Exhibit 10.2


 


June 30, 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 June 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 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 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

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/David N. Olson

  	
   

  	
  By:

  	
  /s/ Gerard T. Feeney

  
	
   

  	
  David N. Olson

  	
   

  	
  Mr. Gerard T. Feeney

  
	
   

  	
  Managing Director

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  Date: June 30, 2008

  	
   

  	
  Date: June 30, 2008