<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934*
COMFORCE CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
20038K109
- --------------------------------------------------------------------------------
(CUSIP Number)
J. David Washburn, Esq.
Arter & Hadden
1717 Main Street, Suite 4100
Dallas, Texas 75201 (214) 761-4309
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 26, 1996
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box.
Check the following box if a fee is being paid with this Statement. [ ]
(A fee is not required only if the Reporting Person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent (5%)
of the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of less than five percent
(5%) of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject
class of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to
the liabilities of that section of the Exchange Act but shall be subject to all
other provisions of the Exchange Act (however, see the Notes).
<PAGE> 2
CUSIP No. 20038K109 13D
<TABLE>
<CAPTION>
<S> <C> <C>
(1) Name of Reporting Person Infinity Investors Limited
I.R.S. Identification N/A
No. of Above Person
(2) Check the Appropriate Box if a (a)[x]
Member of a Group* (b)[ ]
(3) SEC Use Only
(4) Source of Funds* WC
(5) Check Box if Disclosure of Legal [ ]
Proceedings is Required Pursuant
to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization Nevis, West Indies
Number of Shares (7) Sole Voting 812,170
Power
Beneficially
(8) Shared Voting 218,758
Owned by Each Power
Reporting Person (9) Sole Dispositive 812,170
Power
with:
(10) Shared Dispositive 218,758
Power
(11) Aggregate Amount Beneficially Owned 1,030,928
by Each Reporting Person
(12) Check Box if the Aggregate Amount in [ ]
Row (11) Excludes Certain Shares*
(13) Percent of Class Represented by 9.3%
Amount in Row (11)
(14) Type of Reporting Person* CO
</TABLE>
* SEE INSTRUCTIONS
<PAGE> 3
CUSIP No. 20038K109 13D
<TABLE>
<S> <C> <C>
(1) Name of Reporting Person Seacrest Capital Limited
I.R.S. Identification N/A
No. of Above Person
(2) Check the Appropriate Box if a (a)[x]
Member of a Group* (b)[ ]
(3) SEC Use Only
(4) Source of Funds* WC
(5) Check Box if Disclosure of Legal [ ]
Proceedings is Required Pursuant
to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization Nevis, West Indies
Number of Shares (7) Sole Voting 129,250
Power
Beneficially
(8) Shared Voting 901,678
Owned by Each Power
Reporting Person (9) Sole Dispositive 129,250
Power
with:
(10) Shared Dispositive 901,678
Power
(11) Aggregate Amount Beneficially Owned 1,030,928
by Each Reporting Person
(12) Check Box if the Aggregate Amount in [ ]
Row (11) Excludes Certain Shares*
(13) Percent of Class Represented by 9.3%
Amount in Row (11)
(14) Type of Reporting Person* CO
</TABLE>
* SEE INSTRUCTIONS
<PAGE> 4
CUSIP No. 20038K109 13D
<TABLE>
<S> <C> <C>
(1) Name of Reporting Person Fairway Capital Limited
I.R.S. Identification N/A
No. of Above Person
(2) Check the Appropriate Box if a (a)[x]
Member of a Group* (b)[ ]
(3) SEC Use Only
(4) Source of Funds* WC
(5) Check Box if Disclosure of Legal [ ]
Proceedings is Required Pursuant
to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization Nevis, West Indies
Number of Shares (7) Sole Voting 83,508
Power
Beneficially
(8) Shared Voting 947,420
Owned by Each Power
Reporting Person (9) Sole Dispositive 83,508
Power
with:
(10) Shared Dispositive 947,420
Power
(11) Aggregate Amount Beneficially Owned 1,030,928
by Each Reporting Person
(12) Check Box if the Aggregate Amount in [ ]
Row (11) Excludes Certain Shares*
(13) Percent of Class Represented by 9.3%
Amount in Row (11)
(14) Type of Reporting Person* CO
</TABLE>
* SEE INSTRUCTIONS
<PAGE> 5
CUSIP No. 20038K109 13D
<TABLE>
<S> <C> <C>
(1) Name of Reporting Person Infinity Emerging Opportunities Limited
I.R.S. Identification N/A
No. of Above Person
(2) Check the Appropriate Box if a (a)[x]
Member of a Group* (b)[ ]
(3) SEC Use Only
(4) Source of Funds* WC
(5) Check Box if Disclosure of Legal [ ]
Proceedings is Required Pursuant
to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization Nevis, West Indies
Number of Shares (7) Sole Voting 4,000
Power
Beneficially
(8) Shared Voting 1,026,928
Owned by Each Power
Reporting Person (9) Sole Dispositive 4,000
Power
with:
(10) Shared Dispositive 1,026,928
Power
(11) Aggregate Amount Beneficially Owned 1,030,928
by Each Reporting Person
(12) Check Box if the Aggregate Amount in [ ]
Row (11) Excludes Certain Shares*
(13) Percent of Class Represented by 9.3%
Amount in Row (11)
(14) Type of Reporting Person* CO
</TABLE>
* SEE INSTRUCTIONS
<PAGE> 6
CUSIP No. 20038K109 13D
<TABLE>
<S> <C> <C>
(1) Name of Reporting Person Global Growth Limited
I.R.S. Identification N/A
No. of Above Person
(2) Check the Appropriate Box if a (a)[x]
Member of a Group* (b)[ ]
(3) SEC Use Only
(4) Source of Funds* WC
(5) Check Box if Disclosure of Legal [ ]
Proceedings is Required Pursuant
to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization Nevis, West Indies
Number of Shares (7) Sole Voting 2,000
Power
Beneficially
(8) Shared Voting 1,028,928
Owned by Each Power
Reporting Person (9) Sole Dispositive 2,000
Power
with:
(10) Shared Dispositive 1,028,928
Power
(11) Aggregate Amount Beneficially Owned 1,030,928
by Each Reporting Person
(12) Check Box if the Aggregate Amount in [ ]
Row (11) Excludes Certain Shares*
(13) Percent of Class Represented by 9.3%
Amount in Row (11)
(14) Type of Reporting Person* CO
</TABLE>
* SEE INSTRUCTIONS
<PAGE> 7
SCHEDULE 13D
Filed Pursuant to Rule 13d-1
1. SECURITY AND ISSUER.
This original Statement on Schedule 13D (this "Statement") relates to
the common stock, par value $.01 per share (the "Common Stock") of COMFORCE
Corporation, a Delaware corporation, which has its principal executive offices
located at 2001 Marcus Avenue, Lake Success, New York 11042 (the "Issuer").
2. IDENTITY AND BACKGROUND.
Group Filing Pursuant to Rule 13d-1(f)(1) promulgated
Only under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"),
this Statement is filed jointly by (i)
Infinity Investors Limited, a Nevis, West
Indies business corporation ("Infinity"),
(ii) Seacrest Capital Limited, a Nevis, West
Indies business corporation ("Seacrest"),
(iii) Fairway Capital Limited, a Nevis, West
Indies corporation business ("Fairway"), (iv)
Infinity Emerging Opportunities Limited, a
Nevis, West Indies business corporation
("Emerging Opportunities") and (v) Global
Growth Limited, a Nevis, West Indies business
corporation ("Global") (collectively, the
"Reporting Persons") as a "group" as such
term is used in Rule 13d-5 of the Exchange
Act. However, each of such Reporting Persons
expressly states that it is included in this
Statement solely for the purpose of
presenting information with respect to the
ownership of the Common Stock of the Issuer
and disclaims any knowledge as to any
statements made herein by or on behalf of the
other Reporting Persons. Each of the
Reporting Persons disclaims beneficial
ownership of the shares of Common Stock held
(or acquirable upon exercise of derivative
securities held) by the other Reporting
Persons pursuant to Rule 13d-4 of the
Exchange Act. The Reporting Persons have
included as Exhibit 99.1 to this Statement an
agreement in writing that this Statement is
filed on behalf of each of them.
(a) - (c) Each of the Reporting Persons is
and (f) principally engaged in the business of
acquiring, holding, selling, trading,
exchanging or otherwise investing in
securities and other financial assets. The
principal business and principal office of
each of the Reporting Persons is located at
Memorial Square, P.O. Box 556, Charleston,
Nevis, West Indies. The mailing address of
each of the Reporting Persons is 27
Wellington Street, Cork, Ireland. The name,
citizenship (or place of organization, as
applicable), business address, present
principal occupation or employment of each of
the executive officers, directors and persons
who may deemed in control of Infinity, if
any, (and the executive officers and
directors of any entity which could be deemed
ultimately in control of Infinity) are set
forth on Schedule 1 attached hereto and
incorporated herein by reference. Such
persons are collectively referred to herein
as the "Infinity Individuals." The name,
citizenship (or place of organization, as
applicable), business address, present
principal occupation or employment of each of
the
<PAGE> 8
executive officers, directors and persons who
may be deemed in control of Seacrest, if any
(and the executive officers and directors of
any entity which could be deemed ultimately
in control of Seacrest), are set forth on
Schedule 2 attached hereto and incorporated
herein by reference. Such persons are
collectively referred to herein as the
"Seacrest Individuals." The name, citizenship
(or place of organization, as applicable),
business address, present principal
occupation or employment of each of the
executive officers, directors and persons who
may be deemed in control of Fairway, if any
(and the executive officers and directors of
any entity which could be deemed ultimately
in control of Fairway) are set forth on
Schedule 3 attached hereto and incorporated
herein by reference. Such persons are
collectively referred to herein as the
"Fairway Individuals." The name, citizenship
(or place of organization, as applicable),
business address, present principal
occupation or employment of each of the
executive officers, directors and persons who
may be deemed in control of Emerging
Opportunities, if any (and the executive
officers and directors of any entity which
could be deemed ultimately in control of
Emerging Opportunities) are set forth on
Schedule 4 attached hereto and incorporated
herein by reference. Such persons are
collectively referred to herein as the
"Emerging Opportunities Individuals." The
name, citizenship (or place of organization,
as applicable), business address, present
principal occupation or employment of each of
the executive officers, directors and persons
who may be deemed in control of Global
Growth, if any (and the executive officers
and directors of any entity which could be
deemed ultimately in control of Global
Growth) are set forth on Schedule 5 attached
hereto and incorporated herein by reference.
Such persons are collectively referred to
herein as the "Global Growth Individuals."
The Infinity Individuals, Seacrest
Individuals, Fairway Individuals, Emerging
Opportunities Individuals and Global Growth
Individuals are collectively referred to
herein as the "Individuals."
(d) - (e) During the last five (5) years, none of the
Reporting Persons nor any of the Individuals
has been convicted in any criminal proceeding
(excluding traffic violations or similar
misdemeanors) and none of the Reporting
Person nor any of the Individuals is a party
to a civil proceeding of a judicial or
administrative body of competent jurisdiction
such that, as a result of such proceeding,
any of the Reporting Persons or the
Individuals was or is subject to a judgment,
decree of final order enjoining future
violations of, or prohibiting or mandating
activity subject to, federal or state
securities laws or finding any violation with
respect to such laws.
3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The Reporting Persons are filing this Statement because they, as a
group, may be deemed to have acquired beneficial ownership of five percent (5%)
or more of the Common Stock of the Issuer by virtue of (i) the issuance of an
aggregate number of 810,000 shares of Common Stock (collectively, the
"Shares"), (ii) the issuance on December 26, 1996 of certain common stock
purchase warrants (the "December Warrants") exercisable for an aggregate of
198,928 shares of Common Stock (collectively,
<PAGE> 9
the "December Warrant Shares"), and (iii) the issuance on February 27, 1997 of
certain additional common stock purchase warrants (the "February Warrants")
exercisable for an aggregate of 22,000 shares of Common Stock (collectively,
the "February Warrant Shares") all as more particularly described herein. The
December Warrant Shares and the February Warrant Shares are collectively
referred to herein as the "Warrant Shares." As of the date hereof, the Warrant
Shares have not been exercised by the Reporting Persons. The Shares and
December Warrants were issued to certain of the Reporting Persons in connection
with those Private Securities Subscription Agreements, dated December 26, 1996
(collectively, the "Purchase Agreements"), filed as Exhibits 99.2 through 99.5,
inclusive, which such Purchase Agreements are incorporated herein by reference.
The February Warrants were issued to certain of the Reporting Persons in
connection with those Private Securities Subscription Agreements, dated
February 27, 1997 (collectively, the "Bridge Loan Agreements"), a form of which
has been filed as Exhibit 99.7 hereto and is incorporated herein by reference.
A form of the Issuer's Common Stock Purchase Warrant has been attached as
Exhibit 99.8 hereto and is incorporated herein by reference.
3.A. December Transactions. Pursuant to the terms of the Purchase
Agreements, the Issuer issued and sold the following number of Shares to the
individual Reporting Persons for the purchase price set forth below:
<TABLE>
<CAPTION>
Purchase Aggregate
Reporting Person Shares Price/Share Purchase Price
---------------- ------ ----------- --------------
<S> <C> <C> <C>
Infinity (Tranche I) 394,286 $ 7.61 $3,000,000
Infinity (Tranche II) 250,000 10.00 2,500,000
Seacrest 100,000 10.00 1,000,000
Fairway 65,714 7.61 500,000
Emerging Opportunities 0 N/A N/A
Global Growth 0 N/A N/A
</TABLE>
Additionally, the Issuer granted the December Warrants to purchase the
following number of December Warrant Shares to the individual Reporting
Persons, as set forth below:
<TABLE>
<CAPTION>
Reporting Person December Warrant Shares
---------------- -----------------------
<S> <C>
Infinity (Tranche I) 155,884
Infinity (Tranche II) 29,794
Seacrest 13,794
Fairway 79,508
Emerging Opportunities N/A
Global Growth N/A
</TABLE>
Although each of the Purchase Agreements was dated effective as of
December 26, 1996, the transactions effected thereby (including the payment of
the purchase price for the Shares) did not occur until February 14, 1997.
3.B. February Transactions. Pursuant to the terms of the Bridge
Loan Agreements, the Issuer granted the February Warrants to purchase the
following number of February Warrant Shares to the individual Reporting
Persons, as set forth below:
<PAGE> 10
<TABLE>
<CAPTION>
Reporting Person February Warrant Shares
---------------- -----------------------
<S> <C>
Infinity 12,000
Seacrest 0
Fairway 4,000
Emerging Opportunities 4,000
Global Growth 2,000
</TABLE>
The funds used to acquire the Shares were derived from the separate
working capital accounts of Infinity, Seacrest and Fairway, respectively.
Additionally, the Reporting Persons expect that any funds necessary to exercise
the December Warrants and/or the February Warrants will be derived from working
capital. No part of the purchase price was represented by funds borrowed or
otherwise obtained from any bank or other third party.
4. PURPOSE OF TRANSACTION.
Effective December 26, 1996, pursuant to the terms of the Purchase
Agreements, the Issuer issued and sold the Shares and the December Warrants to
Infinity, Seacrest and Fairway. Additionally, effective February 27, 1997,
pursuant to the terms of the Bridge Loan Agreements, the issuer issued the
February Warrants to Infinity, Fairway, Emerging Opportunities and Global
Growth. The Reporting Persons acquired such securities from the Issuer for
investment purposes only. Each of the Reporting Persons may, depending upon its
continuing assessment of pertinent factors, elect to dispose of some or all of
such Shares from time to time by means of privately negotiated sales, market
transactions or otherwise.
Whether the Reporting Persons exercise the December Warrants and/or
the February Warrants into shares of Common Stock, and the amount, method and
timing of any such exercise, will depend upon the Reporting Persons' continuing
assessment of pertinent factors, including, among other things, the Reporting
Persons' evaluation of the Issuer's business prospects and financial condition,
the market for the Issuer's shares, general economic and stock market
conditions, the availability and nature of opportunities to dispose of the
Common Stock, regulatory and other legal considerations and other investment
opportunities. Depending upon their assessment of these factors from time to
time, the Reporting Persons may elect to acquire additional shares of Common
Stock or to dispose of some or all of the Common Stock beneficially owned by
them. However, except as specifically contemplated herein, neither the timing
nor the circumstances of future acquisitions or dispositions has been
determined as of the date hereof.
The Reporting Persons may acquire certain Bonus Shares (as defined
below) and/or Additional Bridge Warrants (as defined below) from the Issuer
pursuant to the provisions identified in Item 5 below. However, none of the
Reporting Persons has any present plans to effect an extraordinary corporate
transaction or a sale or transfer of a material amount of assets of the Issuer;
to change the Issuer's management or its directors, business, corporate
structure, capitalization, dividend policy, Charter or Bylaws; or to delete,
delist or terminate the registration of any of the securities of the Issuer.
Furthermore, none of the Reporting Persons has any present plans to effect any
action similar to those identified in this Item.
<PAGE> 11
5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Reporting Persons, as a group, may be deemed to be the
beneficial owners of an aggregate of 1,030,928 shares of
Common Stock (of which an aggregate of 220,928 shares of
Common stock are acquirable upon exercise of the December
Warrants and the February Warrants) constituting approximately
9.3% of the outstanding Common Stock of the Issuer (based on
10,060,141 shares of Common Stock outstanding at October 31,
1996 pursuant to the Issuer's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1996 (the "10-Q")).
Individually and without reference to the "group" described
above, Infinity, Seacrest, Fairway, Emerging Opportunities and
Global Growth may be deemed to be the beneficial owners of
812,170, 129,250, 83,508, 4,000 and 2,000 shares of Common
Stock, respectively, (of which 167,884, 29,250, 17,794, 4,000
and 2,000 shares of Common Stock are acquirable by such
Reporting Persons, respectively, upon exercise of the December
Warrants and the February Warrants). Accordingly, based on the
information contained in the 10-Q, Infinity, Seacrest,
Fairway, Emerging Opportunities and Global Growth may be
deemed the beneficial owners of 7.5%, 1.3%, .8%, .04% and
.02%, respectively, of the outstanding Common Stock of the
Issuer.
(b) Each of the Reporting Persons believes that it has sole voting
and dispositive power over the Shares held by it, but
acknowledges that, because it is a member of a "group" as such
term is used in Rule 13d-5, it may be deemed to have shared
voting and dispositive power over the Shares held by the other
Reporting Persons. Furthermore, upon acquisition of any
Warrant Shares, each Reporting Person anticipates that it
would have sole voting and dispositive power over all of the
Warrant Shares acquired as a result thereof, but acknowledges
that, because it is a member of a "group" as such term is used
in Rule 13d-5, it may be deemed to have shared voting and
dispositive power over the Warrant Shares held by the other
Reporting Persons. However, pursuant to Rule 13d-4, each
Reporting Person disclaims beneficial ownership of those
Shares or Warrant Shares over which it does not have sole
voting and dispositive power.
The table below summarizes the number of Shares, December
Warrant Shares and February Warrant Shares over which each
Reporting Person holds sole voting and dispositive power and
shared voting and dispositive power:
<TABLE>
<CAPTION>
COMMON STOCK DECEMBER WARRANT SHARES FEBRUARY WARRANT SHARES
---------------------------- ----------------------------- -----------------------------
SOLE VOTING/ SHARED VOTING/ SOLE VOTING/ SHARED VOTING/ SOLE VOTING/ SHARED VOTING/
DISPOSITIVE DISPOSITIVE DISPOSITIVE DISPOSITIVE DISPOSITIVE DISPOSITIVE
------------ -------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Infinity 644,286 165,714 155,884 43,044 12,000 10,000
Seacrest 100,000 710,000 29,250 169,678 0 22,000
Fairway 65,714 744,286 13,794 185,134 4,000 18,000
Emerging Opp. 0 810,000 0 198,928 4,000 18,000
Global Growth 0 810,000 0 198,928 2,000 20,000
</TABLE>
In addition to the Shares and December Warrant Shares
described above, each of Infinity, Seacrest and Fairway may be
issued an indeterminable number of
<PAGE> 12
additional shares of Common Stock pursuant to the terms of the
respective Purchase Agreements (collectively, the "Bonus
Shares"). The exact number of Bonus Shares potentially
acquirable by each such Reporting Person is determined by
reference to the formula contained in the applicable Purchase
Agreement and, in each case, is effected by the market price
of the Issuer's Common Stock as of specified dates. As a
result, the number of shares reported as beneficially owned by
the Reporting Persons herein excludes any Bonus Shares.
In addition to the February Warrant Shares described above,
each of Infinity, Fairway, Emerging Opportunities and Global
Growth may be issued an indeterminable number of additional
shares of Common Stock pursuant to the terms of the respective
Bridge Loan Agreements (collectively, the "Additional Bridge
Warrants"). The exact number of Additional Bridge Warrants
potentially acquirable by each such Reporting Person is
determined by reference to the formula contained in the
applicable Bridge Loan Agreements and, in each case, is
affected by the market price of the Issuer's Common Stock as
of specified dates and the Issuer's ability to repay the $12.5
million aggregate principal amount of 8%/10% Subordinated
Convertible Debentures (the "Bridge Notes") issued in
connection with Bridge Loan Agreements. A form of Bridge Note
has been attached as Exhibit 99.9 hereto and is incorporated
herein by reference.
(c) Effective November 14, 1996, Infinity entered into a Private
Securities Subscription Agreement with the Issuer (the
"Original Infinity Subscription Agreement") pursuant to which,
among other things, Infinity acquired 3,000 shares of Series G
Convertible Preferred Stock (the "Series G Preferred Stock")
of the Issuer and a common stock purchase warrant (the
"Original Infinity Warrant") entitling Infinity to purchase
42,627 shares of Common Stock. The purchase price paid by
Infinity for the Series G Preferred Stock was $1,000 per share
or $3.0 million. The Original Infinity Warrant was exercisable
upon issuance and for a period of three years thereafter for
$19.00 per share.
Additionally, effective November 14, 1996, Fairway entered
into a separate Private Securities Subscription Agreement with
the Issuer (the "Original Fairway Subscription Agreement")
pursuant to which, among other things, Fairway acquired 500
shares of Series G Preferred Stock and a common stock purchase
warrant (the "Original Fairway Warrant") entitling Fairway to
purchase 7,104 shares of Common Stock. The purchase price paid
by Fairway for the Series G Preferred Stock was $1,000 per
share or an aggregate of $500,000. The Original Fairway
Warrant was exercisable upon issuance and for a period of
three years thereafter for $19.00 per share.
Effective December 3, 1996, Infinity entered into a second
Private Securities Subscription Agreement with the Issuer (the
"Second Infinity Subscription Agreement") pursuant to which,
among other things, Infinity acquired 2,500 shares of Series G
Preferred Stock and a common stock purchase warrant (the
"Second Infinity Warrant") entitling Infinity to purchase
35,523 shares of Common Stock. The purchase price paid by
Infinity for the Series G Preferred Stock acquired in this
transaction was $1,000 per share or an aggregate of $2.5
<PAGE> 13
million. The Second Infinity Warrant was exercisable upon
issuance and for a period of three years thereafter for $19.00
per share.
Additionally, effective December 3, 1996, Seacrest entered
into a separate Private Securities Subscription Agreement with
the Issuer (the "Original Seacrest Subscription Agreement")
pursuant to which, among other things, Seacrest acquired 1,000
shares of Series G Preferred Stock and a common stock purchase
warrant (the "Original Seacrest Warrant") entitling Seacrest
to purchase 14,209 shares of Common Stock. The purchase price
paid by Seacrest for the Series G Preferred Stock acquired was
$1,000 per share or an aggregate of $1.0 million. The Original
Seacrest Warrant was exercisable upon issuance and for a
period of three years thereafter for $19.00 per share.
Subsequent to the closing of the transactions contemplated by
the Original Infinity Subscription Agreement, Original Fairway
Subscription Agreement, Second Infinity Subscription Agreement
and Original Seacrest Subscription Agreement, the Issuer
requested certain modifications thereto. As a result,
effective December 26, 1996, the parties elected to rescind
such transactions in their entirety and consummate the
transactions which are the subject of this Statement.
Accordingly, the shares of Series G Preferred, Original
Infinity Warrant, Original Fairway Warrant, Second Infinity
Warrant and Original Seacrest Warrant issued in connection
with the November and December transactions were canceled and
retired by the Issuer.
On February 27, 1997 the Issuer and Infinity, Fairway,
Emerging Opportunities, Global Growth and certain other
institutional investors completed the private placement (the
"Bridge Loan") of an aggregate principal amount of $12,500,000
of Bridge Notes. Infinity, Fairway, Emerging Opportunities and
Global Growth funded $3.0 million, $1.0 million, $1.0 million
and $500,000 of the Bridge Loan, respectively. The Bridge
Notes are one-year subordinated notes of the Issuer and bear
interest at an annual rate of eight percent (8%) per annum
until August 26, 1997 and ten percent (10%) per annum
thereafter. The Bridge Notes are convertible at the option of
the holder thereof at any time after August 27, 1997 at a
conversion price equal to seventy-five percent (75%) of the
five-day average closing bid price on the day preceding the
date of conversion provided that no more than 2.5 million
shares of Common Stock may be issued by the Issuer upon the
conversion of the Bridge Notes.
The Bridge Notes are redeemable by the Issuer at any time at
the prices set forth therein.
(d) Not applicable.
(e) Not applicable.
<PAGE> 14
6. CONTRACTS, ARRANGEMENTS, OR UNDERSTANDINGS WITH RESPECT TO SECURITIES
OF THE ISSUER.
Pursuant to the terms of the relevant Purchase Agreements, Infinity
(relating to the Shares acquired in the first tranche only) and Fairway
have agreed to refrain from selling the Shares acquired by them until
the earlier of (1) five months following the date on which an S-1
registration statement filed by the Issuer registering the Common Stock
for resale in an underwritten public offering (the "Secondary
Offering") has been declared effective by the Securities and Exchange
Commission (the "Effective Date") or (2) August 1, 1997; provided,
however, that if the Effective Date has not occurred by March 31, 1997,
then the Shares will be tradeable on or after April 1, 1997 without
restriction pursuant to a shelf registration statement filed by the
Issuer which does not call for an underwritten offering. Infinity
(relating to the Shares acquired in the second tranche) and Seacrest
have agreed to a similar lock-up; however, pursuant to the terms of the
applicable Purchase Agreements, the restriction continues only until
consummation of the Secondary Offering. Notwithstanding the foregoing,
the Issuer has indicated to one or more of the Reporting Persons that
it will not effect the Secondary Offering by March 31, 1997.
In connection with the transactions contemplated by the Purchase
Agreements, Infinity, Seacrest, Fairway and the Issuer entered into
separate Registration Rights Agreements, dated December 26, 1996 (the
"Registration Rights Agreements"), pursuant to the terms of which the
Issuer will file with the Securities and Exchange Commission a
registration statement covering the Shares, the December Warrant Shares
and the Bonus Shares, if any, for the benefit of the holders thereof.
Additionally, the Issuer has agreed to keep such Registration Statement
effective for a period of two years.
On February 27, 1997, the Issuer, Infinity and Fairway entered into a
letter agreement providing that, among other things, the Issuer would
agree to repurchase, at the option of Infinity and Fairway, up to an
aggregate amount of 115,000 shares of Common Stock on each of April 28,
May 28, June 28 and July 28, 1997, subject to certain conditions. This
put option is at a price of $10.00 per share (subject to adjustment in
the event that Bonus Shares, or cash in lieu of Bonus Shares, is paid).
Additionally, until April 28, 1997, the Issuer may, at its option,
purchase or arrange for the purchase of up to 115,000 shares of Common
Stock at a price of $10.00 per share (subject to adjustment in the
event that Bonus Shares, or cash in lieu of Bonus Shares, is paid).
In connection with the transactions contemplated by the Bridge Loan
Agreements, Infinity, Fairway, Emerging Opportunities, Global Growth
and the Issuer entered into separate Registration Rights Agreements,
dated February 27, 1997 (the "Additional Registration Rights
Agreements"), pursuant to the terms of which the Issuer will file with
the Securities and Exchange Commission a registration statement
covering the shares of Common stock issuable upon conversion of the
Bridge Notes, the February Warrant Shares and the Additional Bridge
Warrants, if any, for the benefit of the holders thereof. A form of
Addition Registration Rights Agreement has been attached as Exhibit
99.10 hereto and is incorporated herein by reference.
Except as described or referred to in this Statement or in the
documents included as Exhibits hereto, the Reporting Persons have no
other contracts, arrangements, understandings, or relationships with
any person with respect to any securities of the Issuer.
<PAGE> 15
7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO. EXHIBIT
----------- -------
99.1 Joint Filing Agreement, dated February 27, 1997,
between Infinity Investors Limited, Seacrest Capital
Limited, Fairway Capital Limited, Infinity Emerging
Opportunities Limited and Global Growth Limited.
99.2 Private Securities Subscription Agreement, dated as
of December 26, 1996, between the Issuer and Infinity
Investors Limited (Tranche I: Shares, December
Warrants).
99.3 Private Securities Subscription Agreement, dated as
of December 26, 1996, between the issuer and Seacrest
Capital Limited (Shares, December Warrants).
99.4 Private Securities Subscription Agreement, dated as
of December 26, 1996, between the Issuer and Infinity
Investors Limited (Tranche II: Shares, December
Warrants).
99.5 Private Securities Subscription Agreement, dated as
of December 26, 1996, between the Issuer and Fairway
Capital Limited (Shares, December Warrants).
99.6 Letter Agreement, dated as of February 27, 1997,
among the Issuer, Infinity Investors Limited and
Fairway Capital Limited.
99.7. Form of Private Securities Subscription Agreement
(Bridge Loan), dated as of February 27, 1997 (and
Schedule of Differences thereto pursuant to
Instruction 2 of Item 601).
99.8 Form of Common Stock Purchase Warrant (and Schedule
of Differences thereto pursuant to Instruction 2 of
Item 601).
99.9 Form of 8%/10% Subordinated Convertible Debenture Due
February 22, 1998 (and Schedule of Differences
thereto pursuant to instruction 2 to Item 601).
99.10 Form of Registration Rights Agreement.
<PAGE> 16
SIGNATURE
After reasonable inquiry, I certify that to the best of my
knowledge and belief the information set forth in this Statement is
true, complete and correct.
Date: February 27, 1997
INFINITY INVESTORS LIMITED
By: /s/ James A. Loughran
----------------------------------
James A. Loughran
Director
SEACREST CAPITAL LIMITED
By: /s/ James E. Martin
----------------------------------
James E. Martin
President
FAIRWAY CAPITAL LIMITED
By: /s/ James E. Martin
----------------------------------
James E. Martin
President
INFINITY EMERGING
OPPORTUNITIES LIMITED
By: /s/ James E. Martin
----------------------------------
James E. Martin
Director
GLOBAL GROWTH LIMITED
By: /s/ James E. Martin
----------------------------------
James E. Martin
Director
Attention: Intentional misstatements or
omissions of fact constitute federal
criminal violations (see 18 U.S.C. 1001).
<PAGE> 17
SCHEDULE 1
INFORMATION REGARDING
INFINITY INVESTORS LIMITED
Set forth below is the name, citizenship (or place of organization, as
applicable), business address and present principal occupation or employment of
each director and executive officer of Infinity Investors Limited ("Infinity").
<TABLE>
<CAPTION>
NAME AND
CITIZENSHIP OR PRESENT PRINCIPAL
PLACE OF OCCUPATION OR POSITION WITH
ORGANIZATION BUSINESS ADDRESS EMPLOYMENT REPORTING PERSON
------------ ---------------- ---------- ----------------
<S> <C> <C> <C>
Cofides S.A.* P. O. Box 556 Nevis business corporation Vice President and
(Nevis, West Indies) Charlestown, Nevis, West which serves as fiduciary Director
Indies of various entities
James A. Loughran 38 Hertford Street Lawyer Director
(Irish) London, England
W1Y 7TG
James E. Martin 38 Hertford Street Accountant Director
(British) London, England
W1Y 7TG
SECORP Limited 38 Hertford Street British corporation which Secretary
(Nevis, West Indies) London, England serves as the Secretary of
W1Y 7TG various entities
Margareta Hedstrom 37 Shepherd Street Business Executive President and
(Swedish) London, England Treasurer
W1Y 7LH
- ---------------
</TABLE>
* The members of the Board of Directors of Cofides S.A. are Ashley Bolt
& Co. Ltd. and Margareta Hedstrom.
Infinity advises that no persons and/or organizations control Infinity
(either individually or as a group) as that term is used in Instruction C to
Rule 13d-101 promulgated under the Securities Exchange Act of 1934, as amended.
<PAGE> 18
SCHEDULE 2
INFORMATION REGARDING
SEACREST CAPITAL LIMITED
Set forth below is the name, citizenship (or place of organization, as
applicable), business address and present principal occupation or employment of
each director and executive officer of Seacrest Capital Limited ("Seacrest").
<TABLE>
<CAPTION>
NAME AND
CITIZENSHIP OR PRESENT PRINCIPAL
PLACE OF OCCUPATION OR POSITION WITH
ORGANIZATION BUSINESS ADDRESS EMPLOYMENT REPORTING PERSON
------------ ---------------- ---------- ----------------
<S> <C> <C> <C>
James E. Martin 38 Hertford Street Accountant President and
(British) London, England Treasurer
W1Y 7TG
SECORP Limited 38 Hertford Street British corporation which Secretary
(Nevis, West Indies) London, England serves as the Secretary of
W1Y 7TG various entities
Parchmore Incorporation* 80 Broad Street Liberian corporation which Director
(Liberia) Monrovia serves as the Director of
Liberia various entities
- --------------------
</TABLE>
* The director of Parchmore Incorporation is Wendover Limited, National
Bank Building, Nevis, West Indies.
Seacrest advises that Hunt Financial Partners, L.P., a Texas limited
partnership ("Hunt Financial") owns 75% of the equity interests of the sole
general partner (the "GP Entity") of a limited partnership which owns 100% of
the outstanding equity interests of Seacrest. As a result, Hunt Financial may
be deemed in control of Seacrest as that term is used in Instruction C to Rule
13d-101 promulgated under the Securities Exchange Act of 1934, as amended. The
remaining 25% of the equity interests in the GP Entity are held by John A.
(Pete) Bricker, Jr., an individual resident of the State of Texas. Hunt
Financial has informed Seacrest that the general partner of Hunt Financial is
Hunt Financial Group, L.L.C., a Delaware limited liability company, whose Board
of Managers consists of J. R. Holland, Jr., Clark K. Hunt and Lamar Hunt, each
an individual resident in the State of Texas.
<PAGE> 19
SCHEDULE 3
INFORMATION REGARDING
FAIRWAY CAPITAL LIMITED
Set forth below is the name, citizenship (or place of organization, as
applicable), business address and present principal occupation or employment of
each director and executive officer of Fairway Capital Limited ("Fairway").
<TABLE>
NAME AND
CITIZENSHIP OR PRESENT PRINCIPAL
PLACE OF OCCUPATION OR POSITION WITH
ORGANIZATION BUSINESS ADDRESS EMPLOYMENT REPORTING PERSON
------------ ---------------- ---------- ----------------
<S> <C> <C> <C>
James E. Martin 38 Hertford Street Accountant President
(British) London, England
W1Y 7TG
Cofides S.A.* P. O. Box 556 Nevis business corporation Director
(Nevis, West Indies) Charlestown, Nevis, West which serves as the
Indies fiduciary of various
entities
- --------------------
</TABLE>
* The members of the Board of Directors of Cofides S.A. are Ashley Bolt
& Co. Ltd. and Margareta Hedstrom.
Fairway advises that Hunt Financial Partners, L.P., a Texas limited
partnership ("Hunt Financial") owns 33a% of the sole general partner (the "GP
Entity") of a limited partnership which owns 100% of the outstanding equity
interests of Fairway. The remaining equity interests in the GP Entity are held
33-1/3% by Fojtasek Capital, Ltd., a Texas limited partnership ("Fojtasek") and
33-1/3% by The Sienna Trust, a Jersey, Channel Islands trust ("Sienna"). As a
result, Hunt Financial, together with Fojtasek and Sienna, may be deemed in
control of Fairway as that term is used in Instruction C to Rule 13d-101
promulgated under the Securities Exchange Act of 1934, as amended. Hunt
Financial has informed Fairway that the general partner of Hunt Financial is
Hunt Financial Group, L.L.C., a Delaware limited liability company, whose Board
of Managers consists of J. R. Holland, Jr., Clark K. Hunt and Lamar Hunt, each
an individual resident in the State of Texas. Fojtasek has informed Fairway
that the general partner of Fojtasek is Randall Fojtasek, an individual
resident in the State of Texas. Sienna has informed Fairway that the Trustee of
Sienna is Europlan.
<PAGE> 20
SCHEDULE 4
INFORMATION REGARDING
INFINITY EMERGING OPPORTUNITIES LIMITED
Set forth below is the name, citizenship (or place of organization, as
applicable), business address and present principal occupation or employment of
each director and executive officer of Infinity Emerging Opportunities Limited
("Emerging Opportunities").
<TABLE>
NAME AND
CITIZENSHIP OR PRESENT PRINCIPAL
PLACE OF OCCUPATION OR POSITION WITH
ORGANIZATION BUSINESS ADDRESS EMPLOYMENT REPORTING PERSON
------------ ---------------- ---------- ----------------
<S> <C> <C> <C>
James E. Martin 38 Hertford Street Accountant President, Treasurer
(British) London, England and Director
W1Y 7TG
Cofides S.A.* P. O. Box 556 Nevis business corporation Director
(Nevis, West Indies) Charlestown, Nevis, West which serves as the
Indies fiduciary of various
entities
SECORP Limited (Nevis, 38 Hertford Street British corporation which Secretary
West Indies) London, England serves as the Secretary of
W1Y 7TG various entities
- --------------------
</TABLE>
* The members of the Board of Directors of Cofides S.A. are Ashley Bolt
& Co. Ltd. and Margareta Hedstrom.
Emerging Opportunities advises that approximately 55% of the
outstanding capital stock of Emerging Opportunities is owned by Infinity
Investors Limited, a Nevis, West Indies business corporation. Information
regarding Infinity Investors Limited is set forth on Schedule 1 attached
hereto.
<PAGE> 21
SCHEDULE 5
INFORMATION REGARDING
GLOBAL GROWTH LIMITED
Set forth below is the name, citizenship (or place of organization, as
applicable), business address and present principal occupation or employment of
each director and executive officer of Global Growth Limited ("Global Growth").
<TABLE>
NAME AND
CITIZENSHIP OR PRESENT PRINCIPAL
PLACE OF OCCUPATION OR POSITION WITH
ORGANIZATION BUSINESS ADDRESS EMPLOYMENT REPORTING PERSON
------------ ---------------- ---------- ----------------
<S> <C> <C> <C>
James E. Martin 38 Hertford Street Accountant President, Treasurer
(British) London, England and Director
W1Y 7TG
Cofides S.A.* P. O. Box 556 Nevis business corporation Director
(Nevis, West Indies) Charlestown, Nevis, West which serves as the
Indies fiduciary of various
entities
SECORP Limited (Nevis, 38 Hertford Street British corporation which Secretary
West Indies) London, England serves as the Secretary of
W1Y 7TG various entities
- --------------------
</TABLE>
* The members of the Board of Directors of Cofides S.A. are Ashley Bolt
& Co. Ltd. and Margareta Hedstrom.
Global Growth advises that it is wholly owned by Hermitage Resources
A.G.
<PAGE> 22
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
----------- -------
99.1 Joint Filing Agreement, dated February 27,
1997, between Infinity Investors Limited,
Seacrest Capital Limited, Fairway Capital
Limited, Infinity Emerging Opportunities
Limited and Global Growth Limited.
99.2 Private Securities Subscription Agreement,
dated as of December 26, 1996, between the
Issuer and Infinity Investors Limited
(Tranche I: Shares, December Warrants).
99.3 Private Securities Subscription Agreement,
dated as of December 26, 1996, between the
issuer and Seacrest Capital Limited (Shares,
December Warrants).
99.4 Private Securities Subscription Agreement,
dated as of December 26, 1996, between the
Issuer and Infinity Investors Limited
(Tranche II: Shares, December Warrants).
99.5 Private Securities Subscription Agreement,
dated as of December 26, 1996, between the
Issuer and Fairway Capital Limited (Shares,
December Warrants).
99.6 Letter Agreement, dated as of February 27,
1997, among the Issuer, Infinity Investors
Limited and Fairway Capital Limited.
99.7 Form of Private Securities Subscription
Agreement (Bridge Loan), dated as of February
27, 1997 (and Schedule of Differences thereto
pursuant to Instruction 2 of Item 601).
99.8 Form of Common Stock Purchase Warrant (and
Schedule of Differences thereto pursuant to
Instruction 2 of Item 601).
99.9 Form of 8%/10% Subordinated Convertible
Debenture Due February 22, 1998 (and Schedule
of Differences thereto pursuant to
instruction 2 to Item 601).
99.10 Form of Registration Rights Agreement.
<PAGE> 1
EXHIBIT 99.1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act of
1934, as amended, the persons named below agree to the joint filing on behalf
of each of them of a Statement on Schedule 13D (including any amendments
thereto) with respect to the Common Stock of COMFORCE Corporation. This Joint
Filing Agreement shall be included as an exhibit to such filing. In evidence
thereof, each of the undersigned, being duly authorized, hereby executes this
Joint Filing Agreement as of the 27th day of February, 1997.
INFINITY INVESTORS LIMITED
By: /s/ James A. Loughran
------------------------------------
James A. Loughran
Director
SEACREST CAPITAL LIMITED
By: /s/ James E. Martin
------------------------------------
James E. Martin
President
FAIRWAY CAPITAL LIMITED
By: /s/ James E. Martin
------------------------------------
James E. Martin
President
INFINITY EMERGING OPPORTUNITIES LIMITED
By: /s/ James E. Martin
------------------------------------
James E. Martin
Director
GLOBAL GROWTH LIMITED
By: /s/ James E. Martin
------------------------------------
James E. Martin
Director
<PAGE> 1
EXHIBIT 99.2
PRIVATE SECURITIES SUBSCRIPTION AGREEMENT
COMFORCE CORPORATION/INFINITY INVESTORS LIMITED
December 26, 1996
THIS PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter the
"Agreement") has been executed by the undersigned in connection with the sale in
a private placement pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), of certain shares of common stock, par value
$.01 per share, (hereinafter the "Common Shares") of COMFORCE Corporation (CFS),
2001 Marcus Avenue, Lake Success, NY 11042, a corporation organized under the
laws of Delaware (hereinafter "SELLER") to Infinity Investors Limited located at
27 Wellington Road, Cork, Ireland, a corporation organized under the laws of
Nevis, West Indies (hereinafter "BUYER"). SELLER and BUYER (hereinafter
collectively the "parties") each hereby represents, warrants and agrees as
follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE AND TERMS
(i) SELLER and BUYER are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule
506 under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission under the Securities Act; and
(ii) BUYER hereby subscribes for Three Hundred Ninety-Four Thousand
Two Hundred Eighty-Six (394,286) Common Shares of Seller ("Common Shares"), for
an aggregate purchase price of Three Million Dollars ($3,000,000) payable
in United States Dollars at the Closing, as defined in Paragraph 8 hereof.
(iii) BUYER shall pay the purchase price by delivering same day
funds in United States Dollars as agreed between the parties, to be delivered
to the order of SELLER upon delivery of the Common Shares.
(iv) In addition, BUYER shall receive a Common Stock Purchase
Warrant (the "Warrant" or "Warrants") entitling BUYER to purchase Eighty-Two
Thousand Seven Hundred Fifty-Eight (82,758) Common Shares at an exercise price
of $19 per share. The Warrants shall be exercisable upon issuance to BUYER at
Closing and will expire on December 26, 1999. The Common Shares issuable upon
exercise of the Warrants are hereinafter referred to as the "Warrant Shares."
(v) The Common Shares issued to BUYER may not be sold until the
earlier of (1) five months following the date on which an S-1 registration
<PAGE> 2
Private Sec. Sub. Agreement: COMFORCE Corporation/Infinity Investors Limited
December 26, 1996 Page 2
statement filed by SELLER registering SELLER'S common stock for resale in an
underwritten public offering (an "Underwritten Registration") has been declared
effective by the U.S. Securities and Exchange Commission (such registration
statement effective date referred to herein as the "Effective Date"), or (2)
August 1, 1997; provided, however, that in any event, if the Effective Date has
not occurred by April 30, 1997, then the Common Shares will be tradable on or
after May 1, 1997 without restriction, it being understood that under such
circumstances SELLER will have registered the Common Shares for resale in a
shelf registration not calling for an underwritten offering. This period
during which the Common Shares are restricted from trading is referred to
herein as the "Lock-Up Period."
(vi) In the event the Market Price (defined as the lesser of (a)
the average of the closing bid price of SELLER'S common stock over the ten
trading days immediately preceding the date in question, or (b) the closing bid
price of SELLER'S common stock on the trading day immediately preceding the
date in question, in both instances as reported by Bloomberg, L.P.) is less
than Ten Dollars ($10.00) per share (1) on May 1, 1997, if the Effective Date
has not occurred by April 30, 1997, or alternatively, (2) on the last day of
the Lock-Up Period, then SELLER shall pay to BUYER the difference between the
Market Price and $10.00, multiplied by the number of Common Shares held by
BUYER on such date. SELLER shall have the option to make such payment in cash
or in common stock of SELLER, or in any combination thereof, and shall make
such payment to BUYER within four (4) business days of the applicable date
referred to in this subsection. Any shares of SELLER'S common stock delivered
to BUYER in satisfaction of SELLER'S obligations under this subsection are
referred to herein as "Bonus Shares."
2. BUYER'S REPRESENTATIONS AND AGREEMENTS
BUYER represents, warrants and agrees as follows:
(i) BUYER understands that the Common Shares, the Bonus Shares,
the Warrants, and the Warrant Shares (collectively, the "Securities") have not
been registered under the Securities Act, or any other applicable securities
law, and, accordingly, none of the Securities may be offered, sold,
transferred, pledged, hypothecated or otherwise disposed of unless registered
pursuant to, or in a transaction exempt from registration under, the Securities
Act and any other applicable securities law;
(ii) BUYER is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3), or (7) of Regulation D (an "Accredited Investor") that is
<PAGE> 3
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 3
acquiring the Securities either for its own account or as a fiduciary or agent
for one or more institutional accounts as to which it exercises sole
discretion, each of which is an Accredited Investor. BUYER has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks
of an investment in the Securities. BUYER has had a reasonable opportunity to
ask questions of and receive answers from SELLER concerning SELLER and the
offering of the Securities. BUYER is not subscribing for the Securities as a
result of or pursuant to any advertisement, article, notice, or other
communication published in any newspaper, magazine, or similar media or
broadcast over television or radio. BUYER is aware that it (or such
institutional account) may be required to bear the economic risk of an
investment in the Securities for an indefinite period, and it (or such
institutional account ) is able to bear such risk for an indefinite period;
(iii) BUYER is acquiring the Securities for its own account or for
one or more institutional accounts as described in Paragraph 2(ii) hereof, in
each case for investment purposes and not with a view to, or for offer or sale
in connection with, any distribution thereof (subject to any requirement of law
that the disposition of its property or the property of such institutional
account or accounts remain within its or their control). BUYER agrees on its
own behalf and on behalf of any such institutional account for which it is
acquiring the Securities to offer, sell or otherwise transfer any Securities
only to Accredited Investors (subject to any requirement of law that the
disposition of its property or the property of such institutional account or
accounts remain within its or their control) in conformity with the Securities
Act and any other applicable securities law and with the restrictions on
transfer set forth on the certificate(s) evidencing the Common Shares and the
Bonus Shares. BUYER acknowledges that each certificate evidencing the Common
Shares and Bonus Shares shall bear a legend substantially to the effect of the
foregoing paragraphs 2(i) and 2(ii) and this paragraph 2(iii). Such legend
shall be in substantially the following form:
"THE COMMON SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED OR SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF
CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A PRIVATE SECURITIES
SUBSCRIPTION AGREEMENT
<PAGE> 4
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 4
BETWEEN THE COMPANY AND INFINITY INVESTORS LIMITED DATED
DECEMBER 26, 1996. A COPY OF THE PORTION OF THE AFORESAID
SUBSCRIPTION AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED
FROM THE COMPANY'S EXECUTIVE OFFICES."
Upon expiration of the Lock-Up Period, SELLER shall promptly exchange
BUYER'S legended Common Stock certificates, representing Common Shares or Bonus
Shares, for unlegended Common Stock certificates.
(iv) BUYER acknowledges that prior to the expiration of the Lock-Up
Period, SELLER or any transfer agent of SELLER shall register the transfer or
exchange of any of the Securities only upon receipt of the certificate(s)
evidencing such Securities with the transfer notice set forth thereon
appropriately completed and upon receipt in writing from the transferee or the
recipient of such Securities in such transfer or exchange (as the case may be)
of a certificate setting forth the representations in Paragraph 2 hereof and
only upon the availability of an exemption from registration under the
Securities Act;
(v) If BUYER is acquiring any of the Securities as fiduciary or
agent for one or more institutional accounts, BUYER represents that it has sole
investment discretion with respect to each such account and that it has full
power to make the foregoing acknowledgments, representations and agreements on
behalf of each such institutional account;
(vi) BUYER acknowledges that SELLER will rely upon the truth and
accuracy of the foregoing acknowledgments, representations and agreements and
further agrees that if, prior to any closing hereunder, any of such
acknowledgments, representations and agreements made by BUYER are no longer
accurate, BUYER will promptly notify SELLER;
(vii) BUYER has received SELLER'S latest Form 10-K, all Forms 10-Q
and 8-K filed thereafter, any amendments thereto, and the Proxy Statement for
its latest fiscal year (collectively, the "Public Documents") and the Private
Placement Memorandum prepared by SELLER;
(viii) This Agreement has been duly authorized, validly executed, and
delivered on behalf of BUYER and is a valid and binding agreement enforceable
in accordance with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally; and
<PAGE> 5
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 5
(ix) BUYER has not engaged and agrees not to engage in any short
sales of the Company's common stock prior to the end of the Lock-Up Period,
except to the extent that any such short sale is fully covered by shares of
common stock of SELLER owned by BUYER other than the Common Shares or Bonus
Shares purchased pursuant to this Agreement.
3. SELLER'S REPRESENTATIONS AND AGREEMENTS
SELLER represents, warrants and agrees as follows:
(i) SELLER has not conducted any general solicitation or general
advertising (as defined in Regulation D) with respect to any of its securities;
(ii) The Common Shares, the Bonus Shares, and Warrant Shares, when
issued and delivered will be duly and validly authorized and issued, fully-paid
and nonassessable, free and clear of any liens, encumbrances, charges, or
adverse claims of any nature whatsoever, and will not subject the holders
thereof to personal liability by reason of being such holders. There are no
preemptive rights of any shareholder of SELLER with respect to the transactions
contemplated by this Agreement or the Warrant;
(iii) This Agreement and the Warrant have each been duly authorized,
validly executed and delivered on behalf of SELLER and constitute valid and
binding agreements in accordance with their respective terms, subject to
general principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally;
(iv) The execution and delivery of this Agreement and the Warrant
and the consummation of the issuance of the Securities and the transactions
contemplated by this Agreement do not and will not conflict with or result in a
breach by SELLER of any of the terms or provisions of, or constitute a default
under, the articles of incorporation (or charter) or bylaws of SELLER, or any
indenture, mortgage, deed of trust or other material agreement or instrument to
which SELLER is a party or by which it or any of its properties or assets are
bound, or any existing applicable decree, judgment or order of any court,
federal or state regulatory body, administrative agency or other governmental
body having jurisdiction over SELLER or any of its properties or assets;
(v) No authorization, approval or consent of or filing with any
federal, state or local governmental body of the United States is legally
required for the issuance and sale of the Securities as contemplated by this
Agreement;
<PAGE> 6
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 6
(vi) Neither the information provided by or on behalf of SELLER to
BUYER and referred to in Section 2(vii) of this Agreement, nor any
representation or warranty made by SELLER to BUYER hereunder contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make such statements, in the light of the circumstance
under which they are made, not misleading. All of such information (the "SEC
Filings") required to be filed under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), was timely filed and each such report, at the time
filed, complied as to form with the requirements of the 1934 Act. Since
December 31, 1995, there has been no material adverse development in the
business, properties, operations, financial condition or results of operations
of SELLER, except as disclosed in the documents referred to in the SEC Filings.
The audited and unaudited consolidated balance sheets of the Seller contained
in the SEC Filings, and the related consolidated statements of income, changes
in stockholders' equity and changes in cash flows for the periods then ended
(the consolidated balance sheet of the SELLER as of December 31, 1995 is
hereinafter referred to as the "Balance Sheet"), including footnotes thereto,
except as indicated therein, have been prepared in accordance with generally
accepted accounting principles consistently followed throughout the periods
indicated. The Balance Sheet fairly presents the financial condition of SELLER
at the date thereof and, except as indicated therein, reflects all claims
against and all debts and liabilities of SELLER, fixed or contingent, as of the
date thereof and the related statements of income, stockholders' equity and
changes in cash flows fairly present the results of the operations of SELLER
and its financial position for the period indicated. Since December 31, 1995,
(the "Balance Sheet Date") there has been (x) no material adverse change in the
assets or liabilities, or in the business condition, financial or otherwise, or
in the results of operations or prospects, of the SELLER and its subsidiaries,
whether as a result of any legislative or regulatory change, revocation of any
license or rights to do business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation, act of God, public force or
otherwise, and (y) no change in the assets or liabilities, or in the business
or condition, financial or otherwise, or in results of operations or prospects,
of the SELLER except the ordinary course of business; and, to the best
knowledge, information and belief of the SELLER, no fact or condition exists or
is contemplated or threatened which might cause such a change in the future.
(vii) SELLER will issue one or more certificates representing the
Common Shares in the name of BUYER in such denominations to be specified by
BUYER prior to closing. SELLER will issue one or more certificates
representing the Warrant in the name of BUYER in such denominations to be
specified by BUYER prior to closing. Until the end of the Lock-Up Period and
prior to any exchange for unlegended share certificates, certificates
representing the Common Shares
<PAGE> 7
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 7
and Bonus Shares will bear the restrictive legend specified in Section 2(iii)
of this Agreement. Upon exercise of the Warrant in accordance with its terms,
SELLER will issue one or more certificates representing Warrant Shares in such
name or names and in such denominations specified by BUYER in an election to
purchase. Subject to the provisions of the Registration Rights Agreement, the
Warrant Shares shall not bear any restrictive legends and shall be freely
tradable, subject to compliance with federal and state securities laws. SELLER
further warrants that no instructions other than these instructions and stop
transfer instructions to give effect to Section 2(i) hereof will be given to
the transfer agent and also warrants that the Securities shall otherwise be
transferable on the books and records of SELLER as and to the extent provided
in this Agreement, subject to compliance with federal and state securities
laws. Following registration of the Common Shares, the Bonus Shares and the
Warrant Shares, SELLER agrees to furnish new instructions to the transfer agent
advising them of registration and instructing them to reissue the Common Shares
without a legend and to notify BUYER of the delivery of such instructions.
Nothing in this Section shall affect in any way BUYER'S obligations and
agreement to comply with all applicable securities laws upon resale of the
Securities.
(viii) Except as disclosed in the SEC Filings, there is no action,
suit or proceeding before or by any court or governmental agency or body,
domestic or foreign, now pending or, to the knowledge of SELLER, threatened
against or affecting SELLER, or any of its properties, which could reasonably
be expected to result in any material adverse change in the business,
properties, results of operations, condition (financial or otherwise), or
prospects of SELLER, or which could reasonably be expected to materially and
adversely affect the properties or assets of SELLER or which could reasonably
be expected to interfere with SELLER'S ability to consummate the transactions
contemplated by this Agreement and the Warrant.
(ix) Private Placements. Except as set forth in the SEC Filings,
SELLER has not issued any shares of its Common Stock (or securities convertible
into or exercisable for shares of Common Stock), pursuant to any exemption from
registration under the Securities Act, except for shares of Common Stock issued
as an adjustment to, or in connection with a conversion or exercise of, such
securities, except as set forth or contemplated in the SEC Filings.
(x) Commissions. Except for a fee which is payable by SELLER to
Shoreline Pacific, no other person, firm or corporation will be entitled to
receive any brokerage fee, commission or other similar payment from SELLER in
connection with the consummation of the transactions contemplated hereby and
<PAGE> 8
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 8
SELLER shall not make any such payment to any person, firm or corporation other
than as set forth herein.
(xi) Accountants. For as long as any Common Shares remain subject
to the Lock-Up Period, SELLER shall, until at least the second anniversary of
the date of the Closing (the "Closing Date"), maintain as its independent
auditors an accounting firm that is authorized to practice before the SEC.
(xii) Corporate Existence and Taxes. For as long as any Common
Shares or Bonus Shares remain subject to the Lock-Up Period, SELLER shall,
until the second anniversary of the Closing Date, maintain its corporate
existence and good standing, and shall pay all its taxes when due except for
taxes which SELLER disputes in good faith and for which adequate reserves are
established on SELLER'S books and records.
(xiii) Reserved Shares and Listings. For so long as any Common
Shares or Bonus Shares or Warrants remain outstanding:
(a) SELLER will reserve from its authorized but unissued
Common Shares a sufficient number of Common Shares to permit the
exercise of the then outstanding Warrants;and
(b) SELLER will maintain a listing of its common stock on
the Nasdaq National Stock Market or a national securities exchange.
(xiv) Capitalization. SELLER has an authorized capitalization
consisting of One Hundred Million (100,000,000) shares of common stock, $0.01
par value, of which Ten Thousand (10,000,000) shares issued and outstanding and
Zero (0) shares are held in SELLER'S treasury. All such outstanding shares
have been duly authorized and validly issued and are fully paid and
nonassessable. There are no outstanding options, warrants, rights, calls,
commitments, conversion rights, rights of exchange, plans or other agreements
of any character providing for the purchase, issuance or sale of any shares of
the capital stock of SELLER, other than as contemplated by this Agreement.
(xv) Subsidiaries. Set forth in Exhibit A attached hereto is a
list of each corporation in which SELLER owns, directly or indirectly, any
equity security (a "subsidiary"). Each subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation (as set forth on Exhibit A), and has all
requisite power to own its property and to carry on its business as now being
conducted. Set forth on Exhibit A is a list of jurisdictions in which each
subsidiary is qualified as a foreign corporation. Such
<PAGE> 9
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 9
jurisdictions are the only jurisdictions in which the character or location of
the properties owned or leased by each subsidiary, or the nature of the
business conducted by each subsidiary, makes such qualifications necessary.
All of the outstanding shares of capital stock of each subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable, and,
except as set forth in Exhibit A, are owned, of record and beneficially, by
SELLER, free and clear of all liens, encumbrances, restrictions and claims of
every kind. No shares of capital stock of any subsidiary are reserved for
issuance and there are no outstanding options, warrants, rights, subscriptions,
claims, agreements, obligations, convertible or exchangeable securities or
other commitments, contingent or otherwise, relating to the capital stock of
any subsidiary or pursuant to which any subsidiary is or may become obligated
to issue or exchange any shares of capital stock. Neither SELLER nor any
subsidiary owns, directly or indirectly, any capital stock or other equity or
ownership or proprietary interest in any corporation, partnership, association,
trust, joint venture or other entity except as set forth on Exhibit A.
(xvi) Private Offering. Assuming (without any independent
investigation or verification by or on behalf of SELLER) the accuracy of the
representations and warranties of BUYER set forth herein, the offer and sale of
the Common Shares, the Bonus Shares, the Warrants, and the Warrant Shares are
exempt from registration under Section 5 of the Securities Act of 1933, as
amended (the "Securities Act"). Neither SELLER nor any person acting on its
behalf has taken or will take any action (including, without limitation, any
offering of any securities of SELLER under circumstances which would require
the integration of such offering with the offering of the shares under the
Securities Act) which might subject the offering, issuance or sale of the
Common Shares, the Bonus Shares, the Warrants, or the Warrant Shares to the
registration requirements of Section 5 of the Securities Act.
(xvii) Consents and Approvals. Neither SELLER nor any Subsidiary is
required to obtain any consent, waiver, authorization or order of, or make any
filing or registration with, any count or other federal, state local, or other
governmental authority or other person in connection with the execution,
delivery and performance by SELLER of the transaction documents except for (i)
the filing of the registration statements contemplated by the Registration
Rights Agreement with the Securities and Exchange Commission, which shall be
filed in the time periods set forth in the Registration Rights Agreement, (ii)
applications for the listing of the Common Shares, the Bonus Shares and the
Warrant Shares with the American Stock Exchange (and with any other national
securities exchange or market on which SELLER'S common stock is then listed),
and (iii) other than, in all other cases, where the failure to obtain such
consent,
<PAGE> 10
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 10
waiver, authorization or order, or to give or make such notice of filing, would
not materially impair or delay the ability of SELLER to effect the Closings and
to deliver to BUYER the Common Shares, the Bonus Shares, the Warrants (and,
upon exercise of the Warrants, the Warrant Shares) in the manner contemplated
hereby and the Registration Rights Agreement free and clear of all liens and
encumbrances of any nature whatsoever.
(xviii) SELLER hereby covenants and agrees to comply with all terms
and conditions of the Registration Rights Agreement which is annexed hereto.
4. CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER TO SELL THE
COMMON SHARES
The obligation of SELLER to sell the Common Shares hereunder is
subject to the satisfaction or waiver by SELLER, at or before the Closing of
the purchase thereof, of each of the following conditions:
(i) Accuracy of BUYER'S Representations and Warranties. The
representations and warranties of BUYER shall be true and correct in all
material respects as of the date when made and as of the Closing Date, as
though made on and as of such date (except that representations and warranties
that are made as of a specific date need be true in all material respects only
as of such date);
(ii) Performance by BUYER. BUYER shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by BUYER at or prior to the Closing;
(iii) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement; and
(iv) Required Approvals. All Required Approvals shall have been
obtained.
5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO PURCHASE THE
COMMON SHARES.
<PAGE> 11
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 11
The obligation of BUYER hereunder to acquire and pay for the Common
Shares is subject to the satisfaction or waiver by BUYER, at or before the
closing of the purchase of the Common Shares, of each of the following
conditions:
(i) Accuracy of SELLER'S Representations and Warranties. The
representations and warranties of SELLER shall be true and correct in all
material respects as of the date when made and as of the closing of the
purchase of the Common Shares as though made on and as of such date;
(ii) Performance by SELLER. SELLER shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by SELLER at or prior to the closing of the purchase of the Common Shares;
(iii) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Registration Rights Agreement;
(iv) Adverse Changes. Since the date of the financial statements
included in SELLER'S Quarterly Report on Form 10-Q or Annual Report on Form
10-K, whichever is more recent, last filed prior to the date of this Agreement,
no event which in the judgment of BUYER had a Material Adverse Effect and no
material adverse change in the financial condition or prospects of SELLER shall
have occurred (for purposes hereof changes in the market price of SELLER'S
common stock may be considered in determining whether there has occurred an
event which has had a Material Adverse Effect or whether a material adverse
change has occurred);
(v) No Suspensions of Trading in Common Stock. The trading in
SELLER'S common stock shall not have been suspended by the Securities and
Exchange Commission or on the American Stock Exchange;
(vi) Listing of Common Stock. SELLER'S common stock shall have at
all times between the date hereof and the closing of the purchase of the Common
Shares been, and on such Closing Date be, listed for trading on the American
Stock Exchange;
(vii) Legal Opinion. SELLER shall have delivered to the escrow
agent on behalf of BUYER the opinion of Doepken Keevican & Weiss, counsel to
SELLER;
<PAGE> 12
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 12
(viii) Required Approvals. All Required Approvals shall have been
obtained;
(ix) Shares of Common Stock. On or prior to the closing of the
purchase of the Common Shares, SELLER shall have duly reserved for issuance
upon exercise of the Warrants sufficient common shares to meet the obligations
of SELLER under this Agreement;
(x) Delivery of Stock Certificates. SELLER shall have delivered
to the escrow agent on behalf of BUYER or its designee the stock certificate(s)
representing the Common Shares, registered in the name of BUYER, each in form
satisfactory to BUYER;
(xi) Registration Rights Agreement. SELLER shall have executed the
Registration Rights Agreement;
(xii) Warrant. SELLER shall have executed and delivered the
Warrants in accordance with the terms of this Agreement;
(xiii) Company Certificates. BUYER shall have received within three
(3) days of closing a certificate, dated the closing date of the purchase of
the Common Shares, signed by the Secretary or an Assistant Secretary of SELLER
and certifying (a) that attached thereto is a true, correct and complete copy
of (1) SELLER'S Restated Articles of Organization, as amended to the date
thereof, (2) SELLER'S By-Laws, as amended to the date thereof, and (3)
resolutions duly adopted by the Board of Directors of Seller authorizing the
execution, delivery and (where appropriate) filing of the transaction documents
and the Certificate of Designation and the issuance and sale of the Common
Shares, the Warrants, and the Warrant Shares underlying the Warrants, and (b)
the incumbency of the officers executing the transaction documents, the Common
Shares and the Warrants.
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO CLOSE
SECOND TRANCHE
The obligation of BUYER to close the second tranche (the "Second
Tranche"), as provided in Section 8 hereof, is subject to the satisfaction or
waiver by BUYER, at or before the closing of the second tranche, each of the
following conditions:
(i) First Tranche. The closing of the First Tranche shall have occurred.
<PAGE> 13
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 13
(ii) Accuracy of SELLER'S Representations and Warranties. The
representations and warranties of SELLER contained herein and in the
Registration Rights Agreement shall be true and correct in all material
respects as of the date when made and as of the closing of the Second Tranche,
as though made on and as of such date;
(iii) Performance by SELLER. SELLER shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement and the Registration Rights Agreement to
be performed, satisfied or complied with by SELLER at or prior to the closing
of the First Tranche or the Second Tranche, as applicable;
(iv) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement relating to the issuance of any
of the Common Shares or exercise of any of the Warrants;
(v) Adverse Changes. Since the date of the financial statements
included in SELLER'S last filed Quarterly Report on Form 10-Q or Annual Report
on Form 10-K, whichever is more recent, last filed prior to the date of this
Agreement, no event which in the judgment of BUYER had a Material Adverse
Effect shall have occurred, nor shall there have occurred in the judgment of
BUYER a material adverse change in the financial conditions or prospects of
SELLER, which is not disclosed in the SEC Filings (for the purposes hereof,
changes in the market price of SELLER'S common stock may be considered in
determining whether there has occurred an event which has had a Material
Adverse Effect or whether a material adverse change has occurred);
(vi) Litigation. No material litigation shall have been instituted
or threatened against SELLER;
(vii) No Suspensions of Trading in Common Stock. The trading in
SELLER'S common stock shall not have been suspended by the Securities and
Exchange Commission or the American Stock Exchange (except for any suspension
of trading of limited duration solely to permit dissemination of material
information regarding SELLER);
(viii) Listing of Common Stock. SELLER'S common stock shall have
been at all times between the closing of the First Tranche and the closing of
the Second
<PAGE> 14
Private Sec. Sub. Agreement: COMFORCE Corporation/INFINITY INVESTORS LIMITED
December 26, 1996 Page 14
Tranche, and on such closing dates be, listed for trading on the American Stock
Exchange.
7. THIRD PARTY BENEFICIARY. The parties acknowledge and agree that
Shoreline Pacific, the Institutional Division of Financial West Group
("Shoreline Pacific"), shall be deemed a third party beneficiary of SELLER'S
agreements and representations set forth in this Agreement, entitled to enforce
the terms thereof, and to indemnification for any damages resulting to
Shoreline Pacific from any actual or threatened breach thereof by SELLER, both
in Shoreline Pacific's personal capacity and, should Shoreline Pacific so
elect, on behalf of BUYER.
8. CLOSING. Subject to the Conditions of Closing set forth below, the
investment of HW Partners, L.P. (which includes BUYER'S investment
hereunder, together with the $500,000 investment of Fairway Capital Ltd. on
like terms) shall take place in two tranches of $3,500,000 each. The first and
second tranches shall close on or about December 26, 1996, or at such other
time as is mutually agreed to by the parties. The appropriate Common Share
certificates and Warrants shall be delivered to BUYER and the funds therefor
shall be delivered to SELLER at each Closing.
9. CONDITIONS TO CLOSING
(i) BUYER understands that SELLER'S obligation to sell the Common
Shares is conditioned upon delivery as agreed between BUYER and SELLER by BUYER
of the amount set forth in Paragraph 1 hereof.
(ii) SELLER understands that BUYER'S obligation to purchase the
Common Shares is conditioned upon delivery of certificate(s) representing
Common Shares as described in Paragraph 1(ii) hereto and provision of an
opinion of counsel confirming the matters set out in Section 3(ii), (iii), (iv)
and (v) above.
(iii) SELLER understands that BUYER'S obligation to purchase the
Common Shares is conditioned upon SELLER and BUYER entering into a Registration
Rights Agreement substantially in the form of Annex I hereto.
(iv) SELLER understands that BUYER'S obligation to close the second
tranche of $3,500,000 is expressly conditioned on there not having occurred any
material adverse change in the business results of operation, condition
(financial or otherwise), prospects, properties or assets of SELLER, or any
material decline in the market price of SELLER'S Common Stock after the date of
this Agreement.
<PAGE> 15
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 15
10. GOVERNING LAW; INTERPRETATION. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of New York without
giving effect to rules governing the conflict of laws. Facsimile signatures of
this agreement shall be binding on all parties hereto.
11. AMENDMENT. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.
12. NOTICES, ETC. Any notice, demand or request required or permitted to
be given by either SELLER or BUYER pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally or by
facsimile, with a hard copy to follow by two (2) day courier addressed to the
parties at the addresses of the parties set forth at the beginning of this
Agreement or such other address as a party may request by notifying the other
in writing.
13. CONFIDENTIALITY. BUYER will keep confidential all non-public
information regarding SELLER that they received from SELLER unless disclosure
of such information is compelled by a court or other administrative body or
otherwise necessary, in the opinion of BUYER'S counsel, to comply with
applicable law. Neither party shall disclosure any information regarding any
of the transactions contemplated hereby without prior consent of the other
party, unless such disclosure is required in filings made with the SEC.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument. A facsimile transmission of a signature hereto shall be valid as
if an original and binding on all parties.
15. SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective
if it materially changes the economic benefit of this Agreement to any party.
16. PARTIES IN INTEREST. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law. This Agreement shall be binding upon, and shall inure to the benefit
of,
<PAGE> 16
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 16
the parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.
IN WITNESS WHEREOF, this Agreement was duly executed and is made effective as
of the 26th day of December, 1996.
Official Signatory of BUYER:
Infinity Investors Limited
BY: /s/ James E. Martin
---------------------------
James E. Martin
Director
Official Signatory of SELLER:
COMFORCE CORPORATION
BY: /s/ Andrew Reiben
---------------------------
Andrew Reiben
Assistant Secretary
<PAGE> 17
ANNEX I
ANNEX I
TO
SUBSCRIPTION
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 26, 1996 (this
"Agreement"), is made by and among COMFORCE Corporation a Delaware corporation
(the "Company"), and the person named on the signature page hereto (the
"Initial Investor").
W I T N E S S E T H :
WHEREAS, in connection with the Private Securities Subscription
Agreement, dated as of December 26, 1996, between the Initial Investor and the
Company (the "Subscription Agreement"), the Company has agreed, upon the terms
and subject to the conditions of the Subscription Agreement, to issue and sell
to the Initial Investor shares of Common Stock (the "Common Stock") and
Warrants to purchase shares of Common Stock (such shares referred to as
"Warrant Shares"). In addition, the Initial Investor may receive additional
Common Stock of the Company (the "Bonus Shares") pursuant to the provisions of
the Subscription Agreement between the parties thereto, to which this
Registration Rights Agreement is annexed. The Common Stock, the Warrant Shares
and the Bonus Shares are sometimes collectively referred to herein as
"Shares"); and
WHEREAS, to induce the Initial Investor to execute and deliver the
Subscription Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
<PAGE> 18
COMFORCE Corporation/Infinity Investors Limited December 26, 1996
Registration Rights Agreement
Page 2
(i) "Investor" means the Initial Investor and any
transferee or assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof; provided, however, that if the
Company has requested acceleration of any Registration Statement to register
the Shares held by such Investor, then the term "Investor" shall not include
any subsequent transferee of such Investor. Notwithstanding such proviso, the
Investor shall not be prohibited from transferring a beneficial interest in the
Shares so long as the same is permitted under applicable securities laws, and
the Company shall do all things necessary or appropriate to give effect to any
such transfer so as to facilitate the subsequent resale of the Shares pursuant
to a Registration Statement, all as contemplated in this Agreement.
(ii) "register," "registered," and "registration" refer to
a registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act on such appropriate
registration form promulgated by the Commission as shall be selected by the
Company, and when requested by the Initial Investor or any Investor pursuant to
Section 2(b) hereof, shall (A) be reasonably acceptable to the holders of a
majority of the Registrable Securities to which such registration relates, and
(B) shall permit the disposition of Registrable Securities in accordance with
the intended method or methods specified in the Investor's request for such
registration, and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
("SEC").
(iii) "Registrable Securities" means the Shares.
(iv) "Registration Statement" means a registration
statement under the Securities Act registering securities of the Company.
(v) "Rule 144" means Rule 144 promulgated under the
Securities Act.
(b) As used in this Agreement, the term Investor includes (i) each
Investor (as defined above) and (ii) each person who is a permitted transferee
or assignee of the Registrable Securities pursuant to Section 9 of this
Agreement.
(c) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Subscription Agreement.
2. REGISTRATION.
(a) REGISTRATION RIGHTS. The Company shall cause the Registrable
Securities to be included for registration for resale under the Securities Act
on Form S-1 (or on Forms S-2 or S-3 or any other form appropriately selected by
the Company for the resale registration of securities other than a registration
statement on Forms S-4 or S- 8). Company shall keep such Registration Statement
and the Prospectus used in connection
<PAGE> 19
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 3
therewith effective for a period of two years thereafter. The Company shall be
permitted to replace any Registration Statement with another (as, for example,
by replacing a Registration Statement on Form S-1 with one on Form S-3) so long
the Shares registered thereby are continuously registered for resale.
(b) DEMAND REGISTRATION. If, at any time after 90 days after the
last Closing, the Company has failed to cause to be declared effective or
failed to keep effective a Registration Statement covering the Shares as
described in Paragraph 2(a) above, and any Investor holding a majority of the
Registrable Securities shall notify the Company in writing that it intends to
offer or cause to be offered for public sale Registrable Securities held by
such Investor, the Company shall cause such of the Registrable Securities as
may be requested by any Investor to be registered, on one occasion only, under
the Securities Act and applicable state laws as expeditiously as possible.
Once the right for registration of any Registrable Securities under this
Section 2(b) has been exercised by any Investor, the Company shall prepare and
file a Registration Statement covering such Registrable Securities with the SEC
within ten (10) days of the exercise of such registration right and such
Registration Statement shall be kept effective for a period of no less than two
years thereafter.
(c) PAYMENTS BY THE COMPANY. If a Registration Statement covering
the Registrable Securities is not effective by April 30, 1997 (the "Required
Date"), then the Company will make payments to each holder of Registrable
Securities (each, a "Holder") in such amounts and at such times as shall be
determined pursuant to this Section 2(c). The amount to be paid by the Company
to the Holders shall be equal to: (1) 1/2% per month in the event the
Registration Statement is not effective by the Required Date; (2) 1% per month
in the event the Registration Statement is not effective within 30 days after
the Required Date; and (3) 2% per month in the event the Registration Statement
is not effective within 60 days after the Required Date, in each case of the
aggregate subscription price paid by the Initial Investor for the Shares
pursuant to the Subscription Agreement (the "Periodic Amount"). In the event
the Company receives a "no comment letter" from the SEC with regard to the S-1
filing, then the Company shall cause the S-1 to be effective within 5 business
days of the no comment letter; and if it is not so effective, then the monthly
penalties noted above will apply beginning on the 6th day following the date of
the no comment letter. The Periodic Amount shall be divided among all the
Holders in the same proportion as each Holder's Registrable Securities bears to
the total of the outstanding Registrable Securities. The Periodic Amount shall
be paid by the Company within five business days after each Computation Date
and shall be payable in cash; provided, however, that the Company may elect in
lieu of payment of any Periodic Amount in cash to deliver to the Initial
Investor shares of Common Stock having an Aggregate Market Value equal to the
amount of the Periodic Amount if, but only if, such shares are freely tradable
by the Initial Investor without any restriction under the Securities Act or any
state securities or "blue sky" law.
<PAGE> 20
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 4
As used in this Section 2(c), the following terms shall have the
following meanings:
"Aggregate Market Value" of any shares of Common Stock as of any
Computation Date means the product obtained by multiplying (a) such number of
shares of Common Stock times (b) the Average Market Price of the Common Stock
for the Measurement Period for such Computation Date.
"Average Market Price" of any security for any period shall be
computed as the average closing bid price of the shares over the five
trading-day period ending on the relevant Computation Date, as reported by
Bloomberg, L.P.
"Computation Date" means the date which is 60 days after the exercise
of demand registration rights under Section 2(b) and, if the Registration
Statement required to be filed by the Company pursuant to Section 2(b) has not
theretofore been declared effective by the SEC, each date which is 30 days
after a Computation Date and, if the Registration Statement required to be
filed by the Company pursuant to Section 2(b) is not declared effective by the
SEC within 60 days after the exercise of demand registration rights under
Section 2(b), the date on which such Registration Statement is declared
effective.
"Measurement Period" means the period of ten consecutive trading days
for the Common Stock ending on (or on the last trading day preceding) each
Computation Date.
3. OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall:
(a) prepare promptly and file with the SEC promptly (but in no
event later than 10 days) after a request in accordance with Section 2(b)
hereof a Registration Statement or Statements with respect to all Registrable
Securities to be included therein, and thereafter use its best efforts to cause
the Registration Statement to become effective as soon as reasonably possible
after such filing. If such Registration Statement is filed pursuant to Rule
415, the Company shall keep the Registration Statement effective pursuant to
Rule 415 at all times until such date as is two years after the date such
Registration Statement is first ordered effective by the SEC. In any case, the
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) filed by the Company shall not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein, or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; provided, however,
that, subject to the conditions set forth in Section 4(a) below, each Investor
may notify the Company in writing that it wishes to
<PAGE> 21
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 5
exclude all or a portion of its Registrable Securities from such Registration
Statement; provided further, however, that if at any time the Investors shall
be entitled to sell all Registrable Securities held by them pursuant to Rule
144 promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration and without
imposing restrictions arising under the federal securities laws on the
purchases thereof in a period of two consecutive months, then the Company
shall, so long as it meets the current public information requirements of Rule
144, thereafter no longer be required to maintain the registration of
Registrable Securities pursuant to this Agreement;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and
the prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times until such
date as is two years after the date such Registration Statement is first
ordered effective by the SEC, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until the earlier of (i) such two-year period or (ii) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in the
Registration Statement;
(c) furnish to each Investor whose Registrable Securities are
included in the Registration Statement, such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Investor;
(d) use reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Investors who hold a
majority in interest of the Registrable Securities being offered reasonably
request, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications
in effect at all times until such date as is the earlier of three years after
the date such Registration Statement is first ordered effective by the SEC or
is three years after the Initial Investor acquired the Shares and (iv) take all
other actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to (I)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (II) subject itself to general
taxation in any such jurisdiction, (III) file a general consent to service of
process in any
<PAGE> 22
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 6
such jurisdiction, (IV) provide any undertakings that cause more than nominal
expense or burden to the Company or (V) make any change in its charter or
by-laws, which in each case the Board of Directors of the Company determines to
be contrary to the best interests of the Company and its stockholders;
(e) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver a number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request;
(f) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any stop order or other suspension
of effectiveness of the Registration Statement at the earliest possible time;
(g) permit a single firm of counsel designated as selling
stockholders' counsel (such counsel to be retained at such Investor(s)'
expense) by the Investors who hold a majority in interest of the Registrable
Securities being sold pursuant to such registration to review the Registration
Statement and all amendments and supplements thereto a reasonable period of
time prior to their filing with the SEC, and shall not file any document in a
form to which such counsel reasonably objects;
provided that counsel shall expeditiously complete its review so that
the registration can be timely effected;
(h) make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions
of Rule 158 under the Securities Act) covering a twelve-month period beginning
not later than the first day of the Company's fiscal quarter next following the
date of the Registration Statement;
(i) make its officers available from time to time to respond to
inquires of Investors and make available to any Investor, all pertinent
financial and other records, pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably necessary to
enable such Investor to exercise its due diligence responsibility, and cause
the Company's officers, directors and employees to supply all information which
such Investor may reasonably request for purposes of such due diligence;
provided, however, that such Investor shall not make any
<PAGE> 23
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 7
disclosure (except to an Investor who has previously entered into a written
confidentiality agreement with the Company) of any Record or other information
which the Company determines in good faith to be confidential and of which
determination the Investor is so notified unless (i) in the event an Investor
believes that disclosure of Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, then it shall notify
the Company in writing of its belief and the basis therefor and shall provide
the Company with reasonable opportunity to correct the misstatement or omission
or provide to Investor reasonably satisfactory evidence that such a correction
is not required (ii) the release of such Records is ordered pursuant to a
subpoena or other order from a court or government body of competent
jurisdiction or (iii) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. Such Investor shall, upon completing such due diligence,
destroy or return to the Company all such Records and all copies or
distillation thereof and all notes or other stored information containing
information derived in whole or in part from such Records; provided further
that such Investor may retain one copy of the Records in its office of its
legal counsel solely for the purpose of preserving the record of the materials
received by it and using the same to defend against any claims or actions
threatened or instituted involving the Records and such Records may not be made
available to any person for any other purpose at any time hereafter. The
Company shall not be required to disclose any confidential information in such
Records to any Investor until and unless such Investor shall have entered into
confidentiality agreements (in form and substance satisfactory to the Company)
with the Company with respect thereto, substantially in the form of this
Section 3(i). Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. The Company shall hold in confidence and shall not make
any disclosure of information concerning an Investor provided to the Company
unless (i) disclosure of such information is necessary to comply with federal
or state securities laws, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or
other order from a court or governmental body of competent jurisdiction or (iv)
such information has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company agrees
that it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor, at
its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information;
<PAGE> 24
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 8
(j) use its best efforts either to (i) cause all the Registrable
Securities covered by the Registration Statement to be listed on a national
securities exchange and on each additional national securities exchange on
which similar securities issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of
such exchange or (ii) secure designation of all the Registrable Securities
covered by the Registration Statement as a National Association of Securities
Dealers Automated Quotations System ("NASDAQ") "national market system
security" within the meaning of Rule 11Aa2-1 of the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the quotation of the
Registrable Securities on the NASDAQ National Market System or, if, despite the
Company's best efforts to satisfy the preceding clause (i) or (ii), the Company
is unsuccessful in satisfying the preceding clause (i) or (ii), to secure
listing on a national securities exchange or NASDAQ authorization and quotation
for such Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with respect
to such Registrable Securities;
(k) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(l) cooperate with the Investors who hold Registrable Securities
being sold to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to the denominations or
amounts as the case may be, and registered in such names as the Investors may
reasonably request; and, within five business days after a Registration
Statement which includes Registrable Securities is ordered effective by the
SEC, the Company shall deliver, and shall cause legal counsel selected by the
Company to deliver, to the transfer agent for the Registrable Securities (with
copies to the Investors whose Registrable Securities are included in such
Registration Statement) instructions to the transfer agent to issue new stock
certificates without a legend and an opinion of such counsel that the shares
have been registered; and
(m) take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant
to the Registration Statement;
4. OBLIGATIONS OF THE INVESTORS. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to each
Investor that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable
<PAGE> 25
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 9
Securities held by it as shall be reasonably required to effect the
registration of the Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least fifteen (15) days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Investor of the
information the Company requires from each such Investor (the "Requested
Information") if such Investor elects to have any of such Investor's
Registrable Securities included in the Registration Statement. If within five
(5) business days prior to the filing date the Company has not received the
Requested Information from an Investor (a "Non- Responsive Investor"), then the
Company may file the Registration Statement without including Registrable
Securities of such Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement;
(c) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e) or
3(f), or that the Board of Directors of the Company has determined, in its good
faith reasonable judgment, that the disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
would materially interfere with, or require the premature disclosure of, any
financing, acquisition or reorganization involving the Company or any of its
subsidiaries or otherwise would require premature disclosure or any other
material nonpublic information as to which the Company has a bona fide business
purpose for maintaining its confidentiality, such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Investor's receipt of
the copies of the supplemented or amended prospectus contemplated by Section
3(e) or 3(f), or upon receipt of written authorization from the Company and ,
if so directed by the Company, such Investor shall deliver to the Company (at
the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in such Investor's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice; and
5. EXPENSES OF REGISTRATION. All expenses (other than
commissions and other fees and expenses of investment bankers and other than
brokerage commissions) incurred in connection with registrations, filings or
qualifications pursuant to Section 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees and
the fees and disbursements of counsel for the Company, shall be borne by the
Company; provided, however, that the Investors shall bear the fees and
<PAGE> 26
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 10
out-of-pocket expenses of the one legal counsel selected by the Investors
pursuant to Section 3(h) hereof.
6. INDEMNIFICATION. In the event any Registrable
Securities are included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified Person"), against any
losses, claims, damages, expenses or liabilities (joint or several)
(collectively "Claims") to which any of them become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations in the Registration Statement, or any post-effective amendment
thereof, or any prospectus included therein: (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary
to make the statements made therein, in light of the circumstances under which
the statements therein were made, not misleading or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act or any
state securities law or any rule or regulation (the matters in the foregoing
clauses (i) through (iv) being, collectively, "Violations"). Subject to the
restrictions set forth in Section 6 (d) with respect to the number of legal
counsel, the Company shall reimburse the Investors and each such underwriter or
controlling person, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a) (I) shall not apply to a Claim arising out of
or based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any Indemnified Person or
underwriter for such Indemnified Person expressly for use in connection with
the preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the
Company pursuant to Section 3(c) hereof; (II) with respect to any preliminary
prospectus shall not inure to the benefit of any such person from whom the
person asserting any such Claim purchased the Registrable Securities that are
the subject
<PAGE> 27
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 11
thereof (or to the benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof; and (III) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf
of the Indemnified Persons and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify and hold
harmless, to the same extent and in the same manner set forth in Section 6(a),
the Company, each of its directors, each of its officers who signs the
Registration Statement, each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder within the
meaning of the Securities Act or the Exchange Act (collectively and together
with an Indemnified Person, an "Indemnified Party"), against any Claim to which
any of them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon any Violation,
in each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished to the
Company by such Investor expressly for use in connection with such Registration
Statement; provided, however, that the indemnity agreement contained in this
Section 6(b) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor,
which consent shall not be unreasonably withheld; provided, further, however,
that the Investor shall be liable under this Section 6(b) for only that amount
of a Claim as does not exceed the net proceeds to such Investor as a result of
the sale of Registrable Securities pursuant to such Registration Statement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
(c) The Company shall be entitled to receive indemnities from
selling brokers, dealer managers and similar securities industry professionals
participating in any distribution, to the same extent as provided above, with
respect to information
<PAGE> 28
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 12
such persons so furnished in writing by such persons expressly for inclusion in
the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof and this indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying parties;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and other party represented by such counsel in such
proceeding. The Company shall pay for only one separate legal counsel for the
Investors; such legal counsel shall be selected by the Investors holding a
majority in interest of the Registrable Securities. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of
any liability to the Indemnified Person or Indemnified Party under this Section
6, except to the extent that the indemnifying party is prejudiced in its
ability to defend such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
7. CONTRIBUTION. To the extent any indemnification provided for
herein is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that (a) no contribution shall be made under circumstances
where the maker would not have been liable for indemnification under the fault
standards set forth in Section 6, (b) no seller of Registrable Securities
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent misrepresentation
and (c) contribution by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale
of such Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making
available to the Investors the benefits of Rule 144 or any other similar rule
or regulation of the SEC that
<PAGE> 29
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 13
may during the period beginning two years after and ending three years from the
earliest conversion date allowed hereunder, permit the Investors to sell
securities of the Company to the public without registration, until such time
as the Investors have sold all the Registrable Securities pursuant to a
Registration Statement or Rule 144, the Company agrees to during such period:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
hold a majority in interest of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.
10. THIRD PARTY BENEFICIARY. The parties acknowledge and agree that
Shoreline Pacific, the Institutional Division of Financial West Group
("Shoreline Pacific"), shall be deemed a third party beneficiary of the
Company's agreements and representations set forth in this Agreement, entitled
to enforce the terms thereof, and to indemnification for any damages resulting
to Shoreline Pacific from any actual or threatened breach thereof by the
Company, both in Shoreline Pacific's personal capacity and, should Shoreline
Pacific so elect, on behalf of the Investor.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
<PAGE> 30
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 14
(b) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when delivered by
facsimile transmission, personally delivered or when sent by registered mail,
return receipt requested, addressed (i) if to the Company, at COMFORCE
Corporation, 2001 Marcus Avenue, Lake Success, NY 11042 Attention: Paul J.
Grillo, Chief Financial Officer, (ii) if to the Initial Investor, at the
address set forth under its name in the Subscription Agreement and (iii) if to
any other Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes
by notice given in accordance with this Section 12(b), and shall be effective,
when delivered by facsimile transmission, upon confirmation thereof; when
personally delivered, upon receipt; and when sent by certified mail, four
business days after deposit with the United States Postal Service.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of New York applicable to the agreements
made and to be performed entirely within such state, without giving effect to
rules governing the conflict of laws. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision hereof.
(e) This Agreement and the Subscription Agreement to which this
Agreement is annexed constitute the entire agreement among the parties hereto
with respect to the subject matter hereof. There are no other restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The headings in the Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
<PAGE> 31
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 15
(i) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of day and
year first above written.
COMFORCE CORPORATION
By /s/ Andrew Reiben
-----------------------
Andrew Reiben
Assistant Secretary
Infinity Investors Limited
By /s/ James E. Martin
-----------------------
James E. Martin
Director
<PAGE> 1
EXHIBIT 99.3
PRIVATE SECURITIES SUBSCRIPTION AGREEMENT
COMFORCE CORPORATION/SEACREST CAPITAL LIMITED
December 26, 1996
THIS PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter the
"Agreement") has been executed by the undersigned in connection with the sale in
a private placement pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), of certain shares of common stock, par value
$.01 per share, (hereinafter the "Common Shares") of COMFORCE Corporation (CFS),
2001 Marcus Avenue, Lake Success, NY 11042, a corporation organized under the
laws of Delaware (hereinafter "SELLER") to Seacrest Capital Limited located at
27 Wellington Road, Cork, Ireland, a corporation organized under the laws of
Nevis, West Indies (hereinafter "BUYER"). SELLER and BUYER (hereinafter
collectively the "parties") each hereby represents, warrants and agrees as
follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE AND TERMS
(i) SELLER and BUYER are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506
under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission under the Securities Act; and
(ii) BUYER hereby subscribes for One Hundred Thousand (100,000) Common
Shares of Seller for an aggregate purchase price of One Million Dollars
($1,000,000) payable in United States Dollars at the Closing, as defined in
Paragraph 7 hereof.
(iii) BUYER shall pay the purchase price by delivering same day funds
in United States Dollars as agreed between the parties, to be delivered to the
order of SELLER upon delivery of the Common Shares.
(iv) In addition, BUYER shall receive a Common Stock Purchase Warrant
(the "Warrant" or "Warrants") entitling BUYER to purchase Twenty-Nine Thousand
Two Hundred Fifty (29,250) Common Shares at an exercise price of $19 per share.
The Warrants shall be exercisable upon issuance to BUYER at Closing and will
expire on December 26, 1999. The Common Shares issuable upon exercise of the
Warrants are hereinafter referred to as the "Warrant Shares".
(v) In the event that SELLER files an S-1 registration statement in
connection with an underwritten public offering (the "Secondary Offering"), the
Common Shares referred to in subsection (ii) above will be included in such
<PAGE> 2
Private Sec. Sub. Agreement: COMFORCE Corporation/Seacrest Capital Limited
December 26, 1996 Page 2
registration statement and will be sold by such underwriters at the price to
the public set forth on the final prospectus therefor. These Common Shares may
not be sold until the closing of the Secondary Offering; provided, however,
that the Common Shares will be tradable on May 1, 1997, in the event the
effective date of said S-1 registration statement (the "Effective Date") has
not occurred by that date, it being understood that under such circumstances
SELLER will have registered the Common Shares for resale in a shelf
registration not calling for an underwritten offering (said period during which
the Common Shares may not be sold referred to herein as the "Lock-Up Period").
(vi) In the event the Market Price (defined as the lesser of (a) the
average of the closing bid price of SELLER'S common stock over the ten trading
days immediately preceding the date in question, or (b) the closing bid price
of SELLER'S common stock on the trading day immediately preceding the date in
question, in both instances as reported by Bloomberg, L.P.) is less than Twelve
Dollars and Five Cents ($12.05) per share on the earlier of the Effective Date
or May 1, 1997, then SELLER shall pay to BUYER the difference between the
Market Price and $12.05, multiplied by the number of Common Shares held by
BUYER on such date (the "Initial Payment Right"); provided, however, that if,
on May 1, 1997, (1) the Market Price is between $10.00 per share and $15.00 per
share (inclusive), and (2) the Effective Date has not yet occurred, and (3) the
average daily trading volume of SELLER'S common stock is less than 57,000
shares for the ten trading days immediately preceding May 1, 1997, then a
payment of $2.05 per share will be made to BUYER in lieu of the Initial Payment
Right. SELLER shall have the option to make the payment required under this
subsection in cash or in common stock of SELLER, or in any combination thereof,
and shall make such payment to BUYER on the earlier of the Effective Date or
May 1, 1997. Any shares of SELLER'S common stock delivered to BUYER in
satisfaction of SELLER'S obligations under this subsection are referred to
herein as "Bonus Shares."
2. BUYER'S REPRESENTATIONS AND AGREEMENTS
BUYER represents, warrants and agrees as follows:
(i) BUYER understands that the Common Shares, the Bonus Shares, the
Warrants, and the Warrant Shares (collectively, the "Securities") have not been
registered under the Securities Act, or any other applicable securities law,
and, accordingly, none of the Securities may be offered, sold, transferred,
pledged, hypothecated or otherwise disposed of unless registered pursuant to,
or in a transaction exempt from registration under, the Securities Act and any
other applicable securities law;
<PAGE> 3
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 3
(ii) BUYER is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3), or (7) of Regulation D (an "Accredited Investor") that is
acquiring the Securities either for its own account or as a fiduciary or agent
for one or more institutional accounts as to which it exercises sole
discretion, each of which is an Accredited Investor. BUYER has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the Securities. BUYER has
had a reasonable opportunity to ask questions of and receive answers from
SELLER concerning SELLER and the offering of the Securities. BUYER is not
subscribing for the Securities as a result of or pursuant to any advertisement,
article, notice, or other communication published in any newspaper, magazine,
or similar media or broadcast over television or radio. BUYER is aware that it
(or such institutional account) may be required to bear the economic risk of an
investment in the Securities for an indefinite period, and it (or such
institutional account ) is able to bear such risk for an indefinite period;
(iii) BUYER is acquiring the Securities for its own account or for one
or more institutional accounts as described in Paragraph 2(ii) hereof, in each
case for investment purposes and not with a view to, or for offer or sale in
connection with, any distribution thereof (subject to any requirement of law
that the disposition of its property or the property of such institutional
account or accounts remain within its or their control). BUYER agrees on its
own behalf and on behalf of any such institutional account for which it is
acquiring the Securities to offer, sell or otherwise transfer any Securities
only to Accredited Investors (subject to any requirement of law that the
disposition of its property or the property of such institutional account or
accounts remain within its or their control) in conformity with the Securities
Act and any other applicable securities law and with the restrictions on
transfer set forth on the certificate(s) evidencing the Common Shares and the
Bonus Shares. BUYER acknowledges that each certificate evidencing the Common
Shares or the Bonus Shares shall bear a legend substantially to the effect of
the foregoing paragraphs 2(i) and 2(ii) and this paragraph 2(iii). Such legend
shall be in substantially the following form:
"THE COMMON SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED OR SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF
CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A PRIVATE
SECURITIES SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND SEACREST
CAPITAL LIMITED DATED DECEMBER 26, 1996. A COPY
<PAGE> 4
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 4
OF THE PORTION OF THE AFORESAID SUBSCRIPTION AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE OFFICES."
Upon expiration of the Lock-Up Period, SELLER shall promptly exchange
Buyer's legended Common Stock certificates representing Common Shares or Bonus
Shares for unlegended Common Stock certificates.
(iv) BUYER acknowledges that prior to the expiration of the Lock-Up
Period, SELLER or any transfer agent of SELLER shall register the transfer or
exchange of any of the Securities only upon receipt of the certificate(s)
evidencing such Securities with the transfer notice set forth thereon
appropriately completed and upon receipt in writing from the transferee or the
recipient of such Securities in such transfer or exchange (as the case may be)
of a certificate setting forth the representations in Paragraph 2 hereof and
only upon the availability of an exemption from registration under the
Securities Act;
(v) If BUYER is acquiring any of the Securities as fiduciary or agent
for one or more institutional accounts, BUYER represents that it has sole
investment discretion with respect to each such account and that it has full
power to make the foregoing acknowledgments, representations and agreements on
behalf of each such institutional account;
(vi) BUYER acknowledges that SELLER will rely upon the truth and
accuracy of the foregoing acknowledgments, representations and agreements and
further agrees that if, prior to any closing hereunder, any of such
acknowledgments, representations and agreements made by BUYER are no longer
accurate, BUYER will promptly notify SELLER;
(vii) BUYER has received SELLER'S latest Form 10-K, all Forms 10-Q and
8-K filed thereafter, any amendments thereto, and the Proxy Statement for its
latest fiscal year (collectively, the "Public Documents") and the Private
Placement Memorandum prepared by SELLER;
(viii) This Agreement has been duly authorized, validly executed, and
delivered on behalf of BUYER and is a valid and binding agreement enforceable
in accordance with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally; and
(ix) BUYER has not engaged and agrees not to engage in any short sales
of the Company's common stock prior to the expiration of the Lock-Up Period,
except to the extent that any such short sale is fully covered by shares of
<PAGE> 5
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 5
common stock of SELLER owned by BUYER other than the Common Shares or Bonus
Shares purchased pursuant to this Agreement.
3. SELLER'S REPRESENTATIONS AND AGREEMENTS
SELLER represents, warrants and agrees as follows:
(i) SELLER has not conducted any general solicitation or general
advertising (as defined in Regulation D) with respect to any of its securities;
(ii) The Common Shares, the Bonus Shares and the Warrant Shares, when
issued and delivered will be duly and validly authorized and issued, fully-paid
and nonassessable, free and clear of any liens, encumbrances, charges, or
adverse claims of any nature whatsoever, and will not subject the holders
thereof to personal liability by reason of being such holders. There are no
preemptive rights of any shareholder of SELLER with respect to the transactions
contemplated by this Agreement or the Warrant;
(iii) Seller is duly organized, validly existing and in good standing
under the laws of Delaware. All subsidiaries of Seller are likewise duly
incorporated, validly existing and in good standing under the laws of the
jurisdictions in which they are organized.
(iv) This Agreement and the Warrant have each been duly authorized,
validly executed and delivered on behalf of SELLER and constitute valid and
binding agreements in accordance with their respective terms, subject to
general principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally;
(v) The execution and delivery of this Agreement and the Warrant and
the consummation of the issuance of the Securities and the transactions
contemplated by this Agreement do not and will not conflict with or result in a
breach by SELLER of any of the terms or provisions of, or constitute a default
under, the articles of incorporation (or charter) or bylaws of SELLER, or any
indenture, mortgage, deed of trust or other material agreement or instrument to
which SELLER is a party or by which it or any of its properties or assets are
bound, or any existing applicable decree, judgment or order of any court,
federal or state regulatory body, administrative agency or other governmental
body having jurisdiction over SELLER or any of its properties or assets;
(vi) No authorization, approval or consent of or filing with any
federal, state or local governmental body of the United States or any third
party is
<PAGE> 6
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 6
required for the issuance and sale of the Securities as contemplated by this
Agreement;
(vii) Neither the information provided by or on behalf of SELLER to
BUYER and referred to in Section 2(vii) of this Agreement, nor any
representation or warranty made by SELLER to BUYER hereunder contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make such statements, in the light of the circumstance
under which they are made, not misleading. All of such information (the "SEC
Filings") required to be filed under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), was timely filed and each such report, at the time
filed, complied as to form with the requirements of the 1934 Act. Since
December 31, 1995, there has been no material adverse development in the
business, properties, operations, financial condition or results of operations
of SELLER, except as disclosed in the documents referred to in the SEC Filings.
The audited and unaudited consolidated balance sheets of the Seller contained
in the SEC Filings, and the related consolidated statements of income, changes
in stockholders' equity and changes in cash flows for the periods then ended
(the consolidated balance sheet of the SELLER as of December 31, 1995 is
hereinafter referred to as the "Balance Sheet"), including footnotes thereto,
except as indicated therein, have been prepared in accordance with generally
accepted accounting principles consistently followed throughout the periods
indicated. The Balance Sheet fairly presents the financial condition of SELLER
at the date thereof and, except as indicated therein, reflects all claims
against and all debts and liabilities of SELLER, fixed or contingent, as of the
date thereof and the related statements of income, stockholders' equity and
changes in cash flows fairly present the results of the operations of SELLER
and its financial position for the period indicated. Since December 31, 1995,
(the "Balance Sheet Date") there has been (x) no material adverse change in the
assets or liabilities, or in the business condition, financial or otherwise, or
in the results of operations or prospects, of the SELLER and its subsidiaries,
whether as a result of any legislative or regulatory change, revocation of any
license or rights to do business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation, act of God, public force or
otherwise, and (y) no change in the assets or liabilities, or in the business
or condition, financial or otherwise, or in results of operations or prospects,
of the SELLER except the ordinary course of business; and, to the best
knowledge, information and belief of the SELLER, no fact or condition exists or
is contemplated or threatened which might cause such a change in the future.
(viii) SELLER will issue one or more certificates representing the
Common Shares in the name of BUYER in such denominations to be specified by
BUYER prior to closing. SELLER will issue one or more certificates
representing the Warrant in the name of BUYER in such denominations to be
specified by BUYER
<PAGE> 7
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 7
prior to closing. Until the end of the Lock-Up Period and prior to any
exchange for unlegended share certificates, certificates representing the
Common Shares and the Bonus Shares will bear the restrictive legend specified
in Section 2(iii) of this Agreement. Upon exercise of the Warrant in
accordance with its terms, SELLER will issue one or more certificates
representing Warrant Shares in such name or names and in such denominations
specified by BUYER in an election to purchase. Subject to the provisions of
the Registration Rights Agreement, the Warrant Shares shall not bear any
restrictive legends and shall be freely tradable, subject to compliance with
federal and state securities laws. SELLER further warrants that no
instructions other than these instructions and stop transfer instructions to
give effect to Section 2(i) hereof will be given to the transfer agent and also
warrants that the Securities shall otherwise be transferable on the books and
records of SELLER as and to the extent provided in this Agreement, subject to
compliance with federal and state securities laws. Following registration of
the Common Shares, the Bonus Shares and the Warrant Shares, SELLER agrees to
furnish new instructions to the transfer agent advising them of registration
and instructing them to reissue the Common Shares without a legend and to
notify Buyer of the delivery of such instructions. Nothing in this Section
shall affect in any way BUYER'S obligations and agreement to comply with all
applicable securities laws upon resale of the Securities.
(ix) Except as disclosed in the SEC Filings, there is no action, suit
or proceeding before or by any court or governmental agency or body, domestic
or foreign, now pending or, to the knowledge of SELLER, threatened against or
affecting SELLER, or any of its properties, which could reasonably be expected
to result in any material adverse change in the business, properties, results
of operations, condition (financial or otherwise), or prospects of SELLER, or
which could reasonably be expected to materially and adversely affect the
properties or assets of SELLER or which could reasonably be expected to
interfere with SELLER'S ability to consummate the transactions contemplated by
this Agreement and the Warrant.
(x) Private Placements. Except as set forth in the SEC Filings,
SELLER has not issued any shares of its Common Stock (or securities convertible
into or exercisable for shares of Common Stock), pursuant to any exemption from
registration under the Securities Act, except for shares of Common Stock issued
as an adjustment to, or in connection with a conversion or exercise of, such
securities, except as set forth or contemplated in the SEC Filings.
(xi) Commissions. Except for a fee which is payable by SELLER to
Shoreline Pacific, no other person, firm or corporation will be entitled to
receive any brokerage fee, commission or other similar payment from SELLER in
connection with the consummation of the transactions contemplated hereby and
<PAGE> 8
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 8
SELLER shall not make any such payment to any person, firm or corporation other
than as set forth herein.
(xii) Accountants. For as long as any Common Shares or Bonus Shares
remain subject to the Lock-Up Period, SELLER shall, until at least the second
anniversary of the date of the Closing (the "Closing Date"), maintain as its
independent auditors an accounting firm that is authorized to practice before
the SEC.
(xiii) Corporate Existence and Taxes. For as long as any Common Shares
or Bonus Shares remain subject to the Lock-Up Period, SELLER shall, until the
second anniversary of the Closing Date, maintain its corporate existence and
good standing, and shall pay all its taxes when due except for taxes which
SELLER disputes in good faith and for which adequate reserves are established
on SELLER'S books and records.
(xiv) Reserved Shares and Listings. For so long as any Common Shares
or Warrants remain outstanding:
(a) SELLER will reserve from its authorized but unissued
Common Shares a sufficient number of Common Shares to permit the
exercise of the then outstanding Warrants; and
(b) SELLER will maintain a listing of its common stock on the
Nasdaq National Stock Market or a national securities exchange.
(xv) Capitalization. SELLER has an authorized capitalization
consisting of (a) One Hundred Million (100,000,000) shares of common stock,
$0.01 par value, of which Ten Thousand (10,000,000) shares are issued and
outstanding and Zero (0) shares are held in SELLER'S treasury. All such
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable. There are no outstanding options, warrants, rights,
calls, commitments, conversion rights, rights of exchange, plans or other
agreements of any character providing for the purchase, issuance or sale of any
shares of the capital stock of SELLER, other than as contemplated by this
Agreement.
(xvi) Subsidiaries. Set forth in Exhibit A attached hereto is a list
of each corporation in which SELLER owns, directly or indirectly, any equity
security (a "subsidiary"). Each subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation (as set forth on Exhibit A), and has all requisite power to own
its property and to carry on its business as now being conducted. Set forth on
Exhibit A is a list of jurisdictions in which each subsidiary is qualified as a
foreign corporation. Such
<PAGE> 9
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 9
jurisdictions are the only jurisdictions in which the character or location of
the properties owned or leased by each subsidiary, or the nature of the
business conducted by each subsidiary, makes such qualifications necessary.
All of the outstanding shares of capital stock of each subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable, and,
except as set forth in Exhibit A, are owned, of record and beneficially, by
SELLER, free and clear of all liens, encumbrances, restrictions and claims of
every kind. No shares of capital stock of any subsidiary are reserved for
issuance and there are no outstanding options, warrants, rights, subscriptions,
claims, agreements, obligations, convertible or exchangeable securities or
other commitments, contingent or otherwise, relating to the capital stock of
any subsidiary or pursuant to which any subsidiary is or may become obligated
to issue or exchange any shares of capital stock. Neither SELLER nor any
subsidiary owns, directly or indirectly, any capital stock or other equity or
ownership or proprietary interest in any corporation, partnership, association,
trust, joint venture or other entity except as set forth on Exhibit A.
(xviii) Private Offering. Assuming (without any independent
investigation or verification by or on behalf of SELLER) the accuracy of the
representations and warranties of BUYER set forth herein, the offer and sale of
the Common Shares, the Bonus Shares, the Warrants, and the Warrant Shares are
exempt from registration under Section 5 of the Securities Act of 1933, as
amended (the "Securities Act"). Neither SELLER nor any person acting on its
behalf has taken or will take any action (including, without limitation, any
offering of any securities of SELLER under circumstances which would require
the integration of such offering with the offering of the shares under the
Securities Act) which might subject the offering, issuance or sale of the
Common Shares, the Bonus Shares, the Warrants, or the Warrant Shares to the
registration requirements of Section 5 of the Securities Act.
(xix) Consents and Approvals. Neither SELLER nor any Subsidiary is
required to obtain any consent, waiver, authorization or order of, or make any
filing or registration with, any court or other federal, state local, or other
governmental authority or other person in connection with the execution,
delivery and performance by SELLER of the transaction documents except for (i)
the filing of the registration statements contemplated by the Registration
Rights Agreement with the Securities and Exchange Commission, which shall be
filed in the time periods set forth in the Registration Rights Agreement, (ii)
applications for the listing of the Common Shares, the Bonus Shares and the
Warrant Shares with the American Stock Exchange (and with any other national
securities exchange or market on which SELLER'S common stock is then listed),
and (iii) other than, in all other cases, where the failure to obtain such
consent, waiver, authorization or order, or to give or make such notice of
filing, would
<PAGE> 10
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 10
not materially impair or delay the ability of SELLER to effect the Closings and
to deliver to BUYER the Common Shares, the Bonus Shares, the Warrants (and,
upon exercise of the Warrants, the Warrant Shares) in the manner contemplated
hereby and the Registration Rights Agreement free and clear of all liens and
encumbrances of any nature whatsoever.
(xx) SELLER hereby covenants and agrees to comply with all terms and
conditions of the Registration Rights Agreement which is annexed hereto.
4. CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER TO SELL THE COMMON
SHARES
The obligation of SELLER to sell the Common Shares hereunder is subject
to the satisfaction or waiver by SELLER, at or before the Closing of the
purchase thereof, of each of the following conditions:
(i) Accuracy of BUYER'S Representations and Warranties. The
representations and warranties of BUYER shall be true and correct in all
material respects as of the date when made and as of the Closing Date, as
though made on and as of such date (except that representations and warranties
that are made as of a specific date need be true in all material respects only
as of such date);
(ii) Performance by BUYER. BUYER shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by BUYER
at or prior to the Closing;
(iii) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement; and
(iv) Required Approvals. All Required Approvals shall have been
obtained.
5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO PURCHASE THE
COMMON SHARES.
The obligation of BUYER hereunder to acquire and pay for the Common
Shares is subject to the satisfaction or waiver by BUYER, at or before the
closing of the purchase of the Common Shares, of each of the following
conditions:
<PAGE> 11
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 11
(i) Accuracy of SELLER'S Representations and Warranties. The
representations and warranties of SELLER contained herein and in the
Registration Rights Agreement shall be true and correct in all material
respects as of the date when made and as of the Closing, as though made on and
as of such date, and SELLER shall have delivered to BUYER a certificate of its
Chief Executive Officer or Chief Financial Officer, dated the Closing Date to
that effect;
(ii) Performance by SELLER. SELLER shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement and the Registration Rights Agreement to
be performed, satisfied or complied with by SELLER at or prior to the Closing;
and SELLER shall have delivered to BUYER a certificate of its Chief Executive
Officer or Chief Financial Officer, dated the Closing Date to that effect;
(iii) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement relating to the issuance or
exercise of any of the Warrants;
(iv) Adverse Changes. Since the date of the financial statements
included in SELLER'S last filed Quarterly Report on Form 10-Q or Annual Report
on Form 10-K, whichever is more recent, last filed prior to the date of this
Agreement, no event which in the judgment of BUYER had a Material Adverse
Effect shall have occurred, nor shall there have occurred in the judgment of
BUYER a material adverse change in the financial conditions or prospects of
SELLER, which is not disclosed in the SEC Filings (for the purposes hereof,
changes in the market price of SELLER'S common stock may be considered in
determining whether there has occurred an event which has had a Material
Adverse Effect or whether a material adverse change has occurred), and SELLER
shall have delivered to BUYER a certificate of its Chief Executive Officer or
Chief Financial Officer, dated the Closing Date to that effect;
(v) Litigation. No material litigation shall have been instituted or
threatened against SELLER, and no proceedings for the dissolution of SELLER
shall have been commenced;
(vi) No Suspensions of Trading in Common Stock. The trading in
SELLER'S common stock shall not have been suspended by the Securities and
Exchange Commission or the American Stock Exchange (except for any
<PAGE> 12
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 12
suspension of trading of limited duration solely to permit dissemination of
material information regarding SELLER);
(vii) Listing of Common Stock. SELLER'S common be, on the dates of
Closing, listed for trading on the American Stock Exchange.
(viii) Legal Opinion. SELLER shall have delivered to the escrow agent
on behalf of BUYER the opinion of Doepken Keevican & Weiss, counsel to SELLER;
(ix) Required Approvals. All Required Approvals shall have been
obtained;
(x) Shares of Common Stock. On or prior to the closing of the
purchase of the Common Shares, SELLER shall have duly reserved for exercise of
the Warrants sufficient common shares to meet the obligations of SELLER under
this Agreement;
(xi) Delivery of Stock Certificates. SELLER shall have delivered to
the escrow agent on behalf of BUYER or its designee the stock certificate(s)
representing the Common Shares, registered in the name of BUYER, each in form
satisfactory to BUYER;
(xii) Registration Rights Agreement. SELLER shall have executed and
delivered the Registration Rights Agreement;
(xiii) Warrant. SELLER shall have executed and delivered the Warrants
in accordance with the terms of this Agreement;
(xiv) Company Certificates. BUYER shall receive a certificate, dated
the closing date of the purchase of the Common Shares, signed by the Secretary
or an Assistant Secretary of SELLER and certifying (a) that attached thereto is
a true, correct and complete copy of (1) SELLER'S Restated Articles of
Organization, as amended to the date thereof, (2) SELLER'S By-Laws, as amended
to the date thereof, and (3) resolutions duly adopted by the Board of Directors
of Seller authorizing the execution, delivery and (where appropriate) filing of
the transaction documents and the issuance and sale of the Common Shares, the
Bonus Shares, the Warrants, and the Warrant Shares underlying the Warrants; and
(b) the incumbency of the officers executing the transaction documents with
their signatures thereon.
6. THIRD PARTY BENEFICIARY. The parties acknowledge and agree that
Shoreline Pacific, the Institutional Division of Financial West Group
("Shoreline Pacific"), shall be deemed a third party beneficiary of SELLER'S
agreements and
<PAGE> 13
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 13
representations set forth in this Agreement, entitled to enforce the terms
thereof, and to indemnification for any damages resulting to Shoreline Pacific
from any actual or threatened breach thereof by SELLER, both in Shoreline
Pacific's personal capacity and, should Shoreline Pacific so elect, on behalf
of BUYER.
7. CLOSING. Subject to the Conditions of Closing set forth below, the
investment of Seacrest Capital Limited (which includes Buyer's investment
hereunder, together with the $2,500,000 investment of Infinity Investors
Limited on like terms) shall close on December 26, 1996 or at such other time
as is mutually agreed to by the parties. The appropriate Common Share
certificates and Warrants shall be delivered to BUYER and the funds therefor
shall be delivered to SELLER at each Closing.
8. CONDITIONS TO CLOSING
(i) BUYER understands that SELLER'S obligation to sell the Common
Shares is conditioned upon delivery as agreed between BUYER and SELLER by BUYER
of the amount set forth in Paragraph 1 hereof.
(ii) SELLER understands that BUYER'S obligation to purchase the Common
Shares is conditioned upon delivery of certificate(s) representing Common
Shares as described in Paragraph 1(ii) hereto and provision of an opinion of
counsel confirming the matters set out in Section 3(ii), (iii), (iv) and (v)
above.
(iii) SELLER understands that BUYER'S obligation to purchase the Common
Shares is conditioned upon SELLER and BUYER entering into a Registration Rights
Agreement substantially in the form of Annex I hereto.
9. GOVERNING LAW; INTERPRETATION. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without giving
effect to rules governing the conflict of laws. Facsimile signatures of this
agreement shall be binding on all parties hereto.
10. AMENDMENT. Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any
such amendment, waiver, discharge or termination is sought.
11. NOTICES, ETC. Any notice, demand or request required or permitted to be
given by either SELLER or BUYER pursuant to the terms of this Agreement shall
be in writing and shall be deemed given when delivered personally or by
facsimile, with a hard copy to follow by two (2) day courier addressed to the
<PAGE> 14
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 14
parties at the addresses of the parties set forth at the beginning of this
Agreement or such other address as a party may request by notifying the other
in writing.
12. CONFIDENTIALITY. BUYER will keep confidential all non-public
information regarding SELLER that they received from SELLER unless disclosure
of such information is compelled by a court or other administrative body or
otherwise necessary, in the opinion of BUYER'S counsel, to comply with
applicable law. Neither party shall disclosure any information regarding any
of the transactions contemplated hereby without prior consent of the other
party, unless such disclosure is required in filings made with the SEC.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument. A facsimile transmission of a signature hereto shall be valid as
if an original and binding on all parties.
14. SEVERABILITY. In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective
if it materially changes the economic benefit of this Agreement to any party.
15. PARTIES IN INTEREST. This Agreement may not be transferred, assigned,
pledged or hypothecated by any party hereto, other than by operation of law.
This Agreement shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.
IN WITNESS WHEREOF, this Agreement was duly executed and is made effective as
of the 26th day of December, 1996.
Official Signatory of BUYER:
Seacrest Capital Limited
BY: /s/ James E. Martin
---------------------------
James E. Martin
Director
Official Signatory of SELLER:
COMFORCE CORPORATION
BY: /s/ Andrew Reiben
---------------------------
Andrew Reiben
Assistant Secretary
<PAGE> 15
ANNEX I
ANNEX I
TO
SUBSCRIPTION
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 26, 1996 (this
"Agreement"), is made by and among COMFORCE Corporation a Delaware corporation
(the "Company"), and the person named on the signature page hereto (the
"Initial Investor").
W I T N E S S E T H :
WHEREAS, in connection with the Private Securities Subscription
Agreement, dated as of [DATE], between the Initial Investor and the Company
(the "Subscription Agreement"), the Company has agreed, upon the terms and
subject to the conditions of the Subscription Agreement, to issue and sell to
the Initial Investor shares of Common Stock (the "Common Stock") and Warrants
to purchase shares of Common Stock (such shares referred to as "Warrant
Shares.") In addition, the Initial Investor may receive additional Common
Stock of the Company (the "Bonus Shares") pursuant to the provisions of the
Subscription Agreement between the parties hereto, to which this Registration
Rights Agreement is annexed. The Common Stock, the Warrant Shares and the
Bonus Shares are sometimes collectively referred to herein as "Shares"); and
WHEREAS, to induce the Initial Investor to execute and deliver the
Subscription Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investor" means the Initial Investor and any transferee
or assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof; provided, however, that if the Company has
requested acceleration of
<PAGE> 16
COMFORCE Corporation/Seacrest Capital Limited December 26, 1996
Registration Rights Agreement
Page 2
any Registration Statement to register the shares of Common Stock of any
Investor then the term "Investor" shall not include any subsequent transferee
of such Investor. Notwithstanding such proviso, the Investor shall not be
prohibited from transferring a beneficial interest in the Shares so long as the
same is permitted under applicable securities laws, and the Company shall do
all things necessary or appropriate to give effect to any such transfer so as
to facilitate the subsequent resale of the Shares pursuant to a Registration
Statement, all as contemplated in this Agreement.
(ii) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act on such appropriate
registration form promulgated by the Commission as shall be selected by the
Company, and when requested by the Initial Investor or any Investor pursuant to
Section 2(b) hereof, shall (A) be reasonably acceptable to the holders of a
majority of the Registrable Securities to which such registration relates, and
(B) shall permit the disposition of Registrable Securities in accordance with
the intended method or methods specified in the Investor's request for such
registration, and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
("SEC").
(iii) "Registrable Securities" means the Shares.
(iv) "Registration Statement" means a registration statement
under the Securities Act registering securities of the Company.
(v) "Rule 144" means Rule 144 promulgated under the Securities
Act.
(b) As used in this Agreement, the term Investor includes (i) each
Investor (as defined above) and (ii) each person who is a permitted transferee
or assignee of the Registrable Securities pursuant to Section 9 of this
Agreement.
(c) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Subscription Agreement.
2. REGISTRATION.
(a) REGISTRATION RIGHTS/UNDERWRITTEN OFFERING. The Company shall
cause the Registrable Securities to be included for registration for resale
under the Securities Act on Form S-1 (or on Forms S-2 or S-3 or any other form
appropriately selected by the Company for the resale registration of securities
other than a registration statement on Forms S-4 or S-8). Company shall keep
such Registration Statement and the Prospectus used in connection therewith
effective for a period of two years thereafter. The Company shall be permitted
to replace any Registration Statement with another (as, for example, by
replacing a Registration Statement on Form S-1 with one on Form S-3) so long
the shares of Common Stock registered thereby are continuously registered for
resale. In the event the Company files a Registration Statement for an
underwritten
<PAGE> 17
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 3
offering ("Underwritten Offering") on or before March 31, 1997, the Company
will, at the option of the Investor, include the Common Stock in such
Registration Statement. The Company agrees to provide the Investor with notice
of the filing of the Registration Statement for such Underwritten Offering in a
manner reasonably designed to afford the Investor the opportunity to decide
whether to instruct the Company to include the Common Stock in such
Underwritten Offering. In the underwriting agreement executed in connection
with such Underwritten Offering, the underwriters or managing underwriters will
agree to purchase the Common Stock on a "firm commitment" basis. In the event
that the underwriters or managing underwriters for such Underwritten Offering
decide that the number of shares of the Company's Common Stock to be sold in
such Underwritten Offering cannot be sold without materially interfering with
such offering or the market for the Company's Common Stock, then the number of
shares of Common Stock to be sold in such Underwritten Offering shall be
reduced first, by excluding shares of Common Stock to be sold by officers,
directors and other affiliates of the Company (excluding the Holders), second,
by excluding shares of Common Stock to be sold pursuant to other registration
rights granted by the Company (excluding any other persons who received Common
Stock contemporaneously with the execution and delivery of the Subscription
Agreement) and third, by excluding shares of Common Stock to be sold in such
Underwritten Offering by the Company. The Initial Investor agrees that it will
(a) enter into an underwriting agreement with the underwriters or managing
underwriters for such Underwritten Offering (containing normal and customary
terms) and (b) agrees to indemnify the underwriters for such Underwritten
Offering to the same extent that the Company is indemnified hereunder.
(b) DEMAND REGISTRATION. If, at any time after 90 days after the
last Closing, the Company has failed to cause to be declared effective or
failed to keep effective a Registration Statement covering the Shares as
described in Paragraph 2(a) above, and any Investor holding a majority of the
Registrable Securities shall notify the Company in writing that it intends to
offer or cause to be offered for public sale Registrable Securities held by
such Investor, the Company shall cause such of the Registrable Securities as
may be requested by any Investor to be registered, on one occasion only, under
the Securities Act and applicable state laws as expeditiously as possible.
Once the right for registration of any Registrable Securities under this
Section 2(b) has been exercised by any Investor, the Company shall prepare and
file a Registration Statement covering such Registrable Securities with the SEC
within ten (10) days of the exercise of such registration right and such
Registration Statement shall be kept effective for a period of no less than two
years thereafter.
(c) PAYMENTS BY THE COMPANY. If a Registration Statement covering
the Registrable Securities is not effective by April 30, 1997 (the "Required
Date"), or within five (5) business days after receipt of an "no action" or "no
review" letter as noted in Section 2(a) above, then the Company will make
payments to each holder of Registrable Securities (each, a "Holder") in such
amounts and at such times as shall be determined
<PAGE> 18
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 4
pursuant to this Section 2(c). The amount to be paid by the Company to the
Holders shall be equal to: (1) 1/2% per month in the event the Registration
Statement is not effective by the Required Date; (2) 1% per month in the event
the Registration Statement is not effective within 30 days after the Required
Date; and (3) 2% per month in the event the Registration Statement is not
effective within 60 days after the Required Date, in each case of the aggregate
subscription price paid by the Initial Investor for the Shares pursuant to the
Subscription Agreement (the "Periodic Amount"). In the event the Company
receives a "no comment letter" from the SEC with regard to the S-1 filing, then
the Company shall cause the S-1 to be effective within 5 business days of the
no comment letter; and if it is not so effective, then the monthly penalties
noted above will apply beginning on the 6th day following the date of the no
comment letter. The Periodic Amount shall be divided among all the Holders in
the same proportion as each Holder's Registrable Securities bears to the total
of the outstanding Registrable Securities. The Periodic Amount shall be paid
by the Company within five business days after each Computation Date and shall
be payable in cash; provided, however, that the Company may elect in lieu of
payment of any Periodic Amount in cash to deliver to the Initial Investor
shares of Common Stock having an Aggregate Market Value equal to the amount of
the Periodic Amount if, but only if, such shares are freely tradable by the
Initial Investor without any restriction under the Securities Act or any state
securities or "blue sky" law.
As used in this Section 2(c), the following terms shall have the
following meanings:
"Aggregate Market Value" of any shares of Common Stock as of any
Computation Date means the product obtained by multiplying (a) such number of
shares of Common Stock times (b) the Average Market Price of the Common Stock
for the Measurement Period for such Computation Date.
"Average Market Price" of any security for any period shall be computed
as the average closing bid price of the shares over the five trading-day period
ending on the relevant Computation Date, as reported by Bloomberg, L.P.
"Computation Date" means the date which is 60 days after the exercise of
demand registration rights under Section 2(b) and, if the Registration
Statement required to be filed by the Company pursuant to Section 2(b) has not
theretofore been declared effective by the SEC, each date which is 30 days
after a Computation Date and, if the Registration Statement required to be
filed by the Company pursuant to Section 2(b) is not declared effective by the
SEC within 60 days after the exercise of demand registration rights under
Section 2(b), the date on which such Registration Statement is declared
effective.
<PAGE> 19
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 5
"Measurement Period" means the period of ten consecutive trading days
for the Common Stock ending on (or on the last trading day preceding) each
Computation Date.
3. OBLIGATIONS OF THE COMPANY. In connection with the registration
of the Registrable Securities, the Company shall:
(a) prepare promptly and file with the SEC promptly (but in no event
later than 10 days) after a request in accordance with Section 2(b) hereof a
Registration Statement or Statements with respect to all Registrable Securities
to be included therein, and thereafter use its best efforts to cause the
Registration Statement to become effective as soon as reasonably possible after
such filing. If such Registration Statement is filed pursuant to Rule 415, the
Company shall keep the Registration Statement effective pursuant to Rule 415 at
all times until such date as is two years after the date such Registration
Statement is first ordered effective by the SEC. In any case, the Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) filed by the Company shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that,
subject to the conditions set forth in Section 4(a) below, each Investor may
notify the Company in writing that it wishes to exclude all or a portion of its
Registrable Securities from such Registration Statement; provided further,
however, that if at any time the Investors shall be entitled to sell all
Registrable Securities held by them pursuant to Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at
any time permit the Investors to sell securities of the Company to the public
without registration and without imposing restrictions arising under the
federal securities laws on the purchases thereof in a period of two consecutive
months, then the Company shall, so long as it meets the current public
information requirements of Rule 144, thereafter no longer be required to
maintain the registration of Registrable Securities pursuant to this Agreement;
(b) prepare and file with the SEC such amendments (including post-
effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times until such
date as is two years after the date such Registration Statement is first
ordered effective by the SEC, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until the earlier of (i) such two-year period or (ii) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in the
Registration Statement;
<PAGE> 20
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 6
(c) furnish to each Investor whose Registrable Securities are
included in the Registration Statement, such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Investor;
(d) use reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Investors who hold a
majority in interest of the Registrable Securities being offered reasonably
request, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications
in effect at all times until such date as is the earlier of three years after
the date such Registration Statement is first ordered effective by the SEC or
is three years after the Initial Investor acquired the Shares and (iv) take all
other actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to (I)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (II) subject itself to general
taxation in any such jurisdiction, (III) file a general consent to service of
process in any such jurisdiction, (IV) provide any undertakings that cause more
than nominal expense or burden to the Company or (V) make any change in its
charter or by-laws, which in each case the Board of Directors of the Company
determines to be contrary to the best interests of the Company and its
stockholders;
(e) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver a number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request;
(f) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any stop order or other suspension
of effectiveness of the Registration Statement at the earliest possible time;
<PAGE> 21
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 7
(g) permit a single firm of counsel designated as selling
stockholders' counsel (such counsel to be retained at such Investor(s)'
expense) by the Investors who hold a majority in interest of the Registrable
Securities being sold pursuant to such registration to review the Registration
Statement and all amendments and supplements thereto a reasonable period of
time prior to their filing with the SEC, and shall not file any document in a
form to which such counsel reasonably objects; provided that counsel shall
expeditiously complete its review so that the registration can be timely
effected;
(h) make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions
of Rule 158 under the Securities Act) covering a twelve-month period beginning
not later than the first day of the Company's fiscal quarter next following the
date of the Registration Statement;
(i) make its officers available from time to time to respond to
inquires of Investors and make available to any Investor, all pertinent
financial and other records, pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably necessary to
enable such Investor to exercise its due diligence responsibility, and cause
the Company's officers, directors and employees to supply all information which
such Investor may reasonably request for purposes of such due diligence;
provided, however, that such Investor shall not make any disclosure (except to
an Investor who has previously entered into a written confidentiality agreement
with the Company) of any Record or other information which the Company
determines in good faith to be confidential and of which determination the
Investor is so notified unless (i) in the event an Investor believes that
disclosure of Records is necessary to avoid or correct a misstatement or
omission in any Registration Statement, then it shall notify the Company in
writing of its belief and the basis therefor and shall provide the Company with
reasonable opportunity to correct the misstatement or omission or provide to
Investor reasonably satisfactory evidence that such a correction is not
required (ii) the release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent jurisdiction or (iii)
the information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. Such
Investor shall, upon completing such due diligence, destroy or return to the
Company all such Records and all copies or distillation thereof and all notes
or other stored information containing information derived in whole or in part
from such Records; provided further that such Investor may retain one copy of
the Records in its office of its legal counsel solely for the purpose of
preserving the record of the materials received by it and using the same to
defend against any claims or actions threatened or instituted involving the
Records and such Records may not be made available to any person for any other
purpose at any time hereafter. The Company shall not be required to disclose
any confidential information in such Records to any Investor until and unless
such Investor shall have entered into confidentiality agreements (in form and
<PAGE> 22
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 8
substance satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3(i). Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. The Company shall hold
in confidence and shall not make any disclosure of information concerning an
Investor provided to the Company unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii) the disclosure
of such information is necessary to avoid or correct a misstatement or omission
in any Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other order from a court or governmental body of
competent jurisdiction or (iv) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement or fiduciary obligation. The Company agrees that it shall,
upon learning that disclosure of such information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Investor, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, such information;
(j) use its best efforts either to (i) cause all the Registrable
Securities covered by the Registration Statement to be listed on a national
securities exchange and on each additional national securities exchange on
which similar securities issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of
such exchange or (ii) secure designation of all the Registrable Securities
covered by the Registration Statement as a National Association of Securities
Dealers Automated Quotations System ("Nasdaq") "national market system
security" within the meaning of Rule 11Aa2-1 of the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the quotation of the
Registrable Securities on the Nasdaq National Market System or, if, despite the
Company's best efforts to satisfy the preceding clause (i) or (ii), the Company
is unsuccessful in satisfying the preceding clause (i) or (ii), to secure
listing on a national securities exchange or Nasdaq authorization and quotation
for such Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with respect
to such Registrable Securities;
(k) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(l) cooperate with the Investors who hold Registrable Securities
being sold to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to the denominations or
amounts as the case may be, and
<PAGE> 23
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 9
registered in such names as the Investors may reasonably request; and, within
five business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall cause legal counsel selected by the Company to deliver, to the transfer
agent for the Registrable Securities (with copies to the Investors whose
Registrable Securities are included in such Registration Statement)
instructions to the transfer agent to issue new stock certificates without a
legend and an opinion of such counsel that the shares have been registered; and
(m) take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant
to the Registration Statement;
4. OBLIGATIONS OF THE INVESTORS. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to each
Investor that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least fifteen (15) days prior to the first anticipated
filing date or five (5) days prior to the effective date of the Registration
Statement, the Company shall notify each Investor of the information the
Company requires from each such Investor (the "Requested Information") if such
Investor elects to have any of such Investor's Registrable Securities included
in the Registration Statement. If within five (5) business days prior to the
filing date the Company has not received the Requested Information from an
Investor (a "Non-Responsive Investor"), then the Company may file the
Registration Statement without including Registrable Securities of such Non-
Responsive Investor;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement;
(c) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e) or
3(f), or that the Board of Directors of the Company has determined, in its good
faith reasonable judgment, that the disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
would materially interfere with, or
<PAGE> 24
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 10
require the premature disclosure of, any financing, acquisition or
reorganization involving the Company or any of its subsidiaries or otherwise
would require premature disclosure or any other material nonpublic information
as to which the Company has a bona fide business purpose for maintaining its
confidentiality, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or 3(f), or
upon receipt of written authorization from the Company and , if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice; and
5. EXPENSES OF REGISTRATION. All expenses (other than commissions
and other fees and expenses of investment bankers and other than brokerage
commissions) incurred in connection with registrations, filings or
qualifications pursuant to Section 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees and
the fees and disbursements of counsel for the Company, shall be borne by the
Company; provided, however, that the Investors shall bear the fees and out-of-
pocket expenses of the one legal counsel selected by the Investors pursuant to
Section 3(h) hereof.
6. INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, employees, agents, and
representatives, if any, of such Investor, and each person, if any, who
controls any Investor within the meaning of the Securities Act or the Exchange
Act (each, an "Indemnified Person"), against any losses, claims, damages,
expenses or liabilities (joint or several) (collectively "Claims") to which any
of them become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any post-effective amendment thereof or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained
in any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
<PAGE> 25
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 11
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act or any state securities law or any rule or regulation (the
matters in the foregoing clauses (i) through (iv) being, collectively,
"Violations"). Subject to the restrictions set forth in Section 6 (d) with
respect to the number of legal counsel, the Company shall reimburse the
Investors and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a) (I) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by any Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof; (II) with respect to any preliminary prospectus shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(c) hereof; and (III)
shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of the Company, which consent
shall not be unreasonably withheld. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Persons and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify and hold
harmless, to the same extent and in the same manner set forth in Section 6(a),
the Company, each of its directors, each of its officers who signs the
Registration Statement, each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder within the
meaning of the Securities Act or the Exchange Act (collectively and together
with an Indemnified Person, an "Indemnified Party"), against any Claim to which
any of them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon any Violation,
in each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished to the
Company by such Investor expressly for use in
<PAGE> 26
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 12
connection with such Registration Statement; provided, however, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented.
(c) The Company shall be entitled to receive indemnities from selling
brokers, dealer managers and similar securities industry professionals
participating in any distribution, to the same extent as provided above, with
respect to information such persons so furnished in writing by such persons
expressly for inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof and this indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying parties;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and other party represented by such counsel in such
proceeding. The Company shall pay for only one separate legal counsel for the
Investors; such legal counsel shall be selected by the Investors holding a
majority in interest of the Registrable Securities. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of
any liability to the Indemnified Person or Indemnified Party under this Section
6, except to the extent that the indemnifying party
<PAGE> 27
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 13
is prejudiced in its ability to defend such action. The indemnification
required by this Section 6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
7. CONTRIBUTION. To the extent any indemnification provided for
herein is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that (a) no contribution shall be made under circumstances
where the maker would not have been liable for indemnification under the fault
standards set forth in Section 6, (b) no seller of Registrable Securities
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent misrepresentation
and (c) contribution by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale
of such Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making available to
the Investors the benefits of Rule 144 or any other similar rule or regulation
of the SEC that may during the period beginning two years after and ending
three years from the earliest conversion date allowed hereunder, permit the
Investors to sell securities of the Company to the public without registration,
until such time as the Investors have sold all the Registrable Securities
pursuant to a Registration Statement or Rule 144, the Company agrees to during
such period:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold a majority in interest of
the
<PAGE> 28
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 14
Registrable Securities. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company.
10. THIRD PARTY BENEFICIARY. The parties acknowledge and agree that
Shoreline Pacific, the Institutional Division of Financial West Group
("Shoreline Pacific"), shall be deemed a third party beneficiary of the
Company's agreements and representations set forth in this Agreement, entitled
to enforce the terms thereof, and to indemnification for any damages resulting
to Shoreline Pacific from any actual or threatened breach thereof by the
Company, both in Shoreline Pacific's personal capacity and, should Shoreline
Pacific so elect, on behalf of the Investor.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when delivered by
facsimile transmission, when personally delivered or when sent by registered
mail, return receipt requested, addressed (i) if to the Company, at COMFORCE
Corporation, 2001 Marcus Avenue, Lake Success, NY 11042 Attention: Paul J.
Grillo, Chief Financial Officer, (ii) if to the Initial Investor, at the
address set forth under its name in the Subscription Agreement and (iii) if to
any other Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes
by notice given in accordance with this Section 12(b), and shall be effective,
when delivered by facsimile, upon conversion; when personally delivered, upon
receipt; and when sent by certified mail, four business days after deposit with
the United States Postal Service.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of New York applicable to the agreements
made and to be performed entirely within such state, without giving effect to
rules governing the conflict of laws. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof which may
<PAGE> 29
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 15
prove invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
(e) This Agreement and the Subscription Agreement to which it is
annexed constitute the entire agreement among the parties hereto with respect
to the subject matter hereof. There are no other restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The headings in the Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of day and
year first above written.
COMFORCE CORPORATION Seacrest Capital Limited
By /s/ Andrew Reiben By /s/ James E. Martin
-------------------------------- ----------------------------------
Andrew Reiben James E. Martin
Assistant Secretary Director
<PAGE> 1
EXHIBIT 99.4
PRIVATE SECURITIES SUBSCRIPTION AGREEMENT II
COMFORCE CORPORATION/INFINITY INVESTORS LIMITED
December 26, 1996
THIS PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter the
"Agreement") has been executed by the undersigned in connection with the sale in
a private placement pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), of certain shares of common stock, par value
$.01 per share, (hereinafter the "Common Shares") of COMFORCE Corporation (CFS),
2001 Marcus Avenue, Lake Success, NY 11042, a corporation organized under the
laws of Delaware (hereinafter "SELLER") to Infinity Investors Limited located at
27 Wellington Road, Cork, Ireland, a corporation organized under the laws of
Nevis, West Indies (hereinafter "BUYER"). SELLER and BUYER (hereinafter
collectively the "parties") each hereby represents, warrants and agrees as
follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE AND TERMS
(i) SELLER and BUYER are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506
under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission under the Securities Act; and
(ii) BUYER hereby subscribes for Two Hundred Fifty Thousand (250,000)
Common Shares of Seller for an aggregate purchase price of Two Million Five
Hundred Dollars ($2,500,000) payable in United States Dollars at the Closing,
as defined in Paragraph 7 hereof.
(iii) BUYER shall pay the purchase price by delivering same day funds
in United States Dollars as agreed between the parties, to be delivered to the
order of SELLER upon delivery of the Common Shares.
(iv) In addition, BUYER shall receive a Common Stock Purchase Warrant
(the "Warrant" or "Warrants") entitling BUYER to purchase Seventy-Three
Thousand One Hundred Twenty-Six (73,126) Common Shares at an exercise price of
$19 per share. The Warrants shall be exercisable upon issuance to BUYER at
Closing and will expire on December 26, 1999. The Common Shares issuable upon
exercise of the Warrants are hereinafter referred to as the "Warrant Shares".
(v) In the event that SELLER files an S-1 registration statement in
connection with an underwritten public offering (the "Secondary Offering"), the
Common Shares referred to in subsection (ii) above will be included in such
<PAGE> 2
PRIVATE SEC. SUB. AGREEMENT: COMFORCE CORPORATION/INFINITY INVESTORS LIMITED
December 26, 1996 PAGE 2
registration statement and will be sold by such underwriters at the price to
the public set forth on the final prospectus therefor. These Common Shares may
not be sold until the closing of the Secondary Offering; provided, however,
that the Common Shares will be tradable on May 1, 1997, in the event the
effective date of said S-1 registration statement (the "Effective Date") has
not occurred by that date, it being understood that under such circumstances
SELLER will have registered the Common Shares for resale in a shelf
registration not calling for an underwritten offering (said period during which
the Common Shares may not be sold referred to herein as the "Lock-Up Period").
(vi) In the event the Market Price (defined as the lesser of (a) the
average of the closing bid price of SELLER'S common stock over the ten trading
days immediately preceding the date in question, or (b) the closing bid price
of SELLER'S common stock on the trading day immediately preceding the date in
question, in both instances as reported by Bloomberg, L.P.) is less than Twelve
Dollars and Five Cents ($12.05) per share on the earlier of the Effective Date
or May 1, 1997, then SELLER shall pay to BUYER the difference between the
Market Price and $12.05, multiplied by the number of Common Shares held by
BUYER on such date (the "Initial Payment Right"); provided, however, that if,
on May 1, 1997, (1) the Market Price is between $10.00 per share and $15.00 per
share (inclusive), and (2) the Effective Date has not yet occurred, and (3) the
average daily trading volume of SELLER'S common stock is less than 57,000
shares for the ten trading days immediately preceding May 1, 1997, then a
payment of $2.05 per share will be made to BUYER in lieu of the Initial Payment
Right. SELLER shall have the option to make the payment required under this
subsection in cash or in common stock of SELLER, or in any combination thereof,
and shall make such payment to BUYER on the earlier of the Effective Date or
May 1, 1997. Any shares of SELLER'S common stock delivered to BUYER in
satisfaction of SELLER'S obligations under this subsection are referred to
herein as "Bonus Shares."
2. BUYER'S REPRESENTATIONS AND AGREEMENTS
BUYER represents, warrants and agrees as follows:
(i) BUYER understands that the Common Shares, the Bonus Shares, the
Warrants, and the Warrant Shares (collectively, the "Securities") have not been
registered under the Securities Act, or any other applicable securities law,
and, accordingly, none of the Securities may be offered, sold, transferred,
pledged, hypothecated or otherwise disposed of unless registered pursuant to,
or in a transaction exempt from registration under, the Securities Act and any
other applicable securities law;
(ii) BUYER is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3), or (7) of Regulation D (an "Accredited Investor") that is
<PAGE> 3
PRIVATE SEC. SUB. AGREEMENT: COMFORCE CORPORATION/[BUYER]
[DATE] PAGE 3
acquiring the Securities either for its own account or as a fiduciary or agent
for one or more institutional accounts as to which it exercises sole
discretion, each of which is an Accredited Investor. BUYER has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the Securities. BUYER has
had a reasonable opportunity to ask questions of and receive answers from
SELLER concerning SELLER and the offering of the Securities. BUYER is not
subscribing for the Securities as a result of or pursuant to any advertisement,
article, notice, or other communication published in any newspaper, magazine,
or similar media or broadcast over television or radio. BUYER is aware that it
(or such institutional account) may be required to bear the economic risk of an
investment in the Securities for an indefinite period, and it (or such
institutional account ) is able to bear such risk for an indefinite period;
(iii) BUYER is acquiring the Securities for its own account or for one
or more institutional accounts as described in Paragraph 2(ii) hereof, in each
case for investment purposes and not with a view to, or for offer or sale in
connection with, any distribution thereof (subject to any requirement of law
that the disposition of its property or the property of such institutional
account or accounts remain within its or their control). Buyer agrees on its
own behalf and on behalf of any such institutional account for which it is
acquiring the Securities to offer, sell or otherwise transfer any Securities
only to Accredited Investors (subject to any requirement of law that the
disposition of its property or the property of such institutional account or
accounts remain within its or their control) in conformity with the Securities
Act and any other applicable securities law and with the restrictions on
transfer set forth on the certificate(s) evidencing the Common Shares and the
Bonus Shares. BUYER acknowledges that each certificate evidencing the Common
Shares or the Bonus Shares shall bear a legend substantially to the effect of
the foregoing paragraphs 2(i) and 2(ii) and this paragraph 2(iii). Such legend
shall be in substantially the following form:
"THE COMMON SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED OR SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF
CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A PRIVATE SECURITIES
SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND INFINITY INVESTORS
LIMITED DATED DECEMBER 26, 1996. A COPY OF THE PORTION OF THE
AFORESAID SUBSCRIPTION
<PAGE> 4
PRIVATE SEC. SUB. AGREEMENT: COMFORCE CORPORATION/[BUYER]
[DATE] PAGE 4
AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM THE
COMPANY'S EXECUTIVE OFFICES."
Upon expiration of the Lock-Up Period, SELLER shall promptly exchange
Buyer's legended Common Stock certificates representing Common Shares or Bonus
Shares for unlegended Common Stock certificates.
(iv) BUYER acknowledges that prior to the expiration of the Lock-Up
Period, SELLER or any transfer agent of SELLER shall register the transfer or
exchange of any of the Securities only upon receipt of the certificate(s)
evidencing such Securities with the transfer notice set forth thereon
appropriately completed and upon receipt in writing from the transferee or the
recipient of such Securities in such transfer or exchange (as the case may be)
of a certificate setting forth the representations in Paragraph 2 hereof and
only upon the availability of an exemption from registration under the
Securities Act;
(v) If BUYER is acquiring any of the Securities as fiduciary or
agent for one or more institutional accounts, BUYER represents that it has sole
investment discretion with respect to each such account and that it has full
power to make the foregoing acknowledgments, representations and agreements on
behalf of each such institutional account;
(vi) BUYER acknowledges that SELLER will rely upon the truth and
accuracy of the foregoing acknowledgments, representations and agreements and
further agrees that if, prior to any closing hereunder, any of such
acknowledgments, representations and agreements made by BUYER are no longer
accurate, BUYER will promptly notify SELLER;
(vii) BUYER has received SELLER'S latest Form 10-K, all Forms 10-Q
and 8-K filed thereafter, any amendments thereto, and the Proxy Statement for
its latest fiscal year (collectively, the "Public Documents") and the Private
Placement Memorandum prepared by SELLER;
(viii) This Agreement has been duly authorized, validly executed, and
delivered on behalf of BUYER and is a valid and binding agreement enforceable
in accordance with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally; and
(ix) BUYER has not engaged and agrees not to engage in any short
sales of the Company's common stock prior to the expiration of the Lock-Up
Period, except to the extent that any such short sale is fully covered by
shares of
<PAGE> 5
PRIVATE SEC. SUB. AGREEMENT: COMFORCE CORPORATION/[BUYER]
[DATE] PAGE 5
common stock of SELLER owned by BUYER other than the Common Shares or Bonus
Shares purchased pursuant to this Agreement.
3. SELLER'S REPRESENTATIONS AND AGREEMENTS
SELLER represents, warrants and agrees as follows:
(i) SELLER has not conducted any general solicitation or
general advertising (as defined in Regulation D) with respect to any of its
securities;
(ii) The Common Shares, the Bonus Shares and the Warrant Shares,
when issued and delivered will be duly and validly authorized and issued,
fully-paid and nonassessable, free and clear of any liens, encumbrances,
charges, or adverse claims of any nature whatsoever, and will not subject the
holders thereof to personal liability by reason of being such holders. There
are no preemptive rights of any shareholder of SELLER with respect to the
transactions contemplated by this Agreement or the Warrant;
(iii) Seller is duly organized, validly existing and in good standing
under the laws of Delaware. All subsidiaries of Seller are likewise duly
incorporated, validly existing and in good standing under the laws of the
jurisdictions in which they are organized.
(iv) This Agreement and the Warrant have each been duly authorized,
validly executed and delivered on behalf of SELLER and constitute valid and
binding agreements in accordance with their respective terms, subject to
general principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally;
(v) The execution and delivery of this Agreement and the Warrant and
the consummation of the issuance of the Securities and the transactions
contemplated by this Agreement do not and will not conflict with or result in a
breach by SELLER of any of the terms or provisions of, or constitute a default
under, the articles of incorporation (or charter) or bylaws of SELLER, or any
indenture, mortgage, deed of trust or other material agreement or instrument to
which SELLER is a party or by which it or any of its properties or assets are
bound, or any existing applicable decree, judgment or order of any court,
federal or state regulatory body, administrative agency or other governmental
body having jurisdiction over SELLER or any of its properties or assets;
(vi) No authorization, approval or consent of or filing with any
federal, state or local governmental body of the United States or any third
party is
<PAGE> 6
PRIVATE SEC. SUB. AGREEMENT: COMFORCE CORPORATION/[BUYER]
[DATE] PAGE 6
required for the issuance and sale of the Securities as contemplated by this
Agreement;
(vii) Neither the information provided by or on behalf of SELLER to
BUYER and referred to in Section 2(vii) of this Agreement, nor any
representation or warranty made by SELLER to BUYER hereunder contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make such statements, in the light of the circumstance
under which they are made, not misleading. All of such information (the "SEC
Filings") required to be filed under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), was timely filed and each such report, at the time
filed, complied as to form with the requirements of the 1934 Act. Since
December 31, 1995, there has been no material adverse development in the
business, properties, operations, financial condition or results of operations
of SELLER, except as disclosed in the documents referred to in the SEC Filings.
The audited and unaudited consolidated balance sheets of the Seller contained
in the SEC Filings, and the related consolidated statements of income, changes
in stockholders' equity and changes in cash flows for the periods then ended
(the consolidated balance sheet of the SELLER as of December 31, 1995 is
hereinafter referred to as the "Balance Sheet"), including footnotes thereto,
except as indicated therein, have been prepared in accordance with generally
accepted accounting principles consistently followed throughout the periods
indicated. The Balance Sheet fairly presents the financial condition of SELLER
at the date thereof and, except as indicated therein, reflects all claims
against and all debts and liabilities of SELLER, fixed or contingent, as of the
date thereof and the related statements of income, stockholders' equity and
changes in cash flows fairly present the results of the operations of SELLER
and its financial position for the period indicated. Since December 31, 1995,
(the "Balance Sheet Date") there has been (x) no material adverse change in the
assets or liabilities, or in the business condition, financial or otherwise, or
in the results of operations or prospects, of the SELLER and its subsidiaries,
whether as a result of any legislative or regulatory change, revocation of any
license or rights to do business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation, act of God, public force or
otherwise, and (y) no change in the assets or liabilities, or in the business
or condition, financial or otherwise, or in results of operations or prospects,
of the SELLER except the ordinary course of business; and, to the best
knowledge, information and belief of the SELLER, no fact or condition exists or
is contemplated or threatened which might cause such a change in the future.
(viii) SELLER will issue one or more certificates representing the
Common Shares in the name of BUYER in such denominations to be specified by
BUYER prior to closing. SELLER will issue one or more certificates
representing the Warrant in the name of BUYER in such denominations to be
specified by BUYER
<PAGE> 7
PRIVATE SEC. SUB. AGREEMENT: COMFORCE CORPORATION/[BUYER]
[DATE] PAGE 7
prior to closing. SELLER will issue one or more certificates representing
the Warrant in the name of BUYER in such denominations to be specified by BUYER
prior to closing. Until the end of the Lock-Up Period and prior to any exchange
for unlegended share certificates, certificates representing the Common Shares
and the Bonus Shares will bear the restrictive legend specified in Section
2(iii) of this Agreement. Upon exercise of the Warrant in accordance with its
terms, SELLER will issue one or more certificates representing Warrant Shares
in such name or names and in such denominations specified by BUYER in an
election to purchase. Subject to the provisions of the Registration Rights
Agreement, the Warrant Shares shall not bear any restrictive legends and shall
be freely tradable, subject to compliance with federal and state securities
laws. SELLER further warrants that no instructions other than these
instructions and stop transfer instructions to give effect to Section 2(i)
hereof will be given to the transfer agent and also warrants that the
Securities shall otherwise be transferable on the books and records of SELLER
as and to the extent provided in this Agreement, subject to compliance with
federal and state securities laws. Following registration of the Common Shares,
the Bonus Shares and the Warrant Shares, SELLER agrees to furnish new
instructions to the transfer agent advising them of registration and
instructing them to reissue the Common Shares without a legend and to notify
Buyer of the delivery of such instructions. Nothing in this Section shall
affect in any way BUYER'S obligations and agreement to comply with all
applicable securities laws upon resale of the Securities.
(ix) Except as disclosed in the SEC Filings, there is no action, suit
or proceeding before or by any court or governmental agency or body, domestic
or foreign, now pending or, to the knowledge of SELLER, threatened against or
affecting SELLER, or any of its properties, which could reasonably be expected
to result in any material adverse change in the business, properties, results
of operations, condition (financial or otherwise), or prospects of SELLER, or
which could reasonably be expected to materially and adversely affect the
properties or assets of SELLER or which could reasonably be expected to
interfere with SELLER'S ability to consummate the transactions contemplated by
this Agreement and the Warrant.
(x) Private Placements. Except as set forth in the SEC Filings,
SELLER has not issued any shares of its Common Stock (or securities convertible
into or exercisable for shares of Common Stock), pursuant to any exemption from
registration under the Securities Act, except for shares of Common Stock issued
as an adjustment to, or in connection with a conversion or exercise of, such
securities, except as set forth or contemplated in the SEC Filings.
(xi) Commissions. Except for a fee which is payable by SELLER to
Shoreline Pacific, no other person, firm or corporation will be entitled to
receive any brokerage fee, commission or other similar payment from SELLER in
connection with the consummation of the transactions contemplated hereby and
<PAGE> 8
PRIVATE SEC. SUB. AGREEMENT: COMFORCE CORPORATION/[BUYER]
[DATE] PAGE 8
SELLER shall not make any such payment to any person, firm or corporation other
than as set forth herein.
(xii) Accountants. For as long as any Common Shares or Bonus Shares
remain subject to the Lock-Up Period, SELLER shall, until at least the second
anniversary of the date of the Closing (the "Closing Date"), maintain as its
independent auditors an accounting firm that is authorized to practice before
the SEC.
(xiii) Corporate Existence and Taxes. For as long as any Common Shares
or Bonus Shares remain subject to the Lock-Up Period, SELLER shall, until the
second anniversary of the Closing Date, maintain its corporate existence and
good standing, and shall pay all its taxes when due except for taxes which
SELLER disputes in good faith and for which adequate reserves are established
on SELLER'S books and records.
(xiv) Reserved Shares and Listings. For so long as any Common Shares
or Warrants remain outstanding:
(a) SELLER will reserve from its authorized but unissued
Common Shares a sufficient number of Common Shares to permit the
exercise of the then outstanding Warrants; and
(b) SELLER will maintain a listing of its common stock on
the Nasdaq National Stock Market or a national securities exchange.
(xv) Capitalization. SELLER has an authorized capitalization
consisting of (a) One Hundred Million (100,000,000) shares of common stock,
$0.01 par value, of which Ten Thousand (10,000,000) shares are issued and
outstanding and Zero (0) shares are held in SELLER'S treasury. All such
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable. There are no outstanding options, warrants, rights,
calls, commitments, conversion rights, rights of exchange, plans or other
agreements of any character providing for the purchase, issuance or sale of any
shares of the capital stock of SELLER, other than as contemplated by this
Agreement.
(xvi) Subsidiaries. Set forth in Exhibit A attached hereto is a list
of each corporation in which SELLER owns, directly or indirectly, any equity
security (a "subsidiary"). Each subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation (as set forth on Exhibit A), and has all requisite power to own
its property and to carry on its business as now being conducted. Set forth on
Exhibit A is a list of jurisdictions in which each subsidiary is qualified as a
foreign corporation. Such
<PAGE> 9
PRIVATE SEC. SUB. AGREEMENT: COMFORCE CORPORATION/[BUYER]
[DATE] PAGE 9
jurisdictions are the only jurisdictions in which the character or location of
the properties owned or leased by each subsidiary, or the nature of the
business conducted by each subsidiary, makes such qualifications necessary. All
of the outstanding shares of capital stock of each subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable, and, except as
set forth in Exhibit A, are owned, of record and beneficially, by SELLER, free
and clear of all liens, encumbrances, restrictions and claims of every kind. No
shares of capital stock of any subsidiary are reserved for issuance and there
are no outstanding options, warrants, rights, subscriptions, claims,
agreements, obligations, convertible or exchangeable securities or other
commitments, contingent or otherwise, relating to the capital stock of any
subsidiary or pursuant to which any subsidiary is or may become obligated to
issue or exchange any shares of capital stock. Neither SELLER nor any
subsidiary owns, directly or indirectly, any capital stock or other equity or
ownership or proprietary interest in any corporation, partnership, association,
trust, joint venture or other entity except as set forth on Exhibit A.
(xviii) Private Offering. Assuming (without any independent
investigation or verification by or on behalf of SELLER) the accuracy of the
representations and warranties of BUYER set forth herein, the offer and sale of
the Common Shares, the Bonus Shares, the Warrants, and the Warrant Shares are
exempt from registration under Section 5 of the Securities Act of 1933, as
amended (the "Securities Act"). Neither SELLER nor any person acting on its
behalf has taken or will take any action (including, without limitation, any
offering of any securities of SELLER under circumstances which would require
the integration of such offering with the offering of the shares under the
Securities Act) which might subject the offering, issuance or sale of the
Common Shares, the Bonus Shares, the Warrants, or the Warrant Shares to the
registration requirements of Section 5 of the Securities Act.
(xix) Consents and Approvals. Neither SELLER nor any Subsidiary is
required to obtain any consent, waiver, authorization or order of, or make any
filing or registration with, any court or other federal, state local, or other
governmental authority or other person in connection with the execution,
delivery and performance by SELLER of the transaction documents except for (i)
the filing of the registration statements contemplated by the Registration
Rights Agreement with the Securities and Exchange Commission, which shall be
filed in the time periods set forth in the Registration Rights Agreement, (ii)
applications for the listing of the Common Shares, the Bonus Shares and the
Warrant Shares with the American Stock Exchange (and with any other national
securities exchange or market on which SELLER'S common stock is then listed),
and (iii) other than, in all other cases, where the failure to obtain such
consent, waiver, authorization or order, or to give or make such notice of
filing, would
<PAGE> 10
PRIVATE SEC. SUB. AGREEMENT: COMFORCE CORPORATION/[BUYER]
[DATE] PAGE 10
not materially impair or delay the ability of SELLER to effect the Closings and
to deliver to BUYER the Common Shares, the Bonus Shares, the Warrants (and,
upon exercise of the Warrants, the Warrant Shares) in the manner contemplated
hereby and the Registration Rights Agreement free and clear of all liens and
encumbrances of any nature whatsoever.
(xx) SELLER hereby covenants and agrees to comply with all terms and
conditions of the Registration Rights Agreement which is annexed hereto.
4. CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER TO SELL THE COMMON
SHARES
The obligation of SELLER to sell the Common Shares hereunder is
subject to the satisfaction or waiver by SELLER, at or before the Closing of
the purchase thereof, of each of the following conditions:
(i) Accuracy of BUYER'S Representations and Warranties. The
representations and warranties of Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing Date, as
though made on and as of such date (except that representations and warranties
that are made as of a specific date need be true in all material respects only
as of such date);
(ii) Performance by BUYER. BUYER shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by BUYER
at or prior to the Closing;
(iii) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement; and
(iv) Required Approvals. All Required Approvals shall have been
obtained.
5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO PURCHASE THE COMMON
SHARES.
The obligation of BUYER hereunder to acquire and pay for the Common
Shares is subject to the satisfaction or waiver by BUYER, at or before the
closing of the purchase of the Common Shares, of each of the following
conditions:
<PAGE> 11
PRIVATE SEC. SUB. AGREEMENT: COMFORCE CORPORATION/[BUYER]
[DATE] PAGE 11
(i) Accuracy of SELLER'S Representations and Warranties. The
representations and warranties of SELLER contained herein and in the
Registration Rights Agreement shall be true and correct in all material
respects as of the date when made and as of the Closing, as though made on and
as of such date, and SELLER shall have delivered to BUYER a certificate of its
Chief Executive Officer or Chief Financial Officer, dated the Closing Date to
that effect;
(ii) Performance by SELLER. SELLER shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement and the Registration Rights Agreement to
be performed, satisfied or complied with by SELLER at or prior to the Closing;
and SELLER shall have delivered to BUYER a certificate of its Chief Executive
Officer or Chief Financial Officer, dated the Closing Date to that effect;
(iii) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement relating to the issuance or
exercise of any of the Warrants;
(iv) Adverse Changes. Since the date of the financial statements
included in SELLER'S last filed Quarterly Report on Form 10-Q or Annual Report
on Form 10-K, whichever is more recent, last filed prior to the date of this
Agreement, no event which in the judgment of BUYER had a Material Adverse
Effect shall have occurred, nor shall there have occurred in the judgment of
BUYER a material adverse change in the financial conditions or prospects of
SELLER, which is not disclosed in the SEC Filings (for the purposes hereof,
changes in the market price of SELLER'S common stock may be considered in
determining whether there has occurred an event which has had a Material
Adverse Effect or whether a material adverse change has occurred), and SELLER
shall have delivered to BUYER a certificate of its Chief Executive Officer or
Chief Financial Officer, dated the Closing Date to that effect;
(v) Litigation. No material litigation shall have been instituted
or threatened against SELLER, and no proceedings for the dissolution of SELLER
shall have been commenced;
(vi) No Suspensions of Trading in Common Stock. The trading in
SELLER'S common stock shall not have been suspended by the Securities and
Exchange Commission or the American Stock Exchange (except for any
<PAGE> 12
PRIVATE SEC. SUB. AGREEMENT: COMFORCE CORPORATION/[BUYER]
[DATE] PAGE 12
suspension of trading of limited duration solely to permit dissemination of
material information regarding Seller);
(vii) Listing of Common Stock. SELLER'S common be, on the dates of
Closing, listed for trading on the American Stock Exchange.
(viii) Legal Opinion. SELLER shall have delivered to the escrow
agent on behalf of BUYER the opinion of Doepken Keevican & Weiss, counsel to
SELLER;
(ix) Required Approvals. All Required Approvals shall have been
obtained;
(x) Shares of Common Stock. On or prior to the closing of the
purchase of the Common Shares, Seller shall have duly reserved for exercise of
the Warrants sufficient common shares to meet the obligations of SELLER under
this Agreement;
(xi) Delivery of Stock Certificates. SELLER shall have delivered
to the escrow agent on behalf of BUYER or its designee the stock certificate(s)
representing the Common Shares, registered in the name of BUYER, each in form
satisfactory to BUYER;
(xii) Registration Rights Agreement. SELLER shall have executed
and delivered the Registration Rights Agreement;
(xiii) Warrant. SELLER shall have executed and delivered the
Warrants in accordance with the terms of this Agreement;
(xiv) Company Certificates. BUYER shall receive a certificate, dated
the closing date of the purchase of the Common Shares, signed by the Secretary
or an Assistant Secretary of SELLER and certifying (a) that attached thereto is
a true, correct and complete copy of (1) SELLER'S Restated Articles of
Organization, as amended to the date thereof, (2) SELLER'S By-Laws, as amended
to the date thereof, and (3) resolutions duly adopted by the Board of Directors
of Seller authorizing the execution, delivery and (where appropriate) filing of
the transaction documents and the issuance and sale of the Common Shares, the
Bonus Shares, the Warrants, and the Warrant Shares underlying the Warrants; and
(b) the incumbency of the officers executing the transaction documents with
their signatures thereon.
6. THIRD PARTY BENEFICIARY. The parties acknowledge and agree that
Shoreline Pacific, the Institutional Division of Financial West Group
("Shoreline Pacific"), shall be deemed a third party beneficiary of SELLER'S
agreements and
<PAGE> 13
PRIVATE SEC. SUB. AGREEMENT: COMFORCE CORPORATION/[BUYER]
[DATE] PAGE 13
representations set forth in this Agreement, entitled to enforce the terms
thereof, and to indemnification for any damages resulting to Shoreline Pacific
from any actual or threatened breach thereof by SELLER, both in Shoreline
Pacific's personal capacity and, should Shoreline Pacific so elect, on behalf
of BUYER.
7. CLOSING. Subject to the Conditions of Closing set forth below, the
investment of HW Partners, L.P. (which includes Buyer's investment hereunder,
together with the $1,000,000 investment of Seacrest Capital Limited on like
terms) shall close on December 26, 1996 or at such other time as is mutually
agreed to by the parties. The appropriate Common Share certificates and
Warrants shall be delivered to BUYER and the funds therefor shall be delivered
to SELLER at each Closing.
8. CONDITIONS TO CLOSING
(i) BUYER understands that SELLER'S obligation to sell the Common
Shares is conditioned upon delivery as agreed between BUYER and SELLER by BUYER
of the amount set forth in Paragraph 1 hereof.
(ii) SELLER understands that BUYER'S obligation to purchase the
Common Shares is conditioned upon delivery of certificate(s) representing
Common Shares as described in Paragraph 1(ii) hereto and provision of an
opinion of counsel confirming the matters set out in Section 3(ii), (iii), (iv)
and (v) above.
(iii) SELLER understands that BUYER'S obligation to purchase the
Common Shares is conditioned upon SELLER and BUYER entering into a Registration
Rights Agreement substantially in the form of Annex I hereto.
9. GOVERNING LAW; INTERPRETATION. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of New York without
giving effect to rules governing the conflict of laws. Facsimile signatures of
this agreement shall be binding on all parties hereto.
10. AMENDMENT. Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any
such amendment, waiver, discharge or termination is sought.
11. NOTICES, ETC. Any notice, demand or request required or permitted to be
given by either SELLER or BUYER pursuant to the terms of this Agreement shall
be in writing and shall be deemed given when delivered personally or by
<PAGE> 14
PRIVATE SEC. SUB. AGREEMENT: COMFORCE CORPORATION/[BUYER]
[DATE] PAGE 14
facsimile, with a hard copy to follow by two (2) day courier addressed to the
parties at the addresses of the parties set forth at the beginning of this
Agreement or such other address as a party may request by notifying the other
in writing.
12. CONFIDENTIALITY. BUYER will keep confidential all non-public
information regarding SELLER that they received from SELLER unless disclosure
of such information is compelled by a court or other administrative body or
otherwise necessary, in the opinion of BUYER'S counsel, to comply with
applicable law. Neither party shall disclosure any information regarding any of
the transactions contemplated hereby without prior consent of the other party,
unless such disclosure is required in filings made with the SEC.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument. A facsimile transmission of a signature hereto shall be valid as if
an original and binding on all parties.
14. SEVERABILITY. In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective
if it materially changes the economic benefit of this Agreement to any party.
15. PARTIES IN INTEREST. This Agreement may not be transferred, assigned,
pledged or hypothecated by any party hereto, other than by operation of law.
This Agreement shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.
IN WITNESS WHEREOF, this Agreement was duly executed and is made effective as
of the 26th day of December, 1996.
Official Signatory of BUYER:
INFINITY INVESTORS LIMITED
BY: /s/ James E. Martin
---------------------------
James E. Martin
Director
Official Signatory of SELLER:
COMFORCE CORPORATION
BY: /s/ Andrew Reiben
---------------------------
Andrew Reiben
Assistant Secretary
<PAGE> 15
ANNEX I
ANNEX I TO
SUBSCRIPTION
AGREEMENT
REGISTRATION RIGHTS AGREEMENT II
THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 26, 1996
(this "Agreement"), is made by and among COMFORCE Corporation a Delaware
corporation (the "Company"), and the person named on the signature page hereto
(the "Initial Investor").
W I T N E S S E T H :
WHEREAS, in connection with the Private Securities Subscription
Agreement, dated as of December 26, 1996, between the Initial Investor and the
Company (the "Subscription Agreement"), the Company has agreed, upon the terms
and subject to the conditions of the Subscription Agreement, to issue and sell
to the Initial Investor shares of Common Stock (the "Common Stock") and
Warrants to purchase shares of Common Stock (such shares referred to as
"Warrant Shares"). In addition, the Initial Investor may receive additional
Common Stock of the Company (the "Bonus Shares") pursuant to the provisions of
the Subscription Agreement between the parties hereto, to which this
Registration Rights Agreement is annexed. The Common Stock, the Warrant Shares
and the Bonus Shares are sometimes collectively referred to herein as
"Shares"); and
WHEREAS, to induce the Initial Investor to execute and deliver the
Subscription Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investor" means the Initial Investor and any
transferee or assignee who agrees to become bound by the provisions of this
Agreement in accordance with
<PAGE> 16
COMFORCE Corporation/Infinity Investors Limited December 26, 1996
Registration Rights Agreement
Page 2
Section 9 hereof; provided, however, that if the Company has requested
acceleration of any Registration Statement to register the shares of Common
Stock of any Investor then the term "Investor" shall not include any subsequent
transferee of such Investor. Notwithstanding such proviso, the Investor shall
not be prohibited from transferring a beneficial interest in the Shares so long
as the same is permitted under applicable securities laws, and the Company
shall do all things necessary or appropriate to give effect to any such
transfer so as to facilitate the subsequent resale of the Shares pursuant to a
Registration Statement, all as contemplated in this Agreement.
(ii) "register," "registered," and "registration" refer to
a registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act on such appropriate
registration form promulgated by the Commission as shall be selected by the
Company, and when requested by the Initial Investor or any Investor pursuant to
Section 2(b) hereof, shall (A) be reasonably acceptable to the holders of a
majority of the Registrable Securities to which such registration relates, and
(B) shall permit the disposition of Registrable Securities in accordance with
the intended method or methods specified in the Investor's request for such
registration, and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
("SEC").
(iii) "Registrable Securities" means the Shares.
(iv) "Registration Statement" means a registration
statement under the Securities Act registering securities of the Company.
(v) "Rule 144" means Rule 144 promulgated under the
Securities Act.
(b) As used in this Agreement, the term Investor includes (i) each
Investor (as defined above) and (ii) each person who is a permitted transferee
or assignee of the Registrable Securities pursuant to Section 9 of this
Agreement.
(c) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Subscription Agreement.
2. REGISTRATION.
(a) REGISTRATION RIGHTS/UNDERWRITTEN OFFERING. The Company shall
cause the Registrable Securities to be included for registration for resale
under the Securities Act on Form S-1 (or on Forms S-2 or S-3 or any other form
appropriately selected by the Company for the resale registration of securities
other than a registration statement on Forms S-4 or S-8). Company shall keep
such Registration Statement and the Prospectus used in connection therewith
effective for a period of two years thereafter. The Company shall be permitted
to replace any Registration Statement with another (as, for example, by
replacing a Registration Statement on Form S-1 with one on Form S-3) so long
the shares of Common Stock registered thereby are continuously registered for
<PAGE> 17
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 3
resale. In the event the Company files a Registration Statement for an
underwritten offering ("Underwritten Offering") on or before March 31, 1997,
the Company will, at the option of the Investor, include the Common Stock in
such Registration Statement. The Company agrees to provide the Investor with
notice of the filing of the Registration Statement for such Underwritten
Offering in a manner reasonably designed to afford the Investor the opportunity
to decide whether to instruct the Company to include the Common Stock in such
Underwritten Offering. In the underwriting agreement executed in connection
with such Underwritten Offering, the underwriters or managing underwriters will
agree to purchase the Common Stock on a "firm commitment" basis. In the event
that the underwriters or managing underwriters for such Underwritten Offering
decide that the number of shares of the Company's Common Stock to be sold in
such Underwritten Offering cannot be sold without materially interfering with
such offering or the market for the Company's Common Stock, then the number of
shares of Common Stock to be sold in such Underwritten Offering shall be
reduced first, by excluding shares of Common Stock to be sold by officers,
directors and other affiliates of the Company (excluding the Holders), second,
by excluding shares of Common Stock to be sold pursuant to other registration
rights granted by the Company (excluding any other persons who received Common
Stock contemporaneously with the execution and delivery of the Subscription
Agreement) and third, by excluding shares of Common Stock to be sold in such
Underwritten Offering by the Company. The Initial Investor agrees that it will
(a) enter into an underwriting agreement with the underwriters or managing
underwriters for such Underwritten Offering (containing normal and customary
terms) and (b) agrees to indemnify the underwriters for such Underwritten
Offering to the same extent that the Company is indemnified hereunder.
(b) DEMAND REGISTRATION. If, at any time after 90 days after the
last Closing, the Company has failed to cause to be declared effective or
failed to keep effective a Registration Statement covering the Shares as
described in Paragraph 2(a) above, and any Investor holding a majority of the
Registrable Securities shall notify the Company in writing that it intends to
offer or cause to be offered for public sale Registrable Securities held by
such Investor, the Company shall cause such of the Registrable Securities as
may be requested by any Investor to be registered, on one occasion only, under
the Securities Act and applicable state laws as expeditiously as possible. Once
the right for registration of any Registrable Securities under this Section
2(b) has been exercised by any Investor, the Company shall prepare and file a
Registration Statement covering such Registrable Securities with the SEC within
ten (10) days of the exercise of such registration right and such Registration
Statement shall be kept effective for a period of no less than two years
thereafter.
(c) PAYMENTS BY THE COMPANY. If a Registration Statement covering
the Registrable Securities is not effective by April 30, 1997 (the "Required
Date"), or within five (5) business days after receipt of an "no action" or "no
review" letter as noted in Section 2(a) above, then the Company will make
payments to each holder of Registrable
<PAGE> 18
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 4
Securities (each, a "Holder") in such amounts and at such times as shall be
determined pursuant to this Section 2(c). The amount to be paid by the Company
to the Holders shall be equal to: (1) 1/2% per month in the event the
Registration Statement is not effective by the Required Date; (2) 1% per month
in the event the Registration Statement is not effective within 30 days after
the Required Date; and (3) 2% per month in the event the Registration Statement
is not effective within 60 days after the Required Date, in each case of the
aggregate subscription price paid by the Initial Investor for the Shares
pursuant to the Subscription Agreement (the "Periodic Amount"). In the event
the Company receives a "no comment letter" from the SEC with regard to the S-1
filing, then the Company shall cause the S-1 to be effective within 5 business
days of the no comment letter; and if it is not so effective, then the monthly
penalties noted above will apply beginning on the 6th day following the date of
the no comment letter. The Periodic Amount shall be divided among all the
Holders in the same proportion as each Holder's Registrable Securities bears to
the total of the outstanding Registrable Securities. The Periodic Amount shall
be paid by the Company within five business days after each Computation Date
and shall be payable in cash; provided, however, that the Company may elect in
lieu of payment of any Periodic Amount in cash to deliver to the Initial
Investor shares of Common Stock having an Aggregate Market Value equal to the
amount of the Periodic Amount if, but only if, such shares are freely tradable
by the Initial Investor without any restriction under the Securities Act or any
state securities or "blue sky" law.
As used in this Section 2(c), the following terms shall have the
following meanings:
"Aggregate Market Value" of any shares of Common Stock as of any
Computation Date means the product obtained by multiplying (a) such number of
shares of Common Stock times (b) the Average Market Price of the Common Stock
for the Measurement Period for such Computation Date.
"Average Market Price" of any security for any period shall be
computed as the average closing bid price of the shares over the five
trading-day period ending on the relevant Computation Date, as reported by
Bloomberg, L.P.
"Computation Date" means the date which is 60 days after the exercise
of demand registration rights under Section 2(b) and, if the Registration
Statement required to be filed by the Company pursuant to Section 2(b) has not
theretofore been declared effective by the SEC, each date which is 30 days
after a Computation Date and, if the Registration Statement required to be
filed by the Company pursuant to Section 2(b) is not declared effective by the
SEC within 60 days after the exercise of demand registration rights under
Section 2(b), the date on which such Registration Statement is declared
effective.
<PAGE> 19
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 5
"Measurement Period" means the period of ten consecutive trading days
for the Common Stock ending on (or on the last trading day preceding) each
Computation Date.
3. OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall:
(a) prepare promptly and file with the SEC promptly (but in no
event later than 10 days) after a request in accordance with Section 2(b)
hereof a Registration Statement or Statements with respect to all Registrable
Securities to be included therein, and thereafter use its best efforts to cause
the Registration Statement to become effective as soon as reasonably possible
after such filing. If such Registration Statement is filed pursuant to Rule
415, the Company shall keep the Registration Statement effective pursuant to
Rule 415 at all times until such date as is two years after the date such
Registration Statement is first ordered effective by the SEC. In any case, the
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) filed by the Company shall not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein, or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; provided, however,
that, subject to the conditions set forth in Section 4(a) below, each Investor
may notify the Company in writing that it wishes to exclude all or a portion of
its Registrable Securities from such Registration Statement; provided further,
however, that if at any time the Investors shall be entitled to sell all
Registrable Securities held by them pursuant to Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at
any time permit the Investors to sell securities of the Company to the public
without registration and without imposing restrictions arising under the
federal securities laws on the purchases thereof in a period of two consecutive
months, then the Company shall, so long as it meets the current public
information requirements of Rule 144, thereafter no longer be required to
maintain the registration of Registrable Securities pursuant to this Agreement;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and
the prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times until such
date as is two years after the date such Registration Statement is first
ordered effective by the SEC, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until the earlier of (i) such two-year period or (ii) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in the
Registration Statement;
<PAGE> 20
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 6
(c) furnish to each Investor whose Registrable Securities are
included in the Registration Statement, such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Investor;
(d) use reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Investors who hold a
majority in interest of the Registrable Securities being offered reasonably
request, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications
in effect at all times until such date as is the earlier of three years after
the date such Registration Statement is first ordered effective by the SEC or
is three years after the Initial Investor acquired the Shares and (iv) take all
other actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to (I)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (II) subject itself to general
taxation in any such jurisdiction, (III) file a general consent to service of
process in any such jurisdiction, (IV) provide any undertakings that cause more
than nominal expense or burden to the Company or (V) make any change in its
charter or by-laws, which in each case the Board of Directors of the Company
determines to be contrary to the best interests of the Company and its
stockholders;
(e) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver a number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request;
(f) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any stop order or other suspension
of effectiveness of the Registration Statement at the earliest possible time;
<PAGE> 21
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 7
(g) permit a single firm of counsel designated as selling
stockholders' counsel (such counsel to be retained at such Investor(s)'
expense) by the Investors who hold a majority in interest of the Registrable
Securities being sold pursuant to such registration to review the Registration
Statement and all amendments and supplements thereto a reasonable period of
time prior to their filing with the SEC, and shall not file any document in a
form to which such counsel reasonably objects; provided that counsel shall
expeditiously complete its review so that the registration can be timely
effected;
(h) make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions
of Rule 158 under the Securities Act) covering a twelve-month period beginning
not later than the first day of the Company's fiscal quarter next following the
date of the Registration Statement;
(i) make its officers available from time to time to respond to
inquires of Investors and make available to any Investor, all pertinent
financial and other records, pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably necessary to
enable such Investor to exercise its due diligence responsibility, and cause
the Company's officers, directors and employees to supply all information which
such Investor may reasonably request for purposes of such due diligence;
provided, however, that such Investor shall not make any disclosure (except to
an Investor who has previously entered into a written confidentiality agreement
with the Company) of any Record or other information which the Company
determines in good faith to be confidential and of which determination the
Investor is so notified unless (i) in the event an Investor believes that
disclosure of Records is necessary to avoid or correct a misstatement or
omission in any Registration Statement, then it shall notify the Company in
writing of its belief and the basis therefor and shall provide the Company with
reasonable opportunity to correct the misstatement or omission or provide to
Investor reasonably satisfactory evidence that such a correction is not
required (ii) the release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent jurisdiction or (iii)
the information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. Such
Investor shall, upon completing such due diligence, destroy or return to the
Company all such Records and all copies or distillation thereof and all notes
or other stored information containing information derived in whole or in part
from such Records; provided further that such Investor may retain one copy of
the Records in its office of its legal counsel solely for the purpose of
preserving the record of the materials received by it and using the same to
defend against any claims or actions threatened or instituted involving the
Records and such Records may not be made available to any person for any other
purpose at any time hereafter. The Company shall not be required to disclose
any confidential information in such Records to any Investor until and unless
such Investor shall have entered into confidentiality agreements (in form and
<PAGE> 22
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 8
substance satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3(i). Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. The Company shall hold
in confidence and shall not make any disclosure of information concerning an
Investor provided to the Company unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii) the disclosure
of such information is necessary to avoid or correct a misstatement or omission
in any Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other order from a court or governmental body of
competent jurisdiction or (iv) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement or fiduciary obligation. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is sought
in or by a court or governmental body of competent jurisdiction or through
other means, give prompt notice to such Investor, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information;
(j) use its best efforts either to (i) cause all the Registrable
Securities covered by the Registration Statement to be listed on a national
securities exchange and on each additional national securities exchange on
which similar securities issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of
such exchange or (ii) secure designation of all the Registrable Securities
covered by the Registration Statement as a National Association of Securities
Dealers Automated Quotations System ("Nasdaq") "national market system
security" within the meaning of Rule 11Aa2-1 of the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the quotation of the
Registrable Securities on the Nasdaq National Market System or, if, despite the
Company's best efforts to satisfy the preceding clause (i) or (ii), the Company
is unsuccessful in satisfying the preceding clause (i) or (ii), to secure
listing on a national securities exchange or Nasdaq authorization and quotation
for such Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with respect
to such Registrable Securities;
(k) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(l) cooperate with the Investors who hold Registrable Securities
being sold to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to the denominations or
amounts as the case may be, and
<PAGE> 23
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 9
registered in such names as the Investors may reasonably request; and, within
five business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall cause legal counsel selected by the Company to deliver, to the transfer
agent for the Registrable Securities (with copies to the Investors whose
Registrable Securities are included in such Registration Statement)
instructions to the transfer agent to issue new stock certificates without a
legend and an opinion of such counsel that the shares have been registered; and
(m) take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant
to the Registration Statement;
4. OBLIGATIONS OF THE INVESTORS. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to each
Investor that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least fifteen (15) days prior to the first anticipated
filing date or five (5) days prior to the effective date of the Registration
Statement, the Company shall notify each Investor of the information the
Company requires from each such Investor (the "Requested Information") if such
Investor elects to have any of such Investor's Registrable Securities included
in the Registration Statement. If within five (5) business days prior to the
filing date the Company has not received the Requested Information from an
Investor (a "Non-Responsive Investor"), then the Company may file the
Registration Statement without including Registrable Securities of such
Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement;
(c) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e) or
3(f), or that the Board of Directors of the Company has determined, in its good
faith reasonable judgment, that the disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
would materially interfere with, or
<PAGE> 24
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 10
require the premature disclosure of, any financing, acquisition or
reorganization involving the Company or any of its subsidiaries or otherwise
would require premature disclosure or any other material nonpublic information
as to which the Company has a bona fide business purpose for maintaining its
confidentiality, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or 3(f), or
upon receipt of written authorization from the Company and , if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice; and
5. EXPENSES OF REGISTRATION. All expenses (other than commissions
and other fees and expenses of investment bankers and other than brokerage
commissions) incurred in connection with registrations, filings or
qualifications pursuant to Section 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees and
the fees and disbursements of counsel for the Company, shall be borne by the
Company; provided, however, that the Investors shall bear the fees and
out-of-pocket expenses of the one legal counsel selected by the Investors
pursuant to Section 3(h) hereof.
6. INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, employees, agents, and
representatives, if any, of such Investor, and each person, if any, who
controls any Investor within the meaning of the Securities Act or the Exchange
Act (each, an "Indemnified Person"), against any losses, claims, damages,
expenses or liabilities (joint or several) (collectively "Claims") to which any
of them become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any post-effective amendment thereof or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained
in any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
<PAGE> 25
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 11
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act or any state securities law or any rule or regulation (the
matters in the foregoing clauses (i) through (iv) being, collectively,
"Violations"). Subject to the restrictions set forth in Section 6 (d) with
respect to the number of legal counsel, the Company shall reimburse the
Investors and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a) (I) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by any Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof; (II) with respect to any preliminary prospectus shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(c) hereof; and (III)
shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of the Company, which consent
shall not be unreasonably withheld. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Persons and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify and hold
harmless, to the same extent and in the same manner set forth in Section 6(a),
the Company, each of its directors, each of its officers who signs the
Registration Statement, each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder within the
meaning of the Securities Act or the Exchange Act (collectively and together
with an Indemnified Person, an "Indemnified Party"), against any Claim to which
any of them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon any Violation,
in each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished to the
Company by such Investor expressly for use in
<PAGE> 26
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 12
connection with such Registration Statement; provided, however, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented.
(c) The Company shall be entitled to receive indemnities from
selling brokers, dealer managers and similar securities industry professionals
participating in any distribution, to the same extent as provided above, with
respect to information such persons so furnished in writing by such persons
expressly for inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof and this indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying parties;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and other party represented by such counsel in such
proceeding. The Company shall pay for only one separate legal counsel for the
Investors; such legal counsel shall be selected by the Investors holding a
majority in interest of the Registrable Securities. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of
any liability to the Indemnified Person or Indemnified Party under this Section
6, except to the extent that the indemnifying party
<PAGE> 27
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 13
is prejudiced in its ability to defend such action. The indemnification
required by this Section 6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
7. CONTRIBUTION. To the extent any indemnification provided for
herein is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that (a) no contribution shall be made under circumstances
where the maker would not have been liable for indemnification under the fault
standards set forth in Section 6, (b) no seller of Registrable Securities
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent misrepresentation
and (c) contribution by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale
of such Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making available to
the Investors the benefits of Rule 144 or any other similar rule or regulation
of the SEC that may during the period beginning two years after and ending
three years from the earliest conversion date allowed hereunder, permit the
Investors to sell securities of the Company to the public without registration,
until such time as the Investors have sold all the Registrable Securities
pursuant to a Registration Statement or Rule 144, the Company agrees to during
such period:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
hold a majority in interest of the
<PAGE> 28
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 14
Registrable Securities. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company.
10. THIRD PARTY BENEFICIARY. The parties acknowledge and agree
that Shoreline Pacific, the Institutional Division of Financial West Group
("Shoreline Pacific"), shall be deemed a third party beneficiary of the
Company's agreements and representations set forth in this Agreement, entitled
to enforce the terms thereof, and to indemnification for any damages resulting
to Shoreline Pacific from any actual or threatened breach thereof by the
Company, both in Shoreline Pacific's personal capacity and, should Shoreline
Pacific so elect, on behalf of the Investor.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when delivered by
facsimile transmission, when personally delivered or when sent by registered
mail, return receipt requested, addressed (i) if to the Company, at COMFORCE
Corporation, 2001 Marcus Avenue, Lake Success, NY 11042 Attention: Paul J.
Grillo, Chief Financial Officer, (ii) if to the Initial Investor, at the
address set forth under its name in the Subscription Agreement and (iii) if to
any other Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes
by notice given in accordance with this Section 12(b), and shall be effective,
when delivered by facsimile, upon confirmation; when personally delivered, upon
receipt; and when sent by certified mail, four business days after deposit with
the United States Postal Service.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of New York applicable to the agreements
made and to be performed entirely within such state, without giving effect to
rules governing the conflict of laws. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof which may
<PAGE> 29
COMFORCE Corporation/[BUYER] December 26, 1996
Registration Rights Agreement
Page 15
prove invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
(e) This Agreement and the Subscription Agreement to which it is
annexed constitute the entire agreement among the parties hereto with respect
to the subject matter hereof. There are no other restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The headings in the Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(i) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of day and
year first above written.
COMFORCE CORPORATION Infinity Investors Limited
By /s/ Andrew Reiben By /s/ James E. Martin
---------------------------- --------------------------
Andrew Reiben James E. Martin
Assistant Secretary Director
<PAGE> 1
EXHIBIT 99.5
PRIVATE SECURITIES SUBSCRIPTION AGREEMENT
COMFORCE CORPORATION/INFINITY INVESTORS LIMITED
December 26, 1996
THIS PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter the
"Agreement") has been executed by the undersigned in connection with the sale in
a private placement pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), of certain shares of common stock, par value
$.01 per share, (hereinafter the "Common Shares") of COMFORCE Corporation (CFS),
2001 Marcus Avenue, Lake Success, NY 11042, a corporation organized under the
laws of Delaware (hereinafter "SELLER") to Infinity Investors Limited, located
at 27 Wellington Road, Cork Ireland, a corporation organized under the laws of
Nevis, West Indies (hereinafter "BUYER"). SELLER and BUYER (hereinafter
collectively the "parties") each hereby represents, warrants and agrees as
follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE AND TERMS
(i) SELLER and BUYER are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506
under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission under the Securities Act; and
(ii) BUYER hereby subscribes for Sixty-Five Thousand Seven Hundred
Fourteen (65,714) Common Shares of Seller ("Common Shares"), for an aggregate
purchase price of Five Hundred Thousand Dollars ($500,000) payable in United
States Dollars at the Closing, as defined in Paragraph 8 hereof.
(iii) BUYER shall pay the purchase price by delivering same day funds
in United States Dollars as agreed between the parties, to be delivered to the
order of SELLER upon delivery of the Common Shares.
(iv) In addition, BUYER shall receive a Common Stock Purchase Warrant
(the "Warrant" or "Warrants") entitling BUYER to purchase Thirteen Thousand
Seven Hundred Ninety-Four (13,794) Common Shares at an exercise price of $19
per share. The Warrants shall be exercisable upon issuance to BUYER at Closing
and will expire on December 26, 1999. The Common Shares issuable upon exercise
of the Warrants are hereinafter referred to as the "Warrant Shares."
(v) The Common Shares issued to BUYER may not be sold until the
earlier of (1) five months following the date on which an S-1 registration
statement filed by SELLER registering SELLER'S common stock for resale in an
<PAGE> 2
Private Sec. Sub. Agreement: COMFORCE Corporation/Fairway Capital Limited
December 26, 1996 Page 2
underwritten public offering (an "Underwritten Registration") has been declared
effective by the U.S. Securities and Exchange Commission (such registration
statement effective date referred to herein as the "Effective Date"), or (2)
August 1, 1997; provided, however, that in any event, if the Effective Date has
not occurred by April 30, 1997, then the Common Shares will be tradable on or
after May 1, 1997 without restriction, it being understood that under such
circumstances SELLER will have registered the Common Shares for resale in a
shelf registration not calling for an underwritten offering. This period
during which the Common Shares are restricted from trading is referred to
herein as the "Lock-Up Period."
(vi) In the event the Market Price (defined as the lesser of (a) the
average of the closing bid price of SELLER'S common stock over the ten trading
days immediately preceding the date in question, or (b) the closing bid price
of SELLER'S common stock on the trading day immediately preceding the date in
question, in both instances as reported by Bloomberg, L.P.) is less than Ten
Dollars ($10.00) per share (1) on May 1, 1997, if the Effective Date has not
occurred by April 30, 1997, or alternatively, (2) on the last day of the Lock-
Up Period, then SELLER shall pay to BUYER the difference between the Market
Price and $10.00, multiplied by the number of Common Shares held by BUYER on
such date. SELLER shall have the option to make such payment in cash or in
common stock of SELLER, or in any combination thereof, and shall make such
payment to BUYER within four (4) business days of the applicable date referred
to in this subsection. Any shares of SELLER'S common stock delivered to BUYER
in satisfaction of SELLER'S obligations under this subsection are referred to
herein as "Bonus Shares."
2. BUYER'S REPRESENTATIONS AND AGREEMENTS
BUYER represents, warrants and agrees as follows:
(i) BUYER understands that the Common Shares, the Bonus Shares, the
Warrants, and the Warrant Shares (collectively, the "Securities") have not been
registered under the Securities Act, or any other applicable securities law,
and, accordingly, none of the Securities may be offered, sold, transferred,
pledged, hypothecated or otherwise disposed of unless registered pursuant to,
or in a transaction exempt from registration under, the Securities Act and any
other applicable securities law;
(ii) BUYER is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3), or (7) of Regulation D (an "Accredited Investor") that is
acquiring the Securities either for its own account or as a fiduciary or agent
for
<PAGE> 3
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 3
one or more institutional accounts as to which it exercises sole discretion,
each of which is an Accredited Investor. BUYER has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks
of an investment in the Securities. BUYER has had a reasonable opportunity to
ask questions of and receive answers from SELLER concerning SELLER and the
offering of the Securities. BUYER is not subscribing for the Securities as a
result of or pursuant to any advertisement, article, notice, or other
communication published in any newspaper, magazine, or similar media or
broadcast over television or radio. BUYER is aware that it (or such
institutional account) may be required to bear the economic risk of an
investment in the Securities for an indefinite period, and it (or such
institutional account) is able to bear such risk for an indefinite period;
(iii) BUYER is acquiring the Securities for its own account or for one
or more institutional accounts as described in Paragraph 2(ii) hereof, in each
case for investment purposes and not with a view to, or for offer or sale in
connection with, any distribution thereof (subject to any requirement of law
that the disposition of its property or the property of such institutional
account or accounts remain within its or their control). BUYER agrees on its
own behalf and on behalf of any such institutional account for which it is
acquiring the Securities to offer, sell or otherwise transfer any Securities
only to Accredited Investors (subject to any requirement of law that the
disposition of its property or the property of such institutional account or
accounts remain within its or their control) in conformity with the Securities
Act and any other applicable securities law and with the restrictions on
transfer set forth on the certificate(s) evidencing the Common Shares and the
Bonus Shares. BUYER acknowledges that each certificate evidencing the Common
Shares and Bonus Shares shall bear a legend substantially to the effect of the
foregoing paragraphs 2(i) and 2(ii) and this paragraph 2(iii). Such legend
shall be in substantially the following form:
"THE COMMON SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED OR SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
THE HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS
OF THE COMPANY SET FORTH IN A PRIVATE SECURITIES SUBSCRIPTION AGREEMENT
BETWEEN THE COMPANY AND FAIRWAY CAPITAL LIMITED DATED DECEMBER 26,
<PAGE> 4
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 4
1996. A COPY OF THE PORTION OF THE AFORESAID SUBSCRIPTION AGREEMENT
EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE
OFFICES."
Upon expiration of the Lock-Up Period, SELLER shall promptly exchange
BUYER'S legended Common Stock certificates, representing Common Shares or Bonus
Shares, for unlegended Common Stock certificates.
(iv) BUYER acknowledges that prior to the expiration of the Lock-Up
Period, SELLER or any transfer agent of SELLER shall register the transfer or
exchange of any of the Securities only upon receipt of the certificate(s)
evidencing such Securities with the transfer notice set forth thereon
appropriately completed and upon receipt in writing from the transferee or the
recipient of such Securities in such transfer or exchange (as the case may be)
of a certificate setting forth the representations in Paragraph 2 hereof and
only upon the availability of an exemption from registration under the
Securities Act;
(v) If BUYER is acquiring any of the Securities as fiduciary or agent
for one or more institutional accounts, BUYER represents that it has sole
investment discretion with respect to each such account and that it has full
power to make the foregoing acknowledgments, representations and agreements on
behalf of each such institutional account;
(vi) BUYER acknowledges that SELLER will rely upon the truth and
accuracy of the foregoing acknowledgments, representations and agreements and
further agrees that if, prior to any closing hereunder, any of such
acknowledgments, representations and agreements made by BUYER are no longer
accurate, BUYER will promptly notify SELLER;
(vii) BUYER has received SELLER'S latest Form 10-K, all Forms 10-Q and
8-K filed thereafter, any amendments thereto, and the Proxy Statement for its
latest fiscal year (collectively, the "Public Documents") and the Private
Placement Memorandum prepared by SELLER;
(viii) This Agreement has been duly authorized, validly executed, and
delivered on behalf of BUYER and is a valid and binding agreement enforceable
in accordance with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally; and
(ix) BUYER has not engaged and agrees not to engage in any short sales
of the Company's common stock prior to the end of the Lock-Up Period, except
<PAGE> 5
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 5
to the extent that any such short sale is fully covered by shares of common
stock of SELLER owned by BUYER other than the Common Shares or Bonus Shares
purchased pursuant to this Agreement.
3. SELLER'S REPRESENTATIONS AND AGREEMENTS
SELLER represents, warrants and agrees as follows:
(i) SELLER has not conducted any general solicitation or general
advertising (as defined in Regulation D) with respect to any of its securities;
(ii) The Common Shares, the Bonus Shares, and Warrant Shares, when
issued and delivered will be duly and validly authorized and issued, fully-paid
and nonassessable, free and clear of any liens, encumbrances, charges, or
adverse claims of any nature whatsoever, and will not subject the holders
thereof to personal liability by reason of being such holders. There are no
preemptive rights of any shareholder of SELLER with respect to the transactions
contemplated by this Agreement or the Warrant;
(iii) This Agreement and the Warrant have each been duly authorized,
validly executed and delivered on behalf of SELLER and constitute valid and
binding agreements in accordance with their respective terms, subject to
general principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally;
(iv) The execution and delivery of this Agreement and the Warrant and
the consummation of the issuance of the Securities and the transactions
contemplated by this Agreement do not and will not conflict with or result in a
breach by SELLER of any of the terms or provisions of, or constitute a default
under, the articles of incorporation (or charter) or bylaws of SELLER, or any
indenture, mortgage, deed of trust or other material agreement or instrument to
which SELLER is a party or by which it or any of its properties or assets are
bound, or any existing applicable decree, judgment or order of any court,
federal or state regulatory body, administrative agency or other governmental
body having jurisdiction over SELLER or any of its properties or assets;
(v) No authorization, approval or consent of or filing with any
federal, state or local governmental body of the United States is legally
required for the issuance and sale of the Securities as contemplated by this
Agreement;
(vi) Neither the information provided by or on behalf of SELLER to
BUYER and referred to in Section 2(vii) of this Agreement, nor any
representation
<PAGE> 6
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 6
or warranty made by SELLER to BUYER hereunder contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
such statements, in the light of the circumstance under which they are made,
not misleading. All of such information (the "SEC Filings") required to be
filed under the Securities Exchange Act of 1934, as amended (the "1934 Act"),
was timely filed and each such report, at the time filed, complied as to form
with the requirements of the 1934 Act. Since December 31, 1995, there has been
no material adverse development in the business, properties, operations,
financial condition or results of operations of SELLER, except as disclosed in
the documents referred to in the SEC Filings. The audited and unaudited
consolidated balance sheets of the Seller contained in the SEC Filings, and the
related consolidated statements of income, changes in stockholders' equity and
changes in cash flows for the periods then ended (the consolidated balance
sheet of the SELLER as of December 31, 1995 is hereinafter referred to as the
"Balance Sheet"), including footnotes thereto, except as indicated therein,
have been prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods indicated. The Balance Sheet
fairly presents the financial condition of SELLER at the date thereof and,
except as indicated therein, reflects all claims against and all debts and
liabilities of SELLER, fixed or contingent, as of the date thereof and the
related statements of income, stockholders' equity and changes in cash flows
fairly present the results of the operations of SELLER and its financial
position for the period indicated. Since December 31, 1995, (the "Balance
Sheet Date") there has been (x) no material adverse change in the assets or
liabilities, or in the business condition, financial or otherwise, or in the
results of operations or prospects, of the SELLER and its subsidiaries, whether
as a result of any legislative or regulatory change, revocation of any license
or rights to do business, fire, explosion, accident, casualty, labor trouble,
flood, drought, riot, storm, condemnation, act of God, public force or
otherwise, and (y) no change in the assets or liabilities, or in the business
or condition, financial or otherwise, or in results of operations or prospects,
of the SELLER except the ordinary course of business; and, to the best
knowledge, information and belief of the SELLER, no fact or condition exists or
is contemplated or threatened which might cause such a change in the future.
(vii) SELLER will issue one or more certificates representing the
Common Shares in the name of BUYER in such denominations to be specified by
BUYER prior to closing. SELLER will issue one or more certificates
representing the Warrant in the name of BUYER in such denominations to be
specified by BUYER prior to closing. Until the end of the Lock-Up Period and
prior to any exchange for unlegended share certificates, certificates
representing the Common Shares and Bonus Shares will bear the restrictive
legend specified in Section 2(iii) of this Agreement. Upon exercise of the
Warrant in accordance with its terms, SELLER
<PAGE> 7
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 7
will issue one or more certificates representing Warrant Shares in such name or
names and in such denominations specified by BUYER in an election to purchase.
Subject to the provisions of the Registration Rights Agreement, the Warrant
Shares shall not bear any restrictive legends and shall be freely tradable,
subject to compliance with federal and state securities laws. SELLER further
warrants that no instructions other than these instructions and stop transfer
instructions to give effect to Section 2(i) hereof will be given to the
transfer agent and also warrants that the Securities shall otherwise be
transferable on the books and records of SELLER as and to the extent provided
in this Agreement, subject to compliance with federal and state securities
laws. Following registration of the Common Shares, the Bonus Shares and the
Warrant Shares, SELLER agrees to furnish new instructions to the transfer agent
advising them of registration and instructing them to reissue the Common Shares
without a legend and to notify BUYER of the delivery of such instructions.
Nothing in this Section shall affect in any way BUYER'S obligations and
agreement to comply with all applicable securities laws upon resale of the
Securities.
(viii) Except as disclosed in the SEC Filings, there is no action, suit
or proceeding before or by any court or governmental agency or body, domestic
or foreign, now pending or, to the knowledge of SELLER, threatened against or
affecting SELLER, or any of its properties, which could reasonably be expected
to result in any material adverse change in the business, properties, results
of operations, condition (financial or otherwise), or prospects of SELLER, or
which could reasonably be expected to materially and adversely affect the
properties or assets of SELLER or which could reasonably be expected to
interfere with SELLER'S ability to consummate the transactions contemplated by
this Agreement and the Warrant.
(ix) Private Placements. Except as set forth in the SEC Filings,
SELLER has not issued any shares of its Common Stock (or securities convertible
into or exercisable for shares of Common Stock), pursuant to any exemption from
registration under the Securities Act, except for shares of Common Stock issued
as an adjustment to, or in connection with a conversion or exercise of, such
securities, except as set forth or contemplated in the SEC Filings.
(x) Commissions. Except for a fee which is payable by SELLER to
Shoreline Pacific, no other person, firm or corporation will be entitled to
receive any brokerage fee, commission or other similar payment from SELLER in
connection with the consummation of the transactions contemplated hereby and
SELLER shall not make any such payment to any person, firm or corporation other
than as set forth herein.
<PAGE> 8
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 8
(xi) Accountants. For as long as any Common Shares remain subject to
the Lock-Up Period, SELLER shall, until at least the second anniversary of the
date of the Closing (the "Closing Date"), maintain as its independent auditors
an accounting firm that is authorized to practice before the SEC.
(xii) Corporate Existence and Taxes. For as long as any Common Shares
or Bonus Shares remain subject to the Lock-Up Period, SELLER shall, until the
second anniversary of the Closing Date, maintain its corporate existence and
good standing, and shall pay all its taxes when due except for taxes which
SELLER disputes in good faith and for which adequate reserves are established
on SELLER'S books and records.
(xiii) Reserved Shares and Listings. For so long as any Common Shares
or Bonus Shares or Warrants remain outstanding:
(a) SELLER will reserve from its authorized but unissued
Common Shares a sufficient number of Common Shares to permit the
exercise of the then outstanding Warrants; and
(b) SELLER will maintain a listing of its common stock on the
Nasdaq National Stock Market or a national securities exchange.
(xiv) Capitalization. SELLER has an authorized capitalization
consisting of One Hundred Million (100,000,000) shares of common stock, $0.01
par value, of which Ten Thousand (10,000,000) shares issued and outstanding and
Zero (0) shares are held in SELLER'S treasury. All such outstanding shares
have been duly authorized and validly issued and are fully paid and
nonassessable. There are no outstanding options, warrants, rights, calls,
commitments, conversion rights, rights of exchange, plans or other agreements
of any character providing for the purchase, issuance or sale of any shares of
the capital stock of SELLER, other than as contemplated by this Agreement.
(xv) Subsidiaries. Set forth in Exhibit A attached hereto is a list
of each corporation in which SELLER owns, directly or indirectly, any equity
security (a "subsidiary"). Each subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation (as set forth on Exhibit A), and has all requisite power to own
its property and to carry on its business as now being conducted. Set forth on
Exhibit A is a list of jurisdictions in which each subsidiary is qualified as a
foreign corporation. Such jurisdictions are the only jurisdictions in which
the character or location of the properties owned or leased by each subsidiary,
or the nature of the business conducted by each subsidiary, makes such
qualifications necessary. All of the
<PAGE> 9
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 9
outstanding shares of capital stock of each subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable, and, except as
set forth in Exhibit A, are owned, of record and beneficially, by SELLER, free
and clear of all liens, encumbrances, restrictions and claims of every kind.
No shares of capital stock of any subsidiary are reserved for issuance and
there are no outstanding options, warrants, rights, subscriptions, claims,
agreements, obligations, convertible or exchangeable securities or other
commitments, contingent or otherwise, relating to the capital stock of any
subsidiary or pursuant to which any subsidiary is or may become obligated to
issue or exchange any shares of capital stock. Neither SELLER nor any
subsidiary owns, directly or indirectly, any capital stock or other equity or
ownership or proprietary interest in any corporation, partnership, association,
trust, joint venture or other entity except as set forth on Exhibit A.
(xvi) Private Offering. Assuming (without any independent
investigation or verification by or on behalf of SELLER) the accuracy of the
representations and warranties of BUYER set forth herein, the offer and sale of
the Common Shares, the Bonus Shares, the Warrants, and the Warrant Shares are
exempt from registration under Section 5 of the Securities Act of 1933, as
amended (the "Securities Act"). Neither SELLER nor any person acting on its
behalf has taken or will take any action (including, without limitation, any
offering of any securities of SELLER under circumstances which would require
the integration of such offering with the offering of the shares under the
Securities Act) which might subject the offering, issuance or sale of the
Common Shares, the Bonus Shares, the Warrants, or the Warrant Shares to the
registration requirements of Section 5 of the Securities Act.
(xvii) Consents and Approvals. Neither SELLER nor any Subsidiary is
required to obtain any consent, waiver, authorization or order of, or make any
filing or registration with, any count or other federal, state local, or other
governmental authority or other person in connection with the execution,
delivery and performance by SELLER of the transaction documents except for (i)
the filing of the registration statements contemplated by the Registration
Rights Agreement with the Securities and Exchange Commission, which shall be
filed in the time periods set forth in the Registration Rights Agreement, (ii)
applications for the listing of the Common Shares, the Bonus Shares and the
Warrant Shares with the American Stock Exchange (and with any other national
securities exchange or market on which SELLER'S common stock is then listed),
and (iii) other than, in all other cases, where the failure to obtain such
consent, waiver, authorization or order, or to give or make such notice of
filing, would not materially impair or delay the ability of SELLER to effect
the Closings and to deliver to BUYER the Common Shares, the Bonus Shares, the
Warrants (and, upon
<PAGE> 10
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 10
exercise of the Warrants, the Warrant Shares) in the manner contemplated hereby
and the Registration Rights Agreement free and clear of all liens and
encumbrances of any nature whatsoever.
(xviii) SELLER hereby covenants and agrees to comply with all
terms and conditions of the Registration Rights Agreement which is annexed
hereto.
4. CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER TO SELL THE COMMON
SHARES
The obligation of SELLER to sell the Common Shares hereunder is subject
to the satisfaction or waiver by SELLER, at or before the Closing of the
purchase thereof, of each of the following conditions:
(i) Accuracy of BUYER'S Representations and Warranties. The
representations and warranties of BUYER shall be true and correct in all
material respects as of the date when made and as of the Closing Date, as
though made on and as of such date (except that representations and warranties
that are made as of a specific date need be true in all material respects only
as of such date);
(ii) Performance by BUYER. BUYER shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by BUYER
at or prior to the Closing;
(iii) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement; and
(iv) Required Approvals. All Required Approvals shall have been
obtained.
5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO PURCHASE THE
COMMON SHARES.
The obligation of BUYER hereunder to acquire and pay for the Common
Shares is subject to the satisfaction or waiver by BUYER, at or before the
closing of the purchase of the Common Shares, of each of the following
conditions:
<PAGE> 11
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 11
(i) Accuracy of SELLER'S Representations and Warranties. The
representations and warranties of SELLER shall be true and correct in all
material respects as of the date when made and as of the closing of the
purchase of the Common Shares as though made on and as of such date;
(ii) Performance by SELLER. SELLER shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by SELLER at or prior to the closing of the purchase of the Common Shares;
(iii) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement;
(iv) Adverse Changes. Since the date of the financial statements
included in SELLER'S Quarterly Report on Form 10-Q or Annual Report on Form 10-
K, whichever is more recent, last filed prior to the date of this Agreement, no
event which in the judgment of BUYER had a Material Adverse Effect and no
material adverse change in the financial condition or prospects of SELLER shall
have occurred (for purposes hereof changes in the market price of SELLER'S
common stock may be considered in determining whether there has occurred an
event which has had a Material Adverse Effect or whether a material adverse
change has occurred);
(v) No Suspensions of Trading in Common Stock. The trading in
SELLER'S common stock shall not have been suspended by the Securities and
Exchange Commission or on the American Stock Exchange;
(vi) Listing of Common Stock. SELLER'S common stock shall have at all
times between the date hereof and the closing of the purchase of the Common
Shares been, and on such Closing Date be, listed for trading on the American
Stock Exchange;
(vii) Legal Opinion. SELLER shall have delivered to the escrow agent
on behalf of BUYER the opinion of Doepken Keevican & Weiss, counsel to SELLER;
(viii) Required Approvals. All Required Approvals shall have been
obtained;
<PAGE> 12
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 12
(ix) Shares of Common Stock. On or prior to the closing of the
purchase of the Common Shares, SELLER shall have duly reserved for issuance
upon exercise of the Warrants sufficient common shares to meet the obligations
of SELLER under this Agreement;
(x) Delivery of Stock Certificates. SELLER shall have delivered to
the escrow agent on behalf of BUYER or its designee the stock certificate(s)
representing the Common Shares, registered in the name of BUYER, each in form
satisfactory to BUYER;
(xi) Registration Rights Agreement. SELLER shall have executed the
Registration Rights Agreement;
(xii) Warrant. SELLER shall have executed and delivered the Warrants
in accordance with the terms of this Agreement;
(xiii) Company Certificates. BUYER shall have received within three (3)
days of closing a certificate, dated the closing date of the purchase of the
Common Shares, signed by the Secretary or an Assistant Secretary of SELLER and
certifying (a) that attached thereto is a true, correct and complete copy of
(1) SELLER'S Restated Articles of Organization, as amended to the date thereof,
(2) SELLER'S By-Laws, as amended to the date thereof, and (3) resolutions duly
adopted by the Board of Directors of Seller authorizing the execution, delivery
and (where appropriate) filing of the transaction documents and the Certificate
of Designation and the issuance and sale of the Common Shares, the Warrants,
and the Warrant Shares underlying the Warrants, and (b) the incumbency of the
officers executing the transaction documents, the Common Shares and the
Warrants.
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO CLOSE SECOND
TRANCHE
The obligation of BUYER to close the second tranche (the "Second
Tranche"), as provided in Section 8 hereof, is subject to the satisfaction or
waiver by BUYER, at or before the closing of the second tranche, each of the
following conditions:
(i) First Tranche. The closing of the First Tranche shall have
occurred.
(ii) Accuracy of SELLER'S Representations and Warranties. The
representations and warranties of SELLER contained herein and in the
Registration Rights Agreement shall be true and correct in all material
respects as of the date
<PAGE> 13
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 13
when made and as of the closing of the Second Tranche, as though made on and as
of such date;
(iii) Performance by SELLER. SELLER shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement and the Registration Rights Agreement to
be performed, satisfied or complied with by SELLER at or prior to the closing
of the First Tranche or the Second Tranche, as applicable;
(iv) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement relating to the issuance of any
of the Common Shares or exercise of any of the Warrants;
(v) Adverse Changes. Since the date of the financial statements
included in SELLER'S last filed Quarterly Report on Form 10-Q or Annual Report
on Form 10-K, whichever is more recent, last filed prior to the date of this
Agreement, no event which in the judgment of BUYER had a Material Adverse
Effect shall have occurred, nor shall there have occurred in the judgment of
BUYER a material adverse change in the financial conditions or prospects of
SELLER, which is not disclosed in the SEC Filings (for the purposes hereof,
changes in the market price of SELLER'S common stock may be considered in
determining whether there has occurred an event which has had a Material
Adverse Effect or whether a material adverse change has occurred);
(vi) Litigation. No material litigation shall have been instituted or
threatened against SELLER;
(vii) No Suspensions of Trading in Common Stock. The trading in
SELLER'S common stock shall not have been suspended by the Securities and
Exchange Commission or the American Stock Exchange (except for any suspension
of trading of limited duration solely to permit dissemination of material
information regarding SELLER);
(viii) Listing of Common Stock. SELLER'S common stock shall have been
at all times between the closing of the First Tranche and the closing of the
Second Tranche, and on such closing dates be, listed for trading on the
American Stock Exchange.
<PAGE> 14
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 14
7. THIRD PARTY BENEFICIARY. The parties acknowledge and agree that
Shoreline Pacific, the Institutional Division of Financial West Group
("Shoreline Pacific"), shall be deemed a third party beneficiary of SELLER'S
agreements and representations set forth in this Agreement, entitled to enforce
the terms thereof, and to indemnification for any damages resulting to
Shoreline Pacific from any actual or threatened breach thereof by SELLER, both
in Shoreline Pacific's personal capacity and, should Shoreline Pacific so
elect, on behalf of BUYER.
8. CLOSING. Subject to the Conditions of Closing set forth below, the
investment of HW Partners, L.P. (which includes BUYER'S investment hereunder,
together with the $3,000,000 investment of Infinity Investors Limited on like
terms) shall take place in two tranches of $3,500,000 each. The first and
second tranches shall close on or about December 26, 1996, or at such other
time as is mutually agreed to by the parties. The appropriate Common Share
certificates and Warrants shall be delivered to BUYER and the funds therefor
shall be delivered to SELLER at each Closing.
9. CONDITIONS TO CLOSING
(i) BUYER understands that SELLER'S obligation to sell the Common
Shares is conditioned upon delivery as agreed between BUYER and SELLER by BUYER
of the amount set forth in Paragraph 1 hereof.
(ii) SELLER understands that BUYER'S obligation to purchase the Common
Shares is conditioned upon delivery of certificate(s) representing Common
Shares as described in Paragraph 1(ii) hereto and provision of an opinion of
counsel confirming the matters set out in Section 3(ii), (iii), (iv) and (v)
above.
(iii) SELLER understands that BUYER'S obligation to purchase the Common
Shares is conditioned upon SELLER and BUYER entering into a Registration Rights
Agreement substantially in the form of Annex I hereto.
(iv) SELLER understands that BUYER'S obligation to close the second
tranche of $3,500,000 is expressly conditioned on there not having occurred any
material adverse change in the business results of operation, condition
(financial or otherwise), prospects, properties or assets of SELLER, or any
material decline in the market price of SELLER'S Common Stock after the date of
this Agreement.
10. GOVERNING LAW; INTERPRETATION. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without giving
effect to rules governing the conflict of laws. Facsimile signatures of this
agreement shall be binding on all parties hereto.
<PAGE> 15
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 15
11. AMENDMENT. Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any
such amendment, waiver, discharge or termination is sought.
12. NOTICES, ETC. Any notice, demand or request required or permitted to be
given by either SELLER or BUYER pursuant to the terms of this Agreement shall
be in writing and shall be deemed given when delivered personally or by
facsimile, with a hard copy to follow by two (2) day courier addressed to the
parties at the addresses of the parties set forth at the beginning of this
Agreement or such other address as a party may request by notifying the other
in writing.
13. CONFIDENTIALITY. BUYER will keep confidential all non-public
information regarding SELLER that they received from SELLER unless disclosure
of such information is compelled by a court or other administrative body or
otherwise necessary, in the opinion of BUYER'S counsel, to comply with
applicable law. Neither party shall disclosure any information regarding any
of the transactions contemplated hereby without prior consent of the other
party, unless such disclosure is required in filings made with the SEC.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument. A facsimile transmission of a signature hereto shall be valid as
if an original and binding on all parties.
15. SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective
if it materially changes the economic benefit of this Agreement to any party.
16. PARTIES IN INTEREST. This Agreement may not be transferred, assigned,
pledged or hypothecated by any party hereto, other than by operation of law.
This Agreement shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.
<PAGE> 16
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
December 26, 1996 Page 16
IN WITNESS WHEREOF, this Agreement was duly executed and is made effective as
of the 26th day of December, 1996.
Official Signatory of BUYER:
Fairway Capital Limited
BY: /s/ James E. Martin
---------------------------
James E. Martin
Director
Official Signatory of SELLER:
COMFORCE CORPORATION
BY: /s/ Andrew Reiben
---------------------------
Andrew Reiben
Assistant Secretary
<PAGE> 17
ANNEX I
ANNEX I
TO
SUBSCRIPTION
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 26, 1996 (this
"Agreement"), is made by and among COMFORCE Corporation a Delaware corporation
(the "Company"), and the person named on the signature page hereto (the
"Initial Investor").
W I T N E S S E T H :
WHEREAS, in connection with the Private Securities Subscription
Agreement, dated as of December 26, 1996, between the Initial Investor and the
Company (the "Subscription Agreement"), the Company has agreed, upon the terms
and subject to the conditions of the Subscription Agreement, to issue and sell
to the Initial Investor shares of Common Stock (the "Common Stock") and
Warrants to purchase shares of Common Stock (such shares referred to as
"Warrant Shares"). In addition, the Initial Investor may receive additional
Common Stock of the Company (the "Bonus Shares") pursuant to the provisions of
the Subscription Agreement between the parties thereto, to which this
Registration Rights Agreement is annexed. The Common Stock, the Warrant Shares
and the Bonus Shares are sometimes collectively referred to herein as
"Shares"); and
WHEREAS, to induce the Initial Investor to execute and deliver the
Subscription Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
<PAGE> 18
(i) "Investor" means the Initial Investor and any transferee
or assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof; provided, however, that if the Company has
requested acceleration of any Registration Statement to register the Shares
held by such Investor, then the term "Investor" shall not include any
subsequent transferee of such Investor. Notwithstanding such proviso, the
Investor shall not be prohibited from transferring a beneficial interest in the
Shares so long as the same is permitted under applicable securities laws, and
the Company shall do all things necessary or appropriate to give effect to any
such transfer so as to facilitate the subsequent resale of the Shares pursuant
to a Registration Statement, all as contemplated in this Agreement.
(ii) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act on such appropriate
registration form promulgated by the Commission as shall be selected by the
Company, and when requested by the Initial Investor or any Investor pursuant to
Section 2(b) hereof, shall (A) be reasonably acceptable to the holders of a
majority of the Registrable Securities to which such registration relates, and
(B) shall permit the disposition of Registrable Securities in accordance with
the intended method or methods specified in the Investor's request for such
registration, and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
("SEC").
(iii) "Registrable Securities" means the Shares.
(iv) "Registration Statement" means a registration statement
under the Securities Act registering securities of the Company.
(v) "Rule 144" means Rule 144 promulgated under the Securities
Act.
(b) As used in this Agreement, the term Investor includes (i) each
Investor (as defined above) and (ii) each person who is a permitted transferee
or assignee of the Registrable Securities pursuant to Section 9 of this
Agreement.
(c) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Subscription Agreement.
2. REGISTRATION.
(a) REGISTRATION RIGHTS. The Company shall cause the Registrable
Securities to be included for registration for resale under the Securities Act
on Form S-1 (or on Forms S-2 or S-3 or any other form appropriately selected by
the Company for the resale registration of securities other than a registration
statement on Forms S-4 or S-8). Company shall keep such Registration Statement
and the Prospectus used in connection
<PAGE> 19
COMFORCE Corporation/Fairway Capital Ltd. December 26, 1996
Registration Rights Agreement
Page 3
therewith effective for a period of two years thereafter. The Company shall be
permitted to replace any Registration Statement with another (as, for example,
by replacing a Registration Statement on Form S-1 with one on Form S-3) so long
the Shares registered thereby are continuously registered for resale.
(b) DEMAND REGISTRATION. If, at any time after 90 days after the
last Closing, the Company has failed to cause to be declared effective or
failed to keep effective a Registration Statement covering the Shares as
described in Paragraph 2(a) above, and any Investor holding a majority of the
Registrable Securities shall notify the Company in writing that it intends to
offer or cause to be offered for public sale Registrable Securities held by
such Investor, the Company shall cause such of the Registrable Securities as
may be requested by any Investor to be registered, on one occasion only, under
the Securities Act and applicable state laws as expeditiously as possible.
Once the right for registration of any Registrable Securities under this
Section 2(b) has been exercised by any Investor, the Company shall prepare and
file a Registration Statement covering such Registrable Securities with the SEC
within ten (10) days of the exercise of such registration right and such
Registration Statement shall be kept effective for a period of no less than two
years thereafter.
(c) PAYMENTS BY THE COMPANY. If a Registration Statement covering
the Registrable Securities is not effective by April 30, 1997 (the "Required
Date"), then the Company will make payments to each holder of Registrable
Securities (each, a "Holder") in such amounts and at such times as shall be
determined pursuant to this Section 2(c). The amount to be paid by the Company
to the Holders shall be equal to: (1) 1/2% per month in the event the
Registration Statement is not effective by the Required Date; (2) 1% per month
in the event the Registration Statement is not effective within 30 days after
the Required Date; and (3) 2% per month in the event the Registration Statement
is not effective within 60 days after the Required Date, in each case of the
aggregate subscription price paid by the Initial Investor for the Shares
pursuant to the Subscription Agreement (the "Periodic Amount"). In the event
the Company receives a "no comment letter" from the SEC with regard to the S-1
filing, then the Company shall cause the S-1 to be effective within 5 business
days of the no comment letter; and if it is not so effective, then the monthly
penalties noted above will apply beginning on the 6th day following the date of
the no comment letter. The Periodic Amount shall be divided among all the
Holders in the same proportion as each Holder's Registrable Securities bears to
the total of the outstanding Registrable Securities. The Periodic Amount shall
be paid by the Company within five business days after each Computation Date
and shall be payable in cash; provided, however, that the Company may elect in
lieu of payment of any Periodic Amount in cash to deliver to the Initial
Investor shares of Common Stock having an Aggregate Market Value equal to the
amount of the Periodic Amount if, but only if, such shares are freely tradable
by the Initial Investor without any restriction under the Securities Act or any
state securities or "blue sky" law.
<PAGE> 20
COMFORCE Corporation/Fairway Capital Ltd. December 26, 1996
Registration Rights Agreement
Page 4
As used in this Section 2(c), the following terms shall have the
following meanings:
"Aggregate Market Value" of any shares of Common Stock as of any
Computation Date means the product obtained by multiplying (a) such number of
shares of Common Stock times (b) the Average Market Price of the Common Stock
for the Measurement Period for such Computation Date.
"Average Market Price" of any security for any period shall be computed
as the average closing bid price of the shares over the five trading-day period
ending on the relevant Computation Date, as reported by Bloomberg, L.P.
"Computation Date" means the date which is 60 days after the exercise of
demand registration rights under Section 2(b) and, if the Registration
Statement required to be filed by the Company pursuant to Section 2(b) has not
theretofore been declared effective by the SEC, each date which is 30 days
after a Computation Date and, if the Registration Statement required to be
filed by the Company pursuant to Section 2(b) is not declared effective by the
SEC within 60 days after the exercise of demand registration rights under
Section 2(b), the date on which such Registration Statement is declared
effective.
"Measurement Period" means the period of ten consecutive trading days
for the Common Stock ending on (or on the last trading day preceding) each
Computation Date.
3. OBLIGATIONS OF THE COMPANY. In connection with the registration
of the Registrable Securities, the Company shall:
(a) prepare promptly and file with the SEC promptly (but in no event
later than 10 days) after a request in accordance with Section 2(b) hereof a
Registration Statement or Statements with respect to all Registrable Securities
to be included therein, and thereafter use its best efforts to cause the
Registration Statement to become effective as soon as reasonably possible after
such filing. If such Registration Statement is filed pursuant to Rule 415, the
Company shall keep the Registration Statement effective pursuant to Rule 415 at
all times until such date as is two years after the date such Registration
Statement is first ordered effective by the SEC. In any case, the Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) filed by the Company shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that,
subject to the conditions set forth in Section 4(a) below, each Investor may
notify the Company in writing that it wishes to
<PAGE> 21
COMFORCE Corporation/Fairway Capital Ltd. December 26, 1996
Registration Rights Agreement
Page 5
exclude all or a portion of its Registrable Securities from such Registration
Statement; provided further, however, that if at any time the Investors shall
be entitled to sell all Registrable Securities held by them pursuant to Rule
144 promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration and without
imposing restrictions arising under the federal securities laws on the
purchases thereof in a period of two consecutive months, then the Company
shall, so long as it meets the current public information requirements of Rule
144, thereafter no longer be required to maintain the registration of
Registrable Securities pursuant to this Agreement;
(b) prepare and file with the SEC such amendments (including post-
effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times until such
date as is two years after the date such Registration Statement is first
ordered effective by the SEC, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until the earlier of (i) such two-year period or (ii) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in the
Registration Statement;
(c) furnish to each Investor whose Registrable Securities are
included in the Registration Statement, such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Investor;
(d) use reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Investors who hold a
majority in interest of the Registrable Securities being offered reasonably
request, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications
in effect at all times until such date as is the earlier of three years after
the date such Registration Statement is first ordered effective by the SEC or
is three years after the Initial Investor acquired the Shares and (iv) take all
other actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to (I)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (II) subject itself to general
taxation in any such jurisdiction, (III) file a general consent to service of
process in any
<PAGE> 22
COMFORCE Corporation/Fairway Capital Ltd. December 26, 1996
Registration Rights Agreement
Page 6
such jurisdiction, (IV) provide any undertakings that cause more than nominal
expense or burden to the Company or (V) make any change in its charter or by-
laws, which in each case the Board of Directors of the Company determines to be
contrary to the best interests of the Company and its stockholders;
(e) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver a number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request;
(f) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any stop order or other suspension
of effectiveness of the Registration Statement at the earliest possible time;
(g) permit a single firm of counsel designated as selling
stockholders' counsel (such counsel to be retained at such Investor(s)'
expense) by the Investors who hold a majority in interest of the Registrable
Securities being sold pursuant to such registration to review the Registration
Statement and all amendments and supplements thereto a reasonable period of
time prior to their filing with the SEC, and shall not file any document in a
form to which such counsel reasonably objects;
provided that counsel shall expeditiously complete its review so that
the registration can be timely effected;
(h) make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions
of Rule 158 under the Securities Act) covering a twelve-month period beginning
not later than the first day of the Company's fiscal quarter next following the
date of the Registration Statement;
(i) make its officers available from time to time to respond to
inquires of Investors and make available to any Investor, all pertinent
financial and other records, pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably necessary to
enable such Investor to exercise its due diligence responsibility, and cause
the Company's officers, directors and employees to supply all information which
such Investor may reasonably request for purposes of such due diligence;
provided, however, that such Investor shall not make any
<PAGE> 23
COMFORCE Corporation/Fairway Capital Ltd. December 26, 1996
Registration Rights Agreement
Page 7
disclosure (except to an Investor who has previously entered into a written
confidentiality agreement with the Company) of any Record or other information
which the Company determines in good faith to be confidential and of which
determination the Investor is so notified unless (i) in the event an Investor
believes that disclosure of Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, then it shall notify
the Company in writing of its belief and the basis therefor and shall provide
the Company with reasonable opportunity to correct the misstatement or omission
or provide to Investor reasonably satisfactory evidence that such a correction
is not required (ii) the release of such Records is ordered pursuant to a
subpoena or other order from a court or government body of competent
jurisdiction or (iii) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. Such Investor shall, upon completing such due diligence,
destroy or return to the Company all such Records and all copies or
distillation thereof and all notes or other stored information containing
information derived in whole or in part from such Records; provided further
that such Investor may retain one copy of the Records in its office of its
legal counsel solely for the purpose of preserving the record of the materials
received by it and using the same to defend against any claims or actions
threatened or instituted involving the Records and such Records may not be made
available to any person for any other purpose at any time hereafter. The
Company shall not be required to disclose any confidential information in such
Records to any Investor until and unless such Investor shall have entered into
confidentiality agreements (in form and substance satisfactory to the Company)
with the Company with respect thereto, substantially in the form of this
Section 3(i). Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. The Company shall hold in confidence and shall not make
any disclosure of information concerning an Investor provided to the Company
unless (i) disclosure of such information is necessary to comply with federal
or state securities laws, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or
other order from a court or governmental body of competent jurisdiction or (iv)
such information has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company agrees
that it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor, at
its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information;
<PAGE> 24
COMFORCE Corporation/Fairway Capital Ltd. December 26, 1996
Registration Rights Agreement
Page 8
(j) use its best efforts either to (i) cause all the Registrable
Securities covered by the Registration Statement to be listed on a national
securities exchange and on each additional national securities exchange on
which similar securities issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of
such exchange or (ii) secure designation of all the Registrable Securities
covered by the Registration Statement as a National Association of Securities
Dealers Automated Quotations System ("NASDAQ") "national market system
security" within the meaning of Rule 11Aa2-1 of the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the quotation of the
Registrable Securities on the NASDAQ National Market System or, if, despite the
Company's best efforts to satisfy the preceding clause (i) or (ii), the Company
is unsuccessful in satisfying the preceding clause (i) or (ii), to secure
listing on a national securities exchange or NASDAQ authorization and quotation
for such Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with respect
to such Registrable Securities;
(k) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(l) cooperate with the Investors who hold Registrable Securities
being sold to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to the denominations or
amounts as the case may be, and registered in such names as the Investors may
reasonably request; and, within five business days after a Registration
Statement which includes Registrable Securities is ordered effective by the
SEC, the Company shall deliver, and shall cause legal counsel selected by the
Company to deliver, to the transfer agent for the Registrable Securities (with
copies to the Investors whose Registrable Securities are included in such
Registration Statement) instructions to the transfer agent to issue new stock
certificates without a legend and an opinion of such counsel that the shares
have been registered; and
(m) take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant
to the Registration Statement;
4. OBLIGATIONS OF THE INVESTORS. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to each
Investor that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable
<PAGE> 25
COMFORCE Corporation/Fairway Capital Ltd. December 26, 1996
Registration Rights Agreement
Page 9
Securities held by it as shall be reasonably required to effect the
registration of the Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least fifteen (15) days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Investor of the
information the Company requires from each such Investor (the "Requested
Information") if such Investor elects to have any of such Investor's
Registrable Securities included in the Registration Statement. If within five
(5) business days prior to the filing date the Company has not received the
Requested Information from an Investor (a "Non-Responsive Investor"), then the
Company may file the Registration Statement without including Registrable
Securities of such Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement;
(c) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e) or
3(f), or that the Board of Directors of the Company has determined, in its good
faith reasonable judgment, that the disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
would materially interfere with, or require the premature disclosure of, any
financing, acquisition or reorganization involving the Company or any of its
subsidiaries or otherwise would require premature disclosure or any other
material nonpublic information as to which the Company has a bona fide business
purpose for maintaining its confidentiality, such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Investor's receipt of
the copies of the supplemented or amended prospectus contemplated by Section
3(e) or 3(f), or upon receipt of written authorization from the Company and ,
if so directed by the Company, such Investor shall deliver to the Company (at
the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in such Investor's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice; and
5. EXPENSES OF REGISTRATION. All expenses (other than commissions
and other fees and expenses of investment bankers and other than brokerage
commissions) incurred in connection with registrations, filings or
qualifications pursuant to Section 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees and
the fees and disbursements of counsel for the Company, shall be borne by the
Company; provided, however, that the Investors shall bear the fees and
<PAGE> 26
COMFORCE Corporation/Fairway Capital Ltd. December 26, 1996
Registration Rights Agreement
Page 10
out-of-pocket expenses of the one legal counsel selected by the Investors
pursuant to Section 3(h) hereof.
6. INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified Person"), against any
losses, claims, damages, expenses or liabilities (joint or several)
(collectively "Claims") to which any of them become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations in the Registration Statement, or any post-effective amendment
thereof, or any prospectus included therein: (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary
to make the statements made therein, in light of the circumstances under which
the statements therein were made, not misleading or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act or any
state securities law or any rule or regulation (the matters in the foregoing
clauses (i) through (iv) being, collectively, "Violations"). Subject to the
restrictions set forth in Section 6 (d) with respect to the number of legal
counsel, the Company shall reimburse the Investors and each such underwriter or
controlling person, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a) (I) shall not apply to a Claim arising out of
or based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any Indemnified Person or
underwriter for such Indemnified Person expressly for use in connection with
the preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the
Company pursuant to Section 3(c) hereof; (II) with respect to any preliminary
prospectus shall not inure to the benefit of any such person from whom the
person asserting any such Claim purchased the Registrable Securities that are
the subject
<PAGE> 27
COMFORCE Corporation/Fairway Capital Ltd. December 26, 1996
Registration Rights Agreement
Page 11
thereof (or to the benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof; and (III) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf
of the Indemnified Persons and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify and hold
harmless, to the same extent and in the same manner set forth in Section 6(a),
the Company, each of its directors, each of its officers who signs the
Registration Statement, each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder within the
meaning of the Securities Act or the Exchange Act (collectively and together
with an Indemnified Person, an "Indemnified Party"), against any Claim to which
any of them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon any Violation,
in each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished to the
Company by such Investor expressly for use in connection with such Registration
Statement; provided, however, that the indemnity agreement contained in this
Section 6(b) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor,
which consent shall not be unreasonably withheld; provided, further, however,
that the Investor shall be liable under this Section 6(b) for only that amount
of a Claim as does not exceed the net proceeds to such Investor as a result of
the sale of Registrable Securities pursuant to such Registration Statement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
(c) The Company shall be entitled to receive indemnities from selling
brokers, dealer managers and similar securities industry professionals
participating in any distribution, to the same extent as provided above, with
respect to information
<PAGE> 28
COMFORCE Corporation/Fairway Capital Ltd. December 26, 1996
Registration Rights Agreement
Page 12
such persons so furnished in writing by such persons expressly for inclusion in
the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof and this indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying parties;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and other party represented by such counsel in such
proceeding. The Company shall pay for only one separate legal counsel for the
Investors; such legal counsel shall be selected by the Investors holding a
majority in interest of the Registrable Securities. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of
any liability to the Indemnified Person or Indemnified Party under this Section
6, except to the extent that the indemnifying party is prejudiced in its
ability to defend such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
7. CONTRIBUTION. To the extent any indemnification provided for
herein is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that (a) no contribution shall be made under circumstances
where the maker would not have been liable for indemnification under the fault
standards set forth in Section 6, (b) no seller of Registrable Securities
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent misrepresentation
and (c) contribution by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale
of such Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making available to
the Investors the benefits of Rule 144 or any other similar rule or regulation
of the SEC that
<PAGE> 29
COMFORCE Corporation/Fairway Capital Ltd. December 26, 1996
Registration Rights Agreement
Page 13
may during the period beginning two years after and ending three years from the
earliest conversion date allowed hereunder, permit the Investors to sell
securities of the Company to the public without registration, until such time
as the Investors have sold all the Registrable Securities pursuant to a
Registration Statement or Rule 144, the Company agrees to during such period:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold a majority in interest of
the Registrable Securities. Any amendment or waiver effected in accordance
with this Section 10 shall be binding upon each Investor and the Company.
10. THIRD PARTY BENEFICIARY. The parties acknowledge and agree that
Shoreline Pacific, the Institutional Division of Financial West Group
("Shoreline Pacific"), shall be deemed a third party beneficiary of the
Company's agreements and representations set forth in this Agreement, entitled
to enforce the terms thereof, and to indemnification for any damages resulting
to Shoreline Pacific from any actual or threatened breach thereof by the
Company, both in Shoreline Pacific's personal capacity and, should Shoreline
Pacific so elect, on behalf of the Investor.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
<PAGE> 30
COMFORCE Corporation/Fairway Capital Ltd. December 26, 1996
Registration Rights Agreement
Page 14
(b) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when delivered by
facsimile transmission, personally delivered or when sent by registered mail,
return receipt requested, addressed (i) if to the Company, at COMFORCE
Corporation, 2001 Marcus Avenue, Lake Success, NY 11042 Attention: Paul J.
Grillo, Chief Financial Officer, (ii) if to the Initial Investor, at the
address set forth under its name in the Subscription Agreement and (iii) if to
any other Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes
by notice given in accordance with this Section 12(b), and shall be effective,
when delivered by facsimile transmission, upon confirmation thereof; when
personally delivered, upon receipt; and when sent by certified mail, four
business days after deposit with the United States Postal Service.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of New York applicable to the agreements
made and to be performed entirely within such state, without giving effect to
rules governing the conflict of laws. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision hereof.
(e) This Agreement and the Subscription Agreement to which this
Agreement is annexed constitute the entire agreement among the parties hereto
with respect to the subject matter hereof. There are no other restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The headings in the Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
<PAGE> 31
COMFORCE Corporation/Fairway Capital Ltd. December 26, 1996
Registration Rights Agreement
Page 15
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of day and
year first above written.
COMFORCE CORPORATION
By /s/ Andrew Reiben
----------------------------
Andrew Reiben
Assistant Secretary
FAIRWAY CAPITAL LIMITED
By /s/ James E. Martin
----------------------------
James E. Martin
Assistant Secretary
<PAGE> 1
EXHIBIT 99.6
COMFORCE CORPORATION
2001 MARCUS AVENUE
LAKE SUCCESS, NEW YORK 11042
February 27, 1997
VIA FACSIMILE
HW Partners, L.P.
4000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Attn: Clark K. Hunt
Dear Mr. Hunt:
This letter is intended to confirm the agreement of COMFORCE Corporation
(the "Corporation") to amend the provisions of the Private Securities
Subscription Agreements dated December 26, 19896 between the Corporation and
(i) Infinity Investors Ltd. ("Infinity") respecting Infinity's subscription for
394,286 shares of the Corporation's Common Stock ("Common Stock") (the
"Infinity I Agreement"), (ii) Infinity respecting Infinity's subscription for
250,000 shares of Common Stock (the "Infinity II Agreement"), (iii) Fairway
Capital Ltd. ("Fairway") respecting Fairway's subscription for 65,714 shares of
Common Stock (the "Fairway Agreement"), and (iv) Seacrest Capital Limited
("Seacrest") respecting Seacrest's subscription for 100,000 shares of Common
Stock (the "Seacrest Agreement"). The amendments herein set forth are
conditioned upon the investment by Infinity and certain other investment funds
advised by you ("Investor") of not less than $5.0 million in the Corporation's
Subordinated Convertible Debentures ("Debentures"), immediately available funds
for which will be received by the Corporation on or before 2:00 p.m. New York
City time on February 27, 1997.
1. All references in Sections 1(v) and 1(vi) of the Infinity II
Agreement and the Seacrest Agreement to May 1, 1997 are changed to April 1,
1997. Notwithstanding anything to the contrary contained in such agreements or
the related Registration Rights Agreements entered into by the parties, the
Corporation shall not be required to include any of the common stock of the
Corporation purchased by Infinity or Seacrest pursuant to the Infinity II
Agreement and the Seacrest Agreement in an underwritten registration statement
of the Corporation.
2. All references in Sections 1(v) and 1(vi) of the Infinity I
Agreement and the Fairway Agreement to April 30, 1997 are changed to March 31,
1997, and to May 1, 1997 are changed to April 1, 1997. Notwithstanding anything
to the contrary contained in such agreements or the related Registration Rights
Agreements entered into by the parties, the Corporation shall not be required
to include any of the common stock of the Corporation purchased by Infinity or
Fairway pursuant to the Infinity I Agreement and the Fairway Agreement in an
underwritten registration statement of the Corporation.
<PAGE> 2
February 27, 1997
Page 2
3. In the event the Corporation shall fail to repay or redeem any
Debentures which have not been converted by the Investor into common stock by
April 28, 1997, May 28, 1997, June 27, 1997 or July 27, 1997 (each a "Put
Option Date"), each of Infinity and Fairway shall have the option to require
the Corporation to purchase from them (or any assignee of either of them that
is advised by HW Partners), immediately upon demand on or after each Put Option
Date, in cash, up to 98,571.5 shares and 16,428.5 shares, respectively, of the
Corporation's common stock (each the "Specified Option Shares") for a purchase
price equal to $10.00 per share (the "Put Option Price"); provided, however, in
the event that the Corporation shall have previously paid to Infinity or
Fairway pursuant to Section (vi) of the Infinity I Agreement or the Fairway
Agreement the consideration therein provided (the "Payment Right
Consideration") in cash, then the Put Option Price shall be reduced by the
amount of the per share Payment Right Consideration previously paid in cash;
and provided, however, in the event that the Corporation shall have previously
paid to Infinity or Fairway pursuant to Section (vi) of the Infinity I
Agreement or the Fairway Agreement the Payment Right Consideration in shares of
the Corporation's common stock, the number of Specified Option Shares shall be
proportionally increased by the number of shares issued per share as Payment
Right Consideration (but the aggregate Put Option Price shall be calculated
without reference to such additional shares). Notwithstanding anything to the
contrary herein contained until April 28, 1997, the Corporation shall have the
right to repurchase or redeem, immediately upon notice given at any time, in
cash, for a purchase price equal to the Put Option price (adjusted as provided
above) any or all of the shares of common stock issued to and then held by
Infinity or Fairway pursuant to the Infinity I Agreement or the Fairway
Agreement.
Very truly yours,
COMFORCE Corporation
By: /s/ Paul Grillo
---------------------------------------
Title: Vice President Finance & CFO
------------------------------------
Agreed and Acknowledged the
27th day of February, 1997
HW PARTNERS, L.P., advisor to
each of INFINITY INVESTORS LTD.,
SEACREST CAPITAL LIMITED and
FAIRWAY CAPITAL LTD.
By: HW FINANCE, L.L.C.
By: /s/ Clark K. Hunt
----------------------------
Clark K. Hunt, Manager
<PAGE> 1
EXHIBIT 99.7
(SCHEDULE OF DIFFERENCES ATTACHED)
PRIVATE SECURITIES SUBSCRIPTION AGREEMENT
COMFORCE CORPORATION/GLOBAL GROWTH LIMITED
February 27, 1997
THIS PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter the
"Agreement") has been executed by the undersigned in connection with the sale
in a private placement pursuant to Section 4(2) of the Securities Act of 1933,
as amended (the "Securities Act"), of certain Subordinated Convertible
Debentures (hereinafter the "Debentures") of COMFORCE Corporation, 2001 Marcus
Avenue, Lake Success, New York, 11042, a corporation organized under the laws
of Delaware (hereinafter "SELLER") to Global Growth Limited, located at 27
Wellington Road, Cork, Ireland, a corporation organized under the laws of
Nevis, West Indies (hereinafter "BUYER"). SELLER and BUYER (hereinafter
collectively the "parties") each hereby represents, warrants and agrees as
follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE
(i) SELLER and BUYER are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission under the Securities
Act;
(ii) BUYER hereby subscribes for Five Hundred Thousand Dollars
($500,000) U.S. principal amount of Debentures, redeemable at the
option of SELLER or convertible into shares of SELLER'S common stock
or cash by BUYER in accordance with the terms set forth in the form of
Debenture attached as Exhibit A to this Agreement. BUYER'S
subscription is part of a maximum placement of up to Twenty-Five
Million U.S. Dollars ($25,000,000) aggregate principal amount of
Debentures, which amount is inclusive of up to Three Million Seven
Hundred Thirty-Seven Thousand Five Hundred U.S. Dollars ($3,737,500)
of Debentures which may be issued by SELLER in connection with the
repurchase by SELLER of SELLER'S outstanding Series F Convertible
Preferred Shares.
(iii) In addition to the Debentures, BUYER may receive a number of
three year warrants ("Warrants") to purchase shares of the common
stock of SELLER, as provided in Section 5 hereof. The shares of
SELLER'S common stock underlying the Debentures and the Warrants are
hereinafter collectively referred to as the "Common Shares." The
Debentures, Warrants, and the Common Shares
<PAGE> 2
Mr. John MacGregor: February 25, 1997
COMFORCE Corporation/Global Growth Limited Page 2
underlying the Debentures and Warrants are collectively referred to as
the "Securities".
(iv) BUYER shall pay the purchase price by delivering to an escrow
agent, at the Closing, as defined in Section 8 hereof, either:
a) Same day funds payable in United States Dollars, to
be delivered to the order of SELLER upon delivery of the
Debentures; or
b) Original Series F Convertible Preferred Share
certificate(s) in the name of BUYER, having an aggregate face
value equal to $ _________, to be delivered to SELLER upon
delivery of the Debentures. Any accrued but unpaid dividends
on said Series F certificates will be paid to BUYER in cash
upon the later of Closing or March 1, 1997.
2. BUYER'S REPRESENTATIONS AND AGREEMENTS
BUYER represents, warrants and agrees as follows:
(i) BUYER understands that the Securities have not been registered
under the Securities Act, or any other applicable securities law, and,
accordingly, that they may not be offered, sold, transferred, pledged,
hypothecated or otherwise disposed of unless registered pursuant to,
or in a transaction exempt from registration under, the Securities Act
and any other applicable securities law;
(ii) BUYER is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3), or (7) of Regulation D (an "Accredited Investor")
that is acquiring the Securities either for its own account or as a
fiduciary or agent for one or more institutional accounts as to which
it exercises sole discretion, each of which is an Accredited Investor.
BUYER has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an
investment in the Securities. BUYER has had a reasonable opportunity
to ask questions of and receive answers from SELLER concerning SELLER
and the offering of the Securities. BUYER is not subscribing for the
Debentures or Securities as a result of or pursuant to any
advertisement, article, notice, or other communication published in
any newspaper, magazine, or similar media or broadcast over television
or radio. BUYER is aware that it (or such institutional account) may
be required to bear the economic risk of an investment in the
Securities for an indefinite period, and it (or such institutional
account ) is able to bear such risk for an indefinite period;
(iii) BUYER is acquiring the Securities for its own account or for
one or more institutional accounts as described in Paragraph 2(ii)
hereof, in each case for
<PAGE> 3
Mr. John MacGregor: February 25, 1997
COMFORCE Corporation/Global Growth Limited Page 3
investment purposes and not with a view to, or for offer or sale in
connection with, any distribution thereof (subject to any requirement
of law that the disposition of its property or the property of such
institutional account or accounts remain within its or their control).
BUYER agrees on its own behalf and on behalf of any such institutional
account for which it is acquiring the Securities to offer, sell or
otherwise transfer any of the Securities only to Accredited Investors
(subject to any requirement of law that the disposition of its
property or the property of such institutional account or accounts
remain within its or their control) in conformity with the Securities
Act and any other applicable securities law and with the restrictions
on transfer set forth on the certificate(s) evidencing the Securities.
BUYER acknowledges that each certificate evidencing the Debentures and
Warrants shall bear a legend substantially to the effect of the
foregoing paragraphs 2(i) and 2(ii) and this paragraph 2(iii). Such
legends shall be in substantially the following form:
(A) For the Debentures:
"NEITHER THIS DEBENTURE NOR ANY SECURITIES ISSUABLE UPON THE
CONVERSION HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY
STATE. NEITHER THIS DEBENTURE NOR ANY SECURITIES ISSUABLE UPON THE
CONVERSION HEREOF MAY BE OFFERED OR SOLD, TRANSFERRED PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS
THE BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A
PRIVATE SECURITIES SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY
AND GLOBAL GROWTH LIMITED DATED FEBRUARY 25, 1997. A COPY OF THE
PORTION OF THE AFORESAID SUBSCRIPTION AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE OFFICES."
(B) For the Warrants:
"NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") OR THE SECURITIES LAWS OF ANY STATE. NEITHER
THESE SECURITIES NOR ANY SECURITIES ISSUABLE UPON THE EXERCISE HEREOF
MAY BE OFFERED OR SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY
OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A PRIVATE
SECURITIES SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND GLOBAL GROWTH
LIMITED DATED FEBRUARY 25, 1997. A COPY OF THE PORTION OF THE
AFORESAID SUBSCRIPTION AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY BE
OBTAINED FROM THE COMPANY'S EXECUTIVE OFFICES."
(iv) BUYER acknowledges that SELLER or any transfer agent of
SELLER shall register the transfer or exchange of any of the
Debentures or Warrants only upon receipt of the certificate(s)
evidencing such Debentures or Warrants with the
<PAGE> 4
Mr. John MacGregor: February 25, 1997
COMFORCE Corporation/Global Growth Limited Page 4
transfer notice set forth thereon appropriately completed and upon
receipt in writing from the transferee or the recipient of such
Debentures or Warrants in such transfer or exchange (as the case may
be) of a certificate setting forth the representations in Paragraph 2
hereof;
(v) If BUYER is acquiring any of the Securities as fiduciary or
agent for one or more institutional accounts, BUYER represents that it
has sole investment discretion with respect to each such account and
that it has full power to make the foregoing acknowledgments,
representations and agreements on behalf of each such institutional
account;
(vi) BUYER acknowledges that SELLER and others will rely upon the
truth and accuracy of the foregoing acknowledgments, representations
and agreements and further agrees that if, prior to the closing, any
of such acknowledgments, representations and agreements made by BUYER
are no longer accurate, BUYER will promptly notify SELLER;
(vii) BUYER has received all information necessary to make an
informed business decision with respect to an investment in the
Securities, including but not limited to SELLER'S latest Form 10-Q,
its S-1 Registration Statement filed February 3, 1997, and the Private
Placement Memorandum prepared by SELLER dated February 24, 1997.
(viii) This Agreement has been duly authorized, validly executed, and
delivered on behalf of BUYER and is a valid and binding agreement
enforceable in accordance with its terms, subject to general
principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally.
(ix) BUYER has no existing short position with respect to the
common stock of SELLER and agrees not to engage in any short sales or
other hedging transactions with respect to SELLER'S common stock;
provided however, that BUYER may enter into such transactions
involving a number of common shares not to exceed the number of Common
Shares for which a notice of conversion or election to purchase has
been submitted to SELLER in connection with the Debentures and
Warrants, respectively.
3. SELLER'S REPRESENTATIONS AND AGREEMENTS
SELLER represents, warrants and agrees as follows:
(i) SELLER has not conducted any general solicitation or general
advertising (as defined in Regulation D) with respect the Securities;
<PAGE> 5
Mr. John MacGregor: February 25, 1997
COMFORCE Corporation/Global Growth Limited Page 5
(ii) The Securities, when issued and delivered, will be duly and
validly authorized and issued, and with respect to the Common Shares
will be fully-paid and nonassessable and will not subject the holders
thereof to personal liability by reason of being such holders. There
are no preemptive rights of any shareholder of SELLER with respect to
the Securities;
(iii) This Agreement has been duly authorized, validly executed and
delivered on behalf of SELLER and is a valid and binding agreement in
accordance with its terms, subject to general principles of equity and
to bankruptcy or other laws affecting the enforcement of creditors'
rights generally;
(iv) The execution and delivery of this Agreement and the
consummation of the issuance of the Securities and the transactions
contemplated by this Agreement do not and will not conflict with or
result in a breach by SELLER of any of the terms or provisions of, or
constitute a default under, the articles of incorporation (or charter)
or bylaws of SELLER, or any indenture, mortgage, deed of trust or
other material agreement or instrument to which SELLER is a party or
by which it or any of its properties or assets are bound, or any
existing applicable decree, judgment or order of any court, federal or
state regulatory body, administrative agency or other governmental
body having jurisdiction over SELLER or any of its properties or
assets;
(v) No authorization, approval or consent of or filing with any
federal, state or local governmental body of the United States is
legally required for the issuance and sale of the Securities as
contemplated by this Agreement;
(vi) The information provided by or on behalf of SELLER to BUYER
and referred to in Section 2(vii) of this Agreement does not contain
any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light
of the circumstance under which they are made, not misleading. Since
February 3, 1997, the date of SELLER'S most recent S-1 Registration
Statement, there has been no material adverse development in the
business, properties, operations, financial condition or results of
operations of SELLER, except as disclosed in the documents referred to
in Section 2(vii) hereof; and
(vii) SELLER will issue one or more certificates representing the
Debentures in the name of BUYER in such denominations to be specified
by BUYER prior to closing. The Debentures will bear the restrictive
legend specified in Section 2(iii) of this Agreement. SELLER further
warrants that no instructions other than these instructions and stop
transfer instructions to give effect to Section 2(i) hereof will be
given to the transfer agent and also warrants that the Debentures
shall otherwise be transferable on the books and records of SELLER as
and to the extent provided in this Agreement, subject to compliance
with federal and state
<PAGE> 6
Mr. John MacGregor: February 25, 1997
COMFORCE Corporation/Global Growth Limited Page 6
securities laws. Nothing in this Section shall affect in any way
BUYER'S obligations and agreement to comply with all applicable
securities laws upon resale of the Securities.
4. DEBENTURES.
(i) The Debentures will bear interest at the rate of eight percent
(8%) per annum during the 180 day period following the Closing, and
thereafter, ten percent (10%) per annum continuing until the
Debentures have been fully redeemed or converted. Interest on the
Debentures shall be payable quarterly in arrears, on the outstanding
principal amount thereof, in cash or in shares of SELLER'S common
stock, at SELLER'S option. If SELLER elects to pay the interest in
common stock, the valuation of such common stock will be based upon
the average closing bid price of SELLER'S common stock, as reported by
Bloomberg, L.P., over the five-trading day period ending on the day
preceding the date interest becomes due. Upon redemption or
conversion of the Debentures, all accrued but unpaid interest will be
added to the principal amount of Debentures redeemed by SELLER or
converted by BUYER;
(ii) Any Debentures left outstanding on the 360th day following
Closing will be automatically converted into Common Shares or, at the
option of SELLER, cash equal to 125% of the principal amount of the
outstanding Debentures;
(iii) Any Debentures redeemed by SELLER shall be redeemed in cash at
a premium to the principal amount thereof, which premium shall
increase in time according to the date of such redemption by SELLER as
set forth in the form of Debenture annexed hereto as Exhibit A;
(iv) The Debentures may be converted in whole or in part, at the
option of BUYER, beginning 181 days following Closing. SELLER shall
have the option, subject to the terms of Section 4(v) following, to
make the requested conversion in either cash or Common Shares. Any
such conversion paid in cash shall be payable at 125% of the principal
amount of the portion of the Debenture to be converted, including any
accrued but unpaid interest thereon. If SELLER elects to convert the
Debenture into Common Shares, the number of Common Shares issuable
upon conversion shall be determined by dividing the principal amount
of Debentures to be converted plus all accrued but unpaid interest
thereon, minus any required withholding, by 75% of the average closing
bid price of SELLER'S common stock over the five (5) trading day
period ending on the day prior to conversion;
<PAGE> 7
Mr. John MacGregor: February 25, 1997
COMFORCE Corporation/Global Growth Limited Page 7
(v) SELLER may issue no more than Two Million Five Hundred
Thousand (2,500,000) Common Shares upon conversion of the Debentures
and the exercise of the Warrants. In the event the aforesaid limit is
reached before BUYER has converted all of its Debentures, SELLER shall
honor any subsequent conversion requests in cash equal to 125% of the
principal amount of Debentures converted. Notwithstanding the
foregoing, the 2.5 million share limit may be increased to 3.5 million
shares if either: (i) SELLER'S shareholders approve the increase; (ii)
the American Stock Exchange ("AMEX") waives its requirement that said
increase be approved by SELLER'S shareholders, or advises SELLER that
shareholder approval is not required; or (iii) SELLER changes the
listing of its common stock from AMEX to either the New York Stock
Exchange ("NYSE") or the National Association of Securities Dealers
Automated Quotation System ("Nasdaq") under circumstances in which
shareholder approval is not required.
(vi) The Debentures will be subordinate to the terms and conditions
of revolving credit or other bank financing in favor of SELLER.
SELLER covenants and agrees that the total credit to be extended by
lenders senior to the purchasers of the Debentures offered hereby
shall not exceed $12.5 million, and that SELLER will take reasonable
steps to avoid defaulting on any senior debt during the term of the
Debentures, including all reasonable steps to cause the senior lender
or lenders to waive compliance by SELLER with any financial covenants
which may appear in any senior credit agreement, and which SELLER
believes, in good faith, must be waived to avoid a default by SELLER.
BUYER covenants and agrees that it will execute a Subordination
Agreement in a form no less favorable to those senior lenders than
that attached hereto as Exhibit C.
5. WARRANTS.
(i) Under the circumstances set forth in this Section 5,
SELLER shall issue three-year Warrants, prorated according to the
principal amount of Debentures issued to each investor in connection
with this placement, as follows: (a) the investors will receive
Warrants to purchase one hundred thousand (100,000) shares of SELLER'S
common stock at Closing; (b) if all Debentures are not redeemed by
SELLER within sixty (60) days of Closing, the investors will receive
Warrants to purchase an additional one hundred thousand (100,000)
shares of SELLER'S common stock on the sixty-first (61st) day
following Closing; (c) if all Debentures are not redeemed by SELLER
within ninety (90) days of Closing, the investors will receive
Warrants to purchase an additional one hundred thousand
(100,000)shares of SELLER'S common stock on the ninety-first (91st)
day following Closing; (d) if all Debentures are not redeemed by
SELLER within one hundred twenty (120) days of Closing, the investors
will receive Warrants to purchase an additional one hundred thousand
(100,000) shares of SELLER'S common stock on the one hundred
twenty-first (121st) day following Closing; and (e) if all
<PAGE> 8
Mr. John MacGregor: February 25, 1997
COMFORCE Corporation/Global Growth Limited Page 8
Debentures are not redeemed by SELLER within one hundred fifty (150)
days of Closing, the investors will receive Warrants to purchase an
additional one hundred thousand (100,000) shares of SELLER'S common
stock on the one hundred fifty-first (151st) day following Closing
provided, however, that the number of Common Shares issuable upon
exercise of the Warrants as set forth above shall be proportionally
reduced in the event that either (i) less than $25,000,000 U.S.
principal amount of Debentures are placed, or (ii) SELLER redeems less
than all outstanding Debentures from time to time. The Warrants will
have a strike price equal to the Market Price (defined as the average
closing bid price of SELLER'S common stock, as reported by Bloomberg,
L.P., over the five-day trading period ending on the day prior to the
date in question) at Closing and will become exercisable on the
six-month anniversary of Closing.
(ii) In addition, if SELLER has not redeemed all Debentures within
one hundred eighty (180) days of Closing, the investors shall receive
additional three-year Warrants (the "Additional Warrants") to
purchase five hundred thousand (500,000) shares of SELLER'S common
stock on the one hundred eighty-first (181st) day following closing,
prorated according to the principal amount of Debentures issued to
each investor in connection with this placement; provided, however,
that the number of Common Shares issuable upon exercise of the
Additional Warrants shall be proportionally reduced in the event that
either (i) less than $25,000,000 U.S. principal amount of Debentures
are placed, or (ii) SELLER redeems less than all outstanding
Debentures from time to time. The Additional Warrants will have a
strike price equal to the Market Price on the 180th day following
Closing and will be exercisable on the later of the issuance of the
Additional Warrants or the effective date of the Registration
Statement referred to below.
(iii) In order to include the Common Shares underlying the Warrants
and Additional Warrants in SELLER'S resale registration statement and
notwithstanding the provisions of Sections 5(i) and 5(ii) above,
SELLER may, at Closing, issue Warrants (the "Original Warrants") to
purchase the maximum number of Common Shares that each investor could
potentially become entitled to receive upon exercise of any Warrant or
Additional Warrant, which Original Warrants shall provide for exercise
upon satisfaction of the conditions to issuance as described in
Sections 5(i) and 5(ii) above (the "Conditions"). SELLER shall retain
the Original Warrants in its possession until such time as any of the
applicable Conditions are satisfied, whereupon SELLER shall issue and
deliver within two (2) business days a replacement Warrant or
Additional Warrant, as the case may be, to each investor with respect
to the Common Shares for which the Conditions are satisfied. The
Warrants and Additional Warrants so issued shall be exercisable as to
the
<PAGE> 9
Mr. John MacGregor: February 25, 1997
COMFORCE Corporation/Global Growth Limited Page 9
number of Common Shares and at the price stated thereon, as determined
pursuant to the terms of the Original Warrants and this Agreement.
6. CONVERSION OF DEBENTURES, EXERCISE OF WARRANTS, AND ISSUANCE OF
COMMON SHARES.
(i) On or after the 181st day following Closing, BUYER may convert
any outstanding Debentures into Common Shares or cash, at the option
of the SELLER, in accordance with the terms set forth herein and the
form of Debenture annexed hereto as Exhibit A;
(ii) All of the Warrants shall be exercisable into Common Shares,
on or after the 181st day following the Closing, in accordance with
the terms of the Common Stock Purchase Warrant Certificate annexed
hereto as Exhibit B; provided however, that the Additional Warrants,
if any, shall be exercisable upon the later of the issuance of the
Additional Warrants or the effective date of the Registration
Statement referred to below;
(iii) Upon conversion of the Debentures and exercise of the Warrants
and Additional Warrants following effectiveness of a registration
statement pursuant to Section 7 hereof, SELLER shall use its best
efforts to issue and deliver to BUYER an unlegended certificate or
certificates for the number of Common Shares to which BUYER shall be
entitled within five (5) business days after BUYER has fulfilled all
conditions required for conversion as set forth in this Agreement and
annexed forms of Debenture and Common Stock Purchase Warrant
Certificate made part of this Agreement (the "Deadline"). SELLER
understands that a delay in the issuance of the Common Shares beyond
the Deadline could result in economic loss to BUYER. As compensation
to BUYER for such loss, and not as a penalty, SELLER agrees to pay
liquidated damages to BUYER for late issuance of Common Shares upon
conversion of the Debentures in the amount of one percent (1%) of the
requested conversion amount per day, beginning on the seventh (7th)
business day from the date of receipt by SELLER of a duly executed
notice of conversion of the Debentures, provided that the original
Debentures to be converted have been delivered to SELLER within such
time period, all in accordance with this Agreement and the forms of
Debenture annexed hereto, and the requirements of SELLER'S transfer
agent. Said liquidated damages shall accrue each day through the date
the Common Shares are issued to BUYER, and shall be paid by wire
transfer to an account designated by BUYER upon the earlier to occur
of (i) issuance of said Common Shares to BUYER, or (ii) each monthly
anniversary of the receipt by SELLER of such BUYER'S notice of
conversion. Nothing herein shall waive SELLER'S obligations to
deliver Common Shares upon conversion of the Debentures or exercise of
the Warrants or limit BUYER'S right to pursue actual damages for
SELLER'S failure to issue and deliver Common Shares to BUYER in
accordance with the terms of this Agreement.
<PAGE> 10
Mr. John MacGregor: February 25, 1997
COMFORCE Corporation/Global Growth Limited Page 10
(iv) SELLER agrees that, in addition to any other remedies which
may be available to BUYER, in the event SELLER fails for any reason to
effect delivery to BUYER of certificates representing Common Shares
within seven (7) business days following receipt by SELLER of a notice
of conversion with respect to the Debentures or an election to
purchase with respect to the Warrants and Additional Warrants, BUYER
may revoke such notice of conversion or election to purchase by
delivering a notice of such effect to SELLER, whereupon SELLER and
BUYER shall each be restored to their respective positions immediately
prior to delivery of such notice of conversion or election to
purchase.
7. REGISTRATION. Subject to the terms of the Registration Rights
Agreement annexed hereto, SELLER must register the Common Shares
underlying the Debentures, Warrants and the Additional Warrants for
resale with the U.S. Securities and Exchange Commission ("SEC"), and
the registration statement therefor (the "Registration Statement")
must be declared effective by the SEC on or before the day prior to
the six-month anniversary of Closing (the "Required Effective Date").
In the event the Registration Statement has not been declared
effective by the Required Effective Date (such situation referred to
herein as "Late Registration"), SELLER shall pay to BUYER cash equal
to 1% of the aggregate subscription price for the first month and 2%
of the aggregate subscription price per month thereafter (the
"Penalties") until the Registration Statement is declared effective,
and as further provided in the Registration Rights Agreement annexed
hereto. Provided that SELLER has reasonably used its best efforts to
have the Registration Statement declared effective by the SEC prior to
the Required Effective Date, BUYER shall have no other remedy for
damages resulting solely from Late Registration for the period between
Closing and the nine-month anniversary of Closing. Thereafter, BUYER
shall be free to bring any action allowable in law or in equity
against SELLER as a result of Late Registration, and the Penalties
shall continue to apply until the Registration Statement has been
declared effective by the SEC and SELLER has notified BUYER of that
fact. These time periods, the Penalties, and other obligations under
the Registration Rights Agreement annexed hereto may be extended or
suspended under terms and conditions mutually agreed to in writing by
SELLER and BUYER.
8. THIRD PARTY BENEFICIARY. The parties acknowledge and agree that
Shoreline Pacific, the Institutional Division of Financial West Group
("Shoreline Pacific"), shall be deemed a third party beneficiary of
SELLER'S agreements and representations set forth in this Agreement,
entitled to enforce the terms thereof, and to indemnification for any
damages resulting to Shoreline Pacific from any actual or threatened
breach thereof by SELLER,
<PAGE> 11
Mr. John MacGregor: February 25, 1997
COMFORCE Corporation/Global Growth Limited Page 11
both in Shoreline Pacific's personal capacity and, should Shoreline
Pacific so elect, on behalf of BUYER.
9. CLOSING. Debentures shall be delivered to BUYER and the funds
therefor shall be delivered to SELLER on or before February 27,
1997(the "Closing") or at such time to be mutually agreed.
10. CONDITIONS TO CLOSING
(i) BUYER understands that SELLER'S obligation to sell the
Debentures is conditioned upon delivery into escrow or otherwise as
agreed between BUYER and SELLER by BUYER of the amount set forth in
Section 1 hereof.
(ii) SELLER understands that BUYER'S obligation to purchase the
Debentures is conditioned upon delivery of certificate(s) representing
Debentures as described in Section 1(ii) hereto and provision of an
opinion of counsel confirming the matters set out in Section 3(ii),
(iii), (iv)(limited as to the best of SELLER'S counsel's opinion)and
(v) above, in the form attached hereto as Exhibit D.
(iii) SELLER understands that BUYER'S obligation to purchase the
Debentures is conditioned upon SELLER and BUYER entering into a
Registration Rights Agreement substantially in the form of Annex I
hereto.
(iv) SELLER understands that BUYER'S obligation to purchase the
Debentures is contingent upon SELLER having consummated the sale of a
total placement of at least $13 million in the aggregate of Debentures
at Closing, inclusive of the Debentures being purchased by BUYER, each
pursuant to the terms of this Agreement and the other agreements
referred to herein, and similar such agreements with the other buyers
of the Debentures.
(v) SELLER, BUYER, Infinity Investors Ltd., and Seacrest Capital Ltd.
shall have executed a letter agreement on the terms as discussed and
agreed to between said parties prior to Closing.
(vi) Currently with Closing, SELLER must complete the acquisition of
RHO Company Incorporated on the terms and conditions as set forth in
the Private Placement Memorandum prepared by SELLER and dated February
24, 1997. Buyer understands, however, that such acquisition is to be
accomplished with the proceeds of the sale of the Debentures and must,
as a result, occur after the Closing hereunder but on the same day.
11. GOVERNING LAW; INTERPRETATION. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of New York
without
<PAGE> 12
Mr. John MacGregor: February 25, 1997
COMFORCE Corporation/Global Growth Limited Page 12
giving effect to rules governing the conflict of laws. The parties
jointly consent to personal jurisdiction in any state or federal court
located in the state of New York, waive any objection as to
jurisdiction or venue, and agree not to assert any defense based on
lack of jurisdiction or venue. Facsimile signatures of this agreement
shall be binding on all parties hereto.
IN WITNESS WHEREOF, this Agreement was duly executed on the date first written
above.
Official Signatory of BUYER:
GLOBAL GROWTH LIMITED
BY:/s/ JAMES E. MARTIN
--------------------------
James E. Martin
Director
Official Signatory of SELLER:
COMFORCE CORPORATION
BY:/S/ ANDREW REIBEN
--------------------------
Andrew Reiben
Chief Accounting Officer
<PAGE> 13
SCHEDULE OF DIFFERENCES
The Reporting Persons identified below have entered into separate
contracts substantially identical in all material respects to the form filed
herewith. Pursuant to General Instruction 2 to Item 601, the Reporting Persons
hereby file this Schedule of Differences to identify the material details in
which such documents differ from the form filed.
EXHIBIT 99.7 - PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (BRIDGE LOAN)
<TABLE>
<S> <C>
Name of Reporting Person Principal Amount of Debentures
- ------------------------ ------------------------------
Infinity Investors Limited $3.0 M
Infinity Emerging Opportunities Limited $1.0 M
Fairway Capital Limited $1.0 M
Global Growth Limited $500,000
</TABLE>
<PAGE> 1
Exhibit 99.8
(Schedule of Differences Attached)
NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR THE SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY
SECURITIES ISSUABLE UPON THE EXERCISE HEREOF MAY BE OFFERED OR SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE
BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A PRIVATE
SECURITIES SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND GLOBAL GROWTH LIMITED
DATED FEBRUARY 25, 1997 A COPY OF THE PORTION OF THE AFORESAID SUBSCRIPTION
AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S
EXECUTIVE OFFICES.
Warrant No. D-6 February 27, 1997
COMFORCE CORPORATION
COMMON STOCK PURCHASE WARRANT
TO PURCHASE UP TO 20,000 SHARES OF COMMON STOCK
This Warrant (the "Warrant") is issued to Global Growth Limited or its
assignee (the "Holder"), in connection with the Holder's purchase of the 8%/10%
Subordinated Convertible Debentures dated of even date herewith (the
"Debentures") of COMFORCE Corporation, a Delaware corporation (the "Company").
This Warrant entitles the Holder to purchase up to twenty thousand (20,000)
shares of the Company's Common Stock on the terms set forth herein.
1. EXERCISE OF WARRANT.
1.1. GENERAL. Subject to the terms and conditions hereof, this
Warrant may be exercised in whole or in part during the periods, if any, during
which the Holder is entitled hereunder to purchase shares of the Company's
Common Stock (the shares of Common Stock issuable upon exercise of this Warrant
being referred to herein as "Warrant Shares"). Exercise shall be by
presentation and surrender to the Company at its principal office at the
address shown in Section 14 hereof of this Warrant and the subscription form
annexed hereto, executed by the Holder, together with payment to the Company in
accordance with Section 2 hereof in an amount equal to the product of the First
Tranche Exercise Price or the Second Tranche Exercise Price (as such terms are
hereinafter defined, being collectively referred to as
1
<PAGE> 2
the "Exercise Price"), as the case may be, multiplied by the number of Warrant
Shares being purchased upon such exercise. Upon and as of receipt by the
Company of such properly completed and duly executed "Election to Purchase" in
the form attached hereto as Exhibit A accompanied by payment as herein
provided, the Holder shall be deemed to be the Holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing
such Warrant Shares shall not then actually be delivered to the Holder.
1.2. FIRST TRANCHE.
(a) If the Debentures are not redeemed on or before April 26,
1997. The Holder shall be entitled to purchase two thousand (2,000) shares of
Stock hereunder at an exercise price of $7.575 (being the average closing bid
price of the Stock as reported by Bloomberg, L.P. over the five-day trading
period ending on the day prior to Closing) (the "First Tranche Exercise Price")
during the period commencing on August 27, 1997 and ending at 5:00 p.m. New
York City time on August 27, 2000.
(b) If the Debentures are not redeemed on or before April 28,
1997, the Holder shall be entitled to purchase two thousand (2,000) shares of
Stock hereunder at the First Tranche Exercise Price during the period
commencing on August 27, 1997 and ending at 5:00 p.m. New York City time on
August 27, 2000.
(c) If the Debentures are not redeemed on or before May 28,
1997, the Holder shall be entitled to purchase two thousand (2,000) shares of
Stock hereunder at the First Tranche Exercise Price during the period
commencing on August 27, 1997 and ending at 5:00 p.m. New York City time on
August 27, 2000.
(d) If the Debentures are not redeemed on or before June 27,
1997, the Holder shall be entitled to purchase two thousand (2,000) shares of
Stock hereunder at the First Tranche Exercise Price during the period
commencing on August 27, 1997 and ending at 5:00 p.m. New York City time on
August 27, 2000.
(e) If the Debentures are not redeemed on or before July 27,
1997, the Holder shall be entitled to purchase two thousand (2,000) shares of
Stock hereunder at the First Tranche Exercise Price during the period
commencing on August 27, 1997 and ending at 5:00 p.m. New York City time on
August 27, 2000.
1.3. SECOND TRANCHE. If the Debentures are not redeemed on or
before August 27, 1997, the Holder shall be entitled to purchase ten thousand
(10,000) shares of Stock hereunder at an exercise price equal to the average
closing bid price of the Stock as reported by Bloomberg, L.P. over the five-day
trading period ending on August 27, 1997 (the "Second Tranche Exercise Price")
during the period commencing on the later of (i) August 27, 1997 or (ii) the
date the Registration Statement registering for resale the Warrant Shares is
declared effective by the Securities and Exchange Commission.
2
<PAGE> 3
1.4. REPLACEMENT WARRANTS. Upon the determination that this
Warrant shall become exercisable, which determination shall be made in
accordance with the terms of the Private Securities Subscription Agreement
between Comforce Corporation and Global Growth Limited dated February 25, 1997
as to certain Warrant Shares (upon the satisfaction of stated contingencies) or
upon determination of the Second Tranche Exercise Price, the Company shall
within two (2) business days of such determination issue one or more
replacement Warrants to describe the terms of exercise on the terms as noted
herein (without contingencies) or to state the dollar amount of the Second
Tranche Exercise Price.
2. PAYMENT OF EXERCISE PRICE. The Exercise Price for the Warrant
Shares being purchased may be paid (i) in cash or by check, (ii) by the
surrender by the Holder to the Company of any promissory notes or other
obligations issued by the Company, with all such notes and obligations so
surrendered being credited against the Exercise Price for the Warrant Shares in
an amount equal to the principal amount thereof plus accrued interest to the
date of surrender, or (iii) by any combination of the foregoing.
3. ADJUSTMENT OF WARRANT. The number and kind of securities
purchasable upon the exercise of this Warrant shall be subject to adjustment
from time to time upon the happening of certain events as follows:
3.1 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. In the event of any reorganization of the capital stock of the Company,
a consolidation or merger of the Company with another corporation (other than a
merger in which the Company is the surviving corporation), the sale of all or
substantially all of the Company's assets or any transaction involving the
transfer of a majority of the voting power over the capital stock of the
Company effected in a manner such that holders of Stock shall be entitled to
receive stock, securities, or other assets or property, then, as a condition of
such reorganization, reclassification, consolidation, merger, sale or
transaction, lawful and adequate provision shall be made whereby the Holder
hereof shall have the right to purchase and receive (in lieu of the shares of
the Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby) such shares of stock,
securities or other assets or property as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby. In any such
reorganization, consolidation, merger, sale or transaction, including
successive events of such nature, appropriate provision shall be made with
respect to the rights and interests of the Holder such that the provisions
hereof thereafter shall be applicable, as nearly as practicable, in relation to
any shares of stock, securities or assets thereafter deliverable upon the
exercise hereof.
3.2 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of the Warrant pursuant to this Section 3, the
Warrant shall, without any action on the part of the holder thereof, be
adjusted in accordance with this Section 3, and the Company promptly shall
prepare and furnish to the Holder a certificate setting forth such
3
<PAGE> 4
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based.
3.3 OTHER EVENTS. If any other event of the type contemplated
by this Section 3 but not expressly provided for by such provisions occurs, the
Board of Directors of the Company will make appropriate adjustment in the
Exercise Price so as to equitably protect the rights of the Holder.
4. NOTICES OF RECORD DATE. Upon (i) any establishment by the
Company of a record date of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, or right or option to acquire securities of the
Company, or any other right, or (ii) any capital reorganization,
reclassification, recapitalization, merger or consolidation of the Company with
or into any other corporation, any transfer of all or substantially all the
assets of the Company, or any voluntary or involuntary dissolution, liquidation
or winding up of the Company, the Company shall mail to the Holder at least 10
days, or such longer period as may be required by law, prior to the record date
specified therein, a notice specifying (a) the date established as the record
date for the purpose of such dividend, distribution, option or right and a
description of such dividend, distribution, option or right, (b) the date on
which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected to become effective
and (c) the date, if any, fixed as to when the holders of record of Stock (or
other securities at that time receivable upon exercise of the Warrant) shall be
entitled to exchange their shares of Stock (or such other stock or securities)
for securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding up.
5. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of
its certificate of incorporation or by-laws or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of
all action as may be necessary or appropriate in order to protect the rights of
the Holder against dilution, or other impairment.
6. FRACTIONAL SHARES. The Company shall not issue any fractional
shares nor scrip representing fractional shares upon exercise of any portion of
this Warrant. If on any exercise of this Warrant a fraction of a share would
otherwise be issuable, in lieu thereof the Company shall pay the cash value of
the fractional share calculated on the basis of the Exercise Price.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS. This Warrant is
issued and delivered by the Company and accepted by each Holder on the basis of
the following representations, warranties and covenants made by the Company:
7.1 AUTHORITY. The Company has all necessary authority to
issue, execute and deliver this Warrant and to perform its obligations
hereunder. This Warrant has been duly
4
<PAGE> 5
authorized, issued, executed and delivered by the Company and is the valid and
binding obligation of the Company, enforceable in accordance with its terms.
7.2 RESERVATION OF WARRANT SHARES. The Warrant Shares
issuable upon the exercise of this Warrant have been duly authorized and
reserved for issuance by the Company and, when issued in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable.
7.3 COMPLIANCE WITH LAWS. The issuance, execution and
delivery of this Warrant do not, and the issuance of the Warrant Shares upon
the exercise of this Warrant in accordance with the terms hereof will not, (i)
violate or contravene the Company's certificate of incorporation or by-laws,
or any law, statute, regulation, rule, judgment or order applicable to the
Company, (ii) violate, contravene or result in a breach or default under any
material contract, agreement or instrument to which the Company is a party or
by which the Company or any of its assets are bound or (iii) require the
consent or approval of or the filing of any notice or registration with any
person or entity.
8. TRANSFER, EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT.
8.1 RESTRICTIONS ON TRANSFER. This Warrant may be
transferred, in whole or in part, subject to the following restrictions. This
Warrant and the Warrant Shares received upon exercise of this Warrant shall be
subject to restrictions on transferability until registered under the
Securities Act of 1933, as amended, and applicable state securities laws,
unless an exemption from such registration is available. Until the
Registration Statement registering the Warrant Shares for resale has been
declared effective by the Securities Exchange Commission or if the Warrant
Shares are otherwise exempt from registration, certificates evidencing the
Warrant Shares shall bear a legend in substantially the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED OR SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE
BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A
PRIVATE SECURITIES SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND
GLOBAL GROWTH LIMITED DATED FEBRUARY 25, 1997. A COPY OF THE
PORTION OF THE AFORESAID SUBSCRIPTION AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE OFFICES.
If any Warrant Shares are issued with this legend, then upon
effectiveness of the Registration Statement, the Company will, within 5
business days of the Holder's request, exchange the legended certificates,
without charge, for unlegended, but otherwise identical, certificates. If any
Warrant Shares are issued after the Registration Statement registering them
for resale becomes effective, then said Warrant Shares shall not bear any
restrictive legend.
5
<PAGE> 6
8.2 PROCEDURE FOR TRANSFER. Any transfer permitted hereunder
shall be made by surrender of this Warrant to the Company at its principal
office or to any person designated by the Company as the transfer agent for
this Warrant (the "Transfer Agent") at its offices with a duly executed request
to transfer the Warrant, which shall provide adequate information and evidence
of authority (in the case of execution by a corporation, partnership, trust or
other entity that is not a natural person) to effect such transfer and shall be
accompanied by funds sufficient to pay any transfer taxes applicable to the
transfer. In the case of a partial transfer of this Warrant, upon compliance
with the immediately preceding sentence, this Warrant shall be divided into two
or more Warrants of even date herewith setting forth Warrant Amounts that in
the aggregate are equal to the Warrant Amount immediately prior to the
transfer. Upon satisfaction of all transfer conditions, the Company or Transfer
Agent shall, without charge, execute and deliver a new Warrant in the name of
the transferee named in such transfer request dated as of the date of this
Warrant, and this Warrant promptly shall be canceled.
8.3 TRANSFER ONLY PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT. The holder hereby covenants and agrees that it shall not transfer
this Warrant or the Warrant Shares received upon exercise of this Warrant
except pursuant to an effective Registration Statement under the Securities
Act of l933, as amended, or pursuant to an available exemption from such
registration.
8.4 LOST, STOLEN OR DESTROYED WARRANT. Upon receipt by the
Company of evidence satisfactory to it of loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction, of
reasonably satisfactory indemnification, or, in the case of mutilation, upon
surrender of this Warrant, the Company will execute and deliver, or instruct
the Transfer Agent to execute and deliver, a new Warrant of like tenor and
date, and any such lost, stolen or destroyed Warrant thereupon shall become
void.
8.5 WARRANT BINDING UPON ASSIGNEE OR SUCCESSOR. The terms and
conditions of this Warrant shall be binding upon any permitted assignee and
successor of the Holder. Any such successor or assignee shall be obligated to
and shall immediately execute an instrument which provides that such party is
bound under the terms of this Warrant. Any transfer, assignment or other
disposition without such execution by the proposed transferee, assignee or
successor shall be null and void.
9. INVESTOR RIGHTS AGREEMENT. The registration rights of the Warrant
Shares deliverable upon exercise of this Warrant and other rights of the Holder
are set forth in the Registration Rights Agreement dated as of February 26,
1997 between the Holder and the Company.
10. ADJUSTMENT OF NUMBER OF WARRANT SHARES ISSUABLE AND EXERCISE
PRICE. The number of Warrant Shares issuable upon the exercise of this Warrant
(the "Warrant Number"), and the exercise price therefor, are subject to
adjustment from time to time upon the occurrence of the events enumerated in,
or as otherwise provided in, this Section 10.
6
<PAGE> 7
10.1 ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If the Company:
(1) pays a dividend or makes a distribution on its
Common Stock in shares of its Common Stock;
(2) subdivides or reclassifies its outstanding shares
of Common Stock into a greater number of shares;
(3) combines or reclassifies its outstanding shares of
Common Stock into a smaller number of shares;
(4) makes a distribution on its Common Stock in shares
of its capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any
shares of its capital stock;
then the Warrant Number in effect immediately prior to such action shall be
proportionately adjusted so that the Holder may receive the aggregate number
and kind of shares of capital stock of the Company which he or it would have
owned immediately following such action if such Warrant had been exercised
immediately prior to such action. In addition, the Exercise Price on the
effective date of such distribution or reclassification or the effective date
of such action shall be adjusted by multiplying such Exercise Price by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately before such event and the denominator of which is the
number of shares of Common Stock outstanding immediately after such event.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any event listed
above shall occur. If the occurrence of any event listed above results in an
adjustment under Section 10.2 or 10.3 below, no further adjustment shall be
made under this Section 10.1.
10.2 ADJUSTMENT FOR RIGHTS ISSUE. If the Company distributes any
rights, options or warrants (whether or not immediately exercisable) to all
holders of its Common Stock entitling them to purchase shares of Common Stock,
or securities convertible into or exchangeable for Common Stock, at a price per
share less than the Current Market Value (as hereinafter defined) per share on
the record date relating to such distribution, the Warrant Number shall be
adjusted in accordance with the formula:
1
W = W x (O + N)
-------
O + (N x P)
-------
M
where:
1
W = the adjusted Warrant Number.
7
<PAGE> 8
W = the Warrant Number immediately prior to the record date
for any such distribution.
O = the number of Fully Diluted Shares (as hereinafter
defined) outstanding on the record date for any such
distribution without accounting for such rights, options
or warrants.
N = the number of additional shares of Common Stock issuable
upon exercise of such rights, options or warrants.
P = the exercise price per share of such rights, options or
warrants.
M = the Current Market Value per share of Common Stock on the
record date for any such distribution.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for determination of stockholders entitled to receive the rights,
options or warrants. If at the end of the period during which such rights,
options or warrants are exercisable, not all rights, options or warrants shall
have been exercised, the Warrant shall be immediately readjusted to what it
would have been if "N" in the above formula had been the number of shares
actually issued. In addition, the Exercise Price on the effective date of such
distribution or reclassification or the effective date of such action shall be
adjusted by multiplying such Exercise Price by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately before
such event and the denominator of which is the number of shares of Common Stock
outstanding immediately after such event.
10.3 ADJUSTMENT FOR OTHER DISTRIBUTIONS. If the Company
distributes to all holders of its Common Stock (i) any evidence of indebtedness
of the Company or any of its subsidiaries, (ii) any assets of the Company or
any of its subsidiaries (other than cash dividends which are paid out of
retained earnings of the Company or the Company and are not prohibited by the
Indenture), or (iii) any rights, options or warrants to acquire any of the
foregoing or to acquire any other securities of the Company, the Warrant Number
shall be adjusted in accordance with the formula:
1
W = W x M
-----
M - F
where:
1
W = the adjusted Warrant Number.
W = the Current Warrant Number on the record date mentioned
below.
8
<PAGE> 9
M = the Current Market Value per share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date mentioned below
of the indebtedness, assets, rights, options or warrants
distributable to one share of Common Stock.
The adjustment shall be made successively whenever any such distribution
is made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution. If an
adjustment is made pursuant to clause (iii) above of this Section 10.3 as a
result of the issuance of rights, options or warrants and at the end of the
period during which any such rights, options or warrants are exercisable, not
all such rights, options or warrants shall have been exercised, the Warrant
shall be immediately readjusted as if "F" in the above formula was the fair
market value on the record date of the indebtedness or assets actually
distributed upon exercise of such rights, options or warrants divided by the
number of shares of Common Stock outstanding on the record date. In addition,
the Exercise Price on the effective date of such distribution or
reclassification or the effective date of such action shall be adjusted by
multiplying such Exercise Price by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately before such event and
the denominator of which is the number of shares of Common Stock outstanding
immediately after such event.
This Section 10.3 does not apply to rights, options or warrants
referred to in Section 10.2.
10.4 CERTAIN DEFINITIONS FOR PURPOSES OF THIS SECTION 10.
(a) The "Current Market Value" per share of Common Stock or of
any other security (herein collectively referred to as a "Security") at any
date shall be:
(1) If the Security is not registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(i) the value of the Security determined in good faith by the
Board of Directors of the Company and certified in a board
resolution, based on the most recently completed arm's length
transaction between the Company and a person other than an
Affiliate of the Company, the closing of which occurs on such
date or shall have occurred within the six months proceeding such
date, (ii) if no such transaction shall have occurred on such
date or within such six-month period, the value of the Security
most recently determined as of a date within the six months
preceding such date by an Independent Financial Expert (as
defined below) or (iii) if neither clause (i) nor (ii) is
applicable, the value of the Security determined as of such date
by an Independent Financial Expert; or
(2) If the Security is registered under the Exchange
Act, the average of the daily market prices for each business day
during the period commencing 30 business days before such date
and ending on the date one day prior to such
9
<PAGE> 10
date or, if the Security has been registered under the Exchange
Act for less than 30 consecutive business days before such date,
then the average of the daily market prices for all of the
business days before such date for which daily market prices are
available. If the market price is not determinable for at least
15 business days in such period, the Current Market Value of the
Security shall be determined as if the Security was not
registered under the Exchange Act.
(b) The "market price" for any Security on each business day
means: (A) if such Security is listed or admitted to trading on any securities
exchange, the closing price, regular way, on such day on the principal exchange
on which such Security is traded, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, (B) if such Security
is not then listed or admitted to trading on any securities exchange, the last
reported sale price on such day, or if there is no such last reported sale
price on such day, the average of the closing bid and the asked prices on such
day, as reported by a reputable quotation source designated by the Company, or
(C) if neither clause (A) nor (B) is applicable, the average of the reported
high bid and low asked prices on such day, as reported by a reputable quotation
source, or a newspaper of general circulation in the Borough of Manhattan, City
of New York, customarily published on each business day, designated by the
Company. If there are no such prices on a business day, then the market price
shall not be determinable for such business day.
(c) "Independent Financial Expert" shall mean a nationally
recognized investment banking firm reasonably acceptable to the holders of a
majority of the Warrants having the same terms as this Warrant (the "Warrants")
(i) that does not (and whose directors, officers, employees and Affiliates do
not) have a direct or indirect material financial interest in the Company or
any of its subsidiaries, (ii) that has not been, and at the time it is called
upon to serve as an Independent Financial Expert under this Agreement is not
(and none of whose directors, officers, employees or Affiliates is) an
employee, director or officer of the Company or any of its subsidiaries, (iii)
that has not been retained by the Company or any of its subsidiaries for any
purpose, other than to perform an equity valuation, within the preceding twelve
months, and (iv) that, in the reasonable judgment of the Board of Directors of
the Company, is otherwise qualified to serve as an independent financial
advisor. Any such person may receive customary compensation and indemnification
by the Company for opinions or services it provides as an Independent Financial
Expert.
(d) "Affiliate" shall mean, with respect to any person, any
other person directly or indirectly controlling or controlled by or under
direct or indirect common control with such person. For the purposes of this
definition, "control," when used with respect to any person, means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
(e) For purposes of this Section 10 the term "shares of Common
Stock" shall mean (i) shares of the class of stock designated as the Common
Stock of the Company at the date of this Agreement, and (ii) shares of any
other class of stock resulting from successive
10
<PAGE> 11
changes or reclassification of such shares consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
(f) "Fully Diluted Shares" shall mean (i) the shares of Common
Stock outstanding as of a specified date, and (ii) shares of Common Stock into
or for which rights, options, warrants or other securities outstanding as of
such date are exercisable or convertible (other than the Warrants).
10.5 WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No adjustment
in the Warrant Number need be made immediately unless the adjustment would
require an increase or decrease of at least 0.5% in the Warrant Number.
Notwithstanding the foregoing, any adjustments that are not made shall be
carried forward and taken into account in any subsequent adjustment, provided
that no such adjustment shall be deferred beyond the date on which a Warrant is
exercised.
All calculations under this Section 10 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
10.6 WHEN NO ADJUSTMENT REQUIRED. If an adjustment is made upon
the establishment of a record date for a distribution subject to Sections 10.1,
10.2 or 10.3 hereof and such distribution is subsequently canceled, the
Warrant Number then in effect shall be readjusted, effective as of the date
when the Board of Directors determines to cancel such distribution, to that
which would have been in effect if such record date had not been fixed.
10.7 NOTICE OF ADJUSTMENT. Whenever the Warrant Number is
adjusted, the Company shall provide notice thereof to the Holder.
10.8 WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED. In any case in
which this Section 10 shall require that an adjustment in the Warrant Number be
made effective as of a record date for a specified event, the Company may elect
to defer the adjustment until the occurrence of such event (i) directing the
Transfer Agent to issue to the Holder after such record date the Warrant Shares
and other capital stock of the Company, if any, issuable upon such exercise
over and above the Warrant Shares and other capital stock of the Company, if
any, issuable upon such exercise on the basis of the Warrant Number prior to
such adjustment, and (ii) directing the Transfer Agent to pay to such Holder
any amount in cash in lieu of a fractional share pursuant to Section 10;
provided, however, that the Company shall direct the Transfer Agent to deliver
to the Holder a due bill or other appropriate instrument evidencing such
Holder's right to receive such additional Warrant Shares, other capital stock
and cash upon the occurrence of the event requiring such adjustment.
10.9 REORGANIZATIONS. In case of any capital reorganization,
other than in the cases referred to in Sections 10.1, 10.2 or 10.3 hereof, or
the consolidation or merger of the Company with or into another corporation
(other than a merger or consolidation in which the Company is the continuing
corporation and which does not result in any reclassification of the
outstanding shares of Common Stock into shares of other stock or other
securities or
11
<PAGE> 12
property), or the sale of the property of the Company as an entirety or
substantially as an entirety (collectively such actions being hereinafter
referred to as "Reorganizations"), there shall thereafter be deliverable upon
exercise of any Warrant (in lieu of the number of shares of Common Stock
theretofore deliverable) the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock that would
otherwise have been deliverable upon the exercise of such Warrant would have
been entitled upon such Reorganization if such Warrant had been exercised in
full immediately prior to such Reorganization. In case of any Reorganization,
appropriate adjustment, as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a duly adopted
resolution certified by the Company's Secretary or Assistant Secretary, shall
be made in the application of the provisions herein set forth with respect to
the rights and interests of Holder so that the provisions set forth herein
shall thereafter be applicable, as nearly as possible, in relation to any
shares or other property thereafter deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization unless prior
to or simultaneously with the consummation thereof the successor corporation
(if other than the Company) resulting from such Reorganization or the
corporation purchasing or leasing such assets or other appropriate corporation
or entity shall (i) expressly assume, by a supplemental Warrant Agreement or
other acknowledgment executed and delivered to the Holder the obligation to
deliver to the Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase, and all other obligations and liabilities under this Agreement and
(ii) enter into an agreement providing to the Holder rights and benefits
substantially similar to those enjoyed by the Holders under the Registration
Rights Agreement of even date herewith.
The foregoing provisions of this Section 10.9 shall apply to
successive Reorganization transactions.
10.10 ADDITIONAL ADJUSTMENTS. In the event that at any time, as
a result of an adjustment made pursuant to this Section 10, the Holder shall
become entitled to purchase any securities of the Company other than, or in
addition to, shares of Common Stock, thereafter the number or amount of such
other securities so purchasable upon exercise of this Warrant shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Warrant Shares contained
herein.
11. ISSUE TAX. The issuance of a certificate for shares of
Stock upon the exercise of this Warrant shall be made without charge to the
Holder of the Warrant for any issue tax (other than applicable income taxes) in
respect thereof; provided, however, that the Company shall not be required to
pay any tax that may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the then
Holder of the Warrant being exercised.
12. AMENDMENT. The terms of this Warrant may be amended,
modified or waived only with the written consent of the Holder.
12
<PAGE> 13
13. GOVERNING LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York, as such laws
are applied to contracts entered into and wholly to be performed within the
State of New York
14. NOTICES. Any notice provided for in this Warrant must be
in writing and must be either personally delivered, transmitted via telecopy or
mailed via certified mail, return receipt requested as follows:
If to the Company:
Comforce Corporation
2001 Marcus Avenue
Lake Success, New York 11042
Attention: Paul Grillo, Chief Financial Officer
If to the Holder:
Global Growth Limited
27 Wellington Road
Cork, Ireland
Attention: James E. Martin, Director
15. RIGHTS AND OBLIGATIONS OF HOLDERS OF THIS CERTIFICATE. The
Holder of this Certificate shall not, by virtue hereof, be entitled to any
rights of a stockholder in the Company, either at law or in equity; provided,
however, that in the event any certificate representing shares of Common Stock
or other securities is issued to the Holder hereof upon exercise of some or all
of the Warrants, such Holder shall, for all purposes, be deemed to have become
the Holder of record of such Common Stock on the date on which this
Certificate, together with a duly executed Purchase Form, was surrendered and
payment of the aggregate Exercise Price was made, irrespective of the date of
delivery of such share certificate.
16. SUCCESSORS AND ASSIGN. This Warrant Certificate shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
17. HEADINGS. The headings of various sections of this Warrant
Certificate have been inserted for reference only and shall not be a part of
this Certificate.
13
<PAGE> 14
IN WITNESS WHEREOF, the Company has executed this Warrant as of
the day and year first written above.
COMFORCE CORPORATION
By: /s/ ANDREW REIBEN
----------------------------------
Andrew Reiben
Chief Accounting Officer
14
<PAGE> 15
EXHIBIT A TO WARRANT
EXECUTION TO PURCHASE
TO BE EXECUTED BY THE HOLDER
IN ORDER TO EXERCISE THE COMMON STOCK
PURCHASE WARRANT CERTIFICATE
The undersigned Holder hereby irrevocably elects to exercise
________ of the Warrants represented by this Common Stock Warrant Certificate,
and to purchase the shares of Common Stock issuable upon the exercise of such
Warrants and requests that certificates for securities be issued in the name
of:
-----------------------------------------------------------
(Please type or print name and address)
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
(Social Security tax identification number)
and delivered to
---------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please type or print name and address)
and, if such number of Warrants shall not be all the Warrants evidenced by this
Common Stock Warrant Certificate, that a new Common Stock Warrant Certificate
for the balance of such Warrants be registered in the name of, and delivered
to, the Holder at the address stated below.
In full payment of the purchase price with respect to the
Warrants exercised and transfer taxes, if any, the undersigned hereby tenders
payment of $________ by check or money order payable in United States currency
to the order of COMFORCE Corporation.
[HOLDER]
Dated: By
--------------- -------------------------------------------
Name:
Title:
Address:
-------------------------------------
---------------------------------------------
---------------------------------------------
(Social Security or Tax Identification No.)
15
<PAGE> 16
SCHEDULE OF DIFFERENCES
The Reporting Persons identified below have entered into separate
contracts substantially identical in all material respects to the form filed
herewith. Pursuant to General Instruction 2 to Item 601, the Reporting Persons
hereby file this Schedule of Differences to identify the material details in
which such documents differ from the form filed.
EXHIBIT 99.8 - COMMON STOCK PURCHASE WARRANT
<TABLE>
<S> <C>
Reporting Person No. February Warrant Shares
- ---------------- ---------------------------
Infinity Investors Limited 12,000
Infinity Emerging Opportunities Limited 4,000
Fairway Capital Limited 4,000
Global Growth Limited 2,000
</TABLE>
<PAGE> 1
EXHIBIT 99.9
(SCHEDULE OF DIFFERENCES ATTACHED)
NEITHER THIS DEBENTURE NOR ANY SECURITIES ISSUABLE UPON THE CONVERSION HEREOF
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), OR THE SECURITIES LAWS OF ANY STATE. NEITHER THIS DEBENTURE NOR ANY
SECURITIES ISSUABLE UPON THE CONVERSION HEREOF MAY BE OFFERED OR SOLD,
TRANSFERRED PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE
BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A PRIVATE
SECURITIES SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND FAIRWAY CAPITAL LTD.
DATED FEBRUARY 25, 1997. A COPY OF THE PORTION OF THE AFORESAID SUBSCRIPTION
AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S
EXECUTIVE OFFICES.
8%/10% SUBORDINATED CONVERTIBLE DEBENTURE DUE FEBRUARY 21, 1998
$250,000 February 25, 1997
Number 41
FOR VALUE RECEIVED, COMFORCE Corporation, a Delaware corporation (the
"Company"), hereby promises to pay to _______________________, or registered
assigns (the "Holder") on February 21, 1998 (the "Maturity Date"), the
principal amount of ______________________________ Dollars ($___________), and
to pay interest on the principal amount hereof, in such amounts, at such times
and on such terms and conditions as are specified herein.
ARTICLE 1. Interest
The Company shall pay interest on the unpaid principal amount of this
Debenture ("Debenture") at the rate of Eight Percent (8%) per annum from the
date of the purchase hereof ("Closing") through and including the 180th day
following Closing, and at the rate of Ten Percent (10%) per annum from the
181st day following Closing and continuing until the principal hereof is paid
in full. Interest shall be payable quarterly in arrears, in cash or stock, at
the Company's option and shall be computed on the basis of a 360-day year of
twelve 30-day months. If the Company elects to pay the interest in common
stock, the valuation of such common stock will be based upon the average
closing bid price of the Company's common stock, as reported by Bloomberg,
L.P., over the five-trading day period ending on the day preceding the date
interest becomes due.
ARTICLE 2. Method of Payment
<PAGE> 2
8%/10% Subordinated Convertible Debenture
Page 2
This Debenture must be surrendered to the Company in order for the
Holder to receive payment of the principal amount hereof. The Company shall pay
the principal of and interest on this Debenture in United States dollars, or by
a check payable in such money, except as provided in Section 3.1 below
regarding conversion into Common Stock. The Company may draw a check for the
payment of interest to the order of the Holder of this Note and mail it to the
Holder's address as shown on the Register (as defined in Section 9.2 below).
Interest and principal payments shall be subject to withholding under
applicable United States Federal Internal Revenue Service Regulations.
ARTICLE 3. Conversion
SECTION 3.1. Conversion Privilege
(a) This Debenture may be converted in whole or in part, at the
Holder's option, beginning 181 days following Closing. The Company shall have
the option to make the requested conversion in either cash or Common Stock of
the Company ("Common Stock"), or any combination of cash or Common Stock.
Within 24 hours of the Company's receipt of a duly executed Notice of
Conversion, the Company shall notify the Holder as to whether the conversion
will be made in cash and/or Common Stock and the percentages thereof. Any such
conversion paid in cash shall be payable at 125% of the face value of the
portion of the Debenture to be converted, including any accrued but unpaid
interest thereon. If the Company elects to convert this Debenture into Common
Stock, the number of such shares issuable upon conversion shall be determined
by dividing the principal amount hereof to be converted plus all accrued but
unpaid interest thereon, minus any required withholding, by the conversion
price in effect on the conversion date (as defined in paragraph (b) of this
Section 3.1 below) and rounding the result to the nearest 1/100th of a share.
Any portion of this Debenture which remains outstanding on the 360th day
following Closing (the "Maturity Date") will be automatically converted on that
date into Common Stock or cash, or any combination thereof.
(b) Notwithstanding the provisions of Section 3.1(a), no more than
2,500,000 shares of Common Stock may be issued by the Company to honor
conversion of this Debenture together with the other Debentures issued by the
Company at Closing, and together with all shares of Common Stock issued upon
the exercise of any warrants issued by the Company in connection with the
issuance of this Debenture. The aggregate principal amount of all Debentures
issued in the placement of which this Debenture is a part shall not exceed
$25,000,000 (see Section 8.1 below). Conversion requests received after the
maximum of 2,500,000 shares of Common Stock have been issued will be paid in
cash. Notwithstanding the foregoing, the 2.5 million share limit may be
increased to 3.5 million shares if either: (i) the Company's shareholders
approve
<PAGE> 3
8%/10% Subordinated Convertible Debenture
Page 3
the increase; (ii) the American Stock Exchange ("AMEX") waives its
requirement that said increase be approved by the Company's shareholders, or
advises the Company that shareholder approval is not required; or (iii) the
Company changes the listing of its common stock from AMEX to either the New
York Stock Exchange ("NYSE") or the National Association of Securities Dealers
Automated Quotation System ("Nasdaq") under circumstances in which shareholder
approval is not required.
(c) The conversion price is Twenty-Five Percent (25%) off the Current
Market Price as defined in Section 3.7 below.
(d) Less than all of the principal amount of this Debenture may be
converted if the portion converted is $10,000 or a whole multiple of $10,000
and the provisions of this Article 3 that apply to the conversion of all of the
Debenture also apply to the conversion of a portion of it. All accrued interest
on this Debenture shall be added to the amount converted and shall be deemed to
be paid and discharged thereby.
SECTION 3.2. Conversion Procedure. To request conversion of this
Debenture, the Holder must (a) complete and sign the Notice of Conversion
attached hereto, (b) surrender the Debenture to the Company, (c) furnish
appropriate endorsements and transfer documents if so requested by the Company,
and (d) subject to Section 3.4, pay any transfer or similar tax if required by
the Company. The date upon which the Company receives the completed Notice of
Conversion (by mail, facsimile or otherwise) is the conversion date, provided
that the Company shall not be required to deliver a certificate for Common
Shares, and/or a check for payment of the conversion amount, unless and until
the Company receives the Debenture. Within five (5) business days after receipt
of the Notice of Conversion, providing the Company has received the Debenture
from the Holder, the Company shall deliver a certificate for the number of full
shares of Common Stock issuable, and/or a check for payment of the amount
converted, in accordance with Section 3.1(a) above; provided, however, that the
Company will make any such cash payments to the Holder by wire transfer if
Holder so requests and provides the Company with the necessary wiring
instructions. The person in whose name the certificate of Common Stock is to be
registered, if applicable, shall be treated as a shareholder of record on and
after the conversion date. If one person converts more than one Debenture at
the same time, the number of full shares issuable upon the conversion shall be
based on the total principal amount of Debentures converted. Upon surrender of
a Debenture that is to be converted in part, the Company shall issue to the
Holder a new Debenture equal in principal amount to the unconverted portion of
the Debenture surrendered.
SECTION 3.3. Fractional Shares. The Company shall not issue a
fractional share of Common Stock upon the conversion of this Debenture.
Instead, the Company shall pay, in lieu of any fractional share, the cash value
thereof at the then current market
<PAGE> 4
8%/10% Subordinated Convertible Debenture
Page 4
price of the Common Stock as determined under Section 3.7 below.
SECTION 3.4. Taxes on Conversion. The Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon the conversion of this Debenture. However, the Holder
shall pay any such tax which is due because the shares are issued in a name
other than its name.
SECTION 3.5. Company to Reserve Stock. The Company shall reserve out
of its authorized but unissued Common Stock or Common Stock held in treasury
enough shares of Common Stock to permit the conversion of this Debenture,
subject to the maximum number of shares which can be issued as set forth in
Section 3.1(b) above. All shares of Common Stock which may be issued upon the
conversion hereof shall be fully paid and nonassessable.
SECTION 3.6. Restrictions on Transfer. This Debenture and the Common
Stock issuable upon the conversion hereof have not been registered under the
Securities Act of 1933 (the "Act") and this Debenture and the Common Stock
issuable upon the conversion of this Debenture may not be offered for sale,
sold or otherwise transferred unless such offer, sale or other transfer is
registered under the Act or such securities or such transfer is exempt from
such registration.
SECTION 3.7. Current Market Price. The current market price per share
of Common Stock on any date is the average of the closing bid price, as
reported by Bloomberg, L.P., of the Common Stock over the five trading day
period ending on the trading day before the date in question, or, if the Common
Stock is not reported on such system, the fair market value of the Common Stock
as determined by the Board of Directors of the Company in its good faith
judgment.
SECTION 3.8. Mergers, Etc. If the Company merges or consolidates with
another corporation or sells or transfers all or substantially all of its
assets to another person and the holders of the Common Stock are entitled to
receive stock, securities or property in respect of or in exchange for Common
Stock, then as a condition of such merger, consolidation, sale or transfer, the
Company and any such successor, purchaser or transferee shall amend this
Debenture to provide that it may thereafter be converted on the terms and
subject to the conditions set forth above into the kind and amount of stock,
securities or property receivable upon such merger, consolidation, sale or
transfer by a holder of the number of shares of Common Stock into which this
Debenture might have been converted immediately before such merger,
consolidation, sale or transfer.
ARTICLE 4. Redemption
<PAGE> 5
8%/10% Subordinated Convertible Debenture
Page 5
SECTION 4.1. Redemption Amounts. This Debenture may be redeemed by the
Company, in whole or in part, at any time within 360 days following Closing as
follows: (a) if it is redeemed within 60 days of Closing, the Holder shall
receive a five percent (5%) premium over the face amount redeemed; (b) if it is
redeemed between 61 days and 90 days of Closing, the Holder shall receive a six
percent (6%) premium over the face amount redeemed; (c) if it is redeemed
between 91 days and 120 days of Closing, the Holder shall receive an eleven
percent (11%) premium over the face amount redeemed; (d) if it is redeemed
between 121 days and 150 days of Closing, the Holder shall receive a thirteen
percent (13%) premium over the face amount redeemed; (e) if it is redeemed
between 151 days and 180 days of Closing, the Holder shall receive a fifteen
percent (15%) premium over the face amount redeemed; and (f) if it is redeemed
between 181 days and 360 days of Closing, the Holder shall receive a
twenty-five percent (25%) premium over the face amount redeemed. In addition to
the foregoing premiums, all accrued but unpaid interest will be paid to the
Holder upon any redemption. In the event that the Company redeems less than all
outstanding Debentures at any time, such partial redemption shall be prorated
among the Holders in accordance with the outstanding principal amount of their
Debentures.
SECTION 4.2. Redemption Procedure. The Company must notify the Holder
at least ten (10) business days prior to the date on which the Company intends
to redeem this Debenture (the "Redemption Date"). The Holder must then
surrender the Debenture to the Company on or before the Redemption Date.
Following the Company's receipt of the original Debenture from the Holder, the
Company shall deliver a check for the amount due to the Holder as calculated
pursuant to Section 4.1 above, including all accrued but unpaid interest
thereon, on the Redemption Date.
ARTICLE 5. Mergers
The Company shall not consolidate or merge into, or transfer all or
substantially all of its assets to, any person, unless such person assumes the
obligations of the Company under this Debenture and immediately after such
transaction no Event of Default exists. Any reference herein to the Company
shall refer to such surviving or transferee corporation and the obligations of
the Company shall terminate upon such assumption.
ARTICLE 6. Reports
The Company will mail to the Holder hereof at its address as shown on
the Register a copy of any annual, quarterly or current report that it files
with the Securities and Exchange Commission promptly after the filing thereof
and a copy of any annual, quarterly or other report or proxy statement that it
gives to its shareholders generally at
<PAGE> 6
8%/10% Subordinated Convertible Debenture
Page 6
the time such report or statement is sent to shareholders.
ARTICLE 7. Defaults and Remedies
SECTION 7.1. Events of Default. An "Event of Default" occurs if (a)
the Company does not make the payment of the principal of this Debenture when
the same becomes due and payable at maturity, upon redemption or otherwise, (b)
the Company does not make a payment of interest when such interest becomes due
and payable and such default continues for a period of 5 days thereafter, (c)
the Company fails to comply with any of its other obligations under this
Debenture, or under the Subscription Agreement and the Registration Rights
Agreement between the parties hereto dated February 25, 1997, and such failure
continues for the period and after the notice specified below, (d) the Company,
pursuant to or within the meaning of any Bankruptcy Law (as hereinafter
defined): (i) commences a voluntary case; (ii) consents to the entry of an
order for relief against it in an involuntary case; (iii) consents to the
appointment of a Custodian (as hereinafter defined) of it or for all or
substantially all of its property; (iv) makes a general assignment for the
benefit of its creditors; or (v) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that: (A) is for relief against the
Company in an involuntary case; (B) appoints a Custodian of the Company or for
all or substantially all of its property or (C) orders the liquidation of the
Company, and the order or decree remains unstayed and in effect for 60 days. As
used in this Section 6.1, the term "Bankruptcy Law" means Title 11 of the
United States Code or any similar federal or state law for the relief of
debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law. A default under clause (c) above
is not an Event of Default until the holders of at least 25% of the aggregate
principal amount of the Debentures notify the Company of such default and the
Company does not cure it within 5 days after the receipt of such notice, which
must specify the default, demand that it be remedied and state that it is a
"Notice of Default."
SECTION 7.2. Acceleration. If an Event of Default occurs and is
continuing, the Holder hereof by notice to the Company, may declare the
principal of and accrued interest on this Debenture to be due and payable,
together with the applicable premium due at the time of acceleration as
calculated pursuant to Section 4.1 above. Upon such declaration, the principal
and interest hereof shall be due and payable immediately.
ARTICLE 8. Registered Debentures
SECTION 8.1. Series. This Debenture is one of a numbered series of
Debentures having an aggregate principal amount of not more than $25,000,000
which are identical except as to the principal amount and date of issuance
thereof and the amount of the redemption premium available to the Series F
Holders as defined in the Subscription
<PAGE> 7
8%/10% Subordinated Convertible Debenture
Page 7
Agreement dated February 26, 1997 between the Company and Holder. Such
Debentures are referred to herein collectively as the "Debentures". The
Debentures shall be issued in whole multiples of $10,000.
SECTION 8.2. Record Ownership. The Company shall maintain a register
of the holders of the Debentures (the "Register") showing their names and
addresses and the serial numbers and principal amounts of Debentures issued to
or transferred of record by them from time to time. The Register may be
maintained in electronic, magnetic or other computerized form. The Company may
treat the person named as the Holder of this Debenture in the Register as the
sole owner of this Debenture. The Holder of this Debenture is the person
exclusively entitled to receive payments of principal and interest on this
Debenture, receive notifications with respect to this Debenture, and otherwise
exercise all of the rights and powers as the absolute owner hereof.
SECTION 8.3. Registration of Transfer. Transfers of this Debenture
may be registered on the books of the Company maintained for such purpose
pursuant to Section 8.2 above (i.e., the Register). Transfers shall be
registered when this Debenture is presented to the Company with a request to
register the transfer hereof and the Debenture is duly endorsed by the
appropriate person, reasonable assurances are given that the endorsements are
genuine and effective, and the Company has received evidence satisfactory to it
that such transfer is rightful and in compliance with all applicable laws,
including tax laws and state and federal securities laws. When this Debenture
is presented for transfer and duly transferred hereunder, it shall be canceled
and a new Debenture showing the name of the transferee as the record holder
thereof shall be issued in lieu hereof. When this Debenture is presented to the
Company with a reasonable request to exchange it for an equal principal amount
of Debentures of other denominations, the Company shall make such exchange and
shall cancel this Debenture and issue in lieu thereof Debentures having a total
principal amount equal to this Debenture in the denominations requested by the
Holder. The Company may charge a reasonable fee for any registration of
transfer or exchange other than one occasioned by a notice of redemption or the
conversion hereof.
SECTION 8.4. Worn and Lost Debentures. If this Debenture becomes worn,
defaced or mutilated but is still substantially intact and recognizable, the
Company or its agent may issue a new Debenture in lieu hereof upon its
surrender. Where the Holder of this Debenture claims that the Debenture has
been lost, destroyed or wrongfully taken, the Company shall issue a new
Debenture in place of the original Debenture if the Holder so requests by
written notice to the Company actually received by the Company before it is
notified that the Debenture has been acquired by a bona fide purchaser and the
Holder has delivered to the Company an indemnity bond in such amount and issued
by such surety as the Company deems satisfactory together with an affidavit of
the
<PAGE> 8
8%/10% Subordinated Convertible Debenture
Page 8
Holder setting forth the facts concerning such loss, destruction or
wrongful taking and such other information in such form with such proof or
verification as the Company may request.
ARTICLE 9. Notices
Except as otherwise provided in this Debenture, any notice which is
required or convenient under the terms of this Debenture shall be duly given if
it is in writing and (a) delivered in person, (b) mailed by first class mail,
postage prepaid, (c) sent by facsimile transmission, or (d) sent by private
overnight mail service (such as Federal Express) and directed to the Holder of
the Debenture at its address as it appears on the Register or if to the Company
to its principal executive offices. Such notice shall be effective, when
personally delivered, upon receipt; when so sent by first class mail, four
business days after deposit with the United States Postal Service; when sent by
facsimile transmission, upon receipt of confirmation of transmission; or when
so sent by private overnight mail service, the next business day after deposit.
ARTICLE 10. Time
Where this Debenture authorizes or requires the payment of money or
the performance of a condition or obligation on a Saturday or Sunday or a
public holiday, or authorizes or requires the payment of money or the
performance of a condition or obligation within, before or after a period of
time computed from a certain date, and such period of time ends on a Saturday
or a Sunday or a public holiday, such payment may be made or condition or
obligation performed on the next succeeding business day, and if the period
ends at a specified hour, such payment may be made or condition performed, at
or before the same hour of such next succeeding business day, with the same
force and effect as if made or performed in accordance with the terms of this
Debenture. Where time is extended by virtue of the provisions of this Article
9, such extended time shall not be included in the computation of interest.
ARTICLE 11. Waivers
The holders of a majority in principal amount of the Debentures may
waive a default or rescind the declaration of an Event of Default and its
consequences except for a default in the payment of principal of or interest on
any Debenture.
ARTICLE 12. Rules of Construction
In this Debenture, unless the context otherwise requires, words in the
singular
<PAGE> 9
8%/10% Subordinated Convertible Debenture
Page 9
number include the plural, and in the plural include the singular, and
words of the masculine gender include the feminine and the neuter, and when the
sense so indicates, words of the neuter gender may refer to any gender. The
numbers and titles of sections contained in this Debenture are inserted for
convenience of reference only, and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation hereof. Wherever,
in this Debenture, a determination of the Company is required or allowed, such
determination shall be made by a majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding
upon the Company and the Holder of this Debenture.
<PAGE> 10
8%/10% Subordinated Convertible Debenture
Page 10
ARTICLE 13. Governing Law
The validity, terms, performance and enforcement of this Debenture
shall be governed and construed by the provisions hereof and in accordance with
the laws of the State of New York applicable to agreements that are negotiated,
executed, delivered and performed solely in the State of New York.
IN WITNESS WHEREOF, the Company has duly executed this Debenture as of
the date first written above.
COMFORCE Corporation
By /s/ Andrew Reiben
------------------
Name: Andrew Reiben
Title: Chief Accounting Officer
<PAGE> 11
8%/10% Subordinated Convertible Debenture
Page 11
NOTICE OF CONVERSION
[To be completed and signed only upon conversion of Debenture]
The
undersigned, the Holder of this Debenture, hereby irrevocably elects to
exercise the right to convert it into common stock, par value $___ per share,
of COMFORCE Corporation as follows:
[Complete if less than ______________________Dollars ($__________)*___
all of principal amount ($10,000 or integral multiples of $10,000)
is to be converted]
[Signature must be _______________________________________________
guaranteed if registered (Name of Holder of shares if different than
holder of stock differs from registered Holder of Debenture)
registered Holder of
Debenture)
_______________________________________________
(Address of Holder if different than address of
registered Holder of Debenture)
_______________________________________________
(Social Security or EIN of Holder of shares if
different than Holder of Debenture)
*If the principal amount of the Debenture to be converted is less than
the entire principal amount thereof, a new Debenture for the balance
of the principal amount shall be returned to the Holder of the
Debenture.
Date:________________ Sign:__________________________________________
(Signature must conform in all respects
to name of Holder shown on face of this
Debenture)
Signature Guaranteed:
<PAGE> 12
8%/10% Subordinated Convertible Debenture
Page 12
Assignment of Debenture
The undersigned hereby sell(s) and assign(s) and transfer(s) unto
__________________________________________________________________________
(name, address and SSN or EIN of assignee)
__________________________________________________Dollars ($_________)____
(principal amount of Debenture, $10,000 or integral multiples of $10,000)
of principal amount of this Debenture together with all accrued interest hereon.
Date:________ Sign:__________________________________________
(Signature must conform in all respects to
name of Holder shown on face of Debenture)
Signature Guaranteed:
<PAGE> 13
SCHEDULE OF DIFFERENCES
The Reporting Persons identified below have entered into separate
contracts substantially identical in all material respects to the form filed
herewith. Pursuant to General Instruction 2 to Item 601, the Reporting Persons
hereby file this Schedule of Differences to identify the material details in
which such documents differ from the form filed.
EXHIBIT 99.9 - 8%/10% SUBORDINATED
CONVERTIBLE DEBENTURE DUE FEBRUARY 27, 1998
<TABLE>
<S> <C>
Reporting Person Principal Amount of Debenture
- ---------------- -----------------------------
Infinity Investors Limited $3.0 M
Infinity Emerging Opportunities Limited $1.0 M
Fairway Capital Limited $1.0 M
Global Growth Limited $500,000
</TABLE>
<PAGE> 1
EXHIBIT 99.10
ANNEX I
ANNEX I
TO
SUBSCRIPTION
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of February 25, 1997
(this "Agreement"), is made by and among COMFORCE Corporation, a Delaware
corporation (the "Company"), and the person named on the signature page hereto
(the "Initial Investor").
W I T N E S S E T H :
WHEREAS, in connection with the Private Securities
Subscription Agreement, dated as of February 25, 1997 between the
Initial Investor and the Company (the "Subscription Agreement"), the
Company has agreed, upon the terms and subject to the conditions of
the Subscription Agreement, to issue and sell to the Initial Investor
Convertible Debentures (the "Debentures"), convertible into shares of
Common Stock, $.01 par value (the "Common Stock"), together with
Warrants (referred to herein as "Warrants" and/or "Additional
Warrants"), which are exercisable for the purchase of shares of common
stock of the Company (the "Common Stock"). The shares of Common Stock
into which the Debentures, Warrants and Additional Warrants are
exercisable to purchase are collectively referred to herein as the
"Shares"); and
WHEREAS, to induce the Initial Investor to execute and
deliver the Subscription Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the "Securities Act"), and applicable
state securities laws with respect to the Shares;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Initial Investor hereby agree as
follows:
<PAGE> 2
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 2
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall
have the following meanings:
(i) "Investor" means the Initial Investor and any transferee
or assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
(ii) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement
or Statements in compliance with the Securities Act on such
appropriate registration form promulgated by the Commission as shall
be selected by the Company, and, when requested by the Initial
Investor or any Investor pursuant to Section 2(c) hereof, shall (A) be
reasonably acceptable to the holders of a majority of the Registrable
Securities to which such registration relates, and (B) shall permit
the disposition of Registrable Securities in accordance with the
intended method or methods specified in the Investor's request for
such registration, and the declaration or ordering of effectiveness of
such Registration Statement by the United States Securities and
Exchange Commission ("SEC").
(iii) "Registrable Securities" means the Shares.
(iv) "Registration Statement" means a registration
statement under the Securities Act registering securities of the
Company.
(b) As used in this Agreement, the term Investor includes (i)
each Investor (as defined above) and (ii) each person who is a
permitted transferee or assignee of the Registrable Securities
pursuant to Section 9 of this Agreement.
(c) Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the
Subscription Agreement.
2. REGISTRATION.
(a) INITIAL REGISTRATION. The Company must register the
Shares underlying the Debentures, the Warrants and the Additional
Warrants for resale with the U.S. Securities and Exchange Commission
("SEC"), and the registration statement therefor (the "Registration
Statement") must be declared effective by the SEC on or before the day
prior to the six-month (180-day) anniversary of Closing (the "Required
Effective Date"). In the event the Registration Statement has not been
declared effective by the Required Effective Date (such situation
referred to herein as "Late Registration"), the Company shall pay to
the Investor cash equal to 1% of the aggregate subscription price paid
by the Investor
<PAGE> 3
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 3
pursuant to the Subscription Agreement for the first month and 2% of
such aggregate subscription price per month thereafter (the
"Penalties") until the Registration Statement is declared effective.
The Penalties for the first month shall be paid by the Company within
two (2) business days of the end of the 30-day period following the
Required Effective Date. Payment of the Penalties shall continue on
the same date of each month thereafter until the Registration
Statement has been declared effective and the Company has so advised
the Investor. Penalties accruing for a period of less than one month
shall be prorated on a daily basis. Provided that the Company has
reasonably used its best efforts to have the Registration Statement
declared effective by the SEC prior to the Required Effective Date,
the Investor shall have no other remedy for damages which occur solely
as a result of Late Registration for the period between Closing and
the nine-month anniversary of Closing. Thereafter, the Investor shall
be free to bring any action allowable in law or in equity against the
Company as a result of Late Registration, for damages occurring on or
after the nine-month anniversary of Closing.
(b) PIGGY-BACK REGISTRATIONS. If the Registration Statement
has not been declared effective within nine (9) months following
Closing and the Company thereafter prepares and files with the SEC a
Registration Statement relating to an offering for its own account or
the account of others under the Securities Act any of its equity
securities, other than on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to each Investor, who is
entitled to registration rights under this Section 2(b) written notice
of such determination and, if within twenty (20) days after receipt of
such notice, such Investor shall so request in writing, the Company
shall include in such Registration Statement all or any part of the
Registrable Securities such Investor requests to be registered, except
that if, in connection with any underwritten public offering for the
account of the Company the managing underwriter(s) thereof shall
impose a limitation on the number of shares of Common Stock which may
be included in the Registration Statement because, in such
underwriter(s)' judgment, such limitation is necessary to effect an
orderly public distribution, then the Company shall be obligated to
include in such Registration Statement only such limited portion, if
any, of the Registrable Securities with respect to which such Investor
has requested inclusion hereunder. Any exclusion of Registrable
Securities shall be made pro rata among the Investors seeking to
include Registrable Securities, in proportion to the number of
Registrable Securities sought to be included by such Investors;
provided, however, that the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding
securities the holders of which are not entitled by right to inclusion
of securities in such Registration Statement; and provided, further,
however, that, after
<PAGE> 4
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 4
giving effect to the immediately preceding proviso, any exclusion of
Registrable Securities shall be made pro rata with holders of other
securities having the right to include such securities in the
Registration Statement to the extent such pro rata allotment is
permitted under the Company's currently existing agreements with such
holders of the Company's securities. No right to registration of
Registrable Securities under this Section 2(b) shall be construed to
limit any registration required under Section 2(c) hereof. The
obligations of the Company under this Section 2(b) may be waived by
Investors holding a majority in interest of the Registrable Securities
and shall expire (i) after the Company has afforded the opportunity
for the Investors to exercise registration rights under this Section
2(b) for two registrations; provided, however, that any Investor who
shall have had any Registrable Securities excluded from any
Registration Statement in accordance with this Section 2(b) shall be
entitled to include in an additional Registration Statement filed by
the Company the Registrable Securities so excluded or (ii) when all of
the Registrable Securities held by any Investor may be sold by such
Investor under Rule 144 under the Securities Act ("Rule 144") within
any three-month period.
(c) DEMAND REGISTRATION. If the Registration Statement has
not been declared effective within nine (9) months following Closing,
any Investor holding a majority of the Registrable Securities shall
notify the Company in writing that it intends to offer or cause to be
offered for public sale Registrable Securities held by such Investor,
the Company shall cause such of the Registrable Securities as may be
requested by any Investor to be registered, on one occasion only,
under the Securities Act and applicable state laws as expeditiously as
possible. Once the right for registration of any Registrable
Securities under this Section 2(c) has been exercised by any Investor,
the Company shall prepare and file a Registration Statement covering
such Registrable Securities with the SEC within seven (7) days of the
exercise of such registration right.
(d) If any offering pursuant to a Registration Statement
pursuant to Section 2(c) hereof involves (at the Company's election)
an underwritten offering, the Investors who hold a majority in
interest of the Registrable Securities subject to such underwritten
offering shall have the right to select one legal counsel and an
investment banker or bankers and manager or managers to administer the
offering, which investment banker or bankers or manager or managers
shall be reasonably satisfactory to the Company. The Investors who
hold the Registrable Securities to be included in such underwriting
shall pay all underwriting discounts and commissions and other fees
and expenses of such investment banker or bankers and manager or
managers so selected in accordance with this Section 2(d) (other than
fees and expenses relating to registration of Registrable Securities
under federal or state securities laws which are payable by the
Company pursuant to Section 5 hereof) with respect to their
<PAGE> 5
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 5
Registrable Securities and the fees and expenses of such legal counsel
selected by the Investors.
3. OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall:
(a) prepare promptly and file with the SEC promptly (but in
no event later than 7 days) after a request in accordance with Section
2(c) hereof a Registration Statement or Statements with respect to all
Registrable Securities to be included therein, and thereafter use its
reasonable best efforts to cause the Registration Statement to become
effective as soon as reasonably possible after such filing. If such
Registration Statement is filed pursuant to Rule 415, the Company
shall keep the Registration Statement effective pursuant to Rule 415
at all times until such date as is three years after the date such
Registration Statement is first ordered effective by the SEC. In any
case, the Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) filed by the
Company shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided,
however, that, subject to the conditions set forth in Section 4(a)
below, each Investor may notify the Company in writing that it wishes
to exclude all or a portion of its Registrable Securities from such
Registration Statement; provided further, however, that if at any time
the Investors shall be entitled to sell all Registrable Securities
held by them pursuant to Rule 144 promulgated under the Securities Act
or any other similar rule or regulation of the SEC that may at any
time permit the Investors to sell securities of the Company to the
public without registration and without imposing restrictions arising
under the federal securities laws on the purchases thereof in a period
of three consecutive months, then the Company shall, so long as it
meets the current public information requirements of Rule 144,
thereafter no longer be required to maintain the registration of
Registrable Securities pursuant to this Agreement;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration
Statement as may be necessary to keep the Registration Statement
effective at all times until such date as is three years after the
date such Registration Statement is first ordered effective by the
SEC, and, during such period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement until
such time as all of such Registrable Securities have been disposed of
in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in the Registration Statement;
<PAGE> 6
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 6
(c) furnish to each Investor whose Registrable Securities are
included in the Registration Statement, such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as such Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor;
(d) use reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under
such other securities or blue sky laws of such jurisdictions as the
Investors who hold a majority in interest of the Registrable
Securities being offered reasonably request, (ii) prepare and file in
those jurisdictions such amendments (including post-effective
amendments) and supplements, (iii) take such other actions as may be
necessary to maintain such registrations and qualifications in effect
at all times until such date as is the earlier of three years after
the date such Registration Statement is first ordered effective by the
SEC or is three years after the Initial Investor acquired the Shares
and (iv) take all other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (I) qualify to do
business in any jurisdiction where it would not otherwise be required
to qualify but for this Section 3(d), (II) subject itself to general
taxation in any such jurisdiction, (III) file a general consent to
service of process in any such jurisdiction, (IV) provide any
undertakings that cause more than nominal expense or burden to the
Company or (V) make any change in its charter or by-laws, which in
each case the Board of Directors of the Company determines to be
contrary to the best interests of the Company and its stockholders;
(e) with regard to a demand registration pursuant to Section
2(c) hereof, in the event Investors who hold a majority in interest of
the Registrable Securities being offered in the offering select
underwriters for the offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such
offering;
(f) as promptly as practicable after becoming aware of such
event, notify each Investor who holds Registrable Securities being
sold pursuant to such registration of the happening of any event of
which the Company has knowledge, as a result of which the prospectus
included in the Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement to correct such untrue
statement or
<PAGE> 7
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 7
omission, and deliver a number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request;
(g) as promptly as practicable after becoming aware of such
event, notify each Investor who holds Registrable Securities being
sold pursuant to such registration (or, in the event of an
underwritten offering pursuant to Section 2(c) hereof, the managing
underwriters) of the issuance by the SEC of any stop order or other
suspension of effectiveness of the Registration Statement at the
earliest possible time;
(h) permit a single firm of counsel designated as selling
stockholders' counsel by the Investors who hold a majority in interest
of the Registrable Securities being sold pursuant to such registration
to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing
with the SEC, and shall not file any document in a form to which such
counsel reasonably objects;
(i) make generally available to its security holders as soon
as practical, but not later than ninety (90) days after the close of
the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Securities Act) covering a
twelve-month period beginning not later than the first day of the
Company's fiscal quarter next following the date of the Registration
Statement;
(j) with regard to a demand registration pursuant to Section
2(c) hereof, at the request of the Investors who hold a majority in
interest of the Registrable Securities being sold pursuant to such
registration, furnish on the date that Registrable Securities are
delivered to an underwriter for sale in connection with the
Registration Statement (i) a letter, dated such date, from the
Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters; and (ii) an opinion, dated such date,
from counsel representing the Company for purposes of such
Registration Statement, in form and substance as is customarily given
in an underwritten public offering, addressed to the underwriters and
Investors;
(k) make available for inspection by any Investor whose
Registrable Securities are being sold pursuant to such registration,
any underwriter participating in any disposition pursuant to the
Registration Statement, and any attorney, accountant or other agent
retained by any such Investor or underwriter (collectively, the
"Inspectors"), all pertinent financial and other records, pertinent
corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably necessary to enable each Inspector
to exercise its due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information which any
Inspector may reasonably
<PAGE> 8
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 8
request for purposes of such due diligence; provided, however, that
each Inspector shall hold in confidence and shall not make any
disclosure (except to an Investor) of any Record or other information
which the Company determines in good faith to be confidential, and of
which determination the Inspectors are so notified, unless (i) the
disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other
order from a court or government body of competent jurisdiction or
(iii) the information in such Records has been made generally
available to the public other than by disclosure in violation of this
or any other agreement. The Company shall not be required to disclose
any confidential information in such Records to any Inspector until
and unless such Inspector shall have entered into confidentiality
agreements (in form and substance satisfactory to the Company) with
the Company with respect thereto, substantially in the form of this
Section 3(k). Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. The Company
shall hold in confidence and shall not make any disclosure of
information concerning an Investor provided to the Company pursuant to
Section 4(e) hereof unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii) the
disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other
order from a court or governmental body of competent jurisdiction or
(iv) such information has been made generally available to the public
other than by disclosure in violation of this or any other agreement.
The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means,
give prompt notice to such Investor, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, such information;
(l) use its best efforts either to (i) cause all the
Registrable Securities covered by the Registration Statement to be
listed on a national securities exchange and on each additional
national securities exchange on which similar securities issued by the
Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or (ii)
secure designation of all the Registrable Securities covered by the
Registration Statement as a National Association of Securities Dealers
Automated Quotations System ("Nasdaq") "national market system
security" within the meaning of Rule 11Aa2-1 of the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the quotation of the Registrable Securities on the Nasdaq National
Market System or, if, despite the Company's best efforts to satisfy
the
<PAGE> 9
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 9
preceding clause (i) or (ii), the Company is unsuccessful in
satisfying the preceding clause (i) or (ii), to secure listing on a
national securities exchange or Nasdaq authorization and quotation for
such Registrable Securities and, without limiting the generality of
the foregoing, to arrange for at least two market makers to register
with the National Association of Securities Dealers, Inc. ("NASD") as
such with respect to such Registrable Securities;
(m) provide a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later
than the effective date of the Registration Statement;
(n) cooperate with the Investors who hold Registrable
Securities being sold and the managing underwriter or underwriters, if
any, to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legends) representing Registrable
Securities to be sold pursuant to the denominations or amounts as the
case may be, and registered in such names as the managing underwriter
or underwriters, if any, or the Investors may reasonably request; and,
within five business days after a Registration Statement which
includes Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel selected by the
Company to deliver, to the transfer agent for the Registrable
Securities (with copies to the Investors whose Registrable Securities
are included in such Registration Statement) instructions to the
transfer agent to issue new stock certificates without a legend and an
opinion of such counsel that the shares have been registered; and
(o) take all other reasonable actions necessary to
expedite and facilitate disposition by the Investor of the Registrable
Securities pursuant to the Registration Statement;
4. OBLIGATIONS OF THE INVESTORS. In connection with
the registration of the Registrable Securities, the Investors shall
have the following obligations:
(a) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Agreement with respect
to each Investor that such Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities
held by it as shall be reasonably required to effect the registration
of the Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably
request. At least fifteen (15) days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify
each Investor of the information the Company requires from each such
Investor (the "Requested Information") if such Investor elects to have
any of such Investor's Registrable Securities included in
<PAGE> 10
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 10
the Registration Statement. If within five (5) business days prior to
the filing date the Company has not received the Requested Information
from an Investor (a "Non-Responsive Investor"), then the Company may
file the Registration Statement without including Registrable
Securities of such Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from
the Registration Statement;
(c) With regard to a demand registration pursuant to Section
2(c) hereof, in the event Investors holding a majority in interest of
the Registrable Securities being registered determine to engage the
services of an underwriter, each Investor agrees to enter into and
perform such Investor's obligations under an underwriting agreement,
in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement;
(d) Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described
in Section 3(f) or 3(g) or that the Board of Directors of the Company
has determined, in its good faith reasonable judgment, that the
disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities would materially
interfere with, or require the premature disclosure of, any financing,
acquisition or reorganization involving the Company or any of its
subsidiaries, or otherwise would require premature disclosure of any
other material nonpublic information as to which the Company has a
good faith, bona fide business purpose for maintaining its
confidentiality (the "Board of Directors Determination"), such
Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 3(f) or
3(g) and, if so directed by the Company, such Investor shall deliver
to the Company (at the expense of the Company) or destroy (and deliver
to the Company a certificate of destruction) all copies in such
Investor's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice; provided,
however, that any restriction on trading resulting from a Board of
Directors Determination shall be limited to a maximum of thirty (30)
<PAGE> 11
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 11
days, and, further, that the Company shall provide the Investors with
written notice regarding any restriction on trading pursuant to this
paragraph within two business days of the Company's determination of
such restriction;
(e) No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder
to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions and other fees and
expenses of investment bankers and any manager or managers of such
underwriting and legal expenses of the underwriter applicable with
respect to its Registrable Securities, in each case to the extent not
payable by the Company pursuant to the terms of this Agreement.
5. EXPENSES OF REGISTRATION. All expenses (other than
underwriting discounts and commissions and other fees and expenses of
investment bankers and other than brokerage commissions) incurred in
connection with registrations, filings or qualifications pursuant to
Section 3, including, without limitation, all registration, listing
and qualifications fees, printers and accounting fees and the fees and
disbursements of counsel for the Company, shall be borne by the
Company; provided, however, that the Investors shall bear the fees and
out-of-pocket expenses of the one legal counsel selected by the
Investors pursuant to Section 3(h) hereof.
6. INDEMNIFICATION. In the event any Registrable Securities
are included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Investor who holds such Registrable
Securities, the directors, if any, of such Investor, the officers, if
any, of such Investor, each person, if any, who controls any Investor
within the meaning of the Securities Act or the Exchange Act, any
underwriter (as defined in the Securities Act) for the Investors, the
directors, if any, of such underwriter and the officers, if any, of
such underwriter, and each person, if any, who controls any such
underwriter within the meaning of the Securities Act or the Exchange
Act (each, an "Indemnified Person"), against any losses, claims,
damages, expenses or liabilities (joint or several) (collectively
"Claims") to which any of them become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such Claims (or actions
or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any of the following statements,
omissions or violations in the Registration Statement, or any
post-effective
<PAGE> 12
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 12
amendment thereof, or any prospectus included therein: (i) any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof or
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus
if used prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if the
Company files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not
misleading or (iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act or any state securities law or
any rule or regulation (the matters in the foregoing clauses (i)
through (iv) being, collectively, "Violations"). Subject to the
restrictions set forth in Section 6 (d) with respect to the number of
legal counsel, the Company shall reimburse the Investors and each such
underwriter or controlling person, promptly as such expenses are
incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating
or defending any such Claim. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this
Section 6(a) (I) shall not apply to a Claim arising out of or based
upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any Indemnified
Person or underwriter for such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus was
timely made available by the Company pursuant to Section 3(c) hereof;
(II) with respect to any preliminary prospectus shall not inure to the
benefit of any such person from whom the person asserting any such
Claim purchased the Registrable Securities that are the subject
thereof (or to the benefit of any person controlling such person) if
the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then
amended or supplemented, if such prospectus was timely made available
by the Company pursuant to Section 3(c) hereof; and (III) shall not
apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld. Such indemnity shall
remain in full force and effect regardless of any investigation made
by or on behalf of the Indemnified Persons and shall survive the
transfer of the Registrable Securities by the Investors pursuant to
Section 9.
(b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify and
hold harmless, to the same extent and in the same manner set forth in
Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement,
<PAGE> 13
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 13
each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act, any underwriter and any other
stockholder selling securities pursuant to the Registration Statement
or any of its directors or officers or any person who controls such
stockholder or underwriter within the meaning of the Securities Act or
the Exchange Act (collectively and together with an Indemnified
Person, an "Indemnified Party"), against any Claim to which any of
them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that
such Violation occurs (i) in reliance upon and in conformity with
written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement or
(ii) the Investor's violation of Rules 10-b-6 or 10-b-7 under the
Exchange Act; and such Investor will promptly reimburse any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent
shall not be unreasonably withheld; provided, further, however, that
the Investor shall be liable under this Section 6(b) for only that
amount of a Claim as does not exceed the net proceeds to such Investor
as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented.
(c) The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution, to the same
extent as provided above, with respect to information such persons so
furnished in writing by such persons expressly for inclusion in the
Registration Statement.
(d) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement
of any action (including any governmental action), such Indemnified
Person or Indemnified Party shall, if a Claim in respect thereof is to
made against any indemnifying party under this Section 6, deliver to
the indemnifying party a written notice of the commencement thereof
and this indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume control of the
defense
<PAGE> 14
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 14
thereof with counsel mutually satisfactory to the indemnifying
parties; provided, however, that an Indemnified Person or Indemnified
Party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and other party represented by
such counsel in such proceeding. The Company shall pay for only one
separate legal counsel for the Investors; such legal counsel shall be
selected by the Investors holding a majority in interest of the
Registrable Securities. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability
to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its
ability to defend such action. The indemnification required by this
Section 6 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
7. CONTRIBUTION. To the extent any indemnification provided
for herein is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts
for which it would otherwise be liable under Section 6 to the fullest
extent permitted by law; provided, however, that (a) no contribution
shall be made under circumstances where the maker would not have been
liable for indemnification under the fault standards set forth in
Section 6, (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation and (c) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making
available to the Investors the benefits of Rule 144 or any other
similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without
registration, until such time as the Investors have sold all the
Registrable Securities pursuant to a Registration Statement or Rule
144, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
<PAGE> 15
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 15
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and
the Exchange Act; and
(c) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the
most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company and (iii) such other
information as may be reasonably requested to permit the Investors to
sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have
the Company register Registrable Securities pursuant to this Agreement
shall be automatically assigned by the Investors to transferees or
assignees of all or any portion of such securities only if: (a) the
Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (i) the name and address
of such transferee or assignee and (ii) the securities with respect to
which such registration rights are being transferred or assigned, (b)
immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities
laws, and (c) at or before the time the Company received the written
notice contemplated by clause (a) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the
provisions contained herein.
10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and
Investors who hold a majority in interest of the Registrable
Securities. Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor and the Company.
11. THIRD PARTY BENEFICIARY. The parties acknowledge and
agree that Shoreline Pacific, the Institutional Division of Financial
West Group ("Shoreline Pacific"), shall be deemed a third party
beneficiary of the Company's agreements and representations set forth
in this Agreement, entitled to enforce the terms thereof, and to
indemnification for any damages resulting to Shoreline Pacific from
any actual or threatened breach thereof by the Company, both in
Shoreline Pacific's personal capacity and, should Shoreline Pacific so
elect, on behalf of the Investor.
12. MISCELLANEOUS.
<PAGE> 16
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 16
(a) A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record
such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the Company
shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
(b) Notices required or permitted to be given hereunder shall
be in writing and shall be deemed to be sufficiently given when
personally delivered or when sent by registered mail, return receipt
requested, addressed (i) if to the Company, to COMFORCE Corporation,
2001 Marcus Avenue, Lake Success, New York, 11042, Attention: Paul
Grillo, CFO; (ii) if to the Initial Investor, at the address set forth
under its name in the Subscription Agreement; and (iii) if to any
other Investor, at such address as such Investor shall have provided
in writing to the Company, or at such other address as each such party
furnishes by notice given in accordance with this Section 12(b), and
shall be effective, when personally delivered, upon receipt; when
delivered by facsimile transmission, upon receipt of confirmation of
transmission; and, when sent by certified mail, four business days
after deposit with the United States Postal Service.
(c) Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising
such right or remedy, shall not operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and
construed in accordance with the laws of the State of New York
applicable to the agreements made and to be performed entirely within
such state, without giving effect to rules governing the conflict of
laws. In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any provision hereof which may prove invalid
or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
(e) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to
the subject matter hereof.
(f) Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
<PAGE> 17
COMFORCE Corporation/Global Growth Limited Registration Rights Agreement
February 25, 1997 Page 17
(g) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may
require.
(h) The headings in the Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
(i) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement,
once executed by a party, may be delivered to the other party hereto
by telephone line facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly
authorized as of day and year first above written.
COMFORCE CORPORATION
By /s/ Andrew Reiben
------------------------------
Andrew Reiben
Chief Accounting Officer
GLOBAL GROWTH LIMITED
By /s/ James E. Martin
------------------------------
James E. Martin
Director
