EXHIBIT 4.1
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ESCROW AGREEMENT
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 "Indemnification Escrow Agent"), Mark B.
Galvin (the "Indemnification Representative") and each of the Shareholders of
the Company identified on the signature page hereto (the "Company
Shareholders").
WHEREAS, the Parent, Merger Sub, the Company and the Company
Shareholders have entered into an Agreement and Plan of Merger and
Reorganization (the "Merger Agreement") dated as of April 15, 1999; and
WHEREAS, the Merger Agreement provides for the designation of Mark B.
Galvin as the Indemnification Representative with all the powers and authority
ascribed to the Indemnification Representative herein; and
WHEREAS, it is a condition of the Merger Agreement that the parties
thereto enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and agreements set
forth below, the parties agree as follows:
SECTION 1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. As
provided in the Merger Agreement, all representations, warranties and covenants
of the Company, Company Shareholders, Parent and Merger Sub contained therein or
in any other agreement, schedule, document, written statement, certificate or
other instrument delivered by or on behalf of the Company, Company Shareholders,
Parent or Merger Sub, as the case may be, pursuant to the terms of this
Agreement or the Merger Agreement shall survive the execution and delivery of
this Agreement and the Merger Agreement, any investigation by or on behalf of
the Company, the Company Shareholders, Parent or Merger Sub, as the case may be,
and the completion of the transactions contemplated hereby and thereby and shall
terminate on the "Indemnification Termination Date", as that term is defined in
Section 7.1 of the Merger Agreement. The aggregate liability of each Company
Shareholder under this Agreement and the Merger Agreement shall be limited to
fifteen percent (15%) of the value of the Parent Common Stock, including the
Indemnification Escrow Shares, and cash received by such Company Shareholder at
the Effective Time pursuant to Article II of the Merger Agreement (the
"Limitation Amount"); provided, however, that nothing in this Agreement or the
Merger Agreement shall be deemed to limit any right or remedy of Parent or the
Surviving Corporation for criminal activity or fraud, or breaches by any Company
Shareholder of covenants or inaccuracies in any representations or warranties
set forth in any Registration Rights Agreement or for breaches by the Company or
any Company Shareholder of the
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representations, warranties or covenants set forth in Section 4.18 or Article
IV-A of the Merger Agreement or for any expenses incurred by Parent in
connection with the Merger and on behalf of the Company in excess of the limits
set forth in Section 9.9 of the Merger Agreement. The value of each share of
Parent Common Stock hereunder shall be $25.64375, which represents the ten (10)
trading day average of the closing sale price per share of the Parent Common
Stock on the Nasdaq National Market from March 15, 1999 through March 26, 1999.
Any capitalized term herein not otherwise defined shall have the meaning
ascribed to such term in the Merger Agreement.
Parent and the Surviving Corporation shall not be entitled to
indemnification pursuant to Section 2 hereof until the aggregate amount of all
losses, expenses, liabilities and other damages suffered by Parent or the
Surviving Corporation exceeds $300,000 (including attorney's fees and expenses
incurred in connection therewith) (the "Indemnity Threshold") whereupon Parent
and the Surviving Corporation shall be entitled to indemnification hereunder for
the aggregate amount of all of such losses, expenses, liabilities and other
damages suffered by Parent or the Surviving Corporation exceeding $300,000. The
Indemnity Threshold shall be determined without regard to any materiality
qualification contained in any representation or warranty and shall not apply
with respect to claims under Section 8.2 or with respect to Section 4.18 or
Article IV-A of the Merger Agreement or for any expenses incurred by Parent in
connection with the Merger on behalf of the Company in excess of the limits set
forth in Section 9.9 of the Merger Agreement.
SECTION 2 INDEMNIFICATION.
(a) Parent and the Surviving Corporation shall be indemnified
and held harmless by the Company Shareholders against any loss, expense,
liability or other damage (including reasonable legal and accounting fees and
costs) suffered by Parent or the Surviving Corporation through the
Indemnification Termination Date resulting from:
(i) any inaccuracy in or breach of any of the
representations, warranties, or covenants made by the Company or a Company
Shareholder in the Merger Agreement, as modified and supplemented by the Company
Disclosure Schedule, or any certificate issued by the Company or a Company
Stockholder pursuant to Sections 6.3(a), 6.3(g) and 6.3(j) of the Merger
Agreement; or
(ii) any expenses and fees incurred by the
Indemnification Representative pursuant to Section 6(c) hereof or incurred by
Parent in connection with the Merger on behalf of the Company in excess of the
limits set forth in Section 9.9 of the Merger Agreement; or
(iii) the failure of any Company Product shipped by
the Company prior to the Closing Date to meet the standards set forth for Year
2000 Compliance as such term is described in Section 4.15 of the Merger
Agreement.
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(b) In case any event shall occur which would otherwise
entitle any of the parties to assert a claim for indemnification hereunder, no
loss, damage or expense shall be deemed to have been sustained by such party to
the extent of any proceeds received by such party from any insurance policies
with respect thereto.
(c) The indemnification obligations of the Company
Shareholders hereunder shall be joint and several, except as set forth below.
The indemnity obligations of the Company Shareholders in respect of Article IV-A
of the Merger Agreement shall be several and not joint, and shall apply, in the
case of any particular Company Shareholder, only to losses arising out of the
breach by such Company Stockholder of his representations and warranties in such
Article.
SECTION 3 DISTRIBUTIONS AND CLAIMS.
(a) Upon obtaining knowledge of any facts, claim or demand
which has given rise to, or could reasonably give rise to, a claim for
indemnification hereunder (referred to herein as an "Indemnification Claim"),
Parent or the Surviving Corporation, as applicable (the "Indemnified Party"),
shall promptly give written notice of such facts, claim or demand ("Notice of
Claim") to the party from whom indemnification is sought (the "Indemnifying
Party") as described below. The Indemnified Party shall give the Notice of Claim
to either (i) the Indemnification Representative and to the Indemnification
Escrow Agent if the Notice of Claim is given prior to the earlier of (x) one (1)
year from the Effective Time and (y) publication of Parent's audited financial
results for the year ended December 31, 1999 (the "Escrow Termination Date") or
(ii) the Company Shareholder(s) against whom the Parent is asserting the
Indemnification Claim if the Notice of Claim is given after the date all
Indemnification Escrow Shares have been delivered to Parent or the Surviving
Corporation in satisfaction of other Indemnification Claims. Parent shall give
written notice to the Indemnification Escrow Agent and the Indemnification
Representative of the publication of Parent's audited financial results for the
year ended December 31, 1999. Such notice shall also set forth the Escrow
Termination Date. Parent or the Surviving Corporation, as applicable, shall not
be entitled to give a Notice of Claim after the Indemnification Termination Date
except with respect to any matter which was the subject of a Notice of Claim
given prior to such date.
The Notice of Claim shall set forth the amount of the loss,
expense, liability or other damage suffered, or which may be suffered, by the
Indemnified Party, and, in the case of a Notice of Claim delivered pursuant to
clause (ii) above, the amount to be paid by the Company Shareholder(s). So long
as the Notice of Claim is given by the Indemnified Party prior to the
Indemnification Termination Date, no failure or delay by the Indemnified Party
in the giving of a Notice of Claim shall reduce or otherwise affect the
Indemnified Party's right to indemnification hereunder except to the extent that
the Indemnifying Party has been prejudiced thereby.
The date of a Notice of Claim shall be deemed to be:
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(x) the second business day after the date of the
postmark on the registered or certified mail (postage
prepaid, return receipt requested) containing the Notice of
Claim; or
(y) if the Notice of Claim is personally delivered,
the date of such personal delivery.
(b) (i) Upon receipt of a Notice of Claim at any time
after the Indemnity Threshold has been reached and prior to the Escrow
Termination Date, the Indemnification Escrow Agent shall, subject to the
provisions of Section 3(b)(ii) hereof, deliver to Parent, as promptly as
practicable after expiration of the twenty-day notice period set forth in clause
(ii) below, Indemnification Escrow Shares with a value equal to the amount of
the loss, expense, liabilities or other damage set forth in the Notice of Claim
(as determined pursuant to Section 1 and rounded up to the nearest whole share).
(ii) The Indemnification Representative shall have
twenty (20) days from the date of a Notice of Claim within which to object, by
written notice of objection given to Parent and the Indemnification Escrow
Agent, to any Indemnification Claim (a "Challenged Claim"). If notice of
objection to any such claim is not provided by the Indemnification
Representative, the validity and stated amount of the claim and the number of
Indemnification Escrow Shares to be delivered will be deemed to have been
accepted (such claims being referred to herein as "Accepted Claims"). The
Indemnification Representative, Parent and Surviving Corporation shall submit
the matter of a Challenged Claim to arbitration in accordance with Section 9
hereof. If a Notice of Claim sets forth a claim or demand asserted by a third
party (a "Third Party Claim"), the provisions of Section 3(d) shall also apply.
(iii) The Indemnification Escrow Agent shall retain
in escrow after the Escrow Termination Date the number of Indemnification Escrow
Shares having a value (as determined pursuant to Section 1 and rounded up to the
nearest whole share) equal to the dollar amount of all Challenged Claims and
pending or threatened Indemnification Claims which have not been finally
determined ("Pending Claims"). The "dollar amount" of any Pending
Indemnification Claim shall be calculated assuming the maximum possible exposure
set forth in the Notice of Claim, except, however, that, with respect to a
Pending Indemnification Claim for which legal action has not been taken against
Parent or the Surviving Corporation within one year following the Notice of
Claim (the "Period"), then the dollar amount of such Pending Indemnification
Claim shall be as agreed upon by Parent and the Indemnification Representative,
and if they cannot agree within 90 days of the end of the Period, then such
dollar amount shall be determined by arbitration in accordance with Section 9
herein.
(iv) As promptly as practicable after the Escrow
Termination Date, the Indemnification Escrow Agent shall deliver to the Company
Shareholders the balance of the Indemnification Escrow Shares not delivered to
Parent or the Surviving Corporation, as applicable, or retained in escrow
pursuant to Section 3(b)(iii). Each Company Shareholder shall receive his
proportional share interest in such distribution, to
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be determined as follows: the number of Indemnification Escrow Shares to be
distributed to each Company Shareholder shall be equal to a percentage of the
remaining Indemnification Escrow Shares determined by dividing (A) the sum of
the number of Indemnification Escrow Shares delivered to the Escrow Agent at the
Closing for the account of such Company Shareholder, less the number of
Indemnification Escrow Shares distributed by the Escrow Agent for the account of
such Company Shareholder in respect of Indemnification Claims for which other
Company Shareholders were not jointly liable by (B) the sum of the remaining
number of Indemnification Escrow Shares plus the aggregate number of
Indemnification Escrow Shares distributed by the Escrow Agent in respect of
Indemnification Claims for which the Company Shareholders were jointly liable.
(v) Upon receipt of a Notice of Claim at any time
after (i) the Indemnity Threshold has been reached and (ii) the date all
Indemnification Escrow shares have been delivered to Parent, and prior to the
Indemnification Termination Date, a Company Shareholder shall, subject to the
provisions of Section 3(b)(vi) hereof, deliver to Parent within five (5) days of
the expiration of the twenty-day notice period set forth in clause (vi) below,
shares of Parent Common Stock acquired in the Merger, or, in the event that such
Company Shareholder no longer owns shares of Parent Common Stock acquired in the
Merger, cash, having a value (as determined under Section 1 above) equal to the
amount set forth in the Notice of Claim or, if less, an amount equal to the
Limitation Amount in respect of such Company Shareholder, determined pursuant to
Section 1 above, less the value of the Indemnification Escrow Shares delivered
to the Escrow Agent for the account of such Company Shareholder at the Effective
Time, determined pursuant to Section 1 above.
(vi) A Company Shareholder shall have twenty (20)
days from the date of a Notice of Claim within which to object, by written
notice to Parent, to any Indemnification Claim (a "Shareholder Challenged
Claim"). If notice of objection to any such claim is not provided by the Company
Shareholder, the validity and stated amount of the claim will be deemed to have
been accepted. The parties shall submit the matter of a Shareholder Challenged
Claim to arbitration in accordance with Section 9 hereof. If a Notice of Claim
sets forth a Third Party Claim the provisions of Section 3(d) shall also apply.
(c) Indemnification Escrow Shares that are not distributed to
the Company Shareholders on the Escrow Termination Date because they have been
retained pursuant to Section 3(b)(iii) shall be distributed (as appropriate) as
promptly as practicable after disposition of each such Indemnification Claim.
Upon the date after which the last of all Challenged Claims and all other
Indemnification Claims has been finally determined and the final distribution
has been made to Parent (and to the Indemnification Representative, if
applicable) (the "Termination Date"), the balance of all Indemnification Escrow
Shares shall be delivered to the Company Shareholders in accordance with Section
3(b)(iv).
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(d) (i) In the event of a Third Party Claim, the
Indemnifying Party acting through the Indemnification Representative if
applicable, shall have the right, but not the obligation, exercisable by written
notice to the Indemnified Party within 10 days of the date of the Notice of
Claim concerning the commencement or assertion of any Third Party Claim, to
participate in the defense of such Third Party Claim. The Indemnified Party
shall not settle such Third Party Claim without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, the Indemnified Party shall have the right to pay
or settle any Third Party Claim at any time, provided that in such event it
waives any right to indemnification therefor by the Indemnifying Party.
(ii) Within 10 days of the date a court of competent
jurisdiction or arbitrator shall determine that the Indemnified Party is liable
for all or a portion of the monetary liability arising out of any Third Party
Claim or a settlement is reached, the Indemnifying Party shall be obligated to
deliver to the Indemnified Party cash or, at the option of the Indemnifying
Party, shares of Parent Common Stock, with a value (as determined pursuant to
Section 1 and rounded up to the nearest whole share) equal to such liability or
settlement unless an appeal is made in accordance with the next sentence. If the
Indemnifying Party desires to appeal from an adverse judgment, then the
Indemnifying Party shall post and pay the cost of the security or bond required
to stay execution of the judgment pending appeal. Upon the payment in full by
the Indemnifying Party of such amounts, the Indemnifying Party shall succeed to
the rights of such Indemnified Party, to the extent not waived in settlement,
against the third party who made such Third Party Claim. The Indemnifying Party
and Indemnified Party shall submit disputes regarding any payments due under
this Section 3(d)(ii) to arbitration in accordance with Section 9.
(iii) The Indemnifying Party and the Indemnified
Party shall cooperate, in the defense or prosecution of any Third Party Claim
and shall furnish or cause to be furnished such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
or appeals, as may be requested in connection therewith.
SECTION 5 VOTING RIGHTS AND DISTRIBUTIONS.
(a) The Indemnification Escrow Shares, unless and until
delivered to Parent pursuant to this Agreement, shall be registered in the
respective name of the Indemnification Escrow Agent and held on behalf of the
Company Shareholders. The Indemnification Escrow Agent will vote any
Indemnification Escrow Shares held by it for the account of any Company
Shareholder in accordance with any written instructions that are provided by
such Company Shareholder to the Indemnification Escrow Agent. All cash dividends
or distributions of assets declared by Parent with respect to its Common Stock
prior to the Escrow Termination Date, shall be payable to the Company
Shareholders as if each had received all of the shares of Parent Common Stock
deliverable to him at the Effective Time of the Merger and no shares had been
placed into escrow under this Agreement (subject to reduction to reflect the
delivery of
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Indemnification Escrow Shares to Parent or the Surviving Corporation) under this
Agreement).
(b) All shares of Parent Common Stock relating to
Indemnification Escrow Shares still held by the Indemnification Escrow Agent
under this Agreement and resulting from conversion, stock dividend, stock split,
reclassification, recapitalization or corporate reorganization of Parent, shall
be delivered to the Indemnification Escrow Agent when deliverable to holders of
other outstanding shares of Parent Common Stock, shall be credited to the
accounts of the Company Shareholders and shall constitute additional
Indemnification Escrow Shares.
SECTION 6 THE INDEMNIFICATION REPRESENTATIVE.
(a) As long as there are shares held in escrow pursuant to
this Agreement, the Company Shareholders, and each of them, will be represented
by the Indemnification Representative who is empowered to receive any notice
under this Agreement for the Company Shareholders, and each of them, and to give
any and all notices and instructions and take any and all action for and on
behalf of the Company Shareholders, and each of them, under this Agreement. The
Company Shareholders will have the right to remove the Indemnification
Representative and, upon such removal or, in the event of the Indemnification
Representative's death or resignation, to appoint as the new Indemnification
Representative any former Company Shareholder at any time and from time to time
during the period when any shares are held in escrow, by a vote of Company
Shareholders holding a majority interest in the Indemnification Escrow Shares
held in escrow at such time evidenced by a writing executed by such Company
Shareholders. The appointment of a new Indemnification Representative will be of
no force or effect whatsoever upon Parent or the Indemnification Escrow Agent or
otherwise under this Agreement until the Indemnification Escrow Agent receives
actual notice of such appointment, which notice must include at least: (i) the
identity and address of the new Indemnification Representative and a statement
that such Indemnification Representative has been appointed by a vote of Company
Shareholders holding a majority interest in the Indemnification Escrow Shares
and then held in escrow; (ii) the duly acknowledged signatures of each of the
Company Shareholders voting for the new Indemnification Representative; and
(iii) a statement that any non-signing Company Shareholder has been notified in
writing of the appointment of the new Indemnification Representative. Parent and
the Indemnification Escrow Agent will be entitled to rely on any notice received
in such form without conducting an investigation of the contents thereof. Prior
to the Escrow Termination Date, any notice given to the Indemnification
Representative will constitute notice to each and all of the Company
Shareholders at the time notice is given to the Indemnification Representative.
Any action taken by, or notice or instruction received from, the Indemnification
Representative will be deemed to be action by, or notice or instruction from,
each and all of the Company Shareholders. Parent may, and the Indemnification
Escrow Agent will, disregard any notice or instruction received from any Company
Shareholder other than the then acting Indemnification Representative with
regard to this Agreement prior to the Escrow Termination Date.
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(b) The Indemnification Representative shall not suffer any
liability or loss for any act performed or omitted to be performed by him under
this Agreement in the absence of gross negligence, bad faith or willful
misconduct. The Indemnification Representative may consult with counsel in
connection with his duties hereunder and shall be fully protected by any act
taken, suffered, permitted, or omitted in good faith in accordance with the
advice of counsel. The Indemnification Representative shall not be responsible
for the sufficiency or accuracy of the form, execution, validity or genuineness
of documents or securities now or hereafter deposited hereunder, or of any
endorsement thereof or for any lack of endorsement thereon, or for any
description therein, nor shall he be responsible or liable in any respect on
account of the identity, authority or rights of the persons executing or
delivering or purporting to execute or deliver any such document, security or
endorsement, and the Indemnification Representative shall be fully protected in
relying upon any written notice, demand, certificate or document which he in
good faith believes to be genuine.
(c) The Indemnification Representative shall be entitled to
employ such legal counsel and other experts as he may deem necessary to advise
him properly with respect to his rights and obligations hereunder and to
evaluate Indemnification Claims and to pursue challenges to Indemnification
Claims or to defend Third Party Claims. The reasonable expenses and fees of such
counsel and experts, and any reasonable, documented out-of-pocket expenses which
the Indemnification Representative incurs under Section 3 or hereunder in
relation to evaluating, challenging or contesting claims, shall be reimbursed by
Parent, provided that any amounts so paid by Parent shall entitle Parent to file
a Notice of Claim with respect to such amounts and collect against the Escrow.
(d) The Indemnification Representative hereby agrees to do
such acts, and execute further documents, as shall be necessary to carry out the
provisions of this Agreement or to transfer any Indemnification Escrow Shares
pursuant to the terms hereof.
SECTION 7 INTEREST IN ESCROW SHARES. The interest of the Company
Shareholders in the Indemnification Escrow Shares (until released to them
hereunder) is nonassignable and shall be transferable only by operation of law.
SECTION 8 PROVISIONS CONCERNING THE ESCROW AGENT.
(a) The Indemnification Escrow Agent shall be entitled to
reasonable compensation for all services rendered and expenses incurred by it in
the performance of its obligations hereunder (on the basis of its regular fees
as set forth on Exhibit A attached hereto). The Indemnification Escrow Agent
shall be entitled to employ such legal counsel and other experts as it may deem
necessary to properly advise it in connection with its obligations hereunder,
and may rely on the advice of such counsel, and may pay them reasonable
compensation therefor. The Indemnification Escrow Agent and such legal counsel's
and other expert's fees and expenses shall be borne by Parent.
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(b) The Indemnification Escrow Agent shall not be liable for
any diminution of value of the Indemnification Escrow Shares. The
Indemnification Escrow Agent shall have no authority to sell or otherwise
dispose of or encumber the Indemnification Escrow Shares except as provided
herein.
(c) Notwithstanding any other provisions herein contained, the
Indemnification Escrow Agent may at all times act upon and in accordance with
the joint written instructions of Parent and the Indemnification Representative.
The Indemnification Escrow Agent shall not be liable for any act done or omitted
by it in accordance with such instructions or pursuant to the advice of counsel
of its selection.
(d) The duties and responsibilities of the Indemnification
Escrow Agent shall be limited to those expressly set forth in this Agreement and
instructions given to the Indemnification Escrow Agent pursuant to this
Agreement, and the Indemnification Escrow Agent shall not be subject to, nor
obligated to recognize, any other agreement between any or all of the parties
hereto even though reference thereto may be made herein; provided, however, with
the written consent of the Indemnification Escrow Agent, this Agreement may be
amended at any time by an instrument in writing signed by Parent and the
Indemnification Representative. The Indemnification Escrow Agent shall advise
Parent and the Indemnification Representative from time to time, upon request,
as to (i) the number of Indemnification Escrow Shares represented by the
certificate held by the Indemnification Escrow Agent, and (ii) the number of
Indemnification Escrow Shares distributed by the Indemnification Escrow Agent to
the Company Shareholders.
(e) The Indemnification Escrow Agent shall not be responsible
for the sufficiency or accuracy of the form, execution, validity or genuineness
of documents or securities now or hereafter deposited hereunder, or of any
endorsement thereof, or for any lack of endorsement thereon, or for any
description therein, nor shall it be responsible or liable in any respect on
account of the identity, authority or rights of the persons executing or
delivering or purporting to execute or deliver any such document, security or
endorsement of this Agreement, and the Indemnification Escrow Agent shall be
fully protected in relying upon any written notice, demand, certificate or
document which it in good faith believes to be genuine.
(f) The Indemnification Escrow Agent is authorized, in its
sole discretion, to disregard any and all notices or instructions given by any
of the parties hereto or by any other person, firm or corporation, except such
notices or instructions as are herein provided for in this Agreement and orders
or process of any court entered or issued with or without jurisdiction. If any
property subject hereto is at any time attached, garnished or levied upon under
any court order, or in case the payment, assignment, transfer, conveyance or
delivery of any such property shall be stayed or enjoined by any court order, or
in case any order, judgment or decree shall be made or entered by any court
affecting such property or any part thereof, then and in any of such events, the
Indemnification Escrow Agent is authorized, in its sole discretion, to rely upon
and comply with any such order, writ, judgment or decree which the
Indemnification Escrow
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Agent is advised by legal counsel of its own choosing is binding upon it; and if
the Indemnification Escrow Agent complies with any such order, writ, judgment or
decree, it shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance even though such order,
writ, judgment or decree may be subsequently reversed, modified, annulled, set
aside or vacated.
(g) The Indemnification Escrow Agent may resign by giving
sixty (60) days' advance written notice to Parent and the Indemnification
Representative and thereafter shall deliver the Indemnification Escrow Shares to
such substitute escrow agent as Parent and the Indemnification Representative
shall jointly direct in writing. If such direction to deliver to a substitute
escrow agent is not received by the Indemnification Escrow Agent within sixty
(60) days after mailing such notice of resignation, it is unconditionally and
irrevocably authorized, directed and empowered to file an interplea motion and
deliver all items held by it to a court of competent jurisdiction.
(h) In consideration of its acceptance of the appointment as
the Indemnification Escrow Agent, the Parent agrees to indemnify and hold the
Indemnification Escrow Agent harmless as to any liability incurred by it to any
person, firm or corporation by reason of its having accepted the same or in
carrying out any of the terms hereof (except as such liability may arise out of
or be based upon the gross negligence, bad faith or willful misconduct of the
Indemnification Escrow Agent), and to reimburse the Indemnification Escrow Agent
for all its reasonable expenses, including, among other things, counsel fees and
court costs, incurred by reason of its position hereunder or actions taken
pursuant hereto.
SECTION 9 ARBITRATION. All disputes related to the indemnification
obligations of all or any of the parties hereto under the provisions of this
Agreement shall be submitted to, and settled by, arbitration in Boston,
Massachusetts, in accordance with the Rules of the American Arbitration
Association. The dispute shall be submitted to one arbitrator agreed to by the
Indemnified Party and the Indemnifying Party. If the Indemnified Party and the
Indemnifying Party cannot agree on one arbitrator, one arbitrator will be
selected by each party, with the two selected arbitrators then selecting a third
arbitrator. The fees and expenses of the arbitration or arbitrators shall be
paid by the Indemnifying Party unless the indemnification obligation is reduced
to less than 50% of the amount in the related Notice of Claim and in such event
the fees and expenses shall be paid by the Indemnified Party. Any arbitration
award may be entered in and enforced by any court having jurisdiction thereover
and the parties hereby consent and commit themselves to the jurisdiction of the
courts of the Commonwealth of Massachusetts for the purposes of the enforcement
of any arbitration award.
SECTION 10 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given if delivered in
person, by overnight courier, electronic facsimile or telex (and shall be deemed
to have been duly given on the date of delivery if so given), or by first class
mail (postage prepaid) (and shall be deemed to have been duly given the second
business day after the date of the postmark if so given) to the respective
parties as follows:
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If to Parent:
Excel Switching Corporation
255 Independence Drive
Hyannis, MA 02601
Facsimile: (508) 862-3160
If to the Company:
RAScom, Inc.
5 Industrial Way
Salem, NH 03070
Facsimile:
If to the Indemnification Representative or any Company Shareholder:
Mark Galvin
RAScom, Inc.
5 Industrial Way
Salem, NH 03079
Telephone: (603)870-4222
Facsimile: (603) 898-4242
If to the Indemnification Escrow Agent:
State Street Bank and Trust Company
Two International Place
Boston, MA 02110
Attn: Corporate Trust Department
or to such other address or facsimile number as any party may have furnished to
the others in writing in accordance herewith, except that notices of changes of
address shall only be effective upon receipt.
SECTION 11 HEADINGS. The descriptive headings in this Agreement have
been inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provision hereof.
SECTION 12 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and the Merger
Agreement constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof and thereof. This Agreement shall not be
assigned by operation of law or otherwise.
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SECTION 13 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 14 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, each of which shall remain in full force
and effect, provided that enforcement of such other provisions in the absence of
the invalid or unenforceable provisions does not deprive any party of the
benefit of the bargain.
SECTION 15 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and same Agreement.
SECTION 16 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
-13-
IN WITNESS WHEREOF, Parent, Merger Sub, the Company, the
Indemnification Representative, the Indemnification Escrow Agent and each
Company Shareholder have caused this Agreement to be signed by their respective
officers thereunto duly authorized, and their respective seals to be affixed
hereto, as of the date first written above.
EXCEL SWITCHING CORPORATION
By: /s/ Chritopher Stavros
-------------------------------------
Title: Vice President and General Counsel
----------------------------------
RACEPOINT ACQUISITION CORPORATION
By: Christopher Stavros
-------------------------------------
Title: Vice President
----------------------------------
RASCOM, INC.
By: /s/ Mark Galvin
-------------------------------------
Title: President
----------------------------------
/s/ Mark Galvin
-----------------------------------------
Name: Mark Galvin
as Indemnification Representative
STATE STREET BANK AND TRUST COMPANY
As Indemnification Escrow Agent
By: /s/ Arthur Blakeslee
-------------------------------------
Title: Assistant Vice President
----------------------------------
/s/ Mark Galvin
-----------------------------------------
Mark Galvin
Address: 69 Indian Ridge Road
East Hempstead, NH 03826
-14-
/s/ Aaron A. Galvin
/s/ Fryda Galvin
-----------------------------------------
Aaron A. Galvin and Frayda Galvin
Address: 130 Mt. Auburn Street
Cambridge, MA 02138
/s/ Allan M. Kline
-----------------------------------------
Allan M. Kline
Address: 34 Philips Road
Sudbury, MA 01776
/s/ Allen A. Hauf
-----------------------------------------
Allen A. Hauf
Address: 60 Brucewood East
Acton, MA 01720
/s/ Arnold B. Denton
-----------------------------------------
Arnold B. Denton
Address: 36 The Garrison
Dover, NH 03820
/s/ C.W. Dick
-----------------------------------------
C.W. Dick
Address: 19 Thoreau Circle
Beverly, MA 01915
CHARLES RIVER PARTNERSHIP VII
1000 Winter Street, Suite 3300
Waltham, MA 02154
By: /s/ Michael Zak
-------------------------------------
Title: General Partner
----------------------------------
/s/ Chris Carroll
-----------------------------------------
Chris Carroll
Address: 120 Gray Street
North Andover, MA 01845
-15-
/s/ Dennis A. Kirshy
-----------------------------------------
Dennis A. Kirshy
Address: 26 Cart Path Road
Weston, MA 02193
/s/ Edward J. Los
-----------------------------------------
Edward J. Los
Address: 7 Cheyenne Drive
Nashua, NH 03063
FIRST ALBANY CORPORATION
CUSTODIAN FBO JAMES C. SCHWALBE IRA
7 Carousel Court
Londonderry, NH 03053
By: /s/ Matthew Hurley
-------------------------------------
Title: Supervisor
----------------------------------
By: /s/ Scott Perkins
-------------------------------------
Title: Guarantor
----------------------------------
/s/ Geoffrey Devine
-----------------------------------------
Geoffrey Devine
Address: P.O. Box 233
Salem, NH 03079
/s/ Gerald A. Friesen
-----------------------------------------
Gerald A. Friesen
Address: 1300 Chinquapin Road
Churchville, PA 18966
/s/ Gilbert M. Kaufman
-----------------------------------------
Gilbert M. Kaufman
Address: 19 Grist Mill Road
Acton, MA 01720
-16-
HANCOCK VENTURE PARTNERS V-DIRECT FUND L.P.
One Financial Center
Boston, MA 02109
By: HVP V - Direct Associates L.L.C.
Its: General Partner
By: Harbour Vest Partners, LLC
Its: Managing Member
By: /s/ Ofer Nemerovsky
-------------------------------------
Title: Managing Director
----------------------------------
/s/ Harry Newton
-----------------------------------------
Harry Newton
Address: 12 West 21st Street
New York, NY 10010
INTERSTOCK ANSTALT
Herrengasse 21
P.O. Box 339
FL-9490 Vaduz
LICHTENSTEIN
By: /s/ Heimo Quaderer
/s/ Edith Hueppi
-------------------------------------
Title: Directors
-----------------------------------
/s/ James C. Schwalbe
-----------------------------------------
James C. Schwalbe
Address:
/s/ Jeffery S. Basile
-----------------------------------------
Jeffery S. Basile
Address: 24 Southgate Road
Hollis, NH 03049
/s/ Joseph C. Genovese
-----------------------------------------
Joseph C. Genovese
Address: 24 Mill Street
Lincoln, MA 01773
-17-
/s/ Joseph H. Reilly
-----------------------------------------
Joseph H. Reilly
Address: 41 Pilgrim Street, #201
Cambridge, MA 03087
/s/ Kathryn Barrie
-----------------------------------------
Kathryn Barrie
Address: 277 Harrantis Lake Road
Chester, NH 03036
/s/ Kenneth M. Stess
-----------------------------------------
Kenneth M. Stess
Address: 26 Chandler Drive
Atkinson, NH 03811
/s/ Kevin D. Smith
/s/ Kathryn B. Smith
-----------------------------------------
Kevin D. and Kathryn B. Smith
Address: 15 Varley Drive
Hanata, Ontario K2K 1E7
CANADA
/s/ Kevin Dick
-----------------------------------------
Kevin Dick
Address: 37 Riverdale Avenue
Bradford, MA 01835
/s/ Kimberly A. Ward
-----------------------------------------
Kimberly A. Ward
Address: 6 Harmony Drive
Londonderry, NH 03053
-18-
LE SERRE
c/o Frank M. Polestra
Ascent Venture Management, Inc.
60 State Street, 19th Floor
Boston, MA 02109
By: /s/ Frank Polestra
-------------------------------------
Title: Partner
----------------------------------
/s/ Leigh Michl
-----------------------------------------
Leigh Michl
Address: 74 Cherry Brook Road
Weston, MA 02193
/s/ Louis Piazza
-----------------------------------------
Louis Piazza
Address: 11 Carter Lane
Andover, MA 01810
/s/ Marcia Haskel
-----------------------------------------
Marcia Haskel
Address: 8 Ivanhoe Lane
Andover, MA 01810
/s/ Margo Bik
/s/ Nicholas Bik
-----------------------------------------
Margo and Nicholas Bik
Address: 132 Farm Street
Balckstone, MA 01504
/s/ Michael Barza
-----------------------------------------
Michael Barza
Address: 46 Tudor Road
Chestnut Hill, MA 02167
/s/ Michael J. Wood
-----------------------------------------
Michael J. Wood
Address: 11 Lori Road
Derry, NH 03038
-19-
/s/ Mitchel Sayare
/s/ Susan E. Whitehead
-----------------------------------------
Mitchel Sayare and Susan E. Whitehead
Address: 15 Woodcliff Avenue
Wellesley, MA 02181
/s/ Naresh C. Parmer
-----------------------------------------
Naresh C. Parmer
Address: 36 Adelman Road
Billerica, MA 01821
/s/ Peter Livingstone
-----------------------------------------
Peter Livingstone
Address: 2 Elmwood Avenue, Apt. 35
Winchester, MA 01890
/s/ Peter S. Rood
-----------------------------------------
Peter S. Rood
Address: 6 High Ridge Road
Franklin, MA 02038
/s/ Philip Arrigo
/s/ Frances Arrigo
-----------------------------------------
Philip Arrigo and Frances Arrigo
Address: 74 Governor Dinsmore
Windham, NH 03087
PCC TRANSFER LIMITED
PARTNERSHIP
60 State Street, 19th Floor
Boston, MA 02109
By: /s/ Frank Polestra
-------------------------------------
Title: Manager
----------------------------------
-20-
PIONEER VENTURES LIMITED PARTNERSHIP II
60 State Street
Boston, MA 02109
By: /s/ Frank Polestra
-------------------------------------
Title: President
----------------------------------
/s/ R. Stephen Cheheyl
-----------------------------------------
Stephen R. Cheheyl
Address: 130 Lane's End
Concord, MA 01742
/s/ Reid L. Simpson
-----------------------------------------
Reid L. Simpson
Address: 141 Greenwood Road
Andover, MA 01810
/s/ Robert J. Grochmal
-----------------------------------------
Robert J. Grochmal
Address: 6 Independence Avenue
Derry, NH 03038
/s/ Robert J. Grochmal
/s/ Debra A. Grochmal
-----------------------------------------
Robert J. Grochmal and Debra A.Grochmal, JTWROS
Address: 6 Independence Avenue
Derry, NH 03038
-21-
/s/ Rodger P. Nordblom
-----------------------------------------
Rodger P. Nordblom
Address: c/o Nordblom Company
31 Third Avenue
Brighton, MA 01803
/s/ Ron Pullis
-----------------------------------------
Ron Pullis
Address: 42527 S.E. 175th Place
North Bend, WA 98045
/s/ Rubin Gruber
-----------------------------------------
Rubin Gruber
Address: 709 Sudbury Road
Concord, MA 01742
/s/ Stefan Giesler
-----------------------------------------
Stefan Gieseler
Address: Erbstollen 8A
44797 Bochum
GERMANY
/s/ Steven A. Mulawski
-----------------------------------------
Steven A. Mulawski
Address: 6 Virginia Road
Tyngsboro, MA 01879
SVE STAR VENTURES ENTERPRISES NO. V,
a German Civil Law Partnership
(with Limitation of Liability)
Possart Strasse 9
D-81679 Munich
GERMANY
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
Its: Managing Partner
By: /s/ Meir Barel
-------------------------------------
Title: Managing Director
----------------------------------
-22-
SVM STAR VENTURES
MANAGEMENTGESELLSCHAFT MBH
Nr. 3 & Co. KG
Possart Strasse 9
D-81679 Munich
GERMANY
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
Its: Managing Partner
By: /s/ Meir Barel
-------------------------------------
Title: Managing Partner
----------------------------------
/s/ Terry R. Young
-----------------------------------------
Terry R. Young
Address: 4 Aiken Street
Derry, NH 03038
THE MHF SYLVAN FUND
63 Sylvan Lane
Weston, MA 02193
By: /s/ Edward Saxe
-------------------------------------
Title: Trustee
----------------------------------
/s/ Thomas W. Mullaney, Jr.
-----------------------------------------
Thomas W. Mullaney, Jr.
Address: 11 Seaview Drive
Newbury, MA 01951
/s/ Warren J. Maxwell
-----------------------------------------
Warren J. Maxwell
Address: 72 High Road
Newbury, MA 01951
-23-
WATERLINE CAPITAL, LLC
c/o Alexander M. Levine
790 Boylston Street
Boston, MA 02199
By: /s/ Alexander M. Levine
-------------------------------------
Title: Managing Director
----------------------------------
/s/ Richard Hannapel
-----------------------------------------
Richard Hannapel
Address:
/s/ Joseph A. Keelan
-----------------------------------------
Joseph A. Keelan
Address: 139 Plain Road
Westford, MA 01886
CASSIE DALTON STESS TRUST
c/o Kenneth Stess
By: /s/ Kenneth Stess
-------------------------------------
Title: Trustee
-----------------------------------
Exhibit A to this Escrow Agreement has not been filed. Exhibit A contains fee
information for services rendered by the Indemnification Escrow Agent. The
Registrant hereby agrees to furnish a copy of Exhibit A if so requested by the
Commission.