Exhibit 10.1

 

WAVE SYSTEMS CORP.
480 Pleasant Street
Lee, Massachusetts 01238

 

LETTER AGREEMENT

 

September 4, 2003

 

To the undersigned holder of the Preferred Shares
issued pursuant to the Purchase Agreement
(as defined below) and the undersigned holder of
a Warrant (as defined in the Purchase Agreement)

 

Gentlemen:

 

We refer to the Series H Convertible Preferred Stock Purchase Agreement, dated
as of April 30, 2003, as amended (as amended, the “Purchase Agreement”), among
Wave Systems Corp. (the “Company”) and the purchasers listed on Exhibit A
thereto.  Unless otherwise defined herein, the terms defined in the Purchase
Agreement shall be used herein as therein defined.

 

Upon the effectiveness of this letter agreement as set forth below, the Company
and the undersigned purchaser agree as follows:

 

(A)          THE UNDERSIGNED PURCHASER HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO
RECEIVE DIVIDENDS ACCRUED AND ACCRUING UNDER SECTION 2 OF THE CERTIFICATE OF
DESIGNATION IN RESPECT OF THE PREFERRED SHARES HELD BY THE UNDERSIGNED
PURCHASER.

 

(B)         ON OR PRIOR TO SEPTEMBER 12, 2003, THE UNDERSIGNED PURCHASER SHALL
CONVERT ALL OF HIS, HER OR ITS PREFERRED SHARES PURSUANT TO SECTION 5 OF THE
CERTIFICATE OF DESIGNATION.

 

(C)          THE TOTAL NUMBER OF WARRANT SHARES ISSUABLE UPON EXERCISE OF THE
WARRANT HELD BY THE UNDERSIGNED PURCHASER SHALL BE REDUCED BY SUCH PURCHASER’S
PRO RATA SHARE OF 900,000 WARRANT SHARES.  THE TERM “PRO RATA SHARE” AS USED
HEREIN SHALL MEAN, FOR THE UNDERSIGNED PURCHASER, THE PERCENTAGE OBTAINED BY
DIVIDING (X) THE TOTAL NUMBER OF PREFERRED SHARES PURCHASED BY SUCH PURCHASER AT
THE CLOSING BY (Y) THE TOTAL NUMBER OF PREFERRED SHARES AND THE OTHER PREFERRED
SHARES PURCHASED BY ALL PURCHASERS WHO EXECUTE AND RETURN A LETTER AGREEMENT
SUBSTANTIALLY IDENTICAL IN FORM TO THIS LETTER AGREEMENT.

 

(D)         ON OR PRIOR TO SEPTEMBER 12, 2003, THE UNDERSIGNED PURCHASER WILL
EXERCISE ITS WARRANT IN FULL PURSUANT TO SECTION 2 THEREOF AND PAY THE
CONSIDERATION

 

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THEREFOR BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS IN ACCORDANCE WITH THE
WIRE INSTRUCTIONS SET FORTH BELOW.

 

(E)          THE DEFINITION OF “WARRANT PRICE” IN SECTION 9 OF THE UNDERSIGNED
PURCHASER’S WARRANT SHALL BE AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:

 

“‘Warrant Price’ means $1.00.”

 

Except as expressly provided herein, no term or provision of the Transaction
Documents shall be amended or otherwise modified, and each term or provision of
the Transaction Documents shall remain in full force and effect.

 

If you agree to the terms and provisions hereof, please evidence such agreement
by executing and returning this letter agreement and the attached waiver via
facsimile to Wave Systems Corp., at (413) 243-0391, Attention to Gerard T.
Feeney.

 

This letter amendment shall become effective as of the date first above written
if, and only if, on or before Friday, September 12, 2003, the Company shall have
received (i) counterparts of this letter agreement in substantially identical
form executed by the Company, the undersigned purchaser and (a) the holders of
at least three-fourths (3/4) of the aggregate number of Preferred Shares and
Other Preferred Shares outstanding (less the aggregate number of Preferred
Shares held by the undersigned purchaser) (the “Other Required Preferred
Holders”) and (b) the holders of Warrants and the Other Warrant exercisable for
at least three-fourths (3/4) of the aggregate number of shares of Warrant Stock
(as defined in the Warrants) issuable under the Warrants and the Other Warrant
(less the aggregate number of shares of Warrant Stock issuable upon exercise of
the Warrant held by the undersigned purchaser) (the “Other Required Warrant
Holders”); (ii) counterparts of the attached waiver executed by the Company, the
undersigned purchaser and the same Other Required Preferred Holders and the
Other Required Warrant Holders who executed counterparts of this letter
agreement in substantially identical form; (iii) the attached Conversion Notice
executed by the undersigned purchaser; (iv) the attached Exercise Form executed
by the undersigned purchaser; (v) original stock certificate representing the
Preferred Shares held by the undersigned purchaser (the “Stock Certificate”);
(vi) the original Warrant held by the undersigned purchaser (the “Warrant
Certificate”); and (vii)  payment in full of the exercise price for all of the
shares of Warrant Stock issuable upon exercise of the undersigned purchaser’s
Warrant (as adjusted hereby).

 

The Conversion Notice, the Exercise Form, the Stock Certificate and the Warrant
Certificate should be delivered via overnight courier to the Company, c/o
Bingham McCutchen LLP, at 399 Park Avenue, New York New York 10022, Attention to
Matthew McMurdo.  The Company shall inform the undersigned purchaser on
Wednesday, September 10, 2003 of the adjusted amount of shares of Warrant Stock
issuable upon exercise of the undersigned purchaser’s Warrant and the cost
thereof.

 

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Payment for the Warrant Stock shall be made by Friday, September 12, 2003 via
wire transfer to the following:

 

Wave Systems Corp.

Bank ABA/Routing #:  021001088

Account #:  610185055

 

HSBC Bank

452 Fifth Avenue

New York, NY  10018

 

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This letter agreement may be executed in any number of counterparts and by any
combination of the parties hereto in separate counterparts (including by
facsimile), each of which counterparts shall be an original and all of which
taken together shall constitute one and the same letter amendment.

 

 

 

Very truly yours,

 

 

 

WAVE SYSTEMS CORP.

 

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

Agreed as of the date
first above written:

 

 

 

 

 

PURCHASER:

 

 

 

 

 

 

 

 

 

 

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