As filed with the Securities and Exchange Commission on July 25, 1997
Registration No. 333-31167
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
Under The Securities Act of 1933
COMFORCE Corporation
(Exact name of registrant as specified in its charter)
Delaware 7361 36 - 2262248
(State or other jurisdiction (Primary Standard (I.R.S Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
----------
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, New York 11042
(516) 328-7300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------
Christopher P. Franco
Chief Executive Officer
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, New York 11042
(516) 328-7300
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
----------
Copy to:
David G. Edwards, Esquire
Doepken Keevican & Weiss Professional Corporation
58th Floor, USX Tower
600 Grant Street
Pittsburgh, Pennsylvania 15219-2703
(412) 355-2600
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
----------
<PAGE>
(Cover page continued)
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement
as determined by market conditions and other factors.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ X ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================== ================ ============================ =========================== ==================
<S> <C> <C> <C> <C>
Title of Each Class of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered(1) Offering Price Per Share(2) Aggregate Offering Price(2) Registration Fee
- ----------------------------------- ---------------- ---------------------------- --------------------------- ------------------
Common Stock 1,135,956 $6.5625 $7,454,711 $2,571
=================================== ================ ============================ =========================== ==================
</TABLE>
(1) Includes certain shares of common stock (the "Common Stock"), of COMFORCE
Corporation ("COMFORCE" or the "Company") issuable upon the exercise of the
Company's warrants to purchase Common Stock or upon the conversion of the
Company's convertible Preferred Stock.
(2) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c), the offering price and registration fee are
computed on the basis of the average of the high and low prices of the
Company's shares of Common Stock traded on the American Stock Exchange on
July 7, 1997.
THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION DATED JULY 25, 1997
PROSPECTUS
1,135,956 Shares
COMFORCE Corporation
COMMON STOCK
COMFORCE Corporation, a Delaware corporation (the "Company" or "COMFORCE")
is a provider of staffing, consulting and outsourcing solutions that address the
high technology needs of businesses.
All of the 1,135,956 shares of common stock ("Common Stock") of COMFORCE
offered hereby are being offered for sale, from time to time by or for the
account of certain existing security holders of the Company ("Selling
Stockholders"). See "Selling Stockholders." The Common Stock is listed on the
American Stock Exchange. The Selling Stockholders have indicated that they
propose from time to time to offer their shares, if any, for sale in regular way
brokerage transactions on the American Stock Exchange or in privately negotiated
transactions; and that sales on or through the facilities of the American Stock
Exchange will be effected at such prices as may be obtainable and are
satisfactory to the respective Selling Stockholders.
In certain cases the Selling Stockholders, brokers executing sales orders
on their behalf and dealers purchasing shares from the Selling Stockholders for
resale, may be deemed to be "underwriters," as that term is defined in Section
2(11) of the Securities Act of 1933, as amended (the "Securities Act"), and any
commissions received by them and any profit on the resale of Common Stock
purchased by them may be deemed underwriting commissions or discounts under the
Securities Act.
The Company will not receive any proceeds from sales of shares to which
this Prospectus relates. However, insofar as the holders of warrants to purchase
shares of the Common Stock are expected to exercise their warrants in order to
sell the underlying shares (which are registered hereby), the Company will
receive the amount of the exercise prices of any warrants so exercised. The
Company cannot predict when or if it will receive proceeds from the exercise of
warrants, or the amount of any such proceeds.
SEE "RISK FACTORS" ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
On July 7, 1997, the closing price of the Common Stock on the American
Stock Exchange was $6.75 per share. The Company will bear certain of the
expenses of this offering, estimated to be $47,000.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is July 25, 1997.
<PAGE>
TABLE OF CONTENTS
Page
Available Information ................................................2
Incorporation of Certain Documents ...................................3
The Company...........................................................3
Risk Factors..........................................................4
Use of Proceeds.......................................................7
Selling Stockholders..................................................8
Description of the Company's Securities..............................12
Plan of Distribution.................................................13
Legal Matters........................................................14
Experts..............................................................14
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), in Washington, D.C., a Registration Statement on Form S-3,
together with all amendments and exhibits thereto (the "Registration Statement")
under the Securities Act, with respect to the Common Stock offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the Rules and
Regulations of the Commission. Statements made in the Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete; with respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference. The
Registration Statement, including exhibits and schedules filed therewith, may be
inspected at the Commission's Public Reference Section, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the regional offices of the Commission
located at 7 World Trade Center, 13th Floor, New York, New York 10048 and Suite
1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of such material
may be obtained upon written request from the Public Reference Section of the
Commission at the address set forth above upon payment of prescribed fees. The
Commission also maintains a Web site at "http://www.sec.gov" which contains
reports, proxy statements and other information regarding registrants that file
electronically with the Commission.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports, proxy statements
and other information with the Commission. Such reports, proxy statements and
other information may be inspected at the Public Reference Section of the
Commission or the Commission's regional offices at the addresses set forth above
or accessed through the Commission's Web site identified above, and copies of
such material may be obtained upon written request from the Public Reference
Section of the Commission upon payment of prescribed fees.
The Common Stock of the Company is listed on the American Stock Exchange
and such reports, proxy material and other information are also available for
inspection at the American Stock Exchange, 86 Trinity Place, New York, New York
10006.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
1-06081) pursuant to the Exchange Act are incorporated by reference in this
Prospectus:
1. Annual Report on Form 10-K for the Year ended December 31, 1996.
2. Amendment No. 1 to Annual Report on Form 10-K/A for the Year ended
December 31, 1996.
3. Amendment No. 1 to Current Report on Form 8-K/A dated January 13,
1997, amending original Current Report on Form 8-K filed November 8,
1996.
4. Amendment No. 1 to Current Report on Form 8-K/A dated January 13,
1997, amending original Current Report on Form 8-K filed November 19,
1996.
5. Amendment No.2 to Current Report on Form 8-K/A dated January 13, 1997,
amending original Current Report on Form 8-K filed September 3, 1996.
6. Amendment No. 2 to Current Report on Form 8-K/A dated February 4,
1997, amending original Current Report on Form 8-K filed November 19,
1996.
7. Amendment No. 2 to Current Report on Form 8-K/A dated February 4,
1997, amending original Current Report on Form 8-K filed November 8,
1996.
8. Amendment No. 3 to Current Report on Form 8-K/A dated February 3,
1997, amending original Current Report on Form 8-K filed May 23, 1996.
9. Current Report on Form 8-K dated March 14, 1997 and Amendment No. 1 to
Current Report on Form 8-K/A dated April 14, 1997.
10. Current Report on Form 8-K dated July 10, 1997 and Amendment No. 1 to
Current Report on Form 8-K/A dated July 11, 1997.
11. Quarterly Report on Form 10-Q for the quarter ended March 31, 1997.
12. The description of the Company's Common Stock included in the
Registration Statement on Form 8-A filed October 10, 1985, as amended
by Amendment No. 1 thereto on Form 8-A/A dated July 25, 1997.
Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock pursuant hereto shall be
deemed to be incorporated by reference in this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained in this Prospectus or in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained in this Prospectus, or in any subsequently
filed document that also is or is deemed to be incorporated by reference in this
Prospectus, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of any
or all of the documents which are incorporated herein by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Requests for such copies should be directed
to COMFORCE Corporation, 2001 Marcus Road, Lake Success, New York 11042 to the
attention of Linda Connolly, telephone (516) 328-7300.
THE COMPANY
COMFORCE Corporation is a provider of technical staffing, consulting and
outsourcing solutions focused on the high technology needs of businesses. The
Company provides services through its highly-skilled labor force that includes
computer programmers, engineers, technicians, scientists and researchers. The
Company's customers include telecommunication equipment manufacturers,
telecommunication service providers (wireline and wireless), computer software
and hardware manufacturers, aerospace and avionics firms, utilities and national
research laboratories. The Company maintains its headquarters in Lake Success,
NY and has over 30 branch offices throughout the United States to enable it to
meet the needs of national as well as local customers. The Company employs
approximately 3,800 persons, and maintains a proprietary database of over
110,000 prospective employees with expertise in the technical disciplines served
by the Company.
The Company serves customers in three principal sectors --
telecommunications, information technology ("IT") and technical services. In the
telecommunications sector, the Company provides staffing for wireline and
wireless communications systems development, satellite and earth station
deployment, network management and plant modernization. In the information
technology sector, the Company provides staffing for specific projects requiring
highly specialized skills such as applications programming and development,
client/server development, systems software architecture and design, systems
engineering and systems integration. In the technical services sector, the
Company provides staffing for national laboratory research in such areas as
environmental safety, alternative energy source development and laser
technology, and provides highly-skilled labor meeting diverse commercial needs
in the avionics and aerospace, architectural, automotive, energy and power,
pharmaceutical, marine and petrochemical fields.
The Company's objective is to be the leading provider of technical
staffing, consulting and outsourcing solutions for the high technology needs of
businesses.
The Company was incorporated in Illinois in 1954 and became a Delaware
corporation through its merger with a Delaware subsidiary in 1969. It maintains
its headquarters at 2001 Marcus Avenue, Lake Success, New York
3
<PAGE>
11042. The Company's telephone number is (516) 328-7300 and its address on the
World Wide Web is www.comforce.com.
RISK FACTORS
Prospective purchasers of the Common Stock offered hereby should consider
carefully the factors set forth below, as well as other information contained in
this Prospectus, before making a decision to purchase the Common Stock offered
hereby. This Prospectus contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those projected or suggested in any
forward-looking statement. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below as well as
those discussed elsewhere in this Prospectus.
Absence of Combined Operating History; Potential Inability to Integrate Acquired
Businesses
The Company's technical staffing business has been developed principally
through the acquisition of established technical staffing businesses, all of
which have been acquired since October 1995. Prior to their acquisition by the
Company, each of these acquired companies operated as a separate independent
entity. There can be no assurance that the Company's management group will be
able to adequately manage the combined entity and effectively implement the
Company's strategy or effectively integrate the businesses acquired. If the
Company is unable to integrate the management personnel needed to manage the
acquired businesses, if such personnel are unable to achieve anticipated
performance levels or if the Company is unable to implement effective controls,
the Company's business, financial condition and results of operations could be
adversely affected. Future operating results will depend upon many factors,
including fluctuations in the economy, the degree and nature of competition,
demand for the Company's services, and the Company's ability to integrate the
operations of acquired businesses, to recruit and place staffing professionals,
to expand into new markets, and to maintain margins in the face of pricing
pressures.
Future Capital Needs; Uncertainty of Financing; Potential Dilution
The Company will need to obtain additional financial resources to fund its
strategy of growth through acquisition, geographic expansion and market
development. The Company can give no assurance that (i) additional financing
will be available or, if available, that it will be available on terms
acceptable to the Company, or (ii) its existing capital resources, the amounts
available for borrowing under its lines of credit with its lenders or its cash
flow from operations, will either individually or collectively be sufficient to
fund future acquisitions or satisfy its working capital requirements. There also
can be no assurance that the Company or any of the acquired businesses will
generate positive cash flow.
If additional funds are raised by issuing equity securities, the Company's
stockholders may experience dilution. Further, such equity securities may have
rights, preferences, or privileges senior to those of the Common Stock. To the
extent the Company finances its activities by issuing debt securities, the
Company may become subject to certain financial and other covenants which may
restrict its ability to pursue its strategy of growth through acquisition. There
can be no assurance that adequate equity or debt will be available as needed or
on terms acceptable to the Company. A lack of available funds may require the
Company to delay, scale back or eliminate all or some of its market development
and acquisition projects and could have a material adverse effect on the
Company's business, financial condition and results of operations.
Reliance on Acquisitions for Company Growth and Risks Associated with
Acquisitions
The ability of the Company to achieve growth through acquisition will
depend on a number of factors, including the availability of attractive
acquisition opportunities, the availability of funds needed to complete
acquisitions, the availability of working capital needed to fund the operations
of acquired businesses and the effect of existing and emerging competition on
operations. The Company has recently consummated several acquisitions. These
acquisitions may not achieve levels of revenue, profitability or productivity
comparable to those of the Company's existing operations or may not otherwise
perform as expected. Acquisitions also involve special risks, including risks
associated with unanticipated liabilities and contingencies, diversion of
management attention and possible adverse effects on earnings resulting from
increased goodwill amortization, increased interest costs, the issuance of
additional securities and difficulties related to the integration of the
acquired business. The Company is actively seeking additional acquisition
opportunities, although the Company has no agreements, understandings or plans
regarding any material acquisitions at this time. There can be no assurance that
the Company will be able to successfully identify additional suitable
acquisition candidates, complete additional acquisitions or integrate acquired
businesses into its operations.
4
<PAGE>
Limited Experience in Managing Rapid Growth
The Company's officers have had limited experience in managing companies as
large and as rapidly growing as the Company. The Company's strategy of
continuing its growth and expansion will place additional demands upon the
Company's current management and will require additional information systems and
management, operational and other financial resources. Not all factors affecting
the Company's growth are within the control of the Company. The Company's
ability to manage growth successfully will require the Company to continue to
enhance its operational, management, financial and information systems and
controls. No assurance can be given that the Company will be able to manage its
expanding operations and, if the Company's management is unable to manage growth
effectively, the Company's business, financial condition and results of
operations could be materially adversely affected.
Risks Related to the Loss of Key Customers
As is common in the staffing industry, the Company's engagements to provide
services to its customers are generally non-exclusive, of a short-term nature
and subject to termination by the customer with little or no notice. For the
fiscal year 1996, sales to one customer accounted for more than 19% of the
Company's revenues. The loss of or a material reduction in the revenues from
this customer or any of the Company's other significant customers could have an
adverse effect on the Company's business, results of operations and financial
condition.
Dilution and Depression of Market Price of Common Stock
The exercise of the Company's warrants and the conversion into Common Stock
of the Company's convertible Preferred Stock at prices below the market price
may result in substantial dilution to existing stockholders. In addition, the
Company has previously registered the shares of Common Stock issuable upon
conversion of the Company's outstanding Preferred Stock and is hereby
registering under the Securities Act the shares issuable on exercise of certain
of the Company's outstanding warrants and on conversion of the Company's
convertible Preferred Stock making such shares freely tradeable upon issuance.
Although the Company is unable to predict the effect that sales of Common Stock
may have on the then prevailing market price of the shares of the Common Stock,
such sales may have a negative effect on such market price.
Effect of Fluctuations in the General Economy
Demand for staffing services is significantly affected by the general level
of economic activity in the country. Companies use staffing services to manage
personnel costs and changes in staffing needs due to business fluctuations. When
economic activity increases, employees from staffing companies are often added
before full-time employees are hired. As economic activity slows, many companies
reduce their usage of employees from staffing companies before undertaking
layoffs of their regular employees. In addition, the Company may experience more
competitive pricing pressure during such periods of economic downturn.
Therefore, any significant economic downturn could have a material adverse
effect on the Company's business.
Liabilities for Customer and Employee Actions
Staffing service providers are in the business of employing people and
placing them in the workplace of other businesses. An attendant risk of such
activity includes possible claims by customers of employee misconduct or
negligence, including claims of discrimination and harassment, employment of
illegal aliens and other similar claims. The Company has policies and guidelines
in place to reduce its exposure to these risks. However, a failure to follow
these policies and guidelines may result in negative publicity and the payment
by the Company of money damages or fines. Although the Company historically has
not had any significant problems in this area, there can be no assurance that
the Company will not experience such problems in the future. The Company is also
exposed to liability with respect to actions taken by its employees while on
assignment, such as damages caused by employee errors, misuse of customer
proprietary information or theft of customer property. Although the Company
maintains insurance, due to the nature of the Company's assignments, in
particular its access to customer information systems and confidential
information, and the potential liability with respect thereto, there can be no
assurance that insurance coverage will continue to be available or that it will
be adequate to cover any such liability.
Increases in Unemployment Insurance Premiums and Workers' Compensation Rates
The Company is required to pay unemployment insurance premiums and workers'
compensation benefits for its billable employees. Unemployment insurance
premiums are set annually by the states in which employees perform services and
could increase as a result of, among other things, increased levels of
unemployment and the lengthening
5
<PAGE>
of periods for which unemployment benefits are available. Workers' compensation
costs have increased as various states in which the Company conducts operations
have raised levels of compensation and liberalized allowable claims. The Company
may incur costs related to workers' compensation claims at rates higher than
anticipated if higher than anticipated losses or an increase in the number or
the severity of claims is experienced. In addition, the Company's costs could
increase as the result of any future health care reforms. Certain federal and
state legislative proposals have included provisions extending health insurance
benefits to billable employees who do not presently receive such benefits. There
can be no assurance that the Company will be able to increase the fees charged
to its customers in a sufficient amount to cover increased costs related to
workers' compensation and unemployment insurance. Further, there can be no
assurance that the Company will be able to obtain or renew workers' compensation
insurance coverage in amounts and types desired at reasonable premium rates.
Potential Impairment of Intangible Assets
As of June 30, 1997, more than 50% of the Company's total assets were
intangible assets. These intangible assets substantially represent amounts
attributable to goodwill recorded in connection with the Company's acquisitions
and are generally amortized over a five to forty year period, resulting in
significant annual charges. Various factors could impact the Company's ability
to generate the earnings necessary to support this amortization schedule,
including fluctuations in the economy, the degree and nature of competition,
demand for the Company's services, and the Company's ability to integrate the
operations of acquired businesses, to recruit and place staffing professionals,
to expand into new markets and to maintain gross margins in the face of pricing
pressures. Although management does not believe any impairment has occurred
through the date of this Prospectus, the failure of the Company to generate
earnings necessary to support the amortization charge may result in an
impairment of the asset. The resulting write-off could have a material adverse
effect on the Company's business, financial condition and results of operations.
Dependence on Availability of Qualified Staffing Personnel
The Company depends on its ability to attract, train and retain personnel
who possess the skills and experience necessary to meet the staffing
requirements of its customers. Competition for individuals with proven skills in
certain areas, particularly information technology and telecommunications, is
intense. The Company competes for such individuals with other providers of
technical staffing services, systems integrators, providers of outsourcing
services, computer systems consultants, customers and personnel agencies. The
Company must continually evaluate, train and upgrade its base of available
personnel to keep pace with changing customers' needs and emerging technologies.
There can be no assurance that qualified personnel will continue to be available
to the Company in sufficient numbers and on economic terms acceptable to the
Company. In addition, although the Company's employment agreements contain
non-compete covenants, there can be no assurance that the Company can
effectively enforce such agreements against its former employees.
Highly Competitive Market; Limited Barriers to Entry
The staffing services industry is highly competitive and has low barriers
to entry. Heightened competition for customers as well as for technical
personnel could adversely impact the Company's margins. Heightened competition
for customers could result in the Company being unable to maintain its current
fee scales without being able to reduce the personnel costs of its billable
employees. Shortages of qualified technical personnel, which currently exist in
some technical specialties and could occur in the future, may result in the
Company being unable to fulfill its customers' needs. Moreover, customers could
employ technical staff directly (rather than using the Company's services) to
ensure the availability of such personnel. Many of the Company's competitors
have greater marketing, financial and personnel resources than the Company does
and could provide increased competition to the Company. The Company expects that
the level of competition will remain high in the future, which could have a
material adverse effect on the Company. Additionally, in certain markets the
Company has experienced significant pricing pressure from some of its
competitors.
Dependence on Key Personnel
The Company is highly dependent on its management. The Company's success
depends upon the availability and performance of James L. Paterek, the Chairman
of the Company, Christopher P. Franco, the Chief Executive Officer of the
Company, and Michael Ferrentino, the President of the Company. The loss of
services of any of these key persons could have a material adverse effect upon
the Company. The Company has entered into employment agreements with all of such
individuals. The Company does not maintain key man life insurance on any of
these individuals.
6
<PAGE>
Control by Insiders
Current management of the Company currently controls more than one-quarter
of the Company's outstanding shares of Common Stock. As a result, such persons
are expected to have the ability to significantly influence all issues submitted
to the Company's stockholders including with respect to its management and the
selection of its Board of Directors. Such concentration of ownership could limit
the price that certain investors might be willing to pay in the future for
shares of Common Stock and could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from attempting to
acquire, control of the Company.
Anti-Takeover Provisions
Certain provisions of the Company's Certificate of Incorporation and Bylaws
authorize the issuance of "blank check" Preferred Stock and the establishment of
advance notice requirements for director nominations and actions to be taken at
stockholder meetings. These provisions could discourage or impede a tender
offer, proxy contest or other similar transaction involving control of the
Company, including transactions in which the stockholders might otherwise
receive a premium for their shares over then current market prices and other
transactions that they may deem to be in their best interests. In particular the
issuance of Preferred Stock could have an adverse effect on holders of Common
Stock by delaying or preventing a change in control of the Company, making
removal of the present management of the Company more difficult or resulting in
restrictions upon the payment of dividends and other distributions to the
holders of Common Stock. For example, the Company could issue shares of
Preferred Stock with extraordinary voting rights or liquidation preferences to
make it more difficult for a hostile acquiror to gain control of the Company. In
addition to the anti-takeover effect of the issuance of preferred stock, holders
of preferred stock have a preferred position over holders of common stock on
liquidation, the right to a fixed or minimum dividend before any dividend is
paid (or accrued) on common stock, and the right to approve certain
extraordinary corporate matters.
No Cash Dividends
The Company anticipates that for the foreseeable future its earnings will
be retained for the operation and expansion of its business and that it will not
pay cash dividends on its Common Stock. In addition, the Company's revolving
credit facility prohibits the payment of cash dividends on the Common Stock
without the lender's consent.
Potential Environmental Liability
The Company, through a predecessor company that was engaged in
manufacturing activities, has been named as one of 80 defendants in a case
alleging that the defendants disposed of hazardous substances at a site in Gary,
Indiana. Management and its counsel cannot determine whether a negative outcome
is probable regarding the Company's potential liability at this site. Although
the Company is entitled to be indemnified for any environmental liabilities in
connection with disposal of hazardous substances at this site, no assurance can
be given that the Company will be effectively indemnified or will not otherwise
ultimately sustain liability for disposing of hazardous substances.
Possible Volatility of Stock Price
From time to time, there has been and may continue to be significant
volatility in the market price for the Company's Common Stock. Quarterly
operating results of the Company or of other staffing companies, changes in
general conditions in the economy, the financial markets or the staffing
industry, natural disasters or other developments could cause the market price
of the Company's Common Stock to fluctuate substantially. In addition, in recent
years the stock market has experienced extreme price and volume fluctuations.
This volatility has had a significant effect on the market prices of securities
issued by many companies for reasons unrelated to their operating performance.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common Stock
offered hereby by the Selling Stockholders. However, if the holders of warrants
to purchase shares of Common Stock exercise their warrants in order to sell the
underlying shares (which are registered hereby), the Company will receive the
amount of the exercise prices of any warrants so exercised. The Company cannot
predict when or if it will receive proceeds from the exercise of warrants, or
the amount of any such proceeds. The Company intends to use the proceeds, if
any, received from the exercise of warrants for working capital purposes. See
"Plan of Distribution."
7
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the shares of
Common Stock held by, or issuable upon the exercise of warrants or the
conversion of convertible Preferred Stock of the Company to, the persons
offering shares pursuant to this Prospectus ("Selling Stockholders"). In cases
where the Selling Stockholder serves or has served within the past three years
as an officer, director or employee of the Company or any of its subsidiaries,
this relationship is noted. Because the Selling Stockholders may offer all or
some part of the Common Stock that they hold pursuant to the offering
contemplated by this Prospectus, and because this offering is not being
underwritten (on a firm commitment or any other basis), no estimate can be given
as to the amount of Common Stock that will be held by Selling Stockholders upon
termination of this offering.
Name of Beneficial Owner Shares Offered Hereby
- -------------------------------- ---------------------
Anita M. Stone Family Trust(1) 24,608
John Bramsen(2) 8,085
Anne Bensen (3) 2,000
Salvatore Bova (3) 1,000
Kenneth Buchanan(4) 4,839
Luke Buse & Brent D. Richardson (3) 8,000
Calloway, An Arizona Partnership (3) 3,000
Woodrow Chamberlain(5) 8,203
Continental Field Services Corporation(3) 36,800
James L. Davis (3) 3,000
Michael F. Dura (3) 1,000
Empire Metals Profit Sharing Plan (3) 1,000
Estate of Sanders H. Campbell (3) 8,250
Fairway Capital Ltd.(6) 17,183
Fleet National Bank (7) 200,000
William A. Franke (3) 3,000
G.P.S. Fund Ltd.(8) 932
Gifford Fund Ltd.(9) 13,048
Joseph Gil(10) 480
Global Growth Ltd.(11) 8,593
Thomas J. Griesel(12) 2,400
Mark Holbrook(3) 243,211
Timothy H. Holmes(13) 2,880
Mark S. Howells (3) 1,800
- --------------------------------------------------------------------------------
8
<PAGE>
Name of Beneficial Owner Shares Offered Hereby
- -------------------------------- ---------------------
Mark S. Howells, IRA (3) 2,000
Infinity Emerging Opportunities Ltd.(14) 17,183
Infinity Investors Ltd.(15) 51,545
International Growth Ventures Ltd.(16) 34,363
JMG Capital Partners, L.P.(17) 18,640
KFC Ltd. (3) 1,000
Harlan P. Kleiman(18) 31,680
Steven Lamar(19) 480
Philip P. Lovell (3) 2,000
Philip P. Lovell Pension Plan (3) 3,000
Neff Family Trust(20) 1,613
Robert C. Pearson and Nancy L. Pearson (3) 1,000
ProFutures Special Equities Fund L.P.(21) 18,640
Jeff Puglisi (3) 7,500
Jeff J. Puglisi IRA (3)d 3,200
Chuck Reeder(22) 4,168
Refco Capital Markets Ltd.(23) 85,905
RGC International Investors, LDC(24) 47,446
Irving M. Rollingher (3) 1,800
Irving M. Rollingher, IRA (3)
300
Rubenstein Family Ltd. Partnership #1 (3) 3,000
Byron H. Rubin (3) 4,000
Gerald Rubin (3) 14,000
Jay Rubin (3) 4,000
Semamor Enterprises (25) 16,091
Seymour Sacks & Star Sacks (3) 1,000
Robert K. Schachter(26) 10,080
John M. Schottenstein Revocable Trust (3) 1,500
Aaron M. Shenkman & Cynthia Shenkman (3) 4,000
Lillian D. Snow (3) 1,500
Henry M. Staley Trust(27) 1,598
STK&K Profit Sharing Plan & Trust (3) 1,000
- --------------------------------------------------------------------------------
9
<PAGE>
Name of Beneficial Owner Shares Offered Hereby
- -------------------------------- ---------------------
Shepard C. Swift Trust(28) 4,158
E.B. Tarrson(29) 16,627
Ronald Tarrson(30) 16,627
Marc Werner(31) 100,000
----------
TOTAL 1,135,956
- ----------
(1) The shares of Common Stock offered by the Anita M. Stone Family Trust
consist of (i) 6,608 shares held of record and (ii) 18,000 shares issuable
upon exercise of a warrant at an exercise price of $7.60, which warrant
terminates on September 2, 2000.
(2) The shares of Common Stock offered by John Bramsen consist of (i) 2,085
shares held of record and (ii) 6,000 shares issuable upon exercise of a
warrant at an exercise price of $7.275, which warrant terminates on
September 8, 2000.
(3) The shares of Common Stock offered by the stockholder are owned of record.
(4) The shares of Common Stock offered by Ken Buchanan consist of (i) 1,239
shares held of record and (ii) 3,600 shares issuable upon exercise of a
warrant at an exercise price of $7.425, which warrant terminates on
September 7, 2000.
(5) The shares of Common Stock offered by Woodrow Chamberlain consist of (i)
2,203 shares held of record and (ii) 6,000 shares issuable upon exercise of
a warrant at an exercise price of $7.475, which warrant terminates on
September 1, 2000.
(6) The shares of Common Stock offered by Fairway Capital Ltd. consist of (i)
5,183 shares held of record and (ii) 12,000 shares issuable upon exercise
of a warrant at an exercise price of $7.575, which warrant terminates on
August 27, 2000.
(7) The shares of Common Stock offered by Fleet National Bank are issuable upon
exercise of a warrant to purchase (i) 100,000 shares of Common Stock at an
exercise price of $7.30 per shares ($1.50 per shares in excess of the
average closing price of the Common Stock for the five business days ended
June 24, 1997), exercisable until June 25, 2000 and (ii) 100,000 shares of
Common Stock at an exercise price of $0.75 per share in excess of the
average closing price of the Common Stock for the five business days ending
prior to the occurrence of specified conditions, exercisable commencing on
such date and for a period of three years thereafter.
(8) The shares of Common Stock offered by G.P.S. Fund Ltd. consist of (i) 242
shares held of record and (ii) 690 shares issuable upon exercise of a
warrant at an exercise price of $7.425, which warrant terminates on
September 7, 2000.
(9) The shares of Common Stock offered by Gifford Fund Ltd. consist of (i)
3,388 shares held of record and (ii) 9,660 shares issuable upon exercise of
a warrant at an exercise price of $7.425, which warrant terminates on
September 7, 2000.
(10) Of the shares of Common Stock offered by Joseph Gil: (i) 80 are owned of
record; (ii) 150 shares are issuable upon the exercise of a warrant
expiring November 7, 1998 at an exercise price of $24.00 per share; and
(iii) 250 shares are issuable upon the exercise of a warrant expiring
December 26, 1999 at an exercise price of $13.025 per share.
(11) The shares of Common Stock offered by Global Growth Ltd. consist of (i)
2,593 shares held of record and (ii) 6,000 shares issuable upon exercise of
a warrant at an exercise price of $7.575, which warrant terminates on
August 27, 2000.
(12) Of the shares of Common Stock offered by Thomas J. Griesel: (i) 400 are
owned of record; (ii) 750 shares are issuable upon the exercise of a
warrant expiring November 7, 1998 at an exercise price of $24.00 per share;
and (iii) 1,250 shares are issuable upon the exercise of a warrant expiring
December 26, 1999 at an exercise price of $13.025 per share.
(13) Of the shares of Common Stock offered by Timothy J. Holmes: (i) 480 are
owned of record; (ii) 900 shares are issuable upon the exercise of a
warrant expiring November 7, 1998 at an exercise price of $24.00 per share;
and (iii) 1,500 shares are issuable upon the exercise of a warrant expiring
December 26, 1999 at an exercise price of $13.025 per share.
(14) The shares of Common Stock offered by Infinity Emerging Opportunities Ltd.
consist of (i) 5,183 shares held of record and (ii) 12,000 shares issuable
upon exercise of a warrant at an exercise price of $7.575, which warrant
terminates on August 27, 2000.
(15) The shares of Common Stock offered by Infinity Investors Ltd. consist of
(i) 15,545 shares held of record and (ii) 36,000 shares issuable upon
exercise of a warrant at an exercise price of $7.575, which warrant
terminates on August 27, 2000.
(16) The shares of Common Stock offered by International Growth Ventures Ltd.
consist of (i) 10,363 shares held of record and (ii) 24,000 shares issuable
upon exercise of a warrant at an exercise price of $7.575, which warrant
terminates on August 27, 2000.
10
<PAGE>
(17) The shares of Common Stock offered by JMG Capital Partners, L.P. consist of
(i) 4,840 shares held of record and (ii) 13,800 shares issuable upon
exercise of a warrant at an exercise price of $7.425, which warrant
terminates on September 7, 2000.
(18) Of the shares of Common Stock offered by Harlan P. Kleiman: (i) 5,280 are
owned of record; (ii) 9,900 shares are issuable upon the exercise of a
warrant expiring November 7, 1998 at an exercise price of $24.00 per share;
and (iii) 16,500 shares are issuable upon the exercise of a warrant
expiring December 26, 1999 at an exercise price of $13.025 per share.
(19) Of the shares of Common Stock offered by Steven Lamar: (i) 80 are owned of
record; (ii) 150 shares are issuable upon the exercise of a warrant
expiring November 7, 1998 at an exercise price of $24.00 per share; and
(iii) 250 shares are issuable upon the exercise of a warrant expiring
December 26, 1999 at an exercise price of $13.025 per share.
(20) The shares of Common Stock offered by the Neff Family Trust consist of (i)
413 shares held of record and (ii) 1,200 shares issuable upon exercise of a
warrant at an exercise price of $7.025, which warrant terminates on
September 9, 2000.
(21) The shares of Common Stock offered by ProFutures Special Equities Fund L.P.
consist of (i) 4,840 shares held of record and (ii) 13,800 shares issuable
upon exercise of a warrant at an exercise price of $7.425, which warrant
terminates on September 7, 2000.
(22) The shares of Common Stock offered by Chuck Reeder consist of (i) 1,168
shares held of record and (ii) 3,000 shares issuable upon exercise of a
warrant at an exercise price of $7.45, which warrant terminates on August
31, 2000.
(23) The shares of Common Stock offered by Refco Capital Markets Ltd. consist of
(i) 25,905 shares held of record and (ii) 60,000 shares issuable upon
exercise of a warrant at an exercise price of $7.575, which warrant
terminates on August 27, 2000.
(24) The shares of Common Stock offered by RGC International Investors, LDC
consist of (i) 11,446 shares held of record and (ii) 36,000 shares issuable
upon exercise of a warrant at an exercise price of $7.575, which warrant
terminates on August 27, 2000.
(25) The shares of Common Stock offered by Semamor Enterprises consist of (i)
4,091 shares held of record and (ii) 12,000 shares issuable upon exercise
of a warrant at an exercise price of $6.925, which warrant terminates on
September 10, 2000.
(26) Of the shares of Common Stock offered by Robert K. Schachter: (i) 1,680 are
owned of record; (ii) 3,150 shares are issuable upon the exercise of a
warrant expiring November 7, 1998 at an exercise price of $24.00 per share;
and (iii) 5,250 shares are issuable upon the exercise of a warrant expiring
December 26, 1999 at an exercise price of $13.025 per share.
(27) The shares of Common Stock offered by the Henry M. Staley Trust consist of
(i) 398 shares held of record and (ii) 1,200 shares issuable upon exercise
of a warrant at an exercise price of $6.85 which warrant terminates on
September 13, 2000.
(28) The shares of Common Stock offered by the Shepard C. Swift Trust consist of
(i) 1,158 shares held of record and (ii) 3,000 shares issuable upon
exercise of a warrant at an exercise price of $7.45, which warrant
terminates on August 31, 2000.
(29) The shares of Common Stock offered by E.B. Tarrson consist of (i) 4,627
shares held of record and (ii) 12,000 shares issuable upon exercise of a
warrant at an exercise price of $7.45, which warrant terminates on August
31, 2000.
(30) The shares of Common Stock offered by Ronald Tarrson consist of (i) 4,627
shares held of record and (ii) 12,000 shares issuable upon exercise of a at
an exercise price of $7.45, which warrant terminates on August 31, 2000.
(31) The shares of Common Stock offered by Marc Werner are issuable upon
exercise of a warrant for 100,000 shares at an exercise price of $7.625,
which warrant terminates on the first anniversary of the effective date of
this Registration Statement.
11
<PAGE>
DESCRIPTION OF THE COMPANY'S SECURITIES
General
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock having a par value of $.01 per share and 10,000,000 shares of
Preferred Stock, par value $0.01 per share, which may be issued in one or more
series with such rights and preferences as determined by the Board of Directors.
As of June 30, 1997, the Company had issued and outstanding capital stock
consisting of 13,718,948 shares of Common Stock and 500 shares of Series F
Preferred Stock. In addition, as of the date of this Prospectus, there were
options and warrants to purchase an additional 3,953,824 shares of Common Stock
issued and outstanding.
The following summary description of the Company's capital stock does not
purport to be complete and is qualified in its entirety by this reference to the
Company's Certificate of Incorporation and Bylaws, copies of which have been
incorporated by reference as exhibits to the Registration Statement of which
this Prospectus is a part.
Common Stock
The holders of the Common Stock are entitled to one vote per share of
record on all matters to be voted upon by stockholders. At a meeting of
stockholders at which a quorum is present, a majority of the votes cast decides
all questions, unless the matter is one upon which a different vote is required
by express provision of law or the Company's Certificate of Incorporation or
Bylaws. Cumulative voting is not permitted with respect to the election of
directors.
The holders of Common Stock have no preemptive rights and have no rights to
convert their Common Stock into any other securities. Subject to the rights of
holders of Preferred Stock, if any shares of Preferred Stock are then
outstanding, in the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to participate equally, share for
share, in all assets remaining after payment of liabilities.
The holders of Common Stock are entitled to receive ratably such dividends
as the Board of Directors may declare out of funds legally available therefor,
when and if so declared. The payment by the Company of dividends, if any, rests
within the discretion of its Board of Directors and will depend upon the
Company's results of operations, financial condition and capital expenditure
plans, as well as other factors considered relevant by the Board of Directors.
Preferred Stock
The Company's Certificate of Incorporation authorizes the Board of
Directors to issue shares of Preferred Stock in one or more series and to
establish such relative voting, dividend, redemption, liquidation, conversion
and other powers, preferences, rights, qualifications, limitations and
restrictions as the Board of Directors may determine without further approval of
the Stockholders of the Company.
On October 25, 1996, the Board authorized the issuance of up to 10,000
shares of Preferred Stock, par value $0.01 per share, designated the Series F
Convertible Preferred Stock ("Series F Preferred Stock"). As subsequently
modified by agreement of the Company and the holders, each share of Series F
Preferred Stock will, (i) at the option of the holder or (ii) automatically on
the second anniversary of the date of issuance, be converted into such number of
shares of Common Stock determined by dividing $1,000 plus all accrued, unpaid
dividends thereon by the per share conversion price. The conversion price is 83%
of the average closing bid price of the Common Stock for the five trading days
immediately preceding the conversion date, subject to certain limitations.
Holders of shares of Series F Preferred Stock are entitled to cumulative
dividends of 5% per annum, payable quarterly on the first day of March, June,
September and December in each year, payable in cash or Common Stock (valued at
the closing price on the date of declaration), at the Company's election. The
Series F Preferred Stock has a liquidation preference over the Common Stock in
the event of any liquidation or sale of the Company. Except as otherwise
provided by law, the holders of Series F Preferred Stock are not entitled to
vote. As of June 30, 1997, there were 500 shares of Series F Preferred Stock
outstanding with a liquidation value of $500,000.
Except for the Series F Preferred Stock, there are no other series or
classes of Preferred Stock with currently outstanding shares. All the shares of
all other series or classes of Preferred Stock previously authorized by the
Company's Board have been repurchased by the Company, canceled or converted into
Common Stock and are not subject to reissue.
12
<PAGE>
The issuance of any additional series of Preferred Stock, and the relative
powers, preferences, rights, qualifications, limitations and restrictions of
such series, if and when established, will depend upon, among other things, the
future capital needs of the Company, the then-existing market conditions and
other factors that, in the judgment of the Board of Directors, might warrant the
issuance of Preferred Stock. The issuance of additional series of Preferred
Stock by the Board of Directors could, among other things, adversely affect the
voting power of the holders of Common Stock and, under certain circumstances,
make it more difficult for a person or group to gain control of the Company. At
the date of this Prospectus, there are no plans, agreements or understandings
relative to the issuance of any shares of Preferred Stock.
Delaware Law
Certain provisions of the General Corporation Law of the State of Delaware,
summarized in the following paragraphs, may be considered to have an
anti-takeover effect and may delay, deter or prevent a tender offer, proxy
contest or other takeover attempt that a stockholder might consider to be in
such stockholder's best interest, including such an attempt as might result in
payment of a premium over the market price for shares held by stockholders.
Section 203 of the General Corporation Law of the State of Delaware
prohibits a public Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which such person became an interested
stockholder unless (i) prior to such date, the Board of Directors approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder; or (ii) upon becoming an
interested stockholder the stockholder then owned at least 85% of the voting
stock, as defined in Section 203; or (iii) subsequent to such date, the business
combination is approved by both the Board of Directors and by at least 66-2/3 of
the corporation's outstanding voting stock, excluding shares owned by the
interested stockholder. For these purposes, the term "business combination"
includes mergers, asset sales and other similar transactions with an "interested
stockholder." An "interested stockholder" is a person who, together with
affiliates and associates, owns (or, within the prior three years, did own) 15%
or more of the corporation's voting stock. Although Section 203 permits a
corporation to elect not to be governed by its provisions, the Company to date
has not made this election.
Section 203 excludes from the definition of "interested stockholder" any
stockholder of the Company that owned over 15% of the Company's stock on
December 23, 1987, so long as such holder continues to own over 15% of the
Company.
Transfer Agent
The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services.
PLAN OF DISTRIBUTION
The manner in which the Common Stock covered by this Prospectus is to be
distributed is set forth on the cover page hereof. Any sales effected through
securities brokers or dealers will be on an "agency" basis, unless as a result
of a privately negotiated transaction a broker or dealer enters into an
agreement with a Selling Stockholder to purchase shares for its own account. At
the date of this Prospectus, none of the Selling Stockholders contemplate
entering into such a contractual relationship with a broker or dealer, although
one or more of them may decide to do so in the future.
To comply with certain states' securities laws, if applicable, the Common
Stock will be sold in such states only through brokers or dealers. In addition,
in certain states the Common Stock may not be sold unless they have been
registered or qualify for sale in such states or an exemption from registration
or qualification is available and is complied with. From time to time, to the
extent required by the rules of the Securities and Exchange Commission, the
Company will distribute Prospectus Supplements.
The Selling Stockholders and any broker-dealers who participate in a sale
of their shares of Common Stock may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
them, and proceeds of any such sales as principal, may be deemed to be
underwriting discounts and commissions under the Securities Act.
All expenses of the registration of Common Stock offered hereby, estimated
to be approximately $47,000, will be borne by the Company. As and when the
Company is required to update this Prospectus, it may incur additional expenses
in excess of this estimated amount. Normal commission expenses and brokerage
fees, as well as any applicable transfer taxes, are payable individually by the
Selling Stockholders.
13
<PAGE>
Since the Selling Stockholders will be subject to the anti-manipulation
rules promulgated under the Exchange Act, including Rule 10b-2, 10b-6 and 10b-7,
in connection with transactions in the Common Stock during the effectiveness of
the Registration Statement of which this Prospectus is a part, the Company
advised the Selling Stockholders to consult competent securities counsel prior
to initiating any such transaction. The Company will notify each Selling
Stockholder of the Commission's rules and, as a condition to agreeing to
register the shares of a Selling Stockholder, will require that such Selling
Stockholder agree to comply with such rules.
The Company will not receive any proceeds from the sale of the Common Stock
offered hereby by the Selling Stockholders. However, insofar as the holders of
warrants to purchase shares of the Common Stock are expected to exercise their
warrants in order to sell the underlying shares (which are registered hereby),
the Company will receive the amount of the exercise prices of any warrants so
exercised. The Company cannot predict when or if it will receive proceeds from
the exercise of warrants, or the amount of any such proceeds. The Company
intends to use the proceeds, if any, received from the exercise of warrants for
working capital purposes.
LEGAL MATTERS
The validity of the Common Stock being offered hereby will be passed
upon for the Company by Doepken, Keevican &Weiss Professional Corporation,
Pittsburgh, Pennsylvania.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in this Prospectus from the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 have been incorporated herein in reliance on
the report of Coopers & Lybrand LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
The financial statements of RHO Company Incorporated which are incorporated
by reference in this Prospectus from the Company's Annual Report on Form 10-K
for the year ended December 31, 1996 have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto which is incorporated herein by reference, and have been so incorporated
in reliance upon the authority of said firm as experts in giving said report.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Theon which are actual) in connection with the offering, all of which are
payable by the Registrant, are as follows:
Description Amount
----------- -------
SEC Registration Fee $ 2,571
Printing Costs 10,000*
Legal Fees 15,000*
Accounting Fees 10,000*
Miscellaneous 9,429*
-------
Total $47,000*
-------
- ----------
*Estimate
Item 15. Indemnification of Directors and Officers.
The Registrant's Bylaws effectively provide that the Registrant, to the
full extent permitted by Section 145 of the General Corporation Law of the State
of Delaware, as amended from time to time ("Section 145"), shall indemnify all
directors and officers of the Company and may indemnify all employees,
representatives and other persons as permitted pursuant thereto.
Section 145 permits a corporation to indemnify its directors and officers
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlements actually and reasonably incurred by them in connection with any
action, suit or proceeding brought by a third party if such directors or
officers acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, indemnification may be made only for expenses
actually and reasonably incurred by directors and officers in connection with
the defense or settlement of an action or suit and only with respect to a matter
as to which they shall have acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interest of the corporation, except
that no indemnification shall be made if such person shall have been adjudged
liable to the corporation, unless and only to the extent that the court in which
the action or suit was brought shall determine upon application that the
defendant officers or directors are reasonably entitled to indemnity for such
expenses despite such adjudication of liability.
The Company has entered into separate indemnification agreements with each
of its outside directors, which provides for indemnification of such directors
to the fullest extent permitted by law. The Company may also enter into
indemnification agreements with other directors, officers or employees or with
anyone else it is permitted to indemnify under Delaware law, but has no present
intention of doing so.
The Company maintains insurance against liabilities under the
Securities Act of 1933 for the benefit of its officers and directors.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
II-1
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
2.1 Stock Purchase Agreement dated September 11, 1995 among Spectrum
Technologies, Inc., the Company, COMFORCE Corporation, ARTRA Group
Incorporated, Peter R. Harvey, Marc L. Werner, James L. Paterek, Michael
Ferrentino and Christopher P. Franco (included as an exhibit to the
Company's Current Report on Form 8-K dated September 11, 1995 and
incorporated herein by reference).
2.2 Purchase Agreement among COMFORCE Telecom, Inc., Williams Communications
Services, Inc. and Bruce Anderson (included as an exhibit to the
Company's Current Report on Form 8-K dated March 13, 1996 and
incorporated herein by reference).
2.3 Stock Purchase Agreement effective as of May 13, 1996 among the Company,
COMFORCE Technical Services, Inc., Project Staffing Support Team, Inc.,
Raphael Rashkin and Stanley Rashkin (included as an exhibit to the
Company's Amended Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 1996 filed May 16, 1996 and incorporated herein by reference).
2.4 Asset Purchase Agreement effective as of May 13, 1996 among the Company,
COMFORCE Technical Services, Inc., DataTech Technical Services, Inc.,
Raphael Rashkin and Stanley Rashkin (included as an exhibit to the
Company's Amended Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 1996 filed May 16, 1996 and incorporated herein by reference).
2.5 Asset Purchase Agreement effective as of May 13, 1996 among the Company,
COMFORCE Technical Services, Inc., RRA, Inc., Raphael Rashkin and
Stanley Rashkin (included as an exhibit to the Company's Amended
Quarterly Report on Form 10-Q/A for the quarter ended March 31, 1996
filed May 16, 1996 and incorporated herein by reference).
2.6 Letter Agreement dated May 6, 1996 amending Asset Purchase Agreement
effective as of May 13, 1996 among the Company, COMFORCE Technical
Services, Inc., RRA, Inc., Raphael Rashkin and Stanley Rashkin (included
as an exhibit to the Company's Amended Quarterly Report on Form 10-Q/A
for the quarter ended March 31, 1996 filed May 16, 1996 and incorporated
herein by reference).
2.7 Letter Agreement dated April 19, 1996 among CTS Acquisition Co. I,
COMFORCE Technical Services, Inc., Project Staffing Support Team, Inc.
and RRA, Inc. (included as an exhibit to the Company's Amended Quarterly
Report on Form 10-Q/A for the quarter ended March 31, 1996 filed May 16,
1996 and incorporated herein by reference).
2.8 Agreement and Plan of Reorganization dated October 22, 1996 between
AZATAR Computer Systems, Inc. and the Company (included as an exhibit to
the Company's Current Report on Form 8-K dated November 8, 1996 and
incorporated herein by reference).
2.9 Asset Purchase Agreement dated October 25, 1996 by and among Continental
Field Services Corporation, Michael Hill, Roy Hill and COMFORCE Telecom,
Inc. (included as an exhibit to the Company's Current Report on Form 8-K
dated November 19, 1996 and incorporated herein by reference).
2.10 Asset Purchase Agreement dated October 25, 1996 between Progressive
Telecom, Inc., Beth Wilson Hill and COMFORCE Telecom, Inc. (included as
an exhibit to the Company's Current Report on Form 8-K dated November
19, 1996 and incorporated herein by reference).
2.11 Amendment to Escrow Agreement and Purchase Agreements dated November 8,
1996 by and among Continental Field Service Corporation, Progressive
Telecom, Inc., Michael Hill, Roy Hill, Beth Wilson Hill, McCarthy,
Fingar, Donovan, Drazen & Smith, and COMFORCE Telecom, Inc. (included as
an exhibit to the Company's Current Report on Form 8-K dated November
19, 1996 and incorporated herein by reference).
II-2
<PAGE>
2.12 Subscription Agreement dated October 28, 1996 by and among RHO Company,
Inc., J. Scott Erbe, COMFORCE Corporation and COMFORCE Technical
Services, Inc. (included as an exhibit to the Company's Current Report
on Form 8-K dated November 19, 1996 and incorporated herein by
reference).
2.13 Stock Sale and Termination Agreement dated October 28, 1996 by and
between James R. Ratcliff and RHO Company, Inc. (included as an exhibit
to the Company's Current Report on Form 8-K dated November 19, 1996 and
incorporated herein by reference).
2.14 Letter Agreement dated November 4, 1996 amending Stock Sale and
Termination Agreement between RHO Company, Inc. and James R. Ratcliff
(included as an exhibit to the Company's Current Report on Form 8-K
dated November 19, 1996 and incorporated herein by reference).
3.1 Restated Certificate of Incorporation of the Company, as amended by
Certificates of Amendment filed with the Delaware Secretary of State on
June 14, 1987 and February 12, 1991 (included as an exhibit to Amendment
No. 1 to the Registration Statement on Form S-1 of the Company filed
with the Commission on May 10, 1996 and incorporated herein by
reference).
3.2 Certificate of Ownership (Merger) of COMFORCE Corporation into the
Company (included as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1995 and incorporated herein by
reference).
3.3 Bylaws of the Company, as amended and restated effective as of February
26, 1997 (included as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1996 and incorporated herein by
reference)
3.4 Designation of Rights and Preferences of Series F Preferred Stock
(included as an exhibit to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 and incorporated herein by reference).
3.5 Certificate of Ownership (Merger) of AZATAR into the Company (included
as an exhibit to the Company's Current Report on Form 8-K dated November
8, 1996 and incorporated herein by reference).
5.1 Opinion of Doepken Keevican & Weiss Professional Corporation.
10.1 Management Agreement dated as of April 9, 1993 between the Company and
Nitsua, Ltd. (a corporation wholly-owned by Austin Iodice, formerly
Lori's Chairman and Chief Executive Officer) (included as an exhibit to
the Company's Annual Report on Form 10-K for the year ended December 31,
1992 and incorporated herein by reference).
10.2 Letter Agreement dated June 29, 1995, among the Company, ARTRA Group
Incorporated, James L. Paterek, Michael Ferrentino and Christopher P.
Franco (included as an exhibit to the Company's Current Report on Form
8-K dated September 11, 1995 and incorporated herein by reference).
10.3 Amendment dated October 6, 1995 of Letter Agreement dated June 29, 1995,
among the Company, ARTRA Group Incorporated, James L. Paterek, Michael
Ferrentino and Christopher P. Franco (included as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995 and incorporated herein by reference).
10.4 Employment Agreement dated December 9, 1995 between the Company and
Michael Ferrentino (included as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 and
incorporated herein by reference).
10.5 Employment Agreement dated December 9, 1995 between the Company and
Christopher Franco (included as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 and
incorporated herein by reference).
II-3
<PAGE>
10.6 Assumption Agreement dated October 17, 1995 between the Company and
ARTRA GROUP Incorporated respecting ARTRA's assumption of substantially
all of the Company's pre-existing liabilities (included as an exhibit to
the Company's Annual Report on Form 10-K for the year ended December 31,
1995 and incorporated herein by reference).
10.7 Asset Purchase Agreement dated as of April 11, 1996 among Lawrence
Jewelry Corporation, ARTRA GROUP Incorporated, the Company and Hanover
Advisors, Inc. respecting the disposition of the assets of the Company's
jewelry business (included as an exhibit to the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 and incorporated
herein by reference).
10.8 Loan Agreement dated as of June 25, 1997 among the Company, COMFORCE
Telecom, Inc., Sumtec Corporation, COMFORCE Technical Services, Inc.,
Project Staffing Support Team, Inc., COMFORCE Information Technologies,
Inc., Force Five, Inc., COMFORCE IT Acquisition Corp., RHO Acquisition
Company, RHO Company Incorporated, Fleet National Bank, as bank and
agent, and U.S. Bank, Washington, as bank.
21.1 List of Subsidiaries (included as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 and
incorporated herein by reference).
23.1 Consent of Doepken Keevican & Weiss Professional Corporation (included
in the opinion filed as Exhibit 5.1 to this Registration Statement).
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Arthur Andersen L.L.P.
24.1 Powers of Attorney (included on signature page of the Registration
Statement).
Item 17. Undertakings.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
II-4
<PAGE>
Commission by the Registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(4) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
of expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lake Success, State of New York, on July 25, 1997.
COMFORCE Corporation
(Registrant)
By: /s/ Christopher P. Franco
------------------------------------------
Christopher P. Franco, Chief Executive Officer
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ James L. Paterek* Chairman
-------------------------
James L. Paterek July 25, 1997
/s/ Christopher P. Franco* Chief Executive Officer,
------------------------- Secretary and Director July 25, 1997
Christopher P. Franco
/s/ Michael Ferrentino* President and
------------------------- Director July 25, 1997
Michael Ferrentino
/s/ Paul Grillo* Chief Financial Officer
------------------------- (Principal Financial
Paul Grillo Officer) July 25, 1997
/s/ Andrew Reiben* Director of Finance and July 25, 1997
------------------------- Chief Accounting Officer
Andrew Reiben (Principal Accounting Officer)
/s/ Richard Barber* Director July 25, 1997
-------------------------
Richard Barber
/s/ Keith Goldberg* Director July 25, 1997
-------------------------
Keith Goldberg
/s/ Glen Miller* Director July 25, 1997
-------------------------
Glen Miller
/s/ Marc Werner* Director July 25, 1997
-------------------------
Marc Werner
/s/ Christopher P. Franco
-------------------------
Christopher P. Franco
Attorney-in-Fact
COMFORCE Corporation
July 25, 1997
Page 2
EXHIBIT 5.1
DOEPKEN KEEVICAN & WEISS
58th Floor, USX Tower
600 Grant Street
Pittsburgh, PA 15219
July 25, 1997
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, NY 11042
RE: COMFORCE Corporation
SEC Registration No. 33-31167
Ladies and Gentlemen:
We have acted as counsel for COMFORCE Corporation, a Delaware corporation
(the "Company"), in connection with the registration with the Securities and
Exchange Commission (the "SEC") by the Company of 1,135,956 shares of the
Company's common stock (the "Common Stock") pursuant to the Securities Act of
1933, as amended (the "Act") for sale by certain selling stockholders.
In connection with the registration, we have examined the following:
(a) The Certificate of Incorporation and By-laws of the Company, each as
amended to date;
(b) The Registration Statement on Form S-3 and Amendment No. 1 thereto (as
amended, the "Registration Statement"), including the Prospectus which
is a part thereof (the "Prospectus"), relating to the Common Stock, as
filed with the SEC;
(c) Resolutions of the Board of Directors of the Company authorizing the
issuance and registration of the Common Stock; and
(d) Such other documents, records, opinions, certificates and papers as we
have deemed necessary or appropriate in order to give the opinions
hereinafter set forth.
<PAGE>
COMFORCE Corporation
July 25, 1997
Page 2
The opinions hereinafter expressed are subject to the following
qualifications and assumptions :
(i) In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity of all documents submitted to us as copies to the originals
thereof.
(ii) As to the accuracy of certain factual matters, we have relied on the
certificates of officers of the Company and certificates, letters,
telegrams or statements of public officials.
(iii) We express no opinion on the laws of any jurisdiction other than the
United States of America and the General Corporation Law of the State
of Delaware.
Based upon and subject to the foregoing, we are pleased to advise you that,
insofar as the laws of the State of Delaware and the United States of America
are concerned, it is our opinion that the shares of Common Stock being
registered for resale under the Registration Statement will, when sold
thereunder, be legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the use of our name in the Prospectus in
connection with the matters referred to under the caption "Legal Matters."
Very truly yours,
/s/ Doepken Keevican & Weiss
DOEPKEN KEEVICAN & WEISS
PROFESSIONAL CORPORATION
EXHIBIT 23.2
CONSENT OF COOPERS & LYBRAND L.L.P.
We consent to the incorporation by reference in the registration statement of
COMFORCE Corporation, Inc. on Form S-3 of our report dated January 30, 1997,
except as to Note 20 for which the date is March 21, 1997, on our audits of the
consolidated financial statements and financial statement schedule of COMFORCE
Corporation, Inc. as of December 31, 1996 and 1995, and for the years ended
December 31, 1996, 1995 and 1994. We also consent to the reference to our Firm
under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Melville, New York
July 25, 1997.
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 24, 1997
incorporated by reference in COMFORCE Corporation's Form 10-K for the year ended
December 31, 1996 and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
Seattle, Washington
July 23, 1997
