<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-1*
AMENDMENT NO. 1
Tender Offer Statement Pursuant to Section 14(d)(1) of the
Securities Exchange Act of 1934
UNIFORCE SERVICES, INC.
(Name of Subject Company [Issuer])
COMFORCE CORPORATION
(Bidder)
Common Stock, $0.01 par value
(Title of class of securities)
904724101
(CUSIP number of class of securities)
Christopher P. Franco
Chief Executive Officer
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, New York 11092
Telephone: (516) 328-7300
(Name, address and telephone number of person authorized to
receive notices and communications on behalf of bidder)
with a copy to:
David G. Edwards, Esq.
Doepken Keevican & Weiss, Professional Corporation
58th Floor, USX Tower
600 Grant Street
Pittsburgh, PA 15219
Telephone: (412) 355-2743
Calculation of Filing Fee
Transaction Valuation(1) Amount of filing fee(2)
$98,256,245 $19,651.25
___________
(1) For purposes of calculating the filing fee only. This calculation assumes
the purchase of 3,038,543 shares of Common Stock, $.01 par value, of Uniforce
Services, Inc. for $28 per share in cash and 0.5217 shares of Common Stock,
par value $0.01 per share, of COMFORCE Corporation ("COMFORCE Common Stock")
at the average per share price of $8.3125 representing the average of the
high and low prices of COMFORCE Common Stock listed on the American Stock
Exchange on October 23, 1997.
(2) The amount of the filing fee equals 1/50th of one percent of the
aggregate value of cash and securities offered by COMFORCE Corporation for
such number of shares.
* This Statement is also being filed to satisfy the reporting requirements
of Section 13(d) of the Securities Exchange Act of 1934, as amended.
[x] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $19,652 Filing Party: COMFORCE Corporation
Form or Registration No.: Schedule 14D-1 Date Filed: October 27, 1997
<PAGE>
1) Names of Reporting Persons S.S. or I.R.S. Identification No. of above
Persons
COMFORCE Corporation 36-2262248
2) Check the Appropriate Box if a Member of a Group [ ] (a) [ ] (b)
3) SEC Use Only ______________________________________________________
4) Source of Funds
WC, BK, OO
5) [ ] Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
6) Citizenship or Place of Organization
Delaware
7) Aggregate Amount Beneficially Owned by Each Reporting Person
None
8) [ ] Check Box if the Aggregate Amount in Row 7 Excludes Certain Shares
9) Percent of Class Represented by Amount in Row 7
-0-%
10) Type of Reporting Person
CO
[2]
<PAGE>
This Amendment No. 1 to the Schedule 14D-1 of COMFORCE Corporation with
respect to its offer to purchase any and all of the outstanding shares of
common stock of Uniforce Services Inc. is being filed to reflect the content
of the Prospectus Supplement, dated November 19, 1997 (the "Supplement") as
follows:
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Uniforce Services, Inc., a New York
corporation (the "Company"). The address of the Company's principal
executive offices is 415 Crossways Park Drive, Woodbury, NY 11792.
(b) This Statement on Schedule 14D-1 relates to the offer by COMFORCE
Corporation (the "Offeror") a Delaware corporation, to purchase all of
the outstanding shares of common stock, $0.01 par value (the "Shares"),
of the Company at a price per share (the "Per Share Amount") of $28.00 in
cash net to the Seller, without interest thereon and 0.5217 shares of
COMFORCE Common Stock upon the terms and subject to the conditions set
forth in the Prospectus/Proxy Statement, dated October 27, 1997 (the
"Prospectus"), the Supplement, and in the related Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer").
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended as of September 30, 1997, filed with the Securities and Exchange
Commission pursuant to the Exchange Act, as of November 11, 1997, there
were 3,038,543 shares Common Stock issued and outstanding. The
information set forth under the heading "The Transactions - The Tender
Offer" of the Prospectus annexed hereto as Exhibit (a)(1) is incorporated
herein by reference.
(c) The information set forth under the heading "Comparative Market Prices
and Dividends - Uniforce" of the Prospectus is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) This Statement is being filed by the Offeror. The information set
forth under the heading "The Companies - COMFORCE" of the Prospectus
is incorporated herein by reference.
(e) and (f) During the last five years, none of the Offeror, its executive
officers or directors, or any person controlling the Offeror
(i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) was a party
to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which any such person was
or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of
such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The Offeror has not engaged in any transactions with the Company or
its affiliates, executive officer and directors in the past three
years except for the Offer and related transactions. The
information set forth under the heading "Background and Purpose of
the Transactions" of the Prospectus is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth under the heading "The Financing" of the
Prospectus as amended by the Supplement is incorporated herein by
reference. COMFORCE intends to repay such borrowing from operations
or possibly by refinancing although it has no present plans with
respect to a refinancing.
(c) Not applicable.
[3]
<PAGE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth under the headings "Background and Purpose
of the Transactions," "The Transactions - The Tender Offer" and "The
Transactions - The Merger" of the Prospectus is incorporated herein
by reference.
(f)-(g) The information set forth under the heading "The Transactions -
Effect of the Offer and the Merger on the Market for Shares; Stock
Quotation, Registration Under the Exchange Act" of the Prospectus is
incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth under the headings "The Special meeting
-Stockholder Agreement" and "The Transactions - Interests of Certain
Persons in the Transactions" of the Prospectus is incorporated
herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth under the headings "The Special meeting
- -Stockholder Agreement" and "The Transactions - Interests of Certain Persons
in the Transactions" of the Prospectus is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under the heading "Opinion of Financial
Advisor" and "The Transactions - The Tender Offer" of the Prospectus is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth under the heading "COMFORCE Corporation and
Subsidiaries Unaudited Pro Forma Financial Statements" and "Comparative Per
Share Data" of the Prospectus is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth under the heading "The Transactions -
Certain Regulatory Matters" of the Prospectus is incorporated herein
by reference.
(d) Not applicable.
(e) Not applicable.
(f) The information set forth in the Prospectus, the Supplement and the
Letter of Transmittal, copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively, is incorporated herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Prospectus/Proxy Statement, dated October 27, 1997.*
[4]
<PAGE>
(a)(2) Letter of Transmittal.*
(a)(3) Notice of Guaranteed Delivery. *
(a)(4) Letter from the Information Agent to Brokers, Dealers, Commercial
Banks, Trust Companies and other Nominees.*
(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees.*
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.*
(a)(7) Text of Press Release, dated October 27, 1997, issued by the Offeror.*
(a)(8) Chairmen's Letter, dated October 27, 1997.*
(a)(9) Prospectus Supplement, dated November 19, 1997.
(a)(10) Text of Press Release, dated November 19, 1997.
(a)(11) Copy of Current Report on Form 10-Q of Uniforce Services, Inc.*
(b)(1) Purchase Agreement, dated November 19, 1997 between COMFORCE
Operating, Inc. and Natwest Capital Markets Limited regarding 12%
Senior Notes due 2007.**
(b)(2) Purchase Agreement, dated November 19, 1997 between COMFORCE
Corporation and NatWest Capital Markets Limited regarding 15%
Senior Secured PIK Debentures due 2009.**
(b)(3) Commitment Letter, dated November 18, 1997, from Heller Financial, Inc.
(c)(1) Agreement and Plan of Merger, dated as of August 13, 1997, by and
between Offeror, COMFORCE Columbus, Inc., a wholly-owned subsidiary
of the Offeror and the Company.*
(c)(2) Shareholder's Agreement, dated as of August 13, 1997, by and among
COMFORCE Corporation, COMFORCE Columbus, Inc., John Fanning and
Fanning Asset Partners, L.P.*
(c)(3) Registration Rights Agreement, dated as of August 13, 1997, by and
among COMFORCE Corporation, COMFORCE Columbus, Inc., John Fanning
and Fanning Asset Partners, L.P.*
(d) Opinion of Doepken Keevican & Weiss Professional Corporation.*
(e)(1) Prospectus/Proxy Statement filed as Exhibit (a)(i) above.*
(e)(2) Prospectus Supplement filed as Exhibit (a)(9) above.
(f) Not applicable.
* Previously filed
** To be filed by amendment
[5]
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
Dated: November 19, 1997
COMFORCE CORPORATION
By: /s/ Christopher P. Franco
__________________________
Christopher P. Franco
Chief Executive Officer
[6]
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
(a)(1) Prospectus/Proxy Statement, dated October 27, 1997 (included as an
exhibit to Schedule 14D-1 filed by COMFORCE Corporation on October
27, 1997 and incorporated herein by reference).
(a)(2) Letter of Transmittal (included as an exhibit to Schedule 14D-1
filed by COMFORCE Corporation on October 27, 1997 and incorporated
herein by reference).
(a)(3) Notice of Guaranteed Delivery (included as an exhibit to Schedule
14D-1 filed by COMFORCE Corporation on October 27, 1997 and
incorporated herein by reference).
(a)(4) Letter from the Information Agent to Brokers, Dealers, Commercial
Banks, Trust Companies and other Nominees (included as an exhibit
to Schedule 14D-1 filed by COMFORCE Corporation on October 27, 1997
and incorporated herein by reference).
(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees (included as an exhibit to
Schedule 14D-1 filed by COMFORCE Corporation on October 27, 1997
and incorporated herein by reference).
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 (included as an exhibit to Schedule 14D-1 filed
by COMFORCE Corporation on October 27, 1997 and incorporated herein
by reference).
(a)(7) Text of Press Release, dated October 27, 1997, issued by the
Offeror (included as an exhibit to Schedule 14D-1 filed by COMFORCE
Corporation on October 27, 1997 and incorporated herein by
reference).
(a)(8) Chairmen's Letter, dated October 27, 1997 (included as an exhibit
to Schedule 14D-1 filed by COMFORCE Corporation on October 27, 1997
and incorporated herein by reference).
(a)(9) Prospectus Supplement, dated November 19, 1997.
(a)(10) Text of Press Release, dated November 19, 1997.
(a)(11) Current Report on Form 10-Q of Uniforce Services, Inc. (filed on
November 11, 1997).
(b)(1) Purchase Agreement, dated November 19, 1997 between COMFORCE
Operating, Inc. and Natwest Capital Markets Limited regarding 12%
Senior Notes due 2007.**
(b)(2) Purchase Agreement, dated November 19, 1997, between COMFORCE
Corporation and NatWest Capital Markets Limited regarding 15%
Senior Secured PIK Debentures due 2009.**
(b)(3) Commitment Letter, dated November 18, 1997 from Heller Financial,
Inc.
(c)(1) Agreement and Plan of Merger, dated as of August 13, 1997, by and
between the Offeror, COMFORCE Columbus, Inc. and the Company
(included as an exhibit to Current Report on Form 8-K filed by
COMFORCE Corporation on August 20, 1997 and incorporated herein by
reference).
** To be filed by amendment.
[7]
<PAGE>
(c)(2) Shareholder's Agreement, dated as of August 13, 1997, by and among
COMFORCE Corporation, COMFORCE Columbus, Inc., John Fanning and
Fanning Asset Partners, L.P. (included as an exhibit to Current
Report on Form 8-K filed by COMFORCE Corporation on August 20, 1997
and incorporated herein by reference).
(c)(3) Registration Rights Agreement, dated as of August 13, 1997, by and
among COMFORCE Corporation, COMFORCE Columbus, Inc., John Fanning
and Fanning Asset Partners, L.P. (included as an exhibit to
Amendment No. 2 to Registration Statement on Form S-4 filed by the
Company on October 24, 1997 and incorporated herein by reference).
(d) Opinion of Doepken Keevican & Weiss Professional Corporation
(included as an exhibit to Amendment No. 2 to Registration
Statement on Form S-4 filed by the Company on October 24, 1997 and
incorporated herein by reference).
(e)(1) Prospectus/Proxy Statement, dated October 27, 1997 (filed as
Exhibit (a)(1) above).
(e)(2) Prospectus Supplement, dated November 19, 1997 (filed as Exhibit
(a)(9) above).
[8]
<PAGE>
Exhibit 99(a)(9)
COMFORCE CORPORATION
PROSPECTUS SUPPLEMENT
Supplement to the Offer to Purchase any and all
outstanding shares of Common Stock of
Uniforce Services, Inc.
UNIFORCE SERVICES, INC.
PROXY STATEMENT SUPPLEMENT
Supplement to Proxy Statement in connection with
Solicitation of Proxies for Special Meeting of
Shareholders to be held on December 2, 1997.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON NOVEMBER 25, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). SHARES
WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO
THE EXPIRATION OF THE OFFER.
THIS PROSPECTUS/PROXY STATEMENT SUPPLEMENT IS DATED AND IS BEING MAILED TO
SHAREHOLDERS ON OR ABOUT NOVEMBER 19, 1997.
INTRODUCTION
This supplement ("Supplement") amends and supplements the Prospectus/Proxy
Statement, dated October 27, 1997 (the "Prospectus/Proxy Statement") (i)
pursuant to which COMFORCE Corporation, a Delaware corporation ("COMFORCE"), has
offered to purchase all of the outstanding shares of Common Stock, par value
$0.01 per share ("Uniforce Common Stock") of Uniforce Services, Inc., a New York
corporation ("Uniforce"), for a per share price (the "Per Share Amount") of
$28.00 in cash and 0.5217 shares of Common Stock, par value of $0.01 per share
("COMFORCE Common Stock") (the "Offer") and (ii) which was furnished to holders
of Uniforce Common Stock in connection with the solicitation by the Board of
Directors of Uniforce of proxies for use at a special meeting of shareholders of
Uniforce to consider and vote upon an Agreement and Plan of Merger among
COMFORCE, Uniforce and COMFORCE Columbus, Inc., an indirect wholly-owned
subsidiary of COMFORCE ("Subsidiary"), providing for the merger of Uniforce with
Subsidiary, with Uniforce to be the surviving corporation and an indirect
wholly-owned subsidiary of COMFORCE. Capitalized terms used herein but not
otherwise defined herein have the meanings set forth in the Prospectus/Proxy
Statement.
EXTENSION OF THE EXPIRATION DATE
COMFORCE and Subsidiary hereby extend the Expiration Date to 12:00 Midnight,
New York City Time, on November 25, 1997. This is an extension of one day.
Shares which are tendered pursuant to the Offer may be withdrawn at any time
prior to the expiration of the Offer. As of the date of this Supplement, at
least 1,892,406 Shares, representing approximately 62% of the issued and
outstanding Shares, have been tendered into the Offer.
THE FINANCING
On November 19, 1997 COMFORCE, through its wholly-owned subsidiary, COMFORCE
Operating, Inc. ("COI") entered into a Purchase Agreement with NatWest Capital
Markets Limited ("NatWest") pursuant to which NatWest agreed to purchase from
COI $110,000,000 aggregate principal amount of COI's 12% Senior Notes due 2007
(the "Notes") at a purchase price of 97% of the principal amount. Pursuant to
the Purchase Agreement, the Notes will be purchased and sold on or about
November 26, 1997. The material terms of the Notes are as described in the
Prospectus/Proxy Statement under the heading "The Financing--The Notes", except
that the Notes will be senior unsecured obligations of COI and will not be
guaranteed by the subsidiaries of COI.
<PAGE>
On November 19, 1997 COMFORCE entered into a Purchase Agreement with NatWest
pursuant to which NatWest agreed to purchase from COMFORCE $20,000,000 aggregate
principal amount of 15% Senior Secured PIK Debentures due 2009 (the
"Debentures") at 96% of the principal amount. Pursuant to the Purchase
Agreement, the Debentures will be purchased and sold on or about November 26,
1997. The material terms of the Debentures are as described in the
Prospectus/Proxy Statement under the heading "The Financing--The Debentures,"
except that (i) to the extent COMFORCE is prohibited from paying interest in
cash when cash payment is otherwise required by the terms of the Debentures, the
interest payable will increase by 2% per annum, not 20% per annum as described
in the prospectus/proxy statement; and (ii) the Debentures may be redeemed in
full at any time after issuance at a redemption price of 103% if such redemption
occurs in the first year after issuance of the Debentures and of 107.5% if such
redemption occurs anytime after the first year except that if the Debentures are
paid at their term there will be no redemption premium payable. The Debentures
will be sold in units with warrants as described in the Prospectus/Proxy
Statement. Each warrant will entitle the holder to acquire 8.45 shares of
COMFORCE Common Stock at an exercise price of $7.55 per share.
On November 18, 1997, Heller issued to COMFORCE a commitment letter (the
"Commitment Letter") pursuant to which Heller committed, subject to certain
conditions precedent, to provide a $75 million revolving loan facility. This
financing will be provided to the active subsidiaries of COI as borrower and
will be guaranteed by COI. As of the date of this Supplement, the parties are
preparing the documentation of the New Credit Agreement which will be consistent
with the terms of the Commitment Letter. COMFORCE anticipates that the New
Credit Agreement will be executed on or about November 26, 1997 which will also
serve as the Closing Date of the New Credit Agreement. The terms of the
Commitment Letter are consistent with the terms of the Proposal letter described
in the Prospectus/Proxy Statement under the heading "The Financing--The New
Credit Facility".
As a result of the financing described above, the table of sources and uses
of funds necessary to consummate the Offer and Merger and the refinancing of
COMFORCE and Uniforce debt described in the Prospectus/Proxy Statement has been
amended as follows:
<TABLE>
<S> <C> <C> <C>
SOURCES: Notes to be issued by COI ......................................... $ 110.0
Debentures......................................................... 20.0
Bank Financing..................................................... 37.0
Existing Cash Balances............................................. 7.2
---------
Total.......................................................... $ 174.2
---------
---------
USES: Purchase of Shares of Uniforce..................................... $ 93.6
Refinance Existing Debt of Uniforce................................ 36.1
Refinance Existing Debt of COMFORCE................................ 36.5
Transaction Costs.................................................. 8.0
---------
Total.......................................................... $ 174.2
---------
---------
</TABLE>
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
OF COMFORCE CORPORATION AND SUBSIDIARIES
Attached to this supplement are unaudited pro forma financial statements
reflecting the third quarter results of COMFORCE and Uniforce and the interest
rates of the Notes and the Debentures, which differ from the rates assumed in
the unaudited pro forma financial statements included in the Prospectus/Proxy
Statement, which should be substituted in their entirety with the attached
statements:
UNIFORCE SERVICES, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
Due to a clerical error, certain lines from the Uniforce Services, Inc. and
subsidiaries consolidated Balance Sheets for December 31, 1996 and 1995 were
inadvertently omitted from page F-3 of the Prospectus/Proxy Statement. The
following page is a corrected copy of page F-3.
Included with this Supplement for your information is a copy of the
Quarterly Report on Form 10-Q of Uniforce Services, Inc. for the period ended
September 30, 1997.
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ---------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents......................................... $5,283,422 6,444,859
Accounts receivable (net of allowance for doubtful accounts of
$68,000 and $167,000, in 1996 and 1995, respectively)........... 17,224,885 14,827,862
Funding and service fees receivable (net of allowance for doubtful
accounts of $212,000 and $402,000 in 1996 and 1995,
respectively)................................................... 18,759,814 20,918,753
Current maturities of notes receivable from licensees (net of
allowance for possible loss of $42,000 and $67,000 in 1996 and
1995, respectively)............................................. 87,051 132,258
Prepaid expenses and other current assets......................... 1,710,969 1,270,268
Deferred income taxes............................................. 201,149 347,149
---------- ---------
Total current assets............................................ 43,267,290 43,941,149
---------- ---------
Notes receivable from licensees (net of current maturities and
allowance for possible loss of $64,000 and $92,000 in 1996 and
1995, respectively)............................................... 136,157 182,642
Fixed assets--net................................................... 3,775,661 2,125,413
Deferred costs and other assets (net of accumulated amortization of
$2,105,777 and $1,685,970 in 1996 and 1995, respectively)......... 1,402,032 821,244
Cost in excess of fair value of net assets acquired (net of
accumulated amortization of $681,601 and $335,954 in 1996 and
1995, respectively)............................................... 6,388,240 3,525,741
---------- ---------
$54,969,380 50,596,189
---------- ---------
---------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loan payable...................................................... $1,000,000 750,000
Payroll and related taxes payable................................. 6,372,319 7,540,947
Payable to licensees and clients.................................. 1,484,238 2,025,563
Income taxes payable.............................................. -- 351,690
Accrued expenses and other liabilities............................ 5,408,070 4,092,058
---------- ---------
Total current liabilities....................................... 14,264,627 14,760,258
---------- ---------
Loan payable--non-current........................................... 25,750,000 11,250,000
Capital lease obligation--non-current............................... 732,658 426,109
Stockholders' equity:
Common stock $.01 par value, authorized 10,000,000 shares; issued
5,109,788 and 4,991,213 shares in 1996 and 1995, respectively... 51,098 49,912
Additional paid-in capital........................................ 8,825,128 7,789,598
Retained earnings................................................. 27,296,463 23,990,043
---------- ---------
36,172,689 31,829,553
Treasury stock, at cost, 2,084,245 and 829,500 shares in 1996 and
1995, respectively.............................................. (21,950,594) (7,669,731)
---------- ---------
Total stockholders' equity...................................... 14,222,095 24,159,822
---------- ---------
$54,969,380 50,596,189
---------- ---------
---------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COMFORCE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements reflect (i)
the treatment of the operation of the Company's jewelry business prior to
January 1, 1996 as a discontinued operation; (ii) the acquisition of business
operating in the staffing industry, including COMFORCE Telecom, Inc. ("COMFORCE
Telecom") in 1995, Williams Communications Services, Inc. ("Williams"), RRA,
Inc., Project Staffing Support Team, Inc. and DataTech Technical Services, Inc.
(collectively, "RRA"), Force Five, Inc. ("Force Five"), Continental Field
Services Corp. ("Continental"), and AZATAR Computer Systems, Inc. ("AZATAR"),
completed in 1996, RHO Company Incorporated ("Rhotech"), completed in 1997, and
the proposed acquisition of Uniforce Services, Inc. ("Uniforce") as if such
acquisitions had occurred on January 1, 1996 (other than the unaudited pro forma
balance sheet at September 30, 1997, which has been prepared as if all such
acquisitions were consummated as of such date) (and accounted for by the
purchase method); and (iii) the financing of $167 million of debt contemplated
by this transaction as if such debt were outstanding for all periods presented
and replaced all historical financing arrangements. Prior to its acquisition by
the Company, each of these acquired businesses operated as a separate
independent entity. Since the unaudited pro forma combined financial statements
set forth below show the combined financial condition and operating results of
these recently acquired businesses during periods when they were not under
common control or management, the information presented may not be indicative of
the results which would have actually been obtained had such acquisitions been
completed on the dates indicated, or the Company's future financial or operating
results. These unaudited pro forma combined financial statements should be read
in conjunction with the financial statements of the respective entities included
therein, and the related notes thereto.
F-2
<PAGE>
COMFORCE CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
COMFORCE UNIFORCE ADJUSTMENTS(1) (THE COMPANY)
------------ ---------- -------------- --------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents................................... $ 2,670 $ 6,555 $ (7,151) $ 2,074
Restricted cash and equivalents............................. 360 -- -- 360
Accounts receivable and Service fees receivable, net........ 26,547 46,522 -- 73,069
Prepaid expenses............................................ 1,050 803 -- 1,853
Deferred financing fees..................................... 1,628 -- (1,628) --
Income tax receivable....................................... 590 -- -- 590
Deferred income taxes....................................... 2,028 201 3,000 5,229
Other assets................................................ 243 -- -- 243
------------ ---------- -------------- --------------
Total current assets.................................... 35,116 54,081 (5,779) 83,418
------------ ---------- -------------- --------------
Deferred financing fees..................................... -- 324 7,676 8,000
Property and equipment, net of accumulated depreciation..... 1,449 4,336 -- 5,785
Intangible assets, net of accumulated amortization.......... 38,722 7,051 85,614 131,387
Other assets................................................ 452 -- -- 452
------------ ---------- -------------- --------------
Total assets............................................ $ 75,739 $ 65,792 $ 87,511 $ 229,042
------------ ---------- -------------- --------------
------------ ---------- -------------- --------------
Current liabilities:
Borrowings under revolving line of credit................... $ 16,488 $ 2,000 $ (14,488) $ 4,000
Current portion of capitalized lease obligations............ -- 204 -- 204
Accounts payable............................................ 956 1,274 -- 2,230
Accrued expenses............................................ 5,232 2,502 -- 7,734
Accrued payroll and payroll taxes........................... 3,337 7,220 -- 10,557
Income taxes................................................ -- 485 -- 485
------------ ---------- -------------- --------------
Total current liabilities............................... 26,013 13,685 (14,488) 25,210
------------ ---------- -------------- --------------
Capitalized lease obligations............................... -- 577 -- 577
Deferred income tax......................................... 90 -- -- 90
Long-term bank debt......................................... 20,000 34,098 (21,098) 33,000
Notes and Senior Debentures................................. -- -- 130,000 130,000
Other....................................................... 690 -- -- 690
Commitments and contingencies............................... -- -- -- --
Stockholders' equity:
Series F Senior convertible preferred stock................. 1 -- -- 1
Common stock................................................ 137 51 (35) 153
Additional paid-in capital.................................. 30,485 9,028 3,113 42,626
Retained deficit, since January 1, 1996..................... (1,677) -- (1,628) (3,305)
Retained earnings........................................... -- 30,304 (30,304) --
Treasury stock.............................................. -- (21,951) 21,951 --
------------ ---------- -------------- --------------
Total stockholders' equity.............................. 28,946 17,432 (6,903) 39,475
------------ ---------- -------------- --------------
Total liabilities and stockholders' equity.................. $ 75,739 $ 65,792 $ 87,511 $ 229,042
------------ ---------- -------------- --------------
------------ ---------- -------------- --------------
</TABLE>
See notes to unaudited pro forma combined financial statements.
F-3
<PAGE>
COMFORCE CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997(2)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
COMFORCE RHOTECH UNIFORCE ADJUSTMENTS(3) (THE COMPANY)
------------ --------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues.................................... $ 145,986 $ 15,416 $ 132,953 -- $ 294,355
Cost of revenues............................ 127,227 14,411 107,449 -- 249,087
------------ --------- ---------- ------- --------------
Gross profit.............................. 18,759 1,005 25,504 -- 45,268
Operating expenses:
Selling, general and administrative....... 11,842 1,524 17,325 -- 30,691
Depreciation and amortization............. 1,241 40 953 1,480 3,714
------------ --------- ---------- ------- --------------
Income (loss) from operations............... 5,676 (559) 7,226 (1,480) 10,863
Other (income) expense:
Bridge financing costs...................... 5,822 -- -- -- 5,822
Other....................................... (344) 384 (9) -- 31
Interest expense............................ 2,151 207 1,829 11,091 15,278
------------ --------- ---------- ------- --------------
7,629 591 1,820 11,091 21,131
------------ --------- ---------- ------- --------------
Income (loss) before income taxes........... (1,953) (1,150) 5,406 (12,571) (10,268)
Provision (credit) for income taxes......... (646) -- 2,126 (4,721) (3,241)
------------ --------- ---------- ------- --------------
Net income (loss)........................... (1,307) $ (1,150) $ 3,280 $ (7,850) (7,027)
--------- ---------- -------
--------- ---------- -------
Dividends on preferred stock................ 732 18
------------ --------------
Loss available for common stockholders...... $ (2,039) $ (7,045)
------------ --------------
------------ --------------
Loss per share from operations.............. $ (0.15) $ (0.45)
------------ --------------
------------ --------------
Weighted average shares outstanding......... 13,256 15,512(4)
------------ --------------
------------ --------------
</TABLE>
See notes to unaudited pro forma combined financial statements.
F-4
<PAGE>
COMFORCE CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996(2)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FORCE
COMFORCE WILLIAMS RRA FIVE AZATAR CONTINENTAL RHOTECH UNIFORCE
------------ ----------- --------- --------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues......................... $ 33,514 $ 657 $ 22,799 $ 4,598 $ 5,781 $ 7,377 $ 63,556 $ 103,393
Cost of revenues................. 28,690 499 20,959 3,454 4,619 6,259 56,656 82,047
------------ ----- --------- --------- ----------- ----------- --------- ----------
Gross profit..................... 4,824 158 1,840 1,144 1,162 1,118 6,900 21,346
Operating expenses:
Selling, general and
administrative................. 2,891 64 1,375 1,274 555 802 5,321 14,556
Depreciation and amortization.... 343 1 34 24 25 13 226 783
------------ ----- --------- --------- ----------- ----------- --------- ----------
Income (loss) from operations.... 1,590 93 431 (154) 582 303 1,351 6,007
Other expense (income)........... (29) -- -- -- (54) (23) 197 (19)
Interest expense (income)........ 102 -- 34 7 29 5 984 1,564
------------ ----- --------- --------- ----------- ----------- --------- ----------
73 -- 34 7 (25) (18) 1,181 1,545
------------ ----- --------- --------- ----------- ----------- --------- ----------
Income (loss) before income
taxes.......................... 1,517 93 397 (161) 607 321 172 4,462
Provision (credit) for income
taxes.......................... 610 39 -- (49) 254 -- -- 1,695
------------ ----- --------- --------- ----------- ----------- --------- ----------
Net income (loss)................ 907 $ 54 $ 397 $ 112 $ 353 $ 321 $ 172 $ 2,767
----- --------- --------- ----------- ----------- --------- ----------
----- --------- --------- ----------- ----------- --------- ----------
Less dividends on preferred
stock.......................... 193
------------
Add dividends on common stock
equivalents.................... 18
------------
Income (loss) available for
common stockholders............ $ 732
------------
------------
Income (loss) per share from
operations..................... $ 0.06
------------
------------
Weighted average shares
outstanding.................... 12,661
------------
------------
<CAPTION>
PRO FORMA PRO FORMA
MONTARE ADJUSTMENTS(3) (THE COMPANY)
----------- -------------- --------------
<S> <C> <C> <C>
Revenues......................... $ 2,474 -- $ 244,149
Cost of revenues................. 1,671 -- 204,854
----------- -------------- --------------
Gross profit..................... 803 -- 39,295
Operating expenses:
Selling, general and
administrative................. 546 -- 27,384
Depreciation and amortization.... 6 2,184 3,639
----------- -------------- --------------
Income (loss) from operations.... 251 (2,184) 8,272
Other expense (income)........... (14) -- 58
Interest expense (income)........ -- 12,553 15,278
----------- -------------- --------------
(14) 12,553 15,336
----------- -------------- --------------
Income (loss) before income
taxes.......................... 265 (14,737) (7,064)
Provision (credit) for income
taxes.......................... -- (4,509) (1,960)
----------- -------------- --------------
Net income (loss)................ $ 265 $ (10,228) (5,104)
----------- --------------
----------- --------------
Less dividends on preferred
stock.......................... 18(5)
--------------
Add dividends on common stock
equivalents....................
--------------
Income (loss) available for
common stockholders............ $ (5,122)
--------------
--------------
Income (loss) per share from
operations..................... $ (0.40)
--------------
--------------
Weighted average shares
outstanding.................... 12,980(4)
--------------
--------------
</TABLE>
See notes to unaudited pro forma combined financial statements.
F-5
<PAGE>
COMFORCE CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996 (2)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FORCE
COMFORCE WILLIAMS RRA FIVE AZATAR CONTINENTAL RHOTECH UNIFORCE
------------ ----------- --------- --------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues......................... $ 55,867 $ 657 $ 22,799 $ 4,598 $ 6,403 $ 8,368 $ 85,746 $ 142,151
Cost of revenues................. 47,574 499 20,959 3,454 5,054 7,017 76,457 112,663
------------ ----- --------- --------- ----------- ----------- --------- ----------
Gross profit..................... 8,293 158 1,840 1,144 1,349 1,351 9,289 29,488
Operating expenses:
Selling, general and
administrative................. 5,266 64 1,375 1,274 612 898 7,215 20,434
Depreciation and amortization.... 614 1 34 14 28 13 297 1,074
------------ ----- --------- --------- ----------- ----------- --------- ----------
Income(loss) from operations..... 2,413 93 431 (144) 709 440 1,777 7,980
Other (income) expense........... (40) -- (54) (25) 260 (45)
Interest expense (income)........ 201 -- 34 7 29 5 1,317 2,170
------------ ----- --------- --------- ----------- ----------- --------- ----------
161 -- 34 7 (25) (20) 1,577 2,125
------------ ----- --------- --------- ----------- ----------- --------- ----------
Income (loss) before income
taxes.......................... 2,252 93 397 (151) 734 460 200 5,855
Provision (credit) for income
taxes.......................... 900 39 -- (49) 301 -- -- 2,185
------------ ----- --------- --------- ----------- ----------- --------- ----------
Net income (loss)................ 1,352 $ 54 $ 397 $ (102) $ 433 $ 460 $ 200 $ 3,670
----- --------- --------- ----------- ----------- --------- ----------
----- --------- --------- ----------- ----------- --------- ----------
Dividends on preferred stock..... 325
Accretive dividend on Series F
Preferred Stock................ 665
------------
Income (loss) available for
common stockholders............ $ 362
------------
------------
Income (loss) per share from
operations..................... $ 0.03
------------
------------
Weighted average shares
outstanding.................... 12,991
------------
------------
<CAPTION>
PRO FORM PRO FORMA
MONTARE ADJUSTMENTS(3) (THE COMPANY)
----------- -------------- --------------
<S> <C> <C> <C>
Revenues......................... $ 2,474 -- $ 329,063
Cost of revenues................. 1,671 -- 275,348
----------- -------------- --------------
Gross profit..................... 803 -- 53,715
Operating expenses:
Selling, general and
administrative................. 546 -- 37,684
Depreciation and amortization.... 6 2,769 4,850
----------- -------------- --------------
Income(loss) from operations..... 251 (2,769) 11,181
Other (income) expense........... (14) -- 82
Interest expense (income)........ -- 16,607 20,370
----------- -------------- --------------
(14) 16,607 20,452
----------- -------------- --------------
Income (loss) before income
taxes.......................... 265 (19,376) (9,271)
Provision (credit) for income
taxes.......................... -- (5,937) (2,561)
----------- -------------- --------------
Net income (loss)................ $ 265 $ (13,439) $ (6,710)
----------- --------------
----------- --------------
Dividends on preferred stock..... $ 25(5)
Accretive dividend on Series F
Preferred Stock................ $ 100
--------------
Income (loss) available for
common stockholders............ $ (6,835)
--------------
--------------
Income (loss) per share from
operations..................... $ (0.51)
--------------
--------------
Weighted average shares
outstanding.................... 13,527(4)
--------------
--------------
</TABLE>
See notes to unaudited pro forma combined financial statements.
F-6
<PAGE>
COMFORCE CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(1) Adjustment to record the acquisition of Uniforce and related financing as
follows (based on balance sheet data as of September 30, 1997):
<TABLE>
<CAPTION>
(IN
Source of Funds: THOUSANDS)
-----------
<S> <C>
Notes...................................................... $ 110,000
Units...................................................... 20,000
Borrowings under New Credit Facility....................... 37,000
Existing cash balances..................................... 7,151
-----------
Total Sources.................................................. $ 174,151
-----------
-----------
Use of Funds:
Refinance Existing Credit Facility......................... $ 36,488
Refinance Uniforce Credit Facility......................... 36,098
Purchase of Uniforce shares................................ 93,565
Transaction Costs.......................................... 8,000
-----------
Total Uses..................................................... $ 174,151
-----------
-----------
</TABLE>
In addition, the Company will issue approximately 1,585,000 shares of
COMFORCE common stock with a value of $12,157,000, which, together with the
cash portion of the purchase price of $93,565,000, will result in additional
intangibles, principally goodwill, of approximately $85,614,000.
In addition, the Company will write off $1,628,000 of deferred financing fees
associated with COMFORCE's previous financing arrangements, which amount has
not been recorded as an expense in the pro forma statement of operations.
(2) The unaudited pro forma statements of operations include the statements of
operations for the companies listed for the periods prior to their
acquisition by COMFORCE. The unaudited pro forma statement of operations for
the period ended September 30, 1997 presents the financial statements of
COMFORCE and Uniforce for their respective 1997 nine month periods and the
results of operations for Rhotech (which was acquired on February 28, 1997
for a purchase price of $14.8 million and a contingent payout not to exceed
$3.3 million) from January 1, 1997 to February 28, 1997. The unaudited pro
forma statement of operations for the period ended September 30, 1996
presents the financial statements of COMFORCE, Uniforce (to be acquired for
a purchase price of $105.7 million), Rhotech, Force Five (which was acquired
for a purchase price of $2 million and contingent payouts not to exceed $2
million), AZATAR (which was acquired for a purchase price of $5.15 million
and a contingent payout not to exceed $1.2 million) and Continental (which
was acquired for a purchase price of $5 million and contingent payout not to
exceed $1.02 million) for their respective 1996 nine month periods and the
results of operations for companies acquired during the nine month period
ended September 30, 1996 as follows: Williams (which was acquired for a
purchase price of $2 million and a contingent payout not to exceed $2
million) (January 1 through March 3, 1996), RRA (which was acquired for a
purchase price of $5.1 million and a contingent payout not to exceed
$650,000) (January 1 through May 10, 1996) and Montare International
("Montare") January 1, 1996 through May 17, 1996. Montare was acquired by
Uniforce on May 17, 1996. The acquisition of Montare did not have a material
impact on Uniforce results of operations. The unaudited pro forma statement
of operations for the year ended December 31, 1996 includes the annual 1996
results of operations for COMFORCE, Uniforce, and Rhotech and the results of
operations for companies acquired during the period as follows: Williams
(January 1 through March 3, 1996), RRA (January 1 through May 10, 1996),
Force Five (January 1 through July 31, 1996), AZATAR (January 1 through
F-7
<PAGE>
COMFORCE CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
November 3, 1996), Continental (January 1 through November 17, 1996) and
Montare (January 1, 1996 through May 17, 1996). The pro forma results of
operations are presented as if these companies were acquired on January 1,
1996 (and accounted for by the purchase method) and do not purport to be an
indication of the results of operations had these acquisitions been made as
of that date or of results which may occur in the future.
(3) Pro forma adjustments include the following:
<TABLE>
<CAPTION>
YEAR ENDED
NINE MONTHS ENDED DECEMBER
SEPTEMBER 30, 31,
--------------------
1997 1996 1996
--------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Additional amortization of intangibles (a)......... $ (1,480) $ (2,184) $ (2,769)
(Increase) in interest expense (b)................. (11,091) (12,553) (16,607)
Decrease in provision for income taxes (c)......... 4,721 4,509 5,937
--------- --------- -----------
Total pro forma adjustments........................ $ (7,850) $ (10,228) $ (13,439)
--------- --------- -----------
--------- --------- -----------
</TABLE>
(a) Amortization of intangibles assumes all of the acquisitions and
proposed acquisitions occurred on January 1, 1996. The table below reflects
the amortization of intangibles with lives ranging from 5 to 40 years,
including Uniforce goodwill amortized over 40 years:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
--------------------
<S> <C> <C> <C>
1997 1996 1996
--------- --------- -------------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
Pro forma amortization:
Telecom........................................................ $ 194 $ 194 $ 258
Williams....................................................... 39 39 52
RRA............................................................ 127 127 169
Force Five..................................................... 39 39 52
Continental.................................................... 100 100 133
AZATAR......................................................... 168 168 224
Rhotech........................................................ 268 268 357
Uniforce....................................................... 2,028 2,028 2,704
Less: historical amortization...................................... (1,483) (779) (1,180)
--------- --------- ------
Pro forma adjustment............................................... $ 1,480 $ 2,184 $ 2,769
--------- --------- ------
--------- --------- ------
</TABLE>
The allocation of excess purchase price over the fair value of the assets
acquired has not been finalized and management believes that any change to
the allocation will not have a material effect on the pro forma financial
statements of COMFORCE.
(b) The pro forma adjustment to interest expense reflects interest
expense on the placement of the Notes and Senior Debentures, borrowings
under the New Credit Facility and capital lease obligations aggregating
$167.8 million. Pro forma interest expense has been calculated using an
average interest rate of 12.20% per annum plus the amortization of debt
financing costs. Financing costs do not include the effects of the warrants.
(c) The pro forma adjustment for income taxes reflects the tax effect of
the proforma adjustments (excluding non-deductible amortization), the tax
effect of S Corporation earnings treated as C
F-8
<PAGE>
COMFORCE CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
Corporation earnings and the tax benefit of losses by other entities within
the pro forma combined group.
(4) Pro forma weighted average shares outstanding are calculated as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
--------------------
<S> <C> <C> <C>
1997 1996 1996
--------- --------- -------------
<CAPTION>
(IN THOUSANDS OF SHARES)
<S> <C> <C> <C>
Historical weighted average shares outstanding..................... 13,256 12,661 12,991
Shares issued--Uniforce acquisition................................ 1,585 1,585 1,585
Shares issued as compensation...................................... * * *
Shares issued--Telecom acquisition................................. * * *
Shares issued--Force Five acquisition.............................. * * *
Shares issued--AZATAR acquisition.................................. * 243 *
Shares issued--Continental acquisition............................. * 37 *
Common stock sold to fund Continental acquisition.................. * 460 *
Common stock equivalents Series D and E preferred stock............ 671 1,107 893
Common stock equivalents on Series F preferred stock............... ** ** **
Warrants issued in connection with the Continental acquisition..... ** ** **
Warrants issued in connection with the Telecom acquisition......... ** ** **
Shares issued to certain shareholders.............................. * ** **
Common stock equivalents which have become anti-dilutive........... ** (3,113) (1,942)
Contingent shares.................................................. ** ** **
--------- --------- ------
Total Pro Forma Shares......................................... 15,512 12,980 13,527
--------- --------- ------
--------- --------- ------
</TABLE>
- ------------------------
* Included in historical weighted average shares outstanding.
** Excluded as the effect would be anti-dilutive.
(5) Pro forma dividends for all periods presented represent dividends and
accretive dividends on $500,000 of Series F preferred stock remaining
outstanding as of September 30, 1997 and deemed outstanding for all periods
presented. Proceeds from this transaction of $167 million have been deemed
to be fully outstanding on a pro forma basis for all periods presented.
Accordingly, Series D preferred stock, the proceeds of which were utilized
for working capital purposes, and Series E preferred stock, the proceeds of
which were utilized to acquire RRA, have been deemed to have been converted
to common stock effective January 1, 1996, with the effects of such common
shares included in weighted average shares outstanding for all periods
presented.
F-9
<PAGE>
Exhibit 99(a)(10)
FOR IMMEDIATE RELEASE
November 19, 1997
COMFORCE CORPORATION ANNOUNCES $130 MILLION RULE 144A DEBT
FINANCING FOR TENDER OFFER
FOR UNIFORCE SERVICES, INC.;
EXTENDS OFFER FOR ONE DAY
Lake Success, NY, November 19, 1997 -- COMFORCE Corporation (ASE: CFS), a
leading provider of high-tech professional staffing, consulting and
outsourcing services, announced today two offerings pursuant to Rule 144A:
(i) $110 million of 12% Senior Notes due 2007 issued by COMFORCE Operating,
Inc., a wholly-owned subsidiary of COMFORCE and (ii) 20,000 units
representing $20 million of 15% Senior Secured PIK Debentures due 2009 issued
by COMFORCE Corporation with warrants to purchase 1.0% of the fully diluted
common shares of COMFORCE at an exercise price of $7.55 per share.
Additionally, COMFORCE announced that it has extended the tender offer for
one day so that the tender offer will now expire at 12:00 Midnight on
November 25, 1997. At the time of this press release, at least 1,892,406
shares representing approximately 62% of the issued and outstanding shares of
Uniforce Common Stock have been deposited into the offer.
The Notes will be unsecured. Interest on the Notes will be payable
semi-annually in cash. Except in certain limited circumstances, the COMFORCE
subsidiary may not redeem the Notes for five years after which they may be
redeemed at a price which, until after 8 years from issuance, will include a
redemption premium. Additionally, at any time and from time to time until
three years after issuance of the Notes, the COMFORCE subsidiary may redeem
up to 35% of the aggregate principal amount of the Notes with the cash
proceeds of one or more public offerings of equity securities of COMFORCE at
a redemption price which will include a redemption premium. The closing of
the purchase of the Notes is expected to occur on or about November 26, 1997.
Interest on the Debentures will be payable semi-annually. For five years
following issuance of the Debentures, interest will be payable either in cash
or added to the principal of the Debentures, at the option of COMFORCE.
Thereafter, interest will be payable in cash. The Debentures will mature in
twelve years. COMFORCE may call the Debentures for payment at any time. If
the Debentures are redeemed in the first year after issuance a redemption
premium of 103% will be paid and if the Debentures are redeemed thereafter a
redemption premium of 107.5% will be paid unless the Debentures are paid at
term in which case no premium will be paid. The Debentures will be sold along
with warrants to purchase a total of 169,000 shares of COMFORCE Common Stock.
The closing of the purchase of the Debentures is expected to occur on or
about November 26, 1997.
COMFORCE will use the net proceeds of the offerings, together with
existing cash and borrowings of approximately $37 million under a new $75
million secured bank credit facility to: (i) finance the $93.6 million cash
purchase price for the outstanding common stock of Uniforce Services, Inc.
(ASE:UFR), (ii) refinance existing COMFORCE and Uniforce debt of
approximately $72.6 million, and (iii) pay $8.0 million of estimated fees and
expenses associated with the offerings and the acquisition.
The new 12% Senior Notes and the 15% Senior Secured PIK Debentures have
not been registered under the Securities Act of 1933, as amended or any other
state securities laws and may not be offered or sold except pursuant to an
exemption from, or in a transaction not subject to the registration
requirements of the Securities Act of 1933 and applicable state securities
laws.
Additionally, COMFORCE has received a commitment letter from Heller
Financial, Inc. pursuant to which Heller has agreed to provide a $75 million
senior secured credit facility to COMFORCE through its operating
subsidiaries. The credit facility will be available for a five year term at
an initial interest rate, at COMFORCE's option, equal to Heller's base rate
plus 0.50% or LIBOR plus 2.25%.
<PAGE>
Additional terms and conditions of each of these financing sources are
included in a Prospectus Supplement being mailed to all Uniforce shareholders
today and to be filed today with the Securities Exchange Commission as part
of COMFORCE's Amendment No. 1 to its Schedule 14D-1.
COMFORCE Corporation is a leading provider of staffing, consulting and
outsourcing solutions focused on the high technology needs of the
telecommunications, information technology and technical market sectors
worldwide. As the result of the acquisition, the Company will operate 86
offices nationwide and has over 2,300 clients, comprised primarily of Fortune
500 companies. COMFORCE will have approximately 7,800 highly skilled billable
employees on assignment in six continents.
<PAGE>
[LETTERHEAD]
Exhibit 99(b)(3)
November 18, 1997
VIA FACSIMILE AND FEDERAL EXPRESS
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, New York 11042
ATTENTION: Christopher P. Franco, Chief Executive Officer
Paul J. Grillo, Chief Financial Officer
Re: Credit Facility for
COMFORCE Operating Company, Inc.
Gentlemen:
Heller Financial, Inc. ("Heller") is pleased to advise you that its Executive
Credit Committee has approved a senior secured credit facility, subject to the
terms and conditions hereinafter set forth, in the aggregate principal amount
of $75,000,000 (the "Credit Facility"). The Credit Facility will be provided to
COMFORCE Operating Company, Inc. for the purpose of: (i) refinancing existing
indebtedness of COMFORCE Corporation ("Parent") and Uniforce Services, Inc.
("Target") (ii) providing general working capital for Borrower (defined below)
as well as to (iii) provide funds for future acquisitions.
BORROWER: Direct and indirect subsidiaries of COMFORCE
Operating Company, Inc. ("Operating"), a
wholly-owned subsidiary of Parent (including, at
Lender's discretion, subsidiaries hereafter
acquired or created).
GUARANTORS: Operating and all of its subsidiaries.
LENDER: Heller and such other financial institutions that
become a party to the loan agreement.
AGENT: Heller.
<PAGE>
REVOLVER: A five year, $75,000,000 revolving loan facility
("Revolver") based upon an advance rate up to 85%
of the net amount of eligible accounts receivable.
Eligible accounts shall consist of accounts
satisfying Agent's eligibility and reserve
requirements. The Revolver shall include a
$10,000,000 sub-limit for Letters of Credit. The
outstanding face amount of all Letters of Credit
shall be reserved against availability under the
Revolver.
INTEREST: Interest shall be calculated based on the Base
Rate or, at the Borrower's option, based on the
LIBOR Rate. From the Closing Date to Heller's
receipt of the December 31, 1998 audited financial
statements (the "Margin Date"), Borrower shall pay
interest under the Revolver on loans which are
Base Rate loans at the Base Rate plus 0.50% and on
loans which are LIBOR loans at LIBOR plus 2.25%.
Subsequent to the Margin Date, the interest rate
margin shall be subject to a quarterly adjustment
based on a grid as detailed below. Such grid
shall be based on a Leverage Ratio (such ratio to
be defined as the ratio of Funded Debt (to be
defined in the Credit Facility Documentation based
on quarterly average funded debt outstanding
excluding subordinated debt on which interest is
being paid in kind) to Adjusted EBITDA (to be
defined in the Credit Facility Documentation but
to be calculated on a rolling four (4) quarter
basis and excluding non-cash charges)).
Not withstanding the foregoing, upon the
occurrence of a "Deleveraging Event" (to be
defined in the Credit Facility Documentation), the
Margin Date shall be the later of (i) May 31, 1997
and (ii) the date of such Deleveraging Event.
Leverage Ratio Base Rate LIBOR Rate
> 6.00 .75 2.50
6.00 > x > 5.50 .50 2.25
-
5.50 > x > 4.50 .25 2.00
-
4.50 > x > 4.00 .00 1.75
-
< 4.00 -.25 1.50.
-
2
<PAGE>
INTEREST
RATE
DEFINITIONS:
BASE
RATE: For purpose of this letter, "Base Rate" means a
variable rate of interest per annum calculated
daily on the basis of a 360-day year equal to the
rate of interest from time to time published by
the Board of Governors of the Federal Reserve
System. The definition of Base Rate used in this
letter has been abbreviated and the Credit
Facility Documentation shall set forth additional
detail regarding the determination of the Base
Rate from time to time and how the method for
determining the Base Rate may change.
LIBOR
RATE: For purposes of this letter, "LIBOR Rate" means,
for each interest period, the rate of interest
determined by Agent at which deposits in U.S.
Dollars for the relevant interest period are
offered based on information presented on the
Reuters Science LIBO Page as of 11:00 a.m. (London
time) on the day which is two business days prior
to the first day of such interest period. The
definition of LIBOR Rate used in this letter has
been abbreviated and the Credit Facility
Documentation shall set forth appropriate detail
relating to the exact method of calculation and
relevant reserve requirements.
If the Facility has not been syndicated prior to
the Closing Date, the Borrower agrees that during
the 60 day period following the Closing Date, any
breakage costs, charges or fees incurred with
respect to Eurodollar Loans on account of the
Agent's syndication efforts, shall immediately be
reimbursed by the Borrower to the Agent. The
Borrower agrees that such right of reimbursement
is to be in addition to and not in limitation of
customary cost and yield protection.
SECURITY: All obligations shall be secured by a first
priority, senior, valid and perfected security
interest in and lien upon all of Operating's and
all of Operating's direct and indirect
subsidiaries' now owned and hereafter acquired
real and personal property and all proceeds
thereof, and a pledge of 100% of the capital stock
of all of Operating's direct and indirect
subsidiaries (the "Collateral"). Liens on the
Collateral in favor of persons other than Agent
shall be prohibited.
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COLLECTIONS: Upon the occurrence of a "Triggering Event" (to be
defined as the event where availability is less
than or equal to $10,000,000 or upon the
occurrence of specified events of default beyond
applicable cure periods as defined in the Credit
Facility Documentation) the Borrower's customers
shall be directed to make all payments to a lock
box/depository account at a bank acceptable to
Agent. For the purpose of calculating interest,
all proceeds received by Agent shall be credited
to Borrower's loan account on the same business
day of the Agent's receipt of immediately
available federal funds in Agent's account at The
First National Bank of Chicago.
FEES: Borrower shall be required to pay the following
fees:
CLOSING FEE: As agreed to in a separate fee agreement.
COMMITMENT As agreed to in a separate fee agreement.
FEE:
UNUSED 0.375% per annum on the average daily balance of
FACILITY FEE: the unused portion of the Revolver, payable
monthly in arrears.
LETTER OF 1.50% per annum on the average undrawn face amount
CREDIT FEE: of all Letters of Credit outstanding, payable
monthly in arrears. In addition, Borrower shall
pay all fees, costs and expenses due to banks for
any bank letters of credit issued for Borrower's
account.
AGENT'S As agreed to in a separate fee agreement.
FEE:
AUDIT $750 per audit day per Heller auditor, plus
FEE: out-of-pocket expenses, or the out of pocket fees,
costs and expenses paid to third party auditors.
PREPAYMENT As agreed to in a separate fee agreement.
FEE:
CONDITIONS On or before the closing date the following
PRECEDENT: conditions precedent shall have been satisfied in
a manner, by parties, and with results
satisfactory to Heller:
AUDIT/ An audit by Heller or its representatives of
DUE DILIGENCE: Borrower's and Target's business, operations,
financial condition, and assets, including the
opportunity to meet with Borrower's and Target's
management and to interview several of Borrower's
customers.
ENVIRONMENTAL Agent shall be satisfied that there are no
MATTERS: existing environmental liabilities which shall
have a material adverse impact on the financial
condition or prospects of Borrower.
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INSURANCE: Receipt of insurance policies or binders for
insurance in types and amounts, under terms and
conditions satisfactory to Agent with appropriate
endorsements naming Agent as loss payee.
PARENT Parent shall issue, at par, debt of not less than
DEBT: $20,000,000 which shall have a payment in kind
interest option during the term of the Credit
Facility. The Parent Debt shall have terms and
conditions acceptable to Agent and may be secured
by the capital stock of Operating.
OPERATING DEBT: Operating shall issue, at par, senior unsecured
notes of not less than $110,000,000. All senior
unsecured notes shall have terms and conditions
acceptable to Agent.
CREDIT FACILITY The Credit Facility shall be subject to formal
DOCUMENTATION: loan documentation, fully acceptable to Agent and
its counsel. The documentation shall contain such
terms, conditions, representations, warranties,
covenants and events of default customary for
loans of this type as Agent may require.
FINANCIAL The Credit Facility Documentation shall contain
COVENANTS: all financial covenants contained in any
subordinated debt and senior unsecured note
documentation. In addition, if and after
availability under the Revolver falls below
$12,500,000, Borrower shall be subject to the
following financial covenants: (i) minimum EBITDA,
and (ii) a minimum fixed charge coverage ratio (to
be defined in the Credit Facility Documentation)
of not less than 1.0 to 1.0; provided that, once
during any 60 day period, Borrower shall have five
(5) business days with which to reinstate the
$12,500,000 minimum availability. If applicable,
the level of minimum EBITDA and fixed charge
coverage shall be tested quarterly and will be
calculated based on a rolling four quarter
measurement period. The anticipated levels for
minimum EBITDA shall be determined by Heller based
on the Borrower's financial projections delivered
heretofore.
In addition, there shall be included such
covenants as shall be customary for Agent for
agented transactions of this type, including, but
not limited to, limitations upon dividends and
transactions with affiliates. Financial and other
reporting requirements shall be as set forth in
the Credit Facility Documentation.
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<PAGE>
PERMITTED The Borrower shall have the ability to undertake
ACQUISITIONS: the acquisition of businesses substantially
similar to that of the Borrower ("Acquisition
Transactions"). Any Acquisition Transaction(s)
shall be subject to the following limitations:
(i) the Acquisition Transaction must be structured
as an asset purchase, (ii) the total aggregate
consideration for all Acquisition Transaction(s)
may not be greater than $60,000,000, (iii) after
giving effect to the Acquisition Transaction(s)
(e.g., including any and all liquidity events
associated with the Acquisition Transaction(s) and
giving effect to payables being paid in accordance
with normal terms, providing for payment of any
accrued interest on any subordinated debt, and any
and all other liquidity events associated with the
Borrower), there shall be a minimum of $15,000,000
Undrawn Availability (to be defined in the Credit
Facility Documentation) under the Revolver, (iv)
receipt of collateral and security documentation
reasonably satisfactory to Agent, it being further
understood that the Agent shall have the ability
to request such other Acquisition Transaction
documentation as it deems reasonable and (v) Agent
shall receive a first and only priority security
interest in the assets acquired.
WARRANTIES: Warranties shall include, but not be limited to,
evidence satisfactory to Agent that (i) the
financial condition, projections and prospects of
Borrower are as represented, (ii) Borrower has
complied with all applicable laws, (iii) no
material adverse condition affecting, or change in
the business, assets, financial condition,
prospects or projected cash flows of Borrower or
Target exists or has occurred and (iv) Parent and
Operating shall at all times operate solely as
holding companies.
OTHER The Credit Facility and the Operating Debt
INDEBTEDNESS: referenced above shall be the only funded debt
allowed to be incurred by Borrower except for (i)
subordinated seller paper issued by Borrower on
terms and conditions acceptable to Agent in
connection with Permitted Pcquisitions provided
that such paper shall not exceed $5,000,000 per
acquisition and $20,000,000 in the aggregate at
any time and (ii) specific amounts of other
indebtedness which shall be specified in the
documentation.
The Parent Debt referenced above shall be the only
funded debt allowed to be incurred by COMFORCE
Corporation.
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SOLVENCY: Borrower shall be required to satisfy Agent on the
closing date that after giving effect to the
transactions contemplated by the Credit Facility,
that Parent on a consolidated basis is solvent,
able to meet its obligations as they mature and
has sufficient capital to enable it to operate its
business. Borrower shall have not less than
$17,500,000 in excess availability under the
Revolver on the closing date, after giving effect
to the payment of all fees, costs and expenses
associated with the transaction.
CAPITAL, The acquisition of Uniforce Services, Inc. by
ORGANIZATION, COMFORCE Corporation (the "Acquisition") shall be
LEGAL STRUCTURE, structured and financed substantially as described
TAX in the draft S-4 Registration statement forwarded
to Agent on September 15, 1997.
Borrower's tax assumptions, capital, organization,
ownership and legal structure must be satisfactory
to Agent and not impair the ability of Agent to
enforce its claims against the Collateral; all
Collateral must be freely pledgeable as collateral
security for the Credit Facility. The exact legal
structure, as it relates to Borrower, Guarantor
and cross corporate Guaranties, will be determined
prior to documentation.
ACQUISITION
DOCUMENTATION: Borrower shall be required to make available to
Agent and Lenders, in preliminary and final form
as and when created, all documentation pertaining
to the Acquisition, including, without limitation,
all disclosure schedules, exhibits and appendices
to such documentation (collectively, the
"Transaction Documents"). The Transaction
Documents shall be subject to Agent's prior review
and approval.
EXPENSES: By signing this letter, Parent and Borrower agree
to pay on demand all costs, fees and expenses
incurred or to be incurred by Agent in connection
with the examination, review, documentation,
administration, syndication and/or closing of the
Credit Facility, including but not limited to, per
diem charges of Agent's internal auditors, counsel
fees (including the allocated cost of internal
counsel), consultants, appraisers and auditor fees
and expenses; and all other out-of-pocket expenses
relating to any of the foregoing, whether or not
the financing transaction contemplated by this
letter is closed.
DEPOSIT: A deposit of $80,000 (the "Deposit") has been paid
by Borrower. The deposit will be returned at such
time as: (i) the transaction has closed, (ii) the
legal expenses of Agent's outside counsel have
been paid, and (iii) all other reimbursable
expenses incurred by Agent in connection with the
proposed financing have been reimbursed
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PARTICIPATION/ Lender shall have the right at any time to sell,
ASSIGNMENT assign or transfer any portion of the Credit
Facility to one or more other lenders. In
connection therewith, Lender shall have the right
to disclose to such prospective lender(s) on a
confidential basis any and all information
regarding or relating to Borrower or this
transaction. Borrower shall agree to make its
senior management and facilities available to
prospective assignees/participants both prior to
and after closing as reasonably required by
Lender.
INDEMNIFICATION By signing this letter, Parent and Borrower agree
AND LIMITATION to indemnify Agent and Lender, their directors,
OF LIABILITY: officers, employees agents, auditors, accountants,
and consultants, counsel and affiliates from, and
hold each of them harmless against, any and all
losses, liabilities, claims, damages or expenses
including amounts paid in settlement, incurred by
any of them arising out of or by reason of any
investigation, litigation or other proceeding
brought or threatened relating to any loan made or
proposed to be made to Borrower in connection
herewith.
Parent and Borrower agree that in any action
arising from an alleged breach of this letter the
only damages that may be sought are those which
are direct and reasonably foreseeable as the
probable result of any breach hereof and any right
to indirect, special or punitive damages or lost
anticipated profits is hereby waived.
This letter has been issued in reliance upon the accuracy of all information
furnished to Heller by or on behalf of Borrower and is delivered to you on the
condition that neither it nor its substance will be disclosed to any third party
except those in a confidential relationship to you. No disclosure shall be made
to any other financial institution or intermediary
This commitment is available for acceptance only through the close of business
on November 21, 1997. Your acceptance will be indicated by your signing and
returning the enclosed copy of this letter on or before November 21, 1997. If
accepted by November 21, 1997, unless the Credit Facility sooner closes, this
commitment shall expire on December 31, 1997.
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Upon your acceptance hereof, this commitment letter shall supersede and take the
place of any and all commitment letterswhich have been issued by Heller
heretofore.
This letter may be executed by the parties hereto in any number of counterparts
and each executed copy shall be an original for all purposes, provided that all
parties hereto have executed a counterpart.
Very truly yours,
HELLER FINANCIAL, INC.
By: /s/ Andrew G. Jakubek
-----------------------------
Andrew G. Jakubek
Vice President
AGREED:
COMFORCE Corporation
(for itself and Borrower)
By: /s/ Paul J. Grillo
_________________________________
Title: Vice President--Finance
_________________________________
Date: November 19, 1997
_________________________________
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