Exhibit 10.1


 


SUBSCRIPTION
AGREEMENT


 


May 23, 2008


 


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 2,151,250 shares of Class A Common
Stock (the “Total Shares”), par value $0.01 per share (the “Common
Stock”) for a purchase price of $0.80 per share (the “Purchase Price”)
and (b) warrants, in substantially form attached hereto as Annex II (the “Warrants”
and, collectively with the Total Shares, the “Securities”), to purchase
up to 537,812 shares of Common Stock at an exercise price of $0.85 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. 333-141429) 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 A and incorporated herein by this
reference as if fully set forth herein.


 

















 


5.             The transaction for the purchase of the Investor
Shares will to settle via DVP (as defined below) UNLESS (a) you elect to receive your Investor Shares using
the Deposit Withdrawal Agent Commission (“DWAC”) system of the
Depository Trust Company or (b) you have a cash account with Security
Research Associates, Inc. (“SRA”) with sufficient cash to fund the
Purchase Price and you elect to settle through such account by initialing on
the following line:


 


             (Initial Here For Settlement through account
with SRA).


 


             (Initial Here For Settlement through DWAC)


 


“DVP” means delivery versus payment  through DTC (i.e., the Company shall deliver
Investor Shares registered in the Investor’s name and address as set forth
below and released by American Stock Transfer Corporation, the Company’s
transfer agent (the “Transfer Agent”), to the Investor at the Closing
directly to the account(s) at Security Research Associates, Inc.
through DTC and simultaneously therewith payment shall be made from such
account(s) by Security Research Associates, Inc. to the Company).


 


If you do not have an
existing account at Security Research Associates for settlement by DVP, we will
need the following information to be faxed to us along with your signature page to
this agreement.  Please fax your clearing information to Security Research
Associates at (866) 592-8132 (or as a back up 415-925-0264) to establish an
account with our clearing broker Wedbush Morgan Securities. Below is what we
will need to open your account.  A “New Account form” is attached in Exhibit B
for your convenience:


 


·              The exact registration name of the
account


 


·              Tax ID or Social Security number of
registered holder


 


·              Investor’s Clearing firm Prime Broker and
contact information (contact name, phone number, email address)


 


·              Internal Account number at Prime Broker


 


·              Institutional and Agent ID


 


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 NASD member.  Exceptions:


 


                                                                                                                                                            

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


 


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 April 27, 2007, 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 


 


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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.


 


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SIGNATURE
PAGE


 


Number of Investor Shares:                        Shares issuable upon exercise of Warrant                       


 


Price Per Investor Share:  $
0.80                             Warrant
Exercise Price $ 0.85


 


Aggregate 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: May 23, 2008

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INVESTOR

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Phone#:

  	
   

  
	
   

  	
  Email:

  	
   

  
								



 


Agreed and Accepted

May23, 2008:


 


WAVE SYSTEMS CORP.


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					



 


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EXHIBIT A


 


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:

  	
   

  



 


If you have elected to
settle 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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EXHIBIT B


 


Institutional DVP/RVP New Account Form.


 


If settling via DVP, and the Investor does
not have an existing account with Security Research Associates, Inc.,
please fill out the below New Account Form and fax back to
SRA with your signature page to the Subscription Agreement.


 


Please Fax to SRA at:  (866) 592-8132 (or as a back up 415-925-0264)

Send “Attention Devon Wygaerts”

Devon can be reached at 415-925-0346.


 


	
  ACCOUNT #

  	
   

  	
  REP #

  	
   

  	
  TAX ID#

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


DVP INSTRUCTIONS:


 


	
  DTC #

  	
   

  	
  INSTITUTION #

  	
   

  	
  AGENT BANK #

  	
   

  	
  INTERNAL A/C #

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  SHORT NAME:

  	
   

  



 


	
  ORIGINAL
  CONFIRMATION:

  	
   

  
	
   

  
	
   

  



 


DUPLICATE
INSTRUCTIONS:


 


	
  INSTITUTION
  OR I/P#

  	
   

  
	
   

  
	
   

  



 


	
  TRIPLICATE
  INSTRUCTIONS:

  	
   

  
	
   

  
	
  SENT BY:

  	
   

  	
   

  	
  DATE:

  	
   

  
						



 


CONTACT INFORMATION:


 


	
  Name (Printed):

  	
   

  	
   

  
	
  Telephone #: 

  	
   

  	
   

  	
  Email Address:

  	
   

  
							



 


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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),
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
Investor Securities are attached as Annex I (the “Signature Page”) for
the aggregate purchase price therefor set forth on the Signature Page.


 


2.2.         The Company proposes to enter into
substantially this 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 this 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 Security Research Associates, Inc. (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 May 28, 2008 (the “Closing Date”).  At the Closing and in accordance with paragraph
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.


 


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
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 prior to the Closing Date, (d) the Registration Statement
remaining in effect and no stop order proceedings with respect 


 


7

















 


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 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:  Unless the Investor elects to settle the
Investor Shares purchased by such Investor by means of the cash account or DWAC
option set forth in Section 5 of the Subscription Agreement, no later than three (3) business days
after the execution of this Agreement by the Investor and the Company, (i) the
Investor shall confirm that the account or accounts at SRA to be credited with
the Investor Shares being purchased by the Investor have a minimum balance
equal to the aggregate purchase price for the Investor Securities being
purchased by the Investor, (ii) authorize and instruct SRA to execute a
trade for the Investor Shares, (an electronic confirmation will be generated to
the clearing firm which will then affirm the trade) and  (iii) the Company shall deliver the
Investor Shares to the Investor directly to the account(s) at SRA
identified by Investor and simultaneously therewith payment shall be made from
such account(s) by SRA to the Company.


 


(b)           If the Investor elects to settle the
Investor Securities purchased by such Investor by means of the cash account
option set forth in Section 5 of the Subscription Agreement, no later than three (3) business days after the execution
of this Agreement by the Investor and the Company, the Company shall
deliver the Investor Securities to the Investor directly to the account(s) at
SRA identified by Investor and simultaneously
therewith payment shall be made from such account(s) by SRA to the
Company.


 


(c)           If the Investor elects to settle the
Investor Securities purchased by such Investor by means of the DWAC system of
the Depository Trust Company, no later
than three (3) business days after the execution of this Agreement by the
Investor and the Company, 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 Shares being purchased by
the Investor hereunder and (ii) direct the broker-dealer at which the
account or accounts to be credited with the Shares being purchased by such
Investor are maintained, which broker/dealer shall be a DTC participant, to set
up a Deposit/Withdrawal at Custodian (“DWAC”) instructing American Stock
Transfer Corporation, the Company’s transfer agent, to credit such account or
accounts with the Shares by means of an electronic book-entry delivery.  Promptly following the delivery to the
Company of the purchase price for the Shares as described herein, the Company
shall direct its transfer agent to credit the Investor’s account or accounts
with the Shares pursuant to the information contained in the DWAC.


 


4.             Representations, Warranties and Covenants.


 


4.1.         Representations,
Warranties and Covenants of the Investor.


 


(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 


 


8

















 


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 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 have 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 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 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, 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 


 


9

















 


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:


 


Bingham McCutchen LLP

399 Park Avenue

New York, NY 10022

Fax: (212) 752-5378

ATTN:  Neil W. Townsend


 


(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 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 


 


10

















 


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 Company or the
Investor.


 


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