As filed with the Securities and Exchange Commission on December 24, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under The Securities Act of 1933
COMFORCE Corporation
(Exact name of registrant as specified in its charter)
Delaware 7361 36-2262248
(State or other (Primary Standard (I.R.S Employer
jurisdiction of Industrial Classification Identification No.)
incorporation Code Number)
or organization)
----------
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, New York 11042
(516) 328-7300
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------
Christopher P. Franco
Chief Executive Officer
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, New York 11042
(516) 328-7300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------
Copy to:
David G. Edwards, Esquire
Doepken Keevican & Weiss Professional Corporation
58th Floor, USX Tower
600 Grant Street
Pittsburgh, Pennsylvania 15219-2703
(412) 355-2600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------
<PAGE>
(Cover page continued)
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement as
determined by market conditions and other factors.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ X ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Title of Each Class of Amount to be Proposed Maximum Offering Proposed Maximum Amount of
Securities to be Registered(1) Price Per Share (2) Aggregate Offering Registration Fee
Registered Price (2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 169,000 $7.3125 $ 1,235,813 $ 365
=========================================================================================================================
</TABLE>
(1) Includes certain shares of common stock (the "Common Stock"), of COMFORCE
Corporation ("COMFORCE" or the "Company") issuable upon the exercise of the
Company's warrants to purchase Common Stock.
(2) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c), the offering price and registration fee are
computed on the basis of the average of the high and low prices of the
Company's shares of Common Stock traded on the American Stock Exchange on
December 19, 1997.
THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION DATED DECEMBER 24, 1997
PROSPECTUS
169,000 Shares
COMFORCE Corporation
COMMON STOCK
COMFORCE Corporation, a Delaware corporation (the "Company" or "COMFORCE")
is a provider of staffing, consulting and outsourcing solutions that address the
high technology needs of businesses.
All of the 169,000 shares of common stock ("Common Stock") of COMFORCE
offered hereby are being offered for sale, from time to time by or for the
account of certain existing security holders of the Company ("Selling
Stockholders"). See "Selling Stockholders." The Common Stock is listed on the
American Stock Exchange. The Selling Stockholders have indicated that they
propose from time to time to offer their shares, if any, for sale in regular way
brokerage transactions on the American Stock Exchange or in privately negotiated
transactions, and that sales on or through the facilities of the American Stock
Exchange will be effected at such prices as may be obtainable and are
satisfactory to the respective Selling Stockholders.
In certain cases the Selling Stockholders, brokers executing sales orders
on their behalf and dealers purchasing shares from the Selling Stockholders for
resale may be deemed to be "underwriters," as that term is defined in Section
2(11) of the Securities Act of 1933, as amended (the "Securities Act"), and any
commissions received by them and any profit on the resale of Common Stock
purchased by them may be deemed underwriting commissions or discounts under the
Securities Act.
The Company will not receive any proceeds from sales of shares to which
this Prospectus relates. However, in that all of the shares of Common Stock to
which this Propspectus relates are issuable upon the exercise of warrants held
by Selling Stockholders, the Company will receive the amount of the exercise
prices of any warrants exercised. The Company cannot predict when or if it will
receive proceeds from the exercise of warrants, or the amount of any such
proceeds.
SEE "RISK FACTORS" ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
On December 19, 1997, the closing price of the Common Stock on the American
Stock Exchange was $7-3/8 per share. The Company will bear certain of the
expenses of this offering, estimated to be $20,000.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ______________________, 1998.
<PAGE>
TABLE OF CONTENTS
Page
Available Information ..................................................... 2
Incorporation of Certain Documents ........................................ 3
Risk Factors............................................................... 4
The Company................................................................ 9
Use of Proceeds............................................................ 10
Selling Stockholders....................................................... 10
Description of Capital Stock............................................... 11
Plan of Distribution....................................................... 12
Legal Matters.............................................................. 13
Experts.................................................................... 13
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), in Washington, D.C., a Registration Statement on Form S-3,
together with all amendments and exhibits thereto (the "Registration Statement")
under the Securities Act, with respect to the Common Stock offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the Rules and
Regulations of the Commission. Statements made in the Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete; with respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference. The
Registration Statement, including exhibits and schedules filed therewith, may be
inspected at the Commission's Public Reference Section, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the regional offices of the Commission
located at 7 World Trade Center, 13th Floor, New York, New York 10048 and Suite
1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of such material
may be obtained upon written request from the Public Reference Section of the
Commission at the address set forth above upon payment of prescribed fees. The
Commission also maintains a Web site at "http://www.sec.gov" which contains
reports, proxy statements and other information regarding registrants that file
electronically with the Commission.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports, proxy statements
and other information with the Commission. Such reports, proxy statements and
other information may be inspected at the Public Reference Section of the
Commission or the Commission's regional offices at the addresses set forth above
or accessed through the Commission's Web site identified above, and copies of
such material may be obtained upon written request from the Public Reference
Section of the Commission upon payment of prescribed fees.
The Common Stock of the Company is listed on the American Stock Exchange
and such reports, proxy material and other information are also available for
inspection at the American Stock Exchange, 86 Trinity Place, New York, New York
10006.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
1-06081) pursuant to the Exchange Act are incorporated by reference in this
Prospectus:
1. Annual Report on Form 10-K for the Year ended December 31, 1996.
2. Amendment No. 1 to Annual Report on Form 10-K/A for the Year ended
December 31, 1996.
3. Amendment No. 1 to Current Report on Form 8-K/A dated January 13,
1997, amending original Current Report on Form 8-K filed November 8,
1996.
4. Amendment No. 1 to Current Report on Form 8-K/A dated January 13,
1997, amending original Current Report on Form 8-K filed November 19,
1996.
5. Amendment No. 2 to Current Report on Form 8-K/A dated January 13,
1997, amending original Current Report on Form 8-K filed September 3,
1996.
6. Amendment No. 2 to Current Report on Form 8-K/A dated February 4,
1997, amending original Current Report on Form 8-K filed November 8,
1996.
7. Amendment No. 2 to Current Report on Form 8-K/A dated February 4,
1997, amending original Current Report on Form 8-K filed November 19,
1996.
8. Amendment No. 3 to Current Report on Form 8-K/A dated February 3,
1997, amending original Current Report on Form 8-K filed May 23, 1996.
9. Current Report on Form 8-K dated March 14, 1997 and Amendment No. 1 to
Current Report on Form 8-K/A dated April 14, 1997.
10. Current Report on Form 8-K dated July 10, 1997 and Amendment No. 1 to
Current Report on Form 8-K/A dated July 11, 1997.
11. Current Report on Form 8-K dated August 20, 1997.
12. Current Report on Form 8-K dated October 28, 1997.
13. Current Report on Form 8-K dated December 9, 1997.
14. Quarterly Report on Form 10-Q for the quarter ended March 31, 1997.
15. Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.
16. Quarterly Report on Form 10-Q for the quarter ended September 30,
1997.
17. The description of the Company's Common Stock included in the
Registration Statement on Form 8-A filed October 10, 1985, as amended
by Amendment No. 1 thereto on Form 8-A/A dated July 25, 1997.
Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock pursuant hereto shall be
deemed to be incorporated by reference in this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained in this Prospectus or in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained in this Prospectus, or in any subsequently
filed document that also is or is deemed to be incorporated by reference in this
Prospectus, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of any
or all of the documents which are incorporated herein by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Requests for such copies should be directed
to COMFORCE Corporation, 2001 Marcus Road, Lake Success, New York 11042 to the
attention of Linda Connolly, telephone (516) 328-7300.
3
<PAGE>
RISK FACTORS
Prospective purchasers of the Common Stock offered hereby should consider
carefully the factors set forth below, as well as other information contained in
this Prospectus, before making a decision to purchase the Common Stock offered
hereby. This Prospectus contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those projected or suggested in any
forward-looking statement. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below as well as
those discussed elsewhere in this Prospectus.
Effect of Fluctuations in the General Economy
Demand for staffing and consulting services is significantly affected by
the general level of economic activity in the country. Companies use staffing
and consulting services to manage personnel costs and changes in staffing needs,
in part due to business fluctuations. When economic activity increases,
employees from staffing and consulting companies are often added before
full-time employees are hired. During such times, there is intense competition
among staffing and consulting companies for qualified personnel for placement.
As economic activity slows, many companies reduce their usage of employees from
staffing and consulting companies before undertaking layoffs of their regular
employees, and the Company may experience more competitive pricing pressure
during such periods of economic downturn. As a result, any significant economic
downturn could have a material adverse effect on the Company's business,
financial condition and results of operations. Similarly, there can be no
assurance that during periods of increased economic activity and higher general
employment levels the Company will be able to recruit and retain sufficient
personnel to meet the needs of its clients.
Absence of Combined Operating History; Potential Inability to Integrate Acquired
Businesses
The Company's contingent staffing and consulting business has been
developed principally through the acquisition of established staffing and
consulting businesses, all of which have been acquired since October 1995. Prior
to their acquisition by the Company, each of these acquired companies operated
as a separate independent entity. The Company has not experienced any
significant difficulties to date in integrating the operations of its acquired
companies. However, the acquisitions in February 1997 of RHO Company,
Incorporated ("Rhotech") and in November 1997 of Uniforce Services, Inc.
("Uniforce") has resulted in a significant increase in the size of COMFORCE. The
significant increase in size, on the basis of net sales, number and location of
offices and nature of operations, may result in more complex problems in
integrating the operations of these entities than the Company has faced with
previous acquisitions. The Company's officers have had limited experience in
managing companies as large and as rapidly growing as the Company. The Company's
strategy of continuing its growth and expansion will place additional demands
upon the Company's current management and will require additional information
systems and management, operational and other financial resources. There can be
no assurance that the Company's management group will be able to adequately
manage the combined entity and effectively implement the Company's strategy or
effectively integrate the businesses acquired. If the Company is unable to hire
and retain the management personnel needed to manage its existing and future
acquired businesses, if such personnel are unable to achieve anticipated
performance levels or if the Company is unable to implement effective controls,
the Company's business, financial condition and results of operations could be
materially adversely affected.
Risks Associated with Rationalization of Operations
The Company intends to improve its financial results through the
rationalization of operations. In connection with the acquisition of Uniforce,
the Company expects to reduce operating expenses through the consolidation of
back office activities, branch system rationalization, personnel-related cost
savings and elimination of costs relating to Uniforce's obligations as a public
company. Although the Company believes that its strategies are reasonable, there
can be no assurance that it will be able to implement its plans without delay or
that it will not encounter unanticipated problems in connection with the
rationalization of operations or that, when implemented, its efforts will result
in the reduction of operating expenses that is currently anticipated. The
Company's plans will require substantial attention
4
<PAGE>
from members of the Company's management, which will limit the amount of time
such members have available to devote to the Company's day-to-day operations.
Future Capital Needs; Uncertainty of Financing; Potential Dilution
The Company will need to obtain additional financial resources to fund its
strategy of growth through acquisition, geographic expansion and market
development. The Company can give no assurance that (i) additional financing
will be available or, if available, that it will be available on terms
acceptable to the Company, or (ii) the Company's existing capital resources,
including the amounts available for borrowing under the Company's lines of
credit and the Company's cash flow from operations, will either individually or
collectively be sufficient to fund future acquisitions or satisfy the Company's
working capital requirements. There also can be no assurance that the Company or
any of the acquired businesses will generate positive cash flow or that adequate
financing or capital resources will be available as needed or on terms
acceptable to the Company. A lack of available funds may require the Company to
delay, scale back or eliminate all or some of its market development and
acquisition projects and could have a material adverse effect on the Company's
business, financial condition and results of operations.
If additional funds are raised by issuing equity securities, the Company's
stockholders may experience dilution. Further, such equity securities may have
rights, preferences, or privileges senior to those of the Common Stock. To the
extent the Company finances its activities by issuing debt securities, the
Company may become subject to certain financial and other covenants which may
restrict its ability to pursue its strategy of growth through acquisition. There
can be no assurance that adequate equity or debt will be available as needed or
on terms acceptable to the Company. A lack of available funds may require the
Company to delay, scale back or eliminate all or some of its market development
and acquisition projects and could have a material adverse effect on the
Company's business, financial condition and results of operations.
Reliance on Acquisitions for Company Growth and Risks Associated with
Acquisitions
The ability of the Company to achieve growth through acquisition will
depend on a number of factors, including the availability of attractive
acquisition opportunities, the availability of funds needed to complete
acquisitions, the availability of working capital needed to fund the operations
of acquired businesses and the effect of existing and emerging competition on
operations. The Company has consummated eight acquisitions during the period
from October 1995 through November 1997. These acquisitions may not achieve
levels of revenue, profitability or productivity comparable to those of the
Company's existing operations or may not otherwise perform as expected.
Acquisitions also involve special risks, including risks associated with
unanticipated liabilities and contingencies, diversion of management attention
and possible adverse effects on earnings resulting from increased goodwill
amortization, increased interest costs, the issuance of additional securities
and difficulties related to the integration of the acquired business. The
Company is actively seeking additional acquisition opportunities, although the
Company has no agreements, understandings or plans regarding any material
acquisitions at this time. There can be no assurance that the Company will be
able to successfully identify additional suitable acquisition candidates,
complete additional acquisitions or integrate acquired businesses into its
operations.
Impact of Pricing Pressure on Margins
Price competition in the contingent staffing and consulting industry is
intense. Pricing pressure from competitors and customers is increasing. The
trend toward larger customers demanding national contracts with a few preferred
providers of staffing and consulting services has resulted, in many cases, in
competitive bidding and determinations based on price, so that margins on these
contracts may be less than the historical margins for providing these staffers.
In addition, the trend toward national contracts may limit the ability of
staffing and consulting firms to pass on all employee costs to customers.
Finally, large, traditional staffing firms have begun to enter the specialty
staffing and consulting sector, and, as a result, margins may decrease,
particularly for the less highly skilled personnel in this sector. There can be
no assurance that the Company will be able to maintain or increase its current
margins,
5
<PAGE>
the reduction of which could have a material adverse effect on the Company's
financial condition and results of operations, including cash flow.
Liabilities for Customer and Employee Actions
Contingent staffing and consulting firms are in the business of employing
people and placing them in the workplace of other businesses. An attendant risk
of such activity includes possible claims by customers of employee misconduct or
negligence, including claims of discrimination and harassment, as well as claims
relating to employment of illegal aliens and other similar claims. The Company
has policies and guidelines in place to reduce its exposure to these risks.
However, a failure to follow these policies and guidelines may result in
negative publicity and the payment by the Company of money damages or fines.
Although the Company historically has not had any significant problems in this
area, there can be no assurance that the Company will not experience such
problems in the future. The Company is also exposed to liability with respect to
actions taken by its employees while on assignment, such as damages caused by
employee errors, misuse of customer proprietary information or theft of customer
property. Although the Company maintains insurance, due to the nature of the
Company's assignments, in particular its access to customer information systems
and confidential information, and the potential liability with respect thereto,
there can be no assurance that insurance coverage will continue to be available
or that it will be adequate to cover any such liability.
Increases in Unemployment Insurance Premiums and Workers' Compensation Rates
The Company is required to pay unemployment insurance premiums and workers'
compensation benefits for its billable employees. Unemployment insurance
premiums are set annually by the states in which employees perform services and
could increase as a result of, among other things, increased levels of
unemployment and the lengthening of periods for which unemployment benefits are
available. Workers' compensation costs have increased as various states in which
the Company conducts operations have raised levels of compensation and
liberalized allowable claims. The Company may incur costs related to workers'
compensation claims at rates higher than anticipated if higher than anticipated
losses or an increase in the number or the severity of claims is experienced. In
addition, the Company's costs could increase as the result of any future health
care reforms. Certain federal and state legislative proposals have included
provisions extending health insurance benefits to billable employees who do not
presently receive such benefits. There can be no assurance that the Company will
be able to increase the fees charged to its customers in a sufficient amount to
cover increased costs related to workers' compensation, unemployment insurance
and health care reforms or other employment-related regulatory changes. Further,
there can be no assurance that the Company will be able to obtain or renew
workers' compensation insurance coverage in amounts and types desired at
reasonable premium rates.
Potential Impairment of Intangible Assets
More than 50% of the Company's total assets are intangible assets. These
intangible assets substantially represent amounts attributable to goodwill
recorded in connection with the Company's acquisitions and are generally
amortized over a five to forty year period, resulting in significant annual
charges. Various factors could impact the Company's ability to generate the
earnings necessary to support this amortization schedule, including fluctuations
in the economy, the degree and nature of competition, demand for the Company's
services, and the Company's ability to integrate the operations of acquired
businesses, to recruit and place staffing professionals, to expand into new
markets and to maintain gross margins in the face of pricing pressures. The
failure of the Company to generate earnings necessary to support the
amortization charge may result in an impairment of the asset. The resulting
write-off could have a material adverse effect on the Company's business,
financial condition and results of operations.
Dependence on Availability of Qualified Staffing Personnel
The Company depends on its ability to attract, train and retain personnel
who possess the skills and experience necessary to meet the staffing and
consulting requirements of its customers. Competition for individuals
6
<PAGE>
with proven skills in certain areas, particularly information technology and
telecommunications, is intense. The Company competes for such individuals with
other contingent staffing and consulting firms, systems integrators, providers
of outsourcing services, computer systems consultants, customers and personnel
agencies. The Company must continually evaluate, train and upgrade its base of
available personnel to keep pace with changing customers' needs and emerging
technologies. There can be no assurance that qualified personnel will continue
to be available to the Company in sufficient numbers and on economic terms
acceptable to the Company. In addition, although the Company's employment
agreements contain non-compete covenants, there can be no assurance that the
Company can effectively enforce such agreements against its former employees.
Highly Competitive Market
The contingent staffing and consulting industry is highly competitive.
Heightened competition for customers as well as for contingent personnel could
adversely impact the Company's margins. Heightened competition for customers
could result in the Company being unable to maintain its current fee scales
without being able to reduce the personnel costs of its billable employees.
Large, traditional staffing companies have begun to enter the specialty staffing
and consulting sector, and, as a result, margins may decrease, particularly for
the less highly skilled personnel in that sector. Conversely, barriers to entry
to certain types of contingent staffing businesses, particularly the more
traditional sector, are low, and the Company could experience competition from
additional competitors entering the business. Shortages of qualified personnel,
which currently exist in some specialty sectors and could occur in the future,
may result in the Company being unable to fulfill its customers' needs.
Moreover, customers could employ personnel directly (rather than using the
Company's services) to ensure the availability of such personnel. Many of the
Company's competitors have greater marketing, financial and personnel resources
than the Company does and could provide increased competition to the Company.
The Company expects that the level of competition will remain high in the
future, which could have a material adverse effect on the Company's business,
financial condition and results of operations. Additionally, in certain markets
the Company has experienced significant pricing pressure from some of its
competitors.
Dependence on Key Personnel
The Company is highly dependent on its management. The Company's success
depends upon the availability and performance of James L. Paterek, the Chairman
of the Company, Christopher P. Franco, the Chief Executive Officer of the
Company, and Michael Ferrentino, the President of the Company. The loss of
services of any of these key persons could have a material adverse effect upon
the Company. The Company has entered into employment agreements with all of such
individuals which include covenants not to engage in a business similar to that
of the Company for a period of two years after termination of employment for any
reason, as well as customary non-disclosure and employer non-solicitation
provisions. The Company does not maintain key man life insurance on any of these
individuals.
Licensing Risks
The Company derives a portion of its net income from licensed operations in
the Professional Services portion of its Staffing Services division. Licensees
may terminate their agreements, resulting in a loss of revenues. While the
Company's licensing agreements contain non-competition covenants, former
licensees may pay the Company an amount based on a predetermined formula and
thereafter continue the operation of the business independently of the Company
and compete with the Company. The licenses are franchises under federal and
state laws and regulations, and the Company must comply with such federal and
state laws and regulations governing the sale of franchises, and with state laws
concerning the ongoing relationship with licensees (including the termination
and non-renewal of such relationships). The Company is subject to the risk of
litigation with licensees pursuant to such laws or otherwise.
7
<PAGE>
Control by Insiders
Current management of the Company currently controls more than one-quarter
of the Company's outstanding shares of Common Stock. As a result, such persons
are expected to have the ability to significantly influence all issues submitted
to the Company's stockholders including with respect to its management and the
selection of its Board of Directors. Such concentration of ownership could limit
the price that certain investors might be willing to pay in the future for
shares of Common Stock and could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from attempting to
acquire, control of the Company.
Anti-Takeover Provisions
Certain provisions of the Company's Certificate of Incorporation and Bylaws
authorize the issuance of "blank check" Preferred Stock and the establishment of
advance notice requirements for director nominations and actions to be taken at
stockholder meetings. These provisions could discourage or impede a tender
offer, proxy contest or other similar transaction involving control of the
Company, including transactions in which the stockholders might otherwise
receive a premium for their shares over then current market prices and other
transactions that they may deem to be in their best interests. In particular,
the issuance of preferred stock could have an adverse effect on holders of
Common Stock by delaying or preventing a change in control of the Company,
making removal of the present management of the Company more difficult or
resulting in restrictions upon the payment of dividends and other distributions
to the holders of Common Stock. For example, the Company could issue shares of
preferred stock with extraordinary voting rights or liquidation preferences to
make it more difficult for a hostile acquiror to gain control of the Company. In
addition to the anti-takeover effect of the issuance of preferred stock, holders
of preferred stock have a preferred position over holders of Common Stock on
liquidation, the right to a fixed or minimum dividend before any dividend is
paid (or accrued) on Common Stock, and the right to approve certain
extraordinary corporate matters.
No Cash Dividends
The Company anticipates that for the foreseeable future its earnings will
be retained for the operation and expansion of its business and that it will not
pay cash dividends on its Common Stock. In addition, the Company's revolving
credit facility prohibits the payment of cash dividends on the Common Stock
without the consent of the lender.
Historical and Pro Forma Losses
COMFORCE had a net loss for the nine months ended September 30, 1997 of
$1.3 million. On a pro forma basis, the Company had net losses for the year
ended December 31, 1996 and the nine months ended September 30, 1997 of $6.7
million and $7.0 million, respectively. No assurance can be given that the
Company's operations will be profitable in the future. The net loss for the nine
months ended September 30, 1997 included $5.8 million of bridge financing costs
related to certain prior refinancings, which contributed to the loss.
Risks Related to the Loss of Key Customers
As is common in the staffing industry, the Company's engagements to provide
services to its customers are generally non-exclusive, of a short-term nature
and subject to termination by the customer with little or no notice. On a
historical basis, for 1996, sales to one customer accounted for more than 19% of
COMFORCE's revenues, and for 1995, sales to three customers accounted for 17.3%,
12.6% and 10.1% of COMFORCE's revenues. In addition, on a historical basis, in
each of 1995 and 1996, revenues of COMFORCE's 10 largest customers accounted for
more than 50% of COMFORCE's total revenues. On a pro forma basis (taking into
account the Rhotech and Uniforce acquisitions), in 1996, sales to one customer
accounted for 8% of the Company's revenues, and sales to the 10 largest
customers of the Company accounted for more than 30% of its revenues. The loss
of or a material reduction in the
8
<PAGE>
revenues from any of the Company's significant customers could have an adverse
effect on the Company's business, results of operations and financial condition.
Possible Volatility of Stock Price
From time to time, there has been and may continue to be significant
volatility in the market price for the Company's Common Stock. Quarterly
operating results of the Company or of other staffing companies, changes in
general conditions in the economy, the financial markets or the staffing
industry, natural disasters or other developments could cause the market price
of the Company's Common Stock to fluctuate substantially. In addition, in recent
years the stock market has experienced extreme price and volume fluctuations.
This volatility has had a significant effect on the market prices of securities
issued by many companies for reasons unrelated to their operating performance.
THE COMPANY
The Company is a leading provider of specialty staffing, consulting and
outsourcing solutions primarily to Fortune 500 companies for their information
technology ("IT"), telecommunications, scientific and engineering-related needs.
Through its network of 86 offices (55 Company-owned and 31 licensed) located
throughout the United States, the Company recruits and places highly skilled
contingent personnel and outsources payrolling and other financial services for
a broad customer base of over 2,300 companies. The Company's labor force
includes approximately 7,800 billable employees, consisting primarily of
computer programmers, systems consultants and analysts, telecommunications and
other engineers and technicians, scientists and researchers, as well as skilled
office support personnel.
The Company's senior management team of Christopher P. Franco, James L.
Paterek and Michael Ferrentino established COMFORCE in 1995 to capitalize on the
consolidation opportunities in the specialty staffing and consulting industry.
Beginning with the initial acquisition of COMFORCE Telecom in October 1995, this
management team has successfully acquired and integrated eight specialty
staffing companies.
The Company operates through four divisions, as described below:
COMFORCE Information Technologies. The Company's IT division provides
highly skilled programmers, help desk personnel, systems consultants and
analysts, software engineers and project managers for a wide range of technical
assignments, including client server, mainframe, Year 2000, desktop services,
internet/intranet and MIS. The IT division also provides payrolling services in
addition to these staffing solutions to certain of its IT customers. The
Company's principal IT customers include Microsoft Corporation, BellSouth
Telecommunications, Inc., Boeing Information Services, Inc., Eastman Kodak
Company, Tyson Foods, Inc., First Union Corporation, NationsBanc Services, Inc.
and MCI Telecommunications Corporation.
COMFORCE Telecom. The Company's Telecom division provides skilled personnel
to plan, design, engineer, install and maintain wireless and wireline
telecommunications systems, including cellular, PCS, microwave, radio, satellite
and other networks. The Company's staffing and consulting business originated
with this specialty sector, and the Company and several of the companies it has
acquired have long-standing relationships with leading telecommunications
companies. The Telecom division's principal customers include AT&T Corporation,
Northern Telecom, Inc., Harris Corporation, Lucent Technologies, Inc., Reltec
Corporation, ALCATEL Network Systems, Inc., Motorola, Inc., Sprint Corporation
and Omnipoint Corporation.
COMFORCE Staffing Services. The Company's Staffing Services division
operates in two areas, Technical Services and Professional Services. The Company
provides Technical staffing solutions and, in some cases, payrolling services to
a group of technology-intensive clients working in the areas of aerospace,
avionics, electronics, laser and weapons technology, environmental safety and
alternative energy source development. The Company's Technical Services business
is generally conducted through long-term, high-volume contracts that are not
subject to fixed prices
9
<PAGE>
and require low administrative overhead. The Company offers Professional
staffing services through 10 Company-owned and 31 licensed locations that
provide services including medical office staffing solutions, office automation
personnel, customer service/call center personnel and laboratory professionals.
The Staffing Services division's principal Technical Services customers include
The Boeing Company, Westinghouse Electric Corporation, McDonnell Douglas
Corporation and the National Department of Energy National Research Laboratories
at Los Alamos, Sandia and Lawrence Livermore. The Staffing Services division's
Professional Services customers include R.R. Donnelley & Sons Co., Estee Lauder
Companies, Inc. and Dial Corporation, as well as many smaller companies such as
independent medical providers and accounting firms.
COMFORCE Financial Services. The Company's Financial Services division
provides payroll funding services and back office support to approximately 100
independent consulting and staffing companies and provides consulting and
related payrolling services to clients in connection with their use of
independent contractors. The Financial Services division significantly benefits
from Uniforce's sophisticated back office operations.
The Company was incorporated in Illinois in 1954 and became a Delaware
corporation through its merger with a Delaware subsidiary in 1969. It maintains
its headquarters at 2001 Marcus Avenue, Lake Success, New York 11042. The
Company's telephone number is (516) 328-7300.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common Stock
offered hereby by the Selling Stockholders. However, in that all of the shares
of Common Stock to which this Prospectus relates are issuable upon the exercise
of warrants held by Selling Stockholders, the Company will receive the amount of
the exercise prices of any warrants exercised. The Company cannot predict when
or if it will receive proceeds from the exercise of warrants, or the amount of
any such proceeds. The Company intends to use the proceeds, if any, received
from the exercise of warrants for working capital purposes. See "Plan of
Distribution."
SELLING STOCKHOLDERS
All of the warrants are held of record by Cede & Co., as nominee for
Depository Trust Company ("DTC"). The shares of Common Stock offered hereby are
issuable to DTC on behalf of the beneficial owners thereof ("Selling
Stockholders") upon the exercise of the warrants. To the knowledge of the
Company, no Selling Stockholder serves or has served within the past three years
as an officer, director or employee of the Company or any of its subsidiaries.
Because the Selling Stockholders may offer all or some part of the Common Stock
that they hold pursuant to the offering contemplated by this Prospectus, and
because this offering is not being underwritten (on a firm commitment or any
other basis), no estimate can be given as to the amount of Common Stock that
will be held by Selling Stockholders upon termination of this offering.
10
<PAGE>
DESCRIPTION OF CAPITAL STOCK
General
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock having a par value of $.01 per share and 10,000,000 shares of
Preferred Stock, par value $0.01 per share, which may be issued in one or more
series with such rights and preferences as determined by the Board of Directors.
As of December 15, 1997, the Company had issued and outstanding capital stock
consisting of 15,296,350 shares of Common Stock and 500 shares of Series F
Preferred Stock. In addition, as of the date of this Prospectus, there were
options to purchase an additional 2,069,030 shares of Common Stock, at an
average exercise price of $7.64 per share, issued and outstanding, and warrants
to purchase an additional 2,137,794 shares of Common Stock, at an average
exercise price of $7.63 per share, issued and outstanding.
The following summary description of the Company's capital stock does not
purport to be complete and is qualified in its entirety by this reference to the
Company's Certificate of Incorporation and Bylaws.
Common Stock
The holders of the Common Stock are entitled to one vote per share of
record on all matters to be voted upon by stockholders. At a meeting of
stockholders at which a quorum is present, a majority of the votes cast decides
all questions, unless the matter is one upon which a different vote is required
by express provision of law or the Company's Certificate of Incorporation or
Bylaws. Cumulative voting is not permitted with respect to the election of
directors.
The holders of Common Stock have no preemptive rights and have no rights to
convert their Common Stock into any other securities. Subject to the rights of
holders of Preferred Stock, if any shares of Preferred Stock are then
outstanding, in the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to participate equally, share for
share, in all assets remaining after payment of liabilities.
The holders of Common Stock are entitled to receive ratably such dividends
as the Board of Directors may declare out of funds legally available therefor,
when and if so declared. The payment by the Company of dividends, if any, rests
within the discretion of its Board of Directors and will depend upon the
Company's results of operations, financial condition and capital expenditure
plans, as well as other factors considered relevant by the Board of Directors.
Preferred Stock
The Company's Certificate of Incorporation authorizes the Board of
Directors to issue shares of Preferred Stock in one or more series and to
establish such relative voting, dividend, redemption, liquidation, conversion
and other powers, preferences, rights, qualifications, limitations and
restrictions as the Board of Directors may determine without further approval of
the stockholders of the Company.
On October 25, 1996, the Board authorized the issuance of up to 10,000
shares of Preferred Stock, par value $0.01 per share, designated the Series F
Convertible Preferred Stock ("Series F Preferred Stock"). As subsequently
modified by agreement of the Company and the holders, each share of Series F
Preferred Stock will, (i) at the option of the holder or (ii) automatically on
the second anniversary of the date of issuance, be converted into such number of
shares of Common Stock determined by dividing $1,000 plus all accrued, unpaid
dividends thereon by the per share conversion price. The conversion price is 83%
of the average closing bid price of the Common Stock for the five trading days
immediately preceding the conversion date, subject to certain limitations.
Holders of shares of Series F Preferred Stock are entitled to cumulative
dividends of 5% per annum, payable quarterly on the first day of March, June,
September and December in each year, payable in cash or Common Stock (valued at
the closing price on the
11
<PAGE>
date of declaration), at the Company's election. The Series F Preferred Stock
has a liquidation preference over the Common Stock in the event of any
liquidation or sale of the Company. Except as otherwise provided by law, the
holders of Series F Preferred Stock are not entitled to vote. As of December 15,
1997, there were 500 shares of Series F Preferred Stock outstanding with a
liquidation value of $500,000.
Except for the Series F Preferred Stock, there are no other series or
classes of Preferred Stock with currently outstanding shares. All the shares of
all other series or classes of Preferred Stock previously authorized by the
Company's Board have been repurchased by the Company, canceled or converted into
Common Stock and are not subject to reissue.
The issuance of any additional series of Preferred Stock, and the relative
powers, preferences, rights, qualifications, limitations and restrictions of
such series, if and when established, will depend upon, among other things, the
future capital needs of the Company, the then-existing market conditions and
other factors that, in the judgment of the Board of Directors, might warrant the
issuance of Preferred Stock. The issuance of additional series of Preferred
Stock by the Board of Directors could, among other things, adversely affect the
voting power of the holders of Common Stock and, under certain circumstances,
make it more difficult for a person or group to gain control of the Company. At
the date of this Prospectus, there are no plans, agreements or understandings
relative to the issuance of any shares of Preferred Stock.
Delaware Law
Certain provisions of the General Corporation Law of the State of Delaware,
summarized in the following paragraphs, may be considered to have an
anti-takeover effect and may delay, deter or prevent a tender offer, proxy
contest or other takeover attempt that a stockholder might consider to be in
such stockholder's best interest, including such an attempt as might result in
payment of a premium over the market price for shares held by stockholders.
Section 203 of the General Corporation Law of the State of Delaware
prohibits a public Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which such person became an interested
stockholder unless (i) prior to such date, the Board of Directors approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder; or (ii) upon becoming an
interested stockholder the stockholder then owned at least 85% of the voting
stock, as defined in Section 203; or (iii) subsequent to such date, the business
combination is approved by both the Board of Directors and by at least 66-2/3 of
the corporation's outstanding voting stock, excluding shares owned by the
interested stockholder. For these purposes, the term "business combination"
includes mergers, asset sales and other similar transactions with an "interested
stockholder." An "interested stockholder" is a person who, together with
affiliates and associates, owns (or, within the prior three years, did own) 15%
or more of the corporation's voting stock. Although Section 203 permits a
corporation to elect not to be governed by its provisions, the Company to date
has not made this election.
Section 203 excludes from the definition of "interested stockholder" any
stockholder of the Company that owned over 15% of the Company's stock on
December 23, 1987, so long as such holder continues to own over 15% of the
Company.
Transfer Agent
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
PLAN OF DISTRIBUTION
The manner in which the Common Stock covered by this Prospectus is to be
distributed is set forth on the cover page hereof. Any sales effected through
securities brokers or dealers will be on an "agency" basis, unless as
12
<PAGE>
a result of a privately negotiated transaction a broker or dealer enters into an
agreement with a Selling Stockholder to purchase shares for its own account. At
the date of this Prospectus, none of the Selling Stockholders contemplate
entering into such a contractual relationship with a broker or dealer, although
one or more of them may decide to do so in the future.
To comply with certain states' securities laws, if applicable, the Common
Stock will be sold in such states only through brokers or dealers. In addition,
in certain states the shares of Common Stock may not be sold unless they have
been registered or qualify for sale in such states or an exemption from
registration or qualification is available and is complied with. From time to
time, to the extent required by the rules of the Securities and Exchange
Commission, the Company will distribute Prospectus Supplements.
The Selling Stockholders and any broker-dealers who participate in a sale
of their shares of Common Stock may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
them, and proceeds of any such sales as principal, may be deemed to be
underwriting discounts and commissions under the Securities Act.
All expenses of the registration of Common Stock offered hereby, estimated
to be approximately $20,000, will be borne by the Company. As and when the
Company is required to update this Prospectus, it may incur additional expenses
in excess of this estimated amount. Normal commission expenses and brokerage
fees, as well as any applicable transfer taxes, are payable individually by the
Selling Stockholders.
Since the Selling Stockholders will be subject to the anti-manipulation
rules promulgated under the Exchange Act, including Rule 10b-2, 10b-6 and 10b-7,
in connection with transactions in the Common Stock during the effectiveness of
the Registration Statement of which this Prospectus is a part, the Company
advised the Selling Stockholders to consult competent securities counsel prior
to initiating any such transaction. The Company will notify each Selling
Stockholder of the Commission's rules and, as a condition to agreeing to
register the shares of a Selling Stockholder, will require that such Selling
Stockholder agree to comply with such rules.
The Company will not receive any proceeds from the sale of the Common Stock
offered hereby by the Selling Stockholders. However, in that the holders of
warrants to purchase shares of the Common Stock must exercise their warrants in
order to sell the underlying shares (which are registered hereby), the Company
will receive the amount of the exercise prices of any warrants so exercised. The
Company cannot predict when or if it will receive proceeds from the exercise of
warrants, or the amount of any such proceeds. The Company intends to use the
proceeds, if any, received from the exercise of warrants for working capital
purposes.
LEGAL MATTERS
The validity of the Common Stock being offered hereby will be passed upon
for the Company by Doepken, Keevican & Weiss Professional Corporation,
Pittsburgh, Pennsylvania.
EXPERTS
The consolidated balance sheets of COMFORCE Corporation and Subsidiaries as
of December 31, 1996 and 1995, and the related consolidated statements of
operations, changes in stockholders' equity (deficit) and cash flows for each of
the three years in the period ended December 31, 1996, incorporated by reference
in this Prospectus from the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, have been incorporated herein in reliance on the report
of Coopers & Lybrand LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
13
<PAGE>
The balance sheets of RHO Company Incorporated as of December 31, 1995 and
1996, and the related statements of income, changes in shareholders' deficit and
cash flows for the years ended December 31, 1995 and 1996, which are
incorporated by reference in this Prospectus from the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto which is incorporated herein by reference, and have been so
incorporated in reliance upon the authority of said firm as experts in giving
said report.
The consolidated balance sheets of Uniforce Services, Inc. and Subsidiaries
as of December 31, 1996 and 1995, and the related consolidated statements of
earnings, stockholders' equity and cash flows for each of the years in the three
year period ended December 31, 1996, have been incorporated by reference herein
in reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The expenses estimated to be incurred (other than the fees of the
Commission which are actual) in connection with the offering, all of which are
payable by the Company, are as follows:
Description Amount
-------------------------------------------- -------------
SEC Registration Fee $ 365
Printing Costs 5,000*
Legal Fees 5,000*
Accounting Fees 5,000*
Miscellaneous 4,635*
Total $20,000*
-----------
*Estimate
Item 15. Indemnification of Directors and Officers.
The Company's Bylaws effectively provide that the Company, to the full
extent permitted by Section 145 of the General Corporation Law of the State of
Delaware, as amended from time to time ("Section 145"), shall indemnify all
directors and officers of the Company and may indemnify all employees,
representatives and other persons as permitted pursuant thereto.
Section 145 permits a corporation to indemnify its directors and officers
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlements actually and reasonably incurred by them in connection with any
action, suit or proceeding brought by a third party if such directors or
officers acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, indemnification may be made only for expenses
actually and reasonably incurred by directors and officers in connection with
the defense or settlement of an action or suit and only with respect to a matter
as to which they shall have acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interest of the corporation, except
that no indemnification shall be made if such person shall have been adjudged
liable to the corporation, unless and only to the extent that the court in which
the action or suit was brought shall determine upon application that the
defendant officers or directors are reasonably entitled to indemnity for such
expenses despite such adjudication of liability.
The Company has entered into separate indemnification agreements with each
of its outside directors which provides for indemnification of such directors to
the fullest extent permitted by law. The Company may also enter into
indemnification agreements with other directors, officers or employees or with
anyone else it is permitted to indemnify under Delaware law, but has no present
intention of doing so.
The Company maintains insurance against liabilities under the Securities
Act of 1933 for the benefit of its officers and directors.
II-1
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
2.1 Stock Purchase Agreement dated September 11, 1995 among Spectrum
Technologies, Inc., the Company, COMFORCE Corporation, ARTRA Group
Incorporated, Peter R. Harvey, Marc L. Werner, James L. Paterek, Michael
Ferrentino and Christopher P. Franco (included as an exhibit to the
Company's Current Report on Form 8-K dated September 11, 1995 and
incorporated herein by reference).
2.2 Purchase Agreement among COMFORCE Telecom, Inc., Williams Communications
Services, Inc. and Bruce Anderson (included as an exhibit to the
Company's Current Report on Form 8-K dated March 13, 1996 and
incorporated herein by reference).
2.3 Stock Purchase Agreement effective as of May 13, 1996 among the Company,
COMFORCE Technical Services, Inc., Project Staffing Support Team, Inc.,
Raphael Rashkin and Stanley Rashkin (included as an exhibit to the
Company's Amended Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 1996 filed May 16, 1996 and incorporated herein by reference).
2.4 Asset Purchase Agreement effective as of May 13, 1996 among the Company,
COMFORCE Technical Services, Inc., DataTech Technical Services, Inc.,
Raphael Rashkin and Stanley Rashkin (included as an exhibit to the
Company's Amended Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 1996 filed May 16, 1996 and incorporated herein by reference).
2.5 Asset Purchase Agreement effective as of May 13, 1996 among the Company,
COMFORCE Technical Services, Inc., RRA, Inc., Raphael Rashkin and Stanley
Rashkin (included as an exhibit to the Company's Amended Quarterly Report
on Form 10-Q/A for the quarter ended March 31, 1996 filed May 16, 1996
and incorporated herein by reference).
2.6 Letter Agreement dated May 6, 1996 amending Asset Purchase Agreement
effective as of May 13, 1996 among the Company, COMFORCE Technical
Services, Inc., RRA, Inc., Raphael Rashkin and Stanley Rashkin (included
as an exhibit to the Company's Amended Quarterly Report on Form 10-Q/A
for the quarter ended March 31, 1996 filed May 16, 1996 and incorporated
herein by reference).
2.7 Letter Agreement dated April 19, 1996 among CTS Acquisition Co. I,
COMFORCE Technical Services, Inc., Project Staffing Support Team, Inc.
and RRA, Inc. (included as an exhibit to the Company's Amended Quarterly
Report on Form 10-Q/A for the quarter ended March 31, 1996 filed May 16,
1996 and incorporated herein by reference).
2.8 Agreement and Plan of Reorganization dated October 22, 1996 between
AZATAR Computer Systems, Inc. and the Company (included as an exhibit to
the Company's Current Report on Form 8-K dated November 8, 1996 and
incorporated herein by reference).
2.9 Asset Purchase Agreement dated October 25, 1996 by and among Continental
Field Services Corporation, Michael Hill, Roy Hill and COMFORCE Telecom,
Inc. (included as an exhibit to the Company's Current Report on Form 8-K
dated November 19, 1996 and incorporated herein by reference).
II-2
<PAGE>
2.10 Asset Purchase Agreement dated October 25, 1996 between Progressive
Telecom, Inc., Beth Wilson Hill and COMFORCE Telecom, Inc. (included as
an exhibit to the Company's Current Report on Form 8-K dated November 19,
1996 and incorporated herein by reference).
2.11 Amendment to Escrow Agreement and Purchase Agreements dated November 8,
1996 by and among Continental Field Service Corporation, Progressive
Telecom, Inc., Michael Hill, Roy Hill, Beth Wilson Hill, McCarthy,
Fingar, Donovan, Drazen & Smith, and COMFORCE Telecom, Inc. (included as
an exhibit to the Company's Current Report on Form 8-K dated November 19,
1996 and incorporated herein by reference).
2.12 Subscription Agreement dated October 28, 1996 by and among RHO Company,
Inc., J. Scott Erbe, COMFORCE Corporation and COMFORCE Technical
Services, Inc. (included as an exhibit to the Company's Current Report on
Form 8-K dated November 19, 1996 and incorporated herein by reference).
2.13 Stock Sale and Termination Agreement dated October 28, 1996 by and
between James R. Ratcliff and RHO Company, Inc. (included as an exhibit
to the Company's Current Report on Form 8-K dated November 19, 1996 and
incorporated herein by reference).
2.14 Letter Agreement dated November 4, 1996 amending Stock Sale and
Termination Agreement between RHO Company, Inc. and James R. Ratcliff
(included as an exhibit to the Company's Current Report on Form 8-K dated
November 19, 1996 and incorporated herein by reference).
2.15 Agreement and Plan of Merger, dated as of August 13, 1997, by and among
COMFORCE Corporation, COMFORCE Columbus, Inc. and Uniforce Services, Inc.
(included as an exhibit to the Company's Current Report on Form 8-K dated
August 20, 1997 and incorporated herein by reference).
2.16 Stockholders Agreement, dated as of August 13, 1997, by and among
COMFORCE Corporation, COMFORCE Columbus, Inc., John Fanning and Fanning
Asset Partners (included as an exhibit to the Company's Current Report on
Form 8-K dated August 20, 1997 and incorporated herein by reference).
2.17 Registration Rights Agreement dated as of August 13, 1997 by and among
the Company, John Fanning and Fanning Asset Partners, L.P., a Georgia
limited partnership (included as an exhibit to Amendment No. 2 to the
Registration Statement on Form S-4 of the Company filed with the
Commission on October 24, 1997 and incorporated herein by reference).
3.1 Restated Certificate of Incorporation of the Company, as amended by
Certificates of Amendment filed with the Delaware Secretary of State on
June 14, 1987 and February 12, 1991 (included as an exhibit to Amendment
No. 1 to the Registration Statement on Form S-1 of the Company filed with
the Commission on May 10, 1996 and incorporated herein by reference).
3.2 Certificate of Ownership (Merger) of COMFORCE Corporation into the
Company (included as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1995 and incorporated herein by
reference).
3.3 Bylaws of the Company, as amended and restated effective as of February
26, 1997 (included as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1996 and incorporated herein by
reference).
3.4 Designation of Rights and Preferences of Series F Preferred Stock
(included as an exhibit to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 and incorporated herein by reference).
II-3
<PAGE>
3.5 Certificate of Ownership (Merger) of AZATAR into the Company (included as
an exhibit to the Company's Current Report on Form 8-K dated November 8,
1996 and incorporated herein by reference).
4.1 Indenture dated as of November 26, 1997 with respect to 12% Senior Notes
due 2007 between COMFORCE Operating, Inc., as issuer, and Wilmington
Trust Company, as trustee (included as an exhibit to the Company's
Current Report on Form 8-K dated December 9, 1997 and incorporated herein
by reference).
4.2 Indenture dated as of November 26, 1997 with respect to 15% Senior
Secured PIK Debentures due 2009 between COMFORCE Corporation, as issuer,
and The Bank of New York, as trustee (included as an exhibit to the
Company's Current Report on Form 8-K dated December 9, 1997 and
incorporated herein by reference).
5.1 Opinion of Doepken Keevican & Weiss Professional Corporation.
10.1 Management Agreement dated as of April 9, 1993 between the Company and
Nitsua, Ltd. (a corporation wholly-owned by Austin Iodice, formerly
Lori's Chairman and Chief Executive Officer) (included as an exhibit to
the Company's Annual Report on Form 10-K for the year ended December 31,
1992 and incorporated herein by reference).
10.2 Letter Agreement dated June 29, 1995, among the Company, ARTRA Group
Incorporated, James L. Paterek, Michael Ferrentino and Christopher P.
Franco (included as an exhibit to the Company's Current Report on Form
8-K dated September 11, 1995 and incorporated herein by reference).
10.3 Amendment dated October 6, 1995 of Letter Agreement dated June 29, 1995,
among the Company, ARTRA Group Incorporated, James L. Paterek, Michael
Ferrentino and Christopher P. Franco (included as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995
and incorporated herein by reference).
10.4 Assumption Agreement dated October 17, 1995 between the Company and ARTRA
GROUP Incorporated respecting ARTRA's assumption of substantially all of
the Company's pre-existing liabilities (included as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995
and incorporated herein by reference).
10.5 Asset Purchase Agreement dated as of April 11, 1996 among Lawrence
Jewelry Corporation, ARTRA GROUP Incorporated, the Company and Hanover
Advisors, Inc. respecting the disposition of the assets of the Company's
jewelry business (included as an exhibit to the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 and incorporated herein
by reference).
10.6 Loan and Security Agreement dated as of November 26, 1997 among COMFORCE
Corporation and specified subsidiaries thereof and Heller Financial,
Inc., as lender and agent for other lenders (included as an exhibit to
the Company's Current Report on Form 8-K dated December 9, 1997 and
incorporated herein by reference).
10.7 Purchase Agreement, dated as of November 19, 1997, by and between
COMFORCE Operating, Inc. and NatWest Capital Markets Limited, as Initial
Purchaser (included as an exhibit to the Registration Statement on Form
S-4 of the Company filed with the Commission on December 24, 1997 and
incorporated herein by reference).
10.8 Purchase Agreement, dated as of November 19, 1997, by and between dated
as of November 26, 1997, by and between the Company and NatWest Capital
Markets Limited, as Initial Purchaser (included as an exhibit to the
Registration Statement on Form S-4 of the Company filed with the
Commission on December 24, 1997 and incorporated herein by reference).
II-4
<PAGE>
10.9 Exchange Offer and Registration Rights Agreement, dated as of November
26, 1997, by and between COMFORCE Operating, Inc. and NatWest Capital
Markets Limited, as Initial Purchaser (included as an exhibit to the
Registration Statement on Form S-4 of the Company filed with the
Commission on December 24, 1997 and incorporated herein by reference).
10.10 Exchange Offer and Registration Rights Agreement, dated as of November
26, 1997, by and between the Company and NatWest Capital Markets Limited,
as Initial Purchaser (included as an exhibit to the Registration
Statement on Form S-4 of the Company filed with the Commission on
December 24, 1997 and incorporated herein by reference).
10.11 Warrant Registration Rights Agreement, dated as of November 26, 1997, by
and between the Company and NatWest Capital Markets Limited, as Initial
Purchaser (included as an exhibit to the Registration Statement on Form
S-4 of the Company filed with the Commission on December 24, 1997 and
incorporated herein by reference).
10.12 Warrant Agreement dated November 26, 1997 by and between the Company and
The Bank of New York, as Warrant Agent (included as an exhibit to the
Registration Statement on Form S-4 of the Company filed with the
Commission on December 24, 1997 and incorporated herein by reference).
10.13 Unit Agreement dated November 26, 1997 by and between the Company and
NatWest Capital Markets Limited (included as an exhibit to the
Registration Statement on Form S-4 of the Company filed with the
Commission on December 24, 1997 and incorporated herein by reference).
10.14 Pledge Agreement by and between the Company and The Bank of New York, as
Collateral Agent (included as an exhibit to the Registration Statement on
Form S-4 of the Company filed with the Commission on December 24, 1997
and incorporated herein by reference).
10.15 Employment Agreement dated December 1, 1997 between the Company and
Michael Ferrentino (included as an exhibit to the Registration Statement
on Form S-4 of the Company filed with the Commission on December 24, 1997
and incorporated herein by reference).
10.16 Employment Agreement dated December 1, 1997 between the Company and
Christopher Franco (included as an exhibit to the Registration Statement
on Form S-4 of the Company filed with the Commission on December 24, 1997
and incorporated herein by reference).
10.17 Employment Agreement dated December 1, 1997 between the Company and James
L. Paterek (included as an exhibit to the Registration Statement on Form
S-4 of the Company filed with the Commission on December 24, 1997 and
incorporated herein by reference).
21.1 List of Subsidiaries (included as an exhibit to the Registration
Statement on Form S-4 of the Company filed with the Commission on
December 24, 1997 and incorporated herein by reference).
23.1 Consent of Doepken Keevican & Weiss Professional Corporation (included in
the opinion filed as Exhibit 5.1 to this Registration Statement).
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Arthur Andersen L.L.P.
23.4 Consent of KPMG Peat Marwick LLP.
II-5
<PAGE>
24.1 Powers of Attorney (included on signature page of the Registration
Statement).
- --------------
(b) Financial Statement Schedules.
None.
Item 17. Undertakings.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(4) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
II-6
<PAGE>
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lake Success, State of New York, on December 22,
1997.
COMFORCE Corporation
(Registrant)
By: /s/ Christopher P. Franco
-----------------------------------
Christopher P. Franco,
Chief Executive Officer
II-8
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Christopher P. Franco and Paul Grillo, and each
of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign any
or all amendments to this Registration Statement, including post-effective
amendments, and to file the same with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents of any of them, or any substitute or substitutes,
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------- ----------------------------- ----------------
<S> <C> <C>
/s/ James L. Paterek Chairman December 22,1997
- ----------------------------------
James L. Paterek
/s/ Christopher P. Franco Chief Executive Officer, December 22, 1997
- ---------------------------------- Secretary and Director
Christopher P. Franco
/s/ Michael Ferrentino President and December 22, 1997
- ---------------------------------- Director
Michael Ferrentino
/s/ Paul Grillo Chief Financial Officer December 22, 1997
- ---------------------------------- (Principal Financial
Paul Grillo Officer)
/s/ Andrew Reiben Vice President of Finance and December 22, 1997
- ---------------------------------- Chief Accounting Officer
Andrew Reiben (Principal Accounting Officer)
/s/ Richard Barber Director December 22, 1997
- ----------------------------------
Richard Barber
/s/ Keith Goldberg Director December 22, 1997
- ----------------------------------
Keith Goldberg
Director December 22, 1997
- ----------------------------------
Glen Miller
/s/ Marc Werner Director December 22, 1997
- ----------------------------------
Marc Werner
Director December 22, 1997
- ----------------------------------
Michael D. Madden
</TABLE>
II-9
Exhibit 5.1
[Letterhead of Doepken Keevican & Weiss Professional Corporation]
December 23, 1997
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, NY 11042
RE: COMFORCE Corporation
Registration Statement of Form S-3
Ladies and Gentlemen:
We have acted as counsel for COMFORCE Corporation, a Delaware corporation
(the "Company"), in connection with the registration with the Securities and
Exchange Commission (the "SEC") by the Company of 169,000 shares of the
Company's common stock ("Common Stock") pursuant to the Securities Act of 1933,
as amended (the "Act") for sale by certain selling stockholders.
In connection with the registration, we have examined the following:
(a) The Certificate of Incorporation and By-laws of the Company, each as
amended to date;
(b) The Registration Statement on Form S-3 (the "Registration Statement"),
including the preliminary prospectus which is a part thereof (the
"Prospectus"), relating to the Common Stock, as filed with the SEC;
(c) That certain Warrant Agreement dated November 26, 1997 by and between
the Company and The Bank of New York, as Warrant Agent, pursuant to
which the Company has issued warrants ("Warrants") to purchase 169,000
shares of its Common Stock in the aggregate;
(d) Resolutions of the Board of Directors of the Company authorizing the
issuance and registration of the Common Stock; and
(e) Such other documents, records, opinions, certificates and papers as we
have deemed necessary or appropriate in order to give the opinions
hereinafter set forth.
<PAGE>
COMFORCE CORPORATION
December 23, 1997
Page 2
The opinions hereinafter expressed are subject to the following
qualifications and assumptions:
(i) In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity of all documents submitted to us as copies to the originals
thereof.
(ii) As to the accuracy of certain factual matters, we have relied on the
certificates of officers of the Company and certificates, letters,
telegrams or statements of public officials.
(iii) We express no opinion on the laws of any jurisdiction other than the
United States of America and the General Corporation Law of the State
of Delaware.
Based upon and subject to the foregoing, we are pleased to advise you that,
insofar as the laws of the State of Delaware and the United States of America
are concerned, it is our opinion that the 169,000 shares of Common Stock being
registered for resale under the Registration Statement will, when issued upon
the exercise of the Warrants and sold under the Registration Statement, be
legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the use of our name in the Prospectus in
connection with the matters referred to under the caption "Legal Matters."
Very truly yours,
/s/ Doepken Keevican & Weiss
-------------------------------
DOEPKEN KEEVICAN & WEISS
PROFESSIONAL CORPORATION
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of COMFORCE Corporation on Form S-3 of our report dated January 30, 1997, except
as to Note 20 for which the date is March 21, 1997, on our audits of the
consolidated financial statements of COMFORCE Corporation as of December 31,
1996 and 1995 and for the years ended December 31, 1996, 1995 and 1994, which
report is included in the Annual Report on Form 10-K. We also consent to the
reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Melville, New York
December 23, 1997
Exhibit 23.4
The Board of Directors
Uniforce Services, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Jericho, New York
December 23, 1997
