EXHIBIT 4.2
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SIDE LETTER AGREEMENT
Side Letter Agreement dated as of May 10, 1999, by and among Excel
Switching Corporation, a Massachusetts corporation ("Parent"), Racepoint
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of
Parent ("Merger Sub"), RAScom, Inc., a Delaware corporation (the "Company"),
State Street Bank and Trust Company (the "Escrow Agent"), and Xxxx X. Xxxxxx
(the "Indemnification Representative").
WHEREAS, the parties are entering into a certain Escrow Agreement dated
of even date herewith (the "Escrow Agreement"), and the parties desire to
further clarify the duties of the Escrow Agent under such Escrow Agreement by
supplementing such Escrow Agreement to include the terms provided below;
NOW, THEREFORE, in consideration of the premises and agreements set
forth below, the parties agree as follows to supplement the Escrow Agreement by
this Side Letter Agreement:
Section 1. DEPOSIT OF SHARES. Capitalized terms used herein but not
defined shall have the meanings set forth in the Escrow Agreement. On or after
the Effective Date of the Merger, the Parent shall cause to be delivered to the
Escrow Agent the amount of 102,122 shares of Parent Common Stock as set forth on
the attached Schedule I (the "Indemnification Escrowed Shares") in the name of
the Escrow Agent. The Escrow Agent agrees to hold and administer said shares
subject to the terms of this Agreement and the Escrow Agreement. Each Company
Shareholder shall have a percentage interest in said Indemnification Escrow
Shares as set forth on Schedule I hereto (each Company Shareholder's "Percentage
Interest"). The Escrow Agent shall not hold any cash hereunder and shall have no
duty to invest any escrowed property.
Section 2. ESCROW AGENT'S DUTY. The Escrow Agent shall have no duty to
review or interpret, or monitor compliance with the terms of, the Merger
Agreement or the other documents executed in connection therewith, and may rely
on the use of defined terms in any communication received by it. Any claim for
indemnification thereunder from Indemnification Escrow Shares shall be valued by
dividing such indemnification claim amount by the Per Share Value to arrive at
the correct amount of Indemnification Escrow Shares to be surrendered. Any
surrender of Indemnification Escrow Shares to satisfy a claim hereunder shall be
accomplished by transfer of Parent Common Stock certificates held in escrow by
the Escrow Agent to the Parent's transfer agent ("Transfer Agent") with
instructions to cancel the requisite amount of shares to satisfy such claim, and
to return a stock certificate or certificates to the Escrow Agent for any
remaining Parent Common Stock still in escrow. All disbursements by the Escrow
Agent from the escrow account shall be made in accordance with written
instructions provided by Parent and the Indemnification Representative
(including the allocation of any claims among the Company Shareholders) and the
Escrow Agent may rely conclusively on such written instructions.
Any disbursements of Indemnification Escrow Shares to Company
Shareholders shall be made by the Transfer Agent based upon written instructions
of the Escrow Agent.
Any claim submitted by Parent or the Indemnification Representative to
the Escrow Agent shall contain a certification that the Indemnity Threshold has
been met.
Any Notice of Claim shall specify if the claim thereunder relates to a
joint and several claim, or a several claim against a particular Company
Shareholder.
The parties agree that they will give or cause the Indemnification
Escrow Agent to be given written instructions as to any voting of
Indemnification Escrow Shares not less than three (3) business days prior to
such vote, and the Escrow Agent shall otherwise be under no obligation to
preserve, protect or exercise rights in the Indemnification Escrow Shares, and
shall be responsible only for reasonable measures to maintain the physical
safekeeping thereof, and otherwise to perform and observe such duties on its
part as are expressly set forth in this Agreement. The Escrow Agent shall not be
responsible for forwarding to any party, notifying any party with respect to, or
taking any action with respect to, any notice, solicitation or other document or
information, written or otherwise, received from an issuer or other person with
respect to the Indemnification Escrow Shares, including but not limited to,
proxy materials, tender options, the pendency of calls and maturities and
expiration of rights.
The Escrow Agent shall have no more or less responsibility or liability
on account of any action or omission of any book-entry depository, securities
intermediary or other subescrow agent employed by the Escrow Agent than any such
book-entry depository, securities intermediary or other subescrow agent has to
the Escrow Agent, except to the extent that such action or omission of any
book-entry depository, securities intermediary or other subescrow agent was
caused by the Escrow Agent's own gross negligence, bad faith or willful
misconduct in breach of this Agreement.
Section 3. NOTICE OF CORPORATE EVENTS. Parent shall give prompt written
notice to the Indemnification Escrow Agent of any corporate event such as a
stock dividend, stock split, reclassification, recapitalization or corporate
reorganization, or any adjustment in the Per Share Value.
Section 4. TAX INDEMNIFICATION. The Parent shall (i) assume any and all
obligations imposed now or hereafter by any applicable tax law with respect to
any payment or distribution of the Indemnification Escrow Shares or performance
of other activities under the Escrow Agreement, (ii) instruct the Escrow Agent
in writing with respect to the Escrow Agent's responsibility for withholding and
other taxes, assessments or other governmental charges, and to instruct the
Escrow Agent with respect to any certifications and governmental reporting that
may be required under any laws or regulations that may be applicable in
connection with its acting as Escrow Agent under the Escrow Agreement, and (iii)
indemnify and hold the Escrow Agent harmless from any liability or obligation on
account of taxes, assessment, additions for late payment, interest, penalties,
expenses and other governmental charges that may be assessed or asserted against
the Escrow Agent in connection with or relating to any payment made or other
activities performed under the terms of the Escrow Agreement, including without
limitation any liability for the withholding or deduction of (or the failure to
withhold or deduct) the same, and any liability for failure to obtain proper
certifications or to report properly to governmental
authorities in connection with the Escrow Agreement, including costs and
expenses (including reasonable legal fees and expenses), interest and penalties.
The foregoing indemnification and agreement to hold harmless, and the
indemnification set forth in Section 8(h) of the Escrow Agreement, shall apply
to the officers, directors, employees and agents of the Indemnification Escrow
Agent and shall survive the termination of the Escrow Agreement.
Section 5. DISPUTE RESOLUTION. It is understood and agreed that (i) the
Escrow Agent's duties under the Indemnification Escrow Agreement are ministerial
and not fiduciary in nature, and (ii) should any dispute arise with respect to
the delivery, ownership, right of possession, and/or disposition of the
Indemnification Escrow Shares, or should the Escrow Agent request or require
additional clarification or instruction, or should any claim be made upon the
Escrow Agent or the Indemnification Escrow Shares by a third party, the Escrow
Agent upon request for clarification or instruction or receipt of notice of such
dispute or claim is authorized and shall be entitled (at its sole option and
election) to retain in its possession without liability to anyone, all or any of
said shares until such dispute shall have been settled either by the mutual
written agreement of the parties involved or by a final order, decree or
judgment of a court in the United States of America, the time for perfection of
an appeal of such order, decree or judgment having expired, or the receipt by
the Escrow Agent of adequate instruction from the Parent and the Indemnification
Representative. The Indemnification Escrow Agent may, but shall be under no duty
whatsoever to, institute or defend any legal proceedings which relate to the
Indemnification Escrow Shares.
In no event shall the Escrow Agent be liable for indirect, punitive,
special or consequential damage or loss (including but not limited to lost
profits) whatsoever, even if the Escrow Agent has been informed of the
likelihood of such loss or damage and regardless of the form of action.
This Side Letter Agreement and the Escrow Agreement may not be altered
or modified without the express written consent of the parties hereto. No course
of conduct shall constitute a waiver of any of the terms and conditions of this
Side Letter Agreement or the Escrow Agreement, unless such waiver is specified
in writing, and then only to the extent so specified. A waiver of any of the
terms and conditions of the Escrow Agreement or this Side Letter Agreement on
one occasion shall not constitute a waiver of the other terms of the Escrow
Agreement or this Side Letter Agreement, or of such terms and conditions on any
other occasion.
Section 6. CONSENT TO JURISDICTION AND SERVICE. Each of the Parent and
the Indemnification Representative hereby absolutely and irrevocably consent and
submit to the jurisdiction of the courts in the Commonwealth of Massachusetts
and of any Federal court located in said Commonwealth in connection with any
actions or proceedings brought against any of the parties (or each of them) by
the Indemnification Escrow Agent arising out of or relating to the Escrow
Agreement. In any such action or proceedings, the parties each hereto absolutely
and irrevocably (i) waives any objection to jurisdiction or venue, (ii) waives
personal services of any summons, complaint, declaration or other process, and
(iii) agrees that the service thereof may be made by certified or registered
first-class mail directed to such party, as the case may be, at their respective
addresses set forth in the Escrow Agreement
Section 7. FORCE MAJEURE. The Indemnification Escrow Agent shall not be
responsible for delays or failures in performance resulting from acts beyond its
control. Such acts shall include but not be limited to acts of God, strikes,
lockouts, riots, acts of war, epidemics, governmental regulations superimposed
after the fact, fire, communication line failures, computer viruses, power
failures, earthquakes or other disasters.
IN WITNESS WHEREOF, Parent, Merger Sub, the Company, the
Indemnification Representative, the Indemnification Escrow Agent have caused
this Side Letter Agreement to be signed by their respective officers thereunto
duly authorized, and their respective seals to be affixed hereto as an
instrument under seal governed by the laws of the Commonwealth of Massachusetts,
as of the date first written above.
EXCEL SWITCHING CORPORATION
By: /s/ Xxxxxxxxxxx Xxxxxxx
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Title: Vice President and General Counsel
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RACEPOINT ACQUISITION CORPORATION
By: /s/ Xxxxxxxxxxx Xxxxxxx
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Title: Vice President
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RASCOM, INC.
By: /s/ Xxxx Xxxxxx
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Title: President
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/s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
as Indemnification Representative
STATE STREET BANK AND TRUST COMPANY
As Escrow Agent
By: /s/ Xxxxxx Xxxxxxxxx
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Title: Assistant Vice President
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EXHIBIT I -- SHARES TO BE ESCROWED
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EXCEL SHARES PERCENTAGE
NAME OF SHAREHOLDER TO BE ESCROWED INTEREST (%)
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Xxxxxx, Xxxxxx 13 .013
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Xxxxxx, Xxxxx 1 .001
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Xxxxx, Xxxxxxx 768 .752
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Xxxxxx, Xxxxxxx X. 348 .341
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Xxx, Xxxxx & Xxxxxxxx 287 .281
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X.X. Xxxx 181 .177
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Xxxxxxx, Xxxxx 19 .019
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Xxxxxx Xxxxxx Stess Trust 45 .044
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Xxxxxxx River Partnership VII 18,088 17.712
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Cheheyl, R. Stephen 274 .268
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Xxxxxx, Xxxxxx 6 .006
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Xxxxxx, Xxxxxxxx 266 .260
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Xxxx, Xxxxx 26 .025
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First Albany Custodian FBO X.X. Xxxxxxxx XXX 87 .085
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Xxxxxxx, Xxxxxx X. 497 .487
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Xxxxxx, Xxxxx & Xxxxxx 1,606 1.573
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Xxxxxx, Xxxx X. 17,751 17.382
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Xxxxxxxx, Xxxxxx X. 432 .423
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Xxxxxxxx, Xxxxxx 211 .207
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Xxxxxxxx, Xxxxxx 45 .044
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Xxxxxxxx, Xxxxxx and Xxxxx JTWROS 67 .066
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Xxxxxx, Xxxxx 452 .443
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Harbour Vest Partners V - Direct Fund L.P. 21,663 21.213
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Xxxxxxxxx, Xxxxxxx 6 .006
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Xxxxxxx, Xxxxxx 22 .022
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Xxxx, Xxxxx X. 612 .599
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Interstock Anstalt 343 .336
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Xxxxxxx, Xxxxxxx 296 .290
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Xxxxxx, Xxxxxx 7 .007
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Xxxxxx, Xxxxxx X. 682 .668
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Xxxxx, Xxxxx X. 327 .320
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Le Serre 362 .354
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Xxxxxxxxxxx, Xxxxx 39 .038
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Los, Xxxxxx 33 .032
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Xxxxxxx, Xxxxxx 25 .024
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Xxxxx, Xxxxx 34 .033
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Xxxxxxxx, Xxxxx 174 .170
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Xxxxxxxx, Xxxxxx 48 .047
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Xxxxxx, Xxxxx 497 .487
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EXCEL SHARES PERCENTAGE
NAME OF SHAREHOLDER TO BE ESCROWED INTEREST (%)
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Xxxxxxxx, Xxxxxx X. 1,529 1.497
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Xxxxxx, Xxxxxx 53 .052
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PCC Transfer Limited Partnership 7,235 7.085
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Xxxxxx, Xxxxx 100 .098
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Pioneer Ventures Limited Partnership II 10,853 10.627
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Xxxxxx, Xxxxxx 45 .044
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Xxxxxx, Xxxxxx 13 .012
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Xxxx, Xxxxx 90 .088
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Xxxxxx, Xxxxxxxx & Xxxxxxxxx, Xxxxx 508 .497
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Xxxxxxxx, Xxxxx 178 .174
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Xxxxxxx, Xxxx 41 .040
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Xxxxx, Xxxxx X. & Xxxxxxx X. 543 .532
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Xxxxx, Xxxxxxx X. 34 .033
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SVE Star Ventures Enterprises No. V 8,387 8.213
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SVM Star Ventures Management gmbH Nr. 3 & Co. KG 1,890 1.851
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The MHF Sylvan Fund 1,637 1.603
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Xxxx, Xxx 3 .003
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Waterline Capital, LLC 2,261 2.214
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Xxxx, Xxxxxxx 53 .052
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Xxxxx, Xxxxx 29 .028
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TOTAL 102,122 99.998
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