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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(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.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________.
Commission file number 000-23711
ACSYS, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Georgia 58-2299173
- ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2000 Pennsylvania Ave., Suite 7650
Washington, DC 20006
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: 202-872-0303
Securities registered pursuant to Section12(b) of the Act: None
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
N/A N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value Per Share
------------------------------------
(Title of Class)
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 that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X] [The registrant
became a reporting company on February 5, 1998.]
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. [X]
The aggregate market value of the voting common equity held by non-affiliates of
the registrant (assuming for these purposes, but not conceding, that all
executive officers and directors are "affiliates" of the registrant), based upon
the closing sale price of common stock on April 27, 1998, as reported by the
Nasdaq Stock Market, was approximately $103,844,172.
As of April 27, 1998, the number of shares outstanding of the registrant's
common stock was 11,428,131.
Documents Incorporated by Reference. N/A
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The registrant hereby amends its annual report on Form 10-K by deleting the text
under Item 10 and replacing it with the following:
The directors and executive officers of the Company and their ages and positions
as of April 27, 1998 are as follows:
Executive Officers and Directors
Name Age Position
- ---- --- --------
David C. Cooper............. 42 Chairman of the Board
Timothy Mann, Jr............ 32 Chief Executive Officer and Director
Edward S. Baumsteim......... 43 President, Chief Operating Officer and
Director
Beth Monroe-Chase........... 46 Chief Development Officer, Executive Vice
President and Director
Barry M. Abelson............ 51 Director
John R. Ficquette........... 43 Director
Paul J. Klaassen............ 40 Director
William Porter Payne........ 50 Director
Harry J. Sauer.............. 46 Director
Mark E. Strassman........... 36 Director
Lester E. Gallagher, III.... 41 Chief Financial Officer
Biographical Information for Executive Officers and Directors
David C. Cooper has served as the Chairman of the Board of Directors of the
Company since its formation and Division President--Atlanta since September
1997. Mr. Cooper founded David C. Cooper & Associates, Inc. and DCCA
Professional Temporaries, Inc. in 1980 and served as their president until May
1997. Mr. Cooper received his Bachelor of Business Administration degree in
Accounting from the University of Georgia. Mr. Cooper is a past president of the
American Association of Accounting and Finance, a national network of
independently owned accounting and finance permanent placement and temporary
staffing businesses.
Timothy Mann, Jr. has served as Chief Executive Officer of the Company since
October 1997 and a Director since its formation. Prior to his becoming Chief
Executive Officer, Mr. Mann served the Company in various roles. From 1992
until 1997, Mr. Mann was an attorney engaged in the private practice of law,
most recently with Alston & Bird LLP in Atlanta, Georgia. Mr. Mann has
extensive staffing industry experience, having served as issuer's counsel in a
number of staffing industry public equity offerings and as buyer's counsel in a
number of staffing industry mergers and acquisitions. Mr. Mann's experience
also includes service in the audit division of Arthur Andersen LLP. Mr. Mann
received his J.D. cum laude from the University of Georgia and his Bachelor of
Science degree in Accounting from the University of Florida.
Edward S. Baumstein has served as the Chief Operating Officer and a Director of
the Company since September 1997 and as President of the Company since October
1997. Mr. Baumstein served as the president and chief executive officer of
AcSys Resources, Inc. from 1994 until September 1997 and had served in various
positions since he joined AcSys Resources in 1983. Prior to joining AcSys
Resources, Mr. Baumstein was with Price Waterhouse. He received his B.B.A. in
Accounting from Temple University and is a certified public accountant.
Beth Monroe-Chase has served as a Director of the Company since its formation.
She served as Chief Operating Officer from the Company's formation until
September 1997, when she became the Company's Chief Development Officer and
Executive Vice President. Ms. Monroe-Chase was one of the founders of Infinity
Enterprises, Inc. (d/b/a Don Richard Associates of Washington) and from 1994
until the formation of the Company served as its president. Ms. Monroe-Chase
served as the director of sales from 1992 to 1994 and as managing director from
1993 to 1994 for the predecessor of Don Richard Associates of Washington (which
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also operated under that name). Her previous staffing industry experience
includes service as an area manager for Staff Builders and as a regional manager
with TeleSec Staffing.
Barry M. Abelson has served as a Director of the Company since the completion of
the Company's initial public offering in February 1998. He has been a partner
in the law firm of Pepper Hamilton LLP, Philadelphia, Pennsylvania since May
1992 and has served as Chairman of its Executive Committee since February 1995.
Mr. Abelson is also a director of Intelligent Electronics, Inc. and XLConnect
Solutions, Inc. Mr. Abelson received his Bachelor of Arts degree in Sociology
from Dartmouth College and his J.D. degree from the University of Pennsylvania.
John R. Ficquette has served as a Director of the Company since September 1997.
Mr. Ficquette was a shareholder and officer of C.P.A. Staffing, Inc. from 1990
until its acquisition by AcSys Resources in August 1997. His responsibilities
at C.P.A. Staffing included client development, training, system development and
administration. Mr. Ficquette received his Bachelor of Science Degree in
Business Administration from the University of Alabama.
Paul J. Klaassen has served as a Director of the Company since February 1998.
He is the co-founder and has served as Chairman of the Board and Chief Executive
Officer of Sunrise Assisted Living, Inc. and its predecessor entities since
1981. He also served as President of Sunrise Assisted Living, Inc. and its
predecessor entities from 1981 through July 1997. Mr. Klaassen is the founding
Chairman of the Assisted Living Facilities Association of America, the largest
assisted living industry trade association. He serves on the editorial advisory
boards of Contemporary Long Term Care, Retirement Housing Report, Assisted
Living Today and Assisted Living Briefing magazines.
William Porter Payne has served as a Director of the Company since the
completion of the Company's initial public offering in February 1998. He has
served as Vice Chairman of NationsBank Corporation since January 1997 and was
President and Chief Executive Officer of the Atlanta Committee for the Olympic
Games from 1991 to 1997. Mr. Payne is also a director of Anheuser-Busch
Companies, Inc., Cousins Properties, Inc. and Jefferson-Pilot Corporation. Mr.
Payne received his Bachelor of Arts in Political Science and J.D. degrees from
the University of Georgia.
Harry J. Sauer has served as a Director of the Company and as the Division
President-Philadelphia since September 1997. Mr. Sauer has worked in the
staffing industry since 1977, when he co-founded AcSys Resources. He served in
various positions with AcSys Resources, most recently as chief operating
officer. Mr. Sauer received his Bachelor of Arts degree in Political Science
from American University and his M.B.A. from Boston College. Mr. Sauer has
served as the president of Hillel of Greater Philadelphia and as a board member
of several nonprofit organizations.
Mark E. Strassman has served as a Director of the Company since its formation.
Mr. Strassman served as the President of the Company from its formation until
October 1997. Mr. Strassman was one of the founders of Don Richard Associates
of Washington and served as its chief executive officer from 1994 until May
1997. From 1987 until 1994, Mr. Strassman served in a variety of capacities
with the predecessor to Don Richard Associates of Washington (which also
operated under that name), most recently as managing director. Prior to 1987,
Mr. Strassman was a tax consultant at the national accounting firm of Grant
Thornton. He received his Bachelor of Science degree in Accounting from Drexel
University and is a certified public accountant.
Lester E. Gallagher, III has served as the Company's Chief Financial Officer
since September 1997. From 1994 through the AcSys Resources acquisition, Mr.
Gallagher served as the chief financial officer of AcSys Resources. From 1990
to 1994, he was a manager with Coopers & Lybrand LLP. Mr. Gallagher received
his Bachelor of Science degree in Accounting from Villanova University and is a
certified public accountant.
ITEM 11. EXECUTIVE COMPENSATION.
The registrant hereby amends its annual report on Form 10-K by deleting the text
under Item 11 and replacing it with the following:
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Summary of Cash and Certain Other Compensation
The Company was incorporated in March 1997 and conducted no operations in 1996.
The Company's most highly compensated executive officers in 1997 were Messrs.
Cooper, Mann, Baumstein, Gallagher and Strassman and Ms. Monroe-Chase (the
"Named Executive Officers").
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------- ------------
Awards
-----------
Securities
Under-
Lying All Other
Options/ Compen-
SARs sation
Name and Principal Position Year Salary($) Bonus($) (#) ($)
- --------------------------- ------ -------- ------- --------- -------
David C. Cooper, Chairman of
the Board of Directors (1)... 1997 $ 83,333 $ -- -- $ --
Timothy Mann, Jr., Chief
Executive Officer (2)....... 1997 110,128 -- 135,198 --
Edward S. Baumstein, President
and Chief Operating
Officer (3).................. 1997 66,666 -- -- --
Mark A. Strassman, former
President (4)................ 1997 107,590 -- -- --
Beth Monroe-Chase, Chief
Development Officer (5)...... 1997 107,590 -- -- --
Lester E. Gallagher, III,
Chief Financial Officer (6).. 1997 $ 41,666 $1,000 18,771 $400(7)
______________________________
(1) Reflects compensation paid by the Company to Mr. Cooper beginning on May
16, 1997, the date that the Company employed Mr. Cooper as its Chairman of
the Board of Directors.
(2) Reflects compensation paid by the Company to Mr. Mann in all capacities
beginning on March 12, 1997, the date that the Company employed Mr. Mann.
Mr. Mann served in various executive positions with the Company before
becoming its Chief Executive Officer in October 1997.
(3) Reflects compensation paid by the Company to Mr. Baumstein in all capacities
beginning on September 3, 1997, the date that the Company employed Mr.
Baumstein. Mr. Baumstein has served as Chief Operating Officer since
September 1997 and as President since October 1997.
(4) Reflects compensation paid by the Company to Mr. Strassman in all capacities
from May 16, 1997, the date that the Company employed Mr. Strassman. Mr.
Strassman served as the Company's President from May 1997 to October 1997
and no longer is an executive officer. See "Item 13, Certain Relationships
and Related Transactions -- Acquisitions -- Don Richard Associates of
Washington."
(5) Reflects compensation paid by the Company to Ms. Monroe-Chase beginning on
May 16, 1997, the date that the Company employed Ms. Monroe-Chase, who
initially served as Chief Operating Officer and became Chief Development
Officer in September 1997.
(6) Reflects compensation paid by the Company to Mr. Gallagher beginning on
September 3, 1997, the date that the Company employed Mr. Gallagher as its
Chief Financial Officer.
(7) Matching contributions by the Company to Mr. Gallagher's account under the
Company's 401(k) pension plan.
Employment Agreements, Termination of Employment and Change in Control
Arrangements
Each of Messrs. Cooper, Mann, Baumstein and Ms. Monroe-Chase entered into
employment agreements with the Company that provide for an annual base salary of
$200,000. Each executive officer (except Messrs. Mann and Gallagher) is also
contractually entitled to a bonus to be agreed upon and based upon certain
performance criteria as set forth in his or her agreement, although no executive
bonuses were paid in or for 1997 other than to Mr. Gallagher. Mr. Mann's
agreement provides for an annual bonus equal to 2.0% of the year-to-year
increase in the Company's earnings before interest, taxes, depreciation and
amortization, and the grant of stock options as described under " -- Option/SAR
Grants in Last Fiscal Year." Mr. Gallagher's agreement provides for an annual
base salary of $125,000, such bonus as the Board of
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Directors may determine up to an amount equal to 15% of his then-current base
salary (he received a $1,000 holiday bonus in 1997), and the grant of stock
options as described under "--Option/SAR Grants in Last Fiscal Year." None of
the Company's executive officers has received or is expected to receive
perquisites the value of which exceeds the lesser of $50,000 or 10% of the
salary and bonus of such executive.
Each employment agreement for the Named Executive Officers (other than Mr.
Strassman, who no longer serves as an executive officer) is for a term of three
years and continues thereafter for additional one year terms until either the
Company or the executive officer elects not to renew the agreement. Each of
these agreements provides that, in the event of a termination of employment
either (i) by the Company without cause (as defined in the agreement) or (ii) by
the employee following a change in control (as defined in the agreement) or a
breach by the Company of such executive's employment agreement or a registration
rights agreement, such executive officer will be entitled to receive from the
Company a lump sum severance payment equal to three times the sum of his or her
then-current annual salary plus the amount of his or her bonus calculated using
the results of the operations of the Company for the twelve months prior to such
termination. In such event, the non-compete provisions discussed below would
not apply to such executive officer. If an executive officer resigns for any
other reason, such executive officer will be entitled to receive from the
Company a lump sum severance payment equal to his or her then current annual
salary. If an executive is terminated upon a determination by the Board of
Directors that such executive officer failed to meet performance expectations,
then such executive officer will be entitled to receive a lump sum severance
payment equal to his or her base salary for the greater of the remainder of the
term of his or her employment agreement or one year.
Each of the above employment agreements contains a covenant not to compete with
the Company for a period of two years immediately following termination of
employment and an obligation not to solicit any employees or customers of the
Company for a period of one year following termination of employment.
Option/SAR Grants in Last Fiscal Year
The following table sets forth information concerning the Company's 1997 grants
of stock options to Timothy Mann, Jr. and Lester E. Gallagher, III, the only
Named Executive Officers who were granted stock options in 1997.
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------
Percent Of
Total Potential Realizable Value at
Number Of Options/ Assumed Annual Rates of Stock
Securities SARs Exercise Price Appreciation for
Underlying Granted To or Base Option Term(1)
Options/SARs Employees in Price Expiration ------------------------------------------
Name Granted(#) Fiscal Year ($/Sh) Date 0%($) 5%($) 10%($)
- ---- ------------ ------------ ------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Timothy Mann, Jr........... 135,198(2) 54.8% $ 8.00 2007 $ -- $680,202 $1,723,766
Lester E. Gallagher, III... 18,771(3) 7.6% $ 2.66 2006 $100,237(4) $ 71,699 $ 171,730
</TABLE>
___________________
(1) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission. There can
be no assurance provided to any executive officer or any other holder of
the Company's securities that the actual stock price appreciation over the
term will be at the assumed 5% and 10% levels or at any other defined
level. Unless the market price of the Common Stock appreciates over the
option term, no value will be realized from options granted to the Named
Executive Officers.
(2) Options were granted at the fair market value of the Common Stock on the
date of grant as determined by the Board. These stock options are fully
vested and have a 10-year term.
(3) In January 1997 AcSys Resources, Inc. granted options to Mr. Gallagher that
were converted into options to purchase 18,771 shares of Common Stock at a
price of $2.66 per share in connection with the Company's acquisition of
AcSys Resources. These options are fully vested and expire in 2006.
(4) Based upon an assumed grant-date market value of $8.00 per share.
In addition to the options granted in 1997 to Messrs. Mann and Gallagher, in
1997 the Company also agreed in each of their respective employment agreements
to grant stock options to them upon the Company's initial public offering as
described below. On February 5, 1998, the effective date of the Company's
registration statement for its initial public offering (the "Offering Date"),
the Company granted to Mr. Mann options to purchase 113,357 shares of Common
Stock (an amount equal to 1% of the shares of Common Stock outstanding on the
date of the offering, assuming the underwriters' over-allotment option was
exercised in full, as in fact occurred), at an exercise price equal to the
initial public offering price of $8.50 per share. One-half of these options
vest on each of the first two anniversaries of the Offering Date, and the
options have a 10-year term. All of Mr. Mann's unvested options vest
immediately if he is terminated without cause or resigns for good reason or upon
a change in control (as such terms are defined in his employment agreement).
The Company also granted to Mr. Gallagher, upon the Offering Date, options to
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purchase 66,229 shares of Common Stock at an exercise price equal to the initial
public offering price of $8.50 per share. One third of these options vest on
each of first, second and third anniversaries of the effective date. All of Mr.
Gallagher's unvested options vest immediately if he is terminated without cause
or resigns for good reason or upon a change in control (as such terms are
defined in his employment agreement).
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
The following table gives information with respect to options held by Mr. Mann
and Mr. Gallagher, the only Named Executive Officers who held unexercised
options at December 31, 1997. The Company has never issued any SARs, and none
of the Named Executive Officers exercised any stock options during 1997. There
was no market for the Common Stock until it began trading on the Nasdaq National
Market on February 6, 1998. The fiscal year-end market value of $8.50 per share
is equal to the initial public offering price of $8.50 per share.
Number Of
Securities Value Of
Underlying Unexercised
Unexercised In-The-Money
Options/SARs Options/SARs
At Fiscal Year-End At Fiscal Year-
(#) End ($)(1)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
- ---- ------------------ ---------------
Timothy Mann, Jr............ 135,198/0 $ 67,599/-
Lester E. Gallagher, III.... 18,771/0 $109,623/-
___________________
(1) Based upon an assumed fiscal year-end market value of $8.50 per share.
Director Compensation
Directors who are employees of the Company do not receive additional
compensation for serving as directors. Each director who is not an employee of
the Company (an "Outside Director") receives $1,000 for each meeting of the
Board of Directors attended and for each meeting of a committee of the Board of
Directors (unless the committee meeting is held on the same day as a meeting of
the Board of Directors). All directors of the Company are reimbursed for out-
of-pocket expenses incurred in attending meetings of the Board of Directors or
its committees and for other expenses incurred in their capacity as Directors.
The Company has adopted a policy of granting to each Outside Director, upon his
or her initial appointment to the Board of Directors, a stock option to purchase
50,000 shares of Common Stock pursuant to the Option Plan. Pursuant to this
policy the Board granted options to purchase 50,000 shares of Common Stock to
each of Messrs. Abelson and Payne at the initial public offering price of $8.50
per share and granted options to purchase 50,000 shares of Common Stock to Mr.
Klaassen at $13.00 per share. In addition, the Company will grant to each
Outside Director, once each quarter during the Outside Director's term as a
director, options to purchase 4,000 shares, with a lifetime cap of 150,000
shares per Outside Director. The option price will be equal to the fair market
value at the date of each grant, and each option will have a 10-year term. One
third of the options will vest on each of the first three anniversaries of the
date of grant, provided that all unvested options will vest upon a change in
control of the Company (as defined in the option agreement) or the death of the
Outside Director.
Compensation Committee Interlocks and Insider Participation
The Board of Directors did not have a Compensation Committee until February
1998. The officers and employees of the Company who participated in
deliberations of the Board in 1997 concerning executive officer compensation
were (i) Edward S. Baumstein, David C. Cooper, John R. Ficquette, Timothy Mann,
Jr., Beth Monroe-Chase, Harry J. Sauer and Mark E. Strassman, each of whom is
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currently a director of the Company; and Kevin W. Cole, Patricia J. Homrich,
Edward K. Turner and Stephen S. Tutwiler, each of whom was a director for a
portion of 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The registrant hereby amends its annual report on Form 10-K by deleting the text
under Item 12 and replacing it with the following:
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of April 27, 1998 by: (i) each of the
Company's directors and Named Executive Officers; (ii) all executive officers
and directors of the Company as a group; and (iii) each person known by the
Company to own beneficially more than 5% of the Common Stock. Each of the
holders listed below has sole voting power and investment power over the shares
beneficially owned. Each of the persons known by the Company to beneficially
own more than 5% of the Common Stock has an address in care of the Company's
principal offices.
Shares Beneficially Owned (1)
-----------------------------
Name Number Percentage
- ---- ------ ----------
David C. Cooper.................. 1,573,714 13.8%
Timothy Mann, Jr. (2)............ 135,198 1.2
Edward S. Baumstein.............. 993,521 8.7
Beth Monroe-Chase................ 651,143 5.7
Lester E. Gallagher, III (3)..... 18,771 *
Barry M. Abelson................. 1,000 *
John R. Ficquette................ 609,637 5.3
Paul J. Klaassen................. 2,500 *
William Porter Payne............. 2,000 *
Harry J. Sauer................... 993,521 8.7
Mark E. Strassman................ 581,143 5.1
Louis Boohaker................... 609,637 5.3
All directors and executive
officers as a group
(11 persons) (4)................ 5,562,148 48.0%
- -----------------
* Less than 1%.
(1) Shares Beneficially Owned is calculated assuming 11,428,131 shares of
Common Stock were outstanding on the date stated above. This percentage
also includes Common Stock of which such individual has the right to
acquire beneficial ownership within sixty days of such date, including but
not limited to the exercise of an option; however, such Common Stock shall
not be deemed outstanding for the purpose of computing the percentage owned
by any other individual.
(2) Comprised of currently exercisable options held by Mr. Mann to purchase a
total of 135,198 shares of Common Stock.
(3) Comprised of currently exercisable options held by Mr. Gallagher to
purchase a total of 18,771 shares of Common Stock.
(4) Includes currently exercisable options to purchase a total of 153,969
shares of Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The registrant hereby amends its annual report on Form 10-K by deleting the text
under Item 13 and replacing it with the following:
Acquisitions
Since the Company's formation in March 1997, it has acquired eight accounting
and finance professional staffing companies. All of these companies now operate
as wholly owned subsidiaries of the Company. In certain of these acquisitions
persons who were previously shareholders of the companies, and who are now
executive officers, directors or holders of at least 5% of the Company's
outstanding Common Stock, received consideration from the Company in connection
with the applicable acquisition. These acquisitions are described in more
detail below:
David C. Cooper & Associates. The Company issued 1,573,714 shares of Common
Stock to David C. Cooper in connection with the mergers of wholly owned
subsidiaries of the Company with and into David C. Cooper & Associates, Inc. and
DCCA Professional Temporaries, Inc. in May 1997.
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Don Richard Associates of Washington. The Company issued a total of 2,237,142
shares of Common Stock in connection with the merger of a wholly owned
subsidiary of the Company with and into Infinity Enterprises, Inc. d/b/a Don
Richard Associates of Washington in May 1997. The following directors, executive
officers and/or 5% shareholders received shares of Common Stock in that merger:
Mark E. Strassman -- 671,143 shares; and Beth Monroe-Chase -- 671,143 shares.
Other Don Richard Associates of Washington shareholders who are not directors,
executive officers and/or 5% shareholders received the balance of 1,193,140
shares issued by the Company. In May 1997 the Company entered into a three-year
employment agreement with Mr. Strassman, a director of the Company, under which
Mr. Strassman served as the Company's President until October 1997 at an annual
base salary of $200,000 (the employment agreement was otherwise substantially
similar to the employment agreements for the Named Executive Officers). Mr.
Strassman's employment agreement was subsequently modified to provide that he
would consult with the Company's senior management and to provide that, upon its
termination, Mr. Strassman would continue to be paid the same compensation and
benefits through November 2000 instead of receiving a lump-sum severance
payment. In December 1997 it was determined that Mr. Strassman would no longer
play an active role in the Company's management. As a result, the Company
recorded a nonrecurring expense of $512,000 (the present value of the payments
due to Mr. Strassman under his employment agreement) in the quarter ended
December 31, 1997. See "Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operation -- Recent Developments."
AcSys Resources. The Company issued a total of 3,206,316 shares of Common Stock
in connection with the merger of a wholly owned subsidiary of the Company with
and into AcSys Resources, Inc. in September 1997. The following directors,
executive officers and/or 5% shareholders received shares of Common Stock in
that merger: Edward S. Baumstein -- 993,521 shares; Harry J. Sauer -- 993,521
shares; John R. Ficquette -- 609,637 shares; and Louis Boohaker -- 609,637
shares. Other AcSys Resources shareholders who are not directors, executive
officers and/or 5% shareholders received the balance of 453,186 shares issued by
the Company.
Albert Detorre, a former shareholder of AcSys Resources, had the contractual
right (the "Put Right") to require the Company to purchase 122,012 shares of the
Company's Common Stock that he received in connection with the AcSys Resources
acquisition at a price equal to the "fair market value" of such shares at the
time Mr. Detorre exercised such right. Mr. Detorre waived the Put Right in
connection with the Company's initial public offering in February 1998. See
Note 8 of Notes to Consolidated Financial Statements.
Prior to their acquisition by the Company, certain companies incurred
indebtedness that was personally guaranteed by their shareholders. The Company
borrowed an aggregate of approximately $11.1 million under the Credit Facility
to repay such indebtedness upon the acquisition of such Acquired Companies.
Obligations which are guaranteed by certain of the Company's current
shareholders having a principal balance of approximately $1.1 million remain
outstanding. See Note 3 of Notes to Consolidated Financial Statements.
Rental of Aircraft from Company Owned by Mr. Cooper
The Company from time to time uses an aircraft owned by Atlantic Leasing
Corporation ("Atlantic"), a company that is wholly owned by David C. Cooper, the
Company's Chairman of the Board. The Company has used the aircraft for business
purposes, and until the completion of the Company's initial public offering in
February 1998, the Company paid Atlantic for the actual operating costs
associated with the Company's use of the aircraft. Since that date the Company
has paid Atlantic a amount equal to the regular commercial coach fare for each
person on the flight. The Company paid Atlantic a total of $28,144 in 1997 and
has paid $55,685 to date in 1998 for such use. The Company anticipates that it
will continue this arrangement in the future.
Company Policy
All transactions with the Company's shareholders, officers and directors or
their affiliates, if any, are subject to the approval of a majority of the
independent and disinterested Outside Directors and will be conducted on terms
no less favorable than could be obtained from unaffiliated third parties on an
arm's-length basis.
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SIGNATURE
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 annual report to
be signed on its behalf by the undersigned, thereunto duly authorized.
ACSYS, Inc.
By: /s/ Timothy Mann, Jr.
------------------------------
Timothy Mann, Jr.
Chief Executive Officer
April 29, 1998
--------------
Date
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