<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the Commission
Only (as Permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
APEX PC SOLUTIONS, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------
(2) Aggregate number of securities to which transaction applies:
----------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------
(4) Proposed maximum aggregate value of transaction:
----------------------
(5) Total fee paid:
-------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF APEX PC SOLUTIONS, INC.
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of Apex PC
Solutions, Inc. will be held at 10:00 a.m. local time on June 26, 1997 at The
Woodmark Hotel, 1200 Carillon Point, Kirkland, Washington 98033, for the
following purposes:
(1) To elect five directors for a one-year term;
(2) To ratify the appointment of Coopers & Lybrand L.L.P. as independent
accountants for the Company for the current fiscal year; and
(3) To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on May 23, 1997 will be entitled
to notice of and to vote at the meeting and any adjournment thereof. The vote
of each shareholder is important. Whether or not you plan to attend the
meeting, you are requested to date and sign the enclosed proxy card and return
it promptly.
By order of the Board of Directors,
APEX PC SOLUTIONS, INC.
/s/ Douglas A. Bevis
Douglas A. Bevis, Secretary
Woodinville, Washington
June 6, 1997
2
<PAGE>
APEX PC SOLUTIONS, INC.
20031 142ND AVENUE N.E.
WOODINVILLE, WASHINGTON 98072
PROXY STATEMENT
INFORMATION REGARDING PROXIES
This Proxy Statement and the accompanying proxy/voting instruction card (proxy
card) are being mailed on or about June 6, 1997 to holders of shares in
connection with the solicitation of proxies by the Board of Directors of Apex PC
Solutions, Inc. (the "Company) for the 1997 Annual Meeting of Shareholders. The
meeting will be held on June 26, 1997 at 10:00 a.m. at The Woodmark Hotel, 1200
Carillon Point, Kirkland, Washington 98033.
Only shareholders of record at the close of business on May 23, 1997 will be
entitled to vote at the meeting. At the close of business on May 23, 1997 there
were 12,163,328 outstanding shares of the Company's common stock ("Common
Stock"). Each share of outstanding Common Stock is entitled to one vote. There
is no provision in the Company's Amended and Restated Articles of Incorporation
for cumulative voting.
If shares are not voted in person, they cannot be voted on your behalf unless a
signed proxy is given. Even if you expect to attend the Annual Meeting in
person, in order to ensure your representation, please complete, sign and date
the enclosed proxy and mail it promptly in the enclosed envelope. A shareholder
giving a proxy pursuant to this solicitation may revoke it at any time before it
is exercised by giving a subsequent proxy or by delivering to the Secretary of
the Company a written notice of revocation prior to the voting of the proxy at
the Annual Meeting. If you attend the Annual Meeting and inform the Secretary
of the Company in writing that you wish to vote your shares in person, your
proxy will not be used. If you receive two or more proxy cards, please
complete, sign, date and return each to complete your representation. All
shares represented by each properly executed and unrevoked proxy, in the
accompanying form, will be voted unless the proxy is mutilated or otherwise
received in such form or at such time as to render it unusable.
If the enclosed proxy is properly executed and returned, it will be voted in
accordance with the instructions specified on the proxy. In the absence of
instructions to the contrary, it will be voted (i) for all of the nominees for
the Company's Board of Directors listed in this proxy statement and (ii) to
ratify the appointment of Coopers & Lybrand L.L.P. as the independent
accountants for the Company for the year ending December 31, 1997.
Votes cast at the Annual Meeting will be tabulated by the persons appointed by
the Company to act as inspectors of election for the Annual Meeting. Shares
represented by proxies that reflect abstentions or "broker non-votes" (i.e.,
shares held by a broker or nominee which are represented at the meeting, but
with respect to which such broker or nominee is not empowered to vote on a
particular proposal) will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum. Abstentions will not
be counted either in favor of or against the election of the nominees or other
proposals. Under the rules of the National Association of Securities Dealers,
brokers holding stock for the accounts of their clients who have not been given
specific voting instructions as to a matter by their clients may vote their
clients' proxies in their own discretion.
The cost of this solicitation will be borne by the Company. Solicitation will
be made by mail, by telegraph and telephone, and personally by officers and
regular employees of the Company who will not receive additional compensation
for solicitation. Brokers, nominees and fiduciaries will be reimbursed for
out-of-
<PAGE>
pocket expenses incurred in obtaining proxies or authorizations from the
beneficial owners of the Common Stock.
The purpose of the meeting and the matters to be acted upon are set forth in the
Notice of Annual Meeting of Shareholders. As of the date of this Proxy
Statement, management knows of no other business which will be presented for
consideration at the Annual Meeting. However, if any such other business shall
properly come before the meeting, votes will be cast pursuant to the proxies in
respect of any such other business in accordance with the best judgment of the
persons acting under the proxies.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors consists of five members, each serving a one-year term.
Each Director will hold office until the first meeting of shareholders
immediately following expiration of his term of office and until his successor
is qualified and elected.
Although the Board of Directors anticipates that all of the nominees will be
available to serve as Directors of the Company, if any of them do not accept the
nomination, or otherwise are unwilling or unable to serve, the proxies will be
voted for the election of a substitute nominee or nominees designated by the
Board of Directors.
INFORMATION ABOUT DIRECTORS AND NOMINEES FOR ELECTION
The names and ages of the nominees, the year in which each first became a
Director of the Company, their principal occupations and certain other
information are as follows:
JEFFREY T. CHAMBERS, age 42, has served as a Director of the Company since
January 1996. Mr. Chambers has been employed by TA Associates, Inc., a venture
capital firm, or its predecessor, since 1980, has been a partner of affiliated
venture funds since 1984 and is currently a Managing Director of TA
Associates, Inc. Mr. Chambers is also a director of Diamond Multimedia Systems,
Inc.
STERLING CRUM, age 42, has served as a Director of the Company since its
inception in 1993. From the Company's inception until June 1995, Mr. Crum
served as the Company's President. From May 1985 to February 1993 Mr. Crum
served in various capacities for Apex Computer Corporation, the Company's
predecessor (the "Predecessor"), including as President and as Director. In
addition, from November 1993 until December 1996 Mr. Crum served as President
and sole director of Water Sports, Inc., a water sports recreation company.
KEVIN J. HAFER, age 40, has been the President of the Company since June 1995,
and has served as the Chief Executive Officer of the Company since December 1995
and as a Director of the Company since January 1996. From February 1993 to
June 1995, Mr. Hafer served as the General Manager of the Company, and from
December 1989 to January 1993 he served as the Manager and Technical Operations
Director of the Predecessor. Prior to joining the Predecessor, Mr. Hafer was
employed at Harris Corporation from May 1979 to September 1989, serving in
various management capacities.
EDWIN L. HARPER, age 52, has served as a Director of the Company since
October 1996. Since June 1996 Mr. Harper has served as President and Chief
Executive Officer of SyQuest Technology, a computer hardware company. From
July 1993 to June 1996 Mr. Harper was employed as President and Chief Executive
Officer of ComByte, Inc., and from June 1988 to May 1993 Mr. Harper served in
various
-2-
<PAGE>
capacities, including President and Chief Executive Officer, at Colorado Memory
Systems, Inc. Mr. Harper is also a Director of SyQuest Technology and McAfee
Associates, a network security management company.
WILLIAM MCALEER, age 45, has served as a Director of the Company since
June 1996. Mr. McAleer is currently Managing Director of Voyager Capital, which
provides venture financing and advisory services to information technology
companies. From 1988 through 1994, he was Vice President Finance, Chief
Financial Officer and Secretary with Aldus Corporation, a publicly held software
company. Prior to joining Aldus, he was Vice President, Finance and
Administration from 1987 to 1988 of Ecova Corporation and also served as a Vice
President with Westin Hotels Company from 1984 through 1987. Mr. McAleer is
also a Director of FourGen Software Technologies, Primus Communications
Corporation and Truevision, Inc.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended December 31, 1996 there was one meeting of the
Board of Directors, and each director attended that meeting. (Prior to that
meeting, all actions requiring director approval in 1996 were effected through
unanimous consents in lieu of meetings.)
The Board of Directors has two committees: the Audit Committee and the
Compensation Committee. The members of the Audit Committee are William McAleer
and Jeffrey T. Chambers. The Audit Committee, which was created in December
1996, reviews with the Company's independent accountants the scope, results and
costs of the annual audit and the Company's accounting policies and financial
reporting. There were no meetings of the Audit Committee during the fiscal year
ended December 31, 1996.
The members of the Compensation Committee are Edwin L. Harper, Sterling Crum and
Jeffrey T. Chambers. The Compensation Committee, which was also created in
December 1996, oversees the Company's compensation and benefits practices and
programs. There was one meeting of the Compensation Committee during the fiscal
year ended December 31, 1996.
The Board of Directors does not have any other standing committees.
EXECUTIVE OFFICERS
The following are the executive officers of the Company. Executive officers are
elected by the Board of Directors.
DOUGLAS A. BEVIS, age 51, has been the Vice President and Chief Financial
Officer of the Company since September 1996, and Secretary since December 1996.
From September 1990 to February 1996, Mr. Bevis was employed at CH2M HILL, Inc.,
a national environmental engineering consulting firm, where he served as Vice
President and Treasurer from September 1990 to April 1993 and as Senior Vice
President and Chief Financial Officer from April 1993 to February 1996.
KEVIN J. HAFER. See description under "Election of Directors - Information
About Directors and Nominees for Election."
CHRISTOPHER L. SIRIANNI, age 43, has been the Vice President, Sales and
Marketing of the Company since August 1996. From March 1994 to August 1996, Mr.
Sirianni served as the Company's Director of Sales and Marketing. From August
1992 to February 1994, Mr. Sirianni served as the Director of Sales of Coastal
Manufacturing, a metal fabrication company. Mr. Sirianni served as a
consultant/sales executive for National Precision Bearing, a distributor, from
November 1992 to June 1992. From September 1982 to October 1991, Mr. Sirianni
served in various capacities, including Vice President of Sales and Marketing
for Augat Communications, a telecommunications company.
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<PAGE>
OTHER SIGNIFICANT EMPLOYEES
In addition to directors and executive officers, the Company has the following
significant employees:
DANNY L. BEASLEY, age 32, has served as the Company's Director of Engineering
since March 1994. From December 1992 to March 1994, Mr. Beasley served as a
Research and Development Engineer for the Company and the Predecessor. Mr.
Beasley served as the Director of Engineering for Spectralogic, Inc., an
engineering design and product development firm, from April 1989 to October
1992.
STEPHEN J. MCCARTHY, age 44, has served as the Company's Director of Product
Development since July 1995. From February 1994 to July 1995, Mr. McCarthy
served as the Company's Research and Development Manager, and from November 1987
to February 1994 he served as the Account Manager for the Company and for the
Predecessor's on-site service division.
COMPENSATION OF DIRECTORS
Directors are reimbursed for their out-of-pocket expenses for attendance at
meetings. Mr. Harper and Mr. McAleer receive annual compensation of $6,000 for
their services as Directors. Each of the Directors was also granted an option
in 1996 to purchase 24,000 shares of the Company's Common Stock. In October
1996, the Company accelerated vesting of up to 50% of options previously granted
to Directors.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS
The following table sets forth information with respect to the ownership of
issued and outstanding shares of the Company by each director, executive
officer, and person known to the Company to be the beneficial owner of more than
5% of any class of the Company's voting securities as of May 23, 1997:
Name and Address of Common Shares Percent
Beneficial Owner (1) Beneficially Owned Owned
- - -------------------- ------------------ --------
Sterling Crum (2) 3,786,000 31.1%
TA Group (3)
c/o TA Associates, Inc.
125 High Street Tower, Suite 2500
Boston, MA 02110 3,774,000 31.0
Britannia Holdings Limited
P.O. Box 556
Main Street
Charleston, Nevis 2,574,000 21.2
Kevin J. Hafer 331,844 2.7
Christopher L. Sirianni(4) 66,000 *
Douglas A. Bevis(5) 25,750 *
Jeffrey T. Chambers(6) 17,032 *
William McAleer 12,000 *
Edwin L. Harper 12,000 *
All directors and executive officers as
a group (7 persons)(7) 4,250,626 34.9%
- - -------------
* Less than 1%.
(1) Except as set forth herein the address of the directors and executive
officers set forth in the table is the address of the Company, 20031 142nd
Avenue, N.E., Woodinville, Washington 98072.
(2) Includes 2,574,000 shares beneficially owned by Britannia Holdings Limited
("Britannia"), whose sole shareholder is The Duvall Trust, an irrevocable
trust for the benefit of Mr. Crum and certain members of his family.
Mr. Crum disclaims beneficial ownership with respect to all of such
2,574,000 shares.
(3) Includes (i) 2,265,321 shares of Common Stock owned by Advent VII L.P.,
(ii) 1,242,627 shares of Common Stock owned by Advent Atlantic and Pacific
II L.P., (iii) 226,538 shares of Common Stock owned by Advent New York L.P.
and (iv) 39,514 shares of Common Stock owned by TA Venture Investors
Limited Partnership. Advent VII L.P., Advent Atlantic and Pacific II L.P.,
Advent New York L.P. and TA Venture Investors Limited Partnership are part
of an affiliated group of investment partnerships referred to,
collectively, as the TA Group. The general partner of Advent VII L.P. is
TA Associates VII L.P. The general partner of Advent Atlantic and Pacific
II L.P. is TA Associates AAP II Partners L.P. The general partner of
Advent New York L.P. is TA Associates VI
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<PAGE>
L.P. The general partner of each of TA Associates VII L.P., TA Associates
AAP II Partners L.P. and TA Associates VI L.P. is TA Associates, Inc. In
such capacity, TA Associates, Inc. exercises sole voting and investment
power with respect to all of the shares held of record by the named
investment partnerships, with the exception of those shares held by TA
Venture Investors Limited Partnership; individually, no shareholder,
director or officer of TA Associates, Inc. is deemed to have or share such
voting or investment power. Principals and employees of TA Associates,
Inc. (including Mr. Chambers, a director of the Company) comprise the
general partners of TA Venture Investors Limited Partnership. In such
capacity, Mr. Chambers may be deemed to share voting and investment power
with respect to the 39,514 shares of Common Stock held of record by TA
Venture Investors Limited Partnership. Mr. Chambers disclaims beneficial
ownership of such shares, except to the extent of the 5,032 shares as to
which he holds a pecuniary interest.
(4) Includes 11,576 shares of Common Stock issuable upon exercise of stock
options currently exercisable at $0.18375 per share.
(5) Includes 2 shares of Common Stock issuable upon exercise of stock options
currently exercisable at $0.18375 per share.
(6) Includes 12,000 shares of Common Stock issuable upon exercise of stock
options currently exercisable at $0.18375 per share and 5,032 shares
beneficially owned by Mr. Chambers through TA Venture Investors Limited
Partnership, of which the 5,032 shares beneficially owned by Mr. Chambers
through TA Venture Investors Limited Partnership are included in the
3,774,000 shares described in Note (3) above. Does not include any shares
beneficially owned by Advent VII L.P., Advent Atlantic and Pacific II L.P.
or Advent New York L.P., of which Mr. Chambers disclaims beneficial
ownership.
(7) Includes 23,578 shares of Common Stock issuable upon exercise of stock
options currently exercisable at $0.18375 per share. Also includes
2,574,000 shares held by Britannia. See Notes (2), (4), (5) and (6) above.
There are no arrangements which may result in a change of control of the
Company.
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COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes all compensation earned by the Company's Chief
Executive Officer and by the Company's other most highly compensated executive
officer whose total annual salary and bonus exceeded $100,000 (collectively, the
"Named Executive Officers") for services rendered in all capacities during the
fiscal year ended December 31, 1996.
Long-Term
Annual Compensation Compensation
------------------- ---------------------
Name and Principal Stock All Other
Position Year Salary Bonus Options Compensation
- - ------------------ ---- --------- ---------- -------- ------------
Kevin J. Hafer
President and Chief
Executive Officer 1996 $157,692 $564,707(1) 24,000 $9,619(2)
Christopher L. Sirianni
Vice President, Sales
and Marketing 1996 $89,123 $148,396(3) 132,000 $4,456(4)
- - ------------
(1) Includes $480,000 bonus earned in 1996 and paid in 1997.
(2) Represents matching contributions in the aggregate amount of $7,500 made by
the Company in 1996 to its 401(k) Profit Sharing Plan and Trust on behalf
of Mr. Hafer and premium payments in the aggregate amount of $2,119 paid by
the Company in 1996 towards a life insurance policy that the Company
maintained at its expense in 1996 on Mr. Hafer's life payable to his wife
or estate (or as otherwise directed by Mr. Hafer).
(3) Includes $54,894 bonus earned in 1996 and paid in 1997.
(4) Represents matching contributions made by the Company to its 401(k) Profit
Sharing Plan and Trust on behalf of Mr. Sirianni.
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<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to grants to the
Named Executive Officers of options to purchase Common Stock of the Company made
during the fiscal year ended December 31, 1996.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------
% of Total
Number of Securities Options Granted Exercise
Underlying Options to Employees in Price per Expiration
Name Granted(#)(1) Fiscal Year Share Date
---- -------------------- ----------------- ---------- ----------
<S> <C> <C> <C> <C>
Kevin J. Hafer(2) 24,000 3.8% $0.18375 06/10/06
Christopher L.
Sirianni (3) 132,000 20.7% $0.18375 01/22/06
</TABLE>
- - -------------
(1) Stock options have an exercise price equal to the fair market value of the
underlying Common Stock on the date of grant. The Company granted options
to purchase an aggregate of 638,000 shares of Common Stock to employees and
non-employee directors in 1996.
(2) Mr. Hafer was granted options to purchase an additional 705,880 shares of
Common Stock in 1995. As of December 31, 1996, options to purchase 404,844
shares of Common Stock were vested and had been exercised by Mr. Hafer. Of
the remaining 325,036 shares subject to options, options to purchase 666
shares will vest on January 1, 1998. Options to purchase approximately
16,458 shares will vest on the first day of each month from February 1998
through June 1999, and options to purchase approximately 6,372 shares will
vest on the first day of each month from July 1999 through January 2000.
(3) As of December 31, 1996, options to purchase 66,000 shares of Common Stock
were vested, of which options to purchase 54,424 shares had been exercised
by Mr. Sirianni. Of the remaining 66,000 shares subject to options,
options to purchase approximately 2,750 shares will vest on the first day
of each month from March 1998 through February 2000.
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<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to option exercises
during the fiscal year ended December 31, 1996 by the Named Executive Officers
and 1996 year-end option values.
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised In-the-
Value Realized Unexercised Options Money Options at
Number of Shares (Market Price at) at Fiscal Year End Fiscal Year End
Acquired on Exercise Less (Exercisable/ (Exercisable/
Name Exercise Exercise Price) Unexercisable) Unexercisable(1)
- - ---- -------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
Kevin J. Hafer 81,296 --(2) 0/325,036 --/$1,971,750
323,548 $102,322(3)
Christopher L.
Sirianni 54,424 $17,212(4) 11,576/66,000 $70,223/$400,373
</TABLE>
- - -------------------
(1) Based upon the Company's estimate of the fair market value of the Company's
Common Stock at fiscal year end of $6.25 per share less the exercise price
payable for such shares.
(2) Based upon the Company's estimate of the fair market value of the Company's
Common Stock at February 12, 1996, May 15, 1996, June 1, 1996, July 1, 1996
and August 16, 1996 of $0.18375 per share less the exercise price payable
for such shares.
(3) Based upon the Company's estimate of the fair market value of the Company's
Common Stock at September 1, 1996, October 1, 1996 and October 14, 1996 of
$0.50 per share less the exercise price payable for such shares.
(4) Based upon the Company's estimate of the fair market value of the Company's
Common Stock at October 14, 1996 of $0.50 per share less the exercise price
payable for such shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company operated as a division of Apex Computer Company through
January 1993. In February 1993, the assets and liabilities of that division
were spun off as a dividend to Sterling Crum, who contributed those assets and
liabilities to the Company as its initial capitalization in return for the
issuance by the Company of 8.0 million shares of Common Stock. At that time,
the assets were valued by Mr. Crum, who was the sole director of the Company, at
approximately $776,000, and the liabilities were valued at approximately
$189,000, for a net value of approximately $587,000.
During 1994 and 1995, Mr. Crum advanced funds (by foregoing distributions) for
the operation of the Company in exchange for unsecured promissory notes totaling
approximately $225,000 for 1994 and $4.6 million for 1995. All of these notes
bore interest at the rate of 12% per annum except for two notes totaling
approximately $270,000 that bore interest at a rate equal to 100% of the
discounts taken by the Company for its early payments to suppliers (the "Net-10
Notes"). All principal and accrued and unpaid interest under these notes was
paid at or shortly after the closing of the Leveraged Recapitalization. At the
time of repayment, accrued interest on these notes (other than the Net-10 Notes)
totaled approximately $112,000, and accrued interest on the two Net-10 Notes
totaled less than $20,000.
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During 1994 and 1995 when the Company was an S Corporation, the Company
distributed $792,279 and $992,815, respectively, to Mr. Crum as dividends. In
1993 and 1994 Mr. Crum received $101,534 and $3,000, respectively, as
compensation.
In December 1995, the Company sold to several entities affiliated with TA
Associates, Inc. (the "TA Group") 1.6 million shares of Common Stock at a price
of $0.18375 per share, 300,000 shares of Series A Redeemable and Convertible
Preferred Stock at a price of $7.35 per share, and $10.0 million in aggregate
principal amount of Class A Subordinated Promissory Notes, for an aggregate
purchase price of approximately $12.5 million in connection with a leveraged
recapitalization (the "Leveraged Recapitalization"). Jeffrey T. Chambers, a
Director of the Company, is a Managing Director of TA Associates, Inc. The
shares of Series A Redeemable and Convertible Preferred Stock issued to the TA
Group converted into 2.4 million shares of Common Stock upon the closing of the
Company's initial public offering (the "IPO") in February 1997. The Class A
Subordinated Promissory Notes issued to the TA Group provided for the quarterly
payment of interest at 7% per annum, and the repayment of the principal amount
and any accrued and unpaid interest upon consummation of certain "Qualified
Liquidity Events," which included the IPO. In connection with the Leveraged
Recapitalization, the Company, the TA Group, Mr. Crum, Kevin J. Hafer, the Chief
Executive Officer and a Director of the Company, and Britannia Holdings Limited
("Britannia"), a major shareholder of the Company, entered into a Shareholders'
Agreement pursuant to which, among other things, the TA Group was granted
certain preemptive rights, co-sale rights and rights of refusal on transfers of
shares by the other shareholder parties, and the Company granted the TA Group
certain registration rights pursuant to a Registration Rights Agreement. The
Shareholders' Agreement terminated by its terms upon consummation of the IPO.
In connection with the Leveraged Recapitalization, the Company redeemed from
Britannia 4.0 million shares of Common Stock for an aggregate price of
approximately $22.5 million, consisting of cash in the amount of $12.5 million
and the Class B Subordinated Promissory Note in the aggregate principal amount
of $10.0 million. The Class B Subordinated Promissory Note issued to Britannia
provided for the quarterly payment of interest at 7% per annum and the repayment
of the principal amount and any accrued and unpaid interest on the consummation
of certain "Qualified Liquidity Events," which included the IPO. Of the
approximately $12.5 million payable to Britannia, $2.5 million was placed in
escrow by the Company to secure certain representations and warranties made to
the TA Group by the Company, Mr. Crum, and Britannia. This escrow arrangement
expired in February 1997, and all escrowed funds were disbursed.
Simultaneously with the Leveraged Recapitalization, Mr. Crum entered into an S
Corporation Indemnification Agreement with the Company indemnifying the Company
from and against any federal or state income tax liability resulting from the
Company's failure to qualify as an S Corporation under Internal Revenue Code
Section 1361(a)(1) for any taxable year ending or prior to October 31, 1995, the
date on which the Company's status as an S Corporation was terminated.
In connection with the Leveraged Recapitalization, Mr. Hafer entered into an
Employment Agreement with the Company for calendar year 1996, subject to
automatic one-year renewals thereafter. Pursuant to the Employment Agreement,
Mr. Hafer received, among other things, 200,000 shares of nonvoting Series B
Redeemable Preferred Stock. In December 1996, the Employment Agreement was
amended so that the Series B Redeemable Preferred Stock vested in Mr. Hafer on
January 1, 1997, and the Company was obligated to redeem 80,000 of such shares
on January 1, 1997 for $5.00 per share and to redeem the remaining 120,000
shares for $5.00 per share upon a "Qualified Public Offering," including the
IPO. The Company subsequently redeemed such shares pursuant to the amendment to
the Employment Agreement.
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<PAGE>
PROPOSAL 2
TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE
INDEPENDENT ACCOUNTANTS FOR THE COMPANY FOR THE YEAR ENDED
DECEMBER 31, 1997
- - --------------------------------------------------------------------------------
The Board of Directors has appointed the firm of Coopers & Lybrand L.L.P. to
conduct an audit in accordance with generally accepted accounting standards of
the Company's financial statements for the fiscal year ending December 31, 1997.
A representative of that firm is expected to be present at the annual meeting to
respond to appropriate questions and will be given an opportunity to make a
statement if he or she so desires. Neither the firm nor any of the partners has
any direct financial interest in the Company as independent accountants. This
appointment is being submitted for ratification at the meeting. If not
ratified, this appointment will be reconsidered by the Board, although the Board
of Directors will not be required to appoint different independent accountants
for the Company. Coopers & Lybrand L.L.P. has served the Company as its
independent accountants since December 1995.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE APPOINTMENT OF COOPERS &
LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1997 AND UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THIS
APPOINTMENT.
OTHER INFORMATION
-----------------
The 1996 Annual Report of the Company for the fiscal year ended December 31,
1996 was mailed to the shareholders prior to or together with the mailing of
this Proxy Statement. Shareholders who did not receive a copy of the 1996
Annual Report with their Proxy Statement may obtain a copy by writing to or
calling Douglas A. Bevis, Secretary, Apex PC Solutions, Inc., 20031 142nd Avenue
N.E., Woodinville, Washington 98072. His telephone number is (425) 402-9393.
SHAREHOLDER PROPOSALS
---------------------
Proposals which shareholders intend to present at the 1998 Annual Meeting of
Shareholders must be received by the Company no later than January 30, 1998 to
be eligible for inclusion in the proxy material for that meeting.
OTHER BUSINESS
--------------
As of the date of this Proxy Statement, management knows of no other business
which will be presented for action at the meeting. If any other business
requiring a vote of the shareholders should come before the meeting, the persons
named in the enclosed proxy form will vote or refrain from voting in accordance
with their best judgment.
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<PAGE>
The Company's 1996 Annual Report is enclosed herewith and contains the Company's
financial statements for the year ended December 31, 1996. A COPY OF FORM
10-KSB, THE ANNUAL REPORT FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION, WILL BE FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER WHO REQUESTS IT
IN WRITING FROM THE COMPANY AT THE ADDRESS NOTED ON THE FIRST PAGE OF THIS PROXY
STATEMENT.
By order of the Board of Directors:
/s/ Douglas A. Bevis
Douglas A. Bevis, Secretary
Woodinville, Washington
June 6, 1997
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<PAGE>
APEX PC SOLUTIONS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 26, 1997
The undersigned hereby appoints Kevin J. Hafer and Douglas A. Bevis, or
either of them (with full power to act alone), as proxies with full power of
substitution, to represent and to vote all of the Common Stock of APEX PC
SOLUTIONS, INC. held of record by the undersigned at the close of business on
May 23, 1997 at the annual meeting of shareholders of APEX PC SOLUTIONS, INC. on
Thursday, June 26, 1997, and at any adjournments thereof, as set forth below and
in accordance with their discretion on any other matters which may properly come
before the meeting or any adjournments thereof.
1. Election of Directors: ___For all ___Withhold all
___For all except:
William McAleer, Jeffrey T. Chambers, Sterling Crum,
Kevin J. Hafer, Edwin L. Harper
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, mark the "For all except" box and strike a line through the nominee's
name.
2. Proposal to ratify the appointment of COOPERS & LYBRAND L.L.P. as
the independent public accountants for the company for the year ending
December 31, 1997.
___For ___Against ___Abstain
The Board of Directors unanimously recommends a vote "FOR" this proposal.
3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THE PROXY WILL BE VOTED IN FAVOR OF THE FOREGOING
PROPOSALS.
<PAGE>
Please sign exactly as shares are registered. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name, by authorized
person.
Signature
Signature if jointly held proxy
DATED:
---------------------------------------------
Please mark, sign, date and return this proxy
promptly using the enclosed envelope.
---------------------------------------------
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