Exhibit 10.1


SUBSCRIPTION
AGREEMENT


October 30, 2006


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 up to 3,693,092 shares
of Class A Common Stock (the “Total Shares”), par value $0.01 per share
(the “Common Stock”), subject to adjustment by the Company’s Board of
Directors, for a purchase price of $2.73 per share (the “Purchase
Price”).


3.             The offering and
sale of the Total Shares (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. 333-130409) 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 Total Shares 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 that portion of the Total Shares
set forth below (the “Shares”) for the aggregate purchase price set
forth below.  The Shares shall be
purchased pursuant to the Terms and Conditions for Purchase of Shares attached
hereto as Annex I and incorporated herein by this reference as if fully
set forth herein.


5.               The transaction will to settle via DVP (as defined
below) UNLESS 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).


“DVP” means
delivery versus payment  through DTC
(i.e., the Company shall deliver 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 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 Annex 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 &
contact information (contact name, phone number, email address)


·                  Internal Account number at Prime Broker


·                  Institutional & 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
represents that, prior to or in connection with the receipt of this Agreement,
it has received the final U.S. Base Prospectus, dated January 13, 2006, which
is a part of the Company’s Registration Statement, and has received 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.



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SIGNATURE PAGE


Number of Shares:
______________________________


Purchase Price Per
Share: $2.73


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:
    October 30, 2006

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INVESTOR

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Phone #:

  	
   

  
	
   

  	
  Email:

  	
   

  
				



 


Agreed and Accepted

October 30, 2006:


WAVE SYSTEMS CORP.


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


 


[Signature—Subscription
Agreement]









 



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 Shares 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:

  	
   

  	
   

  



 


 















 


 


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:  415-925-0264

Send “Attention Devon Wygaerts”

(Devon can be reached at 415-925-0346 or Devon@sracap.com)




	
  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-2














 


 


ANNEX I


TERMS AND
CONDITIONS FOR PURCHASE OF SHARES


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 Shares. 
Subject to the terms and conditions of this Agreement, the Company has
authorized the sale of the Shares.


2.             Agreement
to Sell and Purchase the Shares; 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 Shares
set forth on the last page of this Agreement to which these Terms and
Conditions for Purchase of Shares 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 Total Shares to them as part of the Offering.  The Investor and the Other Investors are
hereinafter sometimes collectively referred to as the “Investors”.  The Company may complete sales of the
remaining Total Shares 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 Shares 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 Shares and Funds.


3.1.         Closing.  The completion of the purchase and sale of
the Shares (the “Closing”) will occur on or before November 2, 2006 (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
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; and (b) the aggregate purchase price for the Shares 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 Shares to the Investor will be subject to the receipt by the Company of the
aggregate purchase price for the Shares being purchased hereunder as set forth
on the Signature 



 Annex-3
 






 



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 Shares will be subject to the accuracy in all material respects on
the Closing Date of the representations and warranties made by the Company in
Section 4.1 below and the fulfillment of those undertakings of the Company with
respect to the Shares and/or the Investor to be fulfilled prior to the Closing
Date (collectively, the “Company Closing Conditions”).  The Investor’s obligations are expressly not
conditioned on the purchase by any or all of the Other Investors of the
remaining Total Shares that they have agreed to purchase from the Company.


3.3.         Delivery
of Funds; Delivery of Shares.


Subject to all of the
provisions set forth in Section 5 of the Subscription Agreement:  Unless the Investor elects to settle the
Shares 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, (i) the Investor
shall confirm that the account or accounts at SRA to be credited with the
Shares being purchased by the Investor have a minimum balance equal to the
aggregate purchase price for the Shares being purchased by the Investor (ii)
authorize and instruct SRA to execute a trade for the Shares, (an electronic
confirmation will be generated to the clearing firm which will then affirm the
trade) and  (iii) the Company shall
deliver the 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.


If the Investor elects to
settle the Shares 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 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.


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 Shares,
including investments in securities 



 Annex-4
 






 



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 Shares; (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 Shares 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 Shares, or possession or
distribution of offering materials in connection with the issue of the Shares
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 Shares or
has in its possession or distributes any offering material, in all cases at its
own expense.  The Placement Agents are
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
Shares, 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) and except as
the indemnification agreements of the Investor herein may be legally
unenforceable.


(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 Shares 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 Shares.


(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 



 Annex-5
 






 



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 Shares 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
electric 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.



 Annex-6
 






 



 


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 Shares to such
Investor.


13.          Entire
Agreement.  This Agreement 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-7