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EXHIBIT 4.1
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CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
Between
WAVE SYSTEMS CORP.
and
COMBINATION INC.
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Dated as of October 9, 1997
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CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT, dated as of
October 9, 1997 (this "Agreement"), between Wave Systems Corp., a Delaware
corporation (the "Company"), and Combination Inc., a corporation organized
and existing under the laws of the British Virgin Islands (the "Purchaser").
WHEREAS, the Company desires to issue and sell to the Purchaser
and the Purchaser desires to acquire shares of the Company's Series F
Convertible Preferred Stock, par value $.01 per share (the "Preferred Stock").
IN CONSIDERATION of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Certain Definitions. As used in this Agreement,
unless the context requires a different meaning, the following terms have the
meanings indicated:
"Affiliate" means, with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common
control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise.
"Business Day" means any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
City of New York are authorized or required by law or other government
actions to close.
"Closing" shall have the meaning set forth in Section 2.1(b).
"Closing Date" shall have the meaning set forth in Section 2.1(b).
"Certificate of Designation" shall have the meaning set forth in
Section 2.1(a).
"Class A Common Stock" means the Company's Class A Common Stock,
par value $.01 per share.
"Class B Common Stock" means the Company's Class B Common Stock,
par value $.01 per share.
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"Code" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations thereunder as in effect on the date hereof.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means, collectively, the Class A Common Stock,
Class B Common Stock, any stock into which such shares may hereafter be
reclassified, and any other class of equity securities of the Company
hereafter designated as Common Stock.
"Conversion Price" shall have the meaning set forth in the
Certificate of Designation.
"Disclosure Materials" means, collectively, the SEC Documents and
the Schedules to this Agreement furnished by or on behalf of the Company
pursuant to Section 3.1.
"Escrow Agent" means Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx
LLP.
"Escrow Agreement" means the escrow agreement, dated as of the
date hereof, by and between the Company, the Purchaser and the Escrow Agent,
substantially in the form of Exhibit E, as the same may be amended,
supplemented or otherwise modified in accordance with its terms.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"June Quarterly Report" shall have the meaning set forth in
Section 3.1(e).
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, encumbrance, right of first refusal, charge or security interest of
any kind in or on such asset or the revenues or income thereon or therefrom.
"Material Adverse Effect" shall have the meaning set forth in
Section 3.1(a).
"Original Issue Date" shall mean the first issuance of any
Shares, regardless of the number of transfers of any particular Share and
regardless of the number of certificates which may be issued to evidence any
particular Share.
"Per Share Market Value" shall have the meaning set forth in the
Certificate of Designation.
"Permitted Third Party Financings" shall have the meaning set
forth in Section 4.9.
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"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Preferred Stock" shall have the meaning set forth in the
recitals hereto.
"Purchase Price" shall have the meaning set forth in Section
2.1(a).
"Registration Rights Agreement" means the registration rights
agreement, dated as of the date hereof, by and between the Company and the
Purchaser, substantially in the form of Exhibit B, as the same may be
amended, supplemented or otherwise modified in accordance with its terms.
"SEC Documents" shall have the meaning set forth in Section
3.1(l).
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Securities" shall have the meaning set forth in Section
3.1(m).
"Shares" means the shares of Preferred Stock to be purchased by
the Purchaser pursuant to this Agreement.
"Subsequent Financing Notice" shall have the meaning set forth in
Section 4.9.
"Subsequent Sale" shall have the meaning set forth in Section 4.9.
"Subsidiaries" shall have the meaning set forth in Section 3.1(a).
"Trading Day" shall have the meaning set forth in the Certificate
of Designation.
"Transaction Documents" shall have the meaning set forth in
Section 3.1(b).
"Underlying Shares" means the shares of Class A Common Stock
issuable upon conversion of Shares in accordance with the terms hereof and
the Certificate of Designation, and as payment of dividends thereon, and upon
exercise of the Warrant in accordance with the terms thereof.
"Underlying Shares Registration Statement" shall have the meaning
set forth in Section 3.1(f).
"Warrant" means the Class A Common Stock purchase Warrant of the
Company to be issued to the Purchaser on the Closing Date, substantially in
the form of
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Exhibit F, entitling the Purchaser to purchase up to 112,500 shares of Class A
Common Stock.
ARTICLE II
PURCHASE OF SHARES
Section 2.1. Purchase of Shares; Closing; Escrow.
(a) Subject to the terms and conditions herein set forth, the
Company shall issue and sell to the Purchaser, and the Purchaser shall
purchase from the Company on the Closing Date 112,500 Shares, which shall
have the respective rights, preferences and privileges set forth in Exhibit A
(the "Certificate of Designation"), at a price per Share of $20. The
"Purchase Price" for the Shares is $2,250,000.
(b) The closing of the purchase and sale of the Shares (the
"Closing") shall take place at the offices of the Escrow Agent, 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, immediately following the
execution hereof, or at such other time and/or place as the Purchaser and the
Company may agree, but not until the conditions listed in Article V have been
satisfied or waived by the appropriate party. The date of the Closing is
referred to herein as the "Closing Date".
(c) At the Closing, the Escrow Agent in accordance with and
subject to the terms and conditions of the Escrow Agreement shall, pursuant
to instructions delivered with respect thereto by the Company and the
Purchaser, deliver (i) to the Purchaser (A) one or more stock certificates
representing the Shares purchased hereunder, and (B) the Warrant, each
registered in the name of the Purchaser, and (ii) to the Company the Purchase
Price, less $15,000 for the legal fees and disbursement contemplated by
Section 7.1 in United States dollars in immediately available funds by wire
transfer to an account designated in writing by the instruments and writings
required to have been delivered at or prior to Closing by either the Company
or the Purchaser pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Company. The
Company hereby represents and warrants to the Purchaser as follows:
(a) Organization and Qualification. The Company is a
corporation, duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, with the requisite
corporate power and authority to own and use its properties
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and assets and to carry on its business as currently conducted. The Company has
no material subsidiaries other than as set forth in the SEC Documents
(collectively, the "Subsidiaries"). Each of the Subsidiaries is a corporation,
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the full corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. Each of the Company and the Subsidiaries is duly qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not, individually or in
the aggregate, have a material adverse effect on the results of operations,
assets, prospects, or financial condition of the Company and the Subsidiaries,
taken as a whole (a "Material Adverse Effect").
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated hereby and by the Registration Rights Agreement,
the Escrow Agreement, the Certificate of Designation and the Warrant
(collectively with this Agreement, the "Transaction Documents") and to
otherwise carry out its obligations hereunder and thereunder. The execution
and delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company. Each of the
Transaction Documents has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application. Neither the Company nor
any Subsidiary is in violation of any of the provisions of its respective
certificate of incorporation, bylaws or other charter documents.
(c) Capitalization. The authorized, issued and outstanding
capital stock of the Company and each of the Subsidiaries is set forth in
Schedule 3.1(c). No shares of Common Stock are entitled to preemptive or
similar rights. Except as specifically disclosed in Schedule 3.1(c), there
are no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or, except as a result
of the purchase and sale of the Shares and the Warrant, securities, rights or
obligations convertible into or exchangeable for, or giving any person any
right to subscribe for or acquire any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock,
or securities or rights convertible or exchangeable into shares of Common
Stock. To the knowledge of the Company, except as disclosed in the
Disclosure Materials, no Person beneficially owns (as determined pursuant to
Rule 13d-3 promulgated under the Exchange Act) or has the right to acquire by
agreement with the Company in excess of 5% of the Common Stock.
(d) Issuance of Shares and Underlying Shares. The Shares are
duly authorized and, when paid for in accordance with the terms hereof and
the Escrow
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Agreement, shall be validly issued, fully paid and nonassessable, free and clear
of any Liens. The Company has and at all times while the Shares and the Warrant
are outstanding will maintain a reserve of shares of Class A Common Stock to
enable it to perform its conversion, exercise and other obligations under this
Agreement, the Certificate of Designation and the Warrant, which reserve shall
be no less than the sum of (1) two times the number of shares of Class A Common
Stock issuable upon conversion in full of the Shares, assuming such conversion
occurred on the Original Issue Date, (2) such number of shares of Class A Common
Stock to permit the Company to pay dividends in respect of the Shares in shares
of Class A Common Stock for a period of one year from the Original Issue Date,
and (3) the number of shares of Class A Common Stock issuable upon exercise in
full of the Warrant. When issued in accordance with the terms hereof, the
Certificate of Designation and the Warrant (as the case may be), the Underlying
Shares will be duly authorized, validly issued, fully paid and nonassessable,
free and clear of all Liens.
(e) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated thereby do not and will not (i) conflict
with or violate any provision of its certificate of incorporation or bylaws
(each as amended through the date hereof) or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company is a party, or (iii) to the knowledge of the
Company result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including Federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected, except in the case of each of clauses (ii) and
(iii), such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as could not, individually or in the
aggregate, (x) adversely affect the legality, validity or enforceability of
any of the Transaction Documents, (y) have a Material Adverse Effect or (z)
adversely impair the Company's ability to perform fully on a timely basis its
obligations under the Transaction Documents. The business of the Company is
not being conducted in violation of any law, ordinance or regulation of any
governmental authority.
(f) Consents and Approvals. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order
of, or make any filing or registration with, any court or other Federal,
state, local or other governmental authority or other Person in connection
with the execution, delivery and performance by the Company of the
Transaction Documents, except for (i) the filing of the Certificate of
Designation with respect to the Shares with the Secretary of State of
Delaware, which filing shall be effected on or prior to the Closing Date,
(ii) the filing of the registration statement covering the Underlying Shares
(the "Underlying Shares Registration Statement") with the Commission and the
making of the applicable blue-sky filings under state securities laws, each
as contemplated by the Registration Rights Agreement, and (iii) other than,
in all other cases, where the failure to obtain such consent, waiver,
authorization or order, or to give or make such notice or filing, could not,
individually or in the aggregate, (x) adversely affect the legality, validity
or enforceability of any of the Transaction Documents, (y) have a Material
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Adverse Effect or (z) adversely impair the Company's ability to perform fully
on a timely basis its obligations under the Transaction Documents.
(g) Litigation; Proceedings. Other than with respect to the
notices referenced in the last sentence of this Section as having been
provided to the Purchaser prior to the date hereof, there is no action, suit,
notice of violation, proceeding or investigation pending or, to the best
knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries or any of their respective properties before or by any
court, governmental or administrative agency or regulatory authority
(Federal, state, county, local or foreign) which (i) relates to or challenges
the legality, validity or enforceability of the Transaction Documents, Shares
or Underlying Shares, (ii) could, individually or in the aggregate, have a
Material Adverse Effect or (iii) could, individually or in the aggregate,
adversely impair the Company's ability to perform fully on a timely basis its
obligations under the Transaction Documents. The Company has provided to the
Purchaser true and complete copies of all notices received since May 30, 1997
from any stock exchange or market on which the Common Stock is listed or
quoted to the effect that the Company is not in compliance with the listing
or maintenance requirements of such exchange, market or quotation system, as
well as true and complete copies of the responses thereto by or on behalf of
the Company.
(h) No Default or Violation. Neither the Company nor any
Subsidiary (i) is in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party
or by which it or any of its properties is bound, (ii) is in violation of any
order of any court, arbitrator or governmental body, or (iii) is in violation
of any statute, rule or regulation of any governmental authority, except as
could not, in any case of (i) above, individually or in the aggregate, (x)
adversely affect the legality, validity or enforceability of any of the
Transaction Documents, (y) have a Material Adverse Effect or (z) adversely
impair the Company's ability to perform fully on a timely basis its
obligations under the Transaction Documents.
(i) Certain Fees. Except for fees payable by the Company to
Xxxxxxx Capital Partners, Ltd., no fees or commissions will be payable by the
Company to any broker, finder, investment banker or bank with respect to the
consummation of the transactions contemplated hereby. The Purchaser shall
have no obligation with respect to such fees or with respect to any claims
made by other Persons for fees due in connection with this transaction. The
Company shall indemnify and hold harmless each of the Purchaser, its
employees, officers, directors, agents, and partners, and their respective
Affiliates from and against all claims, losses, damages, costs (including the
costs of preparation and reasonable attorney's fees) and expenses suffered in
respect of any such claimed or existing fees.
(j) Disclosure Materials. The Disclosure Materials (other than
the SEC Documents) do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
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(k) Private Offering. Neither the Company nor any Person
acting on its behalf has taken or will take any action (including, without
limitation, any offering of any securities of the Company under circumstances
which would require the integration of such offering with the offering of the
Shares under the Securities Act) which might subject the offering, issuance
or sale of the Shares to the registration requirements of Section 5 of the
Securities Act.
(l) SEC Documents. The Company has filed all reports required
to be filed by it under the Exchange Act, including pursuant to Section 13(a)
or 15(d) thereof, for the three years preceding the date hereof (the
foregoing materials being collectively referred to herein as the "SEC
Documents") on a timely basis, or has received a valid extension of such time
of filing and has filed any such SEC Documents prior to the expiration of any
such extension. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the published rules and regulations of the Commission
promulgated thereunder, and none of the SEC Documents, when filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved, except as may be otherwise indicated in such financial
statements or the notes thereto, and fairly present in all material respects
the financial position of the Company and its consolidated subsidiaries as of
and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to
normal year-end audit adjustments. Since the date of the financial
statements included in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1997 (the "June Quarterly Report"), there has
been no event, occurrence or development that could have had a Material
Adverse Effect which is not specifically disclosed in the Disclosure
Materials.
(m) Seniority. No class of equity securities of the Company is
senior to the Shares in right of payment, whether upon liquidation,
dissolution or otherwise other than the Company's Series A Cumulative
Redeemable Preferred Stock, par value $.01 per share, of which, on the date
hereof, 360 shares are outstanding, the Company's Series B Preferred Stock,
par value $.01 per share of which, on the date hereof, no shares are
outstanding, the Company's Series C Convertible Preferred Stock, par value
$.01 per share, and the Company's Series D Convertible Preferred Stock, par
value $.01 per share (collectively, the "Senior Securities").
(n) Form S-3 Eligibility. The Company is eligible to register
securities for resale with the Commission under Form S-3 promulgated under
the Securities Act.
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(o) Investment Company. The Company is not and is not an
Affiliate of an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(p) Class B Common Stock. The issued and outstanding shares of
the Class B Common Stock are restricted securities subject to Rule 144
promulgated under the Exchange Act, and the holders of such shares have no
registration rights or preemptive rights arising out of their ownership of
such shares.
Section 3.2. Representations and Warranties of the Purchaser.
The Purchaser hereby represents and warrants to the Company as follows:
(a) Organization; Authority. The Purchaser is a corporation
duly and validly existing and in good standing under the laws of the
jurisdiction of its incorporation. The Purchaser has the requisite power and
authority to enter into and to consummate the transactions contemplated
hereby and by the Registration Rights Agreement and the Escrow Agreement and
otherwise to carry out its obligations hereunder and thereunder. The
purchase of the Shares and the Warrant (and upon conversion or exercise
thereof (as the case may be), the Underlying Shares) by the Purchaser has
been duly authorized by all necessary action on the part of the Purchaser.
Each of this Agreement, the Registration Rights Agreement and the Escrow
Agreement has been duly executed and delivered by the Purchaser and
constitutes the valid and legally binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights generally and to general principles of equity.
(b) Investment Intent. The Purchaser is acquiring the Shares,
the Warrant and the Underlying Shares for its own account for investment
purposes only and not with a view to or for distributing or reselling such
Shares, Warrant or Underlying Shares or any part thereof or interest therein,
without prejudice, however, to the Purchaser's right, subject to the
provisions of this Agreement and the Registration Rights Agreement, at all
times to sell or otherwise dispose of all or any part of such Shares, Warrant
or Underlying Shares under an effective registration statement under the
Securities Act and in compliance with applicable State securities laws or
under an exemption from such registration.
(c) Purchaser Status. The Purchaser is an "accredited
investor" as defined in Rule 501(a) under the Securities Act.
(d) Experience of Purchaser. The Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the Shares
and the Warrant, and has so evaluated the merits and risks of such investment.
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(e) Ability of Purchaser to Bear Risk of Investment. The
Purchaser is able to bear the economic risk of an investment in the Shares
and the Warrant and, at the present time, is able to afford a complete loss
of such investment.
(f) Prohibited Transactions. Neither the Shares nor the
Warrant are being acquired, directly or indirectly, with the assets of any
"employee benefit plan", within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended.
(g) Access to Information. The Purchaser acknowledges receipt
of the Disclosure Materials and further acknowledges that it or its
representatives have been afforded (i) the opportunity to ask such questions
as it has deemed necessary of, and to receive answers from, representatives
of the Company concerning the terms and conditions of the offering of the
Shares and the Warrant and the merits and risks of investing in the Shares
and the Warrant; (ii) access to information about the Company and the
Company's financial condition, results of operations, business, properties
and management sufficient to enable it to evaluate its investment in the
Shares and the Warrant; and (iii) the opportunity to obtain such additional
information which the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision
with respect to the Shares and the Warrant and to verify the accuracy and
completeness of the information contained in the Disclosure Materials.
(h) Reliance. The Purchaser understands and acknowledges that
(i) the Shares and the Warrant are being offered and sold, and the Underlying
Shares are being offered, to it without registration under the Securities Act
in a private placement that is exempt from the registration provisions of the
Securities Act and (ii) the availability of such exemption depends in part
on, and that the Company will rely upon the accuracy and truthfulness of,
the foregoing representations and the Purchaser hereby consents to such
reliance.
The Company acknowledges and agrees that the Purchaser makes no
representation or warranty with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
Section 4.1. Transfer Restrictions. If the Purchaser should
decide to dispose of any of the Shares or any portion of the Warrant to be
purchased by it hereunder (and upon conversion or exercise (as the case may
be) thereof, any Underlying Shares), the Purchaser understands and agrees
that it may do so only pursuant to an effective registration statement under
the Securities Act or pursuant to an available exemption from the
registration requirements thereof. In connection with any transfer of any
Shares or the Warrant other than pursuant to an effective registration
statement or to the Company, the Company may require that the transferor of
such Shares or Warrant provide to the Company an opinion of
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counsel experienced in the area of United States securities laws selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such Shares or Warrant under the Securities Act or any state
securities laws.
The Purchaser agrees to the imprinting, so long as is required by
the provisions of this Section 4.1, of the following legend on certificates
representing the Shares, the Warrant and the Underlying Shares:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER REGULATION D
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed upon the conversion
of Shares or the exercise of the Warrant (as the case may be) represented by
such certificate at any time after the Underlying Shares Registration
Statement has been declared effective under the Securities Act or, if no
Underlying Shares Registration Statement is then effective, if in the opinion
of counsel to the Company experienced in the area of United States securities
laws such legend is no longer required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued
by the staff of the Commission). The certificates representing the Shares,
the Warrant and the Underlying Shares shall also bear any other legends
required by applicable Federal or state securities laws, which legends shall
be removed when not required in accordance with this Section 4.1. The
Company agrees that it will provide the Purchaser, upon request, with a
substitute stock certificate or certificates or Warrant (as the case may be),
free from such legend at such time as such legend is no longer applicable.
The Purchaser agrees that, in connection with any transfer of Shares, the
Warrant or Underlying Shares by it pursuant to an effective registration
statement under the Securities Act, it will comply with all prospectus
delivery requirements of the Securities Act. The Company makes no
representation, warranty or agreement as to the availability of any exemption
from registration under the Securities Act with respect to any resale of
Shares, the Warrant or Underlying Shares.
Section 4.2. Stop Transfer Instruction. The Purchaser agrees
that the Company shall be entitled to make a notation on its records and give
instructions to any transfer agent of the Company in order to implement the
restrictions on transfer set forth in Section 4.1 above.
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Section 4.3. Furnishing of Information. For so long as the
Purchaser owns Shares or Underlying Shares, the Company covenants to timely
file (or obtain valid extensions in respect thereof) all reports required to
be filed by the Company after the date hereof pursuant to Section 13(a) or
15(d) of the Exchange Act and to promptly furnish the Purchaser with true and
complete copies of all such filings. If the Company is not at the time
required to file reports pursuant to such sections, it will prepare and
furnish to the Purchaser annual and quarterly financial statements, together
with a discussion and analysis of such financial statements in form and
substance substantially similar to those that would otherwise be required to
be included in reports required by Section 13(a) or 15(d) of the Exchange Act
in the time period that such filings would have been required to have been
made under the Exchange Act.
Section 4.4. Use of Disclosure Materials. The Company
consents to the use of the Disclosure Materials, and any amendments and
supplements thereto, by the Purchaser in connection with resales of the
Shares or the Underlying Shares other than pursuant to an effective
registration statement.
Section 4.5. Issuance of Senior Securities. For so long as the
Purchaser shall own Shares, the Company shall not issue any Senior Securities.
Section 4.6. Blue Sky Laws. In accordance with the Registration
Rights Agreement, the Company shall qualify the Shares and the Underlying
Shares under the securities or Blue Sky laws of such jurisdictions as the
Purchaser may request and continue such qualification at all times through
the third anniversary of the Closing Date; provided, however, that neither
the Company nor its Subsidiaries shall be required in connection therewith to
qualify as a foreign corporation where they are not now so qualified.
Section 4.7. Integration. The Company shall not, and shall use
its best efforts to ensure that, no Affiliate shall sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Shares, the Warrant or the Underlying Shares in a manner
that would require the registration under the Securities Act of the sale of
the Shares, the Warrant or Underlying Shares to the Purchaser.
Section 4.8. Solicitation Materials. The Company shall not (i)
distribute any offering materials in connection with the offering and sale of
the Shares, the Warrant or Underlying Shares other than the Disclosure
Materials and any amendments and supplements thereto prepared in compliance
herewith or (ii) solicit any offer to buy or sell the Shares, the Warrant or
Underlying Shares by means of any form of general solicitation or advertising.
Section 4.9. Right of First Refusal; Subsequent Registrations;
Certain Corporate Actions. (a) The Company shall not, directly or
indirectly, without the prior written consent of the Purchaser, offer, sell,
grant any option to purchase, or otherwise dispose (or announce any offer,
sale, grant any option to purchase or other disposition) of any of its or its
Affiliates equity or equity-equivalent securities at a price which is, on the
face thereof, or implied therein, less than the market price or fair market
value for such
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securities (a "Subsequent Sale") for a period of 180 days after the Original
Issue Date, except (i) the granting of options to employees, officers and
directors, and the issuance of shares upon exercise of options granted, under
any stock option plan heretofore or hereinafter duly adopted by the Company,
(ii) shares issued upon exercise of any currently outstanding warrants and upon
conversion of any currently outstanding convertible preferred stock disclosed in
Schedule 3.1(c), (iii) shares of Common Stock issued upon conversion of Shares
or exercise of the Warrant in accordance herewith and the Certificate of
Designation or the Warrant and (iv) shares of the Company's preferred stock
issued in one or more transactions under Regulation D promulgated under the
Securities Act, the aggregate gross proceeds of which may not exceed $500,000,
the term of which shall be identical in all material respects to the terms of
the Transaction Documents (other than the Escrow Agreement), and the funding of
which to the Company shall occur on or prior to the Closing Date (such
transactions, "Permitted Third Party Financings"), as the case may be, unless
(A) the Company delivers to the Purchaser a written notice (the "Subsequent
Financing Notice") of its intention to effect such Subsequent Financing, which
Subsequent Financing Notice shall describe in reasonable detail the proposed
terms of such Subsequent Financing and the amount of proceeds intended to be
raised thereunder and (B) the Purchaser shall not have notified the Company by
5:00 p.m. (Eastern Time) on the third Business Day after its receipt of the
Subsequent Financing Notice of its willingness to enter into good faith
negotiations to provide as promptly as is commercially practicable (or to cause
its sole designee to provide) financing to the Company on substantially the
terms set forth in the Subsequent Financing Notice. If the Purchaser shall fail
to notify the Company of its intention to enter into such negotiations within
such time period, or if the Purchaser shall fail to actually close such
financing within 10 Business Days after such notice, the Company may effect the
Subsequent Financing substantially upon the terms and to the Persons (or
Affiliates of such Persons) set forth in the Subsequent Financing Notice;
provided, that the Company shall provide the Purchaser with a second Subsequent
Financing Notice, and the Purchaser shall again have the right of first refusal
set forth above in this paragraph (a), if the Subsequent Financing subject to
the initial Subsequent Financing Notice shall not have been consummated for any
reason on the terms set forth in such Subsequent Financing Notice within 60
Business Days after the date of the initial Subsequent Financing Notice with the
Person (or an Affiliate of such Person) identified in the Subsequent Financing
Notice. The provisions of this Section 4.9 shall not apply to any financing by
the Company with a strategic partner (including without limitation any company
which is involved in computer hardware, including peripherals, or software
manufacturing, design, development, marketing and sales, content providers,
Internet document transmission, data broadcast systems, and electronic commerce
applications). A strategic partner does not include entities in the business of
acquiring private placement securities for investment purposes only.
(b) Except for the Underlying Shares to be registered in
accordance with the Registration Rights Agreement and the shares of Class A
Common Stock issuable upon conversion of the shares of Company's preferred
stock permitted to be sold pursuant to Permitted Third Party Financings
(which may be registered in the Underlying Shares Registration Statement),
the Company may not, without the prior written consent of the Purchaser, (i)
issue or sell any of its or any of its Affiliates' equity or
equity-equivalent securities pursuant to Regulation S promulgated under the
Securities Act where such
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securities may be converted or resold, or (ii) register for resale any
securities of the Company, in either case of (i) or (ii) above, for a period of
not less than 60 Trading Days after the date that the Underlying Shares
Registration Statement is declared effective by the Commission. Any days that
the Purchaser is unable to sell Underlying Shares under the Underlying Shares
Registration Statement shall be added to such 60 Trading Day period.
(c) As long as there are Shares outstanding, the Company shall
not and shall cause the Subsidiaries not to, without the consent of the
Purchaser, (i) amend its certificate of incorporation, bylaws or other
charter documents so as to adversely affect any rights of the Purchaser;
(ii) split, combine or reclassify its outstanding capital stock;
(iii) declare, authorize, set aside or pay any dividend or other distribution
with respect to the Common Stock; (iv) repay, repurchase or offer to repay,
repurchase or otherwise acquire shares of its Common Stock; or (v) enter into
any agreement with respect to any of the foregoing.
Section 4.10. Purchaser Ownership of Common Stock. The
Purchaser may not use its ability to convert Shares hereunder or under the
terms of the Certificate of Designation or to exercise the Warrant to the
extent that such conversion or exercise would result in the Purchaser owning
more than 4.9% of the outstanding shares of the Common Stock. The Company
shall, promptly upon its receipt of a Conversion Notice tendered by the
Purchaser (or its designee) under the Certificate of Designation and upon an
exercise of any portion of the Warrant, notify the Purchaser of the number of
shares of Common Stock outstanding on such date and the number of Underlying
Shares which would be issuable to the Purchaser (or its designee, as the case
may be) if the conversion or exercise requested in such Conversion Notice or
exercise notice were effected in full, whereupon, notwithstanding anything to
the contrary set forth in the Certificate of Designation or the Warrant, the
Purchaser shall revoke such conversion or exercise to the extent that it
determines that such conversion or exercise would result in the Purchaser
owning in excess of 4.9% of such outstanding shares of Common Stock.
Section 4.11. Listing of Underlying Shares. The Company shall
take all steps necessary to cause the Underlying Shares to be approved for
listing in The Nasdaq SmallCap Market (and each other national securities
exchange or market on which the Common Stock is then listed) no later than
the first day after which shares may be converted hereunder by the Purchaser,
and shall provide to the Purchaser evidence of such listing and shall
maintain the listing of its Common Stock on such exchange.
Section 4.12. Notice of Breaches. Each of the Company and the
Purchaser shall give prompt written notice to the other of any breach of any
representation, warranty or other agreement contained in this Agreement or in
the Registration Rights Agreement, as well as any events or occurrences
arising after the date hereof and prior to the Closing Date, which could
reasonably be likely to cause any representation or warranty or other
agreement of such party, as the case may be, contained herein or therein to
be incorrect or breached. However, no disclosure by either party pursuant to
this Section shall be deemed to cure any breach of any representation,
warranty or other agreement contained herein or in the Registration Rights
Agreement. Neither the Company, any Subsidiary nor the Purchaser will
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take, or agree to commit to take, any action that is intended to make any
representation or warranty of the Company or the Purchaser, as the case may be,
contained herein or in the Registration Rights Agreement inaccurate in any
respect at the Closing Date.
Notwithstanding the generality of the foregoing, the Company shall
promptly notify the Purchaser of any notice or claim (written or oral) that
it receives from any lender of the Company to the effect that the
consummation of the transactions contemplated by any of the Transaction
Documents violates or would violate any written agreement or understanding
between such lender and the Company, and the Company shall promptly furnish
by facsimile to the holders of the Shares a copy of any written statement in
support of or relating to such claim or notice.
Section 4.13. Conversion Procedures. Exhibit D attached hereto
sets forth the procedures with respect to the conversion of the Shares,
including the forms of conversion notice to be provided upon conversion,
instructions as to the procedures for conversion, the form of legal opinion,
if necessary, that shall be rendered to the Company's transfer agent and such
other information and instructions as may be reasonably necessary to enable
the Purchaser to exercise its right of conversion smoothly and expeditiously.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING AND DISTRIBUTION
Section 5.1. Conditions Precedent to Obligations of the
Purchaser. The obligation of the Purchaser to purchase the Shares and the
Warrant is subject to the satisfaction or waiver by the Purchaser, on or
prior to the Closing Date of each of the following conditions:
(a) Legal Opinion. The Purchaser shall have received the legal
opinion, addressed to the Purchaser and dated the Closing Date, of Xxxxxx,
Xxxxxx-Xxxxxxx, Colt & Mosle, counsel for the Company, substantially in the
form of Exhibit C;
(b) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company contained herein and in the
Registration Rights Agreement shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made
at that time;
(c) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Transaction Documents to
be performed, satisfied or complied with by the Company on or prior to the
Closing Date;
(d) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court
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or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents;
(e) No Material Adverse Effect. Since the date of the
financial statements included in the June Quarterly Report, no event which in
the judgment of the Purchaser has or could have a Material Adverse Effect and
no material adverse change in the financial condition or business of the
Company shall have occurred which is not disclosed in the Disclosure
Materials;
(f) No Prohibitions. The purchase of and payment for the
Shares and the Warrant (and upon conversion thereof, the Underlying Shares)
hereunder (i) shall not be prohibited or enjoined (temporarily or
permanently) by any applicable law or governmental regulation and (ii) shall
not subject the Purchaser to any penalty, or in its judgement, other onerous
condition under or pursuant to any applicable law or governmental regulation
that would materially reduce the benefits to the Purchaser of the purchase of
the Shares, the Warrant or the Underlying Shares (provided, however, that
such regulation, law or onerous condition was not in effect in such form at
the date of this Agreement);
(g) Company Certificates. The Purchaser shall have received a
certificate, dated the Closing Date and addressed to the Purchaser, signed by
the Chairman of the Company and certifying (i) that attached thereto is a
true, correct and complete copy of (A) the Company's Restated Certificate of
Incorporation, as amended to the date thereof, (B) the Company's By-Laws, as
amended to the date thereof, and (C) resolutions duly adopted by the Board of
Directors of the Company authorizing the execution and delivery of the
Transaction Documents and the issuance and sale of the Shares, the Warrant
and the Underlying Shares and (ii) the incumbency of officers executing the
Transaction Documents;
(h) Registration Rights Agreement and Escrow Agreement. The
Company shall have executed and delivered to the Escrow Agent the
Registration Rights Agreement and the Escrow Agreement;
(i) No Suspensions of Trading in Common Stock. Trading in the
Common Stock shall not have been suspended by the Commission or the Nasdaq
SmallCap Market or any other national securities exchange or market on which
the Common Stock is listed or quoted (except for any suspension of trading of
limited duration at the direction of the Company solely to permit
dissemination of material information regarding the Company);
(j) Listing of Common Stock. (1) The Common Stock shall have
at all times between the date hereof and the Closing Date been listed for
trading on the Nasdaq National Market or Nasdaq SmallCap Market and (2) the
Purchaser shall have received evidence satisfactory to it that the Class A
Common Stock will continue to be listed for trading on the Nasdaq National
Market or Nasdaq SmallCap Market for the foreseeable future;
(k) Delivery of Stock Certificates and the Warrant. The
Company shall have delivered to the Escrow Agent the stock certificate(s)
representing the Shares and the
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Warrant, each registered in the name of the Purchaser, each in form satisfactory
to the Escrow Agent and the Purchaser;
(l) Shares of Common Stock. On the Closing Date, the Company
shall have duly reserved for issuance to the Purchaser the number of
Underlying Shares as is required pursuant to Section 3.1(d);
(m) Certificate of Designation. The Certificate of Designation
shall have been duly filed by the Secretary of State of Delaware, and the
Company shall have delivered proof of such filing to the Escrow Agent,
reasonably satisfactory to it;
(n) Form S-3 Eligibility. The Company shall be eligible to
register securities for resale under Form S-3 promulgated under the
Securities Act;
(o) Effectiveness of Prior Registration Statements. The
registration statements on Form S-3 covering the resale of the shares of
Class A Common Stock issuable upon (i) conversion of the Company's Series C
and Series D Convertible Preferred Stock and (ii) exercise of the warrants
issued in connection with the purchase by the Purchaser of such securities,
shall have remained effective at all times since the respective effective
dates thereof and shall not be subject to any stop order and no stop order
shall be pending or threatened; and
(p) Certain Nasdaq Stock Market Regulations. A conversion in
full of the Shares at the Conversion Price in effect on the Original Issue
Date would not result in the Company issuing to the Purchaser in excess of
17% of the then outstanding shares of Class A Common Stock.
Section 5.2. Conditions Precedent to Obligations of the
Company. The obligation of the Company to issue and sell the Shares and the
Warrant hereunder is subject to the satisfaction or waiver by the Company, on
or prior to the Closing Date of each of the following conditions:
(a) Accuracy of the Purchaser's Representations and
Warranties. The representations and warranties of the Purchaser contained
herein shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made at that time;
(b) Performance by the Purchaser. The Purchaser shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement, the
Registration Rights Agreement and the Escrow Agreement to be performed,
satisfied or complied with by it on or prior to the Closing Date;
(c) No Prohibitions. The sale of the Shares and the Warrant
(and upon conversion or exercise (as the case may be) thereof, the Underlying
Shares) hereunder (i) shall not be prohibited or enjoined (temporarily or
permanently) by any applicable law or governmental regulation and (ii) shall
not subject the Company to any penalty or any other
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onerous condition under or pursuant to any applicable law or governmental
regulation that would materially reduce the benefits to the Company of the sale
of Shares, the Warrant or the Underlying Shares to the Purchaser (provided,
however, that such regulation, law or onerous condition was not in effect in
such form at the date of this Agreement); and
(d) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court of governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.
ARTICLE VI
TERMINATION
Section 6.1. Termination by Mutual Consent. This Agreement may
be terminated at any time prior to the Closing by the mutual consent of the
Company and the Purchaser.
Section 6.2. Termination by the Company or the Purchaser. This
Agreement may be terminated prior to Closing by either the Company or the
Purchaser, by giving written notice of such termination to the other party,
if:
(a) there shall be in effect any statute, rule, law or
regulation that prohibits the consummation of the transactions
contemplated by the Transaction Documents or if the consummation of the
transactions contemplated by the Transaction Documents would violate
any non-appealable final judgment, order, decree, ruling or injunction
of any court of or governmental authority having competent
jurisdiction; or
(b) there shall have been an amendment to Regulation D or
an interpretive release promulgated or issued thereunder, which, in the
judgment of the terminating party, would materially adversely affect
the transactions contemplated by the Transaction Documents.
Section 6.3. Termination by the Company. This Agreement may be
terminated prior to the Closing by the Company, by giving written notice of
such termination to the Purchaser, if the Purchaser has materially breached
any representation, warranty, covenant or agreement contained in this
Agreement or the Registration Rights Agreement and such breach is not cured
within one Business Day following receipt by the Purchaser of notice of such
breach.
Section 6.4. Termination by the Purchaser. This Agreement may be
terminated prior to the Closing by the Purchaser, by giving written notice of
such termination to the Company, if:
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(a) the Company has breached any representation,
warranty, covenant or agreement contained in this Agreement or the
Registration Rights Agreement and such breach is not cured within one
Business Day following receipt by the Company of notice of such breach;
(b) there has occurred a material adverse change in the
business or financial condition of the Company or an event since the
date of the financial statements included in the June Quarterly Report
which has or could have a Material Adverse Effect and which is not
disclosed in the Disclosure Materials;
(c) trading in the Common Stock has been suspended by the
Commission or the Nasdaq National Market or other national securities
exchange or market on which the Common Stock is listed or quoted;
(d) the Common Stock shall have failed to be listed for
trading on the Nasdaq National Market or on the Nasdaq SmallCap Market;
or
ARTICLE VII
MISCELLANEOUS
Section 7.1. Fees and Expenses. Each party shall pay the fees
and expenses of its advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this the Transaction
Documents, except as set forth in the Registration Rights Agreement and
except that the Company shall reimburse Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP for its legal fees and disbursements. The Company shall pay all
stamp and other taxes and duties levied in connection with the issuance of
the Shares and the Warrant (and upon conversion or exercise thereof (as the
case may be), the Underlying Shares) pursuant hereto. The Purchaser shall be
responsible for its own tax liability that may arise as a result of the
investment hereunder or the transactions contemplated by this Agreement.
Section 7.2. Entire Agreement; Amendments. This Agreement,
together with the Exhibits and Schedules hereto, and each of the other
Transaction Documents contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters.
Section 7.3. Notices. Any notice or other communication required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been received (a) upon hand delivery (receipt acknowledged) or delivery
by telex (with correct answer back received), telecopy or facsimile (with
transmission confirmation report) at the address or number designated below
(if delivered on a Business Day during normal business hours where such
notice is to be received), or the first Business Day following such delivery
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(if delivered other than on a Business Day during normal business hours where
such notice is to be received) or (b) on the second Business Day following
the date of mailing by express courier service, fully prepaid, addressed to
such address, or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications shall be:
If to the Company: Wave Systems Corp.
000 Xxxxxxxx Xxxxxx
Xxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx Xxxxxxx
With copies to: Xxxxxx, Xxxxxx-Xxxxxxx,
Colt & Mosle
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx
If to the Purchaser: Combination Inc.
x/x Xxxxx Xxxxxx
Xxxxxx Xxxxxxx 00
Xxxxx Xxx Xxxxxx
with copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxx
or such other address as may be designated in writing hereafter, in the same
manner, by such person.
Section 7.4. Amendments; Waivers. No provision of this Agreement
may be waived or amended except in a written instrument signed, in the case
of an amendment, by both the Company and the Purchaser, or, in the case of a
waiver, by the party against whom enforcement of any such waiver is sought.
No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of either party to exercise any right
hereunder in any manner impair the exercise of any such right accruing to it
thereafter.
Section 7.5. Headings. The headings herein are for convenience
only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof.
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Section 7.6. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
permitted assigns. Neither the Company nor the Purchaser may assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the other, except that the Purchaser may assign its rights
hereunder and under the Registration Rights Agreement to an Affiliate or
managed fund thereof, provided, that such assignee demonstrates to the
reasonable satisfaction of the Company its satisfaction of the
representations and warranties set forth in Section 3.2 herein. The
assignment by a party of this Agreement or any rights hereunder shall not
affect the obligations of such party under this Agreement.
Section 7.7. No Third-Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
Section 7.8. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State
of New York without regard to the principles of conflicts of law thereof.
Section 7.9. Survival. The representations and warranties of the
Company and the Purchaser contained in Article III and the agreements and
covenants of the parties contained in Article IV and this Article VII shall
survive the Closing (or any earlier termination of this Agreement) and any
conversion of Shares or exercise of the Warrant hereunder.
Section 7.10. Counterpart Signatures. This Agreement may be
executed in two or more counterparts, all of which when taken together shall
be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party,
it being understood that both parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) the same with the same force
and effect as if such facsimile signature page were an original thereof.
Section 7.11. Publicity. The Company and the Purchaser shall
consult with each other in issuing any press releases or otherwise making
public statements with respect to the transactions contemplated hereby and
neither party shall issue any such press release or otherwise make any such
public statement without the prior written consent of the other, which
consent shall not be unreasonably withheld or delayed, except that no prior
consent shall be required if such disclosure is required by law, in which
such case the disclosing party shall provide the other party with prior
notice of such public statement.
Section 7.12. Severability. In case any one or more of the
provisions of this Agreement shall be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and
provisions of this Agreement shall not in any way be affecting or impaired
thereby and the parties will attempt to agree upon a valid and enforceable
provision
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which shall be a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Agreement.
Section 7.13. Remedies. In addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, the Purchaser will be entitled to specific performance of the
obligations of the Company under this Agreement and the Company will be
entitled to specific performance of the obligations of the Purchaser
hereunder with respect to the subsequent transfer of Shares and the
Underlying Shares. Each of the Company and the Purchaser agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of any breach of its obligations described in the foregoing sentence
and hereby agrees to waive in any action for specific performance of any
such obligation the defense that a remedy at law would be adequate.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first indicated above.
WAVE SYSTEMS CORP.
By:
----------------------------------
Name:
Title:
COMBINATION INC.
By:
----------------------------------
Name:
Title:
25
Exhibit D
[To be provided by Company prior to the Closing]