EXHIBIT 10.19

                              EMPLOYMENT AGREEMENT

 

         AGREEMENT made this tenth day of November, 1998, effective as of

November 15, 1998 (this "Agreement"), by and between WAVE SYSTEMS CORP., a

Delaware corporation, with a principal place of business at 480 Pleasant St.,

Lee, MA. (hereinafter referred to as "Employer"), and Steven K. Sprague, an

individual residing at 147 Reservoir Road, Lenox, MA (hereinafter referred to as

"Executive").

 

         WHEREAS, Employer wishes to retain Executive's skill, knowledge and

experience for the management of its operations and Executive wishes to make

such skills, knowledge and experience available to Employer;

 

         NOW, THEREFORE, in consideration of the mutual covenants hereinafter

set forth, and for other good and valuable consideration, the receipt and

sufficiency of which is hereby acknowledged, Employer and Executive hereby agree

as follows:

 

         Section 1.  Employment.

 

         1.1 Term. Employer shall employ Executive, and Executive shall serve

Employer as President and Chief Operating Officer, for a term beginning on

December 1, 1998 and ending on December 1, 1999, as such date may be extended to

the terms of this paragraph (the "Term of Employment"), unless earlier

terminated pursuant to the provisions of Section 5 of this Agreement. The Term

of Employment shall be automatically extended for consecutive additional periods

of one (1) year each unless either Employer or Executive provides written notice

to the other of its/his intention not to renew not less than sixty (60) days

prior to the expiration of the then current term.

 

         1.2      Duties.

 

                  (a) Capacity. During the Term of Employment, Executive shall

         assume and perform such executive, operational and financial duties and

         responsibilities commensurate with his position, and Executive shall

         further assume and perform such other reasonable executive and

         managerial responsibilities and duties as may be assigned to him

         hereafter from time to time by the Board of Directors of Employer.

         Executive shall comply with all applicable employment policies of

         Employer.

 

                  (b) Schedule. During the Term of Employment, Executive shall

         be employed on a full-time basis. Executive's working schedule during

         the Term of Employment shall correspond with the reasonable

         requirements of his position.

 

         1.3 Compensation and Benefits. During the Term of Employment, as

compensation for the services to be rendered during such period and the other

obligations undertaken by Executive hereunder, Executive shall be entitled to

the following compensation:

 

                  (a) Salary. Employer shall pay to Executive an annual minimum

         Base Salary of One Hundred and Eighty Five Thousand ($185,000.00)

         Dollars, payable in accordance with Employer's normal payroll

         procedures. Said annual minimum Base Salary may be increased from time

         to time by Employer in the sole and absolute discretion of the Board of

         Directors of Employer, but shall in no event be reduced by Employer

         without the prior consent of Executive.

 

                  (b) Bonuses. Executive shall be entitled to operational

         bonuses based upon performance. The bonus structure for the initial

         Term of Employment is set forth on Schedule A attached hereto and

         incorporated herein. The bonus structure for all future periods shall

         be subject to determination of Employer, based on similar methods and

         methodologies to those set forth on Schedule A.

 

                  (c) Expenses. During the Term of Employment, Employer shall

         pay or reimburse Executive for all reasonable and necessary business

         expenses incurred or paid by him in the

 

<PAGE>

 

          performance of his duties and responsibilities hereunder, subject to

          such reasonable substantiation or documentation as may be required by

          the Board of Directors from time to time.

 

               (d) Benefits. During the Term of Employment, Executive shall be

          entitled to four (4) weeks vacation and other such fringe benefits,

          including paid holidays, health, life and disability insurances, sick

          days, personal days, etc. in accordance with such executive benefit

          plans and policies as have been or may be established by Employer from

          time to time or which Employer is required to maintain by law.

 

               (e) Additional Benefits. In addition to all other benefits

          provided hereunder, Employer shall pay to Executive the benefits set

          forth on Schedule B.

 

         Section 2.  Development of Inventions, Improvements or Know-How.

 

         2.1 Information. During the Term of Employment, Executive shall keep

Employer informed of any and all promotional and advertising materials,

catalogs, brochures, plans, customer lists, supplier lists, candidate lists,

manuals, handbooks, inventions, discoveries, improvements, trade secrets, secret

processes and any technology, know-how or intellectual property made or

developed by him, in whole or in part, or conceived of by him, alone or with

others, which results from any work he may do for, or at the request of

Employer, or which relates in any way to the business operations, activities,

research, investigations or obligations of Employer (collectively, the

"Confidential Information").

 

         2.2 Assignment of Rights. Executive, and his heirs, assigns and

representatives shall assign, transfer and set over, and do hereby assign,

transfer and set over, to Employer, and its successors and assigns, all of his

and their right, title and interest in and to any and all Information, and any

patents, patent applications, copyrights, trademarks, tradenames or other

intellectual property rights relating thereto, provided or conceived by

Executive during the Term of Employment.

 

         Section 3. Non-Disclosure. The Executive shall keep secret and retain

in strictest confidence, and shall not use for the Executive's benefit or the

benefit of others, except in connection with the business and affairs of the

Employer (the "Business"), all Confidential Information and shall not disclose

any Confidential Information to anyone outside of the Employer, except for

Confidential Information which is at the time of receipt by the Executive, or

thereafter becomes, publicly known through no wrongful act of the Executive. The

obligations of Executive under this Section 3 shall survive any termination of

this Agreement for a period of five (5) years.

 

         Section 4. Covenant Not To Compete. In consideration of the Employer's

obligations hereunder, during the Term of Employment and during the Designated

Period (as defined herein), the Executive will not (i) anywhere within North

America, engage, directly or indirectly, alone or as a shareholder (other than

as a holder of less than five percent (5%) of the common stock of any publicly

traded corporation), partner, officer, director, executive or consultant in any

other business identified as a direct competitor in the Company's annual Form

10-K; (ii) divert to any competitor of the Employer any customer of the

Employer; or (iii) solicit or encourage any officer, executive, employee or

consultant of the Employer to leave its employ for employment by or with any

competitor of the Employer. If at any time the provisions of this Section 4

shall be determined to be invalid or unenforceable, by reason of being vague or

unreasonable as to area, duration or scope of activity, this Section 4 shall be

considered divisible and shall become and be immediately amended to only such

area, duration and scope of activity as shall be determined to be reasonable and

enforceable by the court or other body having jurisdiction over the matter, and

the Executive agrees that this Section 4 as so amended shall be valid and

binding as though any invalid or unenforceable provision had not been included

herein. The term "Designated Period" shall mean a period of two (2) years

immediately following any termination of this Agreement and/or Executive's

employment hereunder, whether voluntary or involuntary and regardless of the

reason for termination.

 

         Section 5.  Termination of Agreement.

 

         5.1.     Right to Terminate.

<PAGE>

 

                  (a) Death. This Agreement shall terminate immediately upon

Executive's death.

 

                  (b) Disability. In the event that Executive, because of

         accident, disability or physical or mental illness, is incapable of

         performing his duties hereunder, unless otherwise prohibited by

         applicable law, Employer shall have the right to terminate Executive's

         employment hereunder upon thirty (30) days prior written notice to

         Executive. For purposes of this Section 5.1(b), Executive shall be

         deemed to have become incapable of performing his duties hereunder if

         he shall have been incapable of so doing for (i) a continuous period of

         one hundred eighty (180) days and remains so incapable at the end of

         such one hundred eighty (180) day period; or (ii) periods amounting in

         the aggregate to one hundred eighty (180) days within any one period of

         three hundred sixty-five (365) days and remains so incapable at the end

         of such aggregate period of one hundred eighty (180) days.

 

                  (c) Cause. Employer shall have the right to terminate

         Executive's employment hereunder for cause immediately without prior

         notice to Executive. The term "cause" shall mean (i) misappropriation

         of material business opportunity, (ii) fraud, embezzlement, or

         misappropriation of funds involving assets of Employer or any of their

         customers, (iii) commission of or conviction with respect to any

         criminal activity which materially affects Executive's ability to

         perform his duties or materially harms the reputation of Employer or

         (iv) final written determination by the Board of Directors of Employer

         after thirty (30) days notice to Executive and the opportunity for

         Executive to be heard by the Board of Directors of (A) Executive's

         willful failure or refusal to comply with material and reasonable Board

         of Directors directives or to render the services required under this

         Agreement (except in the case of an accident, disability or physical or

         mental illness) or (B) Executive's material breach of this Agreement.

 

                  (d) Deemed Termination. Executive shall have the right to

         terminate this Agreement and resign from his employment with Employer

         by written notice to Executive within thirty (30) days of the effective

         date of any material adverse change by Employer in Executive's

         compensation, responsibility, location of employment, or other material

         terms of employment except as specifically contemplated herein or

         within thirty (30) days of the occurrence of a material breach by

         Employer of the terms and conditions of this Agreement.

 

                  (e) Other. Employer and Executive shall each have the right to

         terminate this Agreement and Executive's employment hereunder for any

         other reason not specified in this Section 5.1, with or without cause,

         upon thirty (30) days prior written notice to the other party.

 

                  (f)      Rights and Obligations of Executive Upon Termination.

 

                           (i) Upon the termination of Executive's employment

                  pursuant to Sections 5.1(a), (b), (c), (d), or (e), of this

                  Agreement, Employer shall not have any further obligation to

                  Executive under this Agreement except (other than as provided

                  in Section 5.1(f)(ii) below) to distribute to Executive his

                  Base Salary due pursuant to Section 1.3(a) hereof (and accrued

                  vacation pay) up to the date of termination.

 

(ii) In the event of a Deemed Termination as provided for in Section 5.1(d)

     above or in the event that Executive shall terminate this Agreement and

     Executive's employment hereunder without cause pursuant to Section 5.1(e)

     above, Employer agrees (i) to pay to Executive as severance, on the date of

     such termination, a lump sum payment in an amount equal to three (3) years

     of the Executive's annual Base Salary then in effect, and (ii) continue the

     Executive's health insurance and other benefits set forth on Schedule B for

     a period equal to the remaining Term of Employment then in effect.

 

                           (iii) Upon the termination of this Agreement and

                  Executive's employment hereunder, whether voluntary or

                  involuntary, and regardless of the reason for or manner of

                  termination, all of the obligations of Executive under

                  Sections 2.2,3, and 4 shall remain in full force and effect

                  and shall survive the termination of this Agreement to the

                  extent set forth herein.

<PAGE>

 

         Section 6.  Miscellaneous.

 

         6.1      Remedies.

 

                  (a) Injunctions. Inasmuch as any breach of, or failure to

         comply with, this Agreement will cause serious and substantial damage

         to Employer, if Executive should in any way breach or fail to comply

         with the terms of this Agreement, Employer shall be entitled to an

         injunction restraining Executive from such breach or failure.

 

(b)      Cumulative Remedies. All remedies of Employer expressly provided for

         herein are cumulative of any and all other remedies now existing at law

         or in equity. Employer shall, in addition to the remedies herein

         provided, be entitled to avail itself of all such other remedies as may

         now or hereafter exist at law or in equity for compensation, and for

         the specific enforcement of the covenants contained herein. Resort to

         any remedy provided for hereunder or provided by law shall not prevent

         the concurrent or subsequent employment of any other appropriate remedy

         or remedies, or preclude the recovery by Employer of monetary damages.

 

         6.2 Amendment. This Agreement may be amended only by a writing duly

executed by the parties hereto.

 

         6.3 Entire Agreement. This Agreement and any other agreements expressly

referred to herein set forth the entire understanding of the parties hereto

regarding the subject matter hereof and supersede all prior contracts,

agreements, arrangements, communications, discussions, representations and

warranties, whether oral or written, between the parties regarding the subject

matter hereof.

 

         6.4 Notice. For purposes of this Agreement, notices and communications

provided or permitted to be given hereunder shall be deemed to have been given

when (i) made by telex, telecopy or facsimile transmission; or (ii) sent by

overnight courier or mailed by United States registered or certified mail,

return receipt requested, postage prepaid to the parties at their addresses set

forth below their signature to this Agreement, or at such other addresses as

either may designate in writing as aforesaid from time to time.

 

         6.5 Assignment. This Agreement is personal as to Executive and shall

not be assignable by Executive. Employer may assign its rights under this

Agreement to any affiliate or to any other person, firm, corporation, or other

entity which may acquire all or substantially all of the business which is now

or hereafter conducted by Employer, provided, that any such assignment shall be

subject to the express terms and conditions hereof.

 

         6.6 Governing Law. This Agreement shall in all respects be governed by,

and construed in accordance with, the laws of the State of New York.

             

         6.7 Severability. Each section and subsection of this Agreement

constitutes a separate and distinct provision hereof. It is the intent of the

parties hereto that the provisions of this Agreement be enforced to the fullest

extent permissible under the laws and public policies applicable in each

jurisdiction in which enforcement is sought. Accordingly, if any provision of

this Agreement shall be adjudicated to be invalid, ineffective or unenforceable,

the remaining provisions shall not be affected thereby. The invalid, ineffective

or unenforceable provisions shall, without further action by the parties, be

automatically amended to affect the original purpose and intent of the invalid,

ineffective and unenforceable provision; provided, however, that such amendment

shall apply only with respect to the operation of such provision in the

particular jurisdiction with respect to which such adjudication is made.

 

         6.8 Waiver. The failure of Employer to insist upon strict adherence to

any term of this Agreement on any occasion shall not be construed as a waiver of

or deprive Employer of the right thereafter to insist upon strict adherence to

that term or any other term of this Agreement. Any waiver by Employer must be in

writing and signed by a duly authorized representative of Employer other than

Executive.

<PAGE>

 

         6.9 Headings. The headings of this Agreement are solely for convenience

of reference and shall not be given any effect in the construction or

interpretation of this Agreement.

 

         6.10 Binding Effect. Subject to the foregoing, this Agreement shall be

binding upon and inure to the benefit of the respective parties hereto and their

heirs, personal representatives, successors and permitted assigns.

 

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be

duly executed and delivered as of the date first above written.

 

 

 

                                   EMPLOYER:

                                   WAVE SYSTEMS CORP.

 

 

                                   By:      /s/ Gerard T. Feeney

                                            Name:  Gerard T. Feeney

                                            Title: SVP Finance & Admin, CFO

 

                                   Address for Notices:

 

                                   Wave Systems Corp.

                                   480 Pleasant St.

                                   Lee, MA  01238

 

 

 

                                   EXECUTIVE / Employee:

 

                                   /s/ Steven Sprague

                                   Steven K. Sprague, President & COO

 

 

                                   Address for Notices:

 

                                   Steven Sprague

                                   147 Reservoir Road

                                   Lenox, MA