<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 19, 1998
APOGEE, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-13177 13-3605119
-------- ------- ----------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1060 First Avenue
King of Prussia, Pennsylvania 19406
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 992-2600
--------------
(Not Applicable)
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 27
Index to Exhibits at Page 15
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On May 19, 1998 (the "Closing Date"), the Registrant sold to
PsychPartners, Inc., PsychPartners MidAtlantic, Inc., PsychPartners MPG, Inc.,
PsychPartners North Florida, Inc. and PsychPartners of Florida, each a Delaware
corporation (collectively, the "Purchasers") substantially all of the assets and
business of the Registrant's outpatient behavioral healthcare business, which
consists of (i) all of the capital stock of AGP Acquisition Corp. ("AGP"), one
of the subsidiaries of the Registrant (the "Subsidiary Stock") operating two (2)
outpatient behavioral health practices and (ii) substantially all of the assets
(the "Assets") relating to 19 of the Registrant's outpatient behavioral health
practices (the 21 practices are collectively, the "Practices"). In consideration
for the Sale of the Practices, the Purchasers paid to the Registrant a purchase
price consisting of (a) $26,400,000 in cash, (b) a warrant to purchase 400,000
Common Units of PsychPartners, L.L.C., an Alabama limited liability company
("PsychPartners") at a purchase price of $.05 per Common Unit (the "Warrant") if
certain performance criteria are met and subject to adjustment and (c) the
assumption of certain liabilities of the Registrant and the Practices
(collectively, the "Purchase Price"). The Purchase Price is subject to certain
adjustments. The Purchase Price may be adjusted if the
<PAGE> 3
aggregate amount of the cash, accounts receivable, deposits and prepaid expenses
of the Practices acquired by the Purchasers is less than the aggregate amount of
the liabilities and future contingent cash payment obligations of the Practices
assumed by the Purchasers. These contingent cash payment obligations are based
upon the Practices achieving certain net revenue and pre-tax earnings targets.
As of the Closing Date, the aggregate amount of such assets less the aggregate
amount of such liabilities (not including future cash contingent payment
obligations) was $980,000. The estimated future cash contingent payment
obligations assumed by the Purchasers was $930,000. As of the Closing Date, the
Company would have had a net asset adjustment due to the Purchasers of
approximately ($50,000). The Registrant believes that subsequent to the Closing
Date any required adjustment would not exceed $500,000.
The Warrant entitles the Registrant to purchase, if certain performance criteria
are met and subject to adjustment, 400,000 Common Units of PsychPartners for a
purchase price of $.05 per Common Unit during the five (5) year period following
the Closing Date. The Warrant was delivered on the Closing Date to an escrow
agent. The subsequent issuance of the Warrant to the Registrant is contingent
upon (i) the achievement of certain future operating profit
<PAGE> 4
thresholds by two of the Practices sold to the Purchaser during the one-year
period after the Closing Date of the Sale and (ii) the purchase by the
Purchasers of the assets of the Registrant's LifeStart Clinic practice (the
"LifeStart Practice") in New York State which the Purchasers did not acquire on
the Closing Date within one year of the Closing Date. If the Purchasers do not
acquire the LifeStart Practice within the one-year period following the Closing
Date, 170,000 of the Common Units which the Warrant may be exercised for will be
cancelled. The Registrant has not assigned, and will not assign, a value to the
Warrant until all adjustments and contingencies are resolved and the Warrant is
issued to the Registrant. Neither the Warrant nor the Common Units underlying
the Warrant have been registered under the Securities Act of 1933, as amended,
and the Warrant does not provide for either the Warrant or the Common Units to
be registered by PsychPartners. The Warrant, if exercised, must be exercised in
whole, and not in part, by the Registrant or any permissible transferee of the
Registrant. Upon the presentation of an exercise notice to PsychPartners and the
payment, by check or wire transfer, the Registrant or any permissible transferee
shall be admitted as a member of PsychPartners. PsychPartners is not a publicly
traded company, and, therefore, a public market value for the Common Unit is not
available to compare with the exercise price of the Warrant.
<PAGE> 5
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired:
Not applicable.
(b) Pro forma financial information:
The pro forma financial information required to be filed as part of
this Current Report on Form 8-K are listed in the attached Index to Pro Forma
Financial Information.
(c) Exhibits:
The exhibits required to be filed as part of this Current Report on
Form 8-K are listed in the attached Index to Exhibits.
<PAGE> 6
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
APOGEE, INC.
By /s/ Lawrence M. Davies
---------------------------
Name: Lawrence M. Davies
Title: President
Dated: June 2, 1998
<PAGE> 7
Index to Pro Forma Condensed
Financial Information
Sequential
Description Page Location
----------- -------------
Pro Forma Condensed Balance Sheet as
of March 31, 1998. 9
Pro Forma Condensed Statement of
Operations for the quarter ended
March 31, 1998. 10
Pro Forma Condensed Statement of
Operations for the year ended
December 31, 1997. 11
Notes to Pro Forma Condensed
Financial Information. 12
<PAGE> 8
APOGEE, INC.
PRO FORMA CONDENSED FINANCIAL INFORMATION
In December 1997, the Registrant's Board of Directors approved a plan to
discontinue and exit the Registrant's outpatient group practice operations. In
May 1998, the shareholders of the Registrant's approved the terms of the
Agreement of Purchase and Sale to sell substantially all of the Registrant's
outpatient business assets to PsychPartners and the Registrant then consummated
the Sale. The Registrant will continue to operate its managed care behavioral
health business through its Integra Division. The following unaudited Pro
Forma Condensed Statements of Operations for the three months ended March 31,
1998 and for the year ended December 31, 1997 were prepared as if the
discontinuation and Sale of the Registrant's operations other than Integra,
were effective January 1, 1997. The Pro Forma Condensed Balance Sheet as of
March 31, 1998, was prepared as if the discontinuation and Sale were effective
as of this date.
The Pro Forma Condensed Financial Information should be read in
conjunction with the Registrant's April 23, 1998 Proxy Statement and historical
Consolidated Financial Statements and notes thereto. The Pro Forma Condensed
Financial Information set forth below is presented for informational purposes
only and is not necessarily indicative of the results that would have actually
occurred had the events been consummated as of the dates presented or the
results that may occur in the future.
<PAGE> 9
APOGEE, INC.
PRO FORMA CONDENSED BALANCE SHEET
As of March 31, 1998
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Prior
to Businesses
Businesses Discontinued & Businesses Other
Historical(A) Sold(B) Other Adjustments Discontinued(C) Adjustments Pro Forma
------------- ------- ----------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,938 $ (22,042)(H)$ 23,980 $ 222 $ 19,410(I) $ 4,348
Accounts receivable, net of
allowance for doubtful
accounts 5,885 5,001 884 315 569
Other accounts receivable 820 419 401 15 386
Other current assets 431 237 194 0 194
------------ ------------ ------------ ------------ ------------ ----------
Total current assets 9,074 (16,385) 25,459 552 19,410 5,497
Property and equipment, net 2,378 1,196 1,182 16 1,166
Intangible assets and excess cost over
fair value of net assets acquired,
net 30,837 20,436 10,401 594 9,807
Other assets 192 170 22 16 6
------------ ------------ ------------ ------------ ------------ ----------
$ 42,481 $ 5,417 $ 37,064 $ 1,178 $ 19,410 $ 16,476
============ ============ ============ ============ ============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 15,893 $ 15,893 $ 14,770 $ 1,123
Accounts payable 1,818 $ 481 1,337 $ 40 1,297
Accrued expenses and other current
liabilities 19,920 4,876 15,044 626 4,500 9,918(J)
------------ ------------ ------------ ------------ ------------ ----------
Total current liabilities 37,631 5,357 32,274 666 19,270 12,338
Long-term debt 42 42 0 42
Other long-term liabilities 60 60 0 0 0
Deferred income tax liability 346 346 0 346
------------ ------------ ------------ ------------ ------------ ----------
Total liabilities 38,079 5,417 32,662 666 19,270 12,726
------------ ------------ ------------ ------------ ------------ ----------
Stockholders' equity:
Common stock 101 101 0 101
Capital in excess of par value 86,513 86,513 0 (930)(G) 87,443
Accumulated deficit (82,188) (82,188) 512 1,070 (G) (83,770)
Deferred compensation (24) (24) 0 (24)
------------ ------------ ------------ ------------ ------------ ----------
Total stockholders' equity 4,402 0 4,402 512 140 3,750
------------ ------------ ------------ ------------ ------------ ----------
$ 42,481 $ 5,417 $ 37,064 $ 1,178 $ 19,410 $ 16,476
============ ============ ============ ============ ============ ==========
</TABLE>
The accompanying notes to the Pro Forma Condensed Financial Information
are an integral part of these Statements
<PAGE> 10
APOGEE, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
Quarter Ended March 31 1998
(Dollars in thousands, except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Prior
to Businesses
Businesses Discontinued & Businesses Other
Historical(A) Sold(B) Other Adjustments Discontinued(C) Adjustments Pro Forma
------------- ------- ----------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net revenues $ 15,404 $ 11,881 $ 3,523 $ 684 $ 2,839
Cost of revenues 11,860 9,384 2,476 742 1,734
------------ ------------ ------------ ------------ --------- ------------
Gross profit 3,544 2,497 1,047 (58) 1,105
Selling and administrative expenses 2,493 1,459 1,034 282 752
Provision for doubtful accounts 770 594 176 176 0
Amortization of intangible assets
and excess cost over fair value
of net assets acquired 420 293 127 6 121
------------ ------------ ------------ ------------ --------- ------------
(Loss) income from operations (139) 151 (290) (522) 232
Non-operating expenses (income):
Interest expense(D) 313 188 125 125 0
Interest income (3) (3) (3)
------------ ------------ ------------ ------------ --------- ------------
(Loss) income before income taxes (449) (37) (412) (644) 232
Provision for income taxes 32 12 20 (5) 25(E)
------------ ------------ ------------ ------------ --------- ------------
Net (loss) income $ (481) $ (49) $ (432) $ (639) $ 0 $ 207
============ ============ ============ ============ ========= ============
Basic net (loss) income per
common share $ (0.05) $ (0.04) $ 0.02
============ ============ ============
Weighted average shares
outstanding 10,062,736 10,062,736 400,000(G) 10,462,736
============ ============ ========= ============
</TABLE>
The accompanying notes to the Pro Forma Condensed Financial
Information are an integral part of these Statements
<PAGE> 11
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
Year Ended December 31, 1997
(Dollars in thousands, except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Prior
to Businesses
Businesses Discontinued & Businesses Other
Historical(A) Sold(B) Other Adjustments Discontinued(C) Adjustments Pro Forma
------------- ------- ----------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net revenues $ 70,144 $ 48,107 $ 22,037 $ 11,612 $ 10,425
Cost of revenues 54,202 37,103 17,099 11,280 5,819
------------ ------------ ------------ ------------ ------------ ------------
Gross profit 15,942 11,004 4,938 332 4,606
Selling and administrative expenses 10,447 6,165 4,282 1,279 3,003
Provision for doubtful accounts 4,226 2,405 1,821 1,821
Amortization of intangible assets
and excess cost over fair value
of net assets acquired 2,441 1,398 1,043 788 $ 124(F) 379
Writedown of assets 38,400 38,400
Restructuring and other charges 20,100 20,100
------------ ------------ ------------ ------------ ------------ ------------
(Loss) income from operations (59,672) (37,364) (2,208) (23,656) (124) 1,224
Non-operating expenses (income):
Interest expenses (D) 1,474 877 597 560 37
Interest income (30) (30) (30)
------------ ------------ ------------ ------------ ------------ ------------
(Loss) income before income taxes (61,116) (38,241) (2,775) (24,186) (124) 1,187
Provision for income taxes 102 50 52 (36) 88(E)
------------ ------------ ------------ ------------ ------------ ------------
Net (loss) income $ (61,218) $ (38,291) $ (2,827) $ (24,150) $ (124) $ 1,099
============ ============ ============ ============ ============ ============
Basic net (loss) income per
common share $ (6.17) $ (0.28) $0.11
============ ============ ============
Weighted average shares
outstanding 9,921,374 9,921,374 400,000(G) 10,321,374
============ ============ ============ ============
</TABLE>
The accompanying notes to the Pro Forma Condensed Financial Information
are an integral part of these Statements
<PAGE> 12
APOGEE, INC.
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
(A) The historical balances represent the financial position as of March 31,
1998 and the results of operations for the three months ended March 31,
1998 and the year ended December 31, 1997 as reported in the historical
Consolidated Financial Statements of the Registrant.
(B) Represents balances of the Registrant's outpatient business which have
been sold to PsychPartners.
(C) Represents balances of the Registrant's operations other than Integra and
the outpatient business held for sale to PsychPartners. During these
periods, these operations are principally comprised of the Registrant's
long-term care and Western Region outpatient operations.
(D) Represents the elimination of interest expense pertaining to subordinated
promissory notes issued in connection with acquisitions for business
operations being sold or discontinued and the elimination of interest
expense pertaining to borrowings under the Registrant's revolving credit
facility which were attributed to either sold or discontinued operations.
(E) The Registrant has significant net operating loss carryforwards which are
assumed to be utilized for federal income tax purposes. The Registrant has
taxable income in certain states, and accordingly, the pro forma balance
represents the estimated provision for state income taxes.
(F) In the fourth quarter of 1997, the Registrant changed its estimated useful
life for excess cost over fair value of net assets acquired from 40 years
to 25 years. The Registrant believed this change in estimate was
appropriate given the Registrant's sale to PsychPartners which will
reposition the Registrant as a managed behavioral healthcare company.
Additionally, the Registrant will be significantly smaller in terms of
both revenues and assets. A pro forma adjustment has been made to record
the effect of this change in estimate for the retained Integra business
as if the change occurred at the beginning of 1997.
(G) In the event the Sale would not have been completed, the Registrant
entered into an agreement with certain investment partnerships (the
"Investment Partnerships") which are significant stockholders of the
Registrant and are managed by Foster Management Company, an affiliated
party, to obtain their commitment to guarantee an additional $7,000 of
financing. In return, the Investment Partnerships will receive the
following: (i) a commitment fee of 2% of the guaranteed amount; (ii) a
draw down fee of 2% on borrowings in excess of $15,000; (iii) an unused
commitment fee of 1/2% per annum; and (iv) warrants to purchase 400,000
shares of common stock of the Registrant at a price of $0.05 per share
(the "Apogee Warrants") or, in the event the Sale is not consummated, a
transaction fee of $3,500 payable on April 30, 1999. With the Sale
completed, the Registrant estimates the cost to the Registrant will be
$140 in cash payable to the Investment Partnerships and a non-recurring
charge of approximately $930 which represents the difference between the
exercise price of the Apogee Warrants and the fair market value of the
underlying Common Stock. These charges will be recorded in the
Registrant's results of operations for the quarter ending June 30,
1998.
<PAGE> 13
The impact of this financing commitment guarantee on the Pro Forma
Statements is as follows:
i) the required commitment fee of 2% on the guaranteed amount of $7,000
is $140 (See note I).
ii) the fair value of the Warrant to purchase 400,000 shares of Common
Stock on the date the commitment was made, March 23, 1998, was
approximately $950 and the aggregate financing charge was $930
based on the fair value of the warrants versus the aggregate strike
price of $20.
The above results in a pro forma adjustment to accumulated deficit in the
accompanying consolidated pro forma balance sheet of $1,070 as of January
1, 1997. These adjustments have not been reflected in the accompanying
consolidated statement of operations. With the consummation of the Sale,
the Registrant has terminated the agreement and no further costs for this
guarantee are expected to be incurred by the Registrant. Accordingly,
these charges for the guarantee are non-recurring in nature.
(H) Cash and cash equivalents for businesses sold is calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
Net increase in cash at closing (See note I) ................. $22,610
Less:
Cash remaining with clinics sold ............................. 568
=======
Net increase in cash and cash equivalents for
businesses sold ............................................ $22,042
-------
(I) Net proceeds to be received in connection with the Sale using balances as
of March 31, 1998 is calculated as follows:
Gross cash proceeds from sale ................................ $26,400
Less:
Estimated escrow amounts .................................... 1,150
Severance and separation payments ........................... 1,540
Expenses related to the sale ................................ 1,100
-------
Net increase in cash at closing ............................. 22,610
=======
Less other uses of proceeds:
Repayment of credit facility ................................ 14,770
Financing guarantee and commitment fee ...................... 140
Payment of contingent consideration and settlement of
Florida Medicare review .................................... 4,500
-------
Total other use of proceeds ................................ 19,410
-------
Net remaining proceeds ....................................... $ 3,200
=======
</TABLE>
The net proceeds from the Sale will be available to the Registrant for
general corporate purposes. Severance and separation payments and expenses
related to the Sale, which have been accrued at December 31, 1997 and will
be paid in 1998, are not included in the pro forma statement of
operations.
<PAGE> 14
The issuance of the Warrant by PsychPartners to the Registrant is
contingent upon the achievement of certain future operating profit
thresholds of two of the Practices sold during the one-year period after
the closing date of the Sale. The Company will not assign a value to the
Warrant until the contingency is resolved and the Warrant is issued to
the Registrant. Accordingly, no impact of this Warrant is included in the
pro forma statements.
(J) Accrued expenses and other current liabilities include:
<TABLE>
<CAPTION>
<S> <C>
Clinician fees and medical claims ............................ $1,382
Acquisition related costs .................................... 150
Salaries and vacation ........................................ 370
Restructuring and other costs ................................ 6,403
Other ........................................................ 1,613
------
$9,918
======
</TABLE>
Restructuring and other costs pertain primarily to reserves for long-term
care billings. The Registrant elected to discontinue all of its long term
care operation in December 1996. The Registrant is currently undergoing
post payment reviews of its long term care billings and the Registrant has
established reserves associated with these reviews. (See Notes 11 and 13
in the Registrant's 1997 Consolidated Financial Statement which are
contained in the Registrant's Form 10-K filed with the Securities and
Exchange Commission on April 15, 1998.) The liability pertaining to
these reviews will be retained by the Registrant. The charge associated
with these liabilities has been eliminated in the Businesses
Discontinued column and is a component of the Restructuring and other
charges line.
<PAGE> 15
Index to Exhibits
Exhibit Sequential
Number Description Page Location
------ ----------- -------------
2(a). Agreement of Purchase and Sale dated
as of December 26, 1997 by and among
PsychPartners L.L.C, PsychPartners,
Inc., PsychPartners MidAtlantic, the
Registrant and certain subsidiaries of
the Registrant (incorporated by
reference to the Registrant's Current
Report on Form 8-K dated December 26, --
1997).
2(b). Extension Letter dated April 3, 1998. 16
2(c). First Amendment to Purchase Agreement
dated May 14, 1998. 19
2(d). Second Amendment to Purchase Agreement
dated as of May 18, 1998. 23
<PAGE> 1
Exhibit 2(b)
APOGEE, INC.
1060 First Avenue
King of Prussia, Pennsylvania 19406
April 3, 1998
VIA FACSIMILE AND FEDERAL EXPRESS
PsychPartners, L.L.C.
1900 International Park Drive
Suite 220
Birmingham, Alabama 35243
Attention: Mr. Kerry G. Teel
Ladies and Gentleman:
Reference is made to the Agreement of Purchase and Sale (the
"Purchase Agreement") dated as of December 26, 1997 by and among PsychPartners,
Inc., a Delaware corporation ("PsychPartners, Inc."), and the PsychPartners
MidAtlantic, Inc., a Delaware corporation ("MidAtlantic," and together with
PsychPartners, Inc., the "Purchasers"), PsychPartners, L.L.C., an Alabama
limited liability company ("PsychPartners"), Apogee, Inc., a Delaware
corporation ("Apogee"), and certain subsidiaries of Apogee (the subsidiaries
together with Apogee, the "Sellers"). Capitalized terms used herein and not
defined shall have the meanings set forth in the Purchase Agreement.
Pursuant to Section 9.1(b) of the Purchase Agreement, the Purchase
Agreement may be terminated at the election of either the Purchasers or the
Sellers if the Closing Date shall not have occurred on or before April 30, 1998
(the "Termination Date"), provided, that, no party shall be entitled to
terminate the Purchase Agreement pursuant to Section 9.1(b) if such party's
failure to fulfill any obligation under the Purchase Agreement has been the
primary cause of, or resulted in, the failure of the Closing to occur on or
before such date. In view of the fact that the review of Apogee's proxy
statement by the Securities and Exchange Commission has been in progress for a
period that is longer than was anticipated by the parties at the time the
Purchase Agreement was executed, we request and seek your agreement that the
Termination Date be extended until May 31, 1998 (the "Extension").
<PAGE> 2
If you agree to the Extension, kindly indicate such agreement by
countersigning below on behalf of PsychPartners and the Purchasers.
Very truly yours,
/s/ Lawrence M. Davis
Lawrence M. Davis
President
AGREED AND ACCEPTED
PSYCHPARTNERS, L.L.C.
for itself and on
behalf of the PURCHASERS
By /s/ Kerry G. Teel
- -----------------------------------
Pres. PsychPartners
<PAGE> 1
Exhibit 2(c)
AMENDMENT TO
AGREEMENT OF PURCHASE AND SALE
This AMENDMENT TO THE AGREEMENT OF PURCHASE AND SALE (this
"Amendment") is made as of May 14, 1998, by and among PsychPartners, L.L.C., an
Alabama limited liability company, for itself and on behalf of its direct and
indirect wholly-owned subsidiaries that are parties to the Purchase Agreement
(as defined below)(collectively, the "Purchasers"), and Apogee, Inc., a Delaware
corporation, for itself and on behalf of certain of its direct and indirect
subsidiaries that are parties to the Purchase Agreement (collectively, the
"Sellers").
RECITALS:
WHEREAS, the parties hereto entered into that certain Agreement of
Purchase and Sale, dated as of December 26, 1997 (the "Purchase Agreement"),
which provides for the purchase by Purchasers of certain of the assets and stock
of Sellers; and
WHEREAS, the parties hereto amended the Purchase Agreement, by
letter dated April 3, 1998, to extend the Termination Date (as defined in the
Purchase Agreement) to May 30, 1998; and
WHEREAS, the parties hereto desire to further amend and supplement
certain provisions of the Purchase Agreement as set forth below.
NOW, THEREFORE, on consideration of the mutual covenants and
agreements contained herein and in the Purchase Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Terms. Capitalized terms used herein and not defined herein shall
have the meaning set forth in the Asset Purchase Agreement.
2. Amendment to Purchase Agreement.
(a) The cover page of the Purchase Agreement is hereby amended by
adding, immediately following "PsychPartners, Inc ", the following parties:
PsychPartners MPG, Inc.
PsychPartners North Florida, Inc.
PsychPartners of Florida, Inc.
<PAGE> 2
(b) The first paragraph of the Purchase Agreement is hereby amended
by adding, immediately following the words, "PsychPartners Mid-Atlantic, Inc., a
Delaware corporation", the following:
"PsychPartners MPG, Inc., a Delaware corporation, PsychPartners
North Florida, Inc., a Delaware corporation, and PsychPartners of
Florida, Inc., a Delaware corporation"
(c) All references in the Purchase Agreement to "Purchasers" shall
include PsychPartners of Florida, Inc., a Delaware corporation, PsychPartners
MPG, Inc., a Delaware corporation and PsychPartners North Florida, Inc., a
Delaware corporation.
(d) The cover page of the Purchase Agreement is hereby further
amended by deleting "AGP Acquisition, Inc." in its entirety and substituting
therefor, "AGP Acquisition Corp."
(e) All references to "AGP Acquisition, Inc." in the Purchase
Agreement shall be deleted in their entirety and "AGP Acquisition Corp." shall
be substituted therefor.
(f) All references to the phrase "November 30" in Section 1.7(a) of
the Purchase Agreement shall be deleted in their entirety and "December 31"
shall be substituted therefor.
(g) All references to the word "November" in Section 1.7(a) of the
Purchase Agreement, other than references to "November 30", shall be deleted in
their entirety and the word "December" shall be substituted therefor.
4. Acknowledgement by Additional Purchasers. By signing the
agreement below where indicated, PsychPartners North Florida, Inc.,
PsychPartners MPG, Inc. and PsychPartners of Florida, Inc. agree to be bound by
all terms and conditions of the Purchase Agreement, as heretofore and hereby
amended.
5 Effect on Purchase Agreement. Except as expressly modified hereby
or as necessary to conform to the express terms hereof, all terms and conditions
of the Purchase Agreement, as heretofore amended, shall remain in full force and
effect.
6. Counterparts. This Agreement may be executed in several
counterparts, and by the parties on separate counterparts, and all such
counterparts, which so executed and delivered, shall constitute but one and the
same agreement.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
APOGEE, INC.
/s/ Lawrence M. Davies
----------------------------------------------
By: Lawrence M. Davies
Its: President
PSYCHPARTNERS, L.L.C.
/s/ Emmett E. McLean
----------------------------------------------
By: Emmett E. McLean
Its: Senior Vice President
Acknowledged and Agreed To By:
PSYCHPARTNERS NORTH
FLORIDA, INC.
/s/ Emmett E. McLean
----------------------------------------------
By: Emmett E. McLean
Its: Secretary
PSYCHPARTNERS OF FLORIDA, INC.
/s/ Emmett E. McLean
----------------------------------------------
By: Emmett E. McLean
Its: Secretary
PSYCHPARTNERS MPG, INC.
/s/ Emmett E. McLean
----------------------------------------------
By: Emmett E. McLean
Its: Secretary
-3-
<PAGE> 1
Exhibit 2(d)
SECOND AMENDMENT TO
AGREEMENT OF PURCHASE AND SALE
This SECOND AMENDMENT TO THE AGREEMENT OF PURCHASE AND SALE (this
"Amendment") is made as of May 18, 1998, by and among PsychPartners, L.L.C, an
Alabama limited liability company, for itself and on behalf of its direct and
indirect wholly-owned subsidiaries that are parties to the Purchase Agreement
(as defined below)(collectively, the "Purchasers"), and Apogee, Inc., a Delaware
corporation ("Apogee"), for itself and on behalf of certain of its direct and
indirect subsidiaries that are parties to the Purchase Agreement (collectively,
the "Sellers").
RECITALS:
WHEREAS, the parties hereto entered into that certain Agreement of
Purchase and Sale, dated as of December 26, 1997 (the "Purchase Agreement'),
which provides for the purchase by Purchasers of certain of the assets and stock
of Sellers; and
WHEREAS, the parties hereto amended the Purchase Agreement, by
letter dated April 3, 1998, to extend the Termination Date (as defined in the
Purchase Agreement) to May 30, 1998, and by an Amendment to the Agreement dated
May 14, 1998. to supplement the Purchasers under the Purchase Agreement; and
WHEREAS, the parties hereto have agreed, among other things, that
Apogee and the other Sellers will not sell to Purchasers as part of the
Transferred Assets and Purchasers will not purchase from Apogee and the other
Sellers, as a part of the Transferred Assets, the LifeStart Clinic, Inc.
practice; and
WHEREAS, the parties hereto have agreed that the Purchase Price for
the Transferred Assets shall be $26,400,000 and that the Warrant shall be
subject to adjustment as set forth herein; and
WHEREAS, the parties hereto desire to further amend and supplement
certain provisions of the Purchase Agreement as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and in the Purchase Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
<PAGE> 2
1. Terms. Capitalized terms used herein and not defined herein shall
have the meaning set forth in the Asset Purchase Agreement.
2. Amendment to Purchase Agreement.
(a) Section 1.7(a) of the Purchase Agreement is hereby amended by
deleting the third sentence thereof and substituting in lieu thereof the
following:
"At the Closing, Purchasers shall deliver $150,000 (collectively, the
"Balance Sheet Adjustment Escrow Account") to the Escrow Agent, to be held
pursuant to the terms of the Escrow Agreement, in substantially the form
of Exhibit C attached hereto (the "Escrow Agreement")."
(b) The Purchase Agreement and all Schedules and Exhibits thereto
are hereby amended to delete therefrom all references to LifeStart Clinic, Inc.
and the Administrative Services Agreement, dated as of March 29, 1996, by and
between Apogee Services, Inc. and LifeStart Clinic, Inc. (the "LifeStart
Agreement") and related working capital (together, the "Lifestart Practice"),
and all references in the Purchase Agreement to "22" behavioral health care
practices are amended to read "21" behavioral health care practices. Section 1.6
of the Purchase Agreement is hereby amended to reduce the Purchase Price for the
Transferred Assets by the amount of $600,000 in cash to $26,400,000. In
addition, for a period of one year from the date hereof, the Warrant shall not
be exercisable with respect to 170,000 of the Common Units covered thereby, and
at the end of such year the Warrant shall automatically be cancelled as to
170,000 Common Units if the option hereinafter described in this paragraph has
not been exercised by Purchasers. In the event that, within one year from the
date hereof, Sellers receive from an independent third party, a bona fide offer
to purchase the LifeStart Practice which Sellers intend to accept (the "Third
Party Offer"), Sellers shall so notify Purchasers in writing (and in such notice
shall state the name of such party, the amount of the offer and the terms and
conditions applicable thereto) and Purchasers shall have the right and option to
purchase the LifeStart Practice from Sellers for a price equal to the lesser of
(i) the Third Party Offer and (ii) 4.57 times the Operating Profit of the
LifeStart Practice based on the twelve-month period prior to the date of the
notice of the Third Party Offer; provided, however, Purchasers shall not assume
any earnout liabilities related to the LifeStart Practice. Such option shall be
exercised, if at all, by Purchasers giving written notice to Sellers of the
election to exercise the option with forty-five (45) days of Sellers written
notice. Sellers shall convey the LifeStart Agreement and other assets of the
LifeStart Practice to the Purchasers within thirty (30) days after the exercise
of the option. If such option is exercised, there shall be credited as payment
by Purchasers to Sellers by virtue of the Warrant not being cancelled the sum of
$3.94 per Common Unit, up to the lesser of the amount of the purchase price for
the LifeStart Practice and $669,800, and any portion of the Warrant for such
170,000 Common Units not so applied shall automatically be cancelled.
Notwithstanding the above, Purchasers shall have the right, at any time prior to
electing to purchase the LifeStart Practice by written notice to Sellers to
rescind and release Purchasers right of first refusal set herein and cancel the
Warrant as to such 170,000 Common Units without any action on the part of
Sellers. The Warrant shall be cancelled as to such
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<PAGE> 3
170,000 Common Units immediately upon Purchasers giving such notice to Sellers.
Similarly, Sellers shall have the right to close the LifeStart Practice at any
time and the Warrant shall be automatically cancelled as to such 170,000 Common
Units upon such closure.
(c) Article III of the Purchase Agreement is hereby amended by
adding thereto the following provision.
Section 3.36 LifeStart
Apogee Services, Inc. and LifeStart Clinic, Inc., a practice managed by
Apogee Services, Inc. (together, the "LifeStart Practice") maintain
separate licenses and provider numbers from the Business and no present or
future accounts receivable or other rights or assets of the Business are
or will be subject to any right of offset or claim by any governmental
agency or other party on account of the conduct of the business of the
LifeStart Practice or the management thereof.
3. Estimated Earnouts. The parties hereby agree that the amount of
unpaid Estimated Earnouts for purposes of Section 5.5 is $930,000.
4. Effect on Purchase Agreement. Except as expressly modified hereby
or as necessary to conform to the express terms hereof, all terms and conditions
of the Purchase Agreement, as heretofore amended, shall remain in full force and
effect.
5. Counterparts. This Agreement may be executed in several
counterparts, and by the parties on separate counterparts, and all such
counterparts, which so executed and delivered, shall constitute but one and the
same agreement.
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<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
APOGEE, INC.
/s/ Lawrence M. Davies
----------------------------------------------
By: Lawrence M. Davies
Its: President
PSYCHPARTNERS, L.L.C.
/s/ Emmett E. McLean
----------------------------------------------
By: Emmett E. McLean
Its: Senior Vice President
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