UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 28, 2002
COMMISSION FILE NUMBER: 0-21533
TEAM AMERICA, INC.
(Name of registrant as specified in its charter)
OHIO 31-1209872
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 E. CAMPUS VIEW BLVD., SUITE 170, COLUMBUS, OHIO 43235
(Address of principal executive offices) (Zip Code)
(614) 848-3995
(Registrant's telephone number, including area code)
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
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 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. [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [ ] No [X]
Aggregate market value of the Company's voting common equity held by its
non-affiliates as of June 28, 2002 was approximately $5,913,000 based on the
Closing Price of the Company's Common Stock on the NASDAQ.
There were 8,236,698 shares of the Company's common stock outstanding at
April 17, 2003.
Documents Incorporated by Reference: None.
EXPLANATORY NOTE
This Amendment No. 1 to Report on Form 10-K/A (the "Amendment") is being filed
to amend the Report on Form 10-K of TEAM America, Inc., filed with the
Securities Exchange Commission on March 28, 2003 (the "Original Report on Form
10-K"). The sole purpose of this Amendment is to include Items 10, 11, 12 and 13
previously intended to be incorporated by reference through TEAM America's
Definitive Proxy Statement for its 2003 Annual Meeting of Shareholders. TEAM
America will not be filing its Proxy Statement within 120 days following the end
of its fiscal year 2002, and therefore, is filing this Amendment. The Amendment
does not amend any other disclosure in the Original Report on Form 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Our Directors and Executive Officers, including age and position with
the Company as of April 18, 2003, are as follows:
Name Age Office
---- --- ------
S. Cash Nickerson 43 Chairman and Chief Executive Officer
Jose C. Blanco 47 Director
Ted A. Crawford 38 President and Chief Operating Officer
Crystal Faulkner 43 Director (1)
Daniel J. Jessee 50 Director
Andrew H. Johnson 37 Executive Vice President, Chief Financial
Officer, Treasurer and Director
Robert G. McCreary III 50 Director (2)
Joseph R. Mancuso 61 Director, Chair of Compensation Committee (1)(2)
James D. Robbins 56 Director, Chair of Audit Committee (1)
Jay R. Strauss 58 Executive Vice President, Chief Legal Officer,
Secretary and Director
Theodore R. Tetzlaff 59 Director (2)
Michael H. Thomas 52 Director
- ----------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
The Company's Board of Directors is classified into three classes; each elected
in staggered three-year terms that expire at the corresponding Annual Meeting of
the Company or until their successors are duly elected and qualified.
S. Cash Nickerson Mr. Nickerson has served as the Company's Chairman
and Chief Executive Officer since December 2000,
and his current term as a Director expires at the
2003 Annual Meeting. Mr. Nickerson also served as
a Director of the Company from 1997 to 1999. Prior
to this time, Mr. Nickerson served as the Chairman
and Chief Executive Officer of Mucho.com from July
1999 to December 2000. Prior to that, he was a
founder and partner in the law firm of Strauss
Nickerson LLP, in Lafayette, California, from 1998
to 2000. From 1995 to 1997, Mr. Nickerson was the
President and founder of Workforce Strategies,
Inc., which the Company acquired in 1997.
Jose C. Blanco Mr. Blanco has served as a Director of the Company
since December 2000, and his current term expires
at the 2004 Annual Meeting. He served as
Executive Vice President of Finance and the Chief
Financial Officer of the Company from January 2001
to January 2003. Prior to this time, Mr. Blanco
was the Chief Financial Officer of Mucho.com, Inc.
from July 1999 to December 2000. Mr. Blanco was an
Assistant Professor of Finance in the MBA and
Executive MBA programs at St. Mary's College
(Moraga, California) from September 1996 to
January 2001. From September 1994 to September
1996, Mr. Blanco attended Utah State University
where he received a Ph.D. with a focus in
Econometrics, Applied Microeconomics and Finance.
Ted A. Crawford Mr. Crawford has served as the Company's President
and Chief Operating Officer since September 2002.
He joined the Company in September 2001 as Vice
President of Sales and was subsequently promoted
in May 2002 to Executive Vice President of Sales
and Service. Prior to joining the Company, Mr.
Crawford was the Vice President - Sales of CSI,
Inc., a professional employer organization and
wholly-owned subsidiary of Master Service, Inc.,
from February 2000 to August 2002, the President
of Alliance 1, a sales and marketing company, from
June 1999 to January 2000, and District Sales
Manager for Administaff, Inc., a professional
employer organization, from October 1997 to May
1999.
Crystal L. Faulkner Ms. Faulkner has served as a Director of
the Company since 1997, and her current term
expires at the 2003 Annual Meeting. She currently
is and has been since 1999, a partner in the
accounting firm of Cooney, Faulkner & Stevens,
LLC, in Cincinnati, Ohio. From 1991 to 1999, Ms.
Faulkner was a partner and shareholder in the
accounting firm of Rippe & Kingston, in
Cincinnati, Ohio. Ms. Faulkner serves on the
board of Mental Health East, a not-for-profit
organization serving the needs of children, and
is the President of Accounting for Kids, Inc., a
not-for-profit organization.
Daniel J. Jessee Mr. Jessee has served as a Director of the Company
since 2000, and his current term expires at the
2003 Annual Meeting. He currently is and has been
since August 1998, a principal of Stonehenge
Financial Holdings, a private investing group
headquartered in Columbus, Ohio. Prior to this
time, Mr. Jessee served as a Senior Manager,
Corporate Finance for Banc One Capital Corporation
from August 1991 to August 1998.
Andrew H. Johnson Mr. Johnson has served as a Director since March
2003, as the Company's Executive Vice President,
Chief Financial Officer and Treasurer since
September 2002 and as the Company's Chief
Accounting Officer from January 2002 to August
2002. His current term as a Director expires at
the 2004 Annual Meeting. Prior to joining the
Company, Mr. Johnson was the founder and a
consultant of Future in Focus, LLC, a company
advising clients in the areas of corporate
finance, from April 2001 to December 2001. From
April 2000 to March 2001, Mr. Johnson served as
Chief Financial Officer of Purchasing First, Inc.,
an Internet technology company. Prior to that, Mr.
Johnson served as Director, Middle Market Advisory
Services for PricewaterhouseCoopers LLP. Mr.
Johnson has been a certified public accountant
since 1989.
Robert G. McCreary III Mr. McCreary has served as a Director of the
Company since 2001, and his current term expires
at the 2004 Annual Meeting. He is the founder and
currently a principal of CapitalWorks, LLC, a
merchant bank focusing on investments in
under-appreciated and under-valued micro-cap
public companies. Prior to this time, Mr. McCreary
was the President of Carleton, McCreary, Holmes &
Co., a merger and acquisition boutique, from 1993
to 1996. Mr. McCreary's experience includes
serving in numerous managing partner positions in
investment banking firms and as a partner in a
large regional corporate law firm where his focus
was mergers, acquisitions and succession issues
for privately-held businesses. Mr. McCreary serves
as a director for numerous privately-held and
not-for-profit organizations and serves as a
director of Pioneer-Standard Electronics, Inc., an
electronic component and computer product
distributing company.
Joseph R. Mancuso Mr. Mancuso has served as a Director of the
Company since 2000, and his
current term expires at the 2004 Annual Meeting.
He has served as the Chief Executive Officer of
the CEO Club, Inc. and of the Center for
Entrepreneurial Management, Inc., a not-for-profit
membership association, since 1977. Mr. Mancuso
has also served as the Chairman of the Management
Department at Worcester Polytechnic Institute in
Massachusetts since 1978.
James D. Robbins Mr. Robbins has served as a Director of the
Company since 2001, and his current term expires
at the 2003 Annual Meeting. Since July 2001, he
has served as the President of James D. Robbins
and Co., a financial advisory and investment
company. Prior to this time, Mr. Robbins was a
managing partner of PricewaterhouseCoopers LLP
(and its predecessor firm Coopers & Lybrand),
Columbus market, from November 1, 1993 until his
retirement on June 30, 2001. Mr. Robbins is a
certified public accountant in the State of Ohio
and the Commonwealth of Kentucky. Mr. Robbins
serves as a director of Huntington Preferred
Capital, Inc. and Dollar General Corporation.
Jay R. Strauss Mr. Strauss has served as a Director and Secretary
of the Company since 2001 and as the Company's
Chief Legal Officer and Executive Vice President
of Law and Human Resources since December 2000.
His current term as a Director expires at the 2005
Annual Meeting. Mr. Strauss served as the Chief
Legal Officer and director of Mucho.com from July
1999 until December 2000. Prior to this time, Mr.
Strauss was a founder and partner in the law firm
of Strauss Nickerson LLP, in Lafayette,
California, from August 1998 to July 2000. Mr.
Strauss practiced law with the firm of Foley,
McIntosh, Frey, Claytor and Strauss, in Lafayette,
California, from 1990 to August 1998.
Theodore R. Tetzlaff Mr. Tetzlaff has served as a Director of the
Company since June 2002, and his current term
expires at the 2005 Annual Meeting. He is
currently the Chicago Office Managing Partner for
the law firm of McGuireWoods LLP. He was formerly
a partner in the law firm of Jenner & Block LLC
from 1973 to 1980 and from 1982 to 2001, having
served as Chairman of the Executive Committee.
From 1992 to 1999 he also served as general
counsel of Tenneco Inc., a global manufacturing
company. He was formerly Vice President, Legal and
External Affairs, of Cummins Engine Company from
1980 to 1982. Mr. Tetzlaff is also currently
serving as a director of Continental Materials
Corporation, a heating and cooling manufacturing
company, and a Commissioner of the Public Building
Commission of Chicago.
Michael H. Thomas Mr. Thomas has served as a Director of the Company
since December 2000, and his current term expires
at the 2005 Annual Meeting. Since August 1999, he
has served as a principal of Stonehenge Partners,
Inc., a private equity group based in Columbus,
Ohio. Prior to this time, Mr. Thomas served as a
business consultant specializing in investments,
mergers and acquisitions from January 1998 to July
1999. Mr. Thomas was the Executive Vice President
and Treasurer of JMAC, Inc., a private holding
company, from 1980 to 1998. While with JMAC, Inc.,
Mr. Thomas's duties involved investments,
acquisitions and financial and tax planning.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file with the Securities and Exchange
Commission initial reports of beneficial ownership and change in beneficial
ownership of Common Stock of the Company. Such officers and directors are
required by SEC regulations to furnish to the Company copies of all Section
16(a) reports that they file. Except for the following Section 16(a) filings, to
the
Company's knowledge, all officers and directors of the Company complied with
the Section 16(a) filing requirements: (i) Ted Crawford was inadvertently late
in filing an initial report on Form 3; (ii) Ted Crawford was inadvertently late
in filing a Form 4 for options granted in September 2002; (iii) Andrew Johnson
was inadvertently late in filing a Form 4 for options granted in December 2002;
and (iv) each of Crystal Faulkner, William Johnston (former director), Robert
McCreary III, Joseph Mancuso, James Robbins, Theodore Tetzlaff and Michael
Thomas was inadvertently late in filing a Form 5 for options granted in May
2002.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning our annual and
long-term compensation of the Chief Executive Officer and the top executive
officers as of the end of fiscal year 2002 (based upon compensation) whose total
salary and bonus for fiscal year 2002 exceeded $100,000 (together, the "Named
Executives").
SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
-------------------------------------------------- ----------------
Securities
Other Annual Underlying
Name and Principal Position Year Salary Bonus Compensation Options/SARs (#)
- --------------------------- ---- ---------- -------- ------------ ----------------
S. Cash Nickerson 2002 $ 353,519 $ 25,000 $ 25,474 (2) --
Chairman and Chief 2001 $ 332,292 $ 95,000 $370,620 (3) 50,000
Executive Officer (1) 2000 -- -- -- --
Jose C. Blanco (4) 2002 $ 223,615 -- $ 23,729 (5) --
2001 $ 236,971 -- $ 93,308 (6) --
2000 -- -- -- 145,238
Ted A. Crawford 2002 $ 162,115 -- $ 62,153 (7) 75,000
President 2001 $ 32,308 $ 6,000 -- 10,000
2000 -- -- --
Andrew H. Johnson 2002 $ 138,711 $ 25,000 $ 9,102 (8) 45,000
Chief Financial Officer and 2001 -- -- -- --
Treasurer 2000 -- -- -- --
Jay R. Strauss, Chief 2002 $ 181,865 $ 17,500 $113,679 (9) --
Legal Officer and 2001 $ 178,927 $ 5,000 -- 25,000
Executive Vice President 2000 -- -- -- 26,455
(1) Mr. Nickerson was appointed Chief Executive Officer on December 28, 2000.
(2) Represents additional perquisites and personal benefits, including car
allowance of $8,000 and health care insurance premiums of $7,719, incurred
by Mr. Nickerson and paid by the Company.
(3) Represents additional perquisites and personal benefits, including
relocation expenses of $332,847, incurred by Mr. Nickerson and paid by the
Company.
(4) Mr. Blanco's employment with the Company was terminated effective January
31, 2003.
(5) Represents additional perquisites and personal benefits, including car
allowance of $13,000 and health care insurance premiums of $8,462, incurred
by Mr. Blanco and paid by the Company.
(6) Represents additional perquisites and personal benefits, including
relocation expenses of $73,815, incurred by Mr. Blanco and paid by the
Company.
(7) Represents additional perquisites and personal benefits, including
relocation expenses of $47,527, incurred by Mr. Crawford and paid by the
Company.
(8) Represents additional perquisites and personal benefits, including health
care insurance premiums of $6,314, incurred by Mr. Johnson and paid by the
Company.
(9) Represents additional perquisites and personal benefits, including
relocation expenses of $103,575, incurred by Mr. Strauss and paid by the
Company.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options granted
during 2002 to the Named Executives:
Individual Grants
----------------------------------------------------
Number of Percentage of Potential Realizable
Securities Total Options Value at Assumed Annual
Underlying Granted to Exercise Rates of Stock Price
Options Employees in Price Per Expiration Appreciation for option
Name Granted (#) Fiscal 2002 Share Date Term (1)(2)
- ---- ----------- ------------ --------- ---------- -----------------------
5% 10%
------- --------
S. Cash Nickerson -- -- -- -- -- --
Jose C. Blanco -- -- -- -- -- --
Ted A. Crawford 50,000 41.7% $ 2.90 05/01/12 $91,190 $231,093
Ted A. Crawford 25,000 20.8% $ 0.54 11/14/12 $ 8,490 $ 21,516
Andrew H. Johnson 45,000 37.5% $ 0.54 11/14/12 $15,282 $ 38,728
Jay R. Strauss -- -- -- -- -- --
(1) The dollar amounts in these columns are the product of (a) the difference
between (i) the product of the per-share market price at the date of the
grant and the sum of 1 plus the assumed rate of appreciation (5% and 10%)
compounded annually over the term of the option (ten years) and (ii) the
per-share exercise price of the option and (b) the number of shares
underlying the grant at fiscal year-end.
(2) The appreciation rates stated are arbitrarily assumed and may or may not
reflect actual appreciation in the stock price over the life of the option.
Regardless of any theoretical value that may be placed on a stock option,
no increase in its value will occur without an increase in the value of the
underlying shares. Whether such an increase will be realized will depend
not only on the efforts of the recipient of the option, but also upon
conditions in our industry and market area, competition and economic
conditions, over which the optionee may have little or no control.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth certain information concerning the value of
unexercised stock options held as of December 28, 2002 by the Named Executives:
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End(#) at Fiscal Year-End ($) (2)
----------------------------- ------------------------------
Shares Value
Acquired on Realized
Exercise (#) ($) (1) Exercisable Unexercisable Exercisable Unexercisable
------------ ------- ----------- ------------- ----------- -------------
S. Cash Nickerson 0 0 112,000 40,000 $ 0 $ 0
Jose C. Blanco 0 0 145,238 0 $ 0 $ 0
Ted A. Crawford 0 0 2,000 83,000 $ 0 $ 0
Andrew H. Johnson 0 0 20,000 25,000 $ 0 $ 0
Jay R Strauss 0 0 31,455 20,000 $ 0 $ 0
(1) Represents the difference between the per-share fair market value on the
date of exercise and the per-share option exercise price, multiplied by the
number of shares to which the exercise relates.
(2) Represents the total gain that would be realized if all in-the-money
options held at year-end were exercised, determined by multiplying the
number of shares underlying the options by the difference between the
per-share option exercise price and per-share fair market value at
year-end. An option is in-the-money if the fair market value of the
underlying shares exceeds the exercise price of the option. As of the end
of fiscal year 2002, there were no in-the-money options outstanding.
EMPLOYMENT AGREEMENTS
Effective December 1, 2002, Mr. Nickerson executed an employment agreement with
the Company pursuant to which he agreed to serve as Chief Executive Officer. His
employment is "at-will." Under the terms of the agreement, Mr. Nickerson
received an annual base salary of $350,000, plus incentive compensation in an
amount equal to 100% of his annual based salary based upon achievement of an
EBITDA objective. For fiscal year 2002, the EBITDA objective was not reached.
Subsequent EBITDA objectives will be set by the Compensation Committee of the
Board. Under the agreement, Mr. Nickerson will also receive a bonus of $100,000
plus 100,000 qualified stock options with an exercise price of $0.60 if the
Company completes a sale, merger or major refinance transaction in fiscal year
2003. In the event Mr. Nickerson's employment is terminated for cause, the
Company will pay Mr. Nickerson the compensation and benefits due under his
employment agreement through the date of such termination. In the event Mr.
Nickerson's employment is terminated for reasons other than for cause, Mr.
Nickerson is entitled to severance equal to 150% of his base salary, payable
immediately. Mr. Nickerson's employment agreement contains certain
non-solicitation provisions that prohibit him from soliciting the Company's
clients or customers for his own benefit during his employment and for a period
of three years after termination of his employment and that prevent him from
competing with the Company during his employment and during any period with
respect to which he is being paid severance.
Mr. Blanco executed an employment agreement with the Company, effective December
2000, pursuant to which he agreed to serve as Executive Vice President of
Finance and Chief Financial Officer for a period of one year and, unless
terminated in accordance with the provisions therein, on each anniversary date
of the agreement, the term thereof will be automatically extended for one
additional year. Under the terms of the agreement, Mr. Blanco received an annual
base salary of $225,000 in 2002, plus incentive compensation in an amount equal
to 50% of his annual base salary upon achievement of an EBITDA objective. For
the fiscal year 2002, the EBITDA objective was not reached. Under the agreement,
if Mr. Blanco's employment is terminated for cause, the Company must pay Mr.
Blanco the compensation and benefits due under his employment agreement through
the date of such termination. In the event Mr. Blanco's employment is terminated
for reasons other than for cause, Mr. Blanco is entitled under the agreement to
severance equal to one year's base salary. Mr. Blanco's employment agreement
also contains certain non-solicitation provisions that prohibit him from
soliciting the Company's clients or customers for his own benefit for a period
of three years after termination of his employment. Mr. Blanco's employment was
terminated effective January 31, 2003. The terms of his severance are currently
being negotiated.
Effective September 23, 2002, Mr. Crawford executed a new employment agreement
with the Company (superceding his employment agreement dated May 1, 2002)
pursuant to which he agreed to serve as President. His
employment is "at-will." Under the terms of the agreement, Mr. Crawford received
an annual base salary of $240,000, plus 10,000 qualified options (in addition to
the 50,000 qualified options awarded on May 1, 2002), plus incentive
compensation in an amount equal to 50% of his annual base salary upon
achievement of an EBITDA objective. For fiscal year 2002, the EBITDA objective
was not reached. Subsequent EBITDA objectives will be set by the Compensation
Committee of the Board. Under the agreement, in the event Mr. Crawford's
employment is terminated for cause, the Company is obligated to pay Mr. Crawford
the compensation and benefits due under his employment agreement through the
date of such termination. In the event Mr. Crawford's employment is terminated
for reasons other than for cause, Mr. Crawford is entitled under the agreement
to severance equal to six month's base salary, unless his employment is
terminated for reasons other than for cause within six months of a "change of
control," in which event he will receive severance equal to 12 month's salary.
Mr. Crawford's employment agreement contains certain non-solicitation provisions
that prohibit him from soliciting the Company's clients or customers for his own
benefit during his employment and for a period of three years after termination
of his employment and that prevent him from competing with the Company during
his employment and during any period with respect to which he is being paid
severance.
Effective September 23, 2002, Mr. Johnson executed a new employment agreement
with the Company (superceding his employment agreement dated December 4, 2001)
pursuant to which he agreed to serve as Chief Financial Officer and Treasurer.
His employment is "at-will." Under the terms of the agreement, Mr. Johnson
received an annual base salary of $180,000 (beginning April 1, 2003), plus
25,000 qualified options and 20,000 non-qualified options (both to be issued a
fair market value), plus incentive compensation in an amount based upon
performance as evaluated by the Chief Executive Officer and the Chair of the
Audit Committee. Under the agreement, in the event Mr. Johnson's employment is
terminated for cause, the Company is obligated to pay Mr. Johnson the
compensation and benefits due under his employment agreement through the date of
such termination. In the event Mr. Johnson's employment is terminated for
reasons other than for cause, Mr. Johnson is entitled to severance equal to six
month's base salary, unless his employment is terminated for reasons other than
for cause within six months of a "change of control," in which event he will
receive severance equal to 12 month's salary. Mr. Johnson's employment agreement
contains certain non-solicitation provisions that prohibit him from soliciting
the Company's clients or customers for his own benefit during his employment and
for a period of three years after termination of his employment and that prevent
him from competing with the Company during his employment and during any period
with respect to which he is being paid severance.
Effective December 1, 2002, Mr. Strauss executed a revised employment agreement
with the Company (superceding his employment agreement dated December 28, 2000)
pursuant to which he agreed to serve as Executive Vice President of Law and
Human Resources and General Counsel. His employment is "at-will." Under the
terms of the agreement, Mr. Strauss received an annual base salary of $196,560,
plus incentive compensation in an amount equal to 50% of his annual base salary
upon achievement of an EBITDA objective. For fiscal year 2002, the EBITDA
objective was not reached. Subsequent EBITDA objectives will be set by the
Compensation Committee of the Board. Under the agreement, in the event Mr.
Strauss's employment is terminated for cause, the Company will pay Mr. Strauss
the compensation and benefits due under his employment agreement through the
date of such termination. In the event Mr. Strauss's employment is terminated
for reasons other than for cause, Mr. Strauss is entitled to severance equal to
12 month's base salary, unless his employment is terminated for reasons other
than for cause within six months of a "change of control," in which event he
will receive severance equal to 18 month's base salary. Mr. Strauss's employment
agreement contains certain non-solicitation provisions that prohibit him from
soliciting the Company's clients or customers for his own benefit during his
employment and for a period of three years after termination of his employment
and that prevent him from competing with the Company during his employment and
during any period with respect to which he is being paid severance.
DIRECTOR COMPENSATION
Non-employee directors receive $1,500 for each Board of Directors and Committee
meeting attended, plus out-of-pocket expenses incurred in connection with
attending meetings. The Chairman of the Audit Committee and the Chairman of the
Compensation Committee are paid a monthly retainer of $1,500 for their services.
Directors who are employees do not receive any separate compensation for their
services as directors. Non-employee directors also receive 10,000 stock options
in exchange for serving on the Board of Directors and 3,500 stock options for
each Committee on which they serve.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. McCreary, Mancuso and Tetzlaff currently serve as members and were
members of the Compensation Committee during fiscal year 2002. Messrs. McCreary,
Mancuso and Tetzlaff are not employees or former employees of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information, as of April 17, 2003,
regarding the beneficial ownership of common stock by (i) each person or entity
known by us who beneficially owns more than five percent of our outstanding
common stock, (ii) each of the current directors, (iii) the Named Executives,
and (iv) all current directors and executive officers as a group. As of April
17, 2003, there were 8,236,698 shares of common stock outstanding. Except as
otherwise noted, each person or entity named in the table has sole voting and
investment power with respect to all shares shown as beneficially owned by such
person or entity.
PERCENT
OF COMMON
NAME AND ADDRESS OF NUMBER OF SHARES STOCK
BENEFICIAL OWNER (1) BENEFICIALLY OWNED OWNED(2)
- -------------------- ------------------ ---------
Jose C. Blanco.................................................... 256,475 (3) 3.06 %
Ted A. Crawford................................................... 14,400 (4) *
Crystal Faulkner.................................................. 52,500 (5) *
Daniel J. Jessee.................................................. 3,885,433 (6) 35.72 %
Andrew H. Johnson................................................. 20,300 (7) *
Joseph Mancuso.................................................... 91,408 (8) 1.10 %
Robert G. McCreary III............................................ 648,430 (9) 7.86 %
S. Cash Nickerson................................................. 2,223,577 (10) 26.63 %
James D. Robbins.................................................. 18,500 (11) *
Jay R. Strauss.................................................... 222,929 (12) 2.70 %
Theodore R. Tetzlaff.............................................. 27,608 (13) *
Michael H. Thomas................................................. 3,881,933 (14) 35.70 %
Stonehenge Opportunity Fund LLC................................... 3,871,933 (15) 35.64 %
CapitalWorks, LLC................................................. 634,930 (16) 7.71 %
All Directors and Executive Officers as a group (12 Persons)...... 7,471,560 (17) 65.90 %
* Represents less than 1% of our outstanding shares of common stock.
(1) The address of each director and officer listed in the table, except Mr.
Crawford, is 100 East Campus View Boulevard, Suite 170, Columbus, Ohio
43235. The address for Mr. Crawford is 130 East Wilson Bridge Rd,
Worthington, Ohio 43085. The address for Stonehenge Opportunity Fund LLC
("Stonehenge") is 191 West Nationwide Boulevard, Columbus, Ohio 43215. The
address for CapitalWorks, LLC is 1111 Superior Avenue, Suite 970,
Cleveland, Ohio 44114.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, which generally attribute ownership of
securities to persons who possess sole or shared voting power and/or
investment power with respect to those shares. The percentages of
beneficial ownership shown assume the exercise or conversion of all
preferred convertible stock, options, warrants and other securities
convertible into common stock held by such person or entity currently
exercisable within 60 days of April 17, 2003 but not the exercise or
conversion of preferred convertible stock, options, warrants and other
convertible securities held by other holders of such securities.
(3) Includes 145,238 shares subject to options to purchase common stock
exercisable within 60 days of April 17, 2003.
(4) Includes 12,000 shares subject to options to purchase common stock
exercisable within 60 days of April 17, 2003.
(5) Includes 51,000 shares subject to options to purchase common stock
exercisable within 60 days of April 17, 2003.
(6) Includes 13,500 shares subject to options to purchase common stock
exercisable within 60 days of April 17, 2003. Also includes shares
beneficially owned by Mr. Jessee in his capacity as an officer of the
managing general partner of Stonehenge. Stonehenge owns (a) 1,245,030
shares of common stock, (b) warrants convertible into 1,185,185 shares of
common stock within 60 days of April 17, 2003, and (c) 97,316 shares of
Class A Series 2000 Preferred Stock that are convertible into 1,441,718
shares of common stock within 60 days of April 17, 2003. Mr. Jessee shares
voting and investment power with respect to all of these shares. See Note
15.
(7) Includes 20,000 shares subject to options to purchase common stock
exercisable within 60 days of April 17, 2003.
(8) Includes 20,500 shares subject to options to purchase common stock
exercisable within 60 days of April 17, 2003. Also includes (a) 52,908
shares beneficially owned by Mr. Mancuso in his capacity as the custodian
for his minor children; and (b) 18,000 shares subject to options to
purchase common stock exercisable within 60 days of April 17, 2003 held by
the CEO Club, Inc., a non-for-profit membership association for which Mr.
Mancuso is the CEO. Mr. Mancuso shares voting and investment power with his
minor children for the 52,908 shares held by his children.
(9) Includes 13,500 shares subject to options to purchase common stock
exercisable within 60 days of April 17, 2003. Also includes 634,930 shares
beneficially owned by Mr. McCreary in his capacity as chairman of
CapitalWorks, LLC. CapitalWorks, LLC is the general partner of Short
Vincent Partners, LP ("SVP, LP") and the managing member of SVP
Co-Investors LLC ("SVP Co. LLC"). SVP, LP holds 335,000 shares of
common stock. SVP Co. LLC holds 299,930 shares of common stock.
Mr. McCreary shares voting and investment power with respect to all of
these shares.
(10) Includes 112,000 shares subject to options to purchase common stock
exercisable within 60 days of April 17, 2003. Also includes 21,750 shares
beneficially owned by Mr. Nickerson and held in custodial accounts for the
benefit of family members, which he shares voting and investment power with
his wife.
(11) Includes 13,500 shares subject to options to purchase common stock
exercisable within 60 days of April 17, 2003.
(12) Includes 31,455 shares subject to options to purchase common stock
exercisable within 60 days of April 17, 2003.
(13) Includes 13,500 shares subject to options to purchase common stock
exercisable within 60 days of April 17, 2003.
(14) Includes 10,000 shares subject to options to purchase common stock
exercisable within 60 days of April 17, 2003. Also includes shares
beneficially owned by Mr. Thomas in his capacity as an officer of the
managing general partner of Stonehenge. Stonehenge directly holds (a)
1,245,030 shares of common stock, (b) warrants convertible into 1,185,185
shares of common stock within 60 days of April 17, 2003, and (c) 97,316
shares of Class A Series 2000 Preferred Stock that are convertible into
1,441,718 shares of common stock within 60 days of April 17, 2003. Mr.
Thomas shares voting and investment power with respect to all of these
shares. See Note 15.
(15) Includes (a) 1,245,030 shares of common stock, (b) warrants convertible
into 1,185,185 shares of common stock within 60 days of April 17, 2003, and
(c) 97,316 shares of Class A Series 2000 Preferred Stock that are
convertible into 1,441,718 shares of common stock within 60 days of April
17, 2003. These shares are also beneficially owned by, and Stonehenge
shares voting and investment power with, Messrs. Jessee and Thomas.
(16) Includes 634,930 shares beneficially owned by CapitalWorks, LLC in its
capacity as (a) the general partner of SVP, LP and (b) the managing member
of SVP Co. LLC. SVP, LP directly holds 335,000 shares of common stock. SVP
Co. LLC directly holds 299,930 shares of common stock. These shares are
also beneficially owned by, and CapitalWorks, LLC shares voting and
investment power with, Mr. McCreary. See Note 9.
(17) Includes a total of 1,659,378 shares subject to options and warrants to
purchase common stock by all directors and officers as a group exercisable
within 60 days of April 17, 2003.
PREFERRED STOCK
Class A Series 2000 Convertible Preferred Stock
The Class A Series 2000 Preferred Stock (the "Series 2000 Preferred") votes as a
single class with the common stock, with each share of the Series 2000 Preferred
entitled to the number of votes equal to that number of shares of common stock
into which it would then be converted (with any fractional share determined on
an aggregate conversion basis being rounded down to the nearest whole share).
The following table sets forth certain information as of April 17, 2003,
regarding the beneficial ownership of the Series 2000 Preferred by (i) each
person or entity who beneficially own more than five percent of the outstanding
Series 2000 Preferred, (ii) each of the current directors, (iii) the Named
Executives, and (iv) all current directors and executive officers as a group. As
of April 17, 2003, there were 133,240 shares of Series 2000 Preferred
outstanding. Except as otherwise noted, each person or entity named in the table
has sole voting and investment power with respect to all shares shown as
beneficially owned by such person or entity.
PERCENT
OF PREFERRED
NAME AND ADDRESS OF NUMBER OF SHARES STOCK
BENEFICIAL OWNER (1) BENEFICIALLY OWNED OWNED (2)
- -------------------- ------------------ ------------
Jose C. Blanco.................................................. 0 *
Ted A. Crawford................................................. 0 *
Crystal Faulkner................................................ 0 *
Daniel J. Jessee................................................ 97,316 (3) 73.04%
Andrew H. Johnson............................................... 0 *
Joseph Mancuso.................................................. 0 *
Robert G. McCreary III.......................................... 0 *
S. Cash Nickerson............................................... 0 *
James D. Robbins................................................ 0 *
Jay R. Strauss.................................................. 0 *
Theodore R. Tetzlaff............................................ 0 *
Michael H. Thomas............................................... 97,316 (4) 73.04%
Stonehenge Opportunity Fund LLC................................. 97,316 (5) 73.04%
Provident Financial Group, Inc.................................. 12,135 9.11%
Professional Staff Management, Inc.............................. 23,789 17.85%
All Directors and Executive Officers as a group (12 Persons).... 97,316 73.04%
* Represents less than 1% of our outstanding shares of Series 2000 Preferred.
(1) The address of each director and officer listed in the table, except Mr.
Crawford, is 100 East Campus View Boulevard, Suite 170, Columbus, Ohio
43235. The address for Mr. Crawford is 130 East Wilson Bridge Rd,
Worthington, Ohio 43085. The address for Stonehenge Opportunity Fund LLC is
191 West Nationwide Boulevard, Columbus, Ohio 43215. The address for
Provident Financial Group, Inc. is One East Fourth
Street, Cincinnati, Ohio 45202. The address for Professional Staff
Management, Inc. is C/O ABS Capital, 505 Sansome Street, Suite 1550, San
Francisco, California 94111.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, which generally attribute ownership of
securities to persons who possess sole or shared voting power and/or
investment power with respect to those shares. "Percent of Preferred Stock
Owned" is calculated on the basis of the number of Series 2000 Preferred
shares outstanding on April 17, 2003. There were no outstanding convertible
securities, options or warrants that convert into Series 2000 Preferred as
of April 17, 2003.
(3) Mr. Jessee is the beneficial owner of these shares solely through his
capacity as an officer of the managing general partner of Stonehenge
Opportunity Fund LLC. Mr. Jessee shares voting and investment power with
respect to all of these shares.
(4) Mr. Thomas is the beneficial owner of these shares solely through his
capacity as an officer of the managing general partner of Stonehenge
Opportunity Fund LLC. Mr. Thomas shares voting and investment power with
respect to all of these shares.
(5) These shares are also beneficially owned by, and Stonehenge shares voting
and investment power with, Messrs. Jessee and Thomas.
ITEM 13. Certain Relationships and Related Transactions
Ms. Faulkner is a principal in the accounting firm of Cooney, Faulkner &
Stevens, LLC. Cooney, Faulkner & Stevens, LLC received fees for tax services
provide to us in the amount of $78,650 in fiscal year 2002. In addition, Cooney,
Faulkner & Stevens, LLC has entered into our standard client agreement. We have
provided and expect to continue to provide, professional employer organization
services to Cooney, Faulkner & Stevens, LLC upon terms and conditions no more
favorable than those generally provided to our other clients.
In November 2002, the Company engaged CapitalWorks, LLC to perform certain
investment banking services; Mr. McCreary is Chairman of CapitalWorks, LLC. The
dollar amount of fees paid to CapitalWorks, LLC in fiscal year 2002 did not
exceed 5% of CapitalWorks, LLC's annual gross revenues.
Theodore R. Tetzlaff, a director and member of the Compensation Committee, is a
partner in the law firm of McGuireWoods LLP, Managing Partner of its Chicago
office and member of its governing Board of Partners. The Company retains
McGuireWoods LLP to provide it with legal services. The dollar amount of fees
paid to McGuireWoods LLP by the Company in fiscal year 2002 did not exceed 5% of
McGuireWoods LLP's annual gross revenues.
EXHIBIT INDEX
Exhibit
Number Document Description
- ------- --------------------
99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (filed herewith).
99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (filed herewith).
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, Inc.
Date: April 28, 2003 By: /s/ S. CASH NICKERSON
-------------------------------
S. Cash Nickerson, Chairman and
Chief Executive Officer
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.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ S. CASH NICKERSON Chairman and Chief Executive Officer April 28, 2003
- ---------------------------------------
S. Cash Nickerson (Principal Executive Officer)
/s/ ANDREW H. JOHNSON * Chief Financial Officer and Director April 28, 2003
--------------------------------------
Andrew H. Johnson (Principal Accounting Officer)
/s/ JAY R. STRAUSS Chief Legal Officer and Director April 28, 2003
- ---------------------------------------
Jay R. Strauss
/s/ CRYSTAL FAULKNER * Director April 28, 2003
- ---------------------------------------
Crystal Faulkner
/s/ DANIEL J. JESSEE * Director April 28, 2003
- ---------------------------------------
Daniel J. Jessee
/s/ ROBERT G. McCREARY III * Director April 28, 2003
- ---------------------------------------
Robert G. McCreary III
/s/ JOSEPH MANCUSO * Director April 28, 2003
- ---------------------------------------
Joseph Mancuso
/s/ JAMES D. ROBBINS * Director April 28, 2003
- ---------------------------------------
James D. Robbins
/s/ THEODORE R. TETZLAFF Director April 28, 2003
- ---------------------------------------
Theodore R. Tetzlaff
/s/ MICHAEL H. THOMAS * Director April 28, 2003
- ---------------------------------------
Michael H. Thomas
*By: /s/ S. CASH NICKERSON
----------------------------------
S. Cash Nickerson, attorney-in-fact
for each of the persons indicated
CERTIFICATION
I, S. Cash Nickerson, certify that:
1. I have reviewed this annual report on Form 10-K/A of TEAM America, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: April 28, 2003
/s/ S. Cash Nickerson
--------------------------
S. Cash Nickerson
Chief Executive Officer
CERTIFICATION
I, Andrew H. Johnson, certify that:
1. I have reviewed this annual report on Form 10-K/A of TEAM America, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: April 28, 2003
/s/ Andrew H. Johnson
--------------------------
Andrew H. Johnson
Chief Financial Officer