**EXHIBIT10.27**

**ADDENDUM NO. 1 TO**

**AUTHORIZEDDISTRIBUTOR AGREEMENT**

This Addendum supplements and modifies the AuthorizedDistributor Agreement with an Effective Date of June 29, 2004 betweenEnvoy Data Inc. (“Distributor”) and Wave Systems Corp. (“Wave Systems”).

1.    *Background*.   Dell Inc. has entered into an arrangementwith Distributor under which Distributor distributes third-party softwareauthorized by Dell to be distributed with or for Dell computers. Wave Systemshas obtained approval from Dell for certain of its software products to bedistributed with or for Dell computers. This Addendum contains the terms andconditions under which Distributor will distribute such software of WaveSystems. Except as otherwise specifically mentioned, this Addendum shall onlyapply to the distribution of Wave Systems’ Security Products as defined below.

2.    *Definitions*.   In addition to the definitions in theAuthorized Distributor Agreement the following definitions shall apply to thisAddendum.

“Client Product” means the Product designated asClient Product in Attachment 1 hereto.

“Dell” means Dell Inc. and its subsidiaries.

“Distributor Agreement” means the AuthorizedDistributor Agreement, referenced above, which this Addendum supplements.

“End User” means a person or entity that acquiresSecurity Products for its own use and not for resale or distribution.

“Gold Master” means a CD-ROM which contains a copy ofthe Client Product in object-code form, a click-through End User licenseagreement, and a readme electronic file containing installation and useinstructions and links for on-line help. Such Gold Master will be suitable foruse in making copies of the Client Product and such associated text files.

“Security Products” refers to both the Client Productand the Server Product.

“License Management Codes”  means unique numbers which can be assigned toa copy of software equipped with the License Management Tool to prevent copyingof that copy of the software.

“License Management Tool”means software designed to prevent unauthorized copying of software.

“Server Product” means the Product designated inAttachment 1 as Server Product.

3.    *Distribution of SecurityProducts.*

a.           Distributoris hereby authorized by Wave Systems to distribute the Security Products solelyto Dell and to End Users in accordance with the terms of the DistributorAgreement as supplemented and modified by this Addendum.

b.           Promptlyafter full execution of this Addendum, Wave Systems will deliver to Distributora Gold Master for the Client Product, the License Management Tool, a quantityof License Management Codes as determined by Wave Systems, artwork for CD-ROMsleeves, and artwork for CD-ROM disks.

c.           Distributionof the Client Product may be accomplished via the Internet electronic networkand via CD-ROMs. Distribution of the Server Product may be accomplishedonly via CD-ROMs which will be provided by Wave Systems pursuant to purchaseorders placed by Distributor.

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d.           AllSecurity Products distributed by Distributor must include an operating copy ofthe License Management Tool and License Management Code, both of which will beprovided and paid for by Wave Systems. Wave Systems will periodically supplyDistributor with additional License Management Codes as needed. Distributorwill not directly or indirectly attempt to disable or bypass the LicenseManagement Tool or the embedded End User license agreement.

e.           Distributormay arrange for competent and reliable contractors to replicate the ClientProduct from the Gold Master to CD-ROMs for distribution hereunder provided (i) Distributorhas entered into Replication Services Agreement with such contractors, (ii) Distributorhas promptly provided a copy of such executed agreements to Wave Systems, and (iii) Distributorpromptly ceases doing business with any contractor who violates the terms ofsuch agreements.

4.    *Submission of Orders.*

a.           Uponexecution of this Agreement and on or before January 1 of each year duringthe term of this Addendum, Distributor will provide Wave Systems with apurchase order for the calendar year’s requirements of Client Product, althoughno quantity need be stated. Quantities will be determined in accordance withthe monthly POS Reports.

b.           ServerProduct will be provided by Wave Systems on CD-ROMs to Distributor pursuant topurchase orders placed from time to time by Distributor.

5.    *License Fees*.   The license fee to Distributor for theSecurity Products shall be 40 percent off of Wave Systems’ then current listprice.

6.    *Records, POS Reports, and Audits.*

a.           Distributorshall maintain complete and accurate accounting records, in accordance withsound accounting practices, to support and document all license fees due WaveSystems hereunder. Such records shall contain at a minimum the name and contactinformation for each End User or Dell entity purchasing a license for aSecurity Product from Distributor, the type of delivery (Internet or CD-ROM),the type of Security Product (Client Product or Server Product) the date oflicense sale, the number of copies of the Security Product licensed hereunder,and any refunds or returns. Such records shall be retained for a period of atleast three years after the fees to which such records relate have been accruedand have been paid.

b.           Withinfive days after the end of each month, Distributor will remit to Wave Systemsthe license fees due on copies of Client Product delivered by Distributor to EndUsers and Dell entities during the immediately preceding month, and provideWave Systems with a POS Report, in a format reasonably acceptable to WaveSystems, specifying the number of copies of Client Product that Distributordelivered, the number of copies of the Client Product that were returned by EndUsers or Dell entities, and the calculation of the amount due Wave Systemspursuant to this Agreement. The POS Report shall also specify the name andcontact information for each End User or Dell entity purchasing a license for aSecurity Product from Distributor. For each such customer the POS Report shallshow the type of delivery (Internet or CD-ROM), the type of Security Product(Client Product or Server Product), and the date of license sale, the number ofcopies of the Security Product licensed hereunder, and any refunds or returns.

c.           Uponwritten request from Wave Systems at least ten days in advance, Distributorshall provide reasonable access to Distributor’s records referred to in Section 6aby an independent accounting firm chosen and compensated by Wave Systems forthe purpose of audit. Such audit shall take place during Distributor’s normalbusiness hours and shall not occur more frequently than twice each calendaryear. Such accounting firm shall be required to sign an agreement protectingDistributor’s confidential information and shall be authorized to report toWave Systems only the 

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amount of license fees due.In the event that such an audit discloses an underpayment of more than fivepercent, then Distributor shall pay the costs of such audit.

7.    *Term and Termination*.   This Addendum shall have thesame term as the Distributor Agreement and can be terminated separately under Section 13of the Distributor Agreement.

8.    *Change to Arbitration Clause*.   For all purposes, thefirst sentence in Section 14f of the Distributor Agreement is changed todelete the word “Maryland” and substitute “California.”

9.    *Effect of Addendum*.   To the extent this Addendum isinconsistent with the Distributor Agreement, this Agreement shall prevail withrespect to Security Products and with respect to all products just for Section 8hereof. This effective date of this Addendum shall be the latter of the dateson which it is signed below.

10. Change of Authorized Distribution Agreement(ADA) participants name. For all purposes of use, and references, within theADA, Envoy Data Inc. will be changed to Envoy Data Corporation.
| ENVOY DATA CORP.     |   | WAVE SYSTEMS CORP.   |   |
|----------------------|--------|----------------------|--------|
|                 |   |                 |   |
| Authorized Signature |   | Authorized Signature |   |
|                 |   |                 |   |
| Print Name and Title |   | Print Name and Title |   |
|                 |   |                 |   |
| Date                 |   | Date                 |   |

 

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**ATTACHMENT 1**

**SECURITY PRODUCTS**

1.                 ClientProduct:

***Wave Part Number14-000033 Wave ETS Enterprise Security - Dell Edition 1.0***

***Dell SKU A0436206, Envoy Part Number ENV-14-000033,Synnex SKU 1037412***

Wave’s ETS Enterprise Security includes TPM-basedapplications for file and folder encryption, password and personal datamanagement, multi-factor authentication, key archive management, secure Windowslogon, digital signature. Furthermore, wizards are included to use Wave’sTCG-Enabled CSP for adding hardware security to Outlook and Outlook Expressemail, Microsoft Encrypting File System (EFS), and 802.1x authentication.

Price: $19.99

2.                 ServerProduct:

***Wave Part Number14-000016 Key Transfer Manager Enterprise Server AD 2.0***

***Dell SKU A0428504, Envoy Part Number ENV-14-000016,Synnex SKU 1032709-6***

For server-based key management of trusted platforms,KTM Enterprise Server AD provides the capability to securely store and/ormigrate protected keys from one TPM-enabled system to another according tosecurity policies defined on the server.  This product also protects the enterprise’ssecure data by being able to recover from security hardware malfunction. Integrationwith Microsoft Active Directory benefits IT administrators by incorporatingActive Directory policy and authentication functions and by providing aconsistent management interface.

Price $9,999.00

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**ATTACHMENT 2**

**REPLICATION SERVICES AGREEMENT**

This Agreement, dated                                   ,is entered into by and between the Envoy Data Inc. with its principal officelocated at 2090 E. University Drive, Suite 112, Tempe, AZ 85281, and                                     (“Replicator”), a  **[check one]**[ ] corporation incorporated in                       [state]; [  ] partnership or limited liability company; [  ]individual or sole proprietorship, with its principal office located at                                                                                                                                                             .

*1.*   DEFINITIONS

a.      **“Authorized Trademarks”**means the trademarks, trade names, and logos to be used on the CD-ROMscontaining the Software and on the Packaging.

a.      **“Packaging”**means all CD-ROM sleeves and collateral materials, if any, provided from timeto time to Replicator by Envoy, including user manuals, templates, overlays,quick reference guides, brochures, data sheets, and registration cards.

c.      **“Product”**means the Software and Packaging together.

d.     **“Replication Services”**means the services to be performed by Replicator pursuant to this Agreement.

e.      **“Software”** means the executable object code for Envoy’ssoftware provided to Replicator by Envoy from time to time pursuant to thisAgreement.

*2.*                 REPLICATIONSERVICES

Envoy herebyretains Replicator to perform the following Replication Services in accordancewith written orders placed with Replicator from time to time by Envoy.

a.      arrangefor the reproduction of text and graphics provided by Envoy onto thenon-recorded side of the CD-ROMs;

b.     replicatethe Software onto the CD-ROMs;

c.      reproducethe Packaging;

d.     provideEnvoy with samples of the CD-ROMs and Packaging for review and approval;

e.      combinethe Software and Packaging;

f.      deliver the Products to Envoy.

*3*.                 DELIVERABLESFROM ENVOY

To facilitate theperformance of the Replication Services by Replicator, Envoy shall provideReplicator with the following materials and shall periodically update suchmaterials as deemed necessary by Envoy:

a.      camera-readytext and graphics for reproduction onto the non-recorded side of a CD-ROM;

b.     a mastercopy of the Software on a CD-ROM and updated master copies as needed byReplicator to comply with orders received from Envoy; and

c.      copies of the Packaging for use by Replicator or a camera-readyversion of the Packaging for reproduction.

*4.*                 PAYMENTFOR SERVICES

Replicator’s fees forperforming the Replication Services are specified in Exhibit A. Added tothose fees will be any applicable taxes, customs duties, insurance charges, andfreight charges incurred in shipping to the specified destination. Replicatormay change its fees upon thirty-days advance notice to Envoy. Payment terms arealso listed on Exhibit A.

*5.*                 RECORDS

a.      Replicatorshall maintain records in the English language showing the number of Productsreplicated. Such records shall be maintained for a period of at least two yearsafter the transaction to which they pertain was consummated.

b.     Such records shall be made available at Replicator’s place ofbusiness for inspection and copying by Envoy, its customers or suppliers, andtheir representatives during Replicator’s normal business hours upon at leastten-days advance written notice.

*6.*                 ENVOY’SREPRESENTATIONS AND WARRANTIES

a.      Envoyrepresents that it has the right and authority to enter into this Agreement andto grant Replicator the rights to replicate the Software and Packaging grantedin this Agreement.

b.     **THE FOREGOING IS THE ONLY WARRANTY MADE BYENVOY. ENVOY SPECIFICALLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY ANDFITNESS FOR A PARTICULAR PURPOSE.**

*7.*                 REPLICATOR’SREPRESENTATIONS AND WARRANTIES

a.      Replicatorrepresents that it has the right and authority to enter into this Agreement.

b.     Replicatorrepresents and warrants that it will accurately replicate the Software andPackaging and that all CD-ROMs containing any portion of the Software that aredelivered by Replicator to Envoy will not contain any viruses, worms, or othercode that is specifically designed damage or interfere with any end user’ssoftware or date.

c.      Replicatoragrees to replace and assume two-way transportation charges for Products forwhich Replicator performs replication services that are returned to Envoy dueto defects in the media or replication process, provided such Products arereturned within one year from the time of shipment made by Replicator.

d.     Replicatoragrees to refrain from providing the Software or Packaging to anyone but Envoyor a third party authorized by Envoy in writing to receive the Software and/orPackaging. Replicator further agrees to refrain from attempting to decrypt, disassemble,decompile, or otherwise derive the source code of the Software.

e.      Replicator acknowledges that the Software and the AuthorizedTrademarks are the property of Envoy or Envoy’s licensors. Replicator shall notuse, duplicate, or disseminate the Software or Authorized Trademarks except asspecifically provided in this Agreement.

*8.*                 AUTHORIZEDTRADEMARKS

Replicator shall have theright to use the Authorized Trademarks on the CD-ROMs and on the Packagingsolely as permitted by Envoy. Replicator shall not use the AuthorizedTrademarks in any other manner unless authorized by Envoy in writing.

*9.*                 SUBCONTRACTING

Replicator may subcontractto third parties such portions of the reproduction, printing, and packaging ofthe Software and Packaging as Replicator may, in its discretion, determine;provided, however, that Replicator remains primarily liable for the performanceof any such subcontractor and that any replication of the Software may besubcontracted only to parties which have been previously approved by Envoy andwhich agree in writing to be bound by the provisions of Sections 7b, 7d, 7e,10, 11b, 12, and 14c of this Agreement.

*10.*          CONFIDENTIALITY

Replicator acknowledgesthat, from time to time, it may be exposed to certain confidential informationof Envoy concerning the Software, such as proposed new versions of theSoftware, the identity of Envoy’s suppliers and customers, and Envoy’sunannounced marketing plans for Products (“Confidential Information”). Replicatoragrees that it will take appropriate steps to protect such ConfidentialInformation from unauthorized disclosure, that it will not disclose suchInformation to any third party, and that it will not use any ConfidentialInformation other than as authorized by this Agreement without the priorwritten consent of Envoy. Replicator’s obligations with respect to ConfidentialInformation shall continue until such information becomes publicly known otherthan by breach of this Agreement by Replicator.

*11.*          INDEMNIFICATION

a.      Envoywill defend, indemnify, and hold Replicator harmless from and against any andall liabilities, losses, damages, including reasonable out-of-pocket costs andexpenses associated with any claim or action brought against Replicator foractual or alleged breach of Envoy’s warranties hereunder.

b.     Replicatorshall indemnify and hold Envoy harmless from and against any and allliabilities, losses, damages, costs, including reasonable out-of-pocket costsand expenses associated with any claim or action brought against Envoy that mayarise from Replicator’s alleged breach of any of its representations orwarranties or alleged improper or unauthorized replication, packaging, ordelivery of the Software or Packaging.

c.      Indemnification under this Section 11 shall be contingentupon the party seeking indemnification giving the indemnifying party promptwritten notification of a claim, as well as information, reasonable assistance,and exclusive authority to evaluate, defend, and settle such claim.

*12*             LIMITATIONOF LIABILITY

ENVOY’S LIABILITY TOREPLICATOR SHALL BE LIMITED TO DIRECT DAMAGES AND, EXCEPT AS PROVIDED IN THE SECTION TITLED“INDEMNIFICATION,” SHALL NOT EXCEED THE AMOUNT OF THE FEES PAID BY ENVOY TOREPLICATOR HEREUNDER. IN NO EVENT WILL ENVOY BE LIABLE FOR INCIDENTAL, INDIRECT,SPECIAL, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) SUFFERED BYREPLICATOR, EVEN IF ENVOY HAS PREVIOUSLY BEEN ADVISED OF THE POSSIBILITY OFSUCH DAMAGES.

*13.*          TERMAND TERMINATION

a.      ThisAgreement will continue in effect for one year from the date hereof. It will beautomatically renewed for additional one-year terms on the anniversary of thatdate.

b.     Eitherparty may terminate this Agreement at any time, with or without cause, uponthirty-days advance written notice to the other party.

c.      Upon termination of this Agreement for any reason, Replicatorwill immediately cease duplication of the Software and Packaging and willreturn to Envoy, at Replicator’s expense, the master versions of all Softwareand Packaging, and all Confidential Information of Envoy. Envoy shall remit toReplicator all fees due from Envoy within 30 days of such termination. Terminationby either party will not affect the rights of any end user who has received theSoftware. Sections 6, 7, 10, 11, 12, 13c, and 14c shall survive termination ofthis Agreement.

*14.*          GENERALPROVISIONS

a.      Except asprovided in Section 9, this Agreement and Replicator’s duties hereundermay not be assigned by Replicator directly or by operation of law to any otherperson, firm, or corporation without the express written approval of Envoy. Uponwritten notice to Replicator, Envoy may assign this Agreement to a parent,subsidiary, affiliate, or successor. This Agreement shall be binding upon andinure to the benefit of permitted successors and assigns.

b.     Allnotices and demands hereunder shall be in writing and shall be served bypersonal service or by mail at the address of the receiving party set forth inthis Agreement (or at such different address as may be designated by such partyby written notice to the other party). All notices or demands by mail shall beby certified or registered mail, return receipt requested, or bynationally-recognized private express courier, and shall be deemed completeupon receipt.

c.      ThisAgreement shall be governed by and construed in accordance with the substantivelaws of the State of                  ,excluding that body of law controlling conflicts of law. Any dispute arisingout of or relating to this Agreement, or breach thereof, shall be firstsubmitted to the senior management of each party for resolution. If the disputecannot be resolved within 30 days after such matter is referred to seniormanagement, then the dispute shall be submitted to binding arbitration in                  County,                  ,in accordance with the Commercial Arbitration Rules of the AmericanArbitration Association then in effect. All discovery must be concluded within60 days after the submission to arbitration. The decision of the arbitrationpanel shall be final and may be entered as judgment in any court of competentjurisdiction. The arbitration panel shall determine the allocation ofarbitration costs and reasonable attorneys’ fees between the parties accordingto the relative merits of each party’s case. EACH PARTY HEREBY WAIVES THE RIGHTTO TRIAL BY JURY.

d.     Each partyis acting as an independent contractor and not as an agent, partner, or jointventurer with the other party for any purpose. Except as provided in thisAgreement, neither party shall have any right, power, or authority to act or tocreate any obligation, express or implied, on behalf of the other.

e.      Neitherparty shall be responsible for delays or failure of performance resulting fromacts beyond the reasonable control of such party. Such acts shall include, butnot be limited to, acts of God, strikes, walkouts, riots, acts of war,epidemics, failure of suppliers to perform, governmental regulations, powerfailures, earthquakes, or other disasters.

f.      Thetitles and headings of the various sections and paragraphs in this Agreementare intended solely for reference and are not intended for any other purposewhatsoever or to explain, modify, or place any construction on any of theprovisions of this Agreement.

g.      Noprovisions in either party’s purchase orders, or in any other business formsemployed by either party, will supersede the terms and conditions of thisAgreement, and no supplement, modification, or amendment of this Agreementshall be binding, unless executed in writing by a duly authorized representativeof each party to this Agreement.

h.     Theparties have read this Agreement and agree to be bound by its terms, andfurther agree that this Agreement (including its Exhibit A which is herebyincorporated into and made a part of this Agreement) constitutes the completeand entire agreement of the parties and supersedes all previous communications,oral or written, between them relating to the license and to the subject matterhereof. No representations or statements of any kind made by either party thatare not expressly stated herein shall be binding on such party.

IN WITNESS WHEREOF, theparties have executed this Agreement as of the date specified above.

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| ENVOY DATA INC.       | REPLICATOR           |
|-----------------------|----------------------|
| “Envoy”     |                 |
| By:                   |                 |   | By: |   |   |
|                  |                 |   |   |
| Print Name and  Title | Print Name and Title |   |
|                       |                      |  |  |  |  |  |

 

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**EXHIBIT 10.27**

**EXHIBITA**

**REPLICATOR’S FEES**

 

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