SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-11876
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Uniforce Services, Inc.
(formerly known as Uniforce Temporary Personnel, Inc.)
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 13-1996648
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1335 Jericho Turnpike, New Hyde Park, NY 11040
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 437-3300
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practical date. 4,157,713 (as of November 1, 1995)
<PAGE>
UNIFORCE SERVICES, INC.
INDEX
Page No.
PART I FINANCIAL INFORMATION:
Item 1. Consolidated Condensed Financial Statements
Consolidated condensed statements of earnings -
three months and nine months ended
September 30, 1995 and 1994 (unaudited) 1
Consolidated condensed balance sheets -
September 30, 1995 (unaudited) and December
31, 1994 2
Consolidated condensed statements of cash flows -
nine months ended September 30, 1995 and 1994
(unaudited) 3
Notes to consolidated condensed financial
statements (unaudited) 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II OTHER INFORMATION:
Item 1. Legal Proceedings 9
Item 6. Exhibits and Reports on Form 8-K 9
ITEM 6. Exhibits and Reports:
(a) Exhibits
10(a) Agreement dated November 3, 1995 among
Uniforce Staffing Services, Inc.
("USSI") the Registrant, the
subsidiaries of the Registrant, Natwest
Bank N.A. ("Natwest") and Chemical Bank
("Chemical").
10(b) Promissory Note in the maximum principal
amount of $7,000,000 made by USSI to
Chemical.
10(c) Promissory Note in the maximum principal
amount of $5,000,000 made by USSI to
Natwest.
27 Financial Data Schedule.
(b) Reports on Form 8-K
There were no Current Reports on Form 8-K filed
during the quarter ended September 30, 1995.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
UNIFORCE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- ---------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales of supplemental
staffing services $33,609,759 $29,525,629 $93,248,631 $79,482,745
Service revenues and fees 2,336,979 1,943,205 5,530,092 5,094,896
----------- ----------- ----------- -----------
Total revenues 35,946,738 31,468,834 98,778,723 84,577,641
----------- ----------- ---------- -----------
Costs and expenses:
Cost of supplemental
staffing services 26,260,124 23,028,161 72,663,664 62,076,558
Licensees' share of gross
margin 2,597,035 2,567,202 7,166,125 7,309,871
General and administrative 5,005,916 4,228,463 13,878,639 11,078,070
Depreciation & amortization 227,008 246,179 693,343 674,917
----------- ----------- ----------- -----------
Total costs and expenses 34,090,083 30,070,005 94,401,771 81,139,416
------------ ----------- ----------- -----------
Earnings from operations 1,856,655 1,398,829 4,376,952 3,438,225
Other income (expense):
Interest - net (278,498) (26,216) (527,793) (6,077)
Other - net (5,696) 29,937 28,737 83,888
----------- ----------- ----------- ----------
Earnings before provision for
income taxes 1,572,461 1,402,550 3,877,896 3,516,036
Provision for income taxes 599,000 533,000 1,473,000 1,336,000
----------- ----------- ----------- -----------
NET EARNINGS $ 973,461 $ 869,550 $ 2,404,896 $ 2,180,036
=========== =========== =========== ===========
Weighted average number
of shares outstanding 4,260,056 4,667,266 4,330,296 4,536,748
Earnings per share $ .23 $ .19 $ .56 $ .48
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
1
<PAGE>
UNIFORCE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
September 30, December 31,
1995 1994
------------ ------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 6,771,569 $ 7,298,823
Accounts receivable - net 16,165,968 11,818,740
Funding and service fees
receivable - net 19,686,643 14,466,995
Current maturities of notes
receivable from licensees - net 237,952 399,714
Prepaid expenses and other
current assets 722,976 501,088
Deferred income taxes 379,771 379,771
----------- ------------
Total current assets 43,964,879 34,865,131
----------- ------------
Notes receivable from licensees - net 165,357 277,767
Fixed assets - net 2,257,591 1,294,550
Deferred costs and other assets - net 888,488 1,336,284
Cost in excess of fair value of net
assets acquired 3,576,324 3,722,576
----------- ------------
$50,852,639 $ 41,496,308
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loan payable $10,500,000 $ 3,500,000
Payroll and related taxes payable 8,508,901 7,007,921
Payable to licensees and clients 2,304,045 1,910,111
Income taxes payable 381,024 ---
Accrued expenses and
other liabilities 3,484,060 3,165,869
----------- ------------
Total current liabilities 25,178,030 15,583,901
----------- ------------
Loan payable - non-current 2,200,000 2,800,000
Capital lease obligation - non-current 438,599 ---
Stockholders' equity:
Common stock $.01 par value 49,872 49,468
Additional paid-in capital 7,660,918 7,411,572
Retained earnings 22,958,437 20,952,594
----------- ------------
30,669,227 28,413,634
Treasury stock, at cost, 829,500
shares in 1995 and 578,750
shares in 1994 (7,633,217) (5,301,227)
----------- ------------
Total stockholders' equity 23,036,010 23,112,407
----------- ------------
$50,852,639 $ 41,496,308
=========== ============
See accompanying notes to consolidated condensed financial statements.
2
<PAGE>
UNIFORCE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
-------------------------------
1995 1994
---- ----
Cash flows from operating activities:
Net earnings $2,404,896 $2,180,036
Adjustments to reconcile net
earnings to net cash (used)
by operating activities:
Depreciation and amortization 693,343 674,917
(Increase) in receivables
and prepaid expenses (9,788,764) (8,144,504)
Stock option compensation expense 13,500 13,500
Increase in liabilities 2,508,305 3,411,980
---------- ----------
Net cash (used) by operating
activities (4,168,720) (1,864,071)
---------- ----------
Cash flows from investing activities:
Purchases of fixed assets (709,995) (401,382)
(Increase) decrease in deferred
costs and other investments 172,082 (4,620,452)
Decrease in notes receivable
from licensees 274,172 120,855
---------- ----------
Net cash (used) by investing
activities (263,741) (4,900,979)
---------- ----------
Cash flows from financing activities:
Increase in loan payable 6,400,000 6,600,000
Cash dividends paid (399,053) (397,240)
Purchase of treasury stock (2,331,990) (293,753)
Proceeds from issuance of
common stock 236,250 734,405
---------- ----------
Net cash provided by financing
activities 3,905,207 6,643,412
---------- ----------
Net (decrease) in cash
and cash equivalents (527,254) (121,638)
Cash and cash equivalents at
beginning of period 7,298,823 7,155,081
---------- ----------
Cash and cash equivalents at
end of period $6,771,569 $7,033,443
========== ==========
Supplemental disclosures:
Cash paid for:
Interest $ 422,730 $ 110,601
---------- ----------
Income taxes $1,084,548 $1,428,289
---------- ----------
Non-cash investing and financing activity:
In April 1994, the Company issued 127,720 shares of common stock in
connection with the acquisition of certain assets of Brannon & Tully.
During 1995, the Company entered into a capital lease agreement for
$524,423 of computer software.
See accompanying notes to consolidated condensed financial statements.
3
<PAGE>
UNIFORCE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. PRINCIPLES OF CONSOLIDATION
The consolidated condensed financial statements include the accounts of
Uniforce Services, Inc. and its wholly-owned subsidiaries (the "Company"). All
significant intercompany accounts and transactions have been eliminated in
consolidation.
2. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The consolidated condensed financial statements as shown in the
accompanying index have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows at September 30, 1995, and for all periods presented
have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed, reclassified or omitted. It is suggested that
these consolidated condensed financial statements be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's December 31, 1994 financial statements. The results of operations for
the period ended September 30, 1995 are not necessarily indicative of the
operating results which may be achieved for the full year.
Tax accruals have been made based on estimated effective annual tax
rates for the periods presented.
3. CONTINGENCIES
In April 1994, various prior insurance carriers and their
not-for-profit trade association filed an action against the Company, its
officers, a director and various unrelated parties. The carriers amended the
complaint in October 1995. The action alleges breach of contracts of insurance,
negligence, fraud, conspiracy to defraud and fraudulent inducement resulting in
underpayment of premiums. The time for the Company to respond to the complaint
has not yet expired and the Company continues to deny the validity of the claims
of the Plaintiffs. Further, it intends to assert substantial claims in
opposition to the claims of the Plaintiffs. Additionally, the Company and its
subsidiaries have filed suit against various prior worker compensation carriers
alleging claims mismanagement.
Management believes that the ultimate outcome of these matters will not
have a material adverse affect upon the financial position of the Company.
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Total revenues increased by $4,477,904, or 14.2% from $31,468,834 in
the third quarter of 1994 to $35,946,738 in the third quarter of 1995. For the
first nine months, total revenues increased by $14,201,082 or 16.8% from
$84,577,641 in 1994 to $98,778,723 in 1995.
Sales of supplemental staffing services increased by $4,084,130 and
$13,765,886, respectively, for the third quarter and the first nine months of
1995 as compared to 1994. These increases resulted principally from the
Company's acquisition in April 1994 of certain assets of Brannon & Tully, Inc.,
a provider of information services ("IS") contract professionals. This company
now operates under the tradename of Brannon & Tully/Uniforce Information
Services. This acquisition contributed $6,713,154 and $18,499,048, respectively,
for the third quarter and the first nine months of 1995 and $4,396,829 for the
third quarter of 1994 and $7,374,599 for the period from April 18, 1994 to
September 30, 1994. This acquisition has had a favorable impact on the Company's
results of operations and its ability to develop higher margin professional
services. Sales by the Company's subsidiaries, PrO Unlimited, and to a lesser
degree LabForce, continued to increase as the Company emphasized the marketing
of these services.
The Company's strategy is to expand through the development of higher
margin professional services such as IS, technical, automated office and other
professional support services as well as through its PrO Unlimited and LabForce
subsidiaries, while continuing to reduce the percentage of its sales derived
from light industrial assignments. In addition, the Company intends to continue
to pursue acquisitions of established independent supplemental staffing service
companies that offer specialty services.
Service revenues and fees increased by 20.3% from $1,943,205 in the
third quarter of 1994 to $2,336,979 in the third quarter of 1995 and increased
by 8.5% from $5,094,896 for the first nine months of 1994 to $5,530,092 for the
first nine months of 1995. Service revenues and fees generated by Temporary Help
Industry Servicing Company, Inc. (THISCO) and Brentwood Service Group, Inc.
(BSG), two of the Company's subsidiaries, increased by $318,614 and
$763,475,respectively, for the third quarter and the first nine months of 1995
as compared to 1994. The Company intends to continue to expand this portion of
its business through THISCO and BSG. The nine month increase was offset by
certain licensee service revenues and fees which were reported in 1994 and for
which there were lower amounts in 1995. For the third quarter, licensee service
revenues and fees were higher in 1995 as compared to 1994. In addition,
system-wide sales, which include sales of Associated Offices serviced by THISCO
and BSG, increased $13,430,382 or 19.8% from $67,787,639 in the third quarter of
1994 to $81,218,021 in the third quarter of 1995. In the first nine months,
system-wide sales increased by $41,447,494 or 22.8% from $182,058,511 in 1994 to
$223,506,005 in 1995.
5
<PAGE>
Cost of supplemental staffing services was 78.1% of sales of
supplemental staffing services in the third quarter of 1995, compared to 78.0%
in the third quarter of 1994. For the first nine months, cost of supplemental
staffing services was 77.9% of sales of supplemental staffing services in 1995
and 78.1% in 1994.
Licensees' share of gross margin is principally based upon a percentage
of the gross margin generated from sales by licensed offices. The gross margin
from sales of supplemental staffing services amounted to $7,349,635 and
$6,497,468 for the third quarter of 1995 and 1994, respectively. For the first
nine months, gross margin from such sales amounted to $20,584,967 in 1995 and
$17,406,187 in 1994. Licensees' share of gross margin was 35.3% for the third
quarter of 1995 as compared to 39.5% for the third quarter of 1994. For the
first nine months, licensees' share of gross margin was 34.8% in 1995 and 42.0%
in 1994. The lower share as a percentage of total gross margin in 1995 is due,
in part, to the sales of Brannon & Tully/Uniforce Information Services for which
there are no related licensee distributions, and to the sales of PrO Unlimited
for which there are limited distributions.
General and administrative expenses increased by $777,453 or 18.4%
during the third quarter of 1995 as compared to the third quarter of 1994. For
the first nine months, general and administrative expenses increased by
$2,800,569 or 25.3% in 1995 compared to 1994. As a percentage of revenues,
general and administrative expenses were 13.9% and 13.4% for the third quarter
of 1995 and 1994, respectively and 14.1% in 1995 and 13.1% in 1994 for the first
nine month periods. These increases resulted principally from expenses relating
to the Brannon & Tully/Uniforce Information Services operations. Further
contributing to the increase were higher expenses relating to payroll costs with
respect to permanent staff offset by savings in staff recruiting costs and
increased professional fees relating to the litigation described in Note 3 of
the notes to the consolidated condensed financial statements.
The increase in net interest expense in the 1995 periods as compared to
1994 is a direct result of increased borrowings used for the acquisition of
Brannon & Tully, Inc. and to meet working capital requirements due to the
increased system-wide sales.
As a result of the factors discussed above, net earnings increased by
12.0% from $869,550 ($.19 per share) in the third quarter of 1994 to $973,461
($.23 per share) in the third quarter of 1995. For the first nine months, net
earnings increased by 10.3% from $2,180,036 ($.48 per share) in 1994 to
$2,404,896 ($.56 per share) in 1995.
6
<PAGE>
FINANCIAL CONDITION
As of September 30, 1995, the Company's working capital decreased to
$18,786,849, as compared to $19,281,230 at December 31, 1994. This decrease was
due primarily to the continuing profitable operations of the Company being more
than offset by the repurchase of its common stock, the acquisition of fixed
assets and the payment of the cash dividend detailed below. Funding and service
fees receivables increased by $5,219,648 to $19,686,643 during the first nine
months of 1995. This increase is due principally to the increased service
revenues and fees generated by THISCO and BSG.
During 1995, the Company has paid quarterly cash dividends on shares of
common stock of Uniforce at the quarterly rate of $.03 per share. Subsequent to
September 30, 1995, the Board of Directors declared a quarterly cash dividend of
$.03 per share, which was paid on October 27, 1995 to holders of record on
October 13, 1995.
On April 18, 1994, the Company acquired certain assets of Brannon &
Tully, Inc., a provider of IS contract professionals. The purchase price
consisted of $3,150,000 in cash and the issuance of 127,720 shares of common
stock of the Company. The Company also acquired from Brannon & Tully, Inc.
certain accounts receivable, with recourse, for $1,301,595. The cash portion of
the purchase price and the accounts receivable acquired were initially financed
through a $4,500,000 borrowing under the Company's working capital credit
facility noted below.
The Company maintains, with two banks, a working capital credit
facility and a revolving credit and term loan facility. The working capital
credit facility represents an open line of credit of up to $12,000,000
(increased from $10,000,000, effective in November 1995), borrowings under which
are payable on demand or December 31, 1995. Outstanding borrowings bear
interest, at the Company's option, at the banks' prime rate or at a rate 120
basis points above the banks' LIBOR Rate (a rate based upon the London Interbank
Offered Rate). At September 30, 1995, the Company had outstanding borrowings of
$9,700,000 with interest being charged as follows: 7.075% (120 basis points
above the LIBOR) on $7,200,000 and 8.75% (Prime Rate) on $2,500,000.
On August 31, 1994, the Company entered into a new revolving credit and
term loan agreement establishing a two-year $6,000,000 facility, outstanding
borrowings under which, at the Company's option, could be converted at the
maturity of the revolving credit facility into a five-year term loan. Effective
November 1995, in connection with the increase in the Company's working capital
facility described above, the revolving credit and term loan agreement (under
which there were no outstanding borowings) was terminated. The terminated
facility had replaced a prior revolving credit facility that matured in June
1994. Borrowings under the prior facility, which aggregated $4,000,000 at
maturity, were converted into a five-year term loan. At September 30, 1995,
$3,000,000 was outstanding with interest being charged at 7.325% (145 basis
points above the 90-day LIBOR). The terms of the
7
<PAGE>
prior facility contain restrictive covenants relating to, among other things,
minimum net worth and profitability, with which the Company is in compliance.
The Company is in active negotiations with regard to replacement
financing arrangements, which it currently anticipates will be completed within
the next 30 days.
The Company does not currently have material commitments for capital
expenditures and does not anticipate entering into any such commitments during
the next 12 months. The Company believes that internally generated cash flow and
existing borrowing facilities will be adequate to meet operating requirements
through December 31, 1995. It further believes that the replacement financing
arrangement currently being negotiated will be adequate to meet its operating
requirements subsequent to such date. The Company intends to expand its business
through the development of higher margin professional services as well as
through PrO Unlimited, LabForce and Brannon & Tully/Uniforce Information
Services. Additionally, the Company continues to pursue expansion by acquisition
of established independent supplemental staffing service companies that offer
specialty services. The Company anticipates that this expansion will be financed
from internally generated cash flow and borrowing facilities.
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3. Legal Proceedings of the Company's Annual
Report on Form 10-K for the year ended December 31, 1994, to Item 1. Legal
Proceedings of the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995, and to the description therein of a civil action commenced in
the Circuit Court, for the Fifteenth Judicial Circuit, Palm Beach County,
Florida by National Council on Compensation Insurance, Inc., National Workers
Compensation Reinsurance Pool, Insurance Company of North America, The Travelers
Insurance Company and Liberty Mutual Insurance Company, Case No. CL-94-03275AD.
In October 1995 the Plaintiffs filed a Second Amended Complaint. In the Second
Amended Complaint the Plaintiffs added several defendants unrelated to the
registrant and additionally, three licensees of Uniforce, Gordon Robinett, a
director of Uniforce and the registrant's former Vice-President of Finance, and
the registrant's independent public auditors. The Plaintiffs allege causes of
action for breach of contracts of insurance, negligence, fraud, conspiracy to
defraud, and fraudulent inducement. The Plaintiffs allege that by virtue of the
manner in which the Company conducted its business, the Company secured workers'
compensation coverage for its temporary employees at premiums below those that
should have been paid. The Plaintiffs seek an audit, accounting, and damages in
an unspecified amount not less than $11,500,000. The time for the Company to
respond to the Complaint has not expired. The Company denies the claims and
intends to assert substantial counter-claims.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10(a) Agreement dated November 3, 1995 among
Uniforce Staffing Services, Inc. ("USSI")
the Registrant, the subsidiaries of the
Registrant, Natwest Bank N.A. ("Natwest")
and Chemical Bank ("Chemical").
10(b) Promissory Note in the maximum principal
amount of $7,000,000 made by USSI to
Chemical.
10(c) Promissory Note in the maximum principal
amount of $5,000,000 made by USSI to
Natwest.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter ended
September 30, 1995.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 13, 1995 UNIFORCE SERVICES, INC.
By:/s/ John Fanning
-----------------------------------
John Fanning, Chairman of the Board
and President
By:/s/ Harry Maccarrone
-----------------------------------
Harry Maccarrone, V.P. of Finance,
Principal Financial and Accounting
Officer
10
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
10(a) Agreement dated November 3, 1995 among
Uniforce Staffing Services, Inc. ("USSI")
the Registrant, the subsidiaries of the
Registrant, Natwest Bank N.A. ("Natwest")
and Chemical Bank ("Chemical").
10(b) Promissory Note in the maximum principal
amount of $7,000,000 made by USSI to
Chemical.
10(c) Promissory Note in the maximum principal
amount of $5,000,000 made by USSI to
Natwest.
27 Financial Data Schedule.
AGREEMENT
WHEREAS, the company known as UNIFORCE SERVICES, INC. has changed its
name to UNIFORCE STAFFING SERVICES, INC. (the "Company");
WHEREAS, the company known as UNIFORCE TEMPORARY PERSONNEL, INC. has
changed its name to UNIFORCE SERVICES, INC.;
WHEREAS, the Company has requested that Chemical Bank ("Chemical")
increase the amount available to the Company under its line of credit to
$7,000,000.00 and extend the termination date of its line of credit to the
earlier of demand or December 31, 1995;
WHEREAS, the Company has requested that NatWest Bank N. A. ("NatWest")
extend the termination date of its line of credit to the earlier of demand or
December 31, 1995;
WHEREAS, the Company has agreed from and after October 13, 1995 not to
repurchase stock of the Company;
WHEREAS, the Company has requested that Chemical and NatWest (Chemical
and NatWest, collectively, the "Banks") enter into an intercreditor agreement
due to such increase in availability under the Chemical line of credit;
WHEREAS, the Company has requested that the commitment of Chemical and
NatWest to make revolving credit advances to the Company pursuant to that
certain revolving credit and term loan agreement among the Company, certain
related companies and the Banks dated as of August 31, 1994 be terminated;
WHEREAS, the Company and the Banks wish to memorialize their
understanding with respect to the foregoing;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties hereto agree as follows:
1) Effective retroactive to August 21, 1995, in any document entered
into with or delivered to either of the Banks, the name "Uniforce Services,
Inc." shall be substituted with the name Uniforce Staffing Services, Inc." and
the name "Uniforce Temporary Personnel, Inc." shall be substituted with the name
"Uniforce Services, Inc." in each place in which such names appear.
2) The Banks and the Company agree that the outstanding principal
balance of the Term Loans evidenced by the Term Notes dated June 19, 1993 is
$1,500,000.00 as to each Bank as of October 30, 1995 and all interest due on the
Term Loans has been paid to such date.
<PAGE>
3) As used herein, (a) "Guarantors" shall mean Uniforce Services, Inc.,
Temporary Help Industry Servicing Company, Inc., E.O. Operations Corp., E.O.
Servicing Co., Inc., UTS Corp. of Minnesota, USI Inc. of California, UTS of
Delaware, Inc., Tempfunds International, Inc., PrO Unlimited, Inc., THISCO of
Canada, Inc., Uniforce Payrolling Services, Inc., Brentwood Service Group, Inc.,
Uniforce MIS Services of Georgia, Inc., Labforce of America, Inc., Uniforce
Medical Office Support, Inc. and Computer Consultants Funding & Support, Inc.
and any other subsidiary of the Company or any Guarantor.
(b) "Agreement" shall mean the Revolving Credit and Term Loan
Agreement among the Banks, the Company and certain related companies dated as of
June 19, 1991.
(c) "Loan Documents" shall mean each of the Agreement and any
documents executed in connection therewith and any documents executed in
connection with a line of credit made available by either of the Banks.
4) As an inducement for the Banks to enter into this Agreement, the
Company and the Guarantors hereby jointly and severally represent and warrant as
follows:
(A) There are no defenses or offsets to their respective
obligations under the Agreement or any of the Loan Documents, and if any such
defenses or offsets exist without the knowledge of the Company or the
Guarantors, the same are hereby waived.
(B) All the representations and warranties made by the
Company and the Guarantors in the Agreement or any of the Loan Documents are
true and correct in all respects as if made on the date hereof.
(C) No event which constitutes a Default or an Event of
Default has occurred and is continuing under the Agreement or any of the Loan
Documents.
5) Chemical hereby agrees to increase the availability under its line
of credit to the Company to $7,000,000.00 which line of credit will terminate on
the earlier of demand or December 31, 1995, provided however, that
notwithstanding the foregoing, advances under such line of credit shall be
within the sole discretion of Chemical.
6) NatWest hereby agrees to make its line of credit available to the
Company in an amount not to exceed $5,000,000.00 which line of credit will
terminate on the earlier of demand or December 31, 1995; provided however, that
notwithstanding the foregoing, advances under such line of credit shall be
within the sole discretion of NatWest.
-2-
<PAGE>
7) The Company hereby agrees from and after October 13, 1995 not to
repurchase stock of the Company. The commencement by the Company of a tender
offer for its common stock shall not constitute a breach of this Agreement so
long as no common stock has been purchased pursuant to such tender offer.
8) The Company and the Banks agree that the commitment of Chemical and
NatWest to make revolving credit advances to the Company pursuant to that
certain revolving credit and term loan agreement among the Company and the Banks
dated as of August 31, 1994, is hereby terminated at the Company's request.
9) This Agreement shall become effective on such date as all of the
following conditions shall be satisfied:
(A) NOTES. NatWest and Chemical shall have received the duly
executed notes in the forms of Exhibit A and Exhibit B hereto.
(B) INTERCREDITOR AGREEMENT. The Banks shall have received a
duly executed intercreditor agreement in the form of Exhibit C hereto.
(C) REAFFIRMATIONS. The Banks shall have received the duly
executed reaffirmations of security agreements and reaffirmations of guaranties.
(D) UCC-3 AMENDMENTS. The Banks shall have received duly
executed UCC-3 amendments reflecting the name change of Uniforce Services, Inc.
to Uniforce Staffing Services, Inc. and Uniforce Temporary Personnel, Inc. to
Uniforce Services, Inc.
(E) FEES. The Banks shall have received evidence of payment
of the Banks' fees and all attorneys' fees and expenses associated with the
preparation of this Agreement and any documents executed in connection herewith.
(F) APPROVAL OF THE BANKS' COUNSEL. All legal matters
incident to this Agreement shall be reasonably satisfactory to counsel to the
Banks.
10) This Agreement is dated for convenience as of November 3, 1995 and
shall be effective, unless otherwise indicated, upon the date of the execution
of this Agreement by the Banks.
11) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers on the dates set forth below.
UNIFORCE STAFFING SERVICES, INC. formerly
known as UNIFORCE SERVICES, INC. UNIFORCE
SERVICES, INC. formerly known as UNIFORCE
TEMPORARY PERSONNEL, INC. TEMPORARY HELP
INDUSTRY SERVICING COMPANY, INC. E.O.
OPERATIONS CORP. E.O. SERVICING CO., INC.
UTS CORP, OF MINNESOTA USI INC. OF
CALIFORNIA UTS OF DELAWARE, INC. TEMPFUNDS
INTERNATIONAL, INC. PrO UNLIMITED, INC.
THISCO OF CANADA, INC. UNIFORCE PAYROLLING
SERVICES, INC. UNIFORCE MIS SERVICES OF
GEORGIA, INC. LABFORCE OF AMERICA, INC.
UNIFORCE MEDICAL OFFICE SUPPORT, INC.
COMPUTER CONSULTANTS FUNDING & SUPPORT, INC.
By:/s/ Harry V. Maccarrone
---------------------------------------
Harry V. Maccarrone
Vice President - Finance
Dated: November 3, 1995
BRENTWOOD SERVICE GROUP, INC.
By:/s/ Harry V. Maccarrone
----------------------------------------
Harry V. Maccarrone
President
Dated: November 3, 1995
-4-
<PAGE>
BANKS:
NATWEST BANK N.A.
By:/s/ Tara M. Kazak
----------------------------------------
Tara M. Kazak
Vice President
Dated: November 3, 1995
CHEMICAL BANK
By:/s/ Richard E. Grabowski
----------------------------------------
Richard E. Grabowski
Vice President
Dated: November 3, 1995
-5-
<PAGE>
STATE OF NEW YORK )
:ss.:
COUNTY OF NASSAU )
On the 3rd day of November, 1995, before me personally came HARRY V.
MACCARRONE, to me known, who, being by me duly sworn, did depose and say that he
resides at c/o 1335 Jericho Turnpike, New Hyde Park, New York 11040 that he is
the Vice President-Finance of UNIFORCE STAFFING SERVICES, INC., formerly known
as UNIFORCE SERVICES, INC., UNIFORCE SERVICES, INC., formerly known as UNIFORCE
TEMPORARY PERSONNEL, INC., TEMPORARY HELP INDUSTRY SERVICING COMPANY, INC., E.O.
OPERATIONS CORP., E.O. SERVICING CO., INC., UTS CORP. OF MINNESOTA, USI INC. OF
CALIFORNIA, UTS OF DELAWARE INC., TEMPFUNDS INTERNATIONAL, INC., PrO UNLIMITED,
INC., THISCO OF CANADA, INC., UNIFORCE PAYROLLING SERVICES, INC., UNIFORCE MIS
SERVICES OF GEORGIA, INC., LABFORCE OF AMERICA, INC., UNIFORCE MEDICAL OFFICE
SUPPORT, INC., and COMPUTER CONSULTANTS FUNDING & SUPPORT, INC., the
corporations described in and which executed the foregoing instrument; and that
he signed his name thereto by order of the board of directors of said
corporations.
-----------------------------------
Notary Public
STATE OF NEW YORK )
:ss.:
COUNTY OF NASSAU )
On the 3rd day of November, 1995, before me personally came HARRY V.
MACCARRONE, to me known, who, being by me duly sworn, did depose and say that he
resides at c/o 1335 Jericho Turnpike, New Hyde Park, New York 11040; that he is
the President of BRENTWOOD SERVICE GROUP, INC., the corporation described in and
which executed the foregoing instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
----------------------------------
Notary Public
-6-
<PAGE>
STATE OF NEW YORK )
:ss.:
COUNTY OF NASSAU )
On the 3rd day of November, 1995, before me personally came TARA M.
KAZAK, to me known, who, being by me duly sworn, did depose and say that she
resides at c/o 1335 Jericho Quadrangle, Jericho, New York 11753; that she is a
Vice President of NATWEST BANK N.A., the banking institution described in and
which executed the foregoing document and that she signed his name thereto by
authority of such banking institution.
-----------------------------------
Notary Public
STATE OF NEW YORK )
:ss.:
COUNTY OF NASSAU )
On the 3rd day of November, 1995, before me personally came RICHARD E.
GRABOWSKI, to me known, who, being by me duly sworn, did depose and say that he
resides at c/o 7600 Jericho Turnpike, Woodbury, New York 11797; that he is a
Vice President of CHEMICAL BANK, the banking institution described in and which
executed the foregoing document and that he signed his name thereto by authority
of such banking institution.
-----------------------------------
Notary Public
-7-
PROMISSORY NOTE
$7,000,000 New York, New York
November 3, 1995
1. FOR VALUE RECEIVED, UNIFORCE STAFFING SERVICES, INC. (the
"Borrower"), by this promissory note (the "Note") unconditionally promises to
pay to the order of CHEMICAL BANK (the "Bank"), in lawful money of the United
States, the principal amount of SEVEN MILLION DOLLARS ($7,000,000) or the
aggregate unpaid principal amount of all advances (individually, an "Advance"
and collectively, "Advances") made by the Bank to the Borrower and recorded on
the schedules attached hereto, whichever is less. Each Advance evidenced hereby
shall be made available and shall bear interest at the applicable rate selected
by the Borrower, subject to availability, as provided in subparagraph (a) hereof
(a "Prime Rate Advance") or subparagraph (b) hereof (an "Adjusted Libor Rate
Advance").
(a) Each Prime Rate Advance shall be made available by the Bank
to the Borrower at the Bank's New York, New York office and
shall bear interest at the rate per annum which is equal to
the Bank's Prime Rate. "Prime Rate" shall mean the rate per
annum publicly announced by the Bank at its principal office
from time to time as its prime rate. Each change in the Prime
Rate shall result in a change in the interest rate herein,
effective as of the opening of business on the day on which
such change in the Prime Rate becomes effective.
(b) Each Adjusted Libor Rate Advance shall be made available by
the Bank to the Borrower at the lending office designated by
the Bank (the "Lending Office"), shall be in a minimum amount
of $500,000 and shall bear interest for each Interest Period
(as hereinafter defined in paragraph 3) applicable thereto at
a rate per annum which is equal to 1.20% above the rate per
annum, adjusted as provided in the last sentence of this
paragraph, at which U.S. dollar deposits are offered to the
Lending Office in the London interbank market as at 11:00
a.m., local time of such Lending Office, two Working Days
prior to the first day of such Interest Period in an amount
equal to the amount of such Advance which will be outstanding
during such Interest Period for delivery on the first day of
such Interest Period for the number of days in such Interest
Period. The maximum aggregate principal amount of Adjusted
Libor Rate Advances made by the Bank to the Borrower shall not
exceed $5,000,000 outstanding at any time. "Working Day" shall
mean a day on which dealings in currencies and exchange
between banks may be carried on in New York, New York and on
which dealings in currencies and exchange between banks are
also carried on
<PAGE>
in the London interbank market and banks are open for business
in London and the place where such Lending Office is located.
The interest rate determined hereunder shall be adjusted by
dividing such interest rate by the number equal to 1.00 minus
the rate (expressed as a decimal and rounded upward, if
necessary, to the next higher 1/16 of 1%) of reserves which
are required to be maintained (or which will be required to be
maintained), under Regulation D of the Board of Governors of
the Federal Reserve System (as in effect on the date of
determination of such interest rate), against "Eurocurrency
liabilities" (as such term is defined in Regulation D) from
time to time during the period for which the interest rate is
determined.
2. The Bank may lend, in its sole discretion in each instance, such
amounts as may be requested by the Debtor hereunder, which Loans shall in no
event exceed $7,000,000 in aggregate principal amount outstanding at any time.
Each such request for a Advance shall be made by an officer of the Borrower or
any person designated in writing by any such officer, all of which are hereby
designated and authorized by the Borrower to request Advances and agree to the
terms thereof (including without limitation the applicable interest rate and
Maturity Date with respect thereto). The Debtor shall give the Bank notice at
least two (2) Working Days prior to the date hereof and the end of each Interest
Period (as hereafter defined) specifying whether the Advance shall be a Prime
Rate Advance or an Adjusted Libor Rate Advance and the Interest Period
applicable thereto. In the event the Borrower shall fail to provide such notice,
the Advance shall be deemed to bear interest at the applicable Prime Rate.
3. "Interest Period" shall mean (i) with respect to each Adjusted
Libor Rate Advance, the period beginning on the date of such Advance and ending
1, 2 or 3 months thereafter, as agreed between the Borrower and the Bank not
less than two (2) Working Days prior to the date of such Advance. "Business Day"
shall mean a day other than a Saturday, Sunday of other day on which the Bank is
authorized to close under the laws of the State of New York.
4. Each Prime Rate Advance shall be payable on the earlier of
demand or December 31, 1995. Each Adjusted Libor Rate Advance shall be payable
on the last day of the Interest Period therefor (the "Maturity Date") but not
later than December 31, 1995. Interest on each Prime Rate Advance shall be
payable monthly on the last day of each month and upon payment or prepayment in
full of the unpaid principal amount thereof. Interest on each Adjusted Libor
Rate Advance shall be payable on the Maturity Date thereof.
5. Each Advance, the date on which it is made, the Maturity Date
and the rate charged thereon, if other than a Prime
-2-
<PAGE>
Rate Advance, and each payment made on account of the principal thereof shall be
noted on the appropriate schedule attached hereto. The failure of the Bank,
however, to record any such information shall not relieve the Borrower of its
obligation to repay such Advance with interest thereon as applicable. This Note
shall be used to record all Advances and payments of principal made hereunder
until it is surrendered to the Borrower by the Bank and it shall continue to be
used even though there may be periods prior to such surrender when no amount of
principal or interest is owing hereunder.
6. If all or a portion of any Adjusted Libor Rate Advance shall not
be paid when due (whether as stated, by acceleration or otherwise), such Advance
shall bear interest for the period from the due date until the Maturity Date of
such Advance at the rate per annum which is equal to 2% above the rate which
would otherwise be applicable hereunder and thereafter until paid in full at the
rate per annum which is equal to 2% above the rate which the Bank would charge
the Borrower on such Maturity Date for a Prime Rate Advance. If all or any
portion of any Prime Rate Advance is not paid when due (whether as stated, by
acceleration or otherwise), such Advance shall bear interest from the due date
until paid in full at the rate per annum which is equal to 2% above the rate
which was in effect on the due date.
7. The Borrower may not prepay any Adjusted Libor Rate Advance
without the prior written consent of the Bank.
8. If any payment in respect of a Prime Rate Advance becomes due
and payable on a day which is not a Business Day, such payment shall be made on,
and interest at the applicable rate shall be payable to, the next succeeding
Business Day. If any payment in respect of an Adjusted Libor Rate Advance
becomes due and payable on a day which is not a Working Day, such payment shall
be made on, and interest at the applicable rate shall be payable to, the next
succeeding Working Day, unless such succeeding Working Day shall fall in the
next succeeding calendar month, in which event such payment shall be made on the
next preceding Working Day, and any relevant Interest Period shall be adjusted
accordingly by the Bank.
9. Interest shall be computed on the basis of a 360 day year for
actual days elapsed. Anything in this Note to the contrary notwithstanding, the
Bank shall not be permitted to charge or receive, and the Borrower shall not be
obligated to pay, interest in excess of the maximum rate from time to time
permitted by applicable law; provided, however, if the maximum rate permitted by
law changes, the rate hereunder shall change, without notice to the Borrower, on
the same day the maximum rate permitted by law changes.
10. All payments on account of Prime Rate Advances to be made
hereunder by the Borrower shall be made in immediately
-3-
<PAGE>
available funds at the office of the Bank located at 7600 Jericho Turnpike,
Woodbury, New York 11797 or such other office as the Bank may designate. All
payments on account of Adjusted Libor Rate Advances to be made hereunder by the
Borrower shall be made in immediately available funds at the office of the Bank
located at 4 New York Plaza, New York, New York.
11. If any existing or future applicable law, regulation or
directive, or any change therein or in the interpretation thereof, or compliance
by the Bank with any request (whether or not having the force of law) of any
relevant central bank or other comparable agency, subjects the Bank to any tax
of any kind whatsoever with respect to this Note or changes the basis of
taxation of payments to the Bank of principal, interest or any other amount
payable hereunder (except for changes in the rate of any tax presently imposed
on the Bank) or imposes, modifies or deems applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, or advances or loans by,
or other credit extended by, or any other acquisition of funds by, any office of
the Bank which are not otherwise included in the determination of the rate
applicable to Adjusted Libor Rate Advances hereunder, or imposes on the Bank any
other condition with respect to the London interbank market or this Note or the
loans evidenced hereby, and the result of any of the foregoing is to increase
the cost to the Bank of maintaining advances or credit hereunder or to reduce
any amount receivable in respect thereof, then the Borrower agrees to pay to the
Bank, upon demand, additional amounts which will compensate the Bank for such
increased cost or reduced amount receivable as determined by the Bank with
respect to this Note. The Bank's certificate as to any additional amounts
payable pursuant to the preceding sentence shall be conclusive as to the amounts
due in the absence of manifest error.
12. Notwithstanding anything to the contrary contained elsewhere in
this Note, if any change after the date hereof in any law or regulation or in
the interpretation thereof by any governmental authority charged with the
administration thereof shall make it unlawful (based on the opinion of any
counsel, whether in-house, special or general, for the Bank) for the Bank to
make or maintain any Adjusted Libor Rate Advance or to give effect to its
obligations as contemplated hereby with respect to any Adjusted Libor Rate
Advance, then, by written notice to the Borrower by the Bank the Bank may
require that all outstanding Adjusted Libor Rate Advances made hereunder be
converted to Prime Rate Advances, whereupon all such Adjusted Libor Rate
Advances shall be automatically converted to Prime Rate Advances as of the
effective Date of such notice as provided herein for purposes of this paragraph,
a notice to the Borrower by the Bank pursuant to this paragraph shall be
effective, if lawful and if any Adjusted Libor Rate Rate Advances shall then be
outstanding, on the last day
-4-
<PAGE>
of the then current Interest Period; otherwise, such notice shall be effective
on the date of receipt by the Borrower.
13. The Borrower agrees to pay all the Bank's costs and
out-of-pocket expenses (including, without limitation, reasonable attorneys'
fees) arising in connection with the enforcement of, and preservation of its
rights under, this Note.
14. The Borrower agrees to indemnify the Bank for, and to hold the
Bank harmless from, any loss or expense which the Bank may sustain or incur,
including any interest payment by the Bank to lenders of funds borrowed by it in
order to make or maintain the loans evidenced hereby, as a consequence of (i)
default by the Borrower in payment of the principal amount of, or interest on,
this Note and (ii) with respect to Adjusted Libor Rate Advances, payment by the
Borrower on a day other than the Maturity Date thereof as a result of
acceleration of the obligations hereunder or otherwise. This covenant shall
survive payment of this Note.
15. Upon the occurrence, with respect to the Borrower, or any
endorser or guarantor, of any of the following: default in payment of this Note
or any other obligation of any nature or description to the Bank including,
without limitation any obligations pursuant to the Term Loan Note dated June 6,
1994 made by the Borrower payable to the Bank or pursuant to the terms of that
certain Revolving Credit and Term Loan Agreement among the Borrower, certain of
its subsidiaries and National Westminster Bank USA dated as of June 19, 1991, as
such agreement was amended pursuant to (i) a First Amendment dated as of
November 1, 1991, (ii) a Second Amendment dated as of November 30, 1992, of
which 50% of the indebtedness due thereunder was assigned to the Bank pursuant
to the Second Amendment (collectively, the "Obligations"), (iii) a Third
Amendment dated August 31, 1994, and (iv) a Fourth Amendment dated as of April
26, 1995 (as amended, the "Agreement"); the occurrence of any material breach of
any covenant or provision of any agreement between the Bank and any of them;
calling a meeting of any creditors; filing of a voluntary or involuntary
petition under the Federal Bankruptcy Code which, in the case of an involuntary
petition, is not dismissed, discharged or bonded within 60 days of the date of
such petition; insolvency; failure to pay or remit any tax when assessed or due
unless contested in good faith by appropriate proceedings, for which adequate
reserves are being provided; failing to furnish financial information or to
permit inspection of books or records; making any material representation to the
Bank in obtaining credit; then the Obligations shall be due and payable
immediately without notice or demand.
16. The Bank shall have a continuing lien and/or right of set-off
on deposits (general and special) and credits with the Bank of the Borrower and
every endorser and guarantor, and may apply all or part of same to the
Obligations (whether contingent or unmatured), at any time or times, without
notice. The Bank shall
-5-
<PAGE>
have a continuing lien on all property of the Borrower and every endorser and
guarantor and the proceeds thereof held or received by or for the Bank for any
purpose. Any notice of disposition of property shall be deemed reasonable if
mailed at least five (5) days before such disposition to the last address of the
Borrower or such endorser or guarantor on the Bank's records. Each of the
Borrower and each endorser and guarantor agrees to pay the costs and expenses
(including, without limitation, reasonable attorneys' fees) of enforcing the
Obligations. Each of the Borrower and each maker, endorser and guarantor waives
protest and, in any litigation (whether or not relating to the Obligations) in
which the Bank and any of them shall be adverse parties, waives the right to
interpose any set-off or counterclaim of any nature or description. Time for
payment extended by law shall be included in the computation of interest.
17. The Borrower hereby irrevocably (a) submits, in any legal
proceeding relating to this Note, to the non-exclusive in personam jurisdiction
of any state or United States court of competent jurisdiction sitting in the
State of New York and agrees to suit being brought in any such court, and (b)
agrees that nothing contained herein shall affect the Bank's right to effect
service of process in any other manner permitted by law; and the Borrower and
the Bank hereby irrevocably waive, in any such legal proceeding, trial by jury.
18. This Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
UNIFORCE STAFFING SERVICES, INC.
By:______________________________
Harry V. Maccarrone
Vice President - Finance
-6-
<PAGE>
PRIME RATE ADVANCES
Unpaid
Amount Interest Amount of Principal
of Maturity Rate Per Principal Balance of Notation
Date Advance Date Annum Paid Advance Made By
- ---- ------- ------- ------- -------- ---------- -------
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-7-
<PAGE>
ADJUSTED LIBOR RATE ADVANCES
Unpaid
Amount Interest Amount of Principal
of Maturity Rate Per Principal Balance of Notation
Date Advance Date Annum Paid Advance Made By
---- ------- -------- -------- --------- ------- -------
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-8-
NATWEST BANK N.A.
PROMISSORY NOTE
$5,000,000.00 100 Jericho Quadrangle November 3, 1995
Jericho, New York 11753
ON the earlier of DEMAND or December 31, 1995, for value received,
UNIFORCE STAFFING SERVICES, INC., (the "Borrower") promises to pay to the order
of NATWEST BANK N.A. (the "Bank") at the office of the Bank located at the place
first above stated or at such other place as the holder hereof may from time to
time appoint in writing, in lawful money of the United States of America in
immediately available funds, the principal sum of FIVE MILLION AND 00/100
($5,000,000.00) DOLLARS or such lesser amount as may then be the aggregate
unpaid principal balance of all loans made by the Bank to the Borrower hereunder
(each a "Loan" and collectively the "Loans") as shown on the schedule attached
to and made a part of this Note, on the maturity dates set forth on such
schedule. The Borrower also promises to pay interest (computed on the basis of a
360 day year for actual days elapsed) at said office in like money on the unpaid
principal amount of each Loan from time to time outstanding at a rate per annum,
to be elected by the Borrower at the time each Loan is made, equal to either (i)
a fluctuating rate equal to the Prime Rate (the rate of interest established
from time to time by the Bank as its "prime rate"; a Loan bearing interest at
this rate is sometimes hereinafter called a "Prime Rate Loan"); or (ii) a fixed
rate of 120 basis points plus the Reserve Adjusted LIBOR Rate for an Interest
Period of 1, 2, 3, 4 or 6 months (a Loan bearing interest at this rate is
sometimes hereinafter called a "LIBOR Rate Loan"); provided, that if prior to
the end of any such Interest Period the Borrower and the Bank fail to agree upon
a new Interest Period therefor so as to maintain such Loan as a LIBOR Rate Loan,
such LIBOR Rate Loan shall automatically be converted into a Prime Rate Loan at
the end of such Interest Period and shall be maintained as such until a new
Reserve Adjusted LIBOR Rate and a new Interest Period therefor are agreed upon.
Interest on each Loan shall be payable monthly on the last day of each month
commencing the first such day to occur after a Loan is made hereunder and,
together with principal, on the maturity thereof. Interest on LIBOR Rate Loans
shall also be payable on the last day of each Interest Period applicable
thereto. If any payment of principal or interest becomes due on a day on which
the banks in New York, New York, are required or permitted by law to remain
closed, such payment may be made on the next succeeding day on which such banks
are open, and such extensions shall be included in computing interest in
connection with such payment; provided, however, that if the result of any such
extension would be to extend the maturity date of any LIBOR Rate Loan into
another calendar month the payment shall be made on the immediately preceding
Business Day. The Borrower further agrees that after any stated or any
accelerated maturity of Loans hereunder, all Loans shall bear interest (computer
daily) at a rate of 3% per annum in
<PAGE>
excess of the Prime Rate, payable on demand. In no event shall interest payable
hereunder be in excess of the maximum rate of interest permitted under
applicable law.
The Borrower hereby expressly authorizes the Bank to record on the
attached schedule the amount and date of each Loan, the rate of interest
thereon, Interest Period thereof and the date and amount of each payment of
principal. All such notations shall be presumptive as to the correctness
thereof; provided, however, the failure of the Bank to make any such notation
shall not limit or otherwise affect the obligations of the Borrower under this
Note.
In consideration of the granting of the Loans evidenced by this Note,
the Borrower hereby agrees as follows:
1. LOAN REQUESTS. Requests for LIBOR Rate Loans, and for Interest
Periods subsequent to the initial Interest Period applicable thereto, shall be
made not less than three (3) Business Days prior to the first day of each
Interest Period for each such Loan. Requests for Prime Rate Loans shall be made
not less than one (1) Business Day prior to the date the Loan is to be made. Any
request for a Loan shall be written (including by facsimile transmission)
effective upon receipt. All notices given hereunder shall be irrevocable and
shall be given no later than 11:00 a.m. (New York City time) on the day which is
not less than the number of Business Days specified above for such notice. The
Bank shall have no obligation to make any Loan hereunder.
2. PREPAYMENT. Subject to the indemnification agreement set forth in
Section 3 hereof with respect to LIBOR Rate Loans, the Borrower may prepay any
Loan at any time in whole or in part without premium or penalty. Each such
prepayment shall be made together with interest accrued thereon to and including
the date of prepayment.
3. INDEMNITY; YIELD PROTECTION. The Borrower hereby agrees to indemnify
the Bank against any loss or expense which the Bank may sustain or incur as a
consequence of any of the following:
(a) the failure of the Borrower to borrow a LIBOR Rate Loan after
agreement shall have been reached on the amount, interest rate and Interest
Period thereof;
(b) the receipt or recovery by the Bank, whether by acceleration or
otherwise, of all or any part of a LIBOR Rate Loan prior to the last day of an
Interest Period applicable thereto; or
(c) the conversion, prior to the last day of an applicable Interest
Period into a Prime Rate Loan.
Without limiting the effect of the foregoing, the amount to be paid by
the Borrower to the Bank in order to so indemnify the Bank
-2-
<PAGE>
for any loss occasioned by any of the events described in the preceding
paragraph, and as liquidated damages therefor, shall be equal to the excess, if
any, discounted to its present value as of the date paid to the Bank, of (i) the
amount of interest which otherwise would have accrued on the principal amount so
received, recovered, converted or not borrowed during the period (the "Indemnity
Period") commencing with the date of such receipt, recovery, conversion, or
failure to borrow to the last day of the applicable Interest Period for such
LIBOR Rate Loan at the rate of interest applicable to such Loan (or the rate of
interest agreed to in the case of a failure to borrow) provided for herein
(prior to default) over (ii) the amount of interest which would be earned by the
Bank during the Indemnity Period if it invested the principal amount so
received, recovered, converted or not borrowed at the rate per annum determined
by the Bank as the rate it would bid in the London interbank market for a
deposit of eurodollars in an amount approximately equal to such principal amount
for a period of time comparable to the Indemnity Period.
A certificate as to any additional amounts payable pursuant to this
Section 3 setting forth the basis and method of determining such amounts shall
be conclusive, absent manifest error, as to the determination by the Bank set
forth therein if made reasonably and in good faith. The Borrower shall pay any
amounts so certified to it by the Bank within 10 days of receipt of any such
certificate.
The indemnities set forth herein shall survive payment in full of all
LIBOR Rate Loans and all other Loans made pursuant to this Note.
4. INCREASES COSTS. If the Bank determines that the effect of any
applicable law or government regulation, guideline or order of the
interpretation thereof by any governmental authority charged with the
administration thereof (such as, for example, a change in official reserve
requirements which the Bank is required to maintain in respect of loans or
deposits or other funds procured for funding such loans) is to increase the cost
to the Bank of making or continuing LIBOR Rate Loans hereunder or to reduce the
amount of any payment of principal or interest receivable by the Bank thereon,
then the Borrower will pay to the Bank on demand such additional amounts as the
Bank may reasonably determine to be required to compensate the Bank for such
additional costs or reduction. Any additional payment under this section will be
computed from the effective date at which such additional costs have to be borne
by the Bank. A certificate as to any additional amounts payable pursuant to this
Section 4 setting forth the basis and method of determining such amounts shall
be conclusive, absent manifest error, as to the determination by the Bank set
forth therein if made reasonably and in good faith. The Borrower shall pay any
amounts so certified to it by the Bank within ten (10) days of receipt of any
such certificate.
-3-
<PAGE>
5. CHANGE IN CIRCUMSTANCES. In the event, and on each occasion, that on
the day two (2) Business Days prior to the commencement of any Interest Period
for a LIBOR Rate Loan, the Bank shall have determined (a) that dollar deposits
in the amount of the requested principal amount of such LIBOR Rate Loan are not
generally available in the London interbank market, (b) that the rate at which
such dollar deposits are being offered will not adequately and fairly reflect
the cost to the Bank of making or maintaining such LIBOR Rate Loan during such
Interest Period, or (c) that reasonable means do not exist for ascertaining the
Reserve Adjusted LIBOR Rate, the Bank shall, as soon as practicable thereafter,
give written or telex notice of such determination to the Borrower. In the event
of any such determination, until the circumstances giving rise to such notice no
longer exist, no LIBOR Rate Loans will be made or continued hereunder. Any LIBOR
Rate Loan then outstanding will be converted into a Prime Rate Loan on the
expiration of the then current Interest Period. Each determination by the Bank
hereunder shall be conclusive absent manifest error.
6. CHANGE IN LEGALITY. (a) Notwithstanding anything to the contrary
herein contained, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for the Bank to
make or maintain any LIBOR Rate Loan, then, by written notice the Borrower, the
Bank may:
(i) declare that LIBOR Rate Loans will not thereafter be made by the
Bank hereunder, whereupon the Borrower shall be prohibited from requesting LIBOR
Rate Loans from the Bank hereunder unless such declaration is subsequently
withdrawn; and
(ii) require that all outstanding LIBOR Rate Loans made by it to be
converted to Prime Rate Loans, in which event (x) all such LIBOR Rate Loans
shall be automatically converted to Prime Rate Loans as of the effective date of
such notice as provided in paragraph (b) below and (y) all payments and
prepayments of the principal which would otherwise have been applied to repay
the converted LIBOR Rate Loans shall instead be applied to repay the Prime Rate
Loans resulting from the conversion of such LIBOR Rate Loans.
(b) For purposes of this Section 6, a notice to the Borrower by the
Bank pursuant to paragraph (a) above shall be effective, if lawful, on the last
day of the then current Interest Period; in all other cases, such notice shall
be effective on the day of receipt by the Borrower.
7. Warranties and Representations. The Borrower represents and warrants
that: a) the financial statements of the Borrower heretofore furnished to the
Bank are complete and correct and fairly represent the financial condition of
the Borrower as at the
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<PAGE>
dates thereof and for the periods covered thereby, which financial condition has
not materially, adversely, changed since the date of the most recently dated
balance sheet heretofore furnished to the Bank; b) the Borrower shall not use
any part of the proceeds of any Loan to purchase or carry any margin stock
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or to extend credit to others for the purpose of purchasing or
carrying any margin stock; c) there is no pending or, to the knowledge of the
Borrower, threatened action or proceeding affecting the Borrower before any
court, governmental agency or arbitrator which, if determined adversely to the
Borrower, would have a materially adverse effect on the financial condition of
the Borrower except as described in the financial statements for the Borrower
heretofore furnished to the Bank; and d) on the occasion of the granting of each
Loan all representations and warranties contained herein shall be true and
correct and with the same force and effect as though such representations and
warranties had been made on and as of the date of the making of each such Loan.
8. COLLATERAL SECURITY. This Note is secured pursuant to the terms of
continuing general security agreements from the Borrower and certain affiliated
corporations. As collateral security for the payment of any and all sums owing
under this Note and all other obligations, direct or contingent, joint, several
or independent, of the Borrower and each endorser and guarantor hereof now or
hereafter existing, due or to become due to, or held, or to be held by, the
Bank, whether created directly or indirectly or acquired by assignment or
otherwise, (all of such obligations, including this Note, are hereinafter called
the "Obligations"), the Borrower hereby grants to the Bank a lien on and
security interest in any and all deposits or other sums at any time credited by
or due from the Bank to the Borrower, whether in regular or special depository
accounts or otherwise, and any and all monies, securities and other property of
the Borrower, and the proceeds thereof, now or hereafter held or received by or
in transit to the Bank from or for the Borrower, whether for safekeeping,
custody, pledge, transmission, collection or otherwise, and any such deposits,
sums, monies, securities and other property, may at any time after demand be
set-off, appropriated and applied by the Bank against any of the Obligations
whether or not such Obligations are then due or are secured by any collateral,
or, if they are so secured, whether or not such collateral held by the Bank is
considered to be adequate.
9. DEFINITIONS. As used herein:
(a) "Business Day" means any day other than a Saturday, Sunday or
other business day on which commercial banks in New York, New York are
authorized or required to close under federal law or the Laws of the State of
New York and, if the applicable day relates to a LIBOR Rate Loan, an Interest
Period, or notice with respect to a LIBOR Rate Loan, a day on which dealings in
Dollar
-5-
<PAGE>
deposits are also carried on in the London Interbank market and banks are open
for business in London.
(b) "Reserve Adjusted LIBOR Rate" means with respect to any Interest
Period, the average of the respective rates per annum at which deposits in U.S.
dollars are offered by a Reference Bank (selected by the Bank) in the London
interbank market at approximately 11:00 A.M. (London time) two (2) Business Days
before the first day of such Interest Period in an amount approximately equal to
the principal amount of the LIBOR Rate Loan to which such Interest Period is to
apply and for a period of time comparable to such Interest Period divided by one
minus the LIBOR Reserve Percentage and rounded upward, if necessary, to the next
higher 1/16 of 1%.
"LIBOR Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City which deposits exceeding one billion dollars in
respect of "Eurocurrency Liabilities" as such term is used in Regulation D of
the Board of Governors of the Federal Reserve System, (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rates of LIBOR Rate Loans are determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
the Bank to United States residents). The Reserve Adjusted LIBOR Rate shall be
adjusted automatically on and as of the effective date of any change in the
LIBOR Reserve Percentage.
"Reference Banks" means banks appearing in the display designated
as page "LIBO" on the Reuters' Monitor Money Rates Service (or such other page
as may replace the LIBOR page on that service for the purpose of displaying
London Interbank Offered Rates of major banks); provided that if no such offered
rate shall appear on such display, "Reference Banks" shall mean one or more
major banks in the London interbank market as selected by the Bank.
(c) "Interest Period" means that period selected by the Borrower,
within the limitations of the first paragraph of this Note, during which a LIBOR
Rate Loan may bear interest at the LIBOR Rate plus a margin of 120 basis points.
10. MISCELLANEOUS.
(a) The Borrower agrees to pay on demand all of the Bank's costs and
expenses, including reasonable counsel fees, in connection with collection of
any sums due to the Bank and enforcement of its rights under this Note.
-6-
<PAGE>
(b) No modification or waiver of any provision of this Note shall
be effective unless such modification or waiver shall be in writing and signed
by a duly authorized officer of the Bank and the Borrower, and the same shall
then be effective only for the period and on the conditions and for the specific
instances specified in such writing. No failure or delay by the Bank in
exercising any right, power or privilege hereunder shall operate as a waiver
hereof; nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any rights, power or privilege.
(c) The Borrower hereby waives presentment, demand for payment,
notice of protest, notice of dishonor, and any ad all other notices or demands
except as otherwise expressly provided for herein.
(d) This Note shall be construed in accordance with and governed by
the laws of the State of New York and the Borrower consents to the jurisdiction
of the courts of New York in any action brought to enforce any rights of the
Bank under this Note.
(e) The Borrower waives trial by jury and the right to interpose
any set-off or counterclaim in any litigation in any court with respect to, in
connection with, or arising out of, this Note or any instrument or document
delivered pursuant hereto or the validity, protection, interpretation,
collection or enforcement hereof or thereof.
The Borrower acknowledges that this instrument is PAYABLE ON DEMAND,
and that any condition or requirement set forth in any other agreement between
the Borrower and the Bank is not the only basis upon which demand can be made
hereunder.
UNIFORCE STAFFING SERVICES, INC.
By: /s/ Harry V. Maccarrone
------------------------------
Harry V. Maccarrone
Vice President - Finance
-7-
<PAGE>
LOAN AND REPAYMENT SCHEDULE
PROMISSORY NOTE DATED NOVEMBER 3, 1995
UNIFORCE STAFFING SERVICES, INC.
TO
NATWEST BANK N.A.
Amount
Unpaid of
Amount of Rate of Last Day Principal Principal Notation
Date Loan Interest In Period Repayment Balance Made By
- ---- --------- -------- --------- --------- --------- --------
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-8-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNIFORCE'S
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 6,771,569
<SECURITIES> 0
<RECEIVABLES> 36,783,351
<ALLOWANCES> 527,431
<INVENTORY> 0
<CURRENT-ASSETS> 43,964,879
<PP&E> 4,603,534
<DEPRECIATION> 2,345,943
<TOTAL-ASSETS> 50,852,639
<CURRENT-LIABILITIES> 25,178,030
<BONDS> 0
<COMMON> 49,872
0
0
<OTHER-SE> 22,986,138
<TOTAL-LIABILITY-AND-EQUITY> 50,852,639
<SALES> 0
<TOTAL-REVENUES> 98,778,723
<CGS> 0
<TOTAL-COSTS> 94,401,771
<OTHER-EXPENSES> (28,737)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 527,793
<INCOME-PRETAX> 3,877,896
<INCOME-TAX> 1,473,000
<INCOME-CONTINUING> 2,404,896
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,404,896
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0.56
</TABLE>
