Exhibit 10.2

 

PLACEMENT AGREEMENT

 

August 27, 2003

 

U.S. BANCORP PIPER JAFFRAY, INC.

Piper Jaffray Tower

222 South Ninth Street

Minneapolis, MN 55402

 

Ladies/Gentlemen:

 

1. General. TranSwitch Corporation, a Delaware corporation (the “Company”),
proposes to offer for cash (the “New Money Offering”) up to $20,000,000
aggregate principal amount of 5.45% Convertible Plus Cash NotesSM due September
30, 2007 (the “Plus Cash Notes”) that are convertible into common stock, par
value $0.001 per share (the “Shares”) of the Company to Holders who submit some
or all of their Existing Notes in the Exchange Offer (the “Exchange Offer”).

 

In the event Holders submit indications of interest for more than $20,000,000
aggregate principal amount in the New Money Offering, the additional Plus Cash
Notes will be allocated at the discretion of the Placement Agent (as defined
below) based on the amount of each Holder’s indication in the New Money
Offering. The additional Plus Cash Notes issued in the New Money Offering are to
be issued pursuant to an Indenture, dated as of September 30, 2003, as amended
or modified from time to time (the “Indenture”), between the Company, and U.S.
Bank National Association, as trustee (the “Trustee”). Capitalized terms used
herein without definition shall have their respective meanings set forth in or
pursuant to the Registration Statement (as defined herein), notwithstanding that
such terms as used herein are not capitalized in the Registration Statement.

 

2. Appointment as Agent. By this Placement Agreement (the “Agreement”), the
Company hereby engages and appoints you as exclusive Placement Agent (the
“Placement Agent”) for the New Money Offering and authorizes you to act as such
in connection with the New Money Offering.

 

(a) Subject to the terms and conditions stated herein, the Company hereby agrees
that the Plus Cash Notes to be issued in the New Money Offering will be sold
exclusively through the Placement Agent. The Company and Placement Agent agree
that the Placement Agent may allow, and dealers may reallow, a discount not in
excess of 3.625% per Plus Cash Note in connection with the sale of additional
Plus Cash Notes in the New Money Offering. The Placement Agent agrees to use its
best efforts to obtain purchases from the Holders for any or all of the
additional Plus Cash Notes or to obtain purchases from current shareholders at a
price of $1,000 per additional Plus Cash Note or any integral multiple of
$1,000.

 

1

--------------------------------------------------------------------------------

(b) The Company shall not sell or approve the solicitation of offers for the
purchase of additional Plus Cash Notes in excess of the amount which shall be
authorized by the Company or in excess of the aggregate offering price of the
Plus Cash Notes registered pursuant to the Registration Statement.

 

3. Registration Statement, Prospectus and Offering Materials. The Company has
prepared and filed with the Securities and Exchange Commission (the
“Commission”), under the Securities Act of 1933, as amended (the “Securities
Act”), the Trust Indenture Act of 1939, as amended (the “TIA”), and applicable
rules and regulations (the “Rules and Regulations”) of the Commission under the
Securities Act, the TIA and the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), a registration statement on Form S-3 File No. 333-105332) and
the amendments thereto including a Prospectus, covering the registration of the
offer and sale of the Plus Cash Notes; the Shares issuable upon conversion of
the Plus Cash Notes issued in the New Money Offering; the Shares that may be
issued solely at the Company’s option as payment of interest on the Plus Cash
Notes issued in the New Money Offering; and the Shares issuable solely at the
Company’s option as payment of the Plus Cash amount. The term “Registration
Statement” as used in this Agreement shall mean such registration statement,
including financial statements, schedules and exhibits, in the form in which it
becomes effective and, in the event of any amendment thereto or the filing of
any abbreviated registration statement pursuant to Rule 462(b) of the Rules and
Regulations relating thereto after the effective date of such registration
statement, shall also mean (from and after the effectiveness of such amendment
or the filing of such abbreviated registration statement) such registration
statement as so amended, together with any such abbreviated registration
statement. The term “Prospectus” as used in this Agreement shall mean the final
prospectus included in the Registration Statement. Notwithstanding the
foregoing, if any revised prospectus shall be provided to you by the Company for
use in connection with the New Money Offering that differs from the Prospectus
referred to in the immediately preceding sentence (whether or not such revised
prospectus is required to be filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations), the term “Prospectus” shall refer to such revised
prospectus from and after the time it is first provided to you for such use. Any
reference to the Registration Statement or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act, as of the date of the Registration
Statement or the Prospectus, as the case may be, and any reference to any
amendment or supplement to the Registration Statement or the Prospectus shall be
deemed to refer to and include any documents filed after such date under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Rules
and Regulations of the Commission thereunder, which, upon filing, are
incorporated by reference therein, as required by Item 12 of Form S-3. As used
in this Agreement, the term “Incorporated Documents” means the documents which
at the time are incorporated by reference in the Registration Statement, the
Prospectus or any amendment or supplement thereto. The terms “supplement” and
“amendment” or “supplemented” and “amended” as used herein with respect to the
Prospectus shall include all documents deemed to be incorporated by reference in
the Prospectus that are filed subsequent to the date of the Prospectus and prior
to the termination of the Exchange Offer by the Company with the Commission
pursuant to the Exchange Act and the Rules and Regulations of the Commission
thereunder.

 

2

--------------------------------------------------------------------------------

4. Use of the Prospectus and Registration Statement. The Company authorizes the
Placement Agent to use the Prospectus in connection with the Cash Offer for such
period of time as any such materials are required by law to be delivered in
connection therewith.

 

5. Withdrawal. In the event that the Company: (i) uses or permits the use of, or
files with the Commission or any other Agency, or any amendment or supplement to
the Registration Statement or the Prospectus, and such document (a) has not been
submitted to you previously for you and your counsel’s comments or (b) has been
so submitted, and you or your counsel have made comments which have not been
reflected in a manner reasonably satisfactory to you or your counsel, or (ii)
breaches, in any material respect, any of its representations, warranties,
agreements or covenants herein, or (iii) amends or revises the New Money
Offering in a manner not reasonably acceptable to you, then you shall be
entitled to withdraw as Placement Agent in connection with the New Money
Offering without any liability or penalty to you and without loss of any right
to indemnification or contribution provided in Section 11 or to the payment of
all fees and expenses payable under Sections 6 and 7 below which have accrued to
the date of such withdrawal (it being agreed that in the event of any such
withdrawal, for the purpose of determining the fees payable to you pursuant to
Section 6, the aggregate principal amount of Existing Notes tendered pursuant to
the New Money Offering as of the close of business on the date of such
withdrawal that are thereafter acquired by the Company or any of its
subsidiaries or affiliates pursuant to the New Money Offering or otherwise shall
be deemed to have been acquired as of the date of such withdrawal).

 

6. Fees. The total fee due and payable by the Company on the date the New Money
Offering is consummated (the “Closing Date”) will be determined in accordance
with the fee schedule set forth below as of the date the New Money Offering is
consummated (the “Closing Date”):

 

Amount of New Money
Raised

(in millions)

--------------------------------------------------------------------------------

   Fee

--------------------------------------------------------------------------------

    Maximum Cumulative Fee

--------------------------------------------------------------------------------

    $0.00- $5.00

   4.5 %   $ 230,000

    $5.01 - $10.00

   4.0 %   $ 430,000

    $10.01 - 15.00

   3.5 %   $ 600,000

    $15.01 - $20.00

   3.0 %   $ 750,000

**$20.00

   3.0 %   $ **750,000

--------------------------------------------------------------------------------

** means greater than

 

7. Expenses. Prior to or on the Closing Date, the Company agrees that it will
pay the costs and expenses incident to the performance of the obligations
hereunder whether or not any Plus Cash Notes are offered or sold pursuant to the
New Money Offering, including, without limitation (i) all costs and expenses
incurred by dealers and brokers (including your counsel), commercial banks,
trust companies and nominees for their customary mailing and handling expenses
incurred in forwarding the Prospectus to their customers, (ii) the filing fees
and expenses, if any, incurred with respect to any filing with The Nasdaq
National Market

 

3

--------------------------------------------------------------------------------

(“Nasdaq”), (iii) the filing fees incident to, and the reasonable fees and
disbursements of counsel for the Dealer Manager in connection with, securing any
required review by the National Association of Securities Dealer, Inc., of the
terms of the New Money Offering, (iv) all costs and expenses incident to the
preparation, issuance, execution and delivery of the Plus Cash Notes, (v) all
costs and expenses incident to the preparation, printing and filing under the
Securities Act of the Registration Statement and the Prospectus (including,
without limitation, in each case all exhibits, amendments and supplements
thereto), (vi) all reasonable legal costs and expenses of counsel for the
Placement Agent incurred in connection with Blue Sky matters relating to the New
Money Offering, (vii) all costs and expenses incident to the qualification of
the Plus Cash Notes under state securities laws in accordance with the
provisions of Section 9(c) hereof, the filing fees incident to any necessary
filings under state securities laws and all costs and expenses in connection
with the preparation of the Blue Sky Survey and any supplement thereto
(including, without limitation, the costs and expenses incurred with the
printing of the Blue Sky Survey and any supplement thereto), (viii) all costs
and expenses incurred in connection with the printing (including word processing
and duplication costs) and delivery of the Prospectus and Registration Statement
including, without limitation, mailing and shipping, (ix) all advertising
expenses related to the New Money Offering and the fees and expenses of the
Exchange Agent and the Information Agent, (x) all fees and expenses incurred in
marketing the New Money Offering, including but not limited to road show
presentations, if any, and (xi) the fees and disbursements of Testa, Hurwitz &
Thibeault, LLP, counsel to the Company, and KPMG LLP, auditors to the Company.
In addition, the Company agrees to reimburse the reasonable out-of-pocket
expenses of the Placement Agent in connection with the New Money Offering,
including, without limitation, the reasonable legal fees and expenses of the
Placement Agent’s Counsel in connection with the New Money Offering.

 

8. Representations, Warranties and Agreements of the Company. The Company
represents and warrants to you, and agrees with you, that:

 

(a) The Registration Statement, including the Prospectus, has been prepared by
the Company in conformity with the requirements of the Securities Act and the
Rules and Regulations thereunder and has been filed with the Commission; such
amendments to such Registration Statement and Prospectus and such abbreviated
registration statements pursuant to Rule 462(b) of the Rules and Regulations as
may have been required prior to the date hereof have been similarly prepared and
filed with the Commission; and the Company will file such additional amendments
to such Registration Statement and Prospectus and such abbreviated registration
statements as may hereafter be required. Copies of such Registration Statement
and Prospectus, including all amendments thereto and all documents incorporated
by reference, and of any abbreviated registration statement pursuant to Rule
462(b) of the Rules and Regulations have been or, if filed after the
Commencement Date, will be, delivered or made available to you and your counsel.

 

(b) The Registration Statement, including the Prospectus, has been filed as of
the Commencement Date and will become effective not later than the Expiration
Date; and the Commission has not issued any order refusing or suspending the
effectiveness of the Registration Statement or preventing or suspending the use
of any Prospectus or instituted proceedings for

 

4

--------------------------------------------------------------------------------

that purpose. The Registration Statement and the Prospectus, comply and, as
amended or supplemented, if applicable, will comply in all material respects
with the Securities Act, the Exchange Act and the TIA, and the applicable Rules
and Regulations of the Commission thereunder. The Registration Statement, when
it becomes effective, will not contain and, as amended or supplemented, if
applicable, will not contain, any 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. Neither the Prospectus nor the Registration
Statement contain, and, as amended or supplemented, if applicable, will contain,
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that none of the
representations and warranties contained in this subparagraph (b) shall apply to
information contained in or omitted from the Registration Statement or
Prospectus, or any amendment or supplement thereto, in reliance upon, and in
conformity with, written information relating to you furnished to the Company by
you specifically for use in the preparation thereof.

 

(c) The Incorporated Documents previously filed, when they were filed (or, if
any amendment with respect to any such document was filed, when such amendment
was filed), conformed in all material respects with the requirements of the
Exchange Act and the Rules and Regulations of the Commission thereunder; no such
document when it was filed (or, if an amendment with respect to any such
document was filed, when such amendment was filed), contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
no such further amendment will contain any 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.

 

(d) Subsequent to the respective dates as of which information is given in the
Prospectus: (i) there has been no material adverse change, or any development
that could reasonably be expected to result in a material adverse change, in the
condition, financial or otherwise, or in the earnings, business, operations or
prospects, whether or not arising from transactions in the ordinary course of
business, of the Company and its subsidiaries, considered as one entity, or any
change which would adversely affect the power and ability of the Company to
perform its obligations under this Agreement, the Indenture, or the Plus Cash
Notes (any such change or effect, where the context so requires, is called a
“Material Adverse Change” or a “Material Adverse Effect”); (ii) the Company and
its subsidiaries, considered as one entity, have not incurred any material
liability or obligation, indirect, direct or contingent, not in the ordinary
course of business nor entered into any material transaction or agreement not in
the ordinary course of business; and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or, except for
dividends paid to the Company or other subsidiaries, by any of its subsidiaries
on any class of capital stock or no repurchase or redemption by the Company or
any of its subsidiaries of any class of capital stock.

 

(e) The Company has been duly incorporated and is validly existing as a
corporation under the laws of the jurisdiction of its incorporation with full
power and authority (corporate and other) to own, lease and operate its
properties and conduct its business as described in the Prospectus; the Company
is duly qualified to do business as a foreign corporation and is in good

 

5

--------------------------------------------------------------------------------

standing in each jurisdiction in which the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified or be in good standing would not have a
Material Adverse Effect.

 

(f) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed in
Exhibit 21 to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2002, except for Tera Op (USA), Inc.

 

(g) Each of the Company’s subsidiaries has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction in
which it was organized; has the corporate power to own, lease and operate its
properties and conduct its business as described in the Prospectus; is qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction, if any, in which the ownership and leasing of its properties or
the conduct of its business requires such qualification, except where the
failure to be so qualified or be in good standing would not have a Material
Adverse Effect.

 

(h) All of the issued and outstanding shares of capital stock of each of the
subsidiaries have been duly authorized and validly issued and are fully paid and
nonassessable, and except as disclosed in the Registration Statement,
Prospectus, are owned by the Company directly or through wholly owned
subsidiaries (except for directors’ qualifying shares), free and clear of any
lien, security interest, encumbrance, claim or equitable interest.

 

(i) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary’s capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary’s property or assets to the Company or any other
subsidiary of the Company.

 

(j) The Company has full legal right, power and authority to enter into and
perform its obligations under this Agreement, the Indenture and the Plus Cash
Notes and to consummate the New Money Offering. The New Money Offering has been
duly and validly authorized by all necessary corporate action by the Company
and, except for authorization of final terms of the Plus Cash Notes by the
Pricing Committee of the Board of Directors, no other corporate proceedings by
the Company are necessary to authorize such actions. This Agreement has been
duly authorized, executed and delivered by the Company and is a legal, valid and
binding agreement on the part of the Company, enforceable in accordance with its
terms, except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors’ rights generally or by general equitable
principles. The execution and delivery by the Company of, and the performance by
the Company of its obligations under this Agreement, the issuance and delivery
by the Company of the Plus Cash Notes pursuant to the New Money Offering, the
consummation of the New Money Offering, and the fulfillment of the terms hereof
and thereof, do not and will not result in a breach or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or

 

6

--------------------------------------------------------------------------------

any of its subsidiaries pursuant to, (i) the charter or by-laws of the Company
or any of its subsidiaries, or (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company or any of its
subsidiaries is a party or is bound or to which its or their property is
subject; or (iii) any statute, law, rule, regulation, judgment, order or decree
applicable to the Company or any of its subsidiaries of any court, regulatory
body, administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of its subsidiaries or any of its or
their properties; except where any breach, violation, or default described in
(i), (ii) or (iii) would not singly or in the aggregate have a Material Adverse
Effect. No consent, approval, authorization, filing with or order of any court,
or governmental agency or regulatory body, is required in connection with the
transactions contemplated by this Agreement, the Indenture, the New Money
Offering, the issuance and delivery of the Plus Cash Notes pursuant to the New
Money Offering, and the consummation by the Company or any of its subsidiaries
of the transactions contemplated herein, except such as may be required under
the Securities Act, the Exchange Act, the TIA or under state or other
securities, or Blue Sky laws, all of which requirements have been satisfied
other than as contemplated by such agreements or except where such requirement
would not have a Material Adverse Effect on the execution and delivery of this
Agreement, the Indenture, the issuance of the Plus Cash Notes or the
consummation of the transactions contemplated herein.

 

(k) Except as disclosed in the Prospectus, there is not any action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator against the Company or any of its subsidiaries or its or their
property that is pending or, to the best knowledge of the Company, threatened
that (i) could reasonably be expected to have a Material Adverse Effect on the
consummation of the New Money Offering and the transactions contemplated hereby
that has not been accurately described in all material respects in the
Registration Statement or the Prospectus, or (ii) could reasonably be expected
to result in a Material Adverse Change.

 

(l) There are no agreements, contracts, leases or documents of the Company or
any of its subsidiaries of a character required to be described or referred to
in the Registration Statement or the Prospectus or any Incorporated Document or
to be filed as an exhibit to the Registration Statement by the Securities Act or
the Rules and Regulations thereunder or by the Exchange Act or the Rules and
Regulations of the Commission thereunder which have not been accurately
described in all material respects in the Registration Statement or Prospectus
or any Incorporated Document or filed as exhibits to the Registration Statement
or any Incorporated Document.

 

(m) All outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, were not issued
in violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities, and the authorized and outstanding capital stock of
the Company is as set forth in the Prospectus under the caption “Capitalization”
(except for subsequent issuances, if any, upon exercise of outstanding options
described in the Prospectus) and conforms in all material respects to the
statements relating thereto contained in the Registration Statement and the
Prospectus and any Incorporated Document (and such

 

7

--------------------------------------------------------------------------------

statements correctly state the substance of the instruments defining the
capitalization of the Company); a sufficient number of Shares to be issuable
pursuant to the terms of the Plus Cash Notes have been duly authorized for
issuance and delivery and, when issued and delivered by the Company in
accordance with the terms of the Plus Cash Notes will be duly authorized and
validly issued and fully paid and nonassessable, and will be free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable interest;
and no preemptive right, co-sale right, registration right, right of first
refusal or other similar right of shareholders exists with respect to any of the
Shares issuable pursuant to the terms of the Plus Cash Notes to be issued in the
Exchange Offer or the issuance thereof other than those that have been expressly
waived prior to the date hereof and those that will automatically expire upon
and will not apply to the consummation of the transactions contemplated on or
before the Closing Date. No further approval or authorization of any
shareholder, the Board of Directors of the Company (except for authorization of
final terms of the Plus Cash Notes by the pricing Committee of the Board of
Directors) or others is required for the issuance or transfer of the Shares
issuable pursuant to the terms of the New Notes and except as may be required
under the Securities Act, the Exchange Act or under state or other securities or
Blue Sky laws.

 

(n) The Indenture has been or will be duly authorized by the Company, has been
filed as of the Commencement Date, will be qualified under the TIA not later
than the Expiration Date, and assuming due authorization, execution and delivery
of the Indenture by the Trustee, when executed and delivered by the Company,
will constitute a valid and binding agreement of the Company, enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws affecting enforcement of creditors’ rights generally and (ii)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).

 

(o) The Plus Cash Notes to be issued pursuant to the New Money Offering have
been authorized, and assuming due authorization, execution and delivery of the
Indenture by the Trustee, when executed and authenticated in accordance with the
provisions of the Indenture and delivered in accordance with the terms of the
New Money Offering, will be entitled to the benefits of the Indenture and will
be valid and binding obligations of the Company enforceable in accordance with
their terms, except as the enforcement thereof may be limited by the (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws affecting enforcement of creditors’ rights generally and (ii)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity). The Plus Cash Notes will conform in all
material respects to the description thereof contained in the Registration
Statement and Prospectus.

 

(p) The consolidated financial statements (including the related notes) included
in the Registration Statement and the Prospectus (and any amendments or
supplements thereto) present fairly in all material respects the consolidated
financial position of the Company and of its subsidiaries as of and at the dates
indicated and the results of their operations and cash flows for the periods
specified. Such financial statements have been prepared in conformity with
generally accepted accounting principles applied in the United States on a
consistent basis throughout the periods indicated except as may otherwise be
stated therein. The financial data set forth in the

 

8

--------------------------------------------------------------------------------

Prospectus under the captions “Selected Consolidated Financial Data” and
“Capitalization” fairly present the information set forth therein on a basis
consistent with that of the financial statements presented therein. The interim
consolidated financial statements (including the related notes) included in the
Registration Statement and the Prospectus (and any amendments and supplements
thereto) have been prepared on a basis consistent with the audited consolidated
financial statements except as otherwise stated therein, and include all
adjustments, including normal recurring adjustments necessary to present fairly
the financial information therein. No financial statements or schedules, other
than the consolidated financial statements or schedules that are included in the
Registration Statement and the Prospectus (and any amendments or supplements
thereto), are required to be included therein.

 

(q) The Company and each of its subsidiaries maintain a system of accounting
controls sufficient to provide reasonable assurances that: (i) transactions are
executed in accordance with management’s general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles as
applied in the United States and to maintain accountability for assets; (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 existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.

 

(r) KPMG LLP, who have expressed their opinion with respect to the audited
financial statements (which term as used in this Agreement includes the related
notes thereto) included in the Prospectus, are independent public or certified
public accountants with respect to the Company within the meaning of the
Securities Act and the applicable Rules and Regulations thereunder.

 

(s) The Company and each of its subsidiaries has good and marketable title to
all the properties and assets reflected as owned in the financial statements
included in the Prospectus, in each case free and clear of any security
interests, mortgages, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect the value of such property
and do not materially interfere with the use made or proposed to be made of such
property by the Company or such subsidiary or disclosed in the Prospectus. The
real property, improvements, equipment and personal property held under lease by
the Company or any subsidiary are held under valid and enforceable leases, with
such exceptions as are not material and do not materially interfere with the use
made or proposed to be made of such real property, improvements, equipment or
personal property by the Company or such subsidiary.

 

(t) Each of the Company and its subsidiaries owns or possesses adequate rights
to use all patents, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names and copyrights which are necessary to
conduct its respective business as described in the Prospectus. The patents,
patent rights, trademarks, service marks, trade names or copyrights described in
the Prospectus have been maintained except those for which a lapse would not
result in a Material Adverse Change that is not otherwise disclosed in the
Prospectus; except as otherwise disclosed in the Prospectus, the Company has no
knowledge of any litigation by the Company against others with respect to any of
the Company’s valid patents, patent rights,

 

9

--------------------------------------------------------------------------------

inventions, trade secrets, know-how, trademarks, service marks, trade names or
copyrights which singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect; and the
Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of others with respect to any
valid patent, patent rights, inventions, trade secrets, know-how, trademarks,
service marks, trade names or copyrights which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, might have a Material
Adverse Effect that is not described in the Prospectus. There is no claim being
made against the Company, to its knowledge, regarding patents, patent rights or
licenses, inventions, collaborative research, trade secrets, know-how,
trademarks, service marks, trade names or copyrights that is not described in
the Prospectus. The Company and its subsidiaries do not, to their knowledge, in
the conduct of their businesses as now or proposed to be conducted as described
in the Prospectus infringe or conflict with any right or patent of any third
party, or any discovery, invention, product or process which is the subject of a
patent application filed by any third party, known to the Company or any of its
subsidiaries, which such infringement or conflict is reasonably likely to result
in a Material Adverse Change that is not described in the Prospectus.

 

(u) Except as disclosed in the Registration Statement and Prospectus, the Common
Stock is registered pursuant to Section 12(g) of the Exchange Act and has been
quoted on Nasdaq, and the Company has taken no action designed to terminate, or
likely to have the effect of terminating, the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from Nasdaq, and, except as
disclosed in Exhibit 99.6 of the Company’s Annual report on Form 10-K for the
year ending December 31, 2002, as of March 4, 2003, the Company has not received
any notification that the Commission or Nasdaq is contemplating terminating such
registration or listing.

 

(v) The Company has been advised of the rules and requirements under the
Investment Company Act of 1940, as amended (the “1940 Act”). The Company is not
required to register as an “investment company” or an entity “controlled” by an
“investment company” within the meaning of the 1940 Act and will conduct its
business in a manner so that it will not become subject to the 1940 Act and the
rules and regulations promulgated thereunder.

 

(w) The Company has not taken and will not take, directly or indirectly, any
action resulting in a violation of Rule 102 of Regulation M promulgated under
the Exchange Act or designed to or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Common Stock to
facilitate the distribution of the Plus Cash Notes.

 

(x) Except as otherwise disclosed in the Prospectus, (i) the Company is in
compliance with all rules, laws and regulations relating to the use, treatment,
storage and disposal of toxic substances and protection of public health or the
environment (“Environmental Laws”) which are applicable to its business, except
where the failure to comply would not result in a Material Adverse Change, (ii)
the Company has received no notice from any governmental authority or third
party of an asserted claim under Environmental Laws, (iii) based on present
business plans, the Company will not be required to make future material capital
expenditures to comply with

 

10

--------------------------------------------------------------------------------

Environmental Laws presently in effect and (iv) no property which is owned,
leased or occupied by the Company has been designated as a Superfund site
pursuant to the Comprehensive Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Section 9601, et seq.), or otherwise designated as a
contaminated site under applicable state or local law.

 

(y) There are no business relationships or related-party transactions involving
the Company or any subsidiary or any other person required to be described in
the Registration Statement which have not been described as required.

 

(z) There are no documentary stamp or other issuance or transfer taxes or other
similar fees or charges under Federal law or the laws of any state, or any
political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement, and the Indenture or the issuance and
sale by the Company of the Plus Cash Notes. The Company has not paid or agreed
to pay any person any compensation for soliciting another to purchase any Plus
Cash Notes (except as contemplated by this Agreement).

 

(aa) Except as disclosed in the Prospectus, there are no persons with
registration rights or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the Company
under the Securities Act.

 

9. Further Agreements of the Company. The Company agrees with you that:

 

(a) The Company will use its best efforts to cause the Registration Statement
and any amendment thereof to become effective as soon as possible. If not yet
effective at the time and date that this Agreement is executed and delivered by
the parties hereto, the Company will use its best efforts to cause any
abbreviated registration statement pursuant to Rule 462(b) of the Rules and
Regulations as may be required subsequent to the date the Registration Statement
is declared effective to become effective as promptly as possible; the Company
will notify you, promptly after it shall receive notice thereof, of the time
when the Registration Statement, any subsequent amendment to the Registration
Statement or any abbreviated registration statement has become effective or any
supplement to the Prospectus has been filed; if for any reason the filing of the
final form of the Prospectus is required under Rule 424(b) of the Rules and
Regulations, the Company will provide evidence satisfactory to you that the
Prospectus contains such information and has been filed with the Commission
within the time period prescribed; the Company will notify you promptly of any
request by the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information relating to the New
Money Offering; promptly upon your request, the Company will prepare and file
with the Commission any amendments or supplements to the Registration Statement
or Prospectus which, in the opinion of your counsel, may be necessary or
advisable in connection with the New Money Offering; the Company will promptly
prepare and file with the Commission, and promptly notify you of the filing of,
any amendments or supplements to the Registration Statement or Prospectus which
may be necessary to correct any statements or omissions, if, at any time when a
prospectus relating to the New Money Offering is required to be delivered under
the Securities Act and the Exchange Act, any event shall have occurred as a
result of which the Prospectus or any other prospectus relating to the New Money
Offering as then in effect would include any untrue

 

11

--------------------------------------------------------------------------------

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; and the Company will file no amendment or supplement to
the Registration Statement or Prospectus or the Incorporated Documents, or prior
to the end of the period of time in which the Prospectus relating to the New
Money Offering is required to be delivered under the Securities Act and the
Exchange Act, file any document which upon filing becomes an Incorporated
Document, which shall not previously have been submitted to you a reasonable
time prior to the proposed filing thereof and will give reasonable consideration
to your or your counsel’s comments, if any, thereon, subject, however, to
compliance with the Securities Act and the Rules and Regulations, the Exchange
Act and the Rules and Regulations of the Commission thereunder and the
provisions of this Agreement.

 

(b) The Company will advise you, promptly after it shall receive notice or
obtain knowledge, of the issuance of any order by the Commission refusing or
suspending the effectiveness of the Registration Statement or of the initiation
or threat of any proceeding for that purpose; and it will promptly use its best
efforts to prevent the issuance of any refusal or stop order or to obtain its
withdrawal at the earliest possible moment if such refusal or stop order should
be issued.

 

(c) The Company will use its best efforts to qualify or obtain an exemption for
the Plus Cash Notes issuable pursuant to the New Money Offering under the
securities laws of such jurisdictions as you may designate and to continue such
qualifications in effect or exemptions, as applicable, for so long as may be
required for purposes of the New Money Offering, except that the Company shall
not be required in connection therewith or as a condition thereof to qualify as
a foreign corporation or to execute a general consent to service of process in
any jurisdiction in which it is not otherwise required to be so qualified or to
so execute a general consent to service of process. In each jurisdiction in
which the Plus Cash Notes shall have been qualified or exempted as above
provided, the Company will make and file such statements and reports in each
year as are or may be required by the laws of such jurisdiction.

 

(d) The Company will use its best efforts to have the shares of Common Stock
underlying the Plus Cash Notes accepted for quotation on Nasdaq.

 

(e) The Company will make generally available to its security holders and to the
Placement Agent by filing with the Commission as soon as is practicable, an
earnings statement covering a twelve-month period beginning not later than the
first day of the Company’s fiscal quarter next following the effective date of
the Registration Statement that satisfies the provisions of Section 11(a) of the
Securities Act and the Rules and Regulations of the Commission thereunder.

 

(f) Without limiting Sections 5, 7 and 13 of this Agreement, if the transactions
contemplated hereby are not consummated by reason of any failure, refusal or
inability on the part of the Company to perform any agreement on its part to be
performed hereunder or to fulfill any condition of your obligations hereunder,
the Company will reimburse you for all out-of-pocket expenses (including fees
and disbursements of your counsel) incurred by you in connection with the New
Money Offering.

 

12

--------------------------------------------------------------------------------

(g) During a period of 90 days from the date of the Prospectus, the Company will
not, without the prior written consent of the Placement Agent, (i) directly or
indirectly, offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any options or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of any Shares or any
securities convertible into or exercisable or exchangeable for Shares or file
any registration statement under the Securities Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Shares, whether any such swap or transaction
described in clause (i) or (ii) above is to be settled by delivery of Shares or
such other securities, in cash or otherwise. The foregoing sentence shall not
apply to (A) the Plus Cash Notes to be sold hereunder, (B) any Shares issued or
options to purchase Shares granted pursuant to existing stock-ownership plans of
the Company referred to in the Prospectus, (C) any Shares issued in connection
with the rights described in the Prospectus, (D) any Shares issued pursuant to
any non-employee director stock plan or dividend reinvestment plan, or (E)
Shares issuable upon the conversion of any of the Company’s outstanding Existing
Notes.

 

10. Conditions of Placement Agent’s Obligations. Your obligations as provided
shall be subject at all times on and prior to the Closing Date to the accuracy
of the representations and warranties of the Company herein, to the accuracy of
the statements of officers of the Company made pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and to
the following additional conditions:

 

(a) The Registration Statement shall have been filed and no stop order refusing
the effectiveness thereof shall have been issued and the Registration Statement
shall become effective as promptly as possible but in no event later than the
Closing Date and no stop order suspending the effectiveness thereof shall have
been issued and no proceedings for either purpose shall have been initiated or,
to the knowledge of the Company or you, threatened by the Commission, and any
request of the Commission for additional information (to be included in the
Registration Statement, the Prospectus, any Incorporated Document or otherwise)
shall have been complied with to the reasonable satisfaction of your counsel.

 

(b) After execution and delivery of this Agreement and prior to the Closing Date
there shall not have occurred from the respective dates as of which information
is given in the Prospectus (exclusive of any supplement thereto) (i) any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company whether or not
arising in the ordinary course of business, or (ii) any material adverse change
in the financial markets in the United States or in the international financial
markets, any outbreak of hostilities or escalation thereof or other calamity or
crisis or any change or development involving a prospective change in national
or international political, financial or economic conditions, which, in each
case the effect of which is such as to make it, in the reasonable judgment of
the Placement Agent, impracticable or inadvisable to market the Plus Cash Notes
or to enforce contracts for the exchange and/or sale of the Plus Cash Notes, or
(iii) any trading suspension or material limitation in trading instituted by the
Commission or the

 

13

--------------------------------------------------------------------------------

Nasdaq, or generally, any trading suspension or material limitation in trading
on the American Stock Exchange or the New York Stock Exchange or in the Nasdaq,
or the fixing of minimum or maximum prices for trading, or the establishment of
required maximum ranges for prices by any of said exchanges or by such system or
by order of the Commission, the National Association of Securities Dealers, Inc.
or any other governmental authority, or the occurrence of a material disruption
in commercial banking or securities settlement or clearance services in the
United States, or (iv) the declaration of a banking moratorium by either Federal
or New York authorities.

 

(c) All corporate proceedings and other legal matters in connection with this
Agreement, the Registration Statement, the Prospectus, and the registration,
authorization, issue, and delivery of the Plus Cash Notes issuable in accordance
with the New Money Offering, shall have been executed in a manner reasonably
satisfactory to Placement Agent’s Counsel, and such counsel shall have been
furnished with such papers and information as they may reasonably have requested
to enable them to pass upon the matters referred to in this Section.

 

(d) You shall have received the opinion of Testa, Hurwitz & Thibeault, LLP ,
counsel for the Company, dated the Closing Date addressed to you, substantially
in the form of Exhibit B-1 hereto.

 

(e) You shall have received the opinion of intellectual property counsel for the
Company, dated the Closing Date addressed to you, substantially in the form of
Exhibit B-2 hereto.

 

Counsel rendering the foregoing opinions in (d) and (e) may rely as to questions
of law not involving the laws of the United States of America or the State of
Delaware, upon opinions of local counsel, and as to questions of fact upon
representations or certifications of officers of the Company, and of government
officials, in which case their opinion is to state that they are so relying and
that they have no knowledge of any material misstatement or inaccuracy in any
such opinion, representation or certificate. Copies of any opinion,
representation or certificate so relied upon shall be delivered to you, as
Placement Agent, and to your counsel.

 

(f) You shall have received on the Closing Date an opinion of Shearman &
Sterling LLP, in form and substance satisfactory to you, with respect to the
sufficiency of all such corporate proceedings and other legal matters relating
to this Agreement and the transactions contemplated hereby as you may reasonably
require, and the Company shall have furnished to such counsel such documents as
they may have requested for the purpose of enabling them to pass upon such
matters.

 

(g) At the time of the execution of this Agreement, you shall have received from
KPMG LLP, a letter dated as of such date, in form and substance satisfactory to
you containing statements and information of the type ordinarily included in
accountants’ “comfort letters” to underwriters with respect to the financial
statements and certain financial information for the fiscal years prior 2000,
2001, and 2002 and the six months ended June 30, 2003 contained in the
Prospectus.

 

14

--------------------------------------------------------------------------------

(h) You shall have received by or on the effective date of the Registration
Statement, a bring-down comfort letter, dated as of the effective date (or one
business day prior thereto) as the case may be, from KPMG LLP addressed to you
which shall reaffirm the statements made in the letter referenced in (g) above.

 

(i) You shall have received by or on the Closing Date, a letter dated as of the
Closing Date (or one business day prior thereto) as the case may be, from KPMG
LLP addressed to you substantially in the form of the bring-down comfort letter
dated the date of this Agreement, which shall reaffirm the statements made in
the letters referenced in (g) and (h) above.

 

(j) You shall have received a certificate of the Company, dated as of the
Closing Date, signed by the Chief Executive Officer and Chief Financial Officer
of the Company, certifying that, and you shall be satisfied that:

 

(i) the representations and warranties of the Company in this Agreement are true
and correct in all material respects, as if made on and as of the Closing Date
or such other date as of which any representation speaks, as the case may be,
and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the Closing
Date, as the case may be;

 

(ii) no stop order refusing or suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Securities Act;

 

(iii) when the Registration Statement became effective and at all times
subsequent thereto up to the date of such certificate, the Registration
Statement and the Prospectus, and any amendments or supplements thereto and the
Incorporated Documents, contained all material information required to be
included therein by the Securities Act and the Rules and Regulations thereunder
or the Exchange Act and the applicable Rules and Regulations of the Commission
thereunder, as the case may be, and in all material respects conformed to the
requirements of the Securities Act and the Rules and Regulations thereunder or
the Exchange Act and the applicable Rules and Regulations of the Commission
thereunder, as the case may be; the Registration Statement, and any amendment or
supplement thereto, did not and does not include any 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 or supplement thereto, did not and does not include any 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; and since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth; and

 

(iv) subsequent to the respective dates as of which information is given in the
Registration Statement and Prospectus and up to the date of such certificate,
and

 

15

--------------------------------------------------------------------------------

except as disclosed therein, there has not been (a) any material adverse change
in the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as one
enterprise, (b) any transaction that is material to the Company and its
subsidiaries considered as one enterprise, except transactions entered into in
the ordinary course of business, (c) any obligation, direct or contingent, that
is material to the Company and its subsidiaries considered as one enterprise,
incurred by the Company or its subsidiaries, except obligations incurred in the
ordinary course of business, (d) any change in the capital stock or outstanding
indebtedness of the Company that is material to the Company and its subsidiaries
considered as one enterprise, (e) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company, or (f) any loss or
damage (whether or not insured) to the property of the Company or any of its
subsidiaries which has been sustained or will have been sustained and which has
a Material Adverse Effect or a Material Adverse Effect on the ability of the
Company to perform its obligations under the New Money Offering or consummate
the New Money Offering.

 

(k) The Company shall have furnished to you such further certificates and
documents as you shall reasonably request (including certificates of officers of
the Company) as to the accuracy of the representations and warranties of the
Company herein, as to the performance by the Company of its obligations
hereunder and as to the other conditions concurrent and precedent to your
obligations hereunder.

 

(l) You shall have received lock-up letters, substantially in the form set forth
in Exhibit A hereto, from each of the executive officers and directors of the
Company set forth on Schedule A hereto.

 

(m) You shall have received on the Closing Date, all fees payable to you in cash
pursuant to Section 6 hereof.

 

(n) The NASD shall have confirmed that it has not raised any objection with
respect to the fairness and reasonableness of the terms and arrangements in
connection with the offering of the Securities.

 

All such opinions, certificates, letters and documents will be in compliance
with the provisions hereof only if they are reasonably satisfactory to your
counsel. The Company will furnish you with such number of conformed copies of
such opinions, certificates, letters and documents as you shall reasonably
request.

 

11. Indemnification and Contribution.

 

(a) The Company agrees to indemnify and hold you harmless against any losses,
claims, damages or liabilities, joint or several, to which you may become
subject under the Securities Act, the Exchange Act or otherwise, specifically
including, but not limited to, losses, claims, damages or liabilities (or
actions in respect thereof) arising out of or based upon (i) any breach of any
representation, warranty, agreement or covenant of the Company herein contained;

 

16

--------------------------------------------------------------------------------

(ii) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, or any amendments or supplements
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any untrue statement or alleged untrue statement of any
material fact contained in any Prospectus or any amendment or supplement
thereto, including any Incorporated Document, or the omission or alleged
omission to state therein a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and agrees to reimburse you for any legal or other expenses
reasonably incurred by you in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, or Prospectus, or any such amendment or supplement
thereto, in reliance upon, and in conformity with, written information relating
to you furnished to the Company by you, specifically for use in the preparation
thereof.

 

The indemnity agreement in this Section 11(a) shall extend upon the same terms
and conditions to, and shall inure to the benefit of, you and your affiliates
and the partners, directors, officers, employees and agents of you and your
affiliates, and each person or entity, if any, who controls or is under common
control with, you within the meaning of the Securities Act or the Exchange Act.
This indemnity agreement shall be in addition to any liabilities, which the
Company may otherwise have.

 

(b) You agree to indemnify and hold harmless the Company against any losses,
claims, damages or liabilities, joint or several, to which the Company may
become subject under the Securities Act, the Exchange Act or otherwise,
specifically including, but not limited to, losses, claims, damages or
liabilities (or actions in respect thereof) arising out of or based upon (i) any
breach of any representation, warranty, agreement or covenant of yours herein
contained, (ii) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, or any amendments or supplements
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement and the Prospectus or any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, in the case of
subparagraphs (ii) and (iii) of this Section 11(b) to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon, and in conformity with, written
information furnished to the Company by you specifically for use in the
Registration Statement, or any amendment or supplement thereto or in the
preparation thereof, and you agree to reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action.

 

The indemnity agreement in this Section 11(b) shall extend upon the same terms
and conditions to, and shall inure to the benefit of, each officer of the
Company who signed the

 

17

--------------------------------------------------------------------------------

Registration Statement and each director of the Company, and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act. This indemnity agreement shall be in addition to any liabilities
which you may otherwise have.

 

(c) Promptly after receipt by an indemnified party under this Section 11 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 11, notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party will not relieve
such indemnifying party from any liability which it may have to any indemnified
party for contribution or otherwise than under the indemnity agreement contained
in this Section 11 or to the extent the indemnifying party is not prejudiced as
a proximate result of such failure. In case any such action is brought against
any indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it shall elect, jointly with all other
indemnifying parties similarly notified, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that a conflict may
arise between the positions of the indemnifying party and the indemnified party
in conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party’s election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 11 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party (the Company in the case of Section 11(a) and U.S. Bancorp Piper Jaffray
Inc. in the case of Section 11(b)), representing the indemnified parties who are
parties to such action), (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of such action, or (iii)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party, in each of which
cases the reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party.

 

(d) The indemnifying party under this Section 11 shall not be liable for any
settlement of any proceeding effected without its written consent, unless the
indemnifying party shall have approved the terms of settlement, provided that
such consent shall not be unreasonably withheld. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened

 

18

--------------------------------------------------------------------------------

action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity was or could have been sought hereunder by such
indemnified party, unless such settlement, compromise or consent includes (i) an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.

 

(e) In order to provide for just and equitable contribution in any action in
which a claim for indemnification is made pursuant to this Section 11 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 11 provides for indemnification in
such case, all the parties hereto shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion so that you are responsible for the portion
represented by the percentage that the maximum Placement Agent’s fee payable to
the Placement Agent pursuant to Section 6 hereof bears to the value of the
maximum amount of Plus Cash Notes issuable pursuant to the New Money Offering,
and the Company is responsible for the remaining portion, provided, however,
that (i) you shall not be required to contribute any amount in excess of the
amount by which the fee paid to you pursuant to Section 6 hereof exceeds the
amount of damages which you have been otherwise required to pay and (ii) no
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation. The contribution
agreement in this Section 11(d) shall extend upon the same terms and conditions
to, and shall inure to the benefit of, each person, if any, who controls you or
the Company within the meaning of the Securities Act or the Exchange Act and
each officer of the Company who signed the Registration Statement and each
director of the Company.

 

12. Representations, Warranties, Covenants and Agreements to Survive Delivery.
All representations, warranties, covenants and agreements of the Company and you
herein or in certificates delivered pursuant hereto, and the indemnity and
contribution agreements contained in Section 11 hereof shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of you or any person controlling you within the meaning of the Securities
Act or the Exchange Act, or by or on behalf of the Company or any of its
officers, directors or controlling persons within the meaning of the Securities
Act or the Exchange Act, and shall survive the completion of the New Money
Offering or termination of this Agreement.

 

13. Termination.

 

(a) This Agreement shall terminate upon the earliest to occur of (i) thirty days
after the Expiration Date, (ii) any of the conditions specified in Section 10
has not been fulfilled as of any date such condition is required to be fulfilled
pursuant to Section 10 (and the Placement Agent shall have notified the Company
thereof), (iii) the date on which the Company terminates or withdraws the New
Money Offering for any reason, or (iv) any modification to the business terms of
the New Money Offering in the Company’s sole and absolute discretion that
results in the Placement Agent withdrawing pursuant to Section 5 hereof, (the
earliest to occur of clauses (i), (ii), (iii) or (iv) being referred to as the
“Termination Date”).

 

 

19

--------------------------------------------------------------------------------

(b) Notwithstanding termination of this Agreement pursuant to subsection (a)
above, the obligations of the parties pursuant to Sections 6, 7 and 11 shall
survive any termination of this Agreement.

 

If you elect to terminate this Agreement as provided in this Section 13, you
shall promptly notify the Company by telephone, telecopy or telegram, in each
case confirmed by letter.

 

14. Notices. All notices or communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to you shall be mailed,
delivered, or telecopied (and confirmed by letter) to you c/o U.S. Bancorp Piper
Jaffray Inc., 800 Nicollet Mall, Suite 800, Minneapolis, MN 55402-7020
telecopier number (612-303-1772), Attention: General Counsel’s Department; if
sent to the Company, such notice shall be mailed, delivered, telegraphed (and
confirmed by letter) or telecopied (and confirmed by letter) to TranSwitch
Corporation, 3 Enterprise Drive, Shelton, CT 06484, Attention: Peter J. Tallian,
with a copy to Testa, Hurwitz & Thibeault LLP, 125 High Street, Boston, MA
02110, Attention: Timothy C. Maguire.

 

15. Parties. This Agreement shall inure to the benefit of and be binding upon
the Placement Agent and the Company and their respective executors,
administrators, successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person or entity, other
than the parties hereto and their respective executors, administrators,
successors and assigns, and the controlling persons within the meaning of the
Securities Act or the Exchange Act, officers and directors referred to in
Section 11 hereof, any legal or equitable right, remedy or claim in respect of
this Agreement or any provisions herein contained. This Agreement, and all
conditions and provisions hereof, is intended and is for the sole and exclusive
benefit of the parties hereto and their respective executors, administrators,
successors and assigns and said controlling persons and said officers and
directors, and for the benefit of no other person or entity. No Holder of Plus
Cash Notes shall be construed a successor or assign by reason merely of such
exchange.

 

16. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.

 

17. Counterparts. This Agreement may be signed in several counterparts, each of
which will constitute an original.

 

 

20

--------------------------------------------------------------------------------

Please indicate your willingness to act as Placement Agent on the terms set
forth herein and your acceptance of the foregoing provisions by signing in the
space provided below for that purpose and returning to us a copy of this letter,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.

 

Very truly yours,

TRANSWITCH CORPORATION

By:

 

/s/ Peter J. Tallian

--------------------------------------------------------------------------------

   

Name:    Peter J. Tallian

   

Title: Senior Vice-President, Chief Financial Officer and Treasurer

 

Accepted as of the date first above written:

 

U.S. BANCORP PIPER JAFFRAY INC. By:  

/s/ Brendan C. Dyson

--------------------------------------------------------------------------------

   

Name: Brendan C. Dyson

   

Title: Managing Director

--------------------------------------------------------------------------------

Schedule A

Persons Subject to Lock-Up

 

Dr. Santanu Das

Mr. Alfred F. Boschulte

Mr. Gerald F. Montry

Mr. James M. Pagos

Dr. Albert E. Paladino

Mr. Erik H. van der Kaay

Dr. Hagen Hultzsch

Mr. Peter J. Tallian

Das Family Foundation, Inc.

Atanu Das Irrevocable Trust

--------------------------------------------------------------------------------

Exhibit A

Form of Lock-Up

 

U.S. Bancorp Piper Jaffray, Inc.

Piper Jaffray Tower

222 South Ninth Street

Minneapolis, MN 55402

 

May    , 2003

 

Re: TranSwitch Corporation

 

Ladies and Gentlemen:

 

Reference is made to a Registration Statement on Form S-4 and Form S-3 of
TranSwitch Corporation (the “Company”) (as the same may now or hereafter exist
or be amended, the “Registration Statement”) pursuant to which it is proposed
that $             principal amount of the Company’s     % Convertible Senior
Plus Cash NotesSM due 2007 (the “Notes”) will be exchanged for $            
principal amount of the Company’s 4 1/2% Convertible Notes due 2005 (the
“Exchange Offer”), or on such other terms as described in the final prospectus
with respect to such offering for which U.S. Bancorp Piper Jaffray, Inc. (“Piper
Jaffray”) will act as the dealer manager (the “Dealer Manager”) and pursuant to
which it is proposed that there will be a public offering of $             of
the Notes (the “Public Offering”) for which Piper Jaffray will act as the
placement agent (the “Placement Agent”). Shares of Common Stock, $0.001 par
value per share, of the Company (“Common Stock”) are held by the undersigned.

 

In order to induce Piper Jaffray, as the Dealer Manager that may participate in
the Exchange Offer, and as the Placement Agent that may participate in the
Public Offering, to continue its efforts in connection with the Exchange Offer
and the Public Offering, the undersigned hereby agrees not to, directly or
indirectly, sell, offer to sell, contract to sell, pledge, grant any option for
sale or purchase of, agree to sell or otherwise dispose of (collectively
“Disposition”), any shares of Common Stock, or any securities convertible into
or exercisable for Common Stock (individually and collectively, the
“Securities”), beneficially owned by the undersigned now or acquired by the
undersigned on or before the effective date of the Registration Statement (the
“Effective Date”), or with respect to which the undersigned now has, or on or
before the Effective Date acquires, the power of Disposition, for a period
commencing on the Effective Date and ending 90 days thereafter (the “Lock-Up
Period”), without the prior written consent of Piper Jaffray; provided, however,
that the foregoing agreement shall not apply to (i) gifts to family members or
charitable contributions of Common Stock or securities convertible into or
exercisable for Common Stock made by the undersigned in transfers not involving
a public distribution or public offering, if the recipient of such gift or
contribution agrees in writing as a condition precedent to such gift or
contribution to be bound by the terms hereof, or (ii) transfers of Securities to
“affiliates” of the transferor in transfers not involving a public distribution
or public offering, if the transferee agrees in writing as a condition precedent

--------------------------------------------------------------------------------

to such transfer to be bound by the terms hereof. The term “affiliate” shall
have the meaning given such term in Rule 144 under the Securities Act of 1933.
The transferor shall notify Piper Jaffray in writing prior to the transfer and
shall deliver the above-mentioned agreement on the part of the permitted
transferee, in form and substance satisfactory to Piper Jaffray. During the
Lock-Up Period, there shall be no further transfer of Common Stock or securities
convertible into or exercisable for Common Stock, by either the undersigned or
any permitted transferee, except in accordance with this letter agreement.

 

The foregoing restriction has been expressly agreed to preclude the holder of
the Securities from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition of
Securities during the Lock-Up Period, even if such Securities would be disposed
of by someone other than such holder. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Securities or with
respect to any security (other than a broad-based market basket or index) that
included, relates to or derives any significant part of its value from
Securities.

 

In furtherance of the foregoing, the Company and its transfer agent are hereby
authorized to decline to make any transfer of securities if such transfer would
constitute a violation or breach of this letter agreement. The undersigned also
agrees and consents to the entry of stock transfer instructions with the
Company’s transfer agent against the transfer of any shares of Common Stock or
securities convertible into or exercisable for Common Stock.

 

In addition, the undersigned hereby waives any rights with respect to the
registration of Securities, including any “piggyback” or demand rights for
registration of the Securities under any federal or applicable state securities
laws, that the undersigned may be entitled to exercise as a result of or in
connection with the filing of the Registration Statement or the Exchange Offer
or the Public Offering generally, and further agrees that, without the prior
written consent of Piper Jaffray, it will not, during the period commencing on
the date hereof and ending 90 days after the Effective Date, make any demand for
or exercise any right with respect to, the registration of any Securities.

 

Whether or not the Exchange Offer or the Public Offering actually occurs depends
upon a number of factors, including market conditions. Any Exchange Offer will
only be made pursuant to a dealer-manager agreement, the terms of which are
subject to negotiation between the Dealer Manager and the Company. Any Public
Offering will only be made pursuant to a placement agent agreement or purchase
agreement, the terms of which are subject to negotiation between the Placement
Agent and the Company.

 

The undersigned intends to be legally bound hereby.

 

Very truly yours,

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Printed Name of Holder By:  

 

--------------------------------------------------------------------------------

    Signature

 

--------------------------------------------------------------------------------

    Printed Name of Person Signing     (and indicate capacity of person signing
if signing as custodian, trustee, or on behalf of an entity)

Date:

 

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

EXHIBIT B-1

 

Form of opinion of Testa, Hurwitz & Thibeault, LLP

to be delivered pursuant to Section 10(d)

 

(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.

 

(2) The execution and delivery by the Company of the Placement Agreement, the
performance by the Company of its obligations thereunder and the issuance and
delivery by the Company of the New Notes pursuant to the Indenture and
consummation by the Company of the Cash Offer have been duly authorized by all
necessary corporate action on the part of the Company, and the Placement
Agreement has been duly executed and delivered by the Company.

 

(3) The Company has the corporate power and corporate authority to enter into
the Placement Agreement and the Indenture under which the New Notes will be
issued pursuant to the Cash Offer.

 

(4) Assuming the facts as provided in the Officers’ Certificate, a copy of which
has been provided to you, and, assuming the Company invests the proceeds from
the sale of the New Notes in connection with the Cash Offer consistent with the
intent expressed in the Officers’ Certificate and in a manner and in proportions
consistent with Schedule [ ] to the Officers’ Certificate, the Company is not
required to be registered as an “investment company” as such term is defined in
the 1940 Act.

 

(5) The Registration Statement and the Prospectus, and each amendment or
supplement thereto (other than the financial statements, including supporting
schedules, and financial data derived therefrom, as to which we express no
opinion), as of the effective date of the Registration Statement, complied as to
form in all material respects with the requirements of the Securities Act and
the applicable Rules and Regulations of the Commission thereunder.

 

(6) Each of the Incorporated Documents (other than the financial statements,
including supporting schedules, and the financial data derived therefrom, as to
which we express no opinion) complied when filed pursuant to the Exchange Act
and the applicable Rules and Regulations of the Commission thereunder, as to
form in all material respects with the requirements of the Securities Act and
the Rules and Regulations of the Commission thereunder and the Exchange Act and
the applicable Rules and Regulations of the Commission thereunder.

 

(7) The information in the Prospectus under the captions “Cash Offer of
Additional Plus Cash Notes,” “Description of Plus Cash Notes” and “Description
of Capital Stock,” insofar as such statements purport to constitute a summary of
legal matters, legal proceedings or legal conclusions, has been reviewed by us
and provides an accurate summary in all material respects of such matters,
proceedings or conclusions.

--------------------------------------------------------------------------------

(8) The statements in the Prospectus under the caption “United States Federal
Income Tax Considerations,” insofar as such statements purport to constitute a
summary of legal matters, legal proceedings or legal conclusions, has been
reviewed by us and provides an accurate summary in all material respects of such
matters, proceedings or conclusions.

 

(9) No consent, approval, authorization, permit or order of or qualification
with any U.S. or Delaware government or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries, or over any of their
properties or operations, is necessary in connection with the consummation by
the Company of the transactions contemplated by the Placement Agreement, the
issuance and delivery of the New Notes pursuant to the Cash Offer and the
consummation of the Cash Offer, except such as have been obtained under the
Securities Act, the Exchange Act or the TIA or such as may be required under
state or other securities or Blue Sky laws or as contemplated by the Placement
Agreement.

 

(10) The Indenture has been duly authorized, executed and delivered by the
Company and, assuming due authorization, execution and delivery of the Indenture
by the Trustee, constitutes a valid and binding agreement of the Company under
the laws of the State of New York enforceable against the Company in accordance
with its terms.

 

(11) Assuming the effectiveness of the Registration Statement and the compliance
as to form of the Registration Statement with the TIA, the Indenture has been
qualified under the TIA.

 

(12) The New Notes issued by the Company in the Cash Offer, when (i) executed by
the Company, assuming due authorization, execution and delivery of the Indenture
and authentication of the New Notes by the Trustee in accordance with the
provisions of the Indenture, and (ii) delivered by the Company in accordance
with the terms of the Cash Offer, will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Company under the
laws of the State of New York enforceable against the Company in accordance with
their terms.

 

(13) The Shares issuable by the Company upon conversion of the New Notes issued
in the Cash Offer have been duly authorized and reserved for issuance by the
Company upon conversion of the New Notes issued in the Cash Offer and, when
issued and delivered by the Company in accordance with the terms of the
Indenture, will be validly issued, fully paid and nonassessable, and free from
any statutory preemptive right or other similar right of shareholders pursuant
to the Delaware General Corporation Law; and to our knowledge, the shareholders
of the Company have no contractual preemptive rights, co-sale rights,
registration rights, rights of first refusal or other similar rights with
respect to any of the Shares or applicable to the issuance or sale by the
Company of any thereof.

 

(14) The Company has the corporate authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus.

 

(15) The Company is duly qualified to do business as a foreign corporation and
is in good standing in California, Connecticut, Massachusetts and North
Carolina, which the Company has informed us are the only jurisdictions in which
it owns or leases real property.

--------------------------------------------------------------------------------

(16) The authorized capital stock of the Company is as set forth in the
Prospectus under the title “Capitalization” as of the date stated therein.

 

(17) To our knowledge, there are no legal or governmental proceedings pending or
threatened against the Company or any of its subsidiaries required to be
disclosed in the Registration Statement or the Prospectus by the Securities Act
or the Rules and Regulations thereunder or by the Exchange Act or the applicable
Rules and Regulations of the Commission thereunder, other than those described
therein.

 

(18) The execution and delivery by the Company of, and the performance by the
Company of its obligations under, the Placement Agreement, the issuance and
delivery by the Company of the New Notes pursuant to the Cash Offer and
consummation by the Company of the Cash Offer, other than performance of the
Company’s indemnification and contribution obligations under the Placement
Agreement and the Indenture, as to which we express no opinion, will not (a)
result in any violation of the Certificate of Incorporation or By-laws of the
Company or (b) to our knowledge, result in a breach or violation of any of the
terms and provisions of, or constitute a material default under, any bond,
debenture, note or other evidence of indebtedness, or any lease, contract,
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument, that has been filed as an exhibit to (or incorporated by reference
in) the Company’s most recent Annual Report on Form 10-K for the year ending
December 31, 2002, or any applicable statute, rule or regulation of the United
States or the Delaware General Corporation Law known to us, or any order, writ
or decree known to us of any court, government or governmental agency or body of
the United States or the State of Delaware pursuant to the Delaware General
Corporation Law having jurisdiction over the Company or any of its subsidiaries,
or over any of its or their properties or operations; provided, however, that we
express no opinion concerning state securities or Blue Sky laws.

 

(19) Each of the companies listed below is validly existing in good standing
under the laws of the state listed opposite such company’s name.

 

Name

--------------------------------------------------------------------------------

   State

--------------------------------------------------------------------------------

Horizon Semiconductors, Inc.

   Virginia

Opal Acquisition Corporation

   Delaware

Systems On Silicon, Inc.

   Delaware

TranSwitch II Corp.

   Delaware

TranSwitch III, Inc.

   Delaware

TranSwitch International Corp.

   Delaware

TranSwitch Silicon Valley, Inc.

   California

TX Holdings Inc.

   Delaware

 

The Registration Statement was filed with the Commission prior to the
Commencement Date and, to our knowledge, no refusal order preventing
effectiveness, and after effectiveness, no stop order suspending effectiveness,
has been issued by the Commission, and, to our knowledge, no proceedings for
that purpose are pending before or threatened by the Commission.

--------------------------------------------------------------------------------

In the course of the preparation of the Registration Statement and the
Prospectus, we have participated in conferences with officers, employees and
other representatives of the Company, KPMG LLP, the Company’s independent public
accountants, David Gordon, patent counsel to the Company, and your
representatives and counsel concerning the information contained in the
Registration Statement and the Prospectuses. We have not, however, independently
verified and are not passing upon, and do not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus. Based on our participation as
described above, nothing has come to our attention that would lead us to believe
that the Registration Statement, including any Incorporated Document (except for
financial statements, financial statement schedules, and other financial data
included therein, as to which we make no statement), at the time the
Registration Statement became effective, contained an untrue statement of a
material fact, or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or that the Prospectus
(except for financial statements, financial statement schedules, and other
financial data included therein, as to which we make no statement), as of its
date or as of the date hereof, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

--------------------------------------------------------------------------------

EXHIBIT B-2

 

Form of opinion of intellectual property counsel

to be delivered pursuant to Section 10(e)

 

(i) To the best of my knowledge and belief, in the section of the May         ,
2003 Prospectus titled “RISK FACTORS—Our Failure to Protect Our Proprietary
Rights, or the Costs of Protecting These Rights, May Harm Our Ability to
Compete” and in the sections of the Company’s annual report on Form 10K for the
year ending December 31, 2002 as filed on March 17, 2003 (the “Annual Report”)
entitled “Patents and Licenses” and “Legal Proceedings”, and in the section of
the Company’s quarterly report on Form 10Q for the quarter ending March 31, 2003
as filed on May 9, 2003 entitled “CERTAIN FACTORS THAT MAY AFFECT OUR FUTURE
RESULTS—Our Failure to Protect Our Proprietary Rights, or the Costs of
Protecting These Rights, May Harm Our Ability to Compete”, and in the section of
the Form S-3 Registration Statement dated May 16, 2003 entitled “RISK
FACTORS—Our Failure to Protect Our Proprietary Rights, or the Costs of
Protecting These Rights, May Harm Our Ability to Compete”, and in the section of
the Form S-4 Registration Statement dated May 16, 2003 entitled “RISK
FACTORS—Our Failure to Protect Our Proprietary Rights, or the Costs of
Protecting These Rights, May Harm Our Ability to Compete”, the descriptions of
statutes, legal and governmental proceedings, contracts and other documents
relating to the Company’s patents, patent rights, inventions, trade secrets,
know-how, proprietary techniques, trademarks, service marks, trade names and
copyrights, (“Intellectual Property”) to the extent that they relate to the
Company’s business do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements made therein
not misleading.

 

(ii) The Company and its subsidiaries have duly and properly filed the U.S.
patent applications and trademark applications listed in the section entitled
“Patents and Licenses” of the Annual Report and have duly and properly informed
and instructed foreign patent attorneys and/or agents to duly and properly file
the foreign patent applications and trademark applications listed in the
“Patents and Licenses” section of the Annual Report, and to the best of my
knowledge and belief said foreign patent attorneys and/or agents have duly and
properly filed the foreign patent applications and trademark applications listed
in the “Patents and Licenses” section of the Annual Report, and except as
disclosed in the Prospectus, the Company and its subsidiaries duly hold the U.S.
Patents and trademarks listed in the “Patents and Licenses” section of the
Annual Report, and to the best of my knowledge and belief, duly hold the foreign
patents and trademarks listed in the “Patents and Licenses” section of the
Annual Report.

 

(iii) To the best of my knowledge and belief, for the last three years, except
as disclosed in the Prospectus, or as otherwise disclosed to you, the Company
has not received any notice from any other person pertaining to or challenging
the right of the Company to use any patents or trademarks owned or used by or
licensed to the Company.

 

(iv) To the best of my knowledge and belief, for the last three years, except as
disclosed in the Prospectus, or as otherwise disclosed to you, the Company has
conducted its business without claim of infringement of any United States or
foreign patents or trademarks of others.

--------------------------------------------------------------------------------

(v) To the best of my knowledge and belief, for the last three years, other than
pending patent and trademark applications, or as otherwise disclosed to you,
there is not pending or threatened any action, suit or proceeding to which the
Company is a party, before or by any court or governmental agency or body,
relating to patents or patent rights or patent applications with respect to the
Company’s products.

 

(vi) To the best of my knowledge and belief, for the last three years, except as
otherwise disclosed to you, the Company has not threatened action or litigation
against another party for infringement of Company’s patents or trademarks.

 

(vii) I have reviewed the section of the Prospectus titled “RISK FACTORS—Our
Failure to Protect Our Proprietary Rights, or the Costs of Protecting These
Rights, May Harm Our Ability to Compete”, and the sections entitled “Patents and
Licenses” and “Legal Proceedings” of the Company’s annual report on Form 10K for
the year ending December 31, 2002 as filed on March 17, 2003, and the section of
the Company’s quarterly report on Form 10Q for the quarter ending March 31, 2003
as filed on May 9, 2003 entitled “CERTAIN FACTORS THAT MAY AFFECT OUR FUTURE
RESULTS—Our Failure to Protect Our Proprietary Rights, or the Costs of
Protecting These Rights, May Harm Our Ability to Compete”, and the section of
the Form S-3 Registration Statement dated May 16, 2003 entitled “RISK
FACTORS—Our Failure to Protect Our Proprietary Rights, or the Costs of
Protecting These Rights, May Harm Our Ability to Compete”, and the section of
the Form S-4 Registration Statement dated May 16, 2003 entitled “RISK FACTORS—
Our Failure to Protect Our Proprietary Rights, or the Costs of Protecting These
Rights, May Harm Our Ability to Compete”, which have been delivered to me in
connection with this Opinion, and any further amendments or supplements thereto
made by the Company prior to the Closing Date and brought to my attention, and
insofar as they concern trademarks, patents or patent rights, or patent
applications pertaining to the Company’s business or products, I have no reason
to believe that these sections include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements made therein
not misleading.