8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934

Date of Report: October 20, 2008
(Date of earliest event reported)

AGILYSYS, INC.

(Exact name of registrant as specified in its charter)

Ohio	000-5734	34-0907152
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

28925 Fountain Parkway, Solon, Ohio	44139
(Address of principal executive offices)	(ZIP Code)

Registrant’s telephone number, including area code: (440) 519-8700

2255 Glades Road, Suite 301E, Boca Raton, Florida 33431
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

     On October 22, 2008, Agilysys, Inc. (the “Company”) announced that the Company’s Board of Directors (the “Board”) elected Martin F. Ellis as President and Chief Executive Officer of the Company, succeeding Arthur Rhein, who retired as President and Chief Executive Officer, and stepped down as Chairman of the Board and as a Director of the Company, effective as of October 20, 2008. Mr. Ellis was also elected by the Board to fill the vacancy on the Board created by Mr. Rhein’s retirement. The Board also elected Keith M. Kolerus, a Director of the Company since 1998, as Non-Executive Chairman of the Board. In connection with the management restructuring, the Board also elected Kenneth J. Kossin, Jr. as Senior Vice President and Chief Financial Officer. A copy of the press release with respect to these announcements is attached hereto as Exhibit 99.1 and furnished herewith.

     Prior to being elected President and Chief Executive Officer, Mr. Ellis, age 43, was Executive Vice President, Treasurer and Chief Financial Officer of the Company. Mr. Ellis joined the Company in July 2003. There are no understandings or arrangements between Mr. Ellis and any other person pursuant to which Mr. Ellis was selected as an officer or Director of the Company. Mr. Ellis does not have any family relationship with any Director, executive officer or person nominated or chosen by the Board to become a Director or executive officer. Other than his employment with the Company, Mr. Ellis did not have any material interest, direct or indirect, in any material transaction to which the Company was a party, or which is presently proposed.

     Prior to being elected Senior Vice President and Chief Financial Officer, Mr. Kossin, age 44, was Vice President and Controller of the Company. Mr. Kossin has also previously held the position of Assistant Controller for the Company. Mr. Kossin joined the Company in April 2004. There are no understandings or arrangements between Mr. Kossin and any other person pursuant to which Mr. Kossin was selected as an officer of the Company. Mr. Kossin does not have any family relationship with any Director, executive officer or person nominated or chosen by the Board to become a Director or executive officer. Other than his employment with the Company, Mr. Kossin did not have any material interest, direct or indirect, in any material transaction to which the Company was a party, or which is presently proposed.

     In connection with his resignation, Mr. Rhein signed a separation agreement with the Company, effective October 20, 2008 (a copy of which is attached hereto as Exhibit 10.1, furnished herewith, and incorporated herein by reference), which provides that the Company will pay and provide Mr. Rhein with the rights, obligations, payments and benefits as provided by the Employment Agreement by and between the Company and Mr. Rhein, effective as of December 23, 2005, as amended and restated as of January 1, 2006, and as amended and extended as of January 28, 2008 (the “Employment Agreement”) in the event of a Protected Termination (within the meaning of the Employment Agreement). In connection with his separation agreement, Mr. Rhein and the Company have released all claims against each other. Pursuant to the terms of his Employment Agreement, Mr. Rhein will receive his base salary through October 20, 2008, a prorated portion of any award to which he is entitled under the Annual Incentive Plan for the current fiscal year and severance payments equal to 24 months salary and target annual incentives. In addition, Mr. Rhein is entitled to the payments and benefits provided for under the relevant plans and arrangements of the Company, and the Company must continue Mr. Rhein’s group benefits, executive benefits and most perquisites for a period of two years.

     On October 23, 2008, the Company announced that Peter J. Coleman — Executive Vice President of the Company, and Robert J. Bailey — Executive Vice President of the Company, left the Company after their positions were eliminated as part of a strategic realignment of the Company. Each of Messrs. Bailey and Coleman entered into a Non-Competition Agreement with the Company, effective as of February 25, 2000 and as subsequently amended, pursuant to which the Company will continue to pay monthly base salary, target incentive and benefit coverage for twenty-four (24) months for each of Messrs. Coleman and Bailey. A copy of the press release with respect to these announcements is attached hereto as Exhibit 99.2 and furnished herewith.

Item 8.01 Other Events

     Also on October 22, 2008, the Company announced that the Board has completed its review of strategic alternatives following a five-month evaluation process conducted in concert with JPMorgan, the Company’s financial advisor. As a result of this review, the Board has concluded that the best course of action to maximize shareholder value is to remain as an independent company, realign its cost and overhead structure, and drive value creation. Furthermore, the Company announced that it plans to consolidate its headquarters from Boca Raton, Florida, to its existing offices in suburban Cleveland. These announcements are included in the press release that is attached hereto as Exhibit 99.1 and furnished herewith.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

10.1	Separation Agreement, by and between the Company and Mr. Rhein, effective as of October 20, 2008.
99.1	Press release, dated October 22, 2008 announcing Mr. Rhein’s retirement, additional leadership changes and other items.
99.2	Press release, dated October 23, 2008 announcing departure of Company executives as part of strategic realignment.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AGILYSYS, INC.
	By:	/s/ Martin F. Ellis
		Martin F. Ellis
Date: October 24, 2008		President and Chief Executive Officer

Exhibit Index

Exhibit
Number		Description
	10.1	Separation Agreement, by and between the Company and Mr. Rhein, effective as of October 20, 2008.
	99.1	Press release, dated October 22, 2008 announcing Mr. Rhein’s retirement, additional leadership changes and other items.
	99.2	Press release, dated October 23, 2008 announcing departure of Company executives as part of strategic realignment.

EX-10.1

Exhibit 10.1

SEPARATION AGREEMENT

     THIS AGREEMENT (this “Agreement”), effective as of October 20, 2008 (the “Effective Date”), is by and between AGILYSYS, INC., an Ohio corporation (the “Company”), and Arthur Rhein (the “Executive”).

     WHEREAS, the Company and the Executive entered into that certain Employment Agreement, effective as of December 23, 2005, as amended and restated as of January 1, 2006, and as amended and extended as of January 28, 2008 (the “Employment Agreement”), in connection with the Executive’s service with the Company; and

     WHEREAS, the Company and the Executive have mutually agreed to the Executive’s separation from service with the Company, and hereby set forth the terms relating thereto.

     NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set forth in this Agreement, the Company and the Executive hereby agree as follows:

     1. SEPARATION FROM SERVICE.

     (a) The Company and the Executive agree that the Executive separated from service with the Company in all capacities effective on the Effective Date.

     (b) The Executive confirms that he has retired, effective as of the Effective Date, from the position of Chairman of the Board of Directors of the Company, President and Chief Executive Officer of the Company, and, in addition, as a member of the Board of Directors of the Company (the “Board”), and from all other offices and positions with the Company and all of its subsidiaries, affiliates, joint ventures, partnerships and other business enterprises (collectively, “Affiliates”), as well as from any office or position with any trade group or other industry organization which he holds on behalf of the Company.

2. RIGHTS, PAYMENTS AND BENEFITS. In connection with the Executive’s separation from service with the Company under this Agreement, the Company shall pay and provide the Executive with rights, payments, and benefits, subject to obligations, all as provided by the Employment Agreement in the event of a Protected Termination (within the meaning of the Employment Agreement), regardless of notice or circumstances of such termination.

     3. RELEASE BY THE EXECUTIVE.

     RELEASE. In consideration of the payments and benefits provided to the Executive under this Agreement and the Employment Agreement, and in consideration of the Company’s waiver and release set forth below, in connection with his separation from service and after having the opportunity to consult with counsel, the Executive, and each of Executive’s respective heirs, executors, administrators, representatives, agents, successors and assigns (collectively, the

“Releasors”) hereby irrevocably and unconditionally release and ever discharge the Company and any of its subsidiaries, Affiliates or predecessors (collectively, the “Company Group”) and each of their respective officers, employees, directors, shareholders and agents from any and all claims, actions, causes of action, rights, judgments, obligations, damages, demands, accountings or liabilities of whatever kind or character (other than any of the foregoing allegedly arising under the federal Age Discrimination Employment Act) (collectively, “Claims”), including, without limitation, any Claims arising under Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, the Civil Rights Act of 1991, the Employee Retirement Income Security Act of 1974, the Family Medical Leave Act of 1993, or any other federal, state, local or foreign law, that the Releasors may have arising out of the Executive’s employment relationship with and service as an employee, officer or director of the Company Group, and the termination of such relationship or service; provided, however, that the release set forth in this Section 3(a) shall not apply to the obligations of the Company under this Agreement or the Employment Agreement. The Releasors further agree that the payments and benefits described in this Agreement shall be in full satisfaction of any and all Claims for payments or benefits, whether express or implied, that the Releasors may have against the Company Group arising out of the Executive’s employment relationship or the Executive’s service as an employee, officer or director of the Company Group and the termination thereof other than rights under any and all of the Company’s benefit plans and programs in accordance with the terms of such plans or programs.

4. RELEASE BY THE COMPANY.

     RELEASE. In consideration of the Executive’s waiver and release of claims set forth above and the other obligations of the Executive hereunder, the Company Group, and its and their respective officers, directors, employees, shareholders and agents, hereby irrevocably and unconditionally releases and forever discharges the Executive, his family, his estate, his agents, attorneys, his heirs, executors, administrators, representatives, successors and assigns from and against any and all Claims that they may have relating to or arising out of, directly or indirectly, the Executive’s employment relationship with and service as a director, employee or officer of the Company Group and the termination of such relationship or service; provided, however, that this release shall not apply to any of the Executive’s obligations under this Agreement or, subject to this Agreement, under the Employment Agreement.

5. OHIO LAW. This Agreement and all matters or issues collateral thereto shall be governed by the law of the State of Ohio, without giving effect to the conflicts or laws principles thereof.

6. SEVERABILITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

7. ENTIRE AGREEMENT, ETC. This Agreement supersedes any and all agreements, discussions, negotiations or understandings and constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and can be amended only by a writing signed by the parties hereto. No rule or presumption regarding the construction of this Agreement against the drafter shall apply.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

AGILYSYS, INC.
By:	/s/ Keith M. Kolerus
Title:	Chairman of the Board
/s/ Arthur Rhein
Arthur Rhein

EX-99.1

Exhibit 99.1

Agilysys Announces Leadership Changes, Completes Strategic Alternatives Review
Wednesday October 22, 8:30 am ET

- Arthur Rhein retires as president and CEO, steps down as chairman and director

- Keith Kolerus appointed non-executive chairman; Martin Ellis named president and CEO

- Company to remain independent and realign overhead infrastructure

- Headquarters to be consolidated in suburban Cleveland as part of cost-saving moves

CLEVELAND, Oct. 22 /PRNewswire-FirstCall/ — Agilysys, Inc. (Nasdaq: AGYS — News) announced today that its Board of Directors has appointed Keith M. Kolerus, 62, a current Agilysys director and seasoned IT industry executive, as non-executive chairman. Martin F. Ellis, 43, executive vice president, treasurer and chief financial officer, has been appointed as president and chief executive officer of the company and elected to the Board.

Kolerus and Ellis succeed Arthur Rhein, 62, who is retiring as president and chief executive officer and stepping down as chairman and a company director, effective immediately. The company also announced that Kenneth J. Kossin, Jr., 44, vice president and controller, has been elected senior vice president and chief financial officer, and Curtis Stout, 37, currently vice president, business planning and corporate development, will become vice president and treasurer.

In addition, the company announced today that the Board has completed its review of strategic alternatives following a five-month evaluation process conducted in concert with JPMorgan, the company’s financial advisors. As a result of this review, the Board has concluded that the best course of action to maximize shareholder value is to remain as an independent company, realign its cost and overhead structure, and drive value creation.

“Given the current turmoil in financial and capital markets, the lack of viable strategic and financial buyers, and the sluggish environment for IT capital spending, the Board and its advisors determined that there is not a meaningful opportunity to monetize intrinsic value through the sale of all or part of the company at this time,” said Thomas A. Commes, co-chair of a special committee of the Board. “Accordingly, the decision was reached to expedite and expand the company’s overhead cost-reduction initiatives. Our three business groups — Hospitality Solutions Group, Retail Solutions Group and Technology Solutions Group — continue to build outstanding potential for the future, and they will be managed to further improve profitability.”

Agilysys announced on June 16, 2008, that its Board of Directors had authorized the company’s management and financial advisors to explore a range of strategic and financial alternatives to enhance shareholder value. These alternatives included, but were not limited to, continued implementation of Agilysys’ current strategic growth plan, a sale of certain assets or the entire company, formation of joint ventures, and a change to the company’s capital structure. The company retained JPMorgan as its financial advisor throughout the evaluation process.

New Leadership Team

Ellis becomes president and chief executive officer of Agilysys after serving five years with the company. He has been a member of Agilysys’ senior management team since July 2003, most recently serving as executive vice president, treasurer and chief financial officer. Prior to joining Agilysys, Ellis was senior vice president and principal at Stern Stewart & Co., a global financial consulting firm, where he managed the Corporate Financial Advisory and Middle Market EVA^® practice.

Kolerus, the new non-executive chairman, has been a director of Agilysys for 10 years. A 40-year industry veteran, he has been a director and officer of a variety of high-tech companies, including the American Division of National Semiconductor (Computer Components) and chairman of the board of directors of National Semiconductor Japan, Ltd.

Ellis and Kolerus will work closely in transitioning through the management restructuring and initial cost-reduction process.

“The Board has consistently been impressed with Martin’s strategic leadership skills, and depth and breadth of experience,” said Kolerus. “We are convinced that he is the right executive to guide Agilysys and its new management team to a future of outstanding customer service, enhanced performance and shareholder value creation.”

Rhein was named president and chief executive officer in April 2002 and was elected chairman effective April 30, 2003. As a member of the management team for more than 20 years, his leadership, strategic vision and personal commitment played key roles in fundamentally reshaping the company’s direction and in developing and solidifying its position as a leader in bringing new technology solutions to the marketplace.

“It has been a privilege to serve Agilysys and its shareholders for the past 26 years, and I am confident the company has a bright future,” Rhein said. “I have been very fortunate to lead a dedicated, skilled and resilient team of people. Given the current economic environment, it is time for the company to refocus under the very capable leadership of Keith and Martin.”

Said Kolerus, “Arthur Rhein contributed many years of expertise and leadership to Agilysys, and has helped to position it for future success. We are grateful for his commitment to the company and its shareholders.”

Kossin, who will report to Ellis, has been with Agilysys since 2004. As controller, he has been responsible for the company’s Securities and Exchange Commission (SEC) reporting, technical accounting compliance, Sarbanes Oxley documentation and compliance, internal and external financial reporting and the quarterly and annual auditing process. Prior to joining Agilysys, Kossin was director, general accounting, at Roadway Express, Inc. and corporate controller at Lesco, Inc.

Stout, who also will report to Ellis, has been with Agilysys since 2000. Since joining Agilysys, he has had significant involvement in company acquisitions and divestitures and increasing levels of responsibility in strategically repositioning the company. Stout was promoted to vice president of business planning and corporate development in April, 2007. Prior to joining Agilysys, he spent several years with KeyBank and Cummins Engine Company.

Strategic Realignment Initiatives

The company has set a strategic objective of realigning overhead infrastructure with current market realities. In addition to $17 million of expenses eliminated as a result of cost-reduction initiatives earlier this year, the company has identified further opportunities, including consolidating its headquarters from Boca Raton, Florida, to its existing offices in suburban Cleveland.

“We are committed to taking the actions necessary to improve our operating performance,” Ellis said. “These initiatives will make Agilysys a stronger company that is better positioned to thrive in the current uncertain market conditions as well as take advantage of long-term growth opportunities. We have the operating management talent to deliver sustainable earnings growth, and I intend to see that we realize that potential.”

The company said additional details will be provided when it reports its second-quarter fiscal 2009 earnings on Thursday, November 20.

About Agilysys, Inc.

Agilysys is a leading provider of innovative IT solutions to corporate and public-sector customers, with special expertise in select markets, including retail and hospitality. The company uses technology — including hardware, software and services — to help customers resolve their most complicated IT needs. The company possesses expertise in enterprise architecture and high availability, infrastructure optimization, storage and resource management, identity management and business

continuity; and provides industry-specific software, services and expertise to the retail and hospitality markets. Agilysys, with fiscal 2008 revenues of $781 million, operates extensively throughout North America, with additional sales offices in the United Kingdom and China. For more information, visit www.agilysys.com.

EX-99.2

Exhibit 99.2

Agilysys Announces New Operational Leadership Team;
Eliminates Layer of Senior Management in Strategic Realignment

CLEVELAND, Ohio — October 23, 2008 — Agilysys, Inc. (Nasdaq: AGYS) announced today that as part of its strategic management realignment the leaders of the company’s three operating segments — Hospitality Solutions Group (HSG), Retail Solutions Group (RSG) and Technology Solutions Group (TSG) — will now report directly to President and Chief Executive Officer Martin F. Ellis, in the process eliminating a layer of management.

“We have a very talented and seasoned operational leadership team who I intend to work very closely with in refocusing our corporate strategy to drive value creation,” stated Ellis, who was elected to his new positions earlier this week. “They are acknowledged industry leaders in their respective markets who are keenly focused on growing their distinctive brands and targeted customer bases.”

Tina Stehle, 51, was named senior vice president and general manager of Alpharetta, Georgia-based HSG. Stehle, previously HSG senior vice president, joined Agilysys in 2004 through the acquisition of Inter-American Data, Inc. (IAD), where she served as vice president, software services. Prior to joining IAD, Stehle worked for Flagler Computer Software, where her primary function was software development and technical services. Additionally, over the years, Stehle has held various senior-level positions at Federal Express, Cox Communications and D’Arcy MacManus Masius. Stehle received her bachelor’s degree in education from Wilkes University in Pennsylvania and her MBA from Emory University’s Goizueta School of Business in Atlanta.

Paul Civils, 58, was promoted to senior vice president and general manager of RSG, based in Greenville, South Carolina. Civils, formerly vice president and general manager, joined Agilysys in 2003 through the acquisition of Kyrus Corporation. Prior to joining Kyrus, Civils was a sales manager for the industrial sector of Info Systems of North Carolina, an IBM business partner. He began his career in 1977 at IBM, where he held various sales and sales management positions. Civils earned his bachelor’s degree from Western Kentucky University. Additionally, he has completed leadership and management training from IBM in classes taught at Harvard University and at the IBM campuses.

Tony Mellina, 52, was named senior vice president and general manager of TSG, based in Edison, New Jersey. Mellina, formerly senior vice president of Sun technology solutions, joined Agilysys in 2007 through the acquisition of Innovativ Systems Design, Inc., where he served as CEO. Before joining Innovativ, Mellina held various sales and sales management positions at Sun Microsystems and Honeywell. Mellina earned a bachelor’s degree in economics from the City University of New York.

Three Executive Positions Eliminated
Agilysys has eliminated the positions of Robert J. Bailey and Peter J. Coleman, both executive vice presidents, and Jeff Levine, senior vice president — IT and operations, effective immediately.

All three previously reported to Arthur Rhein, who retired this week as president and chief executive officer, and stepped down as chairman and a company director. Their corporate positions, based in Boca Raton, Florida and Solon, Ohio, will not be filled as part of the company’s plan to more fully integrate their responsibilities into business unit management and consolidate its Florida corporate headquarters into its Solon offices.

“As a result of our emphasis on reshaping and streamlining this company, it has become clear that we no longer can afford the corporate overhead that was anticipated to support our previous growth target,” said Ellis. “As a result, we are restructuring corporate SG&A to improve operating performance, deliver sustainable earnings growth and position the company for the future.”

Agilysys has set a strategic objective of realigning overhead infrastructure with current market realities. In addition to $17 million of expenses eliminated as a result of cost-reduction initiatives earlier this year, the company has identified further opportunities, including a management realignment and headquarters consolidation.

“We greatly appreciate the dedication of Bob, Pete and Jeff, and the many important contributions they have made during their long and distinguished careers with Agilysys,” said Ellis. “We wish them well in their future endeavors.”

Bailey, who began his career with Agilysys in 1977, was named executive vice president in 2002. He had been a member of the Agilysys Executive Committee since 2000.

Coleman began his career with Agilysys in 1972 and was also named executive vice president in 2002. He had been a member of the Agilysys Executive Committee since 2000.

Levine, who joined Agilysys in 1985, was promoted to senior vice president — IT and operations in 2006.

About Agilysys, Inc.
Agilysys is a leading provider of innovative IT solutions to corporate and public-sector customers, with special expertise in select markets, including retail and hospitality. The company uses technology — including hardware, software and services — to help customers resolve their most complicated IT needs. The company possesses expertise in enterprise architecture and high availability, infrastructure optimization, storage and resource management, identity management and business continuity; and provides industry-specific software, services and expertise to the retail and hospitality markets. Headquartered in Cleveland with fiscal 2008 revenues of $781 million, Agilysys operates extensively throughout North America, with additional sales offices in the United Kingdom and China. For more information, visit www.agilysys.com.

Investor contact:

Martin Ellis
President and Chief Executive Officer
Agilysys, Inc.
440-519-8636
martin.ellis@agilysys.com

Media contact:

Shawn Turner
Communications Manager
Agilysys, Inc.
440-519-8627
shawn.turner@agilysys.com