SUBSCRIPTION AGREEMENT

 

6.                                       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.

 

 

CONFIDENTIAL

 

SIGNATURE PAGE

 

Number of Investor Securities:
Price Per Investor Share:		$	4,400
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: September 11, 2008
	INVESTOR
	By:
	Print Name:
	Title:
	Address:
	Phone #:
	Email:

 

Agreed and Accepted
September 11, 2008:

 

WAVE SYSTEMS CORP.
By:
Name:		Gerard T. Feeney
Title:		CFO

 

 

CONFIDENTIAL

 

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 Securities 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:
5.	The mailing address where you would like your certificated securities to be sent to if different from item 3 above:

 

 

CONFIDENTIAL

 

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 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 Investor Securities 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 Agent”) 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 September 15, 2008 (the “Closing Date”).  At the Closing: (a) the Company will deliver (by overnight courier) a certificate representing the number of shares of Series I Preferred 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 (b) 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 by wire transfer of immediately available funds to the account set forth on Annex II hereto the aggregate purchase price for the Securities being purchased by the Investor hereunder.

 

 

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 (i) the filing by the Company of the Certificate of Designations with the Secretary of State of the State of Delaware, substantially in the form attached hereto as Annex III and (ii) the fulfillment of those other 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.

 

4.                                       Representations, Warranties and Covenants .

 

4.1.                             Representations, Warranties and Covenants of the Investor .

 

(a)                                   The Investor represents and warrants to, and covenants with, the Company that: (a) the Investor is knowledgeable, sophisticated and experienced in making, and is qualified to make decisions with respect to, investments in shares presenting an investment decision like that involved in the purchase of the 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; (b) the Investor has answered all questions on the Signature Page for use in the Prospectus Supplement and the answers thereto are true and correct as of the date hereof and will be true and correct as of the Closing Date; and (c) the Investor, in connection with its decision to purchase the number of 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 have 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 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 (10 ^th ) trading day prior to the date of this Agreement, it has not directly or indirectly (a) engaged in any short selling, (b) established or increased any “ put equivalent position ” as defined in Rule 16(a)-1(h) under the Securities Exchange Act of 1934 or (c) granted any option for the purchase of or entered into any hedging or similar 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, 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:

 

(a)	if to the Company, to:
	Wave Systems Corp.
	480 Pleasant Street
	Lee, MA 01238
	Fax: (413) 243-0391
	ATTN:  Gerard Feeney, CFO

 

 

	with copies to:
	Bingham McCutchen LLP
	399 Park Avenue
	New York, NY 10022
	Fax: (212) 752-5378
	ATTN:  Neil W. Townsend

 

(b)                                  if to the Investor, at its address on the Signature Page hereto, or at such other address or addresses as may have been furnished to the Company in writing.

 

7.                                       Changes .  This Agreement shall not be modified or amended except pursuant to an instrument in writing signed by the Company and the Investor.

 

8.                                       Headings .  The headings of the various sections of this Agreement have been inserted for convenience of reference only and will not be deemed to be part of this Agreement.

 

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 II

 

Company Wire Instructions

 

In accordance with section 3.1(b) 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 #   MRMDUS33

 

 

ANNEX III

 

Form of Certificate of Designation

 

CERTIFICATE OF DESIGNATIONS

 

of

 

SERIES I CONVERTIBLE PREFERRED STOCK

 

of

 

WAVE SYSTEMS CORP.

 

Wave Systems Corp., a corporation organized and existing under the laws of the State of Delaware (the “ Corporation ”), does hereby certify that, pursuant to the authority conferred on the Board of Directors of the Corporation by the Restated Certificate of Incorporation (the “ Certificate of Incorporation ”) of the Corporation, on September     , 2008 the Board of Directors of the Corporation duly adopted the following resolution establishing a series of 2,000 shares of Preferred Stock of the Corporation designated as “ Series I Convertible Preferred Stock ” (referred to herein as the “ Series I Preferred Stock ”):

 

RESOLVED, that the Board has determined that it is in the best interests of the Corporation to provide for the designation and issuance of Series I Preferred Stock, par value $0.01 per share, to consist of up to 2,000 shares, and hereby fixes the powers, designations, preferences and relative other special rights of the shares of such Series I Preferred Stock as follows:

 

SERIES I PREFERRED STOCK

 

9.              Designation .  This resolution shall provide for a series of preferred stock, the designation of which shall be “ Series I Preferred Stock ”, par value $0.01 per share.  The number of authorized shares constituting the Series I Preferred Stock is 2,000.  The Series I Preferred Sto