THE ISSUER HAS FILED A REGISTRATION STATEMENT (INCLUDING A PROSPECTUS) WITH THE
COMMISSION FOR THE OFFERING TO WHICH THIS COMMUNICATION RELATES. BEFORE YOU
INVEST, YOU SHOULD READ THE PROSPECTUS IN THAT REGISTRATION STATEMENT AND OTHER
DOCUMENT THE ISSUER HAS FILED WITH THE COMMISSION FOR MORE COMPLETE INFORMATION
ABOUT THE ISSUER AND THIS OFFERING. YOU MAY GET THESE DOCUMENTS FOR FREE BY
VISITING EDGAR OR THE COMMISSION'S WEB SITE AT WWW.SEC.GOV. ALTERNATIVELY, THE
ISSUER, ANY UNDERWRITER OR DEALER PARTICIPATING IN THE OFFERING WILL ARRANGE TO
SEND YOU THE PROSPECTUS IF YOU REQUEST IT BY CALLING THE ISSUER.

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this "Agreement") is dated as of May 8,
2012, between TranSwitch Corporation, a Delaware corporation (the "Company"),
and each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a "Purchaser" and collectively the "Purchasers").

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), the Company desires to issue and sell
to each Purchaser, and each Purchaser, severally and not jointly, desires to
purchase from the Company, securities of the Company as more fully described in
this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1           Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:

 

"Accountants" shall have the meaning assigned to such term in Section 3.1(o).

 

"Acquiring Person" shall have the meaning assigned to such term in Section 4.5.

 

"Actions" shall have the meaning assigned to such term in Section 3.1(p).

 

"Affiliate" means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person as such terms are used in and construed under Rule 405 under the
Securities Act.

 

"Board of Directors" means the board of directors of the Company.

 

 

 

 

"Business Day" means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

 

"Closing" means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.

 

"Closing Date" means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers' obligations to pay the Subscription
Amount and (ii) the Company's obligations to deliver the Securities, in each
case, have been satisfied or waived.

 

"Code” shall have the meaning assigned to such term in Section 3.1(ff).

 

"Commission" means the United States Securities and Exchange Commission.

 

"Common Stock" means the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed.

 

"Common Stock Equivalents" means any securities of the Company which would
entitle the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

 

"Company Counsel" means Pierce Atwood LLP, with offices located at 100 Summer
Street, Suite 2250, Boston, MA 02111.

 

"Environmental Laws” shall have the meaning assigned to such term in Section
3.1(x).

 

"ERISA" shall have the meaning assigned to such term in Section 3.1(ff).

 

"Exchange" means the Nasdaq Capital Market.

 

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

2

 

 

"Federal Reserve Board" shall have the meaning assigned to such term in Section
3.1(gg).

 

"Intellectual Property " shall have the meaning assigned to such term in Section
3.1(w).

 

"Investment Company Act" shall have the meaning assigned to such term in Section
3.1(cc).

 

"Issuer Free Writing Prospectus" means any "issuer free writing prospectus," as
defined in Rule 433 under the Securities Act ("Rule 433"), relating to the
Securities in the form filed or required to be filed with the Commission or, if
not required to be filed, in the form retained in the Company's records pursuant
to Rule 433(g) under the Securities Act.

 

"Material Adverse Effect" shall have the meaning assigned to such term in
Section 3.1(f).

 

"Money Laundering Laws" shall have the meaning assigned to such term in Section
3.1(dd).

 

"Off Balance Sheet Transaction" shall have the meaning assigned to such term in
Section 3.1(ee).

 

"Per Share Purchase Price" equals the greater of $2.07, or the price that will
be the consolidated closing bid price on May 10, 2012, subject to adjustment for
reverse and forward stock splits, stock dividends, stock combinations and other
similar transactions of the Common Stock that occur after the date of this
Agreement.

 

"Permits" shall have the meaning assigned to such term in Section 3.1(q).

 

"Person" shall have the meaning assigned to such term in Section 3.1(n).

 

3

 

 

"Prospectus" means the final prospectus filed for the Registration Statement
(including all documents incorporated therein by reference, and as such
Prospectus may be supplemented by the Prospectus Supplement). Any reference
herein to the Registration Statement (as defined below), the Prospectus or any
amendment or supplement thereto shall be deemed to refer to and include the
documents incorporated by reference therein which were filed under the Exchange
Act on or before the date of this Agreement, and any reference herein to the
terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement or the Prospectus or any amendment or supplement thereto shall be
deemed to refer to and include the filing after the execution hereof of any
document under the Exchange Act deemed to be incorporated by reference therein
(the “Incorporated Documents”).

 

"Prospectus Supplement" means the supplement to the Prospectus complying with
Rule 424(b) of the Securities Act that is filed with the Commission and
delivered by the Company to each Purchaser at the Closing.

 

"Purchaser Party" shall have the meaning ascribed to such term in Section 4.8.

 

"Registration Statement" means the effective registration statement with
Commission file No. 333-162609 which registers the sale of the Shares to the
Purchasers.

 

"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

"Rule 424" means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

"Sarbanes Oxley Act” shall have the meaning assigned to such term in Section
3.1(o).

 

"SEC Reports" means all reports, schedules, forms, statements and other
documents required to be filed by the Company under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15( d) thereof, for the two
years preceding the date hereof (or such shorter period as the Company was
required by law or regulation to file such material) (including the exhibits
thereto and documents incorporated by reference therein, together with the
Prospectus and the Prospectus Supplement).

 

"Securities" means the Shares.

 

"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

4

 

 

"Shares" means the shares of Common Stock issued or issuable to each Purchaser
pursuant to this Agreement.

 

"Short Sales" means all "short sales" as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).

 

"Subscription Amount" means, as to each Purchaser, the aggregate amount to be
paid for Shares purchased hereunder as specified below such Purchaser's name on
the signature page of this Agreement and next to the heading "Subscription
Amount," in United States dollars and in immediately available funds.

 

"Trading Day" means a day on which the Exchange is open for trading.

 

"Transaction Documents" means this Agreement, and any other documents or
agreements executed in connection with the transactions contemplated hereunder.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1          Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell,
and the Purchasers, severally and not jointly, agree to purchase, up to an
aggregate of $333,580 of Shares. Each Purchaser shall deliver to the Company,
via wire transfer of immediately available funds equal to such Purchaser's
Subscription Amount as set forth on the signature page hereto executed by such
Purchaser and the Company shall deliver to each Purchaser its respective Shares
as determined pursuant to Section 2.2(a), and the Company and each Purchaser
shall deliver the other items set forth in Section 2.2 deliverable at the
Closing. Upon satisfaction of the covenants and conditions set forth in Sections
2.2 and 2.3, the Closing shall occur at the offices of Company Counsel or such
other location as the parties shall mutually agree.

 

2.2          Deliveries.

 

(a)          On or prior to the Closing Date, the Company shall deliver or cause
to be delivered to each Purchaser the following:

 

(i)          this Agreement duly executed by the Company;

 

(ii)          a legal opinion of Company Counsel, substantially in the form of
Exhibit A attached hereto;

 

5

 

 

(iii)          a copy of the irrevocable instructions to the Company's transfer
agent instructing the transfer agent to deliver, via the Depository Trust
Company Deposit Withdrawal Agent Commission System ("DWAC") or otherwise, Shares
equal to such Purchaser's Subscription Amount divided by the Per Share Purchase
Price, registered in the name of such Purchaser; and

 

(iv)          the Prospectus and Prospectus Supplement (which may be delivered
in accordance with Rule 172 under the Securities Act).

 

(b)           On or prior to the Closing Date, each Purchaser shall deliver or
cause to be delivered to the Company the following:

 

(i)          this Agreement duly executed by such Purchaser; and

 

(ii)          such Purchaser's Subscription Amount by wire transfer to the
account as specified in writing by the Company.

 

2.3          Closing Conditions.

 

(a)          The obligations of the Company hereunder in connection with the
Closing are subject to the following conditions being met:

 

(i)          the accuracy in all material respects on the Closing Date of the
representations and warranties of the Purchasers contained herein (unless as of
a specific date therein);

 

(ii)          all obligations, covenants and agreements of each Purchaser
required to be performed at or prior to the Closing Date shall have been
performed; and

 

(iii)          the delivery by each Purchaser of the items set forth in Section
2.2(b) of this Agreement.

 

(b)          The respective obligations of the Purchasers hereunder in
connection with the Closing are subject to the following conditions being met:

 

(i)          the accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained herein (unless as of a
specific date therein);

 

(ii)          all obligations, covenants and agreements of the Company required
to be performed at or prior to the Closing Date shall have been performed;

 

(iii)           the delivery by the Company of the items set forth in Section
2.2(a) of this Agreement;

 

6

 

 

(iv)           there shall have been no Material Adverse Effect with respect to
the Company since the date hereof; and

 

(v)           from the date hereof to the Closing Date, trading in the Common
Stock shall not have been suspended by the Commission or the Exchange (except
for any suspension of trading of limited duration agreed to by the Company,
which suspension shall be terminated prior to the Closing), and, at any time
prior to the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported by such
service, or on any trading market, nor shall a banking moratorium have been
declared either by the United States or New York State authorities nor shall
there have occurred any material outbreak or escalation of hostilities or other
national or international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of each Purchaser, makes it impracticable or inadvisable to
purchase the Securities at the Closing.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1          Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with each of the Purchasers that as of
the date of this Agreement, unless such representation, warranty or agreement
specifies a different time:

 

(a)           Registration Statement and Prospectus. The Company and, assuming
no act or omission on the part of a Purchaser that would make such statement
untrue, the transactions contemplated by this Agreement meet the requirements
for and comply with the conditions for the use of Form S-3 under the Securities
Act. The Registration Statement has been filed with the Commission and has been
declared effective under the Securities Act. No stop order of the Commission
preventing or suspending any Prospectus, or the effectiveness of the
Registration Statement, has been issued, and, to the Company’s knowledge, no
proceedings for such purpose have been instituted by the Commission. The
Registration Statement and, assuming no act or omission on the part of a
Purchaser that would make such statement untrue, the offer and sale of Shares as
contemplated hereby meet the requirements of Rule 415 under the Securities Act
and comply in all material respects with Rule 415. Any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement have been so described or filed. Copies of the
Registration Statement, the Prospectus, and any such amendments or supplements
and all documents incorporated by reference therein that were filed with the
Commission on or prior to the date of this Agreement have been delivered, or are
available through EDGAR, to each Purchaser and its counsel. The Company has not
distributed and, prior to the Closing Date, will not distribute any offering
material in connection with the offering or sale of the Shares other than the
Registration Statement and the Prospectus and any Issuer Free Writing Prospectus
to which each Purchaser has consented, any such consent not to be unreasonably
withheld, conditioned or delayed. The Common Stock is currently listed on the
Exchange under the trading symbol “TXCC”. Except as disclosed in the
Registration Statement, including the Incorporated Documents, the Company has
not, in the 12 months preceding the date hereof, received notice from the
Exchange to the effect that the Company is not in compliance with the listing or
maintenance requirements. Except as disclosed in the Registration Statement,
including the Incorporated Documents, or the Prospectus, the Company has no
reason to believe that it will not in the foreseeable future continue to be in
compliance with all such listing and maintenance requirements.

 

7

 

 

(b)          No Misstatement or Omission. The Registration Statement, when it
became effective, and the Prospectus, and any amendment or supplement thereto,
on the date of such Prospectus or amendment or supplement, conformed and will
conform in all material respects with the requirements of the Securities Act. On
the Closing Date, the Registration Statement and the Prospectus, as of such
date, will conform in all material respects with the requirements of the
Securities Act. The Registration Statement, when it became effective, did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Prospectus and any amendment and supplement thereto, on the date
thereof and on the Closing Date, did not or will not include an untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The documents incorporated by reference in the Prospectus did
not, and any further documents filed and incorporated by reference therein will
not, when filed with the Commission, contain an untrue statement of a material
fact or omit to state a material fact required to be stated in such document or
necessary to make the statements in such document, in light of the circumstances
under which they were made, not misleading. The foregoing shall not apply to
statements in, or omissions from, any such document made in reliance upon, and
in conformity with, information furnished to the Company by a Purchaser
expressly for use therein.

 

(c)          Conformity with Exchange Act. The documents incorporated by
reference in the Registration Statement, the Prospectus or any amendment or
supplement thereto, when such documents were or are filed with the Commission
under the Exchange Act, conformed or will conform in all material respects with
the requirements of the Exchange Act, as applicable.

 

8

 

 

(d)          Financial Information. The financial statements of the Company
included or incorporated by reference in the Registration Statement and the
Prospectus, together with the related notes and schedules, complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto as in
effect as of the time of filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates indicated and the results of operations
and cash flows of the Company for the periods specified (subject, in the case of
unaudited statements, to normal year-end audit adjustments which will not be
material, either individually or in the aggregate); the other financial data
with respect to the Company contained or incorporated by reference in the
Registration Statement and the Prospectus are accurately and fairly presented
and prepared on a basis consistent with the financial statements and books and
records of the Company; there are no financial statements (historical or pro
forma) that are required to be included or incorporated by reference in the
Registration Statement, or the Prospectus that are not included or incorporated
by reference as required; the Company does not have any material liabilities or
obligations, direct or contingent (including any off-balance sheet obligations),
not described in the Registration Statement (including the exhibits thereto),
and the Prospectus which are required to be described in the Registration
Statement or the Prospectus (including exhibits thereto and Incorporated
Documents); and all disclosures contained or incorporated by reference in the
Registration Statement and the Prospectus regarding “non-GAAP financial
measures” (as such term is defined by the rules and regulations of the
Commission) comply in all material respects with Regulation G of the Exchange
Act and Item 10 of Regulation S-K under the Securities Act, to the extent
applicable.

 

(e)          Conformity with EDGAR Filing. The Prospectus delivered to each
Purchaser in connection with the sale of the Shares pursuant to this Agreement
will be identical to the versions of the Prospectus created to be transmitted to
the Commission for filing via EDGAR, except to the extent permitted by
Regulation S-T.

 

(f)          Organization. The Company is, and will be, duly organized, validly
existing as a corporation and in good standing under the laws of its
jurisdiction of organization. The Company is, and will be, duly qualified as a
foreign corporation for transaction of business and in good standing under the
laws of each other jurisdiction in which its ownership or lease of property or
the conduct of its businesses requires such qualification, and has all corporate
power and authority necessary to own or hold its properties and to conduct its
businesses as described in the Registration Statement and the Prospectus, except
where the failure to be so qualified or in good standing or have such power or
authority would not, individually or in the aggregate, have or reasonably be
expected to have, a material adverse effect on the business, operations,
properties, financial condition, prospects, stockholder’s equity or results of
operations of the Company taken as a whole, or prevent or materially interfere
with consummation of the transactions contemplated hereby (a “Material Adverse
Effect”).

 

(g)          Subsidiaries. The Company does not have any “significant
subsidiaries” (as such term is defined in Rule 1-02 of Regulation S-X). Except
as set forth in the Registration Statement and in the Prospectus, the Company
owns, directly or indirectly, all of the equity interests of its subsidiaries
free and clear of any lien, charge, security interest, encumbrance, right of
first refusal or other restriction, and all the equity interests of the
subsidiaries are validly issued and are fully paid, nonassessable and free of
preemptive and similar rights.

 

9

 

 

(h)          No Violation or Default. Except as set forth in the Registration
Statement or the Prospectus, the Company is not (i) in violation of its charter
or by-laws or similar organizational documents; (ii) in default, and no event
has occurred that, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which the Company
is bound or to which any of the property or assets of the Company is subject; or
(iii) in violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority
having jurisdiction over the Company, except, in the case of each of clauses
(ii) and (iii) above, for any such violation or default that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The execution and delivery of this Agreement by the Company and
the performance of its obligations hereunder shall not cause a default under any
agreement or instrument to which the Company is a party or by which the Company
is bound or to which any of the property or assets of the Company is subject,
except for any such default that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

  

(i)          No Material Adverse Change. Subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus,
there has not been (i) any Material Adverse Effect, (ii) other than this
Agreement, any transaction which is material to the Company taken as a whole,
(iii) any obligation or liability, direct or contingent (including any
off-balance sheet obligations), incurred by the Company which is material to the
Company taken as a whole, (iv) any material change in the capital stock (other
than (a) as a result of the sale of Shares, (b) as described in a proxy
statement filed on Schedule 14A or a Registration Statement on Form S-4 and
otherwise publicly announced, or (c) changes in the number of outstanding shares
of Common Stock of the Company due to the issuance of shares upon the exercise
or conversion of securities exercisable for, or convertible into, shares of
Common Stock outstanding on the date hereof, or the vesting of restricted stock
units outstanding on the date hereof) or outstanding long-term indebtedness of
the Company, (v) any dividend or distribution of any kind declared, paid or made
on the capital stock of the Company, other than in each case above (A) in the
ordinary course of business, (B) as otherwise disclosed in the Registration
Statement or Prospectus (including any document deemed incorporated by reference
therein) or (C) where such matter, item, change, or development would not make
the statements in the Registration Statement or the Prospectus contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;

 

10

 

 

(j)          Capitalization. The issued and outstanding shares of capital stock
of the Company have been validly issued, are fully paid and non-assessable. The
Company has an authorized, issued and outstanding capitalization as set forth in
the Registration Statement and the Prospectus as of the dates referred to
therein (other than the grant of additional options or restricted stock units or
stock awards under the Company’s existing stock incentive plans, or changes in
the number of outstanding Common Stock of the Company due to the issuance of
shares upon the exercise or conversion of securities exercisable for, or
convertible into, Common Stock outstanding or as a result of the issuance of
Shares) and such authorized capital stock conforms in all material respects to
the description thereof set forth in the Registration Statement and the
Prospectus. Except as disclosed in or contemplated by the Registration Statement
or the Prospectus, as of the date referred to therein, the Company did not have
reserved or available for issuance any shares of Common Stock in respect of
options, or any rights or warrants to subscribe for, or any securities or
obligations convertible into, or exchangeable for, or any contracts or
commitments to issue or sell, any shares of capital stock or other securities.

 

(k)          Authorization; Enforceability. The Company has full legal right,
power and authority to enter into this Agreement and perform the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, except to
the extent that (i) enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and by general equitable principles and (ii) the indemnification and
contribution provisions of Section 4.7 hereof may be limited by federal or state
securities laws and public policy considerations in respect thereof.

 

(l)          Authorization of Shares. The Shares, when issued and delivered
pursuant to the terms approved by the board of directors of the Company or a
duly authorized committee thereof, or a duly authorized executive committee,
against payment therefor as provided herein, will be duly and validly authorized
and issued and fully paid and nonassessable, free and clear of any pledge, lien,
encumbrance, security interest or other claim (other than any pledge, lien,
encumbrance, security interest or other claim arising from an act or omission of
a Purchaser), including any statutory or contractual preemptive rights, resale
rights, rights of first refusal or other similar rights, and will be registered
pursuant to Section 12 of the Exchange Act. The Shares, when issued, will
conform in all material respects to the description thereof set forth in or
incorporated into the Prospectus.

 

(m)          No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or any
governmental or regulatory authority having jurisdiction over the Company is
required for the execution, delivery and performance by the Company of this
Agreement, or the issuance and sale by the Company of the Shares as contemplated
hereby, except for the registration of the Shares under the Securities Act, and
such consents, approvals, authorizations, orders and registrations or
qualifications as may be required under the Exchange Act and applicable state
securities laws or by the Exchange in connection with the sale of the Shares.

 

11

 

 

(n)          No Preferential Rights. Except as set forth in the Registration
Statement or the Prospectus, (i) no person, as such term is defined in Rule 1-02
of Regulation S-X promulgated under the Securities Act (each, a “Person”), has
the right, contractual or otherwise, to cause the Company to issue or sell to
such Person any Common Stock or shares of any other capital stock or other
securities of the Company (other than upon the exercise of options or warrants
to purchase Common Stock, upon the vesting of restricted stock units, or upon
the exercise of options or vesting of restricted stock units that may be granted
from time to time under the Company’s stock incentive plans), (ii) no Person has
any preemptive rights, rights of first refusal, or any other rights (whether
pursuant to a “poison pill” provision or otherwise) to purchase any Common Stock
or shares of any other capital stock or other securities of the Company from the
Company which have not been duly waived with respect to the offering
contemplated hereby, and (iii) no Person has the right, contractual or
otherwise, to require the Company to register under the Securities Act any
Common Stock or shares of any other capital stock or other securities of the
Company, or to include any such shares or other securities in the Registration
Statement or the offering contemplated thereby, whether as a result of the
filing or effectiveness of the Registration Statement or the sale of the Shares
as contemplated thereby or otherwise, except for such rights as have been waived
on or prior to the date hereof.

 

(o)          Independent Registered Public Accounting Firm. Each of Marcum LLP
and UHY LLP (the “Accountants”), whose report on the financial statements of the
Company are filed with the Commission as part of the Company’s most recent
Annual Report on Form 10-K filed with the Commission and incorporated into the
Registration Statement, are (in the case of Marcum LLP) and, during the periods
covered by their respective reports, were independent public registered
accounting firms within the meaning of the Securities Act and the Public Company
Accounting Oversight Board (United States). To the Company’s knowledge, Marcum
LLP is not in violation of the auditor independence requirements of the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) with respect to the
Company.

 

(p)          No Litigation. Except as set forth in the Registration Statement or
the Prospectus, there are no legal, governmental or regulatory actions, suits or
proceedings pending, nor, to the Company’s knowledge, any legal, governmental or
regulatory investigations, to which the Company is a party or to which any
property of the Company is the subject that, individually or in the aggregate,
if determined adversely to the Company, would reasonably be expected to have a
Material Adverse Effect or materially and adversely affect the ability of the
Company to perform its obligations under this Agreement (collectively, the
“Actions”); to the Company’s knowledge, no such Actions are threatened by any
governmental or regulatory authority or threatened by others that, individually
or in the aggregate, if determined adversely to the Company, would reasonably be
expected to have a Material Adverse Effect; and (i) there are no current or
pending legal, governmental or regulatory actions, suits, proceedings or, to the
Company’s knowledge, investigations that are required under the Securities Act
to be described in the Prospectus that are not described in the Prospectus; and
(ii) there are no contracts or other documents that are required under the
Securities Act to be filed as exhibits to the Registration Statement that are
not so filed.

 

12

 

 

(q)          Licenses and Permits. Except as set forth in the Registration
Statement or the Prospectus, the Company possesses or has obtained, all
governmental licenses, certificates, consents, orders, approvals, permits and
other authorizations necessary for the ownership or lease of its properties or
the conduct of its businesses as described in the Registration Statement and the
Prospectus (the “Permits”), except where the failure to possess, obtain or make
the same would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Except as disclosed in the Registration
Statement or the Prospectus, the Company has not received written notice of any
proceeding relating to revocation or modification of any such Permit, except
where such revocation or modification would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

(r)          No Material Defaults. The Company has not defaulted on any
installment on indebtedness for borrowed money or on any rental or one or more
long-term leases, which defaults, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect. The Company has not
filed a report pursuant to Section 13(a) or 15(d) of the Exchange Act since the
filing of its last Annual Report on Form 10-K, indicating that it (i) has failed
to pay any dividend or sinking fund installment on preferred stock or (ii) has
defaulted on any installment on indebtedness for borrowed money or on any rental
or one or more long-term leases.

 

(s)          Certain Market Activities. Neither the Company, nor, to the
Company’s knowledge, any of its directors, officers or controlling persons has
taken, directly or indirectly, any action designed, or that has constituted or
might reasonably be expected to cause or result in, under the Exchange Act or
otherwise, the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.

 

(t)          Broker/Dealer Relationships. Neither the Company nor any of its
related entities (i) is required to register as a “broker” or “dealer” in
accordance with the provisions of the Exchange Act or (ii) directly or
indirectly through one or more intermediaries, controls or is a “person
associated with a member” or “associated person of a member” (within the meaning
set forth in the Financial Industry Regulatory Authority Manual).

 

(u)          Taxes. Except as disclosed in the Registration Statement or the
Prospectus, the Company has filed all federal, state, local and foreign tax
returns which have been required to be filed and paid all taxes shown thereon
through the date hereof, to the extent that such taxes have become due and are
not being contested in good faith, except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect. Except as otherwise
disclosed in or contemplated by the Registration Statement or the Prospectus, no
tax deficiency has been determined adversely to the Company which has had, or
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. The Company has no knowledge of any federal, state or
other governmental tax deficiency, penalty or assessment which has been asserted
or threatened against it which would have a Material Adverse Effect.

 

13

 

 

(v)          Title to Property. Except as set forth in the Registration
Statement or the Prospectus, the Company has good and valid title in fee simple
to all items of real property and good and marketable title to all personal
property (excluding Intellectual Property, which is addressed below) described
in the Registration Statement or Prospectus as being owned by it that are
material to the business of the Company, in each case free and clear of all
liens, encumbrances and claims, except for any failure to have good and valid
title for any liens, encumbrances and claims that (i) do not materially
interfere with the use made of such property by the Company or (ii) would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.

 

(w)          Intellectual Property. Except as set forth in the Registration
Statement or the Prospectus, to the Company’s knowledge, excluding patents that
cover industry standards supported by any of the Company’s products, the Company
owns or possesses adequate enforceable rights to use all patents, patent
applications, trademarks (both registered and unregistered), service marks,
trade names, trademark registrations, service mark registrations, copyrights,
licenses and know-how (including trade secrets and other unpatented and/or
unpatentable proprietary information, systems or procedures) (collectively, the
“Intellectual Property”), necessary for the conduct of its business as conducted
as of the date hereof, except to the extent that the failure to own or possess
adequate rights to use such Intellectual Property would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect; the
Company has not received any written notice of any claim of infringement or
conflict which asserted Intellectual Property rights of others, which
infringement or conflict would reasonably be expected to result in a Material
Adverse Effect; there are no pending, or to the Company’s knowledge, threatened
judicial proceedings or interference proceedings against the Company challenging
the Company’s rights in or to or the validity of the scope of any of the
Company’s material patents, patent applications or proprietary information,
except such proceedings that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; to the Company’s
knowledge, no other entity or individual has any right or claim in any of the
Company’s owned, material patents, patent applications or any patent to be
issued therefrom by virtue of any contract, license or other agreement entered
into between such entity or individual and the Company or by any non-contractual
obligation of the Company, other than by written licenses granted by the
Company, except for such right or claim that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; the Company
has not received any written notice of any claim challenging the rights of the
Company in or to any Intellectual Property owned, licensed or optioned by the
Company which claim would reasonably be expected to result in a Material Adverse
Effect.

 

(x)          Environmental Laws. Except as set forth in the Registration
Statement or the Prospectus, the Company (i) is in compliance with any and all
applicable federal, state, local and foreign laws, rules, regulations, decisions
and orders relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, “Environmental Laws”); (ii) has received and is in
compliance with all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its businesses as described in the
Registration Statement and the Prospectus; and (iii) has not received notice of
any actual or potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes, pollutants or
contaminants, except, in the case of any of clauses (i), (ii) or (iii) above,
for any such failure to comply or failure to receive required permits, licenses,
other approvals or liability as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

14

 

 

(y)          Disclosure Controls. The Company maintains systems of internal
accounting controls designed to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Since the date of the latest audited financial
statements of the Company included in the Prospectus, there has been no change
in the Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting (other than as set forth in the Prospectus).
Except as set forth in the Registration Statement or the Prospectus, since the
end of the Company’s most recent audited fiscal year, there has been (A) no
material weakness in the Company’s internal control over financial reporting
(whether or not remediated) and (B) no change in the Company’s internal control
over financial reporting that has materially affected, or is reasonably likely
to materially affect, the Company’s internal control over financial reporting.

 

(z)         Sarbanes-Oxley. Except as set forth in the Registration Statement or
Prospectus, there is and has been no failure on the part of the Company or, to
the knowledge of the Company, any of the Company’s directors or officers, in
their capacities as such, to comply with any applicable provisions of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder.
Each of the principal executive officer and the principal financial officer of
the Company (or each former principal executive officer of the Company and each
former principal financial officer of the Company as applicable) has made all
certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act with
respect to all reports, schedules, forms, statements and other documents
required to be filed by it or furnished by it to the Commission. For purposes of
the preceding sentence, “principal executive officer” and “principal financial
officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act.

 

(aa)         Finder’s Fees. The Company has not incurred any liability for any
finder’s fees, brokerage commissions or similar payments in connection with the
transactions herein contemplated.

 

(bb)         Labor Disputes. Except as set forth in the Registration Statement
or the Prospectus, no labor disturbance by or dispute with employees of the
Company exists or, to the knowledge of the Company, is threatened which would
reasonably be expected to result in a Material Adverse Effect.

 

15

 

 

(cc)         Investment Company Act. The Company is not, and after giving effect
to the offering and sale of the Shares, will not be an “investment company” or
an entity “controlled” by an “investment company,” as such terms are defined in
the Investment Company Act of 1940, as amended (the “Investment Company Act”).

 

(dd)         Operations. The operations of the Company are and have been
conducted at all times in compliance with applicable financial record keeping
and reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, the money laundering statutes of all jurisdictions to
which the Company is subject, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency having jurisdiction over the Company
(collectively, the “Money Laundering Laws”), except as would not reasonably be
expected to result in a Material Adverse Effect; and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company with respect to the Money Laundering Laws
is pending or, to the knowledge of the Company, threatened.

 

(ee)         Off-Balance Sheet Arrangements. There are no transactions,
arrangements and other relationships between and/or among the Company, and/or,
to the knowledge of the Company, any of its affiliates and any unconsolidated
entity, including, but not limited to, any structural finance, special purpose
or limited purpose entity (each, an “Off Balance Sheet Transaction”) that would
reasonably be expected to affect materially the Company’s liquidity or the
availability of or requirements for its capital resources, including those Off
Balance Sheet Transactions described in the Commission’s Statement about
Management’s Discussion and Analysis of Financial Conditions and Results of
Operations (Release Nos. 33-8056; 34-45321; FR-61), in each case that are
required to be described in the Prospectus which have not been described as
required.

 

(ff)        ERISA. Except as set forth in the Registration Statement or the
Prospectus, to the knowledge of the Company, (i) each material employee benefit
plan, within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), that is maintained, administered or
contributed to by the Company (other than a Multiemployer Plan, within the
meaning of Section 3(37) of ERISA) for employees or former employees of the
Company has been maintained in compliance with its terms and the requirements of
any applicable statutes, orders, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended (the “Code”);
(ii) no prohibited transaction, within the meaning of Section 406 of ERISA or
Section 4975 of the Code, has occurred with respect to any such plan (excluding
transactions effected pursuant to a statutory or administrative exemption); and
(iii) for each such plan that is subject to the funding rules of Section 412 of
the Code or Section 302 of ERISA, no “accumulated funding deficiency” as defined
in Section 412 of the Code has been incurred, whether or not waived, and the
fair market value of the assets of each such plan (excluding for these purposes
accrued but unpaid contributions) equals or exceeds the present value of all
benefits accrued under such plan determined using reasonable actuarial
assumptions, other than, in the case of (i), (ii) and (iii) above, as would not
reasonably be expected to have a Material Adverse Effect.

 

16

 

  

(gg)         Margin Rules. The Company does not own any “margin securities” as
that term is defined in Regulation U of the Board of Governors of the Federal
Reserve System (the “Federal Reserve Board”), and none of the proceeds of the
sale of the Shares will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the Shares to
be considered a “purpose credit” within the meanings of Regulation T, U or X of
the Federal Reserve Board.

 

(hh)         Insurance. Except as set forth in the Registration Statement or the
Prospectus, the Company maintains insurance in such amounts and covering such
risks as the Company reasonably believes are adequate for its business and
customary for companies of similar size engaged in similar businesses in similar
industries.

 

(ii)         No Improper Practices. Except as set forth in the Registration
Statement or the Prospectus or as contemplated by this Agreement, (i) no
relationship, direct or indirect, exists between or among the Company or, to the
Company’s knowledge, any affiliate, on the one hand, and the directors, officers
and stockholders of the Company on the other hand, that is required by the
Securities Act to be described in the Registration Statement and the Prospectus
that is not so described; (ii) except as described in the Prospectus, there are
no material outstanding loans or advances or material guarantees of indebtedness
by the Company to or for the benefit of any of its officers or directors or any
of the members of the families of any of them; (iii) the Company has not
offered, or caused any placement agent to offer, Common Stock to any person with
the intent to influence unlawfully (A) a customer or supplier of the Company to
alter the customer’s or supplier’s level or type of business with the Company or
(B) a trade journalist or publication to write or publish favorable information
about the Company or any of its products or services, and, (iv) neither the
Company nor, to the Company’s knowledge, any employee or agent of the Company
has made any payment of funds of the Company or received or retained any funds
in violation of any law, rule or regulation (including, without limitation, the
Foreign Corrupt Practices Act of 1977), which payment, receipt or retention of
funds is of a character required to be disclosed in the Registration Statement
or the Prospectus.

 

(jj)         Status Under the Securities Act. The Company was not and is not an
ineligible issuer as defined in Rule 405 under the Securities Act at the times
specified in Rules 164 and 433 under the Securities Act in connection with the
offering of the Shares.

 

(kk)      No Conflict in an Issuer Free Writing Prospectus. Any Issuer Free
Writing Prospectus, as of its issue date through the completion of any sale of
Shares for which such Issuer Free Writing Prospectus is used or deemed used,
will not include any information that conflicted, conflicts or will conflict
with the information contained in the Registration Statement or the Prospectus,
including any incorporated document deemed to be a part thereof that has not
been superseded or modified.

 

17

 

 

(ll)         No Conflicts. Neither the execution of this Agreement by the
Company, nor the issuance, offering or sale of the Shares, nor the consummation
by the Company of any of the transactions contemplated herein and therein, nor
the compliance by the Company with the terms and provisions hereof and thereof
will conflict with, or will result in a breach of, any of the terms and
provisions of, or has constituted or will constitute a default under, or has
resulted in or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to the terms of
any contract or other agreement to which the Company is a party or to which any
of the property or assets of the Company is subject, except (i) such conflicts,
breaches or defaults as may have been waived and (ii) such conflicts, breaches,
defaults and liens, charges and encumbrances that would not reasonably be
expected to have a Material Adverse Effect; nor will such action result (x) in
any violation of the provisions of the certificate of incorporation or bylaws of
the Company, or (y) in any material violation of the provisions of any statute
or any order, rule or regulation applicable to the Company or of any court or of
any federal, state or other regulatory authority or other government body having
jurisdiction over the Company, except where such violation would not reasonably
be expected to have a Material Adverse Effect.

 

(mm)         Stock Transfer Taxes. On the Closing Date, all stock transfer or
other taxes (other than income taxes) which are required to be paid by the
Company in connection with the sale and transfer of the Shares to be sold
hereunder will be, or will have been, fully paid or provided for by the Company
and all laws imposing such taxes will be or will have been fully complied with
by the Company in all material respects.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1          Furnishing of Information. Until the time that no Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act. As long as any Purchaser owns Securities, if
the Company is not required to file reports pursuant to the Exchange Act, it
will prepare and furnish to the Purchasers and make publicly available in
accordance with Rule 144(c) such information as is required for the Purchasers
to sell the Securities, including without limitation, under Rule 144. The
Company further covenants that it will take such further action as any holder of
Securities may reasonably request, to the extent required from time to time to
enable such Person to sell such Securities without registration under the
Securities Act, including without limitation, within the requirements of the
exemption provided by Rule 144.

 

4.2          Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate any transaction in respect of any security
(as defined in Section 2 of the Securities Act) that would be integrated with
the offer or sale of the Securities for purposes of the rules and regulations of
the Exchange such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is obtained before
the closing of such subsequent transaction.

 

18

 

 

4.3          Securities Laws Disclosure; Publicity. The Company shall, by 4:30
p.m. (New York City time) on the Trading Day immediately following the date
hereof, issue a press release disclosing the material terms of the transactions
contemplated hereby, and within the time required by such form issue a Current
Report on Form 8-K including the Transaction Documents as exhibits thereto. From
and after the issuance of such Current Report on Form 8-K, the Company shall
have publicly disclosed all material, non-public information delivered to any of
the Purchasers by the Company, or any of their respective officers or directors
in connection with the transactions contemplated by the Transaction Documents.
The Company and each Purchaser shall consult with each other in issuing any
other press releases with respect to the transactions contemplated hereby, and
neither the Company nor any Purchaser shall issue any such press release nor
otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld or delayed, except if
such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or the Exchange, without the
prior written consent of such Purchaser, except (a) as required by federal
securities law in connection with the filing of final Transaction Documents
(including signature pages thereto) with the Commission and (b) to the extent
such disclosure is required by law or Exchange regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure
permitted hereunder.

 

4.4          Shareholder Rights Plan. No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that any
Purchaser is an "Acquiring Person" under any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that any Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities under the
Transaction Documents.

 

4.5          Non-Public Information. Except with respect to the material terms
and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it, nor any other Person acting on
its behalf will provide any Purchaser or its agents or counsel with any
information that the Company believes constitutes material nonpublic
information, unless prior thereto such Purchaser shall have executed a written
agreement with the Company regarding the confidentiality and use of such
information. The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company.

 

4.6          Use of Proceeds. Except as set forth in the Registration Statement
or the Prospectus, the Company shall use the net proceeds from the sale of the
Securities hereunder for working capital or general corporate purposes and shall
not use such proceeds for: (a) the satisfaction of any portion of the Company's
debt (other than payment of trade payables in the ordinary course of the
Company's business and prior practices), (b) the redemption of any Common Stock
or Common Stock Equivalents or (c) the settlement of any outstanding litigation.

 

19

 

 

4.7          Indemnification of Purchasers. Subject to the provisions of this
Section 4.7, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
"Purchaser Party") harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys' fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a Purchaser
in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Purchaser, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Purchaser's representations,
warranties or covenants under the Transaction Documents or any agreements or
understandings such Purchaser may have with any such stockholder or any
violations by such Purchaser of state or federal securities laws or any conduct
by such Purchaser which is otherwise actionable). If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, such Purchaser Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing reasonably acceptable to the Purchaser Party. Any
Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period of time to
assume such defense and to employ counsel, (iii) in such action there is, in the
reasonable opinion of counsel, a material conflict on any material issue between
the position of the Company and the position of such Purchaser Party, in which
case the Company shall be responsible for the reasonable fees and expenses of no
more than one such separate counsel. The Company will not be liable to any
Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party
effected without the Company's prior written consent, which shall not be
unreasonably withheld or delayed; or (z) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party's
breach of any of the representations, warranties, covenants or agreements made
by such Purchaser Party in this Agreement or in the other Transaction Documents.

 

4.8          Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement.

 

20

 

 

4.9          Listing of Common Stock. The Company hereby agrees to use best
efforts to maintain the listing or quotation of the Common Stock on the
Exchange, and concurrently with the Closing, the Company shall apply to list or
quote all of the Shares on the Exchange and promptly secure the listing of all
of the Shares on the Exchange. The Company further agrees, if the Company
applies to have the Common Stock traded on any other trading market, it will
include in such application all of the Shares, and will take such other action
as is necessary to cause all of the Shares to be listed or quoted on such other
trading market as promptly as possible. The Company will then take all action
reasonably necessary to continue the listing and trading of its Common Stock on
a trading market and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of such trading market.

 

4.10          Equal Treatment of Purchasers. No consideration (including any
modification of any Transaction Document) shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered to all of
the parties to the Transaction Documents. For clarification purposes, this
provision constitutes a separate right granted to each Purchaser by the Company
and negotiated separately by each Purchaser, and is intended for the Company to
treat the Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.

 

4.11          Certain Transactions and Confidentiality. Each Purchaser,
severally and not jointly with the other Purchasers, covenants that neither it
nor any Affiliate acting on its behalf or pursuant to any understanding with it
will execute any purchases or sales, including Short Sales of any of the
Company's securities during the period commencing with the execution of this
Agreement and ending at such time that the transactions contemplated by this
Agreement are first publicly announced pursuant to the initial press release as
described in Section 4.3. Each Purchaser, severally and not jointly with the
other Purchasers, covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company pursuant to
the initial press release as described in Section 4.3, such Purchaser will
maintain the confidentiality of the existence and terms of this transaction and
all information provided in connection therewith. Notwithstanding the foregoing
and notwithstanding anything contained in this Agreement to the contrary, the
Company expressly acknowledges and agrees that (i) no Purchaser makes any
representation, warranty or covenant hereby that it will not engage in effecting
transactions in any securities of the Company after the time that the
transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.3, (ii) no
Purchaser shall be restricted or prohibited from effecting any transactions in
any securities of the Company in accordance with applicable securities laws from
and after the time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release as described in
Section 4.3 and (iii) no Purchaser shall have any duty of confidentiality to the
Company after the issuance of the initial press release as described in Section
4.3. Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser's assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser's assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Securities covered by
this Agreement.

 

21

 

 

ARTICLE V.

MISCELLANEOUS

 

5.1          Termination. This Agreement may be terminated by any Purchaser, as
to such Purchaser's obligations hereunder only and without any effect whatsoever
on the obligations between the Company and the other Purchasers, by written
notice to the other parties, if the Closing has not been consummated on or
before May 15, 2012; provided, however, that no such termination will affect the
right of any party to sue for any breach by the other party (or parties).

 

5.2          Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all transfer
agent fees, stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchasers.

 

5.3          Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, and the Prospectus, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.

 

5.4          Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of: (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

 

5.5          Amendments; Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Purchasers holding at least 67% in
interest of the Shares then outstanding or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought. No waiver
of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right.

 

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5.6           Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

 

5.7          Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom such Purchaser assigns or transfers any Securities, provided that such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the
"Purchasers."

 

5.8          No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.7.

 

5.9          Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law. If either party shall
commence an action or proceeding to enforce any provisions of the Transaction
Documents, then, in addition to the obligations of the Company under Section
4.7, the prevailing party in such action or proceeding shall be reimbursed by
the other party for its reasonable attorneys' fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such action or
proceeding.

 

5.10          Survival. The representations and warranties contained herein
shall survive the Closing and the delivery of the Securities for the applicable
statute of limitations.

 

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5.11           Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a ".pdf" format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or ".pdf" signature page were an original
thereof.

 

5.12          Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

5.13          Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction. The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.

 

5.14          Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchsers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agree to waive and
not to assert in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.

 

5.15          Payment Set Aside. To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

 

24

 

 

5.16          Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under any Transaction Document. Nothing contained herein
or in any other Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents. The Company has elected to provide all Purchasers with the same terms
and Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by any of the Purchasers.

 

5.17          Saturdays, Sundays, Holidays. etc. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right
may be exercised on the next succeeding Business Day.

 

5.18          Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto. In
addition, each and every reference to share prices and shares of Common Stock in
any Transaction Document shall be subject to adjustment for reverse and forward
stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement.

 

5.19          WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

 

 

(Signature Pages Follow)

 

25

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

 

TRANSWITCH CORPORATION

 

 

 

By:                                                  

Name:

Title:

Address for notice:

 

Three Enterprise Drive

Shelton, CT 06484

Attention: Robert Bosi, Chief Financial Officer

Telephone: (203) 929-8810 ext. 2465

Facsimile: (203) 926-9453

Email: Robert.bosi@transwitch.com

 

 

With a copy to:

 

Pierce Atwood LLP

100 Summer Street, Suite 2250

Boston, MA 02110

Attention: Timothy C. Maguire, Esq.

Telephone:(617) 488-8140

Facsimile: (617) 824-2020

Email: tmaguire@pierceatwood.com

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK –

SIGNATURE PAGE FOR PURCHASERS FOLLOW]

 

26

 

 

 

[PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

Name of Purchaser:       Signature of Authorized Signatory of Purchaser:      
Name of Authorized Signatory:       Title of Authorized Signatory:       Email
Address of Authorized Signatory:       Facsimile Number of Authorized Signatory:
 

 

Address for Notice of Purchaser:

 

 

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

 

 

Subscription Amount:       Shares:  

 

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

  

[SIGNATURE PAGES CONTINUE]

 

27