Exhibit 10.2


 


March 13,
2009


 


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 March 16, 2009 (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) 36 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 effective price per share of the Company’s common shares
(on an as-if converted basis in the event of a convertible security) paid by
all of the investors in the Financing received by the Company at closing (the “SRA
Warrants”).  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 of $0.55 per share and the underlying shares will be
fully registered and issued from the Company’s shelf.


 


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).


 

















 


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.


 


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: 

  	
  

  	
   

  	
  By:

  	
  /s/ Gerard T. Feeney

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  David N. Olson

  	
   

  	
   

  	
  Mr. Gerard T. Feeney

  
	
   

  	
  Managing Director

  	
   

  	
   

  	
  Chief Financial Officer

  
	
  Date: 3/13/09

  	
   

  	
  Date: 3/13/09

  



 

















 


Engagement Letter Expense Annex


 


CONFIDENTIAL


 


Security Research Associates, Inc. (“SRA”) and Wave Systems Corp.
(the “Company”) are parties to an engagement letter dated March 13,
2009.  In connection with the engagement
letter, SRA and the Company hereby agree as follows:


 


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.


 


It is agreed that SRA will not charge Wave System Corp. expenses
associated with this financing.


 


	
  Security Research Associates, Inc.

  	
   

  	
  Wave Systems Corp.

  
	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  

  	
   

  	
  By:

  	
  /s/ Gerard T. Feeney

  
	
   

  	
  David N. Olson

  	
   

  	
   

  	
  Gerard T. Feeney

  
	
   

  	
  Managing Director

  	
   

  	
   

  	
  CFO