<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
APOGEE, INC.
................................................................................
(Name of Registrant as Specified in Its Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
....................................................................
2) Aggregate number of securities to which transaction applies:
....................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
....................................................................
4) Proposed maximum aggregate value of transaction:
....................................................................
5) Total fee paid:
....................................................................
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
....................................................................
2) Form, Schedule or Registration Statement no.:
....................................................................
3) Filing party:
....................................................................
4) Date Filed:
....................................................................
<PAGE> 2
APOGEE
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 12, 1997
---------------
King of Prussia, Pennsylvania
May 12, 1997
To the Holders of Common Stock of APOGEE, INC.:
The Annual Meeting of the Stockholders of APOGEE, INC. (the "Company") will
be held at the Third Floor Board Room of 1016 West Ninth Avenue, King of
Prussia, Pennsylvania 19406 on Thursday, June 12, 1997 at 9:00 A.M., local time,
to consider and act upon the following matters:
1. To elect seven directors for the ensuing year.
2. To ratify the Board of Directors' selection of Price Waterhouse LLP as
the Company's independent accountants for 1997.
3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on May 6, 1997 are
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
STANLEY F. SZCZYGIEL
Secretary
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND, PLEASE MARK, SIGN AND DATE THE ENCLOSED FORM OF PROXY
AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE SO THAT YOUR VOTE CAN BE
RECORDED. THE ENVELOPE DOES NOT REQUIRE ANY POSTAGE IF MAILED IN THE UNITED
STATES.
<PAGE> 3
PROXY STATEMENT
This Proxy Statement, which will be mailed commencing on or about May 12,
1997 to the persons entitled to receive the accompanying Notice of Annual
Meeting of Stockholders, is furnished in connection with the solicitation of
Proxies by and on behalf of the Board of Directors of Apogee, Inc. (the
"Company") for use at the 1997 Annual Meeting of Stockholders (the "Meeting") to
be held on June 12, 1997, and at any adjournment or adjournments thereof. If
properly signed and returned to the Company and not revoked, the accompanying
Proxy will be voted in accordance with the instructions it contains. The persons
named in the Proxy will vote the shares represented thereby for the Board of
Directors' slate of directors and as recommended by the Board of Directors
unless contrary instructions are given. The Company's principal executive
offices are located at 1018 West Ninth Avenue, King of Prussia, Pennsylvania
19406.
Any Proxy may be revoked at any time before it is exercised by written
notice to the Secretary of the Company. The casting of a ballot at the Meeting
by a stockholder who may theretofore have given a Proxy will not have the effect
of revoking that Proxy unless the stockholder so notifies the Secretary of the
Company in writing at any time prior to the voting of the shares represented by
the Proxy.
Only stockholders of record at the close of business on May 6, 1997 (the
"Record Date") are entitled to vote at the Meeting or any adjournment or
adjournments thereof. As of the Record Date, the Company had outstanding _______
shares of common stock, $.01 par value (the "Common Stock"), each holder of
which is entitled to one vote per share with respect to each matter to be voted
on at the Meeting. The Company has no class or series of stock outstanding other
than the Common Stock.
Directors are elected by plurality vote. Adoption of proposal II will
require the affirmative vote of a majority of the Common Stock voting on that
proposal. Abstentions and broker non-votes (as hereinafter defined) will be
counted as present for the purpose of determining the presence of a quorum. As
to proposal II, abstentions will be included, but broker non-votes will not be
included, in the calculation of the number of holders who are present and voting
at the Meeting. For the purpose of determining the vote required for approval of
matters to be voted on at the Meeting, shares held by stockholders who abstain
from voting will be treated as being "present" and "entitled to vote" on the
matter and, thus, an abstention has the same legal effect as a vote against the
matter. However, in the case of a broker non-vote where a stockholder withholds
authority from his Proxy to vote the Proxy as to a particular matter, such
shares will not be treated as "present" and "entitled to vote" on the matter
and, thus, a broker non-vote or the withholding of a Proxy's authority will have
no effect on the outcome of the vote on the matter. A "broker non-vote" refers
to shares of Common Stock represented at the Meeting in person or by proxy by a
broker or a nominee where such broker or nominee (i) has not received voting
instructions on a particular matter from the beneficial owners or persons
entitled to vote and (ii) the broker or nominee does not have discretionary
voting power on such matter.
<PAGE> 4
I. ELECTION OF DIRECTORS
Seven directors will be elected at the Meeting. It is the intention of each
of the persons named in the accompanying form of Proxy to vote the shares
represented thereby in favor of the seven nominees listed in the following
table, unless otherwise instructed in such Proxy. Each such nominee is presently
serving as a director. In case any of the nominees is unable or declines to
serve, such persons reserve the right to vote the shares represented by such
Proxy for another person duly nominated by the Board of Directors in his stead
or, if no other person is so nominated, to vote such shares only for the
remaining nominees. A vacancy in the Board of Directors occurred effective
February 1, 1997 upon the resignation of Caroline H. Fleming. In addition, Henry
C. Dudley is retiring as a director at the 1997 Annual Meeting of Stockholders.
It is the intention of the Board of Directors to reduce the size of the Board
from nine directors to seven directors following the 1997 Annual Meeting of
Stockholders to eliminate the vacancies. The Board of Directors has no reason to
believe that any nominee listed below will be unable or will decline to serve.
The directors elected by the stockholders will serve until the 1998 Annual
Meeting of Stockholders and until their respective successors are duly elected
and shall have qualified.
CERTAIN INFORMATION CONCERNING NOMINEES
Certain information concerning the nominees for election as directors is set
forth below. Such information was furnished by them to the Company.
<TABLE>
<CAPTION>
Shares of Common
Stock Owned
NAME OF NOMINEE AND Beneficially as PERCENT
CERTAIN BIOGRAPHICAL INFORMATION of April 21, 1997(1) OF CLASS
-------------------------------- -------------------- --------
<S> <C> <C>
JOHN H. FOSTER, age 54, has been Chairman of the Board and Chief
Executive Officer of the Company since March 1991. Mr. Foster has been
Chairman of the Board and Chief Executive Officer of NovaCare, Inc., a
leading national provider of comprehensive medical rehabilitation services
("NovaCare"), since December 1984. Mr. Foster is a director of Corning
Incorporated, an international corporation with business interests in specialty
materials and communications. Mr. Foster is the founder and Chairman of the
Board of Foster Management Company, an investment advisor, and general
partner of various venture capital investment funds. 3,732,474(2) 37.8%
LAWRENCE M. DAVIES, age 38, has been a director of the Company since
January 1992 and its President since June 1993. Mr. Davies was Vice
President of the Central Division of the Contract Services Group of
NovaCare from June 1992 to May 1993 and Division Vice President of the
Midwest Region of the Contract Services Group of NovaCare,
from September 1988 to May 1992. From January 1987 to August 1988,
Mr. Davies was Director of Corporate Development for NovaCare.
Mr. Davies was manager of Mergers and Acquisitions for Foster Medical
Corporation from August 1984 to December 1986. 114,568(3) 1.2
HARVEY V. FINEBERG, M.D., age 51, has been a director of the Company
since November 1993. Dr. Fineberg has been Dean of the Harvard School of
Public Health since July 1984. He has been Professor of Health Policy and
Management at the Harvard School of Public Health since 1982 and has held
other faculty positions at Harvard University since 1973. Dr. Fineberg earned
a medical degree at Harvard Medical School and a doctorate in Public Policy
at the Kennedy School of Government at Harvard University. Dr. Fineberg is
a director of PrincipalCare Incorporated, a provider of women's health
services. 7,000 *
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
Shares of Common
Stock Owned
NAME OF NOMINEE AND Beneficially as PERCENT
CERTAIN BIOGRAPHICAL INFORMATION of April 21, 1997(1) OF CLASS
-------------------------------- -------------------- --------
<S> <C> <C>
TIMOTHY E. FOSTER, age 45, has been a director of the Company since
February 1993. Mr. Foster has been President and Chief Operating Officer of
NovaCare since October 1994 and a director of NovaCare since December
1984. He served as Senior Vice President, Finance and Administration and
Chief Financial Officer of NovaCare from November 1988 to October 1994,
Treasurer of NovaCare from March 1992 to March 1995 and Secretary of
NovaCare from September 1987 to May 1994. 3,708,921(4) 37.6
IRWIN LEHRHOFF, PH.D., age 67, has been a director of the Company since
March 1991, at which time his company, Irwin Lehrhoff & Associates, Inc.,
was acquired by the Company. For more than the prior five years, Dr.
Lehrhoff has engaged in the private practice of clinical psychology in
Southern California. Dr. Lehrhoff holds a Ph.D. in Communication Disorders
and a Ph.D. in Clinical Psychology. He is a member of the American
Psychological Association and the International Society of Mental Health. Dr.
Lehrhoff presently serves as a director of the Thalians Community Mental
Health Center. He was previously a director and President of the National
Association of Rehabilitation Agencies. Dr. Lehrhoff was Director and
President of the California Speech Pathologists and Audiologists in Private
Practice from 1973 to 1977. 186,000(5) 1.9
R. BRUCE MOSBACHER, age 44, has been a director of the Company since
July 1992. Mr. Mosbacher has been a general partner of Saw Island Partners,
a securities, real estate and oil and gas investment firm,since 1985. From
1983 to 1985, Mr. Mosbacher was of counsel to Gaston Snow & Ely Bartlett
of Palo Alto, California; prior to that, he was associated with Wilson
Sonsini, Goodrich & Rosati of Palo Alto, California. Mr. Mosbacher serves
on the Boards of Advisors of investment funds managed by Foster
Management Company and is a director of a number of privately held
companies. He previously was a director of ISI Corporation, ISI Trust Fund,
ISI Growth Fund, Inc. and ISI Income Fund, Inc. and is a member of the
State Bar of California. 15,000(6) *
SHAWKAT RASLAN, age 45, has been a director of the Company since
February 1994. Mr. Raslan serves as President and Chief Executive Officer
of International Resources Holdings, Inc., an asset management and
investment advisory service. He has held these positions since 1982. Mr.
Raslan serves as a director of U.S.Home Care Corporation. 5,000 *
</TABLE>
- ----------
* Less than one percent.
(1) Except as indicated in the following footnotes, each of the persons listed
above has sole voting and investment power with respect to all shares of
Common Stock shown in the table as beneficially owned by him.
(2) Includes 3,683,700 shares of Common Stock owned by Abbingdon Venture
Partners Limited Partnership ("Abbingdon") and Abbingdon Venture Partners
Limited Partnership-II ("Abbingdon-II"), limited partnerships, of each of
which Mr. John H. Foster is a general partner through intermediate general
partnerships. Also includes 16,800 shares of Common Stock owned by the
Trust u/w Virginia C. Foster, of which Mr. John H. Foster is a trustee.
(3) Includes 6,000 shares of Common Stock presently issuable upon the exercise
of stock options.
(4) Includes 3,683,700 shares of Common Stock owned by Abbingdon and
Abbingdon-II, of each of which Mr. Timothy E. Foster is a general partner
through intermediate general partnerships.
(5) Includes 176,000 shares of Common Stock owned by Irwin Lehrhoff Trust No.
1, of which Dr. Lehrhoff is a trustee and a beneficiary. Does not include
500 shares of Common Stock held by Dr. Lehrhoff's spouse, of which shares
of Common Stock Dr. Lehrhoff disclaims beneficial ownership.
3
<PAGE> 6
(6) Represents shares of Common Stock owned by the Mosbacher/Ditz Living
Trust, of which Mr. Mosbacher is the trustee and a beneficiary.
During 1996, the Board of Directors of the Company met five times. Each of
the persons named in the table above, other than Harvey V. Fineberg and Shawkat
Raslan, attended at least 75% of the meetings of the Board of Directors and
meetings of any committees of the Board on which such person served which were
held during the time that such person served.
The Board of Directors has a Compensation Committee, an Acquisition
Committee and an Audit Committee. The Board of Directors does not have a
Nominating Committee.
The members of the Compensation Committee are Shawkat Raslan, who serves as
Chairman, and John H. Foster. Caroline H. Fleming served as a member of the
Compensation Committee until her resignation as a director and officer of the
Company effective February 1, 1997. The Compensation Committee makes
recommendations to the full Board of Directors as to the compensation of senior
management and administers the Apogee, Inc. 1994 Stock Option Plan and
determines the persons who are eligible to receive options and the number of
shares of Common Stock subject to each option. The Compensation Committee met
once during 1996.
The members of the Acquisition Committee are Lawrence M. Davies and R. Bruce
Mosbacher. Caroline H. Fleming served as Chairman of the Acquisition Committee
until her resignation as a director and officer of the Company. The Acquisition
Committee develops acquisition strategies and programs and identifies and
evaluates potential acquisition opportunities. The Acquisition Committee met
twice during 1996.
The members of the Audit Committee are Timothy E. Foster, who serves as
Chairman, Harvey V. Fineberg, Henry C. Dudley and R. Bruce Mosbacher. The Audit
Committee acts as a liaison between the Board of Directors and the independent
auditors and is authorized to recommend to the Board the appointment of the
independent auditors. The Audit Committee reviews with the independent auditors
the planning and scope of the audits of the financial statements, the results of
those audits and the adequacy of internal accounting controls and monitors other
corporate and financial policies. The Audit Committee met three times in 1996.
No family relationships exist between any of the directors and officers of
the Company.
The Board of Directors will consider nominees for directors recommended by
stockholders or others. There are no specified formal procedures for submitting
such recommendations. Recommendations may be addressed to the Chief Executive
Officer, Apogee, Inc., 1018 West Ninth Avenue, King of Prussia, Pennsylvania
19406.
Article Sixth of the Certificate of Incorporation of the Company provides
that the Company shall indemnify and hold harmless any director, officer,
employee or agent of the Company from and against any and all expenses and
liabilities that may be imposed upon or incurred by him or her in connection
with, or as a result of, any proceeding in which he or she may become involved,
as a party or otherwise, by reason of the fact that he or she is or was such a
director, officer, employee or agent of the Company, whether or not he or she
continues to be such at the time such expenses and liabilities shall have been
imposed or incurred, to the extent permitted by the laws of the State of
Delaware, as they may be amended from time to time.
Article Eleventh of the Certificate of Incorporation of the Company contains
a provision, authorized by Delaware law, which eliminates the personal liability
of a director of the Company to the Company or to any of its stockholders for
monetary damages for a breach of his fiduciary duty as a director, except in a
case in which the director breached his or her duty of loyalty, failed to act in
good faith, engaged in intentional misconduct or knowingly violated a law,
authorized the payment of a dividend or approved a stock repurchase in
violation or Delaware corporate law, or obtained an improper personal benefit.
4
<PAGE> 7
DIRECTOR COMPENSATION
Directors of the Company do not receive fees for service as directors but
are reimbursed for out-of-pocket expenses.
EXECUTIVE COMPENSATION
The following table sets forth information for the years ended December 31,
1996, 1995 and 1994 concerning the compensation of the Company's Chief Executive
Officer and each of the four most highly compensated executive officers or other
officers of the Company whose total annual salary and bonus exceeded $100,000
during the year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
---------------------- ------------
OTHER
ANNUAL AWARDS
NAME AND PRINCIPAL COMPENSATION ------------ ALL OTHER
POSITION YEAR SALARY($) BONUS($) ($) OPTIONS(#) COMPENSATION($)
- -------------------------- ---- ---------- -------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
John H. Foster............ 1996 -- -- -- -- --
Chairman of the Board 1995 -- -- -- -- --
and Chief Executive 1994 10,000(1) -- -- -- --
Officer
Lawrence M. Davies........ 1996 150,000 20,000 6,000(2) -- --
President and Chief 1995 160,327 6,750 -- -- --
Operating Officer 1994 114,231 33,000 -- 10,000 --
Alan N. Vinick............ 1996 125,760 18,110 5,500(2) 50,000 3,630(3)
Senior Vice President, 1995 -- -- -- -- --
Finance and Chief 1994 -- -- -- -- --
Financial Officer
Massoud G. Hampton, Ph.D.. 1996 129,433 7,260 -- 3,000 --
Vice President of Clinical 1995 121,443 7,260 -- -- --
Services 1994 110,000 36,000 33,985(4) 15,000 --
Stanley F. Szczygiel...... 1996 110,000 8,000 -- 3,000
Vice President of Finance 1995 101,923 3,000 -- --
1994 79,230 14,440 -- 5,000
</TABLE>
----------------
(1) Represents a management fee of $3,333.33 per month paid to Foster
Management Company, of which Mr. Foster is the sole stockholder. The
agreement to pay a monthly management fee was terminated as of March 31,
1994.
(2) Represents car allowance.
(3) Represents premiums for health and life insurance.
(4) Represents reimbursement of relocation expenses.
5
<PAGE> 8
The Company granted 56,000 stock options to the executive officers named
in the Summary Compensation Table during the year ended December 31, 1996.
The following table sets forth the number and value of options held by
the executive officers of the Company named in the Summary Compensation Table.
During the year ended December 31, 1996, none of the executive officers named in
the Summary Compensation Table exercised any options to purchase Common Stock.
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-The-Money
Options at Options at
December 31, 1996(#) December 31, 1996($)(1)
-------------------- -----------------------
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
---- ------------- -------------
<S> <C> <C>
John H. Foster................ N/A N/A
Lawrence M. Davies............ 6,000/4,000 N/A
Alan N. Vinick ............... 10,000/40,000 N/A
Stanley F. Szczygiel.......... 3,600/4,400 N/A
Massoud G. Hampton, Ph.D...... 9,600/8,400 N/A
</TABLE>
- ----------
(1) None of the options held by the executive officers named in the Summary
Compensation Table were in-the-money at December 31, 1996. In-the-money
options are those for which the fair market value of the underlying Common
Stock exceeds the exercise price of the option.
EMPLOYMENT ARRANGEMENTS
The Company has entered into employment agreements, which are terminable at
will, with each of Lawrence M. Davies, Alan N. Vinick, Stanley F. Szczygiel,
Massoud G. Hampton, Ph.D. and Jane P. Stanton. These agreements set forth, among
other things, the base salary, bonus, equity participation, and other employee
benefit arrangements for each of Messrs. Davies, Vinick, Szczygiel and Hampton
and Ms. Stanton.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors of the
Company during 1996 were Shawkat Raslan, John H. Foster and Caroline H. Fleming.
During 1996, John H. Foster, Chairman of the Board and Chief Executive Officer
of the Company, was a director and a member of the Compensation Committee of
XYAN, Inc. During 1996, Caroline H. Fleming, a former officer and director of
the Company, was Chairman of the Board, Chief Executive Officer, director and a
member of the Compensation Committee of XYAN, Inc. See "Certain Transactions".
6
<PAGE> 9
PERFORMANCE GRAPH
The following performance graph compares the cumulative total stockholder
return of the Company's Common Stock to The NASDAQ Stock Market -- U.S. Index
and to the NASDAQ Health Services Index for the period from June 7, 1994, the
date of the Company's initial public offering, to December 31, 1996. The graph
assumes that $100 was invested in each of the Company's Common Stock, The NASDAQ
Stock Market -- U.S. Index and the NASDAQ Health Services Index on June 7, 1994
and that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN* SINCE JUNE 7, 1994
AMONG APOGEE, INC., THE NASDAQ STOCK MARKET -- US INDEX
AND THE NASDAQ HEALTH SERVICES INDEX
<TABLE>
<CAPTION>
===============================================================================
6/7/94 1994 1995 1996
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
APOGEE, INC. 100 103 54 22
- -------------------------------------------------------------------------------
NASDAQ STOCK 100 102 145 178
MARKET -- US
- -------------------------------------------------------------------------------
NASDAQ HEALTH 100 105 133 133
SERVICES
===============================================================================
</TABLE>
- --------------
* $100 INVESTED ON JUNE 7, 1994 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
7
<PAGE> 10
REPORT OF THE COMPENSATION COMMITTEE
The report of the Compensation Committee documents the Committee's policies
regarding executive officer compensation. The Company's philosophy and
objectives in setting compensation are:
- to offer levels of compensation which are competitive with those offered
by other companies in similar businesses;
- to compensate executives based on each executive's level of responsibility
and contribution to the Company's business goals;
- to link compensation with the Company's financial performance; and
- to align the interests of the Company's executives with the interests of
the Company's stockholders.
There are three major components to executive compensation at the Company:
base salary, bonus and stock options.
Base Salary
Base salary is determined by level of responsibility, individual performance
and Company performance, as well as by the need to provide a competitive package
that allows the Company to recruit and retain key executives. After reviewing
individual and Company performance and salaries at other companies of similar
size, the Chief Executive Officer makes recommendations to the Compensation
Committee concerning officers' salaries. The Compensation Committee reviews and,
with any changes it deems appropriate, approves these recommendations.
Executive Officer Bonuses
Bonuses are paid to the Company's executive officers based upon both their
individual performance and the Company's financial performance. Amounts which
may be earned by an executive officer as bonus, expressed as a percentage of
base salary, are generally agreed upon with the executive officer at the
commencement of his employment, subject to annual review by the President of the
Company in consultation with the Compensation Committee. Bonuses, which are paid
annually, range from 10% to 30% of an employee's annual base salary. Depending
on the provisions of the executive officer's employment agreement, between 30%
and 75% of the employee's bonus will be based upon the financial performance of
the Company. The remaining portion of an executive officer's bonus is based upon
the achievement of personal performance goals which are set by the President of
the Company in consultation with the Compensation Committee in the following
areas: patient care efficiency, employee retention, management objectives and
personal objectives. The President's personal performance goals are set by the
Chief Executive Officer of the Company in consultation with the rest of the
Compensation Committee.
Stock Options
During 1996, the Company granted 59,000 stock options under the Apogee, Inc.
1994 Stock Option Plan (the "Stock Option Plan") to executive officers of the
Company. In addition, in February 1996, the Company granted options for 45,350
shares of Common Stock to 31 other employees of the Company. The primary purpose
of the Stock Option Plan is to align the interests of the Company's key
employees, including its executive officers, more closely with the interests of
the Company's stockholders by offering these key employees an opportunity to
benefit from increases in the market price of the Common Stock. The Stock Option
Plan will provide long-term incentives that will enable the Company to attract
and retain key employees by encouraging their ownership of Common Stock. The
Stock Option Plan is administered by the Compensation Committee of the Board of
Directors, which will determine the persons who are to receive options and the
8
<PAGE> 11
number of shares to be subject to each option. In selecting individuals for
options and determining the terms thereof, the Compensation Committee may take
into consideration any factors it deems relevant, including present and
potential contributions to the success of the Company.
THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Shawkat Raslan, Chairman
John H. Foster
CERTAIN TRANSACTIONS
Each of the directors and the following executive officers of the Company
acquired the following shares of Common Stock from the Company in the following
months for $.10 per share, which shares of Common Stock vest over a three- to
five-year period contingent upon continued service: in March 1992, 5,000 shares
of Common Stock to Lawrence M. Davies, President and Chief Operating Officer and
a director of the Company and 5,000 shares of Common Stock to Henry C. Dudley, a
director of the Company; in August 1992, 5,000 shares of Common Stock to R.
Bruce Mosbacher, a director of the Company; in June 1993, 5,000 shares of Common
Stock to Timothy E. Foster, a director of the Company and 100,000 shares of
Common Stock to Mr. Davies; in July 1993, 5,000 shares of Common Stock to Jane
P. Stanton, Vice President of Human Resources of the Company; in December 1993,
5,000 shares of Common Stock to Harvey V. Fineberg, M.D., a director of the
Company; in January 1994, 10,000 shares of Common Stock to Stanley F. Szczygiel,
Vice President of Finance and Secretary of the Company and 5,000 shares of
Common Stock to Shawkat Raslan, a director of the Company; and in February 1994,
15,000 shares of Common Stock to Massoud G. Hampton, Ph.D., Vice President of
Clinical Services of the Company. The shares issued during January and February
1994 were deemed to have a fair value of $4.00 per share resulting in the
recognition of compensation expense by the Company over the periods during which
such shares vest.
The Company has entered into stock purchase agreements with each of its
directors and executive officers (except John H. Foster, Caroline H. Fleming and
Irwin Lehrhoff, Ph.D.) (the "Stock Purchase Agreements") pursuant to which such
individuals purchased their respective shares of Common Stock. The Stock
Purchase Agreements provide for restrictions on the sale of such shares and
further provide that the Company has the option to repurchase such shares at
$.10 per share upon the occurrence of certain conditions contained therein.
The Company entered into a stockholders agreement with Dr. Lehrhoff (the
"Stockholders Agreement") in connection with the Company's acquisition from Dr.
Lehrhoff of Irwin Lehrhoff & Associates, Inc. in March 1991. The Stockholders
Agreement grants certain registration rights to Dr. Lehrhoff in the event that
the Company registers shares of Common Stock pursuant to a registration
statement (other than a registration statement on Form S-8 or Form S-4 or other
comparable registration form) in connection with a public offering of Common
Stock.
The Company entered into a consulting agreement with Dr. Lehrhoff in April
1996 providing for a fee of $1,500 per month for consulting services plus
contingent fees based upon the consummation of acquisitions. Under the
consulting agreement, with respect to acquisitions initiated by him, Dr.
Lehrhoff receives a fee of $8,000 for each acquisition of a business with less
than $1,000,000 in annual net revenues, a fee of $12,000 for each acquisition of
a business with $1,000,000 or more in annual net revenues but less than
$2,000,000 in annual net revenues and a fee equal to one percent of the annual
net revenues of each acquired business having annual net revenues of $2,000,000
or more. Total fees paid under the consulting agreement in 1996 were $18,000.
9
<PAGE> 12
The Company has subleased its principal corporate offices through December
2002 from NovaCare, Inc., of which John H. Foster is Chairman of the Board,
Chief Executive Officer and a director and Timothy E. Foster is President and
Chief Operating Officer and a director. The Company pays base rent at a rate
equal to NovaCare, Inc.'s cost, including reimbursement for leasehold
improvements made by NovaCare, Inc. During 1996, the Company paid NovaCare, Inc.
a total of $168,000 pursuant to this sublease.
During 1996, NovaCare, Inc. paid the Company $460,000 for EAP and managed
mental health services provided by the Company pursuant to a contract between
the Company and NovaCare, Inc.
INFORMATION CONCERNING CERTAIN STOCKHOLDERS
The stockholders (including any "group" as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934) who, to the knowledge of the
Board of Directors of the Company, owned beneficially more than five percent of
the Company's one class of outstanding voting securities as of April 21, 1997,
each director and each executive officer named in the Summary Compensation Table
of the Company and all directors and officers of the Company as a group, and
their respective shareholdings as of such date (according to information
furnished by them to the Company), are set forth in the following table. Except
as indicated in the footnotes to the table, all of such shares are owned with
sole voting and investment power.
<TABLE>
<CAPTION>
Shares of Common
Stock Owned
Name and Address Beneficially Percent of Class
---------------- ---------------- ----------------
<S> <C> <C>
Abbingdon Venture Partners
Limited Partnership................ 2,762,275 28.0%
1018 West Ninth Avenue
King of Prussia, Pennsylvania 19406
Abbingdon Venture Partners
Limited Partnership-II............. 921,425 9.3
1018 West Ninth Avenue
King of Prussia, Pennsylvania 19406
John H. Foster....................... 3,732,474(1) 37.8
Foster Management Company
1018 West Ninth Avenue
King of Prussia, Pennsylvania 19406
Lawrence M. Davies................... 114,568(2) 1.2
Apogee, Inc.
1018 West Ninth Avenue
King of Prussia, Pennsylvania 19406
Henry C. Dudley...................... 65,000(3) *
Dudley & Company
444 Madison Avenue
34th Floor
New York, New York 10022
Timothy E. Foster.................... 3,708,921(4) 37.6
NovaCare, Inc.
1016 West Ninth Avenue
King of Prussia, Pennsylvania 19406
Harvey V. Fineberg, M.D.............. 7,000 *
Harvard School of Public Health
677 Huntington Avenue
Boston, Massachusetts 02115
Irwin Lehrhoff, Ph.D................ 186,000(5) 1.9
Irwin Lehrhoff & Associates
13946 Ventura Boulevard
Sherman Oaks, California 91423
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
Shares of Common
Stock Owned
Name and Address Beneficially Percent of Class
---------------- ---------------- ----------------
<S> <C> <C>
R. Bruce Mosbacher...................... 15,000(6) *
Mosbacher & Associates
2200 Sand Hill Road
Suite 150
Menlo Park, California 94025
Shawkat Raslan.......................... 5,000 *
International Resources Holdings, Inc.
16th Floor
770 Lexington Avenue
New York, New York 10021
Stanley F. Szczygiel.................... 15,138(7) *
Apogee, Inc.
1018 West Ninth Avenue
King of Prussia, Pennsylvania 19406
Massoud G. Hampton...................... 10,200(8) *
Apogee, Inc.
1018 West Ninth Avenue
King of Prussia, Pennsylvania 19406
Alan N. Vinick.......................... 22,773(9) *
Apogee, Inc.
1018 West Ninth Avenue
King of Prussia, Pennsylvania 19406
Wellington Management
Company, LLP.......................... 662,700 6.7
75 State Street
Boston, Massachusetts 02109
Directors and officers as a group 4,139,374(1)(3) 41.7
(11 persons)............................ (4)(5)
(10)
</TABLE>
- ------------
* Less than one percent (1%).
(1) Includes 3,683,700 shares of Common Stock owned by Abbingdon and
Abbingdon-II, limited partnerships, of each of which Mr. John H. Foster is a
general partner through intermediate general partnerships. Also includes
16,800 shares of Common Stock owned by the Trust u/w Virginia C. Foster, of
which Mr. John H. Foster is a trustee.
(2) Includes 6,000 shares of Common Stock presently issuable upon the exercise
of options.
(3) Includes 60,000 shares of Common Stock owned by Greenfield Partners and
Superior Partners, limited partnerships, of each of which Mr. Dudley is a
general partner.
(4) Includes 3,683,700 shares of Common Stock owned by Abbingdon and
Abbingdon-II, of each of which Mr. Timothy E. Foster is a general partner
through intermediate general partnerships.
(5) Includes 176,000 shares of Common Stock owned by Irwin Lehrhoff Trust No. 1,
of which Dr. Lehrhoff is a trustee and a beneficiary. Does not include 500
shares of Common Stock owned by Dr. Lehrhoff's spouse, of which shares of
Common Stock Dr. Lehrhoff disclaims beneficial ownership.
(6) Represents shares of Common Stock owned by the Mosbacher/Ditz Living Trust,
of which Mr. Mosbacher is the trustee and a beneficiary.
(7) Includes 4,200 shares of Common Stock presently issuable upon the exercise
of options.
11
<PAGE> 14
(8) Includes 10,200 shares of Common Stock presently issuable upon the exercise
of options.
(9) Includes 20,000 shares of Common Stock presently issuable upon the exercise
of options.
(10) Includes 44,400 shares of Common Stock presently issuable upon the exercise
of options.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of the Company's Common Stock, to file with the Securities and
Exchange Commission (the "Commission") initial reports of ownership and reports
of changes in ownership of Common Stock. Such persons are required by the
Commission's regulations to furnish the Company with copies of all Section 16(a)
forms filed.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company, during 1996, all Section 16(a) filing
requirements applicable to its officers, directors and stockholders were
complied with, except that Timothy E. Foster failed to make a timely filing of a
statement on Form 4 at the time he became a general partner of Abbingdon and
Abbingdon-II through intermediate general partnerships. Mr. Timothy E. Foster
has subsequently filed a Form 4 reporting this occurrence. John H. Fosterfailed
to make a timely filing on Form 4 regarding one transaction during fiscal year
1994. Mr. John H. Foster has subsequently filed a Form 5 reporting his
transaction.
12
<PAGE> 15
II. RATIFICATION OF SELECTION
OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected Price Waterhouse LLP to
serve as independent accountants for the Company for 1997. Such firm has
examined the financial statements of the Company since its inception. The Board
of Directors considers Price Waterhouse LLP to be eminently qualified.
Although it is not required to do so, the Board of Directors is submitting
its selection of the Company's accountants for ratification at the Meeting in
order to ascertain the views of stockholders regarding such selection. If the
selection is not ratified, the Board of Directors will reconsider its selection.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF
THE SELECTION OF PRICE WATERHOUSE LLP TO EXAMINE THE CONSOLIDATED FINANCIAL
STATEMENTS OF THE COMPANY AND ITS SUBSIDIARIES FOR 1997. It is the intention of
the persons named in the accompanying form of Proxy to vote the shares
represented thereby in favor of such ratification unless otherwise instructed in
such Proxy.
A representative of Price Waterhouse LLP will be present at the Meeting with
the opportunity to make a statement if such representative desires to do so, and
will be available to respond to appropriate questions.
III. OTHER MATTERS
The Board of Directors of the Company does not know of any other matters
which may be brought before the Meeting. However, if any such other matters are
properly presented for action, it is the intention of the persons named in the
enclosed Proxy to vote the shares represented thereby in accordance with their
judgment on such matters.
IV. MISCELLANEOUS
All costs relating to the solicitation of Proxies will be borne by the
Company. Proxies may be solicited by officers, directors and regular employees
of the Company and its subsidiaries personally, by mail or by telephone or
telegraph, and the Company may pay brokers and other persons holding shares of
stock in their names or those of their nominees for their reasonable expenses
in sending soliciting material to their principals.
It is important that Proxies be returned promptly. Stockholders who do not
expect to attend the Meeting in person are urged to mark, sign and date the
accompanying Proxy and mail it in the enclosed return envelope, which requires
no postage if mailed in the United States, so that their votes can be
recorded.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1998 Annual Meeting of
Stockholders of the Company must be received by the Company by January 13, 1998
in order to be considered for inclusion in the Company's Proxy Statement
relating to such meeting.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for 1996, which has been
filed with the Securities and Exchange Commission, will be sent, without charge,
to stockholders to whom this Proxy Statement is mailed upon written request to
the Chief Financial Officer, Apogee, Inc., 1018 West Ninth Avenue, King of
Prussia, Pennsylvania 19406.
May 12, 1997
13
<PAGE> 16
APOGEE, INC.
PROXY - ANNUAL MEETING OF STOCKHOLDERS - JUNE 12, 1997
COMMON STOCK
The undersigned, a stockholder of APOGEE, INC., does hereby appoint
JOHN H. FOSTER and LAWRENCE M. DAVIES, or either of them, with full power of
substitution, his proxies, to appear and vote all shares of Common Stock of the
Company which the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held on Thursday, June 12, 1997 at 9:00 A.M., local time, or
at any adjournments thereof, upon such matters as may properly come before the
Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby instructs said proxies or their substitutes
to vote as specified below on each of the following matters and in accordance
with their judgment on any other matters which may properly come before the
Meeting.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
SEE REVERSE
SIDE
<PAGE> 17
[ X ] PLEASE MARK YOUR
VOTES AS THIS
EXAMPLE.
1. ELECTION OF DIRECTORS.
<TABLE>
<S> <C>
FOR all the nominees listed [ ] WITHHOLD AUTHORITY [ ]
(except as marked to the contrary to vote for all the nominees listed
below)
</TABLE>
NOMINEES:
John H. Foster, Lawrence M. Davies,
Timothy E. Foster, Harvey V. Fineberg, M.D.,
Irwin Lehrhoff, Ph.D., R. Bruce Mosbacher
and Shawkat Raslan
(Instructions: To withhold authority to vote for any
individual nominee, write that nominee's name in the
space provided below)
_______________________________________________________
2. Ratification of appointment of Price
Waterhouse LLP as independent
accountants for 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" EACH ITEM.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS INDICATED AS TO EITHER OF ITEMS 1 or 2, THEY WILL BE VOTED IN FAVOR OF THE
ITEM(S) FOR WHICH NO DIRECTION IS INDICATED.
IMPORTANT: Before returning this Proxy, please sign your name or names on the
line(s) below exactly as shown hereon. Executors, administrators, trustees,
guardians or corporate officers should indicate their full titles when signing.
Where shares are registered in the name of joint tenants or trustees, each joint
tenant or trustee should sign.
Dated ________________________, 1997
______________________________(L.S.)
______________________________(L.S.)
Stockholder(s) Sign Here
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
