Exhibit 10.2


 


SECURITY RESEARCH
ASSOCIATES, INC.


 


May 23, 2008


 


Gerard T. Feeney


Chief Financial
Officer


Wave Systems Corp.


480 Pleasant Street


Lee, MA 01238


 


Dear Mr. Feeney:


 


We are pleased to
confirm the arrangements under which Security Research Associates, Inc. (“SRA”)
is engaged by Wave Systems Corp. (the “Company”) as non-exclusive placement
agent on a “best-efforts” basis in connection with one or more equity financing
transactions to be completed by the Company (a “Financing”).  The term of this Agreement shall extend to May 30,
2008 (the “Term”).


 


During the term of
our engagement, we will provide you with assistance in connection with the
Financing, which may include performing valuation analyses and assisting you in
negotiating the financial aspects of the transaction.  During the term of our engagement, we will
also identify and contact potential investors for the Company (the “SRA
Investors”).


 


In the event the
Financing is consummated, the Company agrees to pay to SRA a transaction fee
(the “Transaction Fee”) consisting of (i) 6% (six percent) of the gross
proceeds from the Financing received by the Company at closing, and (ii) 18
month warrants to acquire a number of shares of the Company’s Common Shares
equal to 6% (six percent) of the aggregate gross proceeds from the Financing
received by the Company divided by the price per share of the Company’s
securities paid by all of the investors in the Financing received by the
Company at closing (the “SRA Warrants”). 
The warrants will not be exercisable for a period of 180 days following
the closing.  There will be no
Transaction Fees or Warrants issued to SRA on the exercise of Warrants by
Investors.


 


The SRA Warrants
issued to SRA pursuant to this agreement will have a “cashless exercise”
provision and will have an exercise price which will be the same as the price
of such warrants issued to the SRA Investors in the Financing and the
underlying shares will be fully registered and issued from the Company’s
shelf.  Notwithstanding the above to the
extent that the Company places its securities with SRA’s Investors, the Company
will provide the same rights to SRA with respect to the Warrants as the rights
granted by the Company to the SRA Investors.


 


The SRA Warrants
received by SRA from the Company pursuant to this agreement shall be subject to
a lock-up restriction which complies with NASD Conduct Rule 2710(g)(1).
The SRA warrants shall not be sold by SRA during the offering, or sold,
transferred, assigned, pledged, or hypothecated, or be the subject of any
hedging, short sale, derivative, put, or call transaction that would result in
the effective economic disposition of the securities by any person for a period
of 


 

















 


180 days immediately
following the date of effectiveness or commencement of sales of the public
offering of the Company’s stock, except as provided in NASD Conduct Rule 2710(g) (2).


 


If the Company, in
lieu of or in addition to a Financing or a Financing Commitment, enters into a
transaction, during the term of this Agreement or within 6 months of the
termination of this Agreement, pursuant to which the Company sells or licenses
to SRA Investors any of the Company’s divisions, business segments or material
assets, (“Asset Sale”) the Company will, so long as the Asset Sale occurs as a
result of SRA’s efforts, pay to SRA an Asset Sale Fee equal to two and a half
percent (2.5%) of the value attributable to the deal (the acquisition price).
The Asset Sale Fee shall be paid upon consummation of the transaction.  Upon the termination or expiration of this
Agreement, SRA and the Company shall agree to a list of SRA Investors
introduced to the Company by SRA pursuant hereto.


 


Subject to
applicable laws, rules and regulations, the Company agrees to provide all
information and documents reasonably required to permit the SRA Investors to
make an informed investment decision with respect to an investment in the
Company. Such information and documents shall be provided at the cost of the
Company.


 


The Company also
agrees to reimburse SRA periodically, upon request, or upon termination of our
services pursuant to this letter (the “Agreement”), for our reasonable and
reasonably documented out-of-pocket expenses, incurred in connection with our
financial advisory services and the Financing, including the reasonable fees
and expenses of legal counsel, travel expenses and printing. All such
out-of-pocket fees and expenses shall not exceed a combined aggregate amount of
$10,000.


 


Please note that any
written or oral opinion or advice provided by SRA in connection with our
engagement is exclusively for the information of the Board of Directors and
senior management of the Company, and may not be disclosed to any third party
(other than the Company’s legal, accounting or other advisors, who shall have
been instructed with respect to the confidentiality of such advice) or
circulated or referred to publicly without our prior written consent, except as
to the extent required by law, judicial or administrative process or regulatory
demand.


 


The Company or SRA
shall be entitled to terminate this Agreement before the end of the agreement
Term on written notice to the other party at the address set forth for such
party on the signature page hereof. 
In the event of the termination of this Agreement, SRA shall be entitled
to be paid its existing reasonable out-of-pocket expenses subject to the terms
described above.  The confidentiality
provisions of this Agreement shall be unaffected by the termination of this
agreement.  The Company shall not be
obligated to reimburse any expenses incurred by SRA or its advisors with
respect to activities undertaken after notification of termination is
given.  In the event this Agreement is
terminated and prior to the expiration of 6 (six) months from the date of such
termination, an agreement is entered into by the Company with respect to any
transaction contemplated by this agreement with any SRA Investors, SRA will be
entitled to the Transaction Fee set forth above, including transactions
involving the sale of the company, its divisions or its material assets.  Upon the termination or expiration of this
Agreement, SRA and the Company shall agree to a list of SRA Investors
introduced to the Company by SRA pursuant hereto.


 


SRA is an
independent contractor and placement agent of the Company. SRA will not have
any right or authority to bind the Company or otherwise create any obligations
of any kind on 


 


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behalf of the
Company and will make no representation to any third party to the contrary.


 


During the term of
this Agreement and thereafter, each of the Company and SRA agrees to keep
confidential and not disclose to any third party any confidential information
of the other party, and to use such confidential information only in connection
with the engagement hereunder; provided, however, the foregoing will not
prohibit disclosures (i) to the parties’ employees, agents and other
representatives to the extent necessary to enable the Company or SRA to perform
its responsibilities under this Agreement, (ii) to the extent required by
law, judicial or administrative process or regulatory demand, or (iii) with
respect to matters which become public other than by the actions of the
disclosing party hereunder. This section will survive the termination of this
Agreement for a period of five years.


 


Each of the Company
and SRA agrees that in connection with any Financing intended to qualify for
the exemption from the registration requirements of the Securities Act of 1933,
as amended (the “Act”), provided by Section 4(2) of the Act, the
Company and SRA shall limit offers to sell, and solicitations of offers to buy,
securities of the Company in connection with the Financing to persons
reasonably believed by it to be “qualified institutional buyers” as such term
is defined in Rule 144A under the Act or “accredited investors” as such
term is defined in Rule 501(a) of Regulation D promulgated under the
Act.


 


Each of the Company
and SRA agrees that any offers it makes in connection with the Financing will
be made only to prospective purchasers on an individual basis and that it will
not engage in any form of general solicitation or general advertising (within
the meaning of Rule 502 under the Act) in connection with the
Financing.  Each of the Company and SRA
agrees to conduct the Financing in a manner intended to comply with the
registration or qualification requirements, or available exemptions there from,
under applicable state “blue sky” laws and applicable securities laws of other
jurisdictions.


 


The Company may
decline to consummate the Financing with any prospective purchaser in the
Company’s sole discretion.


 


The Company agrees
to:


 


(a)           Indemnify and hold SRA harmless against any
and all losses, claims, damages or liabilities to which SRA may become subject arising
out of or in connection with any of the services rendered by SRA pursuant to
this Agreement, unless such losses, claims, damages or liabilities resulting
from the gross negligence or willful misconduct of SRA or a breach of this
agreement by SRA; and


 


(b)           Reimburse SRA periodically for reasonable
legal or other expenses incurred by SRA in connection with investigating,
preparing to defend or defending, or providing evidence in or preparing to
serve or serving as a witness with respect to, any lawsuits, investigations,
claims or other proceedings arising in any manner out of or in connection with
the rendering of services by SRA pursuant to this Agreement (including, without
limitation, in connection with the enforcement of this Agreement and the indemnification
obligations set forth herein); it being understood however that the Company
shall have no obligation to reimburse SRA for any such expenses and SRA shall
immediately repay any such reimbursements by the Company in the event any
losses, claims, damages or liabilities are finally judicially determined to
have resulted 


 


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from the gross
negligence or willful misconduct of SRA or a breach of this agreement by SRA.


 


The Company agrees
that the indemnification and reimbursement commitments set forth in this
document shall apply whether or not SRA is a formal party to any lawsuits,
arbitrations, claims or other proceedings and that such commitments shall
extend upon the terms set forth in this paragraph to any controlling person,
affiliate, director, officer, employee or agent of SRA (each, with SRA, an “Indemnified
Person”).  In the event an Indemnified
Person is made a formal party to a lawsuit, claim or other proceeding arising
out of or in connection with any of the services rendered by SRA pursuant to
this Agreement, and the Company takes over the defense of such action for an
Indemnified Person, the Company further agrees that it will not, without such
Indemnified Person’s prior written consent, which consent shall not be
unreasonably withheld, enter into any settlement of a lawsuit, claim or other
proceeding arising out of or in connection with the transaction unless such
settlement includes an express and unconditional release from the party bringing
the lawsuit, claim or other proceeding of all Indemnified Persons.  With respect to the immediately preceding
sentence, in the event an Indemnified Person reasonably withholds their consent
to a settlement, the Indemnified Person shall be responsible for all subsequent
costs and expenses arising out of the defense of the Indemnified Person.


 


The Company further
agrees that the Indemnified Persons are entitled to retain separate counsel of
their selection in connection with any of the matters in respect of which
indemnification, reimbursement or contribution may be sought under this
Agreement, provided that, in connection with any one action or proceeding, the
Company shall not be responsible for the fees and expenses of more than one
separate law firm or individual attorney in any one jurisdiction for all
Indemnified Persons.


 


Any dispute arising
out of this Agreement shall be resolved in an arbitration conducted pursuant to
the rules of the National Association of Securities Dealers, Inc. in
New York, NY.


 


Please confirm that
the foregoing is in accordance with your understanding by signing and returning
to us the enclosed copy of this Agreement, which shall become a binding
agreement upon our receipt. We are delighted to accept this engagement and look
forward to working with you on this assignment.


 


Very truly yours,


Brian G. Swift,
Chairman and CEO


 


Agreement Confirmed
by:


 


	
  Security Research Associates, Inc.

  	
  Wave Systems Corp.

  
	
  80 E. Sir Francis Drake Boulevard,
  Suite 3F

  	
  480 Pleasant Street

  
	
  Larkspur, CA 94939  Lee, MA 01238

  	
  Lee, MA 01238

  
	
   

  	
   

  
	
  By:

  	
  /s/ David N. Olson

  	
   

  	
  By:

  	
  /s/ Gerard T. Feeney

  
	
   

  	
  David N. Olson

  	
   

  	
  Mr. Gerard T. Feeney

  
	
   

  	
  Managing Director

  	
   

  	
  Chief Financial Officer

  
	
  Date: 5/23/08

  	
  Date: 5/23/08

  
					



 


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