Exhibit 10.1

 

SUBSCRIPTION AGREEMENT

 

 

December 18, 2013

 

Wave Systems Corp.

480 Pleasant Street

Lee, MA 01238

 

The undersigned (the “Investor”) hereby confirms its agreement with you as
follows:

 

1.                                      This Subscription Agreement (this
“Agreement”) is made as of the date set forth below between Wave Systems Corp.,
a Delaware corporation (the “Company”), and the Investor.

 

2.                                      The Company has authorized the sale and
issuance to certain investors of (a) up to                                   
shares of Class A Common Stock (the “Total Shares”), par value $0.01 per share
(the “Common Stock”) for a purchase price of $0.9725 per share (the “Purchase
Price”) and (b) warrants, in substantially the form attached hereto as Annex II
(the “Warrants” and, collectively with the Total Shares, the “Securities”), to
purchase up to                            shares of Common Stock at an exercise
price of $.91 per share (the “Exercise Price”).

 

3.                                      The offering and sale of the Securities
(the “Offering”) are being made pursuant to the Company’s registration statement
including a base prospectus (the “U.S. Base Prospectus”) on Form S-3
(Registration No. 333-190539) filed with the United States Securities and
Exchange Commission (the “Commission”) (which, together with all amendments or
supplements thereto is referred to herein as the “Registration Statement”) and a
Prospectus Supplement containing certain supplemental information regarding the
Securities and terms of the Offering that will be filed with the Commission (the
“Prospectus Supplement”).

 

4.                                      The Company and the Investor agree that
the Investor will purchase from the Company and the Company will issue and sell
to the Investor, for the aggregate purchase price set forth below, (a) the
number of shares of Common Stock set forth below (the “Investor Shares”) and
(b) a Warrant to purchase the number of shares of Common Stock set forth below
(the “Investor Warrant” and, collectively with the Investor Shares, the
“Investor Securities”).  The Investor Securities shall be purchased pursuant to
the Terms and Conditions for Purchase of Securities attached hereto as Annex I
and incorporated herein by this reference as if fully set forth herein.

 

5.                                      The transaction for the purchase of the
Investor Shares with Security Research Associates, Inc. (“SRA”) will settle by
using the Deposit Withdrawal Agent Commission (“DWAC”) system of The Depository
Trust Company (“DTC”) Settlement via “DWAC”: the Company shall instruct the
Company’s transfer agent, American Stock Transfer & Trust Company, LLC (the
“Transfer Agent”) to deliver Investor Shares registered in the

 

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Investor’s name and address as set forth in Exhibit A (below) at the Closing.
The investor will need to instruct their representative at their broker to
receive the shares via DWAC.

 

6.                                      The Investor represents that, except as
set forth below, (a) it has had no position, office or other material
relationship within the past three years with the Company or any of its
affiliates and (b) it has no direct or indirect affiliation or association with
any member of the Financial Industry Regulatory Authority, Inc.  Exceptions:

 

                                                                                                                                                            

(If no exceptions, write “none.” If left blank, response will be deemed to be
“none.”)

 

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7.                                      The Investor acknowledges that, prior to
or in connection with the execution and delivery of this Agreement, it has
reviewed the final U.S. Base Prospectus, dated September 12, 2013, which is a
part of the Company’s Registration Statement, and the Prospectus Supplement. 
THIS AGREEMENT SHALL NOT CONSTITUTE A BINDING COMMITMENT ON THE PART OF THE
COMPANY UNTIL (A) THE COMPANY HAS TIMELY RECEIVED AN EXECUTED COPY OF THE
COMPLETED SUBSCRIPTION AGREEMENT FROM THE INVESTOR AND (B) THE COMPANY HAS
DELIVERED TO THE INVESTOR AN EXECUTED COUNTERPART SIGNATURE PAGE HERETO.  THE
INVESTOR ACKNOWLEDGES THAT, AT ANY TIME PRIOR TO THE DELIVERY OF ITS EXECUTED
COUNTERPART SIGNATURE PAGE, THE COMPANY MAY ELECT TO NOT ENTER INTO THIS
SUBSCRIPTION AGREEMENT FOR ANY REASON.

 

[Signature page follows]

 

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SIGNATURE PAGE

Please fax this page to SRA at 866-592-8132 or email a scanned PDF

 

Number of Investor Shares:                        

 

Shares issuable upon exercise of Warrant              

 

Shares issuable upon exercise of Investor Warrant

(      % No. of Investor Shares, Exercise Price of $         per share)

 

Purchase Price Per Investor Share:    $                

 

Total Purchase Price:  $               

 

Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.

 

 

 

Dated as of:                     , 2013

 

 

 

 

 

 

 

 

 

 

 

INVESTOR

 

 

 

 

 

By:

 

 

 

Print Name:

 

 

 

Title:

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

Phone #:

 

 

 

Email:

 

 

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Agreed and Accepted

 

 

                      , 2013:

 

 

 

 

 

WAVE SYSTEMS CORP.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

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EXHIBIT A

Please fax this page to SRA at 866-592-8132 or email a scanned PDF

 

Wave Systems Corp.

 

INVESTOR QUESTIONNAIRE

 

Pursuant to Section 3 of Annex I to this Agreement, please provide us with the
following information:

 

1.

The exact name that your Investor Shares and Warrant are to be registered in.
You may use a nominee name if appropriate:

 

 

 

 

 

 

2.

The relationship between the Investor and the registered holder listed in
response to item 1 above:

 

 

 

 

 

 

3.

The mailing address of the registered holder listed in response to item 1 above:

 

 

 

 

 

 

4.

The Social Security Number or Tax Identification Number of the registered holder
listed in response to item 1 above:

 

 

 

DWAC Settlement Details: The settlement and transfer of common shares will be
via DWAC - please include the following additional information:

 

1.

Name of DTC Participant (broker-dealer at which the account or accounts to be
credited with the Shares are maintained)

 

 

 

 

 

 

2.

DTC Participant Number

 

 

 

 

 

 

3.

Name of Account at DTC Participant being credited with the Shares

 

 

 

 

 

 

4.

Account Number at DTC Participant being credited with the Shares

 

 

 

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ANNEX I

 

TERMS AND CONDITIONS FOR PURCHASE OF SECURITIES

 

All capitalized terms not otherwise defined in this Annex I shall have the
meanings ascribed thereto in the Subscription Agreement to which this Annex I is
attached.

 

1.                                      Authorization and Sale of the Investor
Securities.  Subject to the terms and conditions of this Agreement, the Company
has authorized the sale of the Investor Securities.

 

2.                                      Agreement to Sell and Purchase the
Investor Securities; Placement Agents.

 

2.1.                            At the Closing (as defined in Section 3.1
below), the Company will sell to the Investor, and the Investor will purchase
from the Company, upon the terms and conditions set forth herein, the number of
Investor Shares and corresponding Warrant set forth on the last page of the
Subscription Agreement to which these Terms and Conditions for Purchase of
Securities are attached as Annex I (the “Signature Page”) for the aggregate
purchase price set forth on the Signature Page.

 

2.2.                            The Company proposes to enter into substantially
the same form of Subscription Agreement with certain other investors (the “Other
Investors”) and expects to complete sales of some or all of the remaining
Securities to them as part of the Offering (subject to Section 3.2(b) below). 
The Investor and the Other Investors are hereinafter sometimes collectively
referred to as the “Investors”.  The Company may complete sales of the remaining
Securities in the Offering to certain of the Other Investors without requiring
such Other Investors to enter into a Subscription Agreement; such sales shall
nevertheless be on the same price terms as the price terms for all of the other
sales in the Offering.

 

2.3.                            The Investor acknowledges that the Company
intends to pay SRA (the “Placement Agent”) a fee (the “Placement Fee”) in
respect of the sale of the Securities to the Investor pursuant to a Placement
Agency Agreement (the “Placement Agreement”) with the Placement Agent.  A copy
of the Placement Agreement is available to the Investor upon request.

 

3.                                      Closings and Delivery of the Securities
and Funds.

 

3.1.                            Closing.  The completion of the purchase and
sale of the Securities (the “Closing”) will occur on or before                  
          , 2013 (the “Closing Date”).  At the Closing and in accordance with
Section 5 of the Subscription Agreement: (a) the Company will cause the Transfer
Agent to deliver to the Investor the number of Investor Shares set forth on the
Signature Page registered in the name of the Investor or, if so indicated on the
Investor Questionnaire attached to the Subscription Agreement as Exhibit A, in
the name of a nominee designated by the Investor; (b) the Company will deliver
(by overnight courier) a Warrant to purchase the number of shares of Common
Stock set forth on the Signature Page registered in the name of the Investor or,
if so indicated on the Investor Questionnaire attached to the Subscription
Agreement as Exhibit A, in the name of a nominee designated by the Investor; and
(c) the aggregate purchase price for the Investor Securities being purchased by
the Investor will be paid by or on behalf of the Investor to the Company in the
manner set forth in Section 3.3 below.

 

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3.2.                            (a)                                 Conditions
to the Company’s Obligations.  The Company’s obligation to issue the Investor
Securities to the Investor will be subject to (a) the receipt by the Company of
the aggregate purchase price for the Investor Securities being purchased
hereunder as set forth on the Signature Page, (b) the accuracy of the
representations and warranties made by the Investor in this Agreement, (c) the
fulfillment of those undertakings of the Investor to be fulfilled on or prior to
the Closing Date, (d) the Registration Statement remaining in effect and no stop
order proceedings with respect thereto being pending or threatened, and (e)
there being no objections raised by the staff of the NASDAQ Stock Market to the
consummation of the sale without the approval of the Company’s stockholders.

 

(b)                                 Conditions to the Investor’s Obligations. 
The Investor’s obligation to purchase the Investor Securities will be subject to
the fulfillment of those undertakings of the Company with respect to the
Investor Securities and/or the Investor to be fulfilled on or prior to the
Closing Date.  The Investor’s obligations are expressly not conditioned on the
purchase by any or all of the Other Investors of the remaining Securities that
they have agreed to purchase from the Company.

 

3.3.                            Delivery of Funds; Delivery of Investor Shares.

 

(a)                                 Subject to all of the provisions set forth
in Section 5 of the Subscription Agreement settlement of the Investor Securities
purchased by such Investor will be by means of the DWAC system of DTC.  The
Investor shall (i) pay to the Company by wire transfer of immediately available
funds to the account set forth on Annex III hereto the aggregate purchase price
for the Investor Shares being purchased by the Investor hereunder and (ii)
direct the broker-dealer at which the account or accounts to be credited with
the Investor Shares being purchased by such Investor are maintained, which
broker/dealer shall be a DTC participant, to set up a DWAC instructing the
Transfer Agent to credit such account or accounts with the Investor Shares by
means of an electronic book-entry delivery.  Promptly following the delivery to
the Company of the purchase price for the Investor Securities as described
herein, the Company shall direct its transfer agent to credit the Investor’s
account or accounts with the Investor Shares pursuant to the information
contained in the DWAC.

 

4.                                      Representations, Warranties and
Covenants of the Investor.

 

4.1.

 

(a)                                 The Investor represents and warrants to, and
covenants with, the Company that: (a) the Investor is knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to, investments in shares presenting an investment decision like that
involved in the purchase of the Investor Securities, including investments in
securities issued by the Company and investments in comparable companies, and
has requested, received, reviewed and considered all information it deemed
relevant in making an informed decision to purchase the Investor Securities; (b)
the Investor has answered all questions on the Signature Page for use in the
Prospectus Supplement and the answers thereto are true and correct as of the
date hereof and will be true and correct as of the Closing Date; and (c) the
Investor, in connection with its decision to purchase the number of Investor
Securities set forth on the

 

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Signature Page, is relying only upon the U.S. Base Prospectus, the Prospectus
Supplement and the documents incorporated by reference therein.

 

(b)                                 The Investor acknowledges, represents and
agrees that no action has been or will be taken in any jurisdiction outside the
United States by the Company or the Placement Agent that would permit an
offering of the Investor Securities, or possession or distribution of offering
materials in connection with the issue of the Investor Securities, in any
jurisdiction outside the United States where action for that purpose is
required.  The Investor, if outside the United States, will comply with all
applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers Investor Securities or has in its
possession or distributes any offering material, in all cases at its own
expense.  The Placement Agent is not authorized to make and has not made any
representation or use of any information in connection with the issue,
placement, purchase and sale of the Investor Securities, except as set forth or
incorporated by reference in the U.S. Base Prospectus or the Prospectus
Supplement.

 

(c)                                  The Investor further represents and
warrants to, and covenants with, the Company that: (a) the Investor has full
right, power, authority and capacity to enter into this Agreement and to
consummate the transactions contemplated hereby and has taken all necessary
action to authorize the execution, delivery and performance of this Agreement;
and (b) this Agreement constitutes a valid and binding obligation of the
Investor enforceable against the Investor in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

 

(d)                                 The Investor understands that nothing in
this Agreement or any other materials presented to the Investor in connection
with the purchase and sale of the Investor Securities constitutes legal, tax or
investment advice.  The Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of Investor Securities.

 

(e)                                  The Investor acknowledges that the shares
of Common Stock acquired upon the exercise of the Investor Warrant, if not
registered, will have restrictions on resale imposed by state and federal
securities laws.

 

(f)                                   The Investor represents, warrants and
agrees that, since the earlier to occur of (i) the date on which the Placement
Agent first contacted the Investor about the Offering and (ii) the date that is
the tenth (10th) trading day prior to the date of this Agreement, it has not
directly or indirectly (a) engaged in any short selling, (b) established or
increased any “put equivalent position” as defined in Rule 16(a)-1(h) under the
Securities Exchange Act of 1934, as amended, or (c) granted any option for the
purchase of or entered into any hedging or similar transaction with the same
economic effect as a short sale, in each case with respect to the Company’s
securities.

 

5.                                      Survival of Representations, Warranties
and Agreements.  Notwithstanding any investigation made by any party to this
Agreement, all covenants, agreements,

 

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representations and warranties made by the Company and the Investor herein will
survive the execution of this Agreement, the delivery to the Investor of the
Investor Securities being purchased and the payment therefor.

 

6.                                      Notices.  All notices, requests,
consents and other communications hereunder will be in writing, will be mailed
(a) if within the domestic United States by first-class registered or certified
airmail, or nationally recognized overnight express courier, postage prepaid, or
by facsimile or (b) if delivered from outside the United States, by
International Federal Express or facsimile, and will be deemed given (i) if
delivered by first-class registered or certified mail domestic, three business
days after so mailed, (ii) if delivered by nationally recognized overnight
carrier, one business day after so mailed, (iii) if delivered by International
Federal Express, two business days after so mailed, and (iv) if delivered by
facsimile, upon electronic confirmation of receipt and will be delivered and
addressed as follows:

 

(a)                                 if to the Company, to:

 

Wave Systems Corp.

480 Pleasant Street

Lee, MA 01238

Fax: (413) 243-0391

Attn:  Gerard Feeney, CFO

 

with copies to:

 

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, NY 10019

Fax: (212) 728-9272

Attn:  Neil W. Townsend

David B. Cosgrove

 

(b)                                 if to the Investor, at its address on the
Signature Page hereto, or at such other address or addresses as may have been
furnished to the Company in writing.

 

7.                                      Changes.  This Agreement shall not be
modified or amended except pursuant to an instrument in writing signed by the
Company and the Investor.

 

8.                                      Headings.  The headings of the various
sections of this Agreement have been inserted for convenience of reference only
and will not be deemed to be part of this Agreement.

 

9.                                      Severability.  In case any provision
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein will not in any way be affected or impaired thereby.

 

10.                               Governing Law; Jurisdiction.  This Agreement
will be governed by, and construed in accordance with, the internal laws of the
State of New York, without giving effect to the principles of conflicts of law
that would require the application of the laws of any other jurisdiction.  Any
legal action, suit or proceeding arising out of or relating to this Agreement or

 

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the transactions contemplated hereby shall only be instituted, heard and
adjudicated (excluding appeals) only in a state or federal court located in New
York, and each party hereto knowingly, voluntarily and intentionally waives any
objection which such party may now or hereafter have to the laying of the venue
of any such action, suit or proceeding, and irrevocably submits to the exclusive
personal jurisdiction of any such court in any such action, suit or proceeding. 
Service of process in connection with any such action, suit or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement.

 

11.                               Counterparts.  This Agreement may be executed
in two or more counterparts, each of which will constitute an original, but all
of which, when taken together, will constitute but one instrument, and will
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.

 

12.                               Confirmation of Sale.  The Investor
acknowledges and agrees that such Investor’s receipt of the Company’s
counterpart to this Agreement shall constitute written confirmation of the
Company’s sale of Investor Securities to such Investor.

 

13.                               Entire Agreement.  This Agreement and the
Warrant constitutes the entire agreement between the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
understandings between such parties with respect to such subject matter.

 

14.                               No Assignment.  This Agreement shall not be
assigned by any party hereto without the express prior written consent of the
other party

 

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