EXHIBIT
10.27


ADDENDUM NO. 1 TO


AUTHORIZED
DISTRIBUTOR AGREEMENT


This Addendum supplements and modifies the Authorized
Distributor Agreement with an Effective Date of June 29, 2004 between
Envoy Data Inc. (“Distributor”) and Wave Systems Corp. (“Wave Systems”).


1.    Background.   Dell Inc. has entered into an arrangement
with Distributor under which Distributor distributes third-party software
authorized by Dell to be distributed with or for Dell computers. Wave Systems
has obtained approval from Dell for certain of its software products to be
distributed with or for Dell computers. This Addendum contains the terms and
conditions under which Distributor will distribute such software of Wave
Systems. Except as otherwise specifically mentioned, this Addendum shall only
apply to the distribution of Wave Systems’ Security Products as defined below.


2.    Definitions.   In addition to the definitions in the
Authorized Distributor Agreement the following definitions shall apply to this
Addendum.


“Client Product” means the Product designated as
Client Product in Attachment 1 hereto.


“Dell” means Dell Inc. and its subsidiaries.


“Distributor Agreement” means the Authorized
Distributor Agreement, referenced above, which this Addendum supplements.


“End User” means a person or entity that acquires
Security Products for its own use and not for resale or distribution.


“Gold Master” means a CD-ROM which contains a copy of
the Client Product in object-code form, a click-through End User license
agreement, and a readme electronic file containing installation and use
instructions and links for on-line help. Such Gold Master will be suitable for
use in making copies of the Client Product and such associated text files.


“Security Products” refers to both the Client Product
and the Server Product.


“License Management Codes”  means unique numbers which can be assigned to
a copy of software equipped with the License Management Tool to prevent copying
of that copy of the software.


“License Management Tool”
means software designed to prevent unauthorized copying of software.


“Server Product” means the Product designated in
Attachment 1 as Server Product.


3.    Distribution of Security
Products.


a.           Distributor
is hereby authorized by Wave Systems to distribute the Security Products solely
to Dell and to End Users in accordance with the terms of the Distributor
Agreement as supplemented and modified by this Addendum.


b.           Promptly
after full execution of this Addendum, Wave Systems will deliver to Distributor
a Gold Master for the Client Product, the License Management Tool, a quantity
of License Management Codes as determined by Wave Systems, artwork for CD-ROM
sleeves, and artwork for CD-ROM disks.


c.           Distribution
of the Client Product may be accomplished via the Internet electronic network
and via CD-ROMs. Distribution of the Server Product may be accomplished
only via CD-ROMs which will be provided by Wave Systems pursuant to purchase
orders placed by Distributor.



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d.           All
Security Products distributed by Distributor must include an operating copy of
the License Management Tool and License Management Code, both of which will be
provided and paid for by Wave Systems. Wave Systems will periodically supply
Distributor with additional License Management Codes as needed. Distributor
will not directly or indirectly attempt to disable or bypass the License
Management Tool or the embedded End User license agreement.


e.           Distributor
may arrange for competent and reliable contractors to replicate the Client
Product from the Gold Master to CD-ROMs for distribution hereunder provided (i) Distributor
has entered into Replication Services Agreement with such contractors, (ii) Distributor
has promptly provided a copy of such executed agreements to Wave Systems, and (iii) Distributor
promptly ceases doing business with any contractor who violates the terms of
such agreements.


4.    Submission of Orders.


a.           Upon
execution of this Agreement and on or before January 1 of each year during
the term of this Addendum, Distributor will provide Wave Systems with a
purchase order for the calendar year’s requirements of Client Product, although
no quantity need be stated. Quantities will be determined in accordance with
the monthly POS Reports.


b.           Server
Product will be provided by Wave Systems on CD-ROMs to Distributor pursuant to
purchase orders placed from time to time by Distributor.


5.    License Fees.   The license fee to Distributor for the
Security Products shall be 40 percent off of Wave Systems’ then current list
price.


6.    Records, POS Reports, and Audits.


a.           Distributor
shall maintain complete and accurate accounting records, in accordance with
sound accounting practices, to support and document all license fees due Wave
Systems hereunder. Such records shall contain at a minimum the name and contact
information for each End User or Dell entity purchasing a license for a
Security Product from Distributor, the type of delivery (Internet or CD-ROM),
the type of Security Product (Client Product or Server Product) the date of
license sale, the number of copies of the Security Product licensed hereunder,
and any refunds or returns. Such records shall be retained for a period of at
least three years after the fees to which such records relate have been accrued
and have been paid.


b.           Within
five days after the end of each month, Distributor will remit to Wave Systems
the license fees due on copies of Client Product delivered by Distributor to End
Users and Dell entities during the immediately preceding month, and provide
Wave Systems with a POS Report, in a format reasonably acceptable to Wave
Systems, specifying the number of copies of Client Product that Distributor
delivered, the number of copies of the Client Product that were returned by End
Users or Dell entities, and the calculation of the amount due Wave Systems
pursuant to this Agreement. The POS Report shall also specify the name and
contact information for each End User or Dell entity purchasing a license for a
Security Product from Distributor. For each such customer the POS Report shall
show the type of delivery (Internet or CD-ROM), the type of Security Product
(Client Product or Server Product), and the date of license sale, the number of
copies of the Security Product licensed hereunder, and any refunds or returns.


c.           Upon
written request from Wave Systems at least ten days in advance, Distributor
shall provide reasonable access to Distributor’s records referred to in Section 6a
by an independent accounting firm chosen and compensated by Wave Systems for
the purpose of audit. Such audit shall take place during Distributor’s normal
business hours and shall not occur more frequently than twice each calendar
year. Such accounting firm shall be required to sign an agreement protecting
Distributor’s confidential information and shall be authorized to report to
Wave Systems only the 



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amount of license fees due.
In the event that such an audit discloses an underpayment of more than five
percent, then Distributor shall pay the costs of such audit.


7.    Term and Termination.   This Addendum shall have the
same term as the Distributor Agreement and can be terminated separately under Section 13
of the Distributor Agreement.


8.    Change to Arbitration Clause.   For all purposes, the
first sentence in Section 14f of the Distributor Agreement is changed to
delete the word “Maryland” and substitute “California.”


9.    Effect of Addendum.   To the extent this Addendum is
inconsistent with the Distributor Agreement, this Agreement shall prevail with
respect to Security Products and with respect to all products just for Section 8
hereof. This effective date of this Addendum shall be the latter of the dates
on which it is signed below.


10. Change of Authorized Distribution Agreement
(ADA) participants name. For all purposes of use, and references, within the
ADA, Envoy Data Inc. will be changed to Envoy Data Corporation.


	
  ENVOY DATA CORP.

  	
   

  	
  WAVE SYSTEMS CORP.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Authorized Signature

  	
   

  	
  Authorized Signature

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print Name and Title

  	
   

  	
  Print Name and Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Date

  	
   

  



 



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ATTACHMENT 1


SECURITY PRODUCTS


1.                 Client
Product:


Wave Part Number
14-000033 Wave ETS Enterprise Security - Dell Edition 1.0


Dell SKU A0436206, Envoy Part Number ENV-14-000033,
Synnex SKU 1037412


Wave’s ETS Enterprise Security includes TPM-based
applications for file and folder encryption, password and personal data
management, multi-factor authentication, key archive management, secure Windows
logon, digital signature. Furthermore, wizards are included to use Wave’s
TCG-Enabled CSP for adding hardware security to Outlook and Outlook Express
email, Microsoft Encrypting File System (EFS), and 802.1x authentication.


Price: $19.99


2.                 Server
Product:


Wave Part Number
14-000016 Key Transfer Manager Enterprise Server AD 2.0


Dell SKU A0428504, Envoy Part Number ENV-14-000016,
Synnex SKU 1032709-6


For server-based key management of trusted platforms,
KTM Enterprise Server AD provides the capability to securely store and/or
migrate protected keys from one TPM-enabled system to another according to
security policies defined on the server.  This product also protects the enterprise’s
secure data by being able to recover from security hardware malfunction. Integration
with Microsoft Active Directory benefits IT administrators by incorporating
Active Directory policy and authentication functions and by providing a
consistent management interface.


Price $9,999.00
















ATTACHMENT 2


REPLICATION SERVICES AGREEMENT


This Agreement, dated                                   ,
is entered into by and between the Envoy Data Inc. with its principal office
located at 2090 E. University Drive, Suite 112, Tempe, AZ 85281, and                                     
(“Replicator”), a  [check one] [ ] corporation incorporated in
                       
[state]; [  ] partnership or limited liability company; [  ]
individual or sole proprietorship, with its principal office located at                                                                                                                                                             .


1.   DEFINITIONS


a.      “Authorized Trademarks”
means the trademarks, trade names, and logos to be used on the CD-ROMs
containing the Software and on the Packaging.


a.      “Packaging”
means all CD-ROM sleeves and collateral materials, if any, provided from time
to time to Replicator by Envoy, including user manuals, templates, overlays,
quick reference guides, brochures, data sheets, and registration cards.


c.      “Product”
means the Software and Packaging together.


d.     “Replication Services”
means the services to be performed by Replicator pursuant to this Agreement.


e.      “Software” means the executable object code for Envoy’s
software provided to Replicator by Envoy from time to time pursuant to this
Agreement.


2.                 REPLICATION
SERVICES


Envoy hereby
retains Replicator to perform the following Replication Services in accordance
with written orders placed with Replicator from time to time by Envoy.


a.      arrange
for the reproduction of text and graphics provided by Envoy onto the
non-recorded side of the CD-ROMs;


b.     replicate
the Software onto the CD-ROMs;


c.      reproduce
the Packaging;


d.     provide
Envoy with samples of the CD-ROMs and Packaging for review and approval;


e.      combine
the Software and Packaging;


f.      deliver the Products to Envoy.


3.                 DELIVERABLES
FROM ENVOY


To facilitate the
performance of the Replication Services by Replicator, Envoy shall provide
Replicator with the following materials and shall periodically update such
materials as deemed necessary by Envoy:


a.      camera-ready
text and graphics for reproduction onto the non-recorded side of a CD-ROM;


b.     a master
copy of the Software on a CD-ROM and updated master copies as needed by
Replicator to comply with orders received from Envoy; and


c.      copies of the Packaging for use by Replicator or a camera-ready
version of the Packaging for reproduction.


4.                 PAYMENT
FOR SERVICES


Replicator’s fees for
performing the Replication Services are specified in Exhibit A. Added to
those fees will be any applicable taxes, customs duties, insurance charges, and
freight charges incurred in shipping to the specified destination. Replicator
may change its fees upon thirty-days advance notice to Envoy. Payment terms are
also listed on Exhibit A.


5.                 RECORDS


a.      Replicator
shall maintain records in the English language showing the number of Products
replicated. Such records shall be maintained for a period of at least two years
after the transaction to which they pertain was consummated.


b.     Such records shall be made available at Replicator’s place of
business for inspection and copying by Envoy, its customers or suppliers, and
their representatives during Replicator’s normal business hours upon at least
ten-days advance written notice.


6.                 ENVOY’S
REPRESENTATIONS AND WARRANTIES


a.      Envoy
represents that it has the right and authority to enter into this Agreement and
to grant Replicator the rights to replicate the Software and Packaging granted
in this Agreement.


b.     THE FOREGOING IS THE ONLY WARRANTY MADE BY
ENVOY. ENVOY SPECIFICALLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.


7.                 REPLICATOR’S
REPRESENTATIONS AND WARRANTIES


a.      Replicator
represents that it has the right and authority to enter into this Agreement.


b.     Replicator
represents and warrants that it will accurately replicate the Software and
Packaging and that all CD-ROMs containing any portion of the Software that are
delivered by Replicator to Envoy will not contain any viruses, worms, or other
code that is specifically designed damage or interfere with any end user’s
software or date.


c.      Replicator
agrees to replace and assume two-way transportation charges for Products for
which Replicator performs replication services that are returned to Envoy due
to defects in the media or replication process, provided such Products are
returned within one year from the time of shipment made by Replicator.


d.     Replicator
agrees to refrain from providing the Software or Packaging to anyone but Envoy
or a third party authorized by Envoy in writing to receive the Software and/or
Packaging. Replicator further agrees to refrain from attempting to decrypt, disassemble,
decompile, or otherwise derive the source code of the Software.


e.      Replicator acknowledges that the Software and the Authorized
Trademarks are the property of Envoy or Envoy’s licensors. Replicator shall not
use, duplicate, or disseminate the Software or Authorized Trademarks except as
specifically provided in this Agreement.


8.                 AUTHORIZED
TRADEMARKS


Replicator shall have the
right to use the Authorized Trademarks on the CD-ROMs and on the Packaging
solely as permitted by Envoy. Replicator shall not use the Authorized
Trademarks in any other manner unless authorized by Envoy in writing.


9.                 SUBCONTRACTING


Replicator may subcontract
to third parties such portions of the reproduction, printing, and packaging of
the Software and Packaging as Replicator may, in its discretion, determine;
provided, however, that Replicator remains primarily liable for the performance
of any such subcontractor and that any replication of the Software may be
subcontracted only to parties which have been previously approved by Envoy and
which agree in writing to be bound by the provisions of Sections 7b, 7d, 7e,
10, 11b, 12, and 14c of this Agreement.


10.          CONFIDENTIALITY


Replicator acknowledges
that, from time to time, it may be exposed to certain confidential information
of Envoy concerning the Software, such as proposed new versions of the
Software, the identity of Envoy’s suppliers and customers, and Envoy’s
unannounced marketing plans for Products (“Confidential Information”). Replicator
agrees that it will take appropriate steps to protect such Confidential
Information from unauthorized disclosure, that it will not disclose such
Information to any third party, and that it will not use any Confidential
Information other than as authorized by this Agreement without the prior
written consent of Envoy. Replicator’s obligations with respect to Confidential
Information shall continue until such information becomes publicly known other
than by breach of this Agreement by Replicator.


11.          INDEMNIFICATION


a.      Envoy
will defend, indemnify, and hold Replicator harmless from and against any and
all liabilities, losses, damages, including reasonable out-of-pocket costs and
expenses associated with any claim or action brought against Replicator for
actual or alleged breach of Envoy’s warranties hereunder.


b.     Replicator
shall indemnify and hold Envoy harmless from and against any and all
liabilities, losses, damages, costs, including reasonable out-of-pocket costs
and expenses associated with any claim or action brought against Envoy that may
arise from Replicator’s alleged breach of any of its representations or
warranties or alleged improper or unauthorized replication, packaging, or
delivery of the Software or Packaging.


c.      Indemnification under this Section 11 shall be contingent
upon the party seeking indemnification giving the indemnifying party prompt
written notification of a claim, as well as information, reasonable assistance,
and exclusive authority to evaluate, defend, and settle such claim.


12             LIMITATION
OF LIABILITY


ENVOY’S LIABILITY TO
REPLICATOR SHALL BE LIMITED TO DIRECT DAMAGES AND, EXCEPT AS PROVIDED IN THE SECTION TITLED
“INDEMNIFICATION,” SHALL NOT EXCEED THE AMOUNT OF THE FEES PAID BY ENVOY TO
REPLICATOR HEREUNDER. IN NO EVENT WILL ENVOY BE LIABLE FOR INCIDENTAL, INDIRECT,
SPECIAL, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) SUFFERED BY
REPLICATOR, EVEN IF ENVOY HAS PREVIOUSLY BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES.


13.          TERM
AND TERMINATION


a.      This
Agreement will continue in effect for one year from the date hereof. It will be
automatically renewed for additional one-year terms on the anniversary of that
date.


b.     Either
party may terminate this Agreement at any time, with or without cause, upon
thirty-days advance written notice to the other party.


c.      Upon termination of this Agreement for any reason, Replicator
will immediately cease duplication of the Software and Packaging and will
return to Envoy, at Replicator’s expense, the master versions of all Software
and Packaging, and all Confidential Information of Envoy. Envoy shall remit to
Replicator all fees due from Envoy within 30 days of such termination. Termination
by either party will not affect the rights of any end user who has received the
Software. Sections 6, 7, 10, 11, 12, 13c, and 14c shall survive termination of
this Agreement.


14.          GENERAL
PROVISIONS


a.      Except as
provided in Section 9, this Agreement and Replicator’s duties hereunder
may not be assigned by Replicator directly or by operation of law to any other
person, firm, or corporation without the express written approval of Envoy. Upon
written notice to Replicator, Envoy may assign this Agreement to a parent,
subsidiary, affiliate, or successor. This Agreement shall be binding upon and
inure to the benefit of permitted successors and assigns.


b.     All
notices and demands hereunder shall be in writing and shall be served by
personal service or by mail at the address of the receiving party set forth in
this Agreement (or at such different address as may be designated by such party
by written notice to the other party). All notices or demands by mail shall be
by certified or registered mail, return receipt requested, or by
nationally-recognized private express courier, and shall be deemed complete
upon receipt.


c.      This
Agreement shall be governed by and construed in accordance with the substantive
laws of the State of                  ,
excluding that body of law controlling conflicts of law. Any dispute arising
out of or relating to this Agreement, or breach thereof, shall be first
submitted to the senior management of each party for resolution. If the dispute
cannot be resolved within 30 days after such matter is referred to senior
management, then the dispute shall be submitted to binding arbitration in                  
County,                  ,
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. All discovery must be concluded within
60 days after the submission to arbitration. The decision of the arbitration
panel shall be final and may be entered as judgment in any court of competent
jurisdiction. The arbitration panel shall determine the allocation of
arbitration costs and reasonable attorneys’ fees between the parties according
to the relative merits of each party’s case. EACH PARTY HEREBY WAIVES THE RIGHT
TO TRIAL BY JURY.


d.     Each party
is acting as an independent contractor and not as an agent, partner, or joint
venturer with the other party for any purpose. Except as provided in this
Agreement, neither party shall have any right, power, or authority to act or to
create any obligation, express or implied, on behalf of the other.


e.      Neither
party shall be responsible for delays or failure of performance resulting from
acts beyond the reasonable control of such party. Such acts shall include, but
not be limited to, acts of God, strikes, walkouts, riots, acts of war,
epidemics, failure of suppliers to perform, governmental regulations, power
failures, earthquakes, or other disasters.


f.      The
titles and headings of the various sections and paragraphs in this Agreement
are intended solely for reference and are not intended for any other purpose
whatsoever or to explain, modify, or place any construction on any of the
provisions of this Agreement.


g.      No
provisions in either party’s purchase orders, or in any other business forms
employed by either party, will supersede the terms and conditions of this
Agreement, and no supplement, modification, or amendment of this Agreement
shall be binding, unless executed in writing by a duly authorized representative
of each party to this Agreement.


h.     The
parties have read this Agreement and agree to be bound by its terms, and
further agree that this Agreement (including its Exhibit A which is hereby
incorporated into and made a part of this Agreement) constitutes the complete
and entire agreement of the parties and supersedes all previous communications,
oral or written, between them relating to the license and to the subject matter
hereof. No representations or statements of any kind made by either party that
are not expressly stated herein shall be binding on such party.


IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date specified above.











 


	
  ENVOY DATA INC.

  	
  REPLICATOR

  
	
  “Envoy”

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print Name and
  Title

  	
  Print Name and Title

  	
   

  
							



 















  


EXHIBIT 10.27


EXHIBIT
A


REPLICATOR’S FEES