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): September 23, 2015
WAVE SYSTEMS CORP.
(Exact name of registrant as specified in its charter)
|
| | | | |
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
On September 23, 2015, Wave Systems Corp. (the “Company”) entered into Convertible Bridge Instrument and Warrant Subscription Agreements (the "Agreements") with certain investors. The Agreements consists of (i) a $490,000 unsecured bridge instrument that is required to be repaid on or before December 24, 2015 with a repayment amount of $588,000 (the "repayment amount") and (ii) warrants to purchase up to 1,225,000 shares of Wave’s Class A common stock at an exercise price of $0.18 per share. These warrants cannot be exercised for a period six months after the effective date of the transaction and expire in September 2020.
If the Company fails to pay the repayment amount by the repayment date of December 24, 2015, holders may (but are not required to) elect to convert the bridge instrument into shares of our Class A common stock at a conversion rate based on the repayment amount divided by an amount equal to the lesser of $0.168 and 80% of Wave’s VWAP for the 5 trading day period prior to the date on which the conversion election is made. The bridge instrument may not be converted into more than 19.9% of the outstanding common shares immediately preceding the transaction, unless a shareholder approval is obtained by Wave. The investors were granted resale registration rights in respect of the common stock issuable under the convertible bridge instrument and warrants.
Security Research Associates acted as the placement agent in connection with the offering and will receive (i) a cash payment of $29,400 and (ii) warrants to purchase up to 73,500 shares of our Class A common stock at an exercise price of $0.18 per share. These warrants cannot be exercised for a period six months after the effective date of the transaction and expire in September 2020.
Item 8.01 Other Events
On September 28, 2015, the Company issued a press release announcing the convertible bridge loan financing 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.
|
| | |
Exhibit No. | | Description |
| | |
Exhibit 4.1 | | Form of Subscription Agreement. |
| | |
Exhibit 4.2 | | Form of Note Agreement. |
| | |
Exhibit 4.3 | | Form of Warrant Agreement. |
| | |
Exhibit 99.1 | | Press release dated September 28, 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: September 29, 2015
EXHIBIT INDEX
|
| | |
Exhibit No. | | Description |
| | |
Exhibit 4.1 | | Form of Subscription Agreement. |
| | |
Exhibit 4.2 | | Form of Note Agreement. |
| | |
Exhibit 4.3 | | Form of Warrant Agreement. |
| | |
Exhibit 99.1 | | Press release dated September 28, 2015. |
EXHIBIT 4.1
WAVE SYSTEMS CORP.
CONVERTIBLE BRIDGE INSTRUMENT
AND WARRANT
SUBSCRIPTION AGREEMENT
If and when accepted by Wave Systems Corp. (the “Company”), this Convertible Bridge Instrument and Warrant Subscription Agreement (this “Agreement”), when executed below, shall constitute a subscription for the purchase of an instrument substantially in the form attached hereto as Exhibit A (the “Bridge Instrument”) up to an aggregate amount (“Original Amount”) of $1,500,000, and Warrants to purchase shares of the Company’s Class A Common Stock (the “Equity Securities”), substantially in the form attached hereto as Exhibit B (the “Warrants”) (the Bridge Instruments and the Warrants are collectively referred to hereinafter as the “Securities”). A SUBSCRIBER (THE “INVESTOR”), BY EXECUTING BELOW, ACKNOWLEDGES THAT HE/SHE/IT UNDERSTANDS THAT THE COMPANY IS RELYING UPON THE ACCURACY AND COMPLETENESS HEREOF IN DECIDING WHETHER TO ACCEPT THIS AGREEMENT AND TO SELL TO THE INVESTOR, IN COMPLIANCE WITH ITS OBLIGATIONS UNDER APPLICABLE SECURITIES LAWS.
Representations and Warranties of the Investor. The Investor hereby represents and warrants to the Company and to each of the other investors in the Securities (the “Other Investors”), as of the date of this Agreement as follows:
Ability to Bear Risk. The Investor is in a financial position to hold the Securities and is able to bear the economic risk and withstand a complete loss of his/her/its investment in the Securities.
Risk Factors; High Degree of Risk; Risk Factors. THE RISK FACTORS OF THE COMPANY SET FORTH IN THE COMPANY’S PUBLICLY AVAILABLE 10-Q FILING DATED AUGUST 15, 2014 ARE INCORPORATED HEREIN BY REFERENCE. THE INVESTOR RECOGNIZES THAT THE SECURITIES AS INVESTMENTS INVOLVE A HIGH DEGREE OF RISK. There can be no assurance that the Company will be able meet its business and financial objectives and commitments and the Company will need significant additional capital to continue as a going concern and/or to repay the Bridge Instrument in cash, which capital may not be available and will be difficult to obtain. The Investor recognizes that if the Company does not secure sufficient additional financing, it will likely be unable to continue as a going concern.
Professional Advice. The Investor has obtained, to the extent he/she/it deems necessary, his/her/its own professional advice with respect to the risks inherent in the investment in the Securities, the condition of the Company and the suitability of the investment in the Securities in light of his/her/its financial condition and investment needs.
Suitability. The investment in the Securities is suitable for the Investor based upon his/her/its investment objectives and financial needs, and the Investor has adequate net worth and means for providing for his/her/its current financial needs and contingencies and has no need for liquidity of investment with respect to the Securities. The Investor’s overall commitment to investments which are illiquid or not readily marketable is not disproportionate to his/her/its net worth, and investment in the Securities will not cause such overall commitment to become excessive.
Access to Information. The Investor has been given access to information relating the current financial condition of the Company and the risks associated therewith, and has utilized such access to his or her satisfaction for the purpose of obtaining information about the Company; particularly, the Investor has either attended (by phone or in person) or been given reasonable opportunity to attend a meeting with the management of the Company for the purpose of asking questions of, and receiving answers from, such management concerning the current condition and prospects of the Company NS the terms and conditions of the offering of the Securities, and has had the opportunity to obtain any additional information requested by investor regarding (a) the condition and prospects of the Company, and/or (b) necessary to verify the accuracy of information provided about the Company.
Purchase Entirely for Own Account. The Securities will be acquired for investment for the Investor’s own account, not as a nominee or agent, and not with a view to the distribution of any part thereof; the Investor has no present intention of selling, granting any participation in or otherwise distributing the Securities in a manner contrary to the Securities Act of 1933, as amended (the “Act”), or any applicable state securities or Blue Sky law, and the Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities.
Due Diligence. The Investor has been responsible for his/her/its own due diligence investigation of the Company and its business, and his/her/its analysis of the merits and risks of the investment made pursuant to this Agreement, including through the review of publicly available information about the Company, and is not relying on anyone else’s analysis or investigation of the Company, its business or the merits and risks of the Securities. In taking any action or performing any role relative to the arranging of the investments being made pursuant to this Agreement, the Investor has acted solely in his/her/its own interest and not in that of any of the Other Investors, and none of the Other Investors (or any of their respective employees or agents) has acted as an agent or fiduciary for the Investor.
Restricted Securities. The Investor realizes that (a) there are substantial restrictions on the transferability of the Securities (together with the securities issuable upon the exercise of the Warrants or the conversion of the Bridge Instrument (the “Conversion Securities”)) imposed by law and that such Securities or the Conversion Securities cannot be sold or transferred unless they are subsequently registered under the Act or an exemption from such registration is available. In this connection, the Investor represents that he/she/it is familiar with Rule 144 of the Securities and Exchange Commission (the “SEC”), as presently in effect, and understands the resale limitations imposed thereby and by the Act.
Exemption Reliance. The Investor has been advised that neither the Securities nor any of the Conversion Securities are being registered under the Act or the applicable state securities laws, but each is being offered and sold pursuant to exemptions from such laws, and that the Company’s reliance upon such exemptions is predicated in part on the Investor’s representations contained herein. If other than an individual, the Investor represents that it has not been organized for the purpose of investing in the Securities.
Further Limitations on Disposition. Without in any way limiting the representations set forth above, the Investor further agrees not to make any disposition of all or any portion of the Securities or the Conversion Securities unless and until such may be sold under the provisions of Rule 144 or there is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with such registration statement.
Residency. For purposes of the application of state securities laws, the Investor represents that he or she is a bona fide resident of, and is domiciled in, the state set forth in such investor’s address on page 6.
Accreditation. EACH INVESTOR MUST QUALIFY AS AN “ACCREDITED INVESTOR” AS THAT TERM IS DEFINED BY THE SEC. PLEASE INITIAL ONE OR MORE CATEGORIES BELOW APPROPRIATE TO INVESTOR’S QUALIFICATION.
The Investor represents and warrants that he/she/it is:
o(i) A bank as defined in Section 3(a)(2) of the Act, or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); an insurance company as defined in Section 2(13) of the Act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; a small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are Accredited Investors;
o(ii) A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
o(iii) An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
o(iv) A director or executive officer of the Company;
o(v) A natural person whose individual net worth, or joint net worth with that person's spouse, at the time of her purchase exceeds $1,000,000 (exclusive of such individual’s principal residence, with a deduction to be taken for negative equity in any residence);
o(vi) A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
o(vii) A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b) (2) (ii); or
o(viii) An entity in which all of the equity owners are Accredited Investors. (If this alternative is checked, you must identify each equity owner and provide statements signed by each demonstrating how each qualifies as an accredited investor.)
Tax Identification; Withholding. Under penalties of perjury, the Investor certifies that (a) the number shown on page 6 hereto opposite the Investor’s name is the Investor’s correct TIN/Social Security number
and (b) the Investor is not subject to back‑up withholding, either because he or she has not been notified that he or she is subject to back‑up withholding as a result of a failure to report all interest and dividends or because the Internal Revenue Service has notified the Investor that he or she is no longer subject to back‑up withholding. (If the Investor has at any time received notice from the Internal Revenue Service that he or she is subject to back-up withholding and has not subsequently received a notice advising the Investor of the termination of back-up withholding, strike the second clause (b) above of the foregoing representation.)
Covenants. The Investor and the Company agree that:
Transfer Restriction. The Investor will not transfer or assign this Agreement or any of his/her/its interest herein. The Securities and the Conversion Securities shall be assigned or transferred only in accordance with their terms, the provisions hereof and all applicable laws.
No Revocation. The Investor may not cancel, terminate or revoke this Agreement, and this Agreement shall be binding upon his/her/its successors, assigns, legal representatives, heirs, legatees and distributes.
Indemnification. The Investor and the Company shall indemnify, hold harmless and defend the other and its affiliates, agents and attorneys with respect to any and all loss, damage, expense, claim, action or liability any of them may incur as a result of the breach or untruth of any of the agreements, representations and warranties set forth in this Agreement. If the Company or the Investor, or anyone acting on either of their behalf, discovers any breach or untruth of any such agreement, representations or warranties, the Company or the Investor may, at its option, forthwith rescind the sale or purchase, as the case may be, of the Securities.
Waivers and Amendments. Any provision of this Agreement or the Securities may be amended, waived or modified only upon the written consent of the Company and the Investors holding Bridge Instruments representing at least a majority of the Original Amounts (the “Majority in Interest”). Any such amendment, waiver or modification effected in accordance with this paragraph shall be binding upon each holder of any Securities purchased under this Agreement at the time outstanding and each future holder of all such Securities. Each Investor acknowledges that by the operation of this paragraph, the holders of a Majority in Interest will have the right and power to modify all rights of such Investor under this Agreement and the Securities, so long as all such holders are treated equally and ratably.
Governing Law; Successors. The Investor agrees that this Agreement shall be enforced, governed and construed in all respects in accordance with the laws of the State of Delaware, that the rights, powers and duties set forth herein shall be binding upon the Investor, his or her heirs, estate, legal representatives, successors and assigns, and shall inure to the benefit of his or her successors and assigns.
THE INVESTOR HAS BEEN ADVISED, PRIOR TO HIS/HER/ITS PURCHASE OF THE SECURITIES, THAT NEITHER THE OFFERING OF THE SECURITIES NOR THE CONVERSION SECURITIES NOR ANY OFFERING MATERIALS HAVE BEEN REVIEWED BY ANY ADMINISTRATOR UNDER THE ACT, THE DELAWARE CORPORATIONS CODE OR ANY OTHER APPLICABLE SECURITIES LAWS (THE “ACTS”) AND THAT THE SECURITIES AND THE CONVERSION SECURITIES HAVE NOT BEEN REGISTERED UNDER ANY OF THE ACTS AND THEREFORE CANNOT BE RESOLD UNLESS THEY ARE REGISTERED UNDER THE ACTS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
THE INVESTOR MUST RELY ON HIS/HER/ITS OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED IN MAKING AN INVESTMENT DECISION ON THE SECURITIES. THE COMPANY’S DOCUMENTS AND ANY STATEMENTS MADE TO INVESTORS, ALL WITH RESPECT TO THE BUSINESS OF THE COMPANY, ITS MANAGEMENT OR ITS FINANCIAL CONDITION, HAVE NOT BEEN REVIEWED OR PASSED UPON BY ANY FEDERAL, STATE OR LOCAL SECURITIES ADMINISTRATOR OR OTHER GOVERNMENTAL AGENCY. THE COMPANY HAS SPECIFICALLY REQUESTED ITS COUNSEL NOT TO UNDERTAKE ANY SIGNIFICANT ROLE IN THE DISCLOSURE PROCESS OR TO OPINE ON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE. CONSEQUENTLY, THE COMPANY’S COUNSEL SHOULD NOT BE LOOKED TO FOR ANY ASSURANCE THAT THERE HAVE NOT BEEN MATERIAL OMISSIONS OR MISSTATEMENTS IN THE OFFER AND SALE OF THESE SECURITIES. THE INVESTOR, TO THE EXTENT PERMITTED BY APPLICABLE LAW, HEREBY AGREES NOT TO MAKE ANY CLAIM OR BRING ANY ACTION AND WAIVES AND RELEASES ANY AND ALL CLAIMS AGAINST THE COMPANY OR ITS COUNSEL RELATED TO ANY DISCLOSURE OR LACK THEREOF.
The Investor has completed this Agreement as of the date indicated below and understands that this subscription is subject to acceptance by the Company.
The closing of the transactions contemplated hereby will occur on September 24, 2015 (the “Closing Date”). On the Closing Date, the Investor shall pay to the Company by wire transfer of immediately available funds the aggregate purchase price set forth on the signature page hereto in accordance with wire transfer instructions provided to the Investor. Following such payment, the Company will deliver to the Investor (by overnight courier to the address set forth on the signature page hereto) (i) a Bridge Instrument in the Original Amount set forth on the signature page hereto and (ii) a Warrant to purchase the number of shares of Common Stock set forth on the signature page hereto, in each case registered in the name of the Investor.
THIS AGREEMENT SHALL NOT CONSTITUTE A BINDING COMMITMENT ON THE PART OF THE COMPANY UNTIL (A) THE COMPANY HAS TIMELY RECEIVED AN EXECUTED COPY OF THE COMPLETED SUBSCRIPTION AGREEMENT FROM THE INVESTOR, (B) THE COMPANY HAS DELIVERED TO THE INVESTOR AN EXECUTED COUNTERPART SIGNATURE PAGE HERETO AND (C) THE INVESTOR HAS PAID THE PURCHASE PRICE SET FORTH ON THE SIGNATURE PAGE HERETO IN FULL ON THE DATE HEREOF. THE INVESTOR ACKNOWLEDGES THAT, AT ANY TIME PRIOR TO THE DELIVERY OF ITS EXECUTED COUNTERPART SIGNATURE PAGE, THE COMPANY MAY ELECT TO NOT ENTER INTO THIS SUBSCRIPTION AGREEMENT FOR ANY REASON.
This AGREEMENT constitutes the entire understanding of the parties with respect to the subject matter hereof and supersedes any and all prior understandings, PROPOSALS, TERM SHEETS AND/OR agreements, whether written or oral, with respect to such subject matter.
[Signature page follows]
PLEASE PRINT OR TYPE
Date: [_____]
Purchase Price and Original Amount of the Bridge Instrument: $________________ (the “Original Amount”)
Repayment Date: [_____]
Repayment Amount: $ ________________ (Original Amount x 1.2)
Warrant Shares: _________________
Warrant Price: $[_____] (1)
Exercise Price: $_________________
Investor information:
Name:
Mailing Address:
TIN/Social Security Number:
Telephone number:
E-mail:
Signature of Investor:
By:
Name:
Title: (if applicable)
ACCEPTED BY WAVE SYSTEMS CORP
By:
Name: ___________________________
Title: ____________________________
Dated:_________________________
(1)Last Closing Consolidated Bid Price of the Company’s common stock on NASDAQ as of the time this Agreement is executed.
EXHIBIT 4.2
-5-
THE SECURITIES REPRESENTED BY THIS CONVERTIBLE BRIDGE INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
WAVE SYSTEMS CORP.
CONVERTIBLE BRIDGE INSTRUMENT
$ _____________ ( “Original Amount”) September 23, 2015
For value received, Wave Systems Corp., a Delaware corporation (the “Company”), promises to pay to ____________________ (the “Holder”) the sum of $_____________ (the “Repayment Amount”) on the Repayment Date set forth below; provided that, in the event that the Registration Statement (as defined in Section 5 hereof) is not effective on the date that is ninety (90) days after the Effective Date, then the Repayment Amount shall be increased to equal 125% of the Original Amount. This Convertible Bridge Instrument (this “Bridge Instrument”) is one in a series of instruments (such series of instruments, the “Company Issued Bridge Instruments”) issued pursuant to the Convertible Bridge Instrument and Warrant Subscription Agreement dated as of September 23, 2015 (the “Effective Date”) (as amended, modified or supplemented, the “Subscription Agreement”) between the Company and the Investor and the Other Investors (as defined in the Subscription Agreement) (collectively, the “Holders”). This Bridge Instrument is subject to the following terms and conditions.
Repayment. This Bridge Instrument shall be due and payable on December 23, 2015 (the “Repayment Date”). Notwithstanding the foregoing, the Repayment Amount shall become immediately due and payable upon the execution by the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act and, in the case of the filing of a petition against the Company, the continuation of such petition without dismissal for a period of ninety (90) days or more, the appointment of a receiver or trustee to take possession of the property or assets of the Company.
Payment. All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company. Amounts paid by the Company in respect of the Bridge Instruments shall be paid to all holders of Bridge Instruments in a pro rata manner based on each such holder’s respective Repayment Amount.
[Reserved].
Default. The failure by the Company to pay to Holder the Repayment Amount on the Repayment Date shall constitute a default hereunder (a “Default”). In the event of a Default, the Repayment Amount will remain outstanding as an obligation of the Company, provided that, upon the Holder’s written election delivered to the Company at any time after a Default (a “Conversion Election”), the Repayment Amount may be converted on the third Trading Day following delivery of such Conversion Election (a “Conversion”) into a number of shares (the “Conversion Shares”) of the Class A Common Stock (the “Common Stock”) of the Company equal to (i) $0.168 or, if less on the date which the Conversion Notice is delivered, (ii) 80% of the average VWAP (as defined below) for the 5 Trading Day (as defined below) period ending on the Trading Day immediately preceding the date on which the Conversion Notice is delivered, unless the full Repayment Amount has been paid to such Holder on or prior to the date of Conversion. In no event shall the aggregate shares issuable in connection with a Conversion exceed such Holder’s Allocable Share (as defined below) of 19.9% of the total issued and outstanding shares of Common Stock on the date hereof (the “19.9% Limit”) unless and until a shareholder approval as described below (a “Shareholder Approval”) has been obtained. As soon as practicable after Conversion (or any subsequent remaining Conversion following a Shareholder Approval), the Company at its expense will cause to be issued in the name of and delivered to the Holder a certificate or certificates for the number of shares Common Stock to which the Holder shall be entitled upon Conversion (bearing such legends as may be required by applicable state and federal securities laws in the opinion of legal counsel of the Company, by the Company’s Certificate of Incorporation or Bylaws, or by any agreement between the Company and the Holder). No fractional shares will be issued upon a Conversion. If upon a Conversion, a fraction of a share would otherwise result, then in lieu of such fractional share the Company will pay the cash value of that fractional share based on the 5 Trading Day VWAP. The Holder’s “Allocable Share” means the percentage that the Holder’s Original Amount represents out of the aggregate of all Original Amounts under the Company Issued Bridge Instruments, provided that Holder’s Allocable Share will be increased accordingly if one or more other holders of Company Issued Bridge Instruments advises the Company in writing that he/she/it will not be converting and directs that his/her/its Allocable Share (or portion thereof) be reallocated to Holders that elect to make a Conversion.
If a Shareholder Approval is required for a full Conversion, the Company shall use commercially reasonable efforts to call a meeting of its stockholders convened and conducted in accordance with its bylaws and certificate of incorporation (and applicable laws and regulations) for the purpose of submitting to stockholders a proposal to approve the issuance of shares in the Conversion above the 19.9% Limit. If such proposal is duly approved by the Company’s stockholders, the remaining portion of the Conversion will be effective immediately upon such approval (at the same conversion rate per share as the initial portion of the Conversion).
For purposes of this Bridge Instrument, the term: (i) “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the shares of Common Stock (“Shares”) are then listed or quoted on a Trading Market, the daily volume weighted average price of the Shares for such date (or the nearest preceding date) on the Trading Market on which the Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Shares for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Shares are not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Shares are then reported in the “Pink Sheets” published by OTC Markets Group (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Share so reported, or (d) in all other cases, the fair market value of a Share as determined in good faith by the Company; (ii) “Trading Day” means a day on which the principal Trading Market is open for trading; and (iii) “Trading Market” means any of the following markets or exchanges on which the Shares are listed or quoted for trading on the date in question: the NYSE MKT, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the New York Stock Exchange (or any successors to any of the foregoing):
Registration Rights. Within 30 days of the Effective Date, the Company shall file a resale registration statement on Form S-3 (the “Registration Statement”) with the SEC for a number of shares of Common Stock (that could be issuable upon Conversion in accordance with Section 4 above, taking into account clause (ii) thereof) equal to such Holder’s Allocable Share of the 19.9% Limit. The Company shall use commercially reasonable efforts to cause such Registration Statement to be effective within sixty (60) days after the Effective Date. In connection with the preparation of any such Registration Statement, and as a condition to the inclusion of the Holder’s Conversion shares therein, (i) the Holder shall be required to furnish to the Company promptly following request such information as may be reasonably necessary for the Company’s completion of such Registration Statement and (ii) the Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption therefrom is available) in connection with sales of shares pursuant to the applicable Registration Statement.
Limitations on Conversions. Notwithstanding anything to the contrary contained in this Instrument, the Repayment Amount shall not be convertible by the Holder hereof, and the Company shall not effect any Conversion of the Repayment Amount or otherwise issue any shares of Common Stock pursuant hereto to the extent (but only to the extent) that after giving effect to such Conversion or other share issuance hereunder the Holder (together with its affiliates) would beneficially own in excess of 19.9% (the “Maximum Percentage”) of the Common Stock outstanding immediately following such Conversion. For purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Exchange Act (as defined in the Subscription Agreement) and the rules and regulations promulgated thereunder. The limitations contained in this paragraph shall apply to a successor Holder of this Instrument. The Company may not waive this paragraph without the affirmative vote or consent of holders of a majority of all votes cast at a duly convened meeting of the Company’s stockholders. Prior to completing any conversion of this Instrument, the Company may require the Holder to certify in writing as to the total number of shares of Common Stock of the Company beneficially owned by such Holder at such time. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) business day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.
Transfer; Successors and Assigns. The terms and conditions of this Bridge Instrument shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Notwithstanding the foregoing, the Holder may not assign, pledge, or otherwise transfer this Bridge Instrument without the prior written consent of the Company.
Governing Law. This Bridge Instrument and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.
Notices. Any notice required or permitted hereunder shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service, e‑mail, or confirmed facsimile, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if such notice is addressed to the party to be notified at such party’s address, e‑mail address, or facsimile number as set forth below or as subsequently modified by written notice.
Amendments and Waivers. Any term of this Bridge Instrument may be amended only with the written consent of the Company and the Holders of more than 50% in Original Amounts of all Company Issued Bridge Instruments (a “Majority in Interest”). Any amendment or waiver effected in accordance with this Section 10 shall be binding upon the Company, each Holder and each transferee of any Company Issued Bridge Instrument.
Shareholders, Officers and Directors Not Liable. In no event shall any shareholder, officer or director of the Company be liable for any amounts due or payable pursuant to this Bridge Instrument.
Counterparts. This Bridge Instrument may be executed in any number of counterparts, each of which will be deemed to be an original and all of which together will constitute a single agreement.
[Signature page follows]
The Company has caused this Bridge Instrument to be issued as of the date first written above.
COMPANY:
WAVE SYSTEMS CORP.
By:
Name:
Title: ____________________________
AGREED TO AND ACCEPTED:
HOLDER
By:
Name:
Title: (if applicable)
Address:
EXHIBIT 4.3
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND APPLICABLE STATE SECURITIES LAWS IN ACCORDANCE WITH APPLICABLE REGISTRATION REQUIREMENTS OR AN EXEMPTION THEREFROM.
WARRANT TO PURCHASE SHARES
OF
WAVE SYSTEMS CORP.
This Warrant is issued to ________________________ (the “Holder”) as of September 23, 2015 (the “Effective Date”) by Wave Systems Corp., a Delaware corporation (the “Company”), pursuant to the terms of that certain Convertible Bridge Instrument and Warrant Subscription Agreement (the “Subscription Agreement”) of even date herewith, and in connection with the Company’s concurrent issuance to the Holder of a Convertible Bridge Instrument (the “Bridge Instrument”). This Warrant is one in a series of warrants issued by the Company on the date hereof pursuant to the Subscription Agreement (such instruments issued pursuant to the Subscription Agreement, the “Company Issued Bridge Instruments”).
Subject to the terms and conditions set forth below and set forth in the Subscription Agreement, the Holder is entitled, upon surrender of this Warrant at the principal office of the Company (or at such other place as the Company shall notify the holder hereof in writing), to purchase shares of the Company Class A Common Stock (“Shares”) from the Company pursuant to the provisions set forth herein.
The following is a statement of the rights of the Holder and the conditions to which this Warrant is subject, and to which the Holder, by acceptance of this Warrant, agrees:
Number and Price of Shares; Exercise Period.
Number of Shares Purchasable Under Warrant.
The Holder shall have the right to purchase [_______] Shares (as such number of Shares may be adjusted from time to time in accordance with Section 5 hereof).
Exercise Price. The per share exercise price for the Shares shall be $[__]
Exercise Period. This Warrant shall be exercisable, in whole or in part, during the term (i) commencing on the six month anniversary of the Effective Date, and (ii) ending on the expiration of this Warrant pursuant to Section 6.
Exercise of the Warrant.
Exercise. The purchase rights represented by this Warrant may be exercised at the election of the Holder, in whole or in part, in accordance with Section 1, by:
the tender to the Company at its principal office (or such other office or agency as the Company may designate) of a notice of exercise in the form of Exhibit A (the “Notice of Exercise”), duly completed and executed by or on behalf of the Holder, together with the surrender of this Warrant; and
the payment to the Company of an amount equal to (x) the Exercise Price multiplied by (y) the number of Shares being purchased, by wire transfer or certified, cashier’s or other check made payable to the Company.
Net Issue Exercise. In lieu of exercising this Warrant pursuant to Section 2(a)(ii), if the fair market value of one Share is greater than the Exercise Price (at the date of calculation as set forth below), the Holder may elect to receive a number of Shares equal to the value of this Warrant (or of any portion of this Warrant being exercised) by surrender of this Warrant at the principal office of the Company (or such other office or agency as the Company may designate) together with a properly completed and executed Notice of Exercise reflecting such election, in which event the Company shall issue to the Holder that number of Shares computed using the following formula:
-
Where:
|
| | |
X | = | The number of Shares to be issued to the Holder |
Y | = | The number of Shares purchasable under this Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such calculation) |
A | = | the VWAP on the Trading Day immediately preceding the date of such election |
B | = | The Exercise Price. |
For purposes of this Warrant: (i) “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Shares are then listed or quoted on a Trading Market, the daily volume weighted average price of the Shares for such date (or the nearest preceding date) on the Trading Market on which the Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Shares for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Shares are not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Shares are then reported in the “Pink Sheets” published by OTC Markets Group (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Share so reported, or (d) in all other cases, the fair market value of a Share as determined in good faith by the Company; (ii) “Trading Day” means a day on which the principal Trading Market is open for trading; and (iii) “Trading Market” means any of the following markets or exchanges on which the Shares are listed or quoted for trading on the date in question: the NYSE MKT, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the New York Stock Exchange (or any successors to any of the foregoing).
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the rights under this Warrant. In lieu of such fractional share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the Exercise Price multiplied by such fraction.
Reservation of Stock. The Company agrees during the term the rights under this Warrant are exercisable to take all reasonable action to reserve and keep available from its authorized and unissued shares of common stock for the purpose of effecting the exercise of this Warrant such number of shares as shall from time to time be sufficient to effect the exercise of the rights under this Warrant; and if at any time the number of authorized but unissued shares of common stock shall not be sufficient for purposes of the exercise of this Warrant in accordance with its terms, without limitation of such other remedies as may be available to the Holder, the Company will use its best efforts to take such corporate action as may be necessary to increase its authorized and unissued shares of its common stock to a number of shares as shall be sufficient for such purposes.
Limitations on Exercising. Notwithstanding anything to the contrary contained in this Warrant, this Warrant shall not be exercised for Shares by the Holder hereof, and the Company shall not effect any exercise of this Warrant for Shares or otherwise issue any shares of Common Stock pursuant hereto, to the extent (but only to the extent) that after giving effect to such exercise or other share issuance hereunder the Holder (together with its affiliates) would beneficially own in excess of 19.9% (the “Maximum Percentage”) of the Common Stock outstanding immediately following such exercise. For purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with respect to
calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Exchange Act (as defined in the Subscription Agreement) and the rules and regulations promulgated thereunder. The limitations contained in this paragraph shall apply to a successor Holder of this Warrant. The Company may not waive this paragraph without the affirmative vote or consent of holders of a majority of all votes cast at a duly convened meeting of the Company’s stockholders. Prior to completing any exercise of this Warrant, the Company may require the Holder to certify in writing as to the total number of Shares beneficially owned by such Holder at such time. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) business day confirm orally and in writing to the Holder the number of Shares then outstanding.
Warrant Registry.
Warrant Register. The Company shall maintain a register (the “Warrant Register”) containing the name and address of the Holder or Holders. The Holder of this Warrant (or of any portion of this Warrant) may change its address as shown on the Warrant Register by written notice to the Company requesting a change.
Warrant Agent. The Company may appoint an agent for the purpose of maintaining the Warrant Register referred to in Section 3(a), issuing the Shares or other securities then issuable upon the exercise of the rights under this Warrant.
Restrictions on Transfer of the Warrant and Shares; Compliance with Securities Laws. By acceptance of this Warrant, the Holder agrees to comply with the following:
Restrictions on Transfers. The Holder agrees not to make any sale, assignment, transfer, pledge or other disposition of all or any portion of this Warrant and the Shares issuable upon conversion of this Warrant (collectively, the “Securities”), or any beneficial interest therein, unless and until there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement.
Investment Representation Statement. Unless the rights under this Warrant are exercised pursuant to an effective registration statement under the Securities Act that includes the Shares with respect to which the Warrant was exercised, it shall be a condition to any exercise of the rights under this Warrant that the Holder shall have confirmed to the satisfaction of the Company in writing, as set forth in Exhibit A, that the Shares so purchased are being acquired solely for the Holder’s own account and not as a nominee for any other party, for investment and not with a view toward distribution or resale and that the Holder shall have confirmed such other matters related thereto as may be reasonably requested by the Company.
Securities Law Legend. The Securities shall be stamped or imprinted with a legend substantially similar to the following (in addition to any legend required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS IN ACCORDANCE WITH APPLICABLE REGISTRATION REQUIREMENTS OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
Instructions Regarding Transfer Restrictions. The Holder consents to the Company making a notation on its records and giving instructions to any transfer agent in order to implement the restrictions on transfer established in this Section.
Removal of Legend. The legend referring to federal and state securities laws identified in Section 4(c) stamped on a certificate evidencing the Shares and the stock transfer instructions and record notations with respect to such securities shall be removed and the Company shall issue a certificate without such legend to the holder of such securities if such securities are registered under the Securities Act.
Adjustments. Subject to the expiration of this Warrant pursuant to Section 6, the number and kind of shares purchasable hereunder and the Exercise Price therefor are subject to adjustment from time to time, as follows:
Merger or Reorganization. If at any time there shall be any reorganization, recapitalization, merger or consolidation (a “Reorganization”) involving the Company (other than as otherwise provided for herein or as would cause the expiration of this Warrant under Section 6) in which shares of the Company’s stock are converted into or exchanged for securities, cash or other property, then, as a part of such Reorganization, lawful provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, the kind and amount of securities, cash or other property of the successor corporation resulting from such Reorganization, equivalent in value to that which a holder of the Shares deliverable upon exercise of this Warrant would have been entitled in such Reorganization if the right to purchase the Shares hereunder had been exercised immediately prior to such Reorganization. In any such case, appropriate adjustment (as determined in good faith by the Board of Directors
of the successor corporation) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after such Reorganization to the end that the provisions of this Warrant shall be applicable after the event, as near as reasonably may be, in relation to any shares or other securities deliverable after that event upon the exercise of this Warrant.
Reclassification of Shares. If the securities issuable upon exercise of this Warrant are changed into the same or a different number of securities of any other class or classes by reclassification, capital reorganization, or otherwise (other than as otherwise provided for herein) (a “Reclassification”), then, in any such event, in lieu of the number of Shares which the Holder would otherwise have been entitled to receive, the Holder shall have the right thereafter to exercise this Warrant for a number of shares of such other class or classes of stock that a holder of the number of securities deliverable upon exercise of this Warrant immediately before that change would have been entitled to receive in such Reclassification, all subject to further adjustment as provided herein with respect to such other shares.
Subdivisions and Combinations. In the event that the outstanding shares of common stock are subdivided (by stock split, by payment of a stock dividend or otherwise) into a greater number of shares of such securities, the number of Shares issuable upon exercise of the rights under this Warrant immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately increased, and the Exercise Price shall be proportionately decreased, and in the event that the outstanding shares of common stock are combined (by reclassification or otherwise) into a lesser number of shares of such securities, the number of Shares issuable upon exercise of the rights under this Warrant immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately decreased, and the Exercise Price shall be proportionately increased.
Notice of Adjustments. Upon any adjustment in accordance with this Section, the Company shall give notice thereof to the Holder, which notice shall state the event giving rise to the adjustment, the Exercise Price as adjusted and the number of securities or other property purchasable upon the exercise of the rights under this Warrant, setting forth in reasonable detail the method of calculation of each. The Company shall, upon the written request of any Holder, furnish or cause to be furnished to such Holder a certificate setting forth (i) such adjustments, (ii) the Exercise Price at the time in effect and (iii) the number of securities and the amount, if any, of other property that at the time would be received upon exercise of this Warrant.
Expiration of the Warrant. This Warrant shall expire and shall no longer be exercisable as of 5:00 p.m., Pacific Standard Time, on September 23, 2020.
No Rights as a Stockholder. Nothing contained herein shall entitle the Holder to any rights as a stockholder of the Company or to be deemed the holder of any securities that may at any time be issuable on the exercise of the rights hereunder for any purpose
nor shall anything contained herein be construed to confer upon the Holder, as such, any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or any other rights of a stockholder of the Company until the rights under the Warrant shall have been exercised and the Shares purchasable upon exercise of the rights hereunder shall have become deliverable as provided herein.
Representations and Warranties of the Holder. By acceptance of this Warrant, the Holder represents and warrants to the Company as follows:
No Registration. The Holder understands that the Securities have not been registered under the Securities Act and have been issued pursuant to a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Holder’s representations as expressed herein or otherwise made pursuant hereto.
Investment Intent. The Holder is acquiring the Securities for investment for its own account, not as a nominee or agent, and not with a view to, or for resale in connection with, any distribution thereof. The Holder has no present intention of selling, granting any participation in, or otherwise distributing the Securities, nor does it have any contract, undertaking, agreement or arrangement for the same.
Investment Experience. The Holder has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, and has such knowledge and experience in financial or business matters so that it is capable of evaluating the merits and risks of its investment in the Company and protecting its own interests.
Speculative Nature of Investment. The Holder understands and acknowledges that an investment in the Company is highly speculative and involves substantial risks. The Holder can bear the economic risk of its investment and is able, without impairing its financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of its investment.
Access to Data. The Holder has had an opportunity to ask questions of officers of the Company, which questions were answered to its satisfaction. The Holder believes that it has received all the information that it considers necessary or appropriate for deciding whether to acquire the Securities. The Holder understands that any such discussions, as well as any information issued by the Company, were intended to describe certain aspects of the Company’s business and prospects, but were not necessarily a thorough or exhaustive description.
Accredited Investor. The Holder is an “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the Securities and Exchange Commission and agrees to submit to the Company such further assurances of such status as may be reasonably requested by the Company.
Restrictions on Resales. The Holder acknowledges that the Securities must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. The Holder is aware of the provisions of Rule 144 promulgated under the Securities Act (“Rule 144”), which permit resale of shares purchased in a private placement subject to the satisfaction of certain conditions, which may include, among other things, the availability of certain current public information about the Company; the resale occurring not less than a specified period after a party has purchased and paid for the security to be sold; the number of shares being sold during any three-month period not exceeding specified limitations; the sale being effected through a “broker’s transaction,” a transaction directly with a “market maker” or a “riskless principal transaction” (as those terms are defined in the Securities Act or the Exchange Act, as amended, and the rules and regulations promulgated thereunder); and the filing of a Form 144 notice, if applicable. The Holder acknowledges and understands that the Company may not be satisfying the current public information requirement of Rule 144 at the time the Holder wishes to sell the Securities and that, in such event, the Holder may be precluded from selling the Securities under Rule 144 even if the other applicable requirements of Rule 144 have been satisfied. The Holder acknowledges that, in the event the applicable requirements of Rule 144 are not met, registration under the Securities Act or an exemption from registration will be required for any disposition of the Securities. The Holder understands that, although Rule 144 is not exclusive, the Securities and Exchange Commission has expressed its opinion that persons proposing to sell restricted securities received in a private offering other than in a registered offering or pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales and that such persons and the brokers who participate in the transactions do so at their own risk.
Registration Rights. Within 30 days of the Effective Date, the Company shall file a resale registration statement on Form S-3 (the “Registration Statement”) with the SEC for the aggregate number of shares of Common Stock issuable upon exercise of this Warrant (collectively, “Registrable Securities”). The Company shall use commercially reasonable efforts to cause such Registration Statement to be effective within sixty (60) days after the Effective Date. In connection with the preparation of any such Registration Statement, and as a condition to the inclusion of the Holder’s Registrable Securities therein, (i) the Holder shall be required to furnish to the Company promptly following request such information as may be reasonably necessary for the Company’s completion of such Registration Statement and (ii) the Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to the applicable registration statement.
Legal Counsel. The Holder has had the opportunity to review this Warrant, the exhibits and schedules attached hereto and the transactions contemplated by this Warrant with its own legal counsel. The Holder is not relying on any statements or representations of the Company or its agents for legal advice with respect to this investment or the transactions contemplated by this Warrant.
Tax Advisors. The Holder has reviewed with its own tax advisors the U.S. federal, state and local and non-U.S. tax consequences of this investment and the transactions contemplated by this Warrant. With respect to such matters, the Holder relies solely on any such advisors and not on any statements or representations of the Company or any of its agents, written or oral. The Holder understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment and the transactions contemplated by this Warrant.
Miscellaneous.
Amendments. Except as expressly provided herein, neither this Warrant nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Warrant and signed by the Company and the holders of a Majority in Interest, which majority does not need to include the consent of the Holder. Any amendment, waiver, discharge or termination effected in accordance with this Section 12(a) shall be binding upon each holder of the Warrants, each future holder of the Warrants and the Company; provided, however, that no special consideration or inducement may be given to any such holder in connection with such consent that is not given ratably to all such holders, and that such amendment must apply to all such holders equally and ratably in accordance with the number of Shares issuable upon exercise of the Warrants. The Company shall promptly give notice to all holders of Warrants of any amendment effected in accordance with this Section 12(a).
Waivers. No waiver of any single breach or default shall be deemed a waiver of any other breach or default theretofore or thereafter occurring.
Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail (if to the Holder) or otherwise delivered by hand, messenger or courier service addressed:
if to the Holder, to the Holder at the Holder’s address, facsimile number or electronic mail address as shown in the Company’s records, as may be updated in accordance with the provisions hereof, or until any such Holder so furnishes an address, facsimile number or electronic mail address to the Company, then to and at the address, facsimile number or electronic mail address of the last holder of this Warrant for which the Company has contact information in its records; or
if to the Company, to the attention of the President or Chief Financial Officer of the Company at the Company’s address as shown on the signature page hereto, or at such other address as the Company shall have furnished to the Holder.
Each such notice or other communication shall for all purposes of this Warrant be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered, or (ii) if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent by facsimile, upon confirmation of facsimile transfer or, if sent by electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address. In the event of any conflict between the Company’s books and records and this Warrant or any notice delivered hereunder, the Company’s books and records will control absent fraud or error.
Governing Law. This Warrant and all actions arising out of or in connection with this Warrant shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law provisions of the State of Delaware, or of any other state.
Jurisdiction and Venue. Each of the Holder and the Company irrevocably consents to the exclusive jurisdiction and venue of any the Delaware Chancery Court in connection with any matter based upon or arising out of this Warrant or the matters contemplated herein, and agrees that process may be served upon them in any manner authorized by the laws of the State of Delaware for such persons.
Titles and Subtitles. The titles and subtitles used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant. All references in this Warrant to sections, paragraphs and exhibits shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits attached hereto.
Severability. If any provision of this Warrant becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Warrant, and such illegal, unenforceable or void provision shall be replaced with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, unenforceable or void provision. The balance of this Warrant shall be enforceable in accordance with its terms.
Rights and Obligations Survive Exercise of the Warrant. Except as otherwise provided herein, the rights and obligations of the Company and the Holder under this Warrant shall survive exercise of this Warrant.
Entire Agreement. Except as expressly set forth herein, this Warrant (including the exhibits attached hereto), the Subscription Agreement and the Convertible Bridge Instrument constitute the entire agreement and understanding of the Company and
the Holder with respect to the subject matter hereof and thereof, and supersede all prior agreements and understandings..
[Signature page follows]
(Signature Page to Warrant to Purchase Shares of Wave Systems Corp.)
The Company signs this Warrant as of the date stated on the first page.
WAVE SYSTEMS CORP.
By: _____________________________
Name: ___________________________
Title: ____________________________
EXHIBIT A
NOTICE OF EXERCISE
TO: Wave Systems Corp. (the “Company”)
Attention: President
Exercise. The undersigned elects to purchase the following pursuant to the terms of the attached warrant:
Number of shares:
Method of Exercise. The undersigned elects to exercise the attached warrant pursuant to:
| |
o
| A cash payment, and tenders herewith payment of the purchase price for such shares in full, together with all applicable transfer taxes, if any. |
| |
o
| The net issue exercise provisions of Section 2(B) of the attached warrant. |
Stock Certificate. Please issue a certificate or certificates representing the shares in the name of the undersigned.
Unexercised Portion of the Warrant. Please issue a new warrant for the unexercised portion of the attached warrant in the name of the undersigned.
Investment Intent. The undersigned represents and warrants that the aforesaid shares are being acquired for investment for its own account, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and that the undersigned has no present intention of selling, granting any participation in, or otherwise distributing the shares, nor does it have any contract, undertaking, agreement or arrangement for the same, and all representations and warranties of the undersigned in the attached warrant are true and correct as of the date hereof.
(Print name of the warrant holder)
(Signature)
(Name and title of signatory, if applicable)
(Date)
EXHIBIT 99.1
Wave Systems Announces Convertible Bridge Loan Financing
Lee, MA-September 28, 2015-Wave Systems Corp. (NASDAQ: WAVX) today announced that it has completed an unsecured convertible bridge financing consisting of a $490,000 convertible bridge instrument that is required to be repaid on or before December 24, 2015 with a repayment amount of $588,000. Noteholders were issued warrants to purchase up to 1,225,000 shares of Wave’s Class A common stock at an exercise price of $0.18 per share. These warrants cannot be exercised for a period six months after the effective date of the transaction and the warrants expire in September 2020.
If Wave fails to pay the repayment amount by the repayment date, the holders may (but are not required to) elect to convert the bridge investment into shares of our Class A common stock at a conversion rate based on the repayment amount divided by an amount equal to the lesser of $0.168 and 80% of Wave’s VWAP for the 5 trading day period prior to the date on which the conversion election is made. The bridge securities may not be converted into more than 19.9% of the outstanding common shares immediately preceding the transaction, unless a shareholder approval is obtained by Wave. The investors were granted resale registration rights in respect of the common stock issuable under the convertible bridge securities and warrants.
Security Research Associates acted as the placement agent in connection with the offering and will receive (i) a cash payment of $29,400 and (ii) warrants to purchase up to 73,500 shares of our Class A common stock at an exercise price of $0.18 per share. These warrants cannot be exercised for a period six months after the effective date of the transaction and these warrants expire in September 2020.
About Wave Systems
Wave Systems Corp. reduces the complexity, cost and uncertainty of authentication and 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 security capabilities built directly into endpoint computing platforms themselves. Wave is a leading expert in this growing trend and is leading the way with first-to-market solutions and helped shape standards through its board seat on the Trusted Computing Group.
About Security Research Associates
Security Research Associates (SRA) was founded in San Francisco in 1980 and today offers both investment banking and institutional brokerage services. A boutique firm by design, SRA works with a select group of portfolio managers from around the country and focuses on technology and life science companies in the micro and small cap arenas. For more information, visit www.sracap.com.
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.
|
| | |
Wave Systems Corp. | | Investor Relations |
Walter A. Shephard, CFO | | Tanya Kamatu |
(413) 243-1600 | | (212) 924-9800 |
investors@wave.com | | wavx@catalyst-ir.com |