Document:

Exhibit 10.1

 

SUBSCRIPTION
AGREEMENT

 

March 13, 2009

 

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 785,000  shares of Class A Common Stock (the “Total
Shares”), par value $0.01 per share (the “Common Stock”) for a
purchase price of $0.55 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 392,500 shares of Common Stock at an exercise price of $0.55 per share
(the “Exercise Price”).

 

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 Common 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
transaction for the purchase of the Investor Shares will to settle via DVP (as
defined below) UNLESS (a) you
elect to receive your Investor Shares using the Deposit Withdrawal Agent
Commission (“DWAC”) system of the Depository Trust Company or (b) 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).

            
(Initial Here For  Settlement through
DWAC)

 

“DVP” means delivery versus payment  through DTC (i.e., the Company shall deliver
Investor 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 (866) 592-8132 (or as a back up 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 Exhibit 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 and contact information (contact name, phone number,
email address)

 

·                                          Internal
Account number at Prime Broker

 

·                                          Institutional
and 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 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: 

 

Shares issuable upon exercise of Investor
Warrant:  

 

Price Per
Investor Share:  $0.55                                                                                                                             Investor
Warrant Exercise Price:  $0.55

 

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: March 13, 2009

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INVESTOR

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Phone #:

  	
   

  
	
   

  	
  Email:

  	
   

  

 

	
  Agreed and
  Accepted

  
	
  March 13,
  2009:

  
	
   

  
	
  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:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  If you have elected to settle via DWAC, please include the following
  additional information:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Name of DTC
  Participant (broker-dealer at which the account or accounts to be credited
  with the Shares are maintained)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  DTC Participant
  Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Name of
  Account at DTC Participant being credited with the Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Account
  Number at DTC Participant being credited with the Shares

  	
   

  

 

 

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:  (866) 592-8132 (or as a back up 415-925-0264)

Send “Attention Devon Wygaerts”

Devon can be reached at 415-925-0346.

 

	
  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 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 Warrant 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 Agents”) 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 March 16, 2009 (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 Investor
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, (b) the Company will deliver (by overnight courier) an Investor
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 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
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
the fulfillment of those 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.

 

3.3.                            Delivery
of Funds; Delivery of Investor Shares.

 

(a)                                  Subject
to all of the provisions set forth in Section 5 of the Subscription Agreement:  Unless the Investor elects to settle the
Investor Shares purchased by such Investor by means of the cash account or DWAC
option set forth in Section 5 of the Subscription Agreement, no later than March 16, 2009, (i) the
Investor shall confirm that the account or accounts at SRA to be credited with
the Investor Shares being purchased by the Investor have a minimum balance
equal to the aggregate purchase price for the Investor Securities being
purchased by the Investor, (ii) authorize and instruct SRA to execute a
trade for the Investor Shares, (an electronic confirmation will be generated to
the clearing firm which will then affirm the trade) and  (iii) the Company shall deliver the
Investor 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.

 

(b)                                 If
the Investor elects to settle the Investor Securities purchased by such
Investor by means of the cash account option set forth in Section 5 of the
Subscription Agreement, no later than March 16,
2009, the Company shall deliver the Investor Securities 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.

 

(c)                                  If
the Investor elects to settle the Investor Securities purchased by such
Investor by means of the DWAC system of the Depository Trust Company, no later than March 16, 2009, the
Investor shall (i) pay to the Company by wire transfer of immediately
available funds to the account set forth on Annex III hereto the aggregate
purchase price for the Shares being purchased by the Investor hereunder and (ii) direct
the broker-dealer at which the account or accounts to be credited with the
Shares being purchased by such Investor are maintained, which broker/dealer
shall be a DTC participant, to set up a Deposit/Withdrawal at Custodian (“DWAC”)
instructing American Stock Transfer Corporation, the Company’s transfer agent,
to credit such account or accounts with the Shares by means of an electronic
book-entry delivery.  Promptly following
the delivery to the Company of the purchase price for the Shares as 

 

 

described herein, the
Company shall direct its transfer agent to credit the Investor’s account or
accounts with the Shares pursuant to the information contained in the DWAC.

 

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: (i) 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; (ii) 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 (iii) 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, 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 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 (x) engaged in any
short selling, (y) established or increased any “put equivalent
position” as defined in Rule 16(a)-1(h) under the Securities
Exchange Act of 1934 or (z) 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, and (a) if within the
domestic United States, will be delivered 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, will be delivered by International Federal Express or facsimile.  Any such communication will be deemed
delivered (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 in each case shall 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 III

 

Company
Wire Instructions for Settlement via DWAC

 

NOTE: 
THESE INSTRUCTIONS ARE ONLY FOR INVESTORS SEEKING TO SETTLE THE INVESTOR
SECURITIES PURCHASED BY MEANS OF THE DWAC SYSTEM OF THE DEPOSITORY TRUST
COMPANY.

 

In accordance with section 3.3(c) 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 #  
MRMDUS33Exhibit 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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00155-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00155-of-00352.parquet"}]]