As filed with the Securities and Exchange Commission on January 15, 1998
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 incorporation Industrial Classification Identification No.)
or organization) Code Number)
--------------------
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, New York 11042
(516) 328-7300
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
--------------------
Christopher P. Franco
Chief Executive Officer
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, New York 11042
(516) 328-7300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
Copy to:
David G. Edwards, Esquire
Doepken Keevican & Weiss Professional Corporation
58th Floor, USX Tower
600 Grant Street
Pittsburgh, Pennsylvania 15219-2703
(412) 355-2600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
<PAGE>
(Cover page continued)
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement
as determined by market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Title of Each Class of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered(1) Offering Price Per Share (2) Aggregate Offering Price Registration Fee
(2)
====================================================================================================================================
<S> <C> <C> <C> <C>
Common Stock 75,758 $7.375 $558,715 $165
====================================================================================================================================
</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
January 13, 1998.
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 JANUARY 15, 1998
PROSPECTUS
75,758 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.
The shares of common stock, par value $.01 per share ("Common Stock"), of
COMFORCE covered by this Prospectus ("Shares") may be offered from time to time
on the American Stock Exchange or otherwise at prices then obtainable by or for
the account of certain existing security holders of the Company named herein, or
certain transferees or assignees ("Selling Stockholders"). See "Selling
Stockholders" and "Plan of Distribution."
In certain cases the Selling Stockholders, brokers executing sales orders
on its 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 the Shares.
However, in that all of the Shares to which this Prospectus relates are issuable
upon the exercise of warrants held by the Selling Stockholders, the Company will
receive the amount of the exercise prices of any warrants so exercised. The
Company cannot predict when or if it will receive proceeds from the exercise of
warrants, or the amount of any such proceeds.
SEE "RISK FACTORS" ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
On January 13, 1998, 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 $15,000.
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.............................................. 10
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.
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<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 from members
4
<PAGE>
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, the reduction of which could have a material adverse effect on the
Company's financial condition and results of operations, including cash flow.
5
<PAGE>
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 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
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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
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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 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.
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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 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
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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 the Selling Stockholders, the Company will receive
the amount of the exercise prices of any warrants so exercised. The Company
cannot predict when or if it will receive proceeds from the exercise of
warrants, or the amount of any such proceeds. The Company intends to use the
proceeds, if any, received from the exercise of warrants for working capital
purposes. See "Plan of Distribution."
SELLING STOCKHOLDERS
The security holders listed below, and any assignees or transferees thereof
named in any supplement to this Prospectus (the "Selling Stockholders") are
offering for resale hereunder 75,758 shares of Common Stock in the aggregate
issuable to them upon the exercise of warrants held by them. The Company
undertakes to file a supplement to name as Selling Stockholders any such
assignees or transferees. Because the Selling Stockholders may offer all or some
part of the Common Stock 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 the Selling Stockholders upon termination of
this offering. The Company has not been advised that the Selling Stockholders
own any shares of the Common Stock other than the Shares offered hereby.
Name of Beneficial Owner Shares Offered Hereby
C.E. Unterberg, Towbin, L.P.(1) 50,000
Glacier Capital Limited(2) 25,758
- --------------------
(1) All of the shares of Common Stock offered by C.E. Unterberg, Towbin, L.P.
are issuable upon exercise of a warrant at an exercise price of $7.428 per
share, which warrant terminates on November 26, 2001.
(2) Of the shares of Common Stock offered by Glacier Capital Limited, (i)
13,758 are issuable upon exercise of a warrant at an exercise price of
$19.00 per share, which warrant terminates on December 26, 1999 and (ii)
12,000 are issuable upon exercise of a warrant at an exercise price of
$7.575 per share, which warrant terminates on August 27, 2000.
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 31, 1997, the
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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 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 31, 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
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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 Company is not aware of any plan of distribution with respect to the
Shares. Distribution of the Shares by the Selling Stockholders may be effected
from time to time in one or more transactions (which many involve block
transactions) (i) on the American Stock Exchange, (ii) in the over-the-counter
market, (iii) in transactions otherwise than on such exchange or in the
over-the-counter market or (iv) in a combination of any such transactions. Such
transactions may be effected by the Selling Stockholders at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices. The Selling Stockholders may
effect such transactions by selling Shares to or through underwriters, brokers
or dealers, and such underwriters, brokers or dealers may receive compensation
in the form of discounts or commissions from the Selling Stockholders and may
receive commissions from the purchasers of Shares for whom they may act as
agent. COMFORCE has agreed to indemnify the Selling Stockholders against certain
civil liabilities, including liabilities under the Securities Act.
The Selling Stockholders and any other broker-dealers who participate in a
sale of its 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 $15,000, will be borne by the Company. As and when the
Company is required to update this Prospectus, it may incur additional
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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.
The Company will not receive any proceeds from the sale of the Common Stock
offered hereby by the Selling Stockholders. However, insofar as the holders of
the 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 L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
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.
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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 $ 165
Printing Costs 1,000*
Legal Fees 5,000*
Accounting Fees 5,000*
Miscellaneous 3,835*
Total $ 15,000*
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* 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.
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.
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Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
2.1 Stock Purchase Agreement dated September 11, 1995 among Spectrum
Technologies, Inc., the Company, COMFORCE Corporation, ARTRA Group
Incorporated, Peter R. Harvey, Marc L. Werner, James L. Paterek,
Michael Ferrentino and Christopher P. Franco (included as an exhibit
to the Company's Current Report on Form 8-K dated September 11, 1995
and incorporated herein by reference).
2.2 Purchase Agreement among COMFORCE Telecom, Inc., Williams
Communications Services, Inc. and Bruce Anderson (included as an
exhibit to the Company's Current Report on Form 8-K dated March 13,
1996 and incorporated herein by reference).
2.3 Stock Purchase Agreement effective as of May 13, 1996 among the
Company, COMFORCE Technical Services, Inc., Project Staffing Support
Team, Inc., Raphael Rashkin and Stanley Rashkin (included as an
exhibit to the Company's Amended Quarterly Report on Form 10-Q/A for
the quarter ended March 31, 1996 filed May 16, 1996 and incorporated
herein by reference).
2.4 Asset Purchase Agreement effective as of May 13, 1996 among the
Company, COMFORCE Technical Services, Inc., DataTech Technical
Services, Inc., Raphael Rashkin and Stanley Rashkin (included as an
exhibit to the Company's Amended Quarterly Report on Form 10-Q/A for
the quarter ended March 31, 1996 filed May 16, 1996 and incorporated
herein by reference).
2.5 Asset Purchase Agreement effective as of May 13, 1996 among the
Company, COMFORCE Technical Services, Inc., RRA, Inc., Raphael Rashkin
and Stanley Rashkin (included as an exhibit to the Company's Amended
Quarterly Report on Form 10-Q/A for the quarter ended March 31, 1996
filed May 16, 1996 and incorporated herein by reference).
2.6 Letter Agreement dated May 6, 1996 amending Asset Purchase Agreement
effective as of May 13, 1996 among the Company, COMFORCE Technical
Services, Inc., RRA, Inc., Raphael Rashkin and Stanley Rashkin
(included as an exhibit to the Company's Amended Quarterly Report on
Form 10-Q/A for the quarter ended March 31, 1996 filed May 16, 1996
and incorporated herein by reference).
2.7 Letter Agreement dated April 19, 1996 among CTS Acquisition Co. I,
COMFORCE Technical Services, Inc., Project Staffing Support Team, Inc.
and RRA, Inc. (included as an exhibit to the Company's Amended
Quarterly Report on Form 10-Q/A for the quarter ended March 31, 1996
filed May 16, 1996 and incorporated herein by reference).
2.8 Agreement and Plan of Reorganization dated October 22, 1996 between
AZATAR Computer Systems, Inc. and the Company (included as an exhibit
to the Company's Current Report on Form 8-K dated November 8, 1996 and
incorporated herein by reference).
2.9 Asset Purchase Agreement dated October 25, 1996 by and among
Continental Field Services Corporation, Michael Hill, Roy Hill and
COMFORCE Telecom, Inc. (included as an exhibit to the Company's
Current Report on Form 8-K dated November 19, 1996 and incorporated
herein by reference).
2.10 Asset Purchase Agreement dated October 25, 1996 between Progressive
Telecom, Inc., Beth Wilson Hill and COMFORCE Telecom, Inc. (included
as an exhibit to the Company's Current Report on Form 8-K dated
November 19, 1996 and incorporated herein by reference).
2.11 Amendment to Escrow Agreement and Purchase Agreements dated November
8, 1996 by and among Continental Field Service Corporation,
Progressive Telecom, Inc., Michael Hill, Roy Hill, Beth Wilson Hill,
McCarthy, Fingar, Donovan, Drazen & Smith, and COMFORCE Telecom, Inc.
(included as an exhibit to the Company's Current Report on Form 8-K
dated November 19, 1996 and incorporated herein by reference).
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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).
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.
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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 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).
10.9 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 Agreement dated November 26, 1997 by and between the Company
and C.E. Unterberg, Towbin, L.P.
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).
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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 LLP.
23.4 Consent of KPMG Peat Marwick LLP.
24.1 Powers of Attorney (included on signature page of the Registration
Statement).
- -------------------
(b) Financial Statement Schedules.
None.
Item 17. Undertakings.
The Company 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
II-5
<PAGE>
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 Company 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 Company'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 Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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 Company 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-6
<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 January 12, 1998.
COMFORCE Corporation
(Registrant)
By: /s/ Christopher P. Franco
----------------------------------------------
Christopher P. Franco, Chief Executive Officer
II-7
<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
--------------------
James L. Paterek January 12, 1998
/s/ Christopher P. Franco Chief Executive Officer,
-------------------- Secretary and Director January 12, 1998
Christopher P. Franco
/s/ Michael Ferrentino President and
-------------------- Director January 12, 1998
Michael Ferrentino
/s/ Paul Grillo Chief Financial Officer
-------------------- (Principal Financial January 12, 1998
Paul Grillo Officer)
/s/ Andrew Reiben Vice President of Finance and January 12, 1998
-------------------- Chief Accounting Officer
Andrew Reiben (Principal Accounting Officer)
/s/ Richard Barber Director January 12, 1998
--------------------
Richard Barber
Director
--------------------
Keith Goldberg
/s/ Glen Miller Director January 12, 1998
--------------------
Glen Miller
/s/ Marc Werner Director January 12, 1998
--------------------
Marc Werner
/s/ Michael D. Madden Director January 12, 1998
--------------------
Michael D. Madden
</TABLE>
II-8
Exhibit 5.1
January 15, 1998
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 75,758 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) Resolutions of the Board of Directors of the Company authorizing the
issuance and registration of the Common Stock; and
(d) Such other agreements, documents, records, opinions, certificates and
papers as we have deemed necessary or appropriate in order to give the
opinions hereinafter set forth.
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 75,758 shares of Common Stock being
registered for resale under the Registration Statement will, when issued upon
the exercise of the warrants to purchase such shares, 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 10.11
The Warrant represented by this Certificate has been acquired for investment and
has not been registered under the Securities Act of 1933, as amended (the
"Act"), and may not be sold, offered for sale, pledged, hypothecated or
otherwise transferred except pursuant to a registration statement under the Act
or an exemption from registration under the Act or the rules and regulations
thereunder.
November 26, 1997
COMFORCE CORPORATION
WARRANT TO PURCHASE COMMON STOCK
This is to certify that, for value received, C.E. Unterberg, Towbin, L.P.
(formerly Unterberg Harris, L.P.) or its registered assigns (the "Holder"), and
any Holder by acceptance of delivery hereof, agrees that Holder is entitled to
purchase, subject to the provisions of this Warrant, from COMFORCE Corporation,
a Delaware corporation (the "Company"), 50,000 shares of the common stock of the
Company, with $.01 par value ("Common Stock"), at an exercise price of $7.428
per share, and any such Holder shall be governed and bound by all of the
covenants, terms and conditions contained herein. The number of shares of Common
Stock to be received upon the exercise of this Warrant and the price to be paid
for a share of Common Stock may be adjusted from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise and as adjusted
from time to time are hereinafter sometimes referred to as "Warrant Shares," and
the exercise price of a share of Common Stock in effect at any time and as
adjusted from time to time is hereinafter sometimes referred to as the "Exercise
Price."
1. Exercise of Warrant. This Warrant may be exercised at any time from and
after the date of issuance until 5:00 p.m., New York City time, on November 26,
2001 by presentation and surrender hereof to the Company at its office at 2001
Marcus Avenue, Lake Success, New York 11042, with the purchase form annexed
hereto duly executed and accompanied by payment of the Exercise Price for the
number of shares of Common Stock specified in such form. If this Warrant should
be exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the rights of the
Holder to purchase the balance of the Warrant Shares purchasable hereunder. Upon
receipt by the Company of this Warrant at its office in proper form for
exercise, the Holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder.
2. Reservation of Shares, Fractional Shares.
(a) The Company shall reserve for issue and delivery upon exercise of the
Warrant such numbers of shares of its Common Stock as shall be required for
issue and delivery upon exercise of the Warrant.
(b) No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant. With respect to any fraction of a
share called for upon exercise hereof, the Company shall pay to the Holder an
amount in cash equal to such fraction multiplied by the then current market
value of a share of Common Stock.
3. Exchange, Assignment, or Loss of Warrant. This Warrant is exchangeable,
without expense to the Holder, at the option of the Holder, upon presentation
and surrender hereof to the Company for other Warrants of different
denominations entitling the Holder hereof to purchase in the aggregate the same
number of shares of Common Stock purchasable hereunder. Any such exchange shall
be made by surrender of this Warrant to the Company or at the office of its
agent. Subject to compliance with the provisions of applicable law and the
provisions of Section 6 hereof, the Company, without charge to the Holder, shall
execute and deliver a new Warrant in the name of any assignee named in such
instrument or assignment, and this Warrant shall promptly be canceled. This
Warrant may be divided or combined with other Warrants which carry the same
rights upon presentation hereof at the office of the Company or at the office of
its agent, if any, together with a written notice specifying the names and
denominations in which new
<PAGE>
Warrants are to be issued and signed by the Holder hereof. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company
whether or not this Warrant so lost, stolen, destroyed or mutilated shall be at
any time enforceable by anyone.
4. Rights of the Holder. This Warrant shall not entitle the holder hereof
to any voting rights or other rights as a stockholder of the Company. No
provision of this Warrant, in the absence of affirmative action by the Holder to
purchase shares of Common Stock, and no mere enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder for the
warrant purchase price or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company. The rights
of the Holder are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent set forth herein.
5. Anti-Dilution Provisions. The Exercise Price and/or the number and kind
of shares purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the occurrence of certain events described in
this Section 5. Upon each adjustment of the Exercise Price, the Holder of this
Warrant shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment, and by
dividing the product thereof by the Exercise Price resulting from such
adjustment.
(a) Subdivision or Combination of Stock. In case the Company shall at any
time subdivide its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced and, conversely, in case the outstanding shares of
Common Stock of the Company shall be combined into a smaller number of shares,
the Exercise Price in effect immediately prior to such combination shall be
proportionately increased.
(b) Dividends or Distributions in Common Stock, Other Stock or Property. If
at any time or from time to time the holders of Common Stock (or any shares of
capital stock or other securities at the time receivable upon the exercise of
this Warrant) shall have received or shall have become entitled to receive,
without payment therefor,
(i) Common Stock or any shares of stock or other securities which are
at any time directly or indirectly convertible into or
exchangeable for Common Stock, or any rights or options to
subscribe for, purchase or otherwise acquire any of the foregoing
by way of dividend or other distribution, or
(ii) Common Stock or other or additional capital stock or other
securities or property (including cash) by way of spin-off,
split-up, or similar corporate distribution (other than shares of
Common Stock issued as a stock split, adjustments in respect of
which shall be covered by the terms of Section 5(a) above),
then, and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and other property (including
cash in the case referred to in clause (ii) above) which such Holder would hold
on the date of such exercise had it been the holder of record of such Common
Stock as of the date on which holders of Common Stock received or became
entitled to receive such Common Stock, additional stock, other securities and/or
other property.
(c) Reorganization, Reclassification, Consolidation or Merger. If at any
time while this Warrant is outstanding there is effected any reorganization or
reclassification of the capital stock of the Company (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or
<PAGE>
combination of such capital stock), or any consolidation or merger of the
Company with or into another corporation or entity (other than a consolidation
or merger in which the Company is the surviving corporation and in which there
is no reclassification of the Company's outstanding Common Stock), or sale of
all or substantially all of the Company's assets, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provisions shall be made by the Company whereby the Holder hereof shall
thereafter have the right to purchase and receive (in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of this Warrant) such shares of stock, securities, assets or
cash as may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
this Warrant. In any such case, appropriate provision shall be made by the
Company with respect to the rights and interests of the Holder of this Warrant
to the end that the provisions hereof (including, without limitation, provisions
for adjustments of the Exercise Price and of the number of shares purchasable
and receivable upon the exercise of this Warrant) shall thereafter by
applicable, as nearly as may be, in relation to any shares of stock, securities,
assets or cash thereafter deliverable upon the exercise hereof. The Company will
not effect any such consolidation, merger or sale unless, prior to the
consummation thereof, the successor or surviving corporation (if other than the
Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall address of such Holder appearing on the books of
the Company, the obligation to deliver to such Holder such shares of stock,
securities, assets or cash as, in accordance with the foregoing provisions, such
Holder may be entitled to purchase.
(d) Sales or Issuance Below Current Market Value; Other Securities; Other
Adjustments.
(1) If the Company shall at any time or from time to time hereafter
issue or sell any of its Common Stock, convertible preferred stock,
warrants, options or any other rights or securities convertible into or
exchangeable for Common Stock for a consideration per share (calculated as
provided in Section 5(d)(3) below) less than then Current Market Value
(hereinafter defined), the number of shares of stock thereafter purchasable
upon the exercise of this Warrant shall be adjusted (the "Share Number
Adjustment") and determined by multiplying the number of shares of stock
theretofore purchasable by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding immediately after the issuance
of such additional securities and the Common Stock denominator shall be the
total number of shares of Common Stock outstanding immediately prior to the
issuance of the such additional securities plus the number of shares of
Common Stock which the aggregate consideration received for the issuance of
such additional securities would purchase at the Exercise Price. Thereupon,
the Exercise Price will also be appropriately reduced so that the same
aggregate cash payment as was sufficient to purchase all shares of Common
Stock as to which this Warrant was exercisable immediately prior to giving
effect to the Share Number Adjustment will then be sufficient to purchase
all shares Common Stock as to which this Warrant is exercisable after
giving effect to the Share Number Adjustment. For purposes of this Section
5(d), the number of shares of Common Stock deemed to be outstanding at any
given time shall be calculated on a fully diluted basis, as if all shares
of Common Stock issuable upon the exercise and/or conversion of all
outstanding convertible preferred stock, warrants (including this Warrant),
options and other rights or securities convertible into or exchangeable for
Common Stock had been fully converted into or exchanged for shares of
Common Stock or fully exercised immediately prior to such issuance or sale.
(2) The adjustments described in this Section 5(d) will not apply to:
(A) Common Stock issued pursuant to a pro rata stock dividend or other
distribution of shares of the Company's voting capital stock to all of the
Company's stockholders; or (B) up to an aggregate of ten percent (10%) of
the shares of Common Stock which may hereafter be issued to employees,
officers and directors of the Company pursuant to any stock option or
similar plan now or hereafter approved by the Company's Board of Directors.
(3) In the case of the issuance of options, warrants or other rights
to purchase or subscribe for Common Stock (all such options, warrants or
rights being hereinafter referred to as "Options"), securities by their
terms convertible into or exchangeable for Common Stock (all such
convertible or exchangeable securities being hereinafter referred to as
"Convertible Securities"), or options to purchase or rights to subscribe
for such Convertible Securities, the following provisions shall apply
(unless specifically excluded pursuant to the immediately preceding
paragraph) for the purpose of computing the adjustments called for by this
Section 5(d)(3):
<PAGE>
(i) The aggregate maximum number of shares of Common Stock
deliverable upon exercise of such Options shall be deemed to have been
issued at the time such Options were granted (whether or not such
Options are then exercisable) and for a consideration equal to the
aggregate consideration, if any, received or receivable by the Company
upon the grant of such Options plus the minimum additional aggregate
consideration, if any, payable to the Company upon the exercise of all
such Options; and
(ii) The aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such Convertible
Securities or upon the exercise of options to purchase or rights to
subscribe for such Convertible Securities and the subsequent
conversion or exchange thereof shall be deemed to have been issued at
the time such Convertible Securities were issued or such options or
rights were issued (whether or not such Convertible Securities are
then convertible or exchangeable or such options or rights are then
exercisable) and for a consideration equal to the aggregate
consideration, if any, payable to the Company upon the conversion or
exchange of such Convertible Securities or the exercise of any such
options or rights.
(4) No adjustment shall be made under this Section 5(d) upon the
issuance of any additional shares of Common Stock which are issued pursuant
to the exercise of any Options or the conversion of any Convertible
Securities if any adjustment shall previously have been made upon the grant
of any such Options or the issuance of such Convertible Securities as
provided above in this Section 5(d).
(5) For the purpose of this Section 5(d), 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:
(i) If the Security is not registered under 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 arms'-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 as 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 clause (ii) is
applicable, the value of the Security determined as of such date by an
Independent Financial Expert; or
(ii) 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 Business Day prior to such date or, if securities of the same
class as the Security have 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 were not registered under the Exchange Act.
For the purposes of the foregoing definition, 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 or the Nasdaq National Market System, 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 or, the Nasdaq National
Market System, 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 clause (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. Used
herein, "Independent Financial Expert" shall
<PAGE>
mean a recognized investment banking firm having a national or regional presence
reasonably acceptable to the Holder of this Warrant (i) that does not (and whose
directors, officers, employees and Affiliates do not) have a direct or indirect
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. As used herein, "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) Notice of Adjustment. Upon any adjustment of the Exercise Price, and/or
any increase or decrease in the number of shares purchasable upon the exercise
of this Warrant, the Company shall obtain a certificate prepared by the
Company's principal financial or accounting officer or its independent
accountants, stating the Exercise Price resulting from such adjustment and/or
the increase or decrease, if any, in the number of shares purchasable upon the
exercise of this Warrant, and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. The Company
shall send a copy of such certificate to the Holder of this Warrant, by first
class mail, postage prepaid, at the address of such Holder as shown on the books
of the Company, promptly after the occurrence of the event triggering an
adjustment under this Section 5 or, in the case of an adjustment pursuant to
Section 5(d), promptly after the amount of the adjustment shall have been
determined as required thereby.
(f) Other Notices. If at any time:
(1) the Company shall declare any cash dividend or distribution upon
shares of its Common Stock;
(2) the Company shall declare any dividend upon its Common Stock
payable in stock or make any special dividend or other distribution to the
holders of its Common Stock;
(3) the Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or other
rights, or shall offer any of its securities pursuant to a public offering;
(4) there shall be any capital reorganization or reclassification of
the capital stock of the Company, or consolidation or merger of the Company
with or into, or sale of all or substantially all of its assets to, another
corporation;
(5) there shall be a voluntary or involuntary dissolution, liquidation
or winding-up of the Company; or
(6) the Company shall take or propose to take any other action notice
of which is actually provided (or is required to be provided, pursuant to
any written agreement) to holders of Common Stock;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, written notice setting forth
the principal terms of such event (i) at least thirty (30) days prior to the
date on which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining rights
to vote in respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up or with respect to any
other action described in Section 5(f)(6) and (ii) in the case of any such
public offering, reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up or in the case of any
<PAGE>
other action described in Section 5(f)(6), at least thirty (30) days (or, if 30
days' notice is not reasonably practicable, such lesser period of notice (not
less than 10 days in any event) as is reasonably practicable), prior to the date
when the same shall take place. Any notice given in accordance with the
foregoing clause (i) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto. Any notice given in accordance with the
foregoing clause (ii) shall also specify the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up or upon any other action
described in Section 5(f)(6), as the case may be.
(g) Certain Events. If any change in the outstanding Common Stock of the
Company or any other event occurs as to which the other provisions of this
Section 5 are not strictly applicable or if strictly applicable would not fairly
protect the purchase rights of the Holder of this Warrant in accordance with the
essential intent and principles of such provisions, then the Board of Directors
of the Company shall make an adjustment in the number and class of shares
available under this Warrant and/or the Exercise Price and/or the application of
such provisions, in accordance with such essential intent and principles, so as
to protect such purchase rights as aforesaid.
6. Restriction on Transferability. (a) This Warrant and the shares of the
Company issuable upon the exercise of this Warrant have not been registered
under the Securities Act of 1933, as amended (the "Act"). By acceptance hereof,
the Holder covenants, agrees and represents that:
(i) This Warrant has been acquired for, and such shares, if acquired
upon the exercise of this Warrant, shall be acquired for, investment and
may not be sold, offered for sale, pledged, hypothecated or otherwise
transferred, in the absence of an effective registration statement for such
securities under the Act or an opinion of counsel reasonably satisfactory
to the Company to the effect that registration is not required under the
Act.
(ii) The Holder has had the opportunity to ask questions and receive
answers from the Company about the Company's business and the purchase by
it of these securities, and it has been given the opportunity to make any
inquiries that it may desire of any personnel of the Company concerning the
proposed operation of the Company and has been furnished with all of the
information it has requested. No advertisement has been used in connection
with the offer or sale of this Warrant to the Holder.
(iii) The Holder will not offer, sell, transfer, mortgage, assign or
otherwise dispose of this Warrant or the shares of Common Stock issuable
upon the exercise of this Warrant except pursuant to a registration
statement under the Act and qualification under applicable state securities
laws or pursuant to an opinion of counsel reasonably satisfactory to the
Company that such registration and qualification are not required, and that
the transaction (if it involves a sale in the over-the-counter market or on
a securities exchange) does not violate any provision of the Act. The
Holder understands that a stop-transfer order will be placed on the books
of the Company respecting this Warrant and any certificates representing
the shares of Common Stock issuable upon the exercise of this Warrant and
that this Warrant and any such certificates shall bear a restrictive legend
and a stop transfer order shall be placed with the transfer agent
prohibiting any such transfer until such time as the securities represented
by such certificates shall have been registered under the Act or shall have
been transferred in accordance with an opinion of counsel reasonably
satisfactory to the Company that such registration is not required; and
(iv) The Holder understands that it must hold the shares issuable upon
the exercise of this Warrant indefinitely unless they are registered under
the Act or an exemption from registration becomes available, and the
Company has no obligation to register the Warrants or otherwise seek to
make an exemption from registration available to the Holder.
(b) Each certificate for the shares issued upon the exercise of the Warrant
shall bear a legend in substantially the following form:
<PAGE>
"The shares represented by this Certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933, as amended (the
"Act") and may not be sold, offered for sale, pledged,
hypothecated or otherwise transferred except pursuant
to a registration statement under the Act or an
exemption from registration under the Act or the rules
and regulations thereunder."
(c) Notwithstanding anything to the contrary herein contained, for a period
of one year from and after the date of issuance of this Warrant, the Holder
shall not be permitted to sell, transfer or assign to any person or persons (i)
the right under this Warrant to purchase in excess of 25,000 Warrant Shares or
(ii) the record or beneficial interest in more than 25,000 Warrant Shares,
except, in either case, upon the written consent of the Company.
7. Registration of Warrant Shares for Distribution. Simultaneously with the
execution of this Agreement, the Company and Holder shall enter into a
Registration Rights Agreement for the registration of the Warrant Shares in the
form attached hereto as Exhibit 7.
8. Registration on the Books of the Company. The Company shall keep, or
cause to be kept, at its office at 2001 Marcus Avenue, Lake Success, New York, a
register in which the Company shall register this Warrant. No transfer of this
Warrant shall be valid unless made at such office and noted on the Warrant
register upon satisfaction of all conditions for transfer pursuant to Section 6
and or as otherwise required by law. When presented for transfer or payment,
this Warrant shall be accompanied by a written instrument or instruments of
transfer or surrender, in form satisfactory to the Company, duly executed by the
registered Holder or by its duly authorized attorney. The Company may deem and
treat the registered Holder hereof as the absolute owner of this Warrant for all
purposes, and the Company shall not be affected by any notice to the contrary.
9. Governing Law. This Warrant has been executed and delivered in the State
of New York and shall be construed in accordance with the laws of the State of
New York.
IN WITNESS WHEREOF, The Company has caused this Warrant to be executed by
its duly authorized officer.
COMFORCE Corporation
By:_____________________________
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________________ hereby sells, assigns and
transfers unto
Name_____________________________________________________________
(Please typewrite or print in block letters)
Address__________________________________________________________ the right to
purchase Common Stock, represented by this Warrant, and does hereby irrevocably
constitute and appoint _____________________________ (attorney), to transfer the
same on the books of COMFORCE Corporation with full power of substitution in the
premises.
Signature__________________________
Date:__________________
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
ONLY BE SOLD OR TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT OR, AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT, PROVIDED THAT IN THE EVENT THAT ANY RESALE OF THIS SECURITY IS MADE
PURSUANT TO SUCH AN EXEMPTION AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY
AND ITS LEGAL COUNSEL, WILL BE PROVIDED TO THE EFFECT THAT SUCH TRANSFER IS MADE
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OF 1933.
<PAGE>
PURCHASE FORM
Dated______________________
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing __________ shares of Common Stock and hereby makes
payment of $__________ in payment of the exercise price thereof.
-----------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name_____________________________________________________________
(Please typewrite or print in block letters)
Address__________________________________________________________
Social Security or other Taxpayer Identification Number__________
Signature_______________________________
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
ONLY BE SOLD OR TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT OR, AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT, PROVIDED THAT IN THE EVENT THAT ANY RESALE OF THIS SECURITY IS MADE
PURSUANT TO SUCH AN EXEMPTION AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY
AND ITS LEGAL COUNSEL, WILL BE PROVIDED TO THE EFFECT THAT SUCH TRANSFER IS MADE
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OF 1933.
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 and financial statement schedules 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.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Melville, New York
January 15, 1998
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 24, 1997,
incorporated by reference in COMFORCE Corporation's Form 10-K for the year ended
December 31, 1996, and to all references to our Firm included in this
registration statement.
/s/ Arthur Anderson LLP
Seattle, Washington
January 12, 1998
Exhibit 23.4
KPMG Peat Marwick LLP
The Board of Directors
Uniforce Services, Inc.:
We consent to the use of our report included 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
January 8, 1998
