Exhibit 10.1


 


SUBSCRIPTION
AGREEMENT


 


October 29, 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 111 shares of Series J Convertible Preferred Stock (the “Total
Shares”), par value $0.01 per share (the “Series J Preferred Stock”)
for a purchase price of $6,500 per share (the “Purchase Price”) and (b) warrants,
in substantially the form attached hereto as Annex II (the “Warrants”
and, collectively, with the Total Shares, the “Securities”), to purchase
up to 2,220,000 shares of Class A Common Stock of the Company, par value
$0.01 per share (the “Common Stock”) at an exercise price of $0.40 per
share (the “Exercise Price”). 
Investors will be issued Warrants to purchase 20,000 shares of Common
Stock for each share of Series J Preferred Stock purchased by such
Investor.  The terms of the Series J
Preferred Stock will be set forth in the Certificate of Designations
substantially in the form attached hereto as Annex III (the “Certificate of
Designations”).


 


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. 333-150340) 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 Series J Preferred
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 I and incorporated herein by this
reference as if fully set forth herein.


 

















 


5.                                      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.”)

  



 


6.                                      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 June 23, 2008, 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:


 


Price Per Investor Share:                $6,500


 


Aggregate Purchase Price:


 


Shares of Common Stock issuable upon exercise
of Investor Warrant:


 


Exercise Price of Investor Warrant:        $0.40


 


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: October 29, 2008

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INVESTOR

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Phone #:

  	
   

  
	
   

  	
   

  	
  Email:

  	
   

  
	
   

  	
   

  	
   

  
	
  Agreed and
  Accepted

  	
   

  	
   

  
	
  October 29,
  2008:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WAVE SYSTEMS
  CORP.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name: Gerard
  T. Feeney

  	
   

  	
   

  
	
  Title:   CFO

  	
   

  	
   

  
									



 

















 


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:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  The mailing address to which the Investor Share certificate and
  Warrant should be delivered:

  	
   

  	
   

  



 

















 


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 Agent.


 


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
Investor Warrants 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 October 31, 2008
(the “Closing Date”).  At the Closing: (a) the
Company will deliver (by overnight courier) a certificate representing the
number of shares of Series J Preferred 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, (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 by wire 


 

















 


transfer of immediately
available funds to the account set forth on Annex IV hereto the aggregate
purchase price for the Investor Securities being purchased by the Investor
hereunder.


 


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 (i) the receipt by
the Company of the aggregate purchase price for the Investor Securities being
purchased hereunder as set forth on the Signature Page, (ii) the accuracy
of the representations and warranties made by the Investor in this Agreement, (iii) the
fulfillment of those undertakings of the Investor to be fulfilled prior to the
Closing Date, (iv) the Registration Statement remaining in effect and no
stop order proceedings with respect thereto being pending or threatened, and (v) 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 (i) the
filing by the Company of the Certificate of Designations with the Secretary of
State of the State of Delaware, substantially in the form attached hereto as
Annex III and (ii) the fulfillment of those other 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.


 


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
has 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 acknowledges that the shares of Common Stock acquired upon the
exercise of the Investor Warrant or the conversion of the Investor Shares, if
not registered, will have restrictions on resale imposed by state and federal
securities laws.


 


(f)                                    The
Investor represents, warrants and agrees that, since the earlier to occur of (i) the
date on which either 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:


 


WaveSystemsCorp.

480PleasantStreet

Lee,MA01238

Fax:(413)243-0391

ATTN:  Gerard T. Feeney, CFO


 


with copies to:


 


BinghamMcCutchenLLP

399ParkAvenue

NewYork,NY10022

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.


 

















 


ANNEX IV


 


Company
Wire Instructions


 


In accordance with section 3.1(b) of the
terms and conditions attached hereto as Annex I, remit by wire transfer the
amount of funds equal to the aggregate purchase price for the shares being
purchased by the investor to the following account:


 


Wire info for:  Wave Systems Corp


480 Pleasant Street


Lee, MA 01238


 


Account: 
Wave Systems Corp


HSBC Bank


452 Fifth Avenue


New York, NY 10018


 


Bank ABA/Routing #  021001088


US Govt MM Fund:  610185055


Contact: 
Will Aquino  /  Phone: 
212-525-8859   / Fax: 212-525-8924


International Transactions:  Use Swift #  
MRMDUS33