SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 10, 1999
EXCEL SWITCHING CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS
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(State or other jurisdiction of incorporation)
0-23263 04-2992806
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(Commission File Number) (IRS Employer Identification No.)
255 INDEPENDENCE DRIVE
HYANNIS, MASSACHUSETTS 02601
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(Address of principal executive offices)
Registrant's telephone number, including
area code:
(508) 862-3000
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 10, 1999, Racepoint Acquisition Corp.("Racepoint"), a
wholly-owned subsidiary of Excel Switching Corporation ("Excel"), merged (the
"Merger") with and into RAScom, Inc. ("RAScom"). As a result of the Merger,
RAScom became a wholly-owned subsidiary of Excel.
RAScom's assets consist primarily of its open remote access server
technology including the RAServer product line which concurrently supports
access over both the public switched telephony networks and the internet. Prior
to the Merger, RAScom designed and manufactured a remote access solution based
on open platforms for enterprise networks, carriers and internet software
providers ("ISPs"). Excel intends to integrate RAScom's remote access server
technology with Excel's programmable switching technology for the enhanced
services and wireless and infrastructure markets, as well as for small and
medium sized ISPs.
Pursuant to the terms of the Merger, an aggregate of 1,099,940 shares
of Excel's common stock (the "Common Stock") were issued in exchange for all of
the outstanding capital stock and options to purchase capital stock of RAScom.
The shareholders of RAScom received, in the aggregate, 1,021,187 shares of
Excel's Common Stock in exchange for their shares of RAScom capital stock. In
addition, the optionholders of RAScom received, in the aggregate, options to
purchase 78,753 shares of Excel's Common Stock in exchange for their options to
purchase capital stock of RAScom. The source of the consideration for this
acquisition came from the authorized capital stock of Excel, and to the extent
that cash was paid for fractional shares, from Excel's cash on hand.
The terms of this transaction and the consideration received by RAScom
shareholders and option holders were the result of arm's-length negotiations
between management of Excel, management of RAScom and the shareholders of
RAScom. The terms of this transaction and the exchange of RAScom securities for
the Common Stock are more fully described in the Agreement and Plan of Merger
and Reorganization (the "Merger Agreement"), dated as of April 15, 1999, as
amended, among Excel, Racepoint, RAScom, the shareholders of RAScom and Mark B.
Galvin as Indemnification Representative (attached as Exhibit 2.1 to this report
and hereby incorporated by reference). Additional terms are also provided in
Amendment No. 1 to the Merger Agreement ("Amendment No. 1 to the Merger
Agreement"), dated as of May 7, 1999, among Excel, Racepoint, RAScom, those
shareholders of RAScom that are signatories thereto, and Mark B. Galvin as
Indemnification Representative (attached as Exhibit 2.2 to this report and
hereby incorporated by reference).
Of the 1,021,187 shares of Common Stock issued in the Merger to the
RAScom shareholders, 102,122 shares were placed in escrow pursuant to the terms
of an Escrow Agreement (the "Escrow Agreement"), dated as of May 10, 1999, by
and among Excel, Racepoint, RAScom, State Street Bank and Trust Company ("State
Street"), the shareholders of RAScom, and Mark B. Galvin as Indemnification
Representative (attached as Exhibit 4.1 to this report and hereby incorporated
by reference). Additional terms related to the escrow of Excel Common Stock
issued in the Merger is also provided in a Side Letter Agreement (the "Side
Letter Agreement"), dated as of May 10, 1999 by and among Excel, Racepoint,
RAScom, State Street and Mark B.
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Galvin as Indemnification Representative (attached as Exhibit 4.2 to this report
and hereby incorporated by reference).
Shareholders of RAScom that obtained Common Stock of Excel in the
Merger are also entitled to certain registration rights as detailed in the
Registration Rights Agreement (the "Registration Rights Agreement"), dated as of
May 10, 1999, between the various shareholders of RAScom and Excel (attached as
Exhibit 4.3 to this report and hereby incorporated by reference).
The Merger was approved by the Board of Directors of Excel, Racepoint
and RAScom, and in addition, by the shareholders of RAScom. This transaction
will be accounted for as a pooling of interests.
The information contained in the press release of Excel, dated May 11,
1999, announcing the consummation of the Merger, and which is attached to this
report as Exhibit 99.1, is also hereby incorporated by reference. The
information contained in the press release of Excel, dated April 15, 1999,
announcing the acquisition of RAScom by Excel, and reported on a Form 8-K filed
with the Commission on April 23, 1999, is also hereby incorporated by reference.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
Statements contained in this Report on Form 8-K that are not historical
fact may constitute forward-looking statements and are made under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Excel's actual results of operations and financial condition may in the future
vary significantly from those stated in any forward-looking statements. Factors
that may cause such differences include, but are not limited to, the risks,
uncertainties and other information discussed within this Report on Form 8-K and
other risks identified in Excel's Securities and Exchange Commission filings.
The following factors, among others, could cause actual results to
differ materially from those set forth in forward-looking statements contained
or incorporated by reference in this report and presented by management from
time to time. Such factors, among others, may have a material adverse effect
upon Excel's business, results of operations and financial condition:
Difficulty of Integrating Two Companies. In connection with Excel's
acquisition of RAScom, Inc., the successful integration of the operations,
personnel and product lines of the two companies is important to the future
financial performance of the combined enterprise. The anticipated benefits of
the acquisition may not be achieved unless, among other things, the operations
of RAScom are successfully combined with those of Excel in a timely manner. The
diversion of the attention of management, and any difficulties encountered in
the transition process, could have an adverse impact on the revenues, financial
condition and results of operations of the combined enterprise. Excel may not be
able to successfully integrate RAScom and its services and products into Excel's
operations. The inability of management to successfully integrate the operations
of the companies could have a material adverse effect upon the business,
financial condition and results of operations of Excel.
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Difficulty of Integrating RAScom Product Lines. As part of its product
plans following the acquisition of RAScom, Excel expects to be integrating
RAScom's remote access technology with Excel's programmable switching technology
for the enhanced services and wireless and infrastructure markets, as well as
for small- and medium-sized Internet Service Providers. The integration by Excel
of RAScom's product offerings can be costly, and result in unanticipated delays
or difficulties with product integration, and require further development
expenses and further expenditures for sales and marketing campaigns associated
with advertising the new, complementary product offerings. There is no assurance
that the RAScom research and development team can be successfully assimilated
with Excel's engineering personnel, or that the RAScom engineering personnel
will continue to remain with Excel following the acquisition. Excel has no
assurance that its existing customers will purchase the new RAScom product
lines, once integrated, or that Excel will be able to attract new customers with
the added RAScom product capabilities. While management believes that RAScom's
technology enhances Excel's existing product offerings and expands its
addressable markets, delays or difficulties associated with this product
integration or the loss of RAScom engineering personnel could have a material
adverse effect on Excel's business and results of operations.
Uncertainties Relating to Integration of Operations. Excel believes
that the acquisition of RAScom will result in long-term strategic benefits.
However, the realization of these benefits will depend on whether management can
integrate the operations of Excel and RAScom in an efficient and effective
manner. Among other things, Excel must integrate the respective companies'
products, technologies, distribution channels and key personnel. Furthermore,
Excel must coordinate the sales, marketing and research and development efforts
of RAScom. The difficulties of integrating RAScom may be increased by the need
to coordinate organizations with distinct cultures and widely dispersed
operations. The effective integration of the various operations will depend on
the ability of Excel to attract and retain key management, sales, marketing and
research and development personnel. The integration of operations following the
acquisition will require significant attention of management and thus may
distract attention from other day-to-day operations of Excel.
Need to Integrate and Retain Key Employees of RAScom. The successful
integration of RAScom, Inc. is dependent on the retention and integration of the
key management, sales, marketing, engineering and other technical employees of
RAScom. Competition for qualified personnel in the industries in which Excel and
RAScom compete is very intense, and competitors may use aggressive tactics to
recruit key employees of Excel and RAScom during the integration phase following
the acquisition which could result in the loss of key employees. The loss of
these key personnel could have a material adverse effect on Excel's business,
financial condition and results of operations.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired. Pursuant to Instruction
(a)(4) of Item 7 of Form 8-K, financial statements of RAScom, Inc. will
be filed not later than 60 days after May 25, 1999, the date that this
initial report on Form 8-K must be filed.
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(b) Pro Forma Financial Information. Pursuant to Instruction (b)(2) of Item
7 of Form 8-K, pro forma financial information relating to RAScom, Inc.
will be filed not later 60 days after May 25, 1999, the date that this
initial report on Form 8-K must be filed.
(c) Exhibits.
Exhibit No. Description
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2.1 Agreement and Plan of Merger and Reorganization
dated as of April 15, 1999, by and among Excel
Switching Corporation, Racepoint Acquisition
Corp., RAScom, Inc., the shareholders of RAScom,
Inc. and Mark B. Galvin as Indemnification
Representative.
2.2 Amendment No. 1 to the Agreement and Plan of
Merger and Reorganization dated as of May 7,
1999, by and among Excel Switching Corporation,
Racepoint Acquisition Corp., RAScom, Inc., those
shareholders of RAScom, Inc. that are
signatories thereto, and Mark B. Galvin as
Indemnification Representative.
4.1 Escrow Agreement dated as of May 10, 1999, by
and among Excel Switching Corporation, Racepoint
Acquisition Corp., RAScom, Inc., State Street
Bank and Trust Company, the shareholders of
RAScom, Inc. and Mark B. Galvin as
Indemnification Representative.
4.2 Side Letter Agreement dated as of May 10, 1999
by and among Excel Switching Corporation,
Racepoint Acquisition Corp., RAScom, Inc., State
Street Bank and Trust Company and Mark B. Galvin
as Indemnification Representative.
4.3 Registration Rights Agreement, dated as of May
10, 1999, between the shareholders of RAScom
that are signatories thereto and Excel Switching
Corporation.
99.1 Press Release of Excel Switching Corporation,
dated May 11, 1999, announcing the consummation
of the Merger.
99.2 Press Release of Excel Switching Corporation
dated April 15, 1999 announcing the acquisition
of RAScom, Inc. by Excel Switching Corporation
(incorporated by reference to Exhibit 99.1 of
the Report on Form 8-K filed by Excel Switching
Corporation with the Commission on April 23,
1999).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EXCEL SWITCHING CORPORATION
Dated: May 25, 1999 By: /s/ Christopher Stavros
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Christopher Stavros
Vice President and General Counsel
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EXHIBIT INDEX
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Exhibit No. Description
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2.1 Agreement and Plan of Merger and Reorganization dated as of
April 15, 1999, by and among Excel Switching Corporation,
Racepoint Acquisition Corp., RAScom, Inc., the shareholders
of RAScom, Inc. and Mark B. Galvin as Indemnification
Representative.
2.2 Amendment No. 1 to the Agreement and Plan of Merger and
Reorganization dated as of May 7, 1999, by and among Excel
Switching Corporation, Racepoint Acquisition Corp., RAScom,
Inc., those shareholders of RAScom, Inc. that are
signatories thereto, and Mark B. Galvin as Indemnification
Representative.
4.1 Escrow Agreement dated as of May 10, 1999, by and among
Excel Switching Corporation, Racepoint Acquisition Corp.,
RAScom, Inc., State Street Bank and Trust Company, the
shareholders of RAScom, Inc. and Mark B. Galvin as
Indemnification Representative.
4.2 Side Letter Agreement dated as of May 10, 1999 by and among
Excel Switching Corporation, Racepoint Acquisition Corp.,
RAScom, Inc., State Street Bank and Trust Company and Mark
B. Galvin as Indemnification Representative.
4.3 Registration Rights Agreement, dated as of May 10, 1999,
between the shareholders of RAScom that are signatories
thereto and Excel Switching Corporation.
99.1 Press Release of Excel Switching Corporation, dated May 11,
1999, announcing the consummation of the Merger.
99.2 Press Release of Excel Switching Corporation dated April
15, 1999 announcing the acquisition of RAScom, Inc. by
Excel Switching Corporation (incorporated by reference to
Exhibit 99.1 of the Report on Form 8-K filed by Excel
Switching Corporation with the Commission on April 23,
1999).
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