Exhibit 10.2


 


August 11, 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 August 14,
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: August 11, 2008

  	
   

  	
  Date: August 11, 2008