UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 14, 2015
WAVE SYSTEMS CORP.
(Exact name of registrant as specified in its charter)
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DELAWARE | | 0-24752 | | 13-3477246 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
480 Pleasant Street, Lee, Massachusetts 01238
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (413) 243-1600
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry Into a Material Definitive Agreement.
Item 3.02 Unregistered Sales of Equity Securities
On December 14, 2015, Wave Systems Corp. (“Wave”) entered into a financing facility with Marble Bridge Funding Group, Inc. (“MBFG”) pursuant to a Receivables Purchase Agreement by and between Wave and MBFG (the “Purchase Agreement”), as supplemented by an Addendum to the Purchase Agreement by and between Wave and MBFG and by a separate Validity Guaranty delivered in connection therewith (the “Addendum,” and, collectively with the Purchase Agreement, the “Facility”), pursuant to which MBFG will factor certain eligible accounts receivable and purchase orders from Wave. Subject to the terms and conditions in the Purchase Agreement, MBFG will provide an advance rate of 80% on the face amount of accounts receivable submitted for financing and 70% on the face amount of purchase orders submitted for financing. There is a $750,000 sub-limit on factoring of purchase orders. Wave will pay a discount fee for each factored receivable equal to 0.95% of the face amount of such receivable for each 15-day period that has elapsed since and including the applicable purchase date and through the Payment Date (as such term is defined in the Purchase Agreement). The discount fee for each purchase order will be 1.95% per 15-day period. Upon the occurrence of any event of default, pricing on the combined financing facility will increase by 1.0% per 30 days until cured. Wave has also paid a $850 per month facility monitoring fee and a one-time $7,000 due diligence fee. Wave has granted MBFG a first-priority, all-assets lien to secure its obligations under the Facility.
The term of the Facility will be one (1) year with automatic renewal of consecutive one (1) year terms thereafter; provided, that the term of the financing for purchase orders is 9 months. Wave will have the right to terminate the Facility upon 90 days’ prior written notice at least 90 days before the renewal date, so long as there are no outstanding and unpaid receivables that have been purchased by MBFG and no fees, charges or other obligations owed to MBFG. MBFG may terminate the Facility upon 90 days’ prior written notice at any time. If the Facility is terminated for any other reason than by Wave as described above or in connection with an acquisition of Wave resulting in gross proceeds payable by the acquiror of at least $15,000,000, then Seller will pay MBFG a termination fee equal to the highest total cumulative fees charged by MBFG during any 90-day period after the closing date of the Facility.
The Facility will be limited to a maximum borrowing of $500,000 until an investment bank, approved by MBFG, has been retained by Wave to pursue a sale or other strategic alternatives (the “Investment Bank Condition”). A failure to satisfy the Investment Bank Condition within 14 days of initial funding by MBFG will result in an event of default under the Facility. However, on December 15, 2015, the Investment Bank Condition was satisfied by Wave. In addition, an event of default will also occur if Wave does not receive an offer to license or purchase one or more patents owned by Wave or any of its subsidiaries within 60 days of initial funding by MBFG. If there is an event of default with respect to either of the foregoing conditions, MBFG will be entitled to receive from Wave $100,000 upon the occurrence of each such event and an additional $50,000 for each 30-day period that elapses prior to cure. Due to the Investment Bank Condition being satisfied, the total maximum borrowing under the Facility has been increased to $3,000,000 but is effectively limited to the extent of Wave’s qualifying accounts receivable and qualifying purchase orders at any time. Further, Marble Bridge has the discretion to decline to make advances at any time. While this facility provides some assistance in financing our operations, it does not fully address many of the Company’s pressing financial challenges, including the $588,000 Convertible Bridge Instruments that mature on December 23, 2105.
As additional consideration for entering into the Addendum, Wave issued to each of MBFG and its co-lender Agility Capital II LLC (“Agility”), a warrant to purchase up to 2,750,000 (5,500,000 in the aggregate) shares of Wave’s Class A common stock at an exercise price of the lower of (a) $0.15 per share or (b) the lowest closing market price of Wave’s Class A common stock within five days of the date of exercise of the warrant by MBFG or Agility, as applicable (such price, the “Exercise Price”). Each warrant expires on the fifth anniversary of the issue date (the “Expiration Date”), and may not be exercised for a period of 6 month following the issue date. In the event Wave issues (i) its Class A common stock at an exercise price lower than the Exercise Price or (ii) securities convertible into shares of Wave’s Class A common stock with a conversion price that is less than the Exercise Price in certain capital raising transactions, then the Exercise Price of the warrants issued to each of MBFG and Agility shall be adjusted to such lower amount. In addition, if the gross revenue for Wave for any consecutive twelve (12) month period during the term of each warrant (the “Peak Annual Revenue”) is at least $12,000,000, MBFG and/or Agility, as applicable, may require Wave to purchase its warrant in an amount determined by multiplying the Peak Annual Revenue by five percent (5%). MBFG and Agility were also granted rights to participate in future equity offerings, subject to certain conditions.
The issuance of the securities in connection with the Facility were exempt from registration pursuant to Rule 506 of the Securities Act of 1933, as amended.
Although the foregoing documents were dated by the parties as of December 7, 2015, the parties did not release signatures and make the documents effective and binding until MBFG and Wave determined to fund the Facility on December 14, 2015.
The foregoing description of the Purchase Agreement is qualified in its entirety by reference to the full text of the Facility is qualified in its entirety by reference to the full text of the (i) Purchase Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference and (ii) Addendum to Purchase Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the warrants issued to each of MBFG and Agility are qualified in their entirety by reference to the full text of the Form of Warrant which is filed as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the Validity Guaranty is qualified in its entirety by reference to the full text of the Validity Guaranty which is filed as Exhibit 10.4 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 8.01 Other Events
On December 15, 2015, Wave issued a press release announcing its entry into the Facility, and the issuance of the warrants described in Item 1.01 of this report. A copy of this press release is attached as Exhibit 99.1 to this report, and is incorporated herein by reference in its entirety.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
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Exhibit No. | Description | |
10.1 | Receivables Purchase Agreement, dated December 7, 2015, by and between Wave Systems Corp. and Marble Bridge Funding Group, Inc. |
10.2 | Addendum to Receivables Purchase Agreement, dated December 7, 2015, by and between Wave Systems Corp. and Marble Bridge Funding Group, Inc. |
10.3 | Form of Warrant issued to each of Marble Bridge Funding Group, Inc. and Agility Capital II LLC. |
10.4 | Validity Guaranty, dated December 7, 2015, by and between Wave Systems Corp. and Marble Bridge Funding Group, Inc. |
99.1 | Press Release, dated December 15, 2015. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
WAVE SYSTEMS CORP.
By: /s/ Walter A. Shephard
Walter A. Shephard
Chief Financial Officer
Dated: December 17, 2015
Exhibit Index
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Exhibit No. | Description | |
10.1 | Receivables Purchase Agreement, dated December 7, 2015, by and between Wave Systems Corp. and Marble Bridge Funding Group, Inc. |
10.2 | Addendum to Receivables Purchase Agreement, dated December 7, 2015, by and between Wave Systems Corp. and Marble Bridge Funding Group, Inc. |
10.3 | Form of Warrant issued to each of Marble Bridge Funding Group, Inc. and Agility Capital II LLC. |
10.4 | Validity Guaranty, dated December 7, 2015, by and between Wave Systems Corp. and Marble Bridge Funding Group, Inc. |
99.1 | Press Release, dated December 15, 2015. |
RECEIVABLES PURCHASE AGREEMENT
This RECEIVABLES PURCHASE AGREEMENT (this “Agreement”), dated December 7, 2015 (“Effective Date”), is made by and between Wave Systems Corp., with its principal office at 480 Pleasant Street, Lee, MA 01238, (“Seller”) and Marble Bridge Funding Group, Inc., having its principal office at 1440 Maria Lane, Suite 210, Walnut Creek, CA 94596. (“MBFG”).
WHEREAS, Seller desires to sell, and MBFG is willing to purchase, Eligible Receivables (hereinafter defined) on the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the mutual covenants set forth herein, the parties agree as follows:
1.Definitions; Rules of Construction. All terms used and not otherwise defined herein shall have the meaning set forth in the version of the Uniform Commercial Code adopted in California (as amended, “UCC”). Unless otherwise noted, references to “Sections,” “Exhibits,” Schedules,” and “Riders” refer to Sections, Exhibits, Schedules, and Riders hereof “Hereof,” “herein,” “hereunder,” and similar words refer to this Agreement in its entirety. “Or” is not necessarily exclusive. All accounting terms and computations are construed in accordance with generally accepted accounting principles consistently applied (“GAAP”).
“ACA” means the Federal Assignment of Claims Act of 1940, as amended.
“Applicable law” or “applicable law” means any federal, state or local law, treaty, rule, regulation, consent, authorization, or determination of the United States of America, any state, municipality, or any political subdivision thereof; or any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to a government to which a person, entity, Obligor, Contract, Receivable or transaction is subject.
“Approved Invoice” means an invoice submitted by Seller to an Obligor which has been approved for payment by such Obligor in respect of goods and/or services provided to such Obligor by Seller, and is so marked by the Obligor.
“Assignment of Accounts ‘Receivable” means an assignment of one or more Receivables in form and substance acceptable to MBFG in its sole discretion.
“Assignment of Claims” means an assignment of claims in form and substance that complies with the requirements of the ACA and that is acceptable to MBFG in its sole discretion.
“Avoidance Claims” means any claim that any payment received by MBFG is avoidable under the Bankruptcy Code or any other debtor relief statute.
“Business Day” means any day other than a Saturday, Sunday or other day on which banking institutions in the State of California are generally closed.
“Cash Percentage” means 80% until or unless MBFG determines in its sole and absolute discretion to change such percentage.
“Collateral” means all of Seller’s right, title and interest in and to any and all present or future contracts, contracts for sale, contract rights, accounts, accounts receivable, assignments, notes, drafts, tools, deposit accounts (including without limitation, the Specific Reserve Account). whether special or general, documents, instruments, promissory notes, chattel paper, investment property, letter-of-credit rights, letters of credit, general intangibles, including but not limited to trademarks, trade names, patents, copyrights and other forms of intellectual property, and all other assets, including, but not limited to, physical assets, transportation equipment, machinery, equipment, inventory, goods, and farm products, and other assets, whether now or hereafter owned or existing, leased, consigned by or to, or acquired by Seller, and regardless of where located, and all proceeds of any of the foregoing, whether arising from voluntary or involuntary disposition, including, without limitation, Seller’s rights to any returned inventory or rejected goods or personal property, and insurance proceeds.
“Contract” means each written agreement entered into by Seller with an Obligor pursuant to which Seller agrees to provide goods or services for payment.
“Defaulted Receivables” means Receivables in which any portion of payment due thereon remains unpaid 90 or more days after the Receivables Purchase Date.
“Eligible Contract” means a Contract which is acceptable as determined by MBFG in its sole and absolute discretion. In exercising its sole and absolute discretion when determining eligibility, MBFG will consider, but will not be limited to, the following minimum criteria (“Minimum Criteria For Eligible Contract”): it is a Contract: (i) respecting which Seller is in compliance herewith, (ii) meeting all requirements of the origination and servicing procedures adopted by MBFG from time to time, (iii) having an Eligible Obligor, (iv) expressly providing for assignment, (v) not by its terms or by operation of law or regulation providing for a surety of the work to be performed or the goods to be provided by Seller, and (vi) for which an executed Assignment of Accounts Receivable or Assignment of Claims covering all payments has been assigned to MBFG for collection.
“Eligible Obligor” means an Obligor which is acceptable as determined by MBFG in its sole and absolute discretion.
“Eligible Receivable” means a Receivable that is acceptable for purchase as determined by MBFG in its sole and absolute discretion, arid continues to be acceptable until paid in full. In exercising its sole and absolute discretion when determining eligibility, MBFG will consider, but will not be limited to, the following minimum criteria (“Minimum Criteria For Eligible Receivable”):
(a) The Receivable has arisen from an Eligible Contract in the ordinary course of Seller’s business pursuant to a sale of goods or services performed in compliance with all law applicable to such goods and services and to Seller and Obligor;
(b) MBFG has received a valid Assignment of Claims or Assignment of Accounts Receivable or other assignment that has been authorized by Seller and constitutes a “true sale” under applicable law, that sells, transfers and assigns all right title and interest in the Receivables and grants MBFG good title thereto free and clear of all Liens of others;
(c) Seller is not in default under the Contract from which such Receivable arose and the related invoice submitted by Seller is an Approved Invoice;
(d) The Face Amount is between $250 and $1,000,000, unless otherwise permitted by MBFG in its sole and absolute discretion;
(e) Seller or its designee has duly given all notices of assignment required by, and otherwise complied in all respects with, the ACA, the LICC and applicable law, and all such notices are in full force and effect to permit the legal, valid and enforceable transfer of such Receivable by Seller to MBFG;
(f) The Receivable is at all times the legal, valid and binding payment obligation of the Obligor under the Receivable, enforceable against such Obligor in accordance with its terms, and not subject to any tight of rescission, set-off, counterclaim or any other defense against Seller;
(g) On the Receivables Purchase Date Seller has not (i) taken any action that would impair MBFG’s rights in and to the Receivable or (ii) failed to take any action necessary to avoid impairing MBFG’s rights in and to the Receivable:
(h) The Receivable is an “account” as defined in the UCC;
(i) The Receivable is not a Defaulted Receivable;
(j) The Receivable is denominated in United States Dollars; and
(k) The credit of the Obligor of the Receivable has been approved by M.BFG in its sole discretion.
“Event of Default” is defined in Section 16.
“Exposed Payments” means payments received by MBFG from or for the account of an Obligor that have become subject to a bankruptcy proceeding, to the extent such payments cleared Obligor’s deposit account within ninety days of the commencement of said bankruptcy case.
“Face Amount” means, with respect to each Receivable, the dollar amount billed by Seller on the related invoice for goods or services provided to the Obligor under, and in accordance with, the related Contract.
“Hazardous Materials” means substances, materials or waste the generation, handling, storage, treatment or disposal of which is regulated by any local or state government authority as a “hazardous waste,” “hazardous material,” or “hazardous substance,” including without limitation those designated as a “hazardous substance” under Section 311 or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. §§ 1321, 1317), defined as a “hazardous waste” under Section 1004 of the Resource Conservation and Recovery Act, (42 .U.S.C. § 6903) or defined as a “hazardous substance” under Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601), and petroleum.
“Lien” means any security interest, mortgage, deed of trust, encumbrance, charge, pledge, hypothecation, assignment, deposit arrangement, lien (statutory or other), preference, participation interest, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC or comparable law of any jurisdiction to evidence any of the foregoing.
“Misdirected Payment Fee” means 15% (but in no event less than $1,000) of the amount of any payment on account of a Receivable received by Seller and not delivered immediately in kind to MUG as required under Section 13(b).
“Monthly Administrative Fee” means S850.00 per month, charged at the end of each month with no pro-rations. Seller irrevocably authorizes MBR3 to charge Seller this amount until the later of (1) the termination of this agreement or (2) until no remaining obligations are due MBFG under this agreement.
“Obligor” means the party obligated to make payments for goods or services purchased under a Contract.
“Purchase Termination Date” means the earlier to occur of (i) the date on which this Agreement is terminated by either party on 90 days prior written notice as provided in Section 25, or (ii) the date on which this Agreement terminates under Section 16.
“Receivable” means an account, contract right, or account receivable payable by an Obligor to Seller. whether or not pursuant to a Contract, resulting from Seller having provided goods or services to such Obligor.
“Receivables Purchase Date” is defined in Section 3(b).
“Specific Reserve Account” is defined in Section 12. All right, title and interest therein and thereto belongs to MBFG.
“Termination Fee” is an amount equal to the highest total cumulative fees charged by MBFG during any 90-day period after the Effective Date, including fees charged through the date of payoff. Termination Fee will apply in all instances except an acquisition of Seller resulting in gross proceeds of at least S15,000,000.
2. The Purchases. MBFG agrees, on the terms and conditions hereinafter set forth, to purchase from Seller, from time to time until the Purchase Termination Date, Eligible Receivables.
3. Making the Purchases.
(a) Seller shall notify MBFG of its desire to sell Receivables to MBFG by delivering to MBFG a statement specifying the aggregate Face Amount thereof, with copies of invoices and related Contracts for all such Receivables.
(b) After such notification and the fulfillment of the conditions of Section 8, MBFG shall remit to Seller or its designee the Cash Percentage of the Face Amount of the Eligible Receivables to be sold by Seller as specified in Section 9 (such date of payment is the “Receivables Purchase Date”). Upon such payment, all of Seller’s right, title and interest in and to such Eligible Receivables shall be deemed sold, assigned, transferred, conveyed and set over to MBFG.
4. Representations and Warranties. Seller hereby represents and warrants as of the date hereof and as of each Receivables Purchase Date:
(a) Each Receivable sold, assigned and transferred hereunder satisfies all of the Minimum Criteria For Eligible Receivable and is an Eligible Receivable;
(b) Seller is a Delaware corporation duly organized and validly existing and in good standing under the laws of the state of Delaware, and has full power and authority to enter hereinto and conduct its business as presently conducted, and to execute, deliver and perform its obligations hereunder, and is duly qualified to do business, with all necessary licenses and approvals in each jurisdiction in which it conducts its business;
(c) The execution and delivery hereof, the performance of the transactions contemplated hereby and the fulfillment of the terms hereof, have been duly authorized and will not conflict with or breach any terms of any contract, agreement, or instrument to which Seller is a party or by which it or its properties are bound, or conflict with or violate any law applicable to Seller;
(d) All financial information now or hereafter submitted by Seller to MBFG is true and correct, and has been prepared in accordance with GAAI), consistently applied;
(e) Seller’s financial statements fairly and completely present Seller’s assets, liabilities and financial condition and results of operations, recognizing that Seller does make public year-end adjustments;
(f) Seller has no notice or knowledge of non-compliance with any requirement of the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder;
(g) No information contained in any document or written materials furnished by or on behalf of Seller contains any untrue statement of a material fact or, when considered in light of disclosures otherwise made in writing by Seller to MBFG, omits or fails to state a material fact necessary to make the statement contained herein or therein not misleading in light of the circumstances under which made;
(h) Seller has filed all material federal, state and local tax returns and other reports required and has accurately reflected the same in its financial statements;
(i) Seller’s corporate name as set forth in the heading of this Agreement is its corporate name as it appears in its articles or certificate of incorporation or organization, or other constitutional or charter documents, and Seller has not used any corporate or fictitious name except as disclosed herein nor will Seller adopt or use any such name, or change its name;
(j) There are no material proceedings or investigations, pending or threatened, against Seller before any court, regulatory body, administrative agency, or other tribunal or government instrumentality, except as described in Seller’s most recent filing on Form 10-Q or 10-K;
(k) All Contracts and Receivables have been created in accordance with and complied with applicable law;
(l) This Agreement constitutes a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms;
(m) This Agreement effects a valid sale, transfer and assignment to MBFG of all het, title and interest of Seller in all Receivables owned by Seller and the proceeds thereof; including all amounts received by Seller with respect thereto;
(n) Each Contract with respect to which MBFG has purchased a Receivable or accepted assignment of a receivable as security satisfies all of the Minimum Criteria For Eligible Contract and is an Eligible Contract;
(o) The full Face Amount of each Receivable sold, assigned or transferred hereunder to MBFG shall be paid within 90 days of the Receivable Purchase Date:
(p) Neither Obligor, nor any employee, officer, agent, director, stockholder, affiliate, or subsidiary of Obligor, is an employee, officer, agent, director, stockholder, affiliate, or subsidiary of Seller;
(q) Neither Seller, nor any employee, officer, agent, director, stockholder, affiliate, or subsidiary of Seller, is an employee, officer, agent, director, stockholder, affiliate, or subsidiary of Obligor; and
(r) In respect to each Contract with respect to which MBFG purchases a Receivable or accepts assignment of a receivable as security, as of the date that the Receivable is assigned to M.BFG: (i) all products and services contracted for thereunder will have been delivered to the Obligor, (ii) Obligor will have accepted receipt of such products and services, and (iii) Obligor will have approved payment therefor in the amount of the Face Amount without any offset or other qualification or reservation.
5. Notice of Breach. The representations and warranties of Section 4 survive any transfer and assignment to MBFG. Upon discovery by Seller of a breach of any representation or warranty set forth in Section 4. Seller shall give prompt written notice thereof to MBFG.
6. Repurchase of Receivables.
(a) If, on or after any Receivables Purchase Date, any Receivable purchased on that Receivables Purchase Date does not satisfy or no longer satisfies the Minimum Criteria For Eligible Receivable or otherwise was not or is no longer an Eligible Receivable, then, at MBFG’s option, (i) Seller shall repurchase such Receivable immediately for cash, or (ii) MBFG shall charge to the Specific Reserve Account an amount equal to the Purchase Price paid for such Receivable less the aggregate amount received by MUG from the related Obligor with respect to such Receivable prior to the date of such repurchase plus the Discount Fee, or (iii) Seller shall sell to MBFG Eligible Receivables designated by MBFG in MBFG’s sole discretion at a purchase price to be determined by MBFG, at its sole discretion.
(b) Additionally, M.BEG may require Seller to repurchase: (i) any Receivable the payment of which has been disputed by the Obligor obligated thereon, MBFG being under no obligation to determine the bona fides of such dispute: and (ii) all Receivables upon the occurrence of an Event of Default, or upon the Purchase Termination Date. The repurchase of a Receivable shall not constitute a reassignment thereof, and a security interest therein shall remain in MBFG.
7. Security Interest.
(a) To secure Seller’s now existing and hereafter arising obligations to M.BFG under this Agreement, including, without limitation, Seller’s obligation to pay MBFG’s transaction fees, legal fees and all other fees and expenses as set forth in this Agreement, Seller hereby grants to MUG a continuing lien upon and security interest in all of Seller’s now existing and hereafter arising rights and interests in the Collateral. Seller hereby approves and ratifies any financing statement filed by MBFG against Seller prior to or after the Effective Date.
(b) In addition to Seller’s obligation to ensure that the full Face Amount of Receivables which have been purchased by MBFG are transmitted directly to MBFG, Seller shall ensure that the full Face Amount of each Receivable which has not been purchased by MBFG is also transmitted to MBFG in accordance with the terms of the Receivable without offset, delay or deduction. Failure by Seller to transmit the payments described in this Section 7 to MBFG in accordance with the terms of this Section 7 shall constitute an Event of Default.
8. Conditions Precedent to All Purchases of ‘Receivables. Unless expressly waived by MBFG, each purchase of a Receivable (including the initial purchase and all subsequent purchases) shall be subject to the condition precedents that:
(a) The Assignment of Claims or the Assignment of Accounts Receivable, any and all notices of assignment, and any other documents required by MBFG, all in form and substance acceptable to MBFG in its sole and absolute discretion, shall have been duly and effectively filed with the Obligor as required under the ACA and any other applicable law and shall riot have been returned or rejected by such Obligor as incomplete or defective, or for any other reason, and all invoices for Receivables to be issued by Seller shall be marked as required by MBFG:
(b) Seller’s representations and warranties hereunder are correct as of the Receivable Purchase Date:
(c) No event has occurred and is continuing, or would result from such purchase, which constitutes an Event of Default or event that, with the passing of time or the giving of notice, or both, would constitute an Event of Default;
(d) MBFG shall have received such other approvals, opinions or documents as MBFG may request;
(e) All conditions precedent for MBFG to obtain the financing necessary to purchase such Receivables shall have been satisfied;
(f) MBFG shall be satisfied that its security interests or liens are valid, enforceable, and prior to the rights and interests of others except those consented to in writing by MBFG:
(g) Such additional conditions precedent as may be determined by MBFG in its sole and absolute discretion; and
(h) Seller’s address as set forth at the head of this Agreement is accurate and denotes the location of its principal place of business.
Neither MBFG’s waiver of any of these conditions precedent or failure to reject a Receivable on account of it not satisfying any of these conditions precedent will in any way relieve Seller from liability hereunder arising from any breach of this Agreement, including any misstatement or misrepresentation set forth in any of the representations and warranties made by Seller to M.BFG.
9. Purchase Price. Upon satisfaction or waiver of all of the conditions precedent set forth in Section 8, .MBFG shall, subject to the provisions of Section 10, pay Seller or put into the Specific Reserve Account in consideration of each Eligible Receivable purchased on the Receivables Purchase Date:
(a) Cash in an amount equal to the Cash Percentage, as such percentage may be adjusted from time to time at the sole discretion of MBFG, of the Face Amount of such Eligible Receivable; and
(b) Subject to Section 10 hereof, on the date which is three Business Days after the earlier of (x) the date of receipt of good funds by MBFG of the entire Face Amount of such Receivable paid by or on behalf of the Obligor and identified as payment with respect to such Receivable purchased by Seller and (y) 360 days after the Receivables Purchase Date (the “Payment Date”), cash in an amount equal to the Face Amount of such Receivable less the sum of (i) the Cash Percentage of the Face Amount of such Receivable, and (ii) a discount fee (“Discount Fee”) equal to the sum of (A) 0.95% of the Face Amount of such Receivable for the first 15-day period or any portion thereof that has elapsed since and including such Receivables Purchase Date and through the Payment Date, (B) 0.95% of the Face Amount of such Receivable for the second 15-day period or any portion thereof that has elapsed since and including the Receivables Purchase Date and through the Payment Date, (C) 0.95% of the Face Amount of such Receivable for any subsequent I5-day period(s) or any portion thereof that have elapsed since and including the Receivables Purchase Date and through the Payment Date, and (D) a 0% of the Face Amount of such Receivable, which is an administrative fee accruing on the Receivable Purchase Date.
10. Settlement Procedures.
(a) On the Payment Date, MBFG shall determine (i) the net amounts, if any, due Seller pursuant to Section 9 and the amount of any other collections received which are otherwise due Seller, minus (ii) the net amounts due to MBFG pursuant to Seller’s obligations to repurchase Receivables under Section 6 or otherwise. If such amount is positive, MBFG shall pay such amount to Seller, and if such amount is negative, MBFG shall advise Seller of such amount due to MBFG, and if payment therefore is not received on the next Business Day, MBFG shall collect the amount due from Seller (i) first front amounts otherwise due to Seller from MBFG, (ii) second from collections received and otherwise due to Seller, (iii) third from amounts available in the Specific Reserve Account, and (iv) fourth from any other amounts otherwise due Seller. Any amount which remains unsatisfied will constitute an unpaid and outstanding obligation of Seller. Failure by Seller to immediately pay this unpaid and outstanding obligation will constitute an Event of Default.
(b) All payments to MBFG under this Agreement other than wire transfers shall be made to MBFG’s principal office at the address set forth in Section 13(h). Payments must be received by MBFG not later than 12:00 noon Pacific Time Zone; payments received after 12:00 noon shall not be credited to Seller until the next Business Day. All payments to MBFG by wire transfer shall be into the account designated by MBFG. All payments must be in lawful money of the United States of America in same day funds. Payments to Seller under this Agreement, or to a third party for the benefit of Seller, may be by check, which may be mailed, picked up in person, or deposited directly into an account designated by Seller, by wire transfer to an bank account designated in writing by such Seller to MBFG. All fees or costs associated with any payment to Seller, including without limitation, wire transfer fees and other associated fees, shall be the responsibility of Seller.
(c) Whenever any payment to be made hereunder is stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
11. Adjustments. If on any day the outstanding balance of a Receivable is either (i) reduced as a result of any defective, rejected or returned merchandise or services, any cash discount, or any adjustment by Seller, or (ii) reduced or canceled as a result of a set-off in respect of any claim by the Obligor thereof against Seller (whether such claim arises out of the same or a related transaction or an unrelated transaction), the value of the adjustment(s) to the outstanding balance shall be deemed to have been received by Seller and shall be remitted promptly to MBFG, but in no event more than 5 days after such deemed payment.
12. Specific Reserve Account. Notwithstanding any term hereof to the contrary, during the term hereof, Seller shall deposit with MBFG, and MBFG may withhold from amounts otherwise due to be paid to Seller hereunder, in a Specific Reserve Account, an amount equal to the “Specific Reserve Requirement,” which is equal to 10% or such other percentage that MBFG may determine is appropriate from time to time in its sole discretion, of the average aggregate Face Amount of the outstanding Receivables that have been .purchased pursuant hereto during the 120-day period preceding the date as of which the determination of the Specific Reserve Requirement is being made. Amounts in the Specific Reserve Account shall be paid to Seller only after all obligations of Seller to MBFG have been satisfied in full. Seller hereby authorizes MBFG to charge and set-off against the Specific Reserve Account any amounts due MBFG hereunder at any time, without prior notice to Seller.
13. Further Covenants.
(a) At any time and from time to time, at Seller’s expense, Seller will promptly execute and deliver all further instruments and documents, in form and substance acceptable to M.BFG, and take all further action, that may be necessary or desirable, or that al13FG may request, in order to perfect and protect any rights, assignment, or security interest granted or purported to be granted hereby or to enable MBFG to exercise and enforce its rights and remedies hereunder or to preserve and protect MBFG’s interest in or the value of any Receivable or Collateral, and pay the costs of any recording or filing of the same, and MBFG may do anything which it, in its discretion, deems reasonably necessary to perfect and protect its interest in the Receivables and Collateral. Without limiting the generality of the foregoing, Seller will make appropriate entries upon its financial statements and its books and records disclosing MBFG’s security interest in the Collateral. Seller authorizes MBFG to notify any parties of the existence and terms of MBFG’s security interest in the Collateral. MBFG may at its option and at any time require Seller to segregate all collections and proceeds of the Collateral so that they are capable of identification and to deliver daily such collections and proceeds to MBFG in kind; and require Seller to obtain MBFG’s prior written consent to any sale, lease, agreement to sell or lease, or other disposition or any inventory other than in the ordinary course of business.
(b) Seller covenants and agrees that if it receives any payments on any Receivable, then Seller shall hold all such payments in trust for the benefit of MBFG and immediately turn over such payments, in kind, to MBFG. Seller shall not deposit any such payments into its own or another account, and, in the event such payment is not delivered in kind within one Business Day of its receipt by Seller, Seller shall pay to MBFG in cash the Misdirected Payment Fee. If Seller receives payments on any Receivables in any form other than check, including but not limited to cash, credit card or wire transfer, Seller agrees immediately to remit the amount received in good funds to the MBFG.
(c) Upon MBFG’s request, Seller will deliver to MBFG within 3 days after MBFG requests them, all original documents, including the original Contract, orders, invoices, and delivery receipts related to any Receivable. MBFG shall, at all times, have full access to the books and records of Seller, on Seller’s premises, and may at any time examine and make copies of such books and records and to take extracts therefrom. Seller shall provide (i) Accounts Receivable and accounts payable aging monthly within five (5) days of month end; (ii) prepared financial statements monthly, within (30) days of month end; (iii) bank statements within (10) days of month end: (iv) yearend financial statements and tax returns, within one hundred twenty (120) days of fiscal yearend: and (v) such other financial reports as MBFG may reasonably request from time to time. Without expense to MBFG, MBFG may use any of Seller’s personnel, equipment, including computer equipment, programs, printed output and computer readable media, supplies and premises for the collection of accounts and realization on other Collateral as MBFG, in its sole discretion, deems appropriate. Seller hereby irrevocably authorizes all accountants and other third parties to disclose and deliver to MBFG at Seller’s expense all financial information, books and records, work papers, management reports and other information in their possession relating to Seller.
(d) Seller will keep its chief place of business, chief executive office, and the office where it keeps its records concerning and the originals of the invoices of Receivables, Contracts and purchase orders and agreements related to such Receivables, at the address set forth in the preamble.
(e) Seller shall not, without MBFG’s prior written consent in each instance: (i) grant any extension of time for payment of any Receivables or Collateral that is a monetary obligation; (ii) compromise or settle any Receivable or Collateral that is a monetary obligation for less than its full amount; (iii) release in whole or in part any Obligor or other person liable for the payment of any Receivable or Collateral that is a monetary obligation; or (iv) grant any credits, discounts, allowances, deductions, return authorizations or the like with respect to any Receivable or other Collateral.
(f) Seller shall pay all federal, state and local taxes, including, without limitation, payroll taxes, that are due and to make all future tax payments as they become due that in any manner relate to Seller’s business, and indemnifies and holds MBFG harmless with respect to said taxes. Seller shall promptly provide proof of payment of such taxes to MBFG in such form as MBFG shall require.
(g) Seller shall maintain insurance on all insurable property owned or leased by Seller in the manner and against such risks as usually maintained by similar businesses and property owners. All such insurance shall be in amounts and form and with insurance companies acceptable to MBFG in its sole discretion. Seller shall furnish to MBFG any and all information concerning such insurance carried and lender loss payable endorsements in favor of MBFG. All policies of insurance shall provide for not less than 30 days prior written cancellation notice to MBFG.
(h) Seller agrees to have all payments due to it under the terms of any Contract or Receivable sent directly to the MBFG at the following address:
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Wave Systems Corp.
Marble Bridge Funding Group, Inc.
P.O. Box 8195
Walnut Creek, CA 94596 | Wells Fargo Bank
San Francisco, CA 94104
ABA# 121000248
A/C# 4125502302
Attention: Marble Bridge Funding Group, Inc.
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(i) MBFG shall have, with respect to all Receivables and any goods or personal property returned or rejected in connection with such Receivables, all the rights and remedies of an unpaid seller under the UCC and other applicable law, including the rights of replevin, claim and delivery, reclamation, and stoppage in transit. MBFG shall have the right at any time to take possession of goods or personal property rejected, returned or recovered in connection with any such Receivable. If MBFG does not take possession of such goods and personal property, Seller shall resell them for MBFG’s account at Seller’s expense with the proceeds made payable to MBFG. While Seller retains possession of such goods and personal property, Seller shall segregate them and mark them “Property of Marble Bridge Funding Group.”
(j) Seller shall not change its name or undertake the use of any alternative name or fictitious name or change its address as set forth at the head of this Agreement without first notifying MBFG in writing of such change.
(k) Seller shall ensure that the full Face Amount of each Receivable is transmitted to MBFG in accordance with the terms of the Receivable and without any offset, delay or deduction. For the avoidance of doubt, the foregoing applies both to Receivables purchased by MBFG and Receivables assigned to MBFG as security. Accordingly, Seller shall ensure that the full Face Amount of each Receivable which is not purchased by MBFG is also transmitted to MBFG in accordance with the terms of the Receivable and without any offset, delay or deduction.
14. Authorization of MBFG. Seller hereby irrevocably appoints MBFG and its designees Seller’s true and lawful attorney in fact, to exercise at any times in MBFG’s or such designee’s discretion, at Seller’s sole expense, all or any of the following powers until all amounts due MBFG have been fully, finally, and indefeasibly paid in full: (a) receive, take, endorse, assign, deliver, accept and deposit, in the name of MBFG or Seller, any and all cash, checks, commercial paper, drafts, remittances and other instruments and documents relating to the Receivables, Collateral or the proceeds thereof, (b) charge the Specific Reserve Account for miscellaneous expenses incurred by MBFG related to administration of this agreement and the transactions hereunder, including but not limited to wire fees, courier and delivery fees, copy costs, phone costs, transportation costs, staff labor costs, collection costs and legal fees, (c) take or bring, in the name of MBFG or Seller, all steps, actions, suits or proceedings deemed by MBFG necessary or desirable to effect collection of or other realization upon the Receivables, accounts and other Collateral, (d) to receive, open, and dispose of all mail addressed to Seller for the purpose of collecting accounts and shall be appointed as limited agent with no fiduciary responsibility to execute Seller’s name on any post office change of address form, (e) after an Event of Default, extend the time of payment of, compromise or settle for cash, credit, return of merchandise, and upon any terms or conditions, any and all accounts, Receivables, or Collateral and discharge or release any account debtor or other obligor, without affecting any amounts due hereunder, (0 convey full legal and equitable ownership of Receivables to MBFG pursuant to Section 6 to replace ineligible Receivables purchased by MBFG, and (g) pay any sums necessary to discharge any lien or encumbrance which is senior to MBFG’s security interest in the Receivables or Collateral or any claim against Seller that may adversely affect the collection of any Receivable, which sums shall be included as amounts due hereunder. In no event will MBFG have any liability to Seller for lost profits or other special or consequential damages.
15. Intention of MBFG and Seller. It is the express intention of MBFG and Seller that this is an agreement for sales of Receivables by Seller and the purchase of such Receivables by MBFG. The relationship of the parties hereto shall be that of seller and purchaser of Receivables, and neither party is or shall be deemed a fiduciary of or to the other.
16. Events of Default and Remedies. Any of the following events is an “Event of Default”:
(a) Seller fails to pay any amount due hereunder when due;
(b) Seller breaches any term or condition hereof:
(c) Any representation or warranty made herein by Seller or pursuant hereto proves to have been false or misleading when made;
(d) Any guarantor of Seller’s obligations to MBFG fails to perform or observe any of its obligations to MBFG or notifies MBFG of an intention to rescind, modify, terminate or revoke any guaranty, or any such guaranty ceases to be in full force and effect for any reason whatsoever:
(e) MBEG’s security interest in any Collateral or other security for Seller’s obligations becomes impaired for any reason;
(f) Seller or any guarantor of Seller’s obligations to MBFG is generally not paying its debts as they become due, or admits in writing its inability to pay debts generally, or makes an assignment for the benefit of creditors; or is a subject of a bankruptcy, receivership, or oilier reorganization proceeding, including the filing of a security interest on behalf of a trustee for general unsecured creditors;
(g) One or more arbitration awards, final judgments, decrees or orders for the payment of money is rendered against Seller or any guarantor of Seller’s obligations to MBFG;
(h) Seller fails to maintain the required amounts in the Specific Reserve Account;
(i) MBFG, for any reason and in good faith, deems itself insecure with respect to the prospect of repayment or performance of Seller’s obligations hereunder;
(j) Any Collateral is used in a way that could subject MBFG to liability or subject the Collateral to impairment under applicable law, including without limitation those relating to Hazardous Materials, genetic research or materials, government secrecy, or technology export;
(k) A federal, state or local tax lien is filed against Seller or its principals;
(l) Seller deposits, cashes or otherwise converts monies due to .MBFG; or
(m) Any other event described herein as an “Event of Default.”
Upon the occurrence of an Event of Default, MDR) may, without notice to Seller, terminate this Agreement and all Seller’s rights hereunder, at which time all amounts due MBFG shall immediately become due and payable without notice. In addition, upon the occurrence of an Event of Default, MBFG shall have the right to convert Receivables which are held as security by MBEG from security to the outright legal and equitable property of MBFG, and M.BFG shall have no obligation to remit collections from any Receivables that it may possess until and unless the default is cured.
17. Avoidance Claims.
(a) Seller shall indemnify MBFG from any loss, cost and legal expenses arising out of the assertion of any Avoidance Claim relating to Exposed Payments.
(b) Seller shall notify M.BFG within two business days of it becoming aware of the assertion of an Avoidance Claim.
(c) This Section 17 shall survive termination of this Agreement.
18. Assignment. MBFG may assign its rights and delegates its duties hereunder. Upon such Assignment, Seller shall be deemed to have attorned to such assignee and shall owe the same obligations to such assignee and shall accept performance hereunder by such assignee as if such assignee were MBFG. Seller may not assign its rights or obligations hereunder to any other party except as expressly agreed to and authorized by MBFG in writing from MBFG to Seller. Any attempted assignment by Seller without the written approval of MBFG shall he void ab initio.
19. General Indemnity. Without limiting any other rights hereunder or under applicable law, Seller hereby agrees to indemnify MBFG, and its successors, transferees, and assigns and all officers, directors, shareholders, employees and agents thereof (each an “Indemnified Person”), forthwith on demand, from and against any and all damages, losses, claims, liabilities and related costs and expenses, including attorneys’ fees and disbursements (all of the foregoing being collectively referred to as “Indemnified Amounts”) awarded against or incurred by any of them arising out of or relating to the transactions contemplated hereby or the ownership of any Receivable, including without limitation: (a) any representation or warranty made by Seller or any of its officers or affiliates that was false or misleading when made; (b) Seller’s breach of applicable law, rule or regulation; (c) any imperfection in MBFG’s security or ownership interest in any Collateral or Receivable caused by Seller; (d) any dispute, claim, offset or defense of any Obligor, including without limitation, any relating to the goods or services related to such Receivables and products liability claims; (e) any tax or governmental fee or charge and all interest and penalties thereon, including without limitation any sales tax that may be assessed or charged on the purchase and sale of Receivable hereunder: (t) any failure of Seller to perform its duties or obligations hereunder or tinder any Contract; and (g) Seller’s purchase, transport, storing, use or disposing of Hazardous Materials. Seller acknowledges that (i) MBFG is not now, and has not ever been, in control of Seller’s affairs, (ii).MBFG does not have the capacity to influence Seller’s conduct with respect to the ownership, operation or management of Seller or any of its facilities or its handling or disposal of Hazardous Materials (other than to require compliance with applicable law) and (iii) each of Seller and its subsidiaries together constitute a common enterprise.
20. Reinstatement. This Agreement will remain in full force and effect and continue to be effective should: (a) any petition be filed by or against Seller for liquidation or reorganization; (b) Seller become insolvent or make an assignment for the benefit of creditors; or (c) a receiver or trustee be appointed for all or any significant part of Seller’s assets. This Agreement and Seller’s obligations hereunder will continue to be effective or be reinstated, as the case may be, if at any time any payment or performance hereunder is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by M.BFG, whether as a “voidable preference”, “fraudulent conveyance”, or otherwise, all as though such payment or performance had not been made.
21. Waivers. To the maximum extent permitted under applicable law, Seller hereby irrevocably waives all of the following:
(a) Any right to assert against MBFG as a defense, counterclaim, set-off or crossclaim, any defense (legal or equitable), set-off, counterclaim, crossclaim and/or other claim (i) that Seller may now or at any time hereafter have against any party liable to MBFG in any way or manner, or (ii) arising directly or indirectly from the present or future lack of perfection, sufficiency, validity and/or enforceability of any agreement between Seller and MBFG, or any security interest.
(b) (i) Presentment, demand and notice of presentment, dishonor, notice of intent to accelerate, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all accounts, documents, instruments, chattel paper and guaranties at any time held by MBFG on which Seller may in any way be liable and hereby ratifies and confirms whatever MBFG may do in this regard, (ii) any bond or security which might be required by any court prior to allowing MBFG to exercise any of its remedies, and (iii) the benefit of all marshaling, valuation, appraisal and exemption laws.
(c) Any and all rights and remedies now or hereafter conferred by statute or otherwise which may require 141.11FG to take any judicial proceedings in connection with any Collateral or to give any notice or to sell, lease or otherwise use any Collateral in mitigation of MBFG’s damages as set forth herein or which may otherwise limit or modify any of MBFG’s rights or remedies hereunder.
(d) The right, if any, to require M.BFG to (i) proceed against any person liable for any obligations as a condition to or prior to proceeding hereunder; and (ii) foreclose upon, sell or otherwise realize upon or collect or apply any other property, real or personal, securing any obligations of Seller, as a condition to, or prior to proceeding against Seller hereunder.
(e) If MBFG seeks to take possession of any or all of the Collateral by judicial process: (i) any bond and any surety or security relating thereto which is otherwise required by any statute, court rule or otherwise as an incident to such possession; (ii) any demand for possession prior to the commencement of any suit or action to recover possession thereof; and (iii) any requirement that MBFG retain possession and not dispose of any such Collateral until after trial or final judgment; and
(f) No acceptance of, failure to reject, oppose or protest any Contract, Obligor or Receivable by MBFG shall effect a waiver or be deemed to effect a waiver of any of M.BFG’s rights or remedies otherwise arising hereunder or relieve Seller from any liability hereunder arising from any breach of this Agreement, including any misstatement or misrepresentation set forth in any of the representations and warranties made by Seller to MBFG.
22. Bankruptcy. Seller shall provide MBFG ten (10) days’ advance notice (“Advance Notice”) of any voluntary petition to be filed by Seller under federal bankruptcy laws or under any federal or state law for the relief of debtors (a “Petition”). MBFG shall respect the confidentiality of the Advance Notice and shall divulge the same only to its attorneys and agents. Seller shall provide MBFG immediate notice of any involuntary Petition, as soon as Seller becomes aware of the same.
23. Attorneys Fees. Seller agrees to reimburse MBFG, on demand, for: (a) the actual amount of all costs and expenses, including attorneys’ fees, that MBFG has incurred or may incur in negotiating, preparing, or administering this Agreement and any documents prepared in connection herewith; (b) the actual costs, including photocopying, travel, and attorneys’ fees and expenses incurred in complying with any subpoena or other legal process attendant to any litigation in which Seller is a party; and (e) the actual amount of all costs and expenses, including attorneys’ fees, which MBFG may incur in enforcing this Agreement and any documents prepared in connection herewith, or in connection with any federal or state insolvency proceeding commenced by or against Seller, including those (i) arising out of the automatic stay, seeking dismissal or conversion of the bankruptcy proceeding or (ii) opposing confirmation of Seller’s plan thereunder; and (d) the actual costs, expenses and attorneys fees incurred in enforcement actions against account debtors of Seller, regardless of forum.
24. No Lien Termination Without Release. Seller acknowledges that it is obligated under this Agreement to reimburse M.BFG certain expenses including, without limitation, MBFG’s attorneys fees and expenses incurred in defending or otherwise representing MBFG concerning this Agreement. Since MBFG’s expenses are a part of Seller’s obligations which are secured by the Collateral, MBFG shall not be required to discharge any lien or terminate any security interest in the Collateral unless and until Seller executes a general release of liability and indemnification in favor of and acceptable to MBFG.
25. Term and Termination. The term of this Agreement shall be for one (1) year from the date of this Agreement and shall be automatically renewed for consecutive one (I) year terms thereafter. Seller shall have the right to terminate this Agreement at any time that there is no outstanding and unpaid Receivables that have been purchased by MBFG and no fees, charges or other obligations owed to MUG upon 90 days’ prior written notice to MBFG and at least 90 days before the renewal date. If this Agreement is terminated for any other reason than that described above and as described in the definition of Termination Fee, then Seller shall pay MBFG the Termination Fee. In addition to its right to terminate this Agreement upon the occurrence of an Event of Default as provided in Section 16 of this Agreement. MBFG shall have the right to terminate this Agreement at any time upon 90 days’ prior written notice to Seller. Any termination of this Agreement shall not affect MBFG’s security interest in the Collateral or MBFG’s ownership of purchased Receivables, and this Agreement shall continue to be effective until all transactions entered into and obligations incurred under it have been completed and satisfied in full.
26. Miscellaneous.
(a) Governing, Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.
(b) No Waiver by MBFG. Neither MBFG’s failure to require strict performance by Seller of any provision hereof nor MBFG’s implied or express waiver of any right hereunder will waive or diminish MBFG’s right to demand strict compliance with all provisions of the Agreement. Any action by Seller against MBFG for default hereunder must be commenced within one year after such cause of action occurs. Any waiver of any one occurrence of an Event of Default will not suspend, waive or affect MBFG’s rights or remedies as to the occurrence of any other Event of Default.
(c) Amendments, Etc. No amendment or waiver of any provision hereof shall be effective unless in writing and signed by the party to be charged. Any waiver shall be effective only in the specific instance for which given. No course of dealing, course of performance or trade usage, and no parole evidence of any nature, shall be used to supplement or modify any terms hereof.
(d) Notices. All notices hereunder shall be in writing and deemed effective: (i) if personally delivered to recipient at the address set forth in the first paragraph hereof (which includes overnight carrier), when received, (ii) if transmitted by facsimile, when sent, receipt confirmed by telephone or electronic means, and (iii) if sent by regular U.S. mail to recipient at the address set forth in the first paragraph hereof, the third day after deposit in the U.S. mail.
(e) Binding Effect; Survival. This Agreement shall inure to the benefit of the parties, the Indemnified Persons, and their respective successors and assigns. MBFG’s rights and remedies shall survive any termination hereof.
(f) Notice of Litigation. If at any time during the term hereof any litigation, governmental investigations or claims, complaints, actions or prosecutions involving Seller or any guarantor of Seller is commenced or threatened, Seller shall immediately notify M.B.FG in writing thereof
(g) Destruction of Seller’s Documents. MBFG is under no obligation to return any schedules, invoices, statements, budgets, forecasts, reports or other papers delivered by Seller and may destroy or otherwise dispose of same at such time as MBFG, in its discretion, deems appropriate.
(h) Participation. MBFG may at any time sell, assign, grant participation in, or otherwise transfer to any other person, firm, or corporation (a “Participant”), all or part of the obligations of Seller hereunder. Seller agrees that each such disposition will give rise to a direct obligation of Seller to the Participant. Seller authorizes MBFG and each Participant, upon the occurrence of an Event of Default, to proceed directly by right of setoff, banker’s lien, or otherwise, against any assets of Seller which may be in the hands of MBFG or such Participant, respectively. Seller authorizes MBFG to disclose to any prospective Participant and any Participant any and all information in MBFG’s possession concerning Seller, this Agreement, all Contracts, and any Collateral.
(i) Venue; Jurisdiction. Any suit, action or proceeding arising out of the subject matter hereof, or the interpretation, performance or breach hereof, shall at the sole option of MBFG, be instituted in any court of Contra Costa County, State of California or any other court acceptable to MBFG (the “Acceptable Forums”). Each party agrees that the Acceptable Forums are convenient to it, and each party irrevocably submits to the jurisdiction of the Acceptable Forums, irrevocably agreeing to be bound by any judgment rendered thereby in connection herewith, and waives any and all objections to jurisdiction or venue that it may have in any such suit, action or proceeding.
(j) Entire Agreement. This Agreement supersedes all prior or contemporaneous agreements and understandings between said parties, verbal or written, express or implied, relating to the subject matter hereof. There are no intended third-party beneficiaries.
(k) Severability. Each provision hereof shall be severable from every other provision hereof for the purpose of determining the legal enforceability thereof.
(l) WAIVER OF JURY TRIAL. SELLER AND MBFG EACH HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING HERETO, ANY DOCUMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. SELLER AND MBFG ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO MBFG TO ENTER HEREINTO. EACH PARTY FURTHER WAIVES ANY RICHT TO CONSOLIDATE. ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(m) Counterparts. This Agreement may be executed in counterparts all of which taken together shall constitute one and the same original instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their authorized officers or agents as of the date first written above.
WAVE SYSTEMS CORP.
a Delaware corporation
By: /s/ William M. Solms
Name: William M. Solms
Title: CEO
ATTEST: MARBLE BRIDGE FUNDING GROUP, INC.
a corporation
By.: /s/ Cal McGinnis By: /s/ Paul Candau
Name: Cal McGinnis Name: Paul Candau
Title: Operations Analyst Title: President and CEO
ADDENDUM
TO
RECEIVABLES PURCHASE AGREEMENT
(Purchase Order and/or Over Advance Facility)
This Addendum to the Receivables Purchase Agreement dated December 7, 2015 (RP’), is made this day of December, 2015 by and between Marble Bridge Funding Group, Inc. (“MBFG”) and Wave Systems, Corp. (“Seller”) and forms a part of the RPA. All capitalized terms used in this Addendum and not otherwise defined in this Addendum shall have the meanings given them in the RPA.
NOW THEREFORE, in consideration of the mutual promises herein contained, the Parties hereby agree as follows:
1.Advances. Seller agrees that all present and future amounts advanced by MBFG under this Addendum or under the RPA shall constitute indebtedness of Seller to MBFG, shall bear fees as outlined below and any other such fees or charges as provided in this Addendum and the RPA, and shall be due and payable from Seller to MBFG upon demand. All amounts due or to become due shall constitute obligations secured by any and all collateral security now or hereafter granted by Seller to MBFG.
2. Terms. The $3,000,000 combined financing facility available to Seller by MBFG shall be comprised of (i) the amounts financed through purchases of qualified accounts receivable as described in the RPA, as amended herein and (ii) the purchase order facility described below (the “PO Facility”). The combined financing facility will be limited to a maximum borrowing of $500,000 until an investment bank, approved by MBFG has been retained by Seller to pursue a sale or other strategic alternatives (l-Bank Milestone”)(it being understood that GrowthPoint Partners is an acceptable investment bank for this purpose) if Seller does not satisfy I-Bank Milestone within 14 days of initial funding by MBFG, Seller will trigger an event of default and will be subject to Default Fees outlined below in Section 9. If Seller does not receive an offer to license or purchase one or more patents owned by the Seller or any of its subsidiaries (IP Sale Milestone”) within 60 days of initial funding by MBFG, Seller will trigger an event of default and will be subject to Default Fees outlined below in Section 9. Additionally, if Seller is in default under the IP Sale Milestone, the combined financing facility will be limited to qualified accounts receivable only. The PO Facility is limited to $750,000. The term of the PO Facility is 9 months.
3. PO Facility. On or after December 7, 2015, and subject to and in accordance with this Addendum, its terms, conditions and covenants, MBFG may, in its sole discretion, advance up to 70% of the face value of Seller’s qualified purchase orders (“Purchase Order Advance”). Approval on Purchase Order Advances will be dependent on compliance with the I-Bank Milestone and the IP Sale Milestone in addition to at MBEG’s sole discretion. The face value of these purchase orders shall he considered the “Face Amount”. These purchase orders shall be from Eligible Obligors for work to be performed by Seller for which Obligor will pay Seller according to the terms listed in the purchase order (“Purchase Order”). Seller warrants, agrees and covenants that ( I) the proceeds from these Purchase Order Advances by MBFG shall be used to pay vendors and/or suppliers that will lead directly to the conversion of such Purchase Order into an account receivable due and payable by Obligor and (2) that each Purchase Order, within 45 days from MBFG’s advance, will be converted or paid by one of the following (such selection to he made by MBFG): (a) conversion into an accounts receivable advance, (b) payment out of Seller’s Specific Reserve, or (c) a cash payment by Seller to MBFG. Seller shall pay 1.65% of the Face Amount of the Purchase Order for each 15-day period until the Purchase Order Advance and all fees are paid in full. Seller irrevocably authorizes MBFG, and MBFG reserves the right to pay these amounts from the Seller’s Specific Reserve Account,
4. Facility Monitoring Fee. Seller shall pay a $850 per month facility monitoring fee. Seller irrevocably authorizes MBFG, and MBFG reserves the right, to pay these amounts from Seller’s Specific Reserve Account.
5. IP Sale/Lien Release Fee. If Seller completes any sale or license of one or more patents, jilter the date of this Agreement with gross proceeds greater than $500,000, Seller may either payoff the combined financing facility or pay MBFG a Lien Release Fee of 7.5% of gross proceeds on the sale.
6. Due Diligence / Legal/ Document Fee. Seller shall pay MBFG $7,000 by November 27 based upon MBFG now being complete with Due Diligence, Seller has been approved and for legal fees associated with due diligence. In addition, pursuant to the RPM,., Seller shall reimburse MBFG, on demand, for MBFG’s additional reasonable legal expenses incurred in connection with the preparation and negotiation of the RPA, this Addendum and all other contracts, instruments and documents, including without limitation, warrants and security or pledge agreements, plus the costs and expenses incurred by MBFG in connection with perfecting its Liens against the Collateral, and confirming the priority of such Liens.
7. Warrant. As additional consideration for entering into this Addendum, Seller shall issue to MBFG, and execute and deliver concurrent with the execution of this Addendum a warrant in the form attached hereto as Exhibit “A” (the “Warrant”).
8. Success Fee. During the term of the Warrant, NIKO may, in its sole discretion, exchange the Warrant for a success fee as further described in Section 3 of the Warrant (the -Success Fee”). MBFG and Seller hereby acknowledge and agree that Seller’s obligation to pay the Success Fee survives the termination of the Agreement and UCC1 termination, however the Success Fee if unpaid or the Warrant remains outstanding. Seller authorizes MBFG to refile a subordinated CCC-1 with the Collateral as security for the obligation and MBFG agrees to subordinate to a future senior secured lender.
9. Default Fee. If there is an Event of Default as described in Section 13 below, pricing on the combined financing facility will increase by 1.0% per 30 days until cured. If there is an Event of Default on either the 1-Bank Milestone or the 11’ Sale Milestone, MBFG will be paid $100,000 and an additional $50,000 each 30 days until cured,:
10. Interpretation. In the event of any inconsistency between the terms of this Addendum and the terms of any other instrument, document or agreement entered into by and between Seller and MBFG, the terms most favorable to MBFG shall control.
11. Representation, Warranty and Covenant. Seller, and its officers and directors in their respective capacity as Chief Executive Officer and Chief Financial Officer, represent, warrant and covenant to MUG that all amounts represented by Seller are to be used for working capital for Seller and that no Event of Default has occurred and is continuing. Each party to this Addendum warrants and represents to the other that it has full power and authority to enter in this Addendum and the transactions contemplated hereunder, and to perform all obligations hereunder and that this Addendum is valid, binding and enforceable against such party in accordance with its terms.
12. Additional Covenants. In addition to the covenants set forth in the RPA, so loin), as any advance pursuant to this Addendum remains outstanding, Seller will:
(a) Financial Reporting. Deliver the following to MBFG, in form and detail satisfactory to MBFG, which Seller warrants shall be accurate and complete in all material respects:
(i) Monthly Financial Statements. No later than thirty (30) days after the end of each month, Seller’s balance sheet as of the end of such period, and Seller’s income statement for such period and for that portion of Seller’s financial reporting year ending with such period, prepared in accordance with GAAP and attested by a responsible financial officer of Seller as being complete and correct and fairly presenting Seller’s financial condition and the results of Seller’s operations.
(ii) Other Monthly Reports. No later than five (5) days after the end of each month, an aging of Seller’s accounts receivable and accounts payable. No later than ten (10) days after the end of each month, copies of Seller’s most recent hank statements. No later than ten (10) days after the end of each month, a report certified by the chief executive officer or the chief financial officer of the Seller, describing in reasonable detail the gross sales actually billed and earned by Seller during the calendar month most recently ended.
(iii) Year-End Financials; Tax Returns. No later than one hundred twenty (120) days after and as of such financial reporting year and for each financial reporting year thereafter a complete copy of Seller’s audit report, which shall include balance sheet, income statement, statement of changes in equity and statement of cash flows for such year, prepared in accordance with GAAP and certified by an independent certified public accountant selected by Seller and satisfactory to MBFG. Such certification shall not be qualified or limited due to a restricted or limited examination of any material portion of Seller’s records or otherwise. No later than one hundred twenty 120) days after the end of each year and within 5 days of filing a complete copy or Seller’s federal income tax return and all supporting schedules and the complete federal income tax return of any guarantor of Seller’s obligations under the RPA.
(iv) Other Information. Such other financial reports, budgets (as updated), sales projections, forecasts, reports operating plans, capitalization tables (as updated) and information relating to equity and debt financings consummated after the date of this Addendum (including post-closing capitalization table(s)) and other information as IBFG may from time to time reasonably request.
(b) Indebtedness. Not be indebted for borrowed money the deferred purchase price of property, or leases that would be capitalized in accordance with GAAP, or become liable as a surety guarantor accommodation party or otherwise for or upon the obligation of any other person except:
(i) indebtedness incurred for the acquisition of supplies or inventory on normal trade credit, including furniture, fixtures and equipment;
(ii) indebtedness of Seller under the RPA: and
(iii) any other indebtedness of Seller (i) approved by MBFG; and (ii) where the holder’s right to payment of such indebtedness, the priority of any lien securing the same, and the rights of the holder thereof to enforce remedies against Seller following default have been made subordinate to the MBFG’s Liens and to the prior payment to MBFG of the Seller’s obligations to MBFG, either (A) pursuant to a written subordination agreement approved by MBFG in its sole but reasonable discretion or (B) on terms otherwise approved by MBFG in its sole, reasonable discretion (“Subordinated Debt”) (provided that Seller shall not repay, prepay, redeem or otherwise satisfy in any manner any Subordinated Debt, except in accordance with the terms of any subordination agreement among. Seller, MBFG and the holder(s) of such Subordinated Debt).
(c) Liens. Not create, incur, assume or permit to exist any Lien, or grant any other person a negative pledge, on any of Seller’s property, except as approved in writing in advance by MBFG or in respect of leases of furniture fixtures or equipment.
(d) Dividends. Not pay any dividends or purchase, redeem or otherwise acquire or make any other distribution with respect to any of Seller’s capital stock.
13. Events of Default. In addition to those listed in the RPA the occurrence of any one of the following shall constitute an Event of Default under this Addendum: (i) Seller fails to pay or perform any of its obligations under this Addendum as and when due, (ii) there shall be commenced by or against Seller any voluntary or involuntary case under the United States Bankruptcy Code, any assignment for the benefit of creditors or appointment of a receiver or custodian for any of its assets, attachment, lien, garnishment is issued against Seller, or Seller is generally not paying its debtors as they become due, (iii) Seller delivers any document financial statement, schedule or report to MBFG that is false or incorrect in any material respect, or (iv) any representation or warranty made in this Addendum by Seller proves to have been false or misleading when made, or (v) the PO Facility limit is exceeded, or (vi) there is any outstanding balance On the PO Facility after termination of the PO Facility, or (vii) Seller is not in compliance with the I-Bank Milestone, or (viii) Seller is not in compliance with the IP Sale M Milestone.
14. Cross-Default. A default by Seller in payment or performance in any obligation, howsoever arising, to MBFG shall be a default under each and every other obligation instrument document, note and agreement between Seller and MBFG.
15. Remedies Upon Default. Upon the occurrence of any Event of Default without limiting any other remedies available to MBFG under law or equity, all obligations shall immediately become due and payable and MBFG 0) shall be entitled to all rights and remedies as are provided in this Addendum, the -RP. or under California law, and (ii) may proceed against Seller or any guarantor directly without any obligation to proceed against the Seller or any collateral. After the occurrence or an Event of Default, MI3FG may apply any payments to any of the credit facilities referenced herein, as it deems appropriate, despite any contrary instructions which it may have received.
16. No Third Party Beneficiaries. This Addendum is made only for the benefit of Seller and MBFG and their successors and assigns and may not be relied upon by any other third party.
17. Miscellaneous. This Addendum may only be amended in writing signed by MKG and Seller. This Addendum shall be governed by the laws of the state of California. Seller hereby irrevocably submits to the jurisdiction of any California State or Federal Court sitting in Contra Costa or Santa Clara Counties in any action of proceeding arising out of or relating to this Addendum, or any other agreements associated with this Advance Addendum. This Addendum may be executed in counterparts delivered by telefacsimile, all of which, when taken together, shall constitute one and the same original document. Headings to the Sections of this Addendum are for reference only and shall not be used for construing or interpreting the semis and conditions ‘et forth in this Addendum. DEBTOR HEREBY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY SUIT OR PROCEEDING ARISING UNDER OR RELATING TO THIS AGREEMENT.
18. Attorneys’ Fees. Seller shall pay to MBFG immediate upon demand or from Seller’s reserve account all reasonable fees and expenses of attorney and other professionals that MBFG incurs in enforcing this agreement or any other agreement executed in connection herewith, protecting or enforcing its interest in the collateral or foreclosing on the collateral.
[Signature page follows]
IN WITNESS WHEREOF, the parties have executed this Addendum as of the date first above written.
Wave Systems, Corp.
a corporation
By
Name: William M. Solms
Title: President and CEO
Marble Bridge Funding Group, Inc.
a corporation
By:
Name: Paul Candau
Title: President and CEO
EXHIBIT A
Form of Warrant
ASSIGNMENT OF ACCOUNTS RECEIVABLE
Dated as of December 7, 2015, Wave Systems Corp. (“Assignor”) and Marble Bridge Funding Group, Inc. (“Assignee”), for value received, receipt of which is hereby acknowledged, hereby agree as follows:
1. In accordance with Assignment of Claims Act of 1940, 31 U.S.C. 15 (the “Act”), and Uniform Commercial Code, the Assignor hereby transfers and assigns to Assignee, a financing institution, all of the Assignor’s right, title and interest in all amounts now due and to become due under the Assignor’s Invoices, Accounts Receivable and Purchase Orders (Contract”), with each such transfer and assignment being part of one integrated financing transaction.
2. Power of Attorney. The Assignor hereby authorizes and directs any and all parties which owe money to Assignor to make all payments under such Contract directly to the Assignee at the address specified in Section 3 below by check or other order payable to the order of the Assignee, and constitutes and appoints the Assignee as its true and lawful attorney-in-fact, irrevocable, as a power coupled with an interest with full power of substitution, in its name or in the name of the assignor or otherwise, to ask, require, demand and receive any and all such moneys due or to become due under the contract, and to endorse the name of the Assignor to any checks, drafts or other orders for payment of money payable to the Assignor, and in the name of the Assignor or otherwise, to correct and sue for in any court for money due or to become due under such Contract or any part thereof, and to withdraw or settle any claims, suits or proceedings pertaining to or arising with respect to the Assignor.
3. Authority for Payments. The Assignor hereby authorizes and directs the disbursing officer in such Accounts Receivable, or his successor, or any other department or officer of any company which owes money to Assignor to pay the Assignee, or to its successors or assigns, any moneys due or to become due under the Accounts Receivable to:
Wave Systems Corp.
Marble Bridge Funding Croup, Inc.
P.O. Box 8195
Walnut Creek, CA 94596
Attention: Operations
or should be wired to Wells Fargo Bank - San Francisco, CA. in accordance with the wire transfer instructions set forth below:
Wells Fargo Bank
San Francisco, CA 94104
ABA# 121000248
A/C# 4125502302
Attention: Marble Bridge Funding Group, Inc.
4. Payment in trust. The Assignor agrees that, if any payment shall be made to the Assignor, it will receive and hold the same in trust for the Assignee and will forthwith, upon receipt, deliver the same to the Assignee in kind.
5. Governing Law. This Assignment shall be governed by, and construed in accordance with, the laws of the State of California.
6. Counterparts. This Agreement may he executed in two or more counterparts (and by different parties in separate counterparts), each of which shall be an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed and delivered by their respective duly authorized officers or agents as of the date first written above.
Wave Systems Corp.
a Delaware corporation
| |
By: | _______________________________ |
| |
Address: | 480 Pleasant Street |
|
| |
ATTEST:
| Marble Bridge Funding Group, Inc.
a corporation |
By: _______________________________
Name: Cal McGinnis
Title: Operations Analyst
| By: _______________________________
Name: Paul Candau
Title: President and CEO
Address: 1440 Maria Lane, Suite 210
Walnut Creek, CA 94596 |
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT is entered into as of December 7, 2015 by and between MARBLE BRIDGE FUNDING GROUP, INC., a California corporation (“Lender”), and WAVE SYSTEMS CORP., a Delaware corporation (the “Grantor”).
RECITALS
Lender has agreed to make certain advances of money and to extend certain financial accommodations to Grantor in the amounts and manner set forth in that certain [Loan and Security Agreement] by and between Lender and Grantor dated on or about the date hereof and as amended from time to time (the “Loan Agreement”). Capitalized terms used herein have the meaning assigned in the Loan Agreement. Lender is willing to make the financial accommodations to Grantor, but only upon the condition, among others, that Grantor shall grant to Lender a security interest in all of Grantor’s right title, and interest in, to and under all of the Collateral whether presently existing or hereafter acquired, including all of its intellectual property.
NOW, THEREFORE, Grantor agrees as follows:
AGREEMENT
To secure performance of Grantor’s obligations under the Loan Agreement, Grantor grants to Lender a security interest in all of Grantor’s right, title and interest in Grantor’s intellectual property (including without limitation those copyrights, patents and trademarks listed on Exhibits A, B and C hereto), including without limitation all proceeds thereof (such as, by way of example but not by way of limitation, license royalties and proceeds of infringement suits). This security interest is granted in conjunction with the security interest granted to Lender under the Loan Agreement. Each right, power and remedy of Lender provided for herein shall not preclude the simultaneous or later exercise by Lender of any or all other rights, powers or remedies.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF,, the parties have caused this Intellectual Property Security Agreement to be duly executed as of the first date written above.
|
| |
Address of Grantor: 480 Pleasant Street
Lee, MA 01238 | WAVE SYSTEMS CORP. By: _______________________________
Name: William Solms
Title: President and CEO
|
Address of Lender: 1440 Maria Ln #2109
Walnut Creek, CA 94596 | MARBLE BRIDGE FUNDING GROUP, INC. By: _______________________________
Name: Paul Candau
Title: President and CEO |
EXHIBIT A
Copyrights
lf None, check this box:
|
| | |
Title | Registration Number | Registration Date |
Scrabmis Source Code | TXu00 1920265 | 2014-09-08 |
DititzatFTO | PRE000000057 | 2006-01-23 |
EXHIBIT B
Patents
lf-None, cheek this box:
|
| | |
Title | Application No./
Patent Number | Application Date/
Issue Date |
Security systems and methods for social networking | 13/295,686 /
9,047,489 | June 2, 2015 |
Security systems and methods for encoding and decoding digital content | 13/6.10,636 /
9,043,866 | May 26, 201.5 |
Security systems and methods for encoding and decoding digital content | 13/610,657 /
9,015,857 | April 21, 2015 |
Public cryptographic control unit and system therefor | 09/313,295 /
6,449,720 | September 10, 2002 |
Secure communication system with cross linked cryptographic codes | 08/488,624 /
5,671.283 | September 23, 1997 |
Encrypted data package record for use in remote transaction metered data system | 08/488,494 /
5,615,264 | March 25, 1997 |
System method and apparatus for authenticating an encrypted signal | 08/011,883 /
5,351,293 | September 27, 1994 |
Device Identification Scoring | 14/066870 | March 26, 2015 |
Security Systems And Methods For Encoding And Decoding Digital Content | 13/610657 | May 16, 2013 |
Security Systems And .N4ethods For Encoding And Decoding Digital Content | 13/610636 | May 16, 2013 |
Security Systems and Methods for Social Networking | 13/295686 | May 16, 2013 |
System and method for providing a secure environment for performing conditional access functions for a set top box | 11/342766 | July 1.9, 2007 |
Methods and systems for promoting security in a computer system employing attached storage devices | 7,036,020 | April 25, 2006 |
Methods and systems for promoting security in a computer system employing attached storage devices | 7,426,747 | September 16, 2008 |
Method and system for user and group authentication with pseudoanonymity over a public network | 09/906375 | January 16, 2003 |
Method and system for secure communications over a communications network | 10/223201 | December 4, 2003 |
Method and system for electronically signing and processing digital documents | 10/299511 | April 24, 2003 |
Systems and methods for digital evidence preservation, privacy, and recovery | 8,886,958 | November 11, 2014 |
Method and system for conditional installation and execution of services in a secure computing, environment | 09/855898 | January 22, 2004 |
Cryptographic data security system and method | 10/010995 | July 4, 2002 |
System and method for managing trust between clients and servers | 10/015201 | August 8, 2002 |
Method and system for using a trusted disk drive and alternate master boot record for integrity services during the boot of a computing platform | 11/966316 | July 2, 2009 |
Methods and systems for measuring trustworthiness of a self protecting drive | 13/046425 | September 13, 2012 |
EXHIBIT C
Trademarks
If None, check this box:
|
| | | |
Description | Serial Number | Registration Number | Filing Date /
Registration Date |
@@ | 85748806 | | October 9, 2012 |
EMBASSY | 85797541 | 4350318 | December 7, 2012 |
WAVE | 85497396 | 4267014 | December 16, 2011 |
SCRAMBLS | 85480388 | 4203741 | November 23, 2011 |
NETPASS | 78027983 | | September 27, 2000* |
ENVOY | 77821664 | | September 8, 2009 |
SMARTSAFE | 76448814 | 2763874 | September 12, 2002 |
SMARTSIGNATURE | 76448700 | 2736471 | September 12, 2002* |
SMARTSAFE | 76156288 | | October 30, 2000* |
SMARTSIGNATURE | 76156224 | 2629140 | October 30, 2000* |
ENSURING THE INTEGRITY OF DIGITAL | 76156204 | | October 30, 2000* |
CONTRACTS SIGNONLINE | 75765473 | 2753415 | August, 27, 1.999* |
CHARITYWAVE | 75734709 | 2456184 | June 23, 1999* |
WAVEDIRECT | 75718249 | | June 1,1999* |
WAVEDIRECT | 75716995 | 2411397 | June 1,1999* |
EMBASSY | 75611526 | 2579157 | December 23, 1998 |
EMBASSY | 75611525 | 2386447 | June 23, 1997* |
CREDIT CHIP | 75312749 | | June 23, 1997* |
WAVE | 75301059 | 2731459 | June 2, 1997 |
CREDIT CHIP | 75040645 | | January 5, 1996* |
WAVENET | 74478596 | 2012242 | January .12, 1994* |
DATAWAVE | 74478595 | | January 12, 1994* |
WAVEMETER | 74478594 | 2030518 | January 12, 1994* |
*Indicates dead/cancelled/abandoned trademarks
THIS WARRANT AND THE SHARES 1SSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER “THE SECURITIES ACT OF 1933 (AS AMENDED, THE “SECURITIES ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH APPLICABLE I.,AW.
WARRANT TO PURCHASE STOCK
|
| |
Issuing Company: | Wave Systems Corp., a Delaware corporation |
| |
Number of Shares: | 2,750,000 of Class A common stock. |
| |
| |
Exercise Price: | The lower of (a) $0.15 per share, or (b) the lowest price per share issued in any future issuance of debt or equity subject to Section 2.4 for Excluded Issuances, (c) the lowest closing market price within 5 days of the date of exercise by Holder, subject to adjustment pursuant to Section 2.4. |
| |
Issue Date: | December 7, 2015 |
| |
Expiration Date: | The fifth anniversary of the Issue Date. |
| |
THIS WARRANT CERTIFIES THAT, FOR GOOD AND VALUABLE CONSIDERATION, MARBLE BRIDGE FUNDING GROUP, INC., or its assignee (“Holder”), is entitled to purchase that number of fully paid and nonassessable shares of Class A Common Stock (the “Shares”) of Wave Systems, Corp., a corporation (the “Company”), at the initial exercise price per Share (the “Exercise Price”) all as set forth above and herein, and as adjusted pursuant to Section 2 of this Warrant and subject to the provisions and upon the terms and conditions set forth in this Warrant.
This Warrant is being issued in connection with that certain (a) Receivables Purchase Agreement dated December 7. 2015 by and between Holder and the Company (the “RPA”), and (b) Addendum to the Receivables Purchase Agreement dated December 7, 2015 by and between Holder and the Company (the “Addendum,” together with the RPA. the “Credit Facility”). Defined terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Addendum.
1.EXERCISE.
1.1 Method of Exercise. This Warrant is exercisable, in whole or in part, at any time and from time to time after the six (6) month anniversary of the Issue Date and on or before the Expiration Date set forth above. Holder may exercise this Warrant by delivering this Warrant and a duly executed Notice of Exercise in substantially the form attached as Appendix T to the principal office of the Company. Unless Holder is exercising the conversion right set forth in Section 1.2, Holder shall also deliver to the Company a check for the aggregate Exercise Price for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this Warrant as specified in Section 1.1, Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares determined he dividing (a) the aggregate .fair market value of the Shares or other securities otherwise issuable upon exercise of this Warrant minus the aggregate Exercise Price of such Shares by (b) the fair market value of one Share. The fair market value of the Shares shall be determined pursuant to Section 1.3. To the extent this Warrant has not been fully exercised prior to the Expiration Date, it shall automatically be deemed to have been exercised in full on such basis on the Expiration Date.
1.3 Fair Market Value. If the Shares are traded regularly in a public market, the fair market value of the Shares shall be the closing price of the Shares (or the closing price of the Company's stock into which the Shares are convertible) reported for the business day immediately before Holder delivers its Notice of Exercise to the Company. Otherwise, the value shall be as reasonably determined by the board of directors (“Board of Directors”) of the Company in good faith based on relevant facts and circumstances at the time of the net exercise under Section 1.2, including in the case of an Acquisition (as defined in Section 2.9 below) the consideration receivable by the holders of the Shares in such Acquisition and the liquidation preference (including any declared but unpaid dividends), if any, then applicable to the Shares. The foregoing notwithstanding, if Holder advises the Board of Directors in writing that Holder disagrees with such determination, then Company and Holder shall promptly engage a reputable investment banking firm to establish a fair market value of the Shares for purposes of the exercise of this Warrant. If the value established by investment banking firm is greater than that determined by the Board of Directors. then the Company shall pay all fees and expenses of such investment banking firm. In all other circumstances, Holder shall pay such fees and expenses. In all cases the fair market value of the Shares shall be based upon their fair market value as of the business day immediately before Holder delivers the Notice of Exercise to the Company.
1.4 Delivery of Certificate and New Warrant. Promptly after Holder exercises or converts this Warrant, the Company shall deliver to Holder certificates for the Shares acquired and, if this Warrant has not been fully exercised or converted and has not expired. a new warrant representing the Shares not so acquired.
1.5 Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, or surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.
2. ADJUSTMENTS TO THE SHARES.
2.1 Dividends, Splits. Etc. If Company declares or pays a dividend on its common stock (or Shares if Shares are securities other than common stock) payable in common stock or other securities, subdivides the outstanding common stock into a greater amount of common stock, or, if Shares are securities other than common stock, subdivides Shares in a transaction that increases the amount of common stock into which Shares are convertible, then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned Shares of record as of the date the dividend or subdivision occurred.
2.2 Reclassification, Exchange or Substitution. Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant. Holder shall be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of securities and property that Holder would have received for the Shares if this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event. The Company or its successor shall promptly issue to Holder a new Warrant for such new securities or other property. The new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in Section 2 including, without limitation, adjustments to the Exercise Price. The provisions of this Section 2.3 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.
2.3 Adjustments for Combinations, Etc. If at any time while this Warrant, or any portion thereof, remains outstanding and unexpired, the outstanding Shares are reverse-split, combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Exercise Price shall be proportionately increased and the number of Shares issuable upon exercise or conversion of this Warrant shall be proportionately decreased. If the outstanding Shares are split, combined or consolidated, by reclassification or otherwise, into a greater number of shares, the Exercise Price shall be proportionately decreased and the number of Shares issuable upon exercise of or conversion of this Warrant shall be proportionately increased.
2.4 Adjustments for Diluting Issuances. If (a) the Company issues common stock at a price per share that is less than the Exercise Price in a capital raising transaction that is not an Excluded Issuance, then the Exercise Price shall be adjusted to equal the price per share of such issuance, or (h) the Company issues in a capital raising transaction that is not an Excluded Issuance securities convertible into common stock with a conversion price that is less than the Exercise Price, then the Exercise Price shall be adjusted to equal the conversion price per share of such issuance.. Under no circumstances shall (i) the aggregate Exercise Price payable by Holder upon exercise of this Warrant increase as a result of any adjustment pursuant to this section, and (ii) this Warrant he exercisable for less than 2,750,000 shares of common stock of the Company at the time of exercise. “Excluded Issuance” means (a) securities issued to any employee, officer, consultant or director in connection with services provided to the Company or (b) securities issued pursuant to any option, warrant or other convertible security outstanding on the date hereof.
To the extent that antidilution rights applicable to the Shares purchasable hereunder are set forth in Company's articles or certificate of incorporation, as amended through the date of this Warrant (the “Charter”), such antidilution rights shall not he restated, amended, modified or waived in any manner without Holder's prior written consent if the effect of such restatement, amendment, modification or waiver on Holder would he more adverse to Holder than, and substantially dissimilar to, its effect on the other holders of common stock. Company shall promptly provide Holder with any restatement, amendment, modification or waiver of the Charter promptly after the same has been made.
2.5 Adjustment for Pay-to-Play Transactions. If the Company's Charter provides, or is amended to so provide, for the amendment or modification of the rights, preferences or privileges of the Shares, or the reclassification, conversion or exchange of the outstanding shares of the common stock, if a holder of shares of common stock fails to participate in an equity financing transaction (a “Pay-to-Play Provision”), and if such Pay-to-Play Provision becomes operative in a transaction occurring after the Issue Date, this Warrant shall automatically and without any action required become exercisable for that type of share of equity securities as would have been issued or exchanged, or would have remained outstanding, in respect of the Shares issuable under this Warrant had this Warrant been exercised in full prior to such event (and for that number of shares of equity securities as would have been issued or exchanged, or would have remained outstanding, in respect of the Shares issuable hereunder had this Warrant been exercised in full prior to such event, if applicable), and had the Holder participated in the equity financing to the maximum extent permitted.
2.6 No Impairment. The Company shall not. by amendment of its Charter or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale or securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by the Company under this Warrant, but shall at all times in good faith assist in carrying out all the provisions of Section 2, and in taking all such action as may be necessary or appropriate to protect folder's rights under Section 2 against impairment. if the Company takes any action affecting the Shares or its common stock other than as described above that adversely affects Holder's rights under this Warrant, the Exercise Price shall be adjusted downward and the number of Shares issuable upon exercise of this Warrant shall be adjusted upward in such a manner that the aggregate Exercise Price of this Warrant is unchanged.
2.7 Certificate as to Adjustments. Upon each adjustment of the Exercise Price, the Company at its expense shall promptly compute such adjustment and furnish Holder with a certificate of its chief financial officer or other authorized officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the Exercise Price in effect upon the date thereof and the series of adjustments leading, to such Exercise Price,
2.8 Conditional Exercise. Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a public offering or an Acquisition of the Company (pursuant to a merger, sale of stock, or otherwise), such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.
3. RIGHT TO PUT WARRANT / SUCCESS FEE.
3.1 If the gross revenue for the Company for any consecutive twelve (12) month period during the term of this Warrant (“Peak Annual Revenue”) is at least 1;12,000,000, Holder may require the Company (by written notice) to purchase this Warrant from Holder in consideration of the Company's payment to Holder of cash in an amount determined by multiplying the Peak Annual Revenue by 5%.
3.2 In the event of Section 3.1 above, the Company shall pay the amount due to Holder in accordance with such sections concurrent with any payments Seller makes to its stockholders or any of its other creditors, but in no event later than thirty (30) days from Holder's notice to Company of its election.
3.3 Upon Holder's receipt of payment under Section 3, this Warrant shall be terminated, and Holder shall promptly return this Warrant for cancellation. Company shall provide Holder with notice of such event in accordance with Section 5.3 below, and Holder's election of the Put Right may be revocable by Holder or made contingent upon the consummation of such event.
3.4 The foregoing put right shall terminate upon the completion of the first Acquisition after the date hereof, to the extent not exercised prior to such date.
4. RIGHT TO CONVERT OR EXCIIANGE WARRANT
4.1 Conversion on Acquisition. For the purpose of this Warrant, “Acquisition” means any sale, license, or other disposition of all or substantially all of the assets of Company, or any reorganization, consolidation, sale of equity interests or merger of Company where the holders of Company's securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction. In the event of the consummation of an Acquisition, where Holder has not elected to exercise the right to exercise this Warrant under Section 1.1 prior thereto, this Warrant shall (immediately prior to the Acquisition) be automatically exchanged for such number of shares being equal to number of shares issuable pursuant to the terms hereof (after taking into account all adjustments described herein) had Holder elected to exercise this Warrant immediately prior to the closing of such Acquisition and purchased all such shares pursuant to the cashless exercise provision set forth in Section 1.2 hereof (as opposed to the exercise provision set forth in Section 1.1 hereof). Company acknowledges and agrees that Holder shall not be required to make any additional payment (cash or otherwise) for such shares as further consideration for their issuance pursuant to the terms of Section 1.2 hereof and the preceding sentence. This Warrant shall terminate upon Holder's receipt of the shares of Company's equity securities described in this Section 4.1 or the receipt of the cash or property payable in respect thereof in connection with the Acquisition. Company shall provide Holder with notice of such Acquisition in accordance with Section 5.3 below, and any election by the Holder to convert under Section 1.1 may be revocable by Holder prior to, or made contingent upon, the consummation of such event.
5. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
5.1 Representations and Warranties. The Company hereby represents and warrants to the Holder that the capitalization information contained in the Company's most recent report filed on Form I 0-Q correctly states all outstanding shares and rights to acquire shares of the Company, as well as the price at which such shares were purchased or may be acquired. Company has provided Holder with true and complete copies of Company's Charter and each certificate of designation or other charter document setting forth any rights, preferences and privileges of Company's capital stock, each as amended and in effect on the date of' issuance of this Warrant.
5.2 Valid Issuance. The Company shall take all steps necessary to ensure that all Shares which may be issued upon the exercise of this Warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance, be duly authorized, validly issued, fully- paid and nonassessable, and free of any liens and encumbrances.
5.3 Notice of Certain Events. If the Company proposes at any time (a) to declare any dividend or distribution upon its common stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights: (c) to effect any reclassification or recapitalization of common stock; (d) to consummate an Acquisition. or to liquidate, dissolve or wind up; or (e) offer holders of registration rights the opportunity to participate in an underwritten public offering of the Company's securities for cash, then, in connection with each such event, the Company shall give Holder (1) at least 10 days prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of common stock will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (a) and (b) above; (2) in the ease of the matters referred to in (c) and (d) above at least 10 days prior written notice of the date when the same will take place (and specifying the date on which the holders of common stock will be entitled to exchange their common stock for securities or other property deliverable upon the occurrence of such event); and (3) in the case of the matter referred to in (e) above, the same notice as is given to the holders of such registration rights.
5.4 Financial and Other Reports. Until the Expiration Date of this Warrant, Company shall furnish to Holder (i) upon delivery to Company's Board of Directors after the close of each fiscal year of Company, an audited balance sheet and statement of changes in financial position at and as of the end of such fiscal year, together with an audited statement of income for such fiscal year; (ii) within 45 days after the close of each fiscal quarter of Company, an unaudited balance sheet and statement of' cash flows at and as of the end of such quarter, together with an unaudited statement of income for such quarter and a capitalization table; and (iii) promptly after the closing of each equity financing consummated by Company after the Issue Date, a copy of the term sheet for such equity financing (if any), a post-closing capitalization table and other information relating to the valuation of Company. In addition, Company agrees to provide Holder at any time and from time to time with such information that Holder may reasonably request for purposes of Holder's compliance with regulatory, accounting and reporting requirements applicable to Holder, including any 409A valuation reports. Notwithstanding the foregoing, Company shall not be required to furnish to Holder the financial information described in this Section 5.4 if such financial information has been previously delivered to Holder pursuant to the Credit Facility.
5.5 Grant of Right to Purchase Securities in Future Financings. In connection with any equity or debt equity securities that Company may from time to time propose to offer or sell in a capital raising transaction that is not an Excluded Issuance after the Issue Date, Company hereby grants to Holder the right to invest up to such amount of cash as is required to enable Holder to purchase that number of any equity or debt securities as will enable Holder to own or acquire immediately after completion of such offering the same percentage of the common stock of Company (on a fully diluted basis) as Holder owned and/or has the right to purchase (including under this Warrant, under any other warrant instrument held by Holder or any affiliate of Holder or otherwise with respect to any securities owned by Holder or any affiliate of Holder) immediately prior to commencement of such offering. Holder shall not have any obligation to purchase Company's securities in any such future sale(s). If Holder exercises its purchase right set forth under in this section. Holder shall not have any obligation to purchase such securities, nor shall the Company have any obligation to sell such securities, except pursuant to those definitive purchase documents executed by other purchasers in connection with the applicable offering. The right to purchase securities in future sales by Company thereof described in this section shall survive the payment and satisfaction of all of Company's indebtedness and obligations to Holder under the Credit. Facility.
5.6 Reservation of Shares. Until the Expiration Date of this Warrant, the Company shall at all times reserve and keep available out of its authorized but unissued common stock or other securities constituting the Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Shares issuable upon the exercise of this Warrant, and the par value per Share shall at all times be less than or equal to the applicable Exercise Price. The Company shall not increase the par value of any Shares receivable upon the exercise of this Warrant above the Exercise Price then in effect, and shall take all such actions as may he necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of common stock upon the exercise of this Warrant.
5.7 Notice of Expiration. Company shall give Holder written notice of Holder's right to exercise this Warrant in the form attached as Appendix III not more than 90 days and not less than 15 days before the Expiration Date and, in the case of an Acquisition to which the proviso of Section 2.9 shall he applicable, IS days notice of such Acquisition. If the notice is not so given, the Expiration Date shall automatically be extended until 15 days after the date Company delivers the notice to Holder.
5.8 Registration Rights. Company agrees that Shares or, if Shares are convertible into common stock of Company, such common stock. shall be have the registration rights set forth in Appendix IV.
6. MISCELLANEOUS.
6.1 Legends. This Warrant and the Shares (and the securities issuable, directly or indirectly. upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH APPLICABLE. LAW.
6.2 Compliance with Securities Laws on Transfer. This Warrant and the Shares issuable upon exercise this Wan-ant (and the securities issuable. directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee.
6.3 Transfer Procedure. Subject to the provisions of Section 6.2. Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities issuable. directly or indirectly, upon conversion of the Shares, if any) by giving the Company written notice of the portion of the Warrant being transferred setting forth the name, address and taxpayer identification number of the transferee and surrendering this Warrant to the Company for reissuance to the transferee(s) (and Holder, if applicable), provided that no such notice shall be required for a transfer to an affiliate of Holder.
6.4 Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.
6.5 Notices. All notices and other communications from Company to Holder, or vice versa, shall be in writing and shall be deemed delivered and effective when given personally, sent via electronic mail, or mailed by first-class registered or certified mail, postage prepaid, or by overnight courier, at such address as may have been furnished to Company or Holder, as the case may be, in writing by Company or such Holder from time to time.
6.6 Attorneys' Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys' fees.
6.7 Governing Law and Forum. This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Warrant shall he brought in the state or federal courts located in Contra Costa County, California, and each of the parties consents to the jurisdiction of such court (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein.
Wave Systems Corp.
By:__________________
Name: William M. Sulms
Title: CEO
APPENDIX I
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ______ shares of the __________ Stock of Luxie, inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full.
[OR]
1. The undersigned hereby elects to convert the attached Warrant into Shares in the manner specified in Section 1.2 of the Warrant. This conversion is exercised with respect to _______ of the Shares covered by the Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:
[_______________]
3. The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws.
MARBLE BRIDGE FUNDING GROUP INC.
By: __________________________
Name: ________________________
Title: _________________________
_________________________
(Date)
APPENDIX II
Capitalization Table
(Company to attach)
APPENDIX III
Notice that Warrant Is About to Expire
[Insert Date of Notice]
| |
To: | Marble Bridge Funding Group, Inc.
Attn: Paul Candau
P.O. Box 8195
1440 Maria Lane, Suite 210
Walnut Creek, CA 94596 |
The Warrant issued to you described below will expire on _______________ __________.
Issuer:
Class of Security Issuable:
Number of Shares Issuable:
Issue Date:
Exercise Price per Share:
Procedure for Exercise:
Please contact ___________ at (___) ___-_______ with any questions you may have concerning exercise of the Warrant. This is your only notice of pending expiration.
Wave Systems Corp.
By:______________________
Name:
Title:
APPENDIX IV
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of December 7, 2015 is between Marble Bridge Funding Group, Inc. (“Lender”) and the Company whose name appears on the last page of this Agreement.
RECITALS
A. Concurrently with the execution of this Agreement, Lender is purchasing from Company a Warrant to Purchase Stock (the “Warrant”) pursuant to which Lender has the right to acquire from Company the Shares (as defined in the Warrant).
B. By this Agreement, Lender and Company desire to set forth the registration rights of the Shares all as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions hereinafter set forth, the parties hereto agree as follows:
Registration Rights.
1. Registration Rights.
1.6 Definitions. For purposes of this Section 1:
(a) The term “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act of 1933, as amended (the “Securities Act”). and the declaration or ordering of effectiveness of such registration statement or document;
(b) The term Registrable Securities” means (i) the Shares (if Common Stock) or all shares of Common Stock of Company issuable or issued upon conversion of the Shares and (ii) any Common Stock of Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to. or in exchange for or in replacement of, any stock referred to in (i).
(c) The terms “Holder” or “Holders” means Lender or qualifying transferees under subsection 1.8 hereof who hold Registrable Securities.
(d) The term “SEC” means the Securities and Exchange Commission.
1.7 Company Registration.
(a) Registration. If at any time or from time to time, Company shall determine to register any of its securities, for its own account or the account of any of its shareholders, other than a registration on Form S-1 or S-8 relating solely to employee stock option or purchase plans, or a registration on Form S-4 relating solely to an SEC Rule 145 transaction, or a registration on any other form (other than Form S-1, 8-2, S-3 or S-18, or their successor forms) or any successor to such forms, which does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities, Company will:
(i) promptly give to each Holder written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); and
(ii) include in such registration (and compliance), and in any underwriting involved therein, all Registrable Securities specified in a written request or requests, made within 30 days after receipt of such written notice from Company, by any Holder or Holders. except as set forth in subsection 1.2(b) below.
(b) Underwriting. If the registration of which Company gives notice is for a registered public offering involving an underwriting, Company shall so advise Holders as a part of the written notice given pursuant to subsection 1.2(a)(i). In such event the right of any Holder to registration pursuant to this subsection 1.2 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with Company and the other shareholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by Company.
1.8 Expenses of Registration. All expenses incurred in connection with any registration. qualification or compliance pursuant to this Section 1 including without limitation, all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for Company and expenses of any special audits incidental to or required by such registration, shall be borne by Company except Company shall not he required to pay underwriters' fees, discounts or commissions relating to Registrable Securities. All expenses of any registered offering not otherwise borne by Company shall be borne pro rata among Holders participating in the offering and Company.
1.9 Registration Procedures. In the case of each registration, qualification or compliance effected by Company pursuant to this Registration Rights Agreement, Company will keep each Holder participating therein advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. Except as otherwise provided in subsection 1.3, at its expense Company will:
(a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective. and, upon the request of Holders of a majority of Registrable Securities registered thereunder, keep such registration statement effective for up to 120 days.
(b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.
(c) Furnish to Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by Holders, provided that Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering. enter into and perform its obligations under an underwriting agreement, in usual and customary form. with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act or the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.
1.10 Indemnification.
(a) Company will indemnify each Holder of Registrable Securities and each of its officers, directors and partners, and each person controlling such Holder, with respect to which such registration, qualification or compliance has been effected pursuant to this Registration Rights Agreement. and each underwriter, if any, and each person who controls any underwriter of Registrable Securities held by or issuable to such Holder, against all claims, losses, expenses, damages and liabilities (or actions in respect thereto) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on. any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, or any violation or alleged violation by Company of the Securities Act, the Securities Exchange Act of 1934, as amended, (“Exchange Act”) or any state securities law applicable to Company or any rule or regulation promulgated under the Securities Act, the Exchange Act or any such state law and relating to action or inaction required of Company in connection with any such registration, qualification of compliance, and will reimburse each such Holder, each of its officers, directors and partners, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, within a reasonable amount of time after incurred for any reasonable legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection I .5(a) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability, or action if such settlement is effected without the consent of Company (which consent shall not be unreasonably withheld); and provided further, that Company will not be liable in any such case to the extent that any such claim, loss. damage or liability arises out of or is based on any untrue statement. or omission based upon written information furnished to Company by an instrument duly executed by such Holder or underwriter specifically for use therein.
(b) Each Holder will, if Registrable Securities held by or issuable to such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify Company, each of its directors and officers, each underwriter, if any, of Company's securities covered by such a registration statement, each person who controls Company within the meaning of the Securities Act, and each other such Holder, each of its officers, directors and partners and each person controlling such Holder, against all claims, losses, expenses. damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document. or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse Company, such Holders, such directors, officers, partners, persons or underwriters for any reasonable legal or any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement. prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to Company by an instrument duly executed by such Holder specifically for use therein; provided, however. that the indemnity agreement contained in this subsection 1.5(b) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action it-such settlement is effected without the consent of Holder, (which consent shall not he unreasonably withheld); and provided further, that the total amount for which any Holder shall be liable under this subsection I.5(b) shall not in any event exceed the aggregate proceeds received by such Holder from the sale of Registrable Securities held by such Holder in such registration.
(c) Each party entitled to indemnification under this subsection 1.5 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought. and shall permit Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided that counsel for Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by Indemnified Party (whose approval shall not be unreasonably withheld). and Indemnified Party may participate in such defense at such parry's expense; and provided further, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in prejudice to Indemnifying Party; and provided further, that an Indemnified Party (together with all other Indemnified Parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by Indemnifying Party, if representation of such Indemnified Party by the counsel retained by Indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.
1.11 Information by Holder. Any Holder or Holders of Registrable Securities included in any registration shall promptly furnish to Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may request in writing and as shall be required in connection with any registration. qualification or compliance referred to herein.
1.12 Rule 144 Reporting. With a view to making available to Holders the benefits of certain rules and regulations of the SEC which may permit the sale of Registrable Securities to the public without registration. Company shall at all times:
(a) make and keep public information available, as those terms are understood and defined in SEC Rule 144, after 90 days after the effective date of the first registration filed by Company for an offering of its securities to the general public:
(b) file with the SEC in a timely manner all reports and other documents required of Company under the Securities Act and the Exchange Act (at any' time after it has become subject to such reporting requirements); and
(c) so long as a Holder owns any Registrable Securities, to furnish to such Holder forthwith upon request a written statement by Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of Company, and such other reports and documents so filed by Company as Holder may reasonably request in complying with any rule or regulation of the SEC allowing Holder to sell any such securities without registration.
1.13 Transfer of Registration Rights. Holders' rights to cause Company to register their securities and keep information available, granted to them by Company under subsections 1.2 and 1.7 may be assigned to a transferee or assignee of a Holder's Registrable Securities not sold to the public, provided, that Company is given written notice by such Holder at the time of or within a reasonable time after said transfer, stating the name and address of said transferee or assignee and identifying the securities with respect to which such registration rights are being assigned. Company may prohibit the transfer of any Holders' rights under this subsection 1.8 to any proposed transferee or assignee who Company reasonably believes is a competitor of Company.
2. General.
2.9 Waivers and Amendments. With the written consent of the record or beneficial holders of at least a majority of the Registrable Securities, the obligations of Company and the rights of Holders of Registrable Securities under this agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of lime or indefinitely), and with the same consent Company, when authorized by resolution of its Board of Directors, may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement; provided, however, that no such modification, amendment or waiver shall reduce the aforesaid percentage of Registrable Securities without the consent of all of the Holders of Registrable Securities. Upon the effectuation of each such waiver, consent, agreement of amendment or modification, Company shall promptly give written notice thereof to the record holders of Registrable Securities who have not previously consented thereto in writing. This Agreement or any provision hereof may be changed. waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, except to the extent provided in this subsection 2.1.
2.10 Governing Law. This Agreement shall be governed in all respects by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within California.
2.11 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of and be binding upon, the successors. assigns, heirs. executors and administrators of the parties hereto.
2.12 Entire Agreement. Except as set forth below, this Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof
2.13 Notices. etc. All notices and other communications required or permitted hereunder shall be either sent via electronic mail or in writing and shall be mailed by first class mail, postage prepaid, certified or registered mail, return receipt requested, addressed (a) if to I folder. at such Holder's address as set forth below, or at such other address as such Holder shall have furnished to the Company in writing, or (b) if to the Company. at Company's address set forth below, or at such other address as Company shall have furnished to Holder in writing.
2.14 Severability. In case any provision of this Agreement shall be invalid, illegal. Or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement or any provision of the other Agreement s shall not in any way be affected or impaired thereby.
2.15 Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
2.16 Counterparts. This Agreement may he executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.
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COMPANY: | | LENDER: |
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WAVE SYSTEMS CORP | | MARBLE BRIDGE FUNDING GROUP, INC. |
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By: | | | By: | |
Name: | | | Name: | |
Title: | | | Title: | |
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Address for Notices: | | Address for Notices: |
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Attn: [_______]
480 Pleasant Street
Lee, MA 01238 | | Attn: Paul Candau
1440 Maria Lane, Suite 210 P.O. Box 8195
Walnut Creek, California 94596 |
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Tel: [________]
Fax: [________]
| | Tel: (925) 977-8210
Fax: [___________] |
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THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURFFIES ACT OF 1933 (AS AMENDED, THE “SECURITIES ACT”) OR ANY APPLICABLE, STATE SECURITIES LAWS AND MAY NOT BE SOLI), PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH APPLICABLE LAW.
WARRANT TO PURCHASE STOCK
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Issuing Company: | Wave Systems Corp., a Delaware corporation |
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Number of Shares: | 2,750,000 of Class A common stock. |
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Exercise Price: | The lower of (a) $0.15 per share, or (h) the lowest price per share issued in any future issuance of debt or equity subject to Section 2.4 for Excluded Issuances, (c) the lowest closing market price within 5 clays of the date of exercise by Holder, subject to adjustment pursuant to Section 2.4. |
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Issue Date: | December 7, 2015 |
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Expiration Date: | The fifth anniversary attic Issue Date. |
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THIS WARRANT CERTIFIES THAT, FOR GOOD AND VALUABLE CONSIDERATION, AGILITY CAPITAL II, LLC, or its assignee (“Holder”), is entitled to purchase that number of fully paid and nonassessable shares of Class A Common Stock (the “Shares”) of Wave Systems, Corp., a corporation (the “Company”), at the initial exercise price per Share (the “Exercise Price”) all as set forth above and herein, and as adjusted pursuant. to Section 2 of this Warrant and subject to the provisions and upon the terms and conditions set forth in this Warrant.
This Warrant is being issued in connection with that certain (a) Receivables Purchase Agreement dated December 7, 2015 by and between Holder and the Company (the “RPA”), and (b) Addendum to the Receivables Purchase Agreement dated December 7, 2015 by and between Holder and the Company (the “Addendum,” together with the RPA, the “Credit Facility”). Defined terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Addendum.
1. EXERCISE.
1.14 Method of Exercise. This Warrant is exercisable, in whole or in part. at any time and front time to time after the six (6) month anniversary of the Issue Date and on or before the Expiration Date set forth above. Holder may exercise this Warrant by delivering this Warrant and a duly executed Notice of Exercise in substantially the form attached as Appendix Ito the principal office of the Company. Unless Holder is exercising the conversion right set forth in Section 1.2, Holder shall also deliver to the Company a check for the aggregate Exercise Price for the Shares being purchased.
1.15 Conversion Right. In lieu of exercising this Warrant as specified in Section 1.1. Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise without limitation, adjustments to the Exercise Price. The provisions of this Section 2.3 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.
[PAGE 2 MISSING]
2.3 Adjustments for Combinations, Etc. If at any time while this Warrant, or any portion thereof remains outstanding and unexpired. the outstanding Shares are reverse-split, combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Exercise Price shall he proportionately increased and the number of Shares issuable upon exercise or conversion of this Warrant shall be proportionately decreased. If the outstanding Shares are split, combined or consolidated, by reclassification or otherwise, into a greater number of shares, the Exercise Price shall be proportionately decreased and the number of Shares issuable upon exercise of or conversion of this Warrant shall be proportionately increased.
2.4 Adjustments for Diluting Issuances. If (a) the Company issues common stock at a price per share that is less than the Exercise Price in a capital raising transaction that is not an Excluded Issuance, then the Exercise Price shall be adjusted to equal the price per share of such issuance, or (b) the Company issues in a capital raising transaction that is not an Excluded Issuance securities convertible into common stock with a conversion price that is less than the Exercise Price, then the Exercise Price shall be adjusted to equal the conversion price per share of such issuance.. Under no circumstances shall (i) the aggregate Exercise Price payable by Holder upon exercise of this Warrant increase as a result of any adjustment pursuant to this section, and (ii) this Warrant be exercisable for less than 2,750,000 shares of common stock of the Company at the time of exercise. “Excluded Issuance” means (a) securities issued to any employee, officer, consultant or director in connection with services provided to the Company or (b) securities issued pursuant to any option, warrant or other convertible security outstanding on the date hereof.
2.5 Adjustment for Pay-to-Play Transactions. If the Company's Charter provides, or is amended to so provide, for the amendment or modification of the rights, preferences or privileges of the Shares, or the reclassification, conversion or exchange of the outstanding shares of the common stock, if a holder of shares of common stock fails to participate in an equity financing transaction ((a “Pay-to-Play-Provision”), and if such Pay-to-Play Provision becomes operative in a transaction occurring after the Issue Date, this Warrant shall automatically and without any action required become exercisable for that type of share of equity securities as would have been issued or exchanged, or would have remained outstanding, in respect of the Shares issuable under this Warrant had this Warrant been exercised in full prior to such event (and for that number of shares of equity securities as would have been issued or exchanged, or would have remained outstanding, in respect of the Shares issuable hereunder had this Warrant been exercised in full prior to such event, if applicable), and had the Holder participated in the equity financing to the maximum extent permitted.
2.6 No Impairment. The Company shall not. by amendment of its Charter or through a reorganization, transfer of assets, consolidation. merger, dissolution. issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by the Company under this Warrant, but shall at all times in good faith assist in carrying out all the provisions of Section 2, and in taking all such action as may he necessary or appropriate to protect Holder's rights under Section 2 against impairment. If the Company takes any action affecting the Shares or its common stock other than as described above that adversely affects Holder's rights under this Warrant, the Exercise Price shall he adjusted downward and the number of Shares issuable upon exercise of this Warrant shall be adjusted upward in such a manner that the aggregate Exercise Price of this Warrant is unchanged.
2.7 Certificate as to Adjustments. Upon each adjustment of the Exercise Price, the Company at its expense shall promptly compute such adjustment and furnish Holder with a certificate of its chief financial officer or other authorized officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the Exercise Price in effect upon the date thereof and the series of adjustments leading to such Exercise Price.
2.8 Conditional Exercise. Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to he made in connection with a public offering or an Acquisition of the Company (pursuant to a merger, sale of stock, or otherwise), such exercise may at the election of the Molder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.
1. RIGHT TO PUT WARRANT / SUCCESS FEE.
1.16 If the gross revenue for the Company for any consecutive twelve (12) month period during the term of this Warrant (“Peak Annual Revenue”) is at least 812,000,000, Holder may require the Company (by written notice) to purchase this Warrant from Holder in consideration of the Company's payment to Holder of cash in an amount determined by multiplying the Peak Annual Revenue by 5%.
1.17 In the event of Section 3.1 above, the Company shall pay the amount due to Holder in accordance with such sections concurrent with any payments Seller makes to its stockholders or any of its other creditors, but in no event later than thirty (30) days from Holder's notice to Company of its election.
1.18 Upon Holder's receipt of payment under Section 3, this Warrant shall be terminated, and Holder shall promptly return this Warrant for cancellation. Company shall provide Holder with notice of such event in accordance with Section 5.3 below, and Holder's election of the Put Right may be revocable by Holder or made contingent upon the consummation of such event.
1.19 The foregoing put right shall terminate upon the completion of the first Acquisition after the date hereof, to the extent not exercised prior to such date.
2. RIGHT TO CONVERT OR EXCIIANGE WARRANT.
2.17 Conversion on Acquisition. For the purpose of this Warrant. “Acquisition” means any sale, license, or other disposition of all Or substantially all of the assets of Company. or any reorganization. consolidation, sale of equity interests or merger of Company where the holders of Company's securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction. In the event of the consummation of an Acquisition, where Holder has not elected to exercise the right to exercise this Warrant under Section 1.1 prior thereto, this Warrant shall (immediately prior to the Acquisition) he automatically exchanged for such number of shares being equal to number of shares issuable pursuant to the terms hereof (after taking into account all adjustments described herein) had Holder elected to exercise this Warrant immediately prior to the closing of such Acquisition and purchased all such shares pursuant to the cashless exercise provision set forth in Section 1.2 hereof (as opposed to the exercise provision set forth in Section 1.1 hereof). Company acknowledges and agrees that Holder shall not be required to make any additional payment (cash or otherwise) for such shares as further consideration for their issuance pursuant to the terms of Section 1.2 hereof and the preceding sentence. This Warrant shall terminate upon Holder's receipt of the shares of Company's equity securities described in this Section 4.1 or the receipt of the cash or property payable in respect thereof in connection with the Acquisition. Company shall provide Holder with notice of such Acquisition in accordance with Section 5.3 below, and any election by the Holder to convert under Section 1.1 may be revocable by Holder prior to, or made contingent upon, the consummation of such event.
3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.5 Representations and Warranties. The Company hereby represents and warrants to the Holder that the capitalization information contained in the Company's most recent report filed on Form 10-Q correctly states all outstanding shares and rights to acquire shares of the Company, as well as the price at which such shares were purchased or may be acquired. Company has provided Holder with true and complete copies of Company's Charter and each certificate of designation or other charter document setting forth any rights, preferences and privileges of Company's capital stock, each as amended and in effect on the date of issuance of this Warrant.
3.6 Valid Issuance. The Company shall take all steps necessary to ensure that all Shares which may be issued upon the exercise of this Warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance. be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and encumbrances.
3.7 Notice of Certain Events. If the Company proposes at any time (a) to declare any dividend or distribution upon its common stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (h) to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (c) to effect any reclassification or recapitalization of common stock; (d) to consummate an Acquisition, or to liquidate, dissolve or wind up; or (e) offer holders of registration rights the opportunity to participate in an underwritten public offering of the Company's securities for cash, then, in connection with each such event, the Company shall give Holder (I) at least 10 days prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of common stock will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (a) and (b) above; (2) in the case of the matters referred to in (c) and (d) above at least 10 days prior written notice of the date when the same will take place (and specifying the date on which the holders of common stock will be entitled to exchange their common stock for securities or other property deliverable upon the occurrence of such event); and (3) in the case of the matter referred to in (e) above, the same notice as is given to the holders of such registration rights.
3.8 Financial and Other Reports. Until the Expiration Date of this Warrant. Company shall furnish to Holder (i) upon delivery to Company's Board of Directors after the close of each fiscal year of Company, an audited balance sheet and statement of changes in financial position at and as of the end of such fiscal year, together with an audited statement of income for such fiscal year; (ii) within 45 days after the close of each fiscal quarter of Company, an unaudited balance sheet and statement of cash flows at and as of the end of such quarter, together with an unaudited statement of income for such quarter and a capitalization table; and (iii) promptly after the closing of each equity financing consummated by Company after the Issue Date, a copy of the term sheet for such equity financing (if any), a post-closing capitalization table and other information relating to the valuation or Company. In addition, Company agrees to provide Holder at any time and from time to time with such information that Holder may reasonably request for purposes of Holder's compliance with regulatory, accounting and reporting requirements applicable to Holder, including any 409A valuation reports. Notwithstanding the foregoing, Company shall not be required to furnish to Holder the financial information described in this Section 5.4 if such financial information has been previously delivered to Holder pursuant to the Credit Facility.
3.9 Grant of Right to Purchase Securities in Future Financings. In connection with any equity or debt equity securities that Company may from time to time propose to offer or sell in a capital raising transaction that is not an Excluded Issuance after the Issue Date, Company hereby grants to Holder the right to invest up to such amount of cash as is required to enable Holder to purchase that number of any equity or debt securities as will enable Holder to own or acquire immediately after completion of such offering the same percentage of the common stock of Company On a fully diluted basis) as Holder owned and/or has the right to purchase (including under this Warrant, under any other warrant instrument held by Holder or any affiliate of Holder or otherwise with respect to any securities owned by Holder or any affiliate of Holder) immediately prior to commencement of such offering. Holder shall not have any obligation to purchase Company's securities in any such future sale(s). If Holder exercises its purchase right set forth under in this section, Holder shall not have any obligation to purchase such securities, nor shall the Company have any obligation to sell such securities, except pursuant to those definitive purchase documents executed by other purchasers in connection with the applicable offering. The right to purchase securities in future sales by Company thereof described in this section shall survive the payment and satisfaction of all of Company's indebtedness and obligations to Holder under the Credit Facility.
3.10 Reservation of Shares. Until the Expiration Date of this Warrant, the Company shall at all tunes reserve and keep available out of its authorized but unissued common stock or other securities constituting the Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Shares issuable upon the exercise of this Warrant, and the par value per Share shall at all times be less than or equal to the applicable Exercise Price. The Company shall not increase the par value of any Shares receivable upon the exercise of this Warrant above the Exercise Price then in effect, and shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of common stock upon the exercise of this Warrant.
3.11 Notice of Expiration. Company shall give Holder written notice of Holder's right to exercise this Warrant in the form attached as Appendix 111 not more than 90 days and not less than IS days before the Expiration Date and, in the case of an Acquisition to which the proviso of Section 2.9 shall be applicable, 15 days notice of such Acquisition. if the notice is not so given, the Expiration Date shall automatically be extended until 15 days after the date Company delivers the notice to Holder.
3.12 Registration Rights. Company agrees that Shares or, if Shares are convertible into common stock of Company. such common stock, shall be have the registration rights set forth in Appendix IV.
4. MISCELLANEOUS.
4.2 Legends. This Warrant and the Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR. ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH APPLICABLE LAW.
4.3 Compliance with Securities Laws on Transfer. This Warrant and the Shares issuable upon exercise this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares. if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee.
4.4 Transfer Procedure. Subject to the provisions of Section 6.2, Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) by giving the Company written notice of the portion of the Warrant being transferred setting forth the name, address and taxpayer identification number of the transferee and surrendering this Warrant to the Company for reissuance to the transferee(s) (and Holder, if applicable), provided that no such notice shall be required for a transfer to an affiliate of Holder.
4.5 Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver. discharge or termination is sought.
4.6 Notices. All notices and other communications from Company to Holder, or vice versa, shall be in writing and shall be deemed delivered and effective when given personally. sent via electronic mail, or mailed by first-class registered or certified mail, postage prepaid, or by overnight courier, at such address as may have been furnished to Company or Holder, as the case may be, in writing by Company or such Holder from time to time.
4.7 Attorneys' Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys' fees.
4.8 Governing Law and Forum. This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Warrant shall be brought in the state or federal courts located in Contra. Costa County, California, and each of the parties consents to the jurisdiction of such court (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein.
Wave Systems Corp.
By:_____________________
Name:
Title:
By:_____________________
Name:
Title:
APPENDIX I
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ____________ shares of the ___________ Stock of Luxie, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full.
[OR]
1. The undersigned hereby elects to convert the attached Warrant into Shares in the manner specified in Section 12 of the Warrant. This conversion is exercised with respect to ___________ of the Shares covered by the Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:
[_______________]
3. The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws.
AGILITY CAPITAL II. PLC
By: __________________________
Name: ________________________
Title: _________________________
_________________________
(Date)
APPENDIXII
Capitalization Table
(Company to attach)
APPENDIX III
Notice that Warrant Is About to Expire
[Insert Date of Notice]
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To: | Agility Capital II, LLC
Attn: Daniel Corry
812 Anacapa, Suite A
Santa Barbara, CA 93101 |
The Warrant issued to you described below will expire on ___________, ______.
Issuer:
Class of Security Issuable:
Number of Shares Issuable:
Issue Date:
Exercise Price per Share:
Procedure for Exercise:
Please contact _________ at (___) ____-________ with any questions you may have concerning exercise of the Warrant. This is your only notice of pending expiration.
Wave Systems Corp.
By:______________________
Name:
Title:
APPENDIX IV
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of December 7. 2015 is between Marble Bridge Funding Group, Inc. (“Lender”) and the Company whose name appears on the last page of this Agreement.
RECITALS
A. Concurrently with the execution of this Agreement. Lender is purchasing from Company a Warrant to Purchase Stock (the “Warrant”) pursuant to which Lender has the right to acquire from Company the Shares (as defined in the Warrant).
B. By this Agreement. Lender and Company desire to set forth the registration rights of the Shares all as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions hereinafter set forth, the parties hereto agree as follows:
1. Registration Rights.
1.20 Definitions. For purposes of this Section 1:
(a) The term “register.” -registered.” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act of1933, as amended (the “Securities Act”). and the declaration or ordering of effectiveness of such registration statement or document;
(b) The term “Registrable Securities” means (i) the Shares (it' Common Stock) or all shares of Common Stock of Company issuable or issued upon conversion of the Shares and (ii) any Common Stock of Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, any stock referred to in (i).
(c) The terms “Holder” or -Holders” means Lender or qualifying transferees under subsection 1.8 hereof who hold Registrable Securities.
(d) The term “SEC” means the Securities and Exchange Commission.
1.21 Company Registration.
(a) Registration. If at any time or from time to time, Company shall determine to register any of its securities, for its own account or the account of any of its shareholders, other than a registration on Form S-1 or S-8 relating solely to employee stock option or purchase plans, or a registration on Form S-4 relating solely to an SEC Rule 145 transaction, or a registration on any other form (other than Form S-1, S-2, S-3 or S-18, or their successor forms) or any successor to such forms, which does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities, Company will:
(i) promptly give to each Holder written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws): and
(ii) include in such registration (and compliance), and in any underwriting involved therein, all Registrable Securities specified in a written request or requests, made within 30 clays after receipt of such written notice from Company, by any Holder or Holders, except as set forth. in subsection 1.2(b) below.
(b) Underwriting. If the registration of which Company gives notice is for a registered public offering involving an underwriting, Company shall so advise Holders as a part of the written notice given pursuant to subsection 1.2(a)(i). In such event the right of any Holder to registration pursuant to this subsection 1.2 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with Company and the other shareholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by Company.
1.22 Expenses of Registration. All expenses incurred in connection with any registration, qualification or compliance pursuant to this Section 1 including without limitation, all registration, tiling and qualification fees, printing expenses, fees and disbursements of counsel for Company and expenses of any special audits incidental to or required by such registration, shall be borne by Company except Company shall not be required to pay underwriters' fees, discounts or commissions relating to Registrable Securities, All expenses of any registered offering not otherwise borne by Company shall be borne pro rata among Holders participating in the offering and Company.
1.23 Registration Procedures. In the case of each registration, qualification or compliance effected by Company pursuant to this Registration Rights Agreement, Company will keep each Holder participating therein advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. Except as otherwise provided in subsection 1.3, at its expense Company will:
(a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective, and, upon the request of Holders of a majority of Registrable Securities registered thereunder keep such registration statement effective for up to 120 days.
(b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.
(c) Furnish to Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by Holders, provided that Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to he delivered under the Securities Act or the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.
1.24 Indemnification.
(a) Company will indemnify each Holder of Registrable Securities and each of its officers, directors and partners, and each person controlling such Holder, with respect to which such registration, qualification or compliance has been effected pursuant to this Registration Rights Agreement, and each underwriter, if any, and each person who controls any underwriter of Registrable Securities held by or issuable to such Holder, against all claims, losses, expenses, damages and liabilities (or actions in respect thereto) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to he stated therein or necessary to make the statement therein not misleading, or any violation or alleged violation by Company of the Securities Act, the Securities Exchange Act of 1934, as amended, (“Exchange Act”) or any state securities law applicable to Company or any rule or regulation promulgated under the Securities Act, the Exchange Act or any such state law and relating to action or inaction required of Company in connection with any such registration, qualification of compliance, and will reimburse each such Holder, each of its officers, directors and partners, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, within a reasonable amount of time after incurred for any reasonable legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection 1.5(a) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability, or action if such settlement is effected without the consent of Company (which consent shall not be unreasonably withheld); and provided further. that Company will not he liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to Company by an instrument duly executed by such Holder or underwriter specifically for use therein.
(b) Each Holder will if Registrable Securities held by or issuable to such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify Company, each of its directors and officers, each underwriter, if any, of Company's securities covered by such a registration statement, each person who controls Company within the meaning of the Securities Act, and each other such I folder, each of its officers, directors and partners and each person controlling such Holder, against all claims, losses, expenses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading. and will reimburse Company, such holders, such directors, officers, partners. persons or underwriters for any reasonable legal or any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to Company by an instrument duly executed by such Holder specifically for use therein; provided, however, that the indemnity agreement contained in this subsection I.5(b) shall not apply to amounts paid in settlement of any such claim, loss, damage. liability or action if such settlement is effected without the consent of Holder, (which consent shall not be unreasonably withheld); and provided further, that the total amount for which any Holder shall he liable under this subsection 1.5(b) shall not in any event exceed the aggregate proceeds received by such Holder from the sale of Registrable Securities held by such Holder in such registration.
(c) Each party entitled to indemnification under this subsection 1.5 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided that counsel for Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by Indemnified Party (whose approval shall not be unreasonably withheld), and Indemnified Party may participate in such defense at such party's expense; and provided further, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party 01' its obligations hereunder, unless such failure resulted in prejudice to Indemnifying Party; and provided further, that an Indemnified Party (together with all other Indemnified Parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by Indemnifying Party, if representation of such Indemnified Party by the counsel retained by Indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.
1.25 Information by Holder. Any Molder or Holders of Registrable Securities included in any registration shall promptly furnish to Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance referred to herein.
1.26 Rule 144 Reporting. With a view to making available to Holders the benefits of certain rules and regulations of the SEC which may permit the sale of Registrable Securities to the public without registration. Company shall at all times:
(a) make and keep public information available, as those terms are understood and defined in SEC Rule 144, after 90 days after the effective date of the first registration filed by Company for an offering of its securities to the general public:
(b) file with the SEC in a timely manner all reports and other documents required of Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements): and
(c) so long as a Holder owns any Registrable Securities, to furnish to such Holder forthwith upon request a written statement by Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of Company, and such other reports and documents so filed by Company as Holder may reasonably request in complying with any rule or regulation of the SEC allowing bolder to sell any such securities without registration.
1.27 Transfer of Registration Rights. Holders' rights to cause Company to register their securities and keep information available, granted to them by Company under subsections 1.2 and 1.7 may be assigned to a transferee or assignee of a Holder's Registrable Securities not sold to the public, provided, that Company is given written notice by such Holder at the time of or within a reasonable time after said transfer, stating the name and address of said transferee or assignee and identifying the securities with respect to which such registration rights are being assigned. Company may prohibit the transfer of any Holders' rights under this subsection 1.8 to any proposed transferee or assignee who Company reasonably believes is a competitor of Company.
2. General.
2.18 Waivers and Amendments. With the written consent of the record or beneficial holders of at least a majority of the Registrable Securities, the obligations of Company and the rights of Holders of Registrable Securities under this agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely), and with the same consent Company, when authorized by resolution of its Board of Directors, may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement; provided, however, that no such modification. amendment or waiver shall reduce the aforesaid percentage of :Registrable Securities without the consent of all of the Holders of Registrable Securities. Upon the effectuation of each such waiver, consent, agreement of amendment or modification, Company shall promptly give written notice thereof to the record holders of Registrable Securities who have not previously consented thereto in writing. This Agreement or any pro-vision hereof may be changed, waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, except to the extent provided in this subsection 2.1,
2.19 Governing Law. This Agreement shall be governed in all respects by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within California.
2.20 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
2.21 Entire Agreement. Except as set forth below, this Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof
2.22 Notices, etc. All notices and other communications required or permitted hereunder shall be either sent via electronic mail or in writing and shall he mailed by first class mail, postage prepaid. certified or registered mail, return receipt requested, addressed (a) if to Holder, at such Holder's address as set forth below, or at such other address as such Holder shall have furnished to the Company in writing, or (b) if to the Company, at Company's address set forth below, or at such other address as Company shall have furnished to Holder in writing.
2.23 Severability. In case any provision of this Agreement shall he invalid, illegal, or unenforceable, the validity. legality and enforceability of the remaining provisions of this Agreement or any provision of the other Agreement s shall not in any way be affected or impaired thereby.
2.24 Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
2.25 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.
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COMPANY: | | LENDER: |
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WAVE SYSTEMS CORP | | AGILITY CAPITAL II, LLC |
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By: | | | By: | |
Name: | | | Name: | |
Title: | | | Title: | |
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Address for Notices: | | Address for Notices: |
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Attn: [_______]
480 Pleasant Street
Lee, MA 01238 | | Attn: Daniel Corry
812 Anacapa, Suite A
Santa Barbara, California 93101 |
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Tel: [________]
Fax: [________]
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Fax: [___________] |
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VALIDITY GUARANTY
The undersigned officers and/or directors and/or shareholders in their respective capacities as Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of Wave Systems Corp. located at 480 Pleasant Street, Lee, MA 01238 (“Seller”), in order to induce Marble Bridge Funding Group, Inc. (“Purchaser”) to enter into a Receivables Purchase Agreement (“Agreement”) with Seller and to from time to time make advances thereunder, hereby warrants, covenants and guaranties to Purchaser that:
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1. | All Seller’s accounts which have been or will be repotted to you by or on behalf of the Seller and in which you hold a security interest (“Accounts”), whether such reports are in the form of agings, borrowing base certificates, collateral reports or financial statements, are genuine and in all respects what they purport to be, represent bona tide obligations of Seller’s customers arising out of services provided or the sale and completed delivery of merchandise sold by the Seller (the “Sold Goods”) in the ordinary course of it business in accordance with and in full and complete performance of customer’s (each. a “Customer’’) order therefore. |
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2. | Seller will not do anything to impede or interfere with the normal collection and payment of the invoices assigned to the Purchaser. |
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3. | The terms stated in all such invoices are true and correct and express the entire agreement between the parties thereto. |
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4. | Seller will promptly report to Purchaser all accounts on which the original terms of payment have been extended or rewritten and all merchandise repossessed or returned to the client. |
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5. | All reports, facts, figures and representations given, or caused to be given by Seller, including without limitation all representations respecting Accounts and all calculations concerning the availability of funds, in connection with its Agreement with Purchaser shall to true and correct. |
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6. | Seller will deliver to Purchaser collections on its accounts in accordance with the terms and conditions of the Agreement. |
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7. | Upon Purchaser’s request, Seller will provide Purchaser sufficient information and documentation to enable Purchaser to collect the accounts and sell the Inventory and Equipment. |
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8. | All original checks, drafts, notes. letters of credit, acceptances and other proceeds of the Accounts, received by the Seller. will be held in trust for Purchaser and will immediately be forwarded to Purchaser upon receipt, in kind. in accordance with the terms of the Agreements. |
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9. | None of the Accounts are or will be the subject of any offsets. defenses or counterclaims of any nature whatsoever. and Seller will not in any way impede or interfere with the normal collection and payment of the Accounts. |
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10. | Seller owns all of the collateral in which Purchaser has been granted a security interest under the Agreement, free and clear of any and all security interests. liens or encumbrances of other, except those specifically subordinated to Purchaser in writing or permitted under the Agreement. |
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11. | The Sold Goods are and will be, up to the point of sales, the sole and absolute property of the Seller, and the Accounts and Sold Goods will be free and clear of all liens and security interests, except those of Purchaser. |
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12. | The due dates of the Accounts will be as reported to Purchaser by or on behalf of the Seller. |
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13. | Seller will promptly report to Purchaser all disputes, rejections, returns and resales of Sold Goods and all credits allowed by the Seller upon all Accounts. |
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14. | Seller will not sell its inventory except in the ordinary course of business. |
The undersigned, in their respective capacity as CEO and CFO, hereby agree to indemnify and save Purchaser free and harmless from any damage, loss (the amount of such loss shall be presumed to be the face amount of any affected Account or invoice. or the greater of cost or market value of any affected inventory), claim, or liability (including reasonable attorneys fees and costs of defense of litigation) which Purchaser may sustain or incur as a direct or indirect result of any breach of said warranty by the undersigned, or any fraud, deceit, or criminal act by any officer, employee, stockholder. director or agent of the Seller in its dealings with Purchaser.
Furthermore, the undersigned, in their respective capacity as CEO and CFO, hereby agree on demand to reimburse Purchaser and Purchaser’s assignee for all expenses, collection charges, court costs and attorney’s fees incurred in endeavoring to collect or enforce any claim arising out of any breach of the foregoing by the Seller and/or the undersigned or any other person or concern liable thereon; for all of which, with interest in accordance to the Agreement, after due until paid.
The undersigned, in their respective capacity as Chief Executive Officer and Chief Financial Officer, waive any and all claims and defenses arising out of any of the following: (a) any failure to perfect or continue perfected any security interest or lien of Purchaser; (b) the invalidity or unenforceability of any security interest or lien; (c) the failure to protect or insure any collateral; (d) the failure of any indemnitor to receive any notice of any kind: (e) any failure by Purchaser to enforce its claims against Seller: (f) any release. settlement or compromise of any obligations of Seller; or (g) the invalidity or unenforceability of any Indebtedness (as that term is defined in the Agreement).
Nothing herein contained shall be in any way impaired or affected by any change in or amendment of any of the Agreement. This agreement shall be binding upon the undersigned in their capacity as CEO aJ1d CFO, their successors. and assigns. This agreement shall remain in full force and effect until the full, llnal and indefeasible payment in full of all Indebtedness. Purchaser may assign this agreement in whole or in part or Purchaser’s rights hereunder to anyone at any time.
IN WITNESS WHEREOF, the undersigned have executed this Validity Guaranty on this 7th day of December, 2015.
Bill Solms, CEO
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Validity Guarantor Name: | Bill Solms |
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V. Guarantor Address: | 480 Pleasant Street |
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V. Guarantor City/State/Zip: | Lee, MA 01238 |
Wave Systems Secures Financing Agreement and Engages Investment Bank to Evaluate Strategic Alternatives
Lee, MA—December 15, 2015 — Wave Systems Corp. (NASDAQ: WAVX), an enterprise security software provider, announced today that it has completed a financing agreement with Marble Bridge Funding Group, Inc. (MBFG) in the form of a secured accounts receivable and purchase orders financing facility of up to $3 million. The Company has also engaged GrowthPoint Technology Partners to advise it in evaluating its strategic alternatives, including potential M&A opportunities.
Advances on the accounts receivable facility will be made on qualified accounts receivable that are approved by MBFG. The duration of this facility is for 12 months with an automatic 12-month renewal unless Wave terminates the facility or is in default with MBFG.
Advances on the purchase order facility can be made on qualified purchase orders or contracts approved by MBFG that will convert into an account receivable within 45 days from funding. The duration of the purchase order facility is for 9 months or the termination of the credit facility, whichever occurs first.
Additionally, Wave issued a total of 5.5 million warrants to MBFG and its co-lender of Class A common stock at an exercise price of $0.15 per share. These warrants cannot be exercised for a period six months after the effective date of the transaction and will expire on the fifth anniversary of the issue date.
“Closing on this financing agreement is an important development for Wave as it provides capital to help finance current operations and was an important condition for us to engage a firm to advise us on pursuing our strategic alternatives,” said Bill Solms, President and CEO, Wave Systems Corp. “This type of financing facility is not new to Wave as the Company factored its royalties from Dell for several years. Wave is continuing to pursue raising additional capital to meet our needs as required.”
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About Wave Systems Corp.
Wave Systems reduces the complexity, cost and uncertainty of data protection by starting inside the device. Unlike other vendors who try to secure information by adding layers of software for security, Wave leverages the hardware security capabilities built directly into endpoint computing platforms themselves. Wave has been among the foremost experts on this growing trend, leading the way with first-to-market solutions and helping shape standards through its work as a board member for the Trusted Computing Group.
About Marble Bridge Funding Group
Marble Bridge Funding Group is a strategic commercial finance partner providing funding, capital strategies, cash-flow management, and advisory services to growth-driven entrepreneurial companies. As a privately held direct lender, Marble Bridge finances growing businesses from startups to companies with over $50 million in sales, with a variety of customized programs and services. Since 1997 Marble Bridge Funding Group has been working with bankers, brokers, CPAs, financial advisors, and local, state and federal agencies to provide capital and related financial services to our clients. We remain a visible presence in the community, assisting government and private institutions that serve small businesses.
About GrowthPoint Technology Partners
GrowthPoint Technology Partners provides M&A and financial advisory services to technology companies around the world. We have the depth of expertise acquired from hundreds of completed transactions. As former CEOs, founders, inventors, venture capitalists and advisors, we bring a wealth of strategic and financial experience to our clients with the sole objective of helping them achieve success. Headquartered in Silicon Valley, GrowthPoint has completed transactions with virtually all of the major technology companies and has client relationships that span the globe. Our uniqueness is the depth of our technology expertise and curiosity. Whether it is M&A, capital raising or strategic advisory services, we bring the same process expertise and focused commitment to every engagement.
Safe Harbor for Forward-Looking Statements
This press release may contain forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company's financing plans; (ii) trends affecting the company's financial condition or results of operations; (iii) the company's growth strategy and operating strategy; and (iv) the company’s ability to retain its listing on the Nasdaq Capital Market. The words "may," "would," "will," "expect," "estimate," "anticipate," "believe," "intend" and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company's ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Wave assumes no duty to and does not undertake to update forward-looking statements.
All brands are the property of their respective owners.
Walter A. Shephard, CFO
413-243-1600
investors@wave.com
Investor Relations:
Catalyst Global
David Collins, Chris Eddy
212-924-9800
wavx@catalyst-ir.com