Exhibit 10.1


 


SUBSCRIPTION AGREEMENT


 


June 30, 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 1,880,500 shares of Class A
Common Stock (the “Total Shares”), par value $0.01 per share (the “Common
Stock”) for a purchase price of $0.85 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 470,125 shares of Common Stock at an exercise price of $0.90 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



 

















 


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.


 

















 


SIGNATURE
PAGE


 


Number of Investor Shares:                 Shares
issuable upon exercise of Warrant


 


Price Per Investor Share:    $0.85         Warrant
Exercise Price $0.90


 


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: June 30, 2008

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INVESTOR

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Print Name:

  
	
   

  	
  Title:

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Phone #:

  
	
   

  	
  Email:

  



 


Agreed and Accepted

June 30, 2008:


 


	
  WAVE SYSTEMS CORP.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  



 

















 


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

  	
   

  



 

















 


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:

  	
   

  
															



 

















 


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 July 3, 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 


 

















 


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 


 

















 


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 


 

















 


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 


 

















 


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.