<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 30, 2000
REGISTRATION NO. 333-33768
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AEGEAN SEA INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 3577 91-2032368
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of Industrial Identification Number)
incorporation or organization) Classification Code Number)
4991 CORPORATE DRIVE
HUNTSVILLE, ALABAMA 35805
(256) 430-4000
</TABLE>
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------------
DOYLE C. WEEKS AND BARRY L. HARMON
AEGEAN SEA INC.
4991 CORPORATE DRIVE
HUNTSVILLE, ALABAMA 35805
(256) 430-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
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PATRICK J. SCHULTHEIS, ESQ. BARRY L. HARMON STEPHEN F. THORNTON JOHN H. COOPER, ESQ.
CHRISTIAN E. MONTEGUT, ESQ. SAMUEL F. SARACINO, ESQ. DOUGLAS E. PRITCHETT SEAN T. WHEELER, ESQ.
WILSON SONSINI GOODRICH & ROSATI APEX INC. CYBEX COMPUTER SIROTE & PERMUTT, P.C.
PROFESSIONAL CORPORATION 9911 WILLOWS ROAD N.E. PRODUCTS CORPORATION 2311 HIGHLAND AVE. SOUTH
5300 CARILLON POINT REDMOND, WASHINGTON 98052 4991 CORPORATE DRIVE BIRMINGHAM, ALABAMA 35205
KIRKLAND, WASHINGTON 98033 (425) 861-5858 HUNTSVILLE, ALABAMA 35805 (205) 930-5100
(425) 576-5800 (256) 430-4000
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------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the proposed mergers described herein have been satisfied or
waived.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED , 2000
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A MERGER PROPOSAL--
[LOGO] YOUR VOTE IS VERY IMPORTANT [LOGO]
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TO THE SHAREHOLDERS OF APEX INC. AND CYBEX COMPUTER PRODUCTS CORPORATION:
Apex and Cybex have entered into a merger agreement under which they have
agreed to combine the two companies in a merger, resulting in a new combined
corporation named Aegean Sea Inc. In the merger, Apex common shareholders will
receive 1.0905 shares of Aegean Sea common stock for each share they own, and
Cybex common shareholders will receive one share of Aegean Sea common stock for
each share they own. After the merger, former shareholders of Apex will hold
approximately 54.4%, and former shareholders of Cybex will hold approximately
45.6%, of the outstanding common stock of Aegean Sea. Aegean Sea has applied to
list its common stock on The Nasdaq National Market under the symbol "ASEA."
The holders of two-thirds of Apex's outstanding common stock and the holders
of two-thirds of Cybex's outstanding common stock must approve the merger
agreement and the merger. Apex and Cybex will each hold a special meeting of
shareholders on June 28, 2000 to consider and vote upon the merger agreement and
the merger.
- The Apex special meeting will be held at 9:00 a.m., Pacific time at The
Woodmark Hotel, 1200 Carillon Point, Kirkland, Washington 98033. Only Apex
shareholders who hold shares of Apex common stock at the close of business
on May 22, 2000, will be entitled to vote at the Apex special meeting.
- The Cybex special meeting will be held at 11:00 a.m., Central time at the
Bevill Conference Center and Hotel, 550 Sparkman Drive, Huntsville,
Alabama 35816. Only Cybex shareholders who hold shares of Cybex common
stock at the close of business on May 22, 2000, will be entitled to vote
at the Cybex special meeting.
After careful consideration, the boards of directors of Apex and Cybex have
approved the merger and determined the merger to be in the best interests of
their shareholders. THE BOARDS OF DIRECTORS OF APEX AND CYBEX UNANIMOUSLY
RECOMMEND THAT THEIR SHAREHOLDERS VOTE FOR THE MERGER AGREEMENT AND THE MERGER.
The attached joint proxy statement/prospectus provides you with detailed
information concerning Apex, Cybex, Aegean Sea and the merger. Please give all
of the information contained in the joint proxy statement/prospectus your
careful attention. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE DISCUSSION
IN THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 17 OF THE JOINT PROXY
STATEMENT/ PROSPECTUS.
Your vote is very important. Whether or not you expect to attend the
meeting, please complete, date, sign and promptly return the accompanying proxy
in the enclosed postage paid envelope so that your shares may be represented at
the meeting. Returning the proxy will not prevent you from attending the meeting
and voting your shares in person.
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Sincerely, Sincerely,
Kevin J. Hafer Stephen F. Thornton
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
CHAIRMAN OFFICER
APEX INC. CYBEX COMPUTER PRODUCTS CORPORATION
</TABLE>
This joint proxy statement/prospectus is dated , 2000 and was
first mailed to shareholders on or about , 2000.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN
CONNECTION WITH THE MERGER OR DETERMINED IF THIS JOINT PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
This joint proxy statement/prospectus incorporates important business and
financial information about Apex and Cybex from other documents that are not
included in or delivered with the joint proxy statement/prospectus. We will
provide to you a copy of this information, without charge, upon your written or
oral request. YOU SHOULD MAKE ANY REQUEST FOR DOCUMENTS BY , 2000 TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS.
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Requests for documents relating to Apex Requests for documents relating to Cybex
should be directed to: should be directed to:
Apex Inc. Cybex Computer Products Corporation
9911 Willows Road N.E. 4991 Corporate Drive
Redmond, Washington 98052 Huntsville, Alabama 35805
(425) 861-5858 (256) 430-4000
Attention: Barry L. Harmon Attention: Douglas E. Pritchett
</TABLE>
See "DOCUMENTS INCORPORATED BY REFERENCE" which begins on page 110.
REFERENCES IN THIS JOINT PROXY STATEMENT/PROSPECTUS TO "WE," "US," "OUR,"
AND "OURS" REFER TO AEGEAN SEA, APEX, CYBEX AND THEIR CONSOLIDATED
SUBSIDIARIES FOLLOWING THE MERGER.
<PAGE>
[LOGO]
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 28, 2000 AT 9:00 A.M.
To Our Shareholders:
A special meeting of shareholders of Apex Inc. will be held at The Woodmark
Hotel located at 1200 Carillon Point, Kirkland, Washington 98033 on June 28,
2000 at 9:00 a.m., Pacific time, for the following purposes:
1. To consider and vote upon a proposal to approve the merger agreement
dated as of March 8, 2000, among Apex, Cybex Computer Products
Corporation and Aegean Sea Inc., pursuant to which Apex and Cybex will
each merge with a subsidiary of a new company called Aegean Sea Inc. and
each share of Apex common stock will be automatically converted into
1.0905 shares of Aegean Sea common stock, and to approve the merger.
2. To transact any other business that properly comes before the special
meeting or any adjournments or postponements thereof.
The accompanying joint proxy statement/prospectus describes the proposed
merger in more detail. We encourage you to read the entire document carefully.
Apex shareholders are entitled to assert dissenters' rights under Washington
law in connection with the merger. A copy of Chapter 23B.13 of the Washington
Business Corporation Act, which sets forth the dissenters' rights, is attached
to the joint proxy statement/prospectus as Annex D.
We have fixed the close of business on May 22, 2000 as the record date for
the determination of our shareholders entitled to vote at this meeting.
By Order of the Board of Directors of
Apex Inc.
Samuel F. Saracino
SECRETARY
Redmond, Washington
, 2000
YOUR VOTE IS VERY IMPORTANT. TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING. YOU CAN REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS
VOTED. RETURNING THE PROXY DOES NOT PREVENT YOU FROM ATTENDING THE MEETING
AND VOTING YOUR SHARES IN PERSON. IF YOUR SHARES ARE HELD IN AN ACCOUNT AT A
BROKERAGE FIRM OR A BANK, YOU MUST INSTRUCT THEM HOW TO VOTE YOUR SHARES. IF
YOU DO NOT VOTE OR DO NOT INSTRUCT YOUR BROKER OR BANK HOW TO VOTE, IT WILL
HAVE THE SAME EFFECT AS VOTING AGAINST APPROVAL OF THE MERGER AGREEMENT AND
THE MERGER.
<PAGE>
[LOGO]
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 28, 2000 AT 11:00 A.M.
To Our Shareholders:
A special meeting of shareholders of Cybex Computer Products Corporation
will be held at the Bevill Conference Center and Hotel located at 550 Sparkman
Drive, Huntsville, Alabama 35816 on June 28, 2000 at 11:00 a.m., Central time,
for the following purposes:
1. To consider and vote upon a proposal to approve the merger agreement
dated as of March 8, 2000, among Cybex, Apex Inc., and Aegean Sea Inc.
pursuant to which Apex and Cybex will each merge with a subsidiary of a
new company called Aegean Sea Inc. and each share of Cybex common stock
will be automatically converted into one share of Aegean Sea common
stock, and to approve the merger.
2. To transact any other business that properly comes before the special
meeting or any adjournments or postponements thereof.
These items of business are described in the attached joint proxy
statement/prospectus. We encourage you to read the entire document carefully.
Holders of record of Cybex common stock at the close of business on May 22,
2000, the record date, are entitled to notice of, and to vote at, the special
meeting and any adjournments or postponements of the special meeting.
Cybex shareholders are entitled to assert dissenters' rights under Alabama
law in connection with the merger. A copy of Article 13 of the Alabama Business
Corporation Act, which sets forth the dissenters' rights, is attached to the
joint proxy statement/prospectus as Annex E.
By Order of the Board of Directors of
Cybex Computer Products Corporation
Doyle C. Weeks
SECRETARY
Huntsville, Alabama
, 2000
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE VOTE AS SOON AS POSSIBLE TO MAKE SURE THAT YOUR SHARES ARE
REPRESENTED AT THE MEETING. TO VOTE YOUR SHARES, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE
PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. YOU CAN REVOKE YOUR
PROXY AT ANY TIME BEFORE IT IS VOTED. IF YOU ARE A HOLDER OF RECORD, YOU MAY
ALSO CAST YOUR VOTE IN PERSON AT THE SPECIAL MEETING. IF YOUR SHARES ARE
HELD IN AN ACCOUNT AT A BROKERAGE FIRM OR BANK, YOU MUST INSTRUCT THEM ON
HOW TO VOTE YOUR SHARES. IF YOU DO NOT VOTE OR DO NOT INSTRUCT YOUR BROKER
OR BANK HOW TO VOTE, IT WILL HAVE THE SAME EFFECT AS VOTING AGAINST APPROVAL
OF THE MERGER AGREEMENT AND THE MERGER.
<PAGE>
TABLE OF CONTENTS
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PAGE
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SUMMARY OF THE JOINT PROXY STATEMENT/PROSPECTUS............. 1
The companies........................................... 1
We are proposing a merger of Apex and Cybex............. 3
Our reasons for proposing the merger of Apex and
Cybex.................................................. 5
Steps for you to take................................... 7
Other matters to consider............................... 8
Forward-looking statements.............................. 11
SELECTED HISTORICAL AND SELECTED UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL DATA....................... 12
Apex Selected Historical Financial Data................. 12
Cybex Selected Historical Financial Data................ 13
Selected Unaudited Pro Forma Condensed Combined
Financial Data......................................... 14
Comparative Historical and Unaudited Pro Forma Per Share
Data................................................... 15
RISK FACTORS................................................ 17
Risks related to the proposed merger.................... 17
Risks related to the combined company's business........ 20
THE APEX SPECIAL MEETING.................................... 31
Date, time and place of Apex's special meeting.......... 31
Purpose of special meeting.............................. 31
Record date and outstanding shares...................... 31
Vote and quorum required................................ 31
Abstentions; broker non-votes........................... 31
Expenses of proxy solicitation.......................... 32
Proxies................................................. 32
Rights of dissenting shareholders....................... 33
Recommendation of the board of directors................ 33
THE CYBEX SPECIAL MEETING................................... 34
Date, time and place of Cybex's special meeting......... 34
Purpose of special meeting.............................. 34
Record date and outstanding shares...................... 34
Vote and quorum required................................ 34
Abstentions; broker non-votes........................... 34
Expenses of proxy solicitation.......................... 35
Proxies................................................. 35
Rights of dissenting shareholders....................... 36
Recommendation of the board of directors................ 36
THE MERGER.................................................. 37
Background of the merger and related agreements......... 37
Apex's reasons for the merger........................... 40
Recommendation of Apex's board of directors............. 42
Cybex's reasons for the merger.......................... 43
Recommendation of Cybex's board of directors............ 45
Opinion of Apex's financial advisor..................... 45
Fee arrangements with Apex's financial advisor.......... 51
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i
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PAGE
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Opinion of Cybex's financial advisor.................... 51
Fee arrangements with Cybex's financial advisor......... 57
Interests of Apex directors, officers and affiliates in
the merger............................................. 58
Interests of Cybex directors, officers and affiliates in
the merger............................................. 59
Completion and effectiveness of the merger.............. 61
Structure of the merger and conversion of stock and
options................................................ 61
Assumption of stock plans............................... 62
Exchange of Apex and Cybex stock certificates for Aegean
Sea stock certificates................................. 62
No dividends............................................ 63
Material United States federal income tax considerations
of the merger.......................................... 63
Accounting treatment of the merger...................... 64
Regulatory filings and approvals required to complete
the merger............................................. 64
Restrictions on sales of shares by affiliates........... 65
Dissenters' rights...................................... 65
Listing on The Nasdaq Stock Market of Aegean Sea common
stock to be issued in the merger....................... 66
Delisting and deregistration of Apex and Cybex common
stock after the merger................................. 66
Effect of the merger on the patent dispute.............. 66
THE MERGER AGREEMENT........................................ 67
Representations and warranties.......................... 67
Apex's and Cybex's conduct of business before completion
of the merger.......................................... 68
No other negotiations; no solicitation.................. 69
Apex's and Cybex's employee benefit plans............... 71
Treatment of stock options.............................. 71
Conditions to completion of the merger.................. 72
Termination of the merger agreement..................... 73
Payment of termination fees............................. 75
Extension, waiver and amendment of the merger
agreement.............................................. 75
AGREEMENTS RELATED TO THE MERGER............................ 76
Apex shareholders' voting agreements.................... 76
Cybex shareholders' voting agreements................... 76
Apex affiliate agreements............................... 77
Cybex affiliate agreements.............................. 77
MARKET PRICE AND DIVIDEND INFORMATION....................... 78
Historical market prices................................ 78
Recent share price...................................... 78
Dividends............................................... 79
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS.............................................. 80
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF
OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999......... 81
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF
OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000.... 82
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF
MARCH 31, 2000.......................................... 83
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS.............................................. 84
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ii
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PAGE
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COMPARISON OF RIGHTS OF HOLDERS OF AEGEAN SEA COMMON STOCK,
APEX COMMON STOCK AND CYBEX COMMON STOCK................ 89
INFORMATION REGARDING APEX AND CYBEX........................ 99
Security ownership of certain beneficial owners and
management of Apex..................................... 99
Security ownership of certain beneficial owners and
management of Cybex.................................... 100
MANAGEMENT OF AEGEAN SEA.................................... 103
Executive officers and directors........................ 103
Classified board........................................ 105
Audit committee......................................... 105
Compensation committee interlocks and insider
participation.......................................... 105
Director compensation................................... 106
Limitation on directors' liability and
indemnification........................................ 106
DESCRIPTION OF CAPITAL STOCK................................ 106
Common stock............................................ 107
Preferred stock......................................... 107
Antitakeover effects of provisions of the charter
documents.............................................. 107
Effect of Delaware antitakeover statute................. 108
Transfer agent and registrar............................ 109
LEGAL OPINION............................................... 109
EXPERTS..................................................... 109
STOCKHOLDER PROPOSALS....................................... 109
DOCUMENTS INCORPORATED BY REFERENCE......................... 110
INDEX TO BALANCE SHEET...................................... F-1
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ANNEX A Agreement and Plan of Reorganization
ANNEX B Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation
ANNEX C Opinion of SG Cowen Securities Corporation
ANNEX D Chapter 23B.13 of the Washington Business Corporation Act
(Dissenters' Rights)
ANNEX E Article 13 of the Alabama Business Corporation Act
(Dissenters' Rights)
ANNEX F Form of Apex Voting Agreement
ANNEX G Form of Cybex Voting Agreement
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iii
<PAGE>
SUMMARY OF THE JOINT PROXY STATEMENT/PROSPECTUS
THIS JOINT PROXY STATEMENT/PROSPECTUS PERTAINS TO THE MERGER OF APEX AND
CYBEX INTO A COMBINED COMPANY TO BE CALLED AEGEAN SEA INC. THIS JOINT PROXY
STATEMENT/PROSPECTUS IS BEING SENT TO THE HOLDERS OF COMMON STOCK OF BOTH APEX
AND CYBEX.
THIS SUMMARY HIGHLIGHTS, IN A QUESTION AND ANSWER FORMAT, SELECTED
INFORMATION THAT IS MORE FULLY DISCUSSED ELSEWHERE IN THIS JOINT PROXY
STATEMENT/PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. YOU SHOULD CAREFULLY READ THIS ENTIRE DOCUMENT AND THE OTHER
DOCUMENTS REFERENCED IN IT FOR A MORE COMPLETE UNDERSTANDING OF THE MERGER. IN
PARTICULAR, YOU SHOULD READ THE DOCUMENTS ATTACHED TO THIS JOINT PROXY
STATEMENT/PROSPECTUS, INCLUDING THE MERGER AGREEMENT, WHICH IS ATTACHED AS ANNEX
A, THE OPINION OF DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION, WHICH IS
ATTACHED AS ANNEX B, AND THE OPINION OF SG COWEN SECURITIES CORPORATION, WHICH
IS ATTACHED AS ANNEX C. IF YOU WISH TO ASSERT DISSENTERS' RIGHTS, YOU SHOULD
READ THE WASHINGTON LAWS OR ALABAMA LAWS, AS APPLICABLE, REGARDING DISSENTERS'
RIGHTS, ATTACHED AS ANNEX D AND ANNEX E.
THE COMPANIES
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[LOGO] [LOGO]
APEX INC. CYBEX COMPUTER PRODUCTS CORPORATION
9911 Willows Road N.E. 4991 Corporate Drive
Redmond, Washington 98052 Huntsville, Alabama 35805
(425) 861-5858 (256) 430-4000
http://www.apex.com http://www.cybex.com
Apex designs, manufactures, and sells Cybex develops, produces, and markets
stand-alone switching systems and remote keyboard, video monitor and mouse switch,
access products for the client/server extension and remote access products for use
computing market. Network administrators in in the computer industry.
client/server environments have increasingly
complex and growing server populations, and Cybex's keyboard, video monitor and mouse
Apex's switching systems and remote access switch products provide multiple users, each
products help network administrators manage with a separate keyboard, video monitor and
multiple servers from a single keyboard, mouse, with the capability to control over
video monitor and mouse configuration, which 2,000 personal computers, eliminating the
may be at a remote location. Specifically, need for individual keyboards, video monitors
Apex products reduce personnel, space, or mice for the controlled computers. Cybex's
energy, depreciation and maintenance costs keyboard, video monitor and mouse switch
that organizations face when adopting or products are particularly useful in
expanding client/server architecture. networking environments when multiple
computers are dedicated as servers and in
Apex provides comprehensive "plug and play" situations where multiple computers need to
solutions to many of the network be controlled from one location to facilitate
administration, management and storage network management.
problems inherent in client/server network
environments. Apex's Cybex's family of keyboard, video monitor and
OUTLOOK-Registered Trademark-, mouse extension products allow users to
VIEWPOINT-Registered Trademark- and separate the keyboards, video monitors and
EMERGE-TM- products consolidate the control mice up to 600
and monitoring of multiple network servers to
a centralized command center
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1
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consisting of one or more consoles. These feet from the computer. In addition, certain
products work with server populations that extension products allow multiple users
use different platforms and different shared access to the same computer from
operating systems. Most of Apex's console different keyboards, video monitors and mice.
switching and remote access products use the These products are particularly useful in
patented OSCAR-Registered Trademark- congested work areas or where working
interface that enables a network conditions may be hazardous to the function
administrator to immediately identify and of the computer.
access servers using the administrator's own
naming convention. Apex's console switching Cybex's remote access line of extension
and remote access products operate with a products allows users to control servers from
direct hardwired connection between the remote locations using a standard modem,
console and the attached servers through the Internet or network connection, without the
switch. This direct connection enables necessity of remote access hardware or
network administrators to access network software on the computers or servers being
servers and locate the problem server even accessed. When used in conjunction with a
when the network is down. switch product, Cybex's remote access line of
extension products permits users to control
Apex also sells integrated server cabinet attached computers remotely.
solutions to consolidate and store a variety
of servers and related hardware in a single
cabinet that makes physical access and
hardware maintenance tasks safer and more
efficient.
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AEGEAN SEA INC.
4991 Corporate Drive
Huntsville, Alabama 35805
(256) 430-4000
Aegean Sea is a new corporation formed to facilitate the combination of the
businesses of Apex and Cybex. Aegean Sea has not, to date, conducted any
activities other than those relating to its formation, the matters contemplated
by the merger agreement and the preparation of this joint proxy
statement/prospectus. Upon completion of the merger, the business of Aegean Sea
will be the combined businesses currently conducted by Apex and Cybex.
2
<PAGE>
WE ARE PROPOSING A MERGER OF APEX AND CYBEX
Q: WHAT IS THE MERGER? (SEE PAGE 61)
A: The proposed merger will combine Apex and Cybex into the newly-formed
corporation, Aegean Sea.
Q: WHAT WILL I RECEIVE IN THE MERGER? (SEE PAGES 61 AND 62)
A: Following the merger:
- Holders of Apex common stock will receive 1.0905 shares of Aegean Sea
common stock in exchange for each share of Apex common stock. No
fractional shares will be issued. Instead of fractional shares, Apex
shareholders will receive cash in an amount based on the average
closing prices reported on Nasdaq for Apex common stock for the five
trading days immediately preceding the effective date of the Apex
merger divided by 1.0905.
- Each option to purchase Apex common stock that is outstanding
immediately prior to the Apex merger will automatically become an
option to purchase Aegean Sea common stock. The number of shares of
Aegean Sea common stock purchasable under the option will be the
product of the number of shares of Apex common stock that were
purchasable before the merger multiplied by 1.0905. The exercise price
per share will be the pre-merger exercise price divided by 1.0905.
- Holders of Cybex common stock will receive one share of Aegean Sea
common stock in exchange for each share of Cybex common stock.
- Each option to purchase Cybex common stock that is outstanding
immediately prior to the Cybex merger will automatically become an
option to purchase Aegean Sea common stock. The number of shares
purchasable and the exercise price per share will not change.
Q: WHAT PERCENTAGE OF AEGEAN SEA WILL BE OWNED BY THE FORMER APEX SHAREHOLDERS
AND FORMER CYBEX SHAREHOLDERS IMMEDIATELY FOLLOWING THE MERGER? (SEE
PAGE 62)
A: Immediately following the merger, the former shareholders of Apex and
Cybex will have approximately the following aggregate ownership interests
in Aegean Sea common stock:
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<CAPTION>
AEGEAN SEA
COMMON
AEGEAN SEA STOCK,
COMMON ASSUMING
STOCK EXERCISE OF ALL
OUTSTANDING OUTSTANDING
(%) OPTIONS (%)
----------- ---------------
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APEX SHAREHOLDERS 54.4 54.8
CYBEX SHAREHOLDERS 45.6 45.2
</TABLE>
Q: WHO WILL BE THE DIRECTORS OF AEGEAN SEA? (SEE PAGE 103)
A: Following the merger, the board of directors of Aegean Sea will consist
of seven members. These members will consist of:
- FROM APEX: Barry L. Harmon, Apex's current Chief Operating Officer,
Chief Financial Officer and Treasurer, and Edwin L. Harper and William
McAleer, two non-employee members of Apex's board of directors
- FROM CYBEX: three current members of Cybex's board of directors,
including Stephen F. Thornton, Cybex's current Chairman of the Board,
President and Chief Executive Officer, Doyle C. Weeks, Cybex's current
Executive Vice President, Group Operations and Business Development,
and John R. Cooper, a non-employee member of Cybex's board of directors
3
<PAGE>
- The seventh member of the board of directors will be a person named by
the board members from Cybex, subject to the approval of the board
members from Apex. This person must have experience in the computer and
communication technology industry and cannot be affiliated with Apex or
Cybex.
The Aegean Sea board of directors will consist of three classes of
directors. At each annual meeting of stockholders, one of the classes will
be elected. Except for the first term of each class following the merger,
directors will serve for a three year term. The first term will be one year
for Class I, two years for Class II and three years for Class III.
Q: WHO WILL BE THE EXECUTIVE OFFICERS OF AEGEAN SEA? (SEE PAGE 103)
A: Following the merger, the executive management team of Aegean Sea is
expected to include:
- Stephen F. Thornton, as President, Chief Executive Officer and Chairman
(Mr. Thornton currently has the same positions at Cybex)
- Doyle C. Weeks, as Executive Vice President, Group Operations and
Business Development (Mr. Weeks currently has the same positions at
Cybex)
- R. Byron Driver, as Senior Vice President, Operations and Chief
Operating Officer (Mr. Driver currently has the same positions at
Cybex)
- Barry L. Harmon, as Senior Vice President, West Coast Operations
(Mr. Harmon is currently Apex's Chief Operating Officer, Chief
Financial Officer and Treasurer)
- Gary R. Johnson, as Senior Vice President, Sales and Marketing
(Mr. Johnson currently has the same position at Cybex)
- Kieran MacSweeney, as Managing Director of International Operations
(Mr. MacSweeney currently has the same position at Cybex)
- Victor Odryna, as Senior Vice President, Corporate Strategic Marketing
(Mr. Odryna currently has the same position at Cybex)
- Douglas E. Pritchett, as Senior Vice President, Finance, Chief
Financial Officer, Treasurer and Assistant Secretary (Mr. Pritchett
currently has the same positions at Cybex)
- Samuel F. Saracino, as Senior Vice President, Legal and Corporate
Affairs, General Counsel and Secretary (Mr. Saracino is currently
Apex's Vice President of Business Development, General Counsel and
Secretary)
- Christopher L. Thomas, as Senior Vice President, Engineering
(Mr. Thomas currently has the same position at Cybex)
- C. David Perry, as Vice President, OEM Sales (Mr. Perry is currently
Apex's Vice President of Worldwide Sales)
Q: ARE THERE RISKS INVOLVED IN UNDERTAKING THE MERGER? (SEE PAGE 17)
A: Yes. In evaluating the merger, you should carefully consider the factors
discussed in the section entitled "RISK FACTORS" beginning on page 17.
Q: WHAT SHAREHOLDER APPROVALS ARE NEEDED TO COMPLETE THE MERGER? (SEE PAGES 31
AND 34)
A: For Apex, the affirmative vote of the holders of two-thirds of the
outstanding shares of Apex's common stock is required to approve the
merger agreement and the merger.
For Cybex, the affirmative vote of the holders of two-thirds of the
outstanding shares of Cybex's common stock is
4
<PAGE>
required to approve the merger agreement and the merger.
Q: ARE THERE ANY SHAREHOLDERS ALREADY COMMITTED TO VOTING IN FAVOR OF THE
MERGER? (SEE PAGE 76)
A: Yes. Apex shareholders who collectively hold approximately 4.4% of the
outstanding Apex common stock as of May 22, 2000 and Cybex shareholders
who collectively hold approximately 14.0% of the outstanding Cybex common
stock as of May 22, 2000 entered into voting agreements requiring them to
vote all their shares of common stock in favor of the merger agreement
and the merger. These percentages assume that these shareholders exercise
their options which vest within 60 days after May 22, 2000.
<TABLE>
<CAPTION>
APEX CYBEX
-------- --------
<S> <C> <C>
Shares required to
approve merger....... 66.7% 66.7%
Shares committed to
vote in favor........ 4.4% 14.0%
---- ----
Remaining shares needed
to approve merger.... 62.3% 52.7%
</TABLE>
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED? (SEE PAGE 61)
A: Apex and Cybex are working toward completing the merger as quickly as
possible. We hope to complete the merger during the second or third
calendar quarter of 2000.
Q: WHOM SHOULD I CALL WITH QUESTIONS ABOUT THE MERGER? (SEE PAGE 111)
A: Apex shareholders should call Barry L. Harmon, at (425) 461-5858.
Cybex shareholders should call Douglas E. "Dusty" Pritchett, at
(256) 430-4000, ext. 1504.
Q: CAN I GET ADDITIONAL INFORMATION ABOUT APEX AND CYBEX? (SEE PAGE 111)
A: Yes. We incorporate important business and financial information about
Apex and Cybex into this joint proxy statement/prospectus by reference.
You may obtain the information incorporated by reference without charge
by following the instructions in the section entitled "DOCUMENTS
INCORPORATED BY REFERENCE" on page 110.
OUR REASONS FOR PROPOSING THE MERGER OF APEX AND CYBEX
Q: WHY ARE APEX AND CYBEX PROPOSING THE MERGER? (SEE PAGE 37)
A: Apex and Cybex are proposing the merger because they believe the combined
company will be well positioned to speed the development of advanced
solutions for efficiently managing large data centers worldwide. Like
Apex and Cybex today, the combined company will design, manufacture and
market progressive solutions for network management, including
keyboard/video/mouse (KVM) switching systems, KVM extension products,
digital video solutions and remote access management tools.
Q: DO THE BOARDS OF DIRECTORS OF APEX AND CYBEX RECOMMEND VOTING IN FAVOR OF
THE MERGER? (SEE PAGES 42 AND 45)
A: Yes.
- After careful consideration, Apex's board of directors unanimously
recommends that Apex shareholders vote in favor of approval of the
merger agreement and the merger.
- After careful consideration, Cybex's board of directors unanimously
recommends that Cybex shareholders vote in favor of approval of the
merger agreement and the merger.
5
<PAGE>
Q: HAVE APEX AND CYBEX RECEIVED FAVORABLE OPINIONS FROM THEIR FINANCIAL
ADVISORS CONCERNING THE MERGER? (SEE PAGES 45 AND 51)
A: In deciding to approve the merger, Apex's board of directors considered
the opinion from its financial advisor, Donaldson, Lufkin & Jenrette
Securities Corporation, as to the fairness, from a financial point of
view, of the Apex exchange ratio to the Apex shareholders. In deciding to
approve the merger, Cybex's board of directors considered the opinion
from its financial advisor, SG Cowen Securities Corporation, as to the
fairness, from a financial point of view, of the Cybex exchange ratio to
the Cybex shareholders.
The full text of the written opinions of the financial advisors are
attached to this joint proxy statement/prospectus as Annex B and Annex C.
You should read these opinions carefully and completely for a description
of the assumptions made, matters considered and the limitations of the
review the advisors conducted. The opinion of Donaldson, Lufkin &
Jenrette is directed to the Apex board, and the opinion of SG Cowen is
directed to the Cybex board. These opinions do not address the prices at
which Aegean Sea's common stock will trade after the proposed merger and
are not a recommendation as to how to vote on any matter relating to the
proposed merger.
Q: DO PERSONS INVOLVED IN THE MERGER HAVE INTERESTS WHICH MAY CONFLICT WITH
MINE? (SEE PAGES 58 AND 59)
A: Yes. When considering the recommendations of Apex's and Cybex's boards of
directors, you should be aware that some Apex and Cybex directors,
officers and shareholders have interests in the merger that are different
from, or are in addition to, your interests. These interests include:
- Kevin J. Hafer, Apex's Chairman of the Board of Directors, Chief
Executive Officer and President, will receive full acceleration of the
vesting of his Apex options immediately prior to completion of the
merger. For a period of one year following the merger, Mr. Hafer will
continue to receive substantially the same compensation and benefits he
currently receives, even though he will not be an officer or director
of Aegean Sea.
- Franz Fichtner, a non-employee director of Apex, will receive full
acceleration of the vesting of his Apex options immediately prior to
the completion of the merger even though he will not be an officer or
director of Aegean Sea.
- In connection with the merger, Barry L. Harmon, C. David Perry and
Samuel F. Saracino, officers of Apex, will receive partial acceleration
of the vesting of their Apex options immediately prior to completion of
the merger. These officers of Apex will also become officers of Aegean
Sea upon completion of the merger. Mr. Harmon will also be a director
of Aegean Sea following the merger.
- Aegean Sea has agreed to continue to indemnify and provide directors
and officers insurance coverage for the current directors and officers
of Apex and Cybex for six years following the merger.
- Stephen F. Thornton, Doyle C. Weeks, and Douglas E. Pritchett have
amended their employment agreements to provide that the merger does not
constitute a change in control for purposes of their employment
agreements.
- Cybex has entered into separate employment agreements with
6
<PAGE>
Remigius G. Shatas, R. Byron Driver, Gary R. Johnson, Christopher L.
Thomas and Kieran MacSweeney providing for the payment of severance
compensation and accelerated vesting of all stock option awards in the
event the employee terminates employment at any time following a change
in control, such as the Cybex merger.
STEPS FOR YOU TO TAKE
Q: WHEN AND WHERE WILL BE VOTE TAKE PLACE? (SEE PAGES 31 AND 34)
A: SPECIAL MEETING OF APEX'S SHAREHOLDERS. The Apex special meeting will be
held at The Woodmark Hotel, 1200 Carillon Point, Kirkland, Washington
98033 on June 28, 2000, starting at 9:00 a.m., Pacific time.
SPECIAL MEETING OF CYBEX'S SHAREHOLDERS. The Cybex special meeting will
be held at the Bevill Conference Center and Hotel, 550 Sparkman Drive,
Huntsville, Alabama 35816 on June 28, 2000, starting at 11:00 a.m.,
Central time.
Q: WHAT DO I NEED TO DO NOW? (SEE PAGES 32 AND 35)
A: After carefully reading and considering the information contained in this
joint proxy statement/prospectus, please mail your signed Apex or Cybex
proxy card in the enclosed return envelope as soon as possible so that
your shares may be represented at your meeting. Alternatively, you may
vote in person at the special meeting.
Your vote is very important, regardless of the number of shares you own.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW? (SEE PAGES 32 AND 35)
A: No. After the merger is completed, Aegean Sea will send you written
instructions for exchanging your Apex and Cybex stock certificates for
Aegean Sea stock certificates.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME? (SEE PAGES 31 AND 34)
A: Your broker will vote your shares only if you provide instructions on how
to vote by following the information provided to you by your broker.
Q: WHAT DO I DO IF I WANT TO CHANGE MY VOTE? (SEE PAGES 31 AND 34)
A: You can change your vote at any time before your proxy is voted at your
special meeting. There are three ways for you to do this:
- send notice to the secretary of Apex or Cybex (as appropriate) that you
wish to revoke your proxy
- send notice to the secretary of Apex or Cybex (as appropriate) that you
wish to change your proxy
- attend the shareholder meeting and vote in person
If your shares are held in an account at a brokerage firm or bank, you
should contact the brokerage firm or bank to change your vote.
Q: WHAT IF I DON'T VOTE? (SEE PAGES 31 AND 34)
A: If you fail to vote, it will have the same effect as a vote against the
merger.
- If you return your proxy and do not indicate how you want to vote, your
proxy will be counted as a vote to approve the merger agreement and the
merger.
- If you respond and abstain from voting, your proxy will have the same
effect as a vote against approval of
7
<PAGE>
the merger agreement and the merger.
Q: AM I ENTITLED TO ASSERT DISSENTERS' OR APPRAISAL RIGHTS? (SEE PAGE 65)
A: Yes, Apex and Cybex shareholders will have the opportunity to assert
dissenters' rights relating to the merger. To claim these rights, Apex
shareholders must comply with the requirements of Washington law, and
Cybex shareholders must comply with the requirements of Alabama law.
These requirements generally consist of the following:
- Before the shareholder vote is taken, you must deliver to Apex or
Cybex, as applicable, written notice of your intent to demand payment
for your shares if the merger is effected.
- You must not vote your shares in favor of the merger at your
shareholders' meeting.
- You must demand payment for your shares in the manner required by the
notice sent to you by Apex or Cybex, as applicable.
- You must certify that you acquired beneficial ownership of your shares
before March 8, 2000.
- You must deposit the certificates representing your shares as provided
in the notice you receive from Apex or Cybex.
OTHER MATTERS TO CONSIDER
Q: HOW DO THE MARKET PRICES OF APEX AND CYBEX COMMON STOCK COMPARE? (SEE
PAGE 78)
A: Shares of Apex common stock and Cybex common stock are listed on The
Nasdaq Stock Market. Apex's trading symbol is "APEX." Cybex's trading
symbol is "CBXC." On March 7, 2000, the last full trading day prior to
the public announcement of the proposed merger, the last reported sale
prices of Apex's common stock and of Cybex's common stock were:
- $36.00 per share of Apex common stock, and
- $44.8125 per share of Cybex common stock.
On May 22, 2000 the last reported sale prices of shares of Apex common stock
and of Cybex common stock were:
- $37.25 per share of Apex common stock, and
- $35.00 per share of Cybex common stock.
Apex, Cybex and Aegean Sea urge you to obtain current market quotations.
Q: WHERE WILL MY SHARES OF AEGEAN SEA COMMON STOCK BE LISTED? (SEE PAGE 66)
A: We have applied to list the Aegean Sea common stock on Nasdaq under the
symbol "ASEA."
Q: WILL I RECOGNIZE AN INCOME TAX GAIN OR LOSS ON THE MERGER? (SEE PAGE 63)
A: For both Apex shareholders and Cybex shareholders, it is expected that
you will not recognize gain or loss for United States federal income tax
purposes in connection with the merger, except with respect to cash
received through exercise of dissenters' rights and, for Apex
shareholders, cash received for fractional shares. However, all Apex and
Cybex shareholders are urged to consult their own tax advisors to
determine their particular tax consequences.
Q: WHAT IS THE INTENDED ACCOUNTING TREATMENT OF THE MERGER? (SEE PAGE 64)
A: Aegean Sea intends to account for the merger as a purchase of Cybex by
Apex, using the purchase method of accounting.
8
<PAGE>
Q: WHAT IS THE LEGAL STRUCTURE OF THE MERGER (IS IT 1 OR 2 MERGERS)? (SEE
PAGE 61)
A: The merger actually will include two separate mergers that will happen
simultaneously. A new, wholly-owned subsidiary of Aegean Sea will merge
with and into Apex, resulting in Apex becoming a wholly-owned subsidiary
of Aegean Sea. Simultaneously, another new, wholly-owned subsidiary of
Aegean Sea will merge with and into Cybex, resulting in Cybex becoming a
wholly-owned subsidiary of Aegean Sea.
flowchart
Thus, when we refer to the merger throughout this joint proxy statement/
prospectus, we are actually speaking of the simultaneous occurrence of
the Apex merger and the Cybex merger.
The merger agreement is attached to this joint proxy statement/prospectus
as Annex A. You are encouraged to read it carefully.
Q: ARE THERE CONTRACTUAL CONDITIONS TO COMPLETION OF THE MERGER? (SEE PAGE 72)
A: Yes. Apex's and Cybex's obligations to complete the merger are subject to
the satisfaction or waiver of closing conditions. The conditions that
must be satisfied or waived before the completion of the merger include
the following, subject to exceptions and qualifications:
- The merger agreement and the merger must be approved by the Apex
shareholders and the Cybex shareholders.
- No injunction or order preventing the completion of the merger may be
in effect.
- All waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 must have expired or been terminated early.
- Apex and Cybex must each receive an opinion of tax counsel that the
merger will, together, qualify as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code.
- The shares of Aegean Sea common stock to be issued in the merger must
have been approved for listing on Nasdaq.
- Apex's and Cybex's representations and warranties in the merger
agreement must be true and correct unless the failure to be true and
correct would not have a material adverse effect.
- Apex and Cybex must have complied in all material respects with the
agreements and covenants that each has made in the merger agreement.
9
<PAGE>
If either Apex or Cybex waives any conditions, they will each consider the
facts and circumstances at that time and make a determination whether a
resolicitation of proxies from their shareholders is appropriate.
Q: DOES THE MERGER AGREEMENT PERMIT TERMINATION OF THE MERGER? (SEE PAGE 73)
A: Yes. The merger agreement may be terminated prior to the effectiveness of
the merger under the following conditions:
- Apex and Cybex may terminate the merger agreement by mutual consent.
- Either Apex or Cybex may terminate the merger agreement if a
governmental body has prohibited the merger.
- Either Apex or Cybex may terminate the merger agreement if the merger
has not occurred by September 30, 2000. However, a party may not
exercise this termination right if its breach of the merger agreement
caused the delay in effecting the merger.
- Either Apex or Cybex may terminate the merger agreement if the required
approval of the Apex shareholders or of the Cybex shareholders is not
obtained. However, a party may not exercise this termination right if
its breach of the merger agreement caused the shareholder approval not
to be obtained.
- By Apex, if Cybex breaches a representation, warranty or covenant of
the merger agreement, causing the conditions to Apex's obligation to
complete the merger not to be satisfied. Cybex is entitled to a 30-day
period to cure the breach prior to Apex having the right to terminate
the merger agreement.
- By Cybex, if Apex breaches a representation, warranty or covenant of
the merger agreement, causing the conditions to Cybex's obligation to
complete the merger not to be satisfied. Apex is entitled to a 30-day
period to cure the breach prior to Cybex having the right to terminate
the merger agreement.
- By Apex, if the Cybex board of directors fails to recommend unanimously
that the Cybex shareholders approve the merger agreement and the
merger.
- By Cybex, if the Apex board of directors fails to recommend unanimously
that the Apex shareholders approve the merger agreement and the merger.
- By Apex, if the Cybex board of directors makes any recommendation or
approval of any extraordinary transaction involving Cybex and a party
other than Apex, such as a merger or sale of significant assets.
- By Cybex, if the Apex board of directors makes any recommendation or
approval of any extraordinary transaction involving Apex and a party
other than Cybex, such as a merger or sale of significant assets.
Q: COULD PAYMENT OF TERMINATION FEES BE REQUIRED? (SEE PAGE 75)
A: Yes. If the merger agreement is terminated upon certain occurrences, Apex
may be required to pay to Cybex a termination fee of $25 million, or
Cybex may be required to pay to Apex a termination fee of $25 million.
Q: MAY APEX OR CYBEX NEGOTIATE WITH OTHER PARTIES? (SEE PAGE 69)
A: No. Apex and Cybex have each agreed, subject to some exceptions, not to
initiate or engage in discussions with another party concerning a
business combination with another party while the merger is pending.
10
<PAGE>
FORWARD-LOOKING STATEMENTS
This joint proxy statement/prospectus contains forward-looking statements
within the safe harbor provisions of the Private Securities Litigation Reform
Act. These statements include statements with respect to the financial
condition, results of operations and business of Apex, Cybex and Aegean Sea and
the expected impact of the merger on Aegean Sea's financial performance. Words
such as anticipates, expects, intends, plans, believes, seeks, estimates and
similar expressions identify forward-looking statements.
These forward-looking statements are not guarantees of future performance
and are subject to certain risks and uncertainties that could cause actual
results to differ materially from the results contemplated by the
forward-looking statements. In evaluating the merger, you should carefully
consider the discussion of these and other factors in the section entitled "RISK
FACTORS" beginning on page 17.
11
<PAGE>
SELECTED HISTORICAL AND SELECTED UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL DATA
The following tables present (1) selected historical financial data of Apex,
(2) selected historical financial data of Cybex and (3) selected unaudited pro
forma condensed combined financial data of Aegean Sea, which reflect the merger.
APEX SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The selected historical financial data of Apex have been derived from the
audited historical consolidated financial statements and related notes of Apex
for each of the years in the five-year period ended December 31, 1999 and from
unaudited historical consolidated financial statements as of March 31, 2000 and
for the three months ended March 31, 1999 and 2000. The historical data are only
a summary, and you should read them in conjunction with the historical
consolidated financial statements and related notes contained in the annual and
quarterly reports of Apex which have been incorporated by reference into this
joint proxy statement/prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEARS ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------------------------------- -------------------
1995(*) 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED HISTORICAL STATEMENT
OF INCOME DATA:
Net sales........................ $19,671 $33,622 $55,390 $75,640 $107,288 $20,678 $28,244
Gross profit..................... 9,035 14,383 24,902 35,472 49,914 9,774 13,653
Purchased research and
development expenses........... -- -- -- -- -- -- --
Operating income................. 3,737 7,328 14,668 20,993 29,296 5,333 8,145
Income before extraordinary
item........................... 2,344 3,608 10,468 15,710 21,243 3,980 6,001
Basic per share income before
extraordinary item............. 0.20 0.42 0.59 0.78 1.03 0.20 0.28
Diluted per share income before
extraordinary item............. 0.20 0.29 0.55 0.75 0.99 0.19 0.27
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------------------------------------------- ---------
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED HISTORICAL BALANCE SHEET
DATA:
Total assets............................ $ 9,048 $11,953 $55,271 $73,375 $104,314 $113,714
Long-term obligations and preferred
stock................................. 28,819 28,316 -- -- -- --
Cash dividends declared per share....... 0.08 -- -- -- -- --
</TABLE>
- ------------------------
* Income before extraordinary item and per share data are shown on a pro forma
basis for 1995 to record income taxes for a subchapter S corporation.
12
<PAGE>
CYBEX SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The selected historical financial data of Cybex have been derived from the
audited historical consolidated financial statements and related notes of Cybex
for each of the years in the five-year period ended March 31, 1999 and the
unaudited consolidated financial statements for the nine months ended
January 1, 1999 and December 31, 1999, and have been adjusted to reflect
three-for-two stock splits in April 1998, December 1998 and February 2000. The
consolidated historical data are only a summary, and you should read them in
conjunction with the historical financial statements and related notes contained
in the annual and quarterly reports of Cybex which have been incorporated by
reference into this joint proxy statement/prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEARS ENDED MARCH 31, -------------------------
---------------------------------------------------- JANUARY 1, DECEMBER 31,
1995 1996 1997 1998(1) 1999(2) 1999 1999(3)
-------- -------- -------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED HISTORICAL STATEMENT
OF INCOME DATA:
Net sales......................... $18,182 $25,010 $34,568 $52,564 $82,195 $58,662 $85,848
Gross profit...................... 10,142 13,858 18,160 27,584 43,893 31,291 46,069
Purchased research and development
expenses........................ -- -- -- 4,705 1,850 -- 2,462
Operating income.................. 4,050 6,076 7,331 6,181 16,641 12,781 19,145
Net income........................ 2,700 4,693 5,840 3,571 12,432 9,570 13,597
Basic per share income............ 0.28 0.29 0.32 0.19 0.66 0.51 0.71
Diluted per share income.......... 0.24 0.27 0.31 0.19 0.63 0.49 0.67
</TABLE>
<TABLE>
<CAPTION>
MARCH 31,
---------------------------------------------------- JANUARY 1, DECEMBER 31,
1995 1996(4) 1997 1998 1999 1999 1999
-------- -------- -------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED HISTORICAL BALANCE
SHEET DATA:
Total assets....................... $7,498 $47,418 $56,527 $70,719 $92,850 $70,570 $96,985
Long term obligations and preferred
stock............................ -- -- -- -- -- -- --
Cash dividends declared per
share............................ -- -- -- -- -- -- --
</TABLE>
- ------------------------
(1) The Company wrote off approximately $4.7 million of acquired research and
development costs without any alternative future uses related to the
acquisitions of PolyCon Data Systems GmbH and Elsner Computertecnik GmbH on
December 31, 1997. Future periods include additional revenues provided from
these acquisitions.
(2) The Company wrote off approximately $1.85 million of acquired research and
development costs without any alternative future uses related to the
acquisition of Fox Network Systems Corporation on February 1, 1999. Future
periods include additional revenues provided from the acquisition of Fox.
(3) The Company wrote off approximately $2.4 million of acquired research and
development costs without any alternative future uses and other acquisition
related costs related to the acquisition of PixelVision Technology Inc. on
October 6, 1999. Future periods include additional revenues provided from
the acquisition of PixelVision.
(4) On July 28, 1995, the Company completed an initial public offering of common
stock, receiving net proceeds of $32.6 from the sale of 7.1 million shares
of common stock (adjusted for subsequent stock splits).
13
<PAGE>
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The selected unaudited pro forma condensed combined financial data of Apex
and Cybex are derived from the unaudited pro forma condensed combined financial
information, which gives effect to the merger using the purchase method of
accounting, and should be read in conjunction with the unaudited pro forma
condensed combined financial statements and related notes, which are included
elsewhere in this joint proxy statement/prospectus.
The unaudited pro forma condensed combined financial information for Aegean
Sea gives effect to the merger, based on a preliminary allocation of the total
purchase cost. The historical financial information has been derived from the
respective historical financial statements of Apex and Cybex, and should be read
in conjunction with these financial statements and the related notes
incorporated by reference in this joint proxy statement/prospectus. Cybex has a
March 31 year end. Historical financial information for Cybex for the year ended
December 31, 1999 included in the pro forma statements was derived from
quarterly and annual financial information filed on Forms 10-Q and Form 10-K in
1999 and 2000. No complete historical financial information is available for
Cybex for the year ended March 31, 2000. Accordingly, the pro forma information
for the quarter ended March 31, 2000 includes historical financial information
for Cybex for the three months ended December 31, 1999, which is also included
in the pro forma financial information for the year ended December 31, 1999. The
pro forma balance sheet at March 31, 2000 consists of the historical balance
sheet of Cybex as of December 31, 1999 with the historical Apex balance sheet at
March 31, 2000.
Aegean Sea will account for the merger as a purchase of Cybex by Apex using
the purchase method of accounting. Aegean Sea will record the fair value of the
consideration given for Cybex common stock and for options to purchase Cybex
common stock assumed by Aegean Sea, plus the amount of direct transaction costs
as the cost of acquiring Cybex.
The total estimated purchase cost of the merger has been allocated on a
preliminary basis to Cybex's assets and liabilities based on management's best
estimates of their fair value with the excess costs over the net assets acquired
allocated to goodwill. This allocation is subject to change pending a final
analysis of the total purchase cost and the fair value of the assets acquired
and liabilities assumed. The impact of such changes could be material.
The unaudited pro forma condensed combined financial data is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial position that would have occurred if the transaction had
been consummated at the times indicated, nor is it necessarily indicative of
future operating results or financial condition of Aegean Sea.
<TABLE>
<CAPTION>
YEAR ENDED QUARTER ENDED
DECEMBER 31, 1999 MARCH 31, 2000
----------------- --------------
<S> <C> <C>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF
OPERATIONS DATA:
Net sales................................................... $216,669 $ 62,292
Gross profit................................................ 100,586 29,213
Amortization of intangibles................................. 126,321 31,456
Acquired research and development and other acquisition
expenses.................................................. 4,312 2,462
Loss from operations........................................ (81,596) (19,347)
Net loss.................................................... (96,194) (23,147)
Basic per share loss........................................ (2.30) (0.55)
Diluted per share loss...................................... (2.30) (0.55)
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 2000
--------------
<S> <C>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET DATA:
Cash and short-term investments............................. $101,783
Total assets................................................ 865,820
Long-term obligations, net of current portion............... --
Cash dividends declared per share........................... --
</TABLE>
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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA
The following table sets forth:
- historical book value per share and historical net income per share data
of Apex and Cybex
- unaudited pro forma condensed combined book value per share and unaudited
pro forma condensed combined net loss per share data of Aegean Sea after
giving effect to the merger
- unaudited pro forma equivalent condensed combined book value per share and
unaudited pro forma equivalent condensed combined net loss per share data
of Apex and Cybex based on the exchange ratio of 1.0905 shares of Aegean
Sea common stock for each share of Apex common stock and one share of
Aegean Sea common stock for each share of Cybex common stock
The information in the table should be read in conjunction with the
financial statements of Apex and Cybex and the related notes incorporated by
reference in this joint proxy statement/prospectus and the unaudited pro forma
condensed combined financial statements and related notes included elsewhere in
this joint proxy statement/prospectus. The unaudited pro forma condensed
combined financial data is not necessarily indicative of the net loss per share
or book value per share that would have been achieved had the merger been
consummated as of the beginning of the periods presented and should not be
construed as representative of these amounts for any future dates or periods.
Although Apex and Cybex have different fiscal years, pro forma per share
data are presented on a December 31 calendar year basis.
The information in the table is only a summary and you should read it in
conjunction with the "Unaudited Pro Forma Condensed Combined Financial
Statements" beginning on page 80 and the respective audited and unaudited
consolidated financial statements of Apex and Cybex, including the notes
thereto, incorporated by reference in this joint proxy statement/prospectus.
The Cybex pro forma equivalent per share amounts are calculated by
multiplying the Aegean Sea pro forma per share amounts by the fixed exchange
ratio of one Cybex share for one Aegean Sea share.
The Apex pro forma equivalent per share amounts are calculated by
multiplying the Aegean Sea pro forma per share amounts by the fixed exchange
ratio of one Apex share for 1.0905 Aegean Sea shares.
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This information is not necessarily indicative of the results of future
operations of the combined company or the actual results that would have
occurred had the mergers been consummated prior to the period indicated.
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
1999 2000
------------- ------------------
<S> <C> <C>
Per share of Apex common stock:
Book value:
Historical (1)............................ $ 4.54 $ 5.13
Pro forma equivalent...................... $ 3.86 $ 4.19
Net income (loss):
Historical................................ $ 0.99 $ 0.27
Pro forma equivalent (3).................. $(2.51) $(0.60)
Per share of Cybex common stock:
Book value:
Historical (1)............................ $ 3.72 $ 3.72
Pro forma equivalent...................... $ 3.54 $ 3.84
Net income (loss):
Historical................................ $ 0.81 $ 0.20
Pro forma equivalent (4).................. $(2.30) $(0.55)
Per pro forma share of Aegean Sea common
stock:
Book value (2)............................ $ 3.54 $ 3.84
Net loss.................................. $(2.30) $(0.55)
</TABLE>
- ------------------------
(1) Historical book value per share is computed by dividing shareholders' equity
less goodwill and other intangible assets by the number of shares of common
stock outstanding at December 31, 1999 and March 31, 2000.
(2) The pro forma book value per share is computed by dividing pro forma
shareholders' equity less goodwill and other intangible assets, including
the effect of pro forma adjustments, by the pro forma number of shares of
Aegean Sea common stock which would have been outstanding had the merger
been consummated as of December 31, 1999 or March 31, 2000.
(3) The Apex pro forma equivalent per share amounts are calculated by
multiplying the pro forma book value and net loss per share amounts by the
exchange ratio of 1.0905 shares of Aegean Sea common stock for each share of
Apex common stock.
(4) The Cybex pro forma equivalent per share amounts are calculated by
multiplying pro forma book value and net loss per share amounts by the
exchange ratio of one share of Aegean Sea common stock for each share of
Cybex common stock.
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RISK FACTORS
THE MERGER INVOLVES A HIGH DEGREE OF RISK. BY VOTING IN FAVOR OF THE MERGER,
YOU WILL BE CHOOSING TO INVEST IN AEGEAN SEA COMMON STOCK. AN INVESTMENT IN
AEGEAN SEA COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN DECIDING WHETHER TO VOTE FOR
THE MERGER.
RISKS RELATING TO THE PROPOSED MERGER
THE COMBINED COMPANY MAY NOT ACHIEVE THE BENEFITS EXPECTED FROM THE MERGER,
WHICH MAY HAVE A MATERIAL ADVERSE EFFECT ON THE COMBINED COMPANY'S BUSINESS AND
COULD RESULT IN LOSS OF KEY PERSONNEL.
Achieving the benefits of the merger will depend in part on the successful
integration of technology, operations and personnel. The integration of Apex and
Cybex will be a complex, time-consuming and expensive process and may disrupt
both companies' businesses if not completed in a timely and efficient manner.
The challenges involved in this integration include the following:
- Retaining existing customers and strategic partners of each company
- Retaining and integrating management and other key employees of both Apex
and Cybex
- Coordinating research and development activities to enhance introduction
of new products and technologies
- Integrating purchasing and procurement operations in multiple locations
- Combining product offerings and product lines effectively and quickly
- Integrating sales efforts so that customers can do business easily with
the combined company
- Coordinating manufacturing operations in a rapid and efficient manner
- Transitioning all facilities to a common information technology system
- Persuading employees that the business cultures of Apex and Cybex are
compatible
- Offering products and services of Apex and Cybex to each other's customers
- Bringing together the companies' marketing efforts so that the industry
receives useful information about the merger
- Developing and maintaining uniform standards, controls, procedures and
policies
It is not certain that Apex and Cybex can be successfully integrated in a
timely manner or at all or that any of the anticipated benefits will be
realized. Risks to the successful integration of the companies include:
- The impairment of relationships with employees, customers and suppliers as
a result of integration of management and other key personnel
- The potential disruption of the combined company's ongoing business and
distraction of its management
- The difficulty of incorporating acquired technology and rights into the
product offerings of the combined company
- Unanticipated expenses related to integration of the two companies
The combined company may not succeed in addressing these risks or any other
problems encountered in connection with the merger. Further, neither Apex nor
Cybex can assure you that the growth rate of the combined company will equal the
historical growth rates experienced by Apex or Cybex.
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NO MARKET CURRENTLY EXISTS FOR AEGEAN SEA COMMON STOCK, AND THE MARKET VALUE OF
AEGEAN SEA COMMON STOCK AFTER THE MERGERS COULD BE LESS THAN THE MARKET VALUE OF
APEX AND CYBEX BEFORE THE MERGER.
The market value of the shares of Aegean Sea common stock that will be
received in exchange for shares of Apex common stock and shares of Cybex common
stock in the merger will not be known at the time shareholders of Apex and
shareholders of Cybex vote on approval of the merger agreement and the merger
because the shares of Aegean Sea common stock will not trade publicly until the
completion of the merger. Shares of Apex common stock and shares of Cybex common
stock may have a greater market value than the shares of Aegean Sea common stock
for which they are exchanged.
YOU WILL RECEIVE A FIXED NUMBER OF SHARES OF AEGEAN SEA COMMON STOCK DESPITE
CHANGES IN THE MARKET VALUES OF APEX COMMON STOCK OR CYBEX COMMON STOCK.
The number of shares of Aegean Sea common stock to be exchanged for each
share of Apex common stock and each share of Cybex common stock will not change.
Upon completion of the merger, each share of Apex common stock will be exchanged
for 1.0905 shares of Aegean Sea common stock, and each share of Cybex common
stock will be exchanged for one share of Aegean Sea common stock. There will be
no adjustment to these exchange ratios for changes in the market price of either
Apex common stock or Cybex common stock. In addition, neither Apex nor Cybex may
terminate the merger agreement or "walk away" from the merger solely because of
changes in the market price of either company's common stock. Therefore, if the
market value of Apex common stock or Cybex common stock changes relative to the
market value of the other, there will be no change in what you receive in the
merger to reflect this. The share prices of Apex common stock and Cybex common
stock are by nature subject to the general price fluctuations in the market for
publicly traded equity securities and have experienced significant volatility,
and you should obtain recent market quotations for Apex common stock and Cybex
common stock. We cannot predict or give any assurances as to the market prices
of Apex or Cybex common stock before the merger or of Aegean Sea common stock at
any time after the completion of the merger.
THE COMBINED COMPANY'S REPORTED FINANCIAL RESULTS WILL SUFFER AS A RESULT OF
PURCHASE ACCOUNTING TREATMENT AND THE IMPACT OF AMORTIZATION OF GOODWILL AND
OTHER INTANGIBLES RELATING TO THE PROPOSED COMBINATION OF APEX AND CYBEX.
Aegean Sea will account for the merger as a purchase of Cybex by Apex using
the purchase method of accounting. Under purchase accounting, Aegean Sea will
record the fair value of the consideration given for Cybex common stock and for
options to purchase Cybex common stock assumed by Aegean Sea, plus the amount of
direct transaction costs as the cost of acquiring Cybex. Aegean Sea will
allocate these costs to the individual Cybex assets acquired and liabilities
assumed, including various identifiable intangible assets such as acquired
technology, acquired trademarks and trade names and acquired workforce, and to
in-process research and development, based on their respective fair values.
In-process research and development, which is currently estimated at $75 million
for Cybex, will be expensed in the quarter when the merger is completed.
Intangible assets, including goodwill, will be generally amortized over a three-
to seven-year period.
As described in the Unaudited Pro Forma Condensed Combined Financial
Statements included in this joint proxy statement/prospectus, the amount of
purchase cost allocated to goodwill and other intangibles is estimated to be
approximately $655 million. If goodwill and other intangible assets were
amortized in equal quarterly amounts following completion of the merger, the
accounting charge attributable to these items would be approximately $33.5
million per quarter or $134 million per fiscal year. As a result, purchase
accounting treatment of the merger will result in a net loss for Aegean Sea in
the foreseeable future which could have a material and adverse effect on the
market value of Aegean Sea common stock following completion of the merger.
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THE MERGER COULD ADVERSELY AFFECT COMBINED FINANCIAL RESULTS.
Apex and Cybex expect to incur direct transaction costs of approximately
$18 million in connection with the merger. If the benefits of the merger do not
exceed the costs associated with the merger, including any dilution to Apex and
Cybex shareholders resulting from the issuance of shares in connection with the
merger, the combined company's financial results, including earnings per share,
could be adversely affected.
OFFICERS AND DIRECTORS OF APEX AND CYBEX HAVE CONFLICTS OF INTEREST THAT MAY
INFLUENCE THEM TO SUPPORT OR APPROVE THE MERGER.
Some of the directors and officers of Apex and Cybex participate in
arrangements and have continuing indemnification against liabilities that give
them interests in the merger that are different from your interests, including
the following:
- Aegean Sea has agreed that each present and former Apex and Cybex officer
and director will be indemnified against liabilities arising out of such
person's services as an officer or director. Aegean Sea has agreed to
maintain officers' and directors' liability insurance to cover any such
liabilities for the next six years
- As a result of the completion of the merger, unvested options held by some
officers and directors of Apex will immediately vest
- Some officers of Apex will be entitled to severance payments and
additional accelerated vesting of options if they are terminated by Aegean
Sea after completion of the merger
- Some officers of Cybex will be entitled to severance payments and
accelerated vesting of options if they are terminated by, or if they
voluntarily terminate their employment with, Aegean Sea after completion
of the merger
- Apex and Cybex have agreed that each shall be entitled to designate three
individuals who are currently officers or directors of each to serve on
Aegean Sea's board of directors
For the above reasons, the directors and officers of Apex and Cybex could be
more likely to vote to approve the merger agreement than if they did not have
these interests. Apex and Cybex shareholders should consider whether these
interests may have influenced these directors and officers to support or
recommend the merger.
Apex officers and directors, together, beneficially own approximately
953,418 shares of Apex common stock, which represent 4.4% of all outstanding
shares of Apex common stock as of May 22, 2000, and these persons have agreed to
vote in favor of the merger. Cybex officers and directors, who have agreed to
vote in favor of the merger, together, beneficially own approximately 2,765,746
shares of Cybex common stock, which represent 14.0% of all outstanding shares of
Cybex common stock as of May 22, 2000. The share ownership numbers in this
paragraph include shares which could be purchased within 60 days by exercise of
options.
FAILURE TO COMPLETE THE MERGER COULD HAVE A NEGATIVE IMPACT ON APEX'S AND/OR
CYBEX'S STOCK PRICE, FUTURE BUSINESS AND OPERATIONS OR FINANCIAL RESULTS.
If the merger is not completed for any reason, Apex and Cybex may be subject
to a number of material risks, including the following:
- Apex may be required to pay Cybex, or Cybex may be required to pay Apex, a
termination fee of $25 million
- The price of Apex and/or Cybex common stock may decline to the extent that
the relevant current market price reflects a market assumption that the
merger will be completed
19
<PAGE>
- Some costs related to the merger, such as legal, accounting, financial
advisor and financial printing fees, must be paid even if the merger is
not completed
- There may be substantial disruption to the businesses of Apex and Cybex
and distraction of their workforces and management teams
In addition, in response to the announcement of the merger, customers or
suppliers of Apex and Cybex may delay or defer product purchase or other
decisions. Any delay or deferral in product purchase or other decisions by
customers or suppliers could have a material adverse effect on business of the
relevant company, regardless of whether the merger is ultimately completed.
Similarly, current and prospective Apex and/or Cybex employees may experience
uncertainty about their future roles with Aegean Sea until the merger is
completed and Aegean Sea's strategies with regard to the integration of
operations of Apex and Cybex are announced or executed. This may adversely
affect Apex's and/or Cybex's ability to attract and retain key management,
sales, marketing and technical personnel.
APEX AND CYBEX MAY NOT BE ABLE TO OBTAIN THE REQUIRED REGULATORY APPROVALS FOR
COMPLETION OF THE MERGER.
Apex and Cybex must obtain, as a condition to their obligation to complete
the merger, clearance under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and any other foreign consents that are material to the ongoing performance
of the business. Apex and Cybex have made the initial, and will make all
required, filings with the Department of Justice or the Federal Trade
Commission. There can be no assurance that these consents and approvals will be
obtained, or that these consents and approvals will be obtained without
materially adverse restrictions or conditions that would have a material adverse
effect on Apex and Cybex on a combined basis. Even if regulatory approvals are
obtained, any federal, state or foreign governmental agency or private person
may challenge the merger at any time before or after its completion.
RISKS RELATING TO THE COMBINED COMPANY'S BUSINESS
THE COMBINED COMPANY'S BUSINESS WILL BE DEPENDENT UPON A LIMITED NUMBER OF
CUSTOMERS THAT ARE NOT OBLIGATED TO CONTINUE TO DO BUSINESS WITH THE COMBINED
COMPANY.
A substantial portion of Apex's sales is concentrated among a limited number
of private-label OEM customers. The combined company will bear this risk
following the merger. Sales to these OEMs represented approximately 63% of
Apex's net sales for 1999, 60% of Apex's net sales for 1998, and 65% of Apex's
net sales for 1997. Sales to Compaq represented approximately 50% of Apex's net
sales for 1999, 43% of Apex's net sales for 1998, and 51% of Apex's net sales
for 1997. The OEM business of the combined company is subject to risks,
including:
- Contract termination
- Reduced or delayed orders
- Adoption of competing products developed by third parties for the OEM or
by the OEM's internal development team
- Changes in corporate ownership, financial condition, business direction or
product mix by the OEM
Any of these risks could have a material adverse effect on the combined
company's business, financial condition and results of operations. Apex has
experienced, and the combined company may continue to experience, significant
reductions or delays in orders from our OEM customers, which may in the future
have a material adverse effect on the combined company's quarterly sales and
operating results.
The loss of one or more large OEM customers could materially harm the
business of the combined company. While the combined company will have contracts
with existing OEM customers of
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Apex and Cybex, none of these OEM customers is obligated to purchase products
from the combined company except pursuant to binding purchase orders.
Consequently, any OEM customer could cease doing business with the combined
company at any time. Apex's dependence upon a few OEMs also results in a
significant concentration of credit risk, thus a substantial portion of the
combined company's trade receivables outstanding from time to time may be
concentrated among a limited number of customers.
Apex's sales of branded switching products to other manufacturers of servers
and related networking products, who integrate and sell Apex-brand switches with
their own products, are increasing. These manufacturers are not obligated to
purchase products from Apex except pursuant to binding purchase orders and could
cease doing business with the combined company at any time. Apex's business with
these customers is subject to risks such as the following:
- Short order cycles and difficulty in predicting sales
- Reduced or delayed orders
- Adoption of competing products developed by third parties for the customer
or by the customer's own internal development team
- Change in corporate ownership, financial condition, business direction or
product mix of the customer
The loss of, or material decline in orders from, certain of these customers
could have a material adverse effect on the combined company's sales.
THE REVENUE OF THE COMBINED COMPANY MAY GROW MORE SLOWLY THAN THE REVENUES OF
APEX AND CYBEX HAVE IN THE PAST.
Although Apex's and Cybex's revenues have grown substantially in recent
quarters, we do not expect revenue of the combined company to grow at such a
rapid rate in the future, and its revenue could decline. Apex's total revenue
has grown from $55 million in fiscal 1997, to $76 million in fiscal 1998, and to
$107 million in fiscal 1999. Cybex's total revenue has grown from $35 million in
fiscal 1997, to $53 million in fiscal 1998, and to $82 million in fiscal 1999.
As the combined company's business matures, it is unlikely that revenue will
continue to grow at the same rapid pace as it has for each of the companies
individually prior to the merger. If the combined company's revenue does not
increase at or above the rate equity research analysts expect, the trading price
for Aegean Sea's common stock may decline. The future growth rates for Aegean
Sea will depend on the combined company's ability to expand sales of Apex's and
Cybex's existing products, which will require significant expenses that the
combined company's may not have sufficient resources to undertake.
THE COMBINED COMPANY IS LIKELY TO EXPERIENCE FLUCTUATIONS IN OPERATING RESULTS.
Apex and Cybex have historically experienced substantial fluctuations in
operating results, on a quarterly and an annual basis. These fluctuations will
likely continue for the combined company in the future. Operating results for
the combined company will be affected by a number of factors, including, but not
limited to:
- The volume and timing of orders, particularly from private-label OEM and
other large customers
- The timing of shipments
- The timing of new product introductions and enhancements by us and by our
competitors
- Changes in product or distribution channel mixes
- Changes in pricing policies or price reductions
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- Competition and price reductions by competitors
- The availability and cost of supplies and components
- Sales and marketing expenses related to entering into new markets,
introducing new products and retaining current OEM and other large
customers
- Fluctuations in sales of servers due to changes in economic conditions or
capital spending levels
The combined company's operating results will be affected by seasonal trends
and by general conditions in the server market. Apex has experienced, and the
combined company will experience, some degree of seasonality due to customer
buying cycles. The third and fourth quarters generally have higher net sales
levels due to customer budgeting and procurement cycles, which may depress net
sales in other quarters. Because both Apex's and Cybex's business and operating
results have depended to a significant extent on the general conditions in the
server market, any adverse change in the server market due to adverse economic
conditions, declining capital spending levels or other factors could have a
material adverse effect on the combined company's business, financial condition
and results of operations.
We believe that quarter-to-quarter comparisons of Apex's or Cybex's
historical financial results are not necessarily meaningful indicators of the
combined company's future operating results, and you should not rely on them as
an indication of the combined company's future performance. If the combined
company's quarterly operating results fail to meet the expectations of equity
research analysts, the price of the combined company's common stock could be
negatively affected.
A SUBSTANTIAL PORTION OF THE COMBINED COMPANY'S BUSINESS WILL CONSIST OF SALES
TO OEM CUSTOMERS, WHICH VARY SIGNIFICANTLY FROM QUARTER TO QUARTER. A
SUBSTANTIAL DROP IN OEM SALES COULD GREATLY HARM THE COMBINED COMPANY'S
BUSINESS.
The majority of Apex's sales are to OEM customers. Apex has experienced, and
the combined company will experience, period-to-period variability in sales to
OEM customers. Any cancellation, rescheduling or reduction of orders by OEM
customers in the future could materially adversely affect the combined company's
operating results. Although Apex's OEM customers typically place orders for
products up to several months prior to scheduled shipment dates, these orders
are subject to cancellation generally up to six weeks prior to the scheduled
shipment date. Apex currently uses, and the combined company will continue to
use, warehouses near these customers to fulfill orders under a "just-in-time"
inventory management system, and the combined company will generally recognize
revenue when these customers take possession of the combined company's products.
In the past, Apex generally has been required to plan production, order
components and undertake its manufacturing activities prior to the time that
these orders become firm or the products are accepted. In addition, OEM
customers have in the past requested that Apex, and are likely in the future to
request that the combined company, delay shipment dates or cancel orders for
products that are subject to firm orders. Accordingly, sales to OEMs for future
quarters are increasingly difficult to predict. These characteristics of OEM
sales will apply to the combined company after the merger.
A SUBSTANTIAL PORTION OF THE COMBINED COMPANY'S BUSINESS WILL CONSIST OF SALES
OF BRANDED PRODUCTS, WHICH ARE DIFFICULT TO FORECAST. FAILURE TO ACCURATELY
FORECAST THESE SALES COULD LEAD TO COSTLY OVERPRODUCTION OR PRODUCT SHORTAGES.
A substantial portion of Cybex's sales consist of, and a substantial portion
of the combined company's sales will consist of, sales of branded products
(sales to customers other than private-label OEM customers). The combined
company expects these sales to increase in the future. If the combined company
succeeds in increasing branded sales as a percentage of net sales, quarterly
sales and operating results will become more dependent upon the volume and
timing of branded product orders received during the quarter. Because many
customers of Apex's and Cybex's branded products typically
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place orders shortly before their requested shipment date, revenues from branded
sales are difficult to forecast. With recent industry-wide initiatives to reduce
all channel inventories and to shorten lead times, major OEM customers of Apex
and Cybex are reducing early commitment to firm orders. Furthermore, many
purchasers typically require prompt delivery of products. This results in a
limited backlog of orders for these products and requires Apex and Cybex, and
will require the combined company, to maintain sufficient inventory levels to
satisfy anticipated customer demand. The inability to accurately forecast the
timing and volume of orders for branded products during any given quarter could
adversely affect operating results for such quarter and, potentially, for future
periods. If the combined company underestimates sales, it will not be able to
timely fill orders. This could cause customer dissatisfaction and loss of future
business. If the combined company overestimates sales, it will experience
increased costs from inventory storage, waste and obsolescence.
GROSS MARGINS OF THE COMBINED COMPANY ARE EXPECTED TO VARY AND MAY DECLINE.
Gross margins may vary significantly from period-to-period depending on a
number of factors, including:
- The ratio of OEM sales to branded sales, since OEM sales typically have
lower gross margins than branded sales
- Product mix, because sales of some of the combined company's products will
have lower gross margins than sales of other products
- Raw materials and labor costs
- New product introductions by the combined company and by competitors
- The level of outsourcing of manufacturing and assembly services
Gross margins of the combined company may decline in the future primarily
due to increased competition and the introduction of new technologies that may
affect product prices.
THE COMBINED COMPANY'S PRODUCTS WILL BE SUBJECT TO WARRANTY CLAIMS AND RETURNS.
INCREASED WARRANTY CLAIMS OR RETURNS COULD HARM THE COMBINED COMPANY'S BUSINESS.
Cybex has historically offered a 30-day unconditional money-back guarantee
and a twelve to fifteen month limited warranty for all of its products and
allows additional rights of return to certain of its customers. Apex has
typically offered a one to three year limited warranty for all of its products
and allows additional rights of return to certain of its customers. The combined
company may offer similar terms in the future. Although Apex's and Cybex's
historical return experiences have not been significant, this experience does
not indicate that returns will not increase in the future. An increase in
returns would have an adverse effect on the combined company's sales and could
negatively affect the combined company's financial results.
INTENSE COMPETITION FROM NEW AND EXISTING COMPETITORS COULD IMPAIR THE COMBINED
COMPANY'S ABILITY TO GROW THE COMBINED BUSINESS AND SELL ITS PRODUCTS.
The markets for Apex's and Cybex's products are highly fragmented and
intensely competitive. Increased competition from both hardware and software
products could result in price reductions and loss of sales, which would
materially harm the business of the combined company. Apex's and Cybex's
businesses are becoming increasingly sensitive to new product introductions,
price changes and marketing efforts by competitors. Accordingly, the future
success of the combined company will be highly dependent upon timely completion
and introduction of new products and product features at competitive price and
performance levels which address the evolving needs of the combined company's
customers. Apex and Cybex are currently experiencing increased price competition
for stand-alone switching systems, remote access products and integrated server
cabinet solutions, and pricing pressures
23
<PAGE>
on the combined company will increase in the future. Because of this
competition, the combined company may not be successful in gaining additional
OEM or branded server manufacturer customers.
The combined company will compete for sales of switching systems and
extension products with independent third parties such as Raritan, Rose
Electronics, CCC Group, Minicom Advanced Systems, Aten International, CompuCable
Mfg. Group, Belkin, Lightwave Communications and StarTech Computer Accessories.
The combined company will compete for sales of server cabinets with a
significant number of regional and international manufacturers. The combined
company will also face competition from software providers who are able to offer
software solutions at a much lower cost or even bundled for free, and these
software solutions address many of the problems the combined company's switching
systems, extension products and remote access products are designed to address.
Current and potential competitors may be able to respond more quickly to new
or emerging technologies and changes in customer requirements or to devote
greater resources to the development, promotion and sale of their products than
the combined company. In addition, current and potential competitors have
established or may establish cooperative relationships among themselves or with
third parties that enhance the ability of their products to address the needs of
the combined company's prospective customers. The combined company may not be
able to compete successfully against current and future competitors and
competitive pressure may materially harm its business.
Certain of Apex's OEM or other customers, such as Compaq or Microsoft, could
decide to manufacture their own switching or remote access products, enhance
their own internally-developed switching solutions or offer products supplied by
competitors. These customers could also offer other hardware and/or software
solutions to address the problems that the combined company's products address.
Companies with network management products (many of which are substantially
larger than the combined company and have significantly more financial
resources) may also compete with the combined company. Established companies
with network management experience could offer new products, new technologies,
or new solutions that compete with the combined company's products.
Apex's server cabinets also compete with other types of lower density,
unenclosed technology storage systems. Sales of server cabinets and other
technology storage systems are characterized by intense price competition and
low barriers to entry, and many of Apex's competitors offer products at
significantly lower price points. Moreover, Apex's current OEM customers and
certain of its other branded server manufacturer customers sell their own
branded integrated server cabinets. The combined company's ability to compete
successfully will depend in part upon its ability to continue to differentiate
its cabinet systems from competing products.
FAILURE OF THE COMBINED COMPANY TO RESPOND TO RAPID TECHNOLOGICAL CHANGE OR TO
INTRODUCE NEW PRODUCTS MAY RESULT IN LOST SALES AND REVENUE WHICH WOULD IMPAIR
THE OPERATING RESULTS OF THE COMBINED COMPANY.
Sales of switching and remote access products are characterized by rapid
technological advances, frequent new product introductions and enhancements, and
significant price competition. If the combined company does not keep pace with
these changes, it will lose customers, and its business will be harmed. The
introduction of products incorporating superior or alternative technologies
(such as switching software), the emergence of new industry standards or changes
in pricing structure could render existing products and products under
development obsolete or unmarketable.
The combined company's products combine components, such as printed circuit
boards, connectors, cable assemblies, power supplies and enclosures, that are
manufactured by other companies and are generally available to competitors and
potential competitors. The combined company's future success will depend in
large part upon continued innovative application of such commercially available
components to the expansion and enhancement of existing products and the
development and introduction of new products that address changing customer
needs on a cost-effective and timely basis. If the combined company fails to
respond on a timely basis to technological developments, changes in
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industry standards or customer requirements or software innovations, the
combined company will lose customers, and the combined company's business will
be greatly harmed. Similar results could occur if the combined company
experiences significant delays in new product development or introduction.
Due to Apex's significant reliance on OEM relationships, its product
development efforts are often focused on developing new products or enhancements
for OEM customers. As a result, the combined company's OEM relationships may
negatively affect the combined company's ability to develop new and enhanced
products for its non-OEM customers. Moreover, these new products or enhancements
for OEM customers may not be available to or readily marketable to other
customers without significant modification and delay. The termination or
significant disruption of the combined company's relationship with certain
OEMs or other customers for whom it has devoted significant product development
resources is likely to result in lost opportunities with respect to the
development of products or enhancements for the combined company's other
customers.
THE COMBINED COMPANY WILL BE DEPENDENT UPON SUPPLIERS AND OUTSOURCED
MANUFACTURING. DISRUPTION OF THE COMBINED COMPANY'S ACCESS TO THESE SUPPLIES AND
SERVICES, OR PROBLEMS WITH THE QUALITY OF SUPPLIES OR SERVICES, COULD PREVENT IT
FROM FILLING CUSTOMER ORDERS AND HARM ITS BUSINESS.
The principal components of the combined company's products are power
supplies, cable assemblies, line filters, enclosures and printed circuit boards,
all of which are purchased from outside vendors. Both Apex and Cybex generally
buy components under purchase orders and generally do not have long-term
agreements with their suppliers. Also, neither Apex nor Cybex maintains, and the
combined company will not maintain, large inventories of products or components.
Any termination of, or significant disruption of, relationships with suppliers
of product components may prevent the combined company from filling customer
orders in a timely manner which could result in customer dissatisfaction and
lost sales.
Both Apex and Cybex purchase a number of the components for products from a
single supplier or a limited number of suppliers. Both Apex and Cybex have
occasionally experienced, and the combined company may in the future experience,
delays in delivery of such components. Although alternate suppliers are
available for most of the components and services needed to produce Apex's and
Cybex's products, the number of suppliers of some components is limited, and
qualifying a replacement supplier and receiving components from alternate
suppliers could take several months.
The combined company will depend upon suppliers to deliver components that
are free from defects, competitive in functionality and cost and in compliance
with specifications and delivery schedules. Disruption in supply, a significant
increase in the cost of one or more components, failure of a third party
supplier to remain competitive in functionality or price, or the failure of a
supplier to comply with any of our procurement needs could delay or interrupt
the combined company's ability to manufacture and deliver its products to
customers on a timely basis, thereby adversely affecting the combined company's
business, financial condition and results of operations.
Both Apex and Cybex rely on third party manufacturers for subassembly of
their products. These outsourcing arrangements and any future outsourcing
arrangements involve numerous risks, including reduced control over product
quality, delivery schedules, manufacturing yields and costs. Moreover, although
arrangements with such manufacturers may contain provisions for warranty
obligations on the part of such manufacturers, the combined company will remain
primarily responsible to the combined company's customers for warranty
obligations.
IF THE CLIENT/SERVER MARKET DOES NOT CONTINUE TO GROW OR IF NETWORK RELIABILITY
AND TOOLS DO NOT CONTINUE TO DEVELOP, THE BUSINESS OF THE COMBINED COMPANY WILL
BE GREATLY HARMED.
The combined company's business is dependent on the continued acceptance of
the client/server model of network computing. Although distributed network
computing utilizing client/server architecture has gained increasing acceptance,
use of this networking model may not continue to grow
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or may be replaced by new technologies for network computing. This would render
the combined company's products obsolete. In addition, sales of switching and
remote access products are driven in part by the inherent unreliability of
client/server networks. As client/server networks continue to proliferate,
however, server manufacturers and software developers or providers may develop
greater reliability and better tools for managing networks. To the extent that
greater reliability and better network management tools are successfully
developed, the combined company's products could be rendered obsolete, which
could materially harm the combined company's business.
THE COMBINED COMPANY WILL NEED TO EXPAND SALES THROUGH RESELLERS IN ORDER TO
DEVELOP ITS BUSINESS AND INCREASE REVENUE.
The combined company expects to rely increasingly on resellers, including
distributors, VARs and systems integrators, for the distribution and sale of its
branded products. The combined company's strategy contemplates the expansion of
its reseller network both domestically and internationally. The combined
company's future success will depend in part on its ability to attract, train
and motivate new resellers and expand its relationships with current
distributors. The combined company may not be successful in expanding its
reseller channel. The combined company will be required to invest significant
additional resources in order to expand its reseller channel, and the cost of
this investment may exceed the revenues generated from this investment.
RESELLER SALES ARE EXPECTED TO HAVE LOWER MARGINS THAN DIRECT SALES AND DO NOT
PROVIDE FOR COMMITMENTS FOR FUTURE SALES.
The combined company will provide and expects to continue to provide
discounts and other special pricing arrangements to resellers. As a result of
these discounts and other arrangements, the combined company expects gross
margins on sales through resellers to be lower than gross margins on direct
sales. Although the combined company's existing reseller arrangements generally
do not allow significant rights of return, as it expands its reseller channel,
the combined company expects that certain resellers will have significant rights
of return. There can be no assurance that actual returns in the future will not
have a material adverse effect on the combined company's business, financial
condition and results of operations.
Apex's and Cybex's agreements with resellers are generally nonexclusive and
may be terminated on short notice by either party without cause. These resellers
are not obligated to purchase products from the combined company and frequently
offer products of several different manufacturers, including competitor's
products. These resellers may give higher priority to the sale of other
products. A reduction in sales efforts by the combined company's resellers could
lead to a reduction in its sales and could materially adversely affect the
combined company's business, financial condition and results of operations.
APEX AND CYBEX EXECUTIVE OFFICERS AND OTHER KEY PERSONNEL MAY NOT REMAIN WITH
THE COMBINED COMPANY, WHICH COULD HARM ITS ABILITY TO GROW THE BUSINESS.
Apex and Cybex have been, and the combined company will be, greatly
dependent on the ability to retain key management and technical personnel. The
combined company's future success will be highly dependent upon the personal
efforts of management and technical personnel, and the loss of services of any
one of them could have a material adverse effect on its business, financial
condition and results of operations. The combined company's success will also be
dependent in part upon its ability to attract, retain and motivate highly
skilled employees. Competition for employees with the skills required,
particularly engineering and other technical personnel, is intense, and there
can be no assurance that the combined company will be able to attract and retain
highly skilled employees in sufficient numbers to sustain its current business
or to support future growth.
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Prior to the merger, Mr. Kevin J. Hafer, Apex's Chairman of the Board,
President and Chief Executive Officer, has been heavily involved in the daily
operations of Apex. Upon the closing of the merger, Mr. Hafer will not be an
officer of Apex or of the combined company.
DIFFICULTIES ENCOUNTERED MANAGING THE COMBINED COMPANY'S GROWTH COULD ADVERSELY
AFFECT ITS RESULTS OF OPERATIONS.
In recent periods, Apex and Cybex have experienced rapid revenue and
customer growth and expansion in the number of employees, product offerings and
the scope and complexity of their financial systems. This growth has placed
significant strain on the management, operational and financial resources of
both companies and has resulted in new and increased responsibilities for
management personnel. The combined company expects these strains to continue,
and possibly worsen following the mergers. There can be no assurance that
management, personnel, systems, procedures and controls of the combined company
will be adequate to support its existing and future operations.
The combined company's ability to effectively manage this recent growth and
any future growth will require it to continue to implement and improve its
operational, financial and information systems and will likely require
additional management personnel. In addition, the combined company believes that
it must continue to develop greater engineering, marketing, sales and customer
service capabilities in order to develop new products and product enhancements,
secure new customers at a rate necessary to achieve desired growth and
effectively serve the evolving needs of present and future customers. The
combined company may not be successful in strengthening these capabilities.
Without adequate management, engineering, product development, marketing and
sales and customer service capabilities, the combined company's ability to
effectively manage growth, expand and enhance its product line, further
penetrate existing markets and develop new markets will be significantly
limited. If management is unable to effectively manage this growth, the combined
company's business, financial condition and results of operations could be
materially adversely affected.
THE COMBINED COMPANY WILL HAVE LIMITED PROTECTION OF PROPRIETARY RIGHTS AND FACE
RISKS OF THIRD PARTY INFRINGEMENTS.
The combined company's future success is dependent in part upon its ability
to protect proprietary rights in its products. Apex and Cybex have sought to
protect intellectual property rights by invoking the benefits of the patent,
trademark, copyright, trade secret and unfair competition laws of the United
States. These laws afford only limited protection. There can be no assurance
that the steps Apex and Cybex have taken to protect their intellectual property
rights, or that the steps that the combined company takes in the future, will be
adequate to prevent misappropriation of the combined company's technology or
that the combined company's competitors will not independently develop
technologies that are substantially equivalent or superior to the combined
company's technology.
The United States Patent and Trademark Office has issued several patents to
both Apex and Cybex for various aspects of their products. Apex and Cybex have
various corresponding patent applications pending under the provisions of the
Patent Cooperation Treaty (which permits the filing of corresponding foreign
patent applications in numerous foreign countries within a limited time period).
Apex and Cybex also have other United States and foreign patent applications
pending. There can be no assurance that any additional patents will be issued
from any of those pending applications or that any patents will be issued in any
additional countries where Apex's and Cybex's products can be sold. Also, claims
allowed in Apex's or Cybex's patents or in any pending patent applications may
not be of sufficient scope or strength for, or provide meaningful protection or
any commercial advantage to the combined company. Also, competitors may
challenge the validity of, or be able to design around, the U.S. patents or any
other patents that may be issued. The laws of certain foreign countries in which
the combined company's products are or may be developed, manufactured or sold
may not protect the combined company's products or intellectual property rights
to the same extent as do the laws of the
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United States and thus increase the likelihood of piracy of the combined
company's technology and products.
The combined company may initiate claims or litigation against third parties
for infringement of proprietary rights or to establish the validity of
proprietary rights. Existing litigation, and any other litigation relating to
intellectual property to which the combined company becomes a party, is subject
to numerous risks and uncertainties, and the combined company may not be
successful in any such litigation. Existing litigation or other litigation by or
against the combined company could result in significant expense and divert the
efforts of technical and management personnel, whether or not such litigation
results in a favorable determination. In the event of an adverse result in any
such litigation, the combined company could be required to pay substantial
damages, suspend or cease the manufacture, use and sale of any infringing
products, expend significant resources to develop non-infringing technology,
discontinue the use of certain processes or obtain licenses to the infringing
technology. There can be no assurance that the combined company would be
successful in such development or that such licenses would be available on
reasonable terms, or at all, and any such development or license could require
the combined company to expend substantial time and other resources. In the
event that any third party makes a successful claim against the combined
company, or its customers, and a license is not made available on commercially
reasonable terms, the combined company's business, financial condition and
results of operations could be adversely affected.
The network server, electronics and related industries are characterized by
vigorous pursuit and protection of intellectual property rights or positions,
which has resulted in significant and often protracted and expensive litigation.
Apex and Cybex have in the past been, and the combined company may from time to
time in the future be, a party in proceedings alleging infringement of
intellectual property rights owned by third parties. If necessary or desirable,
the combined company may seek licenses under such intellectual property rights.
However, licenses may not be offered on terms acceptable to the combined
company, or at all. The failure to obtain a license from a third party for
technology used by the combined company could cause it to incur substantial
liabilities and to suspend or cease the manufacture of products requiring such
technology.
THE COMBINED COMPANY MUST MEET THE INCREASED DEMANDS ON CUSTOMER SERVICE
OPERATIONS OR CUSTOMER SATISFACTION AND SALES COULD SUFFER.
Continued growth of the combined company's branded sales is likely to be
accompanied by increasing demands on customer service operations. As a result of
the combined company's commitment to a high level of customer service, it will
need to invest significant resources in the maintenance and improvement of its
customer service resources. Any failure to maintain adequate customer service
could cause customer dissatisfaction, result in reduced sales of products and,
accordingly, materially adversely affect business, financial condition and
results of operations.
IF THE COMBINED COMPANY IS UNABLE TO SUCCESSFULLY INTEGRATE ITS INTERNATIONAL
DISTRIBUTION NETWORKS AND INTERNATIONAL SALES EFFORTS, RESULTS OF OPERATIONS MAY
SUFFER.
The combined company will have to develop, integrate and expand Apex's and
Cybex's international distribution networks in an effort to increase
international sales of switching, remote access and other products. The combined
company may not be successful in developing, integrating or expanding the
international distribution network or in marketing and selling products in
foreign markets. If the revenues generated by international sales are not
adequate to recover the expense of establishing, expanding, integrating and
maintaining an international distribution network, the combined company's
business, financial condition and results of operations could be materially
adversely affected.
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If international sales become a more significant component of net sales, the
combined company's business could become more vulnerable to the risks inherent
in doing business on an international level, including:
- Difficulties in managing foreign resellers
- Longer payment cycles and problems in collecting accounts receivable
- The effects of seasonal customer demand
- Changes in regulatory requirements
- Risks relating to intellectual property rights
- Export restrictions, tariffs and other trade barriers
- Fluctuations in currency exchange rates
- Potentially adverse tax consequences and political instability
The existence or occurrence of any one of these factors could have a
material adverse effect on the combined company's business, financial condition
and results of operations.
FLUCTUATIONS IN THE VALUE OF FOREIGN CURRENCIES COULD RESULT IN CURRENCY
EXCHANGE LOSSES.
Currently, a majority of both Apex's and Cybex's international business is
conducted in U.S. dollars. However, as the combined company expands
international operations, it is likely that international business will
increasingly be conducted in foreign currencies. Fluctuations in the value of
foreign currencies relative to the U.S. dollar have caused, and are expected to
increasingly cause, currency translation gains and losses. The combined company
cannot predict the effect of exchange rate fluctuations upon future quarterly
and annual operating results. The combined company may experience currency
losses in the future. To date, the combined company has not adopted a hedging
program to protect it from risks associated with foreign currency fluctuations.
THE COMBINED COMPANY MAY ACQUIRE TECHNOLOGIES OR COMPANIES IN THE FUTURE THAT
COULD CAUSE DISRUPTION OF BUSINESS OR EXPOSURE TO OTHER RISKS.
The combined company may acquire technologies or companies or make
investments in complementary companies, products or technologies. These
acquisitions entail many risks, any of which could materially harm the combined
company's business. These risks include:
- Difficulty assimilating the acquired company's personnel and operations
- Diversion of management's attention
- Loss of key personnel
- Dilution of existing stockholders as a result of issuing equity securities
- Assumption of liabilities of the acquired company
- Incurring substantial expenses as a result of the transaction
Cybex has grown its business in part through strategic acquisitions.
Critical to the success of this growth is the ordered, efficient integration of
these acquired businesses into the combined company. Any failure to manage this
growth and the related integration challenges, could materially harm the
business, financial condition and results of operations of the combined company.
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PROVISIONS IN CHARTER DOCUMENTS AND IN DELAWARE LAW MAY DISCOURAGE POTENTIAL
ACQUISITION BIDS FOR THE COMBINED COMPANY AND PREVENT CHANGES IN MANAGEMENT THAT
STOCKHOLDERS MAY FAVOR.
Provisions in the combined company's charter documents could discourage
potential acquisition proposals and could delay or prevent a change in control
transaction that stockholders may favor. These provisions could have the effect
of discouraging others from making tender offers for shares, and as a result,
these provisions may prevent the market price of our common stock from
reflecting the effects of actual or rumored takeover attempts and may prevent
stockholders from reselling their shares at or above the price at which they
purchased their shares. These provisions may also prevent changes in management
that stockholders may favor. The charter documents of the combined company do
not permit stockholders to act by written consent, limit the ability of
stockholders to call a stockholders meeting and provide for a classified board
of directors, which means stockholders can only elect, or remove, a limited
number of directors in any given year. Furthermore, the board of directors has
the authority to issue up to five million shares of preferred stock in one or
more series. The board of directors can fix the price, rights, preferences,
privileges and restrictions of such preferred stock without any further vote or
action by the combined company's stockholders. The issuance of shares of
preferred stock may delay or prevent a change in control transaction without
further action by the combined company's stockholders.
In addition, Delaware law may inhibit potential acquisition bids for the
combined company. Delaware law prevents certain Delaware corporations, including
the combined company, from engaging, under certain circumstances, in a "business
combination" with any "interested stockholder" for three years following the
date that such stockholder became an interested stockholder. For a further
discussion of these charter provisions and Delaware law, see "DESCRIPTION OF
CAPITAL STOCK" on page 106 of this joint proxy statement/prospectus.
THE STOCK OF THE COMBINED COMPANY WILL LIKELY BE SUBJECT TO SUBSTANTIAL PRICE
AND VOLUME FLUCTUATIONS WHICH MAY PREVENT STOCKHOLDERS FROM RESELLING THEIR
SHARES AT OR ABOVE THE PRICE AT WHICH THEY PURCHASED THEIR SHARES.
Fluctuations in the price and trading volume of the combined company's
common stock may prevent stockholders from reselling their shares above the
price at which they purchased their shares. Stock prices and trading volumes for
many technology companies fluctuate widely for a number of reasons, including
some reasons which may be unrelated to their businesses or results of
operations. This market volatility, as well as general domestic or international
economic, market and political conditions, could materially adversely affect the
market price of the combined company's common stock without regard to operating
performance. In addition, operating results may be below the expectations of
public market analysts and investors. If this were to occur, the market price of
the combined company's common stock would likely significantly decrease.
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THE APEX SPECIAL MEETING
This joint proxy statement/prospectus is being furnished to you in
connection with the solicitation of proxies by Apex's board of directors in
connection with the proposed merger of Apex with Cybex that will result in a new
combined company called Aegean Sea.
DATE, TIME AND PLACE OF APEX'S SPECIAL MEETING
The date, time and place of the special meeting of Apex shareholders are as
follows:
June 28, 2000
9:00 a.m. Pacific Time
The Woodmark Hotel
1200 Carillon Point
Kirkland, Washington 98033
PURPOSE OF THE SPECIAL MEETING
The special meeting is being held so that the Apex shareholders may consider
and vote upon a proposal to approve the merger agreement entered into among
Apex, Cybex and Aegean Sea, dated as of March 8, 2000, and to approve Apex's
merger with Cybex that will result in a new combined company called Aegean Sea,
and to conduct such other business as may properly come before the special
meeting. The Apex board does not expect any other business to come before the
meeting. The merger agreement is included as Annex A to this joint proxy
statement/prospectus. If the merger is approved, among other things, each
outstanding share of Apex common stock will be automatically converted into
1.0905 shares of Aegean Sea common stock.
RECORD DATE AND OUTSTANDING SHARES
Apex's board of directors has fixed the close of business on May 22, 2000 as
the record date for the special meeting. Only holders of record of Apex common
stock at the close of business on the record date are entitled to notice of and
to vote at the meeting. As of the close of business on May 22, 2000, there were
21,263,819 shares of Apex common stock outstanding and entitled to vote, held of
record by approximately [ ] shareholders, although Apex has been informed
that there are in excess of [ ] beneficial owners.
VOTE AND QUORUM REQUIRED
Holders of Apex's common stock are entitled to one vote for each share held
as of the record date. Approval of each proposal to be voted upon by Apex
shareholders requires the affirmative vote of two-thirds ( 2/3) of the total
voting power of the outstanding common stock of Apex. Attendance at the meeting
in person or by proxy of a majority of the outstanding common stock of Apex is
required for a quorum.
On May 22, 2000, directors, executive officers and affiliates of Apex as a
group beneficially owned 953,418 shares of Apex common stock. Several
shareholders of Apex have entered into shareholder voting agreements with Cybex
that obligate them to vote a total of approximately 4.4% of Apex's common stock
outstanding as of May 22, 2000 in favor of approval of the merger and the merger
agreement.
ABSTENTIONS; BROKER NON-VOTES
Abstentions will be included in determining the number of shares present and
voting at the meeting for the purpose of determining the presence of a quorum
and will have the same effect as
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votes against these proposals. If a broker, bank, custodian, nominee or other
record holder of Apex common stock indicates on a proxy that it does not have
discretionary authority to vote certain shares on a particular matter, which is
called a broker non-vote, those shares will not be considered for purposes of
determining the number of shares entitled to vote with respect to a particular
proposal on which the broker has expressly not voted. These shares will be
counted for purposes of determining the presence or absence of a quorum for the
transaction of business.
EXPENSES OF PROXY SOLICITATION
Apex will pay the expenses of soliciting proxies from Apex shareholders to
be voted at the meeting. Following the original mailing of the proxies and other
soliciting materials, Apex and its agents also may solicit proxies by mail,
telephone, facsimile or in person. Following the original mailing of the proxies
and other soliciting materials, Apex will request brokers, custodians, nominees
and other record holders of Apex common stock to forward copies of the proxy and
other soliciting materials to persons for whom they hold shares of Apex common
stock and to request authority for the exercise of proxies. In such cases, upon
the request of the record holders, Apex will reimburse such holders for their
reasonable expenses. Apex has retained Georgeson Shareholder Communications Inc.
to assist in the solicitation of proxies by Apex for a fee of approximately
$10,000 plus reasonable out-of-pocket costs and expenses.
PROXIES
The proxy accompanying this joint proxy statement/prospectus is solicited on
behalf of the Apex board of directors for use at the meeting. Please complete,
date and sign the accompanying proxy and promptly return it in the enclosed
envelope or otherwise mail it to Apex. All properly signed proxies that Apex
receives prior to the vote at the meeting and that are not revoked will be voted
at the meeting according to the instructions indicated on the proxies or, if no
direction is indicated, will be voted FOR approval of the merger agreement and
the merger. You may revoke your proxy at any time before it is exercised at the
meeting by taking any of the following actions:
- Delivering a written notice to the secretary of Apex by any means,
including facsimile, bearing a date later than the date of the proxy,
stating that the proxy is revoked.
- Signing and delivering a proxy relating to the same shares and bearing a
later date prior to the vote at the meeting.
- Attending the meeting and voting in person, although attendance at the
meeting will not, by itself, revoke a proxy. Please note, however, that if
your shares are held of record by a broker, bank or other nominee and you
wish to vote at the meeting, you must bring to the meeting a letter from
the broker, bank or other nominee confirming your beneficial ownership of
the shares.
Apex's board of directors does not know of any matter that is not referred
to in this joint proxy statement/prospectus to be presented for action at the
meeting. If any other matters are properly brought before the meeting, the
persons named in the proxies will have discretion to vote on such matters in
accordance with their best judgment.
YOU SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR PROXIES. A
TRANSMITTAL FORM WITH INSTRUCTIONS FOR THE SURRENDER OF STOCK CERTIFICATES FOR
SHARES OF AEGEAN SEA WILL BE MAILED TO YOU AS SOON AS PRACTICABLE AFTER
COMPLETION OF THE MERGER.
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RIGHTS OF DISSENTING SHAREHOLDERS
Under Washington law, Apex shareholders are entitled to dissent from the
merger and instead demand payment from Apex of the fair value of their shares.
To claim dissenters' rights, you must comply with the following requirements:
- Before the shareholder vote on the merger and the merger agreement is
taken, you must deliver to Apex written notice of your intent to demand
payment for your shares if the merger is effected.
- You must not vote your shares in favor of the merger at the Apex
shareholder meeting.
- If you properly notified Apex of your intent to demand dissenters' rights,
Apex will send you written notice within ten days after the completion of
the merger, indicating when and how to demand payment for your shares.
After receiving the notice, you must demand payment for your shares in the
manner required by the notice sent by Apex.
- You must certify to Apex that you acquired beneficial ownership of your
shares before March 8, 2000.
- You must deposit the certificates representing your shares in the manner
required by the notice you receive from Apex.
If you do not comply with the requirements outlined above, you will not be
entitled to receive payment for your shares under the dissenters' rights
provisions of Washington law.
If you comply with the outlined requirements, within 30 days of the later of
the date of effectiveness of the merger or the date Apex received your demand
for payment, Apex will pay to you the amount Apex estimates to be the fair value
of your shares of Apex common stock. If you believe Apex's estimate of the fair
value of your shares is incorrect, or if Apex has not paid you for your shares
within 60 days of the last day you were entitled to demand payment, you may
notify Apex in writing of your own estimate of the fair value of your shares of
Apex common stock and demand payment of your estimate. YOUR DISSENTERS' RIGHTS
ARE SET OUT IN THEIR ENTIRETY IN CHAPTER 23B.13 OF THE WASHINGTON BUSINESS
CORPORATIONS ACT, WHICH IS ATTACHED TO THIS JOINT PROXY STATEMENT/PROSPECTUS AS
ANNEX D.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The board of directors of Apex has unanimously determined that the terms of
the merger agreement and the merger are fair to and in the best interests of
Apex and the Apex shareholders. Accordingly, the Apex board of directors
recommends that Apex shareholders vote FOR the proposal to approve the merger
agreement and the merger.
YOUR VOTE IS VERY IMPORTANT. TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS
VOTED. RETURNING YOUR PROXY DOES NOT PREVENT YOU FROM ATTENDING THE MEETING
AND VOTING YOUR SHARES IN PERSON. IF YOUR SHARES ARE HELD IN AN ACCOUNT AT A
BROKERAGE FIRM OR BANK, YOU MUST INSTRUCT THEM HOW TO VOTE YOUR SHARES. IF
YOU DO NOT VOTE OR DO NOT INSTRUCT YOUR BROKER OR BANK HOW TO VOTE, IT WILL
HAVE THE SAME EFFECT AS VOTING AGAINST APPROVAL OF THE MERGER AGREEMENT AND
THE MERGER.
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THE CYBEX SPECIAL MEETING
This joint proxy statement/prospectus is being furnished to you in
connection with the solicitation of proxies by Cybex's board of directors in
connection with the proposed merger of Cybex with Apex that will result in a new
combined company called Aegean Sea.
DATE, TIME AND PLACE OF CYBEX'S SPECIAL MEETING
The date, time and place of the special meeting of Cybex shareholders are as
follows:
June 28, 2000
11:00 a.m. Central Time
Bevill Conference Center and Hotel
550 Sparkman Drive
Huntsville, Alabama 35816
PURPOSE OF THE SPECIAL MEETING
The special meeting is being held so that Cybex shareholders may consider
and vote upon a proposal to approve the merger agreement entered into among
Apex, Cybex and Aegean Sea, dated as of March 8, 2000, and to approve Cybex's
merger with Apex that will result in a new combined company called Aegean Sea,
and such other business as may properly come before the special meeting. The
Cybex board of directors does not expect any other business to come before the
meeting. The merger agreement is included as Annex A to this joint proxy
statement/prospectus. If the merger is approved, among other things, each
outstanding share of Cybex common stock will be automatically converted into one
share of Aegean Sea common stock.
RECORD DATE AND OUTSTANDING SHARES
Cybex's board of directors has fixed the close of business on May 22, 2000
as the record date for the special meeting. Only holders of record of Cybex
common stock at the close of business on the record date are entitled to notice
of and to vote at the meeting. As of the close of business on May 22, 2000,
there were 19,419,846 shares of Cybex common stock outstanding and entitled to
vote, held of record by approximately [ ] shareholders, although Cybex has
been informed that there are in excess of [ ] beneficial owners.
VOTE AND QUORUM REQUIRED
Holders of Cybex's common stock are entitled to one vote for each share held
as of the record date. Approval of each of the proposals to be voted upon by
Cybex shareholders requires the affirmative vote of two-thirds ( 2/3) of the
shares of Cybex common stock entitled to vote. Attendance at the meeting in
person or by proxy of a majority of the outstanding common stock of Cybex is
required for a quorum.
On May 22, 2000, directors, executive officers and affiliates of Cybex as a
group beneficially owned 2,809,858 shares of Cybex common stock. Several
shareholders of Cybex have entered into shareholder voting agreements with Apex
that obligate them to vote a total of approximately 14.0% of Cybex's common
stock outstanding as of May 22, 2000 in favor of approval of the merger and the
merger agreement.
ABSTENTIONS; BROKER NON-VOTES
Abstentions will be included in determining the number of shares present and
voting at the meeting for the purpose of determining the presence of a quorum
and will have the same effect as votes against these proposals. If a broker,
bank, custodian, nominee or other record holder of Cybex
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common stock indicates on a proxy that it does not have discretionary authority
to vote certain shares on a particular matter, which is called a broker
non-vote, those shares will not be considered for purposes of determining the
number of shares entitled to vote with respect to a particular proposal on which
the broker has expressly not voted. These shares will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
EXPENSES OF PROXY SOLICITATION
Cybex will pay the expenses of soliciting proxies from Cybex shareholders to
be voted at the meeting. Following the original mailing of the proxies and other
soliciting materials, Cybex and its agents also may solicit proxies by mail,
telephone, telegraph or in person. Following the original mailing of the proxies
and other soliciting materials, Cybex will request brokers, custodians, nominees
and other record holders of Cybex common stock to forward copies of the proxy
and other soliciting materials to persons for whom they hold shares of Cybex
common stock and to request authority for the exercise of proxies. In such
cases, upon the request of the record holders, Cybex will reimburse such holders
for their reasonable expenses. Cybex has retained Corporate Communications, Inc.
to assist in the solicitation of proxies by Cybex for a fee of $7,500 plus
reasonable out-of-pocket costs and expenses.
PROXIES
The proxy accompanying this joint proxy statement/prospectus is solicited on
behalf of the Cybex board of directors for use at the meeting. Please complete,
date and sign the accompanying proxy and promptly return it in the enclosed
envelope or otherwise mail it to Cybex. All properly signed proxies that Cybex
receives prior to the vote at the meeting and that are not revoked will be voted
at the meeting according to the instructions indicated on the proxies or, if no
direction is indicated, will be voted FOR approval of the merger agreement and
the merger. You may revoke your proxy at any time before it is exercised at the
meeting by taking any of the following actions:
- Delivering a written notice to the secretary of Cybex by any means,
including facsimile, bearing a date later than the date of the proxy,
stating that the proxy is revoked.
- Signing and delivering a proxy relating to the same shares and bearing a
later date prior to the vote at the meeting.
- Attending the meeting and voting in person, although attendance at the
meeting will not, by itself, revoke a proxy. Please note, however, that if
your shares are held of record by a broker, bank or other nominee and you
wish to vote at the meeting, you must bring to the meeting a letter from
the broker, bank or other nominee confirming your beneficial ownership of
the shares.
Cybex's board of directors does not know of any matter that is not referred
to in this joint proxy statement/prospectus to be presented for action at the
meeting. If any other matters are properly brought before the meeting, the
persons named in the proxies will have discretion to vote on such matters in
accordance with their best judgment.
YOU SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR PROXIES. A
TRANSMITTAL FORM WITH INSTRUCTIONS FOR THE SURRENDER OF STOCK CERTIFICATES FOR
SHARES OF AEGEAN SEA WILL BE MAILED TO YOU AS SOON AS PRACTICABLE AFTER
COMPLETION OF THE MERGER.
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RIGHTS OF DISSENTING SHAREHOLDERS
Under Alabama law, Cybex shareholders are entitled to dissent from the
merger and instead demand payment from Cybex of the fair value of their shares.
To claim dissenters' rights, you must comply with the following requirements:
- Before the shareholder vote on the merger and the merger agreement is
taken, you must deliver to Cybex written notice of your intent to demand
payment for your shares if the merger is effected.
- You must not vote your shares in favor of the merger at the Cybex
shareholder meeting.
- If you properly notified Cybex of your intent to demand dissenters'
rights, Cybex will send you written notice within ten days after the
completion of the merger, indicating when and how to demand payment for
your shares. After receiving the notice, you must demand payment for your
shares in the manner required by the notice sent by Cybex.
- You must certify to Cybex that you acquired beneficial ownership of your
shares before March 8, 2000.
- You must deposit the certificates representing your shares in the manner
required by the notice you receive from Cybex.
If you do not comply with the requirements outlined above, you will not be
entitled to receive payment for your shares under the dissenters' rights
provisions of Alabama law.
If you comply with the outlined requirements, within 30 days of the later of
the date of effectiveness of the merger or the date Cybex received your demand
for payment, Cybex will pay to you the amount Cybex estimates to be the fair
value of your shares of Cybex common stock. If you believe Cybex's estimate of
the fair value of your shares is incorrect, or if Cybex has not paid you for
your shares within 60 days of the last day you were entitled to demand payment,
you may notify Cybex in writing of your own estimate of the fair value of your
shares of Cybex common stock and demand payment of your estimate. YOUR
DISSENTERS' RIGHTS ARE SET OUT IN THEIR ENTIRETY IN ARTICLE 13 OF THE ALABAMA
BUSINESS CORPORATIONS ACT, WHICH IS ATTACHED TO THIS JOINT PROXY
STATEMENT/PROSPECTUS AS ANNEX E.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Cybex board of directors has unanimously determined that the terms of
the merger agreement and the merger are fair to and in the best interests of
Cybex and the Cybex shareholders. Accordingly, the Cybex board of directors
recommends that Cybex shareholders vote FOR the proposal to approve the merger
agreement and the merger.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
VOTE AS SOON AS POSSIBLE TO MAKE SURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING. TO VOTE YOUR SHARES, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND MAIL IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS
VOTED. IF YOU ARE A HOLDER OF RECORD, YOU MAY ALSO CAST YOUR VOTE IN PERSON AT
THE SPECIAL MEETING. IF YOUR SHARES ARE HELD IN AN ACCOUNT AT A BROKERAGE FIRM
OR BANK, YOU MUST INSTRUCT THEM ON HOW TO VOTE YOUR SHARES. IF YOU DO NOT VOTE
OR DO NOT INSTRUCT YOUR BROKER OR BANK HOW TO VOTE, IT WILL HAVE THE SAME EFFECT
AS VOTING AGAINST APPROVAL OF THE MERGER AGREEMENT AND THE MERGER.
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THE MERGER
THIS SECTION OF THE JOINT PROXY STATEMENT/PROSPECTUS DESCRIBES THE PROPOSED
MERGER. WHILE WE BELIEVE THAT THE DESCRIPTION COVERS THE MATERIAL TERMS OF THE
MERGER AND THE RELATED TRANSACTIONS, THIS SUMMARY MAY NOT CONTAIN ALL OF THE
INFORMATION THAT IS IMPORTANT TO YOU. YOU SHOULD CAREFULLY READ THIS ENTIRE
DOCUMENT AND THE OTHER DOCUMENTS WE REFERRED TO FOR A MORE COMPLETE
UNDERSTANDING OF THE MERGER.
IN ADDITION, IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT APEX AND
CYBEX IS INCORPORATED INTO THIS JOINT PROXY STATEMENT/PROSPECTUS BY REFERENCE.
YOU MAY OBTAIN THE INFORMATION INCORPORATED BY REFERENCE INTO THIS JOINT PROXY
STATEMENT/PROSPECTUS WITHOUT CHARGE BY FOLLOWING THE INSTRUCTIONS IN THE SECTION
ENTITLED "DOCUMENTS INCORPORATED BY REFERENCE" THAT BEGINS ON PAGE 110 OF THIS
JOINT PROXY STATEMENT/PROSPECTUS.
BACKGROUND OF THE MERGER AND RELATED AGREEMENTS
The provisions of the merger agreement are the result of arm's length
negotiations conducted among representatives of Apex and Cybex and their
respective legal and financial advisors. The following is a summary of the
meetings, negotiations and discussions between the parties that preceded the
execution of the merger agreement.
Apex and Cybex have been familiar with each other's business for several
years. Senior executives of the two companies have encountered one another in a
variety of business and industry settings over the years, and senior executives
of Apex and Cybex had preliminary discussions on several occasions in 1997 and
1998 concerning possible business combinations. The senior management of each
company has been familiar with the other's products and customers.
In February 1998, Apex filed complaints for infringement of U.S. Patent
Number 5,721,842 in United States District Court for the Western District of
Washington against Cybex (and Rose Electronics). The complaints alleged that the
products manufactured and sold by the defendants embodied the invention claimed
in U.S. Patent Number 5,721,842, and sought injunctive relief, damages,
attorneys fees, and costs. The defendants each filed counterclaims seeking to
recover the expenses of litigation (including fees and costs) and to obtain a
declaratory judgment that the products did not infringe the 5,721,842 patent and
that the 5,721,842 patent was invalid and unenforceable.
Apex and Cybex had conversations concerning the patent dispute at various
times in 1998. In February 1999, Mr. Samuel F. Saracino, Apex's Vice President
of Business Development and General Counsel, and Mr. Doyle C. Weeks, Cybex's
Executive Vice President for Group Operations and Business Development, met in
Denver to discuss possible ways to settle the patent lawsuit. The parties were
not able to reach an agreement regarding a complete settlement of the patent
dispute. Subsequently, the parties agreed to dismiss the lawsuit without
prejudice and to have the patent issues raised in the lawsuit determined by the
Board of Appeals and Interferences of the United States Patent and Trademark
Office. The parties also agreed that the lawsuit could be reinstated by either
party at the conclusion of the proceedings in the Patent and Trademark Office.
In December 1999, Cybex engaged SG Cowen Securities Corporation as its
financial advisor to determine if a merger or other transaction with Apex was
possible. In December 1999, SG Cowen called Mr. Kevin J. Hafer, Apex's Chairman,
Chief Executive Officer and President, to ask if a meeting could be arranged.
The call was returned by Mr. Saracino and Mr. Barry L. Harmon, Apex's Vice
President, Chief Financial Officer and Treasurer. The parties agreed to hold a
meeting on February 21, 2000.
At a regularly scheduled meeting of Cybex's board of directors on
January 18, 2000, Mr. Stephen F. Thornton, Cybex's Chairman of the Board, Chief
Executive Officer and President, informed the Cybex board of SG Cowen's
conversations with Apex.
At a regularly scheduled meeting of the Apex board of directors on
January 28, 2000, Mr. Hafer informed the Apex board of the inquiry from SG
Cowen.
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On February 12, 2000, Messrs. Harmon and Saracino held a telephone meeting
with SG Cowen to finalize the agenda for the February meeting and to discuss the
process for conducting discussions. On February 15, 2000, SG Cowen confirmed
that Cybex's executive officers would be available for a meeting in SG Cowen's
Boston offices on February 21, 2000. Apex and Cybex agreed on the terms of a
confidentiality and nondisclosure agreement on February 19, 2000.
On February 21, 2000, after Apex and Cybex signed a confidentiality and
nondisclosure agreement, Messrs. Harmon and Saracino met with Mr. Weeks,
Mr. Douglas E. Pritchett, Cybex's Senior Vice President of Finance and Chief
Financial Officer, and representatives of SG Cowen in SG Cowen's Boston offices
to discuss the possible advantages of a potential combination of the two
companies. On February 22, 2000, the meeting reconvened to discuss the benefits,
timing and valuation of a possible combination, as well as roles for senior
executives.
In order to better assess the viability of the proposed transaction, on
February 23, 2000, Messrs. Harmon and Saracino flew to Huntsville, Alabama, to
meet with Mr. Thornton and to visit the Cybex facility. Messrs. Harmon and
Saracino met Mr. Thornton for dinner, and discussed with him the proposed
transaction, management philosophies and related issues.
On February 24, 2000, Messrs. Harmon and Saracino met with Mr. Pritchett in
Huntsville and toured Cybex's Huntsville facility. A special meeting of the
Cybex board of directors had been scheduled for February 24, 2000, to review the
terms of the proposed transaction. Prior to the beginning of the formal meeting,
Messrs. Harmon and Saracino met with the Cybex board of directors.
Messrs. Harmon and Saracino briefly outlined for the Cybex board of directors
their respective professional experiences and their management roles at Apex.
Messrs. Harmon and Saracino then left Cybex.
A special meeting of the Apex board of directors had been scheduled for
later in the day on February 24, 2000, to review the terms of the proposed
transaction. Messrs. Harmon and Saracino participated in that meeting by
telephone conference call and summarized for the Apex board of directors the
history of their negotiations, the proposed terms of the transaction, and other
related matters.
On February 25, 2000, Apex engaged Donaldson, Lufkin & Jenrette Securities
Corporation as its financial advisor for the proposed transaction. Also on
February 25th, Apex's legal counsel distributed an initial draft of the merger
agreement to Cybex, Cybex's legal counsel, SG Cowen and Donaldson, Lufkin &
Jenrette.
On February 27, 2000, Mr. Pritchett, Cybex's legal counsel, representatives
of SG Cowen and Donaldson, Lufkin & Jenrette and representatives of
PricewaterhouseCoopers LLP met with Messrs. Harmon, Saracino and Apex's legal
counsel at Wilson Sonsini Goodrich & Rosati's offices in Kirkland, Washington to
conduct due diligence and review the proposed merger agreement. At the same
time, Apex's legal counsel was conducting due diligence regarding Cybex at the
offices of Sirote & Permutt, P.C., Cybex's legal counsel in Birmingham, Alabama.
During the week of February 28, 2000, Messrs. Hafer, Harmon and Saracino met
in New York City with representatives of Donaldson, Lufkin & Jenrette, who were
in contact with SG Cowen on a variety of open issues regarding the transaction.
On March 3, 2000, Messrs. Harmon and Pritchett finalized the material terms of
the mergers over the telephone.
On March 4, 2000, representatives of Donaldson, Lufkin & Jenrette conducted
a due diligence review of Cybex in Huntsville, Alabama.
On March 4, 2000, the Cybex board of directors met to consider the Cybex
merger, and SG Cowen reviewed its financial analyses. A copy of a revised draft
of the merger agreement had been delivered
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to the Cybex board prior to the meeting. Counsel to Cybex reviewed the terms of
the definitive merger agreement, noting for the Cybex board that:
- The proposed merger agreement contained conditions customary for
transactions of this type, including approval of the shareholders of
Cybex, the continuing accuracy of Apex's and Cybex's respective
representations and warranties, and the absence of any litigation seeking
to prohibit the consummation of the Cybex merger
- The merger agreement had been fully negotiated, but was being revised to
reflect the formation of Aegean Sea and the mergers of Cybex and Apex with
separate subsidiaries of Aegean Sea
- Under Alabama law the Cybex merger would require the affirmative vote of
66 2/3% of the outstanding Cybex common stock
- A special meeting of Cybex's shareholders would be needed to obtain the
requisite approval
On March 6, 2000, the Apex board of directors met to review the status of
the proposed transaction. At this meeting, the board discussed with management
the perceived advantages and disadvantages of the merger, the results of the due
diligence investigations conducted by management and its advisors, and the
issues associated with integrating and managing the businesses following the
mergers. After discussion, the Apex board of directors authorized management to
complete the negotiation of the agreement and to report back to the board of
directors the following day.
On March 7, 2000, the Apex board of directors met again to review the final
terms of the merger agreement. Representatives of Wilson Sonsini Goodrich &
Rosati, Apex's counsel, reviewed with the board its legal responsibilities in
considering the merger and the terms and conditions of the draft merger
agreement and the related voting agreements, which had been circulated prior to
the meeting. Counsel also noted for the Apex board of directors that:
- The proposed merger agreement contained conditions customary for
transactions of this type, including approval of the shareholders of Apex,
the continuing accuracy of Apex's and Cybex's representations and
warranties, and the absence of any litigation seeking to prohibit the
consummation of the merger
- The structure of the mergers was being revised to reflect the formation of
Aegean Sea and the mergers of Apex and Cybex with separate subsidiaries of
Aegean Sea
- Washington law would require the merger to be approved by the affirmative
vote of 66 2/3% of the outstanding Apex common stock
- A special meeting of Apex's shareholders would be needed to obtain the
requisite approval
At the March 7, 2000 meeting of the Apex board, representatives of
Donaldson, Lufkin & Jenrette reviewed for the Apex board the financial analyses
performed by Donaldson, Lufkin & Jenrette in connection with its evaluation of
the Apex exchange ratio and rendered to the Apex board its oral opinion (which
opinion was subsequently confirmed by delivery of a written opinion dated
March 7, 2000), to the effect that, as of such date and based upon and subject
to certain matters, the Apex exchange ratio was fair to the holders of Apex
common stock from a financial point of view. For a more detailed discussion of
this analysis and opinion, see OPINION OF APEX'S FINANCIAL ADVISOR" below.
After careful consideration of the final definitive merger agreement and of
Donaldson, Lufkin & Jenrette's fairness opinion, the Apex board unanimously:
- Determined that the merger is fair to, and in the best interests of, the
Apex shareholders
- Approved the merger, the merger agreement and the transactions
contemplated in the merger agreement
- Resolved to call a special meeting of Apex shareholders to approve the
merger agreement and the merger
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- Resolved to recommend that the shareholders of Apex vote in favor of
approval of the merger agreement and the merger
On March 7, 2000, the Cybex board of directors met again to consider the
merger. At this meeting, SG Cowen reviewed for the Cybex board the financial
analyses performed by SG Cowen in connection with its evaluation of the Cybex
exchange ratio and rendered to the Cybex Board its oral opinion (which opinion
was subsequently confirmed by delivery of a written opinion dated March 7,
2000), to the effect that, as of such date and based upon and subject to certain
matters, the Cybex exchange ratio was fair to the holders of Cybex common stock
from a financial point of view. For a more detailed discussion of this analysis
and opinion, see "OPINION OF CYBEX'S FINANCIAL ADVISOR" below. After careful
consideration of the final definitive merger agreement and receipt of SG Cowen's
written fairness opinion, the Cybex board unanimously:
- Determined that the merger is fair to, and in the best interests of, the
Cybex shareholders
- Approved the merger, the merger agreement and the transactions
contemplated thereby
- Resolved to recommend that the shareholders of Cybex vote in favor of the
approval of the merger agreement and the merger
APEX'S REASONS FOR THE MERGER
In reaching its determination to approve and adopt the merger agreement and
the merger, the Apex board of directors consulted with Apex's management and its
financial and legal advisors, and considered a number of factors. The Apex board
did not assign any relative or specific weights to the factors considered in
reaching such determination, and individual directors may have given differing
weights to different factors. In its decision to recommend and approve the
merger, the most important benefits identified by the board of directors of Apex
were the following:
- Apex's management believes that, given the complementary nature of the
product lines of Apex and Cybex, the merger will enhance the opportunity
for the potential realization of Apex's strategic objectives
- Apex's shareholders would have the opportunity to participate in the
potential for growth of the combined company after the merger
- The combination of Cybex's products with Apex's products will allow the
combined company to offer a more comprehensive product line to its
customers
- The combination of Apex's and Cybex's complimentary distribution
strategies will allow the combined company to distribute its products more
widely
- Combined technological resources may allow the combined company to compete
more effectively against increasing competition from multiple sectors by
providing the combined company with enhanced ability to develop new
products at lower price points with greater functionality than existing
products
- The broader customer base of the combined company will allow it to
mitigate the risk of customer concentration to which Apex is currently
exposed
The Apex board of directors consulted with management and its outside legal
and financial advisors as part of the process of approving the merger. In its
evaluation the Apex board considered the following factors among others:
- The potential strategic benefits of the merger
- Historical information concerning Apex's and Cybex's respective
businesses, prospects, financial performance and condition, operations,
technology, management and competitive position, including public reports
concerning results of operations for each company filed with the SEC
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- Apex's management's view of the financial condition, results of operations
and businesses of Apex and Cybex before and after giving effect to the
merger
- Current financial market conditions and historical market prices,
volatility and trading information with respect to Apex's common stock and
Cybex's common stock
- The consideration to be received by Apex's and Cybex's respective
shareholders in the merger and the relationship between the current and
historical market values of Apex's common stock and Cybex's common stock
and a comparison of comparable merger transactions
- The belief that the terms of the merger agreement, including the Apex
exchange ratio and the parties' representations, warranties and covenants,
and the conditions to their respective obligations, are reasonable. The
Apex board of directors also considered the provisions in the merger
agreement that prohibited solicitation of third-party bids and the
acceptance, approval or recommendation of any unsolicited third-party
bids. The Apex board of directors considered that the provisions in the
merger agreement for the benefit of Apex reasonably protected the
interests of Apex shareholders, and those for the benefit of Cybex did not
present any significant impediments to proceeding with the transaction
considering all of the circumstances.
- The prospects of Apex as an independent company
- The potential for other third parties to enter into strategic
relationships with or to acquire Apex or Cybex
- Detailed financial analysis and pro forma and other information with
respect to the companies presented to the board, including the opinion of
Donaldson, Lufkin & Jenrette that the exchange ratio in the merger was
fair from a financial point of view to Apex's shareholders. The opinion is
subject to assumptions and limitations noted in the opinion and described
under "OPINION OF APEX'S FINANCIAL ADVISOR," and shareholders should
carefully read both that section and the opinion that is attached to this
document as Annex B. The opinion of Donaldson, Lufkin & Jenrette is
directed to the Apex board and does not constitute a recommendation to
shareholders of Apex on how they should vote at, or take any other action
in connection with, the special meeting for the merger. The Apex board
viewed the analyses and opinion of an independent, internationally
recognized financial advisor such as Donaldson, Lufkin & Jenrette to be
important factors in reaching a determination that the Apex merger should
be approved.
- The expectation that the merger will be treated as a tax-free
reorganization for federal income tax purposes
- The expected impact of the merger on Apex's customers and employees
- Reports from management, legal and financial advisors as to the results of
the due diligence investigation of Cybex
- The interests of the officers and directors of Apex in the merger,
including the matters disclosed under "INTERESTS OF APEX DIRECTORS,
OFFICERS AND AFFILIATES IN THE MERGER" beginning on page 58.
Potential risks or other negative factors identified by the Apex board of
directors include the following:
- The risk that the potential benefits of the merger may not be realized
- The challenges of integrating the management teams, strategies, cultures
and organizations of the two companies, especially in light of the
physical distance between Apex's headquarters in Redmond, Washington and
Cybex's headquarters in Huntsville, Alabama
- The risk of disruption of sales momentum as a result of uncertainties
created by the announcement of the merger
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- The risk that the merger might not be consummated despite the parties'
efforts, even if approved by shareholders
- The significant adverse impact to the net income of the combined company
that will arise due to non-cash charges for the amortization of goodwill
and other intangibles in light of the impact of purchase accounting for
the merger
- The substantial charges to be incurred in connection with the merger,
including costs of integrating the businesses and transaction expenses
arising from the merger
- The possibility that the merger might not be consummated and the effect of
public announcement of the merger on (a) Apex's sales and operating
results, (b) Apex's ability to attract and retain key management,
marketing and technical personnel and (c) progress of certain development
projects
- The risk that, despite the efforts of the combined company, other key
technical and management personnel might not remain employed by the
combined company
- The departure of Kevin J. Hafer, Apex's Chairman, Chief Executive Officer
and President, upon completion of the merger
- Other risks described in the section of this joint proxy
statement/prospectus entitled "RISK FACTORS" beginning on page 17.
The foregoing discussion of the information and factors considered by the
Apex board of directors is not intended to be exhaustive but includes the
material factors considered by the Apex board of directors. In view of the
complexity and wide variety of information and factors, both positive and
negative, considered by the Apex board of directors, it did not find it
practical to quantify, rank or otherwise assign relative or specific weights to
the factors considered. In addition, the Apex board did not reach any specific
conclusion with respect to each of the factors considered, or any aspect of any
particular factor. Instead, the Apex board of directors conducted an overall
analysis of the factors described above, including discussions with Apex's
management and legal, financial and accounting advisors. In considering the
factors described above, individual members of the Apex board of directors may
have given different weight to different factors. The Apex board considered all
these factors as a whole and believed the factors supported its determination to
approve the merger. After taking into consideration all of the factors set forth
above, Apex's board of directors concluded that the merger was fair to, and in
the best interests of, Apex and its shareholders and that Apex should proceed
with the merger.
RECOMMENDATION OF APEX'S BOARD OF DIRECTORS
After careful consideration, the Apex board of directors has determined that
the merger is fair to and in the best interests of Apex's shareholders, has
approved the merger and the merger agreement, and recommends that Apex
shareholders vote in favor of approval and adoption of the merger agreement and
approval of the merger.
In considering the recommendation by Apex's board of directors of the merger
agreement, you should be aware that some directors and officers of Apex have
interests in the merger that are different from, or are in addition to, the
interests of Apex's shareholders generally. Please see the section entitled
"INTERESTS OF APEX DIRECTORS, OFFICERS AND AFFILIATES IN THE MERGER" on page 58
of this joint proxy statement/prospectus.
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CYBEX'S REASONS FOR THE MERGER
In reaching its determination, the Cybex board consulted with Cybex's
management and legal and financial advisors, and carefully considered a number
of factors without assigning relative weights to them, including, among others,
the following material factors:
- The Cybex board's familiarity with and review of the business, operations,
financial condition and earnings of Cybex on an historical and a
prospective basis
- The Cybex board's review of the business, operations, financial condition
and earnings of Apex and Cybex on an historical and a prospective basis
and of the combined company on a pro forma basis, the historical stock
price performance of the Cybex common stock and Apex common stock, the
resulting relative interests of Cybex shareholders and Apex shareholders
in the common equity of the combined company, and the potential for
increased earnings of the combined company for the holders of Cybex common
stock
- The process conducted on behalf of Cybex in exploring and determining the
potential value which could be realized by Cybex shareholders in a
business combination transaction
- The potential benefits of the combination of the two companies. The
management of Cybex discussed with the Cybex board the current operations
of Apex and the opportunities that would be created for the benefit of
Cybex shareholders from the combination of the two companies, including
the two companies' complementary product lines and distribution channels.
The Cybex board discussed with Cybex management how the business of Apex
would complement Cybex's business and provide opportunities for revenue
enhancements, operating efficiencies, cost savings and the consolidation
of intellectual property assets and the savings associated with
consolidating duplicative research and development efforts.
- The ability of the combined companies to establish a research and
development platform with faster time-to-market product cycles
- The estimated combined revenue of the two companies in calendar year 2000,
which would create a strong presence in the fast growing computer
peripheral and Internet infrastructure industry
- The ability to cross-sell and integrate products along a complete spectrum
of server switching solutions, which the combination of the two companies
would offer
- The improved access to capital and the lower cost of capital potentially
created by the strategic affiliation with Apex
- The fact that Cybex's Chairman of the Board, President and Chief Executive
Officer and its Senior Vice President of Finance and Chief Financial
Officer, respectively, would serve as the Chairman of the Board, President
and Chief Executive Officer and Senior Vice President of Finance and Chief
Financial Officer, respectively, of Aegean Sea after the merger
- The fact that the corporate headquarters for Aegean Sea after the merger
would initially be in Huntsville, Alabama
- The receipt of Aegean Sea common stock by the holders of Cybex common
stock, which will enable Cybex shareholders to participate in the value
and increased liquidity that may be generated through the combination of
the two companies through their combined equity participation as
shareholders of Aegean Sea
- The current and historical market prices and trading volumes of the Cybex
common stock and the Apex common stock and the current and historical
trading multiples of other comparable companies
43
<PAGE>
- The prospects of Cybex as an independent company
- The potential for other third parties to enter into strategic
relationships with or to acquire Apex or Cybex
- The impact of the merger on Cybex's customers and employees
- Reports from management, legal and financial advisors as to the results of
the due diligence investigation of Apex.
- The risk that the potential benefits of the merger may not be realized
- The challenges of integrating the management teams, strategies, cultures
and organizations of the two companies, especially in light of the
physical distance between Apex's headquarters in Redmond, Washington and
Cybex's headquarters in Huntsville, Alabama
- The terms of the merger agreement and the merger, including the Cybex
exchange ratio
- The Cybex board considered favorably the detailed financial analyses and
pro forma and other information relating to the two companies presented by
SG Cowen, including the opinion of SG Cowen that the Cybex exchange ratio
was fair to Cybex shareholders from a financial point of view. The opinion
is subject to assumptions and limitations noted in the opinion and
described under "OPINION OF CYBEX'S FINANCIAL ADVISOR," and shareholders
should carefully read both that section and the opinion that is attached
to this document as Annex C. The opinion of SG Cowen is directed to the
Cybex board of directors and does not constitute a recommendation to
shareholders of Cybex on how they should vote at, or take any other action
in connection with, the special meeting for the merger. The Cybex board of
directors viewed the analyses and opinion of an independent,
internationally recognized financial advisor such as SG Cowen to be
important factors in reaching a determination that the merger should be
approved.
- The expectation that the merger will be treated as a tax-free
reorganization for federal income tax purposes as discussed under
"MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS OF THE MERGER"
on page 63
- The Cybex board of directors viewed the terms of the merger agreement,
including the parties' representations, warranties and covenants, the
conditions to their respective obligations and the termination provisions,
as reasonable in light of the entire transaction. The Cybex board of
directors also considered the provisions in the merger agreement that
prohibited solicitation of third-party bids and the acceptance, approval
or recommendation of any unsolicited third-party bids. The Cybex board of
directors considered that the provisions in the merger agreement for the
benefit of Cybex reasonably protected the interests of Cybex shareholders,
and those for the benefit of Apex did not present any significant
impediments to proceeding with the transaction considering all of the
circumstances.
- The other provisions of the merger agreement, including the fact that the
Cybex shareholders will vote on the transaction
- The interests of the officers and directors of Cybex in the merger,
including the matters disclosed under "INTERESTS OF CYBEX DIRECTORS,
OFFICERS AND AFFILIATES IN THE MERGER" beginning on page 59
- The challenges of combining the businesses of two major corporations of
this size and the attendant risk of not achieving the expected synergies
or improved earnings (as discussed under "RISK FACTORS--RISKS RELATING TO
THE PROPOSED MERGER" beginning on page 17) and of diverting management
focus and resources from other strategic opportunities and from
operational matters for an extended period of time
44
<PAGE>
The foregoing discussion of the information and factors considered by the
Cybex board is not intended to be exhaustive but is believed to include all
material factors considered by the Cybex board. In view of the complexity and
wide variety of information and factors, both positive and negative, considered
by the Cybex board, it did not find it practical to quantify, rank or otherwise
assign relative or specific weights to the factors considered. In addition, the
Cybex board did not reach any specific conclusion with respect to each of the
factors considered, or any aspect of any particular factor, but, rather,
conducted an overall analysis of the factors described above, including
discussions with Cybex's management and legal, financial and accounting
advisors. In considering the factors described above, individual members of the
Cybex board may have given different weight to different factors. The Cybex
board considered all these factors as a whole and believed the factors supported
its determination to approve the merger. After taking into consideration all of
the factors set forth above, Cybex's board concluded that the merger was fair
to, and in the best interests, of Cybex and the Cybex shareholders and that
Cybex should proceed with the merger.
RECOMMENDATION OF CYBEX'S BOARD OF DIRECTORS
After carefully evaluating these factors, both positive and negative, the
board of directors of Cybex has determined that the merger is fair to and in the
best interests of the Cybex shareholders and unanimously recommends that you
vote for approval and adoption of the merger agreement and approval of the
merger.
In considering the recommendation of the Cybex board with respect to the
merger, you should be aware that some directors and officers of Cybex have
interests in the merger that are different from, or are in addition to, the
interests of Cybex shareholders generally. For information regarding the
interests of these directors and officers, see the section entitled "INTERESTS
OF CYBEX DIRECTORS, OFFICERS AND AFFILIATES IN THE MERGER" on page 59.
OPINION OF APEX'S FINANCIAL ADVISOR
Apex asked Donaldson, Lufkin & Jenrette, in its role as financial advisor to
Apex, to render an opinion to the Apex board as to the fairness, from a
financial point of view, to the holders of Apex common stock of the Apex
exchange ratio. On March 7, 2000, Donaldson, Lufkin & Jenrette delivered to the
Apex board its oral opinion to the effect that, as of that date, the Apex
exchange ratio was fair to the holders of Apex common stock from a financial
point of view. This opinion was subsequently confirmed in the written Donaldson,
Lufkin & Jenrette opinion to the effect that, as of March 7, 2000, and based on
and subject to the assumptions, limitations and qualifications set forth in such
opinion, the Apex exchange ratio was fair to the holders of Apex common stock
from a financial point of view.
THE FULL TEXT OF DONALDSON, LUFKIN & JENRETTE'S OPINION IS ATTACHED AS
ANNEX B TO THIS JOINT PROXY STATEMENT/PROSPECTUS. THE SUMMARY OF DONALDSON,
LUFKIN & JENRETTE'S OPINION SET FORTH IN THIS JOINT PROXY STATEMENT/PROSPECTUS
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF DONALDSON,
LUFKIN & JENRETTE'S OPINION. APEX SHAREHOLDERS ARE URGED TO READ DONALDSON,
LUFKIN & JENRETTE'S OPINION CAREFULLY AND IN ITS ENTIRETY FOR THE PROCEDURES
FOLLOWED, ASSUMPTIONS MADE, OTHER MATTERS CONSIDERED AND LIMITS OF THE REVIEW BY
DONALDSON, LUFKIN & JENRETTE IN CONNECTION WITH ITS OPINION.
Donaldson, Lufkin & Jenrette prepared its opinion for the Apex board. The
opinion addresses only the fairness to the holders of Apex common stock from a
financial point of view, as of the date thereof, of the Apex exchange ratio.
Donaldson, Lufkin & Jenrette expressed no opinion as to the prices at which the
common stock of Aegean Sea, Apex or Cybex would actually trade at any time.
Donaldson, Lufkin & Jenrette's opinion did not address the relative merits of
the merger and the other business strategies considered by the Apex board nor
did it address the Apex board's decision to proceed with the merger. Donaldson,
Lufkin & Jenrette's opinion did not constitute a recommendation to any
shareholder as to how such shareholder should vote on the proposed transaction.
45
<PAGE>
Apex selected Donaldson, Lufkin & Jenrette as its financial advisor because
Donaldson, Lufkin & Jenrette is an internationally recognized investment banking
firm that has substantial experience providing strategic advisory services.
Donaldson, Lufkin & Jenrette was not retained as an advisor or agent to the
shareholders of Apex or any other person. As part of its investment banking
business, Donaldson, Lufkin & Jenrette is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. Donaldson,
Lufkin & Jenrette was not requested to solicit, nor did Donaldson, Lufkin &
Jenrette solicit, the interest of any other party in acquiring or engaging in a
business combination with Apex.
In arriving at its opinion, Donaldson, Lufkin & Jenrette:
- Reviewed the merger agreement
- Reviewed financial and other information that was publicly available or
furnished to it by Apex and Cybex, including information provided during
discussions with their respective managements. Included in the information
provided during discussions with the respective managements were financial
projections of Cybex for the period beginning January 1, 2000 and ending
March 31, 2002, prepared by a nationally recognized research analyst
identified by the management of Cybex, and financial projections of Cybex
for the period beginning April 1, 2002 and ending December 31, 2004 that
were based upon the financial projections for such earlier period with
guidance from the management of Cybex, in each case as adjusted by the
management of Apex, and financial projections of Apex for the period
beginning January 1, 2000 and ending December 31, 2004 prepared by the
management of Apex
- Compared financial and securities data of Apex and Cybex with various
other companies whose securities are traded in public markets
- Reviewed the historical stock prices and trading volumes of the common
stock of Cybex and Apex
- Conducted such other financial studies, analyses and investigations as
Donaldson, Lufkin & Jenrette deemed appropriate for purposes of rendering
its opinion
In rendering its opinion, Donaldson, Lufkin & Jenrette relied upon and
assumed the accuracy and completeness of all of the financial and other
information that was available to it from public sources, that was provided to
or identified to Donaldson, Lufkin & Jenrette by Apex and Cybex, or their
respective representatives or advisors, or that was otherwise reviewed by
Donaldson, Lufkin & Jenrette, and assumed that Apex was not aware of any
information prepared by it, Cybex or their respective representatives or
advisors that might be material to Donaldson, Lufkin & Jenrette's opinion that
has not been made available to Donaldson, Lufkin & Jenrette.
With respect to the financial projections for Apex referred to above,
Donaldson, Lufkin & Jenrette relied on representations that the projections were
reasonably prepared on the basis reflecting the best currently available
estimates and judgments of the management of Apex as to the future operating and
financial performance of Apex.
With respect to the projections for Cybex referred to above:
- Donaldson, Lufkin & Jenrette conducted discussions with members of senior
management of Apex with respect to Apex management's views as to the
accuracy and reasonableness of such projections for Cybex,
- Donaldson, Lufkin & Jenrette relied on representations that they reflect
the best currently available estimates and judgments of the management of
Apex as to the future operating and financial performance of Cybex, and
46
<PAGE>
- Donaldson, Lufkin & Jenrette further assumed with the consent of the Apex
board the reasonableness thereof and that the projections do not
materially differ from the best currently available estimates and
judgments of the management of Cybex as to the future operating and
financial performance of Cybex.
Donaldson, Lufkin & Jenrette did not assume any responsibility for making
any independent evaluation of the assets or liabilities, or for making any
independent verification of the information reviewed by Donaldson, Lufkin &
Jenrette. Donaldson, Lufkin & Jenrette relied on advice of counsel to Apex as to
legal matters, including that the merger will be free of federal tax to Apex and
its shareholders.
Donaldson, Lufkin & Jenrette's opinion was necessarily based on economic,
market, financial and other conditions as they existed on, and on the
information made available to Donaldson, Lufkin & Jenrette as of, the date of
its opinion. Donaldson, Lufkin & Jenrette states in its opinion that, although
subsequent developments may affect its opinion, Donaldson, Lufkin & Jenrette
does not have any obligation to update, revise or reaffirm its opinion.
SUMMARY OF FINANCIAL ANALYSES PERFORMED BY DONALDSON, LUFKIN & JENRETTE
The following is a summary of the financial analyses presented by Donaldson,
Lufkin & Jenrette to the Apex board on March 7, 2000 in connection with the
preparation of Donaldson, Lufkin & Jenrette's opinion. The information
summarized in the tables which follow should be read in conjunction with the
accompanying text. No company used in the analyses that follow is directly
comparable to Apex or Cybex. In addition, mathematical analysis such as
determining the average or median is not in itself a meaningful method of using
selected company data. The analyses performed by Donaldson, Lufkin & Jenrette
are not necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by the analyses.
The implied relative Apex exchange ratios estimated pursuant to the
historical exchange ratio analysis, the comparable publicly traded analysis and
the discounted cash flow analysis summarized below were each based on:
- 21,197,251 shares of Apex common stock outstanding and options outstanding
to purchase 2,873,245 shares of Apex common stock at a weighted average
exercise price of $12.38, and
- 19,288,232 shares of Cybex common stock outstanding and options
outstanding to purchase 2,190,233 shares of Cybex common stock at a
weighted average exercise price of $10.51.
COMMON STOCK TRADING HISTORY. Donaldson, Lufkin & Jenrette examined the
historical closing prices of Apex common stock from March 3, 1999 to March 6,
2000. During this time period, Apex common stock reached a high of $47.13 per
share, a low of $11.44 per share and averaged $24.39 per share. Donaldson,
Lufkin & Jenrette also examined the historical closing prices of Cybex common
stock from March 3, 1999 to March 6, 2000. During this time period, Cybex common
stock reached a high of $46.50 per share, a low of $10.25 per share and averaged
$22.10 per share.
HISTORICAL IMPLIED EXCHANGE RATIO ANALYSIS. Donaldson, Lufkin & Jenrette
reviewed the historical exchange ratios implied by the daily closing prices per
share of Apex common stock and Cybex common stock for the period beginning on
March 3, 1997 and ending on March 6, 2000. This analysis showed that on
March 6, 2000, the last trading day prior to Donaldson, Lufkin & Jenrette's
delivery to
47
<PAGE>
the Apex board of its opinion, the implied Apex exchange ratio was 0.91, and
that the average historical Apex exchange ratios during the periods ending on
March 6, 2000 were as follows:
<TABLE>
<CAPTION>
IMPLIED AVERAGE HISTORICAL
PERIODS ENDED MARCH 6, 2000 APEX EXCHANGE RATIO
- --------------------------- --------------------------
<S> <C>
10 day................................................. 0.97
20 day................................................. 1.10
30 day................................................. 1.15
60 day................................................. 1.16
90 day................................................. 1.14
180 day................................................ 0.98
1 year................................................. 1.14
3 year................................................. 1.58
</TABLE>
COMPARATIVE STOCK PRICE VOLATILITY. Donaldson, Lufkin & Jenrette examined
the relative historical stock price volatility of Apex common stock and Cybex
common stock compared to the stock price volatilities of (1) the NASDAQ
composite index; (2) the Standard & Poor's 500 composite index; and (3) the
Russell 2000 composite index over the 30-, 90- and 180-day periods ended
March 6, 2000, each as reported by Bloomberg LP. This analysis yielded the
following results:
<TABLE>
<CAPTION>
30 DAYS 90 DAYS 180 DAYS
-------- -------- --------
<S> <C> <C> <C>
Apex............................................... 83.6% 75.9% 90.3%
Cybex.............................................. 74.4% 71.5% 62.6%
NASDAQ Composite Index............................. 34.4% 30.8% 28.5%
S&P 500 Index...................................... 21.1% 20.5% 19.4%
Russell 2000....................................... 23.8% 19.7% 17.3%
</TABLE>
COMPARABLE PUBLICLY TRADED COMPANY ANALYSIS. Donaldson, Lufkin & Jenrette
analyzed the market values and trading multiples of selected publicly traded
computer peripheral and technology companies that Donaldson, Lufkin & Jenrette
believed are reasonably comparable to Apex. These comparable companies consisted
of:
- Compaq Computer Corporation
- Symbol Technologies, Inc.
- American Power Conversion Corporation
- Electronics For Imaging Inc.
- Advanced Digital Information Corporation
- Zebra Technologies Corporation
- Black Box Corporation
- Logitech International S.A.
- Artesyn Technologies, Inc.
In examining these comparable companies, Donaldson, Lufkin & Jenrette
calculated the enterprise value of each company as a multiple of its respective:
- revenue for the last reported twelve months and projected calendar year
2000 and 2001 revenue; and
- earnings before interest and taxes for the last reported twelve months and
projected calendar year 2000 and 2001 earnings before interest and taxes.
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<PAGE>
The enterprise value of a company is equal to the value of its fully-diluted
common equity plus debt and the liquidation value of outstanding preferred
stock, if any, minus cash and the value of other assets, including minority
interests in other entities. Donaldson, Lufkin & Jenrette also calculated the
market price of each company as a multiple of projected calendar year 2000 and
2001 earnings per share. All historical data was derived from publicly available
sources and all projected data was obtained from equity research reports and
First Call where available. Donaldson, Lufkin & Jenrette's analysis of the
comparable companies yielded the following multiple ranges:
COMPARABLE COMPUTER PERIPHERAL AND TECHNOLOGY COMPANIES
<TABLE>
<CAPTION>
LAST REPORTED
TWELVE
MONTHS
EARNINGS 2000 2001
LAST REPORTED BEFORE EARNINGS BEFORE EARNINGS BEFORE
12 MONTHS 2000 2001 INTEREST INTEREST INTEREST
REVENUES REVENUES REVENUES AND TAXES AND TAXES AND TAXES
------------- -------- -------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
High......................... 12.1x 9.2x 5.6x 62.9x 71.1x 37.6x
Low.......................... 1.2x 1.1x 0.9x 12.6x 11.5x 8.5x
Average...................... 4.9x 4.0x 2.7x 32.1x 27.7x 18.4x
Median....................... 4.3x 3.7x 2.4x 22.6x 19.3x 14.9x
</TABLE>
<TABLE>
<CAPTION>
2000 PRICE/ 2001 PRICE/
EARNINGS PER EARNINGS PER
SHARE SHARE
------------ ------------
<S> <C> <C>
High........................................................ 86.1x 52.8x
Low......................................................... 16.1x 12.5x
Average..................................................... 38.5x 24.8x
Median...................................................... 26.1x 20.7x
</TABLE>
Based on an analysis of this data and projected results of Apex and Cybex
for comparable periods, Donaldson, Lufkin & Jenrette estimated a value per share
of Apex common stock ranging from approximately $34 to $47 and a value per share
of Cybex common stock ranging from approximately $36 to $49. This analysis also
yielded an implied relative Apex exchange ratio ranging from 0.6940x to 1.3060x
(obtained by comparing the lowest estimated valuation of Apex common stock to
the highest estimated valuation of Cybex common stock and the highest estimated
valuation of Apex common stock to the lowest estimated valuation of Cybex common
stock), compared to the proposed Apex exchange ratio of 1.0905x.
DISCOUNTED CASH FLOW ANALYSIS. Donaldson, Lufkin & Jenrette performed a
discounted cash flow analysis of the projected cash flows of Apex and Cybex for
the period from January 1, 2000 through December 31, 2004 using projections for
Cybex for the period beginning January 1, 2000 and ending March 31, 2002,
prepared by a nationally recognized research analyst identified by the
management of Cybex, and financial projections of Cybex for the period beginning
April 1, 2002 and ending December 31, 2004 that were based upon the financial
projections for such earlier period with guidance from the management of Cybex,
in each case as adjusted by the management of Apex, and financial projections of
Apex for the period beginning January 1, 2000 and ending December 31, 2004
prepared by the management of Apex. Donaldson, Lufkin & Jenrette's discounted
cash flow calculation is an analysis of the present value of projected debt-free
cash flows and an estimated terminal year
49
<PAGE>
enterprise value using the discount rates and terminal year earnings before
interest and taxes multiples indicated below.
<TABLE>
<CAPTION>
RANGES
------
LOW HIGH
--- ----
<S> <C> <C>
Weighted Average Cost of Capital Discount Rate.............. 15.5% 18.5%
Terminal Multiple of 2004 Earnings Before Interest and
Taxes..................................................... 16.0x 19.0x
Estimated Present Value Per Share of Apex Common Stock...... $38.97 $50.15
Estimated Present Value Per Share of Cybex Common Stock..... $40.67 $52.64
</TABLE>
This analysis yielded an implied relative Apex exchange ratio ranging from
0.7403x to 1.2331x (obtained by comparing the lowest estimated valuation of Apex
common stock to the highest estimated valuation of Cybex common stock and the
highest estimated valuation of Apex common stock to the lowest estimated
valuation of Cybex common stock), compared to the proposed Apex exchange ratio
of 1.0905x.
CONTRIBUTION ANALYSIS. Donaldson, Lufkin & Jenrette analyzed the relative
contributions of Apex and Cybex to the pro forma combined company for the
calendar years 1999 through 2002 based on selected financial data, assuming no
anticipated cost savings or related expenses from the proposed transaction.
Donaldson, Lufkin & Jenrette analyzed the respective contributions of each
company's projected revenues, earnings before interest and taxes, net income and
diluted earnings per share for each of the calendar years 1999 through 2002
based on projections for Cybex for the period beginning January 1, 2000 and
ending March 31, 2002, prepared by a nationally recognized research analyst
identified by the management of Cybex, and financial projections of Cybex for
the period beginning April 1, 2002 and ending December 31, 2002 that were based
upon the financial projections for such earlier period with guidance from the
management of Cybex, in each case as adjusted by the management of Apex, and
financial projections of Apex for the period beginning January 1, 2000 and
ending December 31, 2002 prepared by the management of Apex.
The following summarizes the results of Donaldson, Lufkin & Jenrette's
contribution analysis:
<TABLE>
<CAPTION>
IMPLIED APEX EXCHANGE RATIO
---------------------------
1999 2000 2001 2002
<S> <C> <C> <C> <C>
Revenues................................................. 0.9079x 0.9387x 0.9960x 0.9748x
Earnings Before Interest and Taxes....................... 0.9903x 0.9928x 1.0289x 1.0070x
Net Income............................................... 1.0105x 1.0065x 1.0245x 0.9869x
Diluted Earnings Per Share............................... 1.0534x 1.0100x 1.0287x 1.0502x
</TABLE>
This analysis yielded an implied relative Apex exchange ratio ranging from
0.9079x to 1.0534x (obtained by calculating the Apex exchange ratio implied by
the contributions of Apex, on the one hand, and Cybex, on the other hand, to the
results of the pro forma combined company), compared to the proposed Apex
exchange ratio of 1.0905x.
PRO FORMA EARNINGS PER SHARE AND CASH EARNINGS PER SHARE ACCRETION/DILUTION
ANALYSIS. Using projections and assumptions for Cybex for the period beginning
January 1, 2000 and ending March 31, 2002, prepared by a nationally recognized
research analyst identified by the management of Cybex, and financial
projections of Cybex for the period beginning April 1, 2002 and ending
December 31, 2004 that were based upon the financial projections for such
earlier period with guidance from the management of Cybex, in each case as
adjusted by the management of Apex, and financial projections of Apex for the
period beginning January 1, 2000 and ending December 31, 2004 prepared by the
management of Apex, Donaldson, Lufkin & Jenrette compared the 1999 earnings per
share and 1999 cash earnings per share of Apex and Cybex and the projected
earnings per share and cash earnings per share of Apex and Cybex for 2000 and
2001 on a stand-alone basis to the 1999 pro forma earnings per
50
<PAGE>
share and 1999 pro forma cash earnings per share and the projected pro forma
earnings per share and cash earnings per share of the combined company after the
merger. Cash earnings per share is defined as earnings per share before
amortization of goodwill. This analysis showed that without synergies, the
merger would be dilutive to earnings per share and accretive to cash earnings
per share for Apex shareholders.
The summary set forth above does not purport to be a complete description of
the analyses performed by Donaldson, Lufkin & Jenrette but describes, in summary
form, the material elements of the presentation made by Donaldson, Lufkin &
Jenrette to the Apex board on March 7, 2000 in connection with the preparation
of Donaldson, Lufkin & Jenrette's fairness opinion. The preparation of a
fairness opinion involves various determinations as to the most appropriate and
relevant methods of financial analysis and the application of these methods to
the particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. Each of the analyses conducted by Donaldson,
Lufkin & Jenrette was carried out in order to provide a different perspective on
the transaction and to add to the total mix of information available. Donaldson,
Lufkin & Jenrette did not form a conclusion as to whether any individual
analysis, considered in isolation, supported or failed to support an opinion as
to fairness from a financial point of view. Rather, in reaching its conclusion,
Donaldson, Lufkin & Jenrette considered the results of the analyses in light of
each other and ultimately reached its opinion based on the results of all
analyses taken as a whole. Donaldson, Lufkin & Jenrette did not place any
particular reliance or weight on any individual analysis, but instead concluded
that its analyses, taken as a whole, supported its determination. Accordingly,
notwithstanding the separate factors summarized above, Donaldson, Lufkin &
Jenrette has indicated to Apex that it believes that its analyses must be
considered as a whole and that selecting portions of its analyses and the
factors considered by it, without considering all analyses and factors, could
create an incomplete view of the evaluation process underlying its opinion. The
analyses performed by Donaldson, Lufkin & Jenrette are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than suggested by those analyses.
FEE ARRANGEMENTS WITH APEX'S FINANCIAL ADVISOR
Pursuant to an engagement letter dated March 1, 2000, Apex has agreed to pay
Donaldson, Lufkin & Jenrette a fee of $1.1 million in connection with the
delivery of the fairness opinion rendered on March 7, 2000. Upon consummation of
the proposed transaction, Apex has agreed to pay Donaldson, Lufkin & Jenrette an
additional fee of $2.4 million. Apex also has agreed to reimburse Donaldson,
Lufkin & Jenrette for its reasonable out-of-pocket expenses and to indemnify
Donaldson, Lufkin & Jenrette against specified liabilities, including
liabilities under the federal securities laws or relating to or arising out of
Donaldson, Lufkin & Jenrette's engagement as financial advisor.
In the ordinary course of business, Donaldson, Lufkin & Jenrette actively
trades in the equity and derivative securities of Apex and Cybex for its own
account and for the accounts of its customers and, accordingly, may at any time
hold a long or short position in such securities. There was no material
relationship between Apex and Donaldson, Lufkin & Jenrette in the two years
prior to the transaction. Donaldson, Lufkin & Jenrette may in the future provide
investment banking or other financial advisory services to Apex, Cybex or the
combined company.
OPINION OF CYBEX'S FINANCIAL ADVISOR
Cybex retained SG Cowen to render an opinion to the Cybex board as to the
fairness, from a financial point of view, to the holders of Cybex common stock
of the exchange ratio to be received by the holders of Cybex common stock in the
transaction.
51
<PAGE>
On March 7, 2000, SG Cowen delivered its oral opinion to the Cybex board, to
the effect that as of March 7, 2000, the exchange ratio to be received in the
transaction by the holders of Cybex common stock was fair, from a financial
point of view, to the common stockholders of Cybex. This opinion was
subsequently confirmed in writing. The full text of the written opinion of
SG Cowen, dated March 7, 2000, is attached as Annex C and is incorporated by
reference.
Holders of Cybex common stock are urged to read the opinion in its entirety
for the assumptions made, procedures followed, other matters considered and
limits of the review by SG Cowen. This summary of SG Cowen's is qualified in its
entirety by reference to the full text of the opinion.
SG Cowen's analyses and opinion were prepared for and addressed to the Cybex
board and are directed only to the fairness, from a financial point of view, of
the exchange ratio to be received in the transaction by the holders of Cybex
common stock, and do not constitute an opinion as to the merits of the
transaction or a recommendation to any stockholder as to how to vote on the
proposed transaction. The exchange ratio to be received in the transaction by
the holders of Cybex common stock was determined through negotiations between
Cybex and Apex and not pursuant to recommendations of SG Cowen.
In arriving at its opinion, SG Cowen reviewed and considered the financial
and other matters as it deemed relevant, including:
- A draft of the merger agreement dated March 4, 2000
- Publicly available information for Cybex, including its annual reports
filed on Form 10-K for each of the years ended March 31, 1998 and 1999,
its quarterly reports filed on Form 10-Q for each of the quarters ended
July 2, 1999, October 1, 1999 and December 31, 1999, all reports on
Form 8-K filed by Cybex during the last two years
- Publicly available information for Apex, including its annual reports
filed on Form 10-K for each of the years ended December 31, 1997 and 1998,
its quarterly reports filed on Form 10-Q for each of the quarters ended
April 2, 1999, July 2, 1999 and October 1, 1999, the Apex press release
related to its financial condition and results of operations for the year
ended December 31, 1999 and all reports on Form 8-K filed by Apex during
the last two years,
- Internal financial analyses, financial forecasts, reports and other
information concerning Cybex, prepared by the management of Cybex, and the
amounts and timing of the cost savings and related expenses expected to
result from the transaction furnished to us by the management of Cybex.
This cost savings analysis was based on the following assumptions and
considerations as provided by Cybex management:
- projected pro forma revenue enhancements for calendar year 2000 and
calendar year 2001 derived from combining the two companies and
potentially pursuing new growth opportunities,
- projected reduction of pro forma calendar year 2000 and calendar year
2001 operating expenses to reflect some of the strategic and
operational benefits associated with combining the two companies and
functioning as a single entity
- Estimates by First Call research services and financial projections in
Wall Street analyst reports selected by SG Cowen for each of Cybex and
Apex
- Discussions representatives of SG Cowen had with members of the
managements of each of Cybex and Apex concerning the historical and
current business operations, financial conditions and prospects of Cybex
and Apex, respectively, the cost savings expected to result from the
transaction and other matters SG Cowen deemed relevant
52
<PAGE>
- Operating results, the reported price and trading histories of the shares
of the common stock of Cybex and Apex, respectively, as compared to the
operating results, the reported price and trading histories of publicly
traded companies SG Cowen deemed relevant
- Financial terms of the transaction as compared to the financial terms of
selected business combinations SG Cowen deemed relevant
- Pro forma financial effects excluding and including goodwill of the
transaction on an accretion/ dilution basis
- Other information, financial studies, analyses and investigations and
other factors that SG Cowen deemed relevant for the purposes of its
opinion including an assessment of general economic, market and monetary
conditions
In conducting its review and arriving at its opinion, SG Cowen, with Cybex's
consent, assumed and relied, without independent investigation, upon the
accuracy and completeness of all financial and other information provided to it
by Cybex and Apex or which was publicly available. SG Cowen did not undertake
any responsibility for the accuracy, completeness or reasonableness of, or to
verify independently, such information. In addition, SG Cowen did not conduct
nor did it assume any obligation to conduct any physical inspection of the
properties or facilities of Cybex or Apex. SG Cowen further relied upon the
assurance of management of Cybex that they were unaware of any facts that would
make the information provided to SG Cowen incomplete or misleading in any
respect. Apex did not provide SG Cowen with internal financial forecasts or
projections concerning Apex for SG Cowen to be able to perform a discounted cash
flow analysis.
SG Cowen assumed, with Cybex's permission, that:
- The actual financial condition and results of operations of Apex for the
period ending December 31, 1999 will not be substantially different from
the 1999 estimated financials provided to SG Cowen. Management of Cybex
confirmed to SG Cowen,
- The Cybex financial information and description of cost savings expected
to result from the merger provided to SG Cowen were reasonably prepared by
the management of Cybex and reflected the best available estimates and
good faith judgments of such management as to the future performance of
Cybex,
- The projections and cost savings provided to SG Cowen, and the estimates
by First Call and Wall Street analysts projections for each of Cybex and
Apex provide a reasonable basis for SG Cowen's opinion.
SG Cowen did not make or obtain any independent evaluations, valuations or
appraisals of the assets or liabilities of Cybex or Apex, nor was SG Cowen
furnished with these materials. With respect to all legal matters relating to
Cybex, SG Cowen relied on the advice of legal counsel to Cybex. SG Cowen's
opinion was necessarily based upon economic and market conditions and other
circumstances as they existed and could be evaluated by SG Cowen on March 7,
2000. Although subsequent developments may affect its opinion, SG Cowen does not
have any obligation to update, revise or reaffirm its opinion and SG Cowen
expressly disclaims any responsibility to do so. Additionally, SG Cowen was not
authorized or requested to, and did not, solicit alternative offers for Cybex or
its assets, nor did SG Cowen investigate any other alternative transactions that
may be available to Cybex.
For purposes of rendering its opinion, SG Cowen assumed that:
- The representations and warranties of each party contained in the
transaction agreement were true and correct,
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<PAGE>
- Each party will perform all of the covenants and agreements required to be
performed by it under the transaction agreement
- All conditions to the consummation of the transaction will be satisfied
without waiver thereof.
- The final form of the transaction agreement would be substantially similar
to the last draft received by SG Cowen prior to rendering its opinion.
- All governmental, regulatory and other consents and approvals contemplated
by the transaction agreement would be obtained
- In the course of obtaining any of those consents, no restrictions will be
imposed or waivers made that would have an adverse effect on the
contemplated benefits of the transaction
- The transaction will be treated as a tax-free reorganization
SG Cowen's opinion does not constitute a recommendation to any stockholder
of either Cybex or Apex as to how such stockholder should vote on the proposed
transaction or to take any other action in connection with the transaction.
SG Cowen's opinion does not imply any conclusion as to what the value of the
shares of common stock of Aegean Sea actually will be when issued to Cybex's and
Apex's stockholders or the likely trading range for Aegean Sea common stock
which may vary depending on numerous factors that generally influence the price
of securities. SG Cowen's opinion is limited to the fairness, from a financial
point of view, of the exchange ratio to be received by the holders of Cybex
common stock in the transaction. SG Cowen expresses no opinion as to the
underlying business reasons that may support the decision of the Cybex board to
approve, or Cybex's decision to consummate, the transaction.
In order to opine as to the fairness, from a financial point of view, of the
exchange ratio to be received by Cybex common stockholders in the transaction,
SG Cowen performed valuation analyses on both Apex and Cybex, which valuations
were used to derive a valuation of Aegean Sea. SG Cowen then compared the
valuation of Aegean Sea, after giving effect to the exchange ratio to be paid to
Apex common stockholders, to its valuation of Cybex.
The following is a summary of the principal financial analyses performed by
SG Cowen to arrive at its opinion. Some of the summaries of financial analyses
include information presented in tabular format. In order to fully understand
the financial analyses, the tables must be read together with the text of each
summary. The tables alone do not constitute a complete description of the
financial analyses. Considering the data set forth in the tables without
considering the full narrative description of the financial analyses, including
the methodologies and assumptions underlying the analyses, could create a
misleading or incomplete view of the financial analyses. SG Cowen performed each
of the financial analyses described below, and reviewed with the managements of
Cybex and Apex the assumptions on which such analyses were based and other
factors, including the historical and projected financial results of Cybex and
Apex.
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES. SG Cowen compared selected
financial data and ratios for Cybex and Apex to the corresponding financial data
and ratios of other companies whose securities are publicly traded and which
SG Cowen believes have operating, market valuation and trading valuations
similar to what might be expected of Cybex and Apex. These companies were:
- American Power Conversion
- Electronics for Imaging
- Logitech International SA
- Black Box Corp.
- Tellabs
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<PAGE>
- ADC Telecom
- Advanced Fibre Communications
- Adtran
- Westell Technologies
The financial data and ratios compared by SG Cowen included:
- The enterprise value of the selected companies as a multiple of estimated
2000 calendar year revenues
- Stock price as a multiple of 2000 estimated calendar year earnings per
share revenues (as available from research analyst reports or, if not so
available, First Call)
Enterprise value was defined as equity value plus debt less cash.
The following table presents, for the periods indicated, the multiples
implied by the ratio of enterprise value to 2000 estimated calendar year
revenues, and the ratio of equity value to the estimated 2000 calendar year
earnings for Cybex, Apex and the selected companies. The information in the
table is based on the closing stock prices of the selected companies stocks on
March 3, 2000 and on the implied transaction values of Cybex and Apex.
<TABLE>
<CAPTION>
IMPLIED
TRANSACTION
SELECTED COMPANIES MULTIPLES MULTIPLES
-------------------------------- -------------------
MEAN MEDIAN HIGH/LOW CYBEX APEX
-------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Enterprise value as a ratio of:
CY 2000E Revenues.................... 5.8x 5.8x 12.8x/2.2x 6.1x 7.3x
Stock price as a ratio of:
CY 2000E Earnings.................... 39 33 63x/25x 35 38
</TABLE>
As indicated in the above table, the multiples generated by the transaction
are within the range of multiples indicated in the table above. Based on this
analysis, therefore, SG Cowen concluded that the exchange ratio was fair to the
Cybex shareholders.
Although the selected companies were used for comparison purposes, none of
those companies is directly comparable to Cybex or Apex. Accordingly, an
analysis of the results of such a comparison is not purely mathematical, but
instead involves complex considerations and judgments concerning differences in
historical and projected financial and operating characteristics of the selected
companies and other factors that could affect the public trading value of the
selected companies, Cybex or Apex to which they are being compared.
CONTRIBUTION ANALYSIS. SG Cowen analyzed the respective contributions to
the combined company of Apex's and Cybex's respective 1999 calendar year
revenues, earnings before interest and taxes and net incomes and 2000 calendar
year estimated revenues, earnings before interest and taxes and net incomes
based upon the historical and projected financial results of Cybex and Apex
(based upon projections by Wall Street analysts for Apex and Cybex).
<TABLE>
<CAPTION>
% OF COMBINED COMPANY
---------------------------
APEX CYBEX
CONTRIBUTION CONTRIBUTION
------------ ------------
<S> <C> <C>
CY 1999
Revenues......................................... 50% 50%
EBIT............................................. 52 48
Net Income....................................... 53 47
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
% OF COMBINED COMPANY
---------------------------
APEX CYBEX
CONTRIBUTION CONTRIBUTION
------------ ------------
<S> <C> <C>
CY 2000
Revenues......................................... 51 49
EBIT............................................. 51 49
Net Income....................................... 53 47
Average Relative Contribution........................ 51% 49%
</TABLE>
SG Cowen then compared the pro forma percentage ownership that Cybex
shareholders would have in the combined company (45%), together with the
relative representation of Cybex shareholders on the board of the combined
company, to the average relative contribution of Cybex to the combined company
as indicated in the table above. Based on this analysis, SG Cowen concluded that
the exchange ratio was fair to the Cybex shareholders.
HISTORICAL EXCHANGE RATIO ANALYSIS. SG Cowen analyzed the ratios of the
closing prices of Apex common stock to those of Cybex common stock over various
periods ending March 3, 2000. The table below illustrates the ratios for those
periods.
<TABLE>
<CAPTION>
HISTORICAL PERIOD EXCHANGE RATIO
- ----------------- --------------
<S> <C>
One Year Median............................................. 1.15x
One Year Average............................................ 1.14
Latest Six Months Average................................... 0.99
Latest Three Months Average................................. 1.15
Latest One Month Average.................................... 1.19
Latest Ten Days Average..................................... 1.14
Last Trade.................................................. 0.99
Median of Historical Exchange Ratios........................ 1.14x
</TABLE>
Although the median historical exchange ratio derived from this analysis was
slightly higher than the exchange ratio to be received by Cybex shareholders,
SG Cowen concluded that the difference between the proposed exchange ratio and
the median of the historical exchange ratio was not material to its opinion
regarding fairness.
PRO FORMA TRANSACTION ANALYSIS. SG Cowen analyzed the pro forma ownership
in the combined company by the holders of Cybex and noted that holders of Cybex
common stock would own approximately 45.2% of the combined company, based on the
closing share prices of Cybex and Apex on March 3, 2000. Based on this analysis,
SG Cowen concluded that the exchange ratio was fair to the Cybex shareholders.
DISCOUNTED CASH FLOW ANALYSIS. SG Cowen determined not to apply the
discounted cash flow method to the valuation analyses for the following reasons:
- because of the limited number of years for which projected financial
information for Cybex was provided by Cybex,
- because Apex did not provide SG Cowen with internal financial forecasts or
projections concerning Apex for SG Cowen to be able to perform a
discounted cash flow analysis, and
- because the discounted terminal value accounted for such a high percentage
of the discounted present value of Cybex or Apex.
The summary set forth above does not purport to be a complete description of
all the analyses performed by SG Cowen. The preparation of a fairness opinion
involves various determinations as to
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<PAGE>
the most appropriate and relevant methods of financial analyses and the
application of these methods to the particular circumstances and, therefore,
such an opinion is not readily susceptible to partial analysis or summary
description.
SG Cowen did not attribute any particular weight to any analysis or factor
considered by it, but rather made qualitative judgments as to the significance
and relevance of each analysis and factor. Accordingly, notwithstanding the
separate factors summarized above, SG Cowen believes, and has advised the Cybex
board, that its analyses must be considered as a whole and that selecting
portions of its analyses and the factors considered by it, without considering
all analyses and factors, could create an incomplete view of the process
underlying its opinion.
In performing its analyses, SG Cowen made numerous assumptions with respect
to industry performance, business and economic conditions and other matters,
many of which are beyond the control of Cybex and Apex. These analyses performed
by SG Cowen are not necessarily indicative of actual values or future results,
which may be significantly more or less favorable than suggested by such
analyses. In addition, analyses relating to the value of businesses do not
purport to be appraisals or to reflect the prices at which businesses or
securities may actually be sold. Accordingly, such analyses and estimates are
inherently subject to uncertainty, being based upon numerous factors or events
beyond the control of the parties or their respective advisors. None of Cybex,
Apex, SG Cowen or any other person assumes responsibility if future results are
materially different from those projected. The analyses supplied by SG Cowen and
its opinion were among several factors taken into consideration by the Cybex
board in making its decision to enter into the transaction agreement and should
not be considered as determinative of such decision.
FEE ARRANGEMENTS WITH CYBEX'S FINANCIAL ADVISOR
SG Cowen was selected by the Cybex board to render an opinion to the Cybex
board because SG Cowen is a nationally recognized investment banking firm and
because, as part of its investment banking business, SG Cowen is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes. SG Cowen is providing financial services for Cybex for which
it will receive customary fees. In addition, in the ordinary course of its
business, SG Cowen and its affiliates may trade the equity securities of Cybex
and Apex for their own account and for the accounts of their customers, and,
accordingly, may at any time hold a long or short position in such securities.
Pursuant to the SG Cowen engagement letter, if the transaction is
consummated, SG Cowen will be entitled to receive a transaction fee equal to:
- 1.0% of the aggregate consideration to be received by Cybex or its
securityholders up to 110% of the market capitalization of Cybex on the
date of the announcement of the transaction
- 2.0% of the aggregate consideration between 110% and 150% of the market
capitalization of Cybex
plus
- 3.0% of the aggregate consideration above 150% of the market
capitalization of Cybex
Cybex has also agreed to pay a fee of $500,000 to SG Cowen for rendering its
opinion. Additionally, Cybex has agreed to reimburse SG Cowen for its
out-of-pocket expenses, including attorneys' fees, and has agreed to indemnify
SG Cowen against certain liabilities, including liabilities under the federal
securities laws.
The terms of the fee arrangement with SG Cowen, which are customary in
transactions of this nature, were negotiated at arm's length between Cybex and
SG Cowen, and the Cybex board was aware
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<PAGE>
of the arrangement, including the fact that a significant portion of the fee
payable to SG Cowen is contingent upon the completion of the transaction.
Shortly after the announcement of the signing of the merger agreement, Cybex
was notified by representatives of Morgan Keegan & Company, Inc. that Morgan
Keegan claimed that it would be due a fee of 1.2% of the aggregate consideration
upon completion of the merger. Morgan Keegan's claim is apparently based on an
engagement letter entered into between Cybex and Morgan Keegan in January 1998
that Morgan Keegan claims is still in force. Cybex terminated this engagement
letter in February 1998 and does not believe that it owes any fee to Morgan
Keegan. Cybex believes that Morgan Keegan's claim is without merit, and Cybex
intends to vigorously defend its position that no such fee is owed to Morgan
Keegan.
INTERESTS OF APEX DIRECTORS, OFFICERS AND AFFILIATES IN THE MERGER
When considering the recommendation of Apex's board of directors, you should
be aware that Apex's directors and officers have interests in the merger that
are different from, or are in addition to, your interests. The Apex board of
directors was aware of these potential conflicts and considered them.
As of May 22, 2000, Apex's executive officers and directors held options to
purchase a total of 1,894,179 shares of Apex common stock, at the weighted
average exercise price of $12.51 per share. 1,353,252 shares under those options
were unvested.
Under the terms of the merger agreement, several members of Apex's board of
directors and executive management team will become officers and/or members of
the board of directors of Aegean Sea, as follows:
<TABLE>
<CAPTION>
NAME APEX POSITION(S) AEGEAN SEA POSITION(S)
- ---- ----------------------------- -----------------------------
<S> <C> <C>
Barry L. Harmon Chief Operating Officer, Director, Senior Vice
Chief Financial Officer and President, West Coast
Treasurer Operations
Samuel F. Saracino Vice President of Business Senior Vice President, Legal
Development, General Counsel and Corporate Affairs,
and Secretary General Counsel and Secretary
C. David Perry Vice President of Worldwide Vice President, OEM Sales
Sales
Edwin L. Harper Director Director
William McAleer Director Director
</TABLE>
In connection with the merger agreement, four members of the Apex executive
management team, including one member of the Apex board of directors, have
entered into employment agreements or amended existing employment agreements as
follows:
- Kevin J. Hafer, Chairman of the Board, President, Chief Executive Officer
and director of Apex, amended his employment agreement, effective
immediately prior to completion of the merger. The amendment provides that
the vesting of Mr. Hafer's stock options will be fully accelerated
immediately prior to the closing of the merger. Additionally, following
the merger, Mr. Hafer will continue to receive substantially the same
salary and benefits he currently receives for a period of one year. The
amendment also provides that Mr. Hafer will be indemnified for any "golden
parachute" taxes payable by Mr. Hafer as a result of the benefits he
receives in connection with the merger.
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<PAGE>
- In contemplation of the merger, Apex entered into employment agreements
with each of Barry L. Harmon, C. David Perry, and Samuel F. Saracino.
Under these agreements, each of these Apex officers will become an officer
of Aegean Sea on completion of the merger. The agreements provide for
annual base salary increases, annual bonuses and other benefits. The
agreements also provide for severance benefits and full acceleration of
all unvested stock options upon termination without cause or upon
resignation after a change of control that occurs after the merger.
Additionally, the agreements provide that, immediately prior to the
closing of the merger, the vesting of options held by the individuals will
accelerate to the extent of 75,000 shares of Apex common stock. The
agreements also provide for full acceleration of the vesting of options
upon death or disability. The agreements provide that Messrs. Harmon,
Saracino and Perry will be indemnified for any "golden parachute" taxes
payable by any such individual as a result of any benefits they receive in
connection with the merger.
- Franz Fichtner, a non-employee director of Apex, will not become a
director of Aegean Sea and will receive full acceleration of the vesting
of all of his Apex stock options, exercisable into 34,000 shares of Apex
common stock, immediately prior to the closing of the merger.
Under the merger agreement, Aegean Sea has agreed to honor Apex's
obligations under indemnification agreements between Apex and its directors and
officers in effect before the completion of the merger and any indemnification
provisions of Apex's articles of incorporation and bylaws. Aegean Sea has also
agreed to provide for indemnification provisions in the articles of
incorporation and bylaws of Apex following the merger that are at least as
favorable as Apex's current provisions and to maintain these provisions for six
years from the completion of the merger.
In addition, Aegean Sea has agreed to maintain Apex's directors' and
officers' liability insurance for six years from the completion of the merger,
provided that Aegean Sea is not required to pay more than $400,000 per year of
the annual premium for Apex's insurance.
Aegean Sea has agreed to guarantee these obligations or make arrangements to
have them assumed in the event of a subsequent sale of Aegean Sea or Apex to a
third party.
As a result of these interests, these directors and officers of Apex could
be more likely to vote to approve the merger agreement and the merger than if
they did not hold these interests. Apex's shareholders should consider whether
these interests may have influenced these directors and officers to support or
recommend the merger.
INTERESTS OF CYBEX DIRECTORS, OFFICERS AND AFFILIATES IN THE MERGER
When considering the recommendation of Cybex's board of directors, Cybex
shareholders should be aware that Cybex's directors and officers have interests
in the merger that are different from, or are in addition to, your interests.
The Cybex board of directors was aware of these potential conflicts and
considered them.
As of May 22, 2000, Cybex's executive officers and directors held options to
purchase a total of 1,137,750 shares of Cybex common stock, at the weighted
average exercise price of $11.15 per share. A total of 683,405 shares under
those options were unvested.
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<PAGE>
Under the terms of the merger agreement, several members of Cybex's board of
directors and executive management team will become officers and/or members of
the board of directors of Aegean Sea, as follows:
<TABLE>
<CAPTION>
NAME CYBEX POSITION(S) AEGEAN SEA POSITION(S)
- ---- ---------------------------- ----------------------------
<S> <C> <C>
Stephen F. Thornton.................... Director, Chairman of the Director, Chairman of the
Board of Directors, Chief Board of Directors, Chief
Executive Officer, and Executive Officer, and
President President
Doyle C. Weeks......................... Director, Executive Vice Director, Executive Vice
President, Group Operations President, Group Operations
and Business Development and Business Development
Douglas E. Pritchett................... Director, Senior Vice Senior Vice President,
President, Finance, Chief Finance, Chief Financial
Financial Officer, Officer, Treasurer, and
Treasurer, and Assistant Assistant Secretary
Secretary
R. Byron Driver........................ Senior Vice President, Senior Vice President,
Operations and Chief Operations and Chief
Operating Officer Operating Officer
Gary R. Johnson........................ Senior Vice President, Sales Senior Vice President, Sales
and Marketing and Marketing
Kieran MacSweeney...................... Managing Director of Managing Director of
International Operations International Operations
Victor Odryna.......................... Senior Vice President, Senior Vice President,
Corporate Strategic Corporate Strategic
Marketing Marketing
Christopher L. Thomas.................. Senior Vice President, Senior Vice President,
Engineering Engineering
John R. Cooper......................... Director Director
</TABLE>
In connection with the merger agreement, Stephen F. Thornton, Doyle C.
Weeks, and Douglas E. Pritchett, all of whom are members of the Cybex executive
management team and the Cybex board of directors, amended existing employment
agreements to provide that the merger does not constitute a change in control
within the meaning of their employment agreements. The amendments also provide
that Messrs. Thornton, Weeks, and Pritchett will be indemnified for any "golden
parachute" taxes payable by any such individual as a result of any benefits they
receive in connection with any change in control.
Under the merger agreement, Aegean Sea has agreed to honor Cybex's
obligations under the indemnification provisions of Cybex's articles of
incorporation and bylaws. Aegean Sea has also agreed to provide for
indemnification provisions in the articles of incorporation and bylaws of Cybex
following the merger that are at least as favorable as Cybex's current
provisions and to maintain these provisions for six years from the completion of
the Cybex merger.
In addition, Aegean Sea has agreed to maintain Cybex's directors' and
officers' liability insurance for six years from the completion of the mergers,
provided that Aegean Sea is not required to pay more than $400,000 per year of
the annual premium for Cybex's insurance.
Aegean Sea has agreed to guarantee these obligations or make arrangements to
have them assumed in the event of a subsequent sale of Aegean Sea or Cybex to a
third party.
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<PAGE>
As a result of these interests, these directors and officers of Cybex could
be more likely to vote to approve the merger agreement and the merger than if
they did not hold these interests. Cybex's shareholders should consider whether
these interests may have influenced these directors and officers to support or
recommend the merger.
COMPLETION AND EFFECTIVENESS OF THE MERGER
The merger will be completed when all of the conditions to completion of the
merger are satisfied or waived, including approval and adoption of the merger
agreement and the merger by the shareholders of Apex and the approval and
adoption of the merger agreement and the merger by the shareholders of Cybex. We
hope to complete the merger during the second or third quarters of 2000. The
merger will become effective upon the filing of articles of merger with the
State of Washington and with the State of Alabama.
STRUCTURE OF THE MERGER AND CONVERSION OF STOCK AND OPTIONS
Aegean Sea is a newly formed corporation, formed specifically for the merger
described in this joint proxy statement/prospectus. Aegean Sea has also formed
two wholly-owned subsidiaries, Apex Acquisition Corp. and Cybex Acquisition
Corp. As provided in the merger agreement, Apex Acquisition Corp. will merge
with and into Apex, and Cybex Acquisition Corp. will merge with and into Cybex.
These two mergers are collectively referred to in this joint proxy
statement/prospectus as the merger. On the effectiveness of the merger, Apex and
Cybex will become wholly-owned subsidiaries of Aegean Sea, and Apex shareholders
and Cybex shareholders will become stockholders of Aegean Sea as described in
the following paragraphs.
APEX COMMON STOCK
Upon effectiveness of the merger, each outstanding share of Apex common
stock will be converted into the right to receive 1.0905 shares of Aegean Sea
common stock.
APEX SHAREHOLDERS' FRACTIONAL SHARES OF AEGEAN SEA COMMON STOCK
No fractional shares of Aegean Sea common stock will be issued in the
merger. Instead, former Apex shareholders will be entitled to receive an amount
of cash determined by multiplying their fractional share amount, after
aggregating all fractional shares for a former holder of Apex common stock, by
the average closing price of Apex common stock as reported on Nasdaq for the
five trading days ending the last full trading day prior to the effectiveness of
the merger, and then dividing the result by 1.0905.
APEX OPTIONS
Upon completion of the merger, each outstanding stock option issued by Apex
will be assumed by Aegean Sea and become an option to purchase Aegean Sea common
stock. Each option will be exercisable for a number of whole shares of Aegean
Sea common stock determined by multiplying the number of shares of Apex common
stock purchaseable under the option immediately prior to the merger by 1.0905.
The number of shares of Aegean Sea common stock purchaseable under the option
will be rounded down to the nearest whole share, without payment of any cash for
fractional shares. The per share exercise price of the option after the merger
will be equal to the per share exercise price immediately prior to the merger
divided by 1.0905. The exercise price will be rounded up to the nearest whole
cent.
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<PAGE>
APEX EMPLOYEE STOCK PURCHASE PLAN
Upon completion of the merger, each outstanding stock option under the Apex
employee stock purchase plan will be assumed by Aegean Sea and become an option
to purchase Aegean Sea common stock. Each option will continue to be subject to
the terms and conditions of the Apex employee stock purchase plan, except that
the fair market value per share of Apex common stock at the beginning of each
offering period in effect as of the effectiveness of the merger shall be deemed
to be that fair market value divided by 1.0905, rounded up to the nearest whole
cent.
CYBEX COMMON STOCK
Upon completion of the merger, each outstanding share of Cybex common stock
will be converted into the right to receive one share of Aegean Sea common
stock.
CYBEX OPTIONS
Upon completion of the merger, each outstanding stock option issued by Cybex
will be assumed by Aegean Sea and become an option to purchase Aegean Sea common
stock. Each option will be exercisable for a number of whole shares of Aegean
Sea common stock equal to the number of shares of Cybex common stock that would
have been purchaseable under the option immediately prior to the merger. The per
share exercise price of the option after the merger will be equal to the per
share exercise price immediately prior to the merger.
PERCENTAGE OWNERSHIP OF AEGEAN SEA AFTER THE MERGER
Based on the number of outstanding shares of Apex common stock and Cybex
common stock as of May 22, 2000, immediately upon the effectiveness of the
merger, former Apex shareholders will hold approximately 54.4% of the
outstanding common stock of Aegean Sea and former Cybex shareholders will hold
approximately 45.6% of the outstanding common stock of Aegean Sea. Assuming
exercise of all outstanding options, former Apex shareholders and option holders
will hold approximately 54.8% and former Cybex shareholders and option holders
will hold approximately 45.2% of the common stock of Aegean Sea.
ASSUMPTION OF STOCK PLANS
Aegean Sea will, upon effectiveness of the merger, assume the option plans
maintained by Apex and Cybex and the Apex employee stock purchase plan.
EXCHANGE OF APEX AND CYBEX STOCK CERTIFICATES FOR AEGEAN SEA STOCK CERTIFICATES
When the merger is completed, Aegean Sea's exchange agent will mail to Apex
and Cybex shareholders a letter of transmittal and instructions for use in
surrendering Apex and Cybex stock certificates in exchange for Aegean Sea stock
certificates. When you deliver your Apex or Cybex stock certificates to the
exchange agent along with an executed letter of transmittal and any other
required documents, your Apex or Cybex stock certificates will be canceled and
you will receive Aegean Sea stock certificates representing the number of full
shares of Aegean Sea common stock to which you are entitled under the merger
agreement. You will receive payment in cash, without interest, instead of any
fractional shares of Aegean Sea common stock which would have otherwise been
issuable to you in the mergers.
Aegean Sea will only issue to Apex and Cybex shareholders an Aegean Sea
stock certificate or a check in lieu of a fractional share in the name in which
the surrendered Apex or Cybex stock certificate is registered. If Apex and Cybex
shareholders wish to have their certificates issued in another
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name they must present the exchange agent with all documents required to show
and effect the unrecorded transfer of ownership and show that they paid any
applicable stock transfer taxes.
APEX AND CYBEX SHAREHOLDERS SHOULD NOT SUBMIT THEIR APEX AND CYBEX STOCK
CERTIFICATES FOR EXCHANGE UNTIL THEY RECEIVE THE TRANSMITTAL INSTRUCTIONS AND A
FORM OF LETTER OF TRANSMITTAL FROM THE EXCHANGE AGENT.
NO DIVIDENDS
Apex and Cybex shareholders are not entitled to receive any dividends or
other distributions on Aegean Sea common stock until the merger is completed and
they have surrendered their Apex and Cybex stock certificates in exchange for
Aegean Sea stock certificates.
Subject to the effect of applicable laws, promptly following surrender of
Apex and Cybex stock certificates and the issuance of the corresponding Aegean
Sea certificates, Apex and Cybex shareholders will be paid the amount of
dividends or other distributions, if any, without interest, with a record date
after the completion of the merger which were previously paid with respect to
their whole shares of Aegean Sea common stock. At the appropriate payment date,
Apex and Cybex shareholders will also receive the amount of dividends or other
distributions, without interest, with a record date after the completion of the
merger and a payment date after they exchange their Apex and Cybex stock
certificates for Aegean Sea stock certificates.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS OF THE MERGER
The following discussion summarizes the material federal income tax
considerations of the merger that are generally applicable to holders of Apex
common stock and Cybex common stock. This discussion is based on existing
authorities. These authorities may change, or the Internal Revenue Service might
interpret the existing authorities differently. In either case, the tax
consequences of the merger to the holders of Apex common stock and Cybex common
stock could differ from those described below. This discussion is for general
information only and does not provide a complete analysis of all potential tax
considerations that may be relevant to particular shareholders because of their
specific circumstances, or because they are subject to special rules. This
discussion does not describe the federal income tax consequences of transactions
other than the merger or the tax consequences of the merger under foreign,
state, or local law. This discussion also does not address the federal income
tax consequences of the merger to holders of Apex stock options, options under
the Apex employee stock purchase plan or Cybex stock options.
HOLDERS OF APEX COMMON STOCK OR CYBEX COMMON STOCK SHOULD CONSULT THEIR OWN
TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO
THEIR PARTICULAR SITUATIONS AND THE CONSEQUENCES OF FOREIGN, STATE, OR LOCAL
LAWS, AND TAX TREATIES.
The obligations of Apex and Cybex to effect the merger are conditioned on
their receipt of substantially identical written opinions from their counsel,
Wilson Sonsini Goodrich & Rosati, Professional Corporation, for Apex, and
Sirote & Permutt, P.C., for Cybex, that the merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. If the merger qualifies as a reorganization:
- No gain or loss will be recognized by the holders of Apex common stock or
Cybex common stock upon the receipt of Aegean Sea common stock solely in
exchange for their Apex common stock or Cybex common stock in the merger.
- A holder of Apex common stock or Cybex common stock who receives cash in
the merger in lieu of a fractional share of Aegean Sea common stock will
be treated as if he/she had received the fractional share and then had
that share redeemed for the cash. The holder will recognize gain or loss
equal to the difference between the cash received and that portion of
his/her basis in the Aegean Sea common stock attributable to the
fractional share.
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- The aggregate tax basis of the Aegean Sea common stock received by each
holder of Apex common stock or Cybex common stock in the merger (including
any fractional share that the holder will be treated as having received
and then had immediately redeemed for cash) will be the same as the
aggregate tax basis of the Apex common stock or Cybex common stock
surrendered in the exchange.
- The holding period of the Aegean Sea common stock received by each holder
of Apex common stock or Cybex common stock in the merger will include the
period during which the holder held his/her Apex common stock or Cybex
common stock, if he/she held that stock as a capital asset at the time of
the merger.
- Neither Apex nor Cybex will recognize gain as a result of the merger.
Any holder of Apex common stock or Cybex common stock who exercises
dissenters' or appraisal rights will recognize gain or loss measured by the
difference between the amount of cash received by the holder for his/her stock
and the holder's tax basis in the stock.
The tax opinions of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, and Sirote & Permutt, P.C., will be subject to limitations and
qualifications and will be based on representations made by Apex and Cybex. The
tax opinions are not binding on the IRS and do not preclude the IRS from taking
a contrary position. Neither Apex nor Cybex has requested or will request a
ruling from the IRS regarding any of the federal income tax consequences of the
mergers, except that Apex plans to seek a ruling from the IRS that the merger
agreement and the merger do not result in a "change in control" of Apex within
the meaning of Section 280G of the Internal Revenue Code.
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC
TAX CONSEQUENCES OF THE MERGER, INCLUDING THE APPLICABLE FEDERAL, STATE, LOCAL
AND FOREIGN TAX CONSEQUENCES TO THEM OF THE MERGER IN THEIR PARTICULAR
CIRCUMSTANCES.
ACCOUNTING TREATMENT OF THE MERGER
Aegean Sea intends to account for the merger as a "purchase" of Cybex by
Apex for financial reporting and accounting purposes, in accordance with
generally accepted accounting principles.
REGULATORY FILINGS AND APPROVALS REQUIRED TO COMPLETE THE MERGER
The merger is subject to the requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, which prevents reportable transactions from being
completed until statutory waiting periods expire or are terminated. During such
waiting periods, the Antitrust Division of the Department of Justice or the
Federal Trade Commission may request the parties to provide, voluntarily or
otherwise, certain information relevant to their review. Apex and Cybex have
made the required filings with the Department of Justice and the Federal Trade
Commission, and the applicable waiting periods have not yet expired. Apex and
Cybex intend to make any other material notifications to foreign jurisdictions
and to comply with all requests for information from any government entity.
The requirements of Hart-Scott-Rodino will be satisfied if the merger is
completed within one year from the termination of the waiting period. During or
after the statutory waiting periods, and even after completion of the merger,
either the Antitrust Division of the Department of Justice or the Federal Trade
Commission could challenge or seek to block the merger under the antitrust laws,
as it deems necessary or desirable in the public interest. Foreign competition
agencies with jurisdiction over the merger could also initiate action to
challenge or block the merger. In addition, a competitor, customer or other
third party could initiate a private action under the antitrust laws challenging
or seeking to enjoin the merger, before or after they are completed. Apex and
Cybex cannot be sure that a challenge to the merger will not be made or that, if
a challenge is made, Apex and Cybex will prevail.
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Neither Apex nor Cybex is aware of any other material governmental or
regulatory approval required for completion of the merger, other than the
effectiveness of the registration statement of which this joint proxy
statement/prospectus is a part, and compliance with applicable corporate laws of
Washington, Alabama and Delaware.
RESTRICTIONS ON SALES OF SHARES BY AFFILIATES
The shares of Aegean Sea common stock to be issued in the merger will be
registered under the Securities Act. These shares will be freely transferable
under the Securities Act, except for shares of Aegean Sea common stock issued to
any person who is an affiliate of Apex or Cybex. Persons who may be deemed to be
affiliates include individuals or entities that control, are controlled by, or
are under common control of Apex or Cybex and may include some of their
respective officers and directors, as well as their respective principal
shareholders. Affiliates may not sell their shares of Aegean Sea common stock
acquired in the merger except pursuant to (1) an effective registration
statement under the Securities Act covering the resale of those shares, (2) an
exemption under paragraph (d) of Rule 145 under the Securities Act or (3) any
other applicable exemption under the Securities Act.
DISSENTERS' RIGHTS
APEX SHAREHOLDERS. Dissenters' rights under Washington law are available to
Apex shareholders in connection with the merger. To claim dissenters' rights, an
Apex shareholder must comply with the following requirements:
- Before the shareholder vote is taken, you must deliver to Apex written
notice of your intent to demand payment for your shares if the merger is
effected.
- You must not vote your shares in favor of the merger at the Apex
shareholder meeting.
- If you properly notified Apex of your intent to demand dissenters' rights,
Apex will send you written notice within ten days after the completion of
the merger, indicating when and how to demand payment for your shares.
After receiving the notice, you must demand payment for your shares in the
manner required by the notice sent by Apex.
- You must certify to Apex that you acquired beneficial ownership of your
shares before March 8, 2000.
- You must deposit the certificates representing your shares in the manner
required by the notice you receive from Apex.
If you do not comply with the requirements outlined above, you will not be
entitled to receive payment for your shares under the dissenters' rights
provisions of Washington law. If you do comply with the outlined requirements,
within 30 days of the later of the date of effectiveness of the merger or the
date Apex received your demand for payment, Apex will pay to you the amount Apex
estimates to be the fair value of your shares of Apex common stock. If you
believe Apex's estimate of the fair value of your shares is incorrect, or if
Apex has not paid you for your shares within 60 days of the last day you were
entitled to demand payment, you may notify Apex in writing of your own estimate
of the fair value of your shares of Apex common stock and demand payment of your
estimate. YOUR DISSENTERS' RIGHTS ARE SET OUT IN THEIR ENTIRETY IN CHAPTER
23B.13 OF THE WASHINGTON BUSINESS CORPORATIONS ACT, WHICH IS ATTACHED TO THIS
JOINT PROXY STATEMENT/PROSPECTUS AS ANNEX D.
CYBEX SHAREHOLDERS. Dissenters' rights under Alabama law are available to
Cybex shareholders in connection with the merger. To claim dissenters' rights,
an Cybex shareholder must comply with the following requirements:
- Before the shareholder vote is taken, you must deliver to Cybex written
notice of your intent to demand payment for your shares if the merger is
effected.
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- You must not vote your shares in favor of the merger at the Cybex
shareholder meeting.
- If you properly notified Cybex of your intent to demand dissenters'
rights, Cybex will send you written notice within ten days after the
completion of the merger, indicating when and how to demand payment for
your shares. After receiving the notice, you must demand payment for your
shares in the manner required by the notice sent by Cybex.
- You must certify to Cybex that you acquired beneficial ownership of your
shares before March 8, 2000.
- You must deposit the certificates representing your shares in the manner
required by the notice you receive from Cybex.
If you do not comply with the requirements outlined above, you will not be
entitled to receive payment for your shares under the dissenters' rights
provisions of Alabama law. If you do comply with the outlined requirements,
within 30 days of the later of the date of effectiveness of the merger or the
date Cybex received your demand for payment, Cybex will pay to you the amount
Cybex estimates to be the fair value of your shares of Cybex common stock. If
you believe Cybex's estimate of the fair value of your shares is incorrect, or
if Cybex has not paid you for your shares within 60 days of the last day you
were entitled to demand payment, you may notify Cybex in writing of your own
estimate of the fair value of your shares of Cybex common stock and demand
payment of your estimate. YOUR DISSENTERS' RIGHTS ARE SET OUT IN THEIR ENTIRETY
IN ARTICLE 13 OF THE ALABAMA BUSINESS CORPORATION ACT, WHICH IS ATTACHED TO THIS
JOINT PROXY STATEMENT/PROSPECTUS AS ANNEX E.
LISTING ON THE NASDAQ STOCK MARKET OF AEGEAN SEA COMMON STOCK TO BE ISSUED IN
THE MERGER
Aegean Sea has applied to list the shares of Aegean Sea common stock to be
issued in the merger on Nasdaq under the symbol "ASEA." Nasdaq approval is
subject to official notice of issuance prior to the effectiveness of the merger.
DELISTING AND DEREGISTRATION OF APEX AND CYBEX COMMON STOCK AFTER THE MERGER
If the merger is completed, Apex common stock and Cybex common stock will be
delisted from Nasdaq and will be deregistered under the Securities Exchange Act
of 1934, as amended.
EFFECT OF THE MERGER ON THE PATENT DISPUTE
In February 1998, Apex filed complaints for infringement of U.S. Patent
Number 5,721,842 in United States District Court for the Western District of
Washington against Cybex (and Rose Electronics). The complaints alleged that the
products manufactured and sold by the defendants embodied the invention claimed
in U.S. Patent Number 5,721,842, and sought injunctive relief, damages,
attorneys fees, and costs. The defendants each filed counterclaims seeking to
recover the expenses of litigation (including fees and costs) and to obtain a
declaratory judgment that the products did not infringe the 5,721,842 patent and
that the 5,721,842 patent was invalid and unenforceable. Apex and Cybex had
conversations concerning the patent dispute at various times in 1998, and in
February 1999, the parties agreed to dismiss the lawsuit without prejudice and
to have the patent issues raised in the lawsuit determined by the Board of
Appeals and Interferences of the United States Patent and Trademark Office (the
"PTO"). The parties also agreed that the lawsuit could be reinstated by either
party at the conclusion of the proceedings in the PTO.
With the voluntary dismissal of the lawsuit in February 1999, the PTO
proceedings have now been dormant for more than a year, and it is anticipated
that there will not be a final decision from the PTO for at least 20 months
(which would, in any event, likely be subject to further litigation in the
courts). The lawsuit and the PTO proceedings have not had any meaningful impact
on the companies since they agreed to the voluntary dismissal of the litigation
and to the PTO proceedings. The lawsuit and the PTO proceedings were not a
significant factor in the merger discussions or a significant reason for the
merger. We believe that, after the merger is completed, the PTO proceedings will
be dismissed since both Cybex's re-issue application and Apex's patents will be
owned by the combined company.
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THE MERGER AGREEMENT
THIS SECTION OF THE JOINT PROXY STATEMENT/PROSPECTUS DESCRIBES THE MERGER
AGREEMENT AMONG APEX, CYBEX AND AEGEAN SEA, DATED AS OF MARCH 8, 2000. WHILE WE
BELIEVE THAT THE DESCRIPTION COVERS THE MATERIAL TERMS OF THE MERGER AGREEMENT,
THIS SUMMARY MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU.
THE MERGER AGREEMENT IS ATTACHED TO THIS JOINT PROXY STATEMENT/PROSPECTUS AS
ANNEX A, AND WE URGE YOU TO READ IT CAREFULLY.
REPRESENTATIONS AND WARRANTIES
Apex and Cybex each made a number of representations and warranties in the
merger agreement regarding aspects of its respective businesses, financial
condition, structure and other facts pertinent to the merger.
CYBEX REPRESENTATIONS AND WARRANTIES
Cybex's representations and warranties include representations as to:
- Cybex's corporate organization and its qualification to do business
- Cybex's articles of incorporation and bylaws
- Cybex's capitalization
- Authorization of the merger agreement by Cybex
- Regulatory approvals required to complete the merger
- The effect of the merger on obligations of Cybex and under applicable laws
- Cybex's filings and reports with the SEC
- Cybex's financial statements
- Changes in Cybex's business since December 31, 1999
- Cybex's taxes
- Cybex's intellectual property
- Cybex's compliance with applicable laws
- Permits required to conduct Cybex's business and compliance with those
permits
- Restrictions on the conduct of Cybex's business
- Litigation involving Cybex
- Payments, if any, required to be made by Cybex to brokers and agents on
account of the merger
- Cybex's employee benefit plans and agreements
- Cybex's title to the properties it owns and leases
- Environmental matters that apply to Cybex
- Labor matters that apply to Cybex
- Cybex's material contracts
- Information supplied by Cybex in this joint proxy statement/prospectus and
the related registration statement filed by Aegean Sea
- Approval by the Cybex board
- The inapplicability of state takeover statues
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- The fairness opinion received by Cybex from its financial advisor
The representations and warranties of Cybex expire at the effective time of
the merger.
APEX REPRESENTATIONS AND WARRANTIES
Apex made reciprocal representations and warranties to Cybex that were
substantially identical to those made by Cybex to Apex. Apex's representations
and warranties to Cybex expire at the effective time of the merger.
The representations and warranties in the merger agreement are complicated
and not easily summarized. You are urged to carefully read the articles of the
merger agreement entitled "CYBEX REPRESENTATIONS AND WARRANTIES" and "APEX
REPRESENTATIONS AND WARRANTIES."
APEX'S AND CYBEX'S CONDUCT OF BUSINESS BEFORE COMPLETION OF THE MERGER
Apex and Cybex both agreed that, during the period from the execution date
of the merger agreement until the earlier of the completion of the merger or
termination of the merger agreement or unless the other party consents in
writing, each of them will:
- Carry on its business diligently and in accordance with good commercial
practice and in the ordinary course
- Pay its debts and taxes when due
- Pay or perform its material obligations when due
- Preserve intact its present business organization
- Keep available the services of its present officers and employees
- Preserve its relationships with customers, suppliers, distributors,
licensors, licensees, and others with which it has business dealings
Apex and Cybex also both agreed that, until the earlier of the completion of
the merger or termination of the merger agreement, unless the other party
consents in writing, each of them would conduct its business in compliance with
certain specific restrictions relating to the following:
- Restricted stock and stock options
- Entering into partnership arrangements, joint development agreements or
strategic alliances
- Employee severance and termination payments and arrangements
- The transfer or license of intellectual property
- The issuance of dividends or other distributions
- The issuance and redemption of securities
- Modification of charter documents and bylaws
- The merger or consolidation with another entity or the acquisition of
assets or other entities
- Liquidation or reorganization
- The sale, lease, license and disposition of assets
- The incurrence or guaranteeing of indebtedness
- Adopting or amending employee plans or agreements, increasing employee
benefits or paying special bonuses
- Making any payments outside the ordinary course of business in excess of
$500,000 individually or $1 million in the aggregate
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- Payment or settlements of liabilities
- Waiver, termination, amendment or modification of material agreements
- Entrance into or modification of contracts relating to distribution, sale,
license or marketing by third parties of Apex's and Cybex's products
- Revaluing assets or modifying accounting policies and procedures
- Incurrence of obligations or entering into agreements or commitments to
make expenditures outside of the ordinary course of business in excess of
$500,000 individually or $1 million in the aggregate
- Actions which would cause the treatment of the mergers other than as a
"reorganization" under the Internal Revenue Code
- Making of tax elections or settling tax liabilities
- Hiring of employees with annual compensation in excess of $100,000
- Granting exclusive rights to third parties
The provisions in the merger agreement related to the conduct of Apex's and
Cybex's businesses are complicated and not easily summarized. You are urged to
carefully read the sections of the merger agreement entitled "CONDUCT PRIOR TO
THE EFFECTIVE TIME."
NO OTHER NEGOTIATIONS; NO SOLICITATION
Apex and Cybex have agreed to cease, as of the date of the merger agreement,
any and all existing activities, discussions or negotiations with any parties
conducted prior to that date with respect to transactions that would involve a
transfer of control of Apex or Cybex.
RESTRICTIONS ON APEX
As used in this joint proxy statement/prospectus, an APEX ACQUISITION
PROPOSAL is any offer or proposal relating to any APEX ACQUISITION TRANSACTION,
other than an offer or proposal from Cybex or Aegean Sea. An APEX ACQUISITION
TRANSACTION is any transaction or series of transactions, other than the Apex
merger, involving any of the following:
- The acquisition or purchase from Apex by a person or group of more than a
5% interest in the total outstanding voting securities of Apex or any of
its subsidiaries
- Any tender offer or exchange offer that if consummated would result in any
person or group beneficially owning, more than a 5% interest in the total
outstanding voting securities of Apex or any of its subsidiaries
- Any merger, consolidation, business combination or similar transaction
involving Apex in which the shareholders of Apex immediately preceding
such transaction hold less than 95% of the equity interests in the
surviving or resulting entity
- Any sale, lease outside the ordinary course of business, exchange,
transfer, license outside the ordinary course of business, acquisition or
disposition of more than 5% of the assets of Apex
- Any liquidation or dissolution of Apex
Until the merger is completed or the merger agreement is terminated, Apex
has agreed, subject to limited exceptions that it will not, and will not
authorize or permit any of its officers, directors, affiliates or employees, or
any investment banker, attorney, or other advisor or representative authorized
to act on its behalf to, directly or indirectly take any of the following
actions:
- Solicit, initiate, encourage or induce the making, submission or
announcement of any APEX ACQUISITION PROPOSAL
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- Participate in any discussions or negotiations regarding any APEX
ACQUISITION PROPOSAL
- Furnish to any person any non-public information with respect to any APEX
ACQUISITION PROPOSAL
- Take any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to any
APEX ACQUISITION PROPOSAL
- Engage in discussions with any person with respect to any APEX ACQUISITION
PROPOSAL, except as to these restrictive provisions
- Subject to certain limited exceptions discussed below, approve, endorse or
recommend any APEX ACQUISITION PROPOSAL
- Enter into any letter of intent or similar document or any contract,
agreement or commitment contemplating or otherwise relating to any APEX
ACQUISITION TRANSACTION
Until the merger is completed or the merger agreement is terminated, the
board of directors of Apex may withhold, withdraw, amend or modify its unanimous
recommendation in favor of the merger if all of the following conditions are
met:
- An APEX SUPERIOR OFFER is made to Apex,
- Apex has not breached the non-solicitation provisions contained in the
merger agreement, and
- The board of directors of Apex determines in good faith, after
consultation with its outside legal counsel, that such action is required
in order to act in a manner consistent with its fiduciary obligations
under applicable law.
An APEX SUPERIOR OFFER is an unsolicited, bona fide written offer made by a
third party to consummate any of the following transactions:
- Merger, consolidation or similar transaction involving Apex pursuant to
which the shareholders of Apex immediately preceding such transaction hold
less than 50% of the equity interest in the surviving entity, or
- Sale or other disposition of Apex's assets representing in excess of 50%
of the fair market value of Apex's business immediately prior to the
seller, or
- The acquisition by any person or group of the right to 30% of the voting
power of the outstanding shares of Apex,
that the board of directors of Apex determines in its reasonable judgment (after
consultation with its financial advisor) to be more favorable to Apex's
shareholders from a financial point of view than the terms of the merger.
Until the merger is completed or the merger agreement is terminated, Apex
may furnish nonpublic information, enter into confidentiality agreements with,
or entering into discussions with a person or group in response to an APEX
SUPERIOR OFFER submitted by such person or group if all of the following
conditions are met:
- Apex has not breached the non-solicitation provisions contained in the
merger agreement
- The board of directors of Apex determines in good faith, after
consultation with its outside legal counsel, that such action is required
in order to act in a manner consistent with its fiduciary obligations
under applicable law
- At least three days prior to furnishing any such nonpublic information to,
or entering into discussions or negotiations with, such person or group,
Apex gives Cybex written notice of the identity of such person or group
and of Apex's intention to furnish the information or enter into the
discussions or negotiations, and Apex receives from such person or group
an executed confidentiality agreement containing customary limitations on
the use and disclosure of all
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nonpublic written and oral information furnished to such person or group
by or on behalf of Apex
- Contemporaneously with furnishing any nonpublic information, Apex
furnishes the nonpublic information to Cybex, to the extent the nonpublic
information has not been previously furnished to Cybex
For purposes of the non-solicitation and limitations with respect to Apex
relating to its response to an APEX SUPERIOR OFFER, any violation of the
restrictions by any officer, director, affiliate or employee of Apex or any
investment banker, attorney or other advisor or representative of Apex is deemed
to be a breach by Apex.
Apex has agreed to inform Cybex within 24 hours, orally and in writing, of
any request for non-public information that Apex reasonably believes would lead
to an APEX ACQUISITION PROPOSAL, or of any APEX ACQUISITION PROPOSAL, the
material terms and conditions of such request or APEX ACQUISITION PROPOSAL, and
the identity of the person or group making any such request or APEX ACQUISITION
PROPOSAL. Apex further agreed to keep Cybex informed in all material respects of
the status and details, including material amendments or proposed amendments of
any such request or APEX ACQUISITION PROPOSAL.
Apex has agreed to provide Cybex with at least 48 hours prior notice, or
lesser prior notice as provided to Apex's board of directors, but in no event
less than eight hours, of any meeting of Apex's board of directors at which an
APEX SUPERIOR OFFER is reasonably expected to be considered and at least three
business days prior written notice of any meeting of Apex's board of directors
at which it is reasonably expected to recommend an APEX SUPERIOR OFFER.
The Apex board of directors may withdraw its recommendation of the merger
agreement and the merger if either Donaldson, Lufkin & Jenrette has withdrawn
its fairness opinion or the board of directors of Apex determines, in good
faith, in consultation with and in receipt of advice from its outside counsel,
that it is required to withdraw such recommendation in order to act in a manner
consistent with its fiduciary obligations under applicable law.
Regardless of whether the Apex board of directors has received an APEX
SUPERIOR OFFER or withdrawn its recommendation of the merger, Apex is obligated
under the merger agreement to hold and convene the Apex special meeting of
shareholders.
RESTRICTIONS ON CYBEX
Cybex agreed to reciprocal provisions that were substantially identical to
those made by Apex to Cybex as described in the "NO OTHER NEGOTIATIONS; NO
SOLICITATION--RESTRICTIONS ON APEX" section immediately above.
APEX'S AND CYBEX'S EMPLOYEE BENEFIT PLANS
Individuals who are employed by Apex and Cybex when the merger is completed
will become employees of Aegean Sea or one of Aegean Sea's subsidiaries,
including Apex and Cybex. However, Aegean Sea may terminate these employees at
any time. Upon completion of the merger, Aegean Sea will credit Apex and Cybex
employees for certain service and waiting period requirements under Aegean Sea's
comparable employee benefits plans.
TREATMENT OF STOCK OPTIONS
APEX STOCK OPTIONS
Upon completion of the merger, each outstanding stock option issued by Apex
will be assumed by Aegean Sea and become an option to purchase Aegean Sea common
stock. Each option will be exercisable for a number of whole shares of Aegean
Sea common stock determined by multiplying the number of shares of Apex common
stock purchaseable under the option immediately prior to the
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merger by 1.0905. The number of shares of Aegean Sea common stock purchaseable
under the option will be rounded down to the nearest whole share, without
payment of any cash for fractional shares. The per share exercise price of the
option after the merger will be equal to the per share exercise price
immediately prior to the merger divided by 1.0905, rounded up to the nearest
whole cent.
APEX EMPLOYEE STOCK PURCHASE PLAN OPTIONS
Upon completion of the merger, each outstanding stock option under the Apex
employee stock purchase plan will be assumed by Aegean Sea and become an option
to purchase Aegean Sea common stock. Each option will continue to be subject to
the terms and conditions of the Apex employee stock purchase plan, except that
the fair market value per share of Apex common stock at the beginning of each
offering period in effect as of the effectiveness of the merger shall be deemed
to be that fair market value divided by 1.0905, rounded up to the nearest whole
cent.
CYBEX STOCK OPTIONS
Upon completion of the merger, each outstanding stock option issued by Cybex
will be assumed by Aegean Sea and become an option to purchase Aegean Sea common
stock. Each option will be exercisable for a number of whole shares of Aegean
Sea common stock equal to the number of shares of Cybex common stock
purchaseable under the option immediately prior to the merger. The per share
exercise price of the option after the merger will equal to the per share
exercise price immediately prior to the merger.
REGISTRATION ON FORM S-8
Aegean Sea will file with the SEC a registration statement on Form S-8 for
the shares of Aegean Sea common stock issuable with respect to options under the
Apex stock option plan and Apex employee stock purchase plan and with respect to
options under the Cybex stock option plans.
CONDITIONS TO COMPLETION OF THE MERGER
CONDITIONS TO OBLIGATIONS OF APEX AND CYBEX
The obligations of Apex and Cybex to complete the merger and the other
transactions contemplated by the merger agreement are subject to the
satisfaction or waiver of each of the following conditions before completion of
the merger:
- The merger agreement is approved and adopted and the merger is approved by
the requisite holders of Apex's stock and by the requisite holders of
Cybex's stock
- Aegean Sea's registration statement is effective, no stop order suspending
its effectiveness is in effect and no proceedings for suspension of its
effectiveness are pending before or threatened by the SEC
- No law, regulation or order has been enacted or issued which has the
effect of making the merger illegal or otherwise prohibiting completion of
the merger substantially on the terms contemplated by the merger agreement
- All applicable waiting periods under applicable antitrust laws have
expired or been terminated
- Apex and Cybex have each received from their respective tax counsel an
opinion to the effect that the merger will constitute a tax-free
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code
- The shares of Aegean Sea common stock to be issued in the merger must be
authorized for listing on Nasdaq, subject to notice of issuance
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<PAGE>
ADDITIONAL CONDITIONS TO CYBEX'S OBLIGATIONS
Cybex's obligations to complete the merger and the other transactions
contemplated by the merger agreement are subject to the satisfaction or waiver
of each of the following additional conditions before completion of the merger:
- Apex's representations and warranties must be true and correct as of
March 8, 2000 and at and as of the date the merger are to be completed
except:
- To the extent that Apex's representations and warranties address
matters only as of a particular date, they must be true and correct
as of that date
- For breaches of representations and warranties that, individually
or in the aggregate (other than those concerning Apex's capital
structure (which must be true and correct in all respects)), do not
have a material adverse effect on Apex
- Apex must perform or comply in all material respects with all of its
agreements and covenants required by the merger agreement to be performed
or complied with by Apex at or before completion of the merger
ADDITIONAL CONDITIONS TO APEX'S OBLIGATIONS
Apex's obligations to complete the merger and the other transactions
contemplated by the merger agreement are subject to the satisfaction or waiver
of each of the following additional conditions before completion of the merger:
- Cybex's representations and warranties must be true and correct as of
March 8, 2000 and at and as of the date the merger is to be completed
except:
- To the extent that Cybex's representations and warranties address
matters only as of a particular date, they must be true and correct
as of that date
- For breaches of representations and warranties that, individually
or in the aggregate (other than those concerning Cybex's capital
structure (which must be true and correct in all respects)), do not
have a material adverse effect on Cybex
- Cybex must perform or comply in all material respects with all of its
agreements and covenants required by the merger agreement to be performed
or complied with by Cybex at or before completion of the merger
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated at any time prior to completion of
the merger, whether before or after approval and adoption of the merger
agreement and approval of the merger by Apex's and Cybex's shareholders:
- By mutual written consent of Apex and Cybex authorized by the boards of
directors of Apex and Cybex
- By Apex or Cybex, if the merger is not completed before September 30,
2000, except that this right to terminate the merger agreement is not
available to any party whose action or failure to act is a principal cause
of or results in the delay and such action or failure to act is a breach
of the merger agreement
- By Apex or Cybex, if there is any order of a court or governmental
authority having jurisdiction over either Apex or Cybex permanently
restraining, enjoining or prohibiting the completion of the merger which
is final and nonappealable
- By Apex or Cybex, if the merger agreement fails to receive the requisite
vote for approval and adoption by the shareholders of Apex or Cybex at the
Apex or Cybex special meetings or at any
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<PAGE>
adjournment of those meetings, except that this right to terminate the
merger agreement is not available to any party whose action or failure to
act caused the failure to get approval and the action or failure to act is
a breach of the merger agreement
- By Cybex, upon a breach by Apex of any representation, warranty, covenant
or agreement in the merger agreement, or if any of Apex's representations
or warranties are or become untrue so that a condition to completion of
the merger would not be met. However, if the breach or inaccuracy is
curable by Apex with commercially reasonable efforts, and Apex continues
to exercise commercially reasonable efforts, Cybex may not terminate the
merger agreement for 30 days after delivery of written notice from Cybex
to Apex of the breach.
- By Apex, upon a breach by Cybex of any representation, warranty, covenant
or agreement in the merger agreement, or if any of Cybex's representations
or warranties are or become untrue so that a condition to completion of
the merger would not be met. However, if the breach or inaccuracy is
curable by Cybex with commercially reasonable efforts, and Cybex continues
to exercise commercially reasonable efforts, Apex may not terminate the
merger agreement for 30 days after delivery of written notice from Apex to
Cybex of the breach.
- By Apex, if an APEX TRIGGERING EVENT has occurred. An APEX TRIGGERING
EVENT occurs if:
- The board of directors of Cybex withdraws, modifies or changes its
recommendation of the merger agreement or the merger in a manner
adverse to Apex or its shareholders
- The board of directors of Cybex fails to reaffirm its unanimous
recommendation in favor of adoption and approval of the merger
agreement and the merger within 10 business days after Apex
requests in writing that such recommendation be affirmed at any
time following the announcement of a Cybex Acquisition Proposal, as
that term is defined in the merger agreement
- The board of directors of Cybex approves or recommends any Cybex
Acquisition Proposal
- Cybex enters into any letter of intent or similar document
accepting any Cybex Acquisition Proposal
- A tender or exchange offer for Cybex securities is commenced by a
person unaffiliated with Apex, and Cybex has not sent to its
shareholders within 10 business days after such tender or exchange
offer a statement that Cybex recommends rejection of such tender or
exchange offer
- Cybex breaches the non-solicitation provisions of the merger
agreement
- By Cybex, if a CYBEX TRIGGERING EVENT has occurred. A CYBEX TRIGGERING
EVENT occurs if:
- The board of directors of Apex withdraws, modifies or changes its
recommendation of the merger agreement or the merger in a manner
adverse to Cybex or its stockholders
- The board of directors of Apex fails to reaffirm its unanimous
recommendation in favor of adoption and approval of the merger
agreement and the merger within 10 business days after Cybex
requests in writing that such recommendation be affirmed at any
time following the announcement of an Apex Acquisition Proposal, as
that term is defined in the merger agreement
- The board of directors of Apex approves or recommends any Apex
Acquisition Proposal
- Apex enters into any letter of intent or similar document accepting
any Apex Acquisition Proposal
74
<PAGE>
- A tender or exchange offer for Apex securities is commenced by a
person unaffiliated with Cybex, and Apex has not sent to its
shareholders within 10 business days after such tender or exchange
offer a statement that Apex recommends rejection of such tender or
exchange offer
- Apex breaches the non-solicitation provisions of the merger
agreement
PAYMENT OF TERMINATION FEES
If the merger agreement is terminated by Apex because a CYBEX TRIGGERING
EVENT has occurred, Cybex will pay Apex a termination fee of $25 million upon
demand by Apex.
Further, Cybex will pay to Apex upon demand by Apex a termination fee of
$25 million if the merger agreement is terminated because the merger is not
consummated by September 30, 2000 or because Cybex's shareholders do not approve
the merger agreement and, after March 8, 2000 and prior to the termination of
the merger agreement, a third party has announced a CYBEX ACQUISITION PROPOSAL
and within 12 months following the termination of the merger agreement, either
of the following occur:
- A CYBEX ACQUISITION TRANSACTION is consummated
- Cybex enters into an agreement or letter of intent providing for a CYBEX
ACQUISITION TRANSACTION
A CYBEX ACQUISITION TRANSACTION is any of the following:
- A merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Cybex pursuant
to which the shareholders of Cybex immediately preceding such transaction
hold less than 50% of the aggregate equity interests in the surviving or
resulting entity of such transaction
- A sale or other disposition by Cybex of assets representing in excess of
50% of the aggregate fair market value of Cybex's business immediately
prior to such sale
- The acquisition by any person or group, including by way of a tender offer
or an exchange offer or issuance by Cybex, directly or indirectly, of
beneficial ownership or a right to acquire beneficial ownership of shares
representing in excess of 50% of the voting power of the then outstanding
shares of capital stock of Cybex
Under the merger agreement, Apex is obligated to pay Cybex termination fees
totaling $25 million under reciprocal provisions that are substantially
identical to those made by Cybex to Apex and described in this "PAYMENT OF
TERMINATION FEES" section.
EXTENSION, WAIVER AND AMENDMENT OF THE MERGER AGREEMENT
Apex and Cybex may amend the merger agreement before completion of the
merger by mutual written consent.
Either Apex or Cybex may extend the other's time for the performance of any
of the obligations or other acts under the merger agreement, waive any
inaccuracies in the other's representations and warranties and waive compliance
by the other with any of the agreements or conditions contained in the merger
agreement.
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<PAGE>
AGREEMENTS RELATED TO THE MERGER
THIS SECTION OF THE JOINT PROXY STATEMENT/PROSPECTUS DESCRIBES AGREEMENTS
RELATED TO THE MERGER AGREEMENT. WHILE WE BELIEVE THAT THESE DESCRIPTIONS COVER
THE MATERIAL TERMS OF THESE AGREEMENTS, THESE SUMMARIES MAY NOT CONTAIN ALL OF
THE INFORMATION THAT IS IMPORTANT TO YOU. FORMS OF THE VOTING AGREEMENTS ARE
ATTACHED AS ANNEXES F AND G TO THIS JOINT PROXY STATEMENT/PROSPECTUS.
APEX SHAREHOLDERS' VOTING AGREEMENTS
As an inducement for Cybex to enter into the merger agreement, Cybex and
each of Kevin J. Hafer, Barry L. Harmon, C. David Perry, Samuel F. Saracino,
Franz Fichtner, Edwin L. Harper, William McAleer and the Hafer Children Trust
entered into voting agreements. By entering into the voting agreements, each of
these Apex shareholders have agreed to vote the shares of Apex common stock
beneficially owned by these Apex shareholders, including any additional shares
of Apex common stock acquired after the date of the voting agreements, in favor
of the approval of the merger agreement, in favor of the merger and of any other
matters that would facilitate the merger, or in the manner that Cybex directs
with respect to all other proposals submitted to the shareholders of Apex that
in any way relate to the merger. In addition, these Apex shareholders have
irrevocably appointed representatives of Cybex as their proxies with the limited
right to vote their shares of Apex common stock in the manner specified in the
voting agreement.
As of May 22, 2000, these individuals collectively beneficially owned
953,418 shares of Apex common stock, or approximately 4.4% of the outstanding
Apex common stock. None of the Apex shareholders who are parties to the voting
agreements were paid additional consideration in connection with the voting
agreements.
Under the voting agreements, each of these Apex shareholders agrees not to
sell the Apex common stock and options owned, controlled or acquired, either
directly or indirectly, by that person until the earlier of the termination of
the merger agreement or the completion of the merger, unless the transfer is in
accordance with the voting agreement and each transferee agrees to be bound by
the terms and provisions of the voting agreement. The voting agreements will
terminate upon the earlier to occur of the termination of the merger agreement
and the completion of the merger.
CYBEX SHAREHOLDERS' VOTING AGREEMENTS
As an inducement for Apex to enter into the merger agreement, Apex and each
of Stephen F. Thornton, Doyle C. Weeks, Douglas E. Pritchett, Remigius G.
Shatas, R. Byron Driver, Christopher L. Thomas, Gary R. Johnson, John R. Cooper
and David S. Butler entered into voting agreements. By entering into the voting
agreements, each of these Cybex shareholders has agreed to vote the shares of
Cybex common stock beneficially owned by these Cybex shareholders, including any
additional shares of Cybex common stock acquired after the date of the voting
agreements, in favor of the approval and adoption of the merger agreement, in
favor of the merger and of any other matters that would facilitate the merger,
or in the manner that Apex directs with respect to all other proposals submitted
to the shareholders of Cybex that in any way relate to the merger. In addition,
these Cybex shareholders have irrevocably appointed representatives of Apex as
their proxies with the limited right to vote their shares of Cybex common stock
in the manner specified in the voting agreement.
As of May 22, 2000, these individuals collectively beneficially owned
2,765,746 shares of Cybex common stock, or approximately 14.0% of the
outstanding Cybex common stock. None of the Cybex shareholders who are parties
to the voting agreements were paid additional consideration in connection with
the voting agreements.
Under the voting agreements, each of these Cybex shareholders agrees not to
sell the Cybex common stock and options owned, controlled or acquired, either
directly or indirectly, by that person
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until the earlier of the termination of the merger agreement or the completion
of the merger, unless the transfer is in accordance with the voting agreement
and each transferee agrees to be bound by the terms and provisions of the voting
agreement. The voting agreements will terminate upon the earlier to occur of the
termination of the merger agreement and the completion of the merger.
APEX AFFILIATE AGREEMENTS
As an inducement to Cybex to enter into the merger agreement, Apex's
affiliates executed affiliate agreements. Under these affiliate agreements,
Aegean Sea will be entitled to place appropriate legends on the certificates
evidencing any Aegean Sea common stock to be received by these persons, or
entities, and to issue stop transfer instructions to the transfer agent for the
Aegean Sea common stock. Further, these individuals have also acknowledged the
resale restrictions imposed by Rule 145 under the Securities Act on shares of
Aegean Sea common stock to be received by them in the merger.
CYBEX AFFILIATE AGREEMENTS
As an inducement to Apex to enter into the merger agreement, Cybex's
affiliates executed affiliate agreements. Under these affiliate agreements,
Aegean Sea will be entitled to place appropriate legends on the certificates
evidencing any Aegean Sea common stock to be received by these persons, or
entities, and to issue stop transfer instructions to the transfer agent for the
Aegean Sea common stock. Further, these individuals have also acknowledged the
resale restrictions imposed by Rule 145 under the Securities Act on shares of
Aegean Sea common stock to be received by them in the merger.
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<PAGE>
MARKET PRICE AND DIVIDEND INFORMATION
HISTORICAL MARKET PRICES
Apex common stock has been traded on The Nasdaq Stock Market under the
symbol "APEX" since February 19, 1997, the date of Apex's initial public
offering. Cybex common stock has been traded on The Nasdaq Stock Market under
the symbol "CBXC" since July 28, 1995, the date of Cybex's initial public
offering. Prior to such dates, there was no established public trading market
for either company's common stock. The following table sets forth for the
periods indicated the quarterly high and low sale prices per share of Apex
common stock and Cybex common stock as reported on The Nasdaq Stock Market.
<TABLE>
<CAPTION>
APEX CYBEX
------------------- -------------------
HIGH LOW HIGH LOW
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Calendar Year 1998:
First Quarter......................................... $21.167 $14.000 $10.444 $ 6.593
Second Quarter........................................ 20.833 15.000 11.444 8.593
Third Quarter......................................... 23.500 10.500 14.944 8.889
Fourth Quarter........................................ 20.833 7.583 19.583 9.556
Calendar Year 1999:
First Quarter......................................... 26.750 11.000 24.667 10.792
Second Quarter........................................ 20.875 12.250 19.083 9.917
Third Quarter......................................... 35.375 17.500 23.000 13.833
Fourth Quarter........................................ 34.000 11.875 34.917 20.000
Calendar Year 2000:
First Quarter......................................... 51.625 29.500 48.500 24.833
Second Quarter (through May 22)....................... 42.00 24.250 39.125 23.000
</TABLE>
The prices in the table above have been adjusted to reflect:
- Apex's 3-for-2 stock split effective March 4, 1999
- Cybex's 3-for-2 stock split effective April 28, 1998
- Cybex's 3-for-2 stock split effective December 15, 1998
- Cybex's 3-for-2 stock split effective February 18, 2000
RECENT SHARE PRICE
The table below presents the per share closing prices of Apex common stock
and Cybex common stock on The Nasdaq Stock Market and the pro forma equivalent
market value of Aegean Sea common stock to be issued for Apex common stock and
Cybex common stock in the merger as of the dates specified. The pro forma
equivalent market value is determined by multiplying the market price of Cybex
common stock by the number of shares of Aegean Sea common stock received for
each share of Apex common stock or Cybex common stock. March 7, 2000 was the
last trading date before
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<PAGE>
announcement of the mergers. May 22, 2000 was the latest practicable trading day
before the printing of this joint proxy statement/prospectus.
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
EQUIVALENT MARKET EQUIVALENT MARKET
VALUE OF AEGEAN SEA VALUE OF AEGEAN SEA
APEX COMMON STOCK CYBEX COMMON STOCK
COMMON EXCHANGED FOR APEX COMMON EXCHANGED FOR CYBEX
STOCK COMMON STOCK STOCK COMMON STOCK
-------- ------------------- -------- -------------------
<S> <C> <C> <C> <C>
March 7, 2000......................... $36.00 48.$8680 $44.81 44.$8125
May 22, 2000.......................... $37.25 38.$1675 $35.00 35.$0000
</TABLE>
Apex and Cybex shareholders are advised to obtain current market quotations
for Apex common stock and Cybex common stock. No assurance can be given as to
the market prices of Apex common stock or Cybex common stock at any time before
the consummation of merger or as to the market price of Aegean Sea common stock
at any time after the merger. Because the exchange ratios are fixed, the
exchange ratios will not be adjusted to compensate Cybex shareholders for
decreases in the market price of Apex common stock which could occur before the
merger becomes effective. Similarly, the exchange ratios will not be adjusted to
compensate Apex shareholders for decreases in the market price of Cybex common
stock which could occur before the merger becomes effective.
DIVIDENDS
Cybex has never declared or paid cash dividends on its common stock. Apex
paid cash dividends of $305,617 in 1993, $792,279 in 1994 and $992,815 in 1995
to its sole shareholder during the period prior to its initial public offering
when Apex was treated as an S corporation under the Internal Revenue Code.
Pursuant to the merger agreement, each of Apex and Cybex has agreed not to
pay cash dividends pending the consummation of mergers, without written consent
of the other. If the merger is not consummated, the Apex board anticipates that
it would continue its policy of retaining all earnings to finance the operation
and expansion of its business. Similarly, if the merger is not consummated, the
Cybex board anticipates that it would continue its policy of retaining all
earnings to finance the operation and expansion of its business. Aegean Sea
expects to retain all earnings for use in the operation and expansion of its
business and does not anticipate paying any cash dividends after the merger.
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<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
On March 8, 2000, Apex, Cybex and Aegean Sea entered into an agreement
providing for the merger of Apex and Cybex, resulting in a new combined company
called Aegean Sea. The transaction is to be accounted for as a purchase of Cybex
by Apex. Under the terms of the agreement, each issued and outstanding share of
Apex common stock will be exchanged for 1.0905 shares of Aegean Sea common
stock, and each issued and outstanding share of Cybex common stock will be
exchanged for one share of Aegean Sea common stock. Additionally, stock options
to purchase common stock of Apex and Cybex will convert into stock options to
purchase Aegean Sea common stock.
The unaudited pro forma condensed combined financial information for Aegean
Sea gives effect to the merger, based on a preliminary allocation of the total
purchase cost. The historical financial information has been derived from the
respective historical financial statements of Apex and Cybex, and should be read
in conjunction with these financial statements and the related notes
incorporated by reference in this joint proxy statement/prospectus. Cybex has a
March 31 year end. Historical financial information for Cybex for the year ended
December 31, 1999 included in the pro forma statements was derived from
quarterly and annual financial information filed on Forms 10-Q and Form 10-K in
1999 and 2000. No complete historical financial information is available for
Cybex for the year ended March 31, 2000. Accordingly, the pro forma information
for the quarter ended March 31, 2000 includes historical financial information
for Cybex for the three months ended December 31, 1999, which is also included
in the pro forma financial information for the year ended December 31, 1999. The
pro forma balance sheet at March 31, 2000 consists of the historical balance
sheet of Cybex as of December 31, 1999 with the historical Apex balance sheet at
March 31, 2000.
The unaudited pro forma condensed combined statement of operations combines
Apex's and Cybex's historical statements of operations for the year ended
December 31, 1999 and the three months ended March 31, 2000 and gives effect to
the merger including the amortization of goodwill and other intangible assets,
as if the merger occurred as of January 1, 1999. The unaudited pro forma
condensed combined balance sheet assumes the merger took place as of March 31,
2000 and allocates the total purchase consideration of the fair values of the
assets and liabilities of Cybex, based on a preliminary valuation.
The total estimated purchase consideration of the merger has been allocated
on a preliminary basis to assets and liabilities based on management's estimates
of their fair value with the excess costs over the net assets acquired allocated
to goodwill. This allocation is subject to change pending a final analysis of
the total purchase cost and the fair value of the assets acquired and
liabilities assumed. The impact of these changes could be material.
The unaudited pro forma condensed combined financial information is
presented for illustrative purposes only and is not necessarily indicative of
the operating results or financial position that would have occurred if the
transaction had been consummated at the dates indicated, nor is it necessarily
indicative of future operating results or financial position of combined
companies.
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<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
APEX CYBEX ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales.......................................... $107,288 $109,381 $ $216,669
Cost of sales...................................... 57,374 50,709 108,083
Amortization of developed technology............... -- -- 8,000(a) 8,000
-------- -------- --------- --------
Gross profit..................................... 49,914 58,672 (8,000) 100,586
-------- -------- --------- --------
Research and development........................... 6,544 6,476 13,020
Acquired research and development and other
acquisition expenses............................. -- 4,312 4,312
Selling, general and administrative................ 14,074 24,382 73(b) 38,529
Amortization of intangibles........................ -- 497 125,824(c) 126,321
-------- -------- --------- --------
Total operating expenses......................... 20,618 35,667 125,897 182,182
-------- -------- --------- --------
Income (loss) from operations...................... 29,296 23,005 (133,897) (81,596)
Interest income and other.......................... 3,053 1,680 4,733
-------- -------- --------- --------
Income (loss) before taxes......................... 32,349 24,685 (133,897) (76,863)
Provision for income taxes......................... 11,106 8,225 19,331
-------- -------- --------- --------
Net income (loss)................................ $ 21,243 $ 16,460 $(133,897) $(96,194)
======== ======== ========= ========
Earnings (loss) per share:
Basic.......................................... $ 1.03 $ 0.86 $ (2.30)
Diluted........................................ $ 0.99 $ 0.81 $ (2.30)
Weighted average shares outstanding:
Basic.......................................... 20,618 19,081 41,772(d)
Diluted........................................ 21,564 20,269 41,772
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
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<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
APEX CYBEX ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales............................................ $28,244 $34,048 $ $ 62,292
Cost of sales........................................ 14,591 16,488 31,079
Amortization of developed technology................. -- -- 2,000 2,000
------- ------- -------- --------
Gross profit....................................... 13,653 17,560 (2,000) 29,213
------- ------- -------- --------
Research and development............................. 1,451 1,812 3,263
Acquired research and development and other
acquisition expenses............................... -- 2,462 2,462
Selling, general and administrative.................. 4,057 7,304 18 11,379
Amortization of intangibles.......................... -- -- 31,456 31,456
------- ------- -------- --------
Total operating expenses........................... 5,508 11,578 31,474 48,560
------- ------- -------- --------
Income (loss) from operations........................ 8,145 5,982 (33,474) (19,347)
Interest income and other............................ 917 589 1,506
------- ------- -------- --------
Income (loss) before taxes........................... 9,062 6,571 (33,474) (17,841)
Provision for income taxes........................... 3,061 2,245 5,306
------- ------- -------- --------
Net income (loss).................................. $ 6,001 $ 4,326 $(33,474) $(23,147)
======= ======= ======== ========
Earnings (loss) per share:
Basic............................................ $ 0.28 $ 0.23 $ (0.55)
Diluted.......................................... $ 0.27 $ 0.21 $ (0.55)
Weighted average shares outstanding:
Basic............................................ 21,066 19,168 42,261
Diluted.......................................... 22,459 20,637 42,261
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
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<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED
BALANCE SHEET
AS OF MARCH 31, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
APEX CYBEX ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents........................ $ 17,836 $31,307 $ 49,143
Investments maturing within 1 year............... 46,856 5,784 52,640
-------- ------- --------- --------
Total cash and investments..................... 64,692 37,091 101,783
Accounts receivable, net......................... 23,988 22,791 46,779
Inventories...................................... 14,946 9,715 24,661
Prepaid expenses and other current assets........ 721 2,034 2,755
Deferred tax assets.............................. 789 1,838 2,627
-------- ------- --------- --------
Total current assets........................... 105,136 73,469 178,605
Investments........................................ 4,997 3,144 8,141
Property, plant and equipment, net................. 1,905 12,449 381(e) 14,735
Intangibles, net................................... -- 6,859 654,740(f) 661,599
Other.............................................. 1,676 1,064 2,740
-------- ------- --------- --------
Total assets....................................... $113,714 $96,985 $ 655,121 $865,820
======== ======= ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable................................. $ 1,598 $ 9,006 $ 10,604
Income taxes..................................... 697 1,639 2,336
Accrued expenses................................. 2,511 7,715 18,000(g) 28,226
-------- ------- --------- --------
Total current liabilities...................... 4,806 18,360 18,000 41,166
-------- ------- --------- --------
Shareholders' equity
Common stock..................................... 75,062 33,147 757,599(h) 865,808
Accumulated other comprehensive income........... -- (332) 332(i) --
Deferred compensation............................ -- -- --
Retained earnings (deficit)...................... 33,846 45,810 (120,810)(j) (41,154)
-------- ------- --------- --------
Total shareholders' equity..................... 108,908 78,625 637,121 824,654
-------- ------- --------- --------
Total liabilities and shareholders' equity......... $113,714 $96,985 $ 655,121 $865,820
======== ======= ========= ========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
83
<PAGE>
AEGEAN SEA INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
(IN THOUSANDS)
NOTE 1--BASIS OF PRESENTATION:
The unaudited pro forma condensed combined statements of operations for the
year ended December 31, 1999 and for the three months ended March 31, 2000 have
been prepared to reflect the acquisition of Cybex by Apex as if the acquisition
had occurred on January 1, 1999. The unaudited pro forma condensed combined
balance sheet has been prepared to reflect the acquisition of Cybex by Apex as
if the acquisition had occurred on March 31, 2000.
There were no material differences in the accounting policies of Apex and
Cybex for the periods presented.
NOTE 2--PURCHASE ACCOUNTING AND PRO FORMA ADJUSTMENTS:
PURCHASE PRICE
Since the mergers will be accounted for as a purchase of Cybex by Apex, the
Aegean Sea shares and options to be issued to Cybex shareholders were converted
into equivalent Apex shares and options to determine the purchase consideration.
The number of equivalent Apex shares was determined by dividing the number of
Aegean Sea shares by the Apex exchange ratio, 1.0905.
<TABLE>
<CAPTION>
AEGEAN SEA EQUIVALENT APEX
------------------- -------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
NUMBER PRICE NUMBER PRICE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Common Shares............................................ 19,288 17,687
Options.................................................. 2,190 $10.51 2,008 $11.46
</TABLE>
The market value of a share of common stock of Apex was $40.60, determined
by using the average quoted market price of the Apex common stock over a five
day period, including the day of and for the two days preceding and following
the announcement of the mergers. The purchase consideration for outstanding
Cybex common stock was $718,113.
The value of the equivalent Apex options to be exchanged for vested and
nonvested Cybex options has been included in the purchase price. The fair value
of the equivalent options to be issued was determined to be $72,633 using the
following assumptions:
- Risk free interest rate of 5.51%
- Expected holding period of 5 years
- Dividend yield of 0.0%
- Expected volatility of 87.0%
In addition, Cybex liabilities and incurred acquisition costs totaling
$36.36 million were included in the total purchase price.
A summary of the purchase consideration is as follows:
<TABLE>
<S> <C>
Common stock................................................ $718,113
Outstanding options......................................... 72,633
Assumed liabilities and acquisition costs................... 36,360
--------
Total purchase consideration............................ $827,106
--------
</TABLE>
84
<PAGE>
AEGEAN SEA INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
NOTE 2--PURCHASE ACCOUNTING AND PRO FORMA ADJUSTMENTS: (CONTINUED)
ALLOCATION OF PURCHASE PRICE
The appraisal is preliminary and may be subject to further adjustments. The
total purchase price of $827,106 was allocated to the fair value of the assets
acquired as follows:
<TABLE>
<CAPTION>
AMORTIZATION
LIFE
------------
<S> <C> <C>
Tangible assets....................................... $ 90,507 --
Patents and trademarks................................ 15,000 7 years
In-process research and development................... 75,000 --
Developed technology.................................. 40,000 5 years
Assembled workforce................................... 3,000 3 years
Reseller network...................................... 25,000 3 years
Goodwill.............................................. 578,599 5 years
--------
Total............................................... $827,106
--------
</TABLE>
The asset allocation to tangible assets is not expected to change. The asset
allocation within intangible assets may be subject to adjustments. The value of
in-process research and development will be determined by an independent
appraiser. The impact of any change to estimated in-process research and
development would be reflected in the period the merger is consummated. An
increase or decrease in the amount allocated to in-process research and
development would be offset by a change in the carrying value of other
intangible assets. Any difference would then result in a change in the
amortization charges for the other intangible assets over the life of the
assets.
IN-PROCESS RESEARCH AND DEVELOPMENT
The fair value of the purchased in-process research and development will be
determined using the income approach stage of completion method based on the
future cash flows that are projected to be generated by the products under
development over their economic lives.
In-process research and development activities consist of hardware and
software product concept formulation, engineering prototyping, software code
programming and testing procedure design and development. The important elements
of the in-process projects at the time of acquisition include product concepts
and designs, software code, test specifications and processes and pre-prototype
models. The fair value of the in-process products will be determined on a
product-line basis. Material cash inflows from significant projects are
projected to commence in 2001.
Cybex has several switch, extension and remote access projects in process.
The primary focus of the in-process projects involves developments which are
expected to have reduced cost and increased functionality. As of the date the
merger agreement was signed, the individual projects were in various stages of
completion. These products are projected to be introduced in the years 2000
through 2001.
The research and development projects underway generally involve integrating
the capabilities of the recent Cybex acquisitions of PixelVision Technology,
Inc. (integrated, high-information-content, digital display technology) and Fox
Network Systems Corporation (remote access technology for the control and
operation of personal computers and network servers from remote locations over
telecommunications networks) and the recent technology licenses from Mobility
Electronics (PCI bus
85
<PAGE>
AEGEAN SEA INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
NOTE 2--PURCHASE ACCOUNTING AND PRO FORMA ADJUSTMENTS: (CONTINUED)
technology). Using these patented and unpatented intellectual property
technologies with Cybex's own patented and unpatented KVM technology, the major
R&D projects currently in development are:
- VIDEO ENHANCEMENT. This is a project to improve and enhance the quality of
the video fed to a display monitor when that monitor is separated from the
source of the video signal (typically one or more network servers) by
several hundred feet, and involves hardware improvements in Cybex's
existing extension technology. This project is designed to integrate
PixelVision's display technology and Fox's remote access technology in
existing Cybex products.
- REMOTE ACCESS IMPROVEMENTS. This project involves incorporating the remote
access technology originally acquired from Fox into Cybex's existing KVM
products and developing new, stand-alone remote access products in order
to improve both the speed of access and the features available to remote
users. This project also incorporates the video compression and
enhancement technology used by PixelVision in the development of its
digital display technology, and this project is designed to incorporate
this digital technology in the remote access products to handle KVM
signals in digital rather than analog format. Other remote access
improvements under review include porting the licensed remote PCI bus
technology and universal, 32-bit, "no compromises" docking solutions from
Mobility Electronics into Cybex's remote access products, KVM switches,
and developing products with this technology for the desktop computer and
network server markets.
- SERVER MANAGEMENT PARAMETERS. This project is focused on increasing the
number of servers managed, the number of users managing them, and the
parameters that are available to manage them. This project involves
increasing the available matrix of servers and users as well as providing
enhancements in the nature of better, more sensitive mouse support, better
portability (hot plugability), and better diagnostics.
The work to be performed in these projects varies, but the projects can be
described as ten to ninety percent complete. The risks to successful
commercialization are substantial--for instance, the engineering work to
compress and alternate video between digital and analog signals involves
significant risk of failure. In addition, there are the risks that the
technology may not perform as anticipated, that the projects (or the technology)
may infringe on the intellectual property rights of third parties, and that the
projects may not result in commercially marketable or profitable products.
SIGNIFICANT ASSUMPTIONS
The new generation of products under development are projected to sell
through sales channels and to customers that are substantially the same as
current and historical channels and customers. Pricing and margins will differ
from historical levels due to anticipated competitive pressure, and are
projected to be lower overall on higher unit volume. All technology projections
were developed within the context of an overall revenue growth rate for the
company of 25% to 30% annually, based on historical results and industry
prospects.
86
<PAGE>
AEGEAN SEA INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
NOTE 2--PURCHASE ACCOUNTING AND PRO FORMA ADJUSTMENTS: (CONTINUED)
Core Technology:
REVENUE GROWTH--The core technology is embodied in products in various
stages of the product life cycle. These products have estimated remaining lives
ranging from one to six years. The aggregate revenue growth rate for these
products is as follows:
<TABLE>
<CAPTION>
YEAR
-----------------------------------------------------------------------------------------
1 2 3 4 5
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Growth........................ -13.7% -5.2% -32.0% -37.8% -47.0%
<CAPTION>
YEAR
-------------
6
-------------
<S> <C>
Growth........................ -50.0%
</TABLE>
OPERATING MARGINS--Operating margins are projected to remain relatively
constant for these products over their remaining lives as follows:
<TABLE>
<CAPTION>
YEAR
------------------------------------------------------------------------------
1 2 3 4 5 6
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Operating Margin.......................... 31.7% 32.1% 32.5% 30.9% 30.2% 29.6%
</TABLE>
DISCOUNT RATE--The discount rate for the core technologies has been
estimated at 13%.
In-Process Research and Technology:
REVENUE GROWTH--The in-process technology is embodied in products to be
launched in fiscal years 2001 and 2002. These products have estimated economic
lives ranging from five to seven years. The product life cycle is characterized
by an approximate 2 year ramp up period, followed by a 2 to 3 year plateau
exhibiting a growth rate of 25% to 50%, followed by a 2 to 3 year decline
period. The aggregate revenue growth rate for these products is as follows:
<TABLE>
<CAPTION>
YEAR
------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7
-------- -------- -------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Growth................. n/a 82.8% 65.4% 29.2% 5.8% -35.1% -55.5%
<CAPTION>
YEAR
-------------
8
-------------
<S> <C>
Growth................. -98.3%
</TABLE>
OPERATING MARGINS--Operating margins are projected to remain relatively
constant for these products over their remaining lives, with aggregate margins
declining in later years due to shifts in product mix, as follows:
<TABLE>
<CAPTION>
YEAR
--------------------------------------------------------------------------------------------
1 2 3 4 5 6 7
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Margin............ 29.0% 29.0% 28.8% 28.3% 28.1% 26.9% 26.8%
<CAPTION>
YEAR
--------
8
--------
<S> <C>
Operating Margin............ 23.4%
</TABLE>
DISCOUNT RATE--The discount rate for the in-process research and development
has been estimated at 16%.
Development Costs:
We estimate that approximately $2,500,000 will be needed in additional
development costs relating to the in-process research and development which will
be completed within the year 2000.
87
<PAGE>
AEGEAN SEA INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
NOTE 2--PURCHASE ACCOUNTING AND PRO FORMA ADJUSTMENTS: (CONTINUED)
PRO FORMA ADJUSTMENTS
The following adjustments were applied to the historical statements of
operations to arrive at the unaudited pro forma condensed combined statement of
operations and the historical balance sheets to arrive at the unaudited pro
forma condensed combined balance sheet:
(a) Reflects the additional amortization expense of core technology for the
year ended December 31, 1999 and the three months ended March 31, 2000
using the straight-line method over its estimated useful life of 5 years.
(b) Reflects the additional depreciation expense on the write-up of property
and equipment of $73 and $18 for the year ended December 31, 1999 and the
three months ended March 31, 2000, respectively, using the straight-line
method over their estimated useful lives of predominately 5 years.
(c) Reflects the additional amortization expense of intangible assets of
$125,824 and $33,456 for the year ended December 31, 1999 and the three
months ended March 31, 2000, respectively, using the straight-line method
over their estimated useful lives of 3 to 7 years.
(d) Shares used in the per share calculations reflect a weighted average
number of 22,484 shares of Aegean Sea common stock based on the number of
weighted average Apex shares and 19,288 shares of Aegean Sea common stock
issued to Cybex shareholders as if they were outstanding from January 1,
1999.
(e) Reflects the increase to the fair value of property, plant and equipment
based upon preliminary appraisals.
(f) Reflects the allocation of purchase consideration to intangibles based
upon preliminary appraisals.
(g) Reflects accrual for acquisition costs.
(h) Reflect the allocation of purchase consideration to common stock and
option, less the Cybex historical balance.
(i) Reflects elimination of Cybex comprehensive income.
(j) Reflects elimination of Cybex retained earnings and the immediate
writeoff of in-process research and development of $75 million.
In-process research and development costs in the amount of $75,000, which
will be written off immediately after the transaction is complete and
compensation charges related to the acceleration of vesting on certain
executives' options to purchase Apex common stock, have been excluded from the
unaudited pro forma condensed combined statements of operations.
Basic and diluted net loss per share is the same because common stock
equivalents would be anti-dilutive.
If the merger had occurred on March 31, 2000, 23,128,000 and 19,288,000
shares of Aegean Sea common stock would have been issued to Apex and Cybex
shareholders, respectively. This would have resulted in a total of 42,416,000
outstanding shares of Aegean Sea common stock had the merger occurred as of
March 31, 2000.
88
<PAGE>
COMPARISON OF RIGHTS OF HOLDERS OF AEGEAN SEA COMMON STOCK, APEX
COMMON STOCK AND CYBEX COMMON STOCK
THIS SECTION OF THE JOINT PROXY STATEMENT/PROSPECTUS DESCRIBES MATERIAL
DIFFERENCES BETWEEN THE RIGHTS OF SHAREHOLDERS OF APEX AND CYBEX AND THE RIGHTS
OF STOCKHOLDERS OF AEGEAN SEA. THE RIGHTS COMPARED ARE THOSE FOUND IN THE
RESPECTIVE COMPANIES' CHARTER DOCUMENTS AND CORPORATE LAW PROVISIONS FOR THE
STATE IN WHICH EACH IS INCORPORATED. WHILE WE BELIEVE THAT THESE DESCRIPTIONS
ADDRESS THE MATERIAL DIFFERENCES, THIS SUMMARY MAY NOT CONTAIN ALL OF THE
INFORMATION THAT IS IMPORTANT TO THE SHAREHOLDERS OF APEX AND CYBEX. APEX AND
CYBEX SHAREHOLDERS SHOULD READ THIS ENTIRE DOCUMENT AND THE DOCUMENTS REFERRED
TO IN THIS SUMMARY CAREFULLY FOR A MORE COMPLETE UNDERSTANDING OF THE
DIFFERENCES BETWEEN THE RIGHTS OF APEX OR CYBEX SHAREHOLDERS, ON THE ONE HAND,
AND THE RIGHTS OF STOCKHOLDERS OF AEGEAN SEA, ON THE OTHER.
Apex's articles of incorporation and bylaws currently govern the rights of
shareholders of Apex. Cybex's articles of incorporation and bylaws currently
govern the rights of shareholders of Cybex. After completion of the merger, the
shareholders of both Apex and Cybex will become stockholders of Aegean Sea. As a
result, the rights of the former Apex and Cybex shareholders will be governed by
Aegean Sea's certificate of incorporation and bylaws. The following table
summarizes material differences between the rights of Aegean Sea stockholders,
on the one hand, and the rights of Apex and Cybex shareholders, on the other.
<TABLE>
<CAPTION>
AEGEAN SEA APEX CYBEX
---------- ---- -----
<S> <C> <C>
CONSTITUTIONAL PROVISIONS
- ---------------------------------------------------------------------------------------------------------------------
No similar provision No similar provision Section 234 of the Alabama
Constitution provides that the stock
and bonded indebtedness of a
corporation shall not be increased
without the consent of the persons
holding the larger amount in value of
stock, which consent shall be obtained
at a meeting of shareholders where
notice of such meeting has been
provided more than 30 days in advance.
Further, Section 237 of the Alabama
Constitution provides that a
corporation may not issue preferred
stock without the consent of the
owners of two-thirds of the stock of
the corporation.
COMMON STOCK
- ---------------------------------------------------------------------------------------------------------------------
The holders of Aegean Sea common No material differences No material differences
stock are entitled to one vote for
each share held of record on all
matters submitted to a vote of
stockholders. Holders of common stock
have no preemptive rights or rights
to convert their common stock into
any other securities. There are no
redemption or sinking fund provisions
applicable to the common stock. All
outstanding shares of common stock
are fully paid and non-assessable.
Pursuant to Aegean Sea's Certificate Pursuant to Apex's Articles of Pursuant to Cybex's Articles of
of Incorporation, the Board of Incorporation, the Board of Directors Incorporation, the Board of Directors
Directors has the authority, without has the authority to issue 100,000,000 has the authority to issue up to
further action by the stockholders, shares of common stock with no par 50,000,000 shares of common stock,
to issue up to 200,000,000 shares of value per share. One class is issued $0.001 par value per share. One class
common stock, $0.001 par value per and outstanding. is issued and outstanding.
share. One class will be issued and
outstanding.
</TABLE>
89
<PAGE>
<TABLE>
<CAPTION>
AEGEAN SEA APEX CYBEX
---------- ---- -----
<S> <C> <C>
PREFERRED STOCK
- ---------------------------------------------------------------------------------------------------------------------
The Aegean Sea Certificate of No material differences No material differences
Incorporation authorizes the Board of
Directors to issue shares of
preferred stock in series, to
establish from time to time the
number of shares to be included in
such series, and to fix the relative
rights, preferences, privileges and
restrictions to be included in each
series.
Pursuant to Aegean Sea's Certificate The Apex Articles of Incorporation The Cybex Articles of Incorporation
of Incorporation, the Board of reserve for issuance 1,000,000 shares authorize for issuance 5,000,000
Directors has the authority, without of preferred stock, none of which are shares of preferred stock, none of
further action by the stockholders, outstanding. which are outstanding.
to issue up to 5,000,000 shares of
preferred stock. The Board, without
stockholder approval, can issue
preferred stock with voting,
conversion or other rights that could
adversely affect the voting power and
other rights of the holders of common
stock. Preferred stock could thus be
issued quickly with terms calculated
to delay or prevent a change in
control of Aegean Sea or make removal
of management more difficult.
Additionally, the issuance of
preferred stock may have the effect
of decreasing the market price of the
common stock, and may adversely
affect the voting and other rights of
the holders of common stock. There
are no shares of preferred stock
outstanding and Aegean Sea has no
plans to issue any of the preferred
stock.
SPECIAL MEETING OF STOCKHOLDERS
- ---------------------------------------------------------------------------------------------------------------------
Under Delaware law, a special meeting Under Washington law, special meetings Alabama law requires that holders of
of stockholders may be called by the of shareholders may be called by the at least 10% of the votes entitled to
Board of Directors or any other Board of Directors, or by the persons be cast on any issue be able to call a
person authorized to do so in the so authorized in the Articles of special meeting of shareholders.
Certificate of Incorporation or the Incorporation or the Bylaws, or by the
Bylaws. Written notice must be given holders of ten percent or more of the Cybex's Bylaws authorize the
to stockholders not less than ten nor outstanding stock of the corporation. President, Chief Executive Officer or
more than 60 days before the date of The Articles of Incorporation can majority of the Board of Directors to
the meeting. limit or deny the right of call a special meeting of the
shareholders of a public company like stockholders. The Bylaws also
Aegean Sea's Bylaws only authorize Apex to call meetings. The president authorize the President and the
the Board of Directors, the Chairman and other officers of the corporation Secretary of the corporation to call a
of the Board, the President or the have no power to call meetings of special meeting of the stockholders
Chief Executive Officer to call a shareholders unless they are provided upon the written request of the
special meeting of stockholders. with such power by the Articles of holders of shares entitled to cast not
Incorporation or are instructed to do less than ten percent of all the votes
so by the Board of Directors. Written entitled to be cast at such meeting.
notice must be given not less than ten The written notice must state the
nor more than 60 days before the purpose of the meeting being
meeting, except that notice must be no requested. The President or Secretary
fewer than 20 days before the date of of the corporation shall issue a
the meeting in certain circumstances. notice of special meeting within 21
days of receipt of such written
request.
</TABLE>
90
<PAGE>
<TABLE>
<CAPTION>
AEGEAN SEA APEX CYBEX
---------- ---- -----
<S> <C> <C>
The Apex Bylaws permit special
meetings of shareholders to be called
by the President, the Apex Board or
the holders of at least 25% of all the
votes entitled to be cast on any issue
proposed to be considered at such
special meeting.
ACTION BY WRITTEN CONSENT IN LIEU OF
A STOCKHOLDERS' MEETING
- ---------------------------------------------------------------------------------------------------------------------
Under Delaware law, stockholders may Shareholders of Washington Unless the articles of incorporation
take action by written consent in corporations may take action by provide otherwise, Alabama law
lieu of voting at a stockholders written consent. For public companies provides that any action permitted to
meeting. Delaware law permits a like Apex, such consent must be be taken at a meeting may be taken
corporation, pursuant to a provision unanimous. without a meeting if the action is
in its Certificate of Incorporation, taken by all of the shareholders
to eliminate the ability of The Apex Bylaws permit shareholder entitled to vote on the action, as
stockholders to act by written action by unanimous written consent evidenced by a written consent signed
consent. setting forth the actions so taken if by all of the shareholders entitled to
signed by all shareholders entitled to vote on the action.
Aegean Sea's Certificate of vote on the actions. Action by
Incorporation and Bylaws eliminate unanimous written consent of the Cybex's Bylaws and Articles of
the ability of stockholders to act by shareholders is effective when all Incorporation do not have a provision
written consent. consents are in the possession of for action by written consent in lieu
Apex, unless the consent specifies a of a stockholders' meeting.
later date.
VOTING BY WRITTEN BALLOT
- ---------------------------------------------------------------------------------------------------------------------
Under Delaware law, the right to vote Washington law does not contain a There is no provision under Alabama
by written ballot may be restricted provision regarding voting by written law dealing with voting by written
if so provided in the Certificate of ballot and the Apex Articles of ballot.
Incorporation. Incorporation and Bylaws do not
specify any rules for accepting voice Cybex's Bylaws provide that voting may
Aegean Sea's Certificate of or ballot votes. be by voice vote unless the presiding
Incorporation and Bylaws do not officer of the meeting or any
restrict the right to vote by ballot. shareholder demand voting by ballot.
RECORD DATE FOR DETERMINING
STOCKHOLDERS
- ---------------------------------------------------------------------------------------------------------------------
Aegean Sea's Bylaws provide that the Apex's Bylaws provide that the Board Alabama law provides that the bylaws
Board of Directors may fix a record of Directors may fix a record date may fix or provide the manner of
date that shall not be more than 60 that shall not be more than 70 days fixing the record date in order to
days nor less than ten days before prior to the date on which the determine the shareholders entitled to
the date of the meeting. particular action requiring the notice of a meeting or to vote. If the
determination of shareholders is to be bylaws do not fix or provide for
Aegean Sea's Bylaws provide that if taken. fixing a record date, the board of
the Board of Directors does not fix a directors may fix a future date as the
record date in the manner described Apex's Bylaws provide that if the record date, but such date may not be
above, then the record date for Board of Directors does not fix a more than 70 days before the meeting.
determining stockholders entitled to record date in the manner described
notice of or to vote at a meeting of above, then the record date for Cybex's Articles of Incorporation and
stockholders shall be at the close of determining shareholders entitled to Bylaws do not have a provision
business on the day next preceding notice of and to vote at an annual or providing the manner of fixing the
the day on which notice is given, or, special shareholders' meeting is the record date.
if notice is waived, at the close of day before the date on which the
business on the day next preceding notice is effective.
the day on which the meeting is held.
</TABLE>
91
<PAGE>
<TABLE>
<CAPTION>
AEGEAN SEA APEX CYBEX
---------- ---- -----
<S> <C> <C>
ADVANCE NOTICE PROVISIONS FOR BOARD
NOMINATION AND OTHER STOCKHOLDERS'
BUSINESS--ANNUAL MEETINGS
- ---------------------------------------------------------------------------------------------------------------------
The Aegean Sea Bylaws require that The Apex Bylaws require that The Cybex bylaws require that at any
nominations for the election of nominations for the election of annual meeting of the shareholders,
directors or proposals of other directors or proposals of other only such business properly brought
business to be considered at any business to be considered at any before the meeting may be conducted.
meeting of stockholders must be made meeting of shareholders must be made To be properly brought, the business
by: by a shareholder by giving written must be specified in the notice of the
notice to the Secretary of Apex at meeting, be brought by or at the
- - the corporation's notice of meeting least 60 days before the first direction of the Board of Directors,
(or any supplement to the notice), anniversary of the date on which or be properly brought by a
given by or at the direction of the notice of the prior year's annual stockholder.
Board of Directors, meeting was first mailed to
- - the Board of Directors, or shareholders. The notice also must For business to be properly brought by
- - a stockholder who gives proper state the subject matter that the a stockholder, notice must be given in
notice. shareholder desires to bring up at the writing to the Secretary of the
meeting or the names of the nominees corporation mailed and delivered not
For nominations or other business to proposed for election to the Board. less than 30 days or more than 60 days
be properly brought before a The Secretary will forward copies of prior to the meeting; provided,
stockholders' meeting by a the notice to the directors and however, if less than 40 days notice
stockholder, the stockholder must officers of Apex. of the meeting is given, then notice
have given timely notice thereof in by a stockholder is timely if received
writing to the Secretary of Aegean not later than the close of business
Sea and such other business must on the tenth day following the day
otherwise be a proper matter for notice or other public disclosure of
stockholder action. To be timely, the the meeting is made.
stockholder's notice shall be
delivered to or mailed and received
by the Secretary of Aegean Sea not
less than 90 days prior to the
meeting; provided, however, that in
the event that less than 100 days'
notice or prior public disclosure of
the meeting is given to the
stockholders, notice by the
stockholder to be timely must be so
received not later than the close of
business on the tenth day following
the day on which the notice of the
meeting was mailed or prior public
disclosure was made.
ADVANCE NOTICE PROVISIONS FOR BOARD
NOMINATION AND OTHER STOCKHOLDERS
BUSINESS--SPECIAL MEETINGS
- ---------------------------------------------------------------------------------------------------------------------
The Aegean Sea Bylaws provide for the The Apex Bylaws provide for the same The Cybex bylaws do not have a
same requirements for raising requirements for a shareholder when provision for raising business at
business at special meetings of raising business at special meetings special meetings of stockholders.
stockholders as for raising business of shareholders as for when raising
at annual meetings. usiness at annual meetings.
Additionally, the Apex Bylaws prohibit
any business from being transacted at
a special meeting except as specified
in the notice calling such meeting.
</TABLE>
92
<PAGE>
<TABLE>
<CAPTION>
AEGEAN SEA APEX CYBEX
---------- ---- -----
<S> <C> <C>
NUMBER OF DIRECTORS
- ---------------------------------------------------------------------------------------------------------------------
The Aegean Sea Bylaws provide that The Apex Bylaws provide that the Board In accordance with Alabama law, the
the Board of Directors shall be of Directors shall be set forth by Bylaws of Cybex provide that the board
established from time to time by resolution of the Board of Directors. of directors has the power to fix or
resolution of the Board of Directors. The Apex Board of Directors currently change the number of directors;
Immediately following the mergers, consists of four members. provided however, that the board of
the Aegean Sea Board of Directors directors may only increase or
will consist of seven members. decrease by 30% or less the number of
directors last approved by the
shareholders. The Board of Directors
may not reduce the number of directors
below three nor increase it above
fifteen. The Cybex Board of Directors
currently consists of six members.
CLASSIFIED BOARD OF DIRECTORS
- ---------------------------------------------------------------------------------------------------------------------
Delaware law provides that a Washington law allows for Alabama law provides that a
corporation's Board of Directors may classification of the Board of corporation's Board of Directors may
be divided into thirds with staggered Directors into two or three groups be divided into thirds with staggered
three-year terms of office. with corresponding two- or three- year three-year terms of office if there
terms regardless of the number of are nine or more directors.
The Board of Directors of Aegean Sea directors, unless there is cumulative
is divided into three classes, with voting in which case each group must The Cybex Bylaws provide that if at
one class being elected annually. have at least three members. any time there are nine or more
Aegean Sea directors are elected to a directors, then those directors shall
term of three years and until their The Apex Bylaws have no provision for be divided into three classes with one
successors are elected and qualified. a classified Board. Rather, the term class being elected annually.
of each director expires at the next
annual meeting of shareholders.
REMOVAL OF DIRECTORS
- ---------------------------------------------------------------------------------------------------------------------
Under Delaware law, except as Under Washington law, any director or Unless the articles of incorporation
otherwise provided in the the entire board of directors may be provide otherwise, Alabama law
corporation's Certificate of removed, with or without cause, only provides that shareholders may remove
Incorporation, a director of a if the number of votes cast to remove a director with or without cause at a
corporation that has a classified the director exceeds the number of meeting specially called for the
Board of Directors may be removed votes cast not to remove the director. purpose of removing such director. The
only for cause. Further, removal of a director notice for such special meeting must
pursuant to Washington law requires include the removal of that director
The Aegean Sea Certificate of that a special meeting be called for as one of its purposes.
Incorporation provides that any that purpose.
director, or the entire Board of The Cybex Articles of Incorporation
Directors, may be removed from office The Apex Bylaws mirror these provide that a director may be removed
only for cause, by an affirmative provisions of Washington law. at any time with or without cause by a
vote of the holders of at least a majority of the outstanding shares
majority of the outstanding shares entitled to vote.
entitled to vote.
</TABLE>
93
<PAGE>
<TABLE>
<CAPTION>
AEGEAN SEA APEX CYBEX
---------- ---- -----
<S> <C> <C>
BOARD OF DIRECTOR VACANCIES
- ---------------------------------------------------------------------------------------------------------------------
Under Delaware law, vacancies and Washington law provides that, unless Under Alabama law, any vacancy on a
newly created directorships may be the articles of incorporation provide corporation's board of directors may
filled by a majority of the directors otherwise, vacancies and newly created be filled by the board of directors
then in office, even though less than directorships can be filled by unless otherwise provided in the
a quorum, unless otherwise provided shareholders, by the Board of articles of incorporation, except that
in the Certificate of Incorporation Directors or if the directors in the directors may only fill a vacancy
or Bylaws. office constitute fewer than a quorum resulting from an increase in the
of the board, a majority of the number of directors if expressly
The Aegean Sea Certificate of directors then in office may fill the permitted by the articles of
Incorporation provides that vacancies vacancy. Only the holders of the class incorporation. Furthermore, Alabama
on the Board of Directors may be or series of shares which elected the law provides that the term of a
filled only by the vote of a majority director may fill the vacancy left by director who is elected to fill a
of directors then in office, even such director. vacancy expires at the next
though less than a quorum. The Aegean shareholders' meeting at which
Sea Certificate of Incorporation also The Apex Bylaws mirror these directors are elected, even if
provides that newly created provisions of Washington law. directors serve staggered terms on a
directorships resulting from any classified board.
increase in the authorized number of
directors shall, unless the Board of The Cybex Articles of Incorporation
Directors resolves that the newly and Bylaws provide that vacancies on
created directorship shall be filled the Board of Directors may be filled
by the stockholders, be filled by a by the vote of a majority of the
majority of the directors that are in directors then in office, even though
office, although less than a quorum. less than a quorum. Additionally, new
directorships resulting from an
increase in the authorized number of
directors shall be filled by a vote of
the majority of the entire Board of
Directors.
NOTICE OF SPECIAL MEETINGS OF THE
BOARD OF DIRECTORS
- ---------------------------------------------------------------------------------------------------------------------
The Aegean Sea Bylaws provide that The Apex Bylaws provide that special The Cybex Bylaws provide that special
special meetings of the Board of meetings of the Board of Directors may meetings of the Board of Directors may
Directors may be called by the be called at any time and place by the be called by or at the request of the
Chairman of the Board, the President, President, the Secretary or any one Chairman of the Board. Notice of a
any Vice President, the Secretary or Director. Notice may be written or special meeting must be provided in
any two Directors. Notice of the time oral, shall be given at least two days writing delivered personally or
and place of special meeting shall be in advance of the meeting, and may be telegraphed or mailed to each director
delivered personally by mail, delivered through various mediums at his business address or residence
telephone or telegram. If by mail, including mail, carrier, telegraph, address or by telephone. Personally
the notice must be deposited in the telephone or by certain wireless delivered or telegraphed notices shall
United States mail at least four days equipment. Such notice is effective be given at least two days prior to
before the time of the holding of the upon the earlier of receipt or five the meeting. Notice by mail shall be
meeting. If the notice is delivered days after deposited in the mail. given at least five days prior to the
personally or by telephone or meeting. Notices by telephone shall be
telegram, it must be delivered at given at least 24 hours prior to the
least 24 hours before the time of the meeting.
holding of the meeting.
</TABLE>
94
<PAGE>
<TABLE>
<CAPTION>
AEGEAN SEA APEX CYBEX
---------- ---- -----
<S> <C> <C>
AMENDMENTS TO ARTICLES OR CERTIFICATE
OF INCORPORATION AND BYLAWS
- ---------------------------------------------------------------------------------------------------------------------
Delaware law and the Aegean Sea Washington law permits the articles of Amendments to the articles of
Certificate of Incorporation permit incorporation to be amended at any incorporation may be approved in
the certificate of incorporation to time, and allows the board of Alabama generally by a majority of the
be amended at any time by Board directors to enact routine amendments votes cast. Alabama law, in general,
resolution and the affirmative vote without shareholder approval. For a provides that a corporation's board of
of holders of at least two-thirds of public company such as Apex, directors may amend or repeal the
the outstanding shares entitled to amendments affecting shareholder corporation's bylaws unless (i) the
vote. Aegean Sea's Certificate of rights require approval by a simple articles of incorporation reserve such
Incorporation also requires the majority of the outstanding shares of power exclusively to the shareholders
affirmative vote of holders of at each group entitled to vote. Apex's in whole or in part or (ii) the
least two-thirds of the outstanding Articles of Incorporation do not shareholders in amending or repealing
shares entitled to vote for the require a greater margin of a particular bylaw provide expressly
adoption, amendment or appeal of shareholder approval. Apex's Bylaws that the board of directors may not
certain sections of its Bylaws. allow for amendment by shareholders or amend or repeal that bylaw.
the Board of Directors at any annual
or special meeting.
INDEMNIFICATION
- ---------------------------------------------------------------------------------------------------------------------
The Aegean Sea Certificate of No material differences No material differences
Incorporation and Bylaws provide that
the directors and officers shall be
indemnified to the fullest extent
authorized by law against any action,
proceeding or suit brought against
such a person by reason of the fact
that he or she is or was a director,
officer, employee or agent of the
corporation or serves or served at
any other enterprise as at the
request of the corporation. The
Aegean Sea Bylaws further provide
that the corporation indemnifies each
of its directors, officers, employees
or agents of another corporation,
partnership, joint venture, trust or
other enterprise (if serving at the
request of Aegean Sea) against
expenses such as attorneys' fees,
judgments, fines, and amounts paid in
settlement actually and reasonably
incurred in connection with any
proceeding, arising by reason of the
fact that such person is or was an
agent of the corporation, if the
person acted in good faith and in a
manner he reasonably believed to be
in, or not opposed to, the best
interests of Aegean Sea, and, with
respect to any criminal action or
proceeding, had no reasonable cause
to believe his conduct was unlawful.
</TABLE>
95
<PAGE>
<TABLE>
<CAPTION>
AEGEAN SEA APEX CYBEX
---------- ---- -----
<S> <C> <C>
LIMITATIONS ON LIABILITY
- ---------------------------------------------------------------------------------------------------------------------
In accordance with Delaware law, the The Apex Articles of Incorporation The Cybex articles of incorporation
Aegean Sea Certificate of similarly limit directors' liability limit or eliminate, to the fullest
Incorporation limits or eliminates to the full extent permitted by extent permitted by Alabama law, the
the personal liability of a director Washington law, except liability for: personal liability of a director to
to Aegean Sea or its stockholders for - acts or omissions involving Cybex or its stockholders for monetary
monetary damages for breach of intentional misconduct or knowing damages for breach of fiduciary duty
fiduciary duty as a director, except violations of law; as a director. Under Alabama law and
for liability for: - the payment of unlawful the Cybex articles of incorporation,
distributions; or such provision may not eliminate or
- - breaches of the director's duty of - any transaction in which the limit director monetary liability for:
loyalty to the corporation or its director received an improper personal
stockholders; benefit. - the amount of a financial benefit
- - acts or omissions not in good faith received by a director to which such
or involving intentional misconduct director is not entitled;
or knowing violations of law; - an intentional infliction of harm by
- - the payment of unlawful dividends such director to Cybex or its
or unlawful stock repurchases or shareholders;
redemptions; or - unlawful distributions made by a
- - any transaction in which the director under Section 10-2B-8.33 of
director received an improper the Alabama Business Corporation
personal benefit. Act;
- an intentional violation of criminal
law; or
- a breach of the director's duty of
loyalty to the shareholders.
</TABLE>
96
<PAGE>
<TABLE>
<CAPTION>
AEGEAN SEA APEX CYBEX
---------- ---- -----
<S> <C> <C>
ANTI-TAKEOVER STATUTES
- ---------------------------------------------------------------------------------------------------------------------
Under Delaware law, business Washington law imposes restrictions on Alabama does not have anti-takeover
combinations by corporations with certain transactions between certain provisions.
interested stockholders are subject foreign corporations and significant
to a moratorium of three years unless shareholders. A target corporation,
specified conditions are met. The with certain exceptions, is prohibited
prohibited transactions include a from engaging in certain significant
merger with, disposition of assets business transactions with a person or
to, or the issuance of stock to, the group of persons that beneficially
interested stockholder, or certain owns 10% or more of the voting
transactions that have the effect of securities of the target corporation
increasing the proportionate share of (an acquiring person) for a period of
the outstanding securities held by 5 years after such acquisition, unless
the interested stockholder. Under the transaction or acquisition of
Delaware law, an interested shares is approved by a majority of
stockholder may avoid the prohibition the members of the target
against effecting certain significant corporation's board of directors prior
transactions with the corporation if to the time of acquisition. Such
the Board of Directors, prior to the prohibited transactions include, among
time such stockholder becomes an other things, a merger or
interested stockholder, approves such consolidation with, disposition of
transaction or the transaction by assets to, or issuance or redemption
which such stockholder becomes an of stock to or from, the acquiring
interested stockholder or if at or person, termination of 5% or more of
subsequent to such time the Board of the employees of the target
Directors and two-thirds of the corporation as a result of the
shares not held by the interested acquiring person's acquisition of 10%
stockholder approve such transaction. or more of the shares or allowing the
These provisions of Delaware law acquiring person to receive any
apply to a Delaware corporation disproportionate benefit as a
unless the corporation opts out of shareholder. After the 5-year period,
the provisions in its Certificate of a significant business transaction may
Incorporation or Bylaws. Aegean Sea take place as long as it complies with
has not opted out of these provisions certain fair price provisions of the
in its Certificate of Incorporation statute. A corporation may not opt out
or Bylaws and consequently is subject of this statute.
to these provisions.
SHAREHOLDER APPROVAL OF CERTAIN
BUSINESS COMBINATIONS
- ---------------------------------------------------------------------------------------------------------------------
Under Delaware law, holders of a Under Washington law, holders of two- Under Alabama law, a merger or share
majority of the outstanding stock thirds of the outstanding shares exchange requires the affirmative vote
must approve sales of assets, mergers entitled to vote, or two-thirds of of two-thirds of the outstanding
and dissolutions. each voting group entitled to vote, voting stock of the corporation,
must approve sales of assets, mergers unless the articles of incorporation
and dissolutions. Separate voting by require a greater or lesser vote,
voting groups is required in certain regardless of whether the acquiror is
situations. an interested shareholder.
</TABLE>
97
<PAGE>
<TABLE>
<CAPTION>
AEGEAN SEA APEX CYBEX
---------- ---- -----
<S> <C> <C>
DISSENTERS' OR APPRAISAL RIGHTS
- ---------------------------------------------------------------------------------------------------------------------
Under Delaware law, stockholders of a Washington law provides for full In general, Alabama law affords
corporation participating in some appraisal rights for any merger or dissenters' rights of appraisal with
major transactions may be entitled to consolidation, sale or exchange of respect to a merger, share exchange,
appraisal rights. However, these substantially all property or assets, sale of all or substantially all of a
rights are not available: including dissolution, for any plan of corporation's assets and certain
exchange if shares are those that will amendments to the articles of
- - if the corporation is the surviving be acquired, regardless of exchange incorporation that materially and
corporation and no vote of its listing or the number of shareholders, adversely affect shareholders' rights.
stockholders is required for the or for any amendment to the articles Alabama law does not contain an
merger, or of incorporation that materially exclusion for shares of publicly
reduces shares owned to less than a traded corporations.
- - if the shares of the corporation fraction to be acquired for cash.
are either listed on a national
securities exchange or held of
record by more than 2,000
stockholders and if the
stockholders are required to
receive only shares of the
surviving corporation, or shares of
any other corporation which are
either listed on a national
securities exchange or held of
record by more than 2,000
stockholders.
STOCKHOLDER DERIVATIVE SUITS
- ---------------------------------------------------------------------------------------------------------------------
Under Delaware law, a stockholder may No material differences There is no similar provision in the
only bring a derivative action on Alabama Business Corporation Act.
behalf of the corporation if the
stockholder was a stockholder at the
time of the transaction in question
or his or her stock thereafter
devolved upon him or her by operation
of law.
</TABLE>
98
<PAGE>
INFORMATION REGARDING APEX AND CYBEX
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF APEX
The following table sets forth as of May 22, 2000, certain information with
respect to the beneficial ownership of the common stock as to:
- each person known by Apex to own beneficially more than 5% of the
outstanding shares of its common stock
- Apex's Chief Executive Officer and each of Apex's other three most highly
compensated executive officers during fiscal year 1999
- each of its directors
- all of its directors and executive officers as a group
UNLESS OTHERWISE INDICATED BELOW, EACH PERSON OR ENTITY NAMED BELOW HAS AN
ADDRESS IN CARE OF APEX'S PRINCIPAL EXECUTIVE OFFICES. BENEFICIAL OWNERSHIP IS
DETERMINED IN ACCORDANCE WITH THE RULES OF THE SEC. SHARES OF COMMON STOCK
SUBJECT TO OPTIONS THAT ARE PRESENTLY EXERCISABLE OR EXERCISABLE WITHIN 60 DAYS
OF MAY 22, 2000 ARE DEEMED OUTSTANDING FOR THE PURPOSE OF COMPUTING THE
PERCENTAGE OWNERSHIP OF THE PERSON OR ENTITY HOLDING THE OPTIONS, BUT ARE NOT
TREATED AS OUTSTANDING FOR THE PURPOSE OF COMPUTING THE PERCENTAGE OWNERSHIP OF
ANY OTHER PERSON OR ENTITY. THE NUMBER AND PERCENTAGE OF SHARES BENEFICIALLY
OWNED IN AEGEAN SEA AFTER THE MERGER INCLUDE APEX OPTIONS THAT VEST IMMEDIATELY
PRIOR TO COMPLETION OF THE MERGER. THE NUMBERS REFLECTED IN THE PERCENTAGE
OWNERSHIP COLUMNS ARE BASED ON 21,263,819 SHARES OF APEX COMMON STOCK
OUTSTANDING AS OF MAY 22, 2000 AND THE ASSUMPTION THAT 42,608,041 SHARES OF
AEGEAN SEA COMMON STOCK WILL BE OUTSTANDING AFTER THE MERGER. UNLESS OTHERWISE
INDICATED BELOW, THE PERSONS AND ENTITIES NAMED IN THE TABLE HAVE SOLE VOTING
AND SOLE INVESTMENT POWER WITH RESPECT TO ALL SHARES BENEFICIALLY OWNED, SUBJECT
TO COMMUNITY PROPERTY LAWS WHERE APPLICABLE. THIS TABLE INCLUDES PERCENTAGE
OWNERSHIP DATA REFLECTING OWNERSHIP BOTH BEFORE AND AFTER CONSUMMATION OF THE
MERGER.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED
------------------------- -------------------------
BEFORE THE AFTER THE BEFORE THE AFTER THE
MERGER MERGER MERGER MERGER
NAMES OF BENEFICIAL OWNER(1) (APEX) (AEGEAN SEA) (APEX) (AEGEAN SEA)
- ---------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
J. & W. Seligman & Co., Inc.(2)................. 3,357,578 3,661,438 15.8% 8.6%
100 Park Avenue, Eighth Floor
New York, NY 10006
Alliance Capital Management L. P.(3)............ 2,640,945 2,879,950 12.4 6.8
1290 Avenue of the Americas
New York, NY 10104
Capital Research & Management.(4)............... 1,285,000 1,401,292 6.0 3.3
333 South Hope Street, 55th Floor
Los Angeles, CA 90071
Kevin J. Hafer(5)............................... 654,443 1,229,477 3.0 2.8
Samuel F. Saracino(6)........................... 95,350 185,766 * *
Barry L. Harmon(7).............................. 81,250 170,390 * *
C. David Perry(8)............................... 40,475 125,925 * *
William McAleer(9).............................. 30,500 33,260 * *
Franz Fichtner(10).............................. 28,000 65,430 * *
Edwin L. Harper(11)............................. 23,400 25,517 * *
All directors and executive officers as a group
(7 persons) (12).............................. 953,418 1,835,765 4.4 4.2
</TABLE>
- ------------------------
* Less than 1%.
99
<PAGE>
(1) Except as set forth herein the address of the directors and executive
officers set forth in the table is the address of Apex Inc., 9911 Willows
Road, N.E., Redmond, Washington 98052.
(2) As of March 31, 2000, based on a Schedule 13F filed with the SEC.
(3) As of March 31, 2000, based on a Schedule 13F filed with the SEC.
(4) As of March 31, 2000, based on a Schedule 13F filed with the SEC.
(5) Includes 345,178 shares of Apex common stock issuable upon exercise of stock
options currently exercisable or becoming exercisable within 60 days at a
weighted average exercise price of $7.06 per share. Also includes 5,100
shares owned by an irrevocable trust for the benefit of Mr. Hafer's
children, and 61 shares owned by Mr. Hafer as custodian under various
Uniform Transfer to Minors Accounts for the benefit of his nieces and
nephews, and Mr. Hafer disclaims beneficial ownership of all such 5,161
shares.
(6) Includes 88,750 shares of Apex common stock issuable upon exercise of stock
options currently exercisable or becoming exercisable within 60 days at
$14.94 per share. Also includes 5,100 shares owned by an irrevocable trust
for the benefit of Mr. Hafer's children, of which Mr. Saracino is trustee,
and Mr. Saracino disclaims beneficial ownership of all such 5,100 shares.
(7) Includes 81,250 shares of Apex common stock issuable upon exercise of stock
options currently exercisable or becoming exercisable within 60 days at
$17.33 per share.
(8) Includes 18,750 shares of Apex common stock issuable upon exercise of stock
options currently exercisable or becoming exercisable within 60 days at
$16.75 per share.
(9) Includes 25,000 shares of Apex common stock issuable upon exercise of stock
options currently exercisable or becoming exercisable within 60 days at
$3.54 per share.
(10) Includes 28,000 shares of Apex common stock issuable upon exercise of stock
options currently exercisable or becoming exercisable within 60 days at
$14.94 per share.
(11) Includes 22,500 shares of Apex common stock issuable upon exercise of stock
options currently exercisable or becoming exercisable within 60 days at
$2.77 per share.
(12) Includes 609,428 shares of Apex common stock issuable upon exercise of
stock options currently exercisable or becoming exercisable within 60 days
at a weighted average exercise price of $9.93 per share. See Notes (5), (6),
(7), (8), (9), (10) and (11) above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF CYBEX
The following table sets forth as of May 22, 2000, certain information with
respect to the beneficial ownership of the common stock as to:
- each person known by Cybex to own beneficially more than 5% of the
outstanding shares of its common stock
- Cybex's Chief Executive Officer and each of Cybex's other six most highly
compensated executive officers during fiscal year 1999
- each of its directors
- all of its directors and executive officers as a group
UNLESS OTHERWISE INDICATED BELOW, EACH PERSON OR ENTITY NAMED BELOW HAS AN
ADDRESS IN CARE OF CYBEX'S PRINCIPAL EXECUTIVE OFFICES. BENEFICIAL OWNERSHIP IS
DETERMINED IN ACCORDANCE WITH THE RULES OF THE SEC. SHARES OF COMMON STOCK
SUBJECT TO OPTIONS THAT ARE PRESENTLY EXERCISABLE OR EXERCISABLE WITHIN 60 DAYS
OF MAY 22, 2000 ARE DEEMED OUTSTANDING FOR THE PURPOSE OF COMPUTING THE
PERCENTAGE OWNERSHIP OF THE PERSON OR ENTITY HOLDING THE OPTIONS, BUT ARE NOT
TREATED AS OUTSTANDING FOR THE PURPOSE OF COMPUTING THE PERCENTAGE OWNERSHIP OF
ANY OTHER PERSON OR ENTITY. THE NUMBERS REFLECTED IN THE PERCENTAGE OWNERSHIP
COLUMNS ARE BASED ON 19,419,846 SHARES OF CYBEX COMMON STOCK OUTSTANDING AS OF
MAY 22, 2000 AND THE ASSUMPTION
100
<PAGE>
THAT 42,608,041 SHARES OF AEGEAN SEA COMMON STOCK WILL BE OUTSTANDING AFTER THE
MERGER. UNLESS OTHERWISE INDICATED BELOW, THE PERSONS AND ENTITIES NAMED IN THE
TABLE HAVE SOLE VOTING AND SOLE INVESTMENT POWER WITH RESPECT TO ALL SHARES
BENEFICIALLY OWNED, SUBJECT TO COMMUNITY PROPERTY LAWS WHERE APPLICABLE. THIS
TABLE INCLUDES PERCENTAGE OWNERSHIP DATA REFLECTING OWNERSHIP BOTH BEFORE AND
AFTER CONSUMMATION OF THE MERGER.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES
BENEFICIALLY OWNED(1) BENEFICIALLY OWNED
---------------------------- ----------------------------
BEFORE THE AFTER THE BEFORE THE AFTER THE
MERGER MERGER MERGER MERGER
NAME OF BENEFICIAL OWNER (CYBEX) (AEGEAN SEA) (CYBEX) (AEGEAN SEA)
- ------------------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
FMR Corporation(2)............................. 1,250,250 1,250,250 6.44% 2.94%
82 Devonshire Street
Boston, MA 02109
Stephen F. Thornton(3)......................... 1,189,360 1,189,360 6.09 2.78
Remigius G. Shatas(4).......................... 954,811 954,811 4.92 2.24
Gary R. Johnson(5)............................. 114,375 114,375 * *
David S. Butler(6)............................. 231,461 231,461 1.19 *
R. Byron Driver(7)............................. 62,220 62,220 * *
Doyle C. Weeks(8).............................. 71,319 71,319 * *
Douglas E. Pritchett(9)........................ 32,325 32,325 * *
John R. Cooper(10)............................. 14,625 14,625 * *
Christopher L. Thomas(11)...................... 95,250 95,250 * *
Victor Odryna.................................. 0 0 * *
Kieran MacSweeney(12).......................... 44,112 44,112 * *
All executive officers and directors as a group
(11 persons)(13)............................. 2,809,858 2,809,858 14.14 6.53
</TABLE>
- ------------------------
* Less than 1%.
(1) The number of shares set forth in the table reflects the 3-for-2 stock split
effected by Cybex on February 18, 2000 as a 50% stock dividend.
(2) Based on a Schedule 13G/A filed with the SEC on February 11, 2000.
(3) Includes (i) 604,944 shares owned directly by Stephen F. Thornton;
(ii) 231,139 shares owned by Judy Thornton, his wife; and (iii) 239,250
shares held by the Thornton Family Limited Partnership, of which
Mr. Thornton is a general partner and as to which he may be deemed to share
voting and investment power; and (iv) 114,027 shares issuable upon exercise
of stock options exercisable within 60 days of May 22, 2000.
(4) Includes (i) 533,781 shares owned directly by Remigius G. Shatas;
(ii) 7,593 shares owned by his wife; (iii) 75,937 shares held by
Mr. Shatas's minor child; and (iv) 337,500 shares held by Shatas Partners,
Ltd., of which Mr. Shatas is a general partner and as to which he may be
deemed to share voting and investment power.
(5) Includes (i) 73,125 shares owned directly by Gary R. Johnson; and
(ii) 41,250 shares issuable upon exercise of stock options exercisable
within 60 days of May 22, 2000.
(6) Includes (i) 172,364 shares owned directly by David S. Butler; (ii) 7,498
shares held by him in his 401(k) Plan; (iii) 225 shares held by him in his
IRA; (iv) 27,000 shares owned by his wife; and (iv) 24,374 shares issuable
upon exercise of stock options exercisable within 60 days of May 22, 2000.
(7) Includes (i) 30,552 shares owned directly by R. Byron Driver; (ii) 168
shares owned by his wife; and (iii) 31,500 shares issuable upon exercise of
stock options exercisable within 60 days of May 22, 2000.
101
<PAGE>
(8) Includes 71,319 shares issuable upon exercise of stock options exercisable
within 60 days of May 22, 2000.
(9) Includes (i) 2,700 shares owned directly by Douglas E. Pritchett;
(ii) 6,975 shares held by him in his IRA; (iii) 150 shares held by
Mr. Pritchett's minor child, and (iv) 22,500 shares issuable upon exercise
of stock options exercisable within 60 days of May 22, 2000.
(10) Includes (i) 1,500 shares held by him in his IRA; and (ii) 13,125 shares
issuable upon exercise of stock options exercisable within 60 days of
May 22, 2000.
(11) Includes 95,250 shares issuable upon exercise of stock options exercisable
within 60 days of May 22, 2000.
(12) Includes 44,000 shares issuable upon exercise of stock options exercisable
within 60 days of May 22, 2000.
(13) Includes 457,345 shares issuable upon exercise of stock options exercisable
within 60 days of May 22, 2000.
102
<PAGE>
MANAGEMENT OF AEGEAN SEA
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth information regarding the individuals who
will serve as executive officers and directors of Aegean Sea subsequent to the
merger:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- ------------------------------------------
<S> <C> <C>
Stephen F. Thornton....................... 60 Director, Chairman of the Board of
Directors, Chief Executive Officer and
President
Doyle C. Weeks............................ 54 Director, Executive Vice President, Group
Operations and Business Development
R. Byron Driver........................... 59 Senior Vice President, Operations and
Chief Operating Officer
Barry L. Harmon........................... 46 Director, Senior Vice President, West
Coast Operations
Gary R. Johnson........................... 50 Senior Vice President, Sales and Marketing
Kieran MacSweeney......................... 42 Managing Director of International
Operations
Victor Odryna............................. 42 Senior Vice President, Corporate Strategic
Marketing
C. David Perry............................ 45 Vice President, OEM Sales
Douglas E. Pritchett...................... 44 Senior Vice President, Finance, Chief
Financial Officer, Treasurer and Assistant
Secretary
Samuel F. Saracino........................ 49 Senior Vice President, Legal and Corporate
Affairs, General Counsel, and Secretary
Christopher L. Thomas..................... 44 Senior Vice President, Engineering
John R. Cooper............................ 52 Director
Edwin L. Harper........................... 55 Director
William McAleer........................... 49 Director
</TABLE>
STEPHEN F. THORNTON has been Chairman of the Board of Cybex since 1987 and
President and Chief Executive Officer of Cybex since 1984. From 1981 to 1984,
Mr. Thornton was President of Schiller Industries, an ultra precision machining,
specialty cable and laser scanning company in the aerospace industry.
DOYLE C. WEEKS has been Executive Vice President--Group Operations and
Business Development of Cybex since August 1998. Mr. Weeks served as Senior Vice
President--Finance, Chief Financial Officer, and Treasurer of Cybex from 1995 to
August 1998 and as Assistant Secretary of Cybex during 1998. Prior to joining
Cybex, Mr. Weeks served as Vice President--Finance, Chief Financial Officer and
Treasurer of Phoenix Microsystems, Inc., which designs, manufactures, markets
and distribute telecommunication test equipment, from 1985 to 1994 and a member
of the Board of Phoenix Microsystems, Inc. during 1994.
R. BYRON DRIVER has been employed by Cybex since 1992 and was elected Senior
Vice President--Operations and Chief Operating Officer in 1995. From 1985 to
1992, he was Vice President of
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Astrocom Corporation, a data communications company. From 1982 to 1985,
Mr. Driver was vice president of Complexx Systems, Inc., which was acquired by
Astrocom Corporation in 1985.
BARRY L. HARMON has been Vice President, Chief Financial Officer and
Treasurer of Apex since January 1999. In January 2000, Mr. Harmon was appointed
Chief Operating Officer of Apex, in addition to his duties as Chief Financial
Officer and Treasurer of Apex. From February 1992 to January 1999, Mr. Harmon
was employed at Electro Scientific Industries, Inc., a manufacturer of semi-
conductor fabrication equipment, and served as Vice President and Chief
Financial Officer from January 1994 to January 1995, and as Senior Vice
President and Chief Financial Officer from January 1995 to January 1999. Prior
to 1992, Mr. Harmon spent six years with Citibank Global Private Bank as a
Divisional Controller and Chief Financial Officer. Mr. Harmon also worked for
Arthur Andersen LLP for seven years, serving as an Audit Manager for three
years.
GARY R. JOHNSON has been Senior Vice President of Sales and Marketing of
Cybex since April 1997, was formerly Vice President of Sales Channel Development
of Cybex from March 1996 to March 1997. From May 1986 to February 1996, he was
the owner of Sales and Marketing Solutions, Inc., a consulting firm specializing
in product marketing and establishing distribution channels.
KIERAN MACSWEENEY has been Managing Director of International Operations
since joining Cybex in October 1996. From January 1992 to October 1996,
Mr. MacSweeney was general manager of the European distribution facility of
Maidenform International Ltd., a maker of women's apparel.
VICTOR ODRYNA was appointed Senior Vice President of Corporate Strategic
Marketing for Cybex in March 2000. Mr. Odryna was founder and Chief Executive
Officer of PixelVision Technology Inc. from 1991 through October of 1999 when
PixelVision was acquired by Cybex. From 1989 to 1991, Mr. Odryna served as
Senior Consulting Engineer for Graphics and Display Technology at Hewlett-
Packard Corporation, a developer and producer of engineering workstations. From
1983 to 1989 he was employed by Apollo Computer, which was acquired by
Hewlett-Packard. As Senior Consulting Engineer for Graphics and Display
Technology, Mr. Odryna received both a BSEE degree and MSCS degree from the
University of Connecticut.
C. DAVID PERRY has been Vice President of Worldwide Sales of Apex since
November 1998. From March 1997 through September 1998, he served as Vice
President of Sales--Commercial Division of Acer America Corporation, a
manufacturer and seller of computer hardware. Mr. Perry was employed by Texas
Instruments from 1979 until March 1997 and served as Director of North American
channel sales for Texas Instruments, a computer hardware manufacturer, from 1993
until 1997.
DOUGLAS E. PRITCHETT has been Senior Vice President--Finance, Chief
Financial Officer, Treasurer and Assistant Secretary of Cybex since
September 1998. Prior to joining Cybex as an executive officer, Mr. Pritchett
was Chief Financial Officer of Barber Dairies, Inc., a regional dairy, from 1992
to 1998 and a Partner with Coopers & Lybrand L.L.P. (predecessor of
PricewaterhouseCoopers LLP) from 1987 to 1992.
SAMUEL F. SARACINO has been Vice President of Business Development and
General Counsel of Apex since February 1998, and Secretary of Apex since
March 1998. From January 1984 to February 1998, Mr. Saracino was a Partner at
the Seattle law firm of Davis Wright Tremaine LLP.
CHRISTOPHER L. THOMAS served as Engineering Product Manager for Cybex from
February 1995 to March 1996, Vice President of Engineering of Cybex from
March 1996 to April 1997 and currently serves as Senior Vice President of
Engineering of Cybex. Prior to joining Cybex, Mr. Thomas served from 1993 to
1995 as Vice President of Technology for Max Vision, a company specializing in
medical imaging systems. Mr. Thomas was employed by Intergraph, a graphics
workstations company, from 1978 to 1993.
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JOHN R. COOPER has been Vice President--Finance and Chief Financial Officer
of ADTRAN, Inc., a company that designs, develops, manufacturers, markets and
services a broad range of high-speed digital transmission products utilized by
telephone companies and corporate end-users to implement advanced digital data
services over existing telephone networks. Prior to 1996, Mr. Cooper was
President of Sauty Group, a business consulting firm specializing in accounting
and finance, from 1995 to 1996 and a Partner with Coopers & Lybrand LLP
(predecessor of PricewaterhouseCoopers LLP) from 1991 to 1995.
EDWIN L. HARPER has served as one of Apex's Directors since October 1996.
Mr. Harper has served as President and Chief Operating Officer of Manufacturing
Technology, Inc., a privately held company that manufactures slicing and dicing
equipment for the thin film head and semiconductor industries, since September
1999. From June 1996 through December 1998, Mr. Harper served as President and
Chief Executive Officer of SyQuest Technology, a computer hardware company that
filed a petition under Chapter 11 of the Bankruptcy Code in November 1998. 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 capacities, including President and Chief Executive Officer, at Colorado
Memory Systems, Inc. Mr. Harper is also a director of Network Associates, a
network security management company.
WILLIAM MCALEER has served as one of Apex's Directors since June 1996.
Mr. McAleer is currently Managing Director of Voyager Capital, which provides
venture financing to private 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 ClearCommerce Corp., an
e-commerce company, currently in registration with the SEC.
CLASSIFIED BOARD
The Aegean Sea certificate of incorporation and bylaws provide for a board
of directors of seven members consisting of three classes of directors, each
serving staggered three-year terms. As a result, a portion of Aegean Sea's board
of directors is elected each year. Directors are elected for three-year terms,
except that the terms of the initial Class I directors will expire at the first
annual meeting following the merger, the terms of the initial Class II directors
shall expire at the second annual meeting following the merger and the terms of
the initial Class III directors will expire at the third annual meeting
following the merger. The classification of directors will be determined prior
to effectiveness of this registration statement.
Executive officers are appointed by the board of directors on an annual
basis and serve until their successors have been duly elected and qualified.
There are no family relationships among any of the Aegean Sea directors,
officers or key employees.
AUDIT COMMITTEE
Aegean Sea has established an audit committee, which will include John R.
Cooper and another non-employee director to be named prior to the effectiveness
of this registration statement. The audit committee reviews our internal
accounting procedures and consults with and reviews the services provided by our
independent auditors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee will include John R. Cooper, Edwin L. Harper and
William McAleer. The Compensation Committee is responsible for determining
salaries, incentives and other forms of compensation for our directors, officers
and other employees and administering various
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incentive compensation and benefit plans. Stephen F. Thornton, our President,
Chief Executive Officer and a member of our board of directors, will participate
in all discussions and decisions regarding salaries and incentive compensation
for all of our employees and consultants, except that he will be excluded from
discussions regarding his own salary and incentive compensation. No interlocking
relationship exists between any member of our compensation committee and any
member of any other company's board of directors or compensation committee.
DIRECTOR COMPENSATION
Aegean Sea reimburses each member of its board of directors for
out-of-pocket expenses incurred in connection with attending board meetings. No
member of the Aegean Sea board of directors currently receives any additional
cash compensation for serving as a member of the board, although Aegean Sea
anticipates paying outside directors a cash fee for their service on the Aegean
Sea board. The board of directors has discretion to grant options to directors
under Aegean Sea's option plans.
LIMITATION ON DIRECTORS' LIABILITY AND INDEMNIFICATION
The Aegean Sea certificate of incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as directors, except liability for
any of the following acts:
- any breach of their duty of loyalty to the corporation or its stockholders
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law
- unlawful payments of dividends or unlawful stock repurchases or
redemptions
- any transaction from which the director derived an improper personal
benefit
This limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.
The Aegean Sea certificate of incorporation and bylaws provide that Aegean
Sea will indemnify its directors and executive officers and other corporate
agents to the fullest extent permitted by law. We believe that indemnification
under the Aegean Sea bylaws covers at least negligence and gross negligence on
the part of indemnified parties. Our bylaws also permit us to secure insurance
on behalf of any officer, director, employee or other agent for any liability
arising out of his or her actions in this capacity, regardless of whether the
bylaws would permit indemnification.
We have entered into agreements to indemnify our directors and executive
officers, in addition to the indemnification provided for in our certificate of
incorporation and bylaws. These agreements, among other things, provide for
indemnification of our directors and executive officers for many expenses,
including attorneys' fees, judgments, fines and settlement amounts incurred by
any such person in any action or proceeding, including any action by or in the
right of Aegean Sea, arising out of such person's services as a director or
executive officer of ours, any subsidiary of ours or any other company or
enterprise to which the person provided services at our request. We believe that
these provisions and agreements are necessary to attract and retain qualified
persons as directors and executive officers.
DESCRIPTION OF CAPITAL STOCK
Upon completion of the merger, Aegean Sea will be authorized to issue
200,000,000 shares of common stock, $0.001 par value, and 5,000,000 shares of
undesignated preferred stock, $0.001 par value. Immediately after the merger,
based on shares of Apex and Cybex common stock outstanding as
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of May 22, 2000, we estimate that there will be approximately 42,608,041 shares
of Aegean Sea common stock outstanding, 5,541,018 shares of Aegean Sea common
stock will be issuable upon exercise of outstanding options assuming there are
no additional option grants after May 22, 2000 and no shares of Aegean Sea
preferred stock will be issued and outstanding. Upon completion of the merger,
the Aegean Sea certificate of incorporation or bylaws will contain provisions
that are intended to enhance the likelihood of continuity and stability in the
composition of the board of directors and which may have the effect of delaying,
deferring, or preventing a future takeover or change in control of Aegean Sea
unless such takeover or change in control is approved by our board of directors.
COMMON STOCK
Holders of Aegean Sea common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Holders of Aegean Sea common stock
do not have cumulative voting rights, and therefore, holders of a majority of
the shares voting for the election of directors can elect all of the directors.
If this occurs, the holders of the remaining shares will not be able to elect
any directors.
Holders of Aegean Sea common stock are entitled to receive any dividends
that our board of directors may declare from funds legally available for
distribution. Aegean Sea has never declared or paid cash dividends on our
capital stock and expects to retain future earnings, if any, for use in the
operation and expansion of our business. As a result, we do not anticipate
paying any cash dividends in the foreseeable future. In addition, Aegean Sea may
in the future enter into agreements with lenders that could prohibit our paying
cash dividends.
In the event of liquidation, dissolution or winding up of Aegean Sea, the
holders of common stock are entitled to share ratably in all assets legally
available for distribution after payment of all debts and other liabilities and
subject to the prior rights of any holders of preferred stock then outstanding.
Holders of common stock have no preemptive or other subscription or conversion
rights. There are no redemption or sinking fund provisions applicable to the
common stock.
PREFERRED STOCK
Effective upon the closing of the merger, Aegean Sea will be authorized to
issue 5,000,000 shares of undesignated preferred stock. The Aegean Sea board of
directors has the authority without any further stockholder vote to issue the
preferred stock in one or more series and to fix the price and rights of the
preferred stock. The issuance of preferred stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of delaying, deferring or preventing a change in
control of Aegean Sea. It could also adversely affect the market price of Aegean
Sea common stock and the voting and other rights of the holders of Aegean Sea
common stock. Aegean Sea has no current plans to issue any shares of preferred
stock.
ANTITAKEOVER EFFECTS OF PROVISIONS OF THE CHARTER DOCUMENTS
Some of the provisions of the Aegean Sea certificate of incorporation and
bylaws could make the following more difficult:
- Acquisition of Aegean Sea by means of a tender offer
- Acquisition of Aegean Sea by means of a proxy contest or otherwise
- The removal of Aegean Sea's incumbent officers and directors
These provisions, summarized below, are generally expected to discourage
coercive takeover practices and inadequate takeover bids. These provisions are
also designed to encourage persons seeking to acquire control of Aegean Sea to
first negotiate with our board. Aegean Sea believes that
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the benefits of increased protection resulting from our potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire
or restructure Aegean Sea outweigh the disadvantages of discouraging these
proposals because we believe that the negotiation of these proposals could
result in an improvement of their terms.
ELECTION AND REMOVAL OF DIRECTORS
The Aegean Sea board of directors is divided into three classes. The
directors in each class will serve for a three-year term, one class being
elected each year by Aegean Sea stockholders. This system of electing and
removing directors may tend to discourage a third party from making a tender
offer or otherwise attempting to obtain control of Aegean Sea because it
generally makes it more difficult for stockholders to replace a majority of the
directors. See "MANAGEMENT OF AEGEAN SEA--CLASSIFIED BOARD" for a further
discussion of the structure of the board of directors. In addition, the Aegean
Sea certificate of incorporation provides that any director, or the entire board
of directors, may only be removed from office for cause and upon the affirmative
vote of the holders of at least a majority of the voting power of outstanding
voting shares. Vacancies may only be filled by the remaining members of the
board, not by a vote of stockholders.
STOCKHOLDER MEETINGS
The Aegean Sea bylaws provide that only the board of directors, the chairman
of the board, the president and chief executive officer may call special
meetings of stockholders.
REQUIREMENTS FOR ADVANCE NOTIFICATION OF STOCKHOLDER NOMINATIONS AND
PROPOSALS
The Aegean Sea bylaws will contain advance notice procedures with respect to
stockholder proposals and the nomination of candidates for election as
directors, other than nominations made by or at the direction of the board of
directors or a committee of the board.
NO CUMULATIVE VOTING
Our certificate of incorporation and bylaws will not provide for cumulative
voting in the election of directors.
UNDESIGNATED PREFERRED STOCK
The authorization of undesignated preferred stock makes it possible for the
board of directors to issue preferred stock with voting or other rights or
preferences that could impede the success of any attempt to change control of
Aegean Sea. These and other provisions may have the effect of deferring hostile
takeovers or delaying changes in control or management of Aegean Sea.
AMENDMENT OF CHARTER PROVISIONS
The amendment of the above provisions relating to the election and removal
of directors and stockholder meetings will require approval by holders of at
least 66 2/3% of the outstanding common stock.
EFFECT OF DELAWARE ANTITAKEOVER STATUTE
Aegean Sea is subject to Section 203 of the Delaware General Corporation Law
which regulates corporate acquisitions. Section 203 generally prevents Delaware
corporations, including those whose securities are listed for trading on the
Nasdaq National Market, from engaging in a business combination with any
interested stockholder for three years following the date that such stockholder
became an interested stockholder. A business combination includes, among other
things, a merger or consolidation involving Aegean Sea and the interested
stockholder and the sale of more than 10% of
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our assets. Generally, an interested stockholder is any entity or person
beneficially owning 15% or more of Aegean Sea's outstanding voting stock and any
entity or person affiliated with or controlling or controlled by such entity or
person. A Delaware corporation may opt out of Section 203 with an express
provision in its original certificate of incorporation or an express provision
in its certification of incorporation or bylaws resulting from amendments
approved by the holders of at least a majority of the corporation's outstanding
voting shares. Aegean Sea has not opted out of Section 203.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is ChaseMellon
Shareholder Services, L.L.C. and can be contacted by phone at (800) 610-3775.
LEGAL OPINION
The validity of the shares of Aegean Sea common stock offered by this joint
proxy statement/ prospectus will be passed upon for Aegean Sea by Wilson Sonsini
Goodrich & Rosati, Professional Corporation, Kirkland, Washington.
EXPERTS
The financial statements of Apex as of December 31, 1998 and 1999 and for
each of the three years in the period ended December 31, 1999 incorporated by
reference into this joint proxy statement/ prospectus are incorporated by
reference in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The financial statements of Cybex as of March 31, 1999 and 1998 and for each
of the three years in the period ended March 31, 1999, incorporated by reference
in this joint proxy statement/prospectus are incorporated by reference in
reliance on the report of PricewaterhouseCoopers LLP independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The balance sheet of Aegean Sea, Inc. as of March 31, 2000 included in this
joint proxy statement/ prospectus has been so included in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
STOCKHOLDER PROPOSALS
The 2000 annual meeting of the shareholders of Apex will only be held if the
merger is not completed as contemplated by the merger agreement. In order for
Apex shareholders to present proper proposals for inclusion in Apex's proxy
statement and for consideration at the 2000 annual meeting of shareholders, if
one is held, such proposals must have been submitted by January 25, 2000.
The 2000 annual meeting of the shareholders of Cybex will only be held if
the merger is not completed as contemplated by the merger agreement. In order
for Cybex shareholders to present proper proposals for inclusion in Cybex's
proxy statement and for consideration at the 2000 annual meeting of
shareholders, if one is held, such proposals must be received by Cybex by
June 1, 2000.
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DOCUMENTS INCORPORATED BY REFERENCE
THIS JOINT PROXY STATEMENT/PROSPECTUS INCLUDES INFORMATION THAT HAS NOT BEEN
DELIVERED OR PRESENTED TO YOU BUT IS "INCORPORATED BY REFERENCE." This means
that Apex and Cybex disclose information to you by referring you to another
document filed separately with the Securities and Exchange Commission (SEC). The
information incorporated by reference is considered a part of this joint proxy
statement/prospectus, except for any information superseded by information
contained in this joint proxy statement/prospectus. This joint proxy
statement/prospectus incorporates by reference the documents listed below, which
contain important business and financial information.
All documents filed by Apex or Cybex under Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act, after the date of this joint proxy
statement/prospectus and before the date of the Apex special meeting and the
Cybex special meeting are incorporated by reference into and deemed to be a part
of this joint proxy statement/prospectus from the date of filing of those
documents.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT.
The following documents, which were filed by Apex with the SEC, are
incorporated by reference into this joint proxy statement/prospectus:
- Apex's annual report on Form 10-K for the fiscal year ended December 31,
1999, filed on March 30, 2000
- Apex's annual report on Form 10-K/A (Amendment No. 1) for the fiscal year
ended December 31, 1999, filed on May 25, 2000.
- Apex's quarterly report on Form 10-Q for the fiscal quarter ended
March 31, 2000, filed on May 12, 2000.
- Apex's current report on Form 8-K, dated March 8, 2000, filed on
March 13, 2000, which describes the merger agreement and the merger.
The following documents, which were filed by Cybex with the SEC, are
incorporated by reference into this joint proxy statement/prospectus:
- Cybex's annual report on Form 10-K for the fiscal year ended March 31,
1999, filed on June 23, 1999
- Cybex's quarterly report on Form 10-Q for the fiscal quarter ended
July 2, 1999, filed on August 16, 1999
- Cybex's quarterly report on Form 10-Q for the fiscal quarter ended
October 1, 1999, filed on November 15, 1999
- Cybex's quarterly report on Form 10-Q for the fiscal quarter ended
December 31, 1999, filed on February 14, 2000
- Cybex's current report on Form 8-K, dated March 8, 2000, filed on
March 16, 2000, which describes the merger agreement and the merger.
- Cybex's current report on Form 8-K, dated March 31, 2000, filed on
May 26, 2000.
Any statement contained in a document incorporated or deemed to be
incorporated in this document by reference will be deemed to be modified or
superseded for purposes of this joint proxy statement/prospectus to the extent
that a statement contained in this document or any other subsequently filed
document that is deemed to be incorporated in this document by reference
modifies or supersedes the statement. Any statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part of
this joint proxy statement/prospectus.
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The documents incorporated by reference into this joint proxy
statement/prospectus are available from Apex and Cybex upon request. We will
provide to you a copy of any and all of the information that is incorporated by
reference in this joint proxy statement/prospectus (not including exhibits to
the information unless those exhibits are specifically incorporated by reference
into this joint proxy statement/prospectus), without charge, upon written or
oral request. YOU SHOULD MAKE ANY REQUEST FOR DOCUMENTS BY , 2000 TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS.
<TABLE>
<S> <C>
Requests for documents relating to Apex Requests for documents relating to Cybex
should be directed to: should be directed to:
Apex Inc. Cybex Computer Products Corporation
9911 Willows Road N.E. 4991 Corporate Drive
Redmond, Washington 98052 Huntsville, Alabama 35805
(425) 861-5858 (256) 430-4000
Attention: Barry L. Harmon Attention: Douglas E. Pritchett
</TABLE>
Apex and Cybex have filed reports, proxy statements and other information
with the SEC. Copies of its reports, proxy statements and other information may
be inspected and copied at the public reference facilities maintained by the
SEC:
<TABLE>
<S> <C> <C>
Judiciary Plaza Citicorp Center Seven World Trade Center
Room 1024 500 West Madison Street 13th Floor
450 Fifth Street, N.W. Suite 1400 New York, New York 10048
Washington, D.C. 20549 Chicago, Illinois 60661
</TABLE>
Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC
maintains a website that contains reports, proxy statements and other
information regarding each of us. The address of the SEC website is
http://www.sec.gov.
Reports, proxy statements and other information concerning Apex and Cybex
may also be inspected at: The National Association of Securities Dealers, 1735 K
Street N.W., Washington, D.C. 20006.
Aegean Sea has filed a registration statement under the Securities Act with
the SEC with respect to Aegean Sea's common stock to be issued to Apex and Cybex
shareholders in the merger. This joint proxy statement/prospectus constitutes
the prospectus of Aegean Sea filed as part of the registration statement. This
joint proxy statement/prospectus does not contain all of the information set
forth in the registration statement because certain parts of the registration
statement are omitted as provided by the rules and regulations of the SEC. You
may inspect and copy the registration statement at any of the addresses listed
above.
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO PURCHASE, THE AEGEAN SEA COMMON STOCK OR THE SOLICITATION OF A PROXY,
IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO
MAKE THE OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN THAT
JURISDICTION. NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR
ANY DISTRIBUTION OF SECURITIES MEANS, UNDER ANY CIRCUMSTANCES, THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION SET FORTH OR INCORPORATED IN THIS DOCUMENT BY
REFERENCE OR IN ITS AFFAIRS SINCE THE DATE OF THIS JOINT PROXY
STATEMENT/PROSPECTUS. THE INFORMATION CONTAINED IN THIS DOCUMENT WITH RESPECT TO
CYBEX AND ITS SUBSIDIARIES WAS PROVIDED BY CYBEX. THE INFORMATION CONTAINED IN
THIS DOCUMENT WITH RESPECT TO APEX WAS PROVIDED BY APEX.
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AEGEAN SEA INC.
INDEX TO BALANCE SHEET
<TABLE>
<S> <C>
Report of Independent Accountants........................... F-2
Balance Sheet as of March 31, 2000.......................... F-3
Note to Balance Sheet....................................... F-4
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Aegean Sea, Inc.
In our opinion, the accompanying balance sheet presents fairly, in all
material respects, the financial position of Aegean Sea, Inc. at March 31, 2000
in conformity with accounting principles generally accepted in the United
States. This balance sheet is the responsibility of management; our
responsibility is to express an opinion on this balance sheet based on our
audit. We conducted our audit of this balance sheet in accordance with auditing
standards generally accepted in the United States which require that we plan and
perform the audit to obtain reasonable assurance about whether the balance sheet
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance sheet, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Seattle, Washington
May 25, 2000
F-2
<PAGE>
AEGEAN SEA INC.
BALANCE SHEET
March 31, 2000
<TABLE>
<S> <C>
Assets
Total assets................................................ $ --
===============
Liabilities and Stockholders' Equity
Liabilities................................................. $ --
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares
authorized; no shares issued and outstanding............... --
Common stock, $0.001 par value; 200,000,000 shares
authorized, no shares issued and outstanding............... --
---------------
Total stockholders' equity.................................. --
Total liabilities and stockholders' equity.................. $ --
===============
</TABLE>
See accompanying note.
F-3
<PAGE>
AEGEAN SEA INC.
NOTE TO BALANCE SHEET
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
Aegean Sea Inc. (the "Company") was incorporated in the state of Delaware on
March 7, 2000. The Company was formed in connection with the contemplated merger
(the "Merger") of Apex Inc. ("Apex") and Cybex Computer Products Corporation
("Cybex"). Upon completion of the Merger, Apex and Cybex will each become a
wholly owned subsidiary of the Company. Other than its formation, the Company
has not conducted any activities.
No shares of common stock had been issued as of March 31, 2000.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the balance sheet.
F-4
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
APEX INC.
AEGEAN SEA INC.
AND
CYBEX COMPUTER PRODUCTS CORPORATION
DATED AS OF MARCH 8, 2000
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ANNEX A
TABLE OF CONTENTS
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ARTICLE I THE PLAN OF REORGANIZATION................................................ A-2
1.1 The Organization of Newco, Apex Sub and Cybex Sub........... A-2
1.2 The Apex Merger............................................. A-2
1.3 The Cybex Merger............................................ A-2
1.4 Cancellation of Apex-Owned and Cybex-Owned Shares........... A-2
1.5 Adjustments for Capital Changes............................. A-3
1.6 Dissenting Shares........................................... A-3
1.7 Fractional Shares........................................... A-4
1.8 Apex Options and ESPP....................................... A-4
1.9 Cybex Options............................................... A-5
1.10 Newco Plans................................................. A-5
1.11 Effective Time; Effects of the Merger....................... A-5
1.12 Exchange of Certificates.................................... A-6
1.13 Assumption of Options....................................... A-8
1.14 The Closing................................................. A-8
1.15 Tax and Accounting Consequences............................. A-9
1.16 Registration of Newco Common Stock.......................... A-9
1.17 Taking of Necessary Action; Further Action.................. A-9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF CYBEX.................................. A-9
2.1 Organization of Cybex....................................... A-9
2.2 Cybex Capital Structure..................................... A-10
2.3 Obligations With Respect to Capital Stock................... A-10
2.4 Authority................................................... A-11
2.5 SEC Filings; Cybex Financial Statements..................... A-11
2.6 Absence of Certain Changes or Events........................ A-12
2.7 Taxes....................................................... A-13
2.8 Cybex Intellectual Property................................. A-14
2.9 Compliance; Permits; Restrictions........................... A-16
2.10 Litigation.................................................. A-16
2.11 Brokers' and Finders' Fees.................................. A-16
2.12 Employee Benefit Plans...................................... A-16
2.13 Absence of Liens and Encumbrances........................... A-20
2.14 Environmental Matters....................................... A-21
2.15 Labor Matters............................................... A-22
2.16 Agreements, Contracts and Commitments....................... A-22
2.17 Statements; Proxy Statement/Prospectus...................... A-23
2.18 Board Approval.............................................. A-24
2.19 State Takeover Statutes..................................... A-24
2.20 Fairness Opinion............................................ A-24
ARTICLE III REPRESENTATIONS AND WARRANTIES OF APEX.................................. A-25
3.1 Organization of Apex........................................ A-25
3.2 Apex Capital Structure...................................... A-25
3.3 Obligations With Respect to Capital Stock................... A-26
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3.4 Authority................................................... A-26
3.5 SEC Filings; Apex Financial Statements...................... A-27
3.6 Absence of Certain Changes or Events........................ A-28
3.7 Taxes....................................................... A-28
3.8 Apex Intellectual Property.................................. A-29
3.9 Compliance; Permits; Restrictions........................... A-30
3.10 Litigation.................................................. A-31
3.11 Brokers' and Finders' Fees.................................. A-31
3.12 Employee Benefit Plans...................................... A-31
3.13 Absence of Liens and Encumbrances........................... A-34
3.14 Environmental Matters....................................... A-35
3.15 Labor Matters............................................... A-36
3.16 Agreements, Contracts and Commitments....................... A-36
3.17 Statements; Proxy Statement/Prospectus...................... A-38
3.18 Board Approval.............................................. A-38
3.19 State Takeover Statutes..................................... A-38
3.20 Fairness Opinion............................................ A-38
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME...................................... A-38
4.1 Conduct of Business......................................... A-38
ARTICLE V ADDITIONAL AGREEMENTS..................................................... A-41
Proxy Statement/Prospectus; Registration Statement; Other
5.1 Filings................................................... A-41
5.2 Meetings of Shareholders.................................... A-41
5.3 Access to Information; Confidentiality...................... A-43
5.4 No Solicitation............................................. A-44
5.5 Public Disclosure........................................... A-47
5.6 Legal Requirements.......................................... A-47
5.7 Third Party Consents........................................ A-47
5.8 FIRPTA...................................................... A-47
5.9 Notification of Certain Matters............................. A-47
5.10 Commercially Reasonable Efforts and Further Assurances...... A-47
5.11 Form S-8.................................................... A-48
5.12 Indemnification............................................. A-48
5.13 Tax-Free Reorganization..................................... A-49
5.14 NASDAQ Listing.............................................. A-49
5.15 Cybex Affiliate Agreement................................... A-49
5.16 Apex Affiliate Agreement.................................... A-49
5.17 Regulatory Filings; Reasonable Efforts...................... A-49
5.18 Termination of 401(k) Plans................................. A-49
5.19 Board of Directors of Newco After the Effective Time........ A-50
5.20 Headquarters; Officers of Apex After the Effective Time..... A-50
ARTICLE VI CONDITIONS TO THE MERGER................................................. A-51
Conditions to Obligations of Each Party to Effect the
6.1 Merger.................................................... A-51
6.2 Additional Conditions to Obligations of Cybex............... A-51
6.3 Additional Conditions to the Obligations of Apex............ A-52
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER....................................... A-52
7.1 Termination................................................. A-52
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7.2 Notice of Termination; Effect of Termination................ A-54
7.3 Fees and Expenses........................................... A-54
7.4 Amendment................................................... A-56
7.5 Extension; Waiver........................................... A-56
ARTICLE VIII GENERAL PROVISIONS..................................................... A-56
8.1 Non-Survival of Representations and Warranties.............. A-56
8.2 Notices..................................................... A-56
8.3 Interpretation; Knowledge................................... A-57
8.4 Counterparts................................................ A-58
8.5 Entire Agreement............................................ A-58
8.6 Severability................................................ A-58
8.7 Other Remedies; Specific Performance........................ A-58
8.8 Governing Law............................................... A-58
8.9 Rules of Construction....................................... A-58
8.10 Assignment.................................................. A-58
8.11 WAIVER OF JURY TRIAL........................................ A-58
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INDEX OF EXHIBITS
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Exhibit A Apex Voting Agreement
Exhibit B Cybex Voting Agreement
Exhibit C Cybex Affiliate Agreement
Exhibit D Apex Affiliate Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is made and
entered into as of March 8, 2000 among Apex Inc., a Washington corporation
("APEX"), Aegean Sea Inc., a Delaware corporation ("NEWCO"), and Cybex Computer
Products Corporation, an Alabama corporation ("CYBEX").
RECITALS
A. The parties intend that, subject to the terms and conditions of this
Agreement, Apex and Cybex will each become a subsidiary of a new Delaware
corporation referred to herein as Newco which has been formed by Apex solely for
the purpose of the transactions contemplated hereunder (the "MERGER"). To effect
the Merger, (i) Newco will form two new corporations, a Washington corporation
("APEX SUB") and an Alabama corporation ("CYBEX SUB"), as wholly-owned
subsidiaries of Newco, (ii) Apex Sub will merge with and into Apex, with Apex to
be the surviving corporation of such merger (the "APEX MERGER"), and
(iii) Cybex Sub will merge with and into Cybex, with Cybex to be the surviving
corporation of such merger (the "CYBEX MERGER"), all pursuant to the terms and
conditions of this Agreement, the Plans of Merger prepared in accordance with
Washington Law (as defined below) and Alabama Law (as defined below),
respectively (the "PLANS OF MERGER"), and the applicable provisions of the
Washington Business Corporation Act ("WASHINGTON LAW") and the Alabama Business
Corporation Act ("ALABAMA LAW"). Upon the effectiveness of the Merger, all of
the outstanding shares of capital stock of Apex and all of the outstanding
shares of capital stock of Cybex will be converted into shares of Common Stock
of Newco, $0.001 par value per share (the "NEWCO COMMON STOCK"). Newco will
assume all outstanding options, warrants and rights to purchase shares of Common
Stock of both Apex and Cybex, as provided in this Agreement and the Plans of
Merger. The Newco Common Stock issued in the Merger will be registered under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), pursuant to a Newco
registration statement.
B. The Board of Directors of Apex (i) has determined that the Apex Merger
is consistent with and in furtherance of the long-term business strategy of Apex
and fair to and in the best interests of, Apex and its shareholders, (ii) has
approved this Agreement, the Apex Merger and the other transactions contemplated
by this Agreement and (iii) has determined to recommend the approval of this
Agreement and the Apex Merger by the shareholders of Apex.
C. The Board of Directors of Cybex (i) has determined that the Cybex Merger
is consistent with and in furtherance of the long-term business strategy of
Cybex and fair to and in the best interests of, Cybex and its shareholders,
(ii) has approved this Agreement, the Cybex Merger and the other transactions
contemplated by this Agreement and (iii) has determined to recommend the
approval of this Agreement and the Cybex Merger by the shareholders of Cybex.
D. Concurrently with the execution of this Agreement, and as a condition
and inducement to Apex's and Cybex's willingness to enter into this Agreement,
certain affiliates of Apex shall enter into a Voting Agreement in substantially
the form attached hereto as Exhibit A (the "APEX VOTING AGREEMENTS"), and
certain affiliates of Cybex shall enter into a Voting Agreement in substantially
the form attached hereto as Exhibit B (the "CYBEX VOTING AGREEMENTS" and,
collectively with the Apex Voting Agreements, the "VOTING AGREEMENTS").
E. Apex and Cybex desire to make certain representations and warranties and
other agreements in connection with the Merger.
F. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "CODE").
G. It is also intended by the parties hereto that the Merger shall be
accounted for using the purchase method of accounting.
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NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE PLAN OF REORGANIZATION
1.1 THE ORGANIZATION OF NEWCO, APEX SUB AND CYBEX SUB. Apex has formed
Newco under the laws of the State of Delaware for the purposes of the
transactions contemplated by this Agreement. Newco currently has no outstanding
securities and will not issue any securities prior to the Effective Time (as
defined in Section 1.11 below), will conduct no business or operations, will
have no assets and will enter into no agreements or obligations except as
required or contemplated by this Agreement or necessary to perform its
obligations hereunder. As soon as practicable after the date of this Agreement,
Newco shall form a wholly-owned subsidiary named Apex Sub, Inc. under Washington
Law and a wholly-owned subsidiary named Cybex Sub, Inc. under Alabama Law.
1.2 THE APEX MERGER. Subject to the terms and conditions of this
Agreement, and simultaneously with the Cybex Merger, Newco will cause Apex Sub
to execute and deliver a Plan of Merger (the "APEX PLAN OF MERGER") providing
for the Apex Merger, with Apex being the surviving corporation upon the
effectiveness of the Apex Merger and thereby becoming a wholly-owned subsidiary
of Newco, pursuant to this Agreement and the Apex Plan of Merger and in
accordance with applicable provisions of Washington Law as follows:
(a) CONVERSION OF APEX SHARES. Except as provided in Sections 1.4,
1.6(a) and 1.7, each share of the Common Stock of Apex, no par value ("APEX
COMMON STOCK"), that is issued and outstanding immediately prior to the
Effective Time (as defined below) will by virtue of the Apex Merger and at
the Effective Time, and without any further action on the part of Apex,
Newco or any holder of Apex Common Stock, be cancelled and extinguished and
automatically converted into 1.0905 shares (the "APEX APPLICABLE RATIO") of
validly issued, fully paid and nonassessable Newco Common Stock.
1.3 THE CYBEX MERGER. Subject to the terms and conditions of this
Agreement, and simultaneously with the Apex Merger, Newco will cause Cybex Sub
to execute and deliver a Plan of Merger (the "CYBEX PLAN OF MERGER") providing
for the Cybex Merger, with Cybex being the surviving corporation upon the
effectiveness of the Cybex Merger and thereby becoming a wholly-owned subsidiary
of Newco, pursuant to this Agreement and the Cybex Plan of Merger and in
accordance with applicable provisions of Alabama Law as follows:
(a) CONVERSION OF CYBEX SHARES. Except as provided in Sections 1.4,
1.6(b) and 1.7, each share of Common Stock of Cybex, $0.001 par value per
share ("CYBEX COMMON STOCK"), that is issued and outstanding immediately
prior to the Effective Time (as defined below) will by virtue of the Cybex
Merger and at the Effective Time, and without any further action on the part
of Cybex, Newco or any holder of Cybex Common Stock, be cancelled and
extinguished and automatically converted into 1.0000 share of validly
issued, fully paid and nonassessable Newco Common Stock (the "CYBEX
APPLICABLE RATIO" and collectively with the Apex Applicable Ratio, the
"APPLICABLE RATIOS").
1.4 CANCELLATION OF APEX-OWNED AND CYBEX-OWNED SHARES. Each share of Cybex
Common Stock which is, immediately prior to the Effective Time, held in the
treasury of Cybex, held by Apex or Newco or held by any direct or indirect
wholly-owned subsidiary of Newco, Apex or Cybex and each share of Apex Common
Stock which is, immediately prior to the Effective Time, held in the treasury of
Apex, held by Cybex or Newco or held by any direct or indirect wholly-owned
subsidiary of Newco, Cybex or Apex shall be canceled and extinguished without
any conversion thereof.
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1.5 ADJUSTMENTS FOR CAPITAL CHANGES. If, prior to the Effective Time,
either Apex or Cybex recapitalizes through a subdivision of its outstanding
shares into a greater number of shares, or a combination of its outstanding
shares into a lesser number of shares, or reorganizes, reclassifies or otherwise
changes its outstanding shares into the same or a different number of shares of
other classes, or declares a dividend on its outstanding shares payable in
shares of its capital stock or securities convertible into shares of its capital
stock, then the Applicable Ratios will be adjusted appropriately so as to
maintain the relative proportionate interests of the holders of Apex Common
Stock and the holders of the Cybex Common Stock in Newco securities.
1.6 DISSENTING SHARES.
(a) APEX SHAREHOLDERS' DISSENTERS' RIGHTS.
(i) Notwithstanding any provision of this Agreement to the contrary,
any shares of Apex Common Stock held by a holder who has exercised and
perfected dissenters' rights for such shares in accordance with
Washington Law and who, as of the Effective Time of the Merger, has not
effectively withdrawn or lost such dissenters' rights ("APEX DISSENTING
SHARES"), shall not be converted into or represent a right to receive
Newco Common Stock, but the holder thereof shall only be entitled to such
rights as are granted by Washington Law.
(ii) Notwithstanding the provisions of subsection (a), if any holder
of Apex Dissenting Shares shall effectively withdraw or lose (through
failure to perfect or otherwise) his or her dissenters' rights, then, as
of the later of the Effective Time and the occurrence of such event, such
holder's shares shall automatically be converted into and represent only
the right to receive Newco Common Stock, without interest thereon, upon
surrender of the certificate representing such shares.
(iii) Apex shall give Cybex (A) prompt notice of any written demand
for payment received by Apex pursuant to the applicable provisions of
Washington Law and (B) the opportunity to participate in all negotiations
and proceedings with respect to such demands. Apex shall not, except with
the prior written consent of Cybex, voluntarily make any payment with
respect to any such demands or offer to settle or settle any such
demands.
(iv) Apex Dissenting Shares, if any, after payments of fair value in
respect thereto have been made to dissenting shareholders of Apex
pursuant to Washington Law, shall be canceled.
(b) CYBEX SHAREHOLDERS' DISSENTERS' RIGHTS.
(i) Notwithstanding any provision of this Agreement to the contrary,
any shares of Cybex Common Stock held by a holder who has exercised and
perfected dissenters' rights for such shares in accordance with Alabama
Law and who, as of the Effective Time of the Merger, has not effectively
withdrawn or lost such dissenters' rights ("CYBEX DISSENTING SHARES"),
shall not be converted into or represent a right to receive Newco Common
Stock, but the holder thereof shall only be entitled to such rights as
are granted by Alabama Law.
(ii) Notwithstanding the provisions of subsection (a), if any holder
of Cybex Dissenting Shares shall effectively withdraw or lose (through
failure to perfect or otherwise) his or her dissenters' rights, then, as
of the later of the Effective Time and the occurrence of such event, such
holder's shares shall automatically be converted into and represent only
the right to receive Newco Common Stock, without interest thereon, upon
surrender of the certificate representing such shares.
(iii) Cybex shall give Apex (A) prompt notice of any written demand
for payment received by Cybex pursuant to the applicable provisions of
Alabama Law and (ii) the opportunity to participate in all negotiations
and proceedings with respect to such demands.
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Cybex shall not, except with the prior written consent of Apex,
voluntarily make any payment with respect to any such demands or offer to
settle or settle any such demands.
(iv) Cybex Dissenting Shares, if any, after payments of fair value in
respect thereto have been made to dissenting shareholders of Cybex
pursuant to Alabama Law, shall be canceled.
1.7 FRACTIONAL SHARES. No fractional shares of Newco Common Stock will be
issued in connection with the Merger, but in lieu thereof each holder of Apex
Common Stock and of Cybex Common Stock who would otherwise be entitled to
receive a fraction of a share of Newco Common Stock will receive from the
Exchange Agent (as hereinafter defined), at such time as such holder shall
receive a certificate representing shares of Newco Common Stock as contemplated
by Section 1.12, an amount of cash (rounded up to the nearest whole cent)
(a) in the case of Apex Common Stock, equal to the per share market value of
Apex Common Stock (based on the average of the last sale prices of Apex Common
Stock as quoted on the Nasdaq Stock Market ("NASDAQ") during the five day
trading period ending on the day prior to Closing Date (as defined in
Section 1.14) as reported in the Wall Street Journal) (the "APEX AVERAGE PRICE")
multiplied by the fraction of a share of Newco Common Stock to which such holder
would otherwise be entitled, divided by the Apex Applicable Ratio and (b) in the
case of Cybex Common Stock, equal to the per share market value of Cybex Common
Stock (based on the average of the last sale prices of Cybex Common Stock as
quoted on NASDAQ during the five day trading period ending on the day prior to
the Closing Date as reported in the Wall Street Journal) (the "CYBEX AVERAGE
PRICE") multiplied by the fraction of a share of Newco Common Stock to which
such holder would otherwise be entitled, divided by the Cybex Applicable Ratio.
The fractional interests of each Apex shareholder and of each Cybex shareholder
will be aggregated such that no Apex shareholder or Cybex shareholder will
receive cash in an amount equal to or greater than the value of one full share
of Newco Common Stock. Newco shall provide sufficient funds to the Exchange
Agent to make the payments contemplated by this Section 1.7.
1.8 APEX OPTIONS AND ESPP.
(a) ASSUMPTION AND CONVERSION OF APEX OPTIONS. At the Effective Time,
each of the then outstanding options to purchase shares of Apex Common Stock
(collectively, the "APEX OPTIONS") (consisting of all outstanding options
granted under the Apex Employee Stock Plan (the "APEX STOCK OPTION PLAN")
(collectively, and with the Apex Stock Purchase Plan referred to in
Section 1.8(b) below, the "APEX PLANS"), and any individual non-Plan
options) will by virtue of the Merger, and without any further action on the
part of any holder thereof, be assumed and converted into an option to
purchase that number of shares of Newco Common Stock determined by
multiplying the number of shares of Apex Common Stock subject to such Apex
Option at the Effective Time by the Apex Applicable Ratio, at an exercise
price per share of Newco Common Stock equal to the exercise price per share
of such Apex Option immediately prior to the Effective Time divided by the
Apex Applicable Ratio, rounded up to the nearest cent. If the foregoing
calculation results in an assumed Apex Option being exercisable for a
fraction of a share of Newco Common Stock, then the number of shares of
Newco Common Stock subject to such option will be rounded down to the
nearest whole number of shares, with no cash being payable for such
fractional share. The term, exerciseability, vesting schedule, status as an
"incentive stock option" under Section 422 of the Code, if applicable, and
all other terms and conditions of the Apex Options will be unchanged and all
references in any option or warrant agreement governing such option to Apex
shall be deemed to refer to Newco, where appropriate.
(b) APEX STOCK PURCHASE PLAN. Upon the Effective Time, the Newco shall
assume the Apex Employee Stock Purchase Plan (the "APEX STOCK PURCHASE
PLAN") and each outstanding option held by Apex Employees (as defined in
Section 3.12) who are then participating in the Apex Stock Purchase Plan
(the "APEX STOCK PURCHASE PLAN OPTIONS"). Each Apex Stock Purchase Plan
Option so assumed by Newco shall continue to have, and be subject to the
same terms and conditions set
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forth in the Apex Stock Purchase Plan, except that the fair market value per
share of Apex Common Stock at the beginning of each offering period in
effect as of the Effective Time shall be equal to the fair market value per
share of the Apex Common Stock at the beginning of each such offering period
divided by the Apex Applicable Ratio, rounded up to the nearest whole cent.
Apex and Newco shall take all action that may be necessary (under the Apex
Stock Purchase Plan and otherwise) to effectuate the provisions of this
Section 1.8(b) and to ensure that, from and after the Effective Time,
holders of Apex Stock Purchase Plan Options and employees of Apex
participating in the Apex Stock Purchase Plan after the Effective Time have
no rights with respect to the Apex Stock Purchase Plan that are inconsistent
with this Section 1.8(b).
1.9 CYBEX OPTIONS.
(a) ASSUMPTION AND CONVERSION OF CYBEX OPTIONS. At the Effective Time,
each of the then outstanding options to purchase Cybex Common Stock
(collectively, the "CYBEX OPTIONS") (consisting of all outstanding options
granted under Cybex's 1995 Employee Stock Option Plan, 1998 Employee Stock
Incentive Plan and 1995 Outside Director's Stock Option Plan (collectively
the "CYBEX PLANS"), and any individual non-Plan options) will by virtue of
the Merger, and without any further action on the part of any holder
thereof, be assumed and converted into an option to purchase that number of
shares of Newco Common Stock determined by multiplying the number of shares
of Cybex Common Stock subject to such Cybex Option at the Effective Time by
the Cybex Applicable Ratio, at an exercise price per share of Newco Common
Stock equal to the exercise price per share of such Cybex Option immediately
prior to the Effective Time divided by the Cybex Applicable Ratio rounded up
to the nearest cent. If the foregoing calculation results in an assumed
Cybex Option being exercisable for a fraction of a share of Newco Common
Stock, then the number of shares of Newco Common Stock subject to such
option will be rounded down to the nearest whole number of shares, with no
cash being payable for such fractional share. The term, exerciseability,
vesting schedule, status as an "incentive stock option" under Section 422 of
the Code, if applicable, and all other terms and conditions of the Cybex
Options will otherwise be unchanged.
1.10 NEWCO PLANS. Newco shall assume, effective as of the Effective Time,
the Apex Stock Option Plan, the Apex Stock Purchase Plan, the Cybex 1995
Employee Stock Option Plan, the Cybex Employee Stock Incentive Plan and the
Cybex 1995 Outside Director's Stock Option Plan and shall have reserved
3,472,878, 311,070, 1,398,062, 1,675,050, and 129,095 shares, respectively, for
issuance thereunder (collectively, the "NEWCO PLANS"). Newco shall also reserve
a sufficient number of shares of Newco Common Stock for issuance pursuant to the
assumption of the Stock Rights (as defined in Section 5.11 below) provided for
in Sections 1.8 and 1.9 above.
1.11 EFFECTIVE TIME; EFFECTS OF THE MERGER. For purposes of this
Agreement, the "EFFECTIVE TIME" shall mean the effective time and date that the
Apex Plan of Merger and the Cybex Plan of Merger have been filed with the
Secretary of State of the State of Washington and the Secretary of State of the
State of Alabama in accordance with the relevant provisions of Washington Law
and Alabama Law, respectively. At the Effective Time:
(a) the separate existence of Apex Sub will cease and Apex Sub will be
merged with and into Apex, with Apex being the surviving corporation of the
Apex Merger (the "APEX SURVIVING CORPORATION"), pursuant to the terms of
this Agreement and the Apex Plan of Merger;
(b) the separate existence of Cybex Sub will cease and Cybex Sub will be
merged with and into Cybex, with Cybex being the surviving corporation of
the Cybex Merger (the "CYBEX SURVIVING CORPORATION"), pursuant to the terms
of this Agreement and the Cybex Plan of Merger;
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(c) the Articles of Incorporation of Apex Sub, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation of the
Apex Surviving Corporation until thereafter amended as provided by law and
such Articles of Incorporation;
(d) the Bylaws of Apex Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Apex Surviving Corporation until
thereafter amended;
(e) the Articles of Incorporation of Cybex Sub, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation of the
Cybex Surviving Corporation until thereafter amended as provided by law and
such Articles of Incorporation;
(f) the Bylaws of Cybex Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Cybex Surviving Corporation until
thereafter amended;
(g) the directors and officers of Apex Sub immediately prior to the
Effective Time will be the directors and officers of the Apex Surviving
Corporation, until their respective successors are duly elected or appointed
and qualified;
(h) the directors and officers of Cybex Sub immediately prior to the
Effective Time will be the directors and officers of the Cybex Surviving
Corporation, until their respective successors are duly elected or appointed
and qualified;
(i) each share of the Common Stock of Apex Sub outstanding immediately
prior to the Effective Time will be converted into one share of Common Stock
of the Apex Surviving Corporation and each stock certificate of Apex Sub
evidencing ownership of any such shares shall continue to evidence ownership
of such shares of capital stock of Apex Surviving Corporation;
(j) each share of the Common Stock of Cybex Sub outstanding immediately
prior to the Effective Time will be converted into one share of Common Stock
of the Cybex Surviving Corporation and each stock certificate of Cybex Sub
evidencing ownership of any such shares shall continue to evidence ownership
of such shares of capital stock of Cybex Surviving Corporation;
(k) each share of Apex Common Stock, Cybex Common Stock, and each Stock
Right outstanding immediately prior to the Effective Time will be converted
or cancelled as provided in Sections 1.2, 1.3, 1.4, 1.8 and 1.9;
(l) the Apex Plans and the Cybex Plans shall be assumed by Newco;
(m) the Apex Merger will, from and after the Effective Time, have all of
the effects provided by applicable law, including, without limitation,
Washington Law, including, without limiting the generality of the foregoing,
and subject thereto, that at the Effective Time all the property, rights,
privileges, powers and franchises of Apex and Apex Sub shall vest in the
Apex Surviving Corporation, and all debts, liabilities and duties of Apex
and Apex Sub shall become the debts, liabilities and duties of the Apex
Surviving Corporation; and
(n) the Cybex Merger will, from and after the Effective Time, have all
of the effects provided by applicable law, including, without limitation,
Alabama Law, including, without limiting the generality of the foregoing,
and subject thereto, that at the Effective Time all the property, rights,
privileges, powers and franchises of Cybex and Cybex Sub shall vest in the
Cybex Surviving Corporation, and all debts, liabilities and duties of Cybex
and Cybex Sub shall become the debts, liabilities and duties of the Cybex
Surviving Corporation.
1.12 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. ChaseMellon Shareholder Services LLC shall act as
exchange agent (the "EXCHANGE AGENT") in the Merger. Promptly after the
Effective Time, Newco shall deposit with the Exchange Agent, for the benefit
of the holders of shares of Apex Common Stock and
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Cybex Common Stock, for exchange in accordance with this Agreement and the
Plans of Merger, certificates representing the shares of Newco Common Stock
(such shares of Newco Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"EXCHANGE FUND") issuable pursuant to this Agreement and the Plans of
Merger, and cash in an amount sufficient for payment in lieu of fractional
shares pursuant to Section 1.7, in exchange for outstanding shares of Apex
Common Stock and Cybex Common Stock.
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time, Newco shall cause the Exchange Agent to mail to each holder of record
of a certificate or certificates which immediately prior to the Effective
Time represented issued and outstanding shares of Cybex Common Stock or Apex
Common Stock (including persons who purchase Apex Common Stock prior to the
Effective Time upon exercise of Apex Options or Apex Stock Purchase Plan
Options in accordance with Section 1.8 or who purchase Cybex Common Stock
prior to the Effective Time upon exercise of Cybex Options in accordance
with Section 1.9) which shall be converted into Newco Common Stock pursuant
to Sections 1.2 or 1.3 (collectively, the "CERTIFICATES"), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Apex and Cybex may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing Newco Common Stock. Upon surrender of
a Certificate for cancellation to the Exchange Agent, together with a duly
executed letter of transmittal and such other documents as may be reasonably
required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate representing that
number of whole shares of Newco Common Stock and cash in lieu of fractional
shares which such holder has the right to receive pursuant to the provisions
of this Agreement and the Plans of Merger, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of shares of Apex Common Stock or Cybex Common Stock which is not
registered on the transfer records of Apex or Cybex, respectively, a
certificate representing the proper number of shares of Newco Common Stock
may be issued to a transferee if (i) the Certificate representing such Apex
Common Stock or Cybex Common Stock is presented to the Exchange Agent,
properly endorsed and accompanied by all documents required to evidence and
effect such transfer and (ii) the persons requesting such exchange have paid
to Newco or any agent designated by it any transfer or other taxes required
by reason of such transfer or the Certificate representing such Apex Common
Stock or Cybex Common Stock transferred is accompanied by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 1.12 and the Plans of Merger, each Certificate
shall be deemed, on and after the Effective Time, to evidence the ownership
of the number of full shares of Newco Common Stock into which such shares of
Apex Common Stock or Cybex Common Stock, as the case may be, shall have been
so converted and the right to receive an amount in lieu of any fractional
shares of Newco Common Stock as contemplated by Section 1.7, the Plans of
Merger and the Washington Law or Alabama Law, as applicable.
(c) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No
dividends or other distributions declared or made after the Effective Time
with respect to Newco Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Newco Common Stock represented thereby, and no cash
payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 1.7 and the Plans of Merger, until the holder of record
of such Certificate shall surrender such Certificate as provided in
Section 1.12(b). Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the record holder
of the certificates representing whole shares of Newco Common Stock issued
in exchange therefor, without interest, (i) at the time of such surrender,
the amount of any cash payable in lieu of a fractional share of Newco Common
Stock to which such holder is entitled pursuant to Section 1.7 and the Plans
of Merger and the amount
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of dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole shares of Newco Common
Stock, and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of Newco Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN CYBEX COMMON STOCK AND APEX COMMON
STOCK. All shares of Newco Common Stock issued upon the surrender for
exchange of shares of Apex Common Stock and Cybex Common Stock in accordance
with the terms of this Agreement, and the Plans of Merger (including any
cash paid pursuant to Section 1.7 and Section 1.12(c)) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such
shares of Apex Common Stock and Cybex Common Stock. After the Effective Time
there shall be no further registration of transfers on the stock transfer
books of (i) the Apex Surviving Corporation of the shares of Apex Common
Stock, or (ii) the Cybex Surviving Corporation of the shares of Cybex Common
Stock, in each case which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the Apex Surviving Corporation or the Cybex Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article I
and the Plans of Merger.
(e) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the shareholders of Apex or Cybex six months
after the Effective Time shall be delivered to Newco, upon demand, and any
former shareholders of Apex or Cybex who have not theretofore complied with
this Section 1.12 and the Plans of Merger shall thereafter look only to
Newco for payment of their claim for Newco Common Stock, any cash in lieu of
fractional shares of Newco Common Stock and any dividends or distributions
with respect to Newco Common Stock.
(f) NO LIABILITY. Neither the Exchange Agent, Newco, Apex nor Cybex
shall be liable to any holder of shares of Apex Common Stock, Cybex Common
Stock or Newco Common Stock, as the case may be, for any amount delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
(g) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificates,
upon the making of an affidavit of that fact by the holder thereof, such
shares of Newco Common Stock, cash for fractional shares, if any, as may be
required pursuant to Section 1.7 and any dividends or distributions payable
pursuant to Section 1.12(c); PROVIDED, HOWEVER, that Newco may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in
such sum as it may reasonably direct as indemnity against any claim that may
be made against Newco or the Exchange Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
1.13 ASSUMPTION OF OPTIONS. Promptly after the Effective Time, Newco shall
(a) notify in writing each holder of a Stock Right (as defined in Section 5.11)
of the assumption of such Stock Right by Newco, the number of shares of Newco
Common Stock that are then subject to such Stock Right and the exercise price or
purchase price of such Stock Right, as determined pursuant to Sections 1.8 and
1.9 hereof, and (b) pursuant to Section 5.11 file the Form S-8 (as defined in
Section 5.8) to register the Stock Rights.
1.14 THE CLOSING. The closing of the Merger (the "CLOSING") shall occur at
the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, at
5300 Carillon Point, Kirkland, Washington, at a time and date to be specified by
the parties, which shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in Article VI, or at such
other time, date and location as the parties hereto agree in writing (the
"CLOSING DATE").
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1.15 TAX AND ACCOUNTING CONSEQUENCES.
(a) The parties intend to adopt this Agreement and the Merger as a
tax-free plan of reorganization under Section 368(a)(1)(A) of the Code by
virtue of the provisions of Section 368(a)(2)(E) of the Code. The Newco
Common Stock issued in the Merger will be issued solely in exchange for the
Apex Common Stock and the Cybex Common Stock, and no other transaction other
than the Merger represents, provides for or is intended to be an adjustment
to the consideration paid for either the Apex Common Stock or the Cybex
Common Stock. No consideration that could constitute "other property" within
the meaning of Section 356(b) of the Code is being transferred by Newco for
either the Apex Common Stock or the Cybex Common Stock in the Merger. The
parties shall not take a position on any tax return inconsistent with this
Section 1.15. In addition, Newco hereby represents, and will represent as of
the Closing Date, that it intends to continue both Apex's and Cybex's
historic businesses or use a significant portion of Apex's and Cybex's
business assets in a trade or business.
(b) The parties also intend that the Merger shall be accounted for using
the purchase method of accounting.
1.16 REGISTRATION OF NEWCO COMMON STOCK. The Newco Common Stock to be
issued in the Merger shall be registered under the Securities Act on a
registration statement on Form S-4 (the "REGISTRATION STATEMENT") filed with the
Securities and Exchange Commission (the "SEC").
1.17 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Apex Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Apex and the Apex Sub, the officers and directors of Apex and
the Apex Sub will take all such lawful and necessary action. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Cybex Surviving Corporation
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of Cybex and the Cybex Sub, the officers and
directors of Cybex and the Cybex Sub will take all such lawful and necessary
action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CYBEX
Cybex represents and warrants to Apex, subject to the exceptions
specifically disclosed in writing in the disclosure letter supplied by Cybex to
Apex (the "CYBEX SCHEDULES"), that the statements in this Article II are true.
The Cybex Schedules shall be arranged in sections and paragraphs corresponding
to the numbered sections and paragraphs (and subparagraphs) contained in this
Article II, and the disclosure in any paragraph shall qualify only the
corresponding Section or paragraph in this Article II or other sections to which
it is clearly apparent (from a plain reading of the disclosure or by cross
reference) that such disclosure relates.
2.1 ORGANIZATION OF CYBEX.
(a) Cybex and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation; has the corporate power and authority to own, lease and
operate its assets and property and to carry on its business as now being
conducted and as proposed to be conducted; and is duly qualified to do
business and in good standing as a foreign corporation in each jurisdiction
in which the failure to be so qualified would have a Material Adverse Effect
(as defined in Section 8.3) on Cybex.
(b) Cybex has delivered to Apex a true and complete list of all of
Cybex's subsidiaries, indicating the jurisdiction of incorporation of each
subsidiary and Cybex's equity interest therein. All outstanding shares of
capital stock or other equity interests of the subsidiaries of Cybex are
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owned by Cybex or a direct or indirect wholly-owned subsidiary of Cybex,
free and clear of all liens, pledges, charges, encumbrances, security
interests, claims and options of any nature (collectively, "LIENS").
(c) Cybex has delivered or made available to Apex a true and correct
copy of the Articles of Incorporation and Bylaws of Cybex and similar
governing instruments of each of its material subsidiaries, each as amended
to date, and each such instrument is in full force and effect. Neither Cybex
nor any of its subsidiaries is in violation of any of the provisions of its
Articles of Incorporation or Bylaws or equivalent governing instruments.
2.2 CYBEX CAPITAL STRUCTURE. The authorized capital stock of Cybex
consists of 50,000,000 shares of Common Stock, par value $0.001 per share, of
which there were 19,294,982 shares issued and outstanding as of March 6, 2000,
and 5,000,000 shares of Preferred Stock, par value $0.001 per share, of which no
shares are issued or outstanding. All outstanding shares of Cybex Common Stock
are duly authorized, validly issued, fully paid and nonassessable and are not
subject to preemptive rights created by statute, the Articles of Incorporation
or Bylaws of Cybex or any agreement or document to which Cybex is a party or by
which it is bound. As of March 6, 2000, Cybex had reserved an aggregate of
3,202,207 shares of Cybex Common Stock, net of exercises, for issuance to
employees, consultants and non-employee directors pursuant to the Cybex Plans,
under which options are outstanding to purchase an aggregate of 2,183,533 shares
and under which 1,018,674 shares are available for grant as of March 6, 2000.
All shares of Cybex Common Stock subject to issuance as aforesaid, upon issuance
on the terms and conditions specified in the instruments pursuant to which they
are issuable, would be duly authorized, validly issued, fully paid and
nonassessable. Section 2.2 of the Cybex Schedules list each outstanding option
to acquire shares of Cybex Common Stock at February 25, 2000, the name of the
holder of such option, the number of shares subject to such option, the exercise
price of such option, the number of shares as to which such option will have
vested at such date, the vesting schedule for such option and whether the
exerciseability of such option will be accelerated in any way by the
transactions contemplated by this Agreement or for any other reason, and
indicate the extent of acceleration, if any.
2.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Section 2.2, there are no equity securities, partnership interests or similar
ownership interests of any class of Cybex capital stock, or any securities
exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests issued, reserved for
issuance or outstanding. Except for securities Cybex owns, directly or
indirectly through one or more subsidiaries, there are no equity securities,
partnership interests or similar ownership interests of any class of any
subsidiary of Cybex, or any security exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests issued, reserved for issuance or outstanding. Except as set
forth in Section 2.2, there are no options, warrants, equity securities,
partnership interests or similar ownership interests, calls, rights (including
preemptive rights), commitments or agreements of any character to which Cybex or
any of its subsidiaries is a party or by which it is bound obligating Cybex or
any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, or repurchase, redeem or otherwise acquire, or cause the
repurchase, redemption or acquisition, of any shares of capital stock of Cybex
or any of its subsidiaries or obligating Cybex or any of its subsidiaries to
grant, extend, accelerate the vesting of or enter into any such option, warrant,
equity security, partnership interest or similar ownership interest, call,
right, commitment or agreement. There are no registration rights and, to the
knowledge of Cybex, there are (except for the Cybex Voting Agreements) no voting
trusts, proxies or other agreements or understandings with respect to any equity
security of any class of Cybex or with respect to any equity security,
partnership interest or similar ownership interest of any class of any of its
subsidiaries. Cybex has no outstanding stock appreciation rights, phantom stock
or similar rights.
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2.4 AUTHORITY.
(a) Cybex has all requisite corporate power and authority to enter into
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Cybex, subject
only to the approval and adoption of this Agreement and the approval of the
Cybex Merger by Cybex's shareholders and the filing and recordation of the
Cybex Plan of Merger pursuant to Alabama Law. A vote of the holders of at
least two-thirds (2/3) of the outstanding shares of the Cybex Common Stock
is required for Cybex's shareholders to approve and adopt this Agreement and
approve the Cybex Merger. This Agreement has been duly executed and
delivered by Cybex and, assuming the due authorization, execution and
delivery by Apex and Newco, constitutes the valid and binding obligation of
Cybex, enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy and other similar laws and general principles
of equity. The execution and delivery of this Agreement by Cybex does not,
and the performance of this Agreement by Cybex will not (i) conflict with or
violate the Articles of Incorporation or Bylaws of Cybex or the equivalent
organizational documents of any of its subsidiaries, (ii) subject to
obtaining the approval and adoption of this Agreement and the approval of
the Cybex Merger by Cybex's shareholders as contemplated in Section 5.2 and
compliance with the requirements set forth in Section 2.4(b) below, conflict
with or violate any law, rule, regulation, order, judgment, injunction or
decree applicable to Cybex or any of its subsidiaries or by which its or any
of their respective properties is bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or impair Cybex's rights or
alter the rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the properties or
assets of Cybex or any of its subsidiaries pursuant to, any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
authorization, consent, approval, franchise or other instrument or
obligation to which Cybex or any of its subsidiaries is a party or by which
Cybex or any of its subsidiaries or its or any of their respective
properties are bound or affected, authorization, consent, approval, except
to the extent such conflict, violation, breach, default, impairment or other
effect could not, in the case of clause (ii) or (iii), individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Cybex.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any federal, state or local government or any
court, administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign ("GOVERNMENTAL ENTITY") is required
by or with respect to Cybex in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby,
except for (i) the filing of the Registration Statement, (ii) the filing of
the Cybex Plan of Merger with the Secretary of State of Alabama, (iii) the
filing of the Proxy Statement (as defined in Section 2.17) with the SEC in
accordance with the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), (iv) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT") and the laws of any
foreign country and (v) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not be
material to Cybex or Apex or have a material adverse effect on the ability
of the parties to consummate the Merger.
2.5 SEC FILINGS; CYBEX FINANCIAL STATEMENTS.
(a) Cybex has filed all forms, reports and documents required to be
filed with the SEC since January 1, 1998, and has made available to Apex
such forms, reports and documents in the form filed with the SEC. All such
required forms, reports and documents (including those that Cybex
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may file subsequent to the date hereof) are referred to herein as the "CYBEX
SEC REPORTS." As of their respective dates, the Cybex SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Cybex SEC Reports, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None
of Cybex's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Cybex SEC Reports (the
"CYBEX FINANCIALS"), including any Cybex SEC Reports filed after the date
hereof until the Closing, (i) complied as to form in all material respects
with the published rules and regulations of the SEC with respect thereto,
(ii) was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on
Form 10-Q under the Exchange Act) and (iii) fairly presented the
consolidated financial position of Cybex and its subsidiaries at the
respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not, or are not expected to be, material in amount.
The balance sheet of Cybex contained in the Cybex SEC Reports as of
December 31, 1999 is hereinafter referred to as the "CYBEX BALANCE SHEET."
Except as disclosed in the Cybex Financials, neither Cybex nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a balance sheet or in the
related notes to the consolidated financial statements prepared in
accordance with GAAP which are, individually or in the aggregate, material
to the business, results of operations or financial condition of Cybex and
its subsidiaries taken as a whole, except liabilities (i) provided for in
the Cybex Balance Sheet, or (ii) incurred since the date of the Cybex
Balance Sheet in the ordinary course of business consistent with past
practices.
(c) Cybex has heretofore furnished to Apex a complete and correct copy
of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Cybex with the SEC pursuant
to the Securities Act or the Exchange Act.
2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Cybex
Balance Sheet, the business of Cybex and its subsidiaries has been carried on
only in the ordinary and usual course. Since the date of the Cybex Balance
Sheet: (i) there has not been any Material Adverse Effect on Cybex and no event
has occurred and no fact or set of circumstances has arisen which has resulted
in or could reasonably be expected to result in a Material Adverse Effect on
Cybex, (ii) there has not been any material change by Cybex in its accounting
methods, principles or practices, except as required by concurrent changes in
GAAP, (iii) there has not been any revaluation by Cybex of any of its assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable other than in the ordinary course of
business, (iv) no material customer or supplier of Cybex or its subsidiaries has
threatened to alter materially and adversely its relationship with Cybex or its
subsidiaries, and (v) there has not been any agreement by Cybex or any of its
subsidiaries to waive or release of any material right or claim (including
without limitation to any write off or other compromise of any material account
receivable) outside of the ordinary course of business consistent with past
practice.
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2.7 TAXES.
(a) DEFINITION OF TAXES. For the purposes of this Agreement, "TAX" or
"TAXES" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and
liabilities relating to taxes, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added,
ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest, penalties
and additions imposed with respect to such amounts and any obligations under
any agreements or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity.
(b) TAX RETURNS AND AUDITS.
(i) Cybex and each of its subsidiaries have timely filed all federal,
state, local and foreign returns, estimates, information statements and
reports ("RETURNS") relating to Taxes required to be filed by Cybex and
each of its subsidiaries with any Tax authority, except such Returns
which are not material to Cybex. Cybex and each of its subsidiaries have
paid all Taxes shown to be due on such Returns.
(ii) Cybex and each of its subsidiaries as of the Effective Time will
have withheld with respect to its employees all federal and state income
taxes, Taxes pursuant to the Federal Insurance Contribution Act, Taxes
pursuant to the Federal Unemployment Tax Act and other Taxes required to
be withheld, except such Taxes which are not material to Cybex.
(iii) Neither Cybex nor any of its subsidiaries has been delinquent in
the payment of any material Tax nor is there any material Tax deficiency
outstanding, proposed or assessed against Cybex or any of its
subsidiaries, nor has Cybex or any of its subsidiaries executed any
unexpired waiver of any statute of limitations on or extending the period
for the assessment or collection of any Tax.
(iv) No audit or other examination of any Return of Cybex or any of
its subsidiaries by any Tax authority is presently in progress, nor has
Cybex or any of its subsidiaries been notified of any request for such an
audit or other examination.
(v) No adjustment relating to any Returns filed by Cybex or any of
its subsidiaries has been proposed in writing formally or informally by
any Tax authority to Cybex or any of its subsidiaries or any
representative thereof.
(vi) Neither Cybex nor any of its subsidiaries has any liability for
any material unpaid Taxes which has not been accrued for or reserved on
the Cybex Balance Sheet in accordance with GAAP, whether asserted or
unasserted, contingent or otherwise, which is material to Cybex, other
than any liability for unpaid Taxes that may have accrued since the date
of the Cybex Balance Sheet in connection with the operation of the
business of Cybex and its subsidiaries in the ordinary course.
(vii) There is no contract, agreement, plan or arrangement to which
Cybex or any of its subsidiaries is a party as of the date of this
Agreement, including but not limited to the provisions of this Agreement,
covering any employee or former employee of Cybex or any of its
subsidiaries that, individually or collectively, would reasonably be
expected to give rise to the payment of any amount as a result of the
Merger that would not be deductible pursuant to Sections 280G, 404 or
162(m) of the Code. There is no contract, agreement, plan or arrangement
to which Cybex is a party or by which it is bound to compensate any
individual for excise taxes paid pursuant to Section 4999 of the Code.
(viii) Neither Cybex nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any
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disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by Cybex or any of its subsidiaries.
(ix) Neither Cybex nor any of its subsidiaries is party to or has any
obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement.
(x) None of Cybex's or its subsidiaries' assets are tax exempt use
property within the meaning of Section 168(h) of the Code.
(xi) Neither Cybex nor any of its subsidiaries was a " distributing
corporation" or a "controlling corporation" in a distribution of stock to
which Section 355 of the Code applied and that occurred within two years
before the date of this Agreement or as part of a plan or series of
transactions that includes the Merger.
2.8 CYBEX INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data and customer lists, and all documentation
relating to any of the foregoing; (iii) all copyrights, copyrights registrations
and applications therefor, and all other rights corresponding thereto throughout
the world; (iv) all industrial designs and any registrations and applications
therefor throughout the world; (v) all trade names, logos, common law trademarks
and service marks, trademark and service mark registrations and applications
therefor throughout the world; (vi) all databases and data collections and all
rights therein throughout the world; (vii) all moral and economic rights of
authors and inventors, however denominated, throughout the world, and
(viii) any similar or equivalent rights to any of the foregoing anywhere in the
world.
"CYBEX INTELLECTUAL PROPERTY" shall mean any Intellectual Property that is
owned by, or exclusively licensed to, Cybex or any of its subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all United States, international
and foreign: (i) patents and patent applications (including provisional
applications); (ii) registered trademarks, applications to register trademarks,
intent-to-use applications, or other registrations or applications related to
trademarks; (iii) registered copyrights and applications for copyright
registration; and (iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document issued, filed
with, or recorded by any state, government or other public legal authority.
"CYBEX REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, Cybex or any of its
subsidiaries.
(a) Section 2.8(a) of the Cybex Schedules is a complete and accurate
list of all Cybex Registered Intellectual Property and specifies, where
applicable, the jurisdictions in which each such item of Cybex Registered
Intellectual Property has been issued or registered.
(b) No Cybex Intellectual Property or product or service of Cybex or any
of its subsidiaries is subject to any proceeding or outstanding decree,
order, judgment, contract, license, agreement, or stipulation restricting in
any manner the use, transfer, or licensing thereof by Cybex or any of its
subsidiaries, or which may affect the validity, use or enforceability of
such Cybex Intellectual Property.
(c) Cybex owns and has good and exclusive title to, or has license
(sufficient for the conduct of its business as currently conducted and as
proposed to be conducted), each material item of
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Cybex Intellectual Property or other Intellectual Property used by Cybex
free and clear of any lien or encumbrance (excluding licenses and related
restrictions); and Cybex is the exclusive owner of all trademarks and trade
names used in connection with the operation or conduct of the business of
Cybex and its subsidiaries, including the sale of any products or the
provision of any services by Cybex and its subsidiaries.
(d) Cybex owns exclusively, and has good title to, all copyrighted works
that are Cybex products or which Cybex or any of its subsidiaries otherwise
expressly purports to own.
(e) To the extent that any material Intellectual Property has been
developed or created by a third party for Cybex or any of its subsidiaries,
Cybex has a written agreement with such third party with respect thereto and
Cybex thereby either (i) has obtained ownership of, and is the exclusive
owner of, or (ii) has obtained a license (sufficient for the conduct of its
business as currently conducted and as proposed to be conducted) to all such
third party's Intellectual Property in such work, material or invention by
operation of law or by valid assignment, to the fullest extent it is legally
possible to do so.
(f) Neither Cybex nor any of its subsidiaries has transferred ownership
of, or granted any exclusive license with respect to, any Intellectual
Property that is or was material Cybex Intellectual Property, to any third
party.
(g) To the knowledge of Cybex, the operation of the business of Cybex
and its subsidiaries as such business currently is conducted, including
Cybex's and its subsidiaries' design, development, manufacture, marketing
and sale of the products or services of Cybex and its subsidiaries
(including products currently under development) has not, does not and will
not infringe or misappropriate the Intellectual Property of any third party
or, to its knowledge, constitute unfair competition or trade practices under
the laws of any jurisdiction.
(h) Neither Cybex nor any of its subsidiaries has received notice from
any third party that the operation of the business of Cybex or any of its
subsidiaries or any act, product or service of Cybex or any of its
subsidiaries, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the
laws of any jurisdiction.
(i) To the knowledge of Cybex, no person has or is infringing or
misappropriating any Cybex Intellectual Property.
(j) Cybex and each of its subsidiaries has taken reasonable steps to
protect Cybex's and its subsidiaries' rights in Cybex's confidential
information and trade secrets that it wishes to protect and any trade
secrets or confidential information of third parties provided to Cybex or
any of its subsidiaries, and, without limiting the foregoing, each of Cybex
and its subsidiaries has and enforces a policy requiring each employee and
contractor to execute a proprietary information/ confidentiality agreement
substantially in the form provided to Apex and all current and former
employees and contractors of Cybex and any of its subsidiaries have executed
such an agreement, except where the failure to do so is not reasonably
expected to be material to Cybex.
(k) All of Cybex's and its subsidiaries' products (including products
currently under development) (i) will record, store, process, calculate and
present calendar dates falling on and after (and if applicable, spans of
time including) January 1, 2000, and will calculate any information
dependent on or relating to such dates in the same manner, and with the same
functionality, data integrity and performance, as the products record,
store, process, calculate and present calendar dates on or before
December 31, 1999, or calculate any information dependent on or relating to
such dates (collectively, "YEAR 2000 COMPLIANT") and (ii) will lose no
functionality with respect to the introduction of records containing dates
falling on or after January 1, 2000. All of Cybex's or its subsidiaries'
Cybex Information Technology (as defined below) is Year 2000 Compliant, and
will not cause an interruption in the ongoing operations of Cybex's or any
of its
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subsidiaries' business on or after January 1, 2000. For purposes of the
foregoing, the term "CYBEX INFORMATION TECHNOLOGY" shall mean and include
all software, hardware, firmware, telecommunications systems, network
systems, embedded systems and other systems, components and/or services
(other than general utility services including gas, electric, telephone and
postal) that are owned or used by Cybex or any of its subsidiaries in the
conduct of their business, or purchased by Cybex or any of its subsidiaries
from third-party suppliers.
2.9 COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither Cybex nor any of its subsidiaries is, in any material
respect, in conflict with, or in default or violation of (i) any law, rule,
regulation, order, judgment or decree applicable to Cybex or any of its
subsidiaries or by which its or any of their respective properties is bound
or affected, or (ii) any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which Cybex or any of its subsidiaries is a party or by which
Cybex or any of its subsidiaries or its or any of their respective
properties is bound or affected. To the knowledge of Cybex, no investigation
or review by any Governmental Entity is pending or threatened against Cybex
or its subsidiaries, nor has any Governmental Entity indicated an intention
to conduct the same. There is no material agreement, judgment, injunction,
order or decree binding upon Cybex or any of its subsidiaries which has or
could reasonably be expected to have the effect of prohibiting or materially
impairing any business practice of Cybex or any of its subsidiaries, any
acquisition of material property by Cybex or any of its subsidiaries or the
conduct of business by Cybex as currently conducted.
(b) Cybex and its subsidiaries have in effect all authorizations,
certificates, filings, franchises, notices, rights, permits, licenses,
variances, exemptions, orders and approvals from Governmental Entities which
are material to the operation of the business of Cybex including all
authorizations under Environmental Laws (as defined in Section 2.14)
(collectively, the "CYBEX PERMITS"). Cybex and its subsidiaries are in
compliance in all material respects with the terms of the Cybex Permits.
2.10 LITIGATION. As of the date of this Agreement, there is no action,
suit, proceeding, claim, arbitration or investigation pending, or as to which
Cybex or any of its subsidiaries has received any notice of assertion nor, to
Cybex's knowledge, is there a threatened action, suit, proceeding, claim,
arbitration or investigation against Cybex or any of its subsidiaries which
reasonably would be likely to be material to Cybex, or which in any manner
challenges or seeks to prevent, enjoin, alter or delay any of the transactions
contemplated by this Agreement.
2.11 BROKERS' AND FINDERS' FEES. Except for fees payable to SG Cowen
Securities Corporation pursuant to an engagement letter dated February 21, 2000,
a copy of which has been provided to Apex, Cybex has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
2.12 EMPLOYEE BENEFIT PLANS.
(a) DEFINITIONS. With the exception of the definition of "Cybex
Affiliate" set forth in Section 2.12(a)(i) below (which definition shall
apply only to this Section 2.12), for purposes of this Agreement, the
following terms shall have the meanings set forth below:
(i) "CYBEX AFFILIATE" shall mean any other person or entity under
common control with the Cybex within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations issued thereunder;
(ii) "CODE" shall mean the Internal Revenue Code of 1986, as amended;
(iii) "CYBEX EMPLOYEE PLAN" shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay,
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deferred compensation, performance awards, stock or stock-related awards,
fringe benefits or other employee benefits or remuneration of any kind,
whether written or unwritten or otherwise, funded or unfunded, including
without limitation, each "employee benefit plan," within the meaning of
Section 3(3) of ERISA which is or has been maintained, contributed to, or
required to be contributed to, by Cybex or any Cybex Affiliate for the
benefit of any Cybex Employee, or with respect to which Cybex or any
Cybex Affiliate has or may have any liability or obligation;
(iv) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(v) "DOL" shall mean the Department of Labor;
(vi) "CYBEX EMPLOYEE" shall mean any current or former employee,
consultant or director of Cybex or any Cybex Affiliate;
(vii) "CYBEX EMPLOYMENT AGREEMENT" shall mean each management,
employment, severance, consulting, relocation, repatriation,
expatriation, visas, work permit or other agreement, contract or
understanding between Cybex or any Cybex Affiliate and any Cybex
Employee;
(viii) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended;
(ix) "FMLA" shall mean the Family Medical Leave Act of 1993, as
amended;
(x) "CYBEX INTERNATIONAL EMPLOYEE PLAN" shall mean each Cybex
Employee Plan that has been adopted or maintained by Cybex or any Cybex
Affiliate, whether informally or formally, or with respect to which the
Company or any Cybex Affiliate will or may have any liability, for the
benefit of Cybex Employees who perform services outside the United
States;
(xi) "IRS" shall mean the Internal Revenue Service;
(xii) "CYBEX MULTIEMPLOYER PLAN" shall mean any "Cybex Pension Plan"
(as defined below) which is a "multiemployer plan," as defined in
Section 3(37) of ERISA;
(xiii) "PBGC" shall mean the Pension Benefit Guaranty Corporation; and
(xiv) "CYBEX PENSION PLAN" shall mean each Cybex Employee Plan which
is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA.
(b) SCHEDULE. Section 2.12(b) of the Cybex Schedules contains an
accurate and complete list of each Cybex Employee Plan, Cybex International
Employee Plan, and each Cybex Employment Agreement. Cybex does not have any
plan or commitment to establish any new Cybex Employee Plan, Cybex
International Employee Plan, or Cybex Employment Agreement, to modify any
Cybex Employee Plan or Cybex Employment Agreement (except to the extent
required by law or to conform any such Cybex Employee Plan or Cybex
Employment Agreement to the requirements of any applicable law, in each case
as previously disclosed to Apex in writing, or as required by this
Agreement), or to adopt or enter into any Cybex Employee Plan, Cybex
International Employee Plan, or Cybex Employment Agreement.
(c) DOCUMENTS. Cybex has provided to Apex: (i) correct and complete
copies of all documents embodying each Cybex Employee Plan, Cybex
International Employee Plan, and each Cybex Employment Agreement including
(without limitation) all amendments thereto and all related trust documents,
administrative service agreements, group annuity contracts, group insurance
contracts, and policies pertaining to fiduciary liability insurance covering
the fiduciaries for each Plan; (ii) the most recent annual actuarial
valuations, if any, prepared for each Cybex
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Employee Plan; (iii) the two (2) most recent annual reports (Form
Series 5500 and all schedules and financial statements attached thereto), if
any, required under ERISA or the Code in connection with each Cybex Employee
Plan; (iv) if the Cybex Employee Plan is funded, the most recent annual and
periodic accounting of Cybex Employee Plan assets; (v) the most recent
summary plan description together with the summary(ies) of material
modifications thereto, if any, required under ERISA with respect to each
Cybex Employee Plan; (vi) all IRS determination, opinion, notification and
advisory letters, and all applications and correspondence to or from the IRS
or the DOL with respect to any such application or letter; (vii) all
communications material to any Cybex Employee or Cybex Employees relating to
any Cybex Employee Plan and any proposed Cybex Employee Plans, in each case,
relating to any amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or
other events which would result in any material liability to Cybex;
(viii) all correspondence to or from any governmental agency relating to any
Cybex Employee Plan; (ix) all COBRA forms and related notices (or such forms
and notices as required under comparable law); (x) the three (3) most recent
plan years discrimination tests for each Cybex Employee Plan, if applicable;
and (xi) all registration statements, annual reports (Form 11-K and all
attachments thereto) and prospectuses prepared in connection with each Cybex
Employee Plan.
(d) EMPLOYEE PLAN COMPLIANCE. Except as set forth on Section 2.12(d)
of the Cybex Schedules, (i) Cybex has performed in all material respects all
obligations required to be performed by it under, is not in default or
violation of, and has no knowledge of any default or violation by any other
party to each Cybex Employee Plan, and each Cybex Employee Plan has been
established and maintained in all material respects in accordance with its
terms and in compliance with all applicable laws, statutes, orders, rules
and regulations, including but not limited to ERISA or the Code; (ii) each
Cybex Employee Plan intended to qualify under Section 401(a) of the Code and
each trust intended to qualify under Section 501(a) of the Code has either
received a favorable determination, opinion, notification or advisory letter
from the IRS with respect to each such Cybex Employee Plan as to its
qualified status under the Code, including all amendments to the Code
effected by the Tax Reform Act of 1986 and subsequent legislation, or has
remaining a period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a letter and make any amendments
necessary to obtain a favorable determination as to the qualified status of
each such Cybex Employee Plan; (iii) no "prohibited transaction," within the
meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and
not otherwise exempt under Section 4975 of the Code or Section 408 of ERISA
(or any administrative class exemption issued thereunder), has occurred with
respect to any Cybex Employee Plan; (iv) there are no actions, suits or
claims pending, or, to the knowledge of Cybex, threatened or reasonably
anticipated (other than routine claims for benefits) against any Cybex
Employee Plan or against the assets of any Cybex Employee Plan; (v) each
Cybex Employee Plan (other than any stock option plan) can be amended,
terminated or otherwise discontinued after the Effective Time, without
material liability to the Apex, Cybex or any of its Cybex Affiliates (other
than ordinary administration expenses); (vi) there are no audits, inquiries
or proceedings pending or, to the knowledge of Cybex or any Cybex
Affiliates, threatened by the IRS or DOL with respect to any Cybex Employee
Plan; and (vii) neither Cybex nor any Cybex Affiliate is subject to any
penalty or tax with respect to any Cybex Employee Plan under Section 502(i)
of ERISA or Sections 4975 through 4980 of the Code.
(e) PENSION PLAN. Neither Cybex nor any Cybex Affiliate has previously
or currently maintains, sponsors, participates in or contributes to a
Pension Plan which is subject to Title IV of ERISA or Section 412 of the
Code. As of the Effective Time: (i) no legal or administrative action has
been taken by the PBGC to terminate or to appoint a trustee to administer
the Pension Plan; (ii) no liability to the PBGC under Title IV of ERISA has
been incurred by Cybex or an Cybex Affiliate that has not been satisfied in
full; (iii) each Pension Plan was fully-funded on a
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termination basis; (iv) each Pension Plan has been maintained in compliance
with the minimum funding standards of ERISA and the Code where applicable
and has not incurred any "accumulated funding deficiency," as defined in
Section 302 of ERISA and Section 412 of the Code, whether or not waived; and
(v) no Pension Plan has a reportable event within the meaning of
Section 4043 of ERISA and the regulations thereunder; and (vi) no Pension
Plan has incurred any event described in Section 4041 (other than the
standard termination contemplated herein), 4062 or 4063 of ERISA.
(f) COLLECTIVELY BARGAINED, MULTIEMPLOYER AND MULTIPLE EMPLOYER
PLANS. At no time has Cybex or any Cybex Affiliate contributed to or been
obligated to contribute to any Cybex Multiemployer Plan. Neither Cybex, nor
any Cybex Affiliate has at any time ever maintained, established, sponsored,
participated in, or contributed to any multiple employer plan, or to any
plan described in Section 413 of the Code.
(g) NO POST-EMPLOYMENT OBLIGATIONS. Except as set forth in
Section 2.12(g) of the Cybex Schedules, no Cybex Employee Plan provides, or
reflects or represents any liability to provide retiree health benefits to
any person for any reason, except as may be required by COBRA or other
applicable statute, and Cybex has never represented, promised or contracted
(whether in oral or written form) to any Cybex Employee (either individually
or to Cybex Employees as a group) or any other person that such Cybex
Employee(s) or other person would be provided with retiree health, except to
the extent required by statute.
(h) HEALTH CARE COMPLIANCE. Neither Cybex nor any Cybex Affiliate has,
prior to the Effective Time and in any material respect, violated any of the
health care continuation requirements of COBRA, the requirements of FMLA,
the requirements of the Health Insurance Portability and Accountability Act
of 1996, the requirements of the Women's Health and Cancer Rights Act of
1998, the requirements of the Newborns' and Mothers' Health Protection Act
of 1996, or any amendment to each such act, or any similar provisions of
state law applicable to Cybex Employees.
(i) EFFECT OF TRANSACTION.
(i) Except as set forth on Section 2.12(i)(i) of the Cybex Schedules,
the execution of this Agreement and the consummation of the transactions
contemplated hereby will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any Cybex
Employee Plan, Cybex Employment Agreement, trust or loan that will or may
result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any
Cybex Employee.
(ii) Except as set forth on Section 2.12(i)(ii) of the Cybex
Schedules, no payment or benefit which will or may be made by Cybex or
its Cybex Affiliates with respect to any Cybex Employee will be
characterized as a "parachute payment," within the meaning of
Section 280G(b)(2) of the Code.
(j) EMPLOYMENT MATTERS. Cybex: (i) is in compliance in all respects
with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Cybex Employees, except as would not have a Material Adverse Effect on
Cybex; (ii) has withheld and reported all amounts required by law or by
agreement to be withheld and reported with respect to wages, salaries and
other payments to Cybex Employees; (iii) is not liable for any arrears of
wages or any taxes or any penalty for failure to comply with any of the
foregoing; and (iv) is not liable for any payment to any trust or other fund
governed by or maintained by or on behalf of any governmental authority,
with respect to unemployment compensation benefits, social security or other
benefits or obligations for Cybex Employees (other than routine payments to
be
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made in the normal course of business and consistent with past practice).
There are no pending, threatened or reasonably anticipated claims or actions
against Cybex under any worker's compensation policy or long-term disability
policy.
(k) LABOR. No work stoppage or labor strike against Cybex is pending,
threatened or reasonably anticipated. Cybex does not know of any activities
or proceedings of any labor union to organize any Cybex Employees. Except as
set forth in Section 2.12(k) of the Cybex Schedules, there are no actions,
suits, claims, labor disputes or grievances pending, or, to the knowledge of
Cybex, threatened or reasonably anticipated relating to any labor, safety or
discrimination matters involving any Cybex Employee, including, without
limitation, charges of unfair labor practices or discrimination complaints,
which, if adversely determined, would, individually or in the aggregate,
result in any material liability to Cybex. Neither Cybex nor any of its
subsidiaries has engaged in any unfair labor practices within the meaning of
the National Labor Relations Act. Except as set forth in Section 2.12(k) of
the Cybex Schedules, Cybex is not presently, nor has it been in the past, a
party to, or bound by, any collective bargaining agreement or union contract
with respect to Cybex Employees and no collective bargaining agreement is
being negotiated by Cybex.
(l) CYBEX INTERNATIONAL EMPLOYEE PLAN. Each Cybex International
Employee Plan has been established, maintained and administered in
compliance with its terms and conditions and with the requirements
prescribed by any and all statutory or regulatory laws that are applicable
to such Cybex International Employee Plan, except as would not have a
Material Adverse Effect on Cybex. Furthermore, no Cybex International
Employee Plan has unfunded liabilities, that as of the Effective Time, will
not be offset by insurance or fully accrued. Except as required by law, no
condition exists that would prevent Cybex or Apex from terminating or
amending any Cybex International Employee Plan at any time for any reason
without liability to Cybex or its Cybex Affiliates (other than ordinary
administration expenses or routine claims for benefits).
2.13 ABSENCE OF LIENS AND ENCUMBRANCES. Cybex and each of its subsidiaries
has good and marketable title to, or valid leasehold interests in, all its
material properties and assets except for such as are no longer used or useful
in the conduct of its businesses or as have been disposed of in the ordinary
course of business and except for defects in title, easements, restrictive
covenants and similar encumbrances that individually or in the aggregate would
not materially interfere with the ability of Cybex or any of its subsidiaries to
conduct its business as currently conducted. All such material assets and
properties, other than assets and properties in which Cybex or any of its
subsidiaries has a leasehold interest, are free and clear of all Liens except
for Liens that (A) are created, arise or exist under or in connection with any
of the contracts or other matters referred to in the Cybex Schedules or in the
Cybex SEC Reports or the exhibits thereto, (B) relate to any taxes or other
governmental charges or levies that are not yet due and payable, (C) relate to,
or are created, arise or exist in connection with, any legal proceeding that is
being contested in good faith, or (D) individually or in the aggregate would not
materially interfere with the ability of Cybex and each of its subsidiaries to
conduct their business as currently conducted and would not materially and
adversely impact the transferability, financeability, ownership, leasing, use,
development or occupancy of any such properties or assets ("CYBEX PERMITTED
LIENS"). To the knowledge of Cybex, there are no natural or artificial
conditions upon any real property owned by Cybex ("CYBEX OWNED REAL PROPERTY"),
or any other facts or conditions which could, in the aggregate, have a material
and adverse impact on the transferability, financeability, ownership, leasing,
use, development, occupancy or operation of any such Cybex Owned Real Property.
There are no parties in possession of any portion of any Cybex Owned Real
Property, whether as tenants, trespassers or otherwise, except Cybex. There are
no pending, or, to the knowledge of Cybex, threatened assessments, improvements
or activities of any public or quasi-public body either planned, in the process
of construction or completed which may give rise to any assessment against any
Cybex Owned Real Property. Cybex and each of its subsidiaries has complied in
all material respects with and is not in default under the terms of all material
leases to which it is a party, and all such leases are in full force and effect.
To the knowledge of Cybex, no party to any material lease is in
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default of such lease and there exists no event or circumstance with respect to
such lease which with the giving of notice or the passage of time, or both,
would constitute a default by any party to such lease.
2.14 ENVIRONMENTAL MATTERS.
(a) The term "HAZARDOUS MATERIAL" means any material or substance that
is prohibited or regulated by any Environmental Law or that has been
designated by any Governmental Entity to be radioactive, toxic, hazardous or
otherwise a danger to health, reproduction or the environment. The term
"CYBEX BUSINESS FACILITY" means any property including the land, the
improvements thereon, the groundwater thereunder and the surface water
thereon, that is or at any time has been owned, operated, occupied,
controlled or leased by Cybex or any of its subsidiaries in connection with
the operation of its business. The term "DISPOSAL SITE" means a landfill,
disposal agent, waste hauler or recycler of Hazardous Materials. The term
"ENVIRONMENTAL LAWS" means all applicable laws, rules, regulations, orders,
treaties, statutes, and codes promulgated by any Governmental Entity which
prohibit, regulate or control any Hazardous Material or any Hazardous
Material Activity, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, the
Resource Conservation and Recovery Act of 1976, the Federal Water Pollution
Control Act, the Clean Air Act, the Hazardous Materials Transportation Act,
the Clean Water Act, comparable laws, rules, regulations, orders, treaties,
statutes, and codes of other Governmental Entities, the regulations
promulgated pursuant to any of the foregoing, and all amendments and
modifications of any of the foregoing, all as amended to date. The term
"HAZARDOUS MATERIALS ACTIVITY" means the transportation, transfer,
recycling, storage, use, treatment, manufacture, removal, remediation,
release, exposure of others to, sale, or distribution of any Hazardous
Material or any product containing a Hazardous Material. The term "CYBEX
ENVIRONMENTAL PERMIT" means any approval, permit, license, clearance,
registration or consent required to be obtained from any private person or
any Governmental Entity with respect to a Hazardous Materials Activity which
is or was conducted by Cybex or any of its subsidiaries.
(b) Except in compliance with Environmental Laws and in a manner that
could not reasonably be expected to subject Cybex or any of its subsidiaries
to material liability, no Hazardous Materials are present on any Cybex
Business Facility.
(c) Cybex and each of its subsidiaries have conducted all Hazardous
Material Activities in compliance in all material respects with all
applicable Environmental Laws. To the knowledge of Cybex the Hazardous
Materials Activities of Cybex and each of its subsidiaries have not resulted
in the exposure of any person to a Hazardous Material in a manner which has
caused or could reasonably be expected to cause an adverse health effect to
said person.
(d) Section 2.14(d) of the Cybex Schedules accurately describes all of
the Cybex Environmental Permits currently held by Cybex and each of its
subsidiaries. Such Cybex Environmental Permits are all of the Cybex
Environmental Permits necessary for the continued conduct of any Hazardous
Material Activity of Cybex and each of its subsidiaries as such activities
are currently being conducted, except for those permits the absence of which
could not reasonably be expected to result in a Material Adverse Effect on
Cybex. All such Cybex Environmental Permits are valid and in full force and
effect. Cybex and its subsidiaries have complied in all material respects
with all covenants and conditions of any Cybex Environmental Permit which is
or has been in force with respect to its Hazardous Materials Activities. To
the knowledge of Cybex, no circumstance exists which could cause any Cybex
Environmental Permit to be revoked, modified, or rendered non-renewable upon
payment of the permit fee.
(e) No action, proceeding, revocation proceeding, amendment procedure,
writ, injunction or claim is pending, or to the knowledge of Cybex,
threatened, concerning or relating to any Cybex Environmental Permit or any
Hazardous Materials Activity of Cybex or any of its subsidiaries, or
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to any Cybex Business Facility currently owned, operated, occupied,
controlled or leased by Cybex or any of its subsidiaries, or to the
knowledge of Cybex, pending or threatened with respect to any other Cybex
Business Facility.
(f) To the knowledge of Cybex, Cybex and each of its subsidiaries have
transferred or released Hazardous Materials only to those Disposal Sites
described on Section 2.14(f) of the Cybex Schedules; and no action,
proceeding, liability or claim exists or is threatened against any Disposal
Site or against Cybex or any of its subsidiaries with respect to any
transfer or release of Hazardous Materials to a Disposal Site which could
reasonably be expected to subject Cybex or any of its subsidiaries to
liability.
(g) Cybex is not aware of any fact or circumstance which could result in
any environmental liability which could reasonably be expected to result in
a Material Adverse Effect on Cybex.
(h) Cybex has delivered to Apex or made available for inspection by Apex
and its agents and employees all records in Cybex's possession concerning
the Hazardous Materials Activities of Cybex and each of its subsidiaries and
all environmental audits and environmental assessments of any Cybex Business
Facility conducted at the request of, or otherwise in the possession of,
Cybex or any of its subsidiaries. Cybex has complied with all environmental
disclosure obligations imposed by applicable law upon Cybex and any of its
subsidiaries with respect to the Merger.
2.15 LABOR MATTERS. (i) There are no disputes or claims pending or, to the
knowledge of each of Cybex and its respective subsidiaries, threatened, between
Cybex or any of its subsidiaries and any of their respective employees; (ii) as
of the date of this Agreement, neither Cybex nor any of its subsidiaries is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by Cybex or its subsidiaries nor does Cybex or
its subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (iii) as of the date of this Agreement, neither
Cybex nor any of its subsidiaries has any knowledge of any strikes, slowdowns,
work stoppages or lockouts, or threats thereof, by or with respect to any
employees of Cybex or any of its subsidiaries.
2.16 AGREEMENTS, CONTRACTS AND COMMITMENTS. Neither Cybex nor any of its
subsidiaries is a party to or is bound by:
(a) any employment or consulting agreement, contract or commitment with
any officer or director or higher level employee or member of Cybex's Board
of Directors, other than those that are terminable by Cybex or any of its
subsidiaries on no more than thirty (30) days' notice without liability or
financial obligation to Cybex;
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement;
(c) any agreement of indemnification or any guaranty other than any
agreement of indemnification entered into in connection with the sale or
license of computer or communications hardware products in the ordinary
course of business;
(d) any agreement, contract or commitment containing any covenant
limiting in any respect the right of Cybex or any of its subsidiaries to
engage in any line of business, conduct business in any geographical area or
to compete with any person or granting any exclusive distribution rights;
(e) any agreement, contract or commitment currently in force relating to
the disposition or acquisition by Cybex or any of its subsidiaries after the
date of this Agreement of a material amount of assets not in the ordinary
course of business or pursuant to which Cybex has any
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material ownership interest in any corporation, partnership, joint venture
or other business enterprise other than Cybex's subsidiaries;
(f) any dealer, distributor, joint marketing or development agreement
currently in force under which Cybex or any of its subsidiaries have
continuing material obligations to jointly market any product, technology or
service and which may not be canceled without penalty upon notice of ninety
(90) days or less, or any material agreement pursuant to which Cybex or any
of its subsidiaries have continuing material obligations to jointly develop
any intellectual property that will not be owned, in whole or in part, by
Cybex or any of its subsidiaries and which may not be canceled without
penalty upon notice of ninety (90) days or less;
(g) any agreement, contract or commitment currently in force to provide
source code to any third party for any product or technology that is
material to Cybex and its subsidiaries taken as a whole;
(h) any agreement, contract or commitment currently in force to license
any third party to manufacture or reproduce any Cybex product, service or
technology or any agreement, contract or commitment currently in force to
sell or distribute any Cybex products, service or technology except
agreements with distributors or sales representative in the normal course of
business cancelable without penalty upon notice of ninety (90) days or less
and substantially in the form previously provided to Apex;
(i) any mortgages, indentures, guarantees, loans or credit agreements,
security agreements or other agreements or instruments relating to the
borrowing of money or extension of credit;
(j) any settlement agreement entered into within five (5) years prior to
the date of this Agreement; or
(k) any other agreement, contract or commitment that has a value of
$1,000,000 or more individually.
Neither Cybex nor any of its subsidiaries, nor to Cybex's knowledge any
other party to a Cybex Contract (as defined below), is (or with nothing more
than notice and/or the passage of time will be) in breach, violation or default
under, and neither Cybex nor any of its subsidiaries has received written notice
that it has breached, violated or defaulted under, any of the material terms or
conditions of any of the agreements, contracts or commitments to which Cybex or
any of its subsidiaries is a party or by which it is bound that are required to
be disclosed in the Cybex Schedules (any such agreement, contract or commitment,
a "CYBEX CONTRACT") in such a manner as would permit any other party to cancel
or terminate any such Cybex Contract, or would permit any other party to seek
material damages or other remedies (for any or all of such breaches, violations
or defaults, in the aggregate). Each Cybex Contract is in full force and effect,
and is a legal, valid and binding obligation of Cybex or a subsidiary of Cybex
and, to the knowledge of Cybex, each of the other parties thereto, enforceable
in accordance with its terms, except (a) that the enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law) and (b) as would not,
individually or in the aggregate, be reasonably expected to result in a Material
Adverse Effect on Cybex.
2.17 STATEMENTS; PROXY STATEMENT/PROSPECTUS. None of the information
supplied or to be supplied by Cybex for inclusion or incorporation by reference
in (i) the Registration Statement (as defined in Section 1.16) will at the time
it becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading and
(ii) the proxy statement/ prospectus to be sent to the shareholders of Cybex and
shareholders of Apex in connection with the meeting of Cybex's shareholders to
consider the approval and adoption of this Agreement and the approval of the
Cybex Merger (the "CYBEX SHAREHOLDERS' MEETING") and in connection with the
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meeting of Apex's shareholders to consider the approval and adoption of this
Agreement and the approval of the Apex Merger (the "APEX SHAREHOLDERS' MEETING")
(such proxy statement/prospectus as amended or supplemented is referred to
herein as the "PROXY STATEMENT") shall not, on the date the Proxy Statement is
first mailed to Cybex's shareholders and Apex's shareholders, at the time of the
Cybex Shareholders' Meeting or the Apex Shareholders' Meeting and at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not false or misleading, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Cybex Shareholders' Meeting or the Apex Shareholders' Meeting
which has become false or misleading. The Proxy Statement will comply as to form
in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder. If at any time prior to the Effective Time,
any event relating to Cybex or any of its affiliates, officers or directors
should be discovered by Cybex which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, Cybex shall
promptly inform Apex. Notwithstanding the foregoing, Cybex makes no
representation or warranty with respect to any information supplied by Apex or
Newco which is contained in any of the foregoing documents.
2.18 BOARD APPROVAL. The Board of Directors of Cybex has, as of the date
of this Agreement, determined (i) that the Cybex Merger is fair to, advisable
and in the best interests of Cybex and its shareholders, and (ii) to recommend
that the shareholders of Cybex approve and adopt this Agreement and approve the
Cybex Merger.
2.19 STATE TAKEOVER STATUTES. No state takeover statute or similar statute
or regulation applies to or purports to apply to the Merger, this Agreement, the
Cybex Voting Agreement or the transactions contemplated hereby and thereby.
Cybex has not at any time prior to the date of this Agreement Beneficially Owned
(as defined below), either alone or together with its Related Parties (as
defined below), ten percent or more of the outstanding voting shares of Apex. A
"RELATED PARTY" of a person shall mean (for purposes of this Section 2.19 only),
any of the following: (i) another person who directly or indirectly controls, or
is controlled by, or is under common control with, such person, (ii) a domestic
or foreign corporation or organization of which a person is an officer,
director, member, or partner or in which a person performs a similar function;
(iii) a direct or indirect beneficial owner of ten percent or more of any class
of equity securities of a person; (iv) a trust or estate in which a person has a
beneficial interest or as to which a person serves as trustee or in a similar
fiduciary capacity; and (v) the spouse or a parent or sibling of a person or a
child, grandchild, sibling, parent, or spouse of any thereof, of a person or an
individual having the same home as a person. "BENEFICIAL OWNERSHIP," when used
with respect to any shares, means (for purposes of this Section 2.19 only)
ownership by a person: (x) who, directly or indirectly; individually or with or
through any of its Related Parties, has (A) the right to acquire the shares,
whether the right is exercisable immediately or only after the passage of time,
pursuant to any agreement, arrangement, or understanding, whether or not in
writing, or upon the exercise of conversion rights, exchange rights, warrants or
options, or otherwise or (B) the right to vote the shares pursuant to any
agreement, arrangement, or understanding, whether or not in writing; or (y) who
has any agreement, arrangement, or understanding, whether or not in writing, for
the purpose of acquiring, holding, voting or disposing of the shares with any
other person who Beneficially Owns, or whose Related Parties Beneficially Own,
directly or indirectly, the shares.
2.20 FAIRNESS OPINION. Cybex has received a written opinion from SG Cowen
Securities Corporation, dated as of the date hereof, to the effect that as of
the date hereof, the Cybex Applicable Ratio is fair to Cybex's shareholders
(other than Apex and its affiliates) from a financial point of view and has
delivered to Apex a copy of such opinion.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF APEX
Apex represents and warrants to Cybex, subject to the exceptions
specifically disclosed in the disclosure letter supplied by Apex to Cybex (the
"APEX SCHEDULES"), that the statements in this Article III are true. The Apex
Schedules shall be arranged in sections and paragraphs corresponding to the
numbered sections and paragraphs (and subparagraphs) contained in this
Article III, and the disclosure in any paragraph shall qualify only the
corresponding Section or paragraph in this Article III or other sections to
which it is clearly apparent (from a plain reading of the disclosure or by cross
reference) that such disclosure relates.
3.1 ORGANIZATION OF APEX.
(a) Apex and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation; has the corporate power and authority to own, lease and
operate its assets and property and to carry on its business as now being
conducted and as proposed to be conducted; and is duly qualified to do
business and in good standing as a foreign corporation in each jurisdiction
in which the failure to be so qualified would have a Material Adverse Effect
(as defined in Section 8.3) on Apex.
(b) Apex has delivered to Cybex a true and complete list of all of
Apex's subsidiaries, indicating the jurisdiction of incorporation of each
subsidiary and Apex's equity interest therein. All outstanding shares of
capital stock or other equity interests of the subsidiaries of Apex are
owned by Apex or a direct or indirect wholly-owned subsidiary of Apex, free
and clear of all Liens.
(c) Apex has delivered or made available to Cybex a true and correct
copy of the Articles of Incorporation and Bylaws of Apex and similar
governing instruments of each of its material subsidiaries, each as amended
to date, and each such instrument is in full force and effect. Neither Apex
nor any of its subsidiaries is in violation of any of the provisions of its
Articles of Incorporation or Bylaws or equivalent governing instruments.
3.2 APEX CAPITAL STRUCTURE. The authorized capital stock of Apex consists
of 100,000,000 shares of Common Stock, no par value, of which 21,208,588 shares
were issued and outstanding as of March 1, 2000 and 1,000,000 shares of
Preferred Stock, no par value, of which no shares are issued or outstanding. The
authorized capital stock of Newco consists of 200,000,000 shares of Common
Stock, par value $0.001 per share, none of which, as of immediately prior to the
Effective Time, are issued and outstanding and 5,000,000 shares of Preferred
Stock, par value $0.001 per share, none of which, as of immediately prior to the
Effective Time, are issued and outstanding. All outstanding shares of Apex
Common Stock are duly authorized, validly issued, fully paid and non-assessable
and are not subject to preemptive rights created by statute, the Articles of
Incorporation or Bylaws of Apex or any agreement or document to which Apex is a
party or by which it is bound. As of March 1, 2000, Apex had reserved an
aggregate of 3,472,878 shares of Apex Common Stock, net of exercises, for
issuance to employees and non-employee directors pursuant to the Apex Stock
Option Plan, under which options are outstanding to purchase 2,956,908 shares
and under which 525,970 shares were available for grant as of March 1, 2000. All
shares of Apex Common Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, would be duly authorized, validly issued, fully paid and
nonassessable. Section 3.2 of the Apex Schedules list each outstanding option to
acquire shares of Apex Common Stock at March 1, 2000, the name of the holder of
such option, the number of shares subject to such option, the exercise price of
such option, the number of shares as to which such option will have vested at
such date, the vesting schedule for such option and whether the exerciseability
of such option will be accelerated in any way by the transactions contemplated
by this Agreement or for any other reason, and indicate the extent of
acceleration, if any.
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3.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Section 3.2, there are no equity securities, partnership interests or similar
ownership interests of any class of Apex capital stock, or any securities
exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests issued, reserved for
issuance or outstanding. Except for securities Apex owns, directly or indirectly
through one or more subsidiaries, there are no equity securities, partnership
interests or similar ownership interests of any class of any subsidiary of Apex,
or any security exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests issued,
reserved for issuance or outstanding. Except as set forth in Section 3.2, there
are no options, warrants, equity securities, partnership interests or similar
ownership interests, calls, rights (including preemptive rights), commitments or
agreements of any character to which Apex or any of its subsidiaries is a party
or by which it is bound obligating Apex or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem
or otherwise acquire, or cause the repurchase, redemption or acquisition, of any
shares of capital stock of Apex or any of its subsidiaries or obligating Apex or
any of its subsidiaries to grant, extend, accelerate the vesting of or enter
into any such option, warrant, equity security, partnership interest or similar
ownership interest, call, right, commitment or agreement. There are no
registration rights and, to the knowledge of Apex, there are (except for the
Apex Voting Agreements) no voting trusts, proxies or other agreements or
understandings with respect to any equity security of any class of Apex or with
respect to any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries. Apex has no outstanding stock
appreciation rights, phantom stock or similar rights.
3.4 AUTHORITY.
(a) Apex has all requisite corporate power and authority to enter into
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Apex, subject
only to the approval and adoption of this Agreement and the approval of the
Apex Merger by Apex's shareholders and the filing and recordation of the
Apex Plan of Merger pursuant to Washington Law. A vote of the holders of at
least two-thirds (2/3) of the outstanding shares of the Apex Common Stock is
required for Apex's shareholders to approve and adopt this Agreement and
approve the Apex Merger. This Agreement has been duly executed and delivered
by Apex and, assuming the due authorization, execution and delivery by Cybex
and Newco, constitutes the valid and binding obligation of Apex, enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws and general principles of equity. The
execution and delivery of this Agreement by Apex does not, and the
performance of this Agreement by Apex will not (i) conflict with or violate
the Articles of Incorporation or Bylaws of Apex or the equivalent
organizational documents of any of its subsidiaries, (ii) subject to
obtaining the approval and adoption of this Agreement and the approval of
the Apex Merger by Apex's shareholders as contemplated in Section 5.2 and
compliance with the requirements set forth in Section 3.4(b) below, conflict
with or violate any law, rule, regulation, order, judgment, injunction or
decree applicable to Apex or any of its subsidiaries or by which its or any
of their respective properties is bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or impair Apex's rights or alter
the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the properties or assets
of Apex or any of its subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
authorization, consent, approval, franchise or other instrument or
obligation to which Apex or any of its subsidiaries is a party or by which
Apex or any of its subsidiaries or its or any of their respective properties
are bound or affected, except to the extent such conflict, violation,
breach, default,
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impairment or other effect could not, in the case of clause (ii) or (iii),
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Apex.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity is required by or with
respect to Apex in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby,
except for (i) the filing of a Registration Statement with the SEC in
accordance with the Securities Act, (ii) the filing of the Apex Plan of
Merger with the Secretary of State of Washington, (iii) the filing of the
Proxy Statement with the SEC in accordance with the Exchange Act, (iv) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable federal and state securities
laws and the HSR Act and the laws of any foreign country and (v) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not be material to Apex or Cybex or have a Material
Adverse Effect on the ability of the parties to consummate the Merger.
3.5 SEC FILINGS; APEX FINANCIAL STATEMENTS.
(a) Apex has filed all forms, reports and documents required to be filed
with the SEC since January 1, 1998, and has made available to Cybex such
forms, reports and documents in the form filed with the SEC. All such
required forms, reports and documents (including those that Apex may file
subsequent to the date hereof) are referred to herein as the "APEX SEC
REPORTS." As of their respective dates, the Apex SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Apex SEC Reports, and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None
of Apex's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Apex SEC Reports (the
"APEX FINANCIALS"), including any Apex SEC Reports filed after the date
hereof until the Closing, (i) complied as to form in all material respects
with the published rules and regulations of the SEC with respect thereto,
(ii) was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited interim financial statements, as may be
permitted by the SEC on Form 10-Q under the Exchange Act) and (iii) fairly
presented the consolidated financial position of Apex and its subsidiaries
at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not, or are not expected to be,
material in amount. The balance sheet of Apex contained in the Apex SEC
Reports as of October 1, 1999 is hereinafter referred to as the "APEX
BALANCE SHEET." Except as disclosed in the Apex Financials, neither Apex nor
any of its subsidiaries has any liabilities (absolute, accrued, contingent
or otherwise) of a nature required to be disclosed on a balance sheet or in
the related notes to the consolidated financial statements prepared in
accordance with GAAP which are, individually or in the aggregate, material
to the business, results of operations or financial condition of Apex and
its subsidiaries taken as a whole, except liabilities (i) provided for in
the Apex Balance Sheet, or (ii) incurred since the date of the Apex Balance
Sheet in the ordinary course of business consistent with past practices.
(c) Apex has heretofore furnished to Cybex a complete and correct copy
of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to
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agreements, documents or other instruments which previously had been filed
by Apex with the SEC pursuant to the Securities Act or the Exchange Act.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Apex
Balance Sheet, the business of Apex and its subsidiaries has been carried on
only in the ordinary and usual course. Since the date of the Apex Balance Sheet:
(i) there has not been any Material Adverse Effect on Apex and no event has
occurred and no fact or set of circumstances has arisen which has resulted in or
could reasonably be expected to result in a Material Adverse Effect on Apex,
(ii) there has not been any material change by Apex in its accounting methods,
principles or practices, except as required by concurrent changes in GAAP,
(iii) there has not been any revaluation by Apex of any of its assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable other than in the ordinary course of
business, (iv) no material customer or supplier of Apex or its subsidiaries has
threatened to alter materially and adversely its relationship with Apex or its
subsidiaries and (v) there has not been any agreement by Apex or any of its
subsidiaries to waive or release of any material right or claim (including
without limitation to any write off or other compromise of any material account
receivable) outside of the ordinary course of business consistent with past
practice.
3.7 TAXES.
(a) Apex and each of its subsidiaries have timely filed all Returns
relating to Taxes required to be filed by Apex and each of its subsidiaries
with any Tax authority, except such Returns which are not material to Apex.
Apex and each of its subsidiaries have paid all Taxes shown to be due on
such Returns.
(b) Apex and each of its subsidiaries as of the Effective Time will have
withheld with respect to its employees all federal and state income taxes,
Taxes pursuant to the Federal Insurance Contribution Act, Taxes pursuant to
the Federal Unemployment Tax Act and other Taxes required to be withheld,
except such Taxes which are not material to Apex.
(c) Neither Apex nor any of its subsidiaries has been delinquent in the
payment of any material Tax nor is there any material Tax deficiency
outstanding, proposed or assessed against Apex or any of its subsidiaries,
nor has Apex or any of its subsidiaries executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(d) No audit or other examination of any Return of Apex or any of its
subsidiaries by any Tax authority is presently in progress, nor has Apex or
any of its subsidiaries been notified of any request for such an audit or
other examination.
(e) No adjustment relating to any Returns filed by Apex or any of its
subsidiaries has been proposed in writing formally or informally by any Tax
authority to Apex or any of its subsidiaries or any representative thereof.
(f) Neither Apex nor any of its subsidiaries has any liability for any
material unpaid Taxes which has not been accrued for or reserved on the Apex
Balance Sheet in accordance with GAAP, whether asserted or unasserted,
contingent or otherwise, which is material to Apex, other than any liability
for unpaid Taxes that may have accrued since the date of the Apex Balance
Sheet in connection with the operation of the business of Apex and its
subsidiaries in the ordinary course.
(g) There is no contract, agreement, plan or arrangement to which Apex
or any of its subsidiaries is a party as of the date of this Agreement,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of Apex or any of its subsidiaries that,
individually or collectively, would reasonably be expected to give rise to
the payment of any amount as a result of the Merger that would not be
deductible pursuant to Sections 280G, 404 or
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162(m) of the Code. There is no contract, agreement, plan or arrangement to
which Apex is a party or by which it is bound to compensate any individual
for excise taxes paid pursuant to Section 4999 of the Code.
(h) Neither Apex nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as defined in Section 341(f)(4) of the Code) owned by Apex or any of
its subsidiaries.
(i) Neither Apex nor any of its subsidiaries is party to or has any
obligation under any tax-sharing, tax indemnity or tax allocation agreement
or arrangement.
(j) None of Apex's or its subsidiaries' assets are tax exempt use
property within the meaning of Section 168(h) of the Code.
(k) Neither Apex nor any of its subsidiaries was a "distributing
corporation" or a "controlled corporation" in a distribution of stock to
which Section 355 of the Code applied and that occurred within two years
before the date of this Agreement or as part of a plan or series of
transactions that includes the Merger.
3.8 APEX INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"APEX INTELLECTUAL PROPERTY" shall mean any Intellectual Property that is
owned by, or exclusively licensed to, Apex.
"APEX REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, Apex or any of its
subsidiaries.
(a) Section 3.8(a) of the Apex Schedules is a complete and accurate list
of all Apex Registered Intellectual Property and specifies, where
applicable, the jurisdictions in which each such item of Apex Registered
Intellectual Property has been issued or registered.
(b) No Apex Intellectual Property or product or service of Apex or any
of its subsidiaries is subject to any proceeding or outstanding decree,
order, judgment, contract, license, agreement, or stipulation restricting in
any manner the use, transfer, or licensing thereof by Apex or any of its
subsidiaries, or which may affect the validity, use or enforceability of
such Apex Intellectual Property.
(c) Apex owns and has good and exclusive title to, or has licensed
(sufficient for the conduct of its business as currently conducted and as
proposed to be conducted), each material item of Apex Intellectual Property
or other Intellectual Property used by Apex, free and clear of any lien or
encumbrance (excluding licenses and related restrictions); and Apex is the
exclusive owner of all trademarks and trade names used in connection with
the operation or conduct of the business of Apex and its subsidiaries,
including the sale of any products or the provision of any services by Apex
and its subsidiaries.
(d) Apex owns exclusively, and has good title to, all copyrighted works
that are Apex products or which Apex or any of its subsidiaries otherwise
expressly purports to own.
(e) To the extent that any material Intellectual Property has been
developed or created by a third party for Apex or any of its subsidiaries,
Apex has a written agreement with such third party with respect thereto and
Apex thereby either (i) has obtained ownership of, and is the exclusive
owner of, or (ii) has obtained a license (sufficient for the conduct of its
business as currently conducted and as proposed to be conducted) to all such
third party's Intellectual Property in such work, material or invention by
operation of law or by valid assignment, to the fullest extent it is legally
possible to do so.
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(f) Neither Apex nor any of its subsidiaries has transferred ownership
of, or granted any exclusive license with respect to, any Intellectual
Property that is or was material Apex Intellectual Property, to any third
party.
(g) To the knowledge of Apex, the operation of the business of Apex and
its subsidiaries as such business currently is conducted, including Apex's
and its subsidiaries' design, development, manufacture, marketing and sale
of the products or services of Apex and its subsidiaries (including products
currently under development) has not, does not and will not infringe or
misappropriate the Intellectual Property of any third party or, to its
knowledge, constitute unfair competition or trade practices under the laws
of any jurisdiction.
(h) Neither Apex nor any of its subsidiaries has received notice from
any third party that the operation of the business of Apex or any of its
subsidiaries or any act, product or service of Apex or any of its
subsidiaries, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the
laws of any jurisdiction.
(i) To the knowledge of Apex, no person has or is infringing or
misappropriating any Apex Intellectual Property.
(j) Apex and each of its subsidiaries has taken reasonable steps to
protect Apex's and its subsidiaries' rights in Apex's confidential
information and trade secrets that it wishes to protect and any trade
secrets or confidential information of third parties provided to Apex or any
of its subsidiaries, and, without limiting the foregoing, each of Apex and
its subsidiaries has and enforces a policy requiring each employee and
contractor to execute a proprietary information/ confidentiality agreement
substantially in the form provided to Cybex and all current and former
employees and contractors of Apex and any of its subsidiaries have executed
such an agreement, except where the failure to do so is not reasonably
expected to be material to Apex.
(k) All of Apex's and its subsidiaries' products (including products
currently under development) (i) are Year 2000 Compliant and (ii) will lose
no functionality with respect to the introduction of records containing
dates falling on or after January 1, 2000. All of Apex's or its
subsidiaries' Apex Information Technology (as defined below) is Year 2000
Compliant, and will not cause an interruption in the ongoing operations of
Apex's or any of its subsidiaries' business on or after January 1, 2000. For
purposes of the foregoing, the term "APEX INFORMATION TECHNOLOGY" shall mean
and include all software, hardware, firmware, telecommunications systems,
network systems, embedded systems and other systems, components and/or
services (other than general utility services including gas, electric,
telephone and postal) that are owned or used by Apex or any of its
subsidiaries in the conduct of their business, or purchased by Apex or any
of its subsidiaries from third-party suppliers.
3.9 COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither Apex nor any of its subsidiaries is, in any material
respect, in conflict with, or in default or violation of (i) any law, rule,
regulation, order, judgment or decree applicable to Apex or any of its
subsidiaries or by which its or any of their respective properties is bound
or affected, or (ii) any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which Apex or any of its subsidiaries is a party or by which
Apex or any of its subsidiaries or its or any of their respective properties
is bound or affected. To the knowledge of Apex, no investigation or review
by any Governmental Entity is pending or threatened against Apex or its
subsidiaries, nor has any Governmental Entity indicated an intention to
conduct the same. There is no material agreement, judgment, injunction,
order or decree binding upon Apex or any of its subsidiaries which has or
could reasonably be expected to have the effect of prohibiting or materially
impairing any business practice of Apex or any of its
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subsidiaries, any acquisition of material property by Apex or any of its
subsidiaries or the conduct of business by Apex as currently conducted.
(b) Apex and its subsidiaries have in effect all authorizations,
certificates, filings, franchises, notices, rights, permits, licenses,
variances, exemptions, orders and approvals from Governmental Entities which
are material to the operation of the business of Apex, including all
authorizations under Environmental Laws (collectively, the "APEX PERMITS").
Apex and its subsidiaries are in compliance in all material respects with
the terms of the Apex Permits.
3.10 LITIGATION. As of the date of this Agreement, there is no action,
suit, proceeding, claim, arbitration or investigation pending, or as to which
Apex or any of its subsidiaries has received any notice of assertion nor, to
Apex's knowledge, is there a threatened action, suit, proceeding, claim,
arbitration or investigation against Apex or any of its subsidiaries which
reasonably would be likely to be material to Apex, or which in any manner
challenges or seeks to prevent, enjoin, alter or delay any of the transactions
contemplated by this Agreement.
3.11 BROKERS' AND FINDERS' FEES. Except for fees payable to Donaldson,
Lufkin & Jenrette Securities Corporation pursuant to an engagement letter dated
March 1, 2000, a copy of which has been provided to Cybex, Apex has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
3.12 EMPLOYEE BENEFIT PLANS.
(a) DEFINITIONS. With the exception of the definition of "Apex
Affiliate" set forth in Section 3.12(a)(i) below (which definition shall
apply only to this Section 3.12), for purposes of this Agreement, the
following terms shall have the meanings set forth below:
(i) "APEX AFFILIATE" shall mean any other person or entity under
common control with the Apex within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations issued thereunder;
(ii) "APEX EMPLOYEE PLAN" shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, deferred compensation,
performance awards, stock or stock-related awards, fringe benefits or
other employee benefits or remuneration of any kind, whether written or
unwritten or otherwise, funded or unfunded, including without limitation,
each "employee benefit plan," within the meaning of Section 3(3) of ERISA
which is or has been maintained, contributed to, or required to be
contributed to, by Apex or any Apex Affiliate for the benefit of any Apex
Employee, or with respect to which Apex or any Apex Affiliate has or may
have any liability or obligation;
(iii) "APEX EMPLOYEE" shall mean any current or former employee,
consultant or director of Apex or any Apex Affiliate;
(iv) "APEX EMPLOYMENT AGREEMENT" shall mean each management,
employment, severance, consulting, relocation, repatriation,
expatriation, visas, work permit or other agreement, contract or
understanding between Apex or any Apex Affiliate and any Apex Employee;
(v) "APEX INTERNATIONAL EMPLOYEE PLAN" shall mean each Apex Employee
Plan that has been adopted or maintained by Apex or any Apex Affiliate,
whether informally or formally, or with respect to which the Company or
any Apex Affiliate will or may have any liability, for the benefit of
Apex Employees who perform services outside the United States;
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(vi) "APEX MULTIEMPLOYER PLAN" shall mean any "Apex Pension Plan" (as
defined below) which is a "multiemployer plan," as defined in
Section 3(37) of ERISA; and
(vii) "APEX PENSION PLAN" shall mean each Apex Employee Plan which is
an "employee pension benefit plan," within the meaning of Section 3(2) of
ERISA.
(b) SCHEDULE. Section 3.12(b) of the Apex Schedules contains an
accurate and complete list of each Apex Employee Plan, Apex International
Employee Plan, and each Apex Employment Agreement. Apex does not have any
plan or commitment to establish any new Apex Employee Plan, Apex
International Employee Plan, or Apex Employment Agreement, to modify any
Apex Employee Plan or Apex Employment Agreement (except to the extent
required by law or to conform any such Apex Employee Plan or Apex Employment
Agreement to the requirements of any applicable law, in each case as
previously disclosed to Cybex in writing, or as required by this Agreement),
or to adopt or enter into any Apex Employee Plan, Apex International
Employee Plan, or Apex Employment Agreement.
(c) DOCUMENTS. Apex has provided to Cybex: (i) correct and complete
copies of all documents embodying each Apex Employee Plan, Apex
International Employee Plan, and each Apex Employment Agreement including
(without limitation) all amendments thereto and all related trust documents,
administrative service agreements, group annuity contracts, group insurance
contracts, and policies pertaining to fiduciary liability insurance covering
the fiduciaries for each Plan; (ii) the most recent annual actuarial
valuations, if any, prepared for each Apex Employee Plan; (iii) the three
(3) most recent annual reports (Form Series 5500 and all schedules and
financial statements attached thereto), if any, required under ERISA or the
Code in connection with each Apex Employee Plan; (iv) if the Apex Employee
Plan is funded, the most recent annual and periodic accounting of Apex
Employee Plan assets; (v) the most recent summary plan description together
with the summary(ies) of material modifications thereto, if any, required
under ERISA with respect to each Apex Employee Plan; (vi) all IRS
determination, opinion, notification and advisory letters, and all
applications and correspondence to or from the IRS or the DOL with respect
to any such application or letter; (vii) all communications material to any
Apex Employee or Apex Employees relating to any Apex Employee Plan and any
proposed Apex Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits,
acceleration of payments or vesting schedules or other events which would
result in any material liability to Apex; (viii) all correspondence to or
from any governmental agency relating to any Apex Employee Plan; (ix) all
COBRA forms and related notices (or such forms and notices as required under
comparable law); (x) the three (3) most recent plan years discrimination
tests for each Apex Employee Plan, if applicable; and (xi) all registration
statements, annual reports (Form 11-K and all attachments thereto) and
prospectuses prepared in connection with each Apex Employee Plan.
(d) EMPLOYEE PLAN COMPLIANCE. Except as set forth on Section
3.12(d) of the Apex Schedules, (i) Apex has performed in all material
respects all obligations required to be performed by it under, is not in
default or violation of, and has no knowledge of any default or violation by
any other party to each Apex Employee Plan, and each Apex Employee Plan has
been established and maintained in all material respects in accordance with
its terms and in compliance with all applicable laws, statutes, orders,
rules and regulations, including but not limited to ERISA or the Code;
(ii) each Apex Employee Plan intended to qualify under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code has
either received a favorable determination, opinion, notification or advisory
letter from the IRS with respect to each such Apex Employee Plan as to its
qualified status under the Code, including all amendments to the Code
effected by the Tax Reform Act of 1986 and subsequent legislation, or has
remaining a period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a letter and make any amendments
necessary to obtain a favorable determination as to the qualified
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status of each such Apex Employee Plan; (iii) no "prohibited transaction, "
within the meaning of Section 4975 of the Code or Sections 406 and 407 of
ERISA, and not otherwise exempt under Section 4975 of the Code or Section
408 of ERISA (or any administrative class exemption issued thereunder), has
occurred with respect to any Apex Employee Plan; (iv) there are no actions,
suits or claims pending, or, to the knowledge of Apex, threatened or
reasonably anticipated (other than routine claims for benefits) against any
Apex Employee Plan or against the assets of any Apex Employee Plan;
(v) each Apex Employee Plan (other than any stock option plan) can be
amended, terminated or otherwise discontinued after the Effective Time,
without material liability to the Cybex, Apex or any of its Apex Affiliates
(other than ordinary administration expenses); (vi) there are no audits,
inquiries or proceedings pending or, to the knowledge of Apex or any Apex
Affiliates, threatened by the IRS or DOL with respect to any Apex Employee
Plan; and (vii) neither Apex nor any Apex Affiliate is subject to any
penalty or tax with respect to any Apex Employee Plan under Section
502(i) of ERISA or Sections 4975 through 4980 of the Code.
(e) PENSION PLAN. Neither Apex nor any Apex Affiliate has previously
or currently maintains, sponsors, participates in or contributes to a
Pension Plan which is subject to Title IV of ERISA or Section 412 of the
Code. As of the Effective Time: (i) no legal or administrative action has
been taken by the PBGC to terminate or to appoint a trustee to administer
the Pension Plan; (ii) no liability to the PBGC under Title IV of ERISA has
been incurred by Apex or an Apex Affiliate that has not been satisfied in
full; (iii) each Pension Plan was fully-funded on a termination basis;
(iv) each Pension Plan has been maintained in compliance with the minimum
funding standards of ERISA and the Code where applicable and has not
incurred any "accumulated funding deficiency," as defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived; and (v) no Pension
Plan has a reportable event within the meaning of Section 4043 of ERISA and
the regulations thereunder; and (vi) no Pension Plan has incurred any event
described in Section 4041 (other than the standard termination contemplated
herein), 4062 or 4063 of ERISA.
(f) COLLECTIVELY BARGAINED, MULTIEMPLOYER AND MULTIPLE EMPLOYER
PLANS. At no time has Apex or any Apex Affiliate contributed to or been
obligated to contribute to any Apex Multiemployer Plan. Neither Apex, nor
any Apex Affiliate has at any time ever maintained, established, sponsored,
participated in, or contributed to any multiple employer plan, or to any
plan described in Section 413 of the Code.
(g) NO POST-EMPLOYMENT OBLIGATIONS. Except as set forth in Section
3.12(g) of the Apex Schedules, no Apex Employee Plan provides, or reflects
or represents any liability to provide retiree health benefits to any person
for any reason, except as may be required by COBRA or other applicable
statute, and Apex has never represented, promised or contracted (whether in
oral or written form) to any Apex Employee (either individually or to Apex
Employees as a group) or any other person that such Apex Employee(s) or
other person would be provided with retiree health, except to the extent
required by statute.
(h) HEALTH CARE COMPLIANCE. Neither Apex nor any Apex Affiliate has,
prior to the Effective Time and in any material respect, violated any of the
health care continuation requirements of COBRA, the requirements of FMLA,
the requirements of the Health Insurance Portability and Accountability Act
of 1996, the requirements of the Women's Health and Cancer Rights Act of
1998, the requirements of the Newborns' and Mothers' Health Protection Act
of 1996, or any amendment to each such act, or any similar provisions of
state law applicable to Apex Employees.
(i) EFFECT OF TRANSACTION.
(i) Except as set forth on Section 3.12(i)(i) of the Apex Schedules,
the execution of this Agreement and the consummation of the transactions
contemplated hereby will not (either
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alone or upon the occurrence of any additional or subsequent events)
constitute an event under any Apex Employee Plan, Apex Employment
Agreement, trust or loan that will or may result in any payment (whether
of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation
to fund benefits with respect to any Apex Employee.
(ii) Except as set forth on Section 3.12(i)(ii) of the Apex
Schedules, no payment or benefit which will or may be made by Apex or its
Apex Affiliates with respect to any Apex Employee will be characterized
as a "parachute payment," within the meaning of Section 280G(b)(2) of the
Code.
(j) EMPLOYMENT MATTERS. Apex: (i) is in compliance in all respects
with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Apex Employees, except as would not have a Material Adverse Effect on Apex;
(ii) has withheld and reported all amounts required by law or by agreement
to be withheld and reported with respect to wages, salaries and other
payments to Apex Employees; (iii) is not liable for any arrears of wages or
any taxes or any penalty for failure to comply with any of the foregoing;
and (iv) is not liable for any payment to any trust or other fund governed
by or maintained by or on behalf of any governmental authority, with respect
to unemployment compensation benefits, social security or other benefits or
obligations for Apex Employees (other than routine payments to be made in
the normal course of business and consistent with past practice). There are
no pending, threatened or reasonably anticipated claims or actions against
Apex under any worker's compensation policy or long-term disability policy.
(k) LABOR. No work stoppage or labor strike against Apex is pending,
threatened or reasonably anticipated. Apex does not know of any activities
or proceedings of any labor union to organize any Apex Employees. Except as
set forth in Section 3.12(k) of the Apex Schedules, there are no actions,
suits, claims, labor disputes or grievances pending, or, to the knowledge of
Apex, threatened or reasonably anticipated relating to any labor, safety or
discrimination matters involving any Apex Employee, including, without
limitation, charges of unfair labor practices or discrimination complaints,
which, if adversely determined, would, individually or in the aggregate,
result in any material liability to Apex. Neither Apex nor any of its
subsidiaries has engaged in any unfair labor practices within the meaning of
the National Labor Relations Act. Except as set forth in Section 3.12(k) of
the Apex Schedules, Apex is not presently, nor has it been in the past, a
party to, or bound by, any collective bargaining agreement or union contract
with respect to Apex Employees and no collective bargaining agreement is
being negotiated by Apex.
(l) APEX INTERNATIONAL EMPLOYEE PLAN. Each Apex International Employee
Plan has been established, maintained and administered in compliance with
its terms and conditions and with the requirements prescribed by any and all
statutory or regulatory laws that are applicable to such Apex International
Employee Plan, except as would not have a Material Adverse Effect on Apex.
Furthermore, no Apex International Employee Plan has unfunded liabilities,
that as of the Effective Time, will not be offset by insurance or fully
accrued. Except as required by law, no condition exists that would prevent
Apex or Cybex from terminating or amending any Apex International Employee
Plan at any time for any reason without liability to Apex or its Apex
Affiliates (other than ordinary administration expenses or routine claims
for benefits).
3.13 ABSENCE OF LIENS AND ENCUMBRANCES. Apex and each of its subsidiaries
has good and marketable title to, or valid leasehold interests in, all its
material properties and assets except for such as are no longer used or useful
in the conduct of its businesses or as have been disposed of in the ordinary
course of business and except for defects in title, easements, restrictive
covenants and similar encumbrances that individually or in the aggregate would
not materially interfere with the ability of
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Apex or any of its subsidiaries to conduct its business as currently conducted.
All such material assets and properties, other than assets and properties in
which Apex or any of its subsidiaries has a leasehold interest, are free and
clear of all Liens except for Liens that (A) are created, arise or exist under
or in connection with any of the contracts or other matters referred to in the
Apex Schedules or in the Apex SEC Reports or the exhibits thereto, (B) relate to
any taxes or other governmental charges or levies that are not yet due and
payable, (C) relate to, or are created, arise or exist in connection with, any
legal proceeding that is being contested in good faith, or (D) individually or
in the aggregate would not materially interfere with the ability of Apex and
each of its subsidiaries to conduct their business as currently conducted and
would not materially and adversely impact the transferability, financeability,
ownership, leasing, use, development or occupancy of any such properties or
assets ("APEX PERMITTED LIENS"). To the knowledge of Apex, there are no natural
or artificial conditions upon any real property owned by Apex ("APEX OWNED REAL
PROPERTY"), or any other facts or conditions which could, in the aggregate, have
a material and adverse impact on the transferability, financeability, ownership,
leasing, use, development, occupancy or operation of any such Apex Owned Real
Property. There are no parties in possession of any portion of any Apex Owned
Real Property, whether as tenants, trespassers or otherwise, except Apex. There
are no pending, or, to the knowledge of Apex, threatened assessments,
improvements or activities of any public or quasi-public body either planned, in
the process of construction or completed which may give rise to any assessment
against any Apex Owned Real Property. Apex and each of its subsidiaries has
complied in all material respects with and is not in default under the terms of
all material leases to which it is a party, and all such leases are in full
force and effect. To the knowledge of Apex, no party to any material lease is in
default of such lease and there exists no event or circumstance with respect to
such lease which with the giving of notice or the passage of time, or both,
would constitute a default by any party to such lease.
3.14 ENVIRONMENTAL MATTERS.
(a) The term "APEX BUSINESS FACILITY" means any property including the
land, the improvements thereon, the groundwater thereunder and the surface
water thereon, that is or at any time has been owned, operated, occupied,
controlled or leased by Apex or any of its subsidiaries in connection with
the operation of its business. The term "APEX ENVIRONMENTAL PERMIT" means
any approval, permit, license, clearance, registration or consent required
to be obtained from any private person or any Governmental Entity with
respect to a Hazardous Materials Activity which is or was conducted by Apex
or any of its subsidiaries.
(b) Except in compliance with Environmental Laws and in a manner that
could not reasonably be expected to subject Apex or any of its subsidiaries
to material liability, no Hazardous Materials are present on any Apex
Business Facility.
(c) Apex and each of its subsidiaries have conducted all Hazardous
Material Activities in compliance in all material respects with all
applicable Environmental Laws. To the knowledge of Apex, the Hazardous
Materials Activities of Apex and each of its subsidiaries have not resulted
in the exposure of any person to a Hazardous Material in a manner which has
caused or could reasonably be expected to cause an adverse health effect to
said person.
(d) Section 3.14(d) of the Apex Schedules accurately describes all of
the Apex Environmental Permits currently held by Apex and each of its
subsidiaries. Such Apex Environmental Permits are all of the Apex
Environmental Permits necessary for the continued conduct of any Hazardous
Material Activity of Apex and each of its subsidiaries as such activities
are currently being conducted, except for those permits the absence of which
could not reasonably be expected to result in a Material Adverse Effect on
Apex. All such Apex Environmental Permits are valid and in full force and
effect. Apex and its subsidiaries have complied in all material respects
with all covenants and conditions of any Apex Environmental Permit which is
or has been in force with respect to its Hazardous Materials Activities. To
the knowledge of Apex, no circumstance exists
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which could cause any Apex Environmental Permit to be revoked, modified, or
rendered non-renewable upon payment of the permit fee.
(e) No action, proceeding, revocation proceeding, amendment procedure,
writ, injunction or claim is pending, or to the knowledge of Apex,
threatened, concerning or relating to any Apex Environmental Permit or any
Hazardous Materials Activity of Apex or any of its subsidiaries, or to any
Apex Business Facility currently owned, operated, occupied, controlled or
leased by Apex or any of its subsidiaries, or to the knowledge of Apex,
pending or threatened with respect to any other Apex Business Facility.
(f) To the knowledge of Apex, Apex and each of its subsidiaries have
transferred or released Hazardous Materials only to those Disposal Sites
described on Section 3.14(f) of the Apex Schedules; and no action,
proceeding, liability or claim exists or is threatened against any Disposal
Site or against Apex or any of its subsidiaries with respect to any transfer
or release of Hazardous Materials to a Disposal Site which could reasonably
be expected to subject Apex or any of its subsidiaries to liability.
(g) Apex is not aware of any fact or circumstance which could result in
any environmental liability which could reasonably be expected to result in
a Material Adverse Effect on Apex.
(h) Apex has delivered to Cybex or made available for inspection by
Cybex and its agents and employees all records in Apex's possession
concerning the Hazardous Materials Activities of Apex and each of its
subsidiaries and all environmental audits and environmental assessments of
any Apex Business Facility conducted at the request of, or otherwise in the
possession of, Apex or any of its subsidiaries. Apex has complied with all
environmental disclosure obligations imposed by applicable law upon Apex and
any of its subsidiaries with respect to the Merger.
3.15 LABOR MATTERS. (i) There are no disputes or claims pending or, to the
knowledge of each of Apex and its respective subsidiaries, threatened, between
Apex or any of its subsidiaries and any of their respective employees; (ii) as
of the date of this Agreement, neither Apex nor any of its subsidiaries is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by Apex or its subsidiaries nor does Apex or its
subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (iii) as of the date of this Agreement, neither
Apex nor any of its subsidiaries has any knowledge of any strikes, slowdowns,
work stoppages or lockouts, or threats thereof, by or with respect to any
employees of Apex or any of its subsidiaries.
3.16 AGREEMENTS, CONTRACTS AND COMMITMENTS. Neither Apex nor any of its
subsidiaries is a party to or is bound by:
(a) any employment or consulting agreement, contract or commitment with
any officer or director or higher level employee or member of Apex's Board
of Directors, other than those that are terminable by Apex or any of its
subsidiaries on no more than thirty (30) days' notice without liability or
financial obligation to Apex;
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement;
(c) any agreement of indemnification or any guaranty other than any
agreement of indemnification entered into in connection with the sale or
license of computer or communications hardware products in the ordinary
course of business;
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(d) any agreement, contract or commitment containing any covenant
limiting in any respect the right of Apex or any of its subsidiaries to
engage in any line of business, conduct business in any geographic area or
to compete with any person or granting any exclusive distribution rights;
(e) any agreement, contract or commitment currently in force relating to
the disposition or acquisition by Apex or any of its subsidiaries after the
date of this Agreement of a material amount of assets not in the ordinary
course of business or pursuant to which Apex has any material ownership
interest in any corporation, partnership, joint venture or other business
enterprise other than Apex's subsidiaries;
(f) any dealer, distributor, joint marketing or development agreement
currently in force under which Apex or any of its subsidiaries have
continuing material obligations to jointly market any product, technology or
service and which may not be canceled without penalty upon notice of ninety
(90) days or less, or any material agreement pursuant to which Apex or any
of its subsidiaries have continuing material obligations to jointly develop
any intellectual property that will not be owned, in whole or in part, by
Apex or any of its subsidiaries and which may not be canceled without
penalty upon notice of ninety (90) days or less;
(g) any agreement, contract or commitment currently in force to provide
source code to any third party for any product or technology that is
material to Apex and its subsidiaries taken as a whole;
(h) any agreement, contract or commitment currently in force to license
any third party to manufacture or reproduce any Apex product, service or
technology or any agreement, contract or commitment currently in force to
sell or distribute any Apex products, service or technology except
agreements with distributors or sales representative in the normal course of
business cancelable without penalty upon notice of ninety (90) days or less
and substantially in the form previously provided to Cybex;
(i) any mortgages, indentures, guarantees, loans or credit agreements,
security agreements or other agreements or instruments relating to the
borrowing of money or extension of credit;
(j) any settlement agreement entered into within five (5) years prior to
the date of this Agreement; or
(k) any other agreement, contract or commitment that has a value of
$1,000,000 or more individually.
Neither Apex nor any of its subsidiaries, nor to Apex's knowledge any other
party to an Apex Contract (as defined below), is (or with nothing more than
notice and/or the passage of time will be) in breach, violation or default
under, and neither Apex nor any of its subsidiaries has received written notice
that it has breached, violated or defaulted under, any of the material terms or
conditions of any of the agreements, contracts or commitments to which Apex or
any of its subsidiaries is a party or by which it is bound that are required to
be disclosed in the Apex Schedules (any such agreement, contract or commitment,
a "APEX CONTRACT") in such a manner as would permit any other party to cancel or
terminate any such Apex Contract, or would permit any other party to seek
material damages or other remedies (for any or all of such breaches, violations
or defaults, in the aggregate). Each Apex Contract is in full force and effect,
and is a legal, valid and binding obligation of Apex or a subsidiary of Apex
and, to the knowledge of Apex, each of the other parties thereto, enforceable in
accordance with its terms, except (a) that the enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law) and (b) as would not,
individually or in the aggregate, be reasonably expected to result in a Material
Adverse Effect on Apex.
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3.17 STATEMENTS; PROXY STATEMENT/PROSPECTUS. None of the information
supplied or to be supplied by Apex for inclusion or incorporation by reference
in (i) the Registration Statement (as defined in Section 1.16) will at the time
it becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading and
(ii) the Proxy Statement shall not, on the date the Proxy Statement is first
mailed to Apex's shareholders and Cybex's shareholders, at the time of the Apex
Shareholders' Meeting or the Cybex Shareholders' Meeting and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
false or misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Apex Shareholders' Meeting or the Cybex Shareholders' Meeting
which has become false or misleading. The Proxy Statement will comply as to form
in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder. If at any time prior to the Effective Time,
any event relating to Apex or any of its affiliates, officers or directors
should be discovered by Apex which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, Apex shall
promptly inform Cybex. Notwithstanding the foregoing, Apex makes no
representation or warranty with respect to any information supplied by Cybex
which is contained in any of the foregoing documents.
3.18 BOARD APPROVAL. The Board of Directors of Apex has, as of the date of
this Agreement, determined (i) that the Apex Merger is fair to and in the best
interests of Apex and its shareholders, and (ii) to recommend that the
shareholders of Apex approve and adopt this Agreement and approve the Apex
Merger.
3.19 STATE TAKEOVER STATUTES. The Board of Directors of Apex has approved
the Merger, this Agreement, the Apex Voting Agreement and the transactions
contemplated hereby and thereby, and such approval is sufficient (assuming that
such Board of Directors approval was obtained prior to Cybex becoming an
"acquiring person" within the meaning of Section 23B.19.040 of the Washington
Law) to render inapplicable to the Merger, this Agreement, the Apex Voting
Agreement and the transactions contemplated hereby and thereby the provisions of
Section 23B.19.040 of the Washington Law to the extent, if any, such Section is
applicable to the Merger, this Agreement, the Apex Voting Agreement and the
transactions contemplated hereby and thereby. No other state takeover statute or
similar statute or regulation applies to or purports to apply to the Merger,
this Agreement, the Apex Voting Agreement or the transactions contemplated
hereby and thereby.
3.20 FAIRNESS OPINION. Apex has received an opinion from Donaldson,
Lufkin & Jenrette Securities Corporation to the effect that as of the date
hereof the Apex Applicable Ratio is fair to Apex's shareholders from a financial
point of view.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS. During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement pursuant
to its terms or the Effective Time, Cybex (which for the purposes of this
Article IV shall include Cybex and each of its subsidiaries) and Apex (which for
the purposes of this Article IV shall include Apex and each of its subsidiaries)
agree, except (i) in the case of Cybex as provided in Article IV of the Cybex
Schedules and in the case of Apex as provided in Article IV of the Apex
Schedules, or (ii) to the extent that the other party shall otherwise consent in
writing, to carry on its business diligently and in accordance with good
commercial practice and to carry on its business in the ordinary course, in
substantially the same manner as heretofore conducted and in compliance with all
applicable laws and regulations, to pay its debts and
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taxes when due subject to good faith disputes over such debts or taxes, to pay
or perform other material obligations when due, and use its commercially
reasonable efforts consistent with past practices and policies to preserve
intact its present business organization, keep available the services of its
present officers and employees and preserve its relationships with customers,
suppliers, distributors, licensors, licensees and others with which it has
business dealings. In furtherance of the foregoing and subject to applicable
law, Cybex and Apex agree to confer, as promptly as practicable, prior to taking
any material actions or making any material management decisions with respect to
the conduct of business. In addition, except in the case of Cybex as provided in
Article IV of the Cybex Schedules and in the case of Apex as provided in
Article IV of the Apex Schedules, without the prior written consent of the
other, neither Cybex nor Apex shall do any of the following, and neither Cybex
nor Apex shall permit its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or change the
period of exerciseability of options or restricted stock, or reprise options
granted under any employee, consultant or director stock plans or authorize
cash payments in exchange for any options granted under any of such plans;
(b) Enter into any material partnership arrangements, joint development
agreements or strategic alliances;
(c) Grant any severance or termination pay to any officer or employee
except pursuant to written agreements outstanding, or policies existing, on
the date hereof and as previously disclosed in the Cybex Schedules or the
Apex Schedules, as the case may be, or adopt any new severance plan or amend
or modify or alter in any manner any severance plan, agreement or
arrangement existing on the date hereof;
(d) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Cybex Intellectual
Property or the Apex Intellectual Property, as the case may be, or enter
into grants to transfer or license to any person future patent rights, other
than in the ordinary course of business, or amend or modify or alter in any
manner any severance plan, agreement or arrangement existing on the date
hereof;
(e) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for any capital stock;
(f) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Cybex or its subsidiaries, or Apex or its
subsidiaries, as the case may be, except repurchases of unvested shares at
cost in connection with the termination of the employment relationship with
any employee pursuant to stock option or purchase agreements in effect on
the date hereof;
(g) Issue, deliver, sell, authorize, pledge or otherwise encumber or
propose any of the foregoing with respect to any shares of capital stock or
any securities convertible into shares of capital stock, or subscriptions,
rights, warrants or options to acquire any shares of capital stock or any
securities convertible into shares of capital stock, or enter into other
agreements or commitments of any character obligating it to issue any such
shares or convertible securities, other than (i) the issuance, delivery
and/or sale of shares of Cybex Common Stock or Apex Common Stock, as the
case may be, pursuant to the exercise of stock options therefor outstanding
as of the date of this Agreement, and (ii) shares of Apex Common Stock
issuable to participants in the Apex Stock Purchase Plan consistent with the
terms thereof;
(h) Cause, permit or propose any amendments to any charter document or
Bylaw (or similar governing instruments of any subsidiaries);
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(i) Acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a material portion of the assets of, or
by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets which are material, individually or
in the aggregate, to the business of Cybex or Apex, as the case may be, or
enter into any joint ventures, strategic partnerships or alliances, other
than in the ordinary course of business consistent with past practice;
(j) Sell, lease, license, encumber or otherwise dispose of any
properties or assets except (i) sales of inventory in the ordinary course of
business consistent with past practice and (ii) the sale, lease or
disposition (other than through licensing) of property or assets which are
not material, individually or in the aggregate, to the business of Cybex or
Apex, as the case may be;
(k) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
Cybex or Apex, as the case may be, enter into any "keep well" or other
agreement to maintain any financial statement condition or enter into any
arrangement having the economic effect of any of the foregoing other than
(i) in connection with the financing of ordinary course trade payables
consistent with past practice or (ii) pursuant to existing credit facilities
in the ordinary course of business;
(l) Adopt or amend any employee benefit plan or employee stock purchase
or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter
agreements entered into in the ordinary course of business consistent with
past practice with employees who are terminable "at will"), pay any special
bonus or special remuneration to any director or employee, or increase the
salaries or wage rates or fringe benefits (including rights to severance or
indemnification) of its directors, officers, employees or consultants;
(m) Make any individual or series of related payments outside of the
ordinary course of business in excess of $500,000 individually or $1,000,000
in the aggregate (with a series of related payments being treated for this
purpose as a single payment).
(n) Except in the ordinary course of business consistent with past
practice, modify, amend or terminate any material contract or agreement to
which Cybex or any of its subsidiaries or Apex or any of its subsidiaries,
as the case may be, is a party or waive, delay the exercise of, release or
assign any material rights or claims thereunder;
(o) Enter into or materially modify any contracts, agreements or
obligations relating to the distribution, sale, license or marketing by
third parties of Cybex's or Apex's products, as the case may be, or products
licensed by Cybex or Apex, as the case may be;
(p) Revalue any of its assets or, except as required by GAAP, make any
change in accounting methods, principles or practices;
(q) Incur or enter into any agreement or commitment outside of the
ordinary course of business in excess of $500,000 individually or $1,000,000
in the aggregate (with a series of related agreements and or commitments
being treated for this purpose as a single agreement or commitment);
(r) Engage in any action that could reasonably be expected to cause the
Merger to fail to qualify as a "reorganization" under Section 368(a) of the
Code, whether or not (in each case) otherwise permitted by the provisions of
this Article IV;
(s) Hire any employee with an annual compensation level in excess of
$100,000;
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(t) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business;
(u) Make any grant of exclusive rights to any third party; or
(v) Agree in writing or otherwise to take any of the actions described
in Section 4.1 (a) through (u) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER FILINGS.
(a) As promptly as practicable after the execution of this Agreement,
Newco, Cybex and Apex will prepare and Newco will file with the SEC the
Proxy Statement, and Apex, Cybex and Newco will prepare and Newco will file
with the SEC the Registration Statement in which the Proxy Statement will be
included as a prospectus. Each of Newco, Cybex and Apex will respond to any
comments of the SEC, will use its respective best efforts to have the
Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing and Cybex and Apex will cause the
Proxy Statement to be mailed to each of its shareholders at the earliest
practicable time. As promptly as practicable after the date of this
Agreement, Newco, Cybex and Apex will prepare and file any other filings
required under the Exchange Act, the Securities Act or any other Federal,
foreign or Blue Sky laws or the rules and regulations of the National
Association of Securities Dealers, Inc. (the "NASD") or NASDAQ relating to
the Merger and the transactions contemplated by this Agreement (the "OTHER
FILINGS"). Each party will notify the others promptly upon the receipt of
any comments from the SEC or its staff and of any request by the SEC or its
staff or any other government officials for amendments or supplements to the
Registration Statement, the Proxy Statement or any Other Filing or for
additional information and will supply the other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the
other hand, with respect to the Registration Statement, the Proxy Statement,
the Merger or any Other Filing. The Proxy Statement, the Registration
Statement and the Other Filings will comply in all material respects with
all applicable requirements of law and the rules and regulations promulgated
thereunder. Whenever any event occurs which is required to be set forth in
an amendment or supplement to the Proxy Statement, the Registration
Statement or any Other Filing, Newco, Cybex or Apex, as the case may be,
will promptly inform the other parties of such occurrence and cooperate in
filing with the SEC or its staff or any other government officials, and/ or
mailing to shareholders of Cybex or shareholders of Apex, such amendment or
supplement.
(b) Subject to Sections 5.2(c) and 5.2(d), the Proxy Statement will also
include the recommendations of (i) the Board of Directors of Cybex in favor
of adoption and approval of this Agreement and approval of the Cybex Merger,
and (ii) the Board of Directors of Apex in favor of adoption and approval of
this Agreement and approval of the Apex Merger.
5.2 MEETINGS OF SHAREHOLDERS.
(a) Promptly after the date hereof, Cybex will take all action necessary
in accordance with Alabama Law and its Articles of Incorporation and Bylaws
to convene the Cybex Shareholders' Meeting to be held as promptly as
practicable, for the purpose of voting upon this Agreement and the Cybex
Merger. Cybex will consult with Apex and use its commercially reasonable
efforts to hold the Cybex Shareholders' Meeting on the same day as the Apex
Shareholders' Meeting. Promptly after the date hereof, Apex will take all
action necessary in accordance with Washington Law and its Articles of
Incorporation and Bylaws to convene the Apex Shareholders' Meeting to
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be held as promptly as practicable for the purpose of voting upon this
Agreement and the Apex Merger. Apex will consult with Cybex and will use its
commercially reasonable efforts to hold the Apex Shareholders' Meeting on
the same day as the Cybex Shareholders' Meeting. Subject to Sections 5.2(c)
and 5.2(d), Cybex will use its commercially reasonable best efforts (as
defined in Section 8.3) to solicit from its shareholders, proxies in favor
of the adoption and approval of this Agreement and the approval of the Cybex
Merger. Subject to Sections 5.2(c) and 5.2(d), Apex will use its
commercially reasonable best efforts (as defined in Section 8.3) to solicit
from its shareholders, proxies in favor of the adoption and approval of this
Agreement and the approval of the Apex Merger. Subject to Sections 5.2(c)
and 5.2(d), Apex and Cybex will take all other action necessary or advisable
to secure the vote or consent of their respective shareholders required by
Washington Law (in the case of Apex) or Alabama Law (in the case of Cybex)
and all other applicable legal requirements to obtain such approvals.
(b) Subject to Sections 5.2(c) and 5.2(d): (i) the Board of Directors of
Cybex shall unanimously recommend that Cybex's shareholders vote in favor of
and adopt and approve this Agreement and the Cybex Merger at the Cybex
Shareholders' Meeting, and the Board of Directors of Apex shall unanimously
recommend that Apex's shareholders vote in favor of and adopt and approve
this Agreement and approve the Apex Merger; (ii) the Proxy Statement shall
include a statement to the effect that the Board of Directors of Cybex has
unanimously recommended that Cybex's shareholders vote in favor of and adopt
and approve this Agreement and approve the Cybex Merger at the Cybex
Shareholders' Meeting, and a statement to the effect that the Board of
Directors of Apex has unanimously recommended that Apex's shareholders vote
in favor of and adopt and approve this Agreement and the Apex Merger at the
Apex Shareholders' Meeting; and (iii) neither the Board of Directors of
Cybex, the Board of Directors of Apex, nor any committee of either shall
withdraw, amend or modify, or propose or resolve to withdraw, amend or
modify in a manner adverse to the other party, the unanimous recommendation
of the Board of Directors of Cybex that Cybex's shareholders vote in favor
of and adopt and approve this Agreement and approve the Cybex Merger or the
unanimous recommendation of the Board of Directors of Apex that Apex's
shareholders vote in favor of and adopt and approve this Agreement and the
Apex Merger. For purposes of this Agreement, said recommendation of the
Board of Directors shall be deemed to have been modified in a manner adverse
to the other party if said recommendation shall no longer be unanimous.
(c) Nothing in this Agreement shall prevent the Board of Directors of
Cybex from withholding, withdrawing, amending or modifying its unanimous
recommendation in favor of this Agreement and the Cybex Merger if (i) a
Cybex Superior Offer (as defined below) is made to Cybex and is not
withdrawn, (ii) neither Cybex nor any of its representatives shall have
violated any of the restrictions set forth in Section 5.4(a), and (iii) the
Board of Directors of Cybex concludes in good faith, after consultation with
its outside counsel, that, in light of such Cybex Superior Offer, the
withholding, withdrawal, amendment or modification of such recommendation is
required in order for the Board of Directors of Cybex to comply with its
fiduciary obligations to Cybex's shareholders under applicable law. Nothing
contained in this Section 5.2 shall limit Cybex's obligation to hold and
convene the Cybex Shareholders' Meeting (regardless of whether the unanimous
recommendation of the Board of Directors of Cybex shall have been withdrawn,
amended or modified). For purposes of this Agreement, "CYBEX SUPERIOR OFFER"
shall mean an unsolicited, bona fide written offer made by a third party to
consummate any of the following transactions: (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Cybex, pursuant to which the shareholders of Cybex
immediately preceding such transaction hold less than 50% of the equity
interest in the surviving or resulting entity of such transaction; (ii) a
sale or other disposition by Cybex of assets (excluding inventory and used
equipment sold in the ordinary course of business) representing in excess of
50% of the fair market value of Cybex's business immediately prior to such
sale, or (iii) the
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acquisition by any person or group (including by way of a tender offer or an
exchange offer or issuance by Cybex), directly or indirectly, of beneficial
ownership or a right to acquire beneficial ownership of shares representing
in excess of 50% of the voting power of the then outstanding shares of
capital stock of Cybex, in each case on terms that the Board of Directors of
Cybex determines, in its reasonable judgment (after consultation with its
financial advisor) to be more favorable to the Cybex shareholders from a
financial point of view than the terms of the Merger; provided, however,
that any such offer shall not be deemed to be a "Cybex Superior Offer" if
any financing required to consummate the transaction contemplated by such
offer is not committed and is not likely in the judgment of Cybex's Board of
Directors to be obtained by such third party on a timely basis.
(d) Nothing in this Agreement shall prevent the Board of Directors of
Apex from withholding, withdrawing, amending or modifying its unanimous
recommendation in favor of this Agreement and the Apex Merger if (i) an Apex
Superior Offer (as defined below) is made to Apex and is not withdrawn,
(ii) neither Apex nor any of its representatives shall have violated any of
the restrictions set forth in Section 5.4(b), and (iii) the Board of
Directors of Apex concludes in good faith, after consultation with its
outside counsel, that, in light of such Apex Superior Offer, the
withholding, withdrawal, amendment or modification of such recommendation is
required in order for the Board of Directors of Apex to comply with its
fiduciary obligations to Apex's shareholders under applicable law. Nothing
contained in this Section 5.2 shall limit Apex's obligation to hold and
convene the Apex Shareholders' Meeting (regardless of whether the unanimous
recommendation of the Board of Directors of Apex shall have been withdrawn,
amended or modified). For purposes of this Agreement, "APEX SUPERIOR OFFER"
shall mean an unsolicited, bona fide written offer made by a third party to
consummate any of the following transactions: (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Apex, pursuant to which the shareholders of Apex
immediately preceding such transaction hold less than 50% of the equity
interest in the surviving or resulting entity of such transaction; (ii) a
sale or other disposition by Apex of assets (excluding inventory and used
equipment sold in the ordinary course of business) representing in excess of
50% of the fair market value of Apex's business immediately prior to such
sale, or (iii) the acquisition by any person or group (including by way of a
tender offer or an exchange offer or issuance by Apex), directly or
indirectly, of beneficial ownership or a right to acquire beneficial
ownership of shares representing in excess of 50% of the voting power of the
then outstanding shares of capital stock of the Apex, in each case on terms
that the Board of Directors of Apex determines, in its reasonable judgment
(after consultation with its financial advisor) to be more favorable to the
Apex shareholders from a financial point of view than the terms of the
Merger; PROVIDED, HOWEVER, that any such offer shall not be deemed to be an
"Apex Superior Offer" if any financing required to consummate the
transaction contemplated by such offer is not committed and is not likely in
the judgment of Apex's Board of Directors to be obtained by such third party
on a timely basis.
5.3 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Each party will afford the other party and its accountants, counsel
and other representatives reasonable access during normal business hours to
the properties, books, records and personnel of the other party during the
period prior to the Effective Time to obtain all information concerning the
business, properties, results of operations and personnel of such party, as
the other party may reasonably request. No information or knowledge obtained
in any investigation pursuant to this Section 5.3 will affect or be deemed
to modify any representation or warranty contained herein or the conditions
to the obligations of the parties to consummate the Merger.
(b) The parties acknowledge that Cybex and Apex have previously executed
a Confidentiality Agreement, dated February 21, 2000 (the "CONFIDENTIALITY
AGREEMENT"), which Confidentiality Agreement will continue in full force and
effect in accordance with its terms.
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5.4 NO SOLICITATION.
(a) RESTRICTIONS ON CYBEX.
(i) Except as otherwise provided in this Section 5.4 (a)(i), from and
after the date of this Agreement until the Effective Time or termination
of this Agreement pursuant to Article VII, Cybex and its subsidiaries
will not, nor will they authorize or permit any of their respective
officers, directors, affiliates or employees or any investment banker,
attorney or other advisor or representative retained by any of them to,
directly or indirectly (A) solicit, initiate, encourage or induce the
making, submission or announcement of any Cybex Acquisition Proposal (as
defined below), (B) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with
respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes or may reasonably be expected to
lead to, any Cybex Acquisition Proposal, (C) engage in discussions with
any person with respect to any Cybex Acquisition Proposal, except as to
the existence of these provisions, (D) subject to Section 5.2(c),
approve, endorse or recommend any Cybex Acquisition Proposal or
(E) enter into any letter of intent or similar document or any contract,
agreement or commitment contemplating or otherwise relating to any Cybex
Acquisition Transaction (as defined below); PROVIDED, HOWEVER, until the
date on which this Agreement is approved by the required vote of the
Cybex shareholders, this Section 5.4(a) shall not prohibit Cybex from
furnishing nonpublic information regarding Cybex and its subsidiaries to,
entering into a confidentiality agreement with or entering into
discussions with, any person or group in response to a Cybex Superior
Offer submitted by such person or group (and not withdrawn) if
(1) neither Cybex nor any representative of Cybex and its subsidiaries
shall have violated any of the restrictions set forth in this Section
5.4(a), (2) the Board of Directors of Cybex concludes in good faith,
after consultation with its outside legal counsel, that such action is
required in order for the Board of Directors of Cybex to comply with its
fiduciary obligations to Cybex's shareholders under applicable law,
(3) (x) at least three (3) days prior to furnishing any such nonpublic
information to, or entering into discussions or negotiations with, such
person or group, Cybex gives Apex written notice of the identity of such
person or group and of Cybex's intention to furnish nonpublic information
to, or enter into discussions or negotiations with, such person or group
and (y) Cybex receives from such person or group an executed
confidentiality agreement containing customary limitations on the use and
disclosure of all nonpublic written and oral information furnished to
such person or group by or on behalf of Cybex and containing terms no
less favorable to the disclosing party than the terms of the
Confidentiality Agreement, and (4) contemporaneously with furnishing any
such nonpublic information to such person or group, Cybex furnishes such
nonpublic information to Apex (to the extent such nonpublic information
has not been previously furnished by Cybex to Apex). Cybex and its
subsidiaries will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any Cybex Acquisition Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding two sentences by any officer or director of Cybex
or any of its subsidiaries or any investment banker, attorney or other
advisor or representative of Cybex or any of its subsidiaries shall be
deemed to be a breach of this Section 5.4(a) by Cybex. In addition to the
foregoing, Cybex shall (i) provide Apex with at least forty-eight (48)
hours prior notice (or such lesser prior notice as provided to the
members of Cybex's Board of Directors but in no event less than eight
hours) of any meeting of Cybex's Board of Directors at which Cybex's
Board of Directors is reasonably expected to consider a Cybex Superior
Offer and (ii) provide Apex with at least three (3) business days prior
written notice of a meeting of Cybex's Board of Directors at which
Cybex's Board of Directors is reasonably expected to recommend a Cybex
Superior Offer to its shareholders
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and together with such notice a copy of the definitive documentation
relating to such Cybex Superior Offer.
(ii) For purposes of this Agreement, "CYBEX ACQUISITION PROPOSAL"
shall mean any offer or proposal (other than an offer or proposal by Apex
or Newco) relating to any Cybex Acquisition Transaction. For the purposes
of this Agreement, "CYBEX ACQUISITION TRANSACTION" shall mean any
transaction or series of related transactions other than the transactions
contemplated by this Agreement involving: (A) any acquisition or purchase
from Cybex by any person or "group" (as defined under Section 13(d) of
the Exchange Act and the rules and regulations thereunder) of more than a
5% interest in the total outstanding voting securities of Cybex or any of
its subsidiaries or any tender offer or exchange offer that if
consummated would result in any person or "group" (as defined under
Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 5% or more of the total outstanding
voting securities of Cybex or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving
Cybex pursuant to which the shareholders of Cybex immediately preceding
such transaction hold less than 95% of the equity interests in the
surviving or resulting entity of such transaction; (B) any sale, lease
(other than in the ordinary course of business), exchange, transfer,
license (other than in the ordinary course of business), acquisition or
disposition of more than 5% of the assets of Cybex; or (C) any
liquidation or dissolution of Cybex.
(iii) In addition to the obligations of Cybex set forth in paragraph
(i) of this Section 5.4(a), Cybex as promptly as practicable, and in any
event within twenty-four (24) hours, shall advise Apex orally and in
writing of any request received by Cybex for non-public information which
Cybex reasonably believes would lead to a Cybex Acquisition Proposal or
of any Cybex Acquisition Proposal, the material terms and conditions of
such request, Cybex Acquisition Proposal or inquiry, and the identity of
the person or group making any such request, Cybex Acquisition Proposal
or inquiry. Cybex will keep Apex informed in all material respects of the
status and details (including material amendments or proposed amendments)
of any such request, Cybex Acquisition Proposal or inquiry.
(b) RESTRICTIONS ON APEX.
(i) Except as otherwise provided in this Section 5.4(b)(i) from and
after the date of this Agreement until the Effective Time or termination
of this Agreement pursuant to Article VII, Apex and its subsidiaries will
not, nor will they authorize or permit any of their respective officers,
directors, affiliates or employees or any investment banker, attorney or
other advisor or representative retained by any of them to, directly or
indirectly (A) solicit, initiate, encourage or induce the making,
submission or announcement of any Apex Acquisition Proposal (as defined
below), (B) participate in any discussions or negotiations regarding, or
furnish to any person any non-public information with respect to, or take
any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to, any
Apex Acquisition Proposal, (C) engage in discussions with any person with
respect to any Apex Acquisition Proposal, except as to the existence of
these provisions, (D) subject to Section 5.2(d), approve, endorse or
recommend any Apex Acquisition Proposal or (E) enter into any letter of
intent or similar document or any contract, agreement or commitment
contemplating or otherwise relating to any Acquisition Transaction (as
defined below); PROVIDED, HOWEVER, until the date on which this Agreement
is approved by the required vote of the Apex shareholders, this
Section 5.4(b) shall not prohibit Apex from furnishing nonpublic
information regarding Apex and its subsidiaries to, entering into a
confidentiality agreement with or entering into discussions with, any
person or group in response to a Apex Superior Offer submitted by such
person or group (and not withdrawn) if (1) neither Apex nor any
representative of Apex and its subsidiaries shall have violated any of
the restrictions
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set forth in this Section 5.4(b), (2) the Board of Directors of Apex
concludes in good faith, after consultation with its outside legal
counsel, that such action is required in order for the Board of Directors
of Apex to comply with its fiduciary obligations to Apex's shareholders
under applicable law, (3) (x) at least three (3) days prior to furnishing
any such nonpublic information to, or entering into discussions or
negotiations with, such person or group, Apex gives Cybex written notice
of the identity of such person or group and of Apex's intention to
furnish nonpublic information to, or enter into discussions or
negotiations with, such person or group and (y) Apex receives from such
person or group an executed confidentiality agreement containing
customary limitations on the use and disclosure of all nonpublic written
and oral information furnished to such person or group by or on behalf of
Apex and containing terms no less favorable to the disclosing party than
the terms of the Confidentiality Agreement, and (4) contemporaneously
with furnishing any such nonpublic information to such person or group,
Apex furnishes such nonpublic information to Cybex (to the extent such
nonpublic information has not been previously furnished by Apex to
Cybex). Apex and its subsidiaries will immediately cease any and all
existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Apex Acquisition Proposal.
Without limiting the foregoing, it is understood that any violation of
the restrictions set forth in the preceding two sentences by any officer
or director of Apex or any of its subsidiaries or any investment banker,
attorney or other advisor or representative of Apex or any of its
subsidiaries shall be deemed to be a breach of this Section 5.4(b) by
Apex. In addition to the foregoing, Apex shall (i) provide Cybex with at
least forty-eight (48) hours prior notice (or such lesser prior notice as
provided to the members of Apex's Board of Directors but in no event less
than eight hours) of any meeting of Apex's Board of Directors at which
Apex's Board of Directors is reasonably expected to consider a Apex
Superior Offer and (ii) provide Cybex with at least three (3) business
days prior written notice of a meeting of Apex's Board of Directors at
which Apex's Board of Directors is reasonably expected to recommend a
Apex Superior Offer to its shareholders and together with such notice a
copy of the definitive documentation relating to such Apex Superior
Offer.
(ii) For purposes of this Agreement, "APEX ACQUISITION PROPOSAL"
shall mean any offer or proposal (other than an offer or proposal by
Cybex or Newco) relating to any Apex Acquisition Transaction. For the
purposes of this Agreement, "APEX ACQUISITION TRANSACTION" shall mean any
transaction or series of related transactions other than the transactions
contemplated by this Agreement involving: (A) any acquisition or purchase
from Apex by any person or "group" (as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) of more than a 5%
interest in the total outstanding voting securities of Apex or any of its
subsidiaries or any tender offer or exchange offer that if consummated
would result in any person or "group" (as defined under Section 13(d) of
the Exchange Act and the rules and regulations thereunder) beneficially
owning 5% or more of the total outstanding voting securities of Apex or
any of its subsidiaries or any merger, consolidation, business
combination or similar transaction involving Apex pursuant to which the
shareholders of Apex immediately preceding such transaction hold less
than 95% of the equity interests in the surviving or resulting entity of
such transaction; (B) any sale, lease (other than in the ordinary course
of business), exchange, transfer, license (other than in the ordinary
course of business), acquisition or disposition of more than 5% of the
assets of Apex; or (C) any liquidation or dissolution of Apex.
(iii) In addition to the obligations of Apex set forth in paragraph
(i) of this Section 5.4(b), Apex as promptly as practicable, and in any
event within twenty-four (24) hours, shall advise Cybex orally and in
writing of any request received by Apex for non-public information which
Apex reasonably believes would lead to a Apex Acquisition Proposal or of
any Apex Acquisition Proposal, the material terms and conditions of such
request, Apex Acquisition
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Proposal or inquiry, and the identity of the person or group making any
such request, Apex Acquisition Proposal or inquiry. Apex will keep Cybex
informed in all material respects of the status and details (including
material amendments or proposed amendments) of any such request, Apex
Acquisition Proposal or inquiry.
5.5 PUBLIC DISCLOSURE. Newco, Apex and Cybex will consult with each other
and agree before issuing any press release or otherwise making any public
statement with respect to the Merger, this Agreement, a Cybex Acquisition
Proposal or an Apex Acquisition Proposal and will not issue any such press
release or make any such public statement prior to such agreement, except as may
be required by law or any listing agreement with a national securities exchange
or NASDAQ, in which case reasonable efforts to consult with the other party will
be made prior to such release or public statement; provided, however, that no
such consultation or agreement shall be required if, prior to the date of such
release or public statement, either party shall have withheld, withdrawn,
amended or modified its unanimous recommendation in favor of the Merger.
5.6 LEGAL REQUIREMENTS. Each of Apex, Newco and Cybex will take all
reasonable actions necessary or desirable to comply promptly with all legal
requirements which may be imposed on them with respect to the consummation of
the transactions contemplated by this Agreement (including furnishing all
information required in connection with approvals of or filings with any
Governmental Entity, and prompt resolution of any litigation prompted hereby)
and will promptly cooperate with and furnish information to any party hereto
necessary in connection with any such requirements imposed upon any of them or
their respective subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement. Newco, Apex and Cybex will each use
its commercially reasonable efforts to take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of Newco Common Stock pursuant hereto.
5.7 THIRD PARTY CONSENTS. As soon as practicable following the date
hereof, Newco, Apex and Cybex will each use its commercially reasonable efforts
to obtain all material consents, waivers and approvals under any of its or its
subsidiaries' agreements, contracts, licenses or leases required to be obtained
in connection with the consummation of the transactions contemplated hereby.
5.8 FIRPTA. At or prior to the Closing, Cybex, if requested by Apex, shall
deliver to the IRS a notice that the Cybex Common Stock is not a "U.S. Real
Property Interest" as defined and in accordance with the requirements of
Treasury Regulation Section 1.897-2(h)(2).
5.9 NOTIFICATION OF CERTAIN MATTERS. Apex, Cybex and Newco will give
prompt notice to the others of the occurrence, or failure to occur, of any
event, which occurrence or failure to occur would be reasonably likely to cause
(a) any representation or warranty contained in this Agreement to be untrue or
inaccurate at any time from the date of this Agreement to the Effective Time,
such that the conditions set forth in Section 6.2(a) or 6.3(a), as the case may
be, would not be satisfied as a result thereof, or (b) any material failure of
Apex or Cybex, as the case may be, or of any officer, director, employee or
agent thereof, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement. Notwithstanding the
above, the delivery of any notice pursuant to this Section will not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
5.10 COMMERCIALLY REASONABLE EFFORTS AND FURTHER ASSURANCES. Subject to
the respective rights and obligations of Apex and Cybex under this Agreement,
each of the parties to this Agreement will use its commercially reasonable best
efforts (as defined in Section 8.3) to effectuate the Merger and the other
transactions contemplated hereby and to fulfill and cause to be fulfilled the
conditions to closing under this Agreement. Each party hereto, at the reasonable
request of another party hereto, will execute and deliver such other instruments
and do and perform such other acts and things as may be necessary or desirable
for effecting completely the consummation of the transactions contemplated
hereby.
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5.11 FORM S-8. Newco will cause the Newco Common Stock issuable upon
exercise of the assumed Apex Options, Apex Stock Purchase Plan Options, and
Cybex Options (collectively, the "STOCK RIGHTS") and the shares reserved for
issuance pursuant to future awards under the Apex Plans, the Cybex Plans and the
Apex Stock Purchase Plan to be registered on Form S-8 (the "FORM S-8")
promulgated by the SEC as soon as practicable after the Effective Time and will
use its reasonable best efforts to maintain the effectiveness of such
registration statement or registration statements for so long as any such
assumed Stock Rights shall remain outstanding. With respect to those individuals
who subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the Exchange Act (as hereinafter defined), Newco shall
administer the Stock Rights assumed pursuant to Sections 1.8 and 1.9 (including
the provisions of the Apex Plans, and the Cybex Plans incorporated in the Stock
Rights) in a manner that complies with Rule 16b-3 promulgated by the SEC under
the Exchange Act.
5.12 INDEMNIFICATION.
(a) From and after the Effective Time, Newco and the Cybex Surviving
Corporation will fulfill and honor in all respects the obligations of Cybex
pursuant to any indemnification agreements between Cybex and its directors
and officers existing prior to the date hereof. The Articles of
Incorporation and Bylaws of the Cybex Surviving Corporation will contain the
provisions with respect to indemnification and elimination of liability for
monetary damages set forth in the Articles of Incorporation and Bylaws of
Cybex, which provisions will not be amended, repealed or otherwise modified
for a period of six (6) years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who, at the
Effective Time, were directors, officers, employees or agents of Cybex,
unless such modification is required by law.
(b) From and after the Effective Time, Newco and the Apex Surviving
Corporation will fulfill and honor in all respects the obligations of Apex
pursuant to any indemnification agreements between Apex and its directors
and officers existing prior to the date hereof. The Articles of
Incorporation and Bylaws of the Apex Surviving Corporation will contain the
provisions with respect to indemnification and elimination of liability for
monetary damages set forth in the Articles of Incorporation and Bylaws of
Apex, which provisions will not be amended, repealed or otherwise modified
for a period of six (6) years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who, at the
Effective Time, were directors, officers, employees or agents of Apex,
unless such modification is required by law.
(c) For a period of six years after the Effective Time, Newco will cause
the Cybex Surviving Corporation to use its commercially reasonable best
efforts (as defined in Section 8.3) to maintain in effect, if available,
directors' and officers' liability insurance covering those persons who are
currently covered by Cybex's directors' and officers' liability insurance
policy on terms comparable to those applicable to the then current directors
and officers of Newco; PROVIDED, HOWEVER, that in no event will Newco or the
Cybex Surviving Corporation be required to expend in excess of $400,000 in
an annual premium for such coverage (or such coverage as is available for
such annual premium). For a period of six years after the Effective Time,
Newco will cause the Apex Surviving Corporation to use its commercially
reasonable best efforts (as defined in Section 8.3) to maintain in effect,
if available, directors' and officers' liability insurance covering those
persons who are currently covered by Apex's directors' and officers'
liability insurance policy on terms comparable to those applicable to the
then current directors and officers of Newco; PROVIDED, HOWEVER, that in no
event will Newco or the Apex Surviving Corporation be required to expend in
excess of $400,000 in an annual premium for such coverage (or such coverage
as is available for such annual premium).
(d) This Section 5.12 will survive any termination of this Agreement and
the consummation of the Merger at the Effective Time and will be binding on
all successors and assigns of Newco, the Apex Surviving Corporation and the
Cybex Surviving Corporation. In the event that Newco,
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the Apex Surviving Corporation or the Cybex Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into
any other person or entity and shall not be the continuing or surviving
corporation or entity of such consolidation or merger, or (ii) transfers or
conveys all or a substantial portion of its properties or assets to any
person or entity, then, and in each such case, to the extent necessary to
effectuate the purposes of this Section 5.13, proper provision shall be made
so that the successors and the assigns of Newco, the Apex Surviving
Corporation and the Cybex Surviving Corporation assume the obligations set
forth in this Section 5.12.
5.13 TAX-FREE REORGANIZATION. Newco, Apex and Cybex will each use its
commercially reasonable efforts to cause the Merger to be treated as a
reorganization within the meaning of Section 368 of the Code. Newco, Apex and
Cybex will each make available to the other party and their respective legal
counsel copies of all returns requested by the other party.
5.14 NASDAQ LISTING. Newco agrees to authorize for listing on NASDAQ the
shares of Newco Common Stock issuable, and those required to be reserved for
issuance, in connection with the Merger, upon official notice of issuance.
5.15 CYBEX AFFILIATE AGREEMENT. Set forth on the Cybex Schedules is a list
of those persons who may be deemed to be, in Cybex's reasonable judgment,
affiliates of Cybex within the meaning of Rule 145 promulgated under the
Securities Act (a "CYBEX AFFILIATE"). Cybex will provide Apex with such
information and documents as Apex reasonably requests for purposes of reviewing
such list. Cybex will use its best efforts to deliver or cause to be delivered
to Apex as promptly as practicable on or following the date hereof from each
Cybex Affiliate an executed affiliate agreement in substantially the form
attached hereto as Exhibit C (the "CYBEX AFFILIATE AGREEMENT"), each of which
will be in full force and effect as of the Effective Time. Apex will be entitled
to place appropriate legends on the certificates evidencing any Newco Common
Stock to be received by a Cybex Affiliate pursuant to the terms of this
Agreement, and to issue appropriate stop transfer instructions to the transfer
agent for the Newco Common Stock, consistent with the terms of the Cybex
Affiliate Agreement.
5.16 APEX AFFILIATE AGREEMENT. Set forth on the Apex Schedules is a list
of those persons who may be deemed to be, in Apex's reasonable judgment,
affiliates of Apex within the meaning of Rule 145 promulgated under the
Securities Act (a "APEX AFFILIATE"). Apex will provide Cybex with such
information and documents as Cybex reasonably requests for purposes of reviewing
such list. Apex will use its best efforts to deliver or cause to be delivered to
Cybex as promptly as practicable on or following the date hereof from each Apex
Affiliate an executed affiliate agreement in substantially the form attached
hereto as Exhibit D (the "APEX AFFILIATE AGREEMENT"), each of which will be in
full force and effect as of the Effective Time. Cybex will be entitled to place
appropriate legends on the certificates evidencing any Newco Common Stock to be
received by a Apex Affiliate pursuant to the terms of this Agreement, and to
issue appropriate stop transfer instructions to the transfer agent for the Newco
Common Stock, consistent with the terms of the Apex Affiliate Agreement.
5.17 REGULATORY FILINGS; REASONABLE EFFORTS. As soon as may be reasonably
practicable, Cybex and Apex each shall file with the United States Federal Trade
Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice ("DOJ") Notification and Report Forms relating to the
transactions contemplated herein as required by the HSR Act, as well as
comparable pre-merger notification forms required by the merger notification or
control laws and regulations of any applicable jurisdiction, as agreed to by the
parties. Cybex and Apex each shall promptly (a) supply the other with any
information which may be required in order to effectuate such filings and
(b) supply any additional information which reasonably may be required by the
FTC, the DOJ or the competition or merger control authorities of any other
jurisdiction and which the parties may reasonably deem appropriate.
5.18 TERMINATION OF 401(K) PLANS. Cybex and its Cybex Affiliates (as
defined in Section 2.12(a)(i)) and Apex and its Apex Affiliates (as defined in
Section 3.12(a)(i)), as applicable, shall,
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effective the day prior to the Closing, terminate those of their 401(k) plans
that Apex and Cybex have agreed to terminate.
5.19 BOARD OF DIRECTORS OF NEWCO AFTER THE EFFECTIVE TIME. The Board of
Directors of Newco will take all actions within its power to cause the Board of
Directors of Newco, effective upon the Effective Time, to consist of seven (7)
members, (a) three (3) of whom shall have served on the Board of Directors of
Apex, or shall have been an officer of Apex, immediately prior to the Effective
Time (or, if fewer than three (3) of the current members of Apex's Board of
Directors or officers of Apex are available or willing to serve as a director of
Apex after the Effective Time, such replacement directors as may be nominated by
the remaining members of Apex's Board of Directors in accordance with the Bylaws
of Apex) (the "APEX NOMINEES"), (b) three (3) of whom shall have served on the
Board of Directors of the Cybex immediately prior to the Effective Time (or, if
fewer than three (3) of the current members of Cybex's Board of Directors are
available or willing to serve as a director of Apex after the Effective Time,
such replacement directors as may be nominated by the remaining directors of
Cybex) (the "CYBEX NOMINEES") and (c) one (1) vacancy to be filled within six
(6) months of the Effective Time by a prominent individual, who shall not have
previously been an officer, director or employee of either Apex or Cybex, with
extensive management experience in the computer and communications technology
industry to be nominated by the Cybex Nominees and subject to the approval of
the Apex Nominees, which approval will not be unreasonably withheld (the
"SEVENTH NOMINEE"). Each of the three (3) classes of directors (Class I,
Class II and Class III) defined in the Certificate of Incorporation of Newco
shall consist of one (1) of the Apex Nominees and one (1) of the Cybex Nominees.
5.20 HEADQUARTERS; OFFICERS OF APEX AFTER THE EFFECTIVE TIME. Apex and
Cybex contemplate that the headquarters of the combined operations of Newco,
Apex and Cybex following the Merger shall initially be located in Huntsville,
Alabama. The Board of Directors of Newco will take all actions within its power
to cause, effective upon the Effective Time, the following persons to named
officers of Newco with the titles indicated below; provided, that such persons
shall serve at the pleasure of the Board of Directors of Newco until successors
are duly elected or appointed and qualified in accordance with applicable law:
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
Stephen F. Thornton Chairman of the Board, President and
Chief Executive Officer
Doyle C. Weeks Executive Vice President, Group
Operations and Business Development
R. Byron Driver Senior Vice President, Operations and
Chief Operating Officer
Barry L. Harmon Senior Vice President, West Coast
Operations
Gary R. Johnson Senior Vice President, Sales and
Marketing
Douglas E. Pritchett Senior Vice President, Finance, Chief
Financial Officer, Treasurer, and
Assistant Secretary
Samuel F. Saracino Senior Vice President, Legal and
Corporate Affairs, General Counsel,
and Secretary
Christopher Thomas Senior Vice President, Engineering
C. David Perry Vice President, OEM Sales
Vic Odryna Senior Vice President, Corporate
Strategic Marketing
</TABLE>
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ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been approved and
adopted, and the Cybex Merger and the Apex Merger shall have been duly
approved, by the requisite vote under applicable law by the shareholders of
Cybex and Apex, respectively.
(b) REGISTRATION STATEMENT EFFECTIVE; PROXY STATEMENT. The SEC shall
have declared the Registration Statement effective. No stop order suspending
the effectiveness of the Registration Statement or any part thereof shall
have been issued and no proceeding for that purpose, and no similar
proceeding in respect of the Proxy Statement shall have been initiated or
threatened in writing by the SEC.
(c) NO ORDER; HSR ACT. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting consummation of the
Merger. All waiting periods, if any, under the HSR Act relating to the
transactions contemplated hereby will have expired or terminated early.
(d) TAX OPINIONS. Apex and Cybex shall each have received
substantially identical written opinions from their counsel, Wilson Sonsini
Goodrich & Rosati, Professional Corporation, and Sirote & Permutt, P.C.,
respectively, in form and substance reasonably satisfactory to them, to the
effect that the Merger will constitute a reorganization within the meaning
of Section 368(a) of the Code, and such opinions shall not have been
withdrawn; PROVIDED, HOWEVER, that if the counsel to either Apex or Cybex
does not render such opinion, this condition shall nonetheless be deemed to
be satisfied with respect to such party if counsel to the other party
renders such opinion to such party. The parties to this Agreement agree to
make reasonable representations as requested by such counsel for the purpose
of rendering such opinions.
(e) NASDAQ LISTING. The shares of Newco Common Stock issuable to
shareholders of Cybex and Apex pursuant to this Agreement and such other
shares required to be reserved for issuance in connection with the Merger
shall have been authorized for listing on NASDAQ upon official notice of
issuance.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF CYBEX. The obligation of Cybex
to consummate and effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, exclusively by Cybex:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Apex contained in this Agreement shall have been true and correct as of
the date of this Agreement, except where the failure to be so true and
correct would not, in the aggregate, have a Material Adverse Effect on Apex.
In addition, the representations and warranties of Apex contained in this
Agreement shall be true and correct on and as of the Effective Time except
for changes contemplated by this Agreement and except for those
representations and warranties which address matters only as of a particular
date (which shall remain true and correct as of such particular date), with
the same force and effect as if made on and as of the Effective Time, except
in such cases (other than the representations in Sections 3.2 and 3.3) where
the failure to be so true and correct would not, in the aggregate, have a
Material Adverse Effect on Apex. Cybex shall have received a certificate
with respect to the foregoing signed on behalf of Apex by the Chief
Executive Officer and the Chief Financial Officer of Apex; and
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(b) AGREEMENTS AND COVENANTS. Apex and Apex Sub shall have performed
or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or
prior to the Effective Time, and Cybex shall have received a certificate to
such effect signed on behalf of Apex by the Chief Executive Officer and the
Chief Financial Officer of Apex.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF APEX. The obligations of
Apex and Apex Sub to consummate and effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, exclusively by Apex:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Cybex contained in this Agreement shall have been true and correct as of
the date of this Agreement, except where the failure to be so true and
correct would not, in the aggregate, have a Material Adverse Effect on
Cybex. In addition, the representations and warranties of Cybex contained in
this Agreement shall be true and correct on and as of the Effective Time
except for changes contemplated by this Agreement and except for those
representations and warranties which address matters only as of a particular
date (which shall remain true and correct as of such particular date), with
the same force and effect as if made on and as of the Effective Time, except
in such cases (other than the representations in Sections 2.2 and 2.3)where
the failure to be so true and correct would not, in the aggregate, have a
Material Adverse Effect on Cybex. Apex shall have received a certificate
with respect to the foregoing signed on behalf of Cybex by the President and
the Chief Financial Officer of Cybex; and
(b) AGREEMENTS AND COVENANTS. Cybex and Cybex Sub shall have performed
or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, and the Apex shall have received a certificate
to such effect signed on behalf of Cybex by the President and the Chief
Financial Officer of Cybex.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time of the Merger, whether before or after approval of the Cybex
Merger by the shareholders of Cybex or the Apex Merger by the shareholders of
Apex:
(a) by mutual written consent duly authorized by the Boards of Directors
of Apex and Cybex;
(b) by either Cybex or Apex if the Merger shall not have been
consummated by September 30, 2000; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to
any party whose action or failure to act has been a principal cause of or
resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement;
(c) by either Cybex or Apex if a governmental entity shall have issued
an order, decree or ruling or taken any other action, in any case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree or ruling is final and nonappealable;
(d) by either Cybex or Apex if the required approvals of the
shareholders of Cybex or the shareholders of Apex contemplated by this
Agreement shall not have been obtained by reason of the failure to obtain
the required vote upon a vote taken at a meeting of shareholders duly
convened therefor or at any adjournment thereof; PROVIDED, HOWEVER, that the
right to terminate this Agreement under this Section 7.1(d) shall not be
available to any party where the failure to obtain shareholder approval of
such party shall have been caused by the action or failure to act of such
party in breach of this Agreement;
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(e) by Cybex, upon a breach of any representation, warranty, covenant or
agreement on the part of Apex set forth in this Agreement, or if any
representation or warranty of Apex shall have become untrue, in either case
such that the conditions set forth in Section 6.2(a) or Section 6.2(b) would
not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, PROVIDED, that if such
inaccuracy in Apex's representations and warranties or breach by Apex is
curable by Apex through the exercise of its commercially reasonable efforts,
then Cybex may not terminate this Agreement under this Section 7.1(e) for
thirty (30) days after delivery of written notice from Cybex to Apex of such
breach, provided Apex continues to exercise commercially reasonable efforts
to cure such breach (it being understood that Cybex may not terminate this
Agreement pursuant to this paragraph (e) if such breach by Apex is cured
during such thirty (30)-day period);
(f) by Apex, upon a breach of any representation, warranty, covenant or
agreement on the part of Cybex set forth in this Agreement, or if any
representation or warranty of Cybex shall have become untrue, in either case
such that the conditions set forth in Section 6.3(a) or Section 6.3(b) would
not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, PROVIDED, that if such
inaccuracy in Cybex's representations and warranties or breach by Cybex is
curable by Cybex through the exercise of its commercially reasonable
efforts, then Apex may not terminate this Agreement under this
Section 7.1(f) for thirty (30) days after delivery of written notice from
Apex to Cybex of such breach, provided Cybex continues to exercise
commercially reasonable efforts to cure such breach (it being understood
that Apex may not terminate this Agreement pursuant to this paragraph (f) if
such breach by Cybex is cured during such thirty (30)-day period);
(g) by Cybex if a Cybex Triggering Event (as defined below) shall have
occurred; or
(h) by Apex if an Apex Triggering Event (as defined below) shall have
occurred.
For the purposes of this Agreement, a "CYBEX TRIGGERING EVENT" shall be
deemed to have occurred if: (i) the Board of Directors of Apex or any committee
thereof shall for any reason have withdrawn or shall have amended or modified in
a manner adverse to Cybex its unanimous recommendation in favor of the adoption
and approval of this Agreement or the approval of the Apex Merger; (ii) Apex
shall have failed to include in the Proxy Statement the unanimous recommendation
of the Board of Directors of Apex in favor of the adoption and approval of this
Agreement and the approval of the Apex Merger; (iii) the Board of Directors of
Apex fails to reaffirm its unanimous recommendation in favor of the adoption and
approval of this Agreement and the approval of the Apex Merger within ten (10)
business days after Cybex requests in writing that such recommendation be
reaffirmed at any time following the announcement of an Apex Acquisition
Proposal; (iv) the Board of Directors of Apex or any committee thereof shall
have approved or recommended any Apex Acquisition Proposal; (v) Apex shall have
entered into any letter of intent or similar document or any agreement, contract
or commitment accepting any Apex Acquisition Proposal; (vi) a tender or exchange
offer relating to securities of Apex shall have been commenced by a person
unaffiliated with Cybex and Apex shall not have sent to its securityholders
pursuant to Rule 14e-2 promulgated under the Securities Act, within ten (10)
business days after such tender or exchange offer is first published sent or
given, a statement disclosing that Apex recommends rejection of such tender or
exchange offer; or (vii) Apex shall have breached the provisions of Section
5.4(b) of this Agreement.
For the purposes of this Agreement, an "APEX TRIGGERING EVENT" shall be
deemed to have occurred if: (i) the Board of Directors of Cybex or any committee
thereof shall for any reason have withdrawn or shall have amended or modified in
a manner adverse to Apex its unanimous recommendation in favor of the adoption
and approval of the Agreement or the approval of the Cybex Merger; (ii) Cybex
shall have failed to include in the Proxy Statement the unanimous recommendation
of the Board of Directors of Cybex in favor of the adoption and approval of the
Agreement and the approval of the
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<PAGE>
Cybex Merger; (iii) the Board of Directors of Cybex fails to reaffirm its
unanimous recommendation in favor of the adoption and approval of the Agreement
and the approval of the Cybex Merger within ten (10) business days after Apex
requests in writing that such recommendation be reaffirmed at any time following
the announcement of a Cybex Acquisition Proposal; (iv) the Board of Directors of
Cybex or any committee thereof shall have approved or recommended any Cybex
Acquisition Proposal; (v) Cybex shall have entered into any letter of intent or
similar document or any agreement, contract or commitment accepting any Cybex
Acquisition Proposal; (vi) a tender or exchange offer relating to securities of
Cybex shall have been commenced by a person unaffiliated with Apex and Cybex
shall not have sent to its securityholders pursuant to Rule 14e-2 promulgated
under the Securities Act, within ten (10) business days after such tender or
exchange offer is first published sent or given, a statement disclosing that
Cybex recommends rejection of such tender or exchange offer; or (vii) Cybex
shall have breached the provisions of Section 5.4(a) of this Agreement.
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of this
Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article VIII (General Provisions), each of
which shall survive the termination of this Agreement, and (ii) nothing herein
shall relieve any party from liability for any willful breach of this Agreement.
7.3 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses,
whether or not the Merger is consummated; PROVIDED, HOWEVER, that Apex and
Cybex shall share equally all fees and expenses, other than attorneys' and
accountants' fees and expenses, incurred (i) in relation to the printing and
filing of the Proxy Statement (including any preliminary materials related
thereto) and the Registration Statement (including financial statements and
exhibits) and any amendments or supplements thereto or (ii) for the pre-
merger notification and report forms under the HSR Act.
(b) CYBEX PAYMENTS.
(i) Cybex shall pay to Apex in immediately available funds, within
two (2) business days after demand by Apex, an amount equal to
$25,000,000 (the "CYBEX TERMINATION FEE") if this Agreement is terminated
by Apex pursuant to Section 7.1(h).
(ii) Cybex shall pay Apex in immediately available funds, within two
(2) business days after demand by Apex, an amount equal to the Cybex
Termination Fee, if this Agreement is terminated by Apex or Cybex
pursuant to Section 7.1(b) or Section 7.1(d) as a result of Cybex's
failure to obtain the required approvals of the shareholders of Cybex and
either of the following shall occur:
(1) if following the date hereof and prior to the termination of
this Agreement, a third party has announced a Cybex Acquisition
Proposal and within twelve (12) months following the termination of
this Agreement a Cybex Acquisition (as defined below) is consummated;
or
(2) if following the date hereof and prior to the termination of
this Agreement, a third party has announced a Cybex Acquisition
Proposal and within twelve (12) months following the termination of
this Agreement Cybex enters into an agreement or letter of intent
providing for a Cybex Acquisition.
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<PAGE>
(iii) Cybex acknowledges that the agreements contained in this
Section 7.3(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Apex would not enter
into this Agreement; accordingly, if Cybex fails to pay in a timely
manner the amounts due pursuant to this Section 7.3(b) and, in order to
obtain such payment, Apex makes a claim that results in a judgment
against Cybex for the amounts set forth in this Section 7.3(b), Cybex
shall pay to Apex its reasonable costs and expenses (including reasonable
attorneys' fees and expenses) in connection with such suit, together with
interest on the amounts set forth in this Section 7.3(b) at the prime
rate of The Chase Manhattan Bank in effect on the date such payment was
required to be made. Payment of the fees described in this Section
7.3(b) shall not be in lieu of damages incurred in the event of breach of
this Agreement. For the purposes of this Agreement, "CYBEX ACQUISITION"
shall mean any of the following transactions (other than the transactions
contemplated by this Agreement): (i) a merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving Cybex pursuant to which the shareholders of Cybex
immediately preceding such transaction hold less than 50% of the
aggregate equity interests in the surviving or resulting entity of such
transaction, (ii) a sale or other disposition by Cybex of assets
representing in excess of 50% of the aggregate fair market value of
Cybex's business immediately prior to such sale or (iii) the acquisition
by any person or group (including by way of a tender offer or an exchange
offer or issuance by Cybex), directly or indirectly, of beneficial
ownership or a right to acquire beneficial ownership of shares
representing in excess of 50% of the voting power of the then outstanding
shares of capital stock of Cybex.
(c) APEX PAYMENTS.
(i) Apex shall pay to Cybex in immediately available funds, within
two (2) business days after demand by Cybex, an amount equal to
$25,000,000 (the "APEX TERMINATION FEE") if this Agreement is terminated
by Cybex pursuant to Section 7.1(g).
(ii) Apex shall pay Cybex in immediately available funds, within two
(2) business days after demand by Cybex, an amount equal to the Apex
Termination Fee, if this Agreement is terminated by Cybex or Apex
pursuant to Section 7.1(b) or Section 7.1(d) as a result of Apex's
failure to obtain the required approvals of the shareholders of Apex and
either of the following shall occur:
(1) if following the date hereof and prior to the termination of
this Agreement, a third party has announced an Apex Acquisition
Proposal and within twelve (12) months following the termination of
this Agreement an Apex Acquisition (as defined below) is consummated;
or
(2) if following the date hereof and prior to the termination of
this Agreement, a third party has announced an Apex Acquisition
Proposal and within twelve (12) months following the termination of
this Agreement Apex enters into an agreement or letter of intent
providing for an Apex Acquisition.
(iii) Apex acknowledges that the agreements contained in this Section
7.3(c) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Cybex would not enter into
this Agreement; accordingly, if Apex fails to pay in a timely manner the
amounts due pursuant to this Section 7.3(c) and, in order to obtain such
payment, Cybex makes a claim that results in a judgment against Apex for
the amounts set forth in this Section 7.3(c), Apex shall pay to Cybex its
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) in connection with such suit, together with interest on the
amounts set forth in this Section 7.3(c) at the prime rate of The Chase
Manhattan Bank in effect on the date such payment was required to be
made. Payment of the fees described in this Section 7.3(c) shall not be
in lieu of damages incurred in the event of
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<PAGE>
breach of this Agreement. For the purposes of this Agreement, "APEX
ACQUISITION" shall mean any of the following transactions (other than the
transactions contemplated by this Agreement): (i) a merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Apex pursuant to which the
shareholders of Apex immediately preceding such transaction hold less
than 50% of the aggregate equity interests in the surviving or resulting
entity of such transaction, (ii) a sale or other disposition by Apex of
assets representing in excess of 50% of the aggregate fair market value
of Apex's business immediately prior to such sale or (iii) the
acquisition by any person or group (including by way of a tender offer or
an exchange offer or issuance by Apex), directly or indirectly, of
beneficial ownership or a right to acquire beneficial ownership of shares
representing in excess of 50% of the voting power of the then outstanding
shares of capital stock of Apex.
7.4 AMENDMENT. Subject to applicable law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of Apex and Cybex.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. Delay in exercising any right under
this Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Cybex and Apex contained in this Agreement shall terminate at
the Effective Time, and only the covenants that by their terms survive the
Effective Time shall survive the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via facsimile (receipt confirmed) to the parties at
the following addresses or facsimile numbers (or at such other address or
facsimile numbers for a party as shall be specified by like notice):
(a) if to Apex or Apex Sub, to:
Apex Inc.
9911 Willows Road N.E.
Redmond, Washington 98052
Attention: Mr. Kevin J. Hafer
Mr. Barry L. Harmon
Samuel F. Saracino, Esq.
Fax No.: (425) 497-5597
with copies to:
Wilson Sonsini Goodrich & Rosati, Professional Corporation
5300 Carillon Point
Kirkland, Washington 98033
Attention: Patrick J. Schultheis, Esq.
Fax No.: (425) 576-5899
A-56
<PAGE>
(b) if to Cybex or Cybex Sub, to:
Cybex Computer Products Corporation
4991 Corporate Drive
Huntsville, Alabama 35805
Attention: Mr. Stephen Thornton
Mr. Dusty Pritchett
Fax No.: (256) 430-4032
with a copy to:
Sirote & Permutt, P.C.
2311 Highland Ave. South
Birmingham, Alabama 32505
Attention: John H. Cooper, Esq.
Fax No.: (205) 930-5101
(c) if to Newco, to each of the parties at the addresses or facsimile
numbers specified in 8.2(a) and 8.2(b).
8.3 INTERPRETATION; KNOWLEDGE.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise
indicated. The words "INCLUDE," "INCLUDES" and "INCLUDING" when used herein
shall be deemed in each case to be followed by the words "WITHOUT
LIMITATION." The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. When reference is made herein to "THE
BUSINESS OF " an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity. Reference
to the subsidiaries of an entity shall be deemed to include all direct and
indirect subsidiaries of such entity.
(b) For purposes of this Agreement, the term "KNOWLEDGE" means, with
respect to any matter in question, that the executive officers of Cybex or
Apex, as the case may be, have actual knowledge of such matter.
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE EFFECT"
when used in connection with an entity means any change, event, violation,
inaccuracy, circumstance or effect that is materially adverse to the
business, assets (including intangible assets), capitalization, financial
condition or results of operations of such entity and its subsidiaries taken
as a whole; PROVIDED, HOWEVER, that in no event shall (A) a decrease in such
entity's stock price or the failure to meet or exceed Wall Street research
analysts' or such entity's internal earnings or other estimates or
projections in and of itself constitute a Material Adverse Effect or
(B) any change, event, violation, inaccuracy, circumstance or effect that
results from (x) the public announcement or pendency of the transactions
contemplated hereby, (y) changes affecting the network device industry
generally or (z) changes affecting the United States economy generally,
constitute a Material Adverse Effect.
(d) For purposes of this Agreement, "COMMERCIALLY REASONABLE BEST
EFFORTS" means the efforts that a prudent person or entity desirous of
achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible; provided, however, that an
obligation to use commercially reasonable best efforts under this Agreement
does not require the person or entity subject to that obligation to take
actions that would result in a Material Adverse Effect on such person or
entity or that would materially reduce the benefits to such person or entity
of the this Agreement and the Merger.
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<PAGE>
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT. This Agreement and the documents and instruments and
other agreements among the parties hereto as contemplated by or referred to
herein, including the Cybex Schedules and the Apex Schedules (a) constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, it being understood that
the Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as set forth herein.
8.6 SEVERABILITY. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.8 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 law thereof.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or
rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.10 ASSIGNMENT. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
8.11 WAIVER OF JURY TRIAL. EACH OF APEX, CYBEX AND NEWCO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF APEX, CYBEX OR NEWCO IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
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<PAGE>
IN WITNESS WHEREOF, Apex, Cybex and Newco have caused this Agreement to be
executed by their duly authorized respective officers, as of the date first
written above.
<TABLE>
<S> <C> <C>
APEX INC.
By: /s/ KEVIN J. HAFER
-----------------------------------------
Name: Kevin J. Hafer
Title: President, Chief Executive Officer
and Chairman
CYBEX COMPUTER PRODUCTS CORPORATION
By: /s/ STEPHEN F. THORNTON
-----------------------------------------
Name: Stephen F. Thornton
Title: Chairman of the Board, Chief
Executive Officer and President
AEGEAN SEA INC.
By: /s/ DOYLE C. WEEKS
-----------------------------------------
Name: Doyle C. Weeks
Title: President
</TABLE>
****REORGANIZATION AGREEMENT****
A-59
<PAGE>
ANNEX B
March 7, 2000
Board of Directors
Apex Inc.
9911 Willows Road N.E.
Redmond, Washington 98052
Dear Sirs:
You have requested our opinion as to the fairness, from a financial point of
view, to the stockholders of Apex Inc. (the "Company") of the Apex Applicable
Ratio (as defined below) contemplated by the Agreement and Plan of
Reorganization, dated as of March 7, 2000 (the "Agreement"), by and among the
Company, Cybex Computer Products Corporation ("Cybex") and Aegean Sea Inc.
("Newco"), which has been formed by the Company solely for the purpose of the
transactions contemplated by the Agreement (collectively, the "Transaction").
Pursuant to the Agreement, in order to effect the Transaction (i) Newco will
form two new corporations ("Company Sub" and "Cybex Sub," respectively) as
wholly-owned subsidiaries of Newco, (ii) Company Sub will merge with and into
the Company, with the Company to be the surviving corporation of such merger,
(iii) Cybex Sub will merge with and into Cybex, with Cybex to be the surviving
corporation of such merger, and (iv) upon the effectiveness of the Transaction,
all of the outstanding shares of capital stock of the Company and all of the
outstanding shares of capital stock of Cybex will be converted into shares of
common stock of Newco.
Pursuant to the Agreement, (i) each share of common stock of the Company, no
par value ("Company Common Stock"), will be converted, subject to certain
exceptions, into the right to receive 1.0905 shares (the "Apex Applicable
Ratio") of common stock of Newco, $0.001 par value per share ("Newco Common
Stock"); and (ii) each share of common stock of Cybex, $0.001 par value per
share ("Cybex Common Stock"), will be converted, subject to certain exceptions,
into the right to receive 1.0000 shares of Newco Common Stock.
In arriving at our opinion, we have reviewed the Agreement. We also have
reviewed financial and other information that was publicly available or
furnished to us by the Company and Cybex, including information provided during
discussions with their respective managements. Included in the information
provided during discussions with the respective managements were certain
financial projections of Cybex for the period beginning January 1, 2000 and
ending March 31, 2002, prepared by a nationally recognized research analyst
identified by the management of Cybex, and certain financial projections of
Cybex for the period beginning April 1, 2002 and ending December 31, 2004 that
were based upon the financial projections for such earlier period with guidance
from the management of Cybex, in each case as adjusted by the management of the
Company, and certain financial projections of the Company for the period
beginning January 1, 2000 and ending December 31, 2004 prepared by the
management of the Company. In addition, we have compared certain financial and
securities data of the Company and Cybex with various other companies whose
securities are traded in public markets, reviewed the historical stock prices
and trading volumes of the common stock of Cybex and the Company and conducted
such other financial studies, analyses and investigations as we deemed
appropriate for purposes of this opinion. We were not requested to, nor did we,
solicit the interest of any other party in acquiring or engaging in a business
combination with the Company.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us, or identified to us, by the
Company and Cybex or their respective representatives or advisors, or that was
otherwise reviewed by us and have assumed that the Company is not aware of any
information prepared by it, Cybex or their respective representatives or
advisors that might be material to our opinion that has not been made available
to us. With respect to the financial projections for the Company referred to
above, we have relied on representations that they have been reasonably prepared
on the basis reflecting the best currently available estimates and judgments of
the management of the
<PAGE>
Company as to the future operating and financial performance of the Company.
With respect to the projections for Cybex referred to above, we have conducted
discussions with certain members of senior management of the Company with
respect to such management's views as to the accuracy and reasonableness of such
projections for Cybex, we have relied on representations that they reflect the
best currently available estimates and judgments of the management of the
Company as to the future operating and financial performance of Cybex, and have
further assumed with your consent the reasonableness thereof and that they do
not materially differ from the best currently available estimates and judgments
of the management of Cybex as to the future operating and financial performance
of Cybex. We have not assumed any responsibility for making any independent
evaluation of any assets or liabilities or for making any independent
verification of any of the information reviewed by us. We have relied as to
certain legal matters, including that the Transaction will be free of federal
tax to the Company and its stockholders, on advice of counsel to the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. We are expressing no opinion herein as to the
prices at which Newco Common Stock, Company Common Stock or Cybex Common Stock
will actually trade at any time. Our opinion does not address the relative
merits of the Transaction and the other business strategies being considered by
the Company's Board of Directors, nor does it address the Board's decision to
proceed with the Transaction. Our opinion does not constitute a recommendation
to any stockholder as to how such stockholder should vote on the proposed
transaction.
Donaldson, Lufkin & Jenrette Securities Corporation, as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the Apex Applicable Ratio is fair to the holders of the
Company Common Stock from a financial point of view.
<TABLE>
<S> <C> <C>
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By /s/ DANIEL SCHLEIFMAN
-----------------------------------------
Daniel Schleifman
Managing Director
</TABLE>
B-2
<PAGE>
ANNEX C
March 7, 2000
Board of Directors
Cybex Computer Products Corporation
4991 Corporate Drive
Huntsville, AL 35805
Members of the Board of Directors:
You have requested our opinion as to the fairness, from a financial point of
view, to the common stockholders of Cybex Computer Products Corporation ("Cybex"
or the "Company") of the Cybex Exchange Ratio (as defined below) pursuant to the
terms of that certain draft Agreement and Plan of Reorganization, dated as of
March 4, 2000 (the "Agreement"), by and among the Company, Apex Inc. ("Apex" or
"Transaction Partner") and a newly formed Delaware corporation ("NewCo").
As more specifically set forth in the Agreement, and subject to the terms,
conditions and adjustments set forth in the Agreement, both Cybex and Apex will
become wholly owned subsidiaries of NewCo (the "Transaction"). In the
Transaction, each outstanding share of common stock of the Company, par value of
$0.001 per share (other than shares held in the treasury of Cybex or by Apex or
Newco or their affiliates), will be converted into the right to receive 1.0
share of common stock, $0.001 par value per share, of NewCo (the "Cybex Exchange
Ratio"). In addition, each outstanding share of Apex"s common stock, no par
value per share, (other than shares held in the treasury of Apex or by Cybex or
NewCo or their affiliates) will be converted into the right to receive 1.0905
shares of NewCo common stock. The Transaction will be accounted for as a
purchase transaction under generally accepted accounting principles.
SG Cowen Securities Corporation ("SG Cowen"), as part of its investment
banking business, is continually engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. In the
ordinary course of our business, we and our affiliates may actively trade the
securities of the Company and the Transaction Partner for our own account and
for the accounts of our customers and, accordingly, may at any time hold a long
or short position in such securities.
We are acting as lead financial advisor to the Board of Directors of the
Company in connection with the Transaction and will receive a fee from the
Company for our services, a significant portion of which is contingent upon the
consummation of the Transaction. We will also receive a fee for providing this
Opinion. In addition, the Company has agreed to indemnify SG Cowen for certain
liabilities arising out of our engagement. SG Cowen and its affiliates in the
ordinary course of business have from time to time provided, and in the future
may continue to provide, commercial and investment banking services to the
Company and have received customary fees for the rendering of such services.
In connection with our opinion, we have reviewed and considered such
financial and other matters as we have deemed relevant, including, among other
things:
- a draft of the Agreement dated March 4, 2000;
- certain publicly available information for the Company, including its
annual reports filed on Form 10-K for each of the years ended March 31,
1998 and 1999, its quarterly reports filed on Form 10-Q for each of the
quarters ended July 2, 1999, October 1, 1999 and December 31, 1999, all
reports on Form 8-K filed by the Company during the last two years and
certain other relevant historical financial and operating data furnished
to SG Cowen by the Company management;
- certain publicly available information for the Transaction Partner,
including its annual reports filed on Form 10-K for each of the years
ended December 31, 1997 and 1998, its quarterly
<PAGE>
Board of Directors
Cybex Computer Products Corporation
March 7, 2000
Page 2
reports filed on Form 10-Q for each of the quarters ended April 2, 1999,
July 2, 1999 and October 1, 1999, the company press release related to its
financial condition and results of operations for the year ended
December 31, 1999 ("1999 Estimated Financials"), all reports on Form 8-K
filed by the company during the last two years and certain other relevant
historical financial and operating data furnished to SG Cowen by the
Transaction Partner management;
- certain internal financial analyses, financial forecasts, reports and
other information concerning the Company (the "Company Financial
Information"), prepared by the management of the Company, and the amounts
and timing of the cost savings and related expenses expected to result
from the Transaction furnished to us by the management of the Company (the
"Expected Synergies");
- First Call estimates ("First Call Estimates") and financial projections in
Wall Street analyst reports ("Wall Street Projections") for each of the
Company and Transaction Partner;
- discussions we have had with certain members of the managements of each of
the Company and Transaction Partner concerning the historical and current
business operations, financial conditions and prospects of the Company and
Transaction Partner, respectively, the Company Financial Information, the
Expected Synergies and such other matters we deemed relevant;
- certain operating results, the reported price and trading histories of the
shares of the common stock of the Company and Transaction Partner,
respectively, as compared to the operating results, the reported price and
trading histories of certain publicly traded companies we deemed relevant;
- certain financial terms of the Transaction as compared to the financial
terms of certain selected business combinations we deemed relevant;
- certain pro forma financial effects excluding and including goodwill of
the Transaction on an accretion/dilution basis; and
- such other information, financial studies, analyses and investigations and
such other factors that we deemed relevant for the purposes of this
opinion including an assessment of general economic, market and monetary
conditions.
In conducting our review and arriving at our opinion, we have, with your
consent, assumed and relied, without independent investigation, upon the
accuracy and completeness of all financial and other information provided to us
by the Company and the Transaction Partner, respectively, or which is publicly
available. We have not undertaken any responsibility for the accuracy,
completeness or reasonableness of, or independently to verify, such information.
In addition, we have not conducted nor have we assumed any obligation to conduct
any physical inspection of the properties or facilities of the Company or the
Transaction Partner. We have further relied upon the assurance of management of
the Company that they are unaware of any facts that would make the information
provided to us incomplete or misleading in any respect. We have assumed, with
your permission, that the actual financial condition and results of operations
of the Transaction Partner for the period ending December 31, 1999 will not be
substantially different from the 1999 Estimated Financials. We have, with your
consent, assumed that the Company Financial Information and description of
Expected Synergies which we examined were reasonably prepared by the management
of the Company on bases reflecting the best currently available estimates and
good faith judgment of such management as to the future performance of the
Company, and such projections and synergies, and the First Call Estimates
C-2
<PAGE>
Board of Directors
Cybex Computer Products Corporation
March 7, 2000
Page 3
and Wall Street Projections for each of the Company and the Transaction Partner
provide a reasonable basis for our opinion. The Transaction Partner has not
provided us with internal financial forecasts or projections concerning the
Transaction Partner for us to be able to perform a discounted cash flow
analysis.
We have not made or obtained any independent evaluations, valuations or
appraisals of the assets or liabilities of the Company or Transaction Partner,
nor have we been furnished with such materials. With respect to all legal
matters relating to the Company, we have relied on the advice of legal counsel
to the Company. Our services to the Company in connection with the Transaction
have included rendering an opinion from a financial point of view with respect
to the Cybex Exchange Ratio. Our opinion is necessarily based upon economic and
market conditions and other circumstances as they exist and can be evaluated by
us on the date hereof. It should be understood that although subsequent
developments may affect our opinion, we do not have any obligation to update,
revise or reaffirm our opinion and we expressly disclaim any responsibility to
do so. Additionally, we have not been authorized or requested to, and did not,
solicit alternative offers for the Company or its assets, nor have we
investigated any other alternative transactions that may be available to the
Company.
For purposes of rendering our opinion we have assumed in all respects
material to our analysis, that the representations and warranties of each party
contained in the Agreement are true and correct, that each party will perform
all of the covenants and agreements required to be performed by it under the
Agreement and that all conditions to the consummation of the Transaction will be
satisfied without waiver thereof. We have assumed that the final form of the
Agreement will be substantially similar to the last draft reviewed by us. We
have also assumed that all governmental, regulatory and other consents and
approvals contemplated by the Agreement will be obtained and that in the course
of obtaining any of those consents no restrictions will be imposed or waivers
made that would have an adverse effect on the contemplated benefits of the
Transaction. You have informed us, and we have assumed, that the Transaction
will be treated as a tax-free reorganization.
It is understood that this letter is intended for the benefit and use of the
Board of Directors of the Company in its consideration of the Transaction and
may not be used for any other purpose or reproduced, disseminated, quoted or
referred to at any time, in any manner or for any purpose without our prior
written consent. This letter does not constitute a recommendation to any
stockholder of either Apex or Cybex as to how such stockholder should vote with
respect to the Transaction or to take any other action in connection with the
Transaction or otherwise. We are not expressing any opinion as to what the value
of the shares of common stock of NewCo actually will be when issued to the
Company"s and the Transaction Partner"s stockholders pursuant to the
Transaction. We have not been requested to opine as to, and our opinion does not
in any manner address, the Company"s underlying business decision to effect the
Transaction. Furthermore, we express no view as to the price or trading range
for shares of the common stock of NewCo following the consummation of the
Transaction.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, it is our opinion that, as of the date hereof,
the Cybex Exchange Ratio is fair, from a financial point of view, to the common
stockholders of Cybex after giving effect to the Transaction.
Very truly yours,
SG COWEN SECURITIES CORPORATION
C-3
<PAGE>
ANNEX D
CHAPTER 23B.13 RCW
DISSENTERS' RIGHTS
<TABLE>
<S> <C>
Sections
23B.13.010 Definitions.
23B.13.020 Right to dissent.
23B.13.030 Dissent by nominees and beneficial owners.
23B.13.200 Notice of dissenters' rights.
23B.13.210 Notice of intent to demand payment.
23B.13.220 Dissenters' notice.
23B.13.230 Duty to demand payment.
23B.13.240 Share restrictions.
23B.13.250 Payment.
23B.13.260 Failure to take action.
23B.13.270 After-acquired shares.
23B.13.280 Procedure if shareholder dissatisfied with payment or offer.
23B.13.300 Court action.
23B.13.310 Court costs and counsel fees.
</TABLE>
RCW 23B.13.010 DEFINITIONS
As used in this chapter:
(1) "CORPORATION" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer.
(2) "DISSENTER" means a shareholder who is entitled to dissent from
corporate action under RCW 23B.13.020 and who exercises that right when and in
the manner required by RCW 23B.13.200 through 23B.13.280.
(3) "FAIR VALUE," with respect to a dissenter's shares, means the value of
the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(4) "INTEREST" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
(5) "RECORD SHAREHOLDER" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "BENEFICIAL SHAREHOLDER" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(7) "SHAREHOLDER" means the record shareholder or the beneficial
shareholder. [1989 c 165 s 140.]
RCW 23B.13.020 RIGHT TO DISSENT
(1) A shareholder is entitled to dissent from, and obtain payment of the
fair value of the shareholder's shares in the event of, any of the following
corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party
(i) if shareholder approval is required for the merger by RCW 23B.11.030,
23B.11.080, or the articles of
<PAGE>
incorporation and the shareholder is entitled to vote on the merger, or
(ii) if the corporation is a subsidiary that is merged with its parent under
RCW 23B.11.040;
(b) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
(c) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the shareholders
within one year after the date of sale;
(d) An amendment of the articles of incorporation that materially
reduces the number of shares owned by the shareholder to a fraction of a
share if the fractional share so created is to be acquired for cash under
RCW 23B.06.040; or
(e) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this chapter may not challenge the corporate action
creating the shareholder's entitlement unless the action fails to comply with
the procedural requirements imposed by this title, RCW 25.10.900 through
25.10.955, the articles of incorporation, or the bylaws, or is fraudulent with
respect to the shareholder or the corporation.
(3) The right of a dissenting shareholder to obtain payment of the fair
value of the shareholder's shares shall terminate upon the occurrence of any one
of the following events:
(a) The proposed corporate action is abandoned or rescinded;
(b) A court having jurisdiction permanently enjoins or sets aside the
corporate action; or
(c) The shareholder's demand for payment is withdrawn with the written
consent of the corporation. [1991 c 269 s 37; 1989 c 165 s 141.]
RCW 23B.13.030 DISSENT BY NOMINEES AND BENEFICIAL OWNERS
(1) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in the shareholder's name only if the shareholder dissents
with respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf
the shareholder asserts dissenters' rights. The rights of a partial dissenter
under this subsection are determined as if the shares as to which the dissenter
dissents and the dissenter's other shares were registered in the names of
different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares held
on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder does so with respect to all shares of
which such shareholder is the beneficial shareholder or over which such
shareholder has power to direct the vote. [1989 c 165 s 142.]
D-2
<PAGE>
RCW 23B.13.200 NOTICE OF DISSENTERS' RIGHTS
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this chapter and be accompanied by a copy of this chapter.
(2) If corporate action creating dissenters' rights under RCW 23B.13.020 is
taken without a vote of shareholders, the corporation, within ten days after
[the] effective date of such corporate action, shall notify in writing all
shareholders entitled to assert dissenters' rights that the action was taken and
send them the dissenters' notice described in RCW 23B.13.220. [1989 c 165
s 143.]
RCW 23B.13.210 NOTICE OF INTENT TO DEMAND PAYMENT
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights must (a) deliver to the corporation before
the vote is taken written notice of the shareholder's intent to demand payment
for the shareholder's shares if the proposed action is effected, and (b) not
vote such shares in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection
(1) of this section is not entitled to payment for the shareholder's shares
under this chapter. [1989 c 165 s 144.]
RCW 23B.13.220 DISSENTERS' NOTICE
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of RCW 23B.13.210.
(2) The dissenters' notice must be sent within ten days after the effective
date of the corporate action, and must:
(a) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(b) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting dissenters'
rights certify whether or not the person acquired beneficial ownership of
the shares before that date;
(d) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than thirty nor more than sixty days after the
date the notice in subsection (1) of this section is delivered; and
(e) Be accompanied by a copy of this chapter. [1989 c 165 s 145.]
RCW 23B.13.230 DUTY TO DEMAND PAYMENT
(1) A shareholder sent a dissenters' notice described in RCW 23B.13.220 must
demand payment, certify whether the shareholder acquired beneficial ownership of
the shares before the date required to be set forth in the dissenters' notice
pursuant to RCW 23B.13.220(2)(c), and deposit the shareholder's certificates in
accordance with the terms of the notice.
D-3
<PAGE>
(2) The shareholder who demands payment and deposits the shareholder's share
certificates under subsection (1) of this section retains all other rights of a
shareholder until the proposed corporate action is effected.
(3) A shareholder who does not demand payment or deposit the shareholder's
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for the shareholder's shares under this
chapter. [1989 c 165 s 146.]
RCW 23B.13.240 SHARE RESTRICTIONS
(1) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is effected or the restriction is released under RCW 23B.13.260.
(2) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until the effective date of the
proposed corporate action. [1989 c 165 s 147.]
RCW 23B.13.250 PAYMENT
(1) Except as provided in RCW 23B.13.270, within thirty days of the later of
the effective date of the proposed corporate action, or the date the payment
demand is received, the corporation shall pay each dissenter who complied with
RCW 23B.13.230 the amount the corporation estimates to be the fair value of the
shareholder's shares, plus accrued interest.
(2) The payment must be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(b) An explanation of how the corporation estimated the fair value of
the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter' right to demand payment under RCW
23B.13.280; and
(e) A copy of this chapter. [1989 c 165 s 148.]
RCW 23B.13.260 FAILURE TO TAKE ACTION
(1) If the corporation does not effect the proposed action within sixty days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release any transfer
restrictions imposed on uncertificated shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation wishes to undertake the proposed action, it must
send a new dissenters' notice under RCW 23B.13.220 and repeat the payment demand
procedure. [1989 c 165 s 149.]
RCW 23B.13.270 AFTER-ACQUIRED SHARES
(1) A corporation may elect to withhold payment required by RCW 23B.13.250
from a dissenter unless the dissenter was the beneficial owner of the shares
before the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action.
D-4
<PAGE>
(2) To the extent the corporation elects to withhold payment under
subsection (1) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of the dissenter's demand. The corporation shall send with its offer an
explanation of how it estimated the fair value of the shares, an explanation of
how the interest was calculated, and a statement of the dissenter's right to
demand payment under RCW 23B.13.280. [1989 c 165 s 150.]
RCW 23B.13.280 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER
(1) A dissenter may notify the corporation in writing of the dissenter's own
estimate of the fair value of the dissenter's shares and amount of interest due,
and demand payment of the dissenter's estimate, less any payment under RCW
23B.13.250, or reject the corporation's offer under RCW 23B.13.270 and demand
payment of the dissenter's estimate of the fair value of the dissenter's shares
and interest due, if:
(a) The dissenter believes that the amount paid under RCW 23B.13.250 or
offered under RCW 23B.13.270 is less than the fair value of the dissenter's
shares or that the interest due is incorrectly calculated;
(b) The corporation fails to make payment under RCW 23B.13.250 within
sixty days after the date set for demanding payment; or
(c) The corporation does not effect the proposed action and does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty days after the date set for
demanding payment.
(2) A dissenter waives the right to demand payment under this section unless
the dissenter notifies the corporation of the dissenter's demand in writing
under subsection (1) of this section within thirty days after the corporation
made or offered payment for the dissenter's shares. [1989 c 165 s 151.]
RCW 23B.13.300 COURT ACTION
(1) If a demand for payment under RCW 23B.13.280 remains unsettled, the
corporation shall commence a proceeding within sixty days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the sixty-day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(2) The corporation shall commence the proceeding in the superior court of
the county where a corporation's principal office, or, if none in this state,
its registered office, is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled, parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(4) The corporation may join as a party to the proceeding any shareholder
who claims to be a dissenter but who has not, in the opinion of the corporation,
complied with the provisions of this chapter. If the court determines that such
shareholder has not complied with the provisions of this chapter, the
shareholder shall be dismissed as a party.
(5) The jurisdiction of the court in which the proceeding is commenced under
subsection (2) of this section is plenary and exclusive. The court may appoint
one or more persons as appraisers to
D-5
<PAGE>
receive evidence and recommend decision on the question of fair value. The
appraisers have the powers described in the order appointing them, or in any
amendment to it. The dissenters are entitled to the same discovery rights as
parties in other civil proceedings.
(6) Each dissenter made a party to the proceeding is entitled to judgment
(a) for the amount, if any, by which the court finds the fair value of the
dissenter's shares, plus interest, exceeds the amount paid by the corporation,
or (b) for the fair value, plus accrued interest, of the dissenter's
after-acquired shares for which the corporation elected to withhold payment
under RCW 23B.13.270. [1989 c 165 s 152.]
RCW 23B.13.310 COURT COSTS AND COUNSEL FEES
(1) The court in a proceeding commenced under RCW 23B.13.300 shall determine
all costs of the proceeding, including the reasonable compensation and expenses
of appraisers appointed by the court. The court shall assess the costs against
the corporation, except that the court may assess the costs against all or some
of the dissenters, in amounts the court finds equitable, to the extent the court
finds the dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under RCW 23B.13.280.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of RCW 23B.13.200 through 23B.13.280; or
(b) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by chapter 23B.13 RCW.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited. [1989 c 165 s 153.]
D-6
<PAGE>
ANNEX E
CODE OF ALABAMA
TITLE 10.
CHAPTER 2B.
ARTICLE 13.
DISSENTERS' RIGHTS.
DIVISION A
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES.
SECTION 10-2B-13.01. DEFINITIONS.
(1) "Corporate action" means the filing of articles of merger or share
exchange by the probate judge or Secretary of State, or other action giving
legal effect to a transaction that is the subject of dissenters' rights.
(2) "Corporation" means the issuer of shares held by a dissenter before the
corporate action, or the surviving or acquiring corporation by merger or share
exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 10-2B-13.02 and who exercises that right when and
in the manner required by Sections 10-2B-13.20 through 10-2B-13.28.
(4) "Fair Value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans, or, if none, at a rate that is fair and
equitable under all circumstances.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(7) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(8) "Shareholder" means the record shareholder or the beneficial
shareholder. (Acts 1994, No. 94-245, p. 343, Section 1.)
SECTION 10-2B-13.02. RIGHT TO DISSENT.
(a) A shareholder is entitled to dissent from, and obtain payment of the
fair value of his or her shares in the event of, any of the following corporate
actions:
(1) Consummation of a plan of merger to which the corporation is a party
(i) if shareholder approval is required for the merger by
Section 10-2B-11.03 or the articles of incorporation and the shareholder is
entitled to vote on the merger or (ii) if the corporation is a subsidiary
that is merged with its parent under Section 10-2B-11.04;
(2) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
(3) Consummation of a sale or exchange by all, or substantially all, of
the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to
<PAGE>
vote on the sale or exchange, including a sale in dissolution, but not
including a sale pursuant to court order or a sale for cash pursuant to a
plan by which all or substantially all of the net proceeds of the sale will
be distributed to the shareholders within one year after the date of sale;
(4) To the extent that the articles of incorporation of the corporation
so provide, an amendment of the articles of incorporation that materially
and adversely affects rights in respect to a dissenter's shares because it:
(i) Alters or abolishes a preferential right of the shares;
(ii) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase of the shares;
(iii) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(iv) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights; or
(v) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be acquired
for cash under Section 10-2B-6.04; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for shares under
this chapter may not challenge the corporate action creating his or her
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation. (Acts 1994, No. 94-245, p. 343, Section 1.)
SECTION 10-2B-13.03. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(a) A record shareholder may assert dissenters' rights as to fewer than all
of the shares registered in his or her name only if he or she dissents with
respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf he
or she asserts dissenters' rights. The rights of a partial dissenter under this
subsection are determined as if the shares to which he or she dissents and his
or her other shares were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares held
on his or her behalf only if:
(1) He or she submits to the corporation the record shareholder's
written consent to the dissent not later than the time the beneficial
shareholder asserts dissenters' rights; and
(2) He or she does so with respect to all shares of which he or she is
the beneficial shareholder or over which he or she has power to direct the
vote. (Acts 1994, No. 94-245, p. 343, Section 1.)
E-2
<PAGE>
DIVISION B.
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.
SECTION 10-2B-13.20. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under
Section 10-2B-13.02 is submitted to a vote at a shareholders' meeting, the
meeting notice must state that shareholders are or may be entitled to assert
dissenters' rights under this article and be accompanied by a copy of this
article.
(b) If corporate action creating dissenters' rights under
Section 10-2B-13.02 is taken without a vote of shareholders, the corporation
shall (1) notify in writing all shareholders entitled to assert dissenters'
rights that the action was taken; and (2) send them the dissenters' notice
described in Section 10-2B-13.22. (Acts 1994, No. 94-245, p. 343, Section 1.)
SECTION 10-2B-13.21. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under
Section 10-2B-13.02 is submitted to a vote at a shareholder's meeting, a
shareholder who wishes to assert dissenters' rights (1) must deliver to the
corporation before the vote is taken written notice of his or her intent to
demand payment or his or her shares if the proposed action is effectuated; and
(2) must not vote his or her shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a) is
not entitled to payment for his or her shares under this article. (Acts 1994,
No. 94-245, p. 343, Section 1.)
SECTION 10-2B-13.22. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under
Section 10-2B-13.02 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Section 10-2B-13.21.
(b) The dissenters' notice must be sent no later than 10 days after the
corporate action was taken, and must:
(1) State where the payment demand must be sent;
(2) Inform holders of shares to what extent transfer of the shares will
be restricted after the payment demand is received;
(3) Supply a form for demanding payment;
(4) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than 30 nor more than 60 days after the date the
subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this article. (Acts 1994, No. 94-245,
p. 343, Section 1.)
SECTION 10-2B-13.23. DUTY TO DEMAND PAYMENT.
(a) A shareholder sent a dissenters' notice described in Section 10-2B-13.22
must demand payment in accordance with the terms of the dissenters' notice.
(b) The shareholder who demands payment retains all other rights of a
shareholder until those rights are canceled or modified by the taking of the
proposed corporate action.
(c) A shareholder who does not demand payment by the date set in the
dissenters' notice is not entitled to payment for his or her shares under this
article.
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<PAGE>
(d) A shareholder who demands payment under subsection (a) may not
thereafter withdraw that demand and accept the terms offered under the proposed
corporate action unless the corporation shall consent thereto. (Acts 1994, No.
94-245, p. 343, Section 1.)
SECTION 10-2B-13.24. SHARE RESTRICTIONS.
(a) Within 20 days after making a formal payment demand, each shareholder
demanding payment shall submit the certificate or certificates representing his
or her shares to the corporation for (1) notation thereon by the corporation
that such demand has been made and (2) return to the shareholder by the
corporation.
(b) The failure to submit his or her shares for notation shall, at the
option of the corporation, terminate the shareholders' rights under this article
unless a court of competent jurisdiction, for good and sufficient cause, shall
otherwise direct.
(c) If shares represented by a certificate on which notation has been made
shall be transferred, each new certificate issued therefor shall bear similar
notation, together with the name of the original dissenting holder of such
shares.
(d) A transferee of such shares shall acquire by such transfer no rights in
the corporation other than those which the original dissenting shareholder had
after making demand for payment of the fair value thereof. (Acts 1994,
No. 94-245, p. 343, Section 1.)
SECTION 10-2B-13.25. OFFER OF PAYMENT.
(a) As soon as the proposed corporate action is taken, or upon receipt of a
payment demand, the corporation shall offer to pay each dissenter who complied
with Section 10-2B-13.23 the amount the corporation estimates to be the fair
value of his or her shares, plus accrued interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of the offer, an income
statement for that year, and the latest available interim financial
statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under Section
10-2B-13.28; and
(5) A copy of this article.
(c) Each dissenter who agrees to accept the corporation's offer of payment
in full satisfaction of his or her demand must surrender to the corporation the
certificate or certificates representing his or her shares in accordance with
terms of the dissenters' notice. Upon receiving the certificate or certificates,
the corporation shall pay each dissenter the fair value of his or her shares,
plus accrued interest, as provided in subsection (a). Upon receiving payment, a
dissenting shareholder ceases to have any interest in the shares. (Acts 1994,
No. 94-245, p. 343, Section 1.)
SECTION 10-2B-13.26. FAILURE TO TAKE CORPORATE ACTION.
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment, the corporation shall release the
transfer restrictions imposed on shares.
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<PAGE>
(b) If, after releasing transfer restrictions, the corporation takes the
proposed action, it must send a new dissenters' notice under
Section 10-2B-13.22 and repeat the payment demand procedure. (Acts 1994,
No. 94-245, p. 343, Section 1.)
SECTION 10-2B-13.27. RESERVED.
SECTION 10-2B-13.28. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH OFFER OF
PAYMENT.
(a) A dissenter may notify the corporation in writing of his or her own
estimate of the fair value of his or her shares and amount of interest due, and
demand payment of his or her estimate, or reject the corporation's offer under
Section 10-2B-13.25 and demand payment of the fair value of his or her shares
and interest due, if:
(1) The dissenter believes that the amount offered under
Section 10-2B-13.25 is less than the fair value of his or her shares or that
the interest due is incorrectly calculated;
(2) The corporation fails to make an offer under Section 10-2B-13.25
within 60 days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does not
release the transfer restrictions imposed on shares within 60 days after the
date set for demanding payment.
(b) A dissenter waives his or her right to demand payment under this section
unless he or she notifies the corporation of his or her demand in writing under
subsection (a) within 30 days after the corporation offered payment for his or
her shares. (Acts 1994, No. 94-245, p. 343, Section 1.)
DIVISION C.
JUDICIAL APPRAISAL OF SHARES.
SECTION 10-2B-13.30. COURT ACTION.
(a) If a demand for payment under Section 10-2B-13.28 remains unsettled, the
corporation shall commence a proceeding within 60 days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the 60 day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(b) The corporation shall commence the proceeding in the circuit court of
the county where the corporation's principal office (or, if none in this state,
its registered office) is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
(c) The corporation shall make all dissenters (whether or not residents of
this state) whose demands remain unsettled parties to the proceeding as in an
action against their shares, and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided under the Alabama Rules of Civil Procedure.
(d) After service is completed, the corporation shall deposit with the clerk
of the court an amount sufficient to pay unsettled claims of all dissenters
party to the action in an amount per share equal to its prior estimate of fair
value, plus accrued interest, under Section 10-2B-13.25.
(e) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the
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<PAGE>
order appointing them, or in any amendment to it. The dissenters are entitled to
the same discovery rights as parties in other civil proceedings.
(f) Each dissenter made a party to the proceeding is entitled to judgment
for the amount the court finds to be the fair value of his or her shares, plus
accrued interest. If the court's determination as to the fair value of a
dissenter's shares, plus accrued interest, is higher than the amount estimated
by the corporation and deposited with the clerk of the court pursuant to
subsection (d), the corporation shall pay the excess to the dissenting
shareholder. If the court's determination as to fair value, plus accrued
interest, of a dissenter's shares is less than the amount estimated by the
corporation and deposited with the clerk of the court pursuant to subsection
(d), then the clerk shall return the balance of funds deposited, less any costs
under Section 10-2B-13.31, to the corporation.
(g) Upon payment of the judgment, and surrender to the corporation of the
certificate or certificates representing the appraised shares, a dissenting
shareholder ceases to have any interest in the shares. (Acts 1994, No. 94-245,
p. 343, Section 1.)
SECTION 10-2B-13.31. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under
Section 10-2B-13.30 shall determine all costs of the proceeding, including
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or not
in good faith in demanding payment under Section 10-2B-13.28.
(b) The court may also assess the reasonable fees and expenses of counsel
and experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of Sections 10-2B-13.20 through 10-2B-13.28; or
(2) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this chapter.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefitted. (Acts 1994, No. 94-245, p. 343, Section 1.)
SECTION 10-2B-13.32. STATUS OF SHARES AFTER PAYMENT.
Shares acquired by a corporation pursuant to payment of the agreed value
therefor or to payment of the judgment entered therefor, as in this chapter
provided, may be held and disposed of by such corporation as in the case of
other treasury shares, except that, in the case of a merger or share exchange,
they may be held and disposed of as the plan of merger or share exchange may
otherwise provide. (Acts 1994, No. 94-245, p. 343, Section 1.)
E-6
<PAGE>
ANNEX F
APEX VOTING AGREEMENT
THIS VOTING AGREEMENT (this "AGREEMENT") is made and entered into as of
March , 2000, among Cybex Computer Products Corporation, an Alabama
corporation ("CYBEX"), and the undersigned shareholder (the "SHAREHOLDER") of
Apex Inc., a Washington corporation ("APEX").
RECITALS
A. Apex, Cybex and Aegean Sea Inc., a Delaware corporation ("AEGEAN"), have
entered into an Agreement and Plan of Reorganization (the "MERGER AGREEMENT"),
which provides for the merger of a wholly-owned subsidiary of Aegean with and
into Cybex and the merger of another wholly-owned subsidiary of Aegean with and
into Apex, pursuant to which mergers Cybex and Apex will become wholly-owned
subsidiaries of Aegean (all of the foregoing, the "MERGER"). Pursuant to the
Merger, all outstanding shares of Common Stock of Cybex and all of the
outstanding shares of Common Stock of Apex shall be converted into the right to
receive Common Stock of Aegean, as set forth in the Merger Agreement (the "SHARE
ISSUANCE");
B. Shareholder is the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of such number
of shares of the outstanding capital stock of Apex and shares subject to
outstanding options and warrants as is indicated on the signature page of this
Agreement; and
C. In consideration of the execution of the Merger Agreement by Cybex,
Shareholder (in his or her capacity as such) agrees to vote the Shares (as
defined below) and other such shares of capital stock of Apex over which
Shareholder has voting power so as to facilitate consummation of the Merger.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree as
follows:
1. CERTAIN DEFINITIONS. Capitalized terms not defined herein shall have
the meanings ascribed to them in the Merger Agreement. For purposes of this
Agreement:
(a) "EXPIRATION DATE" shall mean the earlier to occur of (i) such date
and time as the Merger Agreement shall have been terminated pursuant to
Article VII thereof, or (ii) such date and time as the Merger shall become
effective in accordance with the terms and provisions of the Merger
Agreement.
(b) "PERSON" shall mean any (i) individual, (ii) corporation, limited
liability company, partnership or other entity, or (iii) governmental
authority.
(c) "SHARES" shall mean: (i) all securities of Apex (including all
shares of Apex Common Stock and all options, warrants and other rights to
acquire shares of Apex Common Stock) owned by Shareholder as of the date of
this Agreement; and (ii) all additional securities of Apex (including all
additional shares of Apex Common Stock and all additional options, warrants
and other rights to acquire shares of Apex Common Stock) of which
Shareholder acquires ownership during the period from the date of this
Agreement through the Expiration Date.
(d) "TRANSFER". A Person shall be deemed to have effected a "TRANSFER"
of a security if such person directly or indirectly: (i) sells, pledges,
encumbers, grants an option with respect to, transfers or disposes of such
security or any interest in such security; or (ii) enters into an agreement
or commitment providing for the sale of, pledge of, encumbrance of, grant of
an option with respect to, transfer of or disposition of such security or
any interest therein.
2. TRANSFER OF SHARES.
(a) TRANSFEREE OF SHARES TO BE BOUND BY THIS AGREEMENT. Stockholder
agrees that, during the period from the date of this Agreement through the
Expiration Date, Shareholder shall not cause
<PAGE>
or permit any Transfer of any of the Shares to be effected unless each
Person to which any of such Shares, or any interest in any of such Shares,
is or may be transferred shall have: (a) executed a counterpart of this
Agreement and a proxy in the form attached hereto as EXHIBIT A (with such
modifications as Cybex may reasonably request); and (b) agreed in writing to
hold such Shares (or interest in such Shares) subject to all of the terms
and provisions of this Agreement.
(b) TRANSFER OF VOTING RIGHTS. Shareholder agrees that, during the
period from the date of this Agreement through the Expiration Date,
Shareholder shall not deposit (or permit the deposit of) any Shares in a
voting trust or grant any proxy or enter into any voting agreement or
similar agreement in contravention of the obligations of Shareholder under
this Agreement with respect to any of the Shares.
3. AGREEMENT TO VOTE SHARES. At every meeting of the shareholders of Apex
called, and at every adjournment thereof, and on every action or approval by
written consent of the shareholders of Apex, Shareholder (in his or her capacity
as such) shall cause the Shares to be voted in favor of approval of the Merger,
the Merger Agreement and the Share Issuance.
4. IRREVOCABLE PROXY. Concurrently with the execution of this Agreement,
Shareholder agrees to deliver to Cybex a proxy in the form attached hereto as
EXHIBIT A (the "PROXY"), which shall be irrevocable to the fullest extent
permissible by law, with respect to the Shares.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. Shareholder (i) is
the beneficial owner of the shares of Apex Common Stock indicated on the final
page of this Agreement, free and clear of any liens, claims, options, rights of
first refusal, co-sale rights, charges or other encumbrances; (ii) does not
beneficially own any securities of the Apex other than the shares of Apex Common
Stock and options and warrants to purchase shares of Common Stock of Apex
indicated on the final page of this Agreement; and (iii) has full power and
authority to make, enter into and carry out the terms of this Agreement and the
Proxy.
6. ADDITIONAL DOCUMENTS. Shareholder (in his or her capacity as such)
hereby covenants and agrees to execute and deliver any additional documents
necessary or desirable, in the reasonable opinion of Cybex, to carry out the
intent of this Agreement.
7. TERMINATION. This Agreement shall terminate and shall have no further
force or effect as of the Expiration Date.
8. MISCELLANEOUS.
(a) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
(b) BINDING EFFECT AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor
any of the rights, interests or obligations of the parties hereto may be
assigned by either of the parties without prior written consent of the
other.
(c) AMENDMENTS AND MODIFICATION. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
(d) SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties hereto
acknowledge that Cybex shall be irreparably harmed and that there shall be
no adequate remedy at law for a violation of any of the covenants or
agreements of Shareholder set forth herein. Therefore, it is agreed that, in
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<PAGE>
addition to any other remedies that may be available to Cybex upon any such
violation, Cybex shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other means
available to Cybex at law or in equity.
(e) NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to
the parties at the following address (or at such other address for a party
as shall be specified by like notice):
<TABLE>
<S> <C>
If to Cybex: Cybex Computer Products Corporation
----------------------------------------------
Facsimile:
----------------------------------------------
Attention:
----------------------------------------------
With a copy to: Sirote & Permutt, P.C.
2311 Highland Ave. South
Birmingham, Alabama 32505
Attention: John H. Cooper, Esq.
Facsimile: (205) 930-5101
If to Shareholder: To the address for notice set forth on the
signature page hereof.
</TABLE>
(f) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware, without reference to rules of conflicts of law.
(g) ENTIRE AGREEMENT. This Agreement and the Proxy contain the entire
understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
(h) OFFICERS AND DIRECTORS. To the extent that Shareholder is or
becomes (during the term hereof) a director or officer of Apex, he or she
makes no agreement or understanding herein in his or her capacity as such
director or officer, and nothing herein will limit or affect, or give rise
to any liability to Shareholder by virtue of, any actions taken by
Shareholder in his or her capacity as an officer or director of Apex in
exercising its rights under the Merger Agreement.
(i) EFFECT OF HEADINGS. The section headings are for convenience only
and shall not affect the construction or interpretation of this Agreement.
(j) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
F-3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written. The undersigned is executing
this Agreement only in its capacity as a Shareholder. Such signature in no way
affects its obligations as an officer or director of Apex.
<TABLE>
<S> <C>
CYBEX COMPUTER PRODUCTS SHAREHOLDER
CORPORATION
By: By:
Signature
Name: Name:
Title: Title:
Print Address
Telephone
Facsimile No.
Share beneficially owned:
Apex Common Shares
Apex Common Shares
issuable upon exercise of outstanding
options or warrants
</TABLE>
[SIGNATURE PAGE TO VOTING AGREEMENT]
F-4
<PAGE>
EXHIBIT A
IRREVOCABLE PROXY
The undersigned Shareholder of Apex Inc., a Washington corporation ("APEX"),
hereby irrevocably (to the fullest extent permitted by law) appoints Doyle C.
Weeks and Stephen F. Thornton and each of them, as the sole and exclusive
attorneys and proxies of the undersigned, with full power of substitution and
resubstitution, to vote and exercise all voting and related rights (to the full
extent that the undersigned is entitled to do so) with respect to all of the
shares of capital stock of Apex that now are or hereafter may be beneficially
owned by the undersigned, and any and all other shares or securities of Apex
issued or issuable in respect thereof on or after the date hereof (collectively,
the "SHARES") in accordance with the terms of this Proxy. The Shares
beneficially owned by the undersigned Shareholder of Apex as of the date of this
Proxy are listed on the final page of this Proxy. Upon the undersigned's
execution of this Proxy, any and all prior proxies given by the undersigned with
respect to any Shares are hereby revoked and the undersigned agrees not to grant
any subsequent proxies with respect to the Shares until after the Expiration
Date (as defined below).
This Proxy is irrevocable (to the fullest extent permitted by law), is
coupled with an interest and is granted pursuant to that certain Voting
Agreement of even date herewith by and among Cybex Computer Products
Corporation, an Alabama corporation ("CYBEX"), and the undersigned shareholder
(the "VOTING AGREEMENT"), and is granted in consideration of Cybex entering into
that certain Agreement and Plan and Reorganization (the "MERGER AGREEMENT"), by
and between Apex, Cybex and Aegean Sea Inc., a Delaware corporation ("AEGEAN").
The Merger Agreement provides for the merger of a wholly-owned subsidiary of
Aegean with and into Cybex and the merger of another wholly-owned subsidiary of
Aegean with and into Apex in accordance with its terms (the "MERGER"). Pursuant
to the Merger, all outstanding Common Stock of Cybex and all outstanding Common
Stock of Apex shall be converted into the right to receive Comon Stock of
Aegean, as set forth in the Merger Agreement (the "SHARE ISSUANCE"). As used
herein, the term "EXPIRATION DATE" shall mean the earlier to occur of (i) such
date and time as the Merger Agreement shall have been validly terminated
pursuant to Article VII thereof or (ii) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the Merger
Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting, consent and similar rights of the undersigned with respect
to the Shares (including, without limitation, the power to execute and deliver
written consents) at every annual, special or adjourned meeting of shareholders
of Apex and in every written consent in lieu of such meeting in favor of
approval of the Merger, the Merger Agreement and the Share Issuance.
The attorneys and proxies named above may not exercise this Proxy on any
other matter except as provided above. The undersigned shareholder may vote the
Shares on all other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned. The undersigned is executing this
Proxy only in its capacity as a shareholder. Such signature in no way affects
its obligations as an officer or director of Apex.
F-5
<PAGE>
This Proxy is irrevocable (to the fullest extent permitted by law). This
Proxy shall terminate, and be of no further force and effect, automatically upon
the Expiration Date.
Dated:
- ----------------------------, 2000
<TABLE>
<S> <C>
Signature of Shareholder:
------------------------------------------------
Print Name of Shareholder:
------------------------------------------------
Shares beneficially owned:
Apex Common Shares
Apex Common Shares issuable upon exercise of
outstanding options or warrants
</TABLE>
[SIGNATURE PAGE TO IRREVOCABLE PROXY]
F-6
<PAGE>
ANNEX G
CYBEX VOTING AGREEMENT
THIS VOTING AGREEMENT (this "AGREEMENT") is made and entered into as of
March , 2000, among Apex Inc., a Washington corporation ("APEX"), and the
undersigned shareholder (the "SHAREHOLDER") of Cybex Computer Products
Corporation, an Alabama corporation ("CYBEX").
RECITALS
A. Cybex, Apex and Aegean Sea Inc., a Delaware corporation ("AEGEAN") have
entered into an Agreement and Plan of Reorganization (the "MERGER AGREEMENT"),
which provides for the merger of a wholly-owned subsidiary of Aegean with and
into Cybex and the merger of another wholly-owned subsidiary of Aegean with and
into Apex, pursuant to which mergers Cybex and Apex will become wholly-owned
subsidiaries of Aegean (all of the foregoing, the "MERGER"). Pursuant to the
Merger, all outstanding shares of Common Stock of Cybex and all of the
outstanding shares of Common Stock of Apex shall be converted into the right to
receive Aegean Common Stock, as set forth in the Merger Agreement;
B. Shareholder is the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of such number
of shares of the outstanding capital stock of Cybex and shares subject to
outstanding options and warrants as is indicated on the signature page of this
Agreement; and
C. In consideration of the execution of the Merger Agreement by Apex,
Shareholder (in his or her capacity as such) agrees to vote the Shares (as
defined below) and other such shares of capital stock of Cybex over which
Shareholder has voting power so as to facilitate consummation of the Merger.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree as
follows:
1. CERTAIN DEFINITIONS. Capitalized terms not defined herein shall have
the meanings ascribed to them in the Merger Agreement. For purposes of this
Agreement:
(a) "EXPIRATION DATE" shall mean the earlier to occur of (i) such date
and time as the Merger Agreement shall have been terminated pursuant to
Article VII thereof, or (ii) such date and time as the Merger shall become
effective in accordance with the terms and provisions of the Merger
Agreement.
(b) "PERSON" shall mean any (i) individual, (ii) corporation, limited
liability company, partnership or other entity, or (iii) governmental
authority.
(c) "SHARES" shall mean: (i) all securities of Cybex (including all
shares of Cybex Common Stock and all options, warrants and other rights to
acquire shares of Cybex Common Stock) owned by Shareholder as of the date of
this Agreement; and (ii) all additional securities of Cybex (including all
additional shares of Cybex Common Stock and all additional options, warrants
and other rights to acquire shares of Cybex Common Stock) of which
Shareholder acquires ownership during the period from the date of this
Agreement through the Expiration Date.
(d) "TRANSFER." A Person shall be deemed to have effected a "TRANSFER"
of a security if such person directly or indirectly: (i) sells, pledges,
encumbers, grants an option with respect to, transfers or disposes of such
security or any interest in such security; or (ii) enters into an agreement
or commitment providing for the sale of, pledge of, encumbrance of, grant of
an option with respect to, transfer of or disposition of such security or
any interest therein.
2. TRANSFER OF SHARES.
(a) TRANSFEREE OF SHARES TO BE BOUND BY THIS AGREEMENT. Shareholder
agrees that, during the period from the date of this Agreement through the
Expiration Date, Shareholder shall not cause
<PAGE>
or permit any Transfer of any of the Shares to be effected unless each
Person to which any of such Shares, or any interest in any of such Shares,
is or may be transferred shall have: (a) executed a counterpart of this
Agreement and a proxy in the form attached hereto as EXHIBIT A (with such
modifications as Apex may reasonably request); and (b) agreed in writing to
hold such Shares (or interest in such Shares) subject to all of the terms
and provisions of this Agreement.
(b) TRANSFER OF VOTING RIGHTS. Shareholder agrees that, during the
period from the date of this Agreement through the Expiration Date,
Shareholder shall not deposit (or permit the deposit of) any Shares in a
voting trust or grant any proxy or enter into any voting agreement or
similar agreement in contravention of the obligations of Shareholder under
this Agreement with respect to any of the Shares.
3. AGREEMENT TO VOTE SHARES. At every meeting of the shareholders of Cybex
called, and at every adjournment thereof, and on every action or approval by
written consent of the shareholders of Cybex, Shareholder (in his or her
capacity as such) shall cause the Shares to be voted in favor of the Merger and
the Merger Agreement.
4. IRREVOCABLE PROXY. Concurrently with the execution of this Agreement,
Shareholder agrees to deliver to Apex a proxy in the form attached hereto as
EXHIBIT A (the "PROXY"), which shall be irrevocable to the fullest extent
permissible by law, with respect to the Shares.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. Shareholder (i) is
the beneficial owner of the shares of Cybex Common Stock indicated on the final
page of this Agreement, free and clear of any liens, claims, options, rights of
first refusal, co-sale rights, charges or other encumbrances; (ii) does not
beneficially own any securities of Cybex other than the shares of Cybex Common
Stock and options and warrants to purchase shares of Common Stock of Cybex
indicated on the final page of this Agreement; and (iii) has full power and
authority to make, enter into and carry out the terms of this Agreement and the
Proxy.
6. ADDITIONAL DOCUMENTS. Shareholder (in his or her capacity as such)
hereby covenants and agrees to execute and deliver any additional documents
necessary or desirable, in the reasonable opinion of Apex, to carry out the
intent of this Agreement.
7. TERMINATION. This Agreement shall terminate and shall have no further
force or effect as of the Expiration Date.
8. MISCELLANEOUS.
(a) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
(b) BINDING EFFECT AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor
any of the rights, interests or obligations of the parties hereto may be
assigned by either of the parties without prior written consent of the
other.
(c) AMENDMENTS AND MODIFICATION. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
(d) SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties hereto
acknowledge that Apex shall be irreparably harmed and that there shall be no
adequate remedy at law for a violation of any of the covenants or agreements
of Shareholder set forth herein. Therefore, it is agreed that, in
G-2
<PAGE>
addition to any other remedies that may be available to Apex upon any such
violation, Apex shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other means
available to Apex at law or in equity.
(e) NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to
the parties at the following address (or at such other address for a party
as shall be specified by like notice):
<TABLE>
<S> <C>
If to Apex: Apex Inc.
------------------------------------
------------------------------------
Attention:
Facsimile:
With copies to: Wilson Sonsini Goodrich & Rosati,
Professional Corporation
5300 Carillon Point
Kirkland, Washington 98033-7356
Facsimile: (425) 576-5803
Attention: Patrick J. Schultheis, Esq.
</TABLE>
If to Shareholder: To the address for notice set forth on the signature
page hereof.
(f) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware, without reference to rules of conflicts of law.
(g) ENTIRE AGREEMENT. This Agreement and the Proxy contain the entire
understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
(h) OFFICERS AND DIRECTORS. To the extent that Shareholder is or
becomes (during the term hereof) a director or officer of Cybex, he or she
makes no agreement or understanding herein in his or her capacity as such
director or officer, and nothing herein will limit or affect, or give rise
to any liability to Shareholder by virtue of, any actions taken by
Shareholder in his or her capacity as an officer or director of Cybex in
exercising its rights under the Merger Agreement.
(i) EFFECT OF HEADINGS. The section headings are for convenience only
and shall not affect the construction or interpretation of this Agreement.
(j) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
G-3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written. The undersigned is executing
this Agreement only in its capacity as a shareholder. Such signature in no way
affects its obligations as an officer or director of Cybex
<TABLE>
<S> <C>
APEX INC. STOCKHOLDER
By: ------------------------------------ By: ------------------------------------
Signature
Name: ---------------------------------- Name: ----------------------------------
Title: ----------------------------------- Title: -----------------------------------
----------------------------------------
----------------------------------------
Print Address
----------------------------------------
Telephone
----------------------------------------
Facsimile No.
Share beneficially owned:
shares of Cybex Common Stock
shares of Cybex Common Stock issuable upon
exercise of outstanding options or warrants
</TABLE>
[SIGNATURE PAGE TO VOTING AGREEMENT]
G-4
<PAGE>
EXHIBIT A
IRREVOCABLE PROXY
The undersigned shareholder of Cybex Computer Products Corporation, an
Alabama corporation ("CYBEX"), hereby irrevocably (to the fullest extent
permitted by law) appoints Samuel F. Saracino and Barry L. Harmon and each of
them, as the sole and exclusive attorneys and proxies of the undersigned, with
full power of substitution and resubstitution, to vote and exercise all voting
and related rights (to the full extent that the undersigned is entitled to do
so) with respect to all of the shares of capital stock of Cybex that now are or
hereafter may be beneficially owned by the undersigned, and any and all other
shares or securities of Cybex issued or issuable in respect thereof on or after
the date hereof (collectively, the "SHARES") in accordance with the terms of
this Proxy. The Shares beneficially owned by the undersigned shareholder of
Cybex as of the date of this Proxy are listed on the final page of this Proxy.
Upon the undersigned's execution of this Proxy, any and all prior proxies given
by the undersigned with respect to any Shares are hereby revoked and the
undersigned agrees not to grant any subsequent proxies with respect to the
Shares until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the fullest extent permitted by law), is
coupled with an interest and is granted pursuant to that certain Voting
Agreement of even date herewith by and among Apex Inc., a Washington corporation
("APEX"), and the undersigned shareholder (the "VOTING AGREEMENT"), and is
granted in consideration of Apex entering into that certain Agreement and Plan
of Merger (the "MERGER AGREEMENT"), by and between Apex, Cybex and Aegean Sea
Inc., a Delaware corporation ("AEGEAN"). The Merger Agreement provides for the
merger of a wholly-owned subsidiary of Aegean with and into Cybex and the merger
of another wholly-owned subsidiary of Aegean with and into Apex in accordance
with its terms (the "MERGER"). Pursuant to the Merger, all outstanding Common
Stock of Cybex and all outstanding Common Stock of Apex shall be converted into
the right to receive Aegean Common Stock, as set forth in the Merger Agreement
(the "SHARE ISSUANCE"). As used herein, the term "EXPIRATION DATE" shall mean
the earlier to occur of (i) such date and time as the Merger Agreement shall
have been validly terminated pursuant to Article VII thereof or (ii) such date
and time as the Merger shall become effective in accordance with the terms and
provisions of the Merger Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting, consent and similar rights of the undersigned with respect
to the Shares (including, without limitation, the power to execute and deliver
written consents) at every annual, special or adjourned meeting of shareholders
of Cybex and in every written consent in lieu of such meeting in favor of the
Merger and the Merger Agreement.
The attorneys and proxies named above may not exercise this Proxy on any
other matter except as provided above. The undersigned shareholder may vote the
Shares on all other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned. The undersigned is executing this
Proxy only in its capacity as a shareholder. Such signature in no way affects
its obligations as an officer or director of Cybex
G-5
<PAGE>
This Proxy is irrevocable (to the fullest extent permitted by law). This
Proxy shall terminate, and be of no further force and effect, automatically upon
the Expiration Date.
Dated: ____________, 2000
Signature of Shareholder: ____________
Print Name of Shareholder: ____________
Shares beneficially owned:
___ shares of Cybex Common Stock
___ shares of Cybex Common Stock issuable upon
exercise of outstanding options or warrants
[SIGNATURE PAGE TO IRREVOCABLE PROXY]
G-6
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the Delaware General Corporation Law, the registrant's
certificate of incorporation includes a provision that eliminates the personal
liability of its directors to the registrant or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability:
- for any breach of the director's duty of loyalty to the corporation or its
stockholders
- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law
- under Section 174 of the Delaware General Corporation Law or
- for any transaction from which the director derived an improper personal
benefit.
As permitted by Section 145 of the Delaware General Corporation Law, the
registrant's certificate of incorporation further provides:
- for mandatory indemnification, to the fullest extent permitted by
applicable law, for any person who is or was a director or officer, or is
or was serving at the request of the registrant as a director, officer,
employee or agent of another corporation or of a partnership, joint
venture, trust, enterprise or nonprofit entity, including service with
respect to employee benefit plans, against all liability and loss suffered
and expenses (including attorneys' fees) reasonably incurred by such
person
- that the registrant's obligation to indemnify any person who was or is
serving at the registrant's request as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust,
enterprise or nonprofit entity must be reduced by any amount such person
may collect as indemnification from such other corporation, partnership,
joint venture, trust, enterprise or nonprofit entity
- that the registrant must advance to all indemnified parties the expenses
(including attorney's fees) incurred in defending any proceeding provided
that indemnified parties (if they are directors or officers) must provide
the registrant an undertaking to repay such advances if indemnification is
determined to be unavailable
- that the rights conferred in the certificate of incorporation are not
exclusive; and
- that the registrant may not retroactively amend the certification of
incorporation provisions relating to indemnity.
The indemnification provision in the registrant's certificate of
incorporation may be sufficiently broad to permit indemnification of the
registrant's directors and officers for liabilities arising under the Securities
Act.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
<C> <S>
2.1* Agreement and Plan of Reorganization by and among Apex Inc.,
Cybex Computer Products Corporation and Aegean Sea Inc.,
dated as of March 8, 2000
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
<C> <S>
3.1** Certificate of Incorporation of Aegean Sea
3.2** Bylaws of Aegean Sea
4.1 Specimen Common Stock Certificate
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, regarding the legality of the securities being
issued
8.1 Form of Opinion of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, regarding certain tax issues
8.2 Form of Opinion of Sirote & Permutt, P.C. regarding certain
tax issues
9.1* Form of Voting Agreement, dated March 8, 2000, between Apex
Inc. and certain shareholders of Cybex Computer Products
Corporation
9.2* Form of Voting Agreement, dated March 8, 2000, between Cybex
Computer Products Corporation and certain shareholders of
Apex Inc.
10.2 Employee Stock Plan, incorporated by reference (pursuant to
the provisions of Rule 411) to Exhibit No. 10.9 to
Registration Statement on Form SB-2 No. 333-17753 of Apex
Inc.
10.2.1 Form of Nonstatutory Stock Option Letter Agreement related
to Employee Stock Plan, incorporated by reference (pursuant
to the provisions of Rule 411) to Exhibit No. 10.10 to
Registration Statement on Form SB-2 No. 333-17753 of Apex
Inc.
10.3 1995 Employee Stock Option Plan, incorporated by reference
(pursuant to the provisions of Rule 411) to Exhibit No. 10.3
to Registration Statement No. 33-93124 of Cybex Computer
Products Corporation
10.4 1995 Outside Directors Stock Option Plan, incorporated by
reference (pursuant to the provisions of Rule 411) to
Exhibit No. 10.4 to Registration Statement No. 33-93124 of
Cybex Computer Products Corporation
10.5 1998 Employee Stock Incentive Plan, incorporated by
reference to. Exhibit No. 10.7 (pursuant to the provisions
of Rule 411) to Cybex Computer Products Corporation's Annual
Report on Form 10-K as filed on June 26, 1998
10.6 Employee Stock Purchase Plan, incorporated by reference
(pursuant to the provisions of Rule 411) to Exhibit No.
10.11 to Registration Statement on Form SB-2 No. 333-17753
of Apex Inc.
10.7 Employment and Noncompetition Agreement dated as of July 1,
1999 by and among PolyCon Investments, Inc., a Texas
corporation d/b/a Cybex Employment Services Co., Cybex
Computer Products Corporation, and Stephen F. Thornton,
incorporated by reference (pursuant to the provisions of
Rule 411) to Exhibit 10.1 of Cybex Computer Products
Corporation's Quarterly Report on Form 10-Q as filed on
February 14, 2000
10.8 Amendment to Employment and Noncompetition Agreement dated
as of March 7, 2000 by and among PolyCon Investments, Inc.,
a Texas corporation d/b/a Cybex Employment Services Co.,
Cybex Computer Products Corporation, and Stephen F. Thornton
10.9 Employment and Noncompetition Agreement dated as of July 1,
1999 by and among PolyCon Investments, Inc., a Texas
corporation d/b/a Cybex Employment Services Co., Cybex
Computer Products Corporation, and Doyle C. Weeks,
incorporated by reference (pursuant to the provisions of
Rule 411) to Exhibit 10.2 of Cybex Computer Products
Corporation's Quarterly Report on Form 10-Q as filed on
February 14, 2000
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
<C> <S>
10.10 Amendment to Employment and Noncompetition Agreement dated
as of March 7, 2000 by and among PolyCon Investments, Inc.,
a Texas corporation d/b/a Cybex Employment Services Co.,
Cybex Computer Products Corporation, and Doyle C. Weeks
10.11 Employment and Noncompetition Agreement dated as of July 1,
1999 by and among PolyCon Investments, Inc., a Texas
corporation d/b/a Cybex Employment Services Co., Cybex
Computer Products Corporation, and Douglas E. Pritchett,
incorporated by reference (pursuant to the provisions of
Rule 411) to Exhibit 10.3 of Cybex Computer Products
Corporation's Quarterly Report on Form 10-Q as filed on
February 14, 2000
10.12 Amendment to Employment and Noncompetition Agreement dated
as of March 7, 2000 by and among PolyCon Investments, Inc.,
a Texas corporation d/b/a Cybex Employment Services Co.,
Cybex Computer Products Corporation, and Douglas E.
Pritchett
10.13 Employment and Noncompetition Agreement dated as of July 1,
1999 by and among PolyCon Investments, Inc., a Texas
corporation d/b/a Cybex Employment Services Co., Cybex
Computer Products Corporation, and R. Byron Driver,
incorporated by reference (pursuant to the provisions of
Rule 411) to Exhibit 10.4 of Cybex Computer Products
Corporation's Quarterly Report on Form 10-Q as filed on
February 14, 2000
10.14 Employment and Noncompetition Agreement dated as of July 1,
1999 by and among PolyCon Investments, Inc., a Texas
corporation d/b/a Cybex Employment Services Co., Cybex
Computer Products Corporation, and Gary R. Johnson,
incorporated by reference (pursuant to the provisions of
Rule 411) to Exhibit 10.5 of Cybex Computer Products
Corporation's Quarterly Report on Form 10-Q as filed on
February 14, 2000
10.15 Employment and Noncompetition Agreement dated as of July 1,
1999 by and among PolyCon Investments, Inc., a Texas
corporation d/b/a Cybex Employment Services Co., Cybex
Computer Products Corporation, and Christopher Thomas,
incorporated by reference (pursuant to the provisions of
Rule 411) to Exhibit 10.6 of Cybex Computer Products
Corporation's Quarterly Report on Form 10-Q as filed on
February 14, 2000
10.16 Employment and Noncompetition Agreement dated March 7, 2000
by and between Apex Inc. and Barry L. Harmon
10.17 Employment and Noncompetition Agreement dated March 7, 2000
by and between Apex Inc. and C. David Perry
10.18 Employment and Noncompetition Agreement dated March 7, 2000
by and between Apex Inc. and Samuel F. Saracino
10.19 Amendment Agreement dated March 7, 2000 by and between Apex
Inc. and Kevin J. Hafer, incorporated by reference (pursuant
to the provisions of Rule 411) to Exhibit No. 10.3.3 of
Apex's Annual Report on Form 10-K as filed on March 30, 2000
10.20 Purchase Agreement dated September 19, 1994, by and between
Apex Inc. and Compaq Computer Corporation, as amended,
incorporated by reference (pursuant to the provisions of
Rule 411) to Exhibit No. 10.6.1 to Registration Statement on
Form SB-2 No. 333-17753 of Apex Inc. +
10.21 Amendment to Purchase Agreement effective as of August 6,
1998, by and between Apex Inc. and Compaq Computer
Corporation, incorporated by reference (pursuant to the
provisions of Rule 411) to Exhibit No. 10.6.2 to
Registration Statement on Form SB-2 No. 333-17753 of Apex
Inc. +
23.1 Consent of PricewaterhouseCoopers, LLP
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
<C> <S>
23.2 Consent of PricewaterhouseCoopers, LLP
23.3 Consent of Sirote & Permutt, P.C. (included in Exhibit 8.2)
23.4 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1 and Exhibit 8.1)
23.5 Consent of PricewaterhouseCoopers LLP
23.5** Consent of Donaldson, Lufkin & Jenrette Securities
Corporation
23.6** Consent of SG Cowen Securities Corporation
24.1** Power of Attorney
99.1** Form of Apex Inc. proxy card
99.2** Form of Cybex Computer Products Corporation proxy card
99.3** Consent of Person About to Become a Director--Stephen F.
Thornton
99.4** Consent of Person About to Become a Director--John R. Cooper
99.5** Consent of Person About to Become a Director--Edwin L.
Harper
99.6** Consent of Person About to Become a Director--William
McAleer
</TABLE>
- ------------------------
* Filed as an annex to the joint proxy statement/prospectus constituting part
of this registration statement and incorporated herein by reference
** Previously filed
+ Confidential treatment has previously been requested for portions of these
documents
(b) FINANCIAL STATEMENT SCHEDULES
Not applicable.
(c) REPORTS, OPINIONS OR APPRAISALS
Opinions of Donaldson, Lufkin & Jenrette Securities Corporation and SG
Cowen Securities Corporation (attached as Annexes B and C, respectively,
to the joint proxy statement/ prospectus filed as part of this
registration statement).
ITEM 22. UNDERTAKINGS
(1) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(2) The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be
II-4
<PAGE>
deemed underwriters, in addition to the information called for by the other
Items of the applicable form.
(3) The registrant undertakes that every prospectus (i) that is filed pursuant
to paragraph (2) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Exchange Act and is used
in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not
be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(4) Insofar as the indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(5) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt
of such request, and to send the incorporated documents by first class mail
or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration
statement through the date of responding to the request.
(6) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, Aegean Sea Inc. has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Redmond, State of
Washington, on the 26th day of May, 2000.
<TABLE>
<S> <C> <C>
AEGEAN SEA INC.
BY: /S/ DOYLE C. WEEKS
-----------------------------------------
Doyle C. Weeks, PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DOYLE C. WEEKS President and Director (principal
-------------------------------------- executive officer) May 26, 2000
Doyle C. Weeks
Senior Vice President, Finance, Chief
* Financial Officer and Treasurer
-------------------------------------- (principal financial and accounting May 26, 2000
Douglas E. Pritchett officer)
* Senior Vice President, West Coast
-------------------------------------- Operations, and Director May 26, 2000
Barry L. Harmon
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ DOYLE C. WEEKS
--------------------------------------
Doyle C. Weeks
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
Exhibit 4.1
TYPE: EX-4.1
SEQUENCE: 3
DESCRIPTION: SPECIMEN STOCK CERTIFICATE
<TABLE>
<S> <C> <C>
COMMON STOCK AEGEAN COMMON STOCK
NUMBER SEA SHARES
</TABLE>
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SEE REVERSE FOR CERTAIN
DEFINITIONS AND A STATEMENT
AS TO THE RIGHTS, REFERENCES,
PRIVILEGES AND RESTRICTIONS
ON SHARES
THIS CERTIFIES THAT CUSIP 00760U 10 3
[BACKGROUND ILLUSTRATION]
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $.001 PAR VALUE, OF
AEGEAN SEA INC.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned by the Transfer
Agent and Registrar.
WITNESS this facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
DATED
/s/ Samuel F. Saracino /s/ Stephen F. Thornton
------------------ --------------------
SECRETARY PRESIDENT
[CORPORATE SEAL OF
AEGEAN SEA INC.
MAR. 07, 2000
*DELAWARE*]
COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT AND REGISTRAR
<PAGE>
By __________________________
AUTHORIZED SIGNATURE
AEGEAN SEA INC.
This certificate evidences shares of Common Stock of the corporation. Other
classes of shares of the corporation are or may in the future be authorized, and
those classes may consist of one or more series of shares, each with different
rights, preferences and limitations. The corporation will furnish any
shareholder, upon request and without charge, a full statement of the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
The following abbreviations, when used in the inscription of the face of
this certificate, shall be construed and though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S><C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- __________Custodian _______
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act______________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, _______________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
__________________________________________________
__________________________________________________
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
_______________________________________________________________________________
________________________________________________________________________ Shares
_______________________________________________________________________________
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
______________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated ___________________
x________________________________
NOTICE: THE SIGNATURE TO THIS
ASSIGNMENT MUST CORRESPOND
<PAGE>
WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER
Signature(s) Guaranteed
By ___________________________________________
THE SIGNATURE(S) MUST BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15
<PAGE>
EXHIBIT 5.1
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
5300 CARILLON POINT
KIRKLAND, WASHINGTON 98033-7356
TELEPHONE 425-576-5800 FACSIMILE 425-576-5899
May 26, 2000
Aegean Sea Inc.
4991 Corporate Drive
Huntsville, Alabama 35805
RE: REGISTRATION STATEMENT ON FORM S-4
----------------------------------
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-4 filed by Aegean
Sea Inc. (the "Company") with the Securities and Exchange Commission on March
31, 2000 (the "Registration Statement") in connection with the registration
under the Securities Act of 1933, as amended, of 45,215,131 shares of the
Company's Common Stock (the "Shares"). As your counsel in connection with,
this transaction, we have examined the proceedings taken and are familiar
with the proceedings proposed to be taken by you in connection with the sale
and issuance of the Shares.
It is our opinion that the Shares will be, as or when issued and sold
in the manner described in the Registration Statement and in accordance with the
resolutions of the Company's Board of Directors, and upon completion of the
proceedings being taken in order to permit such transactions to be carried out
in accordance with the securities laws of the various states where required,
legally and validly issued. It is our further opinion, subject to the
assumptions set forth in the preceding sentence, that the Shares will be fully
paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the joint proxy statement/prospectus
constituting a part thereof, and any amendment thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE>
May 26, 2000
Apex, Inc.
9911 Willows Road NE
Redmond, Washington 98052
RE: MERGER OF WHOLLY-OWNED SUBSIDIARY OF AEGEAN SEA, INC. INTO
APEX, INC.
Ladies and Gentlemen:
We have acted as counsel to Apex, Inc. in connection with the Agreement
and Plan of Reorganization (the "Reorganization Agreement") made and entered
into as of March 7, 2000, among Apex, Aegean Sea, Inc. ("Newco") and Cybex
Computer Products Corporation. Pursuant to the Reorganization Agreement, Newco
will acquire all of the stock of Apex and Cybex by means of mergers of
wholly-owned subsidiaries of Newco into each corporation. The Registration
Statement of Newco on Form S-4 describes the mergers. We are providing this
opinion pursuant to the requirements of Item 21(a) of the Form S-4 under the
Securities Act of 1933 (the "1933 Act").
We have examined and are familiar with the Reorganization Agreement,
the Registration Statement, and those other documents, records, and legal
authorities that we have considered appropriate for providing this opinion. We
have assumed that the merger to which Apex will be a party (the "Apex Merger")
will occur in accordance with the Reorganization Agreement and as described in
the joint Proxy Statement/Prospectus of Apex and Cybex included in the
Registration Statement. We have also assumed that the representations and
warranties made by Apex in the Reorganization Agreement and the representations
in letters provided to us by Apex and Newco are true and accurate. Finally, we
have assumed that any representation or statement made to a person's best
knowledge or belief, or subject to a similar qualification, is correct without
regard to the qualification.
Based on and subject to the foregoing, in our opinion, the discussion
contained in the Registration Statement under the caption "Material United
States federal income tax considerations of the merger," subject to the
limitations and qualification described in that discussion, sets forth the
material U.S. federal income tax considerations generally applicable to the Apex
Merger. Because we are delivering this opinion before the effective time of the
Apex Merger, the opinion must be considered prospective and dependent on future
events. Changes in the law could occur that would affect the U.S. federal income
tax consequences of the Apex Merger. Moreover, while our opinion reflects our
best judgment regarding the application of the U.S. federal income tax laws, it
is not binding on the Internal Revenue Service, which could take positions
contrary to the description of the tax consequences of the Apex Merger provided
in the Registration Statement.
<PAGE>
Apex, Inc.
May 26, 2000
Page 2
We are providing this opinion solely for use in connection with the
Registration Statement. We consent to the filing of this opinion as Exhibit 8.1
to the Registration Statement. We also consent to the reference to our firm name
wherever appearing in the Registration Statement with respect to the discussion
of the material federal income tax consequences of the Apex Merger. In giving
this consent, we do not admit that we are in the category of persons whose
consent is required under section 7 of the 1933 Act, or that we are "experts,"
as that term is used in the 1933 Act, or the rules and regulations of the
Securities and Exchange Commission under the 1933 Act.
Sincerely,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE>
OPINION OF SIROTE & PERMUTT, P.C.
EXHIBIT 8.2
[Letterhead]
date
Cybex Computer Products Corporation
4991 Corporate Drive
Huntsville, Alabama 35805
Re: Agreement and Plan of Reorganization Dated as of March 8, 2000, by and
among, Apex Inc., Aegean Sea Inc., and Cybex Computer Products
Corporation.
Dear Sirs:
We have acted as counsel for Cybex Computer Products Corporation, an Alabama
corporation ("Cybex"), in connection with the transactions contemplated by the
Agreement and Plan of Reorganization (the "Reorganization Agreement") made and
entered into as of March 8, 2000, by and among Apex Inc. ("Apex"), Aegean Sea
Inc. ("Newco"), and Cybex, in which Cybex Sub, a subsidiary of Newco, shall be
merged with and into Cybex with Cybex surviving as a wholly owned subsidiary of
Newco (the "Merger").
Capitalized terms not otherwise defined herein shall have the meanings specified
in the registration statement on Form S-4 and any amendments thereto (the
"Registration Statement"), which includes the Joint Proxy Statement and
Prospectus of Apex and Cybex (the "Proxy Statement/Prospectus"), as filed with
the Securities and Exchange Commission (the "SEC").
This opinion is being delivered pursuant to the requirements of Item 21(a) of
the Form S-4 under the Securities Act of 1933 (the "1933 Act").
In providing our opinion, we have examined the Reorganization Agreement
(including exhibits thereto), the Registration Statement, which includes the
Joint Proxy Statement/Prospectus, representations made to us by Newco, and Cybex
in separate representation letters delivered to us by authorized officers of
those corporations (the "Representation Letters"), and such other documents,
records, and legal authorities as we have deemed necessary or appropriate for
purposes of our opinion.
We are relying upon (without any independent investigation or review of the
facts therein) the truth and accuracy, at all relevant times, of the statements,
covenants, representations and warranties contained in any of the foregoing.
<PAGE>
Cybex Computer Products Corporation
________, 2000
Page 2
In rendering our opinion, we have assumed or obtained representations that:
(a) the Reorganization Agreement was executed by the relevant parties that
were authorized to do so;
(b) the execution and delivery of the Reorganization Agreement by all
parties thereto are free of misunderstanding, mutual mistake, misrepresentation,
criminal activity, undue influence, fraud and duress;
(c) the Reorganization Agreement complies with, and all parties to the
Reorganization Agreement have complied with, any test required by law of good
faith, fair dealing and conscionability, and that each party will act in
accordance with the terms and conditions of the Reorganization Agreement;
(d) no party to the Reorganization Agreement is, or will be, engaging in
misleading or unconscionable conduct or seeking to conduct any relevant
transaction or any associated activity in a manner or for a purpose not evident
on the face of the Reorganization Agreement which might render the
Reorganization Agreement or any relevant transaction or associated activity
illegal, void or voidable;
(e) there are no agreements or understandings among the parties, written or
oral, and there is no usage of trade or course of prior dealing among the
parties that would, in either case, define, supplement or qualify the terms of
the Reorganization Agreement;
(f) to the extent that any obligation under the Reorganization Agreement is
to be performed in any jurisdiction other than the State of Alabama, its
performance will not be illegal, invalid or unenforceable under the laws of such
other jurisdiction;
(g) the Reorganization Agreement submitted to us for review in connection
with this opinion is accurate and complete, the original Reorganization
Agreement is authentic, that all signatures on the Reorganization Agreement
submitted to us for examination are genuine, that each individual executing the
Reorganization Agreement is legally competent to do so, and that all public
records (including their proper indexing and filing) are accurate and complete;
(h) all conditions to the consummation of the Reorganization Agreement have
been or will be fulfilled;
(i) the Reorganization Agreement has been duly authorized, executed and
delivered by each party thereto and other than Cybex, constitutes valid and
binding obligations of the
<PAGE>
Cybex Computer Products Corporation
________, 2000
Page 3
parties thereto, enforceable against the parties thereto in accordance with
their respective terms; and
(j) That neither Apex nor Apex's counsel has any knowledge of any reason
why any portion of this opinion is not accurate.
In addition, we have assumed with your consent that (i) the Merger will be
consummated in accordance with the provisions of the Reorganization Agreement
and the Registration Statement, (ii) the statements concerning the Merger set
forth in the Reorganization Agreement and the Registration Statement are true,
complete and correct and will remain true, complete and correct at all times up
to and including the Effective Time (as defined in the Reorganization
Agreement), (iii) the representations made in the Representation Letters are
true, complete and correct and will remain true, complete and correct at all
times up to and including the Effective Time (as defined in the Reorganization
Agreement) and (iv) any representations made in the Representation Letters "to
the knowledge of" or similarly qualified are correct without such qualification.
We have also assumed that the parties have complied with and, if applicable,
will continue to comply with, the covenants contained in the Reorganization
Agreement.
If any of the above described assumptions are untrue for any reason or if the
Merger is consummated in a manner that is different from the manner in which
they are described in the Reorganization Agreement or the Proxy
Statement/Prospectus, our opinion as expressed below may be adversely affected
and may not be relied upon.
Based upon the foregoing, we are of the opinion that the discussion contained in
the Registration Statement under the caption "Material United States federal
income tax considerations of the merger," subject to the limitations and
qualifications described in the discussion, sets forth the material U.S. federal
income tax considerations generally applicable to the Merger.
Our opinions are based on current provisions of the Code, Treasury Regulations
promulgated thereunder, published pronouncements of the Internal Revenue Service
and case law, any of which may be changed at any time with retroactive effect.
In addition, such opinions are based solely on the documents that we have
examined, the additional information that we have obtained, the facts that we
have assumed and the representations that have been made to us and cannot be
relied upon if any of the facts contained in such documents or in such
additional information is, or later becomes, inaccurate or if any of the
representations made to us or any of the facts assumed by us, is, or later
becomes, inaccurate. Finally, our opinions are limited to the federal income tax
matters specifically covered herein and no other opinions are rendered with
respect to other federal tax matters or to any issues arising under the tax laws
of
<PAGE>
Cybex Computer Products Corporation
________, 2000
Page 4
any state, locality or foreign country. We undertake no obligation to update the
opinions expressed herein after the date of this letter.
We express no opinion as to the tax treatment of any conditions existing at the
time of, or effects resulting from, the transactions which are not specifically
addressed in the foregoing opinion. No opinion should be inferred as to the tax
consequences of the Merger under any state, local or foreign law, or with
respect to other areas of United States federal taxation.
We are members of the Bar of the State of Alabama, and we do not express any
opinion herein concerning any law other than the federal law of the United
States.
This opinion is being furnished solely for use in connection with the
Registration Statement and may not be used or relied upon for any other purpose
and, other than the filing of this opinion as an exhibit to any filings to be
made by you pursuant to applicable securities laws (to which we hereby consent),
may not be circulated, quoted or otherwise referred to for any other purpose
without our express written consent. We also consent to the reference to our
firm name wherever appearing in the Registration Statement with respect to the
discussion of the material federal income tax consequences of the Merger. In
giving this consent, we do not admit that we are in the category of persons
whose consent is required under section 7 of the 1933 Act, or that we are
"experts," as that term is used in the 1933 Act, or the rules and regulations of
the Securities and Exchange Commission under the 1933 Act.
Very truly yours,
SIROTE & PERMUTT, P.C.
By:_____________________________________
<PAGE>
FIRST AMENDMENT
TO THE
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This First Amendment (the "Amendment") to that certain
Employment and Noncompetition Agreement by and among PolyCon Investments,
Inc., a Texas corporation d/b/a Cybex Employment Services Co. (the
"Employee"), Cybex Computer Products Corporation, an Alabama corporation (the
"Cybex"), and Stephen F. Thornton (the "Employee") dated July 1, 1999 (the
"Employment Agreement") is dated this 7th day of March, 2000.
RECITALS
WHEREAS, Cybex, Apex, Inc., a Washington corporation
("Apex"), and Apex/Cybex, Inc., a Delaware corporation ("Apex/Cybex"), are
entering into an Agreement and Plan of Reorganization dated March 7, 2000
(the "Reorganization Agreement"). Pursuant to the Reorganization Agreement,
(i) Cybex Sub, Inc., an Alabama corporation and a wholly-owned subsidiary of
Apex/Cybex, will merge with and into Cybex (the "Cybex Merger"), and upon the
Cybex Merger, Cybex will become a wholly-owned subsidiary of Apex/Cybex, and
(ii) Apex Sub., Inc., a Washington corporation and a wholly-owned subsidiary
of Apex./Cybex, will merge with and into Apex (the "Apex Merger"), and upon
the Apex Merger, Apex will also become a wholly-owned subsidiary of
Apex/Cybex; and
WHEREAS, Cybex, Employee, and Employer desire to amend the
terms of the Employment Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. DEFINED TERMS. All capitalized terms in this Amendment,
to the extent not otherwise defined herein, shall have the meanings assigned
to such terms in the Employment Agreement.
2. EFFECTIVE DATE. This Amendment shall become effective
(the "Effective Date") on the closing of the Cybex Merger described in the
Reorganization Agreement.
3. AMENDMENT OF SECTION 2.1(d); CONFIRMATION OF EMPLOYMENT.
The parties hereby agree that, on the Effective Date, the Employment
Agreement is amended by deleting the existing language in Section 2.1(d) and
substituting therefor the following new language:
(d) "TERMINATION UPON A CHANGE IN CONTROL" shall mean a
termination by the Employee of the Employee's employment with
Employer or services to Cybex or Apex/Cybex (as defined below)
following a "Change in Control" other than any "Change in
Control" contemplated by or described in that certain
Agreement and Plan of Reorganization dated March 7, 2000, by
and among Apex/Cybex, Inc., a Delaware corporation
("Apex/Cybex"), Apex, and Cybex (the "Reorganization
Agreement") and/or resulting from the closing of the
transactions described in the Reorganization Agreement
including, without limitation, the Cybex Merger, the Apex
Merger, and the Merger (as such terms are defined in the
Reorganization Agreement).
Employee hereby acknowledges and agrees that, following the closing of the
transactions described in the Reorganization Agreement including, without
limitation, the Cybex Merger, the Apex Merger, and the Merger (as such terms
are defined in the Reorganization Agreement), Employee will continue to be
employed by Employer under (and subject to) the terms and conditions of the
Employment Agreement as
<PAGE>
modified by this Amendment. Employee also acknowledges and agrees that,
following the closing of the transactions described in the Reorganization
Agreement including, without limitation, the Cybex Merger, the Apex Merger,
and the Merger, any future termination of Employee's employment with
Employer, whether by Employee or by Employer, will not constitute a
"TERMINATI0N UPON A CHANGE IN CONTROL" as described in Section 2.8 of the
Employment Agreement unless there is, after the closing of the transactions
described in the Reorganization Agreement, a subsequent Change in Control as
defined in Section 2.1(c) of the Employment Agreement.
4. AMENDMENT OF SECTION 2.1(c). The parties hereby agree
that, on the Effective Date, the Employment Agreement is amended by deleting
the existing language in Section 2.1(c) and substituting therefor the
following new language:
(e) "CHANGE IN CONTROL" shall mean any one of the following
events:
(i) Any person (other than Apex/Cybex) acquires
beneficial ownership of Cybex's or Apex/Cybex's securities
and is or thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent (25%)
or more of the combined voting power of Cybex's
Apex/Cybex's then outstanding stock. For purposes of this
Agreement, "beneficial ownership" shall be determined in
accordance with Regulation 13D under the Securities
Exchange Act of 1934, or any similar successor regulation
or rule; and the term "person" shall include any natural
person, corporation, partnership, trust or association, or
any group or combination thereof, whose ownership of
Cybex's or Apex/Cybex's securities, would be required to be
reported under such Regulation 13D, or any similar
successor regulation or rule.
(ii) Within any twenty-four (24) month period,
individuals who were Directors of Cybex or Apex/Cybex at
the beginning of such period, together with any other
Directors first elected as directors of Cybex or Apex/Cybex
pursuant to nominations approved or ratified by at least
two-thirds (2/3) of the Directors in office immediately
prior to such respective elections, cease to constitute a
Majority of the Board of Directors of Apex/Cybex.
(iii) Apex/Cybex's stockholders approve:
(1) any consolidation or merger of Apex/Cybex in
which Apex/Cybex is not the continuing or surviving
corporation or pursuant to which shares of Apex/Cybex
common stock would be converted into cash, securities
or other property, other than a merger or consolidation
of Apex/Cybex in which the holders of Apex/Cybex's
common stock immediately prior to the merger or
consolidation have substantially the same proportionate
ownership and voting control of the surviving
corporation immediately after the merger or
consolidation; or
(2) any sale, lease, exchange, liquidation or
other transfer (in one transaction or a series of
transactions) of all or substantially all of the assets
of Apex/Cybex.
Notwithstanding subparagraphs (c)(iii)(1) and (e)(iii)(2)
above, the term "Change in Control" shall not include a
consolidation, merger, or other reorganization if
2
<PAGE>
upon consummation of such transaction all of the outstanding
voting stock of Apex/Cybex is owned, directly or indirectly,
by a holding company, and the holders of Apex/Cybex's common
stock immediately prior to the transaction have
substantially the same proportionate ownership and voting
control of such holding company.
(iv) Cybex's stockholders approve:
(1) any consolidation or merger of Cybex in which
Cybex is not the continuing or surviving corporation or
pursuant to which shares of Cybex common stock would be
converted into cash, securities or other property,
other than a merger or consolidation of Cybex in which
the holders of Cybex common stock immediately prior to
the merger or consolidation have substantially the same
proportionate ownership and voting control of the
surviving corporation immediately after the merger or
consolidation; or
(2) any sale, lease, exchange, liquidation or
other transfer (in one transaction or a series of
transactions) of all or substantially all of the assets
of Cybex or Apex/Cybex.
Notwithstanding subparagraphs (e)(iv)(1) and (e)(iv)(2)
above, the term "Change in Control" shall not include a
consolidation, merger, or other reorganization if upon
consummation of such transaction all of the outstanding
voting stock of Cybex is owned, directly or indirectly, by a
holding company, and the holders of Cybex's common stock
immediately prior to the transaction have substantially the
same proportionate ownership and voting control of such
holding company.
5. AMENDMENT OF ACCELERATION LANGUAGE. The parties hereby
agree that, on the Effective Date, the Employment Agreement is amended by
deleting the phrase "(including accelerated vesting of any awards granted to
the Employee under Cybex's stock option plans)" in each of Sections 2.5, 2.6,
and 2.8 and substituting therefor in each such Section the following new
language: "(including having the vesting of any awards granted to the
Employee under any Cybex or Apex/Cybex stock option plans fully
accelerated)." The parties hereby also agree that, on the Effective Date, the
Employment Agreement is amended by deleting the sentence "The Employee shall
also be entitled to an accelerated vesting of any awards granted to the
Employee under Cybex's stock option plans" in each of Sections 4.1 and 4.2
and substituting therefor in each such Section the following new sentence:
"The Employee shall also be entitled to have the vesting or any awards
granted to the Employee under any Cybex or Apex/Cybex stock option plans
fully accelerated."
6. AMENDMENT OF SECTION 6.2. The parties hereby agree that,
on the Effective Date, the Employment Agreement is amended by deleting the
existing language in Section 6.2 and substituting therefor the following new
language:
6.2 GUARANTEE. Immediately following the closing of the
Cybex Merger, Cybex shall obtain from Apex/Cybex Apex/Cybex's
unconditional and irrevocable guarantee of the payment
obligations of the Employer under this Agreement, including,
without limitation, the Employer's obligations under Section
6.1 hereof.
3
<PAGE>
7. AMENDMENT OF SECTION 6.11; DUTIES FOR APEX/CYBEX. The
parties hereby agree that, on the Effective Date, the Employment Agreement is
amended by deleting the existing language in Section 6.11 and substituting
therefor the following new language:
6.11 SURVIVAL OF EMPLOYER'S OBLIGATIONS. The Employer's
obligations hereunder shall not be terminated by reason of any
liquidation, dissolution, bankruptcy, cessation of business,
or similar event relating to the Employer, to Cybex, or to
Apex/Cybex. This Agreement shall not be terminated by any
merger or consolidation or other reorganization of the
Employer, Cybex, or Apex/Cybex. In the event any such merger,
consolidation or reorganization shall be accomplished by
transfer of stock or by transfer of assets or otherwise, the
provisions of this Agreement shall be binding upon and inure
to the benefit of the surviving or resulting corporation or
person. This Agreement shall be binding upon and inure to the
benefit of the executors, administrators, heirs, successors
and assigns or the parties; provided, however, that except as
herein expressly provided, this Agreement shall not be
assignable either by the Employer (except to an affiliate of
the Employer (including Apex/Cybex) in which event the
Employer shall remain liable if the affiliate fails to meet
any obligations to make payments or provide benefits or
otherwise) or by the Employee.
The parties agree that, from and after the Effective Date, Employee will
perform the same duties for Apex/Cybex that he has traditionally performed
for Cybex as described in Section 1 of the Employment Agreement.
8. NEW SECTION 6.14. The parties agree that, on the
Effective Date, the Employment Agreement is amended by adding a new Section
6.14 as follows:
6.14 INDEMNIFICATION FOR SECTION 4999 EXCISE, TAXES. In
the event that it shall be determined that any payment or
other benefit paid by Apex/Cybex, Cybex, or Employer to or for
the benefit of the Employee under the Employment Agreement or
otherwise, but determined without regard to any additional
payments required under this Amendment (the "Payments") would
be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code (the "Excise Tax"), then Cybex shall
indemnify Employee for such Excise Tax in accordance with the
following:
(a) Employee shall be entitled to receive an
additional payment from Cybex equal to (i) one hundred
percent (100%) of any Excise Tax actually paid or
finally or payable by the Employee in connection with
the Payments, plus (ii) an additional payment in such
amount, that after all taxes, interest and penalties
incurred in connection with all payments under this
Section 2(a), Employee retains an amount equal to one
hundred percent (100%) of the Excise Tax.
(b) All determinations required to be made under
this Section shall be made by Cybex' primary
independent public accounting firm, or any other
nationally recognized accounting firm reasonably
acceptable to Cybex and the Employee (the "Accounting
Firm"). Cybex shall cause the Accounting Firm to
provide detailed supporting calculations of its
determinations to Cybex and Employee. All fees and
expenses of the Accounting Firm shall be borne solely
by Cyrus. For purposes of making the calculations
required by this Section, the Accounting Firm may make
reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith
interpretations
4
<PAGE>
concerning the application of Sections 280G and 4999 of
the Internal Revenue Code, provided the Accounting
Firm's determinations must be made with substantial
authority (within the meaning of Section 6662 of the
Internal Revenue Code). The payments to which Employee
is entitled pursuant to this Section shall be paid by
Cyrus to Employee in cash and in full not later than
thirty (30) calendar days following the date Employee
becomes subject to the Excise Tax.
(Signature Page Follows)
5
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this
Amendment, in the case of the Employer and Cybex by their duly authorized
officer, as of the day and year set forth below.
DATE: MARCH 7, 2000 POLYCON INVESTMENTS, INC., D/B/A CYBEX
----------------------- EMPLOYMENT SERVICES CO.
By: /S/ DOUGLAS E. PRITCHETT
------------------------------
Title: CHIEF FINANCIAL OFFICER
------------------------------
CYBEX COMPUTER PRODUCTS CORPORATION
By: /S/ DOYLE C. WEEKS
------------------------------
Title: EXECUTIVE VICE PRESIDENT
------------------------------
EMPLOYEE
/S/ STEPHEN F. THORNTON
--------------------------------------
Stephen F. Thornton
6
<PAGE>
FIRST AMENDMENT
TO THE
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This First Amendment (the "Amendment") to that certain
Employment and Noncompetition Agreement by and among PolyCon Investments,
Inc., a Texas corporation d/b/a Cybex Employment Services Co. (the
"Employee"), Cybex Computer Products Corporation, an Alabama corporation (the
"Cybex"), and Doyle C. Weeks (the "Employee") dated July 1, 1999 (the
"Employment Agreement") is dated this 7th day of March, 2000.
RECITALS
WHEREAS, Cybex, Apex, Inc., a Washington corporation
("Apex"), and Apex/Cybex, Inc., a Delaware corporation ("Apex/Cybex"), are
entering into an Agreement and Plan of Reorganization dated March 7, 2000
(the "Reorganization Agreement"). Pursuant to the Reorganization Agreement,
(i) Cybex Sub, Inc., an Alabama corporation and a wholly-owned subsidiary of
Apex/Cybex, will merge with and into Cybex (the "Cybex Merger"), and upon the
Cybex Merger, Cybex will become a wholly-owned subsidiary of Apex/Cybex, and
(ii) Apex Sub., Inc., a Washington corporation and a wholly-owned subsidiary
of Apex/Cybex, will merge with and into Apex (the "Apex Merger"), and upon
the Apex Merger, Apex will also become a wholly-owned subsidiary of
Apex/Cybex; and
WHEREAS, Cybex, Employee, and Employer desire to amend the
terms of the Employment Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. DEFINED TERMS. All capitalized terms in this Amendment,
to the extent not otherwise defined herein, shall have the meanings assigned
to such terms in the Employment Agreement.
2. EFFECTIVE DATE. This Amendment shall become effective
(the "Effective Date") on the closing of the Cybex Merger described in the
Reorganization Agreement.
3. AMENDMENT OF SECTION 2.1(d); CONFIRMATION OF EMPLOYMENT.
The parties hereby agree that, on the Effective Date, the Employment
Agreement is amended by deleting the existing language in Section 2.1(d) and
substituting therefor the following new language:
(d) "TERMINATION UPON A CHANGE IN CONTROL" shall mean a
termination by the Employee of the Employee's employment with
Employer or services to Cybex or Apex/Cybex (as defined below)
following a "Change in Control" other than any "Change in
Control" contemplated by or described in that certain
Agreement and Plan of Reorganization dated March 7, 2000, by
and among Apex/Cybex, Inc., a Delaware corporation
("Apex/Cybex"), Apex, and Cybex (the "Reorganization
Agreement") and/or resulting from the closing of the
transactions described in the Reorganization Agreement
including, without limitation, the Cybex Merger, the Apex
Merger, and the Merger (as such terms are defined in the
Reorganization Agreement).
Employee hereby acknowledges and agrees that, following the closing of the
transactions described in the Reorganization Agreement including, without
limitation, the Cybex Merger, the Apex Merger, and the Merger (as such terms
are defined in the Reorganization Agreement), Employee will continue to be
employed by Employer under (and subject to) the terms and conditions of the
Employment Agreement as
<PAGE>
modified by this Amendment. Employee also acknowledges and agrees that,
following the closing of the transactions described in the Reorganization
Agreement including, without limitation, the Cybex Merger, the Apex Merger,
and the Merger, any future termination of Employee's employment with
Employer, whether by Employee or by Employer, will not constitute a
"TERMINATI0N UPON A CHANGE IN CONTROL" as described in Section 2.8 of the
Employment Agreement unless there is, after the closing of the transactions
described in the Reorganization Agreement, a subsequent Change in Control as
defined in Section 2.1(e) of the Employment Agreement.
4. AMENDMENT OF SECTION 2.1(e). The parties hereby agree
that, on the Effective Date, the Employment Agreement is amended by deleting
the existing language in Section 2.1(e) and substituting therefor the
following new language:
(e) "CHANGE IN CONTROL" shall mean any one of the following
events:
(i) Any person (other than Apex/Cybex) acquires
beneficial ownership of Cybex's or Apex/Cybex's securities
and is or thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent (25%)
or more of the combined voting power of Cybex's
Apex/Cybex's then outstanding stock. For purposes of this
Agreement, "beneficial ownership" shall be determined in
accordance with Regulation 13D under the Securities
Exchange Act of 1934, or any similar successor regulation
or rule; and the term "person" shall include any natural
person, corporation, partnership, trust or association, or
any group or combination thereof, whose ownership of
Cybex's or Apex/Cybex's securities, would be required to be
reported under such Regulation 13D, or any similar
successor regulation or rule.
(ii) Within any twenty-four (24) month period,
individuals who were Directors of Cybex or Apex/Cybex at
the beginning of such period, together with any other
Directors first elected as directors of Cybex or Apex/Cybex
pursuant to nominations approved or ratified by at least
two-thirds (2/3) of the Directors in office immediately
prior to such respective elections, cease to constitute a
majority of the Board of Directors of Apex/Cybex.
(iii) Apex/Cybex's stockholders approve:
(1) any consolidation or merger of Apex/Cybex in
which Apex/Cybex is not the continuing or surviving
corporation or pursuant to which shares of Apex/Cybex
common stock would be converted into cash, securities
or other property, other than a merger or consolidation
of Apex/Cybex in which the holders of Apex/Cybex's
common stock immediately prior to the merger or
consolidation have substantially the same proportionate
ownership and voting control of the surviving
corporation immediately after the merger or
consolidation; or
(2) any sale, lease, exchange, liquidation or
other transfer (in one transaction or a series of
transactions) of all or substantially all of the assets
of Apex/Cybex.
Notwithstanding subparagraphs (e)(iii)(1) and (c)(iii)(2)
above, the term "Change in Control" shall not include a
consolidation, merger, or other reorganization if
2
<PAGE>
upon consummation of such transaction all of the
outstanding voting stock of Apex/Cybex is owned, directly
or indirectly, by a holding company, and the holders of
Apex/Cybex's common stock immediately prior to the
transaction have substantially the same proportionate
ownership and voting control of such holding company.
(iv) Cybex's stockholders approve:
(1) any consolidation or merger of Cybex in which
Cybex is not the continuing or surviving corporation or
pursuant to which shares of Cybex common stock would be
converted into cash, securities or other property,
other than a merger or consolidation of Cybex in which
the holders of Cybex common stock immediately prior to
the merger or consolidation have substantially the same
proportionate ownership and voting control of the
surviving corporation immediately after the merger or
consolidation; or
(2) any sale, lease, exchange, liquidation or
other transfer (in one transaction or a series of
transactions) of all or substantially all of the assets
of Cybex or Apex/Cybex.
Notwithstanding subparagraphs (e)(iv)(1) and (c)(iv)(2)
above, the term "Change in Control" shall not include a
consolidation, merger, or other reorganization if upon
consummation of such transaction all of the outstanding
voting stock of Cybex is owned, directly or indirectly, by
a holding company, and the holders of Cybex's common stock
immediately prior to the transaction have substantially the
same proportionate ownership and voting control of such
holding company.
5. AMENDMENT OF ACCELERATION LANGUAGE. The parties hereby
agree that, on the Effective Date, the Employment Agreement is amended by
deleting the phrase "(including accelerated vesting of any awards granted to the
Employee under Cybex's stock option plans)" in each of Sections 2.5, 2.6, and
2.8 and substituting therefor in each such Section the following new language:
"(including having the vesting of any awards granted to the Employee under any
Cybex or Apex/Cybex stock option plans fully accelerated)." The parties hereby
also agree that, on the Effective Date, the Employment Agreement is amended by
deleting the sentence "The Employee shall also be entitled to an accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans"
in each of Sections 4.1 and 4.2 and substituting therefor in each such Section
the following new sentence: "The Employee shall also be entitled to have the
vesting of any awards granted to the Employee under any Cybex or Apex/Cybex
stock option plans fully accelerated."
6. AMENDMENT OF SECTION 6.2. The parties hereby agree that, on
the Effective Date, the Employment Agreement is amended by deleting the existing
language in Section 6.2 and substituting therefor the following new language:
6.2 GUARANTEE. Immediately following the closing of the
Cybex Merger, Cybex shall obtain from Apex/Cybex Apex/Cybex's
unconditional and irrevocable guarantee of the payment
obligations of the Employer under this Agreement, including,
without limitation, the Employer's obligations under Section
6.1 hereof.
3
<PAGE>
7. AMENDMENT OF SECTION 6.11; DUTIES FOR APEX/CYBEX. The
parties hereby agree that, on the Effective Date, the Employment Agreement is
amended by deleting the existing language in Section 6.11 and substituting
therefor the following new language:
6.11 SURVIVAL OF EMPLOYER'S OBLIGATIONS. The Employer's
obligations hereunder shall not be terminated by reason of any
liquidation, dissolution, bankruptcy, cessation of business,
or similar event relating to the Employer, to Cybex, or to
Apex/Cybex. This Agreement shall not be terminated by any
merger or consolidation or other reorganization of the
Employer, Cybex, or Apex/Cybex. In the event any such merger,
consolidation or reorganization shall be accomplished by
transfer of stock or by transfer of assets or otherwise, the
provisions of this Agreement shall be binding upon and inure
to the benefit of the surviving or resulting corporation or
person. This Agreement shall be binding upon and inure to the
benefit of the executors, administrators, heirs, successors
and assigns or the parties; provided, however, that except as
herein expressly provided, this Agreement shall not be
assignable either by the Employer (except to an affiliate of
the Employer (including Apex/Cybex) in which event the
Employer shall remain liable if the affiliate fails to meet
any obligations to make payments or provide benefits or
otherwise) or by the Employee.
The parties agree that, from and after the Effective Date, Employee will perform
the same duties for Apex/Cybex that he has traditionally performed for Cybex as
described in Section 1 of the Employment Agreement.
8. NEW SECTION 6.14. The parties agree that, on the Effective
Date, the Employment Agreement is amended by adding a new Section 6.14 as
follows:
6.14 INDEMNIFICATION FOR SECTION 4999 EXCISE, TAXES. In
the event that it shall be determined that any payment or
other benefit paid by Apex/Cybex, Cybex, or Employer to or for
the benefit of the Employee under the Employment Agreement or
otherwise, but determined without regard to any additional
payments required under this Amendment (the "Payments") would
be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code (the "Excise Tax"), then Cybex shall
indemnify Employee for such Excise Tax in accordance with the
following:
(a) Employee shall be entitled to receive an
additional payment from Cybex equal to (i) one hundred
percent (100%) of any Excise Tax actually paid or
finally or payable by the Employee in connection with
the Payments, plus (ii) an additional payment in such
amount, that after all taxes, interest and penalties
incurred in connection with all payments under this
Section 2(a), Employee retains an amount equal to one
hundred percent (100%) of the Excise Tax.
(b) All determinations required to be made under
this Section shall be made by Cybex' primary
independent public accounting firm, or any other
nationally recognized accounting firm reasonably
acceptable to Cybex and the Employee (the "Accounting
Firm"). Cybex shall cause the Accounting Firm to
provide detailed supporting calculations of its
determinations to Cybex and Employee. All fees and
expenses of the Accounting Firm shall be borne solely
by Cyrus. For purposes of making the calculations
required by this Section, the Accounting Firm may make
reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections
280G and 4999 of the Internal Revenue
4
<PAGE>
Code, provided the Accounting Firm's determinations
must be made with substantial authority (within the
meaning of Section 6662 of the Internal Revenue Code).
The payments to which Employee is entitled pursuant to
this Section shall be paid by Cyrus to Employee in cash
and in full not later than thirty (30) calendar days
following the date Employee becomes subject to the
Excise Tax.
(Signature Page Follows)
5
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this
Amendment, in the case of the Employer and Cybex by their duly authorized
officer, as of the day and year set forth below.
DATE: MARCH 7, 2000 POLYCON INVESTMENTS, INC., D/B/A CYBEX
---------------- EMPLOYMENT SERVICES CO.
By: /s/ DOUGLAS E. PRITCHETT
--------------------------------
Title: CHIEF FINANCIAL OFFICER
--------------------------------
CYBEX COMPUTER PRODUCTS CORPORATION
By: /s/ DOUGLAS E. PRITCHETT
--------------------------------
Title: ASSISTANT SECRETARY
--------------------------------
EMPLOYEE
/s/ DOYLE C. WEEKS
---------------------------------------
Doyle C. Weeks
6
<PAGE>
FIRST AMENDMENT
TO THE
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This First Amendment (the "Amendment") to that certain
Employment and Noncompetition Agreement by and among PolyCon Investments, Inc.,
a Texas corporation d/b/a Cybex Employment Services Co. (the "Employee"), Cybex
Computer Products Corporation, an Alabama corporation (the "Cybex"), and Douglas
E. Pritchett (the "Employee") dated July 1, 1999 (the "Employment Agreement") is
dated this 7th day of March, 2000.
RECITALS
WHEREAS, Cybex, Apex, Inc., a Washington corporation ("Apex"),
and Apex/Cybex, Inc., a Delaware corporation ("Apex/Cybex"), are entering into
an Agreement and Plan of Reorganization dated March 7, 2000 (the "Reorganization
Agreement"). Pursuant to the Reorganization Agreement, (i) Cybex Sub, Inc., an
Alabama corporation and a wholly-owned subsidiary of Apex/Cybex, will merge with
and into Cybex (the "Cybex Merger"), and upon the Cybex Merger, Cybex will
become a wholly-owned subsidiary of Apex/Cybex, and (ii) Apex Sub., Inc., a
Washington corporation and a wholly-owned subsidiary of Apex/Cybex, will merge
with and into Apex (the "Apex Merger"), and upon the Apex Merger, Apex will also
become a wholly-owned subsidiary of Apex/Cybex; and
WHEREAS, Cybex, Employee, and Employer desire to amend the
terms of the Employment Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. DEFINED TERMS. All capitalized terms in this Amendment, to
the extent not otherwise defined herein, shall have the meanings assigned to
such terms in the Employment Agreement.
2. EFFECTIVE DATE. This Amendment shall become effective (the
"Effective Date") on the closing of the Cybex Merger described in the
Reorganization Agreement.
3. AMENDMENT OF SECTION 2.1(d); CONFIRMATION OF EMPLOYMENT.
The parties hereby agree that, on the Effective Date, the Employment Agreement
is amended by deleting the existing language in Section 2.1(d) and substituting
therefor the following new language:
(d) "TERMINATION UPON A CHANGE IN CONTROL" shall mean a
termination by the Employee of the Employee's employment with
Employer or services to Cybex or Apex/Cybex (as defined below)
following a "Change in Control" other than any "Change in
Control" contemplated by or described in that certain
Agreement and Plan of Reorganization dated March 7, 2000, by
and among Apex/Cybex, Inc., a Delaware corporation
("Apex/Cybex"), Apex, and Cybex (the "Reorganization
Agreement") and/or resulting from the closing of the
transactions described in the Reorganization Agreement
including, without limitation, the Cybex Merger, the Apex
Merger, and the Merger (as such terms are defined in the
Reorganization Agreement).
Employee hereby acknowledges and agrees that, following the closing of the
transactions described in the Reorganization Agreement including, without
limitation, the Cybex Merger, the Apex Merger, and the Merger (as such terms are
defined in the Reorganization Agreement), Employee will continue to be employed
by Employer under (and subject to) the terms and conditions of the Employment
Agreement as
<PAGE>
modified by this Amendment. Employee also acknowledges and agrees that,
following the closing of the transactions described in the Reorganization
Agreement including, without limitation, the Cybex Merger, the Apex Merger,
and the Merger, any future termination of Employee's employment with
Employer, whether by Employee or by Employer, will not constitute a
"TERMINATI0N UPON A CHANGE IN CONTROL" as described in Section 2.8 of the
Employment Agreement unless there is, after the closing of the transactions
described in the Reorganization Agreement, a subsequent Change in Control as
defined in Section 2.1(e) of the Employment Agreement.
4. AMENDMENT OF SECTION 2.1(e). The parties hereby agree that,
on the Effective Date, the Employment Agreement is amended by deleting the
existing language in Section 2.1(c) and substituting therefor the following new
language:
(e) "CHANGE IN CONTROL" shall mean any one of the
following events:
(i) Any person (other than Apex/Cybex)
acquires beneficial ownership of Cybex's or
Apex/Cybex's securities and is or thereby becomes a
beneficial owner of securities entitling such person to
exercise twenty-five percent (25%) or more of the
combined voting power of Cybex's Apex/Cybex's then
outstanding stock. For purposes of this Agreement,
"beneficial ownership" shall be determined in
accordance with Regulation 13D under the Securities
Exchange Act of 1934, or any similar successor
regulation or rule; and the term "person" shall include
any natural person, corporation, partnership, trust or
association, or any group or combination thereof, whose
ownership of Cybex's or Apex/Cybex's securities, would
be required to be reported under such Regulation 13D,
or any similar successor regulation or rule.
(ii) Within any twenty-four (24) month period,
individuals who were Directors of Cybex or Apex/Cybex
at the beginning of such period, together with any
other Directors first elected as directors of Cybex or
Apex/Cybex pursuant to nominations approved or ratified
by at least two-thirds (2/3) of the Directors in office
immediately prior to such respective elections, cease
to constitute a majority of the Board of Directors of
Apex/Cybex.
(iii) Apex/Cybex's stockholders approve:
(1) any consolidation or merger of
Apex/Cybex in which Apex/Cybex is not the
continuing or surviving corporation or pursuant
to which shares of Apex/Cybex common stock would
be converted into cash, securities or other
property, other than a merger or consolidation of
Apex/Cybex in which the holders of Apex/Cybex's
common stock immediately prior to the merger or
consolidation have substantially the same
proportionate ownership and voting control of the
surviving corporation immediately after the
merger or consolidation; or
(2) any sale, lease, exchange,
liquidation or other transfer (in one transaction
or a series of transactions) of all or
substantially all of the assets of Apex/Cybex.
Notwithstanding subparagraphs (e)(iii)(1) and
(c)(iii)(2) above, the term "Change in Control" shall
not include a consolidation, merger, or other
reorganization if upon consummation of such
transaction all of the outstanding voting stock of
2
<PAGE>
Apex/Cybex is owned, directly or indirectly, by a
holding company, and the holders of Apex/Cybex's
common stock immediately prior to the transaction
have substantially the same proportionate ownership
and voting control of such holding company.
(iv) Cybex's stockholders approve:
(1) any consolidation or merger of
Cybex in which Cybex is not the continuing or
surviving corporation or pursuant to which
shares of Cybex common stock would be converted
into cash, securities or other property, other
than a merger or consolidation of Cybex in which
the holders of Cybex common stock immediately
prior to the merger or consolidation have
substantially the same proportionate ownership
and voting control of the surviving corporation
immediately after the merger or consolidation;
or
(2) any sale, lease, exchange,
liquidation or other transfer (in one
transaction or a series of transactions) of
all or substantially all of the assets of
Cybex or Apex/Cybex.
Notwithstanding subparagraphs (e)(iv)(1) and (c)(iv)(2)
above, the term "Change in Control" shall not include a
consolidation, merger, or other reorganization if upon
consummation of such transaction all of the outstanding
voting stock of Cybex is owned, directly or indirectly,
by a holding company, and the holders of Cybex's common
stock immediately prior to the transaction have
substantially the same proportionate ownership and
voting control of such holding company.
5. AMENDMENT OF ACCELERATION LANGUAGE. The parties hereby
agree that, on the Effective Date, the Employment Agreement is amended by
deleting the phrase "(including accelerated vesting of any awards granted to the
Employee under Cybex's stock option plans)" in each of Sections 2.5, 2.6, and
2.8 and substituting therefor in each such Section the following new language:
"(including having the vesting of any awards granted to the Employee under any
Cybex or Apex/Cybex stock option plans fully accelerated)." The parties hereby
also agree that, on the Effective Date, the Employment Agreement is amended by
deleting the sentence "The Employee shall also be entitled to an accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans"
in each of Sections 4.1 and 4.2 and substituting therefor in each such Section
the following new sentence: "The Employee shall also be entitled to have the
vesting of any awards granted to the Employee under any Cybex or Apex/Cybex
stock option plans fully accelerated."
6. AMENDMENT OF SECTION 6.2. The parties hereby agree that, on
the Effective Date, the Employment Agreement is amended by deleting the existing
language in Section 6.2 and substituting therefor the following new language:
6.2 GUARANTEE. Immediately following the closing of the
Cybex Merger, Cybex shall obtain from Apex/Cybex Apex/Cybex's
unconditional and irrevocable guarantee of the payment
obligations of the Employer under this Agreement, including,
without limitation, the Employer's obligations under Section
6.1 hereof.
7. AMENDMENT OF SECTION 6.11; DUTIES FOR APEX/CYBEX. The
parties hereby agree that, on the Effective Date, the Employment Agreement is
amended by deleting the existing language in Section 6.11 and substituting
therefor the following new language:
3
<PAGE>
6.11 SURVIVAL OF EMPLOYER'S OBLIGATIONS. The Employer's
obligations hereunder shall not be terminated by reason of any
liquidation, dissolution, bankruptcy, cessation of business,
or similar event relating to the Employer, to Cybex, or to
Apex/Cybex. This Agreement shall not be terminated by any
merger or consolidation or other reorganization of the
Employer, Cybex, or Apex/Cybex. In the event any such merger,
consolidation or reorganization shall be accomplished by
transfer of stock or by transfer of assets or otherwise, the
provisions of this Agreement shall be binding upon and inure
to the benefit of the surviving or resulting corporation or
person. This Agreement shall be binding upon and inure to the
benefit of the executors, administrators, heirs, successors
and assigns or the parties; provided, however, that except as
herein expressly provided, this Agreement shall not be
assignable either by the Employer (except to an affiliate of
the Employer (including Apex/Cybex) in which event the
Employer shall remain liable if the affiliate fails to meet
any obligations to make payments or provide benefits or
otherwise) or by the Employee.
The parties agree that, from and after the Effective Date, Employee will perform
the same duties for Apex/Cybex that he has traditionally performed for Cybex as
described in Section 1 of the Employment Agreement.
8. NEW SECTION 6.14. The parties agree that, on the Effective
Date, the Employment Agreement is amended by adding a new Section 6.14 as
follows:
6.14 INDEMNIFICATION FOR SECTION 4999 EXCISE, TAXES. In
the event that it shall be determined that any payment or
other benefit paid by Apex/Cybex, Cybex, or Employer to or for
the benefit of the Employee under the Employment Agreement or
otherwise, but determined without regard to any additional
payments required under this Amendment (the "Payments") would
be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code (the "Excise Tax"), then Cybex shall
indemnify Employee for such Excise Tax in accordance with the
following:
(a) Employee shall be entitled to receive an
additional payment from Cybex equal to (i) one hundred
percent (100%) of any Excise Tax actually paid or
finally or payable by the Employee in connection with
the Payments, plus (ii) an additional payment in such
amount, that after all taxes, interest and penalties
incurred in connection with all payments under this
Section 2(a), Employee retains an amount equal to one
hundred percent (100%) of the Excise Tax.
(b) All determinations required to be made under
this Section shall be made by Cybex' primary
independent public accounting firm, or any other
nationally recognized accounting firm reasonably
acceptable to Cybex and the Employee (the "Accounting
Firm"). Cybex shall cause the Accounting Firm to
provide detailed supporting calculations of its
determinations to Cybex and Employee. All fees and
expenses of the Accounting Firm shall be borne solely
by Cyrus. For purposes of making the calculations
required by this Section, the Accounting Firm may make
reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections
280G and 4999 of the Internal Revenue Code, provided
the Accounting Firm's determinations must be made with
substantial authority (within the meaning of Section
6662 of the Internal Revenue
4
<PAGE>
Code). The payments to which Employee is entitled
pursuant to this Section shall be paid by Cyrus to
Employee in cash and in full not later than thirty (30)
calendar days following the date Employee becomes
subject to the Excise Tax.
(Signature Page Follows)
5
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this
Amendment, in the case of the Employer and Cybex by their duly authorized
officer, as of the day and year set forth below.
DATE: MARCH 7, 2000 POLYCON INVESTMENTS, INC., D/B/A CYBEX
-------------------- EMPLOYMENT SERVICES CO.
By: /s/ DOUGLAS E. PRITCHETT
---------------------------------
Title: CHIEF FINANCIAL OFFICER
---------------------------------
CYBEX COMPUTER PRODUCTS CORPORATION
By: /s/ DOYLE C. WEEKS
---------------------------------
Title: EXECUTIVE VICE PRESIDENT
---------------------------------
EMPLOYEE
/s/ DOUGLAS E. PRITCHETT
---------------------------------------
Douglas E. Pritchett
6
<PAGE>
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement") is dated
this 7th day of March, 2000, by and between Apex Inc., a Washington corporation
("Apex" or the "Employer"), and Barry L. Harmon (the "Employee").
RECITALS
WHEREAS, Apex is engaged in the business of designing, manufacturing,
and selling stand-alone console/KVM switching systems, console/KVM remote access
products, and integrated server cabinet solutions for the client/server
computing market; and
WHEREAS, Apex desires to employ the Employee and the Employee is
willing to accept such employment by Apex on the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, on the date of this Agreement, Apex, Cybex Computer Products
Corporation, an Alabama corporation, and Aegean Sea Inc., a Delaware corporation
("Holdco"), are entering into an Agreement and Plan of Reorganization dated
March 7, 2000 (the "Reorganization Agreement"). Pursuant to the Reorganization
Agreement, (i) Apex Sub, Inc., a Washington corporation and a wholly-owned
subsidiary of Holdco, will merge with and into Apex (the "Apex Merger"), and
upon the Apex Merger, Apex will become a wholly-owned subsidiary of Holdco, and
(ii) Cybex Sub, Inc., an Alabama corporation and a wholly-owned subsidiary of
Holdco will merge with and into Cybex (the "Cybex Merger"), and upon the Cybex
Merger, Cybex will also become a wholly-owned subsidiary of Holdco.
AGREEMENT
THE PARTIES HERETO AGREE AS FOLLOWS:
1. DUTIES. During the term of this Agreement, the Employee agrees
to be employed by Apex and to serve Holdco and Apex as their Senior Vice
President -West Coast Operations. The Employee shall devote such of his
business time, energy, and skill to the affairs of Holdco and Apex as shall
be necessary to perform the duties of the Senior Vice President - West Coast
Operations of Holdco and Apex. The Employee shall report to the President of
Holdco, and to the Board of Directors of Holdco, and at all times during the
term of this Agreement, the Employee shall have powers and duties at least
commensurate with his position as Senior Vice President - West Coast
Operations. The Employee's principal place of business with respect to his
services to Holdco and Apex shall be within the vicinity of the city of
Redmond, Washington. The Employee shall function as the principal officer
with responsibility for business activities in Holdco's Redmond, Washington
facility, currently consisting of engineering, production, marketing, sales
and after-sales support, administration, and finance. Employee shall assist
Holdco in integrating the work of the departments and individuals in Redmond,
within the context of a developing, worldwide business and merger integration
strategy for Holdco. Employee shall also contribute to the development of a
worldwide business strategy, with key managers and individuals located in
Huntsville, Alabama,
<PAGE>
Shannon, Ireland, and Acton, Massachusetts. Employee's duties will also include
a role in investor and press relations actives, including conference speaking
engagements and one-on-one meetings with institutional investors. Coordination
of these investor and press relations duties will be done with the CFO.
2. TERM OF EMPLOYMENT.
2.1 DEFINITIONS. For purposes of this Agreement the
following terms shall have the following meanings:
(a) "TERMINATION FOR CAUSE" shall mean termination by the
Employer of the Employee's employment by the Employer by reason of the
Employee's willful dishonesty towards, fraud upon, or deliberate injury or
attempted injury to, the Employer or by reason of the Employee's willful
material breach of this Agreement which has resulted in material injury to
the Employer.
(b) "TERMINATIONS OTHER THAN FOR CAUSE" shall mean
termination by the Employer of the Employee's employment by the Employer
(other than in a Termination for Cause) and shall include (i) constructive
termination of the Employee's employment by reason of material breach of this
Agreement by the Employer, such constructive termination to be effective upon
thirty (30) days written notice from the Employee to the Employer of such
constructive termination and (ii) any attempt to relocate outside of the
vicinity of Redmond, Washington: (x) the Employee, (y) the Employee's duties
and responsibilities, or (z) the Employer's office at which Employee is
employed. Notwithstanding the foregoing, Employee agrees that a change in his
duties and responsibilities shall not result in a constructive termination
under this Section 2.1(b) unless such change results in a substantial
diminution of Employee's duties and responsibilities.
(c) "VOLUNTARY TERMINATION" shall mean termination by the
Employee of the Employee's employment by the Employer other than (i)
constructive termination as described in subsection 2.1(b), (ii) "Termination
Upon a Change in Control" as described in Section 2.1(e), and (iii)
termination by reason of the Employee's disability or death as described in
Sections 2.5 and 2.6.
(d) "TERMINATION UPON A CHANGE IN CONTROL" shall mean a
termination by the Employee of the Employee's employment with the Employer or
services to Apex or Holdco following a "Change in Control" other than any
"Change in Control" contemplated by or described in the Reorganization
Agreement and/or resulting from the closing of the transactions described in
the Reorganization Agreement including, without limitation, the Cybex Merger,
the Apex Merger, and the Merger (as such terms are defined in the
Reorganization Agreement).
(e) "CHANGE IN CONTROL" shall mean any one of the
following events:
(i) Any person (other than Holdco) acquires
beneficial ownership of Apex's or Holdco's securities and is or thereby
becomes a beneficial owner of securities entitling
2
<PAGE>
such person to exercise twenty-five percent (25%) or more of the combined
voting power of Apex's or Holdco's then outstanding stock. For purposes of
this Agreement, "beneficial ownership" shall be determined in accordance with
Regulation 13D under the Securities Exchange Act of 1934, or any similar
successor regulation or rule; and the term "person" shall include any natural
person, corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Apex's or Holdco's securities would
be required to be reported under such Regulation 13D, or any similar
successor regulation or rule.
(ii) Within any twenty-four (24) month
period, individuals who were Directors of Apex or Holdco at the beginning of
such period, together with any other Directors first elected as directors of
Apex or Holdco pursuant to nominations approved or ratified by at least
two-thirds (2/3) of the Directors in office immediately prior to such respective
elections, cease to constitute a majority of the Board of Directors of Holdco.
(iii) Holdco's stockholders approve:
(1) any consolidation or merger of Holdco in
which Holdco is not the continuing or surviving corporation or pursuant to
which shares of Holdco common stock would be converted into cash, securities
or other property, other than a merger or consolidation of Holdco in which
the holders of Holdco's common stock immediately prior to the merger or
consolidation have substantially the same proportionate ownership and voting
control of the surviving corporation immediately after the merger or
consolidation; or
(2) any sale, lease, exchange, liquidation or
other transfer (in one transaction or a series of transactions) of all or
substantially all of the assets of Holdco.
Notwithstanding subparagraphs (e)(iii)(1) and (e)(iii)(2) above, the term
"Change in Control" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the
outstanding voting stock of Holdco is owned, directly or indirectly, by a
holding company, and the holders of Holdco's common stock immediately prior
to the transaction have substantially the same proportionate ownership and
voting control of such holding company after such transaction.
(iv) Apex's stockholders approve:
(1) any consolidation or merger of Apex in
which Apex is not the continuing or surviving corporation or pursuant to
which shares of Apex common stock would be converted into cash, securities or
other property, other than a merger or consolidation of Apex in which the
holders of Apex's common stock immediately prior to the merger or
consolidation have substantially the same proportionate ownership and voting
control of the surviving corporation immediately after the merger or
consolidation; or
(2) any sale, lease, exchange, liquidation or
other transfer (in one transaction or a series of transactions) of all or
substantially all of the assets of Apex or Holdco.
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Notwithstanding subparagraphs (e)(iv)(1) and (e)(iv)(2) above, the term
"Change in Control" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the
outstanding voting stock of Apex is owned, directly or indirectly, by a
holding company, and the holders of Apex's common stock immediately prior to
the transaction have substantially the same proportionate ownership and
voting control of such holding company after such transaction.
2.2 BASIC TERM. The term of employment of the Employee by the
Employer shall be for the period beginning immediately prior to the closing
of the Apex Merger described in the Reorganization Agreement and ending on
March 31, 2004, unless terminated earlier pursuant to this Section 2. At any
time before March 31, 2004, the Employer and the Employee may by mutual
written agreement extend the Employee's employment under the terms of this
Agreement for such additional periods as they may agree.
2.3 TERMINATION FOR CAUSE. Termination For Cause may be
effected by the Employer at any time during the term of this Agreement and
shall be effected by thirty (30) days written notification to the Employee
from the Board of Directors of Holdco stating the reason for termination.
Upon Termination For Cause, the Employee immediately shall be paid all
accrued salary, vested deferred compensation, if any (other than pension plan
or profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Apex or Holdco in which the
Employee is a participant to the full extent of the Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses
incurred by the Employee in connection with his duties hereunder, all to the
date of termination, but the Employee shall not be paid any other
compensation or reimbursement of any kind, including without limitation,
severance compensation.
2.4 TERMINATION OTHER THAN FOR CAUSE. Notwithstanding anything
else in this Agreement, the Employer may effect a Termination Other Than For
Cause at any time upon giving thirty (30) days written notice to the Employee
of such termination. Upon any Termination Other Than For Cause, the Employee
shall immediately be paid all accrued salary, bonus compensation to the
extent earned, vested deferred compensation, if any (other than pension plan
or profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Apex or Holdco in which the
Employee is a participant to the full extent of the Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses
incurred by the Employee in connection with his duties hereunder, all to the
date of termination, and all severance compensation provided in Section 4.2,
but no other compensation or reimbursement of any kind.
2.5 TERMINATION BY REASON OF DISABILITY. If, during the term
of this Agreement, the Employee, in the reasonable judgment of the Board of
Directors of Holdco, has failed to perform his duties under this Agreement on
account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than six (6) consecutive months,
the Employer shall have the right to terminate the Employee's employment
hereunder by delivery of written notice to the Employee at any time after
such six month period and payment to the Employee of all accrued salary,
bonus compensation in an amount equal to the average annual
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bonus earned by the Employee in the two (2) years immediately preceding the
date of termination, vested deferred compensation, if any (other than pension
plan or profit sharing plan benefits which will be paid in accordance with
the applicable plan), any benefits under any plans of Apex or Holdco in which
the Employee is a participant to the full extent of the Employee's rights
under such plans (including having the vesting of any awards granted to the
Employee under any Apex or Holdco stock option plans fully accelerated),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, with the exception of medical and dental benefits which shall
continue through the expiration of this Agreement, but the Employee shall not
be paid any other compensation or reimbursement of any kind, including
without limitation, severance compensation.
2.6 TERMINATION BY REASON OF DEATH. In the event of the
Employee's death during the term of this Agreement, the Employee's employment
shall be deemed to have terminated as of the last day of the month during
which his death occurs and the Employer shall pay to his estate or such
beneficiaries as the Employee may from time to time designate all accrued
salary, bonus compensation to the extent earned, vested deferred
compensation, if any (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits
under any plans of Apex or Holdco in which the Employee is a participant to
the full extent of the Employee's rights under such plans (including having
the vesting of any awards granted to the Employee under any Apex or Holdco
stock option plans fully accelerated), accrued vacation pay and any
appropriate business expenses incurred by the Employee in connection with his
duties hereunder, all to the date of termination, but the Employee's estate
shall not be paid any other compensation or reimbursement of any kind,
including without limitation, severance compensation.
2.7 VOLUNTARY TERMINATION. Notwithstanding anything else in
this Agreement, the Employee may effect a Voluntary Termination at any time
upon giving thirty (30) days written notice to the Employer of such
termination. In the event of a Voluntary Termination, the Employer shall
immediately pay all accrued salary, bonus compensation to the extent earned,
vested deferred compensation, if any (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of Apex or Holdco in which the Employee
is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, but no other compensation or reimbursement of any kind,
including without limitation, severance compensation.
2.8 TERMINATION UPON A CHANGE IN CONTROL. In the event of a
Termination Upon a Change in Control, the Employee shall immediately be paid
all accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits
under any plans of Apex or Holdco in which the Employee is a participant to
the full extent of the Employee's rights under such plans (including having
the vesting of any awards granted to the Employee under any Apex or Holdco
stock option plans fully accelerated), accrued vacation pay and any
appropriate business expenses incurred by the Employee in connection with his
duties hereunder, all to the date of termination, and all severance
compensation provided in Section 4.1, but no other compensation or
reimbursement of any kind.
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3. SALARY, BENEFITS AND BONUS COMPENSATION.
3.1 BASE SALARY. As payment for the services to be rendered by
the Employee as provided in Section 1 and subject to the terms and conditions
of Section 2, the Employer agrees to pay to the Employee a "Base Salary" at
the rate of $245,000.00 per annum, payable in equal bi-weekly installments.
The Base Salary for each calendar year (or proration thereof) beginning
January 1, 2001 shall be determined by the Board of Directors of Holdco upon
a recommendation from the Compensation Committee of Holdco (the "Compensation
Committee"), which shall authorize an increase in the Employee's Base Salary
in an amount which, at a minimum, shall be equal to the cumulative
cost-of-living increment on the Base Salary as reported in the "Consumer
Price Index, Seattle, Washington, All Items," published by the U.S.
Department of Labor (using January 1, 1999, as the base date for
computation). The Employee's Base Salary shall be reviewed annually by the
Board of Directors and the Compensation Committee of Holdco.
3.2 BONUSES. The Employee shall be eligible to receive a bonus
for each calendar year (or portion thereof) during the term of this Agreement
and any extensions thereof, with the actual amount of any such bonus to be
determined in the sole discretion of the Board of Directors of Holdco based
upon its evaluation of the Employee's performance during such year. All such
bonuses shall be payable during the last month of the fiscal year or within
forty-five (45) days after the end of the fiscal year to which such bonus
relates. All such bonuses shall be reviewed annually by the Compensation
Committee of Holdco.
3.3 ADDITIONAL BENEFITS. During the term of this Agreement,
the Employee shall be entitled to the following fringe benefits:
(a) THE EMPLOYEE BENEFITS. The Employee shall be eligible
to participate in such of Apex's or Holdco's benefits and deferred
compensation plans as are now generally available or later made generally
available to executive officers of Apex, Cybex, or Holdco, including, without
limitation, stock option plans, Section 401(k) plan, profit sharing plans,
annual physical examinations, dental and medical plans, personal catastrophe
and disability insurance, retirement plans and supplementary executive
retirement plans, if any. For purposes of establishing the length of service
under any benefit plans or programs of Apex, Cybex, or Holdco, the Employee's
employment with the Employer (or any successor) will be deemed to have
commenced on the date that Employee first commenced employment with Apex,
which was January 18, 1999.
(b) VACATION. The Employee shall be entitled to vacation
in accordance with the Employer's vacation policy but in no event less than
three weeks during each year of this Agreement.
(c) LIFE INSURANCE. For the term of this Agreement and
any extensions thereof, the Employer shall at its expense procure and keep in
effect term life insurance on the life of the Employee, payable to such
beneficiaries as the Employee may from time to time designate, in an
aggregate amount equal to the lesser of (i) three times the Employee's Base
Salary or
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(ii) $500,000. Such policy shall be owned by the Employee or by any person or
entity with an insurable interest in the life of the Employee.
(d) REIMBURSEMENT FOR EXPENSES. During the term of this
Agreement, the Employer shall reimburse the Employee for reasonable and
properly documented out-of-pocket business and/or entertainment expenses
incurred by the Employee in connection with his duties under this Agreement.
4. SEVERANCE COMPENSATION.
4.1 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION UPON
A CHANGE IN CONTROL. In the event the Employee's employment is terminated in
a Termination Upon a Change in Control, the Employee shall be paid as
severance compensation his Base Salary (at the rate payable at the time of
such termination) for a period of 12 months from the date of termination of
this Agreement, on the dates specified in Section 3.1, and an amount equal to
the average annual bonus earned by the Employee in the two (2) years
immediately preceding the date of termination. Notwithstanding anything in
this Section 4.1 to the contrary, the Employee may in the Employee's sole
discretion, by delivery of a notice to the Employer within thirty (30) days
following a Termination Upon a Change in Control, elect to receive from the
Employer a lump sum severance payment by bank cashier's check equal to the
present value of the flow of cash payments that would otherwise be paid to
the Employee pursuant to this Section 4.1. Such present value shall be
determined as of the date of delivery of the notice of election by the
Employee and shall be based on a discount rate equal to the interest rate of
90-day U.S. Treasury bills, as reported in THE WALL STREET JOURNAL (or
similar publication), on the date of delivery of the election notice. If the
Employee elects to receive a lump sum severance payment, the Employer shall
make such payment to the Employee within ten (10) days following the date on
which the Employee notifies the Employer of the Employee's election. The
Employee shall also be entitled to have the vesting of any awards granted to
the Employee under any Apex or Holdco stock option plans fully accelerated.
The Employee shall be provided with medical plan benefits under any health
plans of Apex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans for a period of 12
months from the date of termination of this Agreement; provided, however,
that the benefits under any such plans of Apex or Holdco in which the
Employee is a participant, including any such perquisites, shall cease upon
employment by a new employer.
4.2 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION OTHER
THAN FOR CAUSE. In the event the Employee's employment is terminated in a
Termination Other Than for Cause, the Employee shall be paid as severance
compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 12 months from the date of such termination, on
the dates specified in Section 3.1, and an amount equal to the average annual
bonus earned by the Employee in the two (2) years immediately preceding the
date of termination. Notwithstanding anything in this Section 4.2 to the
contrary, the Employee may in the Employee's sole discretion, by delivery of
a notice to the Employer within thirty (30) days following a Termination
Other Than for Cause, elect to receive from the Employer a lump sum severance
payment by bank cashier's check equal to the present value of the flow of
cash payments that would otherwise be paid to the Employee pursuant to this
Section 4.2. Such present value shall be
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determined as of the date of delivery of the notice of election by the
Employee and shall be based on a discount rate equal to the interest rate on
90-day U.S. Treasury bills, as reported in THE WALL STREET JOURNAL (or
similar publication), on the date of delivery of the election notice. If the
Employee elects to receive a lump sum severance payment, the Employer shall
make such payment to the Employee within ten (10) days following the date on
which the Employee notifies the Employer of the Employee's election. The
Employee shall also be entitled to have the vesting of any awards granted to
the Employee under any Apex or Holdco stock option plans fully accelerated.
4.3 NO SEVERANCE COMPENSATION UNDER OTHER TERMINATION. In the
event of a Voluntary Termination, Termination For Cause, termination by
reason of the Employee's disability pursuant to Section 2.5, or termination
by reason of the Employee's death pursuant to Section 2.6, the Employee or
his estate shall not be paid any severance compensation.
5. NON-COMPETITION OBLIGATIONS. Unless waived or reduced by the
Employer or Holdco, during the term of this Agreement and for a period of 12
months thereafter, the Employee will not, without the Employer's prior
written consent, directly or indirectly, alone or as a partner, joint
venturer, officer, director, employee, consultant, agent, independent
contractor or stockholder of any company or business, engage in any business
activity in the United States, Canada, or Europe which is substantially
similar to or in direct competition with any of the business activities of or
services provided by the Employer at such time (a "Competing Business").
Notwithstanding the foregoing, (i) the ownership by the Employee of not more
than five percent (5%) of the shares of stock of any corporation having a
class of equity securities actively traded on a national securities exchange
or on The Nasdaq Stock Market shall not be deemed, in and of itself, to
violate the prohibitions of this Section 5, and (ii) the Employee's
performance of services in any capacity for any consulting firm, public
accounting firm, or law firm that has as a client any company or business
that is a Competing Business shall not violate the prohibitions of this
Section 5 so long as the Employee does not perform any services directly for
such Competing Business.
6. MISCELLANEOUS.
6.1 PAYMENT OBLIGATIONS. If litigation after a Change in
Control shall be brought to enforce or interpret any provision contained
herein, the Employer, to the extent permitted by applicable law and the
Employer's and Holdco's Articles of Incorporation and Bylaws, hereby
indemnifies the Employee for the Employee's reasonable attorneys' fees and
disbursements incurred in such litigation.
6.2 GUARANTEE. Immediately following the closing of the Apex
Merger, Apex shall obtain from Holdco Holdco's unconditional and irrevocable
guarantee of the payment obligations of the Employer under this Agreement,
including, without limitation, the Employer's obligations under Section 6.1
hereof.
6.3 WITHHOLDINGS. All compensation and benefits to the
Employee hereunder shall be reduced by all federal, state, local, and other
withholdings and similar taxes and payments required by applicable law.
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6.4 WAIVER. The waiver of the breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or other provision hereof.
6.5 ENTIRE AGREEMENT; MODIFICATIONS. Except as otherwise
provided herein, this Agreement represents the entire understanding among the
parties with respect to the subject matter hereof, and this Agreement
supersedes any and all prior understandings, agreements, plans and
negotiations, whether written or oral with respect to the subject matter
hereof including without limitation, Section 1 of that certain Proprietary
Information and Non-Competition Agreement dated January 18, 1999, between the
Employee and Apex, which such section shall be of no further force or effect
(although the other sections of such Proprietary Information and
Non-Competition Agreement shall remain in full force and effect), and any
understandings, agreements or obligations respecting any past or future
compensation, bonuses, reimbursements or other payments to the Employee from
the Employer. All modifications to the Agreement must be in writing and
signed by the party against whom enforcement of such modification is sought.
6.6 NOTICES. All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery or
first class mail, certified or registered with return receipt requested, and
shall be deemed to have been duly given upon hand delivery to an officer of
the Employer or the Employee, as the case may be, or upon three (3) days
after mailing to the respective persons named below:
If to the Employer/Apex: Apex Inc.
9911 Willows Road NE
Redmond, WA 98052-2531
Attn: Chief Operating Officer
With copy to: General Counsel
Fax: 425-497-5597
If to the Employee: Barry L. Harmon
-----------------------------
-----------------------------
Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.6.
6.7 HEADINGS. The Section headings herein are intended
for reference and shall not by themselves determine the construction or
interpretation of this Agreement.
6.8 GOVERNING LAW; VENUE. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Washington. The Employee and the Employer each hereby expressly consents to
the exclusive venue of the state and federal courts located in Seattle, King
County, Washington, for any lawsuit arising from or relating to this
Agreement.
6.9 ARBITRATION. Any controversy or claim arising out of
or relating to this Agreement, or breach thereof, shall be settled by
arbitration in Seattle, Washington, in accordance
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with the Rules of the American Arbitration Association, and judgment upon any
proper award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. There shall be three (3) arbitrators, one (1) to be
chosen directly by each party at will, and the third arbitrator to be
selected by the two (2) arbitrators so chosen. To the extent permitted by the
Rules of the American Arbitration Association, the selected arbitrators may
grant equitable relief. Each party shall pay the fees of the arbitrator
selected by him and of his own attorneys, and the expenses of his witnesses
and all other expenses connected with the presentation of his case. The cost
of the arbitration including the cost of the record or transcripts thereof,
if any, administrative fees, and all other fees and costs shall be borne
equally by the parties.
6.10 SEVERABILITY. If a court or other body of competent
jurisdiction determines that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other provisions of this Agreement
shall be deemed valid and enforceable to the extent possible.
6.11 SURVIVAL OF EMPLOYER'S OBLIGATIONS. The Employer's
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to
the Employer or Holdco. This Agreement shall not be terminated by any merger
or consolidation or other reorganization of the Employer or Holdco. In the
event any such merger, consolidation or reorganization shall be accomplished
by transfer of stock or by transfer of assets or otherwise, the provisions of
this Agreement shall be binding upon and inure to the benefit of the
surviving or resulting corporation or person. This Agreement shall be binding
upon and inure to the benefit of the executors, administrators, heirs,
successors and assigns of the parties; provided, however, that except as
herein expressly provided, this Agreement shall not be assignable either by
the Employer (except to an affiliate of the Employer (including Holdco) in
which event the Employer shall remain liable if the affiliate fails to meet
any obligations to make payments or provide benefits or otherwise) or by the
Employee.
6.12 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which taken together shall constitute one and
the same Agreement.
6.13 INDEMNIFICATION. In addition to any rights to
indemnification to which the Employee is entitled to under the Employer's
Articles of Incorporation and Bylaws, the Employer shall indemnify the
Employee at all times during and after the term of this Agreement to the
maximum extent permitted under the corporation laws of the State of
Washington and any other applicable state law, and shall pay the Employee's
expenses in defending any civil or criminal action, suit, or proceeding in
advance of the final disposition of such action, suit, or proceeding, to the
maximum extent permitted under such applicable state laws.
6.14 AMENDMENT OF STOCK OPTION LETTER AGREEMENTS.
(a) ACCELERATED VESTING. The parties agree that,
effective immediately prior to the closing of the Apex Merger described in
the Reorganization Agreement, Section 6 of that certain Nonstatutory Stock
Option Letter Agreement dated March 12, 1999,
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between the Employer and the Employee is hereby amended by deleting the
existing language and substituting therefor the following new language:
6. VESTING. Your option shall vest and become
exercisable in full immediately prior to the closing of
the Apex Merger described in that certain Agreement and
Plan of Reorganization dated March 7, 2000, by and among
the Company, Cybex, and Holdco. Specifically, immediately
prior to the closing of the Apex Merger (as defined in
such Agreement and Plan of Reorganization), your entire
option grant (all 75,000 shares) will become fully vested
and immediately available for exercise. You may exercise
your option on vested option shares; however, you may only
exercise your option for whole shares.
(b) REMAINING TERMS UNCHANGED. Except as
specifically set forth in this Section 6.14, the remaining terms and
conditions of the Nonqualified Stock Option Letter Agreements dated March 12,
1999, shall remain unchanged and in full force and effect.
6.15 INDEMNIFCATION FOR SECTION 4999 EXCISE TAXES. In the
event that it shall be determined that any payment or other benefit paid by
the Employer or Holdco to or for the benefit of the Employee under this
Employment Agreement or otherwise, but determined without regard to any
additional payments required under this Amendment (the "Payments") would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code (the "Excise Tax"), then the Employer shall indemnify the Employee for
such Excise Tax in accordance with the following:
(a) The Employee shall be entitled to receive an
additional payment from the Employer equal to (i) one hundred percent
(100%) of any Excise Tax actually paid or finally or payable by the
Employee in connection with the Payments, plus (ii) an additional
payment in such amount that after all taxes, interest and penalties
incurred in connection with all payments under this Section 2(a), the
Employee retains an amount equal to one hundred percent (100%) of the
Excise Tax.
(b) All determinations required to be made under this
Section shall be made by the Employer's primary independent public
accounting firm, or any other nationally recognized accounting firm
reasonably acceptable to the Employer and the Employee (the "Accounting
Firm"). The Employer shall cause the Accounting Firm to provide
detailed supporting calculations of its determinations to the Employer
and the Employee. All fees and expenses of the Accounting Firm shall be
borne solely by the Employer. For purposes of making the calculations
required by this Section, the Accounting Firm may make reasonable
assumptions and approximations concerning applicable taxes and may rely
on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Internal Revenue Code, provided the
Accounting Firm's determinations must be made with substantial
authority (within the meaning of Section 6662 of the Internal Revenue
Code). The payments to which the Employee is entitled pursuant to this
Section shall be paid by the Employer to the Employee in cash and in
full not later than thirty (30) calendar days following the date the
Employee becomes subject to the Excise Tax.
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The indemnification in this Section 6.15 shall apply to any Payment resulting
from the amendment of the Nonqualified Stock Option Letter Agreement and the
acceleration of Employee's options described in Section 6.14, but Employee shall
not be entitled to indemnification under this Section 6.15 for other Payments
that result solely from any other acceleration of Employee's options in the
event Employee's terminates his employment in a Termination Upon a Change in
Control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
APEX INC.
By:
---------------------------------------
Its: President and Chief Executive Officer
BARRY L. HARMON:
------------------------------------------
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EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement") is dated
this 7th day of March, 2000, by and between Apex Inc., a Washington corporation
("Apex" or the "Employer"), and C. David Perry (the "Employee").
RECITALS
WHEREAS, Apex is engaged in the business of designing, manufacturing,
and selling stand-alone console/KVM switching systems, console/KVM remote access
products, and integrated server cabinet solutions for the client/server
computing market; and
WHEREAS, Apex desires to employ the Employee and the Employee is
willing to accept such employment by Apex on the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, on the date of this Agreement, Apex, Cybex Computer Products
Corporation, an Alabama corporation, and Aegean Sea Inc., a Delaware corporation
("Holdco"), are entering into an Agreement and Plan of Reorganization dated
March 7, 2000 (the "Reorganization Agreement"). Pursuant to the Reorganization
Agreement, (i) Apex Sub, Inc., a Washington corporation and a wholly-owned
subsidiary of Holdco, will merge with and into Apex (the "Apex Merger"), and
upon the Apex Merger, Apex will become a wholly-owned subsidiary of Holdco, and
(ii) Cybex Sub, Inc., an Alabama corporation and a wholly-owned subsidiary of
Holdco will merge with and into Cybex (the "Cybex Merger"), and upon the Cybex
Merger, Cybex will also become a wholly-owned subsidiary of Holdco.
AGREEMENT
THE PARTIES HERETO AGREE AS FOLLOWS:
1. DUTIES. During the term of this Agreement, the Employee agrees
to be employed by Apex and to serve Holdco and Apex as their Vice President -
OEM Sales. The Employee shall devote such of his business time, energy, and
skill to the affairs of Holdco and Apex as shall be necessary to perform the
duties of the Vice President - OEM Sales of Holdco and Apex. The Employee
shall report to the Senior Vice President - Sales and Marketing, and at all
times during the term of this Agreement, the Employee shall have powers and
duties at least commensurate with his position as Vice President - OEM Sales.
The Employee's principal place of business with respect to his services to
Holdco and Apex shall be within the vicinity of the city of Redmond,
Washington or within Texas as selected by Employee. The Employee shall
function as Holdco's principal sales representative managing and coordinating
OEM accounts, sales, and relationships. Employee will work with key managers
and individuals in Holdco's sales and marketing departments on sales and
marketing activities.
<PAGE>
2. TERM OF EMPLOYMENT.
2.1 DEFINITIONS. For purposes of this Agreement the following
terms shall have the following meanings:
(a) "TERMINATION FOR CAUSE" shall mean termination by the
Employer of the Employee's employment by the Employer by reason of the
Employee's willful dishonesty towards, fraud upon, or deliberate injury or
attempted injury to, the Employer or by reason of the Employee's willful
material breach of this Agreement which has resulted in material injury to
the Employer.
(b) "TERMINATIONS OTHER THAN FOR CAUSE" shall mean
termination by the Employer of the Employee's employment by the Employer
(other than in a Termination for Cause) and shall include (i) constructive
termination of the Employee's employment by reason of material breach of this
Agreement by the Employer, such constructive termination to be effective upon
thirty (30) days written notice from the Employee to the Employer of such
constructive termination and (ii) any attempt to relocate outside of the
vicinity of Redmond, Washington or within Texas as selected by Employee: (x)
the Employee, (y) the Employee's duties and responsibilities, or (z) the
Employer's office at which Employee is employed. Notwithstanding the
foregoing, Employee agrees that a change in his duties and responsibilities
shall not result in a constructive termination under this Section 2.1(b)
unless such change results in a substantial diminution of Employee's duties
and responsibilities.
(c) "VOLUNTARY TERMINATION" shall mean termination by the
Employee of the Employee's employment by the Employer other than (i)
constructive termination as described in subsection 2.1(b), (ii) "Termination
Upon a Change in Control" as described in Section 2.1(e), and (iii)
termination by reason of the Employee's disability or death as described in
Sections 2.5 and 2.6.
(d) "TERMINATION UPON A CHANGE IN CONTROL" shall mean a
termination by the Employee of the Employee's employment with the Employer or
services to Apex or Holdco following a "Change in Control" other than any
"Change in Control" contemplated by or described in the Reorganization
Agreement and/or resulting from the closing of the transactions described in
the Reorganization Agreement including, without limitation, the Cybex Merger,
the Apex Merger, and the Merger (as such terms are defined in the
Reorganization Agreement).
(e) "CHANGE IN CONTROL" shall mean any one of the
following events:
(i) Any person (other than Holdco) acquires
beneficial ownership of Apex's or Holdco's securities and is or thereby
becomes a beneficial owner of securities entitling such person to exercise
twenty-five percent (25%) or more of the combined voting power of Apex's or
Holdco's then outstanding stock. For purposes of this Agreement, "beneficial
ownership" shall be determined in accordance with Regulation 13D under the
Securities Exchange Act of 1934, or any similar successor regulation or rule;
and the term "person" shall include any natural person, corporation,
partnership, trust or association, or any group or combination thereof, whose
ownership
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of Apex's or Holdco's securities would be required to be reported under such
Regulation 13D, or any similar successor regulation or rule.
(ii) Within any twenty-four (24) month period,
individuals who were Directors of Apex or Holdco at the beginning of such
period, together with any other Directors first elected as directors of Apex
or Holdco pursuant to nominations approved or ratified by at least two-thirds
(2/3) of the Directors in office immediately prior to such respective
elections, cease to constitute a majority of the Board of Directors of Holdco.
(iii) Holdco's stockholders approve:
(1) any consolidation or merger of Holdco in
which Holdco is not the continuing or surviving corporation or pursuant to
which shares of Holdco common stock would be converted into cash, securities
or other property, other than a merger or consolidation of Holdco in which
the holders of Holdco's common stock immediately prior to the merger or
consolidation have substantially the same proportionate ownership and voting
control of the surviving corporation immediately after the merger or
consolidation; or
(2) any sale, lease, exchange, liquidation or
other transfer (in one transaction or a series of transactions) of all or
substantially all of the assets of Holdco.
Notwithstanding subparagraphs (e)(iii)(1) and (e)(iii)(2) above, the term
"Change in Control" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the
outstanding voting stock of Holdco is owned, directly or indirectly, by a
holding company, and the holders of Holdco's common stock immediately prior
to the transaction have substantially the same proportionate ownership and
voting control of such holding company after such transaction.
(iv) Apex's stockholders approve:
(1) any consolidation or merger of Apex in
which Apex is not the continuing or surviving corporation or pursuant to
which shares of Apex common stock would be converted into cash, securities or
other property, other than a merger or consolidation of Apex in which the
holders of Apex's common stock immediately prior to the merger or
consolidation have substantially the same proportionate ownership and voting
control of the surviving corporation immediately after the merger or
consolidation; or
(2) any sale, lease, exchange, liquidation or
other transfer (in one transaction or a series of transactions) of all or
substantially all of the assets of Apex or Holdco.
Notwithstanding subparagraphs (e)(iv)(1) and (e)(iv)(2) above, the term
"Change in Control" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the
outstanding voting stock of Apex is owned, directly or indirectly, by a
holding company, and the holders of Apex's common stock immediately prior to
the transaction have substantially the same proportionate ownership and
voting control of such holding company after such transaction.
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2.2 BASIC TERM. The term of employment of the Employee by
the Employer shall be for the period beginning immediately prior to the
closing of the Apex Merger described in the Reorganization Agreement and
ending on March 31, 2004, unless terminated earlier pursuant to this Section
2. At any time before March 31, 2004, the Employer and the Employee may by
mutual written agreement extend the Employee's employment under the terms of
this Agreement for such additional periods as they may agree.
2.3 TERMINATION FOR CAUSE. Termination For Cause may be
effected by the Employer at any time during the term of this Agreement and
shall be effected by thirty (30) days written notification to the Employee
from the Board of Directors of Holdco stating the reason for termination.
Upon Termination For Cause, the Employee immediately shall be paid all
accrued salary, vested deferred compensation, if any (other than pension plan
or profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Apex or Holdco in which the
Employee is a participant to the full extent of the Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses
incurred by the Employee in connection with his duties hereunder, all to the
date of termination, but the Employee shall not be paid any other
compensation or reimbursement of any kind, including without limitation,
severance compensation.
2.4 TERMINATION OTHER THAN FOR CAUSE. Notwithstanding
anything else in this Agreement, the Employer may effect a Termination Other
Than For Cause at any time upon giving thirty (30) days written notice to the
Employee of such termination. Upon any Termination Other Than For Cause, the
Employee shall immediately be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation, if any (other than pension
plan or profit sharing plan benefits which will be paid in accordance with
the applicable plan), any benefits under any plans of Apex or Holdco in which
the Employee is a participant to the full extent of the Employee's rights
under such plans, accrued vacation pay and any appropriate business expenses
incurred by the Employee in connection with his duties hereunder, all to the
date of termination, and all severance compensation provided in Section 4.2,
but no other compensation or reimbursement of any kind.
2.5 TERMINATION BY REASON OF DISABILITY. If, during the
term of this Agreement, the Employee, in the reasonable judgment of the Board
of Directors of Holdco, has failed to perform his duties under this Agreement
on account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than six (6) consecutive months,
the Employer shall have the right to terminate the Employee's employment
hereunder by delivery of written notice to the Employee at any time after
such six month period and payment to the Employee of all accrued salary,
bonus compensation in an amount equal to the average annual bonus earned by
the Employee in the two (2) years immediately preceding the date of
termination, vested deferred compensation, if any (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Apex or Holdco in which the
Employee is a participant to the full extent of the Employee's rights under
such plans (including having the vesting of any awards granted to the
Employee under any Apex or Holdco stock option plans fully accelerated),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, with the exception of medical and dental benefits which shall
continue through the expiration of this
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Agreement, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance
compensation.
2.6 TERMINATION BY REASON OF DEATH. In the event of the
Employee's death during the term of this Agreement, the Employee's employment
shall be deemed to have terminated as of the last day of the month during
which his death occurs and the Employer shall pay to his estate or such
beneficiaries as the Employee may from time to time designate all accrued
salary, bonus compensation to the extent earned, vested deferred
compensation, if any (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits
under any plans of Apex or Holdco in which the Employee is a participant to
the full extent of the Employee's rights under such plans (including having
the vesting of any awards granted to the Employee under any Apex or Holdco
stock option plans fully accelerated), accrued vacation pay and any
appropriate business expenses incurred by the Employee in connection with his
duties hereunder, all to the date of termination, but the Employee's estate
shall not be paid any other compensation or reimbursement of any kind,
including without limitation, severance compensation.
2.7 VOLUNTARY TERMINATION. Notwithstanding anything else
in this Agreement, the Employee may effect a Voluntary Termination at any
time upon giving thirty (30) days written notice to the Employer of such
termination. In the event of a Voluntary Termination, the Employer shall
immediately pay all accrued salary, bonus compensation to the extent earned,
vested deferred compensation, if any (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of Apex or Holdco in which the Employee
is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, but no other compensation or reimbursement of any kind,
including without limitation, severance compensation.
2.8 TERMINATION UPON A CHANGE IN CONTROL. In the event of
a Termination Upon a Change in Control, the Employee shall immediately be
paid all accrued salary, bonus compensation to the extent earned, vested
deferred compensation, if any (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of Apex or Holdco in which the Employee is a
participant to the full extent of the Employee's rights under such plans
(including having the vesting of any awards granted to the Employee under any
Apex or Holdco stock option plans fully accelerated), accrued vacation pay
and any appropriate business expenses incurred by the Employee in connection
with his duties hereunder, all to the date of termination, and all severance
compensation provided in Section 4.1, but no other compensation or
reimbursement of any kind.
3. SALARY, BENEFITS AND BONUS COMPENSATION.
3.1 BASE SALARY. As payment for the services to be rendered by
the Employee as provided in Section 1 and subject to the terms and conditions
of Section 2, the Employer agrees to pay to the Employee a "Base Salary" at
the rate of $180,000 per annum, payable in equal bi-weekly installments. The
Base Salary for each calendar year (or proration thereof) beginning January
1, 2001 shall be determined by the Board of Directors of Holdco upon a
recommendation from the Compensation Committee of Holdco (the "Compensation
Committee"),
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which shall authorize an increase in the Employee's Base Salary in an amount
which, at a minimum, shall be equal to the cumulative cost-of-living
increment on the Base Salary as reported in the "Consumer Price Index,
Seattle, Washington, All Items," published by the U.S. Department of Labor
(using January 1, 1999, as the base date for computation). The Employee's
Base Salary shall be reviewed annually by the Board of Directors and the
Compensation Committee of Holdco.
3.2 BONUSES. The Employee shall be eligible to receive a
bonus for each calendar year (or portion thereof) during the term of this
Agreement and any extensions thereof, with the actual amount of any such
bonus to be determined in the sole discretion of the Board of Directors of
Holdco based upon its evaluation of the Employee's performance during such
year. All such bonuses shall be payable during the last month of the fiscal
year or within forty-five (45) days after the end of the fiscal year to which
such bonus relates. All such bonuses shall be reviewed annually by the
Compensation Committee of Holdco.
3.3 ADDITIONAL BENEFITS. During the term of this
Agreement, the Employee shall be entitled to the following fringe benefits:
(a) THE EMPLOYEE BENEFITS. The Employee shall be
eligible to participate in such of Apex's or Holdco's benefits and deferred
compensation plans as are now generally available or later made generally
available to executive officers of Apex, Cybex, or Holdco, including, without
limitation, stock option plans, Section 401(k) plan, profit sharing plans,
annual physical examinations, dental and medical plans, personal catastrophe
and disability insurance, retirement plans and supplementary executive
retirement plans, if any. For purposes of establishing the length of service
under any benefit plans or programs of Apex, Cybex, or Holdco, the Employee's
employment with the Employer (or any successor) will be deemed to have
commenced on the date that Employee first commenced employment with Apex,
which was November 16, 1998.
(b) VACATION. The Employee shall be entitled to
vacation in accordance with the Employer's vacation policy but in no event
less than three weeks during each year of this Agreement.
(c) LIFE INSURANCE. For the term of this Agreement
and any extensions thereof, the Employer shall at its expense procure and
keep in effect term life insurance on the life of the Employee, payable to
such beneficiaries as the Employee may from time to time designate, in an
aggregate amount equal to the lesser of (i) three times the Employee's Base
Salary or (ii) $500,000. Such policy shall be owned by the Employee or by any
person or entity with an insurable interest in the life of the Employee.
(d) REIMBURSEMENT FOR EXPENSES. During the term of
this Agreement, the Employer shall reimburse the Employee for reasonable and
properly documented out-of-pocket business and/or entertainment expenses
incurred by the Employee in connection with his duties under this Agreement.
If Employee elects to relocate to the State of Texas, Employer will reimburse
Employee for all reasonable and ordinary moving expense, including closings
costs, household and automobile moving expenses, air transportation for
relocation and house hunting purposes, and miscellaneous out of pocket
relocation expenses.
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4. SEVERANCE COMPENSATION.
4.1 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION UPON
A CHANGE IN CONTROL. In the event the Employee's employment is terminated in
a Termination Upon a Change in Control, the Employee shall be paid as
severance compensation his Base Salary (at the rate payable at the time of
such termination) for a period of 12 months from the date of termination of
this Agreement, on the dates specified in Section 3.1, and an amount equal to
the average annual bonus earned by the Employee in the two (2) years
immediately preceding the date of termination. Notwithstanding anything in
this Section 4.1 to the contrary, the Employee may in the Employee's sole
discretion, by delivery of a notice to the Employer within thirty (30) days
following a Termination Upon a Change in Control, elect to receive from the
Employer a lump sum severance payment by bank cashier's check equal to the
present value of the flow of cash payments that would otherwise be paid to
the Employee pursuant to this Section 4.1. Such present value shall be
determined as of the date of delivery of the notice of election by the
Employee and shall be based on a discount rate equal to the interest rate of
90-day U.S. Treasury bills, as reported in THE WALL STREET JOURNAL (or
similar publication), on the date of delivery of the election notice. If the
Employee elects to receive a lump sum severance payment, the Employer shall
make such payment to the Employee within ten (10) days following the date on
which the Employee notifies the Employer of the Employee's election. The
Employee shall also be entitled to have the vesting of any awards granted to
the Employee under any Apex or Holdco stock option plans fully accelerated.
The Employee shall be provided with medical plan benefits under any health
plans of Apex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans for a period of 12
months from the date of termination of this Agreement; provided, however,
that the benefits under any such plans of Apex or Holdco in which the
Employee is a participant, including any such perquisites, shall cease upon
employment by a new employer.
4.2 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION OTHER
THAN FOR CAUSE. In the event the Employee's employment is terminated in a
Termination Other Than for Cause, the Employee shall be paid as severance
compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 12 months from the date of such termination, on
the dates specified in Section 3.1, and an amount equal to the average annual
bonus earned by the Employee in the two (2) years immediately preceding the
date of termination. Notwithstanding anything in this Section 4.2 to the
contrary, the Employee may in the Employee's sole discretion, by delivery of
a notice to the Employer within thirty (30) days following a Termination
Other Than for Cause, elect to receive from the Employer a lump sum severance
payment by bank cashier's check equal to the present value of the flow of
cash payments that would otherwise be paid to the Employee pursuant to this
Section 4.2. Such present value shall be determined as of the date of
delivery of the notice of election by the Employee and shall be based on a
discount rate equal to the interest rate on 90-day U.S. Treasury bills, as
reported in THE WALL STREET JOURNAL (or similar publication), on the date of
delivery of the election notice. If the Employee elects to receive a lump sum
severance payment, the Employer shall make such payment to the Employee
within ten (10) days following the date on which the Employee notifies the
Employer of the Employee's election. The Employee shall also be entitled to
have the vesting of any awards granted to the Employee under any Apex or
Holdco stock option plans fully accelerated.
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4.3 NO SEVERANCE COMPENSATION UNDER OTHER TERMINATION. In the
event of a Voluntary Termination, Termination For Cause, termination by
reason of the Employee's disability pursuant to Section 2.5, or termination
by reason of the Employee's death pursuant to Section 2.6, the Employee or
his estate shall not be paid any severance compensation.
5. NON-COMPETITION OBLIGATIONS. Unless waived or reduced by the
Employer or Holdco, during the term of this Agreement and for a period of 12
months thereafter, the Employee will not, without the Employer's prior
written consent, directly or indirectly, alone or as a partner, joint
venturer, officer, director, employee, consultant, agent, independent
contractor or stockholder of any company or business, engage in any business
activity in the United States, Canada, or Europe which is substantially
similar to or in direct competition with any of the business activities of or
services provided by the Employer at such time (a "Competing Business").
Notwithstanding the foregoing, (i) the ownership by the Employee of not more
than five percent (5%) of the shares of stock of any corporation having a
class of equity securities actively traded on a national securities exchange
or on The Nasdaq Stock Market shall not be deemed, in and of itself, to
violate the prohibitions of this Section 5, and (ii) the Employee's
performance of services in any capacity for any consulting firm, public
accounting firm, or law firm that has as a client any company or business
that is a Competing Business shall not violate the prohibitions of this
Section 5 so long as the Employee does not perform any services directly for
such Competing Business.
6. MISCELLANEOUS.
6.1 PAYMENT OBLIGATIONS. If litigation after a Change in
Control shall be brought to enforce or interpret any provision contained
herein, the Employer, to the extent permitted by applicable law and the
Employer's and Holdco's Articles of Incorporation and Bylaws, hereby
indemnifies the Employee for the Employee's reasonable attorneys' fees and
disbursements incurred in such litigation.
6.2 GUARANTEE. Immediately following the closing of the Apex
Merger, Apex shall obtain from Holdco Holdco's unconditional and irrevocable
guarantee of the payment obligations of the Employer under this Agreement,
including, without limitation, the Employer's obligations under Section 6.1
hereof.
6.3 WITHHOLDINGS. All compensation and benefits to the
Employee hereunder shall be reduced by all federal, state, local, and other
withholdings and similar taxes and payments required by applicable law.
6.4 WAIVER. The waiver of the breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or other provision hereof.
6.5 ENTIRE AGREEMENT; MODIFICATIONS. Except as otherwise
provided herein, this Agreement represents the entire understanding among the
parties with respect to the subject matter hereof, and this Agreement
supersedes any and all prior understandings, agreements, plans and
negotiations, whether written or oral with respect to the subject matter
hereof including without limitation, Section 1 of that certain Proprietary
Information and Non-Competition
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Agreement dated November 18, 1998, between the Employee and Apex, which such
section shall be of no further force or effect (although the other sections
of such Proprietary Information and Non-Competition Agreement shall remain in
full force and effect), and any understandings, agreements or obligations
respecting any past or future compensation, bonuses, reimbursements or other
payments to the Employee from the Employer. All modifications to the
Agreement must be in writing and signed by the party against whom enforcement
of such modification is sought.
6.6 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery or first
class mail, certified or registered with return receipt requested, and shall
be deemed to have been duly given upon hand delivery to an officer of the
Employer or the Employee, as the case may be, or upon three (3) days after
mailing to the respective persons named below:
If to the Employer/Apex: Apex Inc.
9911 Willows Road NE
Redmond, WA 98052-2531
Attn: Chief Operating Officer
With copy to: General Counsel
Fax: 425-497-5597
If to the Employee: C. David Perry
---------------------------------
---------------------------------
Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.6.
6.7 HEADINGS. The Section headings herein are intended for
reference and shall not by themselves determine the construction or
interpretation of this Agreement.
6.8 GOVERNING LAW; VENUE. This Agreement shall be governed by
and construed in accordance with the laws of the State of Washington (or , if
Employee selects Texas as his place of employment, the laws of the State of
Texas). The Employee and the Employer each hereby expressly consents to the
exclusive venue of the state and federal courts located in Seattle, King
County, Washington (or, if Employee selects Texas as his place of employment,
state and federal courts in Texas) for any lawsuit arising from or relating
to this Agreement.
6.9 ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or breach thereof, shall be settled by
arbitration in Seattle, Washington (or , if Employee selects Texas as his
place of employment, in Texas) , in accordance with the Rules of the American
Arbitration Association, and judgment upon any proper award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. There
shall be three (3) arbitrators, one (1) to be chosen directly by each party
at will, and the third arbitrator to be selected by the two (2) arbitrators
so chosen. To the extent permitted by the Rules of the American Arbitration
Association, the selected arbitrators may grant equitable relief. Each party
shall pay the fees of the arbitrator selected by him and of his own
attorneys, and the expenses of his witnesses and all other expenses connected
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with the presentation of his case. The cost of the arbitration including the
cost of the record or transcripts thereof, if any, administrative fees, and
all other fees and costs shall be borne equally by the parties.
6.10 SEVERABILITY. If a court or other body of competent
jurisdiction determines that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other provisions of this Agreement
shall be deemed valid and enforceable to the extent possible.
6.11 SURVIVAL OF EMPLOYER'S OBLIGATIONS. The Employer's
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to the
Employer or Holdco. This Agreement shall not be terminated by any merger or
consolidation or other reorganization of the Employer or Holdco. In the event
any such merger, consolidation or reorganization shall be accomplished by
transfer of stock or by transfer of assets or otherwise, the provisions of this
Agreement shall be binding upon and inure to the benefit of the surviving or
resulting corporation or person. This Agreement shall be binding upon and inure
to the benefit of the executors, administrators, heirs, successors and assigns
of the parties; provided, however, that except as herein expressly provided,
this Agreement shall not be assignable either by the Employer (except to an
affiliate of the Employer (including Holdco) in which event the Employer shall
remain liable if the affiliate fails to meet any obligations to make payments or
provide benefits or otherwise) or by the Employee.
6.12 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one and the
same Agreement.
6.13 INDEMNIFICATION. In addition to any rights to
indemnification to which the Employee is entitled to under the Employer's
Articles of Incorporation and Bylaws, the Employer shall indemnify the
Employee at all times during and after the term of this Agreement to the
maximum extent permitted under the corporation laws of the State of
Washington and any other applicable state law, and shall pay the Employee's
expenses in defending any civil or criminal action, suit, or proceeding in
advance of the final disposition of such action, suit, or proceeding, to the
maximum extent permitted under such applicable state laws.
6.14 AMENDMENT OF STOCK OPTION LETTER AGREEMENTS.
(a) ACCELERATED VESTING. The parties agree that,
effective immediately prior to the closing of the Apex Merger described in
the Reorganization Agreement, Section 6 of that certain Nonstatutory Stock
Option Letter Agreement dated March 12, 1999, between the Employer and the
Employee is hereby amended by deleting the existing language and substituting
therefor the following new language:
6. VESTING. Your option shall vest and become
exercisable in full immediately prior to the closing of the
Apex Merger described in that certain Agreement and Plan of
Reorganization dated March 7, 2000, by and among the Company,
Cybex, and Holdco. Specifically, immediately prior to the
closing of the Apex Merger (as defined in such Agreement and
Plan of Reorganization), your entire
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option grant (all 75,000 shares) will become fully vested and
immediately available for exercise. You may exercise your
option on vested option shares; however, you may only exercise
your option for whole shares.
(b) REMAINING TERMS UNCHANGED. Except as
specifically set forth in this Section 6.14, the remaining terms and
conditions of the Nonqualified Stock Option Letter Agreements dated March 12,
1999, shall remain unchanged and in full force and effect.
6.15 INDEMNIFCATION FOR SECTION 4999 EXCISE TAXES. In the event
that it shall be determined that any payment or other benefit paid by the
Employer or Holdco to or for the benefit of the Employee under this
Employment Agreement or otherwise, but determined without regard to any
additional payments required under this Amendment (the "Payments") would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code (the "Excise Tax"), then the Employer shall indemnify the Employee for
such Excise Tax in accordance with the following:
(a) The Employee shall be entitled to receive an
additional payment from the Employer equal to (i) one hundred percent
(100%) of any Excise Tax actually paid or finally or payable by the
Employee in connection with the Payments, plus (ii) an additional
payment in such amount that after all taxes, interest and penalties
incurred in connection with all payments under this Section 2(a), the
Employee retains an amount equal to one hundred percent (100%) of the
Excise Tax.
(b) All determinations required to be made under this
Section shall be made by the Employer's primary independent public
accounting firm, or any other nationally recognized accounting firm
reasonably acceptable to the Employer and the Employee (the "Accounting
Firm"). The Employer shall cause the Accounting Firm to provide
detailed supporting calculations of its determinations to the Employer
and the Employee. All fees and expenses of the Accounting Firm shall be
borne solely by the Employer. For purposes of making the calculations
required by this Section, the Accounting Firm may make reasonable
assumptions and approximations concerning applicable taxes and may rely
on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Internal Revenue Code, provided the
Accounting Firm's determinations must be made with substantial
authority (within the meaning of Section 6662 of the Internal Revenue
Code). The payments to which the Employee is entitled pursuant to this
Section shall be paid by the Employer to the Employee in cash and in
full not later than thirty (30) calendar days following the date the
Employee becomes subject to the Excise Tax.
The indemnification in this Section 6.15 shall apply to any Payment resulting
from the amendment of the Nonqualified Stock Option Letter Agreement and the
acceleration of Employee's options described in Section 6.14, but Employee shall
not be entitled to indemnification under this Section 6.15 for other Payments
that result solely from any other acceleration of Employee's options in the
event Employee's terminates his employment in a Termination Upon a Change in
Control.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
APEX INC.
By:
---------------------------------------
Its: President and Chief Executive Officer
C. DAVID PERRY:
------------------------------------------
<PAGE>
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement") is
dated this 7th day of March, 2000, by and between Apex Inc., a Washington
corporation ("Apex" or the "Employer"), and Samuel F. Saracino (the
"Employee").
RECITALS
WHEREAS, Apex is engaged in the business of designing,
manufacturing, and selling stand-alone console/KVM switching systems,
console/KVM remote access products, and integrated server cabinet solutions
for the client/server computing market; and
WHEREAS, Apex desires to employ the Employee and the Employee is
willing to accept such employment by Apex on the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, on the date of this Agreement, Apex, Cybex Computer
Products Corporation, an Alabama corporation, and Aegean Sea Inc., a Delaware
corporation ("Holdco"), are entering into an Agreement and Plan of
Reorganization dated March 7, 2000 (the "Reorganization Agreement"). Pursuant
to the Reorganization Agreement, (i) Apex Sub, Inc., a Washington corporation
and a wholly-owned subsidiary of Holdco, will merge with and into Apex (the
"Apex Merger"), and upon the Apex Merger, Apex will become a wholly-owned
subsidiary of Holdco, and (ii) Cybex Sub, Inc., an Alabama corporation and a
wholly-owned subsidiary of Holdco will merge with and into Cybex (the "Cybex
Merger"), and upon the Cybex Merger, Cybex will also become a wholly-owned
subsidiary of Holdco.
AGREEMENT
THE PARTIES HERETO AGREE AS FOLLOWS:
1. DUTIES. During the term of this Agreement, the Employee agrees
to be employed by Apex and to serve Holdco and Apex as their Senior Vice
President - Legal and Corporate Affairs, General Counsel, and Secretary. The
Employee shall devote such of his business time, energy, and skill to the
affairs of Holdco and Apex as shall be necessary to perform the duties of the
Senior Vice President - Legal and Corporate Affairs, General Counsel, and
Secretary of Holdco and Apex. The Employee shall report to the Executive Vice
President of Holdco, to the President of Holdco, and to the Board of
Directors of Holdco, and at all times during the term of this Agreement, the
Employee shall have powers and duties at least commensurate with his position
as Senior Vice President - Legal and Corporate Affairs, General Counsel, and
Secretary. The Employee's principal place of business with respect to his
services to Holdco and Apex shall be within the vicinity of the city of
Redmond, Washington. The Employee shall function as the principal legal
officer of Holdco and its affiliates with responsibility for legal and
corporate affairs (including the legal aspects of Holdco's mergers and
acquisitions, business development strategy, intellectual property affairs,
and other legal matters). Employee will work with key managers and
individuals located in Huntsville, Alabama,
<PAGE>
Shannon, Ireland, and Acton, Massachusetts, and work closely with the
Executive Vice President on business development activities.
2. TERM OF EMPLOYMENT.
2.1 DEFINITIONS. For purposes of this Agreement the following
terms shall have the following meanings:
(a) "TERMINATION FOR CAUSE" shall mean termination by the
Employer of the Employee's employment by the Employer by reason of the
Employee's willful dishonesty towards, fraud upon, or deliberate injury or
attempted injury to, the Employer or by reason of the Employee's willful
material breach of this Agreement which has resulted in material injury to
the Employer.
(b) "TERMINATIONS OTHER THAN FOR CAUSE" shall mean
termination by the Employer of the Employee's employment by the Employer
(other than in a Termination for Cause) and shall include (i) constructive
termination of the Employee's employment by reason of material breach of this
Agreement by the Employer, such constructive termination to be effective upon
thirty (30) days written notice from the Employee to the Employer of such
constructive termination and (ii) any attempt to relocate outside of the
vicinity of Redmond, Washington: (x) the Employee, (y) the Employee's duties
and responsibilities, or (z) the Employer's office at which Employee is
employed. Notwithstanding the foregoing, Employee agrees that a change in his
duties and responsibilities shall not result in a constructive termination
under this Section 2.1(b) unless such change results in a substantial
diminution of Employee's duties and responsibilities.
(c) "VOLUNTARY TERMINATION" shall mean termination by the
Employee of the Employee's employment by the Employer other than (i)
constructive termination as described in subsection 2.1(b), (ii) "Termination
Upon a Change in Control" as described in Section 2.1(e), and (iii)
termination by reason of the Employee's disability or death as described in
Sections 2.5 and 2.6.
(d) "TERMINATION UPON A CHANGE IN CONTROL" shall mean a
termination by the Employee of the Employee's employment with the Employer or
services to Apex or Holdco following a "Change in Control" other than any
"Change in Control" contemplated by or described in the Reorganization
Agreement and/or resulting from the closing of the transactions described in
the Reorganization Agreement including, without limitation, the Cybex Merger,
the Apex Merger, and the Merger (as such terms are defined in the
Reorganization Agreement).
(e) "CHANGE IN CONTROL" shall mean any one of the
following events:
(i) Any person (other than Holdco) acquires
beneficial ownership of Apex's or Holdco's securities and is or thereby
becomes a beneficial owner of securities entitling such person to exercise
twenty-five percent (25%) or more of the combined voting power of Apex's or
Holdco's then outstanding stock. For purposes of this Agreement, "beneficial
ownership" shall be
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determined in accordance with Regulation 13D under the Securities Exchange
Act of 1934, or any similar successor regulation or rule; and the term
"person" shall include any natural person, corporation, partnership, trust or
association, or any group or combination thereof, whose ownership of Apex's
or Holdco's securities would be required to be reported under such Regulation
13D, or any similar successor regulation or rule.
(ii) Within any twenty-four (24) month period,
individuals who were Directors of Apex or Holdco at the beginning of such
period, together with any other Directors first elected as directors of Apex
or Holdco pursuant to nominations approved or ratified by at least two-thirds
(2/3) of the Directors in office immediately prior to such respective
elections, cease to constitute a majority of the Board of Directors of Holdco.
(iii) Holdco's stockholders approve:
(1) any consolidation or merger of Holdco in
which Holdco is not the continuing or surviving corporation or pursuant to
which shares of Holdco common stock would be converted into cash, securities
or other property, other than a merger or consolidation of Holdco in which
the holders of Holdco's common stock immediately prior to the merger or
consolidation have substantially the same proportionate ownership and voting
control of the surviving corporation immediately after the merger or
consolidation; or
(2) any sale, lease, exchange, liquidation or
other transfer (in one transaction or a series of transactions) of all or
substantially all of the assets of Holdco.
Notwithstanding subparagraphs (e)(iii)(1) and (e)(iii)(2) above, the term
"Change in Control" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the
outstanding voting stock of Holdco is owned, directly or indirectly, by a
holding company, and the holders of Holdco's common stock immediately prior
to the transaction have substantially the same proportionate ownership and
voting control of such holding company after such transaction.
(iv) Apex's stockholders approve:
(1) any consolidation or merger of Apex in
which Apex is not the continuing or surviving coporation or pursuant to which
shares of Apex common stock would be converted into cash, securities or other
property, other than a merger or consolidation of Apex in which the holders
of Apex's common stock immediately prior to the merger or consolidation have
substantially the same proportionate ownership and voting control of the
surving corporation immeadiately after the merger or consolidation; or
(2) any sale, lease, exchange, liquidation or
other transfer (in one transaction or a series of transactions) of all or
substantially all of the assets of Apex or Holdco.
Notwithstanding subparagraphs (e)(iv)(1) and (e)(iv)(2) above, the term
"Change in Control" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the
outstanding voting stock of Apex is owned, directly or indirectly, by a
holding
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company, and the holders of Apex's common stock immediately prior to the
transaction have substantially the same proportionate ownership and voting
control of such holding company after such transaction.
2.2 BASIC TERM. The term of employment of the Employee by the
Employer shall be for the period beginning immediately prior to the closing
of the Apex Merger described in the Reorganization Agreement and ending on
March 31, 2004, unless terminated earlier pursuant to this Section 2. At any
time before March 31, 2004, the Employer and the Employee may by mutual
written agreement extend the Employee's employment under the terms of this
Agreement for such additional periods as they may agree.
2.3 TERMINATION FOR CAUSE. Termination For Cause may be
effected by the Employer at any time during the term of this Agreement and
shall be effected by thirty (30) days written notification to the Employee
from the Board of Directors of Holdco stating the reason for termination.
Upon Termination For Cause, the Employee immediately shall be paid all
accrued salary, vested deferred compensation, if any (other than pension plan
or profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Apex or Holdco in which the
Employee is a participant to the full extent of the Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses
incurred by the Employee in connection with his duties hereunder, all to the
date of termination, but the Employee shall not be paid any other
compensation or reimbursement of any kind, including without limitation,
severance compensation.
2.4 TERMINATION OTHER THAN FOR CAUSE. Notwithstanding anything
else in this Agreement, the Employer may effect a Termination Other Than For
Cause at any time upon giving thirty (30) days written notice to the Employee
of such termination. Upon any Termination Other Than For Cause, the Employee
shall immediately be paid all accrued salary, bonus compensation to the
extent earned, vested deferred compensation, if any (other than pension plan
or profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Apex or Holdco in which the
Employee is a participant to the full extent of the Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses
incurred by the Employee in connection with his duties hereunder, all to the
date of termination, and all severance compensation provided in Section 4.2,
but no other compensation or reimbursement of any kind.
2.5 TERMINATION BY REASON OF DISABILITY. If, during the term
of this Agreement, the Employee, in the reasonable judgment of the Board of
Directors of Holdco, has failed to perform his duties under this Agreement on
account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than six (6) consecutive months,
the Employer shall have the right to terminate the Employee's employment
hereunder by delivery of written notice to the Employee at any time after
such six month period and payment to the Employee of all accrued salary,
bonus compensation in an amount equal to the average annual bonus earned by
the Employee in the two (2) years immediately preceding the date of
termination, vested deferred compensation, if any (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Apex or Holdco in which the
Employee is a participant to the full extent of the Employee's rights under
such plans
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(including having the vesting of any awards granted to the Employee under any
Apex or Holdco stock option plans fully accelerated), accrued vacation pay
and any appropriate business expenses incurred by the Employee in connection
with his duties hereunder, all to the date of termination, with the exception
of medical and dental benefits which shall continue through the expiration of
this Agreement, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance
compensation.
2.6 TERMINATION BY REASON OF DEATH. In the event of the
Employee's death during the term of this Agreement, the Employee's employment
shall be deemed to have terminated as of the last day of the month during
which his death occurs and the Employer shall pay to his estate or such
beneficiaries as the Employee may from time to time designate all accrued
salary, bonus compensation to the extent earned, vested deferred
compensation, if any (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits
under any plans of Apex or Holdco in which the Employee is a participant to
the full extent of the Employee's rights under such plans (including having
the vesting of any awards granted to the Employee under any Apex or Holdco
stock option plans fully accelerated), accrued vacation pay and any
appropriate business expenses incurred by the Employee in connection with his
duties hereunder, all to the date of termination, but the Employee's estate
shall not be paid any other compensation or reimbursement of any kind,
including without limitation, severance compensation.
2.7 VOLUNTARY TERMINATION. Notwithstanding anything else in
this Agreement, the Employee may effect a Voluntary Termination at any time
upon giving thirty (30) days written notice to the Employer of such
termination. In the event of a Voluntary Termination, the Employer shall
immediately pay all accrued salary, bonus compensation to the extent earned,
vested deferred compensation, if any (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of Apex or Holdco in which the Employee
is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, but no other compensation or reimbursement of any kind,
including without limitation, severance compensation.
2.8 TERMINATION UPON A CHANGE IN CONTROL. In the event of a
Termination Upon a Change in Control, the Employee shall immediately be paid
all accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits
under any plans of Apex or Holdco in which the Employee is a participant to
the full extent of the Employee's rights under such plans (including having
the vesting of any awards granted to the Employee under any Apex or Holdco
stock option plans fully accelerated), accrued vacation pay and any
appropriate business expenses incurred by the Employee in connection with his
duties hereunder, all to the date of termination, and all severance
compensation provided in Section 4.1, but no other compensation or
reimbursement of any kind.
3. SALARY, BENEFITS AND BONUS COMPENSATION.
3.1 BASE SALARY. As payment for the services to be rendered by
the Employee as provided in Section 1 and subject to the terms and conditions
of Section 2, the
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Employer agrees to pay to the Employee a "Base Salary" at the rate of
$214,000.00 per annum, payable in equal bi-weekly installments. The Base
Salary for each calendar year (or proration thereof) beginning January 1,
2001 shall be determined by the Board of Directors of Holdco upon a
recommendation from the Compensation Committee of Holdco (the "Compensation
Committee"), which shall authorize an increase in the Employee's Base Salary
in an amount which, at a minimum, shall be equal to the cumulative
cost-of-living increment on the Base Salary as reported in the "Consumer
Price Index, Seattle, Washington, All Items," published by the U.S.
Department of Labor (using January 1, 1999, as the base date for
computation). The Employee's Base Salary shall be reviewed annually by the
Board of Directors and the Compensation Committee of Holdco.
3.2 BONUSES. The Employee shall be eligible to receive a bonus
for each calendar year (or portion thereof) during the term of this Agreement
and any extensions thereof, with the actual amount of any such bonus to be
determined in the sole discretion of the Board of Directors of Holdco based
upon its evaluation of the Employee's performance during such year. All such
bonuses shall be payable during the last month of the fiscal year or within
forty-five (45) days after the end of the fiscal year to which such bonus
relates. All such bonuses shall be reviewed annually by the Compensation
Committee of Holdco.
3.3 ADDITIONAL BENEFITS. During the term of this Agreement,
the Employee shall be entitled to the following fringe benefits:
(a) THE EMPLOYEE BENEFITS. The Employee shall be eligible
to participate in such of Apex's or Holdco's benefits and deferred
compensation plans as are now generally available or later made generally
available to executive officers of Apex, Cybex, or Holdco, including, without
limitation, stock option plans, Section 401(k) plan, profit sharing plans,
annual physical examinations, dental and medical plans, personal catastrophe
and disability insurance, retirement plans and supplementary executive
retirement plans, if any. For purposes of establishing the length of service
under any benefit plans or programs of Apex, Cybex, or Holdco, the Employee's
employment with the Employer (or any successor) will be deemed to have
commenced on the date that Employee first commenced employment with Apex,
which was February 23, 1998.
(b) VACATION. The Employee shall be entitled to vacation
in accordance with the Employer's vacation policy but in no event less than
three weeks during each year of this Agreement.
(c) LIFE INSURANCE. For the term of this Agreement and
any extensions thereof, the Employer shall at its expense procure and keep in
effect term life insurance on the life of the Employee, payable to such
beneficiaries as the Employee may from time to time designate, in an
aggregate amount equal to the lesser of (i) three times the Employee's Base
Salary or (ii) $500,000. Such policy shall be owned by the Employee or by any
person or entity with an insurable interest in the life of the Employee.
(d) REIMBURSEMENT FOR EXPENSES. During the term of this
Agreement, the Employer shall reimburse the Employee for reasonable and
properly documented
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out-of-pocket business and/or entertainment expenses incurred by the Employee
in connection with his duties under this Agreement.
4. SEVERANCE COMPENSATION.
4.1 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION UPON
A CHANGE IN CONTROL. In the event the Employee's employment is terminated in
a Termination Upon a Change in Control, the Employee shall be paid as
severance compensation his Base Salary (at the rate payable at the time of
such termination) for a period of 12 months from the date of termination of
this Agreement, on the dates specified in Section 3.1, and an amount equal to
the average annual bonus earned by the Employee in the two (2) years
immediately preceding the date of termination. Notwithstanding anything in
this Section 4.1 to the contrary, the Employee may in the Employee's sole
discretion, by delivery of a notice to the Employer within thirty (30) days
following a Termination Upon a Change in Control, elect to receive from the
Employer a lump sum severance payment by bank cashier's check equal to the
present value of the flow of cash payments that would otherwise be paid to
the Employee pursuant to this Section 4.1. Such present value shall be
determined as of the date of delivery of the notice of election by the
Employee and shall be based on a discount rate equal to the interest rate of
90-day U.S. Treasury bills, as reported in THE WALL STREET JOURNAL (or
similar publication), on the date of delivery of the election notice. If the
Employee elects to receive a lump sum severance payment, the Employer shall
make such payment to the Employee within ten (10) days following the date on
which the Employee notifies the Employer of the Employee's election. The
Employee shall also be entitled to have the vesting of any awards granted to
the Employee under any Apex or Holdco stock option plans fully accelerated.
The Employee shall be provided with medical plan benefits under any health
plans of Apex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans for a period of 12
months from the date of termination of this Agreement; provided, however,
that the benefits under any such plans of Apex or Holdco in which the
Employee is a participant, including any such perquisites, shall cease upon
employment by a new employer.
4.2 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION OTHER
THAN FOR CAUSE. In the event the Employee's employment is terminated in a
Termination Other Than for Cause, the Employee shall be paid as severance
compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 12 months from the date of such termination, on
the dates specified in Section 3.1, and an amount equal to the average annual
bonus earned by the Employee in the two (2) years immediately preceding the
date of termination. Notwithstanding anything in this Section 4.2 to the
contrary, the Employee may in the Employee's sole discretion, by delivery of
a notice to the Employer within thirty (30) days following a Termination
Other Than for Cause, elect to receive from the Employer a lump sum severance
payment by bank cashier's check equal to the present value of the flow of
cash payments that would otherwise be paid to the Employee pursuant to this
Section 4.2. Such present value shall be determined as of the date of
delivery of the notice of election by the Employee and shall be based on a
discount rate equal to the interest rate on 90-day U.S. Treasury bills, as
reported in THE WALL STREET JOURNAL (or similar publication), on the date of
delivery of the election notice. If the Employee elects to receive a lump sum
severance payment, the Employer shall make such payment to the Employee
within ten (10) days following the date on which the Employee notifies the
Employer of
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the Employee's election. The Employee shall also be entitled to have the
vesting of any awards granted to the Employee under any Apex or Holdco stock
option plans fully accelerated.
4.3 NO SEVERANCE COMPENSATION UNDER OTHER TERMINATION. In the
event of a Voluntary Termination, Termination For Cause, termination by
reason of the Employee's disability pursuant to Section 2.5, or termination
by reason of the Employee's death pursuant to Section 2.6, the Employee or
his estate shall not be paid any severance compensation.
5. NON-COMPETITION OBLIGATIONS. Unless waived or reduced by the
Employer or Holdco, during the term of this Agreement and for a period of 12
months thereafter, the Employee will not, without the Employer's prior
written consent, directly or indirectly, alone or as a partner, joint
venturer, officer, director, employee, consultant, agent, independent
contractor or stockholder of any company or business, engage in any business
activity in the United States, Canada, or Europe which is substantially
similar to or in direct competition with any of the business activities of or
services provided by the Employer at such time (a "Competing Business").
Notwithstanding the foregoing, (i) the ownership by the Employee of not more
than five percent (5%) of the shares of stock of any corporation having a
class of equity securities actively traded on a national securities exchange
or on The Nasdaq Stock Market shall not be deemed, in and of itself, to
violate the prohibitions of this Section 5, and (ii) the Employee's
performance of services in any capacity for any consulting firm, public
accounting firm, or law firm that has as a client any company or business
that is a Competing Business shall not violate the prohibitions of this
Section 5 so long as the Employee does not perform any services directly for
such Competing Business.
6. MISCELLANEOUS.
6.1 PAYMENT OBLIGATIONS. If litigation after a Change in
Control shall be brought to enforce or interpret any provision contained
herein, the Employer, to the extent permitted by applicable law and the
Employer's and Holdco's Articles of Incorporation and Bylaws, hereby
indemnifies the Employee for the Employee's reasonable attorneys' fees and
disbursements incurred in such litigation.
6.2 GUARANTEE. Immediately following the closing of the Apex
Merger, Apex shall obtain from Holdco Holdco's unconditional and irrevocable
guarantee of the payment obligations of the Employer under this Agreement,
including, without limitation, the Employer's obligations under Section 6.1
hereof.
6.3 WITHHOLDINGS. All compensation and benefits to the
Employee hereunder shall be reduced by all federal, state, local, and other
withholdings and similar taxes and payments required by applicable law.
6.4 WAIVER. The waiver of the breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or other provision hereof.
6.5 ENTIRE AGREEMENT; MODIFICATIONS. Except as otherwise
provided herein, this Agreement represents the entire understanding among the
parties with respect to the
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subject matter hereof, and this Agreement supersedes any and all prior
understandings, agreements, plans and negotiations, whether written or oral
with respect to the subject matter hereof including without limitation,
Section 1 of that certain Proprietary Information and Non-Competition
Agreement dated February 16, 1998, between the Employee and Apex, which such
section shall be of no further force or effect (although the other sections
of such Proprietary Information and Non-Competition Agreement shall remain in
full force and effect), and any understandings, agreements or obligations
respecting any past or future compensation, bonuses, reimbursements or other
payments to the Employee from the Employer. All modifications to the
Agreement must be in writing and signed by the party against whom enforcement
of such modification is sought.
6.6 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery or first
class mail, certified or registered with return receipt requested, and shall
be deemed to have been duly given upon hand delivery to an officer of the
Employer or the Employee, as the case may be, or upon three (3) days after
mailing to the respective persons named below:
If to the Employer/Apex: Apex Inc.
9911 Willows Road NE
Redmond, WA 98052-2531
Attn: Chief Operating Officer
With copy to: General Counsel
Fax: 425-497-5597
If to the Employee: Samuel F. Saracino
-----------------------------
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Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.6.
6.7 HEADINGS. The Section headings herein are intended for
reference and shall not by themselves determine the construction or
interpretation of this Agreement.
6.8 GOVERNING LAW; VENUE. This Agreement shall be governed by
and construed in accordance with the laws of the State of Washington. The
Employee and the Employer each hereby expressly consents to the exclusive
venue of the state and federal courts located in Seattle, King County,
Washington, for any lawsuit arising from or relating to this Agreement.
6.9 ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or breach thereof, shall be settled by
arbitration in Seattle, Washington, in accordance with the Rules of the
American Arbitration Association, and judgment upon any proper award rendered
by the arbitrators may be entered in any court having jurisdiction thereof.
There shall be three (3) arbitrators, one (1) to be chosen directly by each
party at will, and the third arbitrator to be selected by the two (2)
arbitrators so chosen. To the extent permitted by the Rules of the American
Arbitration Association, the selected arbitrators may grant equitable relief.
Each party shall pay the fees of the arbitrator selected by him and of his
own attorneys, and the expenses of his witnesses and
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all other expenses connected with the presentation of his case. The cost of
the arbitration including the cost of the record or transcripts thereof, if
any, administrative fees, and all other fees and costs shall be borne equally
by the parties.
6.10 SEVERABILITY. If a court or other body of competent
jurisdiction determines that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other provisions of this Agreement
shall be deemed valid and enforceable to the extent possible.
6.11 SURVIVAL OF EMPLOYER'S OBLIGATIONS. The Employer's
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to
the Employer or Holdco. This Agreement shall not be terminated by any merger
or consolidation or other reorganization of the Employer or Holdco. In the
event any such merger, consolidation or reorganization shall be accomplished
by transfer of stock or by transfer of assets or otherwise, the provisions of
this Agreement shall be binding upon and inure to the benefit of the
surviving or resulting corporation or person. This Agreement shall be binding
upon and inure to the benefit of the executors, administrators, heirs,
successors and assigns of the parties; provided, however, that except as
herein expressly provided, this Agreement shall not be assignable either by
the Employer (except to an affiliate of the Employer (including Holdco) in
which event the Employer shall remain liable if the affiliate fails to meet
any obligations to make payments or provide benefits or otherwise) or by the
Employee.
6.12 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one and the
same Agreement.
6.13 INDEMNIFICATION. In addition to any rights to
indemnification to which the Employee is entitled to under the Employer's
Articles of Incorporation and Bylaws, the Employer shall indemnify the
Employee at all times during and after the term of this Agreement to the
maximum extent permitted under the corporation laws of the State of
Washington and any other applicable state law, and shall pay the Employee's
expenses in defending any civil or criminal action, suit, or proceeding in
advance of the final disposition of such action, suit, or proceeding, to the
maximum extent permitted under such applicable state laws.
6.14 AMENDMENT OF STOCK OPTION LETTER AGREEMENTS.
(a) ACCELERATED VESTING. The parties agree that,
effective immediately prior to the closing of the Apex Merger described in
the Reorganization Agreement, Section 6 of that certain Nonstatutory Stock
Option Letter Agreement dated March 12, 1999, between the Employer and the
Employee is hereby amended by deleting the existing language and substituting
therefor the following new language:
6. VESTING. Your option shall vest and become
exercisable in full immediately prior to the closing of the
Apex Merger described in that certain Agreement and Plan of
Reorganization dated March 7, 2000, by and among the Company,
Cybex, and Holdco. Specifically, immediately prior to the
closing of the Apex Merger (as defined in such Agreement and
Plan of Reorganization), your entire
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option grant (all 75,000 shares) will become fully vested and
immediately available for exercise. You may exercise your
option on vested option shares; however, you may only exercise
your option for whole shares.
(b) REMAINING TERMS UNCHANGED. Except as
specifically set forth in this Section 6.14, the remaining terms and
conditions of the Nonqualified Stock Option Letter Agreements dated March 12,
1999, shall remain unchanged and in full force and effect.
6.15 INDEMNIFCATION FOR SECTION 4999 EXCISE TAXES. In the
event that it shall be determined that any payment or other benefit paid by
the Employer or Holdco to or for the benefit of the Employee under this
Employment Agreement or otherwise, but determined without regard to any
additional payments required under this Amendment (the "Payments") would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code (the "Excise Tax"), then the Employer shall indemnify the Employee for
such Excise Tax in accordance with the following:
(a) The Employee shall be entitled to receive an
additional payment from the Employer equal to (i) one hundred percent
(100%) of any Excise Tax actually paid or finally or payable by the
Employee in connection with the Payments, plus (ii) an additional
payment in such amount that after all taxes, interest and penalties
incurred in connection with all payments under this Section 2(a), the
Employee retains an amount equal to one hundred percent (100%) of the
Excise Tax.
(b) All determinations required to be made under
this Section shall be made by the Employer's primary independent public
accounting firm, or any other nationally recognized accounting firm
reasonably acceptable to the Employer and the Employee (the "Accounting
Firm"). The Employer shall cause the Accounting Firm to provide
detailed supporting calculations of its determinations to the Employer
and the Employee. All fees and expenses of the Accounting Firm shall be
borne solely by the Employer. For purposes of making the calculations
required by this Section, the Accounting Firm may make reasonable
assumptions and approximations concerning applicable taxes and may rely
on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Internal Revenue Code, provided the
Accounting Firm's determinations must be made with substantial
authority (within the meaning of Section 6662 of the Internal Revenue
Code). The payments to which the Employee is entitled pursuant to this
Section shall be paid by the Employer to the Employee in cash and in
full not later than thirty (30) calendar days following the date the
Employee becomes subject to the Excise Tax.
The indemnification in this Section 6.15 shall apply to any Payment resulting
from the amendment of the Nonqualified Stock Option Letter Agreement and the
acceleration of Employee's options described in Section 6.14, but Employee
shall not be entitled to indemnification under this Section 6.15 for other
Payments that result solely from any other acceleration of Employee's options
in the event Employee's terminates his employment in a Termination Upon a
Change in Control.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
APEX INC.
By:
--------------------------------------
Its: President and Chief Executive Officer
SAMUEL F. SARACINO:
------------------------------------------
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-4 of Aegean Sea Inc. of our report
dated January 25, 2000 relating to the consolidated financial
statements appearing in Apex Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1999. We also consent to the reference
to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Seattle, Washington
May 26, 2000
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-4 of Aegean Sea Inc. of our report
dated May 3, 1999 relating to the financial statements appearing in
Cybex Computer Products Corporation's Annual Report on Form 10-K for
the year ended March 31, 1999. We also consent to the incorporation by
reference of our report dated May 3, 1999 relating to the financial
statement schedules, which appears in such Annual Report on Form 10-K.
We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Birmingham, Alabama
May 26, 2000
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-4 of our
report dated May 25, 2000 relating to the financial statements of Aegean Sea,
Inc., which appear in such Registration Statement. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Seattle, Washington
May 26, 2000
