Document:

Exhibit 4.1

 

FORM OF NOTE

 

[FACE OF GLOBAL NOTE]

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.  THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

ANGLOGOLD ASHANTI HOLDINGS PLC

 

[·]% Notes due 20[·]

 

Guaranteed By

ANGLOGOLD ASHANTI LIMITED

 

	
No. [001]
    	
$[·]
    
	
 
    	
CUSIP No. [·]
    
	
 
    	
ISIN No. [·]
    

 

ANGLOGOLD ASHANTI HOLDINGS PLC, a company incorporated under the laws of the Isle of Man (herein called the “Company”, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of $[·] on [·], 20[·] and to pay interest thereon from [·], 20[·] or from the most recent Interest Payment Date (as defined below) to which interest has been paid or duly provided for, semi-annually in arrears on [·] and [·] in each year, commencing [·], 20[·] (each, an “Interest Payment Date”), at the rate of [·]% per annum, until principal hereof is paid or made available for payment.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note is registered at the close of business on [date] and [date] each, a “Regular Record Date” for such interest.  Any such interest which is payable, but is not punctually paid or duly provided for, on such Interest Payment Date will forthwith cease to be payable to such Holder on the relevant Regular Record Date by virtue of having been such Holder, and such defaulted interest and, if applicable, interest on such defaulted interest (to the extent lawful) at the rate specified in this Note may be paid by the Company or the Guarantor, at its election , in each case, as provided in the Indenture.

 

 

Interest on this Note shall be computed on the basis of a 360-day year of twelve 30-day months.

 

Payment of the principal of, and interest, if any, on this Note will be made at the office or agency of the Company maintained for that purpose in New York City, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

 

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Unless the certificate of authentication hereon has been executed by the Authentication Agent by manual signature of an authorized signatory, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed manually or in facsimile.

 

Dated:     [date]

 

	
 
    	
ANGLOGOLD ASHANTI   HOLDINGS PLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

Dated:

 

This is one of the Notes of the series designated therein referred to in the within mentioned Indenture.

 

	
 
    	
THE BANK OF NEW   YORK MELLON, as Trustee
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Authorized   Signatory
    

 

 

FORM OF GUARANTEE

 

For value received, ANGLOGOLD ASHANTI LIMITED, a corporation duly organized and existing under the laws of South Africa (herein called the “Guarantor”, which term includes any successor Person under the Indenture (the “Indenture”) referred to in the Note on which this Guarantee is endorsed), has unconditionally guaranteed, pursuant to the terms of the Guarantee contained in Article Sixteen of the Indenture, the due and punctual payment of the principal of and any premium and interest on such Note, when and as the same shall become due and payable, whether at the Stated Maturity, by declaration of acceleration, call for redemption or otherwise, in accordance with the terms of such Note and the Indenture.

 

All payments pursuant to this Guarantee shall be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the Isle of Man or South Africa or the jurisdiction of organization of any successor to the Company, or any political subdivision or taxing authority thereof or therein, unless such taxes, duties, assessments or governmental charges are required by the Isle of Man or South Africa or such other jurisdiction or any such subdivision or authority to be withheld or deducted. In that event, the Guarantor will pay such Additional Amounts as will result (after deduction of such taxes, duties, assessments or governmental charges and any additional taxes, duties, assessments or governmental charges payable in respect of such) in the payment to the Holder of the Note on which this Guarantee is endorsed of the amounts which would have been payable in respect of the Guarantee thereof had no such withholding or deduction been required, subject to certain exceptions as set forth in Article Ten of the Indenture.

 

The obligations of the Guarantor to the Holders of the Notes and to the Trustee pursuant to the Guarantee and the Indenture are expressly set forth in Article Sixteen of the Indenture, and reference is hereby made to such Article and Indenture for the precise terms of the Guarantee.

 

The Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which this Guarantee is endorsed shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized signatories.

 

Capitalized terms used herein and not otherwise defined herein have the meanings specified in the Indenture.

 

 

IN WITNESS WHEREOF, the Guarantor has caused this instrument to be duly executed.

 

	
 
    	
Dated:
    
	
 
    	
 
    
	
 
    	
ANGLOGOLD ASHANTI   LIMITED
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title
    	
 
    

 

 

[REVERSE OF GLOBAL NOTE]

 

This Note is one of a duly authorized issue of securities of the Company (herein called the “Note”), issued and to be issued in one or more series under an Indenture, dated as of April 28, 2010 (herein called the “Indenture” which term shall have the meaning assigned to it in such instrument), among the Company, AngloGold Ashanti Limited, as Guarantor (herein called the “Guarantor”, which term includes any successor Person under the Indenture) and The Bank of New York Mellon, as Trustee (herein called the “Trustee”, which term includes any other successor trustee under the Indenture) and reference is hereby made to the Indenture and the Officers’ Certificate of the Company and the Guarantor dated as of July 30, 2013 issued pursuant to Section 301 of the Indenture (herein called the “Officers’ Certificate”) for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee, and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered.  This Note is one of the series designated on the face hereof, initially limited in aggregate principal amount to U.S.$ [·].

 

The Company may, without the consent of the holders of the Notes of any series, issue additional notes of one or more series having the same ranking and same interest rate, maturity date, redemption terms and other terms as the Notes except for the price to the public and issue date, provided, however, that no such additional notes may be issued unless they are fungible with the Notes for U.S. federal income tax purposes.  Any such additional notes, together with the Notes, will constitute a single series of securities under the Indenture.  There is no limitation on the amount of Notes or other debt securities that the Company may issue under the Indenture.

 

The Notes will be unsecured and unsubordinated indebtedness of the Company and will rank equally with all of its other unsecured and unsubordinated indebtedness from time to time outstanding.

 

The Notes of this series are issuable only in registered form without coupons in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof.  The Notes will initially be issued in the form of one or more global notes (each, a “Global Note”).  Except as provided in the Indenture, a Global Note shall not be exchangeable for one or more definitive Notes.

 

If an Event of Default with respect to Notes of this series occurs and is continuing, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Notes of this series may declare the principal of all of the Notes of this series to be due and payable in the manner and with the effect provided in the Indenture.

 

If an Event of Default with respect to the Notes occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the 

 

 

rights of the Holders of the Notes of this series and related coupons by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in the Indenture or in aid of the exercise of any power granted therein, or to enforce any other proper remedy.

 

All payments of, or in respect of, principal of and any premium and interest on any Note of this series, and all payments pursuant to the Guarantee, shall be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of a Taxing Jurisdiction, unless such taxes, duties, assessments or governmental charges are required by such Taxing Jurisdiction to be withheld or deducted. In that event, the Company or the Guarantor, as applicable, will pay such additional amounts of, or in respect of, principal and any premium and interest (“Additional Amounts”) as will result (after deduction of such taxes, duties, assessments or governmental charges and any additional taxes, duties, assessments or governmental charges payable in respect of such) in the payment to each Holder of Notes of the amounts which would have been payable in respect of such Notes or the Guarantee, as the case may be, had no such withholding or deduction been required, except that no Additional Amounts shall be so payable for or on account of:

 

(1)           any tax, duty, assessment or other governmental charge imposed by any jurisdiction other than a Taxing Jurisdiction (including the United States or any political subdivision or taxing authority thereof or therein);

 

(2)           any tax, duty, assessment or other governmental charge which would not have been imposed but for (A) the existence of any present or former connection between such Holder or a third party on behalf of such Holder by reason of its (or between a fiduciary, settlor, beneficiary member, shareholder or possessor of a power over such Holder, if such Holder is an estate, trust, partnership or corporation) having some present or former connection with a Taxing Jurisdiction (including being or having been a citizen or resident of a Taxing Jurisdiction or being or having been engaged in a trade or business or present therein or having or having had a permanent establishment therein, but not including the mere holding or ownership of a debt security), or (B) the presentation of such Note or the Guarantee thereof for payment more than 30 days after the date on which such payment became due or was provided for, whichever is later;

 

(3)           any estate, inheritance, gift, sale, transfer, personal property or similar tax, duty, assessment or other governmental charge;

 

(4)           any tax, duty, assessment or other governmental charge which is payable otherwise than by withholding or deduction from payments of (or in respect of) principal of or any premium or interest on the Notes or the Guarantee thereof;

 

 

(5)           any tax, duty, assessment or other governmental charge that is imposed or withheld by reason of the failure to comply by the Holder or the beneficial owner of a Note with a request of the Company or the Guarantor addressed to the Holder (A) to provide information concerning the nationality, residence or identity of the Holder or such beneficial owner or (B) to make any declaration or other similar claim or satisfy any information or reporting requirement, which, in the case of (A) or (B), is required or imposed by statute, treaty, regulation or administrative practice of the Taxing Jurisdiction as a precondition to exemption from all or part of such tax, assessment or other governmental charge;

 

(6)           any withholding or deduction that is imposed on a payment to an individual and required to be made pursuant to any European Union Directive on the taxation of savings implementing the conclusions of the ECOFIN (European Union Economic and Finance Ministers) Counsel Meeting of 26-27 November 2000 or any law implementing or complying with or introduced in order to conform to such Directive; or

 

(7)           any combination of items (1), (2), (3), (4), (5) and (6).

 

Additionally, Additional Amounts shall not be paid with respect to any payment in respect of any Note to any Holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to such Additional Amounts had it been the Holder of such Note.

 

References herein to the payment of the principal of or any premium or interest on, or in respect of, any Note of this series (or any payments pursuant to the Guarantee thereof) such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to the provisions herein and express mention of the payment of Additional Amounts in any provisions hereof shall not be construed as excluding Additional Amounts in those provisions hereof where such express mention is not made.

 

The provisions herein shall apply mutatis mutandis to any withholding or deduction for or on account of any present or future taxes, assessments or governmental charges of whatever nature of any jurisdiction in which any successor Person to the Company or the Guarantor is organized, or any political subdivision or taxing authority thereof or therein.

 

The Notes of this series are redeemable at the option of the Company or the Guarantor (or their successors) in whole but not in part at any time at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption (except in the case of Outstanding Original Issue Discount Securities which may be redeemed at the Redemption Price specified by 

 

 

the terms of such series of Notes) if, (i) the Company or the Guarantor is or would be required to pay Additional Amounts as a result of any change in or amendment to the laws or any regulations or rulings promulgated thereunder of a Taxing Jurisdiction or any change in the official application or interpretation of such laws, regulations or rulings, or any change in the official application or interpretation of, or any execution of or amendment to, any treaty or treaties affecting taxation to which a Taxing Jurisdiction is a party, which change, execution or amendment becomes effective on or after the date of issuance of this series on July 30, 2013 (or in the case of a successor Person to the Company or the Guarantor, the date on which such successor Person became such or in the case of an assumption by the Guarantor or its Subsidiaries of obligations of the Company under the Notes, the date of such assumption), or (ii) as a result of any change in the official application or interpretation of, or any execution of or amendment to, any treaty or treaties affecting taxation to which a Taxing Jurisdiction is a party, which change, execution or amendment is proposed and becomes effective on or after a date on which the Guarantor or any of its Subsidiaries (an “Intercompany Debtor”) borrows money from the Company, the Intercompany Debtor is or would be required to deduct or withhold tax on any payment to the Company to enable the Company to make any payment of principal, premium, if any, or interest, and the payment of such Additional Amounts, in the case of clause (i), or such deductions or withholding, in the case of clause (ii), cannot be avoided by the use of any reasonable measures available to the Company, the Guarantor or the Intercompany Debtor. Prior to the giving of notice of such redemption, the Company will deliver to the Trustee an Officers’ Certificate, stating that the Company is entitled to effect such redemption and setting forth in reasonable detail a statement of circumstances showing that the conditions precedent to the right of the Company to redeem such Notes pursuant to the Indenture have been satisfied.

 

At any time and from time to time prior to July 30, 2016, the Company or the Guarantor may redeem the Notes in whole or in part, at its option, upon not less than 30 nor more than 60 days’ prior notice at a Redemption Price equal to 100% of the principal amount of such Notes plus the relevant Applicable Premium as of, and accrued and unpaid interest and Additional Amounts, if any, to the Redemption Date.

 

At any time and from time to time on or after July 30, 2016, the Company or the Guarantor may redeem the Notes, in whole or in part, at a Redemption Price equal to the percentage of principal amount set forth below plus accrued and unpaid interest and Additional Amounts, if any, to the Redemption Date, if redeemed during the twelve-month period beginning on July 30 of the years indicated below:

 

	
 
    	
 
    	
Percentage
    	
 
    
	
2016
    	
 
    	
106.375
    	
%
    
	
2017
    	
 
    	
104.250
    	
%
    
	
2018
    	
 
    	
102.125
    	
%
    
	
2019 and thereafter
    	
 
    	
100.000
    	
%
    

 

 

At any time and from time to time prior to July 30, 2016, the Company or the Guarantor may redeem Notes with the net cash proceeds received by the Company or the Guarantor from any Equity Offering at a Redemption Price equal to 108.500% plus accrued and unpaid interest to the Redemption Date, in an aggregate principal amount for all such redemptions not to exceed 35% of the original aggregate principal amount of the Notes, provided that

 

(1)           in each case the redemption takes place not later than 180 days after the closing of the related Equity Offering, and

 

(2)           not less than 65% of the original aggregate principal amount of the Notes initially issued remains outstanding immediately thereafter.

 

Any redemption and notice of redemption may, at the Company or the Guarantor’s discretion, be subject to the satisfaction of one or more conditions precedent (including, in the case of a redemption related to an Equity Offering, the consummation of such Equity Offering).

 

If the Redemption Date is on or after a Regular Record Date and on or before the Related Interest Payment Date, the accrued and unpaid interest will be paid to the Person in whose name the Note is registered at the close of business on such record date, and no additional interest will be payable to holders of Notes whose Notes will be subject to redemption by the Company or the Guarantor.

 

The terms Applicable Premium, Equity Offering and Treasury Rate (and defined terms used therein) have the meanings set forth in Annex I to the Officer’s Certificate to the Indenture, dated July 30, 2013, and, to the extent applicable to the defined terms used therein, the Indenture, as applicable.

 

If less than all of the Notes are to be redeemed at any time, the Trustee will select the Notes for redemption in compliance with the requirements of the principal securities exchange, if any, on which the Notes are listed, as certified to the Trustee by the Guarantor, and in compliance with the requirements of DTC, or if the Notes are not so listed or such exchange prescribes no method of selection and the Notes are not held through DTC or DTC prescribes no method of selection, on a pro rata basis; provided, however, that no Note of $1,000 in aggregate principal amount or less shall be redeemed in part.

 

If any Note is to be redeemed in part only, the notice of redemption that relates to that Note shall state the portion of the principal amount thereof to be redeemed, in which case a portion of the original Note will be issued in the name of the holder thereof upon cancellation of the original Note. In the case of a global Note, an appropriate notation will be made on such Note to decrease the principal amount thereof to an amount equal to the unredeemed portion thereof. Subject to the terms of the applicable redemption notice (including any conditions contained 

 

 

therein), Notes called for redemption become due on the date fixed for redemption. On and after the Redemption Date, interest ceases to accrue on Notes or portions of them called for redemption unless the Company or the Guarantor, as applicable, defaults in the making of such redemption payment.

 

Unless the Company or the Guarantor defaults in payment of the Redemption Price, on and after the Redemption Date, interest will cease to accrue on the Notes or portions thereof called for redemption.

 

If a Change of Control Repurchase Event occurs in respect of the Notes of this series, unless either the Company or the Guarantor has exercised its right to redeem the Notes of this series as described above, the Company will be required to make an offer to each Holder of the Notes of this series to repurchase all or any part (in minimal denominations of $1,000 and integral multiples of $1,000 in excess thereof) of that Holder’s Notes of this series at a repurchase price in cash equal to 101 % of the aggregate principal amount of the Notes of this series plus any accrued and unpaid interest on the Notes repurchased to, but not including, the date of repurchase. Within 30 days following any Change of Control Repurchase Event or, at the option of the Company, prior to any Change of Control, but after the public announcement of the proposed Change of Control, the Company will mail a notice to each Holder, with a copy to the Trustee, describing the transaction or transactions that constitute or may constitute the Change of Control Repurchase Event and offering to repurchase the Notes of this series on the payment date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, other than as may be required by law. The notice shall, if mailed prior to the date of consummation of the Change of Control, state that the offer to purchase is conditioned on a Change of Control Repurchase Event occurring on or prior to the payment date specified in the notice. Holders of the Notes of this series electing to have their Notes of this series purchased pursuant to a Change of Control Repurchase Event offer will be required to surrender their Notes of this series, with the form entitled “Option of Holder to Elect Purchase” on the reverse of this Note completed, to the Paying Agent at the address specified in the notice, or transfer their Notes of this series to the Paying Agent by book-entry transfer pursuant to the applicable procedures of the Paying Agent, prior to the close of business on the third business day prior to the repurchase payment date. The Company will comply with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended, (the “Securities Exchange Act”) and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes of this series as a result of a Change of Control Repurchase Event. To the extent that the provisions of any applicable securities or corporate laws or regulations conflict with the Change of Control Repurchase Event provisions of the Notes of this series, the Company will comply with the applicable securities or corporate laws and regulations and will not be deemed to have breached its obligations under the Change of Control Repurchase Event provisions of the Notes of this series by virtue of such conflict.

 

 

On the repurchase date following a Change of Control Repurchase Event, the Company will, to the extent lawful:

 

(1)           accept for payment all Notes of this series or portions of the Notes of this series properly tendered pursuant to its offer;

 

(2)           deposit with the Paying Agent an amount equal to the aggregate purchase price in respect of all the Notes of this series or portions of Notes of this series properly tendered; and

 

(3)           deliver or cause to be delivered to the Trustee the Notes of this series properly accepted, together with an Officers’ Certificate stating the aggregate principal amount of Notes of this series being purchased by the Company.

 

The Paying Agent will promptly mail to each Holder of Notes of this series properly tendered the purchase price for the Notes of this series (or make payment through the Depositary), and the Trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder a new Note of this series equal in principal amount to any unpurchased portion of any Notes of this series surrendered; provided, however, that each new Note of this series will be in a minimum principal amount of $1,000 and integral multiples of $1,000 in excess thereof.

 

The Company will not be required to make an offer to repurchase the Notes of this series issued by it upon a Change of Control Repurchase Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by the Company and such third party purchases all Notes of this series properly tendered and not withdrawn under its offer.

 

“Change of Control” means the occurrence of any of the following:

 

(1)           the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger, scheme of arrangement, amalgamation or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Guarantor and its subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d)(3) of the Securities Exchange Act) other than to the Guarantor or one of its subsidiaries;

 

(2)           the consummation of any transaction (including, without limitation, any merger, scheme of arrangement, amalgamation or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Securities Exchange Act) (other than a subsidiary of the Guarantor) becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act), directly or indirectly, of more than 50% of the combined voting power of the Guarantor’s Voting Stock or other Voting Stock into which the 

 

 

Guarantor’s Voting Stock is reclassified, consolidated, exchanged or changed measured by voting power rather than number of shares;

 

(3)           the Guarantor consolidates with, or merges with or into, or enters into a scheme of arrangement with or amalgamates with, any “person” (as that term is used in Section 13(d)(3) of the Securities Exchange Act), or any person consolidates with, or merges with or into, or enters into a plan or arrangement with, the Guarantor, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Guarantor or such other person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the Voting Stock of the Guarantor outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction;

 

(4)           the first day on which the majority of the members of the Board of Directors of the Guarantor cease to be continuing directors; or

 

(5)           the adoption of a plan relating to the liquidation or dissolution of the Guarantor.

 

Notwithstanding the foregoing, a transaction will not be deemed to involve a change of control if (1) the Guarantor becomes a direct or indirect wholly-owned subsidiary of a holding company and (2)(A) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction are substantially the same as the holders of the Guarantor’s Voting Stock immediately prior to that transaction or (B) immediately following that transaction, no “person” (as that term is used in Section 13(d)(3) of the Securities Exchange Act) (other than a holding company satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company.

 

“Change of Control Repurchase Event” means the circumstance where each of the Rating Agencies has reduced its rating of the Notes of this series by one or more gradations (including gradations within ratings categories as well as between ratings categories) on any date during the 60-day period (which period shall be extended so long as the rating of the series of the Notes is under publicly announced consideration for a possible downgrade by any of the Rating Agencies) (the “Trigger Period”) after the earlier of (1) the occurrence of a Change of Control; and (2) public notice of the intention by the Guarantor to effect a Change of Control; provided, however, that a Change of Control Repurchase Event shall be deemed not to have occurred if (A) a Rating Agency that has reduced its rating of the Notes of this series by one or more gradations (including gradations within ratings categories as well as between ratings categories) during the Trigger Period does not announce or publicly confirm or inform the Trustee in writing at the Company’s request that the reduction was the 

 

 

result, in whole or in part, of any event or circumstance comprised from or arising as a result of the applicable Change of Control (regardless of whether that Change of Control shall then have occurred) or (B) a rating of the Notes of this series by one of the Rating Agencies is within the Trigger Period subsequently upgraded to a credit rating gradation not lower than that at the commencement of such 60-day period. Notwithstanding the foregoing, a Change of Control Repurchase Event will be deemed not to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated.  Any change in the outlook of a rating will not constitute a change in gradation.

 

“Continuing Director” means, as of any date of determination, any member of the Board of Directors of the Guarantor who:

 

(1)           was a member of such Board of Directors on the date of the closing of this offering; or

 

(2)           was nominated for election, elected or appointed to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination, election or appointment (either by a specific vote or by approval of the Guarantor’s proxy statement in which such member was named as a nominee for election as a director, without objection to such nomination).

 

“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors.

 

“Rating Agency” means each of Moody’s and S&P; provided, however, that if either Moody’s or S&P ceases to rate the Notes of this series or fails to make a rating of the Notes of this series publicly available for reasons outside of the Guarantor’s control, the Guarantor may select (as certified by a resolution of the Guarantor’s board of directors) a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Securities Exchange Act, as a replacement agency for Moody’s or S&P, or both of them, as the case may be.

 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.

 

“Voting Stock” of any specified “person” (as that term is used in Section 13(d)(3) of the Securities Exchange Act) as of any date means the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of such person.

 

The Indenture contains provisions for defeasance at any time of the entire indebtedness on this Note upon compliance by the Company with certain conditions set forth thereon, which provisions apply to this Note.

 

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company or the Guarantor and the rights of the Holders of the Notes of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Notes at the time Outstanding of each series to be affected.  The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Notes of each series at the time Outstanding, on behalf of the Holders of all Notes of such series to waive compliance by the Company or the Guarantor with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

 

As set forth in, and subject to, the provisions of the Indenture, no Holder of any Note of this series or any related coupon shall have any right to institute any proceeding, judicial or otherwise, with respect to the Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (i) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Notes of this series; (ii) the Holders of not less than 25% in principal amount of the Outstanding Notes of this series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee; (iii) such Holder or Holders offer to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; (iv) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (v) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Notes of this series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of the Indenture to affect, disturb or prejudice the rights of any other such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under the Indenture, except in the manner provided in the Indenture and for the equal and ratable benefit of all such Holders of Notes of this series.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, or the Guarantor which is absolute and unconditional, to pay the principal of, and interest, if any, on this Note at the time, place and rate, and in the coin or currency, herein prescribed or to convert this Note as provided in the Indenture.

 

No service charge shall be made for any such registration of transfer or exchange, but the Company, the Guarantor, or the Trustee may require payment 

 

 

of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

Prior to due presentation of this Note for registration of transfer, the Company, the Guarantor, the Trustee, and any agent of the Company or the Guarantor or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Company, the Guarantor, the Trustee, or any such agent shall be affected by notice to the contrary. None of the Company, the Guarantor, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Note in global form or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Nothing shall prevent the Company, the Guarantor, the Trustee from giving effect to any written certification, proxy or other authorization furnished by any depositary, as a Holder, with respect to such global Note or impair, as between such depositary and owners of beneficial interests in such global Note, the operation of customary practices governing the exercise of the rights of such depositary (or its nominee) as Holder of such global Note.

 

This Note shall be governed by and construed in accordance with the laws of the State of New York.

 

Unless otherwise defined herein, all terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture or the Officers’ Certificate.  To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

 

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Company pursuant to the Change of Control Repurchase Event provisions of this Note, check the following box:

 

o Purchase pursuant to Change of Control Repurchase Event

 

If you want to elect to have only part of this Note purchased by the Company pursuant to the Change of Control Repurchase Event provisions of this Note, state the amount:

 

$

 

	
Date:
    	
 
    	
 
    	
Your Signature:
    	
 
    
	
 
    	
 
    	
(Sign exactly as   your name appears on the other side of the Note)
    
	
 
    	
 
    	
 
    
	
Signature   Guarantee:
    	
 
    	
 
    
	
 
    	
 
    	
Signature must be   guaranteed by a participant in a recognized signature guarantee medallion   program or other signature guarantor acceptable to the Trustee.
    

 

 

SCHEDULE OF PRINCIPAL AMOUNT

 

The initial principal amount of this Note shall be $[·].  The following decreases/increases in the principal amount of this Note have been made:

 

	
Date of
   Decrease/Increase
    	
 
    	
Decrease in
   Principal
   Amount
    	
 
    	
Increase in
   Principal
   Amount
    	
 
    	
Total Principal
   Amount
   Following such
   Decrease/Increase
    	
 
    	
Notation Made
   by or on Behalf
   of TrusteeExhibit 4.1

 

COMMON STOCK PURCHASE WARRANT

 

To Purchase                Shares of Class A Common Stock of

 

Date:  July       , 2013

 

WAVE SYSTEMS CORP.

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,                                                            (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on July 30, 2016 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Wave Systems Corp., a Delaware corporation (the “Company”), up to 72,268 shares (the “Warrant Shares”) of Class A Common Stock, par value $0.01 per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This Warrant is being issued pursuant to the terms of that certain Placement Agent Agreement, of even date herewith, between the Company and the Holder.

 

Section 1.                                           Definitions.  As used herein, the following terms shall have the following meanings:

 

“Trading Day” means a day on which the Common Stock is traded on a Trading Market.

 

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market, the Nasdaq Global Market, the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin Board.

 

Section 2.                                           Exercise.

 

(a)                                 Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, within 2 Trading Days of the date said Notice of Exercise is delivered to the Company, if this Warrant is exercised in full, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain

 

 

records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall honor any valid Notice of Exercise Form pursuant to the terms hereof. The Company shall deliver an objection to any invalid Notice of Exercise Form within three (3) Trading Days of its receipt thereof. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

(b)                                 Exercise Price.  The exercise price of the Common Stock under this Warrant shall be $1.27 subject to adjustment hereunder (the “Exercise Price”).

 

(c)                                  Cashless Exercise. This Warrant may also be exercised by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A)  =  the VWAP on the Trading Day immediately preceding the date of such election;

 

(B)  =  the Exercise Price of this Warrant, as adjusted; and

 

(X)  =  the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

 

For purposes hereof “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined in a reasonable manner and in good faith by the Company.

 

(d)                                 Mechanics of Exercise.

 

i.                                          Authorization of Warrant Shares.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

ii.                                       Delivery of Certificates Upon Exercise.  Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by

 

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crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within three (3) Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”). This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, have been paid.

 

iii.                                    Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iv.                                   Rescission Rights.  If the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 2(d) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

v.                                      No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

 

vi.                                   Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form annexed hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

vii.                                Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

3

 

(e)                                  Exercise Without Registration Statement.  If, at the time of any exercise of this Warrant, the Warrant Shares shall not be registered under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), the Company may require, as a condition of such exercise, that the Holder furnish to the Company an opinion of counsel reasonably satisfactory to the Company to the effect that such exercise may be made without registration under the Securities Act or registration or qualification under any state or other applicable securities laws.

 

Section 3.                                           Certain Adjustments.

 

(a)                                 Stock Dividends and Splits.  If the Company, at any time while this Warrant is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Warrant), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

(b)                                 Fundamental Transactions.  If, at any time after the Initial Exercise Date, there shall occur any capital reorganization or reclassification of the Common Stock (other than a change in par value or a subdivision or combination as provided for in Section 3 (a) above), or any consolidation or merger of the Company with or into another corporation, or a transfer of all or substantially all of the assets of the Company, or the payment of a liquidating distribution, then, as part of any such reorganization, reclassification, consolidation, merger, sale, or liquidating distribution, lawful provision shall be made so that Holder shall have the right thereafter to receive upon the exercise hereof (to the extent still exercisable) the kind and amount of shares of stock or other securities or property to which the Holder would have been entitled to receive if, immediately prior to any such reorganization, reclassification, consolidation, merger, sale, or liquidating distribution, as the case may be, the Holder had held the number of shares of Common Stock which were then purchasable upon the exercise of this Warrant. In any such case, appropriate adjustment (as reasonably determined by the Board of Directors of the Company) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the Holder such that the provisions set forth in this paragraph (b) shall thereafter be applicable, as nearly as is reasonably practicable, in relation to any shares of stock or other securities or property thereafter deliverable upon the exercise of this Warrant.

 

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(c)                                  Calculations.  All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

(d)                                 Notice to Holders.  Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company shall promptly mail to each Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

Section 4.                                           Transfer of Warrant.

 

(a)                                 Transferability.

 

(i)                                     Subject to Section 4(a)(ii) and Section 5(a) below, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form annexed hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

(ii)                                  This Warrant is deemed compensation by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and, therefore, is subject to a lock-up restriction pursuant to Rule 5110(g)(1) of the FINRA Conduct Rules. This Warrant and the Common Stock issued in connection with any exercise thereof cannot be sold by the Holder 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 Rule 5110(g)(2) of the FINRA Conduct Rules.

 

(b)                                 New Warrants.  This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

 

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Section 5.                                           Miscellaneous.

 

(a)                                 Title to Warrant.  Prior to the Termination Date and subject to compliance with applicable laws and Section 4 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed.

 

(b)                                 No Rights as Shareholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

 

(c)                                  Loss, Theft, Destruction or Mutilation of Warrant.  The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

(d)                                 Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

 

(e)                                  Authorized Shares.  The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.

 

(f)                                   Governing Law; Jurisdiction.  This Warrant 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 Warrant 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

 

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hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant.

 

(g)                                  Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

(h)                                 Notices.  All notices, requests, consents and other communications hereunder will be in writing, will be mailed (a) if within the domestic United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile or (b) if delivered from outside the United States, by International Federal Express or facsimile, and will be deemed given (i) if delivered by first-class registered or certified mail domestic, three business days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed, and (iv) if delivered by facsimile, upon electronic confirmation of receipt and will be delivered and addressed as follows:

 

1.                                      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:

 

Willkie Farr & Gallagher LLP
 787 Seventh Avenue
 New York, NY 10019
 Fax: (212) 728-9272
 Attn:  Neil W. Townsend

David B. Cosgrove

 

2.                                      if to the Holder, at such address or addresses of the Holder as have been furnished to the Company in writing.

 

(i)                                     Limitation of Liability.  No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

(j)                                    Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant

 

7

 

and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

 

(k)                                 Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

 

(l)                                     Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

(m)                             Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

(n)                                 Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

[Signature page follows]

 

8

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

 

 

	
Dated:   
    	
July     ,   2013
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
WAVE   SYSTEMS CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

NOTICE OF EXERCISE

 

TO:                           WAVE SYSTEMS CORP.

 

(1)                                 The undersigned hereby elects to purchase            Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)                                 Payment shall take the form of (check applicable box):

 

o                                    in lawful money of the United States; or

 

o                                    the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)                                 Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

The Warrant Shares shall be delivered to the following:

 

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this form and supply required information.
 Do not use this form to exercise the Warrant.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

 

	
whose address is
    
	
 
    
	
 
    
	
Dated:
    
	
 
    
	
 
    
	
Holder’s Signature:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Holder’s Address:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature   Guaranteed:
    	
 
    	
 
    
				

 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

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