Execution Copy
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Exhibit 2.3
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SECURITIES PURCHASE AGREEMENT
BY AND AMONG
THE SELLERS IDENTIFIED ON THE SIGNATURE PAGES HERETO
AND
TRANSWITCH CORPORATION
Dated as of March 27, 2002
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TABLE OF CONTENTS
PAGE
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ARTICLE I -- DEFINITIONS.......................................................1
1.1. Definitions...........................................................1
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ARTICLE II -- PURCHASE AND SALE................................................2
2.1. Purchase and Sale.....................................................2
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2.2. Closing...............................................................2
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2.3. Payment...............................................................3
2.4. Withholding Taxes.....................................................3
ARTICLE III -- ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLERS............3
3.1. Title to and Validity of Notes........................................3
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3.2. Authority.............................................................3
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3.3. Consent, Approvals....................................................4
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3.4. Power To Act as Trustee or Executor...................................4
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3.5. Warrants and Shares to be Received if Warrant is Exercised............4
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ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF TRANSWITCH.....................4
ARTICLE V -- COVENANTS OF THE SELLERS..........................................4
5.1. Confidentiality.......................................................4
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ARTICLE VI -- COVENANTS OF TRANSWITCH..........................................6
6.1. Confidentiality.......................................................6
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ARTICLE VII -- COVENANTS OF ALL PARTIES........................................6
7.1. Best Efforts..........................................................6
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7.2. Certain Filings.......................................................6
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7.3. Public Announcements..................................................7
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ARTICLE VIII -- CONDITIONS TO CLOSING..........................................7
8.1. Conditions to the Obligations of Each Party...........................7
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8.2. Conditions to Obligation of TranSwitch................................7
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8.3. Conditions to Obligation of Sellers...................................8
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ARTICLE IX -- MISCELLANEOUS...................................................10
9.1. Notices..............................................................10
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9.2. Entire Agreement.....................................................11
9.3. Governing Law; Consent to Jurisdiction...............................11
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Schedules
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Schedule 2.01 List of Sellers
Exhibits
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Exhibit 2.2 Form of Release of Claims
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PURCHASE AGREEMENT
AGREEMENT dated as of March 27, 2002 by and among the Sellers identified on
the signature pages hereto (the "Sellers") and tranSwitch Corporation, a
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Delaware corporation ("TranSwitch").
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W I T N E S S E T H :
WHEREAS, TranSwitch, Systems on Silicon, Inc., a Delaware corporation
("SOSI") and the other parties thereto have entered into a Management Sellers
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Stock Purchase Agreement dated as of March 27, 2002 (the "Management Sellers
Stock Purchase Agreement"), and a Non-Management Sellers Stock Purchase
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Agreement dated as of March 27, 2002 (the "Non-Management Sellers Stock Purchase
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Agreement") whereby TranSwitch shall acquire all of the outstanding capital
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stock of SOSI (the "Acquisition");
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WHEREAS, in connection with the Acquisition, TranSwitch desires to purchase
from Sellers all of the outstanding amount of convertible interest-bearing
promissory notes of SOSI owned and held by the Sellers as set forth on Schedule
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2.01 (the "Notes");
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WHEREAS, each Seller desires to sell to TranSwitch all of the Notes owned
by such Seller;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. (a) The following terms, as used herein, have the
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following meanings:
"Affiliates" shall have the meaning assigned in the Management Sellers
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Stock Purchase Agreement.
"Closing Date" means the date of the Closing.
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"Lien" shall have the meaning assigned in the Management Sellers Stock
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Purchase Agreement.
"Management Sellers Stock Purchase Agreement" means the Management
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Sellers Stock Purchase Agreement by and among TranSwitch and the Sellers as
defined therein, dated as of the date hereof.
"Material Adverse Effect" means a material adverse effect on the
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business, assets, condition (financial or otherwise) or results of operations of
SOSI.
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"Non-Management Sellers Stock Purchase Agreement" means the
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Non-Management Sellers Stock Purchase Agreement by and among TranSwitch and the
Sellers as defined therein, dated as of the date hereof.
"Person" means an individual, corporation, partnership, association,
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trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
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SOSI Recitals
Closing 2.2
Notes Recitals
Purchase Price 2.1
TranSwitch Recitals
ARTICLE II
PURCHASE AND SALE
2.1. Purchase and Sale. Upon the terms and subject to the conditions of
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this Agreement, each Seller, severally but not jointly, shall sell to
TranSwitch, and TranSwitch shall purchase from each such Seller, at the Closing,
that amount of Notes as is set forth opposite such Seller's name on Schedule
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2.01. The aggregate purchase price for each Seller with respect to their Notes,
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to be paid in cash, shall be equal to the amount of Notes, including outstanding
principal and interest as of the Closing Date (in each instance, such amount
being referred to as the "Purchase Price"). Sellers shall acknowledge that the
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sale by Sellers of Notes held by them, and the payment to Sellers hereunder
shall release SOSI from any and all obligations of SOSI to the Sellers under the
Notes, which obligations shall now run to TranSwitch. Such payment shall also
constitute full payment, satisfaction and discharge of the obligations of
TranSwitch to the Sellers under this Agreement. The Purchase Price shall be paid
as provided in Section 2.2.
2.2. Closing. The closing (the "Closing") of the purchase and sale of the
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Notes hereunder shall take place at the offices of TranSwitch's counsel in
Boston, Massachusetts or such other location as the parties may mutually agree
upon, but in no event later than the Closing Date set forth in the Management
Sellers Stock Purchase Agreement (the "Acquisition Closing Date") or at such
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other time or place as TranSwitch, SOSI and Sellers may agree in writing. At the
Closing,
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(a) The Purchase Price to be received for each Note shall be as
provided in Section 2.1 hereof.
(b) Each of the Sellers shall have executed a Release of Claims in
substantially the form attached hereto as Exhibit 2.2.
(c) The parties shall execute and deliver any other instruments,
documents and certificates that are required to be delivered pursuant to this
Agreement or as may be reasonably requested by any party in order to consummate
the transactions contemplated by this Agreement.
(d) Each of the Sellers shall provide to TranSwitch either the
appropriate executed IRS Form W-8 (if the Seller is not a United States Seller)
or an executed IRS Form W-9 (if the Seller is a United States Seller).
2.3. Payment. Sellers, at the time of the closing, will receive a check in
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the amount equal to their Purchase Price, minus any withholding taxes deducted
and withheld as provided in Section 2.4, in exchange for their validly delivered
Notes.
2.4. Withholding Taxes. TranSwitch shall be entitled to deduct and withhold
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from the consideration otherwise payable pursuant to this Agreement to any
Person such amounts as TranSwitch determines it is required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended, or any provision of state, local, or foreign tax law.
To the extent that amounts are so withheld, such withheld amounts shall be
treated for all purposes hereof as having been paid to such Person in respect of
which such deduction and withholding was made.
ARTICLE III
ADDITIONAL REPRESENTATIONS
AND WARRANTIES OF SELLERS
Each Seller, severally but not jointly, represents and warrants to, and
agrees with, TranSwitch as follows:
3.1. Title to and Validity of Notes. Seller is, and on the Closing Date
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will be, the lawful owner of the Notes to be purchased for the TranSwitch Stock
pursuant to this Agreement and has, and on the Closing Date will have, good and
clear title to such Notes, free of all Liens.
3.2. Authority. Such Seller has, and on the Closing Date will have, full
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legal right, power and authority to enter into this Agreement and to sell and
deliver the Notes owned by him, her or it in the manner provided herein. Such
Seller has duly and validly executed this Agreement and has, or prior to the
Closing will have, duly and validly executed and delivered all other agreements
contemplated hereby, and each of this Agreement and such other agreements
constitutes a valid, binding and enforceable obligation of such Seller in
accordance with its terms.
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3.3. Consent, Approvals. The execution, delivery and performance of this
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Agreement and the other agreements contemplated hereby by such Seller, and the
consummation of the transactions contemplated hereby or thereby, will not
require, on the part of such Seller, any consent, approval, authorization or
other order of, or any filing with, any governmental entity, or under any
contract, agreement or commitment to which such Seller is a party or by which
such Seller or property of such Seller is bound, and will not constitute a
violation on the part of such Seller of any law, administrative regulation or
ruling or court decree, or any contract, agreement or commitment, applicable to
such Seller or property of such Seller.
3.4. Power To Act as Trustee or Executor. If such Seller is serving as
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trustee or executor with respect to its Notes, such Seller is duly authorized
and empowered by the instruments creating such trust or trusts or by the will of
which such Seller is acting as executor and under applicable law to enter into
this Agreement with respect to the Notes held by such Seller and to consummate
the transactions contemplated herein.
3.5. Warrants and Shares to be Received if Warrant is Exercised. Seller is
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the record holder of a warrant to purchase common stock of SOSI at price of
$0.4447 per share. Seller hereby agrees and acknowledges that a) the warrant
will be cancelled immediately prior to the Closing and cannot be exercised after
the Closing and b) if Seller exercises his warrant prior to the Closing, the
shares received upon exercise of the warrant will be purchased by Buyer at a
price of $0.005 per share. Seller hereby waives any and all rights related to
the warrants and the exercise thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TRANSWITCH
TranSwitch hereby incorporates and adopts the representations and
warranties contained in Article V of the Management Sellers Stock Purchase
Agreement and restates such representations and warranties as though fully set
forth herein.
ARTICLE V
COVENANTS OF THE SELLERS
Each Seller agrees that:
5.1. Confidentiality. Sellers and their Affiliates will hold, and will use
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their best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning
TranSwitch furnished to Sellers or their Affiliates in connection with the
transactions contemplated by this Agreement, and (after the Closing Date) all
confidential
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documents and information concerning SOSI, except to the extent that such
information can be shown to have been (i) previously known on a nonconfidential
basis by Sellers, (ii) in the public domain through no fault of Sellers or (iii)
later lawfully acquired by Sellers from sources other than SOSI or TranSwitch;
provided that Sellers may disclose such information to their respective
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officers, directors, employees, accountants, counsel, consultants, advisors and
agents in connection with the transactions contemplated by this Agreement so
long as such persons are informed by Sellers of the confidential nature of such
information and are directed by Sellers to treat such information
confidentially. The obligation of Sellers and their Affiliates to hold any such
information in confidence shall be satisfied if they exercise the same care with
respect to such information as they would take to preserve the confidentiality
of their own similar information. If this Agreement is terminated, Seller will,
and will use its best efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents to, destroy or
deliver to TranSwitch, upon request, all documents and other materials, and all
copies thereof, obtained by Seller or on its behalf from TranSwitch in
connection with this Agreement that are subject to such confidence.
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ARTICLE VI
COVENANTS OF TRANSWITCH
TranSwitch agrees that:
6.1. Confidentiality. Prior to the Closing Date and after any termination
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of this Agreement, TranSwitch will hold, and will use its best efforts to cause
its respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of law,
all confidential documents and information concerning SOSI furnished to
TranSwitch in connection with the transactions contemplated by this Agreement,
except to the extent that such information can be shown to have been (i)
previously known on a nonconfidential basis by TranSwitch, (ii) in the public
domain through no fault of TranSwitch or (iii) later lawfully acquired by
TranSwitch from sources other than SOSI; provided that TranSwitch may disclose
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such information to its officers, directors, employees, accountants, counsel,
consultants, advisors and agents in connection with the transactions
contemplated by this Agreement so long as such Persons are informed by
TranSwitch of the confidential nature of such information and are directed by
TranSwitch to treat such information confidentially. The obligation of
TranSwitch to hold any such information in confidence shall be satisfied if they
exercise the same care with respect to such information as they would take to
preserve the confidentiality of their own similar information. If this Agreement
is terminated, TranSwitch will, and will use its best efforts to cause their
respective officers, directors, employees, accountants, counsel, consultants,
advisors and agents to, destroy or deliver to Seller, upon request, all
documents and other materials, and all copies thereof, obtained by TranSwitch or
on its behalf from a Seller in connection with this Agreement that are subject
to such confidence.
ARTICLE VII
COVENANTS OF ALL PARTIES
The parties hereto agree that:
7.1. Best Efforts. Subject to the terms and conditions of this Agreement,
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each party will use its best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary or desirable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement. Sellers, TranSwitch, and SOSI each agree to execute and deliver
such other documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable in order to consummate or
implement expeditiously the transactions contemplated by this Agreement.
7.2. Certain Filings. Sellers, SOSI and TranSwitch shall cooperate with
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each other (a) in determining whether any action by or in respect of, or filing
with, any governmental body, agency, official or authority is required, or any
actions, consents, approvals or waivers are
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required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Agreement and (b)
in taking such actions or making any such filings, furnishing information
required in connection therewith and seeking timely to obtain any such actions,
consents, approvals or waivers.
7.3. Public Announcements. The parties agree to consult with each other
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before issuing any press release or making any public statement with respect to
this Agreement or the transactions contemplated hereby and, except as may be
required by applicable law or any listing agreement with any national securities
exchange, will not issue any such press release or make any such public
statement prior to such consultation. Provided however, that TranSwitch may
issue an initial press release concerning the Acquisition following the Closing.
TranSwitch will not include the names of the Sellers in such press release
without the permission of any Seller mentioned therein.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1. Conditions to the Obligations of Each Party. The obligations of
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TranSwitch and Sellers to consummate the Closing are subject to the satisfaction
of the following conditions:
(a) No proceeding challenging this Agreement, the Management Sellers
Stock Purchase Agreement or the Non-Management Sellers Stock Purchase Agreement
or the Acquisition or the transactions contemplated hereby or thereby or seeking
to prohibit, alter, prevent or materially delay the Closing shall have been
instituted by any Person before any court, arbitrator or governmental body,
agency or official and be pending.
(b) Each of the conditions to closing specified in Article X of the
Management Sellers Stock Purchase Agreement or the Non-Management Sellers Stock
Purchase Agreement shall have been satisfied or waived.
(c) All actions by or in respect of or filings with any governmental
body, agency, official or authority required to permit the consummation of the
Closing shall have been obtained.
8.2. Conditions to Obligation of TranSwitch. The obligation of TranSwitch
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to consummate the Closing is subject to the satisfaction of the following
further conditions:
(a) The Acquisition shall have become effective.
(b) The representations and warranties of Sellers set forth in this
Agreement will be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except (i) as otherwise contemplated by this Agreement, (ii) as a
result of actions taken or not taken at
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the direction of or after consultation with and written concurrence of
TranSwitch and (iii) for representations and warranties specifically limited to
an earlier date(s). TranSwitch will have received a certificate signed by each
Seller to such effect on the Closing Date.
(c) Sellers will have performed in all material respects all
agreements and covenants required to be performed by them under this Agreement
prior to the Closing Date except (i) as otherwise contemplated or permitted by
this Agreement and (ii) as a result of actions taken or not taken at the
direction of or after consultation with and written concurrence of TranSwitch,
and TranSwitch will have received a certificate signed by each Seller to such
effect on the Closing Date.
(d) No court, arbitrator or governmental body, agency or official
shall have issued any order, and there shall not be any statute, rule or
regulation, restraining the effective operation by TranSwitch of the business of
SOSI after the Closing Date, and no proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter, prevent or
materially delay the Closing shall have been instituted by any Person before any
court, arbitrator or governmental body, agency or official and be pending.
(e) Each of the Sellers shall have executed and delivered his, her or
its Release of Claims at the Closing, in substantially the form attached as an
exhibit to this Agreement.
(f) TranSwitch shall have received all other closing documents
specified in Section 2.2 of this Agreement, Section 10.02 of the Management
Sellers Stock Purchase Agreement and Section 10.02 of the Non-Management Sellers
Stock Purchase Agreement and all other closing documents that it may reasonably
request, all in form and substance reasonably satisfactory to TranSwitch.
(g) Each of the Sellers shall have executed and delivered at the
Closing his, her or its appropriate IRS Form W-8 or IRS Form W-9.
8.3. Conditions to Obligation of Sellers. The obligation of Sellers to
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consummate the Closing is subject to the satisfaction of the following further
conditions:
(a) The representations and warranties of TranSwitch set forth in this
Agreement will be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement, and SOSI will
have received a certificate signed on behalf of TranSwitch by a duly authorized
officer of TranSwitch to such effect.
(b) TranSwitch will have performed in all material respects all
agreements and covenants required to be performed by it under this Agreement
prior to the Closing Date, and SOSI will have received a certificate signed on
behalf of TranSwitch by officers of TranSwitch to such effect.
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(c) No proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit, alter, prevent or materially delay
the Closing shall have been instituted by any Person before any court,
arbitrator or governmental body, agency or official and be pending.
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ARTICLE IX
MISCELLANEOUS
9.1. Notices. All notices, requests, demands or other communications which
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are required or may be given pursuant to the terms of this Agreement will be in
writing and will be deemed to have been duly given: (i) on the date of delivery
if personally delivered by hand, (ii) upon the third day after such notice is
deposited in the United States mail, if mailed by registered or certified mail,
postage prepaid, return receipt requested, (iii) upon the date scheduled for
delivery after such notice is sent by a nationally recognized overnight express
courier or (iv) by fax upon written confirmation (including the automatic
confirmation that is received from the recipient's fax machine) of receipt by
the recipient of such notice:
If to TranSwitch:
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TranSwitch Corporation
0 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
if to SOSI, to:
Xxxxxx Xxxxx, President
Systems on Silicon, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 00
Xxxxxxxx Xxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
with a copy to:
W. Xxxxxxx Xxxxxx, Esq.
Greenbaum, Rowe, Xxxxx, Xxxxx, Xxxxx & Himmell, LLP
00 Xxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Telecopy:
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if to a Seller:
at his, her or its address shown in
Schedule 2.01
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9.2. Entire Agreement. This Agreement, including the exhibits, schedules
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and other agreements delivered pursuant to this Agreement contain all of the
terms and conditions agreed upon by the parties relating to the subject matter
of this Agreement and supersede all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, whether oral or
written, respecting that subject matter.
9.3. Governing Law; Consent to Jurisdiction. This Agreement will be
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governed by the internal laws of the State of Delaware. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of Delaware, and each of the parties hereby consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any obligation to venue laid therein. Process in any such
action or proceeding may be served on any party anywhere in the world, whether
within or without the State of Delaware.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
TRANSWITCH CORPORATION
By: /s/ Xxxxxx X. Xxxx
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Title: Vice President Business Development
GTV CAPITAL L.P.
By: /s/ Xxxx X. Xxxxx
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Title:
NISKO HI-TECH GROUP, LTD.
By: /s/ Xxxxxx Xxxxx
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Title: President and CEO
POWER EQUITIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Title: CEO
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/s/ Xxxxx Xxxx
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Xxxxx Xxxx
/s/ Stefaan Dumery
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Stefaan Dumery
/s/ G. Xxxxxxxxxxx Xxxxxx
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G. Xxxxxxxxxxx Xxxxxx
/s/ Xxxxxx XxXxxx
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Xxxxxx XxXxxx
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
Schedule 2.1
Noteholder Payout
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Interest Principal Plus
Name Address Principal Rate Interest
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Xxxxx Xxxx $ 50,000.00 8.50% $ 52,515.07
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Stefaan Dumery $ 50,000.00 8.50% $ 51,234.25
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Xxxxxxxxxxx Xxxxxx $ 25,000.00 8.50% $ 25,617.12
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GTV Capital L.P. $ 10,000.00 8.50% $ 10,346.99
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Xxxxxx XxXxxx $ 25,000.00 8.50% $ 25,617.12
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Xxxxxx X. Xxxxx $ 25,000.00 8.50% $ 25,617.12
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Nisko Hi-Tech Group Ltd. $200,000.00 8.50% $209,873.97
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Power Equities, Inc. $250,000.00 8.50% $255,297.95
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Xxxx Xxxxxx $ 25,000.00 8.50% $ 25,529.79
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Totals: $660,000.00 $681,649.38
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