  shall  immediately  notify  the  Investor  upon  the
occurrence of any of the following events in respect of a Registration Statement
or related prospectus in respect of an offering of Registrable  Securities:  (i)
receipt  of any  request  for  additional  information  by the SEC or any  other
federal or state  governmental  authority  during the period of effectiveness of
the  Registration  Statement or amendments or  supplements  to the  Registration
Statement  or  related  prospectus;  (ii) the  issuance  by the SEC or any other
federal  or state  governmental  authority  of any  stop  order  suspending  the
effectiveness  of a Registration  Statement or the initiation of any proceedings
for  that  purpose;  (iii)  receipt  of any  notification  with  respect  to the
suspension of the  qualification  or exemption from  qualification of any of the
Registrable  Securities  for  sale  in any  jurisdiction  or the  initiation  or
threatening of any proceeding for such purpose;  (iv) the happening of any event
that  makes  any  statement  made  in such  Registration  Statement  or  related
prospectus or any document  incorporated or deemed to be incorporated therein by
reference  untrue in any  material  respect or that  requires  the making of any
changes in the Registration Statement,  related prospectus or documents so that,
in the  case  of a  Registration  Statement,  it will  not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein not misleading,  and
that in the case of the  related  prospectus,  it will not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein, in the light of the
circumstances under which they were made, not misleading; (v) the declaration by
the SEC of the effectiveness of a Registration Statement; and (vi) the Company's
reasonable  determination  that a  post-effective  amendment to the Registration
Statement would be appropriate, and the Company promptly shall make available to
the Investor any such supplement or amendment to the related prospectus.

         (h) The Company  shall enter into  customary  agreements  and take such
other actions as are reasonably  required in order to expedite or facilitate the
disposition  of such  Registrable  Securities  (whereupon  the Investor,  at its
option,  may  require  that any or all of the  representations,  warranties  and
covenants of the Company also be made to and for the benefit of the Investor).

         (i) The Company shall make  available to the Investor (and will deliver
to Investor's  counsel),  subject to  restrictions  imposed by the United States
government   or  any   agency  or   instrumentality   thereof,   copies  of  all
correspondence  between the SEC and the  Company,  concerning  any  Registration
Statement,  and also will make  available for inspection by the Investor and any
attorney,   accountant   or  other   professional   retained  by  the   Investor
(collectively,  the  "Inspectors"),  all financial and other records,  pertinent
corporate documents and properties of the Company (collectively,  the "Records")
as shall be reasonably  necessary to enable them to exercise their due diligence
responsibility,  and cause the  Company's  officers and  employees to supply all
information  reasonably  requested  by any  Inspectors  in  connection  with any
Registration Statement.
<PAGE>

Records that the Company determines,  in good faith, to be confidential and that
it notifies  the  Inspectors  are  confidential  shall not be  disclosed  by the
Inspectors  unless (i) the  disclosure  of such Records is necessary to avoid or
correct a  misstatement  or omission in any  Registration  Statement or (ii) the
disclosure or release of such Records is requested or required  pursuant to oral
questions, interrogatories,  requests for information or documents or a subpoena
or  other  order  from a court  of  competent  jurisdiction  or  other  process;
provided,  however,  that prior to any disclosure or release  pursuant to clause
(ii),  the  Inspectors  shall provide the Company with prompt notice of any such
request or requirement  so that the Company may seek an  appropriate  protective
order or waive such  Inspectors'  obligation not to disclose such Records;  and,
provided, further, that if failing the entry of a protective order or the waiver
by the  Company  permitting  the  disclosure  or  release of such  Records,  the
Inspectors,  upon advice of counsel, are compelled to disclose such Records, the
Inspectors may disclose that portion of the Records that counsel has advised the
Inspectors  that the Inspectors are compelled to disclose.  The Investor  agrees
that  information  obtained  by it solely as a result of such  inspections  (not
including any information  obtained from a third party who,  insofar as is known
to the Investor after reasonable  inquiry, is not prohibited from providing such
information  by a  contractual,  legal or fiduciary  obligation  to the Company)
shall be deemed  confidential  and,  if  material  non-public  information,  the
Investor  shall not while in  possession  of such  information  engage in market
transactions in the securities of the Company or its Affiliates unless and until
such information is made generally available to the public. The Investor further
agrees that upon learning  that  disclosure of such Records is sought in a court
of  competent  jurisdiction,  it will give  notice to the  Company and allow the
Company, at its expense,  to undertake  appropriate action to prevent disclosure
of the Records deemed confidential.

         (j) To the extent  required by law or reasonably  necessary to effect a
sale of Registrable  Securities in accordance with prevailing business practices
at the time of any sale of  Registrable  Securities  pursuant to a  Registration
Statement,  the  Company  shall  deliver to the  Investor a signed  counterpart,
addressed  to the  Investor,  of (1) an  opinion or  opinions  of counsel to the
Company  and  (2) a  comfort  letter  or  comfort  letters  from  the  Company's
independent public accountants, each in customary form and covering such matters
of the type customarily  covered by opinions of comfort letters, as the case may
be, as the Investor therefor reasonably requests.

         (k) The Company  otherwise  shall comply with all applicable  rules and
regulations  of  the  SEC,  including,   without  limitation,   compliance  with
applicable reporting requirements under the Exchange Act.

         (l) The Company may require the Investor to furnish promptly in writing
to the Company such  information as may be legally  required in connection  with
any registration including,  without limitation,  all such information as may be
requested by the SEC or the National  Association  of Securities  Dealers,  Inc.
(the  "NASD").  The  Investor  agrees to provide such  information  requested in
connection  with any  registration  within ten Trading Days after receiving such
written  request  and the  Company  shall not be  responsible  for any delays in
obtaining or maintaining the effectiveness of a Registration Statement caused by
the  Investor's  failure to timely  provide  such  information.
<PAGE>

Each seller of  Registrable  Securities  shall notify the Company as promptly as
practicable of any inaccuracy or change in information  previously  furnished by
such seller to the Company or of the occurrence of any event,  in either case as
a result of which any prospectus relating to the Registrable Securities contains
or would contain an untrue statement of a material fact regarding such seller or
its intended  method of disposition of such  Registrable  Securities or omits to
state any material fact regarding such seller or such seller's  intended  method
of disposition of such Registrable  Securities  required to be stated therein or
necessary  to make the  statements  therein,  in the light of the  circumstances
under which they were made, not misleading,  and promptly furnish to the Company
any  additional  information  required  to correct  and  update  any  previously
furnished  information  or required so that such  prospectus  shall not contain,
with respect to such seller or the disposition of such  Registrable  Securities,
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements  therein,  in the light
of the circumstances under which they were made, not misleading.

         Section 2.2       REGISTRATION EXPENSES.

         a. In connection with each  Registration  Statement,  the Company shall
pay all  registration  expenses  incurred in  connection  with the  registration
thereunder (the "Registration Expenses"), including, without limitation: (i) all
registration,  filing,  securities  exchange  listing and fees required by NASD,
(ii) all  registration,  filing,  qualification  and other fees and  expenses of
compliance  with  securities  or blue sky laws  (including  reasonable  fees and
disbursements  of  counsel in  connection  with blue sky  qualifications  of the
Registrable  Securities  required  hereby),  (iii)  all  of the  Company's  word
processing,  duplicating,  printing,  messenger and delivery expenses,  (iv) the
Company's internal expenses  (including,  without  limitation,  all salaries and
expenses of its officers and employees  performing legal or accounting  duties),
(v) the fees and expenses incurred by the Company in connection with the listing
of the Registrable Securities, (vi) reasonable fees and disbursements of counsel
for the Company and,  subject to paragraph (b) below, the Investor and customary
fees and expenses for independent  certified public accountants  retained by the
Company  (including  the  expenses of any special  audits or comfort  letters or
costs associated with the delivery by independent  certified public  accountants
of such  special  audit(s) or comfort  letter(s)  requested  pursuant to Section
2.1(j) hereof),  (vii) the fees and expenses of any special experts  retained by
the Company in  connection  with such  registration,  (viii)  premiums and other
costs of  policies  of  insurance  purchased  at the  discretion  of the Company
against  liabilities  arising  out of any  public  offering  of the  Registrable
Securities being registered, and (ix) any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but excluding underwriting
fees, discounts, transfer taxes or commissions, if any, attributable to the sale
of Registrable Securities,  which shall be payable by each holder of Registrable
Securities pro rata on the basis of the number of Registrable Securities of each
such holder that are included in a registration under this Agreement.

         b. The Company  shall pay all  reasonable  fees and expenses of counsel
for the Investor  incurred in  connection  with the review,  and  assistance  in
preparation,  of each  Registration  Statement  up to $10,000  per  Registration
Statement,  unless a greater  amount is required due to the nature of the review
performed  by  Investor's  counsel  or the  extent  of  assistance  provided  by
Investor's  counsel (an  estimate of such greater fees and expenses of such firm
of  counsel  to the  Investor  shall be  provided  to the  Company  prior to the
undertaking of such counsel's additional review or assistance).
<PAGE>

                                   ARTICLE III
                        INDEMNIFICATION AND CONTRIBUTION

         Section 3.1       INDEMNIFICATION.

         a. The Company agrees to indemnify and hold harmless the Investor,  its
partners, Affiliates, officers, directors, employees and duly authorized agents,
and each Person or entity,  if any, who controls the Investor within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act,  together
with its  controlling  persons  from and  against  any and all  losses,  claims,
damages, liabilities, costs and expenses (including, without limitation, any and
all  reasonable  attorneys'  fees and  disbursements  and costs and  expenses of
investigating  and  defending  any such  claim and any and all  amounts  paid in
settlement  of, any action,  suit or proceeding  between any of the  indemnified
parties and any  indemnifying  parties or between any indemnified  party and any
third party,  or otherwise,  or any claim asserted)  (collectively,  "Damages"),
joint or several,  and any action in respect thereof to which the Investor,  its
partners, Affiliates, officers, directors, employees and duly authorized agents,
and any such  controlling  person,  becomes subject to under the Securities Act,
the Exchange  Act or other  federal or state  statutory  law or  regulation,  at
common law or  otherwise,  as and when  incurred,  insofar as such  Damages  (or
actions or proceedings in respect  thereof) (i) arise out of, or are based upon,
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement, or in any preliminary prospectus,  final prospectus,
summary  prospectus,  documents  filed under the  Exchange  Act and deemed to be
incorporated by reference into any Registration Statement,  application or other
document executed by or on behalf of the Company or based on written information
furnished by or on behalf of the Company filed in any  jurisdiction  in order to
qualify the Registrable Securities under the securities or blue sky laws thereof
or filed with the SEC,  amendment  or  supplement  relating  to the  Registrable
Securities  or (ii) arise out of, or are based  upon,  any  omission  or alleged
omission  to state  therein a material  fact  required  to be stated  therein or
necessary to make the statements therein not misleading, and shall reimburse the
Investor,  its partners,  Affiliates,  officers,  directors,  employees and duly
authorized  agents,  and each such controlling  person,  for any legal and other
expenses  reasonably  incurred  by  the  Investor,  its  partners,   Affiliates,
officers,  directors,   employees  and  duly  authorized  agents,  or  any  such
controlling  person, as incurred,  in investigating or defending or preparing to
defend against any such Damages or actions or  proceedings;  provided,  however,
that the Company  shall not be liable to the extent that any such Damages  arise
out of the Investor's  failure to send or give a copy of the final prospectus or
supplement at or prior to the written  confirmation  of the sale of  Registrable
Securities  to the  persons  asserting  an untrue  statement  or alleged  untrue
statement  or  omission  or  alleged   omission  at  or  prior  to  the  written
confirmation  of the  sale of  Registrable  Securities  to such  person  if such
statement or omission was corrected in such final prospectus or supplement,  and
provided that the Investor had been  obligated  under  applicable law to deliver
such final prospectus or supplement to such person; provided,  further, that the
Company  shall not be liable to the extent that any such Damages arise out of or
are based upon an untrue  statement or alleged  untrue  statement or omission or
alleged omission made in such  Registration  Statement,  or any such preliminary
prospectus,  final prospectus,  summary  prospectus,  amendment or supplement in
reliance  upon and in  conformity  with  written  information  furnished  to the
Company by the Investor or any other person who  participates  as a seller or as
an  underwriter in the offering or sale of such  securities,  in either case, in
any  questionnaire  or other request by the Company,  or otherwise  specifically
stating that it is for use in the  preparation
<PAGE>

thereof and provided that such written  information  furnished to the Company by
the  Investor,  or any  other  person  who  participates  as a  seller  or as an
underwriter  in the  offering  or  sale of such  securities,  is not  materially
altered by the  Company.  All claims for  indemnification  shall be asserted and
resolved as set forth in Section 9.2 of the Stock Purchase Agreement.

         b. The Investor agrees to indemnify and hold harmless the Company,  its
Affiliates, officers, directors, employees, and duly authorized agents, from and
against any and all Damages, joint or several, and any action in respect thereof
to which the Company, its Affiliates,  officers, directors,  employees, and duly
authorized  agents becomes subject to under the Securities Act, the Exchange Act
or  other  federal  or state  statutory  law or  regulation,  at  common  law or
otherwise,  as and  when  incurred,  insofar  as such  Damages  (or  actions  or
proceedings  in respect  thereof)  arise out of, or are based  upon,  any untrue
statement or alleged untrue  statement or omission or alleged omission made in a
Registration Statement, or any preliminary prospectus, final prospectus, summary
prospectus,  amendment or supplement  in reliance  upon and in  conformity  with
written   information   furnished   to  the  Company  by  the  Investor  in  any
questionnaire or other request by the Company, or otherwise specifically stating
that it is for use in the  preparation  thereof;  provided,  however,  that such
written  information  furnished to the Company by the Investor is not materially
altered by the Company.  Notwithstanding the foregoing, the Investor shall in no
event be  required  to  indemnify  the  Company  for any amount in excess of the
amount by which  the total  price at which  the  Registrable  Securities  of the
Investor were sold to the public (less  underwriting  discounts and commissions)
exceeds the amount  actually paid by the Investor under the Securities  Purchase
Agreement for such Registrable Securities sold to the public.

         Section 3.2 ARBITRATION. Any controversy,  claim or dispute arising out
of or in connection  with this Agreement,  including any question  regarding its
existence, validity,  interpretation,  breach, or termination, shall be referred
to and finally  resolved in  accordance  with Section 9.3 of the Stock  Purchase
Agreement.

         Section  3.3 OTHER  INDEMNIFICATION.  Indemnification  similar  to that
specified in the  preceding  paragraphs  of this  Article III (with  appropriate
modifications)  shall be given  by the  Company  with  respect  to any  required
registration or other qualification of securities under any federal or state law
or regulation of any  governmental  authority other than the Securities Act. The
provisions  of this  Article  III shall be in  addition  to any other  rights to
indemnification,  contribution or other remedies which an Indemnified  Party may
have pursuant to law, equity, contract or otherwise.

         Section 3.4  CONTRIBUTION.  If the  indemnification  and  reimbursement
obligations  provided for in any section of this Article III is  unavailable  or
insufficient to hold harmless the Indemnified  Parties in respect of any Damages
referred to herein,  then the Indemnifying  Party, in lieu of indemnifying  such
Indemnified  Party,  shall  contribute  to the  amount  paid or  payable by such
Indemnified  Party as a result of such Damages as between the Company on the one
hand  and  the  Investor  or  seller  on the  other,  in such  proportion  as is
appropriate  to reflect the relative fault of the Company and of the Investor or
seller  in  connection  with  such  statements  or  omissions,  as well as other
equitable considerations.  The relative fault of the Company on the one hand and
of the  Investor or seller on the other shall be  determined  by  reference  to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the  omission or alleged  omission to state a material  fact  relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to  information  and  opportunity to correct or prevent such statement or
omission.
<PAGE>

         The  Company  and the  Investor  agree  that it  would  not be just and
equitable if  contribution  pursuant to this Section 3.4 were  determined by pro
rata  allocation or by any other method of allocation that does not take account
of  the  equitable  considerations  referred  to in  the  immediately  preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
Damages  referred to in the immediately  preceding  paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably  incurred by such Indemnified Party in connection with  investigating
or defending any such action or claim.  Notwithstanding  the  provisions of this
Section 3.4, the Investor or seller shall in no event be required to  contribute
any  amount  in excess  of the  amount  by which  the  total  price at which the
Registrable  Securities  of the Investor or seller were sold to the public (less
underwriting  discounts and commissions) exceeds the amount of any damages which
the  Investor  or seller has  otherwise  been  required to pay by reason of such
untrue or alleged untrue  statement or omission or alleged  omission.  No Person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the Securities  Act) shall be entitled to  contribution  from any Person who was
not guilty of such fraudulent misrepresentation.

                                   ARTICLE IV
                                  MISCELLANEOUS

         Section 4.1  OUTSTANDING  REGISTRATION  RIGHTS.  Except as set forth on
Schedule  4.1  attached  hereto,  the  Company  represents  and  warrants to the
Investor  that there is not in effect on the date  hereof any  agreement  by the
Company  pursuant to which any holders of securities of the Company have a right
to cause the Company to register or qualify such securities under the Securities
Act or any securities or blue sky laws of any  jurisdiction.  The Company hereby
covenants  and  agrees  that  until 270  calendar  days  after the  Registration
Statement has been declared  effective by the SEC it will not, without the prior
written  consent  of the  Investor,  enter  into or amend any  agreement  by the
Company  pursuant to which any holders of securities of the Company have a right
to cause the Company to register or qualify  securities under the Securities Act
or any securities or blue sky laws of any jurisdiction;  provided, however, that
the foregoing  part of this  sentence  shall not apply (i) to a Third Party Sale
(as such term is defined in the Stock Purchase Agreement) for which the Investor
has elected not to exercise its right of first refusal  pursuant to Section 6.12
of the Stock Purchase  Agreement,  (ii) to a Strategic  Acquisition  (as defined
below) pursuant to which the consideration for such acquisition  includes Common
Stock or securities  convertible  into or exercisable for Common Stock, or (iii)
in connection  with the  distribution  of Common Stock pursuant to the Company's
employee  stock  option  plans.  The  term  "Strategic   Acquisition"  means  an
acquisition  by the Company for strategic  business  purposes of another  entity
that is in a business  that is similar or related to the business of the Company
at the time of such  acquisition  whether such  Strategic  Acquisition is in the
form of a merger, stock purchase, asset purchase, or other form of acquisition.

         Section 4.2 TERM. The  registration  rights  provided to the holders of
Registrable Securities hereunder shall terminate at such time as all Registrable
Securities  have  been  issued  and have  ceased to be  Registrable  Securities.
Notwithstanding  the foregoing,  paragraphs (c) and (d) of Section 1.1,  Article
III,  Section  4.8,  and  Section  4.9 shall  survive  the  termination  of this
Agreement.
<PAGE>

         Section 4.3 RULE 144. If the Company is required to file reports  under
the  Exchange  Act,  the  Company  will  file in a timely  manner,  information,
documents and reports in compliance with the Securities Act and the Exchange Act
and will,  at its  expense,  promptly  take such  further  action as  holders of
Registrable  Securities  reasonably  may  request  to  enable  such  holders  of
Registrable Securities to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions  provided by (a) Rule
144 under the Securities Act ("Rule 144"), as such Rule may be amended from time
to time, or (b) any similar rule or regulation  hereafter adopted by the SEC. If
at any time the Company is not required to file such  reports,  it will,  at its
expense,  forthwith  upon the  written  request  of any  holder  of  Registrable
Securities  who intends to make a sale under Rule 144, make  available  adequate
current  public  information  with respect to the Company  within the meaning of
paragraph  (c)(2) of Rule 144 or such other  information  as necessary to permit
sales  pursuant to Rule 144. Upon the request of the Investor,  the Company will
deliver to the Investor a written statement,  signed by the Company's  principal
financial officer,  as to whether it has complied with such  requirements.  This
Section  4.3  shall  terminate  at the same time as the  registration  rights as
provided in Section 4.2.

         Section 4.4  CERTIFICATE.  The Company will, at its expense,  forthwith
upon the request of any holder of Registrable Securities, deliver to such holder
a certificate,  signed by the Company's principal financial officer, stating (a)
the Company's name,  address and telephone number (including area code), (b) the
Company's Internal Revenue Service  identification number, (c) the Company's SEC
file  number,  (d) the  number of shares of each class of stock  outstanding  as
shown by the most recent report or statement  published by the Company,  and (e)
whether  the  Company  has  filed the  reports  required  to be filed  under the
Exchange Act for a period of at least ninety (90) days prior to the date of such
certificate  and in addition has filed the most recent annual report required to
be filed thereunder.

         Section 4.5 AMENDMENT AND MODIFICATION. Any provision of this Agreement
may be waived,  provided that such waiver is set forth in a writing  executed by
both parties to this Agreement. The provisions of this Agreement,  including the
provisions of this sentence, may not be amended,  modified or supplemented,  and
waivers or consents to departures  from the provisions  hereof may not be given,
unless the Company has obtained the written consent of the holders of a majority
of the then outstanding Registrable  Securities.  Notwithstanding the foregoing,
the  waiver of any  provision  hereof  with  respect  to a matter  that  relates
exclusively to the rights of holders of Registrable  Securities whose securities
are being sold  pursuant to a  Registration  Statement  and does not directly or
indirectly  affect the rights of other holders of Registrable  Securities may be
given by holders of at least a majority of the Registrable Securities being sold
by such  holders;  provided  that the  provisions  of this  sentence  may not be
amended,  modified or  supplemented  except in accordance with the provisions of
the immediately  preceding  sentence.  No course of dealing between or among any
Person having any interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this  Agreement or any rights or  obligations  of
any person under or by reason of this Agreement.
<PAGE>

         Section 4.6 SUCCESSORS AND ASSIGNS;  ENTIRE  AGREEMENT.  This Agreement
and all of the provisions  hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective  successors and assigns. The Investor
may  assign  its  rights  under  this  Agreement  to any  subsequent  holder the
Registrable  Securities,  provided  that the  Company  shall  have the  right to
require any holder of  Registrable  Securities to execute a counterpart  of this
Agreement  and  agree to be  bound  by the  provisions  of this  Agreement  as a
condition  to such  holder's  claim to any  rights  hereunder.  This  Agreement,
together with the Stock  Purchase  Agreement,  the Warrants and the exhibits and
schedules  to such  agreements  together  set forth  the  entire  agreement  and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.

         Section  4.7  SEVERABILITY.  In the event  that any  provision  of this
Agreement or the application of any provision  hereof is declared to be illegal,
invalid or otherwise  unenforceable  by a court of competent  jurisdiction,  the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall  substantially  impair the benefits of the remaining portions
of this Agreement.

         Section  4.8  NOTICES.  All  notices,  demands,   requests,   consents,
approvals,  and other communications required or permitted hereunder shall be in
writing and shall be (i) deposited in the mail, registered or certified,  return
receipt  requested,  postage  prepaid,  (ii)  delivered by reputable air courier
service with charges prepaid, or (iii) transmitted by hand delivery, telegram or
facsimile,  addressed as set forth below or to such other  address as such party
shall  have  specified  most  recently  by written  notice.  Any notice or other
communication  required  or  permitted  to be given  hereunder  shall be  deemed
effective  (a) upon hand  delivery  or  delivery  by  facsimile,  with  accurate
confirmation  generated by the transmitting facsimile machine, at the address or
number  designated  below (if delivered on a business day during normal business
hours where such notice is to be received),  or the first business day following
such delivery (if delivered  other than on a business day during normal business
hours  where such notice is to be  received)  or (b) on the third  business  day
following  the date of  mailing  by  express  courier  service,  fully  prepaid,
addressed to such address,  or upon actual  receipt of such  mailing,  whichever
shall first occur. The addresses and facsimile  numbers for such  communications
shall be:

         If to the Company:

                               WaveRider Communications Inc.
                               255 Consumers Road, Suite 500
                               Toronto, Ontario
                               Canada M2J 1R4
                               Attention:      T. Scott Worthington
                               Telephone:      (416) 502-3200
                               Facsimile:      (416) 502-2968
<PAGE>

         with a copy (which shall not constitute notice) to:

                               Foley, Hoag & Eliot
                               One Post Office Square
                               Boston, MA 02109
                               Attention:      David A. Broadwin, Esq.
                               Telephone:      (617) 832-1259
                               Facsimile:      (617) 832-7000


         if to the Investor:

                               Crescent International Ltd.
                               c/o GreenLight (Switzerland) SA
                               84, av Louis-Casai
                               1216 Geneva, Cointrin
                               Switzerland
                               Attention:  Mel Craw/Maxi Brezzi
                               Telephone:  +41 22 791 71 69
                               Facsimile:  +41 22 929 53 94

         with a copy (which shall not constitute notice) to:

                               Clifford Chance Rogers & Wells LLP
                               200 Park Avenue
                               New York, NY  10166
                               Attention:      Earl S. Zimmerman, Esq.
                               Telephone:      (212)  878-8000
                               Facsimile:      (212)  878-8375

         Either party hereto may from time to time change its address or
facsimile number for notices under this Section 4.8 by giving at least 10 days'
prior written notice of such changed address or facsimile number to the other
party hereto.

         Section 4.9 GOVERNING LAW. This Agreement  shall be construed under the
laws of the State of New York.

         Section  4.10  HEADINGS.   The  headings  in  this  Agreement  are  for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.

         Section 4.11  COUNTERPARTS.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.

         Section 4.12 FURTHER  ASSURANCES.  Each party shall  cooperate and take
such action as may be  reasonably  requested by another  party in order to carry
out  the  provisions  and  purposes  of  this  Agreement  and  the  transactions
contemplated hereby.
<PAGE>

         Section 4.13 ABSENCE OF PRESUMPTION.  This Agreement shall be construed
without  regard  to  any   presumption  or  rule   requiring   construction   or
interpretation  against  the party  drafting  or causing  any  instrument  to be
drafted.

         Section 4.14 REMEDIES.  In the event of a breach or a threatened breach
by any party to this  Agreement of its  obligations  under this  Agreement,  any
party  injured or to be injured by such  breach  will be  entitled  to  specific
performance  of its rights under this  Agreement  or to  injunctive  relief,  in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
including  monetary damages,  for breach of any such provision may be inadequate
compensation for any loss.



<PAGE>








         IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.



                                            CRESCENT INTERNATIONAL LTD.


                                              By: /s/ Mel Craw & Maxi Brezzi
                                           -------------------------------------
                                             Name: Mel Craw & Maxi Breezi
                                             Title:



                                            WAVERIDER COMMUNICATIONS INC.


                                            By:               /s/ D.B. Sinclair
                                               ---------------------------------
                                                  Name:       D.B. Sinclair
                                                  Title:      President & CEO









<PAGE>


                                                                    EXHIBIT 10.5
                          WAVERIDER COMMUNICATIONS INC.

                          CERTIFICATE OF DESIGNATION OF
                     SERIES D 5% CONVERTIBLE PREFERRED STOCK

                     NEVADA REVISED STATUTES SECTION 78.1955

         WaveRider  Communications  Inc., a Nevada  corporation (the "Company"),
certifies  by and  through  its  undersigned  President  or  Vice-President  and
Secretary  or  Assistant  Secretary  that the Board of Directors of the Company,
pursuant to Nevada Revised  Statutes  Section  78.1955 and Article  FIFTH,  Part
II(b) of the Articles of Incorporation of the Company,  has adopted a resolution
establishing a series of the Company's  authorized preferred stock designated as
Series D 5%  Convertible  Preferred  Stock (the "Series D Convertible  Preferred
Stock").

         The number of shares of the Series D Convertible Preferred Stock which
the Company is authorized to issue is 30,000.

         The voting powers, designations, preferences, limitations, restrictions
and relative rights of the Series D Convertible Preferred Stock are set forth in
the  Unanimous  Consent of the  Directors of WaveRider  Communications  Inc. set
forth in Exhibit A attached hereto and made a part hereof.

         In witness  whereof,  the undersigned have executed this Certificate of
Amendment as of the 22nd day of May, 2001.



                          WAVERIDER COMMUNICATIONS INC.
                          By:/s/ D. B. Sinclair
                          -------------------
                          D. Bruce Sinclair, President

                          By:/s/ S. Tome
                          ------------------
                          S. Tome, Assistant Secretary

PROVINCE OF ONTARIO                 )
                                    )  ss.

This instrument was acknowledged before me on May 22, 2001, by Bruce Sinclair as
President and by Cameron Mingay, President and Secretary, respectively, of
WaveRider Communications Inc.

                                /s/ C.A. Mingay
                                --------------------
                                NOTARY PUBLIC
My Commission does not Expire

PROVINCE OF ONTARIO                 )
                                    )  ss.

This instrument was acknowledged before me on May 22, 2001, by Sophie Tome as
Assistant Secretary of WaveRider Communications Inc.
                                /s/ C.A. Mingay
                                -------------------
                                NOTARY PUBLIC
My Commission does not Expire



<PAGE>




                                                                    Exhibit A


                   UNANIMOUS WRITTEN CONSENT OF THE DIRECTORS

                                       OF

                          WAVERIDER COMMUNICATIONS INC.

                                       TO

                         ACTIONS TAKEN WITHOUT A MEETING

Pursuant to Section 78.315 of the Nevada Revised Statutes and Article FIFTH,
Part II(b) of the Articles of Incorporation (the "Articles of Incorporation") of
WaveRider Communications Inc., a Nevada corporation (the "Company"), the
undersigned, being all of the directors (the "Directors") of the Company, hereby
take the following actions by unanimous written consent (this "Consent") in lieu
of a meeting of the Directors, by consent of said Directors, as set forth in the
following resolutions, as if taken by unanimous vote of the Directors at a
special meeting of the directors at which all of the Directors were present:

WHEREAS, the Directors desire to establish and designate a series of shares of
preferred stock of the Company and to fix and determine the designation, number,
voting powers, preferences, limitations, restrictions and relative rights
thereof in accordance with the following resolutions;

NOW, THEREFORE, be it hereby:

RESOLVED: That the Company shall be, and hereby is, authorized to issue up to
30,000 shares of a series of the preferred stock, par value $0.01, of the
Company with the following voting powers, designation, preferences, limitations,
restrictions and relative rights:

1.       Designation and Consideration

         The  designation  of the series of the Preferred  Stock created by this
         resolution  shall be,  and  hereby  is,  the  "Series D 5%  Convertible
         Preferred Stock." Shares of this series are hereinbelow  referred to as
         the "Series D Convertible  Preferred Stock." Each share of the Series D
         Convertible  Preferred Stock shall be issued for such  consideration as
         set forth in the Stock Purchase  Agreement,  dated June 4, 2001 between
         the Company and Crescent  International  Ltd.  Once duly issued for the
         consideration called for by resolution of the Directors,  shares of the
         Series D  Convertible  Preferred  Stock shall be deemed  fully paid and
         nonassessable.  Shares of the Series D Convertible  Preferred Stock may
         only be issued to Crescent International Ltd. or an affiliate thereof.


2.       Definitions.  Capitalized  terms used herein and not otherwise  defined
         shall have the following meanings:

         "Closing Bid Price"  shall mean the per share  closing bid price of the
         Common Stock as reported by Bloomberg L.P.

         "Common Stock" shall mean the common stock, par value $0.001 per share,
         of the Company.
<PAGE>

         "Conversion  Date"  shall  mean  the  date  the  conversion  notice  is
         delivered pursuant to Section 8.

         "Conversion Price" shall mean the lower of (i) the Fixed Conversion
         Price or (ii) 95% of the average of the lowest three consecutive
         Closing Bid Prices during the 22 Trading Day period immediately
         preceding the Conversion Date.

         "Conversion  Ratio"  shall have the  meaning  ascribed  to such term in
         Section 8(a).

         "Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as
         amended, and the rules and regulations promulgated thereunder.

         "Fixed Conversion Price" shall mean 110% of the average of the Closing
         Bid Prices for the 10 consecutive Trading Days immediately preceding
         the Issue Date.

         "Floor Price" shall mean $0.60.

         "Issue  Date" shall mean the date of issuance of the shares of Series D
         Convertible Preferred Stock.

         "Liquidation  Preference"  shall have the meaning ascribed to such term
         in Section 6(a).

         "Principal Market" shall mean the Nasdaq National Market, the Nasdaq
         SmallCap Market, the American Stock Exchange, the Electronic Bulletin
         Board or the New York Stock Exchange, whichever is at the time the
         principal trading exchange or market for the Common Stock.

         "Redemption Date" shall mean the date which is 30 Trading Days from the
         date a Redemption Notice is delivered by the Company to the holders of
         Series D Convertible Preferred Stock pursuant to Section 7(a) hereof.

         "Redemption  Notice"  shall have the  meaning  ascribed to such term in
         Section 7(a).

         "Securities Act" shall mean the U.S. Securities Act of 1933, as
         amended, and the rules and regulations promulgated thereunder.

         "Trading  Day"  shall mean any day during  which the  Principal  Market
         shall be open for business.


3.       Rank. The shares of Series D Convertible  Preferred  Stock shall,  with
         respect to the  distribution of assets on  liquidation,  dissolution or
         winding  up of the  Company,  rank (i)  senior  and prior to the Common
         Stock and any other  class or series of  capital  stock of the  Company
         currently or hereafter  issued,  other than the Parity  Securities  (as
         defined below),  (collectively,  the "Junior Securities"),  and (ii) on
         parity with the Series A Voting Convertible  Preferred Stock, par value
         $0.01  per  share,  of the  Company,  the  Series B Voting  Convertible
         Preferred Stock, par value $0.01 per share of the Company, the Series C
         Voting 8% Convertible  Preferred  Stock,  par value $0.01 per share, of
         the  Company and any other  class or series of  preferred  stock of the
         Company hereafter issued, the terms of which specifically  provide that
         shares of such class or series of preferred stock shall rank pari passu
         with the  Series  D  Convertible  Preferred  Stock  (collectively,  the
         "Parity Securities").
<PAGE>

4.       Voting Rights. Notwithstanding anything herein to the contrary, so long
         as any shares of Series D Convertible  Preferred Stock are outstanding,
         the Company shall not and shall cause its  subsidiaries not to, without
         the affirmative  vote of the holders of a majority of the shares of the
         Series D Convertible  Preferred  Stock then  outstanding,  (i) alter or
         change adversely the absolute or relative powers, preferences or rights
         given to the Series D Convertible  Preferred Stock, (ii) alter or amend
         this Certificate of  Designations,  (iii) authorize or create any class
         or series of stock  ranking as to dividends or  distribution  of assets
         upon a  liquidation  or  otherwise  senior to the Series D  Convertible
         Preferred Stock, (iv) amend its Certificate of Incorporation, bylaws or
         other  charter  documents so as to affect  adversely  any rights of any
         holders of Series D  Convertible  Preferred  Stock,  (v)  increase  the
         authorized  number of shares of Series D Convertible  Preferred  Stock,
         (vi)  issue or  reissue  any  shares of  Series  A, B or C  Convertible
         Preferred  Stock,  or (vii) enter into any  agreement  to do any of the
         foregoing.  Except as provided herein or as required by applicable law,
         the Series D Convertible Preferred Stock shall have no voting rights.

5.       Dividends. In the event that there is a failure to deliver Common Stock
         certificates  by the  Company  pursuant  to Section  8(e)(v),  then the
         Company  shall  pay  to the  holders  out of  funds  legally  available
         therefor, before any dividend is paid on any Junior Securities,  yearly
         dividends  at a fixed  rate  of  5.0%  per  annum,  payable  in cash in
         quarterly  installments on March 1, June 1, September 1, and December 1
         of each calendar year,  beginning on June 1, 2001. Such  dividends,  if
         due,  shall be payable on all shares of Series D Convertible  Preferred
         Stock,  other than such shares  which have  previously  and timely been
         converted or redeemed in  accordance  with the  provisions of Section 8
         hereof,  and shall be due from the Issue Date until all such shares are
         converted or redeemed in accordance with the terms hereof.

6.       Liquidation.


         (a)  Liquidation  Amount.  In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, before any
distribution  or  payment  shall be made to the  holders of  outstanding  Junior
Securities,  including,  but not  limited to, the Common  Stock,  the holders of
outstanding shares of Series D Convertible  Preferred Stock shall be entitled to
receive,  out of the  assets  of the  Company  at  the  time  legally  available
therefor,  in exchange for their shares of Series D Convertible  Preferred Stock
an amount in cash equal to $100.00 per share of Series D  Convertible  Preferred
Stock,  as adjusted for stock splits,  stock  dividends,  recapitalizations  and
other similar events (the  "Liquidation  Preference"),  plus an amount per share
per annum in cash equal to 5.0% of the Liquidation Preference, accruing from the
Issue Date until the date on which the Liquidation  Preference for each share of
Series D  Convertible  Preferred  Stock has been paid in full,  on a pari  passu
basis with the rights of the holders of any Parity Securities. If, upon any such
voluntary or involuntary  liquidation,  dissolution or winding up of the affairs
of  the  Company,  the  assets  of  the  Company  available  therefor  shall  be
insufficient to permit the payment in full to the holders of outstanding  shares
of Series D Convertible Preferred Stock of the preferential  liquidation amounts
to which they are then entitled  pursuant to the  provisions of this clause (a),
the entire assets of the Company thus  distributable  shall be distributed among
the holders of outstanding  shares of Series D Convertible  Preferred  Stock and
any Parity Securities  ratably,  in proportion to the full amounts to which such
holders  would  otherwise be entitled if such assets were  sufficient  to permit
payment in full.

         (b) Limitation on Distribution.  Upon any such voluntary or involuntary
liquidation,  dissolution or winding up of the affairs of the Company, after the
payment in full to the  holders of  outstanding  shares of Series D  Convertible
Preferred  Stock  and any  Parity  Securities  of the  preferential  liquidation
amounts to which they are then entitled pursuant to the provisions of clause (a)
above, the holders of outstanding shares of Series D Convertible Preferred Stock
shall not be entitled to  participate in any further  distributions  made to the
holders of the Common Stock or any other class of Junior Securities.
<PAGE>

         (c) Other  Events.  At the option of the  holders of a majority  of the
issued and outstanding Series D Convertible  Preferred Stock, the sale of all or
substantially all of the assets of the Company, the acquisition of a majority of
the  outstanding  Common Stock  (including,  but not limited to, the sale of the
outstanding Common Stock that effectuates a "going-private" transaction), or the
merger of the Company with or into another  corporation  shall be deemed to be a
dissolution, liquidation or winding up of the Company.

7.       Redemption.

         (a) Redemption  Amount. At any time after the Issue Date, any or all of
the  outstanding  shares of Series D  Convertible  Preferred  Stock shall at the
option of the  Company  and upon 30  Trading  Days prior  written  notice by the
Company  (the  "Redemption  Notice")  to the  holders  of  Series D  Convertible
Preferred  Stock, be subject to redemption by the Company on the Redemption Date
for a purchase  price per share payable in cash in immediately  available  funds
equal to $130 per share of Series D Convertible Preferred Stock the ("Redemption
Amount"). If less than all of the shares of Series D Convertible Preferred Stock
are  redeemed,  such  redemption  shall be pro rata among the  holders  thereof.
Notwithstanding  the  foregoing,  the Company  shall not be  permitted to redeem
shares of Series D Convertible Preferred Stock with respect to which the holders
of such  shares have  previously  given  notice to the Company of such  holders'
intent to  convert  such  shares of Series D  Convertible  Preferred  Stock into
shares of Common Stock in accordance with Section 8 hereof.

         (b)  Termination  of  Preferred  Stock  Rights.   From  and  after  any
Redemption  Date,  unless the Company shall default on such  Redemption  Date in
paying the  Redemption  Amount to the  holder,  all rights of the holders of the
shares of Series D  Convertible  Preferred  Stock  surrendered  for  redemption,
except the right to receive  the  Redemption  Amount and all  accrued but unpaid
dividends in respect of such shares,  shall cease and terminate  with respect to
such shares of Series D Convertible  Preferred Stock  surrendered for redemption
only.

         (c) Default by Company.  If the Company shall default on any Redemption
Date in paying the Redemption Amount to the holder, all rights of the holders of
the shares of Series D Convertible  Preferred  Stock  surrendered for redemption
with respect to such shares shall be reinstated,  including  without  limitation
the right of such holders to convert  shares of Series D  Convertible  Preferred
Stock into shares of Common Stock pursuant to Section 8 hereof.  Furthermore, if
on the Redemption  Date, any portion of the Redemption  Amount shall not be paid
by the Company,  liquidated  damages  shall accrue on the unpaid  portion of the
Redemption Amount at the rate of 2% per month (which amount shall not constitute
a penalty)  until either (i) the  Redemption  Amount,  plus all such  liquidated
damages  is paid in  full,  or (ii) the date on which  all  shares  of  Series D
Convertible  Preferred  Stock  subject to  redemption  by the Company  have been
converted into shares of Common Stock  pursuant to Section 8 hereof  (including,
without limitation, delivery of all certificates required by Section 8(e)).

         (d)  Option of Holder to  Convert.  During  the 30  Trading  Day period
following the date a holder of Series D Convertible Preferred Stock has received
a  Redemption  Notice  from the  Company,  such holder may convert its shares of
Series D Convertible  Preferred Stock into shares of Common Stock of the Company
in accordance with the provisions of Section 8 hereof.
<PAGE>

         (e) Mechanics of  Redemption.  A Redemption  Notice may be delivered to
the holders of Series D  Convertible  Preferred  Stock via  facsimile,  and upon
receipt of such notice each holder shall deliver written  acknowledgment thereof
via  facsimile  to the  Company.  The  redemption  of the  shares  of  Series  D
Convertible  Preferred  Stock upon any  Redemption  Date shall take place at the
principal place of business of the Company. On such Redemption Date, the Company
shall tender the  Redemption  Amount by wire transfer of  immediately  available
funds to an account  designated  in writing by each holder.  Upon receipt of the
Redemption Amount,  each holder of the certificate or certificates  representing
the shares of Series D Convertible Preferred Stock being redeemed shall promptly
deliver such  certificate or  certificates to the Company at its principal place
of business.

8.       Conversion.

         (a)  Conversion by the Holder.  Subject to the provision for adjustment
set forth below and subject to paragraph  (c) below,  each share of the Series D
Convertible  Preferred  Stock shall be  convertible  at the option of the holder
thereof at any time after the Issue Date into a number of shares of Common Stock
equal  to the  then  effective  Conversion  Ratio.  As  used  herein,  the  term
"Conversion  Ratio," determined as of any date, shall equal the number of shares
of Common Stock into which one share of Series D Convertible  Preferred Stock is
convertible  pursuant to this Section 8, which shall be  determined  by dividing
$100.00 by the then effective  Conversion  Price.  The Conversion Ratio shall be
subject to adjustment as provided in Section 8(f).  Notwithstanding  anything in
this Section 8(a) to the  contrary,  at the option of the Company,  which option
must be  exercised  by the  Company  within one  Trading  Day of  delivery  of a
conversion  notice to the Company and which option may not be  exercised  during
any period  which is 120 days after the date that the  Company  first  exercises
this option,  the shares of Series D  Convertible  Preferred  Stock shall not be
convertible in the event that the average of the Closing Bid Prices during the 7
Trading  Day  period  immediately  preceding  the  date of a  conversion  notice
delivered in accordance  with the  provisions of Section  8(e)(i) hereof is less
than the Floor Price; provided,  however, that subsequent to the exercise by the
Company of such option,  the holder may deliver another conversion notice to the
Company  and in such  event  the  Company  shall  not have the  option to refuse
conversion of the shares of Series D Convertible  Preferred Stock if the average
of the Closing Bid Prices during the 7 Trading Day period immediately  preceding
the Company's  receipt of such subsequent  conversion notice is greater than the
Floor Price.

         (b) Conversion by the Company.  Subject to the provision for adjustment
set forth in this  Section 8 and subject to paragraph  (c) below,  each share of
the Series D Convertible  Preferred  Stock shall be convertible at the option of
the  Company  at any time after the Issue Date into a number of shares of Common
Stock equal to the then effective Conversion Ratio, provided that:

         (i)      the shares of Common Stock  issuable upon such  conversion may
                  be  sold  by  the  holder  (1)   pursuant   to  an   effective
                  registration  statement  filed  with the U.S.  Securities  and
                  Exchange  Commission or (2) without  registration  and without
                  any time, volume or manner limitations pursuant to Rule 144(k)
                  (or any similar provision then in effect) under the Securities
                  Act;

         (ii)     the  Closing  Bid  Prices  for  each  of the 22  Trading  Days
                  immediately preceding the date on which a conversion notice is
                  delivered  pursuant to paragraph  (e)(ii) of this Section 8 is
                  equal to or greater than 280% of the Fixed Conversion Price;
<PAGE>

         (iii)    unless  otherwise  agreed to in  writing  by the  holder,  the
                  number of shares of Common Stock issuable upon such conversion
                  is less  than or equal  to twice  the  average  daily  trading
                  volume of the Common Stock on the Principal  Market for the 22
                  Trading Day period  immediately  preceding the date on which a
                  conversion  notice is delivered  pursuant to paragraph (e)(ii)
                  of this Section 8;

         (iv)     at least 22 Trading Days have elapsed since any prior exercise
                  by the  holders  of Series D  Convertible  Preferred  Stock of
                  their  conversion  rights  pursuant to paragraph (a) above and
                  since any prior  exercise  by the  Company  of its  conversion
                  rights pursuant to this paragraph (b); and

         (v)      no shares of Common Stock  issuable upon  conversion of shares
                  of  Series  D  Convertible  Preferred  Stock  are or  shall be
                  subject to any shareholder agreements,  lock-up provisions, or
                  restrictions on transfer of any kind whatsoever.

         (c) Limitations on Conversion. At no time may the holders of the Series
D Convertible  Preferred  Stock or the Company  exercise any  conversion  rights
pursuant to this  Section 8 such that the number of shares of Common Stock to be
received  pursuant to such exercise  aggregated  with all other shares of Common
Stock owned by the Series D Convertible  Preferred Stock holder  beneficially or
deemed  beneficially  owned (as such term is  defined  in Rule  13(d)  under the
Exchange  Act) by the  Series  D  Convertible  Preferred  Stock  holder  and its
affiliates  would result in any Series D Convertible  Preferred Stock holder and
its  affiliates  owning  more  than  9.9% of all such  Common  Stock as would be
outstanding  immediately after conversion on the applicable  Conversion Date, as
determined in accordance with Section 13(d) of the Exchange Act.

         (d)  Reservation  of Stock.  The Company shall at all times reserve and
keep  available  for  issuance  upon the  conversion  of  Series  D  Convertible
Preferred Stock,  free from any preemptive rights or any other actual contingent
purchase  rights of  persons  other  than the  holders  of Series D  Convertible
Preferred Stock,  such number of shares of its authorized but unissued shares of
Common Stock as will from time to time be necessary to permit the  conversion of
all outstanding  shares of Series D Convertible  Preferred Stock,  together with
all accrued but unpaid dividends thereon, into shares of Common Stock, and shall
take all action  required to increase the authorized  number of shares of Common
Stock if necessary to permit the conversion of all outstanding  shares of Series
D Convertible  Preferred Stock. The Company  covenants that all shares of Common
Stock  that  shall  be so  issuable  shall,  upon  issue,  be duly  and  validly
authorized, fully paid, nonassessable and freely tradeable.

         (e) Mechanics of Conversion.

         (i)      Conversion  by the Holder.  Conversion of Series D Convertible
                  Preferred  Stock may be  effected  by any  holder  thereof  by
                  delivery  of a  written  notice  in a  form  agreed  to by the
                  Company  and the  holders  of Series D  Convertible  Preferred
                  Stock.  Such  conversion  notice  shall state that such holder
                  elects to convert all or a specified  portion of such Series D
                  Convertible Preferred Stock in accordance with this Section 8,
                  and  shall  specify  the name or names  in which  such  holder
                  wishes the  certificate or  certificates  for shares of Common
                  Stock to be issued and the address or  addresses to which such
                  holder wishes such  certificate(s)  to be delivered.  Any such
                  conversion   notice  may  be  delivered  to  the  Company  via
                  facsimile.  Within one Trading Day of receipt of a  conversion
                  notice  the
<PAGE>

                  Company  will  deliver  written  acknowledgement  thereof  via
                  facsimile  to the  holders of Series D  Convertible  Preferred
                  Stock so  electing to convert  shares of Series D  Convertible
                  Preferred  Stock,  and the Company  shall  specify  whether it
                  chooses to exercise its option to refuse  conversion  pursuant
                  to and subject to the  provisions of Section 8(a). As promptly
                  as practicable after the delivery of a conversion  notice, the
                  holder  electing  to  convert  shares of Series D  Convertible
                  Preferred   Stock  shall  surrender  to  the  Company  at  the
                  principal  place  of  business  of  the  Company  certificates
                  representing  Series  D  Convertible  Preferred  Stock  to  be
                  converted.

         (ii)     Conversion  by  the  Company.  Subject  to the  provisions  of
                  paragraph  (b) of this  Section  8,  Conversion  of  Series  D
                  Convertible  Preferred Stock may be effected by the Company by
                  delivery  of a  written  notice  in a  form  agreed  to by the
                  Company  and the  holders  of Series D  Convertible  Preferred
                  Stock.  Any such  notice may be  delivered  to the  holders of
                  Series D Convertible  Preferred Stock via facsimile,  and upon
                  receipt  of  such  notice  the  holder  will  deliver  written
                  acknowledgement  thereof  via  facsimile  to the  Company.  As
                  promptly as  practicable  after the  delivery of a  conversion
                  notice,   each  holder  of  shares  of  Series  D  Convertible
                  Preferred   Stock  shall  surrender  to  the  Company  at  the
                  principal  place  of  business  of  the  Company  certificates
                  representing  Series  D  Convertible  Preferred  Stock  to  be
                  converted.

         (iii)    Taxes. The Company shall pay any and all issue and
                  transfer taxes that may be payable in respect of any issuance
                  and/or delivery of shares of Common Stock upon the conversion
                  of Series D Convertible Preferred Stock pursuant hereto.

         (iv)     Delivery. As promptly as practicable,  and in any event within
                  three  Trading Days after the  surrender of such  certificates
                  representing Series D Convertible Preferred Stock, the Company
                  shall  deliver or cause to be delivered to the address  stated
                  in the conversion notice or to any other address designated in
                  writing and  provided to the Company by the holder of Series D
                  Convertible  Preferred Stock (i)  certificate(s)  representing
                  the number of  validly  issued,  fully paid and  nonassessable
                  shares  of  Common  Stock  to which  the  holder  of  Series D
                  Convertible  Preferred Stock being converted shall be entitled
                  and (ii) if less  than all of the  shares  represented  by the
                  surrendered   certificate(s)   are  being  converted,   a  new
                  certificate  representing  the  number  of  shares of Series D
                  Convertible Preferred Stock which remain outstanding upon such
                  partial  conversion.  Subject to Section 8(e)(v) hereof,  such
                  conversion  shall be  deemed to have been made at the close of
                  business on the applicable  Conversion Date so that the rights
                  of the  holder  thereof as to Series D  Convertible  Preferred
                  Stock  being  converted  shall  cease  except for the right to
                  receive shares of Common Stock in accordance herewith, and the
                  persons  entitled to receive  shares of Common  Stock shall be
                  treated for all purposes as having become the record holder of
                  such shares of Common Stock at such time.

         (v)      Failure  to  Deliver  Certificates.  If the  Company  fails to
                  deliver   Common  Stock   certificate(s)   to  the  holder  in
                  accordance  with  Section  8(e)(iv)  on or prior to the  tenth
                  Trading  Day  after  the  applicable   Conversion   Date  (the
                  "Delivery  Failure Date"),  then:

         a.  Dividends as  described  in Section 5, will become  payable and the
Company shall, within seven Trading Days after the Delivery Failure Date, pay to
each holder all such  accrued but unpaid  dividends  on all of the shares of the
Series D  Convertible  Preferred  Stock,  other than such shares which have been
timely converted or redeemed in accordance with the provisions herein;
<PAGE>

         b. Upon notice  provided by the holder to the Company by facsimile (the
"Forced  Redemption  Notice")  that it requires the Company to redeem  shares of
Series D  Convertible  Preferred  Stock,  the Company  shall  redeem such number
shares as requested by the holder in the Forced Redemption Notice,  within seven
Trading  Days of  such  Forced  Redemption  Notice,  by  paying  in  immediately
available  funds the Forced  Redemption  Price (as defined  below).  The "Forced
Redemption  Price"  shall be equal to the product of (x) the number of shares of
Series D  Convertible  Preferred  Stock being  redeemed by such holder,  (y) the
average  Closing Bid Price of the  Company's  Common  Stock for the five Trading
Days  immediately  preceding the Conversion  Date and (z) the  Conversion  Ratio
calculated  on the  Conversion  Date. If the Company fails for any reason to pay
the Forced  Redemption  Price  within such time  period,  the Company  shall pay
liquidated  damages on the Forced  Redemption Price at a rate of 2% per month in
immediately  available  funds to such holder,  accruing from such due date until
the Forced Redemption Price and any accrued  liquidated damages thereon are paid
in full;

         c.  In  the  event  that  the  holder  purchases  (in  an  open  market
transaction or otherwise)  shares of Common Stock to deliver to the satisfaction
of a sale by such  holder of the  shares  underlying  the  Series D  Convertible
Preferred  Stock that the holder  anticipated  receiving upon such conversion on
the  Conversion  Date (a  "Conversion  Buy-In"),  the holder  shall  provide the
Company written notice indicating the holder's  calculation of the Buy-In Amount
(as defined  below) in respect of the Conversion  Buy-In (the "Buy-In  Notice").
Within seven Trading Days of the Buy-In Notice, the Company shall pay the Buy-In
Amount (as such term is defined below) in immediately  available funds. The term
"Buy-In  Amount"  shall be equal to the amount by which (x) the  holder's  total
purchase  price  (including  brokerage  commissions,  if any) for the  shares of
Common  Stock  purchased  for a  Conversion  Buy-In  exceeds  (y) the  aggregate
Conversion  Price for the  number of  shares of Common  Stock in the  Conversion
Buy-In  for which  such  conversion  was not timely  honored.  For  illustration
purposes  only,  if the holder  purchases  shares of Common Stock having a total
purchase  price of  $11,000  to cover a  Conversion  Buy-In  with  respect to an
attempted  conversion of $10,000  aggregate  Conversion  Price for the number of
shares of Common Stock in the Conversion  Buy-In,  the Company shall be required
to pay the holder $1,000.  If the Company fails for any reason to pay the Buy-In
Amount within such time period,  the Company shall pay liquidated damages on the
Buy-In Amount at a rate of 2% per month in immediately  available  funds to such
holder,  accruing from the day following the date of the Buy-In Notice until the
Buy-In Amount and any accrued liquidated damages thereon are paid in full; and .

         d. Nothing herein shall limit a holder's right to pursue actual damages
for the Company's failure to deliver certificates  representing shares of Common
Stock upon conversion  within the period  specified  herein  including,  without
limitation,  damages  relating to any Conversion  Buy-In,  and such holder shall
have the  right to  pursue  all  remedies  available  to it at law or in  equity
(including,   without  limitation,  a  decree  of  specific  performance  and/or
injunctive relief).

         (f) Adjustments.

           (i)  Subdivision or Combination of Shares;  Stock  Dividends.  In the
event of any  change in the number of issued  and  outstanding  shares of Common
Stock of the Company by reason of any stock split, stock dividend,  subdivision,

<PAGE>

or  combination  of  shares,  or any other  change in the  corporate  or capital
structure of the Company  which is effected in such a manner that the holders of
Common  Stock are  entitled  to  receive  (either  directly  or upon  subsequent
liquidation)  shares of stock, other securities,  money or property with respect
to Common Stock (each such event, a "Diluting Event"), then the Conversion Price
and Fixed  Conversion  Price in effect on the  effective  date thereof  shall be
adjusted to that price  determined by multiplying  each of the Conversion  Price
and Fixed Conversion Price in effect immediately prior to such Diluting Event by
a fraction (A) the  numerator of which shall be the total number of  outstanding
shares of Common Stock of the Company  immediately  prior to such Diluting Event
and (B) the denominator of which shall be the total number of outstanding shares
of Common  Stock of the  Company  immediately  after such  Diluting  Event.  Any
adjustment  made  pursuant  to this  subparagraph  (i)  shall  become  effective
immediately  as of the effective  date of such Diluting Event or, if the Company
shall  take a record of  holders  of its  Common  Stock for the  purpose of such
Diluting Event, as of such record date, whichever is earlier;  provided, that if
the Company shall set such a record date,  and before the effective date of such
Diluting Event,  legally abandon its plan to effect such Diluting Event, then no
adjustment  in the  Conversion  Price or Fixed  Conversion  Price then in effect
shall be made by reason of the taking of such  record,  and any such  adjustment
previously made as a result of the taking of such record shall be reversed.

           (ii) Reorganization,  Reclassification,  Merger or Sale. In the event
the Company  effects  any  recapitalization,  reorganization,  reclassification,
consolidation,  spin-off,  distribution,  conversion or exchange of shares,  any
merger or sale of all or substantially  all of the Company's assets or any other
change in the corporate or capital structure of the Company,  in each case which
is effected in such a manner  that the holders of Common  Stock are  entitled to
receive (either directly or upon subsequent  liquidation) shares of stock, other
securities,  money or property  with  respect to or in exchange for Common Stock
(each such event, an "Organic  Change"),  then the holders of shares of Series D
Convertible  Preferred Stock shall have the right to receive the kind and amount
of shares of stock,  other  securities,  money or property  receivable upon such
Organic  Change,  had the  holder  converted  shares  of  Series  D  Convertible
Preferred  Stock  immediately  prior to such  Organic  Change or the record date
therefor,  and an appropriate  provision for the foregoing  shall be made by the
Company as part of any such Organic Change.  An adjustment made pursuant to this
subparagraph  (ii) shall  become  effective  at the close of business on the day
upon which  such  Organic  Change  becomes  effective.  The  provisions  of this
subparagraph  (ii) shall not apply to any event for which an  adjustment is made
pursuant  to  subparagraph  (i) above,  unless the  holders of Common  Stock are
entitled to an adjustment  pursuant to both  subparagraph (i) and (ii), in which
case an adjustment shall be made pursuant to both subparagraph (i) and (ii) with
respect to outstanding shares of Series D Convertible Preferred Stock.

           (g) Fractional  Shares. No fractional shares of Common Stock shall be
issued upon conversion of shares of the Series D Convertible Preferred Stock. If
any  conversion  of any shares of Series D  Convertible  Preferred  Stock  would
create a  fractional  share of Common  Stock,  such  fractional  share  shall be
disregarded  and the number of shares of Common Stock  issuable upon  conversion
shall be the next higher whole number of shares.
<PAGE>

9. Notice of Adjustment.  Upon any  adjustment of the  Conversion  Price and the
Conversion  Ratio then in effect  pursuant to the provisions of Section 8, then,
and in each such case, the Company shall promptly deliver to each of the holders
of  Series D  Convertible  Preferred  Stock a  certificate  signed  by the Chief
Executive Officer or the Chief Financial Officer of the Company setting forth in
reasonable  detail the event requiring the adjustment,  the method by which such
adjustment was calculated and the Conversion  Price and Conversion Ratio then in
effect following such adjustment. Where appropriate,  such notice to the holders
of Series D Convertible Preferred Stock may be given in advance.

10. Notices. All notices,  demands,  requests,  consents,  approvals,  and other
communications  required or permitted  hereunder shall be in writing and, unless
otherwise  specified herein,  shall be (i) personally served,  (ii) deposited in
the mail,  registered or certified,  return receipt requested,  postage prepaid,
(iii) delivered by reputable air courier service with charges  prepaid,  or (iv)
transmitted by hand  delivery,  telegram,  or facsimile,  addressed as set forth
below or to such other address as such party shall have  specified most recently
by  written   notice  given  in  accordance   herewith.   Any  notice  or  other
communication  required  or  permitted  to be given  hereunder  shall be  deemed
effective  (a) upon hand  delivery or delivery  by  facsimile  at the address or
number  designated  below (if delivered on a business day during normal business
hours where such notice is to be received),  or the first business day following
such delivery (if delivered  other than on a business day during normal business
hours  where such notice is to be  received)  or (b) on the third  business  day
following  the date of  mailing  by  express  courier  service,  fully  prepaid,
addressed to such address,  or upon actual  receipt of such  mailing,  whichever
shall first occur.  The  addresses for such  communications  shall be: if to the
Company to its  offices at 255  Consumers  Road,  Suite 500,  Toronto,  Ontario,
Canada M2J 1R4, Attention: T. Scott Worthington,  Facsimile: (416) 502-2968 with
a copy to Foley,  Hoag & Eliot LLP at One Post Office Square,  Boston, MA 02109,
Attention:  David Broadwin, Esq., Facsimile:  (617) 832-7000, and if to a holder
of Series D  Convertible  Preferred  Stock,  to such  holder at the  address  or
facsimile  number of such  holder as  listed  in the stock  record  books of the
Company,  or to such other address as the Company or the holder, as the case may
be, shall have designated upon ten day's prior written notice similarly given.

FURTHER RESOLVED: That all actions taken and transactions entered into by the
Company and its officers, directors, stockholders and duly authorized agents on
its behalf, and any act or failure to act concerning all matters referred to in
the foregoing resolutions, are hereby ratified, confirmed and approved in all
respects.

FURTHER RESOLVED: That the officers of the Company be, and each of them hereby
is, authorized, empowered and directed, on behalf of the Company and in its
name, to take all actions necessary or advisable to carry out the intent and the
purposes of the foregoing resolutions, to execute and deliver any and all
certificates, agreements and other documents and take all such further action
that they, or any of them, may deem necessary, advisable or appropriate in order
to effectuate the intent and accomplish the purposes of the foregoing
resolutions.
<PAGE>

FURTHER RESOLVED: That this Consent to the adoption of the foregoing resolutions
may be executed in  counterparts,  all of which taken together shall  constitute
but one and the same original.

FURTHER RESOLVED: That the authority given in these resolutions is retroactive
and any and all acts authorized herein performed before the passage of these
resolutions are hereby ratified and affirmed.

Each of the Directors, by his signature below, hereby:

Waives  written notice of the time,  place and purposes of a Special  Meeting of
the Directors of the Company;

     Consents to the transaction of the business set forth herein;

Affirms that he has read the foregoing resolutions; and

Approves, adopts and ratifies the resolutions and all acts taken or authorized
therein.

IN WITNESS WHEREOF, each of the undersigned has executed this Unanimous Written
Consent of the Directors to Actions Taken Without a Meeting to be effective as
of the 18th day of May, 2001.

                                            DIRECTORS:

                                           /s/ D. Bruce Sinclair
                                            -------------------------
                                               D. Bruce Sinclair

                                           /s/ Gerry Chastelet
                                            -----------------------
                                               Gerry Chastelet

                                            /s/ Guthrie Stewart
                                            ----------------------
                                                Guthrie Stewart


                                            /s/ Dennis Wing
                                            ----------------------
                                                Dennis Wing


                                            /s/ John Curry
                                            -----------------
                                                John Curry


                                            /s/ Cameron A. Mingay
                                            ------------------------
                                                Cameron A. Mingay
[{"type": "8-K", "sequence": "1", "filename": "main.txt", "description": "8K FOR WAVERIDER", "secsgml_size_bytes": 346278}]
{"company-data": {"conformed-name": "WAVERIDER COMMUNICATIONS INC", "cik": "0000844053", "assigned-sic": "4813", "irs-number": "330264030", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-25680", "film-number": "1662618"}, "business-address": {"street1": "255 CONSUMERS ROAD SUITE 500", "street2": "TORONTO", "city": "ONTARIO CANADA", "state": "A6", "zip": "00000", "phone": "4165023200"}, "mail-address": {"street1": "255 CONSUMERS ROAD SUITE 500", "street2": "TORONTO", "city": "ONTARIO CANADA", "state": "A6"}, "former-company": [{"former-conformed-name": "CHANNEL I INC", "date-changed": "19950324"}, {"former-conformed-name": "CHANNEL I LTD", "date-changed": "19931119"}, {"former-conformed-name": "ATHENA VENTURES INC", "date-changed": "19920703"}]}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

Pursuant to Sections 13 or 15(d) of the Securities and Exchange Act of 1934

 -------------------------------------------------------------------------------
         Date of Report (Date of earliest event reported): June 1, 2001
 -------------------------------------------------------------------------------

                          WAVERIDER COMMUNICATIONS INC.
--------------------------------------------------------------------------------
               (Exact name of registrant as specified in charter)

                                     NEVADA
--------------------------------------------------------------------------------
         (State or other jurisdiction of incorporation or organization)

               0-25680                                 33-0264030
--------------------------------------------------------------------------------
      (Commission File Number            (I.R.S. Employer Identification Number)

         255 Consumers Road, Suite 500, Toronto, Ontario, Canada M2J 1R4
--------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (416) 502-3200
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

--------------------------------------------------------------------------------
          (Former name or former address, if changed since last report)
Item 5.    Sale of convertible preferred stock and establishment of equity line

On June 4, WaveRider Communications Inc. entered into a financing agreement,
arranged by its investment banker, Gruntal & Co., with Crescent International
Ltd. through their investment management firm GreenLight (Switzerland) SA. The
agreement includes an initial investment of $3 Million, for the purchase of
convertible preferred shares, followed by the ability of WaveRider to sell up to
$7 Million in common shares from time to time for a period of two years. In
addition, in consideration of entering the agreement, WaveRider has provided
Crescent with 877,193 common stock purchase warrants, which are exercisable for
up to 5 years at $1.71 per share.

The preferred shares are initially convertible to common shares at the lower of
(i) $1.3772 or (ii) 95% of the average of the lowest three consecutive Closing
Bid Prices during the 22 Trading Day period immediately preceding the Conversion
Date. The agreement provides a limiting factor or "Floor" for the conversion
price by providing the Company with the ability, under certain terms and
conditions, to refuse to allow the conversion of the preferred shares if the
average of the Closing Bid Prices of the common stock is less than $0.60 for the
7 days prior to a request for conversion. In addition, should the average
Closing Bid Price of the common stock exceed $3.86 for a period of 30 days, and
certain other conditions, including availability of freely tradeable common
stock and minimum trading volumes, are met, the Company has the ability to
require the preferred shares be converted.

Future sales of common stock can be made, subject to certain terms and
conditions, in amounts of up to $500,000 per sale and will be priced at the
average of the 3 lowest consecutive Closing Bid Prices for the Company's common
stock over the 22 days prior to the sale. Each sale must be a minimum of 22 days
apart.

The agreement allows for the sale of either registered or unregistered common
shares, however, the Company intends to register a number of shares, which would
cover any future sales in order to avoid certain price protection clauses of the
agreement.

As part of completion of the agreement, WaveRider has received from CVI
International Inc. a waiver of certain rights from the Company's December 2000
financing, including a waiver of CVI's right to purchase additional convertible
notes and warrants. In consideration of this waiver and as part of the terms of
the December 2000 financing, the Company has reduced the conversion rate for the
remaining convertible notes from approximately $1.49 to approximately $1.455,
the exercise price of the one year Series K warrants from $2.539 to
approximately $2.48 and the exercise price of the five year Series J warrants
form $3.35 to $2.80.

In conjunction with the transaction, the Company paid Gruntal & Co. fees of
$315,000, GreenLight fees of $60,000 and legal and due diligence costs of
Crescent in the amount of $48,285. In addition, the Company will pay Gruntal and
GreenLight fees of 5% and 2%, respectively, for each future sale of common stock
and the Company has committed to providing Gruntal with 350,000 common stock
purchase warrants, exercisable for 3 years at an exercise price which will be
set at the lessor of $2.00 or 125% of the average closing bid price of the
Company's common stock over the fifteen trading day period immediately preceding
the date that the registration statement to be filed in conjunction with this
agreement is declared effective.
Item 9.  Regulation FD Disclosure

This document contains forward-looking statements that involve risks and
uncertainties, including the risks associated with the effect of changing
economic conditions, trends in the development of the Internet as a commercial
medium, market acceptance risks, technological development risks, seasonality
and other risk factors detailed in the Company's filings with the Securities and
Exchange Commission

The following disclosures appear on our website.

Q -  Can you provide information on the $25 Million supply agreement that
you recently announced with Emaar Properties PJSC

A - The agreement with Emaar Properties PJSC ("Emaar")  establishes Emaar as our
Exclusive Authorized Wireless Service Provider and Reseller within a significant
portion of the Middle East and surrounding area, including:

1.       GCC Countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia & United Arab
         Emirates

2.       Middle East: Jordan, Lebanon, Syria, Turkey & Yemen

3.       Northern Africa: Algeria, Egypt, Morocco, Nigeria, Sudan & Tunisia

4.       CIS  Countries:  Armenia,  Azerbaijan,  Belarus,  Georgia,  Kazakhstan,
         Kyrghyzstan,  Moldova, Mongolia, Tadjikistan,  Turkmenistan,  Ukraine &
         Uzbekistan

5.       Indian Subcontinent: India & Pakistan

6.       Restricted  Countries:  At the time of this Agreement  WaveRider is not
         legally  permitted  to allow the export of  Products  to Iran,  Iraq or
         Libya.  These  countries  will be added to Territory  when WaveRider is
         legally permitted to allow the export of Products to them.

These are markets where Emaar has an established capability for sales and
support of high technology products. We believe that Emaar's financial strength
and established sales channels will provide WaveRider with a broad reaching
sales organization to sell and deploy products in these markets.

In order to maintain their exclusivity in the territories covered by the
agreement Emaar must purchase a minimum of $25 million of WaveRider product in
the first three years of the agreement (ending April 30, 2004). This
expenditure level includes annual targets of $5 million by the end of the first
year and $13 million by the end of the second year.

As part of the agreement, Emaar has already purchased and is deploying over
$500,000 in equipment and services.

Q -  Can you provide details of the $10 Million financing which you
announced?

A - The new agreement is to replace the second half of the funding that
was arranged in December 2000, which has not and will not proceed. Under the new
arrangement, the Company will be drawing a lower amount of funds at the current
time than it would under the original financing, while arranging for the
flexibility to obtain ongoing investment.

The financing, arranged by our investment banker, Gruntal & Co., is with
Crescent International Ltd. The arrangement basically comes in two parts.
There is an initial investment of $3 Million for the purchase of convertible
preferred shares followed by the ability of WaveRider to sell up to $7 Million
in common shares from time to time for a period of two years. In addition, in
consideration of entering the agreement, WaveRider has provided Crescent with
877,193 common stock purchase warrants, which are exercisable at $1.71 per
share.
The agreement provides a limiting factor or "Floor" for the conversion price by
providing the Company with the ability, under certain terms and conditions, to
refuse to allow the conversion of the preferred shares. In addition, should the
average Closing Bid Price of the common stock exceed $3.86 for a period of 30
days, and certain other conditions are met, including availability of freely
tradeable common stock and minimum trading volumes, the Company has the ability
to require the preferred shares be converted.

The agreement allows for the sale of either registered or unregistered common
shares, however, the Company intends to register a number of shares which would
cover any future sales in order to avoid certain price protection clauses of the
agreement.

Complete details of the transaction are included in a Form 8-K filed by the
Company and available at the Security and Exchange Commissions' EDGAR website.

Exhibits

10.1     Stock Purchase  Agreement  between  WaveRider  Communications  Inc. and
         Crescent International Inc. dated June 4, 2001.
10.2     Class N Warrant,  for the right to  purchase  877,193  Shares of Common
         Stock at an exercise  price of $1.71 per common share,  for a period of
         five years, ending June 4, 2006
10.3     Class O Warrant, for the right to purchase a number of Shares of Common
         Stock at an  exercise  price to be  determined  for a five  years,  the
         number and price to be  determined at such time as the Company may sell
         unregistered shares of Common Stock under the Stock Purchase Agreement.
10.4     Registration Rights Agreement
10.5     Certificate  of  Designation  for the  Company's  Class  D  Convertible
         Preferred Stock.

Signatures:

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this current report on Form 8-K to be signed on its
behalf by the undersigned thereunto duly authorized.

Dated:  June 14, 2001

                          WaveRider Communications Inc.

                                        Per: /s/ D. Bruce Sinclair
                                        ------------------------------
                                        D. Bruce Sinclair, President & CEO
EXHIBIT 10.1

                            STOCK PURCHASE AGREEMENT

                                 by and between

                           Crescent International Ltd.

                                       and

                          WaveRider Communications Inc.

                            dated as of June 4, 2001

This STOCK PURCHASE AGREEMENT is entered into as of the 4th day of June, 2001
(this "Agreement"), by and between Crescent International Ltd. (the "Investor"),
an entity organized and existing under the laws of Bermuda, and WaveRider
Communications Inc., a corporation organized and existing under the laws of the
State of Nevada (the "Company").

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Investor, from time to
time as provided herein, and the Investor shall purchase, up to $10,000,000
worth of securities including (i) shares of Common Stock (as defined below) and
(ii) shares of Preferred Stock (as defined below);

WHEREAS, pursuant to the terms of and in partial consideration for the Investor
entering into this Agreement, the Company is required to issue to the Investor
an Incentive Warrant (as defined below), exercisable from time to time within
five years following the date of issuance, for the purchase of a number of
shares of Common Stock at a price to be determined as described in such
Incentive Warrant;

WHEREAS, pursuant to the terms of and in partial consideration for the Investor
entering into this Agreement, the Company may be required to issue Protective
Warrants (as defined below) to the Investor, each of which may become
exercisable from time to time, for the purchase of a number of shares of Common
Stock at a price to be determined as described in each such Protective Warrant;
and

WHEREAS, such investments will be made in reliance upon the provisions of
Section 4(2) ("Section 4(2)") and Regulation D ("Regulation D") of the U.S.
Securities Act of 1933, as amended and the rules and regulations promulgated
thereunder (the "Securities Act"), and/or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect
to any or all of the investments in Common Stock to be made hereunder.

         NOW, THEREFORE, in consideration of the premises, representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as
follows:

                                   ARTICLE I

                               CERTAIN DEFINITIONS

Section 1.1. "Affiliate" shall mean any Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by, or
is under direct or indirect common control with any other Person. For the
purposes of this definition, "control," when used with respect to any Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise, and the term "controls" and "controlled" have meanings correlative
to the foregoing.
Section 1.2.  "Bid Price" shall mean, with respect to the Common Stock,
the per share closing bid price for such Common Stock as reported by Bloomberg
L.P. in accordance with Section 10.2 of this Agreement.

Section 1.3.  "Capital Shares" shall mean the Common Stock and any shares
of any other class of common stock whether now or hereafter authorized, having
the right to participate in the distribution of dividends (as and when declared)
or assets (upon liquidation of the Company).

Section 1.4.  "Certificate of Designation" shall mean the certificate of
designation of the Preferred Stock, filed by the Company with the Secretary of
State of the State of Nevada prior to the Closing Date of the First Sale.

Section 1.5.  "Closing" shall mean one of the closings of a purchase and
sale of the Preferred Stock or the Common Stock and the issuance of the Warrants
pursuant to Section 2.1 of this Agreement.

Section 1.6. "Closing Date" shall mean, with respect to a Closing, the
second Trading Day following the Sale Date related to such Closing, provided all
conditions to such Closing have been satisfied on or before such Trading Day.

Section 1.7.  "Closing Statement" shall mean the closing statement in the
form of Exhibit A attached hereto, executed by the Company and the Investor on
the Subscription Date and on each Sale Date, setting forth the actions taken by
the Company and the Investor on the Subscription Date and on such Sale Date, as
applicable, and setting forth the actions to be taken by the Company and the
Investor on the applicable Closing Date, and the amounts due on such Closing
Date to the payee entities set forth on Schedule 10.1 hereto.

Section 1.8.  "Commitment Period" shall mean the period commencing on the
Subscription Date and expiring on the earlier to occur of (i) the date on which
the Investor shall have purchased Commitment Shares and Preferred Stock pursuant
to this Agreement for an aggregate Purchase Price of the Maximum Commitment
Amount, (ii) the date this Agreement is terminated pursuant to Section 2.5
hereof, or (iii) the date occurring 24 months from the Subscription Date.

Section  1.9.  "Commitment  Shares"  shall  mean the  Conversion  Shares and the
Subsequent Sale Shares, collectively.

Section 1.10.  "Common Stock" shall mean the Company's common stock,  $0.001 par
value per share.

Section 1.11. "Condition  Satisfaction Date" shall have the meaning set forth in
Section 7.2 of this Agreement.

Section  1.12.  "Conversion  Shares"  shall mean all shares of Common Stock into
which shares of Preferred Stock are or may be converted.

Section  1.13.  "Daily  Trading  Value" shall mean,  on any Trading Day, the Bid
Price multiplied by the trading volume of the Common Stock.

Section  1.14.  "Damages"  shall  mean  any and  all  losses,  claims,  damages,
liabilities,  costs and expenses  (including,  without  limitation,  any and all
investigative,  legal and other expenses reasonably incurred in connection with,
and any and all amounts paid in defense or  settlement  of, any action,  suit or
proceeding  between any indemnified party and any indemnifying  party or between
any indemnified party and any third party, or otherwise, or any claim asserted).

Section  1.15.  "Effective  Date"  with  respect  to each  Sale  of  Registrable
Securities  or  Preferred  Stock  shall  mean the  earlier  to occur of: (i) the
applicable date on which the SEC has declared effective a Registration Statement
registering  resale of Registrable  Securities as set forth in the  Registration
Rights  Agreement and (ii) the date on which such  Registrable  Securities first
become eligible for resale pursuant to Rule 144 of the Securities Act.
Section  1.16.  "Exchange  Act" shall mean the U.S.  Securities  Exchange Act of
1934, as amended and the rules and regulations promulgated thereunder.

Section 1.17. "First Sale" shall have the meaning set forth in Section 2.1(a) of
this Agreement.

Section 1.18.  "Incentive  Warrant" shall mean the Incentive Warrant in the form
of  Exhibit B hereto  issued  pursuant  to  Section  2.1(d)  of this  Agreement,
together with any new or replacement warrant issued in accordance with the terms
of the Incentive Warrant.

Section 1.19.  "Incentive  Warrant Shares" shall mean all shares of Common Stock
issued or issuable pursuant to exercise of the Incentive Warrant.

Section 1.20. "Investment Amount" shall mean the dollar amount to be invested by
the Investor to purchase (i) Preferred  Stock  pursuant to Section 2.1(a) hereof
or (ii)  Subsequent Sale Shares with respect to any Sale Date as notified by the
Company to the Investor in accordance  with Section 2.3 hereof.  With respect to
any Subsequent  Sale,  the Investment  Amount (A) shall not exceed the lesser of
(i) twice the  average of the Daily  Trading  Values  during the 22 Trading  Day
period  immediately  preceding  the  applicable  Sale  Notice  Date and (ii) the
Maximum  Sale  Amount,  and (B) shall not be less than the Minimum  Sale Amount;
provided,  however,  that if the Bid Price on each  Trading  Day during any Sale
Notice Period is less than $0.60 or the Investment Amount as calculated pursuant
to clause (A) above would be less than the Minimum Sale Amount,  the  Investment
Amount shall be $25,000.

Section 1.21.  "Legend" shall have the meaning  specified in Section 8.1 of this
Agreement.

Section 1.22.  "Material  Adverse Effect" shall mean any effect on the business,
operations, properties, prospects, or financial condition of the Company that is
material  and adverse to the  Company or to the Company and such other  entities
controlling  or  controlled  by  the  Company,  taken  as a  whole,  and/or  any
condition, circumstance, or situation that would prohibit or otherwise interfere
with the ability of the Company to enter into and perform its obligations  under
any of (i) this Agreement,  (ii) the Registration Rights Agreement and (iii) the
Warrants.

Section 1.23. "Maximum Commitment Amount" shall mean $10,000,000.

Section 1.24. "Maximum Sale Amount" shall mean $500,000,  unless a higher amount
is agreed to by the Investor;  provided,  however,  that the aggregate amount of
all Sales shall not exceed the Maximum Commitment Amount.

Section 1.25. "Minimum Sale Amount" shall mean $200,000,  unless a lesser amount
is agreed to by the Investor.

Section 1.26.  "Minimum Time  Interval"  shall mean (i) 22 Trading Days from the
Effective Date relating to the First Sale,  (ii) if the previous Sale related to
the sale of  unregistered  Common Stock, 22 Trading Days from the Effective Date
relating  to such  Sale or (iii) if the  previous  Sale  related  to the sale of
registered Common Stock, 22 Trading Days from the previous Sale Date.

Section 1.27. "NASD" shall mean the National  Association of Securities Dealers,
Inc.

Section 1.28.  "Outstanding" when used with reference to Common Stock or Capital
Shares  (collectively  the  "Shares"),  shall mean,  at any date as of which the
number of such Shares is to be determined,  all issued and  outstanding  Shares,
and shall include all such Shares  issuable in respect of  outstanding  scrip or
any certificates  representing  fractional  interests in such Shares;  provided,
however,  that "Outstanding" shall not refer to any such Shares then directly or
indirectly owned or held by or for the account of the Company.
Section 1.29. "Person" shall mean an individual,  a corporation,  a partnership,
an association, a trust or other entity or organization,  including a government
or political subdivision or an agency or instrumentality thereof.

Section 1.30.  "Preferred  Stock" shall mean the Company's  series D convertible
preferred stock, $0.01 par value per share.

Section 1.31.  "Principal  Market" shall mean the Nasdaq  National  Market,  the
Nasdaq SmallCap  Market,  the American Stock Exchange,  the Electronic  Bulletin
Board or the New York Stock  Exchange,  whichever  is at the time the  principal
trading exchange or market for the Common Stock.

Section 1.32.  "Protective Warrant" or "Protective Warrants" shall mean any
and all Protective Warrant(s) in the form of Exhibit C hereto issued pursuant to
Section 2.1(c) of this Agreement.

Section 1.33.  "Protective Warrant Shares" shall mean all shares of Common Stock
issued or issuable pursuant to exercise of the Protective Warrants.

Section  1.34.  "Purchase  Price" shall mean (i) with respect to the First Sale,
$100.00 per share of Preferred Stock and (ii) with respect to a Subsequent Sale,
the average of the lowest three consecutive Bid Prices during the 22 Trading Day
period immediately  preceding the applicable Sale Date and (iii) with respect to
an Effective Date, the average of the lowest three consecutive Bid Prices during
the 22 Trading Day period immediately preceding such Effective Date.

Section 1.35.  "Registrable  Securities"  shall mean (i) the Commitment  Shares,
(ii) the  Warrant  Shares,  and (iii) any  securities  issued or  issuable  with
respect to any of the  foregoing  by way of  exchange,  stock  dividend or stock
split or in connection with a combination of shares,  recapitalization,  merger,
consolidation  or  other  reorganization  or  otherwise.  As to  any  particular
Registrable   Securities,   once  issued  such  securities  shall  cease  to  be
Registrable  Securities when (w) the applicable  Registration Statement has been
declared  effective  by the SEC and all such  Registrable  Securities  have been
disposed of  pursuant to the  applicable  Registration  Statement,  (x) all such
Registrable Securities have been sold under circumstances under which all of the
applicable conditions of Rule 144 (or any similar provision then in force) under
the Securities  Act ("Rule 144") are met, (y) such time as all such  Registrable
Securities have been otherwise  transferred to holders who may trade such shares
without  restriction  under the Securities  Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive  legend or (z) in the  opinion  of  counsel  to the  Company,  which
counsel shall be reasonably  acceptable  to the Investor,  all such  Registrable
Securities  may be sold by the  Investor  without  registration  and without any
time,  volume or manner  limitations  pursuant  to Rule  144(k) (or any  similar
provision then in effect) under the Securities Act.

Section 1.36. "Registration Rights Agreement" shall mean the registration rights
agreement by and between the Company and the Investor,  in the form of Exhibit D
hereto.

Section 1.37. "Registration  Statement" or "Registration  Statements" shall have
the meaning set forth in the Registration Rights Agreement.

Section 1.38. "Regulation D" shall have the meaning set forth in the recitals of
this Agreement.

Section  1.39.  "Representative"  of a party shall mean any  officer,  director,
employee,  agent, counsel,  accountant,  financial advisor,  consultant or other
representative of such party.

Section  1.40.  "Sale"  shall  mean the First  Sale,  together  with any and all
Subsequent Sales.

Section  1.41.  "Sale  Date"  shall  mean with  respect to the First  Sale,  the
Subscription  Date,  and with respect to  Subsequent  Sales,  the Trading Day on
which a Sale Notice Period expires.

Section 1.42.  "Sale Fees" shall have the meaning  specified in Section  10.1(b)
hereof.
Section 1.43.  "Sale Notice" shall mean a written  notice to the Investor in the
form of Exhibit E hereto,  setting forth, inter alia, the intended Closing Date,
the Investment  Amount and the number of shares of Common Stock that the Company
intends  to require  the  Investor  to  purchase  pursuant  to the terms of this
Agreement.

Section  1.44.  "Sale  Notice  Date"  shall  mean the  Trading  Day  during  the
Commitment  Period upon which a Sale Notice to sell Common Stock to the Investor
is deemed delivered pursuant to Section 2.3(b) hereof.

Section  1.45.  "Sale  Notice  Period"  shall mean a period  beginning on a Sale
Notice Date and ending 7 Trading Days after a Sale Notice Date.

Section 1.46. "SEC" shall mean the U.S. Securities and Exchange Commission.

Section 1.47.  "SEC Documents"  shall mean the Company's  latest Form 10-K as of
the time in  question,  all Forms 10-Q and 8-K filed  thereafter,  and the Proxy
Statement for its latest fiscal year as of the time in question  until such time
the Company no longer has an  obligation  to  maintain  the  effectiveness  of a
Registration Statement as set forth in the Registration Rights Agreement.

Section 1.48. "Section 4(2)" shall have the meaning set forth in the recitals of
this Agreement.

Section 1.49.  "Securities Act" shall have the meaning set forth in the recitals
of this Agreement.

Section 1.50.  "Short Sale" shall have the meaning specified in Rule 3b-3 of the
Exchange Act.

Section 1.51. "Subscription Date" shall mean the date on which this
Agreement is executed and delivered by the parties hereto.

Section  1.52.  "Subscription  Fee" shall have the  meaning set forth in Section
10.1(a) hereof.

Section  1.53.  "Subsequent  Sale"  shall have the  meaning set forth in Section
2.1(b) of this Agreement.

Section  1.54.  "Subsequent  Sale  Shares"  shall have the  meaning set forth in
Section 2.1(b) of this Agreement.

Section 1.55. "Subsidiary" shall mean any Person in which the Company,  directly
or indirectly through Subsidiaries or otherwise, beneficially owns more than 50%
of either the equity interests in, or the voting control of, such Person.

Section 1.56. "Trading Day" shall mean any day during which the Principal Market
shall be open for business.

Section 1.57.  "Transfer Agent Instructions" shall have the meaning set forth in
Section 2.4(a) of this Agreement.

Section 1.58.  "Underwriter"  shall mean any  underwriter  participating  in any
disposition of the Registrable  Securities on behalf of the Investor pursuant to
a Registration Statement.

Section  1.59.  "Warrants"  shall mean the  Protective  Warrants  and  Incentive
Warrant.

Section 1.60.  "Warrant Shares" shall mean the Protective Warrant Shares and the
Incentive Warrant Shares.

                                   ARTICLE II

            SALE AND PURCHASE OF COMMON STOCK, WARRANTS AND PREFERRED STOCK
                           TERMINATION OF OBLIGATIONS

Section 2.1.      Sales.
                  -----

         (a) First Sale. In accordance  with the terms and  conditions set forth
herein (including without limitation the provisions of Article VII hereof),  the
Sale Date of the First Sale shall occur on the Subscription Date. On the Closing
Date  relating  to the First Sale,  the Company  shall issue and sell and, if so
issued and sold, the Investor shall  purchase,  30,000 shares of Preferred Stock
at a Purchase  Price of $100 per share for an  Investment  Amount of  $3,000,000
(such transaction is referred to herein as the "First Sale").

         (b) Subsequent  Sales.  In accordance with the terms and conditions set
forth herein  (including,  without  limitation,  the  provisions  of Article VII
hereof), on any Sale Notice Date the Company shall exercise a Subsequent Sale by
the delivery of a Sale Notice.  On the Closing Date relating to each  Subsequent
Sale,  the Company  shall issue and sell and the Investor  shall  purchase  such
number of shares of Common Stock that are  determined by dividing the Investment
Amount stated in the  applicable  Sale Notice by the  applicable  Purchase Price
(each such  transaction  is referred to herein as a  "Subsequent  Sale," and all
such shares are referred to herein as the "Subsequent Sale Shares").

         (c)  Protective  Warrants.  In partial  consideration  for the Investor
entering into this  Agreement,  if the Company elects to exercise its right with
respect to any Sale to require the  Investor to purchase  shares of Common Stock
that, at the time of the Closing Date, have not been  previously  registered and
are not  covered  by a  Registration  Statement  that  has been  filed  with and
declared  effective by the SEC, on each Closing Date relating to each such Sale,
the Company shall issue and deliver to the Investor a Protective Warrant with an
exercise price of $0.01 for each share of Common Stock, for the purchase of such
number of shares of Common Stock as described in such Protective Warrant.

         (d)  Incentive  Warrant.  In  partial  consideration  for the  Investor
entering into this Agreement, on the Closing Date of the First Sale, the Company
shall issue and deliver to the Investor the  Incentive  Warrant for the purchase
of such number of shares of Common Stock and with an exercise price as described
in such Incentive Warrant.

Section 2.2.      Sale Notice.
                  -----------

         (a) Timing. At any time during the Commitment  Period,  the Company may
deliver a Sale Notice to the Investor,  subject to the  conditions  set forth in
Section 7.2.

         (b) Date of Delivery  of Sale  Notice.  A Sale  Notice  shall be deemed
delivered on (i) the Trading Day it is received by facsimile or otherwise by the
Investor if such notice is received  prior to 12:00 noon New York time,  or (ii)
the  immediately  succeeding  Trading  Day if it is  received  by  facsimile  or
otherwise  after  12:00 noon New York time on a Trading  Day or at any time on a
day which is not a Trading  Day. No Sale Notice will be deemed  delivered,  on a
day that is not a Trading Day.

Section 2.3.      Closings.
                  --------

         Subscription  Date.  On the  Subscription  Date (i) the Company and the
Investor shall execute the  Registration  Rights  Agreement and (ii) the Company
shall execute and deliver irrevocable instructions to the transfer agent, in the
form of  Exhibit F attached  hereto  (the  "Transfer  Agent  Instructions"),  to
prepare  and  deliver to the  Investor,  following  each Sale or  conversion  of
Preferred  Stock,  a share  certificate  in the name of the  Investor and in the
amount of the applicable Commitment Shares, the transfer agent shall confirm and
accept such instructions,  and a copy of such instructions shall be delivered to
the Investor's legal counsel. In addition, on or prior to the Subscription Date,
each of the Company and the Investor  shall deliver to the other all  documents,
instruments  and writings  required to be delivered or  reasonably  requested by
either of them  pursuant to this  Agreement in order to implement and effect the
transactions contemplated herein.
Closing  Date.  On each  Closing  Date (i) the Company  shall issue and
deliver to the  Investor a  Protective  Warrant,  if required by Section  2.1(c)
hereof, (ii) with respect to the First Sale, the Company shall issue and deliver
to the Investor the  Incentive  Warrant,  (iii) the Company  shall  instruct the
transfer agent to prepare and deliver to the Investor a share certificate in the
name of the  Investor  and in the  amount  of the  applicable  Common  Stock  in
accordance with the Transfer Agent Instructions,  and the Company shall take all
other actions  necessary to ensure the prompt delivery of such share certificate
to the Investor,  (iv) with respect to the First Sale, the Company shall prepare
and deliver to the Investor a share  certificate in the name of the Investor and
in the amount of the shares of Preferred  Stock,  (v) the Investor shall deliver
to the Company and the Company  shall  execute a Closing  Statement and (vi) the
Investor  shall deliver to the Company the  Investment  Amount  specified in the
Closing Statement,  less applicable fees and costs determined in accordance with
Section  10.1, by wire transfer of  immediately  available  funds to the account
designated  in  writing in the Sale  Notice.  In  addition,  on or prior to each
Closing  Date,  each of the Company and the Investor  shall deliver to the other
all documents,  instruments and writings  required to be delivered or reasonably
requested by either of them pursuant to this Agreement in order to implement and
effect the transactions contemplated herein.

         Section 2.4.  Termination of Agreement and Investment  Obligation.  The
Company  shall have the right to  terminate  this  Agreement at any time upon 30
days'  written  notice to the  Investor.  The  Investor  shall have the right to
immediately terminate this Agreement (including with respect to any Sale, notice
of which has been given but the applicable Closing Date has not yet occurred) in
accordance  with  Section  6.12  or in the  event  that:  (i)  any  Registration
Statement has not been declared  effective by the SEC within the applicable time
periods  set forth in Section 1.1 of the  Registration  Rights  Agreement,  (ii)
there  shall  occur any stop order or  suspension  of the  effectiveness  of any
Registration Statement for an aggregate of 30 Trading Days during the Commitment
Period,  or  (iii)  the  Company  shall  at any  time  fail to  comply  with the
requirements of Section 6.2, 6.3, 6.4, 6.5, 6.6, 6.8 or 6.9.

                                  ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

The Investor represents and warrants to the Company that:

Section 3.1.  Intent.  The Investor is entering into this  Agreement for its own
account,  and the Investor has no view to the  distribution  of the  Registrable
Securities,  Preferred Stock or Warrants and has no present arrangement (whether
or not legally binding) at any time to sell, assign, transfer, pledge, encumber,
hypothecate or otherwise dispose of the Registrable Securities,  Preferred Stock
or  Warrants  to or through  any person or entity;  provided,  however,  that by
making  the  representations  herein,  the  Investor  does not agree to hold the
Registrable  Securities,  Preferred  Stock or Warrants  for any minimum or other
specific term and reserves the right to dispose of the  Registrable  Securities,
Preferred Stock or Warrants at any time pursuant to the  Registration  Statement
and in  accordance  with federal and state  securities  laws  applicable to such
disposition.

Section 3.2.  Sophisticated  Investor.  The Investor is a sophisticated investor
(as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited  investor
(as defined in Rule 501 of Regulation  D), and the Investor has such  experience
in business and financial  matters that it is capable of  evaluating  the merits
and risks of an  investment  in the Common Stock and the  Preferred  Stock.  The
Investor  acknowledges  that an investment in the Common Stock and the Preferred
Stock is speculative and involves a high degree of risk.
Section 3.3.  Authority.  Each of this  Agreement  and the  Registration  Rights
Agreement  has been duly  authorized by all  necessary  corporate  action and no
further consent or authorization  of the Investor,  or its Board of Directors or
stockholders  is required.  Each of this Agreement and the  Registration  Rights
Agreement was validly executed and delivered by the Investor and each is a valid
and binding agreement of the Investor  enforceable against it in accordance with
its terms,  subject  to  applicable  bankruptcy,  insolvency,  or  similar  laws
relating to, or affecting  generally the enforcement of,  creditors'  rights and
remedies or by other equitable principles of general application.

Section  3.4.  Not an  Affiliate.  The  Investor is not an officer,  director or
"affiliate"  (as that term is defined in Rule 405 of the Securities  Act) of the
Company.

Section 3.5. Organization and Standing. The Investor is duly organized,  validly
existing, and in good standing under the laws of Bermuda.

Section 3.6. Absence of Conflicts.  The execution and delivery of this Agreement
and any other document or instrument  contemplated  hereby, and the consummation
of the transactions  contemplated  thereby, and compliance with the requirements
thereof,  will not to the  Investor's  knowledge  (a)  violate  any  law,  rule,
regulation,  order, writ, judgment,  injunction,  decree or award binding on the
Investor, (b) violate any provision of any indenture, instrument or agreement to
which the Investor is a party or is subject,  or by which the Investor or any of
its  assets is  bound,  (c)  conflict  with or  constitute  a  material  default
thereunder, (d) result in the creation or imposition of any lien pursuant to the
terms of any such indenture,  instrument or agreement, or constitute a breach of
any fiduciary  duty owed by the Investor to any third party,  or (e) require the
approval  of any  third-party  (that  has not  been  obtained)  pursuant  to any
material  contract  to which  the  Investor  is  subject  or to which any of its
assets, operations or management may be subject.

Section 3.7. Disclosure; Access to Information. The Investor has received or had
access to all  documents,  records,  books and other  information  pertaining to
Investor's  investment in the Company that have been requested by Investor.  The
Investor  has received and  reviewed  copies of the SEC  Documents.  Neither the
receipt by the Investor of such  information,  nor the access of the Investor to
such information shall modify, amend or affect the Investor's right to rely upon
the representations and warranties made by the Company pursuant to Article IV of
this Agreement.

Section 3.8. Manner of Sale. At no time was Investor presented with or solicited
by or through any leaflet, public promotional meeting,  television advertisement
or any other form of general solicitation or advertising.

Section 3.9. Resale  Restrictions.  Investor  acknowledges  that any Registrable
Securities,  Preferred  Stock and  Warrants to be acquired by Investor  have not
been  registered  under the  federal  securities  laws or any  applicable  state
securities laws in reliance upon exemptions  available for non-public or limited
offerings.  Investor  understands  that it must  bear the  economic  risk of the
investment in the Registrable  Securities,  Preferred Stock and Warrants because
the  Registrable  Securities,  Preferred  Stock  and  Warrants  have not been so
registered  and  therefore are subject to  restrictions  upon transfer such that
they  may not be sold or  otherwise  transferred  unless  registered  under  the
applicable  securities laws or an exemption from such registration is available.
The  Investor  will not  reoffer,  sell,  assign,  transfer,  pledge,  encumber,
hypothecate or otherwise dispose of any Registrable Securities,  Preferred Stock
or  the  Warrants  in  the  absence  of  an  effective  registration  statement,
qualification  or  authorization  relating  thereto under federal and applicable
state  securities  laws or an opinion of qualified  counsel  satisfactory to the
Company  to  the  effect  that  the  proposed  transaction  in  the  Registrable
Securities, Preferred Stock or the Warrants will neither constitute or result in
any violation of the federal or state securities laws. Subject to Section 8.1 of
this   Agreement,   any  certificate  or  other  document  that  may  be  issued
representing  any  shares  of  Registrable  Securities,  Preferred  Stock or the
Warrants may be endorsed with a legend to this effect.
ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Investor that on the Subscription
Date, each Effective Date and each Closing Date:

Section 4.1.  Organization  of the Company.  The Company is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Nevada and has all requisite  power and authority to own,  lease and operate its
properties  and to carry on its business as now being  conducted.  Except as set
forth in the SEC  Documents,  the  Company  does  not own  more  than 50% of the
outstanding  capital stock of or control any other  Person.  The Company 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 or property
owned by it makes such  qualification  necessary,  other than those in which the
failure so to qualify would not have a Material Adverse Effect.

Section 4.2.  Authority.  (i) The Company has the requisite  corporate power and
authority to enter into and perform its obligations  under this  Agreement,  the
Registration  Rights  Agreement  and the  Warrants  and to issue the  Commitment
Shares,  the  Preferred  Stock,  the Warrants and the Warrant  Shares;  (ii) the
execution and delivery of this Agreement and the Registration  Rights Agreement,
and the execution, issuance and delivery of the Warrants, by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly  authorized by all necessary  corporate  action,  and no further consent or
authorization  of the  Company  or its Board of  Directors  or  stockholders  is
required; and (iii) each of this Agreement and the Registration Rights Agreement
has been duly executed and delivered,  and the Warrants have been duly executed,
issued  and  delivered,   by  the  Company  and  constitute  valid  and  binding
obligations of the Company  enforceable  against the Company in accordance  with
their  respective  terms,  except  as  such  enforceability  may be  limited  by
applicable  bankruptcy,  insolvency,  or similar laws  relating to, or affecting
generally  the  enforcement  of,  creditors'  rights  and  remedies  or by other
equitable principles of general  application.  Section 4.3. Corporate Documents.
The Company has  furnished or made  available  to the Investor  true and correct
copies of the Company's  Articles of Incorporation,  as amended and in effect on
the date hereof (the "Articles"),  and the Company's By-Laws,  as amended and in
effect on the date hereof (the "By-Laws").

Section 4.4.  Books and Records.  The minute books and other similar  records of
the Company and its  subsidiaries  as made  available  to Investor  prior to the
execution of this Agreement  contain a true and complete record, in all material
respects,  of all action taken at all  meetings  and by all written  consents in
lieu of meetings of the stockholders,  the boards of directors and committees of
the boards of directors of the Company and the subsidiaries. Neither the Company
nor any subsidiary has any of its books or records recorded, stored, maintained,
operated  or  otherwise  wholly  or partly  dependent  upon or held by any means
(including  any  electronic,   mechanical  or  photographic   process,   whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the  exclusive  ownership  and direct  control of the Company or a
subsidiary.

Section 4.5.      Capitalization.

         (a) The  authorized  capital  stock of the  Company  is as set forth on
Schedule 4.5 hereto.  All shares of the Company's  preferred stock designated as
Series A, Series B, and Series C have been  retired and shall not be reissued by
the Company.  Except as set forth on Schedule 4.5 hereto,  there are no options,
warrants,  preemptive rights for, or rights to subscribe to, securities,  rights
or  obligations  convertible  into or  exchangeable  for or giving  any right to
subscribe  for, any shares of capital stock of the Company.  Except as set forth
on  Schedule  4.5  hereto,  there  are  no  anti-dilution  or  price  adjustment
provisions  contained in any security issued by the Company (or in any agreement
providing rights to security  holders) that will be triggered by the issuance of
Common  Stock  or  Preferred  Stock  pursuant  to  this  Agreement.  All  of the
outstanding  shares of Common Stock and preferred stock of the Company have been
duly and validly authorized and issued and are fully paid and nonassessable.
(b) Attached  hereto as Exhibit K is a true,  correct and complete copy
of a waiver and consent  agreement  entered into between the Company and Capital
Ventures  International  ("CVI)  concerning  that  certain  Securities  Purchase
Agreement, dated as of December 8, 2000, by and between the Company and CVI (the
"CVI Agreement").  Without limitation of the representations made by the Company
in paragraph (a) above,  the Company has no obligations to issue to CVI, and CVI
has no right to purchase,  Common Stock, options,  warrants, notes, or any other
securities,  pursuant  to the CVI  Agreement  other than the  issuance of Common
Stock  issuable upon  conversion of the Notes (as defined in the CVI  Agreement)
and Warrants (as defined in the CVI Agreement)  beneficially owned by CVI on the
date hereof.

Section  4.6.  Registration  and  Listing  of  Common  Stock.  The  Company  has
registered  its Common Stock  pursuant to Section 12(b) or 12(g) of the Exchange
Act and is in full  compliance  with all reporting  requirements of the Exchange
Act, and the Company has maintained all requirements  for the continued  listing
or quotation of its Common Stock,  and such Common Stock is currently  listed or
quoted on the Principal Market.  As of the date hereof,  the Principal Market is
the Nasdaq National Market.

Section 4.7. Financial Statements. Prior to the execution of this Agreement, the
Company has delivered to the Investor true and complete  copies of the following
financial statements:

         (a) the audited  balance  sheets of the  Company  and its  consolidated
subsidiaries  as of December  31,  2000,  and the related  audited  consolidated
statements of  operations,  stockholders'  equity and cash flows for each of the
fiscal years then ended,  together with a true and correct copy of the report on
such audited  information  by  PricewaterhouseCoopers  LLP, and all letters from
such accountants with respect to the results of such audits; and

         (b) the unaudited  balance  sheets of the Company and its  consolidated
subsidiaries  as of March  31,  2001,  and the  related  unaudited  consolidated
statements of operations and stockholders'  equity for the portion of the fiscal
year then ended.

The  financial  statements  of the Company  delivered to the Investor  have been
prepared in accordance with generally accepted accounting  principles applied on
a consistent  basis 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  financial  position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).

Section 4.8. SEC  Documents.  The Company has timely filed all SEC Documents and
has delivered or made available to the Investor true and complete  copies of the
SEC Documents  (including,  without  limitation,  audited financial  statements,
proxy information and solicitation  materials).  The Company has not provided to
the  Investor  any  information  that,  according  to  applicable  law,  rule or
regulation,  should have been disclosed publicly prior to the date hereof by the
Company, but which has not been so disclosed.  As of their respective dates, the
SEC Documents  complied as to form and  substance in all material  respects with
the  requirements of the Securities Act or the Exchange Act, as the case may be,
and other federal,  state and local laws,  rules and  regulations  applicable to
such SEC Documents, and none of the SEC Documents 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  prior  to  the  date  hereof).  The  financial
statements of the Company  included in the SEC  Documents  comply as to form and
substance in all material respects with applicable  accounting  requirements and
the published  rules and  regulations of the SEC or other  applicable  rules and
regulations with respect thereto.  Such financial  statements have been prepared
in  accordance  with  generally  accepted  accounting  principles  applied  on a
consistent  basis  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 include summary notes
and may be condensed or summary  statements)  and fairly present in all material
respects the  financial  position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
Section 4.9. Exemption from Registration;  Valid Issuances;  New Issuances.  The
sale and issuance of the Warrants,  the Warrant Shares,  the Preferred Stock and
the  Commitment  Shares  in  accordance  with the  terms and on the basis of the
representations  and  warranties  set forth in this  Agreement,  may and will be
properly  issued  pursuant to Section 4(2),  Regulation D and/or any  applicable
state law. When issued and paid for as provided herein and in the Warrants,  the
Warrant Shares,  the Commitment  Shares and the Preferred Stock will be duly and
validly  issued,  fully  paid,  and  nonassessable.  Neither  the  sales  of the
Commitment  Shares,  the  Preferred  Stock,  the Warrants or the Warrant  Shares
pursuant  to, nor the  Company's  performance  of its  obligations  under,  this
Agreement,  the Registration Rights Agreement or the Warrants will (i) result in
the creation or imposition of any liens,  charges,  claims or other encumbrances
upon the Commitment  Shares,  the Preferred Stock, the Warrant Shares, or any of
the assets of the Company,  or (ii) entitle the holders of  Outstanding  Capital
Shares or holders of  preferred  stock of the  Company  to  preemptive  or other
rights to subscribe to or acquire the Capital  Shares,  such preferred  stock or
other securities of the Company.  The Commitment Shares, the Preferred Stock and
the Warrant Shares will not subject the Investor to personal liability by reason
of the ownership  thereof.  The  Commitment  Shares and Warrant Shares have been
duly  authorized  by the  Company,  but  have not been  issued  (whether  or not
subsequently  repurchased by the Company) to any Person,  and when issued to the
Investor in accordance  with this  Agreement and the Warrants will not have been
issued  (whether or not  subsequently  repurchased by the Company) to any Person
other than the Investor.

Section  4.10.  No  General  Solicitation  or  Advertising.  In  regard  to  the
transactions  contemplated hereby, neither the Company nor any of its Affiliates
nor  any  distributor  or any  person  acting  on its or  their  behalf  (i) has
conducted or will conduct any general solicitation (as that term is used in Rule
502(c) of  Regulation  D) or  general  advertising  with  respect  to any of the
Commitment Shares, the Preferred Stock, the Warrants,  or the Warrant Shares, or
(ii) made any offers or sales of any security or solicited any offers to buy any
security under any circumstances  that would require  registration of the Common
Stock under the Securities Act.

Section 4.11. No Conflicts.  The  execution,  delivery and  performance  of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including without limitation the issuance of the Commitment
Shares, the Preferred Stock, the Warrants and the Warrant Shares do not and will
not (i) result in a violation of the Articles or By-Laws or (ii) conflict  with,
or constitute a material  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, acceleration or cancellation of, any material agreement,
indenture,  instrument or any "lock-up" or similar provision of any underwriting
or  similar  agreement  to which the  Company is a party,  or (iii)  result in a
violation of any federal, state, local or foreign law, rule, regulation,  order,
judgment or decree (including federal and state securities laws and regulations,
or any rule,  regulation,  order,  judgment  or  decree  of any  self-regulatory
organization having authority over the matters contemplated  hereby,  applicable
to the  Company  or by which any  property  or asset of the  Company is bound or
affected  (except  for  such  conflicts,  defaults,  terminations,   amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate,  have a Material  Adverse  Effect)  nor is the Company  otherwise  in
violation of, conflict with or in default under any of the foregoing;  provided,
however, that for purposes of the Company's representations and warranties as to
violations of foreign law, rule or regulation  referenced in clause (iii),  such
representations  and  warranties  are  made  only to the  best of the  Company's
knowledge  insofar as the execution,  delivery and performance of this Agreement
by the  Company  and  the  consummation  by  the  Company  of  the  transactions
contemplated  hereby are or may be affected by the status of the Investor  under
or pursuant to any such foreign  law,  rule or  regulation.
The  business of the Company is not being  conducted  in  violation  of any law,
ordinance or regulation of any governmental or  self-regulatory  entity,  except
for possible  violations  that either singly or in the aggregate do not and will
not have a  Material  Adverse  Effect.  The  Company is not  required  under any
federal,  state or local law,  rule or  regulation,  order,  judgment  or decree
(including  federal and state  securities  laws and  regulations),  or any rule,
regulation, order, judgment or decree of any self-regulatory organization having
authority  over  the  matters   contemplated  hereby,  to  obtain  any  consent,
authorization or order of, or make any filing or registration with, any court or
governmental  agency in order for it to  execute,  deliver or perform any of its
obligations  under this Agreement or issue and sell the Commitment  Shares,  the
Preferred  Stock,  the Warrants,  or the Warrant  Shares in accordance  with the
terms hereof (other than any SEC, NASD or state  securities  filings that may be
required to be made by the Company  subsequent to any Closing,  any registration
statement  that may be  filed  pursuant  hereto,  and any  shareholder  approval
required by the rules  applicable to companies  whose common stock trades on the
Nasdaq National Market);  provided that, for purposes of the representation made
in this  sentence,  the Company is assuming and relying upon the accuracy of the
relevant representations and agreements of the Investor herein.

Section 4.12. No Material Adverse Change.  Since December 31, 2000, no event has
occurred that would have a Material Adverse Effect on the Company.

Section 4.13. No  Undisclosed  Liabilities.  The Company has no  liabilities  or
obligations  that are material,  individually  or in the  aggregate,  other than
those incurred in the ordinary course of the Company's businesses since December
31, 2000 and which, individually or in the aggregate, do not or would not have a
Material Adverse Effect on the Company.

Section 4.14.No Undisclosed Events or Circumstances. Since December 31, 2000, no
event or circumstance  has occurred or exists with respect to the Company or its
businesses,  properties,  prospects,  operations or financial  condition,  that,
under  applicable  law,  rule  or  regulation,  requires  public  disclosure  or
announcement  prior to the date  hereof by the Company but which has not been so
publicly disclosed or announced.

Section  4.15.  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
Commitment Shares, the Preferred Stock, the Warrants or the Warrant Shares under
the Securities Act.

Section 4.16.  Litigation and Other Proceedings.  Except as set forth in the SEC
Documents, there are no lawsuits or proceedings pending or to the best knowledge
of the Company threatened, against the Company, nor has the Company received any
written or oral notice of any such action,  suit,  proceeding or  investigation,
which have had or might have a Material  Adverse Effect.  Except as set forth in
the SEC Documents,  no judgment,  order, writ, injunction or decree or award has
been issued by or, so far as is known by the  Company,  requested  of any court,
arbitrator  or  governmental  agency  which has resulted in or might result in a
Material Adverse Effect.

Section 4.17. No Misleading  or Untrue  Communication.  The Company,  any Person
representing the Company, and, to the knowledge of the Company, any other Person
selling or offering to sell the  Commitment  Shares,  the Preferred  Stock,  the
Warrants or the Warrant Shares in connection with the transactions  contemplated
by this  Agreement,  have not  made,  at any  time,  any oral  communication  in
connection  with the  offer  or sale of the  same  which  contained  any  untrue
statement of a material fact or omitted to state any material fact  necessary in
order to make the statements, in the light of the circumstances under which they
were made, not misleading.

Section 4.18. Material Non-Public Information.  The Company is not in possession
of, nor has the Company or its agents  disclosed to the  Investor,  any material
non-public  information  that (i) if disclosed,  would,  or could  reasonably be
expected to have,  an effect on the price of the Common Stock or (ii)  according
to applicable  law, rule or regulation,  should have been disclosed  publicly by
the Company prior to the date hereof but which has not been so disclosed.
ARTICLE V

                            COVENANTS OF THE INVESTOR

         Section 5.1. Compliance. The Investor's trading activities with respect
to  shares  of the  Company's  Common  Stock  will  be in  compliance  with  all
applicable  state and federal  securities  laws,  rules and  regulations and the
rules and  regulations  of the Principal  Market on which the  Company's  Common
Stock is listed.

         Section 5.2. Short Sale. Neither the Investor nor any of its Affiliates
will directly or indirectly engage in any Short Sale of the Commitment Shares or
the Warrant Shares during the Commitment Period.

                                   ARTICLE VI

                            COVENANTS OF THE COMPANY

Section  6.1.  Registration  Rights.  The Company  shall cause the  Registration
Rights  Agreement  to remain in full force and  effect,  and the  Company  shall
comply in all respects with the terms thereof.

Section 6.2. Reservation of Common Stock. As of the date hereof, the Company has
available and the Company shall reserve and keep available at all times, free of
preemptive  rights,  shares of Common  Stock for the  purpose  of  enabling  the
Company to satisfy any obligation to issue the Commitment Shares and the Warrant
Shares, such amount of shares of Common Stock to be reserved shall be calculated
based  upon the Floor  Price  (as such term is  defined  in the  Certificate  of
Designation)  of the  Preferred  Stock,  the Minimum Bid Price and the  Exercise
Price of the  Incentive  Warrant and the maximum  number of  Protective  Warrant
Shares  issuable  pursuant to the Protective  Warrants.  The number of shares so
reserved from time to time, as  theretofore  increased or reduced as hereinafter
provided, may be reduced by the number of shares actually delivered.

Section 6.3. Listing of Common Stock. The Company shall exercise best efforts to
maintain the listing or quotation of the Common Stock on a Principal Market, and
as soon as practicable (but in any event prior to the Closing Date for any Sale)
will  cause the  Commitment  Shares and the  Warrant  Shares to be listed on the
Principal Market.  The Company further shall, if the Company applies to have the
Common Stock traded on any other Principal  Market,  include in such application
the Commitment  Shares and the Warrant Shares,  and shall take such other action
as is  necessary or desirable in the opinion of the Investor to cause the Common
Stock to be listed on such other Principal  Market as promptly as possible.  The
Company shall use  commercially  reasonable  efforts to continue the listing and
trading  of  its  Common  Stock  on the  Principal  Market  (including,  without
limitation,  maintaining  sufficient net tangible assets) and will comply in all
respects with the Company's  reporting,  filing and other  obligations under the
bylaws or rules of the NASD and the Principal Market.

Section  6.4.  Exchange  Act  Registration.  The Company  shall  comply with all
applicable   requirements  set  forth  in  the  Registration  Rights  Agreement,
including without limitation its obligation to file each Registration  Statement
with the SEC within the  applicable  time periods set forth in the  Registration
Rights Agreement.  After each  Registration  Statement  becomes  effective,  the
Company shall cause the Common Stock covered by such  Registration  Statement to
continue to be registered under Section 12(g) or 12(b) of the Exchange Act, will
comply in all  respects  with its  reporting  and filing  obligations  under the
Exchange Act, and will not take any action or file any document  (whether or not
permitted by the Exchange Act or the rules  thereunder)  to terminate or suspend
such   registration  or  to  terminate  or  suspend  its  reporting  and  filing
obligations under the Exchange Act.
Section 6.5. Legends. The certificates  evidencing the Warrants,  the Commitment
Shares,  the  Preferred  Stock and the Warrant  Shares shall be free of legends,
except as provided for in Article VIII.

Section 6.6. Corporate Existence.  The Company shall take all steps necessary to
preserve and continue the corporate existence of the Company.

Section 6.7. Additional SEC Documents.  Until all Registrable  Securities issued
or  issuable  to the  Investor  pursuant  to this  Agreement  may be sold by the
Investor without registration and without any time, volume or manner limitations
pursuant  to Rule  144(k) (or any similar  provision  then in effect)  under the
Securities  Act,  the  Company  shall,  as and when the  originals  thereof  are
submitted  to the SEC for  filing,  notify  the  Investor  in writing of any SEC
Documents  furnished  or  submitted  to the SEC,  and upon  the  request  of the
Investor the Company shall  deliver to the Investor  copies of all SEC Documents
so furnished or submitted to the SEC.

Section 6.8.  Notice of Certain  Events  Affecting  Registration;  Suspension of
Right to Make a  Subsequent  Sale.  The  Company  shall  immediately  notify the
Investor  upon the  occurrence  of any of the  following  events in respect of a
Registration  Statement  or related  prospectus  in respect  of an  offering  of
Registrable Securities: (i) receipt of any request for additional information by
the SEC or any other federal or state  governmental  authority during the period
of effectiveness of the Registration  Statement for amendments or supplements to
the Registration  Statement or related prospectus;  (ii) the issuance by the SEC
or  any  other  federal  or  state  governmental  authority  of any  stop  order
suspending the  effectiveness  of a Registration  Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the  Registrable  Securities for sale in any  jurisdiction  or the initiation or
threatening of any proceeding for such purpose;  (iv) the happening of any event
that  makes  any  statement  made  in such  Registration  Statement  or  related
prospectus or any document  incorporated or deemed to be incorporated therein by
reference  untrue in any  material  respect or that  requires  the making of any
changes in the Registration Statement,  related prospectus or documents so that,
in the  case  of a  Registration  Statement,  it will  not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein not misleading,  and
that in the case of the  related  prospectus,  it will not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein, in the light of the
circumstances under which they were made, not misleading; (v) the declaration by
the SEC of the effectiveness of a Registration Statement; and (vi) the Company's
reasonable  determination  that a  post-effective  amendment to the Registration
Statement would be appropriate, and the Company shall promptly make available to
the Investor any such  supplement  or amendment to the related  prospectus.  The
Company   shall  not  deliver  to  the  Investor  any  Sale  Notice  during  the
continuation of any of the foregoing events, except for (v) above.

Section 6.9. Consolidation; Merger. The Company shall not, at any time after the
date hereof,  effect any merger or consolidation of the Company with or into, or
a transfer of all or substantially  all of the assets of the Company to, another
entity unless the resulting  successor or acquiring  entity (if not the Company)
executes a written instrument acknowledging and assuming the obligation to issue
to the Investor,  upon any Sale,  upon conversion of the Preferred Stock or upon
the exercise of any Warrant,  in lieu of each share of Common Stock  theretofore
issuable upon such Sale,  upon such  conversion  of the Preferred  Stock or upon
exercise of any such Warrant,  other  securities,  money or property  receivable
upon such  merger,  consolidation  or transfer had the Sale,  conversion  of the
Preferred Stock or exercise of such Warrant occurred  immediately  prior to such
merger, consolidation or transfer.

Section 6.10.  Issuance of Shares.  The issuance and sale of the Preferred Stock
and the Subsequent  Sale Shares,  the issuance of the Warrants,  the issuance of
the Warrant Shares pursuant to exercise of the Warrants, and the issuance of the
Conversion  Shares upon  conversion  of the  Preferred  Stock,  shall be made in
accordance  with  the  provisions  and  requirements  of  Regulation  D and  any
applicable state law. Issuance of the Warrant Shares pursuant to exercise of the
Warrants  through  a  cashless  exercise  shall be made in  accordance  with the
provisions and  requirements of Section 3(a)(9) under the Securities Act and any
applicable state law.
Section 6.11. Legal Opinions. The Company's independent counsel shall deliver to
the  Investor  on the Closing  Date  related to the First Sale an opinion in the
form of Exhibit G, except for  paragraph 7 thereof.  The  Company's  independent
counsel  shall  deliver  to  the  Investor,   on  the  effective  date  of  each
Registration  Statement,  an opinion in the form of Exhibit G hereto,  including
paragraph 7 thereof.

Section 6.12. No Similar Arrangement;  Right of First Refusal. The Company shall
refrain from entering into any other agreements,  arrangements or understandings
granting to the Company  the right to sell  shares of its  securities  to one or
more investors,  other than agreements entered into by the Company in connection
with  acquisitions  of businesses  related to the business of the Company at the
time of such acquisition  (whether such  acquisitions are structured as mergers,
stock  purchases,  asset  purchases  or as  other  forms  of  acquisitions)  (an
"Acquisition")  and  other  than to the  Investor,  in  placements  exempt  from
registration  under  the  Securities  Act  until 60  calendar  days  after  this
Agreement  is  terminated  pursuant  to  Section  2.5 hereof  (the  "Exclusivity
Period"). If the Company, for the purpose of obtaining any additional financing,
wishes to sell shares of its securities in placements  exempt from  registration
under the  Securities Act during the  Exclusivity  Period to a party (the "Third
Party") other than pursuant to an Acquisition  and other than to the Investor (a
"Third  Party  Sale"),  the  Company  shall  first  offer (the  "Offer")  to the
Investor,  in writing,  the right to purchase such shares (the "Offered Shares")
at the bona fide price offered by the Third Party (the "Offer Price"). The Offer
shall  grant the  Investor  the right  during  the 5  Trading  Days  immediately
following  the date of the Offer to elect to purchase  any or all of the Offered
Shares.  The Company,  in connection with such a Third Party Sale, shall refrain
from  circumventing  or attempting to circumvent the  Investor's  right of first
refusal  by way of  making  such a Third  Party  Sale  to any of its  Affiliates
without first making an Offer to the Investor.  If the Investor so exercises its
right to purchase any or all of the Offered Shares, the purchase will be treated
as a Subsequent Sale except that the purchase price for the Offered Shares shall
be the Offer Price.  The closing and method of payment  shall be as provided for
in  Sections  2.3 and 2.4 hereof and the  Closing  Date shall be 7 Trading  Days
after the Investor  exercises such right.  If the Investor fails to exercise its
right to purchase any or all of the Offered Shares,  then during the 60 calendar
days  immediately  following the expiration of such right,  the Company shall be
free to sell any or all of the  Offered  Shares to a  purchaser  for a  purchase
price not lower than the Offer Price  payable on terms and  conditions  that are
not more favorable to such purchaser than those  contained in the Offer.  In the
event that the Company  effects a Third Party Sale, the Investor may immediately
terminate this Agreement.

Section 6.13. Public  Announcements.  The Company, its Representatives and legal
advisors,  and the Investor  will not issue or make any reports,  statements  or
releases to the public or to any third party with  respect to this  Agreement or
the transactions contemplated hereby without the consent of both the Company and
the Investor,  which consent shall not be unreasonably  withheld or delayed. The
Company,  its  Representatives  and legal  advisers,  and the Investor also will
obtain  the other  party's  prior  approval  of any press  release  to be issued
announcing the consummation of the  transactions  contemplated by this Agreement
or in any way referring to the other party or affiliates of the other party.  If
either party is unable to obtain the approval of its public  report,  statement,
or press or other  release from the other party and such report,  statement,  or
press or other  release  is, in the  opinion  of legal  counsel  to such  party,
required by applicable law or by any rule or regulation of the Principal  Market
in order to discharge such party's disclosure  obligations,  then such party may
make or issue the legally required report,  statement, or press or other release
and promptly furnish the other party with a copy thereof.
ARTICLE VII

                            CONDITIONS TO DELIVERY OF
                     SALE NOTICES AND CONDITIONS TO CLOSING

Section 7.1. Conditions  Precedent to the Obligation of the Company to Issue and
Sell Preferred Stock and Common Stock.  The obligation  hereunder of the Company
to issue and sell the Preferred  Stock or Common Stock,  as  applicable,  to the
Investor incident to each Closing is subject to the  satisfaction,  at or before
each such Closing, of each of the conditions set forth below.

         (a)  Accuracy of the  Investor's  Representation  and  Warranties.  The
representations  and warranties of the Investor shall be true and correct in all
material  respects as of the date of this  Agreement  and as of the date of each
such Closing as though made at each such time.

         (b)  Performance by the Investor.  The Investor  shall have  performed,
satisfied  and  complied in all  respects  with all  covenants,  agreements  and
conditions  required by this  Agreement to be  performed,  satisfied or complied
with by the Investor at or prior to such Closing.

Section 7.2. Conditions  Precedent to the Right of the Company to deliver a Sale
Notice and the Obligation of the Investor to Purchase Preferred Stock and Common
Stock . The right of the  Company  to deliver a Sale  Notice,  in the event of a
Subsequent Sale, and the obligation of the Investor hereunder to acquire and pay
for the  Preferred  Stock or Common  Stock,  as  applicable,  with  respect to a
Closing is subject to the satisfaction,  on (i) the Subscription  Date, (ii) the
applicable  Sale  Notice  Date and (iii) the  applicable  Closing  Date  (each a
"Condition  Satisfaction Date"), of each of the following conditions;  provided,
however,  that with respect to the Subscription Date and the Closing relating to
the First Sale only, the Investor  waives the conditions set forth in paragraphs
(a),  (b) and  (j) of this  Section  7.2:

         (a) Filing of Registration  Statements with the SEC. In accordance with
the provisions set forth in the Registration Rights Agreement, the Company shall
have  filed  with  the  SEC  Registration  Statements  covering  the  resale  of
Registrable Securities relating to all prior Sales.

         (b)  Effective  Registration  Statements.  (1) The  Company  shall have
notified  the  Investor  in  accordance  with  Section 6.8 hereof that all prior
Registration  Statements covering  Registrable  Securities relating to the First
Sale and any  Subsequent  Sales have been declared  effective by the SEC. (2) In
accordance  with  the  Registration  Rights  Agreement,  all  such  Registration
Statements  shall remain  effective on each  Condition  Satisfaction  Date.  (3)
Neither the Company nor the Investor shall have received notice that the SEC has
issued or intends to issue a stop order with respect to a Registration Statement
or that the SEC  otherwise has  suspended or withdrawn  the  effectiveness  of a
Registration  Statement,  either  temporarily or permanently,  or intends or has
threatened  to do so (unless  the SEC's  concerns  have been  addressed  and the
Investor  is  reasonably  satisfied  that the SEC no  longer is  considering  or
intends to take such action).  (4) No other  suspension of the use or withdrawal
of the effectiveness of such Registration  Statement or related prospectus shall
exist.

         (c)  Accuracy of the  Company's  Representations  and  Warranties.  The
representations  and  warranties  of the Company shall be true and correct as of
each  Condition  Satisfaction  Date as though made at each such time (except for
representations and warranties specifically made as of a particular date).

         (d)  Performance  by the  Company.  The Company  shall have  performed,
satisfied  and  complied in all  respects  with all  covenants,  agreements  and
conditions required by this Agreement, the Registration Rights Agreement and the
Warrants to be performed,  satisfied or complied with by the Company at or prior
to each Condition Satisfaction Date.
(e) No  Injunction.  No statute,  rule,  regulation,  executive  order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
adopted by any court or governmental  authority of competent  jurisdiction  that
prohibits the  transactions  contemplated  by this  Agreement or otherwise has a
Material  Adverse  Effect,  and no  actions,  suits or  proceedings  shall be in
progress,  pending or threatened by any Person,  that seek to enjoin or prohibit
the transactions contemplated by this Agreement or otherwise could reasonably be
expected to have a Material Adverse Effect.  For purposes of this paragraph (e),
no proceeding  shall be deemed  pending or threatened  unless one of the parties
has  received  written  or oral  notification  thereof  prior to the  applicable
Closing Date.

         (f) No  Suspension  of Trading in or  Delisting  of Common  Stock.  The
trading  of the  Common  Stock  shall not have been  suspended  by the SEC,  the
Principal  Market or the NASD, and the Common Stock shall have been approved for
listing or  quotation  on and shall not have been  delisted  from the  Principal
Market.  The issuance of shares of Common  Stock with respect to the  applicable
Closing shall not violate the shareholder approval requirements of the Principal
Market.

         (g) Due  Diligence.  No dispute  between the  Company and the  Investor
shall  exist  pursuant  to  Section  7.3 as to the  adequacy  of the  disclosure
contained in the Registration Statement.

         (h) Ten  Percent  Limitation.  On each  Closing  Date,  the  number  of
Commitment  Shares then to be  purchased  by the  Investor  shall not exceed the
number of such shares  that,  when  aggregated  with all other  shares of Common
Stock and  Registrable  Securities  then owned by the Investor  beneficially  or
deemed beneficially owned by the Investor,  as determined in accordance with the
definition of beneficial  ownership in Rule 13d-3 promulgated under the Exchange
Act, would result in the Investor owning no more than 9.9% of all of such Common
Stock as would be  outstanding on such Closing Date, as determined in accordance
with  Section  13(d)  of  the  Exchange  Act  and  the  regulations  promulgated
thereunder. For purposes of this Section, in the event that the amount of Common
Stock outstanding as determined in accordance with Section 13(d) of the Exchange
Act and the regulations promulgated thereunder is greater on a Closing Date than
on the Sale Notice Date  associated with such Closing Date, the amount of Common
Stock  outstanding on such Closing Date shall govern for purposes of determining
whether the  Investor,  when  aggregating  all  purchases  of Common  Stock made
pursuant to this Agreement and, if any,  Warrant Shares would own more than 9.9%
of the Common Stock following such Closing Date.

         (i) No Knowledge. The Company shall have no knowledge of any event more
likely than not to have the effect of causing any  Registration  Statement to be
suspended or otherwise ineffective (which event is more likely than not to occur
within the fifteen  Trading Days  following the Trading Day on which such notice
is deemed delivered).

         (j)  Minimum  Time  Interval.  The  Minimum  Time  Interval  shall have
elapsed.

         (k) Shareholder Vote. The issuance of Commitment Shares with respect to
the  applicable  Closing,  if any,  shall not violate the  shareholder  approval
requirements  of the  Principal  Market.  Each Sale  Notice  shall  provide  the
Investor with the following  information as of the applicable  Sale Notice Date:
(i) the total number of shares of Outstanding  Common Stock,  (ii) the number of
Subsequent  Sale Shares issuable with respect to the applicable  Closing,  (iii)
the number of Protective  Warrant Shares  issuable,  if any, with respect to the
applicable  Closing,  (iv) the  number  of shares of  Commitment  Shares  issued
pursuant to previous Sales,  (v) the number of Incentive  Warrant Shares issued,
(vi) the number of  Protective  Warrant  Shares  previously  issued  pursuant to
previous  Sales (vii) the number of  Conversion  Shares  previously  issued upon
conversion of the Preferred  Stock,  and (viii) the number of Conversion  Shares
issuable upon future conversions.  If the issuance by the Company of a number of
shares of  Commitment  Shares equal to the sum of the amounts  stated in clauses
(ii) through (vi), inclusive,  hereof would result in a violation by the Company
of the shareholder approval requirements of the Principal Market, the applicable
Sale Notice shall be deemed null and void.

         (l) Certificate of Designation.  The Company, prior to the Closing Date
relating  to the First Sale  only,  shall  have duly  filed the  Certificate  of
Designation  with, and the  Certificate of Designation  shall have been approved
by, the Secretary of State of the State of Nevada.
(m) Other. On each Condition Satisfaction Date, the Investor shall have
received  and  been  reasonably  satisfied  with  such  other  certificates  and
documents as shall have been  reasonably  requested by the Investor in order for
the Investor to confirm the Company's  satisfaction  of the conditions set forth
in  this  Section  7.2.,  including,   without  limitation,   a  certificate  in
substantially  the form and  substance  of Exhibit H hereto,  executed in either
case by an  executive  officer of the  Company  and to the  effect  that all the
conditions to such Closing shall have been satisfied as at the date of each such
certificate.

         (n) Certain  Events.  The Company  shall not be  permitted to deliver a
Sale  Notice  during any period in which the events  described  in Section  6.8,
except for clause (v) thereof, continue to occur.

Section 7.3. Due Diligence Review; Non-Disclosure of Non-Public Information.

         (a) The Company shall make  available for  inspection and review by the
Investor, advisors to and representatives of the Investor (who may or may not be
affiliated with the Investor and who are reasonably  acceptable to the Company),
and any  Underwriter,  any  Registration  Statement or  amendment or  supplement
thereto or any blue sky, NASD or other filing,  all financial and other records,
all SEC  Documents  and other  filings  with the SEC,  and all  other  corporate
documents and  properties of the Company as may be reasonably  necessary for the
purpose  of such  review,  and  cause  the  Company's  officers,  directors  and
employees to supply all such information reasonably requested by the Investor or
any  such  representative,  advisor  or  Underwriter  in  connection  with  such
Registration  Statement  (including,  without  limitation,  in  response  to all
questions  and other  inquiries  reasonably  made or  submitted by any of them),
prior to and from  time to time  after  the  filing  and  effectiveness  of such
Registration  Statement  for the sole  purpose of enabling the Investor and such
representatives,  advisors and Underwriters and their respective accountants and
attorneys  to conduct  initial  and ongoing due  diligence  with  respect to the
Company and the accuracy of such Registration Statement.

         (b) None of the Company, its officers, directors,  employees and agents
shall in any event disclose non-public information to the Investor,  advisors to
or   representatives  of  the  Investor  unless  prior  to  disclosure  of  such
information  the  Company   identifies  such  information  as  being  non-public
information and provides the Investor,  such advisors and  representatives  with
the  opportunity to accept or refuse to accept such  non-public  information for
review. As a condition to disclosing any non-public information  hereunder,  the
Company may require the Investor's  advisors and representatives to enter into a
confidentiality agreement in form reasonably satisfactory to the Company and the
Investor.

         (c) Nothing  herein  shall  require the Company to disclose  non-public
information to the Investor or its advisors or representatives,  and the Company
represents that it does not disseminate  non-public information to any investors
who purchase stock in the Company in a public offering,  to money managers or to
securities analysts;  provided, however, that notwithstanding anything herein to
the contrary, the Company shall, as hereinabove provided, immediately notify the
advisors and  representatives  of the Investor and any Underwriters of any event
or the  existence of any  circumstance  (without any  obligation to disclose the
specific  event  or  circumstance)  of  which  it  becomes  aware,  constituting
non-public  information (whether or not requested of the Company specifically or
generally  during  the course of due  diligence  by such  persons or  entities),
which,   if  not  disclosed  in  the  prospectus   included  in  the  applicable
Registration  Statement  would  cause  such  prospectus  to  include a  material
misstatement  or to omit a material fact required to be stated  therein in order
to make the statements,  therein,  in light of the  circumstances  in which they
were made,  not  misleading.  Nothing  contained  in this  Section  7.3 shall be
construed to mean that such persons or entities other than the Investor (without
the written consent of the Investor prior to disclosure of such information) may
not obtain  non-public  information in the course of conducting due diligence in
accordance  with the terms and  conditions of this  Agreement and nothing herein
shall prevent any such persons or entities  from  notifying the Company of their
opinion that based on such due diligence by such persons or entities,  that such
Registration  Statement contains an untrue statement of a material fact or omits
a  material  fact  required  to be  stated  in such  Registration  Statement  or
necessary  to  make  the  statements   contained   therein,   in  light  of  the
circumstances in which they were made, not misleading.
ARTICLE VIII

                                     LEGENDS

         Section 8.1.  Legends.  Each of the Warrants,  the Preferred Stock and,
unless  otherwise  provided below,  each  certificate  representing  Registrable
Securities will bear the following legend (the "Legend"):

         "THE SECURITIES  EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE U.S.  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
         ACT"), OR ANY OTHER APPLICABLE  SECURITIES LAWS AND HAVE BEEN ISSUED IN
         RELIANCE UPON AN EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS  OF THE
         SECURITIES ACT AND SUCH OTHER  SECURITIES  LAWS.  NEITHER THIS SECURITY
         NOR ANY  INTEREST  OR  PARTICIPATION  HEREIN  MAY BE  REOFFERED,  SOLD,
         ASSIGNED, TRANSFERRED,  PLEDGED, ENCUMBERED,  HYPOTHECATED OR OTHERWISE
         DISPOSED OF,  EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT
         UNDER THE  SECURITIES  ACT OR PURSUANT TO A TRANSACTION  THAT IS EXEMPT
         FROM,  OR NOT  SUBJECT  TO,  SUCH  REGISTRATION.  THE  HOLDER  OF  THIS
         CERTIFICATE IS THE  BENEFICIARY  OF CERTAIN  OBLIGATIONS OF THE COMPANY
         SET FORTH IN A STOCK PURCHASE  AGREEMENT,  DATED AS OF [DATE],  BETWEEN
         WAVERIDER COMMUNICATIONS INC. AND CRESCENT INTERNATIONAL LTD. A COPY OF
         THE PORTION OF THE AFORESAID AGREEMENT  EVIDENCING SUCH OBLIGATIONS MAY
         BE OBTAINED FROM WAVERIDER COMMUNICATION INC.'S EXECUTIVE OFFICES."

         On the Subscription  Date the Company shall issue to the transfer agent
for its Common Stock (and to any  substitute or  replacement  transfer agent for
its Common  Stock  upon the  Company's  appointment  of any such  substitute  or
replacement  transfer  agent)  Transfer Agent  Instructions,  with a copy to the
Investor. Other than as required as a result of change in law, such instructions
shall be  irrevocable  by the Company from and after the date hereof or from and
after the issuance thereof to any such substitute or replacement transfer agent,
as the case may be, except as otherwise  expressly  provided in the Registration
Rights Agreement. It is the intent and purpose of such instructions, as provided
therein,  to require the  transfer  agent for the Common Stock from time to time
upon transfer of  Registrable  Securities by the Investor to issue  certificates
evidencing such  Registrable  Securities free of the Legend during the following
periods and under the following  circumstances  and without  consultation by the
transfer  agent with the  Company or its  counsel  and  without the need for any
further advice or instruction or  documentation to the transfer agent by or from
the Company or its counsel or the Investor, and the Company agrees that it will,
and will cause its  counsel  to,  provide  the  transfer  agent with any and all
documentation requested or required by the transfer agent, the Investor or their
respective   counsel,   including  without   limitation  the  documentation  and
confirmations referenced in the Transfer Agent Instructions:

         (a) At any time after the applicable  Effective Date, upon surrender of
one or more certificates evidencing Registrable Securities that bear the Legend,
to  the  extent   accompanied  by  a  notice  requesting  the  issuance  of  new
certificates free of the Legend to replace those surrendered;  provided that (i)
the  applicable  Registration  Statement  shall  then be  effective  and (ii) if
reasonably requested by the transfer agent the Investor confirms to the transfer
agent that the Investor has transferred the Registrable  Securities  pursuant to
such  Registration  Statement  and has  complied  with the  prospectus  delivery
requirement; or

         (b) At any  time  upon  any  surrender  of  one  or  more  certificates
evidencing   Registrable   Securities  that  bear  the  Legend,  to  the  extent
accompanied by a notice  requesting the issuance of new certificates free of the
Legend to replace those  surrendered  and  containing  representations  that the
Investor  is  permitted  to  dispose  of  such  Registrable  Securities  without
limitation  as to amount or manner of sale  pursuant  to Rule  144(k)  under the
Securities Act.
Section 8.2. No Other  Legend or Stock  Transfer  Restrictions.  No legend other
than the one  specified  in Section 8.1 has been or shall be placed on the share
certificates  representing  the Registrable  Securities and the Preferred Stock,
and no  instructions  or "stop  transfer  orders,"  so called,  "stock  transfer
restrictions,"  or  other  restrictions  have  been or  shall  be  given  to the
Company's  transfer agent with respect thereto other than as expressly set forth
in this Article VIII.

Section 8.3. Investor's Compliance. Nothing in this Article VIII shall affect in
any way the  Investor's  obligations  to comply with all  applicable  securities
laws.

                                   ARTICLE IX

                          INDEMNIFICATION; ARBITRATION

Section 9.1. Indemnification.

         (a) The Company agrees to indemnify and hold harmless the Investor, its
partners,  Affiliates,  officers,  directors,  employees,  and  duly  authorized
agents,  and each Person or entity, if any, who controls the Investor within the
meaning of Section 15 of the  Securities  Act or Section 20 of the Exchange Act,
together  with its  controlling  persons from and against any Damages,  joint or
several, and any action in respect thereof to which the Investor,  its partners,
Affiliates,  officers, directors, employees, and duly authorized agents, and any
such controlling  person becomes subject to,  resulting from,  arising out of or
relating to any  misrepresentation,  breach of warranty or  nonfulfillment of or
failure to perform any covenant or agreement on the part of Company contained in
this  Agreement,  as such  Damages  are  incurred,  unless such  Damages  result
primarily from the Investor's  gross  negligence,  recklessness  or bad faith in
performing its obligations  under this Agreement;  provided,  however,  that the
maximum  aggregate  liability  of the  Company  shall be  limited  to the amount
actually invested by the Investor under this Agreement,  and provided,  further,
that in no event  shall  this  provision  be  deemed  to  limit  any  rights  to
indemnification arising under the Registration Rights Agreement.

         The Investor  agrees to indemnify  and hold  harmless the Company,  its
Affiliates,  officers, directors, employees, and duly authorized agents from and
against  any  Damages,  joint or several,  and any action in respect  thereof to
which the Company,  its Affiliates,  officers,  directors,  employees,  and duly
authorized agents, and any such controlling person becomes subject to, resulting
from, arising out of or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
the Investor contained in this Agreement,  as such Damages are incurred,  unless
such Damages result primarily from the Company's gross negligence,  recklessness
or bad faith in  performing  its  obligations  under this  Agreement;  provided,
however,  that the maximum aggregate  liability of the Investor shall be limited
to the amount by which the total price at which the Registrable  Securities held
by the Investor were sold to the public exceeds the amount  actually paid by the
Investor  under  this  Agreement  for such  Registrable  Securities  sold to the
public, and provided,  further,  that in no event shall this provision be deemed
to limit any rights to  indemnification  arising under the  Registration  Rights
Agreement.

Section  9.2.  Method  of  Asserting  Indemnification  Claims.  All  claims  for
indemnification  by any  Indemnified  Party (as defined below) under Section 9.1
shall be asserted and resolved as follows:

         (a) In the event any claim or  demand in  respect  of which any  person
claiming  indemnification  under any  provision of Section 9.1 (an  "Indemnified
Party") might seek indemnity under Section 9.1 is asserted  against or sought to
be collected from such Indemnified Party by a person other than the Company, the
Investor  or  any  Affiliate  of  the  Company  (a  "Third  Party  Claim"),  the
Indemnified Party shall deliver a written notification,  enclosing a copy of all
papers  served,  if any, and  specifying  the nature of and basis for such Third
Party Claim and for the Indemnified  Party's claim for  indemnification  that is
being  asserted  under any  provision  of Section  9.1  against  any person (the
"Indemnifying  Party"),  together  with the  amount  or, if not then  reasonably
ascertainable,  the estimated  amount,  determined in good faith,  of such Third
Party Claim (a "Claim  Notice") with reasonable  promptness to the  Indemnifying
Party.
If the  Indemnified  Party  fails to provide the Claim  Notice  with  reasonable
promptness  after the  Indemnified  Party  receives  notice of such Third  Party
Claim,  the  Indemnifying   Party  shall  not  be  obligated  to  indemnify  the
Indemnified  Party with respect to such Third Party Claim to the extent that the
Indemnifying  Party's ability to defend has been irreparably  prejudiced by such
failure of the  Indemnified  Party.  The  Indemnifying  Party  shall  notify the
Indemnified  Party as soon as  practicable  within the period ending 30 calendar
days following receipt by the Indemnifying  Party of either a Claim Notice or an
Indemnity  Notice  (as  defined  below)  (the  "Dispute   Period")  whether  the
Indemnifying  Party disputes its liability or the amount of its liability to the
Indemnified Party under Section 9.1 and whether the Indemnifying  Party desires,
at its sole cost and expense, to defend the Indemnified Party against such Third
Party Claim.

         (i)      If the  Indemnifying  Party  notifies  the  Indemnified  Party
                  within the Dispute Period that the Indemnifying  Party desires
                  to defend  the  Indemnified  Party  with  respect to the Third
                  Party  Claim  pursuant  to  this  Section  9.2(a),   then  the
                  Indemnifying  Party  shall  have  the  right to  defend,  with
                  counsel  reasonably  satisfactory to the Indemnified Party, at
                  the sole cost and  expense  of the  Indemnifying  Party,  such
                  Third  Party  Claim  by  all  appropriate  proceedings,  which
                  proceedings  shall be vigorously and diligently  prosecuted by
                  the  Indemnifying  Party  to a  final  conclusion  or  will be
                  settled at the discretion of the Indemnifying  Party (but only
                  with the consent of the  Indemnified  Party in the case of any
                  settlement that provides for any relief other than the payment
                  of  monetary  damages  or that  provides  for the  payment  of
                  monetary  damages as to which the Indemnified  Party shall not
                  be   indemnified   in  full  pursuant  to  Section  9.1).  The
                  Indemnifying Party shall have full control of such defense and
                  proceedings,  including any compromise or settlement  thereof;
                  provided, however, that the Indemnified Party may, at the sole
                  cost and expense of the  Indemnified  Party, at any time prior
                  to the Indemnifying Party's delivery of the notice referred to
                  in the first  sentence of this  clause  (i),  file any motion,
                  answer or other  pleadings  or take any other  action that the
                  Indemnified  Party  reasonably  believes  to be  necessary  or
                  appropriate  to protect its interests;  and provided  further,
                  that if requested by the  Indemnifying  Party, the Indemnified
                  Party will,  at the sole cost and expense of the  Indemnifying
                  Party,  provide  reasonable  cooperation  to the  Indemnifying
                  Party  in   contesting   any  Third   Party   Claim  that  the
                  Indemnifying  Party elects to contest.  The Indemnified  Party
                  may participate in, but not control, any defense or settlement
                  of any Third Party Claim controlled by the Indemnifying  Party
                  pursuant  to this  clause  (i),  and except as provided in the
                  preceding  sentence,  the Indemnified Party shall bear its own
                  costs  and  expenses  with  respect  to  such   participation.
                  Notwithstanding the foregoing,  the Indemnified Party may take
                  over the control of the defense or settlement of a Third Party
                  Claim  at any  time if it  irrevocably  waives  its  right  to
                  indemnity  under  Section 9.1 with respect to such Third Party
                  Claim.

         (ii)     If the  Indemnifying  Party  fails to notify  the  Indemnified
                  Party within the Dispute  Period that the  Indemnifying  Party
                  desires to defend the Third  Party  Claim  pursuant to Section
                  9.2(a),  or if the  Indemnifying  Party  gives such notice but
                  fails to prosecute  vigorously  and  diligently  or settle the
                  Third Party Claim, or if the Indemnifying  Party fails to give
                  any notice  whatsoever  within the  Dispute  Period,  then the
                  Indemnified  Party shall have the right to defend, at the sole
                  cost and expense of the  Indemnifying  Party,  the Third Party
                  Claim by all appropriate proceedings,  which proceedings shall
                  be prosecuted by the Indemnified  Party in a reasonable manner
                  and in good faith or will be settled at the  discretion of the
                  Indemnified Party (with the consent of the Indemnifying Party,
                  which  consent  will  not  be  unreasonably   withheld).
The  Indemnified  Party will have full control of such defense
                  and  proceedings,   including  any  compromise  or  settlement
                  thereof;   provided,   however,   that  if  requested  by  the
                  Indemnified  Party, the  Indemnifying  Party will, at the sole
                  cost and expense of the Indemnifying Party, provide reasonable
                  cooperation  to the  Indemnified  Party  and  its  counsel  in
                  contesting any Third Party Claim which the  Indemnified  Party
                  is  contesting.  Notwithstanding  the foregoing  provisions of
                  this clause (ii), if the  Indemnifying  Party has notified the
                  Indemnified   Party   within  the  Dispute   Period  that  the
                  Indemnifying Party disputes its liability or the amount of its
                  liability  hereunder to the Indemnified  Party with respect to
                  such Third  Party  Claim,  and if such  dispute is resolved in
                  favor of the  Indemnifying  Party in the  manner  provided  in
                  clause  (iii)  below,  the  Indemnifying  Party  will  not  be
                  required  to bear the costs and  expenses  of the  Indemnified
                  Party's  defense  pursuant  to  this  clause  (ii)  or of  the
                  Indemnifying Party's  participation therein at the Indemnified
                  Party's request, and the Indemnified Party shall reimburse the
                  Indemnifying  Party  in full  for  all  reasonable  costs  and
                  expenses incurred by the Indemnifying Party in connection with
                  such litigation.  The  Indemnifying  Party may participate in,
                  but not control,  any defense or settlement  controlled by the
                  Indemnified  Party  pursuant  to  this  clause  (ii),  and the
                  Indemnifying  Party shall bear its own costs and expenses with
                  respect to such participation.

         (iii)    If the Indemnifying  Party notifies the Indemnified Party that
                  it  does  not  dispute  its  liability  or the  amount  of its
                  liability to the  Indemnified  Party with respect to the Third
                  Party  Claim  under   Section  9.1  or  fails  to  notify  the
                  Indemnified  Party  within  the  Dispute  Period  whether  the
                  Indemnifying Party disputes its liability or the amount of its
                  liability to the Indemnified  Party with respect to such Third
                  Party Claim,  the Damages in the amount specified in the Claim
                  Notice  shall  be  conclusively  deemed  a  liability  of  the
                  Indemnifying  Party  under  Section  9.1 and the  Indemnifying
                  Party shall pay the amount of such Damages to the  Indemnified
                  Party on demand. If the Indemnifying Party has timely disputed
                  its liability or the amount of its  liability  with respect to
                  such claim, the Indemnifying  Party and the Indemnified  Party
                  shall  proceed in good faith to negotiate a resolution of such
                  dispute,  and if not resolved through  negotiations within the
                  period of 30 calendar days  immediately  following the Dispute
                  Period,  such  dispute  shall be  resolved by  arbitration  in
                  accordance with Section 9.3.

         (b) In the  event  any  Indemnified  Party  should  have a claim  under
Section 9.1 against the  Indemnifying  Party that does not involve a Third Party
Claim, the Indemnified Party shall deliver a written notification of a claim for
indemnity  under Section 9.1  specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably ascertainable, the estimated
amount,  determined in good faith,  of such claim (an  "Indemnity  Notice") with
reasonable  promptness to the Indemnifying Party. The failure by any Indemnified
Party  to give the  Indemnity  Notice  shall  not  impair  such  party's  rights
hereunder except to the extent that the Indemnifying  Party demonstrates that it
has been irreparably  prejudiced thereby. If the Indemnifying Party notifies the
Indemnified  Party that it does not dispute the claim or the amount of the claim
described  in such  Indemnity  Notice or fails to notify the  Indemnified  Party
within the Dispute Period whether the  Indemnifying  Party disputes the claim or
the amount of the claim described in such Indemnity  Notice,  the Damages in the
amount specified in the Indemnity Notice will be conclusively deemed a liability
of the Indemnifying Party under Section 9.1 and the Indemnifying Party shall pay
the  amount  of  such  Damages  to  the  Indemnified  Party  on  demand.  If the
Indemnifying  Party has  timely  disputed  its  liability  or the  amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute, and
if not  resolved  through  negotiations  within the period of 30  calendar  days
immediately  following  the Dispute  Period,  such dispute  shall be resolved by
arbitration in accordance with Section 9.3.

Section 9.3. Arbitration. Any controversy, claim or dispute arising out of or in
connection  with  this  Agreement,  the  Registration  Rights  Agreement  or the
Warrants,   including   any  question   regarding   its   existence,   validity,
interpretation,  breach,  or  termination,  shall  be  referred  to and  finally
resolved in accordance with the International  Arbitration Rules of the American
Arbitration  Association,  and judgment upon the award  rendered by the arbitral
tribunal  may be  entered  by any court  having  jurisdiction  thereof or having
jurisdiction over any party or any party's assets.
(a) The tribunal shall consist of three arbitrators,  two of whom shall
be  appointed  by the  respective  parties  and  the  third,  who  shall  be the
chairperson of the tribunal,  by the two  party-appointed  arbitrators within 30
days of the last of their  appointments.  Save that, if either party should fail
to appoint  an  arbitrator  within 30 days of  receiving  written  notice of the
appointment of an arbitrator by the other party, the second arbitrator shall, at
the  written  request of the party  which has already  made an  appointment,  be
appointed forthwith by the American Arbitration  Association.  Likewise,  if the
party-appointed   arbitrators  fail  to  make  an  agreed  appointment  for  the
chairperson  within 30 days of the last of their  appointments,  the chairperson
shall,  at the written  request of either party,  be appointed  forthwith by the
American Arbitration Association.

         The place of arbitration shall be New York, New York.

         This  arbitration  clause and the conduct of the  arbitral  proceedings
shall be governed by the Federal Arbitration Act, 9 U.S.C.A. sec. 1 et seq.

         The language of the arbitration shall be English.

         Nothing in these dispute  resolution  provisions  shall be construed as
preventing  either party from seeking  conservatory or similar interim relief in
any court of competent jurisdiction.

         To the extent practicable, the arbitral tribunal shall render its award
no more than 60 calendar  days from the date that the three  member  tribunal is
constituted.  The arbitral  tribunal shall not lose jurisdiction over the matter
based on a failure to render an award within this time period.

                                   ARTICLE X

                                  MISCELLANEOUS

Section 10.1.  Fees and  Transaction  Costs. In connection with the execution of
this  agreement the following  Sale Fees,  Investor Legal Fees and Due Diligence
Costs (as defined below and in Schedule  10.1) are payable by the Company to the
payee  entities  listed in Schedule  10.1.  The  Investor is  authorized  by the
Company  to  deduct  such  amounts  from  any  sums  due to the  Company  on the
applicable Closing Date.

         (a) Sale Fees.  On each  Closing  Date,  the  Company  shall pay to the
Investor an amount calculated in accordance with Schedule 10.1 (the "Sale Fee").

         (b) Transaction  Costs.  The fees,  expenses and  disbursements  of the
Investor's counsel (the "Investor Legal Fees") shall be paid as follows: (i) the
Investor  shall pay the  initial  $10,000  of  Investor  Legal Fees and (ii) the
Company  shall pay all  Investor  Legal Fees in excess of  $10,000.  The Company
shall pay the Investor due diligence costs in connection  with the  consummation
of this Agreement and the transactions  contemplated  hereby (the "Due Diligence
Costs") up to a maximum amount of $10,000. The Company shall pay to the Investor
the Company's  share of the Investor  Legal Fees and Due Diligence  Costs on the
Subscription  Date, to the extent such share of the Investor  Legal Fees and Due
Diligence  Costs can be determined on the  Subscription  Date. The Company shall
pay its share of the remaining  Investor  Legal Fees and Due Diligence  Costs to
the  Investor  not later than 10 days after  receipt of notice from the Investor
that such amount is due. The Company agrees to pay its own expenses  incident to
the performance of its obligations hereunder.

Section 10.2. Reporting Entity for the Common Stock. The reporting entity relied
upon for the  determination  of the Bid Price or  trading  volume of the  Common
Stock on the Principal  Market on any given Trading Day for the purposes of this
Agreement shall be the Bloomberg L.P. The written mutual consent of the Investor
and the Company shall be required to employ any other reporting entity.
Section  10.3.  Brokerage.  Except as  disclosed  in Section  10.1,  each of the
parties hereto  represents  that it has had no dealings in connection  with this
transaction  with any finder or broker which would impose a legal  obligation to
pay any fee or commission. The Company on the one hand, and the Investor, on the
other hand,  agree to indemnify  the other  against and hold the other  harmless
from any and all liabilities to any persons  claiming  brokerage  commissions or
finder's  fees on account of services  purported to have been rendered on behalf
of the indemnifying  party in connection with this Agreement or the transactions
contemplated hereby.

Section 10.4. Conversion Notices. Any conversion of the Preferred Stock shall be
effected in accordance with the  Certificate of Designation,  (i) any conversion
notice delivered  thereunder by the Investor to the Company shall be in the form
of Exhibit I hereto, and (ii) any conversion notice delivered  thereunder by the
Company to the Investor shall be in the form of Exhibit J hereto.

Section 10.5. Notices. All notices, demands, requests, consents,  approvals, and
other  communications  required or permitted  hereunder shall be in writing and,
unless  otherwise  specified  herein,  shall  be  (i)  personally  served,  (ii)
deposited  in the mail,  registered  or  certified,  return  receipt  requested,
postage  prepaid,  (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other  address as such party shall have  specified
most  recently by written  notice given in  accordance  herewith.  Any notice or
other communication  required or permitted to be given hereunder shall be deemed
effective  (a) upon hand  delivery or delivery  by  facsimile  at the address or
number  designated  below (if delivered on a Trading Day during normal  business
hours where such notice is to be  received),  or the first Trading Day following
such delivery (if delivered  other than on a Trading Day during normal  business
hours  where such  notice is to be  received)  or (b) on the third  Trading  Day
following  the date of  mailing  by  express  courier  service,  fully  prepaid,
addressed to such address,  or upon actual  receipt of such  mailing,  whichever
shall first occur. The addresses for such communications shall be:

         If to the Company:

                           WaveRider Communications Inc.
                           255 Consumers Road, Suite 500
                           Toronto, Ontario
                           Canada M2J 1R4
                           Attention:       T. Scott Worthington
                           Telephone:       (416) 502-3200
                           Facsimile:       (416) 502-2968

         with a copy (which shall not constitute notice) to:

                           Foley, Hoag & Eliot LLP
                           One Post Office Square
                           Boston, MA 02109
                           Attention:       David A. Broadwin, Esq.
                           Telephone:       (617) 832-1259
                           Facsimile:       (617) 832-7000

         if to the Investor:

                           Crescent International Ltd.
                           c/o GreenLight (Switzerland) SA
                           84, av Louis-Casai
                           1216 Geneva, Cointrin
                           Switzerland
                           Attention:       Mel Craw/Maxi Brezzi
                           Telephone:       +41 22 791 71 69
                           Facsimile:       +41 22 929 53 94
with a copy (which shall not constitute notice) to:

                           Clifford Chance Rogers & Wells LLP
                           200 Park Avenue
                           New York, NY  10166
                           Attention:       Earl S. Zimmerman, Esq.
                           Telephone:       (212) 878-8000
                           Facsimile:       (212) 878-8375

Either party hereto from time to time may change its address or facsimile number
for notices under this Section by giving at least ten (10) calendar  days' prior
written  notice of such changed  address or facsimile  number to the other party
hereto.

Section 10.6. Assignment.  Neither this Agreement nor any rights of the Investor
or the Company  hereunder  may be assigned by either party to any other  Person.
Notwithstanding the foregoing,  the Investor's interest in this Agreement may be
assigned at any time, in whole or in part, to any Affiliate of the Investor upon
the  prior  written  consent  of the  Company,  which  consent  shall  not to be
unreasonably  withheld provided,  however,  that any such assignment or transfer
shall  relieve  the  Investor  of its  duties  under  this  Agreement  only upon
performance thereof by any such assignee or transferee.

Section  10.7.  Amendment;  No Waiver.  No party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as  specifically  set forth in this Agreement.  Except as expressly  provided in
this  Agreement,  neither  this  Agreement  nor any term  hereof may be amended,
waived,  discharged or terminated other than by a written  instrument  signed by
both  parties  hereto.  The  failure  of the  either  party to  insist on strict
compliance  with this  Agreement,  or to exercise any right or remedy under this
Agreement,  shall not  constitute  a waiver of any  rights  provided  under this
Agreement,  nor estop the parties from  thereafter  demanding  full and complete
compliance nor prevent the parties from exercising such a right or remedy in the
future.

Section 10.8. Annexes and Exhibits;  Entire Agreement.  All annexes and exhibits
to this Agreement are incorporated herein by reference and shall constitute part
of this Agreement.  This  Agreement,  the Warrants and the  Registration  Rights
Agreement  set forth the  entire  agreement  and  understanding  of the  parties
relating to the subject  matter  hereof and thereof and  supersede all prior and
contemporaneous agreements, negotiations and understandings between the parties,
both oral and written, relating to the subject matter hereof.

Section 10.9.  Survival.  The  provisions of Articles VI, VIII, IX and X, and of
Section 7.3, shall survive the termination of this Agreement.

Section 10.10.  Severability.  In the event that any provision of this Agreement
becomes or is  declared  by a court of  competent  jurisdiction  to be  illegal,
unenforceable  or void,  this Agreement  shall continue in full force and effect
without said provision;  provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party.

Section  10.11.  Title and  Subtitles.  The  titles and  subtitles  used in this
Agreement are used for the convenience of reference and are not to be considered
in construing or interpreting this Agreement.

Section 10.12. Counterparts. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument.

Section 10.13.  Choice of Law. This Agreement  shall be construed under the laws
of the State of New York.
Section 10.14.  Other Expenses.  In the event that a dispute between the parties
is not determined by a Board of  Arbitration,  the  non-prevailing  party in any
action,  suit or  proceeding  shall  bear all  investigative,  legal  and  other
expenses reasonably incurred in connection with, and any and all amounts paid in
defense or settlement of such action, suit or proceeding.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by the undersigned, thereunto duly authorized, as of the date first set forth
above.

                                        CRESCENT INTERNATIONAL LTD.

                                        By: /s/ Mel Craw & Maxi Brezzi
                                           -------------------------------------
                                             Name: Mel Craw & Maxi Breezi
                                             Title:

                                        WAVERIDER COMMUNICATIONS INC.

                                        By:          /s/ D.B. Sinclair
                                           -------------------------------------
                                             Name: D.B. Sinclair
                                             Title: President & CEO
SCHEDULE 10.1

                           FEES AND TRANSACTION COSTS

The Company shall pay to the Investor the following fees and costs, which the
Investor shall pay on behalf of the Company to the following payee entities:
Events Triggering the      Fees / Transaction            Calculation                     Payee Entity                 Amount
          payment                    Costs
----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Closing Date for the First    Legal Fees           Investor Legal Fees less       Crescent International Ltd.        $43,139
Sale                                               $10,000
----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Closing Date for the First    Due Diligence Costs  Due Diligence Costs with a     GreenLight (Switzerland) S.A.      $5,146
Sale                                               maximum amount of $ 10,000
----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Closing Date for the First    Sale Fee             2% of the applicable           GreenLight (Switzerland) S.A.      $60,000
Sale                                               Investment Amount
----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Closing Date for a            Sale Fee             2% of the applicable           GreenLight (Switzerland) S.A.      To be
Subsequent Sale                                    Investment Amount                                                 determined at
                                                                                                                  Closing.
----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
EXHIBIT A
                            FORM OF CLOSING STATEMENT

                                CLOSING STATEMENT
======================================================== ===========================================================
Closing Date........................................     [Date] ("Closing Date")
-------------------------------------------------------- -----------------------------------------------------------
Investor............................................     Crescent International Ltd. ("Investor")
-------------------------------------------------------- -----------------------------------------------------------
Company.............................................     WaveRider Communications Inc. ("Company")
-------------------------------------------------------- -----------------------------------------------------------
Transaction.........................................     This closing represents the closing of the sale by the
                                                         Company to Investor of shares of the Company's [Common
                                                         Stock], [Preferred Stock] pursuant to the Stock Purchase
                                                         Agreement dated [Date] (the "Stock Purchase Agreement").
                                                         Capitalized terms not otherwise defined herein shall have
                                                         the meaning assigned by the Stock Purchase Agreement.
-------------------------------------------------------- -----------------------------------------------------------
Maximum Commitment Amount...........................     $10,000,000
-------------------------------------------------------- -----------------------------------------------------------
Purchase Price for Common Stock.....................     $[determined at applicable Closing of a Subsequent Sale]
-------------------------------------------------------- -----------------------------------------------------------
Shares of Common Stock Sold.........................      [Subsequent Sale Only]
-------------------------------------------------------- -----------------------------------------------------------
Purchase Price for Preferred Stock..................     $100.00 [First Closing Only]
-------------------------------------------------------- -----------------------------------------------------------
Shares of Preferred Stock Sold......................     30,000 [First Closing Only]
-------------------------------------------------------- -----------------------------------------------------------
Closing Disbursements:
-------------------------------------------------------- -----------------------------------------------------------
1.  Investment Amount...............................     $
2.  Less: Sale Fee (2.0%) (Schedule 10.1)...........     $
3.  Less:  Legal Fees...............................     $
4.  Less:  Due Diligence Costs......................     $
5.  Net Amount......................................     $
                                                          ==========
-------------------------------------------------------- -----------------------------------------------------------
Actions on Subscription Date:
-------------------------------------------------------- -----------------------------------------------------------
1.  Stock Purchase Agreement........................     The Investor and the Company executed the Stock Purchase
                                                         Agreement.
-------------------------------------------------------- -----------------------------------------------------------
2.  Registration Rights Agreement...................     The Investor and the Company executed the Registration
                                                         Rights Agreement.
-------------------------------------------------------- -----------------------------------------------------------
3.  Instructions to Transfer Agent..................     The Company executed and delivered irrevocable
                                                         Instructions to the
                                                         Transfer Agent and the
                                                         Transfer Agent
                                                         confirmed and accepted
                                                         such instructions. A
                                                         copy of such
                                                         instructions and
                                                         acceptance was received
                                                         by the Investor's legal
                                                         counsel.
-------------------------------------------------------- -----------------------------------------------------------
Actions at Closing:
--------------------------------------------------------------------------------------------------------------------
1.  Incentive Warrant...............................     The Company executed and delivered the Incentive Warrant
                                                         to the Investor.
-------------------------------------------------------- -----------------------------------------------------------
2.  Protective Warrant..............................     [The Company executed and delivered a Protective Warrant
                                                         to the Investor].
-------------------------------------------------------- -----------------------------------------------------------
3. Legal Opinion....................................     Foley Hoag & Eliot LLP delivered its legal opinion.
-------------------------------------------------------- -----------------------------------------------------------
4. Wire Transfer....................................     Upon confirmation of above actions by Investor's legal
                                                         counsel, Investor will wire to the Company the Net Amount
                                                         indicated on the front page hereof, and thereafter
                                                         deliver to the Transfer Agent a Wire Transfer Notice
                                                         indicating completion of delivery by wire transfer to the
                                                         Company the Net Amount.
-------------------------------------------------------- -----------------------------------------------------------
Acknowledged and Agreed:
Crescent International Ltd.                              WaveRider Communications Inc.

By:                                                      By:
      ----------------------------------------------
======================================================== ===========================================================

================================================================ ===================================================
Total Pursuant to the Stock Purchase Agreement                                                          $10,000,000
---------------------------------------------------------------- ---------------------------------------------------
Sale of Preferred Stock                                                                                <$3,000,000>
---------------------------------------------------------------- ---------------------------------------------------
Sale of Common Stock                                                                                       [<$.00>]
---------------------------------------------------------------- ---------------------------------------------------
Remaining Balance                                                                                      [$7,000,000]
================================================================ ===================================================
EXHIBIT B
                            FORM OF INCENTIVE WARRANT

                         (SEE EXHIBIT 10.2 TO FORM 8-K)

                                    EXHIBIT C
                           FORM OF PROTECTIVE WARRANT

                         (SEE EXHIBIT 10.3 TO FORM 8-K)

                                    EXHIBIT D
                      FORM OF REGISTRATION RIGHTS AGREEMENT

                         (SEE EXHIBIT 10.4 TO FORM 8-K)
EXHIBIT E
                               FORM OF SALE NOTICE

Company                                            WaveRider Communications Inc.
Sale Notice Date
Proposed Closing Date
Investment Amount                                              $
Purchase Price per Share                                       $
Number of Shares to be Issued on Closing Date

The following information as of the Sale Notice Date is provided in accordance
with Section 7.2(k) of the Stock Purchase Agreement, dated June 4, 2001 between
WaveRider Communications Inc. and Crescent International Ltd. (the "Agreement")
(Capitalized terms used shall have the respective meanings ascribed to such
terms in the Agreement):

1.   Shares of Outstanding Common Stock
2.   Shares to be issued on proposed Closing Date
3.   Protective Warrant Shares to be registered with respect
     to the proposed Closing
4.   Shares issued pursuant to previous Sales
5.   Incentive Warrant Shares issued
6.   Protective Warrant Shares issued pursuant to previous
     Sales
7.   Conversion Shares issued pursuant to the conversion of
     Preferred Stock
8.   Conversion Shares issuable upon future conversions
9.   Total (2) through (8) above
                                                                ==============
10.  Total as a percentage of Outstanding Common Stock (1)      %

                  WAVERIDER COMMUNICATIONS INC.

                  By:
                        Name:
                        Title:
EXHIBIT F
                           TRANSFER AGENT INSTRUCTIONS

                  [Letterhead of WaveRider Communications Inc.]

                                                          [DATE]

[TRANSFER AGENT][ADDRESS]
Attention:

Dear :

Reference is made to the Stock Purchase Agreement (the "Agreement"), dated as of
[DATE] between Crescent International Limited (the "Investor") and WaveRider
Communications Inc. (the "Company"). Pursuant to the Agreement, the Investor has
agreed to purchase from the Company and the Company has agreed to sell to the
Investor (i) shares of Preferred Stock of the Company which are convertible into
shares of Common Stock of the Company and (ii) shares of Common Stock of the
Company, from time to time. As a condition to the effectiveness of the
Agreement, the Company has agreed to issue to you, as the transfer agent for the
Common Stock (the "Transfer Agent"), these instructions (the "Irrevocable
Instructions") relating to the Common Stock to be issued to the Investor (or a
permitted assignee) pursuant to the Agreement and upon conversion of the
Preferred Stock. Any term used herein and not otherwise defined shall have the
meaning set forth in the Agreement, if defined therein, or in the Certificate of
Designation, if defined therein.

1. MECHANICS OF DELIVERY OF CERTIFICATES REPRESENTING COMMON STOCK

a. Conversion. Upon confirmation by the Company of the conversion of shares of
Preferred Stock, the Transfer Agent shall deliver to the Investor by overnight
courier certificates representing Common Stock as promptly as practicable, but
in no event later than three Trading Days after the applicable Conversion Date.

b. Subsequent Sales. Upon receipt of the Closing Statement duly signed by both
the Company and the Investor agreeing to the transfer of the funds due to the
Company pursuant to a Subsequent Sale and specifying the number of shares of
Common Stock to be issued to the Investor in respect of such funds, the Transfer
Agent shall deliver to the Investor by overnight courier certificates
representing Common Stock as promptly as practicable, but in no event later than
three Trading Days after the Closing Date relating to such Subsequent Sale.

c.  Address.   Unless  otherwise  notified  in  writing  by  the  Investor,  the
certificates delivered to the Investor pursuant to the Agreement
and the preceding two paragraphs shall be delivered at the following address:

[ADDRESS]

With notice to:

[ADDRESS]

2. ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND

a. Pursuant to the  Agreement,  the Company is required to prepare and file with
the Commission,  and maintain the effectiveness of, a registration  statement or
registration  statements  registering the resale of the Common Stock acquired or
to be acquired by the  Investor.  The Company will advise the Transfer  Agent in
writing of the  effectiveness of any such  registration  statement and provide a
copy of the  effective  registration  statement  and the legal  opinion filed as
Exhibit 5 thereto,  promptly  upon its being  declared  effective.
The  Transfer  Agent shall be  entitled to rely on such advice and shall  assume
that such registration  statement remains effective unless the Transfer Agent is
otherwise  advised  in  writing  by the  Company  and shall not be  required  to
independently   confirm  the  continued   effectiveness  of  such   registration
statement.  In the  circumstances set forth in paragraph (b) below, the Transfer
Agent shall deliver to the Investor  certificates  representing Common Stock not
bearing the Legend without requiring further advice or instruction or additional
documentation  from the Company or its counsel or the Investor or its counsel or
any other party (other than as described in such paragraphs).

b. At any time after the effective date of the applicable registration statement
(provided  that the Company has not informed the Transfer  Agent in writing that
such registration  statement is not effective) upon any surrender of one or more
certificates  evidencing  Common Stock which bear the Legend,  accompanied  by a
notice from the Investor, its broker, custodian or permitted assignee requesting
the issuance of new certificates free of the Legend to replace those surrendered
and setting  forth whether a transfer is pursuant to a  registration  statement,
Rule 144 or Rule  144(k),  the  Transfer  Agent  shall  promptly  deliver to the
Investor  certificates  representing the Common Stock not bearing the Legend, in
such names and denominations as requested, provided that:

         i.       if pursuant to a registration statement,  the Investor (or its
                  broker,  custodian or  permitted  assignee)  shall  confirm in
                  writing to the  Transfer  Agent that the Investor has complied
                  with the prospectus delivery requirements under the Securities
                  Act;

         ii.      if  pursuant  to Rule  144(k)  the  Investor  (or its  broker,
                  custodian or permitted assignee) shall deliver to the Transfer
                  Agent an opinion of counsel  satisfactory  to the Company,  to
                  the effect that the  Investor is  permitted to dispose of such
                  Common Stock without limitation as to amount or manner of sale
                  pursuant to Rule 144(k) under the  Securities  Act as amended,
                  and the Company shall provide the Transfer  Agent with written
                  confirmation that such opinion is satisfactory; or

         iii.     if  pursuant  to  Rule  144,  the  Investor  (or  its  broker,
                  custodian or permitted assignee) shall deliver to the Transfer
                  Agent an opinion of counsel  satisfactory  to the Company,  to
                  the effect that the Investor  has complied  with the manner of
                  sale and notice  requirements of Rule 144 under the Securities
                  Act, as amended,  and the Company  shall  provide the Transfer
                  Agent  with   written   confirmation   that  such  opinion  is
                  satisfactory.

Any advice,  notice or  instructions to the Transfer Agent required or permitted
to be given hereunder may be transmitted  via facsimile to the Transfer  Agent's
facsimile number of () -.

The certificates bearing the Legend shall be surrendered and delivered to the
Transfer Agent at the following address:

[TRANSFER AGENT]
[ADDRESS]
Attention:
Tel: ()  -

3. FEES OF TRANSFER AGENT; INDEMNIFICATION

The Company agrees to pay the Transfer Agent for all fees and expenses incurred
in connection with these Irrevocable Instructions. The Company agrees to
indemnify the Transfer Agent and its officers, employees and agents, against any
losses, claims, damages or liabilities, joint or several, to which it or they
become subject based upon the performance by the Transfer Agent of its duties in
accordance with the Irrevocable Instructions.
4. THIRD PARTY BENEFICIARY

The Company and the Transfer Agent acknowledge and agree that the Investor is an
express third party beneficiary of these Irrevocable Instructions and shall be
entitled to rely upon, and enforce, the provisions hereof.

                                                 WAVERIDER COMMUNICATIONS INC.

                                                 By:
                                                 Name:
                                                 Title:

AGREED:

[TRANSFER AGENT]

By:
         Name:
         Title:
EXHIBIT G

              FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL

[Date]

Crescent International Ltd.
c/o GreenLight (Switzerland) SA
84, av Louis-Casai, P.O. Box 42
1216 Geneva, Cointrin
Switzerland

Re: Stock Purchase Agreement Between Crescent International Ltd. and [COMPANY]

Ladies and Gentlemen:

This opinion is furnished to you pursuant to Section [6.11] of the Stock
Purchase Agreement by and between Crescent International Ltd., a Bermuda entity
(the "Investor") and WaveRider Communications Inc. (the "Company"), dated [DATE]
(the "Stock Purchase Agreement"), which provides for the issuance and sale by
the Company of up to $10,000,000 worth of securities consisting of (i) shares of
Series D Convertible Preferred Stock of the Company (the "Preferred Stock") and
(ii) Common Stock of the Company (the "Common Stock"), a warrant to purchase up
to  shares of Common Stock of the Company (the "Incentive Warrant") and
warrants to purchase a number of shares to be determined in accordance with the
terms of such warrants (the "Protective Warrants", and together with the
Incentive Warrant, the "Warrants") (the shares of Common Stock issued or
issuable pursuant to exercise of the Warrants are referred to herein as the
"Warrant Shares"). All terms used herein have the meanings defined for them in
the Stock Purchase Agreement unless otherwise defined herein.

We have acted as counsel for the Company in connection with the negotiation of
the Stock Purchase Agreement, the Warrants, and the Registration Rights
Agreement between the Investor and the Company, dated [DATE] (the "Registration
Rights Agreement" and together with the Stock Purchase Agreement, the
"Agreements"). As counsel, we have made such legal and factual examinations and
inquiries as we have deemed advisable or necessary for the purpose of rendering
this opinion. In addition, we have examined, among other things, originals or
copies of such corporate records of the Company, certificates of public
officials and such other documents and questions of law that we consider
necessary or advisable for the purpose of rendering this opinion. In such
examination we have assumed the genuineness of all signatures on original
documents, the authenticity and completeness of all documents submitted to us as
originals, the conformity to original documents of all copies submitted to us as
copies thereof, the legal capacity of natural persons, and the due execution and
delivery of all documents (except as to due execution and delivery by the
Company) where due execution and delivery are a prerequisite to the
effectiveness thereof.
As used in this opinion, the expression "to our knowledge" refers to the current
actual knowledge of the attorneys of this firm who have worked on matters for
the Company solely in connection with the Agreements and the Warrants and the
transactions contemplated thereby.

         For purposes of this opinion, we have assumed that you have all
requisite power and authority, and have taken any and all necessary corporate
action, to execute and deliver the Agreements, and we are assuming that the
representations and warranties made by the Investor in the Agreements and
pursuant thereto are true and correct.

         Based upon and subject to the foregoing, we are of the opinion that:

1.  The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada and has all requisite power
and authority (corporate and other) to carry on its business and to own, lease
and operate its properties and assets as described in the Company's SEC
Documents. To our knowledge, the Company does not own more than fifty percent
(50%) of the outstanding capital stock of or control any other business entity.
The Company is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in the United States of America in which the
Company owns or leases property, other than those in which the failure so to
qualify would not have a Material Adverse Effect.

2.  The Company has the requisite corporate power and authority to enter
into and perform its obligations under the Agreements and the Warrants and to
issue the Commitment Shares, the Preferred Stock, the Warrants and the Warrant
Shares. The execution and delivery of the Agreements, and the execution,
issuance and delivery of the Warrants, by the Company and the consummation by it
of the transactions contemplated thereby have been duly authorized by all
necessary corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required. Each of the
Agreements has been duly executed and delivered, and the Warrants have been, and
upon issuance will be, duly executed, issued and delivered, by the Company and
each of the Agreements and the Warrants constitutes, and upon issuance will
constitute, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws relating
to, or affecting generally the enforcement of, creditors' rights and remedies or
by other equitable principles of general application. Furthermore, we express no
opinion concerning the enforceability of provisions of any agreement purporting
to indemnify any person for violations of applicable securities law.

3.  The execution, delivery and performance of the Agreements and the
Warrants by the Company and the consummation by the Company of the transactions
contemplated thereby, including without limitation the issuance of the
Commitment Shares, the Preferred Stock, the Warrant and the Warrant Shares, do
not and will not (i) result in a violation of the Company's Articles or By-Laws;
(ii) to our knowledge, conflict with, or constitute a material 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, acceleration or
cancellation of, any material agreement, indenture, instrument or any "lock-up"
or similar provision of any underwriting or similar agreement to which the
Company is a party, except for such conflicts, defaults, terminations,
amendments, accelerations and cancellations as would not, individually or in the
aggregate, have a Material Adverse Effect or for which a consent and waiver have
been obtained; or (iii) result in a violation of any federal or state law, rule
or regulation applicable to the Company or by which any property or asset of the
Company is bound or affected, except for such violations as would not,
individually or in the aggregate, have a Material Adverse Effect. To our
knowledge, the Company is not in violation of any terms of its Articles or
Bylaws.

4.  The issuance of the Subsequent Sale Shares, the Preferred Stock and
the Warrants in accordance with the Stock Purchase Agreement, the issuance of
the Conversions Shares upon conversion of the Preferred Stock, and the issuance
of the Warrant Shares in accordance with the Warrants, will be exempt from
registration under the Securities Act of 1933 and will be in compliance with
Nevada state securities laws. When so issued, the Subsequent Sale Shares, the
Preferred Stock, the Conversion Shares and the Warrant Shares will be duly and
validly issued, fully paid and nonassessable, and free of any liens,
encumbrances and preemptive or similar rights contained in the Articles or
Bylaws or, to our knowledge, in any agreement to which the Company is party.

5.  To our knowledge, except as disclosed in the SEC Documents, there are
no claims, actions, suits, proceedings or investigations that are pending
against the Company or its properties, or against any officer or director of the
Company in his or her capacity as such, nor has the Company received any written
threat of any such claims, actions, suits, proceedings, or investigations which
are required to be and have not been disclosed in the SEC Documents.

6.  To our knowledge, there are no outstanding options, warrants, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any right to
subscribe for or acquire any shares of Common Stock or Preferred Stock or
contracts, commitments, understandings, or arrangements by which the Company is
or may become bound to issue additional shares of Common Stock or Preferred
Stock, or securities or rights convertible or exchangeable into shares of Common
Stock or Preferred Stock, except as described in the SEC Documents.
7.  The statements in (i) the Company's Registration Statement on Form
S-3[/A], filed by the Company with the Commission on  and deemed effective
by the Commission on (the "Registration Statement"), and the Prospectus
included therein, at the time the Registration Statement became effective, under
the headings titled "Risk Factors", "Description of Securities", and "Legal
Matters" [Investor to decide additional sections after review of S-3] (ii) the
Company's Annual Report on Form 10K for the year ended December 31, 2000 under
the captions "Description of Property", "Legal Proceedings", "Risk Factors",
"Executive Compensation", and "Certain Relationships and Related Transactions"
and (iii) in the Company's Quarterly Report on Form 10Q for the period ended
[March 31, 2001] [June 30, 2001] under the captions "Legal Proceedings" and
"Risk Factors", insofar as such statements constitute matters of law, summaries
of legal matters, contracts, the Company's charter or by-law provisions,
documents or legal proceedings, or legal conclusions, have been reviewed by us
and fairly present and summarize, in all material respects, the matters referred
to therein.] [For Opinion pursuant to the second sentence of Section 6.11.]

This opinion is furnished to the Investor solely for its benefit in connection
with the transactions described above and may not be relied upon by any other
person or for any other purpose without our prior written consent.

                                                              Very truly yours,
EXHIBIT H
                             COMPLIANCE CERTIFICATE

         The undersigned,_______ hereby certifies, with respect to shares
of [Series D Preferred Stock] [Common Stock] of WaveRider Communications Inc.
(the "Company") issuable pursuant to Article II of the Stock Purchase Agreement,
dated [DATE], by and between the Company and Crescent International Ltd. (the
"Agreement"), as follows:

         1. The undersigned is the duly elected [Office] of the Company.

         2. The  representations  and  warranties  of the  Company  set forth in
Article IV of the Agreement are true and correct as though made on and as of the
date hereof.

         3. The  Company  has  performed  all  covenants  and  agreements  to be
performed by the Company on or prior to the Closing Date and has complied in all
material  respects with all obligations and conditions  contained in Article VII
of the Agreement.

The undersigned has executed this Certificate this ____ day of _____, _____

                                                     By:
                                                     ---------------------------
                                                     Name:
                                                     Title:
EXHIBIT I
                      [FORM OF INVESTOR CONVERSION NOTICE]

                            CONVERSION NOTICE No.

To: WaveRider Communications Inc.

         The undersigned holder of [TOTAL] shares of Series D Convertible
Preferred Stock, par value $0.01 per share (the "Preferred Stock") of WaveRider
Communications Inc. (the "Company") hereby irrevocably exercises the option to
convert_______ shares of Preferred Stock into common stock, par value $0.001
per share, of the Company (the "Common Stock"), in accordance with the terms of
the Preferred Stock. The applicable conversion price is US$_________ and the
number of shares of Common Stock issuable upon conversion is__________  (the
"Conversion Shares").

         The undersigned directs that:

         (i) the Conversion Shares be issued in the name of Crescent
         International Ltd., and stock certificates representing such Conversion
         Shares be delivered to ________  in accordance with the Transfer
         Agent Instructions, dated _______, 2001, delivered by the Company to
         [NAME/ADDRESS]; and

         (ii) a new  stock  certificate  in the name of  Crescent  International
         Ltd.,  representing  the number of shares of Preferred  Stock,  if any,
         held by the undersigned immediately following the conversion of _______
         shares of Preferred Stock in accordance with this Conversion Notice, be
         delivered to GreenLight (Switzerland) S.A. at _________.

         Shares of Common Stock held (excluding shares issuable upon conversion
         of Preferred Stock or exercise of Warrants) on the date hereof:_____

Dated:

-------------------------
Signature of Registered Holder
Name of Registered Holder

Please confirm acceptance of this Conversion Notice (which confirmation shall
constitute a waiver of the Company's option to refuse a conversion pursuant to
and subject to Section 8(a) of the Certificate of Designation of the Preferred
Stock) by faxing a duly executed copy of this Conversion Notice within 24 hours
of receipt to GreenLight (Switzerland) S.A. at facsimile number +11 41 22 929 53
94.

Acknowledged:    _________________                          Date: ____________
Contact Person:  _________________                          Phone: ___________

                   WaveRider Communications, Inc.
EXHIBIT J
                       [FORM OF COMPANY CONVERSION NOTICE]

                            CONVERSION NOTICE No.

To: [Registered Holder]

         WaveRider Communications Inc. (the "Company") hereby irrevocably
exercises the option to convert ______shares of Series D Convertible
Preferred Stock, par value $0.01 per share, of the Company (the "Preferred
Stock") into common stock, par value $0.001 per share, of the Company (the
"Common Stock"), in accordance with the terms of the Preferred Stock. The
applicable conversion price is US$ _________and the number of shares of
Common Stock issuable upon conversion is _________  (the "Conversion
Shares").

Dated:

WAVERIDER COMMUNICATIONS INC.

By:
     Name:
     Title:

Please acknowledge receipt by faxing a duly executed copy of this Conversion
Notice within 24 hours of receipt to WaveRider Communications Inc. at facsimile
number ____________ .

The undersigned acknowledges receipt of this Conversion Notice and directs that:

         (i) the Conversion Shares be issued in the name of Crescent
         International Ltd., and stock certificates representing such Conversion
         Shares be delivered to  _________ in accordance with the Transfer
         Agent Instructions, dated ________, 2001, delivered by the Company to
         [NAME/ADDRESS]; and

         (ii) a new  stock  certificate  in the name of  Crescent  International
         Ltd.,  representing  the number of shares of Preferred  Stock,  if any,
         held  by  the  undersigned  immediately  following  the  conversion  of
         ________shares  of Preferred  Stock in accordance  with this Conversion
         Notice, be delivered to GreenLight (Switzerland) S.A. at _______.

Acknowledged:     _____________________                       Date: _______
                  Name of Registered Holder                   Phone:_______
STOCK PURCHASE AGREEMENT

                                 by and between

                           Crescent International Ltd.

                                       and

                          WAVERIDER COMMUNICATIONS INC.

                            dated as of June 4, 2001

                                TABLE OF CONTENTS
Page
ARTICLE I             CERTAIN DEFINITIONS........................................................................2

         Section 1.1.      "Affiliate"...........................................................................2

         Section 1.2.      "Bid Price"...........................................................................2

         Section 1.3.      "Capital Shares"......................................................................2

         Section 1.4.      "Certificate of Designation"..........................................................2

         Section 1.5.      "Closing".............................................................................2

         Section 1.6.      "Closing Date"........................................................................2

         Section 1.7.      "Closing Statement"...................................................................2

         Section 1.8.      "Commitment Period"...................................................................2

         Section 1.9.      "Commitment Shares"...................................................................2

         Section 1.10.     "Common Stock"........................................................................3

         Section 1.11.     "Condition Satisfaction Date".........................................................3

         Section 1.12.     "Conversion Shares"...................................................................3

         Section 1.13.     "Daily Trading Value".................................................................3

         Section 1.14.     "Damages".............................................................................3

         Section 1.15.     "Effective Date"......................................................................3

         Section 1.16.     "Exchange Act"........................................................................3

         Section 1.17.     "First Sale"..........................................................................3

         Section 1.18.     "Incentive Warrant"...................................................................3
Section 1.19.     "Incentive Warrant Shares"............................................................3

         Section 1.20.     "Investment Amount"...................................................................3

         Section 1.21.     "Legend"..............................................................................4

         Section 1.22.     "Material Adverse Effect".............................................................4

         Section 1.23.     "Maximum Commitment Amount"...........................................................4

         Section 1.24.     "Maximum Sale Amount".................................................................4

         Section 1.25.     "Minimum Sale Amount".................................................................4

         Section 1.26.     "Minimum Time Interval"...............................................................4

         Section 1.27.     "NASD"................................................................................4

         Section 1.28.     "Outstanding".........................................................................4

         Section 1.29.     "Person"..............................................................................4

         Section 1.30.     "Preferred Stock".....................................................................4

         Section 1.31.     "Principal Market"....................................................................4

         Section 1.32.     "Protective Warrant"..................................................................5

         Section 1.33.     "Protective Warrant Shares"...........................................................5

         Section 1.34.     "Purchase Price"......................................................................5

         Section 1.35.     "Registrable Securities"..............................................................5

         Section 1.36.     "Registration Rights Agreement".......................................................5

         Section 1.37.     "Registration Statement"..............................................................5

         Section 1.38.     "Regulation D"........................................................................5

         Section 1.39.     "Representative"......................................................................5

         Section 1.40.     "Sale"................................................................................5

         Section 1.41.     "Sale Date"...........................................................................6

         Section 1.42.     "Sale Fees"...........................................................................6

         Section 1.43.     "Sale Notice".........................................................................6

         Section 1.44.     "Sale Notice Date"....................................................................6

         Section 1.45.     "Sale Notice Period"..................................................................6

         Section 1.46.     "SEC".................................................................................6

         Section 1.47.     "SEC Documents".......................................................................6

         Section 1.48.     "Section 4(2)"........................................................................6

         Section 1.49.     "Securities Act"......................................................................6

         Section 1.50.     "Short Sale"..........................................................................6

         Section 1.51.     "Subscription Date"...................................................................6

         Section 1.52.     "Subscription Fee"....................................................................6

         Section 1.53.     "Subsequent Sale".....................................................................6
Section 1.54.     "Subsequent Sale Shares"..............................................................6

         Section 1.55.     "Subsidiary"..........................................................................7

         Section 1.56.     "Trading Day".........................................................................7

         Section 1.57.     "Transfer Agent Instructions".........................................................7

         Section 1.58.     "Underwriter".........................................................................7

         Section 1.59.     "Warrants"............................................................................7

         Section 1.60.     "Warrant Shares"......................................................................7

ARTICLE II            SALE AND PURCHASE OF COMMON STOCK, WARRANTS
                      AND PREFERRED STOCK TERMINATION OF OBLIGATIONS.............................................7

         Section 2.1.      Sales.................................................................................7

         Section 2.2.      Twenty Percent Limitation.............................................................8

         Section 2.3.      Sale Notice...........................................................................8

         Section 2.4.      Closings..............................................................................8

         Section 2.5.      Termination of Agreement and Investment Obligation....................................9

ARTICLE III           REPRESENTATIONS AND WARRANTIES OF INVESTOR.................................................9

         Section 3.1.      Intent................................................................................9

         Section 3.2.      Sophisticated Investor...............................................................10

         Section 3.3.      Authority............................................................................10

         Section 3.4.      Not an Affiliate.....................................................................10

         Section 3.5.      Organization and Standing............................................................10

         Section 3.6.      Absence of Conflicts.................................................................10

         Section 3.7.      Disclosure; Access to Information....................................................10

         Section 3.8.      Manner of Sale.......................................................................11

         Section 3.9.      Resale Restrictions..................................................................11

ARTICLE IV            REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................11

         Section 4.1.      Organization of the Company..........................................................11

         Section 4.2.      Authority............................................................................11

         Section 4.3.      Corporate Documents..................................................................12

         Section 4.4.      Books and Records....................................................................12

         Section 4.5.      Capitalization.......................................................................12

         Section 4.6.      Registration and Listing of Common Stock.............................................13

         Section 4.7.      Financial Statements.................................................................13

         Section 4.8.      SEC Documents........................................................................13

         Section 4.9.      Exemption from Registration; Valid Issuances;
                           New Issuances........................................................................14

         Section 4.10.     No General Solicitation or Advertising...............................................14
Section 4.11.     No Conflicts.........................................................................14

         Section 4.12.     No Material Adverse Change...........................................................15

         Section 4.13.     No Undisclosed Liabilities...........................................................15

         Section 4.14.     No Undisclosed Events or Circumstances...............................................15

         Section 4.15.     No Integrated Offering...............................................................16

         Section 4.16.     Litigation and Other Proceedings.....................................................16

         Section 4.17.     No Misleading or Untrue Communication................................................16

         Section 4.18.     Material Non-Public Information......................................................16

ARTICLE V             COVENANTS OF THE INVESTOR.................................................................16

         Section 5.1.      Compliance...........................................................................16

         Section 5.2.      Short Sale...........................................................................16

ARTICLE VI            COVENANTS OF THE COMPANY..................................................................17

         Section 6.1.      Registration Rights..................................................................17

         Section 6.2.      Reservation of Common Stock..........................................................17

         Section 6.3.      Listing of Common Stock..............................................................17

         Section 6.4.      Exchange Act Registration............................................................17

         Section 6.5.      Legends..............................................................................17

         Section 6.6.      Corporate Existence..................................................................18

         Section 6.7.      Additional SEC Documents.............................................................18

         Section 6.8.      Notice of Certain Events Affecting Registration;
                           Suspension of Right to Make a Subsequent Sale. ......................................18

         Section 6.9.      Consolidation; Merger................................................................18

         Section 6.10.     Issuance of Shares...................................................................19

         Section 6.11.     Legal Opinions.......................................................................19

         Section 6.12.     No Similar Arrangement; Right of First Refusal.......................................19

         Section 6.13.     Public Announcements.................................................................20

ARTICLE VII           CONDITIONS TO DELIVERY OF SALE NOTICES AND
                      CONDITIONS TO CLOSING.....................................................................20

         Section 7.1.      Conditions Precedent to the Obligation of the Company to Issue and Sell Preferred Stock and Common
                           Stock................................................................................20

         Section 7.2.      Conditions Precedent to the Right of the Company to deliver a Sale Notice and the Obligation of
                           the Investor to Purchase Preferred Stock and Common Stock ...........................20

         Section 7.3.      Due Diligence Review; Non-Disclosure of Non-Public Information.......................23

ARTICLE VIII          LEGENDS...................................................................................24

         Section 8.1.      Legends..............................................................................24
Section 8.2.      No Other Legend or Stock Transfer Restrictions.......................................26

         Section 8.3.      Investor's Compliance................................................................26

ARTICLE IX            INDEMNIFICATION; ARBITRATION..............................................................26

         Section 9.1.      Indemnification......................................................................26

         Section 9.2.      Method of Asserting Indemnification Claims...........................................27

         Section 9.3.      Arbitration..........................................................................30

ARTICLE X             MISCELLANEOUS.............................................................................30

         Section 10.1.     Fees and Transaction Costs...........................................................30

         Section 10.2.     Reporting Entity for the Common Stock................................................31

         Section 10.3.     Brokerage............................................................................31

         Section 10.4.     Conversion Notices...................................................................31

         Section 10.5.     Notices..............................................................................31

         Section 10.6.     Assignment...........................................................................33

         Section 10.7.     Amendment; No Waiver.................................................................33

         Section 10.8.     Annexes and Exhibits; Entire Agreement...............................................33

         Section 10.9.     Survival.............................................................................33

         Section 10.10.    Severability.........................................................................33

         Section 10.11.    Title and Subtitles..................................................................33

         Section 10.12.    Counterparts.........................................................................33

         Section 10.13.    Choice of Law........................................................................34

         Section 10.14.    Other Expenses.......................................................................34
EXHIBIT 10.2

                                INCENTIVE WARRANT

                      CLASS N COMMON STOCK PURCHASE WARRANT

THE SECURITIES  EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S.  SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"),  OR ANY OTHER
APPLICABLE  SECURITIES  LAWS AND HAVE BEEN ISSUED IN RELIANCE  UPON AN EXEMPTION
FROM  THE  REGISTRATION  REQUIREMENTS  OF THE  SECURITIES  ACT  AND  SUCH  OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION  HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED
OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES  ACT OR PURSUANT TO A TRANSACTION  WHICH IS EXEMPT FROM, OR
NOT  SUBJECT  TO,  SUCH  REGISTRATION.  THE  HOLDER OF THIS  CERTIFICATE  IS THE
BENEFICIARY OF CERTAIN  OBLIGATIONS OF THE COMPANY SET FORTH IN A STOCK PURCHASE
AGREEMENT,  DATED AS OF JUNE 4, 2001, BETWEEN WAVERIDER  COMMUNICATIONS INC. AND
CRESCENT  INTERNATIONAL  LTD. A COPY OF THE PORTION OF THE  AFORESAID  AGREEMENT
EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM WAVERIDER COMMUNICATIONS INC.'S
EXECUTIVE OFFICES. June 4, 2001

      Warrant to Purchase up to 877,193 shares of Common Stock of WaveRider
                              Communications Inc.
                     (hereinafter, the "Incentive Warrant").
                        -----------------

         WaveRider  Communications  Inc., an entity organized and existing under
the laws of the State of Nevada (the  "Company"),  hereby  agrees that  Crescent
International Ltd. (the "Investor") or any other Warrant Holder is entitled,  on
the terms and  conditions  set forth below,  to purchase from the Company at any
time during the Exercise  Period (as defined below) up to 877,193 fully paid and
nonassessable shares of Common Stock, par value $0.001 per share, of the Company
(the "Common Stock"),  as the same may be adjusted from time to time pursuant to
Section 6 hereof,  at the Exercise Price (as defined below),  as the same may be
adjusted pursuant to Section 6 hereof.  The resale of the shares of Common Stock
or other securities issuable upon exercise or exchange of this Incentive Warrant
is subject to the provisions of the  Registration  Rights  Agreement (as defined
below).

Section 1.        Definitions.

         "Aggregate Exercise Price" shall mean, with respect to any exercise (in
whole or in part) of this Incentive Warrant the Exercise Price multiplied by the
total number of shares of Common Stock for which this Incentive Warrant is being
exercised.

         "Agreement" shall mean the Stock Purchase  Agreement,  dated as of June
4, 2001, between the Company and the Investor.

         "Exercise  Date" shall mean,  with respect to any exercise (in whole or
in part) of this  Incentive  Warrant  the date the  Exercise  Notice  is sent by
facsimile to the Company.

         "Exercise Notice" shall mean, with respect to any exercise (in whole or
in part) of this Incentive  Warrant the exercise form attached hereto as Exhibit
A, duly executed by the Warrant Holder.
"Exercise  Period"  shall mean the period  beginning on the date hereof
and continuing until the expiration of the five-year period thereafter; provided
that such period  shall be extended  one day for each day after the date hereof,
that the Registration  Statement covering (i) Commitment Shares purchased by the
Investor,  (ii) the Protective  Warrant Shares, if any, related to any Sales and
(iii)  the  Incentive  Warrant  Shares  purchasable  through  exercise  of  this
Incentive  Warrant,  is  not  effective  during  the  period  such  Registration
Statement  is  required to be  effective  pursuant  to the  Registration  Rights
Agreement.

         "Exercise  Price" as of the date  hereof  shall mean $1.71 per share of
Common  Stock,  subject  to the  adjustments  provided  for in Section 6 of this
Incentive Warrant.

         "Per Share Warrant Value" shall mean,  with respect to any exercise (in
whole  or in part) of this  Incentive  Warrant  the  difference  resulting  from
subtracting  the Exercise  Price from the Bid Price of one share of Common Stock
on the Trading Day immediately preceding the Exercise Date.

         "Registration  Rights  Agreement"  shall mean the  registration  rights
agreement, dated June 4, 2001 between the Company and the Investor.

         "Warrant  Holder" shall mean the Investor or any assignee or transferee
of all or any portion of this Incentive Warrant.

         Other  capitalized  terms used but not defined  herein shall have their
respective meanings set forth in the Agreement.

Section 2.        Exercise; Cashless Exercise.

         (a) Method of  Exercise.  This  Incentive  Warrant may be  exercised in
whole or in part (but not as to a fractional share of Common Stock), at any time
and from time to time during the Exercise  Period,  by the Warrant Holder by the
delivery  by  facsimile  of an executed  and  completed  Exercise  Notice to the
Company and delivery to the Company within five Trading Days  thereafter of this
Incentive  Warrant,  the original  Exercise  Notice and the  Aggregate  Exercise
Price.

         (b) Payment of  Aggregate  Exercise  Price.  Subject to  paragraph  (c)
below, payment of the Aggregate Exercise Price shall be made by wire transfer to
an account  designated by the Company.  If the amount of the payment received by
the Company is less than the Aggregate  Exercise Price,  the Warrant Holder will
be notified of the  deficiency  and shall make  payment in that amount  within 5
Trading  Days of such  notice.  In the event the payment  exceeds the  Aggregate
Exercise Price,  the Company will refund the excess to the Warrant Holder within
3 Trading  Days of both the receipt of such  payment and the  knowledge  of such
excess.

         (c) Cashless  Exercise.  As an  alternative to payment of the Aggregate
Exercise  Price in accordance  with Section 2(b) above,  the Warrant  Holder may
elect to effect a cashless  exercise by so indicating on the Exercise Notice and
including  a  calculation  of the number of shares of Common  Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless  Exercise").
In the event of a Cashless  Exercise,  the Warrant  Holder shall  surrender this
Incentive  Warrant for that number of shares of Common Stock  determined  by (i)
multiplying  the number of  Incentive  Warrant  Shares for which this  Incentive
Warrant is being  exercised by the Per Share Warrant Value and (ii) dividing the
product by the Bid Price of one share of the  Common  Stock on the  Trading  Day
immediately preceding the Exercise Date.

         (d) Replacement Warrant. In the event that the Incentive Warrant is not
exercised in full,  the number of Incentive  Warrant  Shares shall be reduced by
the number of such Incentive  Warrant Shares for which this Incentive Warrant is
exercised, and the Company, at its expense, shall forthwith issue and deliver to
the  Warrant  Holder a new  Incentive  Warrant  of like tenor in the name of the
Warrant  Holder or as the Warrant Holder may request,  reflecting  such adjusted
number of Incentive Warrant Shares.
Section 3. Ten Percent  Limitation.  At no time may the Warrant Holder  exercise
this  Incentive  Warrant such that the number of Incentive  Warrant Shares to be
received  pursuant to such exercise  aggregated  with all other shares of Common
Stock then owned by the Warrant Holder beneficially or deemed beneficially owned
(as such term is defined in Rule 13(d)  under the  Exchange  Act) by the Warrant
Holder and its affiliates  would result in the Warrant Holder and its affiliates
owning more than 9.9% of all of such  Common  Stock as would be  outstanding  on
such  Exercise  Date,  as  determined  in  accordance  with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.

Section 4. Delivery of Stock Certificates.

         (a) Subject to the terms and conditions of this Incentive  Warrant,  as
soon as practicable  after the exercise of this Incentive  Warrant in full or in
part, and in any event within five (5) Trading Days  thereafter,  the Company at
its expense (including,  without limitation, the payment by it of any applicable
issue taxes) will cause to be issued in the name of and delivered to the Warrant
Holder,  or as  the  Warrant  Holder  lawfully  may  direct,  a  certificate  or
certificates  for the number of validly  issued,  fully paid and  non-assessable
Incentive  Warrant  Shares to which the Warrant Holder shall be entitled on such
exercise,  together  with  any  other  stock  or other  securities  or  property
(including cash, where  applicable) to which the Warrant Holder is entitled upon
such exercise in accordance with the provisions hereof; provided,  however, that
any such delivery to a location  outside of the United States also shall be made
within five Trading Days after the exercise of this Incentive Warrant in full or
in part.

         (b) This Incentive Warrant may not be exercised as to fractional shares
of Common Stock.  In the event that the exercise of this Incentive  Warrant,  in
full or in part,  would result in the right to acquire any  fractional  share of
Common  Stock,  then in such event such  fractional  share shall be considered a
whole  share of  Common  Stock and  shall be added to the  number  of  Incentive
Warrant Shares issuable to the Investor upon exercise of this Incentive Warrant.

Section 5. Representations, Warranties and Covenants of the Company.

         (a) The Company shall take all necessary  action and proceedings as may
be required and permitted by applicable  law, rule and  regulation for the legal
and valid issuance of this Incentive Warrant and the Incentive Warrant Shares to
the Warrant Holder.

         (b) At all times during the Exercise Period, the Company shall take all
steps  reasonably  necessary  and within its  control to insure  that the Common
Stock remains listed or quoted on the Principal Market.

         (c) The Incentive  Warrant  Shares,  when issued in accordance with the
terms hereof, will be duly authorized and, when paid for or issued in accordance
with the terms hereof, shall be validly issued, fully paid and non-assessable.

         (d) The Company has authorized and reserved for issuance to the Warrant
Holder the requisite  number of shares of Common Stock to be issued  pursuant to
this  Incentive  Warrant.  The  Company  at all  times  shall  reserve  and keep
available,  solely  for  issuance  and  delivery  as  Incentive  Warrant  Shares
hereunder, such shares of Common Stock as from time to time shall be issuable as
Incentive Warrant Shares, and accordingly shall adjust the number of such shares
of Common Stock promptly upon the  occurrence of any of the events  specified in
Section 6 hereof.
Section  6.  Adjustment  of  the  Exercise   Price.   The  Exercise  Price  and,
accordingly,  the number of Incentive  Warrant Shares  issuable upon exercise of
the Incentive Warrant, shall be subject to adjustment from time to time upon the
happening of certain events as follows:

         (a) Reclassification,  Consolidation, Merger; Mandatory Share Exchange;
Sale  Transfer  or Lease of  Assets.  If the  Company,  at any time  while  this
Incentive  Warrant is unexpired and not exercised in full, (i)  reclassifies  or
changes its  Outstanding  Capital  Shares (other than a change in par value,  or
from par value to no par value per share,  or from no par value per share to par
value or as a result of a subdivision or  combination of outstanding  securities
issuable upon exercise of this Incentive Warrant) or (ii)  consolidates,  merges
or effects a  mandatory  share  exchange  (x) with or into  another  corporation
(other than a merger or mandatory  share  exchange with another  corporation  in
which the Company is a  continuing  corporation  and that does not result in any
reclassification or change,  other than a change in par value, or from par value
to no par value per share,  or from no par value per share to par value,  or (y)
as a result of a  subdivision  or  combination  of  Outstanding  Capital  Shares
issuable upon exercise of the  Incentive  Warrant) or (iii) sells,  transfers or
leases  all or  substantially  all of its  assets,  then in any such  event  the
Company, or such successor or purchasing corporation, as the case may be, shall,
without payment by the Warrant Holder of any additional  consideration therefor,
amend this Incentive  Warrant or issue a new warrant  providing that the Warrant
Holder  shall have rights not less  favorable  to the Warrant  Holder than those
then  applicable to this  Incentive  Warrant and to receive upon exercise  under
such amendment of this Incentive  Warrant or new warrant,  in lieu of each share
of Common Stock  theretofore  issuable upon exercise of this  Incentive  Warrant
hereunder,  the kind and amount of shares of stock,  other securities,  money or
property receivable upon such reclassification,  change, consolidation,  merger,
mandatory share exchange,  lease, sale or transfer by the holder of one share of
Common Stock issuable upon exercise of the Incentive  Warrant had this Incentive
Warrant  been  exercised  immediately  prior to such  reclassification,  change,
consolidation,  merger,  mandatory  share exchange or sale or transfer  (without
giving effect to the limitation on ownership set forth in Section 3 hereof), and
an appropriate  provision for the foregoing shall be made by the Company as part
of any such event.  Such amended  Incentive Warrant or new warrant shall provide
for adjustments that shall be as nearly  equivalent as may be practicable to the
adjustments  provided for in this Section 6. The provisions of this Section 6(a)
shall similarly apply to successive reclassifications,  changes, consolidations,
mergers, mandatory share exchanges, sales, transfers and leases.

         (b)  Subdivision  or  Combination of Shares;  Stock  Dividends.  If the
Company, at any time while this Incentive Warrant is unexpired and not exercised
in full,  shall  subdivide  its Common Stock,  combine its Common  Stock,  pay a
dividend in its Capital  Shares,  or make any other  distribution of its Capital
Shares,  then the Exercise  Price shall be adjusted,  as of the date the Company
shall take a record of the  holders  of its  Capital  Shares for the  purpose of
effecting such subdivision, combination or dividend or other distribution (or if
no  such  record  is  taken,  as of the  effective  date  of  such  subdivision,
combination,  dividend  or other  distribution),  to that  price  determined  by
multiplying the Exercise Price in effect  immediately prior to such subdivision,
combination, dividend or other distribution by a fraction:

           (i) the  numerator of which shall be the total number of  Outstanding
Capital Shares immediately prior to such subdivision,  combination,  dividend or
other distribution, and

           (ii)  the   denominator  of  which  shall  be  the  total  number  of
Outstanding  Capital Shares  immediately  after such  subdivision,  combination,
dividend or other  distribution.  The  provisions of this Section 6(b) shall not
apply under any of the circumstances for which an adjustment is made pursuant to
Section 6(a).
(c) Liquidating Dividends,  Etc. If the Company, at any time while this
Incentive  Warrant is unexpired and not exercised in full,  makes a distribution
of its assets or evidences of  indebtedness to the holders of its Capital Shares
as a dividend in  liquidation  or by way of return of capital or other than as a
dividend  payable out of earnings or surplus  legally  available  for  dividends
under  applicable law or any distribution to such holders made in respect of the
sale of all or substantially all of the Company's assets, or any spin-off of any
of the Company's lines of business,  divisions or subsidiaries (other than under
the circumstances  provided for in the foregoing  subsections (a) and (b)), then
the  Warrant  Holder  shall be  entitled  to receive  upon such  exercise of the
Incentive  Warrant in addition to the  Incentive  Warrant  Shares  receivable in
connection  therewith,  and without payment of any consideration  other than the
Exercise  Price, an amount in cash equal to the value of such  distribution  per
Capital Share multiplied by the number of Incentive  Warrant Shares that, on the
record  date for such  distribution,  are  issuable  upon such  exercise  of the
Incentive  Warrant  (without  giving  effect to the  limitation on ownership set
forth in Section 3 hereof), and an appropriate  provision therefor shall be made
by the  Company as part of any such  distribution.  The value of a  distribution
that is paid in other than cash shall be  determined  in good faith by the Board
of Directors of the Company.

         (d)  Adjustment  of  Number of  Shares.  Upon  each  adjustment  of the
Exercise  Price  pursuant  to any  provisions  of this  Section 6, the number of
Incentive Warrant Shares issuable  hereunder at the option of the Warrant Holder
shall be calculated,  to the nearest one hundredth of a whole share, multiplying
the number of Incentive  Warrant  Shares  issuable  prior to an  adjustment by a
fraction:

           (i) the  numerator  of which shall be the  Exercise  Price before any
adjustment pursuant to this Section 6; and

           (ii) the  denominator of which shall be the Exercise Price after such
adjustment.

         (e) Other Action Affecting  Capital Shares. In the event after the date
hereof the Company  shall take any action  affecting  the number of  Outstanding
Capital  Shares,  other  than an  action  specifically  described  in any of the
foregoing  subsections  (a) through (c) hereof,  inclusive  (including,  without
limitation,  a subdivision or  combination of Common Stock,  or the payment of a
dividend  in  its  Capital  Shares  or  any  other  distribution),  that  in the
reasonable  opinion of the Warrant Holder would have a materially adverse effect
upon the rights of the Warrant  Holder at the time of exercise of the  Incentive
Warrant, the Exercise Price shall be adjusted in such manner and at such time as
the  Board of  Directors  on the  advice  of the  Company's  independent  public
accountants shall in good faith determine to be equitable in the circumstances.

         (f) Notice of Certain  Actions.  In the event the Company  shall,  at a
time while the Incentive  Warrant is unexpired and outstanding,  take any action
pursuant to subsections  (a) through (e) of this Section 6 that may result in an
adjustment of the Exercise Price, the Company shall notify the Warrant Holder of
such action 10 days in advance of its  effective  date in order to afford to the
Warrant Holder an  opportunity  to exercise the Incentive  Warrant prior to such
action becoming effective.

         (g) Notice of  Adjustments.  Whenever the  Exercise  Price or number of
Incentive  Warrant  Shares shall be adjusted  pursuant to Section 6 hereof,  the
Company  shall  promptly  deliver by facsimile,  with the original  delivered by
express  courier  service in accordance  with Section 11 hereof,  a certificate,
which shall be signed by the Company's  President or a Vice President and by its
Treasurer or  Assistant  Treasurer  or its  Secretary  or  Assistant  Secretary,
setting  forth in reasonable  detail the event  requiring  the  adjustment,  the
amount of the  adjustment,  the method by which such  adjustment  was calculated
(including a description of the basis on which the Company's  Board of Directors
made  any  determination  hereunder),  and the  Exercise  Price  and  number  of
Incentive Warrant Shares  purchasable at that Exercise Price after giving effect
to such adjustment.
Section 7. No Impairment.  The Company will not, by amendment of its Certificate
or By-Laws or through any  reorganization,  transfer  of assets,  consolidation,
merger, dissolution,  issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Incentive  Warrant,  but will at all times in good faith  assist in the carrying
out of all such terms and in the taking of all such  action as may be  necessary
or  appropriate  in order to protect  the rights of the Warrant  Holder  against
impairment.  Without  limiting the generality of the foregoing,  the Company (a)
will not increase the par value of any Incentive Warrant Shares above the amount
payable  therefor on such exercise,  and (b) will take all such action as may be
reasonably  necessary or  appropriate  in order that the Company may validly and
legally  issue  fully paid and  nonassessable  Incentive  Warrant  Shares on the
exercise of this Incentive Warrant.

Section 8. Rights As  Stockholder.  Prior to exercise of this Incentive  Warrant
and except as provided  in Section 6 hereof,  the  Warrant  Holder  shall not be
entitled  to any rights as a  stockholder  of the  Company  with  respect to the
Incentive Warrant Shares,  including (without limitation) the right to vote such
shares,  receive  dividends  or other  distributions  thereon or be  notified of
stockholder  meetings.  However,  in the event of any taking by the Company of a
record of the holders of any class of securities  for the purpose of determining
the holders  thereof who are entitled to receive any dividend (other than a cash
dividend)  or other  distribution,  any  right to  subscribe  for,  purchase  or
otherwise  acquire any shares of stock of any class or any other  securities  or
property,  or to receive any other right, the Company shall mail to each Warrant
Holder,  at  least  10 days  prior  to the  date  specified  therein,  a  notice
specifying  the date on which any such  record is to be taken for the purpose of
such  dividend,  distribution  or right,  and the amount and  character  of such
dividend, distribution or right.

Section 9. Replacement of Incentive Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of the
Incentive Warrant and, in the case of any such loss, theft or destruction of the
Incentive  Warrant,   upon  delivery  of  an  indemnity  agreement  or  security
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation,  on surrender and cancellation of such Incentive  Warrant,  the
Company  at its  expense  will  execute  and  deliver,  in lieu  thereof,  a new
Incentive Warrant of like tenor.

Section 10. Restricted Securities.

         (a) Registration or Exemption Required. This Incentive Warrant has been
issued  in a  transaction  exempt  from  the  registration  requirements  of the
Securities  Act in  reliance  upon  Section  4(2) of the  Securities  Act.  This
Incentive  Warrant and the Incentive  Warrant  Shares  issuable upon exercise of
this  Incentive  Warrant  may not be  resold  except  pursuant  to an  effective
registration  statement or an exemption to the registration  requirements of the
Securities Act and applicable state laws.

         (b) Legend.  Any  replacement  Incentive  Warrants  issued  pursuant to
Section 2 hereof and any Incentive  Warrant Shares issued upon exercise  hereof,
shall bear the following legend:

         "THE SECURITIES  EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE U.S.  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
         ACT"), OR ANY OTHER APPLICABLE  SECURITIES LAWS AND HAVE BEEN ISSUED IN
         RELIANCE UPON AN EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS  OF THE
         SECURITIES ACT AND SUCH OTHER  SECURITIES  LAWS.  NEITHER THIS SECURITY
         NOR ANY  INTEREST  OR  PARTICIPATION  HEREIN  MAY BE  REOFFERED,  SOLD,
         ASSIGNED, TRANSFERRED,  PLEDGED, ENCUMBERED,  HYPOTHECATED OR OTHERWISE
         DISPOSED OF,  EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT
         UNDER THE SECURITIES  ACT OR PURSUANT TO A TRANSACTION  WHICH IS EXEMPT
         FROM,  OR NOT  SUBJECT  TO,  SUCH  REGISTRATION.  THE  HOLDER  OF  THIS
         CERTIFICATE IS THE  BENEFICIARY  OF CERTAIN  OBLIGATIONS OF THE COMPANY
         SET  FORTH IN A STOCK  PURCHASE  AGREEMENT,  DATED AS OF JUNE 4,  2001,
         BETWEEN WAVERIDER COMMUNICATIONS INC. AND CRESCENT INTERNATIONAL LTD. A
         COPY  OF  THE  PORTION  OF  THE  AFORESAID  AGREEMENT  EVIDENCING  SUCH
         OBLIGATIONS  MAY  BE  OBTAINED  FROM  WAVERIDER   COMMUNICATION  INC.'S
         EXECUTIVE OFFICES."
Removal of such legend shall be in accordance with the legend removal provisions
in the Agreement.

         (c) No Other  Legend or Stock  Transfer  Restrictions.  No legend other
than the one  specified in paragraph (b) of this Section 10 has been or shall be
placed on the share  certificates  representing the Incentive Warrant Shares and
no  instructions  or  "stop  transfer   orders,"  so  called,   "stock  transfer
restrictions" or other restrictions have been or shall be given to the Company's
transfer  agent with respect  thereto  other than as expressly set forth in this
Section 10.

         (d)  Assignment.   Assuming  the  conditions  of  Section  10(a)  above
regarding registration or exemption have been satisfied,  the Warrant Holder may
sell, transfer,  assign,  pledge or otherwise dispose of this Incentive Warrant,
in whole or in part.  The Warrant  Holder shall deliver a written  notice to the
Company  substantially  in the form of the  assignment  form attached  hereto as
Exhibit B (the  "Assignment  Notice")  indicating  the person or persons to whom
this Incentive  Warrant shall be assigned and the respective  number of warrants
to be assigned to each assignee.  The Company shall effect the assignment within
ten  days of  receipt  of such  Assignment  Notice,  and  shall  deliver  to the
assignee(s)  designated by the Warrant  Holder a Incentive  Warrant or Incentive
Warrants of like tenor and terms for the specified number of shares.

         (e) Investor's  Compliance.  Nothing in this Section 10 shall affect in
any way the  Investor's  obligations  under any  agreement  to  comply  with all
applicable securities laws upon resale of the Common Stock.

Section 11. Notices. All notices, demands,  requests,  consents,  approvals, and
other  communications  required or permitted  hereunder  shall be in writing and
shall be deemed duly given (i) upon  delivery if hand  delivered  at the address
designated  below (if delivered on a business day during normal  business  hours
where such notice is to be received),  or the first  business day following such
delivery (if delivered other than on a business day during normal business hours
where  such  notice is to be  received),  (ii) on the fifth  business  day after
deposit into the mail, if deposited in the mail, registered or certified, return
receipt requested,  postage prepaid,  addressed to the address designated below,
(iii) upon  delivery if delivered by reputable  express  courier  service to the
address   designated  below,  or  (iv)  upon  confirmation  of  transmission  if
transmitted by facsimile to the facsimile number  designated below (if delivered
on a business  day  during  normal  business  hours  where such  notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal  business  hours where such notice is to be
received). The addresses and facsimile numbers for such communications shall be:

         if to the Company:

                WaveRider Communications Inc.
                255 Consumers Road, Suite 500
                Toronto, Ontario, Canada M2J 1R4
                Attention:     T. Scott Worthington
                Telephone:     (416) 502-3200   Facsimile:  (416) 502-2968
with a copy (which shall not constitute notice) to:

                Foley, Hoag & Eliot
                One Post Office Square, Boston, MA 02109
                Attention:     David A. Broadwin, Esq.
                Telephone:     (617) 832-1259   Facsimile:  (617) 832-7000

         if to the Investor:

                 Crescent International Ltd.
                 c/o GreenLight (Switzerland) SA
                 84, av Louis-Casai, P.O. Box 42
                 1216 Geneva, Cointrin, Switzerland
                 Attention:     Mel Craw/Maxi Brezzi
                 Telephone:     +41 22 791 71 69  Facsimile: +41 22 929 53 94

         with a copy (which shall not constitute notice) to:

                   Clifford Chance Rogers & Wells LLP
                   200 Park Avenue, New York, NY  10166
                   Attention:     Earl S. Zimmerman, Esq.
                   Telephone:     (212) 878-8000  Facsimile:   (212) 878-8375

Either party hereto may from time to time change its address or facsimile number
for  notices  under  this  Section  11 by giving at least ten (10)  days'  prior
written  notice of such changed  address or facsimile  number to the other party
hereto.

Section 12.  Miscellaneous.  This  Incentive  Warrant and any term hereof may be
changed,  waived,  discharged  or  terminated  only by an  instrument in writing
signed by the party against which enforcement of such change, waiver,  discharge
or  termination  is sought.  The  headings  in this  Incentive  Warrant  are for
purposes of reference  only, and shall not limit or otherwise  affect any of the
terms hereof. The invalidity or  unenforceability  of any provision hereof shall
in no way affect the validity or enforceability of any other provision.

         IN WITNESS  WHEREOF,  this  Incentive  Warrant was duly executed by the
undersigned, thereunto duly authorized, as of the date first set forth above.

WAVERIDER COMMUNICATIONS INC.

By:               /s/ D.B. Sinclair
      --------------------------------------
      Name:       D.B. Sinclair
      Title:      President & CEO

Attested:

By:               /s/ Sophie Tome
      ------------------------------
      Name:       Sophie Tome
      Title:      Assistant Secretary
EXHIBIT A TO THE INCENTIVE WARRANT

                                  EXERCISE FORM

                          WaveRider Communications Inc.

The undersigned (the "Registered Holder") hereby irrevocably exercises the right
to purchase  _________shares of Common Stock of WaveRider
Communications Inc., an entity organized and existing under the laws of the
State of Nevada (the "Company"), evidenced by the attached Incentive Warrant,
and herewith makes payment of the Exercise Price with respect to such shares in
full in the form of (check the appropriate box) (i) wire transfer to the
Company's account at _________, _________,_________  (Account
No.: _________); or (ii)_________  Incentive Warrant Shares, which represent the
amount of Incentive Warrant Shares as provided in the attached Incentive Warrant
to be canceled in connection with such exercise, all in accordance with the
conditions and provisions of said Incentive Warrant. The undersigned requests
that stock certificates for such Incentive Warrant Shares be issued, and an
Incentive Warrant representing any unexercised portion hereof be issued,
pursuant to this Incentive Warrant in the name of the Registered Holder and
delivered to the undersigned at the address set forth below.

Dated:
         --------------------------------------------------------------

______________________________
Signature of Registered Holder

______________________________
Name of Registered Holder (Print)

______________________________
Address
                                     NOTICE

The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Incentive Warrant in every particular,
without alteration or enlargement or any change whatsoever.
EXHIBIT B TO THE INCENTIVE WARRANT

                                   ASSIGNMENT

(To be executed by the  registered  Warrant  Holder  (the  "Registered  Holder")
desiring to transfer the Incentive Warrant, in whole or in part.)

FOR VALUED RECEIVED,  the undersigned  Warrant Holder of the attached  Incentive
Warrant hereby sells,  assigns or transfers unto the person(s)  named below (the
"Assignee")  the right to  purchase  shares  of the  Common  Stock of  WaveRider
Communications  Inc. evidenced by the attached Incentive Warrant and does hereby
irrevocably  constitute and appoint  (attorney) to transfer the number of shares
specified of the said Incentive  Warrant on the books of the Company,  with full
power of substitution in the premises.

The undersigned requests that such Incentive Warrant be issued, and an Incentive
Warrant representing any unsold, unassigned or non-transferred portion hereof be
issued,  pursuant to this Incentive Warrant in the name of the Registered Holder
and delivered to the undersigned at the address set forth below.

Dated:
         --------------------------------------------------------------

______________________________
Signature of Registered Holder

______________________________
Name of Registered Holder (Print)

______________________________
Address of Registered Holder

______________________________
Name of Assignee (Print)

______________________________
Address of Assignee (including zip code number)

______________________________
Fill in for new Registration of Incentive Warrant:

______________________________
Name

______________________________
Address

______________________________
Please print name and address of assignee (including zip code number)

                                     NOTICE

The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached  Incentive  Warrant in every  particular,  without
alteration or enlargement or any change whatsoever.
EXHIBIT 10.3
                               PROTECTIVE WARRANT

                      CLASS O COMMON STOCK PURCHASE WARRANT

THE SECURITIES  EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S.  SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"),  OR ANY OTHER
APPLICABLE  SECURITIES  LAWS AND HAVE BEEN ISSUED IN RELIANCE  UPON AN EXEMPTION
FROM  THE  REGISTRATION  REQUIREMENTS  OF THE  SECURITIES  ACT  AND  SUCH  OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION  HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED
OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES  ACT OR PURSUANT TO A TRANSACTION  WHICH IS EXEMPT FROM, OR
NOT  SUBJECT  TO,  SUCH  REGISTRATION.  THE  HOLDER OF THIS  CERTIFICATE  IS THE
BENEFICIARY OF CERTAIN  OBLIGATIONS OF THE COMPANY SET FORTH IN A STOCK PURCHASE
AGREEMENT,  DATED AS OF JUNE 4, 2001, BETWEEN WAVERIDER  COMMUNICATIONS INC. AND
CRESCENT  INTERNATIONAL  LTD. A COPY OF THE PORTION OF THE  AFORESAID  AGREEMENT
EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM WAVERIDER  COMMUNICATION INC.'S
EXECUTIVE OFFICES. [DATE]

         Warrant to Purchase Shares of Common Stock of WaveRider  Communications
Inc.  (hereinafter a "Protective  Warrant"),  up to a total number determined in
accordance with Section 2(b) hereof.

         WaveRider  Communications  Inc., an entity organized and existing under
the laws of the State of Nevada (the  "Company"),  hereby  agrees that  Crescent
International Ltd. (the "Investor") or any other Warrant Holder is entitled,  on
the terms and  conditions  set forth below,  to purchase from the Company at any
time  during  the  Exercise  Period  (as  defined  below) up to a total  number,
determined  in  accordance   with  Section  2(b)  hereof,   of  fully  paid  and
nonassessable shares of Common Stock, par value $0.001 per share, of the Company
(the "Common Stock"),  as the same may be adjusted from time to time pursuant to
Section 7 hereof,  at the Exercise Price (as defined below),  as the same may be
adjusted pursuant to Section 7 hereof.  The resale of the shares of Common Stock
or other  securities  issuable  upon  exercise or  exchange  of this  Protective
Warrant is subject to the provisions of the  Registration  Rights  Agreement (as
defined below).

Section 1. Definitions.

         "Aggregate Exercise Price" shall mean, with respect to any exercise (in
whole or in part) of this Protective  Warrant,  the Exercise Price multiplied by
the total number of shares of Common Stock for which this Protective  Warrant is
being exercised.

         "Agreement" shall mean the Stock Purchase  Agreement,  dated as of June
4, 2001, between the Company and the Investor.

         "Cash-Out  Price" shall mean, with respect to any exercise (in whole or
in part) of this  Protective  Warrant,  the  product of (x) the Bid Price of one
share of Common Stock on the Trading Day immediately preceding the Exercise Date
multiplied  by (y) the  number of shares of Common  Stock for which the  Company
elects the Cash-Out Option.

         "Exercise Date" shall mean with respect to any exercise (in whole or in
part)  of this  Protective  Warrant  the  date the  Exercise  Notice  is sent by
facsimile to the Company.
"Exercise  Notice" shall mean with respect to any exercise (in whole or
in part) of this Protective Warrant the exercise form attached hereto as Exhibit
A, duly executed by the Warrant Holder.

         "Exercise Period" shall mean the period beginning on the Effective Date
applicable to the  corresponding  Sale and continuing  until the two-year period
thereafter;  provided  that such period  shall be extended  one day for each day
after such  Effective  Date,  that any  Registration  Statement is not effective
during  the  period the  Registration  Statement  is  required  to be  effective
pursuant to the Registration Rights Agreement.

         "Exercise  Price" as of the date  hereof  shall mean $0.01 per share of
Common  Stock,  subject  to the  adjustments  provided  for in Section 7 of this
Protective Warrant.

         "Per Share  Protective  Warrant Value" shall mean,  with respect to any
exercise  (in  whole or in  part) of this  Protective  Warrant,  the  difference
resulting from subtracting the Exercise Price from the Bid Price of one share of
Common Stock on the Trading Day immediately preceding the Exercise Date.

         "Registration  Rights  Agreement"  shall mean the  registration  rights
agreement, dated as of June 4, 2001 between the Company and the Investor.

         "Warrant  Holder" shall mean the Investor or any assignee or transferee
of all or any portion of this Protective Warrant.

Other capitalized terms used but not defined herein shall have their respective
meanings set forth in the Agreement.

Section 2. Exercisability.

         (a) Timing.  If the Purchase Price on the Effective Date  applicable to
the  corresponding  Sale is lower than the Purchase  Price on the Sale Date with
respect  to  such  Sale,  this  Protective   Warrant  shall  become  immediately
exercisable, subject to clause (c) below.

         (b)  Number of Shares.  The number of shares of Common  Stock for which
this Protective  Warrant is exercisable (the "Protective  Warrant Shares") shall
be  determined  by  subtracting  (x) the  Investment  Amount with respect to the
applicable  Sale  divided  by the  Purchase  Price on the Sale Date from (y) the
Investment  Amount with respect to the  applicable  Sale divided by the Purchase
Price on the Effective Date applicable to the Sale Date.

         (c) Cash  Payment in Lieu of Issuance of Shares.  In the event that the
Warrant  Holder  exercises  this  Protective  Warrant  (in  whole or in part) in
accordance  with  Section 3 hereof,  then the  Company  may,  in lieu of issuing
shares of Common  Stock  pursuant  to such  exercise,  pay to the  Investor  the
Cash-Out  Price for any or all of the shares of Common Stock  purchasable by the
Investor  through the exercise of this  Protective  Warrant (such  payment,  the
"Cash-Out Option").  For avoidance of doubt, the Company may elect such Cash-Out
Option in the event that,  inter alia,  the number of Protective  Warrant Shares
plus the number of First Sale  Shares and  Subsequent  Sale  Shares  exceeds the
number of shares  registered  pursuant  to  Section  1.1(a) of the  Registration
Rights Agreement.

         (d) Notice of Cash Payment in Lieu of Issuance of Shares.  In the event
that the Company  elects the Cash-Out  Option the Company  shall  promptly  give
notice to the Investor of such election on the Trading Day following delivery by
facsimile of the Exercise Notice described in Section 3(a). Such notice from the
Company  shall  set forth  the  number  of shares of Common  Stock for which the
Company elects the Cash-Out Option.
(e)  Method of  Cash-Out;  Effect of  Cash-Out.  In the event  that the
Company  elects  the  Cash-Out   Option,   then  in  lieu  of  delivering  stock
certificates as provided in Section 5 hereof,  the Company shall deliver by wire
transfer of immediately available funds to an account designated by the Investor
as soon as  practicable  after delivery by the Company of notice of its election
of the Cash-Out Option and in any event within two Trading Days thereafter,  the
Cash-Out  Price for any and all  shares of  Common  Stock for which the  Company
elects the Cash-Out Option.

Section 3. Exercise; Cashless Exercise.

         (a) Method of  Exercise.  This  Protective  Warrant may be exercised in
whole or in part (but not as to a fractional share of Common Stock), at any time
and from time to time during the Exercise  Period,  by the Warrant Holder by the
delivery  by  facsimile  of an executed  and  completed  Exercise  Notice to the
Company and delivery to the Company within five Trading Days  thereafter of this
Protective  Warrant,  the original  Exercise  Notice and the Aggregate  Exercise
Price.

         (b) Payment of  Aggregate  Exercise  Price.  Subject to  paragraph  (c)
below, payment of the Aggregate Exercise Price shall be made by wire transfer to
an account  designated by the Company.  If the amount of the payment received by
the Company is less than the Aggregate  Exercise Price,  the Warrant Holder will
be notified of the  deficiency and shall make payment in that amount within five
Trading  Days of such  notice.  In the event the payment  exceeds the  Aggregate
Exercise Price,  the Company will refund the excess to the Warrant Holder within
three Trading Days of both the receipt of such payment and the knowledge of such
excess.

         (c) Cashless  Exercise.  As an  alternative to payment of the Aggregate
Exercise  Price in accordance  with Section 3(b) above,  the Warrant  Holder may
elect to effect a cashless  exercise by so indicating on the Exercise Notice and
including  a  calculation  of the number of shares of Common  Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless  Exercise").
In the event of a Cashless  Exercise,  the Warrant  Holder shall  surrender this
Protective  Warrant for that number of shares of Common Stock  determined by (i)
multiplying  the number of Protective  Warrant Shares for which this  Protective
Warrant is being  exercised by the Per Share  Protective  Warrant Value and (ii)
dividing  the  product by the Bid Price of one share of the Common  Stock on the
Trading Day immediately preceding the Exercise Date.

         (d) Replacement  Protective  Warrant.  In the event that the Protective
Warrant is not exercised in full, the number of Protective  Warrant Shares shall
be  reduced  by the  number of such  Protective  Warrant  Shares  for which this
Protective  Warrant  is  exercised,  and  the  Company,  at its  expense,  shall
forthwith  issue and deliver to the Warrant Holder a new  Protective  Warrant of
like  tenor in the name of the  Warrant  Holder  or as the  Warrant  Holder  may
request, reflecting such adjusted number of Protective Warrant Shares.

Section 4. Ten Percent  Limitation.  At no time may the Warrant Holder  exercise
this Protective  Warrant such that the number of Protective Warrant Shares to be
received  pursuant to such exercise  aggregated  with all other shares of Common
Stock then owned by the Warrant Holder beneficially or deemed beneficially owned
(as such term is defined in  Rule13(d)  under the  Exchange  Act) by the Warrant
Holder and its affiliates  would result in the Warrant Holder and its affiliates
owning more than 9.9% of all of such  Common  Stock as would be  outstanding  on
such  Exercise  Date,  as  determined  in  accordance  with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
Section 5. Delivery of Stock Certificates.

         (a) Subject to the terms and conditions of this Protective  Warrant, as
soon as practicable after the exercise of this Protective  Warrant in full or in
part, and in any event within five Trading Days  thereafter,  the Company at its
expense  (including,  without  limitation,  the payment by it of any  applicable
issue taxes) will cause to be issued in the name of and delivered to the Warrant
Holder,  or as  the  Warrant  Holder  lawfully  may  direct,  a  certificate  or
certificates  for the number of validly  issued,  fully paid and  non-assessable
Protective  Warrant Shares to which the Warrant Holder shall be entitled on such
exercise,  together  with  any  other  stock  or other  securities  or  property
(including cash, where  applicable) to which the Warrant Holder is entitled upon
such exercise in accordance with the provisions hereof; provided,  however, that
any such delivery to a location  outside of the United States also shall be made
within five Trading Days after the exercise of this  Protective  Warrant in full
or in part.

         (b) This  Protective  Warrant  may not be  exercised  as to  fractional
shares of  Common  Stock.  In the event  that the  exercise  of this  Protective
Warrant, in full or in part, would result in the right to acquire any fractional
share of  Common  Stock,  then in such  event  such  fractional  share  shall be
considered  a whole  share of Common  Stock and shall be added to the  number of
Protective  Warrant  Shares  issuable  to the  Investor  upon  exercise  of this
Protective Warrant.

Section 6. Representations, Warranties and Covenants of the Company.

         (a) The Company shall take all necessary  action and proceedings as may
be required and permitted by applicable  law, rule and  regulation for the legal
and valid issuance of this Protective  Warrant and the Protective Warrant Shares
to the Warrant Holder.

         (b) At all times during the Exercise Period, the Company shall take all
steps  reasonably  necessary  and within its  control to insure  that the Common
Stock remains listed or quoted on the Principal Market.

         (c) The Protective  Warrant Shares,  when issued in accordance with the
terms hereof, will be duly authorized and, when paid for or issued in accordance
with the terms hereof, shall be validly issued, fully paid and non-assessable.

         (d) The Company has authorized and reserved for issuance to the Warrant
Holder the requisite  number of shares of Common Stock to be issued  pursuant to
this  Protective  Warrant.  The  Company  at all times  shall  reserve  and keep
available,  solely for  issuance  and  delivery  as  Protective  Warrant  Shares
hereunder, such shares of Common Stock as from time to time shall be issuable as
Protective  Warrant  Shares,  and  accordingly  shall  adjust the number of such
shares  of  Common  Stock  promptly  upon the  occurrence  of any of the  events
specified in Section 7 hereof.

Section  7.  Adjustment  of  the  Exercise   Price.   The  Exercise  Price  and,
accordingly,  the number of Protective  Warrant Shares issuable upon exercise of
the Protective  Warrant,  shall be subject to adjustment  from time to time upon
the happening of certain events as follows:

         (a)   Reclassification,   Consolidation,   Merger  or  Mandatory  Share
Exchange,  Sale,  Transfer or Lease of Assets. If the Company, at any time while
this Protective Warrant is unexpired and not exercised in full, (i) reclassifies
or changes its Outstanding  Capital Shares (other than a change in par value, or
from par value to no par value per share,  or from no par value per share to par
value, or as a result of a subdivision or combination of outstanding  securities
issuable upon exercise of this Protective Warrant) or (ii) consolidates,  merges
or effects a  mandatory  share  exchange  (x) with or into  another  corporation
(other than a merger or mandatory  share  exchange with another  corporation  in
which the Company is a  continuing  corporation  and that does not result in any
reclassification or change,  other than a change in par value, or from par value
to no par value per  share,  or from no par value per share to par value) or (y)
as a result of a  subdivision  or  combination  of  Outstanding  Capital  Shares
issuable upon exercise of this Protective Warrant) or (iii) sells,  transfers or
leases  all or  substantially  all of its  assets,  then in any such  event  the
Company, or such successor or purchasing corporation, as the case may be, shall,
without payment by the Warrant Holder of any additional  consideration  therefor
amend this Protective  Warrant or issue a new warrant providing that the Warrant
Holder  shall have rights not less  favorable  to the Warrant  Holder than those
then  applicable to this  Protective  Warrant and to receive upon exercise under
such amendment of this Protective Warrant or new warrant,  in lieu of each share
of Common Stock  theretofore  issuable upon exercise of this Protective  Warrant
hereunder,  the kind and amount of shares of stock,  other securities,  money or
property receivable upon such reclassification,  change, consolidation,  merger,
mandatory share exchange,  lease, sale or transfer by the holder of one share of
Common  Stock  issuable  upon  exercise  of this  Protective  Warrant  had  this
Protective  Warrant been exercised  immediately prior to such  reclassification,
change,  consolidation,  merger,  mandatory  share  exchange or sale or transfer
(without  giving  effect to the  limitation  on ownership set forth in Section 4
hereof) and an  appropriate  provision  for the  foregoing  shall be made by the
Company  as part of any such  event.  Such  amended  Protective  Warrant  or new
warrant shall provide for adjustments that shall be as nearly  equivalent as may
be practicable to the adjustments provided for in this Section 7. The provisions
of this  Section 7(a) shall  similarly  apply to  successive  reclassifications,
changes,  consolidations,  mergers, mandatory share exchanges,  sales, transfers
and leases.

         (b)  Subdivision  or  Combination of Shares;  Stock  Dividends.  If the
Company,  at any  time  while  this  Protective  Warrant  is  unexpired  and not
exercised in full,  shall subdivide its Common Stock,  combine its Common Stock,
pay a dividend  in its Capital  Shares,  or make any other  distribution  of its
Capital  Shares,  then the Exercise Price shall be adjusted,  as of the date the
Company shall take a record of the holders of its Capital Shares for the purpose
of effecting such subdivision, combination or dividend or other distribution (or
if no such  record  is  taken,  as of the  effective  date of such  subdivision,
combination,  dividend  or other  distribution),  to that  price  determined  by
multiplying the Exercise Price in effect  immediately prior to such subdivision,
combination, dividend or other distribution by a fraction:

           (i) the numerator of which shall be the total number of Outstanding
Capital Shares immediately prior to such subdivision,  combination,  dividend or
other distribution, and

           (ii)  the   denominator  of  which  shall  be  the  total  number  of
Outstanding  Capital Shares  immediately  after such  subdivision,  combination,
dividend or other  distribution.  The  provisions of this Section 7(b) shall not
apply under any of the circumstances for which an adjustment is made pursuant to
Section 7(a).

         (c) Liquidating Dividends,  Etc. If the Company, at any time while this
Protective  Warrant is unexpired and not exercised in full, makes a distribution
of its assets or evidences of  indebtedness to the holders of its Capital Shares
as a dividend in  liquidation  or by way of return of capital or other than as a
dividend  payable out of earnings or surplus  legally  available  for  dividends
under  applicable law or any distribution to such holders made in respect of the
sale of all or substantially all of the Company's assets, or any spin-off of any
of the Company's lines of business,  divisions or subsidiaries (other than under
the circumstances  provided for in the foregoing  subsections (a) and (b)), then
the  Warrant  Holder  shall be  entitled  to receive  upon such  exercise of the
Protective  Warrant in addition to the Protective  Warrant Shares  receivable in
connection  therewith,  and without payment of any consideration  other than the
Exercise  Price, an amount in cash equal to the value of such  distribution  per
Capital Share multiplied by the number of Protective Warrant Shares that, on the
record  date for such  distribution,  are  issuable  upon such  exercise  of the
Protective  Warrant  (without  giving effect to the  limitation on ownership set
forth in Section 4 hereof), and an appropriate  provision therefor shall be made
by the Company as a part of any such  distribution.  The value of a distribution
that is paid in other than cash shall be  determined  in good faith by the Board
of Directors of the Company.
(d)  Adjustment  of  Number of  Shares.  Upon  each  adjustment  of the
Exercise  Price  pursuant  to any  provisions  of this  Section 7, the number of
Protective Warrant Shares issuable hereunder at the option of the Warrant Holder
shall be calculated,  to the nearest one hundredth of a whole share, multiplying
the number of Protective  Warrant  Shares  issuable  prior to an adjustment by a
fraction:

           (i) the  numerator  of which shall be the  Exercise  Price before any
adjustment pursuant to this Section 7; and

           (ii) the  denominator of which shall be the Exercise Price after such
adjustment.

         (e) Other Action Affecting  Capital Shares. In the event after the date
hereof the Company  shall take any action  affecting  the number of  Outstanding
Capital  Shares,  other  than an  action  specifically  described  in any of the
foregoing  subsections  (a) through (c) hereof,  inclusive,  (including  without
limitation a subdivision  or  combination  of Common Stock,  or the payment of a
dividend  in  its  Capital  Shares  or  any  other  distribution),  that  in the
reasonable  opinion of the Warrant Holder would have a materially adverse effect
upon the rights of the Warrant  Holder at the time of exercise of the Protective
Warrant, the Exercise Price shall be adjusted in such manner and at such time as
the  Board of  Directors  on the  advice  of the  Company's  independent  public
accountants shall in good faith determine to be equitable in the circumstances.

         (f) Notice of Certain  Actions.  In the event the Company  shall,  at a
time while the Protective Warrant is unexpired and outstanding,  take any action
pursuant to subsections  (a) through (e) of this Section 7 that may result in an
adjustment of the Exercise Price, the Company shall notify the Warrant Holder of
such action 10 days in advance of its  effective  date in order to afford to the
Warrant Holder an  opportunity to exercise the Protective  Warrant prior to such
action becoming effective.

         (g) Notice of  Adjustments.  Whenever the  Exercise  Price or number of
Protective  Warrant Shares shall be adjusted  pursuant to Section 7 hereof,  the
Company  shall  promptly  deliver by facsimile  with the  original  delivered by
express  courier  service in accordance  with Section 12 hereof;  a certificate,
which shall be signed by the Company's  President or a Vice President and by its
Treasurer or  Assistant  Treasurer  or its  Secretary  or  Assistant  Secretary,
setting  forth in reasonable  detail the event  requiring  the  adjustment,  the
amount of the  adjustment,  the method by which such  adjustment  was calculated
(including a description of the basis on which the Company's  Board of Directors
made  any  determination  hereunder),  and the  Exercise  Price  and  number  of
Protective Warrant Shares purchasable at that Exercise Price after giving effect
to such adjustment.

Section 8. No Impairment.  The Company will not, by amendment of its Certificate
or By-Laws or through any  reorganization,  transfer  of assets,  consolidation,
merger, dissolution,  issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Protective  Warrant,  but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such  action as may be  necessary
or  appropriate  in order to protect  the rights of the Warrant  Holder  against
impairment.  Without  limiting the generality of the foregoing,  the Company (a)
will not  increase  the par value of any  Protective  Warrant  Shares  above the
amount payable  therefor on such exercise,  and (b) will take all such action as
may be reasonably necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable  Protective Warrant Shares on the
exercise of this Protective Warrant.
Section 9. Rights As Stockholder.  Prior to exercise of this Protective  Warrant
and except as provided  in Section 7 hereof,  the  Warrant  Holder  shall not be
entitled  to any rights as a  stockholder  of the  Company  with  respect to the
Protective Warrant Shares, including (without limitation) the right to vote such
shares,  receive  dividends  or other  distributions  thereon or be  notified of
stockholder  meetings.  However,  in the event of any taking by the Company of a
record of the holders of any class of securities  for the purpose of determining
the holders  thereof who are entitled to receive any dividend (other than a cash
dividend)  or other  distribution,  any  right to  subscribe  for,  purchase  or
otherwise  acquire any shares of stock of any class or any other  securities  or
property,  or to receive any other right, the Company shall mail to each Warrant
Holder,  at least ten (10) days prior to the date  specified  therein,  a notice
specifying  the date on which any such  record is to be taken for the purpose of
such  dividend,  distribution  or right,  and the amount and  character  of such
dividend, distribution or right.

Section  10.  Replacement  of  Protective  Warrant.  Upon  receipt  of  evidence
reasonably  satisfactory  to the  Company  of the loss,  theft,  destruction  or
mutilation of the Protective Warrant and, in the case of any such loss, theft or
destruction of the Protective  Warrant,  upon delivery of an indemnity agreement
or security reasonably satisfactory in form and amount to the Company or, in the
case of any such  mutilation,  on surrender and  cancellation of such Protective
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Protective Warrant of like tenor.

Section 11. Restricted Securities.

         (a)  Registration or Exemption  Required.  This Protective  Warrant has
been issued in a transaction  exempt from the  registration  requirements of the
Securities  Act in  reliance  upon  Section  4(2) of the  Securities  Act.  This
Protective  Warrant and the Protective  Warrant Shares issuable upon exercise of
this  Protective  Warrant  may not be resold  except  pursuant  to an  effective
registration  statement or an exemption to the registration  requirements of the
Securities Act and applicable state laws.

         (b) Legend.  Any  replacement  Protective  Warrants  issued pursuant to
Section 2 hereof and any Protective  Warrant Shares issued upon exercise hereof,
shall bear the following legend:

         "THE SECURITIES  EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE U.S.  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
         ACT"), OR ANY OTHER APPLICABLE  SECURITIES LAWS AND HAVE BEEN ISSUED IN
         RELIANCE UPON AN EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS  OF THE
         SECURITIES ACT AND SUCH OTHER  SECURITIES  LAWS.  NEITHER THIS SECURITY
         NOR ANY  INTEREST  OR  PARTICIPATION  HEREIN  MAY BE  REOFFERED,  SOLD,
         ASSIGNED, TRANSFERRED,  PLEDGED, ENCUMBERED,  HYPOTHECATED OR OTHERWISE
         DISPOSED OF,  EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT
         UNDER THE SECURITIES  ACT OR PURSUANT TO A TRANSACTION  WHICH IS EXEMPT
         FROM,  OR NOT  SUBJECT  TO,  SUCH  REGISTRATION.  THE  HOLDER  OF  THIS
         CERTIFICATE IS THE  BENEFICIARY  OF CERTAIN  OBLIGATIONS OF THE COMPANY
         SET  FORTH IN A STOCK  PURCHASE  AGREEMENT,  DATED AS OF JUNE 4,  2001,
         BETWEEN WAVERIDER COMMUNICATIONS INC. AND CRESCENT INTERNATIONAL LTD. A
         COPY  OF  THE  PORTION  OF  THE  AFORESAID  AGREEMENT  EVIDENCING  SUCH
         OBLIGATIONS  MAY  BE  OBTAINED  FROM  WAVERIDER  COMMUNICATIONS  INC.'S
         EXECUTIVE OFFICES."

Removal of such legend shall be in accordance with the legend removal provisions
in the Agreement.
(c) No Other  Legend or Stock  Transfer  Restrictions.  No legend other
than the one  specified in paragraph (b) of this Section 11 has been or shall be
placed on the share certificates  representing the Protective Warrant Shares and
no  instructions  or  "stop  transfer   orders,"  so  called,   "stock  transfer
restrictions" or other restrictions have been or shall be given to the Company's
transfer  agent with respect  thereto  other than as expressly set forth in this
Section 11.

         (d)  Assignment.   Assuming  the  conditions  of  Section  11(a)  above
regarding registration or exemption have been satisfied,  the Warrant Holder may
sell, transfer,  assign, pledge or otherwise dispose of this Protective Warrant,
in whole or in part.  The Warrant  Holder shall deliver a written  notice to the
Company  substantially  in the form of the  assignment  form attached  hereto as
Exhibit B (the  "Assignment  Notice"),  indicating the person or persons to whom
this Protective  Warrant shall be assigned and the respective number of warrants
to be assigned to each assignee.  The Company shall effect the assignment within
ten (10) days of receipt of such  Assignment  Notice,  and shall  deliver to the
assignee(s)  designated by the Warrant Holder a Protective Warrant or Protective
Warrants of like tenor and terms for the specified number of shares.

         (e) Investor's  Compliance.  Nothing in this Section 11 shall affect in
any way the  Investor's  obligations  under any  agreement  to  comply  with all
applicable securities laws upon resale of the Common Stock.

Section 12. Notices. All notices, demands,  requests,  consents,  approvals, and
other  communications  required or permitted  hereunder  shall be in writing and
shall be deemed duly given (i) upon  delivery if hand  delivered  at the address
designated  below (if delivered on a business day during normal  business  hours
where such notice is to be received) or the first  business day  following  such
delivery (if delivered other than on a business day during normal business hours
where  such  notice is to be  received),  (ii) on the fifth  business  day after
deposit into the mail, if deposited in the mail, registered or certified, return
receipt requested,  postage prepaid,  addressed to the address designated below,
(iii) upon  delivery  delivered  by  reputable  express  courier  service to the
address   designated  below,  or  (iv)  upon  confirmation  of  transmission  if
transmitted by facsimile to the facsimile number  designated below (if delivered
on a business  day  during  normal  business  hours  where such  notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal  business  hours where such notice is to be
received). The addresses and facsimile numbers for such communications shall be:

         if to the Company:

                           WaveRider Communications Inc.
                           255 Consumers Road, Suite 500
                           Toronto, Ontario
                           Canada M2J 1R4
                           Attention:     T. Scott Worthington
                           Telephone:     (416) 502-3200
                           Facsimile:     (416) 502-2968

         with a copy (which shall not constitute notice) to:

                           Foley, Hoag & Eliot
                           One Post Office Square
                           Boston, MA 02109
                           Attention:     David A. Broadwin, Esq.
                           Telephone:     (617) 832-1259
                           Facsimile:     (617) 832-7000
if to the Investor:

                           Crescent International Ltd.
                           c/o GreenLight (Switzerland) SA
                           84, av Louis-Casai
                           P.O. Box 42
                           1216 Geneva, Cointrin
                           Switzerland
                           Attention:     Mel Craw/Maxi Brezzi
                           Telephone:     +41 22 791 71 69
                           Facsimile:     +41 22 929 53 94

         with a copy (which shall not constitute notice) to:

                           Clifford Chance Rogers & Wells LLP
                           200 Park Avenue
                           New York, NY  10166
                           Attention:     Earl S. Zimmerman, Esq.
                           Telephone:     (212) 878-8000
                           Facsimile:     (212) 878-8375

Either party hereto may from time to time change its address or facsimile number
for notices under this Section 12 by giving at least ten (10) days' prior
written notice of such changed address or facsimile number to the other party
hereto.

Section 13.  Miscellaneous.  This Protective  Warrant and any term hereof may be
changed,  waived,  discharged  or  terminated  only by an  instrument in writing
signed by the party against which enforcement of such change, waiver,  discharge
or  termination  is sought.  The  headings  in this  Protective  Warrant are for
purposes of reference  only, and shall not limit or otherwise  affect any of the
terms hereof. The invalidity or  unenforceability  of any provision hereof shall
in no way affect the validity or enforceability of any other provision.

IN WITNESS WHEREOF, this Protective Warrant was duly executed by the
undersigned, thereunto duly authorized, as of the date first set forth above.

WAVERIDER COMMUNICATIONS INC.

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

Attested:

By:
         -----------------------------------------------------
         Name:
         Title:   Secretary
EXHIBIT A TO THE PROTECTIVE WARRANT

                                  EXERCISE FORM

                          WaveRider Communications Inc.

The undersigned (the "Registered Holder") hereby irrevocably exercises the right
to purchase  __________shares of Common Stock of WaveRider  Communications Inc.,
an entity  organized  and  existing  under the laws of the State of Nevada  (the
"Company"),  evidenced by the attached  Protective  Warrant,  and herewith makes
payment of the Exercise Price with respect to such shares in full in the form of
(check  the  appropriate  box) (i) wire  transfer  to the  Company's  account at
_______,  _______, _______ (Account No.:________);  or (ii) _________ Protective
Warrant  Shares,  which  represent  the amount of Protective  Warrant  Shares as
provided in the attached  Protective  Warrant to be canceled in connection  with
such  exercise,  all in accordance  with the  conditions  and provisions of said
Protective  Warrant.  The undersigned  requests that stock certificates for such
Protective Warrant Shares be issued,  and a Protective Warrant  representing any
unexercised portion hereof be issued, pursuant to this Protective Warrant in the
name of the registered Registered Holder and delivered to the undersigned at the
address set forth below.

Dated:    ______________________________

______________________________
Signature of Registered Holder

______________________________
Name of Registered Holder (Print)

______________________________
Address

                                     NOTICE

         The signature to the foregoing Exercise Form must correspond to the
name as written upon the face of the attached Protective Warrant in every
particular, without alteration or enlargement or any change whatsoever.
EXHIBIT B TO THE PROTECTIVE WARRANT

                                   ASSIGNMENT

         (To be executed by the registered Warrant Holder (the "Registered
Holder") desiring to transfer the Protective Warrant, in whole or in part.)

         FOR VALUED  RECEIVED,  the  undersigned  Warrant Holder of the attached
Protective  Warrant hereby sells,  assigns or transfers unto the person(s) named
below (the  "Assignee") the right to purchase _______ shares of the Common Stock
of WaveRider  Communications  Inc. evidenced by the attached  Protective Warrant
and  does  hereby  irrevocably  constitute  and  appoint  ________(attorney)  to
transfer the number of shares  specified of the said  Protective  Warrant on the
books of the Company, with full power of substitution in the premises.

         The undersigned  requests that such Protective Warrant be issued, and a
Protective  Warrant  representing  any  unsold,  unassigned  or  non-transferred
portion hereof be issued, pursuant to this Protective Warrant in the name of the
Registered  Holder and  delivered  to the  undersigned  at the address set forth
below.

Dated: ______________________________

______________________________
Signature of Registered Holder

______________________________
Name of Registered Holder (Print)

______________________________
Address of Registered Holder

______________________________
Name of Assignee (Print)

______________________________
Address of Assignee (including zip code number)

Fill in for new Registration of Protective Warrant:

______________________________
Name

______________________________
Address

______________________________
Please print name and address of assignee (including zip code number)

                                     NOTICE

         The signature to the foregoing Assignment must correspond to the name
as written upon the face of the attached Protective Warrant in every particular,
without alteration or enlargement or any change whatsoever.
EXHIBIT 10.4

                          REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 4, 2001,
is made and entered into by and between WaveRider Communications Inc., a Nevada
corporation (the "Company"), and Crescent International Ltd., an entity
organized and existing under the laws of Bermuda (the "Investor").

WHEREAS, the Company and the Investor have entered into that certain Stock
Purchase Agreement, dated as of June 4, 2001 (the "Stock Purchase Agreement"),
pursuant to which the Company will issue, from time to time, to the Investor and
the Investor shall purchase up to $10,000,000 worth of securities of the Company
including (i) common stock, par value $0.001 per share, of the Company (the
"Common Stock") and (ii) 30,000 shares of series D convertible preferred stock,
par value $0.01 per share, of the Company (the "Preferred Stock");

WHEREAS, pursuant to the terms of and in partial consideration for the Investor
entering into the Stock Purchase Agreement, the Company is required to issue to
the Investor an incentive warrant, exercisable from time to time within five
years following the date of issuance (the "Incentive Warrant") for the purchase
of a number of shares of Common Stock at a price to be determined as described
in such Incentive Warrant;

WHEREAS, pursuant to the terms of and in partial consideration for the Investor
entering into the Stock Purchase Agreement, the Company may be required to issue
protective warrants to the Investor, each of which may become exercisable from
time to time as described in such warrants and in the Stock Purchase Agreement
(collectively, the "Protective Warrants" and together with the Incentive Warrant
and any new or replacement warrants issued in accordance with the terms of the
Protective Warrants and the Incentive Warrant, the "Warrants") for the purchase
of a number of shares of Common Stock at a price to be determined as described
in each such Protective Warrant;

WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investor's agreement to enter into the Stock Purchase Agreement, the Company has
agreed to provide the Investor with certain registration rights as described
herein;

NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, in the Warrants, and in
the Stock Purchase Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, intending to be legally
bound hereby, the parties hereto agree as follows (capitalized terms used herein
and not defined herein shall have the respective meanings ascribed to them in
the Stock Purchase Agreement):
ARTICLE I
                               REGISTRATION RIGHTS

         Section 1.1       REGISTRATION STATEMENTS.

         (a) Filing of Registration  Statements.  The Company shall register for
resale all Commitment  Shares issued or issuable to the Investor pursuant to the
Stock  Purchase  Agreement  and all Warrant  Shares issued or issuable upon full
exercise of the Warrants. Subject to the terms and conditions of this Agreement,
the Company shall effect such registration in the manner provided below:

           (i) First  Registration  Statement.  On or  before  the end of the 20
calendar day period immediately following the First Sale, the Company shall file
with the SEC a registration  statement (the "First  Registration  Statement") on
Form S-3 if such form is then available to the Company and, if not, on such form
promulgated  by the SEC for which the Company  qualifies,  that  counsel for the
Company shall deem appropriate and which form shall be available for the sale of
all Conversion  Shares,  the Incentive Warrant Shares and any Protective Warrant
Shares,  in  accordance  with  the  intended  method  of  distribution  of  such
securities.  The  aggregate  number of shares of Common  Stock to be  registered
under the First Registration Statement shall be 12,000,000;

           (ii) Subsequent Registration Statements.

             (1) If the Company shall,  pursuant to any Subsequent Sale, require
the Investor to purchase  shares of Common Stock not  previously  registered and
not covered by an effective  Registration  Statement filed with the SEC which is
not a Failed Registration  Statement (as hereinafter  defined) (an "Unregistered
Sale"),  then on or  before  the end of a 20  calendar  day  period  immediately
following each Closing Date relating to each such  Subsequent  Sale, the Company
shall  file  with  the  SEC  a  registration   statement   (each  a  "Subsequent
Registration  Statement," and together with the First Registration Statement and
any other registration  statement covering  Registrable  Securities or otherwise
required to be filed by the Company with the SEC as provided in this  Agreement,
the "Registration  Statements" or each, a "Registration  Statement") on Form S-3
if such  form  is then  available  to the  Company  and,  if not,  on such  form
promulgated  by the SEC for which the Company  qualifies,  that  counsel for the
Company shall deem appropriate and which form shall be available for the sale of
the Subsequent Sale Shares  purchased by the Investor and any Conversion  Shares
and Warrant Shares that have not been previously registered,  in accordance with
the intended method of distribution of such securities.  The aggregate number of
shares to be registered  under each Subsequent  Registration  Statement shall be
equal to (w) the number of Subsequent  Sale Shares  purchased by the Investor on
the applicable Closing Date plus (x) a number of Protective Warrant Shares equal
to the  number of  Subsequent  Sale  Shares  purchased  by the  Investor  on the
applicable Closing Date plus (y) any Conversion Shares not previously registered
plus (z) any Warrant Shares not previously registered;

             (2) Prior to any Subsequent Sale which is not an Unregistered Sale,
the Company shall file with the SEC a Registration Statement on Form S-3 if such
form is then  available to the Company and, if not, on such form  promulgated by
the SEC for which the Company qualifies, that counsel for the Company shall deem
appropriate  and which  form  shall be  available  for the sale of the shares of
Common Stock to be  purchased by the Investor and any Warrant  Shares which have
not  previously  been  registered,  in  accordance  with the intended  method of
distribution of such securities. The aggregate number of shares to be registered
under such Registration Statement shall be determined by the Company.
(b)  Effectiveness  of  the  Registration  Statements.   The  following
conditions for effectiveness shall apply to the Registration Statements required
to be filed by the Company with the SEC pursuant to paragraph (a) above, without
limiting the Company's  obligation  to file such  Registration  Statements.  The
Company shall use its best efforts: (i) to have the First Registration Statement
declared  effective by the SEC in no event later than 90 calendar days after the
Closing  Date  relating  to the First  Sale,  and (ii) to have  each  Subsequent
Registration  Statement  declared effective by the SEC in no event later than 60
calendar days after the Closing Date relating to each Unregistered  Sale, and in
any event prior to any further  Subsequent  Sales. The Company shall ensure that
each  Registration  Statement and any amendments  thereto remain in effect until
the later of (1) a period  ending 1 day  following the date of expiration of the
Incentive  Warrant  Exercise  Period (as such term is  defined in the  Incentive
Warrant) if the  Incentive  Warrant has not been  exercised  in full and if such
Registration  Statement  covers the Warrant Shares issuable under such Incentive
Warrant and (2) the date the Registrable Securities covered by such Registration
Statement and issued or issuable to the Investor  pursuant to the Stock Purchase
Agreement may be sold by the Investor without registration and without any time,
volume or manner  limitations  pursuant to Rule 144(k) (or any similar provision
then in effect) under the Securities  Act or have otherwise been sold;  provided
that such  period  shall be extended  one day for each day after the  applicable
Effective Date that any Registration  Statement covering Registrable  Securities
is not effective during the period such Registration Statement is required to be
effective pursuant to this Agreement.

         (c)  Failure  to  Obtain  or  Maintain  Effectiveness  of  Registration
Statements.

           (i) In the  event the  Company  fails  for any  reason to obtain  the
effectiveness of any Registration Statement within the time periods set forth in
Section  1.1(b)  (a "Tardy  Registration  Statement")  or in the event  that the
Company fails for any reason to maintain the  effectiveness  of any Registration
Statement (or the underlying prospectus) covering Registrable Securities for the
time period set forth in Section 1.1(b) (an "Ineffective Registration Statement"
together with a Tardy Registration Statement, a "Failed Registration Statement")
or upon the occurrence of any event of the kind described in Section  2.1(g)(iv)
hereof (unless the Registrable Securities covered by such Registration Statement
shall have become freely tradable  pursuant to Rule 144(k) of the Securities Act
or have been  otherwise  sold),  then,  in either  event an amount  equal to two
percent  (2.0%)  of the  aggregate  Purchase  Price  of  all of the  Registrable
Securities  covered by any such Failed  Registration  Statement then held by the
Investor for each calendar month and for each portion of a calendar  month,  pro
rata,  (the  "Failed  Registration  Statement  Fee")  during  any period of such
ineffectiveness  or,  in the  case of the  occurrence  of an  event  of the kind
described in Section 2.1(g)(iv)  hereof,  until the Investor shall have received
copies  of the  supplemental  or  amended  prospectus  contemplated  by  Section
2.1(g)(iv)  hereof (an  "Ineffective  Period"),  shall become due and payable to
Investor.

           (ii) If Failed Registration Statement Fees accrue with respect to any
Ineffective   Registration  Statement,   payment  of  such  Failed  Registration
Statement Fees shall be made on the first Trading Day after the earlier to occur
of (1) the expiration of the applicable  Ineffective Period and (2) the last day
of each calendar month during an Ineffective Period.
(d)  Restricted  Period.  While in  possession  of material  non-public
information  received  from the Company (a  "Restricted  Period"),  the Investor
shall not  dispose  of any  Registrable  Securities  until such  information  is
disclosed  to the public;  provided  that,  if such  Restricted  Period is for a
period  of up to 30 days  during  any 360 day  period,  the  liquidated  damages
described  in  Section  1.1(c)  hereof  shall not apply  until and  unless  such
Restricted  Period  exceeds 30 days  during  such 360 day period  and;  provided
further that, if such Restricted Period exceeds 120 days, the liquidated damages
described in Section  1.1(c) hereof shall be increased to three  percent  (3.0%)
until such Restricted Period shall have elapsed.

         (e) Failure to Register  Sufficient  Number of Shares. If the number of
Protective Warrant Shares included in the First  Registration  Statement or each
Subsequent  Registration  Statement is less than the total number of  Protective
Warrant  Shares  issuable upon  exercise at the Exercise  Price (as such term is
defined in each  Protective  Warrant)  (such  deficit in the number of shares is
referred  to  herein  as the  "Deficit  Shares"),  then  (i) the  Company  shall
immediately  amend  such  Registration  Statement  (or  file a new  Registration
Statement)  to cover  the  Deficit  Shares  (such  amended  or new  Registration
Statement is referred to herein as a "Deficit  Shares  Registration  Statement")
and (ii) the Company shall pay to the Investor in  immediately  available  funds
into an  account  designated  by the  Investor  an  amount  equal to 2.0% of the
product of (x) the number of Deficit  Shares  multiplied by (y) the Bid Price of
the Common Stock on the applicable  Effective  Date, for each calendar month and
for each  portion  of a calendar  month,  pro rata,  during the period  from the
Effective Date of the applicable Registration Statement to the Effective Date of
the applicable Deficit Shares Registration Statement.

         (f) Liquidated Damages. The Company and the Investor hereby acknowledge
and agree that the sums  payable  under  subsections  1.1(c),  1.1(d) and 1.1(e)
hereof  shall  constitute  liquidated  damages  and not  penalties.  The parties
further acknowledge that (i) the amount of loss or damages likely to be incurred
is incapable or is difficult to estimate  precisely,  (ii) the amounts specified
in such subsections bear a reasonable  proportion and are not plainly or grossly
disproportionate  to the probable loss likely to be incurred in connection  with
any  failure  by the  Company  to  obtain or  maintain  the  effectiveness  of a
Registration  Statement,  (iii)  one of the  reasons  for  the  Company  and the
Investor  reaching an agreement as to such amounts was the  uncertainty and cost
of litigation regarding the question of actual damages, and (iv) the Company and
the Investor are  sophisticated  business  parties and have been  represented by
sophisticated and able legal and financial counsel and negotiated this Agreement
at arm's length.

                                   ARTICLE II
                             REGISTRATION PROCEDURES

         Section  2.1  FILINGS;   INFORMATION.   The  Company  will  effect  the
registration  of the  Registrable  Securities  in  accordance  with the intended
methods of  disposition  thereof as  furnished  to the  Company by any  proposed
seller of such  Registrable  Securities  prior to the  filing of a  Registration
Statement  therefor.  Without  limiting the foregoing,  the Company in each such
case will do the following as expeditiously  as possible,  but in no event later
than the deadline, if any, prescribed therefor in this Agreement:
(a)  The  Company   shall  (i)  prepare  and  file  with  the  SEC  the
Registration  Statement(s) covering the shares as described in subsection 1.1(a)
above; (ii) use its best efforts to cause such filed  Registration  Statement(s)
to become and remain effective (pursuant to Rule 415 under the Securities Act or
otherwise) for the period  prescribed by Section 1.1(b);  (iii) prepare and file
with the SEC such amendments and supplements to each Registration  Statement and
the  prospectus  used in  connection  therewith as may be necessary to keep each
Registration  Statement  effective  for the time  period  prescribed  by Section
1.1(b);  and (iv) comply with the  provisions of the Securities Act with respect
to the  disposition of all  securities  covered by each  Registration  Statement
during such period in accordance with the intended methods of disposition by the
Investor set forth in each Registration Statement.

         (b)  The  Company   shall  file  all   necessary   amendments  to  each
Registration Statement in order to effectuate the purpose of this Agreement, the
Stock Purchase Agreement, and the Warrants.

         (c) Five  Trading Days prior to filing each  Registration  Statement or
prospectus,  or any amendment or supplement thereto (excluding amendments deemed
to result from the filing of documents  incorporated by reference therein),  the
Company shall deliver to the Investor and one firm of counsel  representing  the
Investor,  in accordance  with the notice  provisions of Section 4.8,  copies of
such  Registration  Statement as proposed to be filed,  together  with  exhibits
thereto,  which  documents will be subject to review and comment by the Investor
and such counsel,  and thereafter  deliver to the Investor and such counsel,  in
accordance  with the notice  provisions of Section 4.8, such number of copies of
such Registration Statement, each amendment and supplement thereto (in each case
including all exhibits  thereto),  the prospectus  included in such Registration
Statement  (including each  preliminary  prospectus) and such other documents or
information  as the  Investor  or  counsel  may  reasonably  request in order to
facilitate the disposition of the Registrable Securities.

         (d) The Company shall deliver, in accordance with the notice provisions
of Section  4.8,  to each  broker as  directed  by the  Investor  such number of
conformed  copies  of such  Registration  Statement  and of each  amendment  and
supplement   thereto  (in  each  case   including  all  exhibits  and  documents
incorporated by reference), such number of copies of the prospectus contained in
such  Registration  Statement  (including  each  preliminary  prospectus and any
summary  prospectus) and any other  prospectus  filed under Rule 424 promulgated
under the Securities Act relating to the Registrable Securities,  and such other
documents,  as may be reasonably  requested to facilitate the disposition of the
Registrable Securities.

         (e) After the filing of each Registration Statement,  the Company shall
promptly  notify the Investor of any stop order issued or  threatened by the SEC
in connection therewith and take all commercially reasonable actions required to
prevent the entry of such stop order or to remove it if entered.

         (f) The Company  shall use its best  efforts to (i) register or qualify
the Registrable  Securities under such other securities or blue sky laws of such
jurisdictions  in the United States as the Investor may  reasonably (in light of
its  intended  plan of  distribution)  request,  and (ii) cause the  Registrable
Securities to be registered with or approved by such other governmental agencies
or  authorities  in the  United  States  as may be  necessary  by  virtue of the
business and  operations of the Company and do any and all other acts and things
that may be  reasonably  necessary  or  advisable  to  enable  the  Investor  to
consummate the disposition of the  Registrable  Securities;  provided,  however,
that the Company will not be required to qualify generally to do business in any
jurisdiction  where it would not  otherwise  be required to qualify but for this
paragraph (f), subject itself to taxation in any such  jurisdiction,  or consent
or subject itself to general service of process in any such jurisdiction.
(g)  The  Company  shall  immediately  notify  the  Investor  upon  the
occurrence of any of the following events in respect of a Registration Statement
or related prospectus in respect of an offering of Registrable  Securities:  (i)
receipt  of any  request  for  additional  information  by the SEC or any  other
federal or state  governmental  authority  during the period of effectiveness of
the  Registration  Statement or amendments or  supplements  to the  Registration
Statement  or  related  prospectus;  (ii) the  issuance  by the SEC or any other
federal  or state  governmental  authority  of any  stop  order  suspending  the
effectiveness  of a Registration  Statement or the initiation of any proceedings
for  that  purpose;  (iii)  receipt  of any  notification  with  respect  to the
suspension of the  qualification  or exemption from  qualification of any of the
Registrable  Securities  for  sale  in any  jurisdiction  or the  initiation  or
threatening of any proceeding for such purpose;  (iv) the happening of any event
that  makes  any  statement  made  in such  Registration  Statement  or  related
prospectus or any document  incorporated or deemed to be incorporated therein by
reference  untrue in any  material  respect or that  requires  the making of any
changes in the Registration Statement,  related prospectus or documents so that,
in the  case  of a  Registration  Statement,  it will  not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein not misleading,  and
that in the case of the  related  prospectus,  it will not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein, in the light of the
circumstances under which they were made, not misleading; (v) the declaration by
the SEC of the effectiveness of a Registration Statement; and (vi) the Company's
reasonable  determination  that a  post-effective  amendment to the Registration
Statement would be appropriate, and the Company promptly shall make available to
the Investor any such supplement or amendment to the related prospectus.

         (h) The Company  shall enter into  customary  agreements  and take such
other actions as are reasonably  required in order to expedite or facilitate the
disposition  of such  Registrable  Securities  (whereupon  the Investor,  at its
option,  may  require  that any or all of the  representations,  warranties  and
covenants of the Company also be made to and for the benefit of the Investor).

         (i) The Company shall make  available to the Investor (and will deliver
to Investor's  counsel),  subject to  restrictions  imposed by the United States
government   or  any   agency  or   instrumentality   thereof,   copies  of  all
correspondence  between the SEC and the  Company,  concerning  any  Registration
Statement,  and also will make  available for inspection by the Investor and any
attorney,   accountant   or  other   professional   retained  by  the   Investor
(collectively,  the  "Inspectors"),  all financial and other records,  pertinent
corporate documents and properties of the Company (collectively,  the "Records")
as shall be reasonably  necessary to enable them to exercise their due diligence
responsibility,  and cause the  Company's  officers and  employees to supply all
information  reasonably  requested  by any  Inspectors  in  connection  with any
Registration Statement.
Records that the Company determines,  in good faith, to be confidential and that
it notifies  the  Inspectors  are  confidential  shall not be  disclosed  by the
Inspectors  unless (i) the  disclosure  of such Records is necessary to avoid or
correct a  misstatement  or omission in any  Registration  Statement or (ii) the
disclosure or release of such Records is requested or required  pursuant to oral
questions, interrogatories,  requests for information or documents or a subpoena
or  other  order  from a court  of  competent  jurisdiction  or  other  process;
provided,  however,  that prior to any disclosure or release  pursuant to clause
(ii),  the  Inspectors  shall provide the Company with prompt notice of any such
request or requirement  so that the Company may seek an  appropriate  protective
order or waive such  Inspectors'  obligation not to disclose such Records;  and,
provided, further, that if failing the entry of a protective order or the waiver
by the  Company  permitting  the  disclosure  or  release of such  Records,  the
Inspectors,  upon advice of counsel, are compelled to disclose such Records, the
Inspectors may disclose that portion of the Records that counsel has advised the
Inspectors  that the Inspectors are compelled to disclose.  The Investor  agrees
that  information  obtained  by it solely as a result of such  inspections  (not
including any information  obtained from a third party who,  insofar as is known
to the Investor after reasonable  inquiry, is not prohibited from providing such
information  by a  contractual,  legal or fiduciary  obligation  to the Company)
shall be deemed  confidential  and,  if  material  non-public  information,  the
Investor  shall not while in  possession  of such  information  engage in market
transactions in the securities of the Company or its Affiliates unless and until
such information is made generally available to the public. The Investor further
agrees that upon learning  that  disclosure of such Records is sought in a court
of  competent  jurisdiction,  it will give  notice to the  Company and allow the
Company, at its expense,  to undertake  appropriate action to prevent disclosure
of the Records deemed confidential.

         (j) To the extent  required by law or reasonably  necessary to effect a
sale of Registrable  Securities in accordance with prevailing business practices
at the time of any sale of  Registrable  Securities  pursuant to a  Registration
Statement,  the  Company  shall  deliver to the  Investor a signed  counterpart,
addressed  to the  Investor,  of (1) an  opinion or  opinions  of counsel to the
Company  and  (2) a  comfort  letter  or  comfort  letters  from  the  Company's
independent public accountants, each in customary form and covering such matters
of the type customarily  covered by opinions of comfort letters, as the case may
be, as the Investor therefor reasonably requests.

         (k) The Company  otherwise  shall comply with all applicable  rules and
regulations  of  the  SEC,  including,   without  limitation,   compliance  with
applicable reporting requirements under the Exchange Act.

         (l) The Company may require the Investor to furnish promptly in writing
to the Company such  information as may be legally  required in connection  with
any registration including,  without limitation,  all such information as may be
requested by the SEC or the National  Association  of Securities  Dealers,  Inc.
(the  "NASD").  The  Investor  agrees to provide such  information  requested in
connection  with any  registration  within ten Trading Days after receiving such
written  request  and the  Company  shall not be  responsible  for any delays in
obtaining or maintaining the effectiveness of a Registration Statement caused by
the  Investor's  failure to timely  provide  such  information.
Each seller of  Registrable  Securities  shall notify the Company as promptly as
practicable of any inaccuracy or change in information  previously  furnished by
such seller to the Company or of the occurrence of any event,  in either case as
a result of which any prospectus relating to the Registrable Securities contains
or would contain an untrue statement of a material fact regarding such seller or
its intended  method of disposition of such  Registrable  Securities or omits to
state any material fact regarding such seller or such seller's  intended  method
of disposition of such Registrable  Securities  required to be stated therein or
necessary  to make the  statements  therein,  in the light of the  circumstances
under which they were made, not misleading,  and promptly furnish to the Company
any  additional  information  required  to correct  and  update  any  previously
furnished  information  or required so that such  prospectus  shall not contain,
with respect to such seller or the disposition of such  Registrable  Securities,
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements  therein,  in the light
of the circumstances under which they were made, not misleading.

         Section 2.2       REGISTRATION EXPENSES.

         a. In connection with each  Registration  Statement,  the Company shall
pay all  registration  expenses  incurred in  connection  with the  registration
thereunder (the "Registration Expenses"), including, without limitation: (i) all
registration,  filing,  securities  exchange  listing and fees required by NASD,
(ii) all  registration,  filing,  qualification  and other fees and  expenses of
compliance  with  securities  or blue sky laws  (including  reasonable  fees and
disbursements  of  counsel in  connection  with blue sky  qualifications  of the
Registrable  Securities  required  hereby),  (iii)  all  of the  Company's  word
processing,  duplicating,  printing,  messenger and delivery expenses,  (iv) the
Company's internal expenses  (including,  without  limitation,  all salaries and
expenses of its officers and employees  performing legal or accounting  duties),
(v) the fees and expenses incurred by the Company in connection with the listing
of the Registrable Securities, (vi) reasonable fees and disbursements of counsel
for the Company and,  subject to paragraph (b) below, the Investor and customary
fees and expenses for independent  certified public accountants  retained by the
Company  (including  the  expenses of any special  audits or comfort  letters or
costs associated with the delivery by independent  certified public  accountants
of such  special  audit(s) or comfort  letter(s)  requested  pursuant to Section
2.1(j) hereof),  (vii) the fees and expenses of any special experts  retained by
the Company in  connection  with such  registration,  (viii)  premiums and other
costs of  policies  of  insurance  purchased  at the  discretion  of the Company
against  liabilities  arising  out of any  public  offering  of the  Registrable
Securities being registered, and (ix) any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but excluding underwriting
fees, discounts, transfer taxes or commissions, if any, attributable to the sale
of Registrable Securities,  which shall be payable by each holder of Registrable
Securities pro rata on the basis of the number of Registrable Securities of each
such holder that are included in a registration under this Agreement.

         b. The Company  shall pay all  reasonable  fees and expenses of counsel
for the Investor  incurred in  connection  with the review,  and  assistance  in
preparation,  of each  Registration  Statement  up to $10,000  per  Registration
Statement,  unless a greater  amount is required due to the nature of the review
performed  by  Investor's  counsel  or the  extent  of  assistance  provided  by
Investor's  counsel (an  estimate of such greater fees and expenses of such firm
of  counsel  to the  Investor  shall be  provided  to the  Company  prior to the
undertaking of such counsel's additional review or assistance).
ARTICLE III
                        INDEMNIFICATION AND CONTRIBUTION

         Section 3.1       INDEMNIFICATION.

         a. The Company agrees to indemnify and hold harmless the Investor,  its
partners, Affiliates, officers, directors, employees and duly authorized agents,
and each Person or entity,  if any, who controls the Investor within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act,  together
with its  controlling  persons  from and  against  any and all  losses,  claims,
damages, liabilities, costs and expenses (including, without limitation, any and
all  reasonable  attorneys'  fees and  disbursements  and costs and  expenses of
investigating  and  defending  any such  claim and any and all  amounts  paid in
settlement  of, any action,  suit or proceeding  between any of the  indemnified
parties and any  indemnifying  parties or between any indemnified  party and any
third party,  or otherwise,  or any claim asserted)  (collectively,  "Damages"),
joint or several,  and any action in respect thereof to which the Investor,  its
partners, Affiliates, officers, directors, employees and duly authorized agents,
and any such  controlling  person,  becomes subject to under the Securities Act,
the Exchange  Act or other  federal or state  statutory  law or  regulation,  at
common law or  otherwise,  as and when  incurred,  insofar as such  Damages  (or
actions or proceedings in respect  thereof) (i) arise out of, or are based upon,
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement, or in any preliminary prospectus,  final prospectus,
summary  prospectus,  documents  filed under the  Exchange  Act and deemed to be
incorporated by reference into any Registration Statement,  application or other
document executed by or on behalf of the Company or based on written information
furnished by or on behalf of the Company filed in any  jurisdiction  in order to
qualify the Registrable Securities under the securities or blue sky laws thereof
or filed with the SEC,  amendment  or  supplement  relating  to the  Registrable
Securities  or (ii) arise out of, or are based  upon,  any  omission  or alleged
omission  to state  therein a material  fact  required  to be stated  therein or
necessary to make the statements therein not misleading, and shall reimburse the
Investor,  its partners,  Affiliates,  officers,  directors,  employees and duly
authorized  agents,  and each such controlling  person,  for any legal and other
expenses  reasonably  incurred  by  the  Investor,  its  partners,   Affiliates,
officers,  directors,   employees  and  duly  authorized  agents,  or  any  such
controlling  person, as incurred,  in investigating or defending or preparing to
defend against any such Damages or actions or  proceedings;  provided,  however,
that the Company  shall not be liable to the extent that any such Damages  arise
out of the Investor's  failure to send or give a copy of the final prospectus or
supplement at or prior to the written  confirmation  of the sale of  Registrable
Securities  to the  persons  asserting  an untrue  statement  or alleged  untrue
statement  or  omission  or  alleged   omission  at  or  prior  to  the  written
confirmation  of the  sale of  Registrable  Securities  to such  person  if such
statement or omission was corrected in such final prospectus or supplement,  and
provided that the Investor had been  obligated  under  applicable law to deliver
such final prospectus or supplement to such person; provided,  further, that the
Company  shall not be liable to the extent that any such Damages arise out of or
are based upon an untrue  statement or alleged  untrue  statement or omission or
alleged omission made in such  Registration  Statement,  or any such preliminary
prospectus,  final prospectus,  summary  prospectus,  amendment or supplement in
reliance  upon and in  conformity  with  written  information  furnished  to the
Company by the Investor or any other person who  participates  as a seller or as
an  underwriter in the offering or sale of such  securities,  in either case, in
any  questionnaire  or other request by the Company,  or otherwise  specifically
stating that it is for use in the  preparation
thereof and provided that such written  information  furnished to the Company by
the  Investor,  or any  other  person  who  participates  as a  seller  or as an
underwriter  in the  offering  or  sale of such  securities,  is not  materially
altered by the  Company.  All claims for  indemnification  shall be asserted and
resolved as set forth in Section 9.2 of the Stock Purchase Agreement.

         b. The Investor agrees to indemnify and hold harmless the Company,  its
Affiliates, officers, directors, employees, and duly authorized agents, from and
against any and all Damages, joint or several, and any action in respect thereof
to which the Company, its Affiliates,  officers, directors,  employees, and duly
authorized  agents becomes subject to under the Securities Act, the Exchange Act
or  other  federal  or state  statutory  law or  regulation,  at  common  law or
otherwise,  as and  when  incurred,  insofar  as such  Damages  (or  actions  or
proceedings  in respect  thereof)  arise out of, or are based  upon,  any untrue
statement or alleged untrue  statement or omission or alleged omission made in a
Registration Statement, or any preliminary prospectus, final prospectus, summary
prospectus,  amendment or supplement  in reliance  upon and in  conformity  with
written   information   furnished   to  the  Company  by  the  Investor  in  any
questionnaire or other request by the Company, or otherwise specifically stating
that it is for use in the  preparation  thereof;  provided,  however,  that such
written  information  furnished to the Company by the Investor is not materially
altered by the Company.  Notwithstanding the foregoing, the Investor shall in no
event be  required  to  indemnify  the  Company  for any amount in excess of the
amount by which  the total  price at which  the  Registrable  Securities  of the
Investor were sold to the public (less  underwriting  discounts and commissions)
exceeds the amount  actually paid by the Investor under the Securities  Purchase
Agreement for such Registrable Securities sold to the public.

         Section 3.2 ARBITRATION. Any controversy,  claim or dispute arising out
of or in connection  with this Agreement,  including any question  regarding its
existence, validity,  interpretation,  breach, or termination, shall be referred
to and finally  resolved in  accordance  with Section 9.3 of the Stock  Purchase
Agreement.

         Section  3.3 OTHER  INDEMNIFICATION.  Indemnification  similar  to that
specified in the  preceding  paragraphs  of this  Article III (with  appropriate
modifications)  shall be given  by the  Company  with  respect  to any  required
registration or other qualification of securities under any federal or state law
or regulation of any  governmental  authority other than the Securities Act. The
provisions  of this  Article  III shall be in  addition  to any other  rights to
indemnification,  contribution or other remedies which an Indemnified  Party may
have pursuant to law, equity, contract or otherwise.

         Section 3.4  CONTRIBUTION.  If the  indemnification  and  reimbursement
obligations  provided for in any section of this Article III is  unavailable  or
insufficient to hold harmless the Indemnified  Parties in respect of any Damages
referred to herein,  then the Indemnifying  Party, in lieu of indemnifying  such
Indemnified  Party,  shall  contribute  to the  amount  paid or  payable by such
Indemnified  Party as a result of such Damages as between the Company on the one
hand  and  the  Investor  or  seller  on the  other,  in such  proportion  as is
appropriate  to reflect the relative fault of the Company and of the Investor or
seller  in  connection  with  such  statements  or  omissions,  as well as other
equitable considerations.  The relative fault of the Company on the one hand and
of the  Investor or seller on the other shall be  determined  by  reference  to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the  omission or alleged  omission to state a material  fact  relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to  information  and  opportunity to correct or prevent such statement or
omission.
The  Company  and the  Investor  agree  that it  would  not be just and
equitable if  contribution  pursuant to this Section 3.4 were  determined by pro
rata  allocation or by any other method of allocation that does not take account
of  the  equitable  considerations  referred  to in  the  immediately  preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
Damages  referred to in the immediately  preceding  paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably  incurred by such Indemnified Party in connection with  investigating
or defending any such action or claim.  Notwithstanding  the  provisions of this
Section 3.4, the Investor or seller shall in no event be required to  contribute
any  amount  in excess  of the  amount  by which  the  total  price at which the
Registrable  Securities  of the Investor or seller were sold to the public (less
underwriting  discounts and commissions) exceeds the amount of any damages which
the  Investor  or seller has  otherwise  been  required to pay by reason of such
untrue or alleged untrue  statement or omission or alleged  omission.  No Person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the Securities  Act) shall be entitled to  contribution  from any Person who was
not guilty of such fraudulent misrepresentation.

                                   ARTICLE IV
                                  MISCELLANEOUS

         Section 4.1  OUTSTANDING  REGISTRATION  RIGHTS.  Except as set forth on
Schedule  4.1  attached  hereto,  the  Company  represents  and  warrants to the
Investor  that there is not in effect on the date  hereof any  agreement  by the
Company  pursuant to which any holders of securities of the Company have a right
to cause the Company to register or qualify such securities under the Securities
Act or any securities or blue sky laws of any  jurisdiction.  The Company hereby
covenants  and  agrees  that  until 270  calendar  days  after the  Registration
Statement has been declared  effective by the SEC it will not, without the prior
written  consent  of the  Investor,  enter  into or amend any  agreement  by the
Company  pursuant to which any holders of securities of the Company have a right
to cause the Company to register or qualify  securities under the Securities Act
or any securities or blue sky laws of any jurisdiction;  provided, however, that
the foregoing  part of this  sentence  shall not apply (i) to a Third Party Sale
(as such term is defined in the Stock Purchase Agreement) for which the Investor
has elected not to exercise its right of first refusal  pursuant to Section 6.12
of the Stock Purchase  Agreement,  (ii) to a Strategic  Acquisition  (as defined
below) pursuant to which the consideration for such acquisition  includes Common
Stock or securities  convertible  into or exercisable for Common Stock, or (iii)
in connection  with the  distribution  of Common Stock pursuant to the Company's
employee  stock  option  plans.  The  term  "Strategic   Acquisition"  means  an
acquisition  by the Company for strategic  business  purposes of another  entity
that is in a business  that is similar or related to the business of the Company
at the time of such  acquisition  whether such  Strategic  Acquisition is in the
form of a merger, stock purchase, asset purchase, or other form of acquisition.

         Section 4.2 TERM. The  registration  rights  provided to the holders of
Registrable Securities hereunder shall terminate at such time as all Registrable
Securities  have  been  issued  and have  ceased to be  Registrable  Securities.
Notwithstanding  the foregoing,  paragraphs (c) and (d) of Section 1.1,  Article
III,  Section  4.8,  and  Section  4.9 shall  survive  the  termination  of this
Agreement.
Section 4.3 RULE 144. If the Company is required to file reports  under
the  Exchange  Act,  the  Company  will  file in a timely  manner,  information,
documents and reports in compliance with the Securities Act and the Exchange Act
and will,  at its  expense,  promptly  take such  further  action as  holders of
Registrable  Securities  reasonably  may  request  to  enable  such  holders  of
Registrable Securities to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions  provided by (a) Rule
144 under the Securities Act ("Rule 144"), as such Rule may be amended from time
to time, or (b) any similar rule or regulation  hereafter adopted by the SEC. If
at any time the Company is not required to file such  reports,  it will,  at its
expense,  forthwith  upon the  written  request  of any  holder  of  Registrable
Securities  who intends to make a sale under Rule 144, make  available  adequate
current  public  information  with respect to the Company  within the meaning of
paragraph  (c)(2) of Rule 144 or such other  information  as necessary to permit
sales  pursuant to Rule 144. Upon the request of the Investor,  the Company will
deliver to the Investor a written statement,  signed by the Company's  principal
financial officer,  as to whether it has complied with such  requirements.  This
Section  4.3  shall  terminate  at the same time as the  registration  rights as
provided in Section 4.2.

         Section 4.4  CERTIFICATE.  The Company will, at its expense,  forthwith
upon the request of any holder of Registrable Securities, deliver to such holder
a certificate,  signed by the Company's principal financial officer, stating (a)
the Company's name,  address and telephone number (including area code), (b) the
Company's Internal Revenue Service  identification number, (c) the Company's SEC
file  number,  (d) the  number of shares of each class of stock  outstanding  as
shown by the most recent report or statement  published by the Company,  and (e)
whether  the  Company  has  filed the  reports  required  to be filed  under the
Exchange Act for a period of at least ninety (90) days prior to the date of such
certificate  and in addition has filed the most recent annual report required to
be filed thereunder.

         Section 4.5 AMENDMENT AND MODIFICATION. Any provision of this Agreement
may be waived,  provided that such waiver is set forth in a writing  executed by
both parties to this Agreement. The provisions of this Agreement,  including the
provisions of this sentence, may not be amended,  modified or supplemented,  and
waivers or consents to departures  from the provisions  hereof may not be given,
unless the Company has obtained the written consent of the holders of a majority
of the then outstanding Registrable  Securities.  Notwithstanding the foregoing,
the  waiver of any  provision  hereof  with  respect  to a matter  that  relates
exclusively to the rights of holders of Registrable  Securities whose securities
are being sold  pursuant to a  Registration  Statement  and does not directly or
indirectly  affect the rights of other holders of Registrable  Securities may be
given by holders of at least a majority of the Registrable Securities being sold
by such  holders;  provided  that the  provisions  of this  sentence  may not be
amended,  modified or  supplemented  except in accordance with the provisions of
the immediately  preceding  sentence.  No course of dealing between or among any
Person having any interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this  Agreement or any rights or  obligations  of
any person under or by reason of this Agreement.
Section 4.6 SUCCESSORS AND ASSIGNS;  ENTIRE  AGREEMENT.  This Agreement
and all of the provisions  hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective  successors and assigns. The Investor
may  assign  its  rights  under  this  Agreement  to any  subsequent  holder the
Registrable  Securities,  provided  that the  Company  shall  have the  right to
require any holder of  Registrable  Securities to execute a counterpart  of this
Agreement  and  agree to be  bound  by the  provisions  of this  Agreement  as a
condition  to such  holder's  claim to any  rights  hereunder.  This  Agreement,
together with the Stock  Purchase  Agreement,  the Warrants and the exhibits and
schedules  to such  agreements  together  set forth  the  entire  agreement  and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.

         Section  4.7  SEVERABILITY.  In the event  that any  provision  of this
Agreement or the application of any provision  hereof is declared to be illegal,
invalid or otherwise  unenforceable  by a court of competent  jurisdiction,  the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall  substantially  impair the benefits of the remaining portions
of this Agreement.

         Section  4.8  NOTICES.  All  notices,  demands,   requests,   consents,
approvals,  and other communications required or permitted hereunder shall be in
writing and shall be (i) deposited in the mail, registered or certified,  return
receipt  requested,  postage  prepaid,  (ii)  delivered by reputable air courier
service with charges prepaid, or (iii) transmitted by hand delivery, telegram or
facsimile,  addressed as set forth below or to such other  address as such party
shall  have  specified  most  recently  by written  notice.  Any notice or other
communication  required  or  permitted  to be given  hereunder  shall be  deemed
effective  (a) upon hand  delivery  or  delivery  by  facsimile,  with  accurate
confirmation  generated by the transmitting facsimile machine, at the address or
number  designated  below (if delivered on a business day during normal business
hours where such notice is to be received),  or the first business day following
such delivery (if delivered  other than on a business day during normal business
hours  where such notice is to be  received)  or (b) on the third  business  day
following  the date of  mailing  by  express  courier  service,  fully  prepaid,
addressed to such address,  or upon actual  receipt of such  mailing,  whichever
shall first occur. The addresses and facsimile  numbers for such  communications
shall be:

         If to the Company:

                               WaveRider Communications Inc.
                               255 Consumers Road, Suite 500
                               Toronto, Ontario
                               Canada M2J 1R4
                               Attention:      T. Scott Worthington
                               Telephone:      (416) 502-3200
                               Facsimile:      (416) 502-2968
with a copy (which shall not constitute notice) to:

                               Foley, Hoag & Eliot
                               One Post Office Square
                               Boston, MA 02109
                               Attention:      David A. Broadwin, Esq.
                               Telephone:      (617) 832-1259
                               Facsimile:      (617) 832-7000

         if to the Investor:

                               Crescent International Ltd.
                               c/o GreenLight (Switzerland) SA
                               84, av Louis-Casai
                               1216 Geneva, Cointrin
                               Switzerland
                               Attention:  Mel Craw/Maxi Brezzi
                               Telephone:  +41 22 791 71 69
                               Facsimile:  +41 22 929 53 94

         with a copy (which shall not constitute notice) to:

                               Clifford Chance Rogers & Wells LLP
                               200 Park Avenue
                               New York, NY  10166
                               Attention:      Earl S. Zimmerman, Esq.
                               Telephone:      (212)  878-8000
                               Facsimile:      (212)  878-8375

         Either party hereto may from time to time change its address or
facsimile number for notices under this Section 4.8 by giving at least 10 days'
prior written notice of such changed address or facsimile number to the other
party hereto.

         Section 4.9 GOVERNING LAW. This Agreement  shall be construed under the
laws of the State of New York.

         Section  4.10  HEADINGS.   The  headings  in  this  Agreement  are  for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.

         Section 4.11  COUNTERPARTS.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.

         Section 4.12 FURTHER  ASSURANCES.  Each party shall  cooperate and take
such action as may be  reasonably  requested by another  party in order to carry
out  the  provisions  and  purposes  of  this  Agreement  and  the  transactions
contemplated hereby.
Section 4.13 ABSENCE OF PRESUMPTION.  This Agreement shall be construed
without  regard  to  any   presumption  or  rule   requiring   construction   or
interpretation  against  the party  drafting  or causing  any  instrument  to be
drafted.

         Section 4.14 REMEDIES.  In the event of a breach or a threatened breach
by any party to this  Agreement of its  obligations  under this  Agreement,  any
party  injured or to be injured by such  breach  will be  entitled  to  specific
performance  of its rights under this  Agreement  or to  injunctive  relief,  in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
including  monetary damages,  for breach of any such provision may be inadequate
compensation for any loss.
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.

                                            CRESCENT INTERNATIONAL LTD.

                                              By: /s/ Mel Craw & Maxi Brezzi
                                           -------------------------------------
                                             Name: Mel Craw & Maxi Breezi
                                             Title:

                                            WAVERIDER COMMUNICATIONS INC.

                                            By:               /s/ D.B. Sinclair
                                               ---------------------------------
                                                  Name:       D.B. Sinclair
                                                  Title:      President & CEO
EXHIBIT 10.5
                          WAVERIDER COMMUNICATIONS INC.

                          CERTIFICATE OF DESIGNATION OF
                     SERIES D 5% CONVERTIBLE PREFERRED STOCK

                     NEVADA REVISED STATUTES SECTION 78.1955

         WaveRider  Communications  Inc., a Nevada  corporation (the "Company"),
certifies  by and  through  its  undersigned  President  or  Vice-President  and
Secretary  or  Assistant  Secretary  that the Board of Directors of the Company,
pursuant to Nevada Revised  Statutes  Section  78.1955 and Article  FIFTH,  Part
II(b) of the Articles of Incorporation of the Company,  has adopted a resolution
establishing a series of the Company's  authorized preferred stock designated as
Series D 5%  Convertible  Preferred  Stock (the "Series D Convertible  Preferred
Stock").

         The number of shares of the Series D Convertible Preferred Stock which
the Company is authorized to issue is 30,000.

         The voting powers, designations, preferences, limitations, restrictions
and relative rights of the Series D Convertible Preferred Stock are set forth in
the  Unanimous  Consent of the  Directors of WaveRider  Communications  Inc. set
forth in Exhibit A attached hereto and made a part hereof.

         In witness  whereof,  the undersigned have executed this Certificate of
Amendment as of the 22nd day of May, 2001.

                          WAVERIDER COMMUNICATIONS INC.
                          By:/s/ D. B. Sinclair
                          -------------------
                          D. Bruce Sinclair, President

                          By:/s/ S. Tome
                          ------------------
                          S. Tome, Assistant Secretary

PROVINCE OF ONTARIO                 )
                                    )  ss.

This instrument was acknowledged before me on May 22, 2001, by Bruce Sinclair as
President and by Cameron Mingay, President and Secretary, respectively, of
WaveRider Communications Inc.

                                /s/ C.A. Mingay
                                --------------------
                                NOTARY PUBLIC
My Commission does not Expire

PROVINCE OF ONTARIO                 )
                                    )  ss.

This instrument was acknowledged before me on May 22, 2001, by Sophie Tome as
Assistant Secretary of WaveRider Communications Inc.
                                /s/ C.A. Mingay
                                -------------------
                                NOTARY PUBLIC
My Commission does not Expire
Exhibit A

                   UNANIMOUS WRITTEN CONSENT OF THE DIRECTORS

                                       OF

                          WAVERIDER COMMUNICATIONS INC.

                                       TO

                         ACTIONS TAKEN WITHOUT A MEETING

Pursuant to Section 78.315 of the Nevada Revised Statutes and Article FIFTH,
Part II(b) of the Articles of Incorporation (the "Articles of Incorporation") of
WaveRider Communications Inc., a Nevada corporation (the "Company"), the
undersigned, being all of the directors (the "Directors") of the Company, hereby
take the following actions by unanimous written consent (this "Consent") in lieu
of a meeting of the Directors, by consent of said Directors, as set forth in the
following resolutions, as if taken by unanimous vote of the Directors at a
special meeting of the directors at which all of the Directors were present:

WHEREAS, the Directors desire to establish and designate a series of shares of
preferred stock of the Company and to fix and determine the designation, number,
voting powers, preferences, limitations, restrictions and relative rights
thereof in accordance with the following resolutions;

NOW, THEREFORE, be it hereby:

RESOLVED: That the Company shall be, and hereby is, authorized to issue up to
30,000 shares of a series of the preferred stock, par value $0.01, of the
Company with the following voting powers, designation, preferences, limitations,
restrictions and relative rights:

1.       Designation and Consideration

         The  designation  of the series of the Preferred  Stock created by this
         resolution  shall be,  and  hereby  is,  the  "Series D 5%  Convertible
         Preferred Stock." Shares of this series are hereinbelow  referred to as
         the "Series D Convertible  Preferred Stock." Each share of the Series D
         Convertible  Preferred Stock shall be issued for such  consideration as
         set forth in the Stock Purchase  Agreement,  dated June 4, 2001 between
         the Company and Crescent  International  Ltd.  Once duly issued for the
         consideration called for by resolution of the Directors,  shares of the
         Series D  Convertible  Preferred  Stock shall be deemed  fully paid and
         nonassessable.  Shares of the Series D Convertible  Preferred Stock may
         only be issued to Crescent International Ltd. or an affiliate thereof.

2.       Definitions.  Capitalized  terms used herein and not otherwise  defined
         shall have the following meanings:

         "Closing Bid Price"  shall mean the per share  closing bid price of the
         Common Stock as reported by Bloomberg L.P.

         "Common Stock" shall mean the common stock, par value $0.001 per share,
         of the Company.
"Conversion  Date"  shall  mean  the  date  the  conversion  notice  is
         delivered pursuant to Section 8.

         "Conversion Price" shall mean the lower of (i) the Fixed Conversion
         Price or (ii) 95% of the average of the lowest three consecutive
         Closing Bid Prices during the 22 Trading Day period immediately
         preceding the Conversion Date.

         "Conversion  Ratio"  shall have the  meaning  ascribed  to such term in
         Section 8(a).

         "Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as
         amended, and the rules and regulations promulgated thereunder.

         "Fixed Conversion Price" shall mean 110% of the average of the Closing
         Bid Prices for the 10 consecutive Trading Days immediately preceding
         the Issue Date.

         "Floor Price" shall mean $0.60.

         "Issue  Date" shall mean the date of issuance of the shares of Series D
         Convertible Preferred Stock.

         "Liquidation  Preference"  shall have the meaning ascribed to such term
         in Section 6(a).

         "Principal Market" shall mean the Nasdaq National Market, the Nasdaq
         SmallCap Market, the American Stock Exchange, the Electronic Bulletin
         Board or the New York Stock Exchange, whichever is at the time the
         principal trading exchange or market for the Common Stock.

         "Redemption Date" shall mean the date which is 30 Trading Days from the
         date a Redemption Notice is delivered by the Company to the holders of
         Series D Convertible Preferred Stock pursuant to Section 7(a) hereof.

         "Redemption  Notice"  shall have the  meaning  ascribed to such term in
         Section 7(a).

         "Securities Act" shall mean the U.S. Securities Act of 1933, as
         amended, and the rules and regulations promulgated thereunder.

         "Trading  Day"  shall mean any day during  which the  Principal  Market
         shall be open for business.

3.       Rank. The shares of Series D Convertible  Preferred  Stock shall,  with
         respect to the  distribution of assets on  liquidation,  dissolution or
         winding  up of the  Company,  rank (i)  senior  and prior to the Common
         Stock and any other  class or series of  capital  stock of the  Company
         currently or hereafter  issued,  other than the Parity  Securities  (as
         defined below),  (collectively,  the "Junior Securities"),  and (ii) on
         parity with the Series A Voting Convertible  Preferred Stock, par value
         $0.01  per  share,  of the  Company,  the  Series B Voting  Convertible
         Preferred Stock, par value $0.01 per share of the Company, the Series C
         Voting 8% Convertible  Preferred  Stock,  par value $0.01 per share, of
         the  Company and any other  class or series of  preferred  stock of the
         Company hereafter issued, the terms of which specifically  provide that
         shares of such class or series of preferred stock shall rank pari passu
         with the  Series  D  Convertible  Preferred  Stock  (collectively,  the
         "Parity Securities").
4.       Voting Rights. Notwithstanding anything herein to the contrary, so long
         as any shares of Series D Convertible  Preferred Stock are outstanding,
         the Company shall not and shall cause its  subsidiaries not to, without
         the affirmative  vote of the holders of a majority of the shares of the
         Series D Convertible  Preferred  Stock then  outstanding,  (i) alter or
         change adversely the absolute or relative powers, preferences or rights
         given to the Series D Convertible  Preferred Stock, (ii) alter or amend
         this Certificate of  Designations,  (iii) authorize or create any class
         or series of stock  ranking as to dividends or  distribution  of assets
         upon a  liquidation  or  otherwise  senior to the Series D  Convertible
         Preferred Stock, (iv) amend its Certificate of Incorporation, bylaws or
         other  charter  documents so as to affect  adversely  any rights of any
         holders of Series D  Convertible  Preferred  Stock,  (v)  increase  the
         authorized  number of shares of Series D Convertible  Preferred  Stock,
         (vi)  issue or  reissue  any  shares of  Series  A, B or C  Convertible
         Preferred  Stock,  or (vii) enter into any  agreement  to do any of the
         foregoing.  Except as provided herein or as required by applicable law,
         the Series D Convertible Preferred Stock shall have no voting rights.

5.       Dividends. In the event that there is a failure to deliver Common Stock
         certificates  by the  Company  pursuant  to Section  8(e)(v),  then the
         Company  shall  pay  to the  holders  out of  funds  legally  available
         therefor, before any dividend is paid on any Junior Securities,  yearly
         dividends  at a fixed  rate  of  5.0%  per  annum,  payable  in cash in
         quarterly  installments on March 1, June 1, September 1, and December 1
         of each calendar year,  beginning on June 1, 2001. Such  dividends,  if
         due,  shall be payable on all shares of Series D Convertible  Preferred
         Stock,  other than such shares  which have  previously  and timely been
         converted or redeemed in  accordance  with the  provisions of Section 8
         hereof,  and shall be due from the Issue Date until all such shares are
         converted or redeemed in accordance with the terms hereof.

6.       Liquidation.

         (a)  Liquidation  Amount.  In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, before any
distribution  or  payment  shall be made to the  holders of  outstanding  Junior
Securities,  including,  but not  limited to, the Common  Stock,  the holders of
outstanding shares of Series D Convertible  Preferred Stock shall be entitled to
receive,  out of the  assets  of the  Company  at  the  time  legally  available
therefor,  in exchange for their shares of Series D Convertible  Preferred Stock
an amount in cash equal to $100.00 per share of Series D  Convertible  Preferred
Stock,  as adjusted for stock splits,  stock  dividends,  recapitalizations  and
other similar events (the  "Liquidation  Preference"),  plus an amount per share
per annum in cash equal to 5.0% of the Liquidation Preference, accruing from the
Issue Date until the date on which the Liquidation  Preference for each share of
Series D  Convertible  Preferred  Stock has been paid in full,  on a pari  passu
basis with the rights of the holders of any Parity Securities. If, upon any such
voluntary or involuntary  liquidation,  dissolution or winding up of the affairs
of  the  Company,  the  assets  of  the  Company  available  therefor  shall  be
insufficient to permit the payment in full to the holders of outstanding  shares
of Series D Convertible Preferred Stock of the preferential  liquidation amounts
to which they are then entitled  pursuant to the  provisions of this clause (a),
the entire assets of the Company thus  distributable  shall be distributed among
the holders of outstanding  shares of Series D Convertible  Preferred  Stock and
any Parity Securities  ratably,  in proportion to the full amounts to which such
holders  would  otherwise be entitled if such assets were  sufficient  to permit
payment in full.

         (b) Limitation on Distribution.  Upon any such voluntary or involuntary
liquidation,  dissolution or winding up of the affairs of the Company, after the
payment in full to the  holders of  outstanding  shares of Series D  Convertible
Preferred  Stock  and any  Parity  Securities  of the  preferential  liquidation
amounts to which they are then entitled pursuant to the provisions of clause (a)
above, the holders of outstanding shares of Series D Convertible Preferred Stock
shall not be entitled to  participate in any further  distributions  made to the
holders of the Common Stock or any other class of Junior Securities.
(c) Other  Events.  At the option of the  holders of a majority  of the
issued and outstanding Series D Convertible  Preferred Stock, the sale of all or
substantially all of the assets of the Company, the acquisition of a majority of
the  outstanding  Common Stock  (including,  but not limited to, the sale of the
outstanding Common Stock that effectuates a "going-private" transaction), or the
merger of the Company with or into another  corporation  shall be deemed to be a
dissolution, liquidation or winding up of the Company.

7.       Redemption.

         (a) Redemption  Amount. At any time after the Issue Date, any or all of
the  outstanding  shares of Series D  Convertible  Preferred  Stock shall at the
option of the  Company  and upon 30  Trading  Days prior  written  notice by the
Company  (the  "Redemption  Notice")  to the  holders  of  Series D  Convertible
Preferred  Stock, be subject to redemption by the Company on the Redemption Date
for a purchase  price per share payable in cash in immediately  available  funds
equal to $130 per share of Series D Convertible Preferred Stock the ("Redemption
Amount"). If less than all of the shares of Series D Convertible Preferred Stock
are  redeemed,  such  redemption  shall be pro rata among the  holders  thereof.
Notwithstanding  the  foregoing,  the Company  shall not be  permitted to redeem
shares of Series D Convertible Preferred Stock with respect to which the holders
of such  shares have  previously  given  notice to the Company of such  holders'
intent to  convert  such  shares of Series D  Convertible  Preferred  Stock into
shares of Common Stock in accordance with Section 8 hereof.

         (b)  Termination  of  Preferred  Stock  Rights.   From  and  after  any
Redemption  Date,  unless the Company shall default on such  Redemption  Date in
paying the  Redemption  Amount to the  holder,  all rights of the holders of the
shares of Series D  Convertible  Preferred  Stock  surrendered  for  redemption,
except the right to receive  the  Redemption  Amount and all  accrued but unpaid
dividends in respect of such shares,  shall cease and terminate  with respect to
such shares of Series D Convertible  Preferred Stock  surrendered for redemption
only.

         (c) Default by Company.  If the Company shall default on any Redemption
Date in paying the Redemption Amount to the holder, all rights of the holders of
the shares of Series D Convertible  Preferred  Stock  surrendered for redemption
with respect to such shares shall be reinstated,  including  without  limitation
the right of such holders to convert  shares of Series D  Convertible  Preferred
Stock into shares of Common Stock pursuant to Section 8 hereof.  Furthermore, if
on the Redemption  Date, any portion of the Redemption  Amount shall not be paid
by the Company,  liquidated  damages  shall accrue on the unpaid  portion of the
Redemption Amount at the rate of 2% per month (which amount shall not constitute
a penalty)  until either (i) the  Redemption  Amount,  plus all such  liquidated
damages  is paid in  full,  or (ii) the date on which  all  shares  of  Series D
Convertible  Preferred  Stock  subject to  redemption  by the Company  have been
converted into shares of Common Stock  pursuant to Section 8 hereof  (including,
without limitation, delivery of all certificates required by Section 8(e)).

         (d)  Option of Holder to  Convert.  During  the 30  Trading  Day period
following the date a holder of Series D Convertible Preferred Stock has received
a  Redemption  Notice  from the  Company,  such holder may convert its shares of
Series D Convertible  Preferred Stock into shares of Common Stock of the Company
in accordance with the provisions of Section 8 hereof.
(e) Mechanics of  Redemption.  A Redemption  Notice may be delivered to
the holders of Series D  Convertible  Preferred  Stock via  facsimile,  and upon
receipt of such notice each holder shall deliver written  acknowledgment thereof
via  facsimile  to the  Company.  The  redemption  of the  shares  of  Series  D
Convertible  Preferred  Stock upon any  Redemption  Date shall take place at the
principal place of business of the Company. On such Redemption Date, the Company
shall tender the  Redemption  Amount by wire transfer of  immediately  available
funds to an account  designated  in writing by each holder.  Upon receipt of the
Redemption Amount,  each holder of the certificate or certificates  representing
the shares of Series D Convertible Preferred Stock being redeemed shall promptly
deliver such  certificate or  certificates to the Company at its principal place
of business.

8.       Conversion.

         (a)  Conversion by the Holder.  Subject to the provision for adjustment
set forth below and subject to paragraph  (c) below,  each share of the Series D
Convertible  Preferred  Stock shall be  convertible  at the option of the holder
thereof at any time after the Issue Date into a number of shares of Common Stock
equal  to the  then  effective  Conversion  Ratio.  As  used  herein,  the  term
"Conversion  Ratio," determined as of any date, shall equal the number of shares
of Common Stock into which one share of Series D Convertible  Preferred Stock is
convertible  pursuant to this Section 8, which shall be  determined  by dividing
$100.00 by the then effective  Conversion  Price.  The Conversion Ratio shall be
subject to adjustment as provided in Section 8(f).  Notwithstanding  anything in
this Section 8(a) to the  contrary,  at the option of the Company,  which option
must be  exercised  by the  Company  within one  Trading  Day of  delivery  of a
conversion  notice to the Company and which option may not be  exercised  during
any period  which is 120 days after the date that the  Company  first  exercises
this option,  the shares of Series D  Convertible  Preferred  Stock shall not be
convertible in the event that the average of the Closing Bid Prices during the 7
Trading  Day  period  immediately  preceding  the  date of a  conversion  notice
delivered in accordance  with the  provisions of Section  8(e)(i) hereof is less
than the Floor Price; provided,  however, that subsequent to the exercise by the
Company of such option,  the holder may deliver another conversion notice to the
Company  and in such  event  the  Company  shall  not have the  option to refuse
conversion of the shares of Series D Convertible  Preferred Stock if the average
of the Closing Bid Prices during the 7 Trading Day period immediately  preceding
the Company's  receipt of such subsequent  conversion notice is greater than the
Floor Price.

         (b) Conversion by the Company.  Subject to the provision for adjustment
set forth in this  Section 8 and subject to paragraph  (c) below,  each share of
the Series D Convertible  Preferred  Stock shall be convertible at the option of
the  Company  at any time after the Issue Date into a number of shares of Common
Stock equal to the then effective Conversion Ratio, provided that:

         (i)      the shares of Common Stock  issuable upon such  conversion may
                  be  sold  by  the  holder  (1)   pursuant   to  an   effective
                  registration  statement  filed  with the U.S.  Securities  and
                  Exchange  Commission or (2) without  registration  and without
                  any time, volume or manner limitations pursuant to Rule 144(k)
                  (or any similar provision then in effect) under the Securities
                  Act;

         (ii)     the  Closing  Bid  Prices  for  each  of the 22  Trading  Days
                  immediately preceding the date on which a conversion notice is
                  delivered  pursuant to paragraph  (e)(ii) of this Section 8 is
                  equal to or greater than 280% of the Fixed Conversion Price;
(iii)    unless  otherwise  agreed to in  writing  by the  holder,  the
                  number of shares of Common Stock issuable upon such conversion
                  is less  than or equal  to twice  the  average  daily  trading
                  volume of the Common Stock on the Principal  Market for the 22
                  Trading Day period  immediately  preceding the date on which a
                  conversion  notice is delivered  pursuant to paragraph (e)(ii)
                  of this Section 8;

         (iv)     at least 22 Trading Days have elapsed since any prior exercise
                  by the  holders  of Series D  Convertible  Preferred  Stock of
                  their  conversion  rights  pursuant to paragraph (a) above and
                  since any prior  exercise  by the  Company  of its  conversion
                  rights pursuant to this paragraph (b); and

         (v)      no shares of Common Stock  issuable upon  conversion of shares
                  of  Series  D  Convertible  Preferred  Stock  are or  shall be
                  subject to any shareholder agreements,  lock-up provisions, or
                  restrictions on transfer of any kind whatsoever.

         (c) Limitations on Conversion. At no time may the holders of the Series
D Convertible  Preferred  Stock or the Company  exercise any  conversion  rights
pursuant to this  Section 8 such that the number of shares of Common Stock to be
received  pursuant to such exercise  aggregated  with all other shares of Common
Stock owned by the Series D Convertible  Preferred Stock holder  beneficially or
deemed  beneficially  owned (as such term is  defined  in Rule  13(d)  under the
Exchange  Act) by the  Series  D  Convertible  Preferred  Stock  holder  and its
affiliates  would result in any Series D Convertible  Preferred Stock holder and
its  affiliates  owning  more  than  9.9% of all such  Common  Stock as would be
outstanding  immediately after conversion on the applicable  Conversion Date, as
determined in accordance with Section 13(d) of the Exchange Act.

         (d)  Reservation  of Stock.  The Company shall at all times reserve and
keep  available  for  issuance  upon the  conversion  of  Series  D  Convertible
Preferred Stock,  free from any preemptive rights or any other actual contingent
purchase  rights of  persons  other  than the  holders  of Series D  Convertible
Preferred Stock,  such number of shares of its authorized but unissued shares of
Common Stock as will from time to time be necessary to permit the  conversion of
all outstanding  shares of Series D Convertible  Preferred Stock,  together with
all accrued but unpaid dividends thereon, into shares of Common Stock, and shall
take all action  required to increase the authorized  number of shares of Common
Stock if necessary to permit the conversion of all outstanding  shares of Series
D Convertible  Preferred Stock. The Company  covenants that all shares of Common
Stock  that  shall  be so  issuable  shall,  upon  issue,  be duly  and  validly
authorized, fully paid, nonassessable and freely tradeable.

         (e) Mechanics of Conversion.

         (i)      Conversion  by the Holder.  Conversion of Series D Convertible
                  Preferred  Stock may be  effected  by any  holder  thereof  by
                  delivery  of a  written  notice  in a  form  agreed  to by the
                  Company  and the  holders  of Series D  Convertible  Preferred
                  Stock.  Such  conversion  notice  shall state that such holder
                  elects to convert all or a specified  portion of such Series D
                  Convertible Preferred Stock in accordance with this Section 8,
                  and  shall  specify  the name or names  in which  such  holder
                  wishes the  certificate or  certificates  for shares of Common
                  Stock to be issued and the address or  addresses to which such
                  holder wishes such  certificate(s)  to be delivered.  Any such
                  conversion   notice  may  be  delivered  to  the  Company  via
                  facsimile.  Within one Trading Day of receipt of a  conversion
                  notice  the
Company  will  deliver  written  acknowledgement  thereof  via
                  facsimile  to the  holders of Series D  Convertible  Preferred
                  Stock so  electing to convert  shares of Series D  Convertible
                  Preferred  Stock,  and the Company  shall  specify  whether it
                  chooses to exercise its option to refuse  conversion  pursuant
                  to and subject to the  provisions of Section 8(a). As promptly
                  as practicable after the delivery of a conversion  notice, the
                  holder  electing  to  convert  shares of Series D  Convertible
                  Preferred   Stock  shall  surrender  to  the  Company  at  the
                  principal  place  of  business  of  the  Company  certificates
                  representing  Series  D  Convertible  Preferred  Stock  to  be
                  converted.

         (ii)     Conversion  by  the  Company.  Subject  to the  provisions  of
                  paragraph  (b) of this  Section  8,  Conversion  of  Series  D
                  Convertible  Preferred Stock may be effected by the Company by
                  delivery  of a  written  notice  in a  form  agreed  to by the
                  Company  and the  holders  of Series D  Convertible  Preferred
                  Stock.  Any such  notice may be  delivered  to the  holders of
                  Series D Convertible  Preferred Stock via facsimile,  and upon
                  receipt  of  such  notice  the  holder  will  deliver  written
                  acknowledgement  thereof  via  facsimile  to the  Company.  As
                  promptly as  practicable  after the  delivery of a  conversion
                  notice,   each  holder  of  shares  of  Series  D  Convertible
                  Preferred   Stock  shall  surrender  to  the  Company  at  the
                  principal  place  of  business  of  the  Company  certificates
                  representing  Series  D  Convertible  Preferred  Stock  to  be
                  converted.

         (iii)    Taxes. The Company shall pay any and all issue and
                  transfer taxes that may be payable in respect of any issuance
                  and/or delivery of shares of Common Stock upon the conversion
                  of Series D Convertible Preferred Stock pursuant hereto.

         (iv)     Delivery. As promptly as practicable,  and in any event within
                  three  Trading Days after the  surrender of such  certificates
                  representing Series D Convertible Preferred Stock, the Company
                  shall  deliver or cause to be delivered to the address  stated
                  in the conversion notice or to any other address designated in
                  writing and  provided to the Company by the holder of Series D
                  Convertible  Preferred Stock (i)  certificate(s)  representing
                  the number of  validly  issued,  fully paid and  nonassessable
                  shares  of  Common  Stock  to which  the  holder  of  Series D
                  Convertible  Preferred Stock being converted shall be entitled
                  and (ii) if less  than all of the  shares  represented  by the
                  surrendered   certificate(s)   are  being  converted,   a  new
                  certificate  representing  the  number  of  shares of Series D
                  Convertible Preferred Stock which remain outstanding upon such
                  partial  conversion.  Subject to Section 8(e)(v) hereof,  such
                  conversion  shall be  deemed to have been made at the close of
                  business on the applicable  Conversion Date so that the rights
                  of the  holder  thereof as to Series D  Convertible  Preferred
                  Stock  being  converted  shall  cease  except for the right to
                  receive shares of Common Stock in accordance herewith, and the
                  persons  entitled to receive  shares of Common  Stock shall be
                  treated for all purposes as having become the record holder of
                  such shares of Common Stock at such time.

         (v)      Failure  to  Deliver  Certificates.  If the  Company  fails to
                  deliver   Common  Stock   certificate(s)   to  the  holder  in
                  accordance  with  Section  8(e)(iv)  on or prior to the  tenth
                  Trading  Day  after  the  applicable   Conversion   Date  (the
                  "Delivery  Failure Date"),  then:

         a.  Dividends as  described  in Section 5, will become  payable and the
Company shall, within seven Trading Days after the Delivery Failure Date, pay to
each holder all such  accrued but unpaid  dividends  on all of the shares of the
Series D  Convertible  Preferred  Stock,  other than such shares which have been
timely converted or redeemed in accordance with the provisions herein;
b. Upon notice  provided by the holder to the Company by facsimile (the
"Forced  Redemption  Notice")  that it requires the Company to redeem  shares of
Series D  Convertible  Preferred  Stock,  the Company  shall  redeem such number
shares as requested by the holder in the Forced Redemption Notice,  within seven
Trading  Days of  such  Forced  Redemption  Notice,  by  paying  in  immediately
available  funds the Forced  Redemption  Price (as defined  below).  The "Forced
Redemption  Price"  shall be equal to the product of (x) the number of shares of
Series D  Convertible  Preferred  Stock being  redeemed by such holder,  (y) the
average  Closing Bid Price of the  Company's  Common  Stock for the five Trading
Days  immediately  preceding the Conversion  Date and (z) the  Conversion  Ratio
calculated  on the  Conversion  Date. If the Company fails for any reason to pay
the Forced  Redemption  Price  within such time  period,  the Company  shall pay
liquidated  damages on the Forced  Redemption Price at a rate of 2% per month in
immediately  available  funds to such holder,  accruing from such due date until
the Forced Redemption Price and any accrued  liquidated damages thereon are paid
in full;

         c.  In  the  event  that  the  holder  purchases  (in  an  open  market
transaction or otherwise)  shares of Common Stock to deliver to the satisfaction
of a sale by such  holder of the  shares  underlying  the  Series D  Convertible
Preferred  Stock that the holder  anticipated  receiving upon such conversion on
the  Conversion  Date (a  "Conversion  Buy-In"),  the holder  shall  provide the
Company written notice indicating the holder's  calculation of the Buy-In Amount
(as defined  below) in respect of the Conversion  Buy-In (the "Buy-In  Notice").
Within seven Trading Days of the Buy-In Notice, the Company shall pay the Buy-In
Amount (as such term is defined below) in immediately  available funds. The term
"Buy-In  Amount"  shall be equal to the amount by which (x) the  holder's  total
purchase  price  (including  brokerage  commissions,  if any) for the  shares of
Common  Stock  purchased  for a  Conversion  Buy-In  exceeds  (y) the  aggregate
Conversion  Price for the  number of  shares of Common  Stock in the  Conversion
Buy-In  for which  such  conversion  was not timely  honored.  For  illustration
purposes  only,  if the holder  purchases  shares of Common Stock having a total
purchase  price of  $11,000  to cover a  Conversion  Buy-In  with  respect to an
attempted  conversion of $10,000  aggregate  Conversion  Price for the number of
shares of Common Stock in the Conversion  Buy-In,  the Company shall be required
to pay the holder $1,000.  If the Company fails for any reason to pay the Buy-In
Amount within such time period,  the Company shall pay liquidated damages on the
Buy-In Amount at a rate of 2% per month in immediately  available  funds to such
holder,  accruing from the day following the date of the Buy-In Notice until the
Buy-In Amount and any accrued liquidated damages thereon are paid in full; and .

         d. Nothing herein shall limit a holder's right to pursue actual damages
for the Company's failure to deliver certificates  representing shares of Common
Stock upon conversion  within the period  specified  herein  including,  without
limitation,  damages  relating to any Conversion  Buy-In,  and such holder shall
have the  right to  pursue  all  remedies  available  to it at law or in  equity
(including,   without  limitation,  a  decree  of  specific  performance  and/or
injunctive relief).

         (f) Adjustments.

           (i)  Subdivision or Combination of Shares;  Stock  Dividends.  In the
event of any  change in the number of issued  and  outstanding  shares of Common
Stock of the Company by reason of any stock split, stock dividend,  subdivision,
or  combination  of  shares,  or any other  change in the  corporate  or capital
structure of the Company  which is effected in such a manner that the holders of
Common  Stock are  entitled  to  receive  (either  directly  or upon  subsequent
liquidation)  shares of stock, other securities,  money or property with respect
to Common Stock (each such event, a "Diluting Event"), then the Conversion Price
and Fixed  Conversion  Price in effect on the  effective  date thereof  shall be
adjusted to that price  determined by multiplying  each of the Conversion  Price
and Fixed Conversion Price in effect immediately prior to such Diluting Event by
a fraction (A) the  numerator of which shall be the total number of  outstanding
shares of Common Stock of the Company  immediately  prior to such Diluting Event
and (B) the denominator of which shall be the total number of outstanding shares
of Common  Stock of the  Company  immediately  after such  Diluting  Event.  Any
adjustment  made  pursuant  to this  subparagraph  (i)  shall  become  effective
immediately  as of the effective  date of such Diluting Event or, if the Company
shall  take a record of  holders  of its  Common  Stock for the  purpose of such
Diluting Event, as of such record date, whichever is earlier;  provided, that if
the Company shall set such a record date,  and before the effective date of such
Diluting Event,  legally abandon its plan to effect such Diluting Event, then no
adjustment  in the  Conversion  Price or Fixed  Conversion  Price then in effect
shall be made by reason of the taking of such  record,  and any such  adjustment
previously made as a result of the taking of such record shall be reversed.

           (ii) Reorganization,  Reclassification,  Merger or Sale. In the event
the Company  effects  any  recapitalization,  reorganization,  reclassification,
consolidation,  spin-off,  distribution,  conversion or exchange of shares,  any
merger or sale of all or substantially  all of the Company's assets or any other
change in the corporate or capital structure of the Company,  in each case which
is effected in such a manner  that the holders of Common  Stock are  entitled to
receive (either directly or upon subsequent  liquidation) shares of stock, other
securities,  money or property  with  respect to or in exchange for Common Stock
(each such event, an "Organic  Change"),  then the holders of shares of Series D
Convertible  Preferred Stock shall have the right to receive the kind and amount
of shares of stock,  other  securities,  money or property  receivable upon such
Organic  Change,  had the  holder  converted  shares  of  Series  D  Convertible
Preferred  Stock  immediately  prior to such  Organic  Change or the record date
therefor,  and an appropriate  provision for the foregoing  shall be made by the
Company as part of any such Organic Change.  An adjustment made pursuant to this
subparagraph  (ii) shall  become  effective  at the close of business on the day
upon which  such  Organic  Change  becomes  effective.  The  provisions  of this
subparagraph  (ii) shall not apply to any event for which an  adjustment is made
pursuant  to  subparagraph  (i) above,  unless the  holders of Common  Stock are
entitled to an adjustment  pursuant to both  subparagraph (i) and (ii), in which
case an adjustment shall be made pursuant to both subparagraph (i) and (ii) with
respect to outstanding shares of Series D Convertible Preferred Stock.

           (g) Fractional  Shares. No fractional shares of Common Stock shall be
issued upon conversion of shares of the Series D Convertible Preferred Stock. If
any  conversion  of any shares of Series D  Convertible  Preferred  Stock  would
create a  fractional  share of Common  Stock,  such  fractional  share  shall be
disregarded  and the number of shares of Common Stock  issuable upon  conversion
shall be the next higher whole number of shares.
9. Notice of Adjustment.  Upon any  adjustment of the  Conversion  Price and the
Conversion  Ratio then in effect  pursuant to the provisions of Section 8, then,
and in each such case, the Company shall promptly deliver to each of the holders
of  Series D  Convertible  Preferred  Stock a  certificate  signed  by the Chief
Executive Officer or the Chief Financial Officer of the Company setting forth in
reasonable  detail the event requiring the adjustment,  the method by which such
adjustment was calculated and the Conversion  Price and Conversion Ratio then in
effect following such adjustment. Where appropriate,  such notice to the holders
of Series D Convertible Preferred Stock may be given in advance.

10. Notices. All notices,  demands,  requests,  consents,  approvals,  and other
communications  required or permitted  hereunder shall be in writing and, unless
otherwise  specified herein,  shall be (i) personally served,  (ii) deposited in
the mail,  registered or certified,  return receipt requested,  postage prepaid,
(iii) delivered by reputable air courier service with charges  prepaid,  or (iv)
transmitted by hand  delivery,  telegram,  or facsimile,  addressed as set forth
below or to such other address as such party shall have  specified most recently
by  written   notice  given  in  accordance   herewith.   Any  notice  or  other
communication  required  or  permitted  to be given  hereunder  shall be  deemed
effective  (a) upon hand  delivery or delivery  by  facsimile  at the address or
number  designated  below (if delivered on a business day during normal business
hours where such notice is to be received),  or the first business day following
such delivery (if delivered  other than on a business day during normal business
hours  where such notice is to be  received)  or (b) on the third  business  day
following  the date of  mailing  by  express  courier  service,  fully  prepaid,
addressed to such address,  or upon actual  receipt of such  mailing,  whichever
shall first occur.  The  addresses for such  communications  shall be: if to the
Company to its  offices at 255  Consumers  Road,  Suite 500,  Toronto,  Ontario,
Canada M2J 1R4, Attention: T. Scott Worthington,  Facsimile: (416) 502-2968 with
a copy to Foley,  Hoag & Eliot LLP at One Post Office Square,  Boston, MA 02109,
Attention:  David Broadwin, Esq., Facsimile:  (617) 832-7000, and if to a holder
of Series D  Convertible  Preferred  Stock,  to such  holder at the  address  or
facsimile  number of such  holder as  listed  in the stock  record  books of the
Company,  or to such other address as the Company or the holder, as the case may
be, shall have designated upon ten day's prior written notice similarly given.

FURTHER RESOLVED: That all actions taken and transactions entered into by the
Company and its officers, directors, stockholders and duly authorized agents on
its behalf, and any act or failure to act concerning all matters referred to in
the foregoing resolutions, are hereby ratified, confirmed and approved in all
respects.

FURTHER RESOLVED: That the officers of the Company be, and each of them hereby
is, authorized, empowered and directed, on behalf of the Company and in its
name, to take all actions necessary or advisable to carry out the intent and the
purposes of the foregoing resolutions, to execute and deliver any and all
certificates, agreements and other documents and take all such further action
that they, or any of them, may deem necessary, advisable or appropriate in order
to effectuate the intent and accomplish the purposes of the foregoing
resolutions.
FURTHER RESOLVED: That this Consent to the adoption of the foregoing resolutions
may be executed in  counterparts,  all of which taken together shall  constitute
but one and the same original.

FURTHER RESOLVED: That the authority given in these resolutions is retroactive
and any and all acts authorized herein performed before the passage of these
resolutions are hereby ratified and affirmed.

Each of the Directors, by his signature below, hereby:

Waives  written notice of the time,  place and purposes of a Special  Meeting of
the Directors of the Company;

     Consents to the transaction of the business set forth herein;

Affirms that he has read the foregoing resolutions; and

Approves, adopts and ratifies the resolutions and all acts taken or authorized
therein.

IN WITNESS WHEREOF, each of the undersigned has executed this Unanimous Written
Consent of the Directors to Actions Taken Without a Meeting to be effective as
of the 18th day of May, 2001.

                                            DIRECTORS:

                                           /s/ D. Bruce Sinclair
                                            -------------------------
                                               D. Bruce Sinclair

                                           /s/ Gerry Chastelet
                                            -----------------------
                                               Gerry Chastelet

                                            /s/ Guthrie Stewart
                                            ----------------------
                                                Guthrie Stewart

                                            /s/ Dennis Wing
                                            ----------------------
                                                Dennis Wing

                                            /s/ John Curry
                                            -----------------
                                                John Curry

                                            /s/ Cameron A. Mingay
                                            ------------------------
                                                Cameron A. Mingay