SUBSCRIPTION AGREEMENT

EXHIBIT 99.1

SUBSCRIPTION AGREEMENT

May 23, 2007

Wave Systems Corp.
480 Pleasant Street
Lee, MA 01238

The undersigned (the “ Investor ”) hereby confirms its agreement with you as follows:

1.             This Subscription Agreement (this “ Agreement ”) is made as of the date set forth below between Wave Systems Corp., a Delaware corporation (the “ Company ”), and the Investor.

2.             The Company has authorized the sale and issuance to certain investors of up to 7,317,073 shares of Class A Common Stock (the “ Total Shares ”), par value $0.01 per share (the “ Common Stock ”), subject to adjustment by the Company’s Board of Directors, for a purchase price of $2.05 per share (the “ Purchase Price ”).

3.             The offering and sale of the Total Shares (the “ Offering ”) are being made pursuant to the Company’s registration statement including a base prospectus (the “ U.S. Base Prospectus ”) on Form S-3 (Registration No. 333-141429) filed with the United States Securities and Exchange Commission (the “ Commission ”) (which, together with all amendments or supplements thereto is referred to herein as the “ Registration Statement ”) and a Prospectus Supplement containing certain supplemental information regarding the Total Shares and terms of the Offering that will be filed with the Commission (the “ Prospectus Supplement ”).

4.             The Company and the Investor agree that the Investor will purchase from the Company and the Company will issue and sell to the Investor that portion of the Total Shares set forth below (the “Shares”) for the aggregate purchase price set forth below.  The Shares shall be purchased pursuant to the Terms and Conditions for Purchase of Shares attached hereto as Annex I and incorporated herein by this reference as if fully set forth herein.

5.             The transaction will to settle via DVP (as defined below) UNLESS you have a cash account with Security Research Associates, Inc. (“SRA”) with sufficient cash to fund the Purchase Price and you elect to settle through such account by initialing on the following line:

_____ _ (Initial Here For  Settlement through account with SRA).

“DVP” means delivery versus payment through DTC (i.e., the Company shall deliver Shares registered in the Investor’s name and address as set forth below and released by American Stock Transfer Corporation, the Company’s transfer agent (the “ Transfer Agent ”), to the Investor at the Closing directly to the account(s) at Security Research Associates, Inc. through DTC and simultaneously therewith payment shall be made from such account(s) by Security Research Associates, Inc. to the Company).

If you do not have an existing account at Security Research Associates for settlement by DVP,

we will need the following information to be faxed to us along with your signature page to this agreement.  Please fax your clearing information to Security Research Associates at (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 Annex B for your convenience:

·                                           The exact registration name of the account

·                                           Tax ID or Social Security number of registered holder

·                                           Investor’s Clearing firm Prime Broker 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:

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 April 27, 2007, 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

Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose.

Agreed and Accepted
May 23, 2007:

Exhibit A

WAVE SYSTEMS CORP.

INVESTOR QUESTIONNAIRE

Pursuant to Section 3 of Annex I to this Agreement, please provide us with the following information:

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.

DVP INSTRUCTIONS:

ANNEX I

TERMS AND CONDITIONS FOR PURCHASE OF SHARES

All capitalized terms not otherwise defined in this Annex I shall have the meanings ascribed thereto in the Subscription Agreement to which this Annex I is attached.

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

2.             Agreement to Sell and Purchase the Shares; Placement Agents.

2.1.         At the Closing (as defined in Section 3.1), the Company will sell to the Investor, and the Investor will purchase from the Company, upon the terms and conditions set forth herein, the number of Shares set forth on the last page of the Subscription Agreement to which these Terms and Conditions for Purchase of Shares are attached as Annex I (the “Signature Page”) for the aggregate purchase price therefor set forth on the Signature Page.

2.2.         The Company proposes to enter into substantially this same form of Subscription Agreement with certain other investors (the “Other Investors”) and expects to complete sales of some or all of the remaining Total Shares to them as part of the Offering.  The Investor and the Other Investors are hereinafter sometimes collectively referred to as the “Investors”.&