Wave Systems Corp. (fka WAVXQ)

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24601, thanks



The Board of Directors recommends that the shareholders approve the proposal to amend the Restated Certificate of Incorporation of the Company to increase the number of authorized shares of Class A Common Stock from 75 million to 120 million shares. At May 28, 2003, 51,781,918 shares of Class A Common Stock were outstanding. There is no proposal to increase the number of shares of Class B Common Stock or Preferred Stock. If the proposed amendment is adopted, the first paragraph of Article Four of the Company's Restated Certificate of Incorporation will be amended to read as follows:

FOURTH. (1) The total number of shares of stock which the Corporation shall have authority to issue is One Hundred Fifteen Million (135,000,000) shares divided into the following classes:

(a) One Hundred Million (120,000,000) shares of Class A Common Stock with a par value of one cent ($0.01) per share;

(b) Thirteen Million (13,000,000) shares of Class B Common Stock with a par value of one cent ($0.01) per share; and

(c) Two Million (2,000,000) shares of Preferred Stock with a par value of one cent ($0.01) per share.