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FORM 10-K/A
The U.S. Securities and Exchange Commission
Washington, D.C. 20549
AMENDMENT NO. 1
(Mark One)
[X]ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number: 0-21533
TEAM AMERICA CORPORATION
(Name of registrant as specified in its charter)
Ohio 31-1209872
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
110 E. Wilson Bridge Road
Worthington, Ohio 43085
(Address of principal executive offices)(Zip Code)
Registrant's telephone number: 614-848-3995
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No par value
(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, and (2) has been subject to the filing
requirements for at least 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.[X]
Aggregate market value of voting stock held by non-affiliates of
registrant as of March 18, 1997 was approximately $17,181,600.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 3,335,088 shares of
Common Stock were outstanding at, March 1, 1997
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Listed below are the names of each Director, their ages, the year in
which each first became a Director, their principal occupations during the past
five years and other directorships, if any, held by them in companies with a
class of equity securities registered pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or otherwise subject to its periodic
reporting requirements.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS
---- --- ----- --------------------------------------------
<S> <C> <C> <C>
Richard C. Schilg 39 1986 Chairman of the Board of Directors, President and
Chief Executive Officer of the Company since its
founding in 1986.
Kevin T. Costello 47 1992 Senior Vice President of Operations and Chief
Operating Officer of the Company since 1993; Vice
President of Sales and Marketing of the Company
from 1991 to 1993.
Charles F. Dugan 57 1994 Assistant Secretary of the Company since 1992;
II Outside counsel to the Company since 1987; Partner
in the law firm of Vorys, Sater, Seymour and Pease
from 1970 to 1990.
Paul M. Cash 50 1990 Human resource consultant to the Company since
1989.
William W. 50 1990 Secretary of the Company since 1990; outside
Johnston general counsel to the Company since 1989.
M. R. Swartz 57 1991 Owner, operator of the Dairy Depot restaurant
located in Delaware, Ohio.
</TABLE>
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EXECUTIVE OFFICERS
The following table and biographies set forth information concerning
the executive officers of the Company, who are elected by the Board of
Directors:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Richard C. Schilg 39 Chairman of the Board of Directors, President
and Chief Executive Officer
Kevin T. Costello 47 Senior Vice President, Chief Operating Officer
and Director
Michael R. Goodrich 44 Vice President of Finance, Treasurer and Chief
Financial Officer
William W. Johnston 50 Secretary and Director
Charles F. Dugan II 57 Assistant Secretary and Director
</TABLE>
- ----------------
Richard C. Schilg has served as Chairman of the Board of Directors,
President and Chief Executive officer of the Company since founding the Company
in 1986. From 1982 to 1986, Mr. Schilg served as a Career Agent, Sales Manager
and Director of Development of Mutual Security Life Insurance Company located in
Ft. Wayne, Indiana. Mr. Schilg served as President of the Ohio Association of
Professional Employer Organizations, a state chapter of the National Association
of Professional Organizations, from March 1995 to September 1996. Mr. Schilg is
a Certified Professional Employer Specialist.
Kevin T. Costello has been a Director of the Company since 1992 and has
served as Senior Vice President of Operations and Chief Operating Officer of the
Company since 1993. From 1991 to 1993, Mr. Costello served as Vice President of
Sales and Marketing of the Company.
Michael R. Goodrich was appointed Vice President of Finance, Treasurer
and Chief Financial Officer of the Company on March 31, 1997. Mr. Goodrich was
Chief Financial Officer and Secretary of Barefoot Inc. located in Worthington,
Ohio from 1991 to March 31, 1997 and was Vice President Finance of Barefoot
Grass Lawn Service, Inc. from 1986 to March 31, 1997. From 1974 to 1986, Mr.
Goodrich was a Certified Public Accountant in the Columbus, Ohio office of
Arthur Andersen & Co.
William W. Johnston has been a Director of the Company since 1990 and
has served as Secretary of the Company since 1990 and as general counsel to the
Company since 1989. From 1982 to 1990, Mr. Johnston was a partner in the law
firm of Crabbe, Brown, Jones, Potts and Schmidt located in Columbus, Ohio. Mr.
Johnston currently practices law in his own firm
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located in Worthington, Ohio. From 1976 to 1982, Mr. Johnston was the Chairman
of the Ohio Industrial Commission.
Charles F. Dugan II has been a Director of the Company since 1994 and
has served as Assistant Secretary of the Company since 1992. Mr. Dugan has
served as counsel to the Company since 1987. From 1970 to 1990, Mr. Dugan was a
partner in the law firm of Vorys, Sater, Seymour and Pease located in Columbus
Ohio. Mr. Dugan currently practices law in his own firm located in Columbus,
Ohio.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth certain information concerning the
annual and long-term compensation of the chief executive officer of the Company
and the one other executive officer (together, the "Named Executives"), whose
total salary and bonus for the last completed fiscal year exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION
-------------
STOCK OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER(4) # GRANTED
- --------------------------- ---- ------ ----- -------- ---------
<S> <C> <C> <C> <C> <C>
Richard C. Schilg, Chairman 1996 $241,561 $206,637(3) $4,553 50,000
of the Board, President and 1995 $180,010(2) $158,790 $4,529 -0-
Chief Executive Officer
Kevin T. Costello, Senior 1996 $232,210 $138,930(3) $4,558 50,000
Vice President and Chief 1995 $178,316(2) $98,285 $4,529 -0-
Operating Officer
<FN>
- ------------------
(1) Under rules promulgated by the Commission, since the Company was not a
reporting company during the three immediately preceding fiscal years, only
the information with respect to the two most recently completed fiscal years
is noted in the Summary Compensation Table.
(2) Includes commissions in the amounts of $51,010 and $97,716 paid to Mr.
Schilg and Mr. Costello, respectively.
(3) Includes payments of $70,000 and $63,000 in February 1997 to Messrs. Schilg
and Costello, respectively, based in part on the financial performance of
the Company in 1996. In accordance with generally accepted accounting
principles, these amounts were required to be recognized as expense in
fiscal 1996. Also included are payments of $136,637 and $75,930 in June 1996
of discretionary bonuses to Messrs. Schilg and Costello, respectively. These
discretionary bonuses were not related to specific performance criteria for
the Company in 1995 and accordingly were not required to be expensed until
paid in 1996.
(4) Represents health care insurance premiums paid by the Company for the
benefit of the indicated Named Executive Officer.
</TABLE>
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STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options
granted during fiscal 1996 to the Named Executives.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------------------------------------
PERCENTAGE OF
TOTAL OPTIONS POTENTIAL REALIZABLE VALUE AT
NUMBER OF GRANTED TO EXERCISE ASSUMED ANNUAL RATES OF
OPTIONS EMPLOYEES PRICE PER EXPIRATION STOCK PRICE APPRECIATION
NAME GRANTED IN FISCAL 1996 SHARE DATE FOR OPTION TERM
- ----------------- -------- ---------------- ------- ----- ------------------------
5% 10%
------ -------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Schilg 50,000 26.9% $12.00 12/09/06 $377,500 $956,000
Kevin T. Costello 50,000 26.9% $12.00 12/09/06 $377,500 $956,000
</TABLE>
In fiscal 1996, the Company granted options to purchase a total of
186,000 Common Shares, subject to the terms and conditions of the Company's 1996
Incentive Stock Plan. All such options were granted in connection with the
initial public offering of the Company's Common Shares in December 1996. Such
options consisted of (i) options to purchase 50,000 Common Shares granted to
each of Messrs. Schilg and Costello , (ii) options to purchase an aggregate of
66,000 Common Shares granted to a total of twelve other key employees, and (iii)
options to purchase an aggregate of 20,000 Common Shares granted to the
Directors. All such options expire on December 9, 2006 and have an exercise
price of $12.00 per share. The options granted to Messrs. Schilg and Costello
and key employees are subject to vesting 20% per year over five years and the
options granted to the Directors will vest on December 9, 1997.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning the value
of unexercised stock options held as of December 31, 1996 by the Named
Executives. No options were exercised by such executive officers during fiscal
1996.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY OPTIONS
NAME AND PRINCIPAL POSITION OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END
- --------------------------- -------------------------- ------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Richard C. Schilg,
President and Chief 0 50,000 NA NA
Executive Officer
Kevin T. Costello,
Vice President and 0 50,000 NA NA
Chief Operating Officer
</TABLE>
EMPLOYMENT AGREEMENTS
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Richard C. Schilg. Mr. Schilg has executed an employment agreement with
the Company pursuant to which he has agreed to serve as Chairman of the Board,
President and Chief Executive Officer of the Company for a period of three years
and, unless terminated in accordance with the provisions therein, on the first
day of each month that the agreement is in effect, the remaining term thereof
will be automatically extended for one additional month. Under the terms of the
agreement, Mr. Schilg receives an annual base salary of $195,000, plus incentive
compensation in an amount determined by the Company's Compensation Committee
based upon various factors including the Company's results of operations and
financial condition and Mr. Schilg's performance during the relevant period. In
addition to such base salary and incentive compensation, Mr. Schilg may receive
commissions on sales to clients for which he is responsible pursuant to terms
and conditions determined by the Company's Compensation Committee. In the event
Mr. Schilg's employment is terminated for cause, the Company will pay Mr. Schilg
the compensation and benefits due under his employment agreement through the
date of such termination. Mr. Schilg's employment agreement contains certain
non-competition and non-solicitation provisions which prohibit him from
competing with the Company during his employment by the Company and for a period
of one year after termination of his employment.
The Company has agreed to maintain one or more life insurance policies
on the life of Mr. Schilg in an aggregate amount sufficient to pay Mr. Schilg's
widow at least $48,000 per year for 15 years in the event that he dies prior to
his retirement. No such benefit will be paid in the event that Mr. Schilg dies
after his retirement. In addition, upon Mr. Schilg's retirement on or after his
sixty-fifth birthday, the Company will pay him an amount calculated to be equal
to the maximum loan available from such insurance policy which will not cause
the insurance policy to lapse prior to his life expectancy. Thereafter, such
amount shall be recalculated on an annual basis and the Company will pay Mr.
Schilg any increase in such amount.
Pursuant to Mr. Schilg's employment agreement, on December 9, 1996, the
Company granted to Mr. Schilg the right to purchase 50,000 Common Shares at an
exercise price equal to the initial offering price of the Company's Common
Shares of $12.00 per share, subject to vesting 20% per year over five years.
These options will expire on December 9, 2006 and are subject to the terms and
conditions of the Company's 1996 Incentive Stock Plan. See "Executive
Compensation--Stock Option Grants in Last Fiscal Year."
Kevin T. Costello. Mr. Costello has executed an employment agreement
with the Company pursuant to which he has agree to serve as Senior Vice
President of Operations and Chief Operating Officer of the Company for a period
of three years and, unless terminated in accordance with the provisions therein,
on the first day of each month that the agreement is in effect, the remaining
term thereof will be automatically extended for one additional month. Under the
terms of the agreement, Mr. Costello receives an annual base salary of $175,000,
plus incentive compensation in an amount determined by the Company's
Compensation Committee based upon various factors including the Company's
results of operations and financial condition and Mr. Costello's performance
during the relevant period. In addition to such base salary and
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incentive compensation, Mr. Costello may receive commissions on sales to clients
for which he is responsible pursuant to terms and conditions determined by the
Company's Compensation Committee. In the event Mr. Costello's employment is
terminated for cause, the Company will pay Mr. Costello the compensation and
benefits due under his employment agreement through the date of such
termination. Mr. Costello's employment agreement contains certain noncompetition
and non-solicitation provisions which prohibit him from competing with the
Company during his employment by the Company and for a period of one year after
termination of his employment.
The Company has agreed to maintain one or more life insurance policies
on the life of Mr. Costello in an aggregate amount sufficient to pay Mr.
Costello's widow at least $24,000 per year for 15 years in the event that he
dies prior to his retirement. No such benefit will be paid in the event that Mr.
Costello dies after his retirement. In addition, upon Mr. Costello's retirement
on or after his sixty-fifth birthday, the Company will pay him an amount
calculated to be equal to the maximum loan available from such insurance policy
which will not cause the insurance policy to lapse prior to his life expectancy.
Thereafter, such amount shall be recalculated on an annual basis and the Company
will pay Mr. Costello any increase in such amount.
Pursuant to Mr. Costello's employment agreement, on December 9, 1996,
the Company granted to Mr. Costello the right to purchase 50,000 Common Shares
at an exercise price equal to the initial offering price of the Company's Common
Shares of $12.00 per share, subject to vesting 20% per year over five years.
These options will expire on December 9, 2006 and are subject to the terms and
conditions of the Company's 1996 Incentive Stock Plan.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Shares as of April 21, 1997, by each person known by the
Company to own beneficially more than five percent of the Company's outstanding
Common Shares, by each Director, by each Named Executive and by all Directors
and executive officers as a group. As of April 21, 1997, there were 3,375,703
Common Shares issued and outstanding and no Common Shares subject to options
exercisable within 60 days thereafter. Except as otherwise noted, each person
named in the table has sole voting and investment power with respect to all
shares shown as beneficially owned by him or her.
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<TABLE>
<CAPTION>
PERCENT OF
SHARES
NAME AND ADDRESS OF SHARES BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER OWNED AT APRIL 21, 1997 OWNED
- -------------------- ----------------------- ------
<S> <C> <C>
Richard C. Schilg 1,181,464(1) 35.0%
110 East Wilson Bridge Road
Worthington, Ohio 43085
Judith Schilg 223,443(2) 6.6%
110 East Wilson Bridge Road
Worthington, Ohio 43085
Kevin T. Costello 423,200(3) 12.5%
110 East Wilson Bridge Road
Worthington, Ohio 43085
Anne M. Costello 373,200(4) 11.1%
110 East Wilson Bridge Road
Worthington, Ohio 43085
Michael R. Goodrich 2,500 *
Charles F. Dugan II 32,200 *
Paul M. Cash 9,936 *
M. R. Swartz 11,960 *
All Directors and Executive
Officers as a group (7 1,661,260 49.2%
Persons)
<FN>
- -----------------------------
* Represents less than 1%.
(1) Includes 958,021 shares owned of record by Mr. Schilg over which he has
sole voting and investment power and 223,443 shares owned of record by
Mr. Schilg and his wife, Judith Schilg, as joint tenants, of which Mr.
Schilg shares with his wife voting and investment power.
(2) Includes 223,443 shares owned of record by Mrs. Schilg and her husband,
Richard C. Schilg, as joint tenants, of which Mrs. Schilg shares with
her husband voting and investment power. Mrs. Schilg disclaims
beneficial ownership of the 958,021 shares owned of record by her
husband.
</TABLE>
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(3) Includes 50,000 shares owned of record by Mr. Costello of which he has
the sole voting and investment power and 373,200 shares owned of record
by Mr. Costello and his wife, Anne M. Costello, as joint tenants, of
which Mr. Costello shares with his wife voting and investment power.
(4) Includes 373,200 shares owned of record by Mrs. Costello and her
husband, Kevin T. Costello, as joint tenants, of which Mrs. Costello
shares with her husband voting and investment power. Mrs. Costello
disclaims beneficial ownership of the 50,00 shares owned of record by
her husband.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During fiscal 1996, Messrs. Johnston and Dugan received fees for legal
services provided to the Company in the amounts of $68,892 and $54,656,
respectively, and Mr. Cash received fees for consulting services provided to the
Company in the amount of $11,040.
During fiscal 1996, Mr. Schilg personally guaranteed the Company's
performance of its obligations under its credit facility with a bank. No amounts
are currently owed by the Company under such credit facility. In 1997, the bank
released Mr. Schilg from such guaranty.
Each of Messrs. Johnston, Dugan and Cash have entered into a standard
client agreement with the Company pursuant to which each of them is both a
client and a worksite employee of the Company. The Company has provided, and
expects to continue to provide, professional employer organization services to
such individuals upon terms and conditions no more favorable to such individuals
than those generally provided to the Company's other clients.
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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.
TEAM AMERICA CORPORATION
Date: April 24, 1997 By: /s/Michael R. Goodrich
----------------------------
Michael R. Goodrich, Vice President,
Treasurer and Chief Financial Officer
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