<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended December 31, 1997
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-13177
APOGEE, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3605119
----------------------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1060 First Avenue
King of Prussia, Pennsylvania 19406
-------------------------------------- -----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 610-992-7670
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
- ------------------- -----------------------
<S> <C>
Common Stock, $.01 par value American Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period as the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers, pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
<PAGE> 2
2
As of March 31, 1998, 10,089,329 shares of Common Stock, $.01 par
value, were outstanding, and the aggregate market value of the shares of Common
Stock, $.01 par value, held by non-affiliates of the registrant as of March 31,
1998 was approximately $13,400,000. (Determination of stock ownership by
non-affiliates was made solely for the purpose of responding to this requirement
and registrant is not bound by this determination for any other purpose).
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the documents, all or portions of which are
incorporated by reference herein, and the Part of the Form 10-K into which the
document is incorporated:
None.
<PAGE> 3
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT.
Information regarding the Company's executive officers is contained
in Part I under "Item 1. Business - Executive Officers of the Company."
CERTAIN INFORMATION CONCERNING DIRECTORS
Certain biographical information concerning the directors of the
Company as of March 31, 1998 is set forth below. Such information was furnished
by them to the Company.
<TABLE>
<CAPTION>
Certain
Name of Director Age Biographical Information
- ---------------- --- ------------------------
<S> <C> <C>
JOHN H. FOSTER 55 Chairman of the Board and Chief Executive
Officer of the Company since March 1991. Mr.
Foster has been Chairman of the Board of
NovaCare, Inc., a leading national provider of
comprehensive medical rehabilitation services
("NovaCare"), since December 1984. Between
December 1984 and May 1997, he was also Chief
Executive Officer of NovaCare. Mr. Foster is a
director of Corning Incorporated, an
international corporation with business
interests in specialty materials,
communications, laboratory services and
consumer products. Mr. Foster is a director of
CulturalAccessWorldwide, Inc., an outsourced
and marketing services company. Mr. Foster is
the founder and Chairman of the Board of
Foster Management Company, a venture capital
firm, and general partner of various venture
capital investment funds.
</TABLE>
<PAGE> 4
2
<TABLE>
<CAPTION>
Certain
Name of Director Age Biographical Information
- ---------------- --- ------------------------
<S> <C> <C>
LAWRENCE M. DAVIES 39 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.
HARVEY V. FINEBERG, M.D. 52 Director of the Company since November 1993.
Dr. Fineberg has been Provost of Harvard
University since July 1997 and 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.
</TABLE>
<PAGE> 5
3
<TABLE>
<CAPTION>
Certain
Name of Director Age Biographical Information
- ---------------- --- ------------------------
<S> <C> <C>
TIMOTHY E. FOSTER 46 Director of the Company since February 1993.
Mr. Foster has been Chief Executive officer of
NovaCare since May 1997. Between October 1994
and May 1997 he was President and Chief
Operating Officer of NovaCare. He has been a
director of NovaCare since December 1984.
Prior to becoming President of NovaCare, he
served in a variety of finance and
administrative roles at NovaCare beginning in
1984. Mr. Foster has been a Managing Partner
of Foster Management Company since June 1997.
IRWIN LEHRHOFF, PH.D. 68 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.
</TABLE>
<PAGE> 6
4
<TABLE>
<CAPTION>
Certain
Name of Director Age Biographical Information
- ---------------- --- ------------------------
<S> <C> <C>
R. BRUCE MOSBACHER 45 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.
SHAWKAT RASLAN 46 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.
</TABLE>
No family relationships exist between any of the directors and
officers of the Company.
<PAGE> 7
5
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. Officers, directors and greater
than ten percent stockholders are required by the Commission regulations to
furnish the Company with copies of all Section 16(a) reports filed.
To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company and representations that no other
reports were required, during the fiscal year ended December 31, 1997 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with, except that each
of John H. Foster, Abbingdon Venture Partners Limited Partnership ("Abbingdon"),
and Abbingdon Venture Partners Limited Partnership-II ("Abbingdon-II") failed to
make a timely filing of a statement on Form 4 regarding certain transactions.
Mr. Foster, Abbingdon and Abbingdon-II have subsequently each filed a Form 5
reporting their transactions.
<PAGE> 8
6
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth information for the years ended
December 31, 1997, 1996 and 1995 concerning the compensation of the Company's
Chief Executive Officer and each of the other most highly compensated executive
officers of the Company whose total annual salary and bonus exceeded $100,000
during the year ended December 31, 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
--------------------
Other --------
Annual Awards
Compensation -------- All Other
Name and Principal Position Year Salary($) Bonus($) ($) Options(#) Compensation($)
- -------------------------- ------- --------- -------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John H. Foster........... 1997 -- -- -- -- --
Chairman of the Board and 1996 -- -- -- -- --
Chief Executive Officer 1995 -- -- -- -- --
Lawrence M. Davies....... 1997 150,000 20,000 6,000(1) -- 2,885(2)
President and Chief 1996 150,000 20,000 6,000(1) -- --
Operating Officer 1995 160,327 6,750 -- -- --
Massoud G. Hampton, Ph.D. 1997 137,471 10,600 -- 5,000 12,354(3)(4)
Vice President of Clinical 1996 129,433 7,260 -- 3,000 11,700(5)
Services 1995 121,443 7,260 -- -- 11,700(6)
--
Stanley F. Szczygiel..... 1997 113,820 8,800 -- 5,000 9,915(7)(8)
Vice President of Finance 1996 110,000 8,000 -- 3,000 7,800(9)
1995 101,923 3,000 -- -- 7,800(10)
</TABLE>
- ----------------
(1) Represents car allowance.
(2) Represents payment for unused paid time off.
(3) Includes $2,654 payment for unused paid time off.
(4) Includes $11,700 representing the difference between the fair market
value ($4.00) of the 3,000 (out of 15,000) shares of Common Stock
which have vested during fiscal year 1997 and the purchase price
($0.10) paid by Mr. Hampton for such shares.
(5) Represents the difference between the fair market value ($4.00) of
the 3,000 (out of 15,000) shares which have vested during fiscal
year 1996 and the purchase price ($0.10) paid by Mr. Hampton for
such shares.
(6) Represents the difference between the fair market value ($4.00) of
the 3,000 (out of 15,000) shares which have vested during fiscal
year 1995 and the purchase price ($0.10) paid by Mr. Hampton for
such shares.
(7) Includes $2,115 payment for unused paid time off.
(8) Includes $7,800 representing the difference between the fair market
value ($4.00) of the 2,000 (out of 10,000) shares which have vested
during fiscal year 1997 and the purchase price ($0.10) paid by
Mr. Szczygiel for such shares.
(9) Represents the difference between the fair market value ($4.00) of
the 2,000 (out of 10,000) shares which have vested during fiscal
year 1996 and the purchase price ($0.10) paid by Mr. Szczygiel for
such shares.
(10) Represents the difference between the fair market value ($4.00) of
the 2,000 (out of 10,000) shares which have vested during fiscal
year 1995 and the purchase price ($0.10) paid by Mr. Szczygiel for
such shares.
The Company granted 10,000 stock options to the executive officers
named in the Summary Compensation Table during the year ended December 31, 1997.
<PAGE> 9
7
The following table sets forth the grants of stock options to the
executive officers named in the Summary Compensation Table during the year ended
December 31, 1997. The amounts shown for each of the named executive officers as
potential realizable values are based on arbitrarily assumed annualized rates of
stock price appreciation of five percent and ten percent over the exercise price
of the options during the full terms of the options, which would result in stock
prices of approximately $5.30 and $8.42, respectively. The amounts shown as
potential realizable values for all stockholders represent the corresponding
increases in the market value of 10,029,325 outstanding shares of the Common
Stock held by all stockholders as of December 31, 1997, which would total
approximately $53,155,423 and $84,446,917, respectively. No gain to the
optionees is possible without an increase in stock price which will benefit all
stockholders proportionately. These potential realizable values are based solely
on arbitrarily assumed rates of appreciation required by applicable Securities
and Exchange Commission regulations. Actual gains, if any, on option exercises
and holdings of Common Stock are dependent on the future performance of the
Common Stock and overall market conditions. There can be no assurance that the
potential realizable values shown in this table will be achieved.
OPTION GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
% of Total Potential Realizable Value
Options at Assumed Annual Rates of
Granted to Stock Price Appreciation for
Employees Exercise Option Term
Options in Fiscal Price Expiration -----------------------------
Name Granted Year ($/sh) Date 5% 10%
- ------------------------- ----------- ------------ ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
All Stockholders' Stock N/A N/A N/A N/A $53,155,423 $84,466,917
Appreciation
John H. Foster.............. 0 0 N/A N/A N/A N/A
Lawrence M. Davies.......... 0 0 N/A N/A N/A N/A
Stanley F. Szczygiel........ 5,000 5% $3.25 5/09/07 $10,250 $25,850
Massoud G. Hampton, Ph.D.... 5,000 5% $3.25 5/09/07 $10,250 $25,850
</TABLE>
The following table sets forth the number and value of options held
by the executive officers of the Company named in the Summary Compensation
Table. During the fiscal year ended December 31, 1997 none of the executive
officers named in the Summary Compensation Table exercised any options to
purchase Common Stock.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised In-
Options at December 31, The-Money Options at
1997(#) December 31, 1997($)(1)
---------------------------- -----------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------------- ---------------------------- -----------------------------
<S> <C> <C>
John H. Foster............... N/A N/A
Lawrence M. Davies........... 8,000/2,000 N/A
Stanley F. Szczygiel......... 6,200/6,800 N/A
Massoud G. Hampton, Ph.D..... 6,200/6,800 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, 1997. Options are
those for which the fair market value of the underlying Common Stock
exceed the exercise price of the option. The value of in-the-money options
is determined in accordance with regulations of the Securities and
Exchange Commission by subtracting the aggregate exercise price of the
option from the aggregate year-end value of the underlying Common Stock.
<PAGE> 10
8
Director Compensation
Directors of the Company do not receive fees for service as
directors but are reimbursed for out-of-pocket expenses. Dr. Lehrhoff receives
fees for consulting services he performs for the Company. See Compensation
Committee Interlocks and Insider Participation.
Employment Arrangements
The Company has entered into employment agreements, which are
terminable at will, with each of Lawrence M. Davies, Stanley F. Szczygiel,
Massoud G. Hampton, Ph.D. and Mark D. Gibson. These agreements set forth, among
other things, the base salary, bonus, equity participation, and other employee
benefit arrangements for each of Messrs. Davies, Szczygiel, Gibson and Hampton.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee of the Board of Directors
of the Company during 1997 were Shawkat Raslan and John H. Foster. During 1997,
John H. Foster, Chairman of the Board and Chief Executive Officer of the
Company and Shawkat Raslan, a director of the Company, were directors and
members of the Compensation Committee of CulturalAccessWorldwide, Inc.
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; 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 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.
<PAGE> 11
9
The Company has entered into stock purchase agreements with each of
its directors (except John H. Foster and Irwin Lehrhoff, Ph.D.) and executive
officers (except Mark D. Gibson) (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. ("ILA") 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 and expenses reimbursed under the consulting agreement
in 1997 were approximately $32,000.
Until February 1998, the Company subleased its principal corporate
offices from NovaCare, Inc., of which John H. Foster is Chairman of the Board
and a director and Timothy E. Foster is President and Chief Executive Officer
and a director. The Company paid base rent at a rate equal to NovaCare, Inc.'s
cost, including reimbursement for leasehold improvements made by NovaCare, Inc.
During 1997, the Company paid NovaCare, Inc. a total of $129,000 pursuant to
this sublease.
During 1997, NovaCare, Inc. paid the Company $526,000 for EAP and
managed mental health services provided by the Company pursuant to a contract
between the Company and NovaCare, Inc.
<PAGE> 12
10
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
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 March 31,
1998, 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 2,767,650 27.4%
Limited Partnership
1018 West Ninth Avenue
King of Prussia,
Pennsylvania 19406
Abbingdon Venture Partners Limited 921,550 9.1
Partnership-II
1018 West Ninth Avenue
King of Prussia,
Pennsylvania 19406
John H. Foster 3,737,974 (1) 37.0
Foster Management Company
1018 West Ninth Avenue
King of Prussia,
Pennsylvania 19406
Lawrence M. Davies 120,568 (2) 1.2
Apogee, Inc.
1060 First Avenue
King of Prussia,
Pennsylvania 19406
Timothy E. Foster 3,719,421 (3) 36.9
NovaCare, Inc.
1016 West Ninth Avenue
King of Prussia,
Pennsylvania 19406
</TABLE>
<PAGE> 13
11
<TABLE>
<CAPTION>
Shares of Common
Stock Owned
Name and Address Beneficially Percent of Class
- -------------------------------------- ------------------ -----------------
<S> <C> <C>
Harvey V. Fineberg, M.D. 7,000 *
Harvard University
677 Huntington Avenue
Boston, Massachusetts 02115
Irwin Lehrhoff, Ph.D. 196,500 (4) 1.9
Irwin Lehrhoff & Associates
13946 Ventura Boulevard
Sherman Oaks, California 91423
R. Bruce Mosbacher 5,000 (5) *
Saw Island Partners
2200 Sand Hill Road
Suite 150 Menlo Park, California
94025
Shawkat Raslan 10,000 *
International Resources
Holdings, Inc.
16th Floor
770 Lexington Avenue
New York, New York 10021
Stanley F. Szczygiel 18,738 (6) *
Apogee, Inc.
1060 First Avenue
King of Prussia,
Pennsylvania 19406
Massoud G. Hampton, Ph.D. 22,800 (7) *
Apogee, Inc.
1060 First Avenue
King of Prussia,
Pennsylvania 19406
Mark D. Gibson 3,500 (8) *
Apogee, Inc.
1060 First Avenue
King of Prussia,
Pennsylvania 19406
Wellington Management Company, L.L.P. 664,000 6.6
75 State Street
Boston, Massachusetts 02109
Wellington Trust Company, L.L.P. 664,000 6.6
75 State Street
Boston, Massachusetts 02109
Directors and officers as a group 4,152,301 (1)(2) 41.0
(10 persons) (3)(4)
(5)(9)
</TABLE>
- ----------
* Less than one percent (1%).
(1) Includes 3,689,200 shares of Common Stock owned by Abbingdon and
Abbingdon-II, limited partnerships of each of which Mr. Foster is
<PAGE> 14
12
a general partner of the 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. Foster is a trustee.
(2) Includes 8,000 shares of Common Stock presently issuable upon the exercise
of stock options.
(3) Includes 3,689,200 shares of Common Stock owned by Abbingdon and
Abbingdon-II, limited partnerships of each of which Mr. Timothy E. Foster
is a general partner of the general partner through intermediate general
partnerships.
(4) Includes 176,000 shares of Common Stock owned by Irwin Lehrhoff Trust No.
1, of which Dr. Lehrhoff is a trustee and beneficiary. Does not include
500 shares of Common Stock owned by Dr. Lehrhoff's spouse, of which Dr.
Lehrhoff disclaims beneficial ownership.
(5) Represents shares of Common Stock owned by the Mosbacher/Ditz Living
Trust, of which Mr. Mosbacher is the trustee and a beneficiary.
(6) Includes 7,800 shares of Common Stock presently issuable upon the exercise
of stock options.
(7) Includes 7,800 shares of Common Stock presently issuable upon the exercise
of stock options.
(8) Represents 3,500 shares of Common Stock presently issuable upon the
exercise of stock options.
(9) Includes 27,100 shares of Common Stock presently issuable upon the
exercise of stock options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Irwin Lehrhoff, Ph.D. was the sole stockholder of ILA, which the
Company acquired in March 1991. The Company paid Dr. Lehrhoff $300,000 in cash,
an 8% promissory note of the Company in the principal amount of $750,000,
payable in three annual installments beginning on March 15, 1992, and 180,000
shares of Common Stock from the Company for his shares of stock in ILA. Such
note issued to Dr. Lehrhoff was paid in full, together with all accrued and
unpaid interest thereon, in March 1994 in accordance with its terms. In
connection with the sale of ILA, Dr. Lehrhoff
<PAGE> 15
13
entered into a consulting agreement with the Company. See "Item 11. Executive
Compensation - Employment Arrangements".
Each of the directors and 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 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
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 (except John H. Foster and Irwin Lehrhoff, Ph.D.) and executive
officers (except for Mark D. Gibson) (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. In
addition, the Company and each of Messrs. Davies, Szczygiel and Hampton have
agreed that, in the event of a proposed sale of control of the Company, each of
such individuals will be permitted, or may be required, to sell a number of
those shares of Common Stock covered by his or her respective Stock Purchase
Agreement as shall be proportionate to the number of shares of Common Stock that
the controlling stockholders shall sell of the shares owned by them, for the
same consideration per share and on the same terms and conditions received by
such controlling stockholders in such sale of control.
<PAGE> 16
14
The Company entered into a stockholders agreement with Dr. Lehrhoff
(the "Stockholders Agreement") in connection with the Company's acquisition of
ILA. 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, other than in connection with the Company's initial
public offering in June 1994.
<PAGE> 17
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this amendment
to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: April 30, 1998
APOGEE, INC.
By /s/ Lawrence M. Davies
-------------------------------
Lawrence M. Davies
President, Chief
Operating Officer
and Director
