Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
APEX INC.
AEGEAN SEA INC.
AND
CYBEX COMPUTER PRODUCTS CORPORATION
DATED AS OF MARCH 7, 2000
TABLE OF CONTENTS
PAGE
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ARTICLE I THE PLAN OF REORGANIZATION......................................... 2
1.1 The Organization of Newco, Apex Sub and Cybex Sub............ 2
1.2 The Apex Merger.............................................. 2
1.3 The Cybex Merger............................................. 3
1.4 Cancellation of Apex-Owned and Cybex-Owned Shares............ 3
1.5 Adjustments for Capital Changes.............................. 3
1.6 Dissenting Shares............................................ 3
1.7 Fractional Shares............................................ 5
1.8 Apex Options and ESPP........................................ 5
1.9 Cybex Options................................................ 6
1.10 Newco Plans.................................................. 6
1.11 Effective Time; Effects of the Merger........................ 7
1.12 Exchange of Certificates..................................... 8
1.13 Assumption of Options....................................... 11
1.14 The Closing................................................. 11
1.15 Tax and Accounting Consequences............................. 11
1.16 Registration of Newco Common Stock.......................... 11
1.17 Taking of Necessary Action; Further Action.................. 11
ARTICLE II REPRESENTATIONS AND WARRANTIES OF CYBEX.......................... 12
2.1 Organization of Cybex....................................... 12
2.2 Cybex Capital Structure..................................... 12
2.3 Obligations With Respect to Capital Stock................... 13
2.4 Authority................................................... 13
2.5 SEC Filings; Cybex Financial Statements..................... 14
2.6 Absence of Certain Changes or Events........................ 15
2.7 Taxes....................................................... 16
2.8 Cybex Intellectual Property................................. 17
2.9 Compliance; Permits; Restrictions........................... 20
2.10 Litigation.................................................. 20
2.11 Brokers' and Finders' Fees.................................. 21
2.12 Employee Benefit Plans...................................... 21
2.13 Absence of Liens and Encumbrances........................... 26
2.14 Environmental Matters....................................... 26
2.15 Labor Matters............................................... 28
2.16 Agreements, Contracts and Commitments....................... 28
2.17 Statements; Proxy Statement/Prospectus...................... 30
2.18 Board Approval.............................................. ▇▇
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▇.▇▇ ▇▇▇▇▇ Takeover Statutes..................................... 31
2.20 Fairness Opinion............................................ 31
ARTICLE III REPRESENTATIONS AND WARRANTIES OF APEX.......................... 31
3.1 Organization of Apex........................................ 32
3.2 Apex Capital Structure...................................... 32
3.3 Obligations With Respect to Capital Stock................... 33
3.4 Authority................................................... 33
3.5 SEC Filings; Apex Financial Statements...................... 34
3.6 Absence of Certain Changes or Events........................ 35
3.7 Taxes....................................................... 36
3.8 Apex Intellectual Property.................................. 37
3.9 Compliance; Permits; Restrictions........................... 39
3.10 Litigation.................................................. 39
3.11 Brokers' and Finders' Fees.................................. 39
3.12 Employee Benefit Plans...................................... 40
3.13 Absence of Liens and Encumbrances........................... 44
3.14 Environmental Matters....................................... 45
3.15 Labor Matters............................................... 46
3.16 Agreements, Contracts and Commitments....................... 46
3.17 Statements; Proxy Statement/Prospectus...................... 48
3.18 Board Approval.............................................. 49
3.19 State Takeover Statutes..................................... 49
3.20 Fairness Opinion............................................ 49
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME.............................. 49
4.1 Conduct of Business......................................... 49
ARTICLE V ADDITIONAL AGREEMENTS............................................. 52
5.1 Proxy Statement/Prospectus; Registration Statement;
Other Filings............................................... 52
5.2 Meetings of Shareholders.................................... 53
5.3 Access to Information; Confidentiality...................... 55
5.4 No Solicitation............................................. 56
5.5 Public Disclosure........................................... 59
5.6 Legal Requirements.......................................... 60
5.7 Third Party Consents........................................ 60
5.8 FIRPTA...................................................... 60
5.9 Notification of Certain Matters............................. 60
5.10 Commercially Reasonable Efforts and Further Assurances...... 60
5.11 Form S-8.................................................... 61
5.12 Indemnification............................................. 61
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TABLE OF CONTENTS
(CONTINUED)
5.13 Tax-Free Reorganization..................................... 62
5.14 NASDAQ Listing.............................................. 62
5.15 Cybex Affiliate Agreement................................... 62
5.16 Apex Affiliate Agreement.................................... 63
5.17 Regulatory Filings; Reasonable Efforts...................... 63
5.18 Termination of 401(k) Plans................................. 63
5.19 Board of Directors of Newco After the Effective Time........ 63
5.20 Headquarters; Officers of Apex After the Effective Time..... 64
ARTICLE VI CONDITIONS TO THE MERGER......................................... 65
6.1 Conditions to Obligations of Each Party to
Effect the Merger........................................... 65
6.2 Additional Conditions to Obligations of Cybex............... 65
6.3 Additional Conditions to the Obligations of Apex............ 66
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................... 67
7.1 Termination................................................. 67
7.2 Notice of Termination; Effect of Termination................ 69
7.3 Fees and Expenses........................................... 69
7.4 Amendment................................................... 71
7.5 Extension; Waiver........................................... 71
ARTICLE VIII GENERAL PROVISIONS............................................. 72
8.1 Non-Survival of Representations and Warranties.............. 72
8.2 Notices..................................................... 72
8.3 Interpretation; Knowledge................................... 73
8.4 Counterparts................................................ 74
8.5 Entire Agreement............................................ 74
8.6 Severability................................................ 74
8.7 Other Remedies; Specific Performance........................ 74
8.8 Governing Law............................................... 75
8.9 Rules of Construction....................................... 75
8.10 Assignment.................................................. 75
8.11 WAIVER OF JURY TRIAL........................................ 75
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TABLE OF CONTENTS
(CONTINUED)
INDEX OF EXHIBITS
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 7, 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.
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
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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.
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
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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. 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.
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(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
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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 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
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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;
(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
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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 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
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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 of
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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.
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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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional
Corporation, at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, 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").
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,
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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 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,
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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.
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
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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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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.
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(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 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
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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.
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.
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(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 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:
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"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 ▇▇▇▇ 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 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
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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.
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(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 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,
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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 ▇▇ ▇▇▇▇▇
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, 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;
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(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 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
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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
-23-
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
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.
-24-
(ii) Except as set forth on Section 2.12(i)(ii)
f 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 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).
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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 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
-26-
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 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.
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(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;
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(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 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.
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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
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
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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 ▇▇
▇▇▇▇▇ 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.
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
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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
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
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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.
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
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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, 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
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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 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
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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 162(m) of the Code. There is no contract,
agreement, plan or arrangement to which Apex is a party
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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
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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.
(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.
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(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 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 ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation pursuant to an engagement letter dated
March 1, 2000, a copy of which has
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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;
(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.
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(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
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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 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
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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 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
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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 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,
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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 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
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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,
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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 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;
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(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.
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
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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 ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ 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 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
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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
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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);
(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;
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(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;
(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
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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 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.
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(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 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
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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
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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.
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
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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 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.
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(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 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
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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 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.
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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
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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, 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.
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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, 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
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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:
NAME TITLE
------------------------------- ---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Chairman of the Board, President and
Chief Executive Officer
------------------------------- ---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ Executive Vice President, Group
Operations and Business Development
------------------------------- ---------------------------------------------
▇. ▇▇▇▇▇ Driver Senior Vice President, Operations and
Chief Operating Officer
------------------------------- ---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Senior Vice President, West Coast
Operations
------------------------------- ---------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Senior Vice President, Sales and
Marketing
------------------------------- ---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Senior Vice President, Finance, Chief
Financial Officer, Treasurer, and
Assistant Secretary
------------------------------- ---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Senior Vice President, Legal and
Corporate Affairs, General Counsel, and
Secretary
------------------------------- ---------------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Senior Vice President, Engineering
------------------------------- ---------------------------------------------
C. ▇▇▇▇▇ ▇▇▇▇▇ Vice President, OEM Sales
------------------------------- ---------------------------------------------
▇▇▇ ▇▇▇▇▇▇ Senior Vice President, Corporate
Strategic Marketing
------------------------------- ---------------------------------------------
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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, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, 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
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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
(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
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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;
(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);
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(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
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Agreement and the approval of the 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
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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.
(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
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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 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.
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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.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional
Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to Cybex or Cybex Sub, to:
Cybex Computer Products Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Sirote & Permutt, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(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
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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.
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
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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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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.
APEX INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Title: President and Chief
Executive Officer
----------------------------
CYBEX COMPUTER PRODUCTS
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: President, Chief Executive
Officer and Chairman
----------------------------
AEGEAN SEA INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Title: President
----------------------------
****REORGANIZATION AGREEMENT****