Negative Pledge Agreement

ExhibiT 10.26
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NEGATIVE PLEDGE AGREEMENT


This Negative Pledge Agreement is made as of July 16, 1998, by and between SILICON VALLEY BANK, a California-chartered bank with its principal place of business at 3003 Tasman Drive, Santa Clara, CA 95054 and with a loan production office located at Wellesley Office Park, 40 William Street, Suite 350, Wellesley, MA 02181, doing business under the name Silicon Valley East ("Bank"), and TRANSWITCH CORPORATION, a Delaware corporation with its principal place of business at 3 Enterprise Drive, Shelton, Connecticut 06484 ("Borrower").


In connection with the Loan Documents (as that term is defined in the Commitment Letter between Borrower and Bank dated July 1, 1993, as amended) concurrently being executed between Borrower and Bank, Borrower agrees as follows:


1. Borrower shall not, without Bank's prior written consent which consent shall not be unreasonably withheld, sell, transfer, or assign other than in the ordinary course of business mortgage, pledge, lease, grant a security interest in, or encumber any of Borrower's property, including, without limitation, the following:


(a) All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor
vehicles and trailers), and any interest in any of the foregoing, and
all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing, wherever located;


(b) All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing ...