Exhibit 1.2
PLACEMENT AGREEMENT
June ___, 2003
U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇, INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies/Gentlemen:
1. General. TranSwitch Corporation, a Delaware corporation (the
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"Company"), proposes to offer for cash (the "Cash Offer") up to $20,000,000
aggregate principal amount of 6.0% Convertible Senior Plus Cash NotesSM due
June , 2007 (the "New 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
$20,000,000 aggregate principal amount in the Cash Offer, the additional New
Notes will be allocated at the discretion of the Placement Agent (as defined
below) based on the amount of each Holder's indication in the Cash Offer. The
additional New Notes issued in the Cash Offer are to be issued pursuant to an
Indenture, dated as of June ___, 2003, as amended or modified from time to time
(the "Indenture"), between the Company, and U.S. Bank National Association, as
trustee (the "Trustee"). Capitalized terms used herein without definition shall
have their respective meanings set forth in or pursuant to the Registration
Statement (as defined herein), notwithstanding that such terms as used herein
are not capitalized in the Registration Statement.
2. Appointment as Agent. By this Placement Agreement (the "Agreement"),
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the Company hereby engages and appoints you as exclusive Placement Agent (the
"Placement Agent") for the Cash Offer and authorizes you to act as such in
connection with the Cash Offer.
(a) Subject to the terms and conditions stated herein, the
Company hereby agrees that the New Notes to be issued in the Cash Offer will be
sold exclusively through the Placement Agent. The Company and Placement Agent
agree that the Placement Agent may allow, and dealers may reallow, a discount
not in excess of [$. ] per New Note in connection with the sale of additional
New Notes in the Cash Offer. The Placement Agent agrees to use its best efforts
to obtain purchases from the Holders for any or all of the additional New Notes
or to obtain purchases from current shareholders at a price of $1,000 per
additional New Note or any integral multiple of $1,000.
(b) The Company shall not sell or approve the solicitation of
offers for the purchase of additional New Notes in excess of the amount which
shall be authorized by the Company or in excess of the aggregate offering price
of the New Notes registered pursuant to the Registration Statement.
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3. Registration Statement, Prospectus and Offering Materials. The
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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),
including a Prospectus, covering the registration of the offer and sale of the
New Notes; the Shares issuable upon conversion of the New Notes issued in the
Cash Offer; the Shares that may be issued solely at the Company's option as
payment of interest on the New Notes issued in the Cash Offer; 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 Cash Offer 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.
4. Use of the Prospectus and Registration Statement. The Company
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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
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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
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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 Cash Offer in a manner not reasonably acceptable to you,
then you shall be entitled to withdraw as Placement Agent in connection with the
Cash Offer 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 Cash Offer 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 Cash Offer 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
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Cash Offer is consummated (the "Closing Date") will be determined in accordance
with the fee schedule set forth below as of the date the Cash Offer is
consummated (the "Closing Date"):
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Amount of New Money Fee Maximum Cumulative Fee
Raised
(in millions)
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$0.00- $5.00 4.5% $230,000
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$5.01 - $10.00 4.0% $430,000
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$10.01 - 15.00 3.5% $600,000
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$15.01 - $20.00 3.0% $750,000
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**$20.00 3.0% $**750,000
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** means greater than
7. Expenses. Prior to or on the Closing Date, the Company agrees that it
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will pay the costs and expenses incident to the performance of the obligations
hereunder whether or not any New Notes are offered or sold pursuant to the Cash
Offer, 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 SmallCap Market
("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 Cash Offer, (iv) all costs and expenses incident to the
preparation, issuance, execution and delivery of the New Notes, (v) all costs
and expenses incident to the preparation, printing and filing under the
Securities Act of the Registration Statement and the
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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 Cash Offer, (vii) all costs and expenses incident to the
qualification of the New 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 Cash Offer and the fees and expenses of the Exchange
Agent and the Information Agent, (x) all fees and expenses incurred in marketing
the Cash Offer, including but not limited to road show presentations, if any,
and (xi) the fees and disbursements of ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, 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 Cash Offer, including, without limitation, the reasonable
legal fees and expenses of the Placement Agent's Counsel in connection with the
Cash Offer.
8. Representations, Warranties and Agreements of the Company. The
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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 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
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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 New 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 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.
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(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 New Notes and to consummate the Cash Offer. The Cash Offer has been duly and
validly authorized by all necessary corporate action by the Company and, except
for authorization of final terms of the New 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 New Notes pursuant to the Cash Offer, the consummation of the Cash Offer,
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 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
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required in connection with the transactions contemplated by this Agreement, the
Indenture, the Cash Offer, the issuance and delivery of the New Notes pursuant
to the Cash Offer, 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 New 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 Cash Offer 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 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 New Notes have been duly authorized for issuance and delivery and, when
issued and delivered by the Company in accordance with the terms of the New
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 New 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
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approval or authorization of any shareholder, the Board of Directors of the
Company (except for authorization of final terms of the New 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 New Notes to be issued pursuant to the Cash Offer 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
Cash Offer, 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 New 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 Prospectus
under the captions "Selected Historical 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.
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(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, 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
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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 New 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 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.
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(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 New Notes. The Company has not paid or
agreed to pay any person any compensation for soliciting another to purchase any
New 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 Cash
Offer; 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 Cash Offer; 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 Cash Offer 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 Cash Offer as then in effect
would 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 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 Cash Offer 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.
11
(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 New Notes issuable pursuant to the Cash Offer 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 Cash Offer, 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 New 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 New 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 Cash Offer.
(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 New 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
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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 New Notes or to
enforce contracts for the exchange and/or sale of the New Notes, or (iii) any
trading suspension or material limitation in trading instituted by the
Commission or the 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 New Notes issuable in
accordance with the Cash Offer, 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.
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(d) You shall have received the opinion of ▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, 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, 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 three months ended March 31, 2003 contained
in the Prospectus.
(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:
14
(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 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
15
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 Cash Offer or consummate
the Cash Offer.
(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; (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,
16
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 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
17
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 ▇▇▇▇▇ ▇▇▇▇▇▇▇,
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 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
18
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 New Notes issuable pursuant to the Cash Offer,
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 Cash
Offer 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 Cash Offer for any reason, or (iv) any modification to the
business terms of the Cash Offer 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").
(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.
19
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 ▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇ 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, ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, with a copy to ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
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 New
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.
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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 ____________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice-President,
Chief Financial
Officer and Treasurer
Accepted as of the date first above written:
U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇, INC.
By _________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
Schedule A
Persons Subject to Lock-Up
▇▇. ▇▇▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇ ▇. van der Kaay
▇▇. ▇▇▇▇▇ Hultzsch
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Exhibit A
Form of Lock-Up
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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 Subordinated 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 ▇▇▇▇▇ ▇▇▇▇▇▇▇,
Inc. ("▇▇▇▇▇ ▇▇▇▇▇▇▇") 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 ▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇ ▇▇▇▇▇▇▇, 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 ▇▇▇▇▇ ▇▇▇▇▇▇▇; 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 ▇▇▇▇▇
▇▇▇▇▇▇▇ 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 ▇▇▇▇▇ ▇▇▇▇▇▇▇. 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 ▇▇▇▇▇ ▇▇▇▇▇▇▇, 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 ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, 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.
26
(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
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
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.
27
(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
--------------------------
28
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, ▇▇▇▇▇ ▇▇▇▇▇▇, 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.
29
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
30
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.
31