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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, 1999.
|_| 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.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 58-2299173
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
75 14TH STREET, SUITE 2200, ATLANTA, GEORGIA 30309
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
404-817-9440
(REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
Common Stock, No Par Value per Share American Stock Exchange
Series A Junior Participating Preferred Stock American Stock Exchange
Purchase Rights
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, No Par Value Per Share
Series A Junior Participating Preferred Stock Purchase Rights
(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 /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. / /
The aggregate market value of the voting common equity held by
non-affiliates of the registrant, based upon the closing sale price of common
stock on March 10, 2000, as reported by the American Stock Exchange(R), was
approximately $22,934,577*.
As of March 10, 2000, the number of shares outstanding of the registrant's
common stock was 14,499,400.
- -----------------------
*Solely for purposes of this calculation, all executive officers and
directors of the registrant and all shareholders reporting beneficial ownership
of more than 5% of the registrant's common stock are considered to be
affiliates.
<PAGE>
TABLE OF CONTENTS
<TABLE>
PART III
<S> <C>
EXPLANATORY NOTE...................................................... 1
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.................... 1
ITEM 11 EXECUTIVE COMPENSATION................................................ 3
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........ 9
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................ 10
</TABLE>
<PAGE>
PART III
EXPLANATORY NOTE
On April 16, 2000, Acsys, Inc. (the "Company") entered into a Merger
Agreement (the "Merger Agreement") with Tiberia B.V., a company organized under
the laws of the Netherlands ("Parent"), Vedior N.V., a company organized under
the laws of the Netherlands ("Vedior"), Platform Purchaser Inc., a Georgia
corporation and an affiliate of Vedior (the "Purchaser"), and Select
Appointments North America Inc., a Delaware corporation and wholly owned
indirect subsidiary of Vedior. Pursuant to the Merger Agreement, on April 27,
2000 the Purchaser commenced a tender offer (the "Offer") to purchase all of the
outstanding shares of the Company's common stock, no par value per share (the
"Common Stock"), together with the associated series A junior participating
preferred stock purchase rights issued pursuant to the Shareholder Protection
Rights Agreement, dated June 20, 1999, between the Company and SunTrust Bank,
Atlanta, as Rights Agent, as amended by the Amendment No. 1 thereto, dated April
16, 2000 (together with the Common Stock, the "Shares"), for $5.00 per Share in
cash. Immediately prior to the initial purchase of Shares in the Offer, the
Purchaser will become a wholly owned subsidiary of Parent and Parent will become
an affiliate of Vedior. Under the Merger Agreement and subject to the terms
thereof, following the Offer, the Purchaser will be merged with and into the
Company (the "Merger") and all Shares not purchased in the Offer (other than
Shares owned by Parent, Vedior, the Company or any subsidiary of Parent or the
Company, and by shareholders, if any, who exercise their statutory dissenters'
rights under Georgia law) will be converted into the right to receive $5.00 per
Share in cash. Following the Merger, the Company will be a subsidiary of Parent.
As a result of the execution of the Merger Agreement and the
commencement of the Offer, the Company has decided to postpone indefinitely its
annual meeting of shareholders previously scheduled to occur on June 20,
2000. The Merger Agreement provides that upon the consummation of the Offer,
the Company shall cause Parent's designees to be elected to the Board of
Directors under circumstances described in the Merger Agreement. Parent has
informed the Company that it presently intends to designate five Board
members from among the individuals described in Schedule I to the Purchaser's
Offer to Purchase, dated April 27, 2000 (the "Offer to Purchase") under the
captions "Directors and Executive Officers of Vedior" and/or "Other Potential
Proposed Designees." The Offer to Purchase was filed with the Securities and
Exchange Commission as an exhibit to Amendment No. 1 to the Schedule TO filed
by Vedior, Parent and the Purchaser on April 27, 2000 in connection with the
Offer.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The directors and the executive officers of the Company and their ages and
positions as of April 24, 2000 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- -----------------------------------
<S> <C> <C>
David C. Cooper.................... 44 Chairman of the Board of Directors
and Chief Executive Officer
Barry M. Abelson................... 53 Director
Paul J. Klaassen................... 41 Director
William Porter Payne............... 52 Director
Harry J. Sauer..................... 49 Executive Vice
President--Professional Services
and Director
Brady W. Mullinax, Jr.............. 47 Executive Vice President--Finance
and Administration, Secretary and
Director
M. Faye Wilson..................... 62 Director
Patricia Kennedy................... 44 Executive Vice
President--Information Technology
</TABLE>
DAVID C. COOPER has served as the Chairman of the Board of Directors since
the Company's formation, as the Division President--Atlanta from September 1997
to July 1998 and as Chief Executive Officer since December 1999. 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 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.
1
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BARRY M. ABELSON has served as a Director 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 received his Bachelor of Arts in Sociology from Dartmouth College
and his J.D. from the University of Pennsylvania.
PAUL J. KLAASSEN has served as a Director since February 1998. He is the
co-founder and has served as Chairman of the Board of Directors and Chief
Executive Officer of Sunrise Assisted Living, Inc., a long-term healthcare
provider, 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 since the completion of the
Company's initial public offering in February 1998. Mr. Payne has served as Vice
Chairman of WebMD since September 1998. He also serves as Vice Chairman of
Premiere Technologies, Inc. Mr. Payne previously served as Vice Chairman of
NationsBank Corporation from January 1997 until June 1998. He 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. from the University of Georgia.
HARRY J. SAUER has served as a Director since September 1997 and Executive
Vice President--Professional Services since December 1999 and previously served
as Division President--Philadelphia since September 1997. Mr. Sauer has worked
in the staffing industry since 1977, when he founded Acsys Resources where he
served in various positions including Chief Operating Officer. From 1974 to 1977
he worked in the Boston office of Coopers & Lybrand. Mr. Sauer received his
Bachelor of Arts 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.
BRADY W. MULLINAX, JR. has served as a Director since October 1999 and
Executive Vice President--Finance and Administration and Secretary since January
2000. Prior to that Mr. Mullinax served as Vice President--Finance, Treasurer
and Secretary since August 1998. From 1994 to 1997, Mr. Mullinax served as Chief
Financial Officer and Treasurer of Fuqua Enterprises, Inc., a New York Stock
Exchange listed company that operated a healthcare equipment manufacturing
business and a leather tanning business that was sold on December 30, 1997. From
1987 to 1993, he was a partner with Price Waterhouse LLP. Mr. Mullinax received
his Bachelor of Science in Business Administration from the University of North
Carolina and is a certified public accountant.
M. FAYE WILSON has served as a Director since November 1999. Ms. Wilson is
Senior Vice President, Values Initiatives for The Home Depot, Inc. Ms. Wilson
joined The Home Depot full time in June 1998, following her retirement from Bank
of America where she served as an Executive Vice President since June 1991 and
as President of Security Pacific Financial Services, a wholly owned subsidiary
of BankAmerica Corporation, since December 1993. Ms. Wilson is also a director
of The Home Depot and Farmers Insurance Group and the non-profit Big Brothers
Big Sisters of Metro Atlanta. Ms. Wilson received both her MBA in International
Relations in 1976 and Bachelor of
2
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Business Administration in 1977 from the University of Southern California.
Ms. Wilson has been a Certified Public Accountant since 1961.
PATRICIA KENNEDY has served as Executive Vice President--Information
Technology since February 2000. Ms. Kennedy served as Vice President for the
Central Region of Modis Consulting from January 1999 to February 2000. Prior to
her employment with Modis Consulting, Ms. Kennedy was prevented from working for
one year due to a non-compete provision of her employment agreement with Interim
Technology SSG, a division of Interim Services. Ms. Kennedy worked with Interim
Technology SSG from September 1987 until January 1998, when she resigned from
her position as Executive Vice President, a position that she had held since
December 1993. Ms. Kennedy received her Bachelor of Business Administration in
Elementary Education in 1976 from Northern University of Illinois.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors, officers and beneficial
owners of more than 10% of the Company's outstanding Common Stock to file
with the Commission initial reports of ownership of the Company's equity
securities and to file subsequent reports when there are changes to such
ownership. Based on a review of copies of reports submitted to the Company
for 1999, the Company believes that all Section 16(a) filing requirements for
1999 by such persons were complied with on a timely basis, except that Ms.
Wilson was late filing a Form 3 stating that she had become a reporting
person of the Company in November 1999, and Mr. Cooper was late filing a Form
4 regarding his wife's purchase of 50 shares of Common Stock in December
1999.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table presents certain summary information concerning
compensation paid or accrued for services rendered in all capacities to the
Company during 1999, 1998 and 1997 for (i) the Chief Executive Officer of the
Company, (ii) each of the four other most highly compensated executive officers
of the Company (determined as of December 31, 1999) and (iii) one additional
individual for whom disclosure would have been provided pursuant to item (ii),
except that individual was not serving as an executive officer at the end of
December 31, 1999 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL SECURITIES
COMPENSATION UNDERLYING ALL OTHER
-------------------- OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS (#) ($)
- --------------------------- -------- --------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C>
David C. Cooper,............................................ 1999 $200,000 $ -- -- $ 2,500(1)
Chairman of the Board of Directors and Chief Executive
Officer 1998 198,605 -- -- --
1997(2) 83,333 -- -- --
Timothy Mann, Jr.,.......................................... 1999(3) 241,167 78,000 -- 94,454(4)
Former Chief Executive Officer 1998 211,153 -- 213,357 --
1997(5) 110,128 -- 135,198 --
Brady W. Mullinax, Jr.,..................................... 1999 210,000 70,000 75,000 2,363(1)
Executive Vice President--Finance and Administration and 1998(6) 71,173 -- 150,000 --
Secretary 1997 -- -- -- --
Harry J. Sauer,............................................. 1999(7) 200,000 85,000 -- 2,500(1)
Executive Vice President--Professional Services 1998 189,783 17,773 -- 1,391(1)
1997 154,939 264,196 -- 2,875(1)
Mary Beth Chase,............................................ 1999(8) 179,411 -- -- 14,038(9)
Former Executive Vice President and Chief Development
Officer 1998 198,460 -- -- --
1997(10) 107,590 -- -- --
</TABLE>
- --------------------------
(1) Represents matching contributions made by the Company to the officer's
retirement account in the Acsys, Inc. 401(k) Plan (or in the case of Mr.
Sauer only, for 1998 and 1997, in the ACSYS Resource, Inc. 401(k) Plan)
based on a percentage of the officer's contributions to such plan.
(2) Reflects compensation paid by the Company to Mr. Cooper beginning on
May 16, 1997, the date that the Company employed Mr. Cooper as the Chairman
of its Board of Directors.
(3) Mr. Mann resigned on December 1, 1999.
(4) Includes (a) $91,954 paid to Mr. Mann in accordance with his Separation and
Release Agreement dated November 23, 1999 entered into in connection with
his resignation on December 1, 1999 and (b) $2,500 of matching
contributions made by the Company to Mr. Mann's retirement account in the
Acsys, Inc. 401(k) Plan based on a percentage of Mr. Mann's contributions
to the Acsys, Inc. 401(k) Plan. The compensation presented excludes
(i) $108,046 for severance that the Company must pay Mr. Mann in 2000 in
accordance with his Separation and Release Agreement, effective
December 1, 1999, and (ii) $235,000 that the Company must pay Mr. Mann in
five installments by January 3, 2001 in accordance with the post-employment
covenants included in his Shareholder and Restrictive Covenant Agreement,
effective December 1, 1999. For a description of Mr. Mann's Separation and
Release Agreement and his Shareholder and Restrictive Covenant Agreement,
refer to "Item 13. Certain Relationships and Related Transactions."
(5) 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
<PAGE>
(6) Reflects compensation paid by the Company to Mr. Mullinax beginning on
August 21, 1998, the date that the Company employed Mr. Mullinax as its
Vice President--Finance, Secretary and Treasurer. Mr. Mullinax's base
compensation was $200,000 in 1998.
(7) Reflects compensation paid by the Company to Mr. Sauer in all capacities
for 1999. Mr. Sauer has served in various positions with the Company before
becoming Executive Vice President--Professional Services in December 1999.
(8) Ms. Chase's base compensation was $200,000 prior to her resignation on
December 1, 1999. The compensation presented excludes (1) $138,462 for
severance that the Company must pay Ms. Chase in accordance with her
Separation and Release Agreement, dated December 1, 1999, and (2) $150,000
that the Company must pay Ms. Chase in equal monthly installments by
January 1, 2001 in accordance with the post-employment covenants included
in her Shareholder and Restrictive Covenants Agreement, dated December 1,
1999. For a description of Ms. Chase's Separation and Release Agreement and
her Shareholder and Restrictive Covenant Agreement, refer to "Item 13.
Certain Relationships and Related Transactions."
(9) Includes (1) $11,538 paid to Ms. Chase in accordance with her Separation
and Release Agreement, dated December 1, 1999, entered into in connection
with her resignation on December 1, 1999 and (2) $2,500 of matching
contributions made by the Company to Ms. Chase's retirement account in the
Acsys, Inc. 401(k) Plan based on a percentage of Ms. Chase's contributions
to the Acsys, Inc. 401(k) Plan.
(10) Reflects compensation paid by the Company to Ms. Chase beginning on
May 16, 1997, the date that the Company employed Ms. Chase, who initially
served as Executive Vice President and Chief Operating Officer. Ms. Chase
became Chief Development Officer and Executive Vice President in
September 1997.
OPTION/SAR GRANTS IN 1999
The following table sets forth information concerning the Company's 1999
grants of stock options to Brady W. Mullinax, Jr., the only Named Executive
Officer who was granted options in 1999.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------------- ANNUAL
PERCENT OF RATES OF STOCK
NUMBER OF TOTAL PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM (1)
OPTIONS/SARS EMPLOYEES IN OR BASE PRICE EXPIRATION -------------------
NAME GRANTED(2) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ------------- ------------- ------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Brady W. Mullinax, Jr........................ 50,000 5.0% $4.375 2009 $137,571 $348,631
25,000 3.0 1.813 2009 28,505 72,236
</TABLE>
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(1) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Commission. There can be no assurance provided
to any 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 Officer.
(2) Options were granted as a consideration for employment at the fair market
value of the Common Stock on the date of the grant. All shares underlying
the options will vest within 3 years of the date they were granted or upon
a change in control as defined in the option agreements. The options have a
10-year term.
4
<PAGE>
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table gives information with respect to options held by
Brady W. Mullinax, Jr. and Timothy Mann, Jr., the only Named Executive Officers
who held stock options at December 31, 1999. The Company has never issued SARs,
and none of the Named Executive Officers exercised stock options in 1999. The
fiscal year-end market value of $1.688 per share is equal to the closing sales
price of the Common Stock on December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
<S> <C> <C>
Timothy Mann, Jr. (2)....................................... 225,210/123,345 --/--
Brady W. Mullinax, Jr....................................... 100,000/125,000 --/--
</TABLE>
- --------------------------
(1) Based upon the closing sales price of the Common Stock on December 31, 1999
of $1.688 per share. The exercise price for the stock options exceeded the
closing sales price on December 31, 1999.
(2) Pursuant to the terms of his option agreements with the Company, all of
Mr. Mann's options have expired since December 31, 1999.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Messrs. Cooper, Mullinax and Sauer and Ms. Kennedy each executed employment
agreements with the Company under which each executive currently receives an
annual base salary of $200,000, $240,000, $225,000 and $250,000, respectively.
Each of these executive officers is also contractually entitled to a bonus that
is to be agreed upon and based upon certain criteria set forth in his or her
agreement. In 1999, Messrs. Mullinax and Sauer each received a bonus of $70,000
and $85,000, respectively. Mr. Cooper and Ms. Kennedy, who did not join the
Company until February 2000, did not receive a bonus in 1999. Under their
current employment agreements, none of the Company's executive officers has
received or is expected to receive perquisites that exceed the lesser of $50,000
or 10% of the salary and bonus of such executive.
Each employment agreement for the executive officers (other than for
Mr. Mullinax) 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. Mr. Mullinax's agreement remains in effect
until December 31, 2000 and continues thereafter for one-year terms until either
Mr. Mullinax or the Company elects to not renew the agreement. The Company
anticipates that Mr. Cooper's employment agreement, with is scheduled to expire
on May 16, 2000, will be extended until the date of the initial purchase of the
shares pursuant to the Offer.
Each of Messrs. Cooper's and Sauer's employment agreements provides that, in
the event of a termination of employment, either (1) by the Company without
cause (as defined in the agreements) or (2) by the employee following a change
in control (as defined in the agreements) or a breach by the Company of such
executive's employment agreement or the registration rights agreement between
the Company and such executive, such executive officer will be entitled to
receive from the Company a lump sum severance payment equal to three times the
sum of his then-current annual salary plus the amount of his bonus calculated
using the results of the operations of the Company for the 12 months prior to
such termination. In such event, the non-compete and non-solicitation provisions
discussed below would not apply to such executive officer. If an executive
officer resigns for any other reason,
5
<PAGE>
such executive officer will be entitled to receive from the Company a lump sum
severance payment equal to his 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 base
salary for the greater of the remainder of the term of his employment agreement
or one year's annual salary.
Mr. Mullinax's agreement provides that in the event of termination of
employment either (1) by the Company without cause (as defined in the agreement)
or (2) by Mr. Mullinax following a change in control (as defined in the
agreement), the relocation of Mr. Mullinax outside of metro Atlanta or a breach
by the Company of Mr. Mullinax's employment agreement, Mr. Mullinax will be
entitled to receive a lump sum severance payment equal to three times the sum of
his then-current annual salary plus a bonus equal to his annual bonus for the
year prior to the year in which such termination occurs. If Mr. Mullinax is
terminated upon a determination by the Board of Directors that he failed to meet
performance expectations, then he will be entitled to receive a lump sum
severance payment equal to his annual salary for the greater of the remainder of
the term of his employment agreement or one year's annual salary. Mr. Mullinax
must comply with the non-competition and non-solicitation covenants of his
employment agreement in the event he is terminated from employment with the
Company for any reason; however, if Mr. Mullinax's employment is terminated
either (i) by the Company without cause or (ii) by Mr. Mullinax for good reason,
the Company must pay Mr. Mullinax $200,000 as consideration for his abiding by
the non-competition and non-solicitation covenants, among others, of his
agreement.
Ms. Kennedy's agreement provides that in the event of termination of her
employment either (1) by the Company without cause (as defined in the agreement)
or (2) by Ms. Kennedy following a change in control (as defined in the
agreement) or a breach by the Company of Ms. Kennedy's employment agreement, she
will be entitled to a lump sum severance payment equal to one year of her salary
plus her guaranteed bonus at her then-current rate, provided she executes a
separation agreement containing a general release and a reaffirmation of certain
covenants in her employment agreement in a form acceptable to the Company. If
Ms. Kennedy is terminated by the Company for cause, resigns without good reason
or upon the determination by the Chief Executive Officer of the Company that she
failed to meet performance expectations, she is not entitled to severance
payments. If Ms. Kennedy is terminated upon a determination by the Chief
Executive Officer of the Company that she has failed to meet performance
expectations, the non-competition provision of her employment agreement
discussed below would not apply following her termination of employment. If
Ms. Kennedy resigns for good reason or is terminated without cause upon or after
a change in control and Ms. Kennedy executes a separation agreement containing a
general release and a reaffirmation of certain covenants in her employment
agreement in a form acceptable to the Company, she is entitled to a lump sum
severance payment equal to three times the sum of her then-current annual salary
plus her guaranteed bonus.
Each of these employment agreements contains a covenant not to compete with
the Company for a period of two years immediately following termination of
employment (with the exception of Ms. Kennedy's whose covenant is for a period
of one year) and an obligation not to solicit any employees or customers of the
Company for a period of one year immediately following termination of employment
(with the exception of Mr. Cooper's covenant that is for a period of two years).
For a description of the separation agreements executed with Edward S.
Baumstein, Timothy Mann, Jr. and Mary Beth Chase, each of whom was an
executive officer of the Company in 1999, see "Item 13. Certain Relationships
and Related Transactions."
6
<PAGE>
AMENDMENTS TO THE EMPLOYMENT AGREEMENTS
In connection with the execution of the Merger Agreement, Mr. David C.
Cooper, Chairman of the Board and Chief Executive Officer of the Company,
Mr. Brady W. Mullinax, Jr., Executive Vice President--Finance and
Administration, Secretary and a director of the Company, Mr. Harry J. Sauer,
Executive Vice President--Professional Services and a director of the Company,
and Ms. Patricia Kennedy, Executive Vice President--Information Technology of
the Company, have each entered into amendments to their respective existing
employment agreements with the Company, the terms of which will take effect at
the time of the initial purchase of Shares under the Offer. The principal
provisions of the amendments to the employment agreements are described below.
The amendment to Mr. Cooper's employment agreement provides for a
continuation of the employment agreement until (and including the date of) the
two-year anniversary of the initial purchase of Shares under the Offer. The
amendment also provides for a base salary of $300,000 with a bonus based on the
Company's performance. In addition, in lieu of the severance benefit upon a
change in control of the Company, Mr. Cooper will receive $300,000 upon the
initial purchase of Shares under the Offer and a second payment of $300,000 if
either he (i) is employed by such company on the two-year anniversary of such
date, (ii) resigns for good reason after such date but prior to the two-year
anniversary of such date, or (iii) is terminated without cause after such date
but prior to the two-year anniversary of such date. The amendment to
Mr. Cooper's employment agreement also requires Mr. Cooper to continue to comply
with certain non-solicitation, non-competition and confidentiality covenants in
the event that he is terminated from employment with the Company for any reason.
The amendment to Mr. Mullinax's employment agreement provides for a
continuation of the employment agreement until (and including the date of) the
two-year anniversary of the initial purchase of Shares under the Offer. The
amendment also provides for a base salary of $240,000 with a bonus to be
determined at the discretion of the Chief Executive Officer of the Company,
provided that such bonus would be at least 20% of his base salary then in
effect. In addition, in lieu of the severance benefit upon a change in control
of the Company, Mr. Mullinax will receive $535,000 upon the initial purchase of
Shares under the Offer and a second payment of $535,000 if either he (i) is
employed by the Company on the two-year anniversary of such date, (ii) resigns
for good reason after such date but prior to the two-year anniversary of such
date, or (iii) is terminated without cause after such date but prior to the
two-year anniversary of such date. The amendment to Mr. Mullinax's employment
agreement also eliminates the Company's requirement to pay Mr. Mullinax $200,000
as compensation for his complying with certain non-competition, non-solicitation
and confidentiality covenants for two years following his employment with the
Company.
The amendment to Mr. Sauer's employment agreement provides for a
continuation of the employment agreement until (and including the date of) the
two-year anniversary of the initial purchase of Shares under the Offer. The
amendment also provides for a base salary of $225,000 with a bonus to be
determined based on the Company's performance, provided that such bonus would be
at least $75,000. In addition, in lieu of the severance benefit upon a change in
control of the Company, Mr. Sauer will receive $487,500 upon the initial
purchase of Shares under the Offer and a second payment of $487,500 if either he
(i) is employed by the Company on the two-year anniversary of such date, (ii)
resigns for good reason after such date but prior to the two-year anniversary of
such date, or (iii) is terminated without cause after such date but prior to the
two-year anniversary of such date. The amendment to Mr. Sauer's employment
agreement also requires Mr. Sauer to comply with certain non-solicitation,
non-competition and confidentiality covenants in the event that he is terminated
from employment with the Company for any reason.
7
<PAGE>
The amendment to Ms. Kennedy's employment agreement does not impact the
duration of Ms. Kennedy's employment agreement or her compensation thereunder.
The amendment provides, in lieu of the severance benefit upon a change in
control of the Company, Ms. Kennedy will receive $532,013 upon the initial
purchase of Shares under the Offer and a second payment of $532,013 if either
she (i) is employed by the company on the two-year anniversary of such date,
(ii) resigns for good reason after, but prior to the two-year anniversary of
such date, or (iii) is terminated without cause after such date but prior to the
two-year anniversary of such date. The amendment also requires the Company to
pay Ms. Kennedy 50% of the value of her unvested Company Options at the
Effective Time of the Merger and 50% of the value of her unvested Company
Options on the second anniversary of the Effective Time of the Merger. The
amendment to Ms. Kennedy's employment agreement also requires Ms. Kennedy to
continue to comply with certain non-competition restrictions in the event that
she is terminated from employment with the Company for cause resulting from her
failure to meet certain performance expectations.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors did not have a Compensation Committee until
February 1998. The members of the Compensation Committee are Messrs. Abelson,
Klaassen and Payne and Ms. Wilson, none of whom are executive officers or
employees of the Company.
DIRECTOR COMPENSATION
Directors who are also employees of the Company do not receive additional
compensation for serving as directors. Each director who is not an employee (an
"Outside Director") receives $1,000 for each meeting of the Board of Directors
attended and $500 for each meeting of a committee of the Board of Directors
attended. All directors 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 Company's option plan.
The options granted to the Outside Directors have a three-year vesting schedule
with one third of the options vesting on each of the first, second and third
anniversaries of the date of grant. The exercise price of the options is based
on the closing sales price of the Common Stock on the date of the grant. The
options have a 10-year term. Pursuant to this policy, in November 1999 the Board
of Directors granted options to purchase 50,000 shares of Common Stock to
Ms. Wilson at a price of $1.94 per share.
In addition, the Company has adopted a policy of granting to each Outside
Director, once each quarter during the Outside Director's term, options to
purchase 4,000 shares of Common Stock, with a lifetime aggregate cap of 150,000
shares per Outside Director. The option exercise price for such quarterly grants
will be equal to the closing sales price of the Common Stock on 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. Pursuant
to this policy, in each of the four quarters of 1999, the Company granted to
each of Messrs. Abelson, Payne and Klaassen options to purchase 4,000 shares of
Common Stock at a price per quarter of $4.38 per share, $3.50 per share, $4.69
per share and $1.81 per share.
8
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of April 27, 2000 by: (i) each of the
Company's directors and executive officers; (ii) all of the Company's executive
officers and directors 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. Except as noted below, 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 executive offices.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
-------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENTAGE(%)
- ------------------------ --------- -------------
<S> <C> <C>
DIRECTORS, EXECUTIVE OFFICERS AND 5% OR GREATER
SHAREHOLDERS:
David C. Cooper(2).................................. 1,656,164 11.4%
Brady W. Mullinax, Jr.(3)........................... 275,000 1.9
Barry M. Abelson(4)................................. 86,001 *
Paul J. Klaassen(5)................................. 89,000 *
William Porter Payne(6)............................. 101,000 *
Harry J. Sauer(7)................................... 795,521 5.5
M. Faye Wilson(3)................................... 50,000 *
Patricia Kennedy.................................... -- --
Edward S. Baumstein(8).............................. 783,521 5.4
All directors and executive officers as a group
(8 persons)(9)..................................... 3,052,686 20.3
</TABLE>
- --------------------------
* Less than 1%.
(1) Shares beneficially owned is calculated based upon 14,499,400 shares of
Common Stock that were outstanding on April 27, 2000. This percentage also
includes Common Stock of which such individual has the right to acquire
beneficial ownership within 60 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. Under the terms of their respective options agreements, upon the
change in control of the Company deemed to have resulted from the execution
of the Merger Agreement, each of the executive officer's (other than
Ms. Kennedy's) and each of the director's options vested and became
immediately exercisable.
(2) Includes 50 shares of Common Stock held by Mr. Cooper's spouse with whom he
shares voting and dispositive power over such shares.
(3) Represents options to purchase shares of Common Stock.
(4) Includes options held by Mr. Abelson to purchase 82,000 shares of Common
Stock.
(5) Includes options held by Mr. Klaassen to purchase a total of 82,000 shares
of Common Stock.
(6) Includes options held by Mr. Payne to purchase a total of 82,000 shares of
Common Stock.
(7) Includes 25,000 shares of Common Stock held by The Sauer Family Foundation,
an entity controlled by Mr. Sauer.
(8) Based upon a Schedule 13G filed with the Commission on February 24, 1999 and
a Form 144 filed with the Commission on April 27, 1999. The address for
Mr. Baumstein is c/o Stephen M. Goodman, Morgan, Lewis & Bockius, 1701
Market Street, Philadelphia, PA 19103-2921.
(9) Includes options to purchase a total of 571,000 shares of Common Stock
exercisable within 60 days of April 27, 2000.
9
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On December 1, 1999 Timothy Mann, Jr. resigned as Chief Executive Officer
and a director of the Company and entered into a Separation and Release
Agreement and a Shareholder and Restrictive Covenant Agreement with the Company.
Under the terms of the Separation and Release Agreement, Mr. Mann is entitled to
$200,000 of severance pay that the Company must pay in five installments by
January 3, 2001. The terms of the Shareholder and Restrictive Covenant Agreement
entitles Mr. Mann to $235,000 that the Company must pay in five installments by
January 3, 2001. The payments made to Mr. Mann under the Shareholder and
Restrictive Covenant Agreement are in consideration for Mr. Mann's compliance
with certain non-competition and non-solicitation covenants contained therein.
On December 1, 1999, Mary Beth Chase resigned as Executive Vice President,
Chief Development Officer and a director of the Company and entered into a
Separation and Release Agreement and a Shareholder and Restrictive Covenant
Agreement with the Company. Ms. Chase's Separation and Release Agreement
entitles her to $150,000 in severance pay that the Company must pay to her in
equal monthly installments through January 1, 2001. The terms of Ms. Chase's
Shareholder and Restrictive Covenant Agreement entitle her to $150,000 that the
Company must pay in equal installments by January 1, 2001. The payments made to
Ms. Chase under the Shareholder and Restrictive Covenant Agreement are in
consideration for Ms. Chase's compliance with certain non-competition and
non-solicitation covenants contained therein.
The terms of each of Mr. Mann's and Ms. Chase's Shareholder and Restrictive
Covenant Agreements also: (i) require each to vote the shares beneficially held
by them in favor of director nominees recommended by the Company's Board of
Directors, (ii) require each to vote on shareholder proposals in accordance with
the recommendations of the Company's Board of Directors, (iii) forbid each from
assigning, selling, pledging or otherwise transferring or disposing of the
shares of Common Stock beneficially owned by them, subject to exceptions,
(iv) forbid each from purchasing or acquiring beneficial ownership or any equity
security of the Company, subject to certain exceptions and (v) forbid each from
assisting or encouraging others in the acquisition of any equity security of the
Company or from engaging in the "solicitation" of "proxies" under the Exchange
Act. Mr. Mann's restrictions remain in effect for two years following the date
of his agreement. Ms. Chase's restrictions remain in effect for one year
following the date of her agreement.
On December 1, 1999, Robert M. Kwatnez resigned as Group Director, New
Products of Acsys IT, Inc., a wholly owned subsidiary of the Company, and as a
director of the Company and entered into a Separation and Release Agreement and
a Shareholder and Restrictive Covenant Agreement with the Company.
Mr. Kwatnez's Separation and Release Agreement entitles him to $122,778 in
severance pay that the Company must pay to him in equal monthly installments
through September 30, 2000. The terms of Mr. Kwatnez's Shareholder and
Restrictive Covenant Agreement entitle him to $245,555 that the Company must pay
in equal monthly installments by September 30, 2000. The payments made to
Mr. Kwatnez under the Shareholder and Restrictive Covenant Agreement are in
consideration for Mr. Kwatnez's compliance with certain non-competition and
non-solicitation covenants contained therein.
The terms of Mr. Kwatnez's Shareholder and Restrictive Covenant Agreements
also require him: (i) to vote the shares beneficially held by him in favor of
director nominees recommended by the Company's Board of Directors, (ii) to vote
on shareholder proposals only on matters relating to the Company's Rights
Agreement or amendments to the Company's charter and by-laws in accordance with
the recommendation of the Company's Board of Directors, (iii) not to assign,
sell, pledge or otherwise transfer or dispose of the Common Stock beneficially
owned by him, subject to certain exceptions, and
10
<PAGE>
(iv) not to assist or encourage others in the acquisition of any equity
securities of the Company or to engage in the "solicitation" of "proxies" under
the Exchange Act. Mr. Kwatnez's restrictions remain in effect for a period of 10
to 12 months following the date of his agreement.
The Company entered into a Separation and Release Agreement with Edward S.
Baumstein effective March 12, 1999. Pursuant to the terms of the agreement,
Mr. Baumstein resigned as President and Chief Operating Officer of the Company
and as a director of the Company. The Company paid a lump sum of approximately
$550,000 to Mr. Baumstein as a severance benefit and agreed to reimburse
Mr. Baumstein for his attorneys' fees. Mr. Baumstein further agreed that until
March 12, 2000 (or earlier in the event that the closing sales price of the
Company's Common Stock was below certain specified prices for a period of
20 consecutive trading days) he would not, directly or indirectly, take certain
actions, including calling shareholders' meetings, executing written shareholder
consents, participating in the solicitation of proxies or a tender offer,
purchasing additional securities or assets of the Company or acquiring control
of the Company's Board of Directors. In addition, the Company and Mr. Baumstein
agreed to release and discharge the other party of any claims that such party
might have against the other relating to events occurring before the date of the
agreement.
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 those that could be obtained from unaffiliated third
parties on an arms'-length basis.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized as of the 28th day of
April 2000.
Acsys, Inc.
By: /s/ Brady W. Mullinax, Jr.
-------------------------------------
Name: Brady W. Mullinax, Jr.
Title: Executive Vice President--
Finance and Administration
and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
* Chairman of the Board of Directors April 28, 2000
- -------------------------------------- and Chief Executive Officer
David C. Cooper
/S/ BRADY W. MULLINAX, JR. Executive Vice President -- April 28, 2000
- -------------------------------------- Finance and Administration,
Brady W. Mullinax, Jr. Secretary and Director
* Director April 28, 2000
- --------------------------------------
Barry M. Abelson
* Director April 28, 2000
- --------------------------------------
Paul J. Klaassen
* Director April 28, 2000
- --------------------------------------
William Porter Payne
* Executive Vice President -- April 28, 2000
- -------------------------------------- Professional Services
Harry J. Sauer and Director
* Director April 28, 2000
- --------------------------------------
M. Faye Wilson
</TABLE>
* By: /s/ Brady W. Mullinax, Jr.
-------------------------------------
Brady W. Mullinax, Jr.
Attorney-in-Fact pursuant to a power of attorney
filed as part of the original
signature page to the Annual Report
on Form 10-K
12
