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


 

















 


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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