SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-11876
UNIFORCE SERVICES, INC.
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(Exact name of Registrant as specified in its charter)
New York 13-1996648
(State or other jurisdiction (IRS Employer Identification
of incorporation or organi- Number)
zation)
1335 Jericho Turnpike, New Hyde Park, NY 11040
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (516) 437-3300
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
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(Title of Class)
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 / /
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
The aggregate market value at March 1, 1996 of shares of the
Registrant's Common Stock, $.01 par value (based upon the closing price per
share of such stock on the NASDAQ National Market), held by non-affiliates of
the Registrant was approximately $14,725,262. Solely for the purposes of this
calculation, shares held by directors and officers of the Registrant have been
excluded. Such exclusion should not be deemed a determination or an admission by
the Registrant that such individuals are, in fact, affiliates of the Registrant.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: At March 1, 1996,
there were outstanding 2,981,763 shares of the Registrant's Common Stock, $.01
par value.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Registrant's definitive proxy statement to be
filed not later than April 29, 1996 pursuant to Regulation 14A are incorporated
by reference in Items 10 through 13 of Part III of this Annual Report on Form
10-K.
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ITEM 1. BUSINESS
The Company is a specialty niche supplemental staffing company focused
in the areas of information services ("IS"), technology, office automation and
medical office support. It provides services to businesses, educational
institutions, professional and service organizations, federal, state and local
governmental agencies and others in the United States. The Company also supplies
payroll, billing and/or financial support services to independent supplemental
staffing firms (the "Associated Offices"), provides temporary laboratory
staffing support to the scientific community and provides confidential
consulting and payrolling, permitting clients to utilize the services of former
1099 independent contractors and consultants.
Uniforce(R) assists clients in meeting peak workloads, handling
special projects, overcoming personnel shortages and solving staffing
emergencies by supplying them with a supplemental work force. Supplemental
staffing assignments range in duration from days and weeks to many months.
Planned use of supplemental staffing affords economies and flexibility to
clients by permitting the hiring of only such permanent employees as are
required for the basic day-to-day workload. As clients pay only for actual hours
worked by supplemental staff, the cost of such personnel is directly related to
production and work flow. Use of services provided by the Company on a routine
basis also eliminates or reduces clients' recordkeeping, payroll tax, insurance,
benefits, hiring, training and turnover costs.
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A subsidiary of Uniforce, trading as Uniforce Information
Services/Brannon & Tully, places specialized IS professionals on a supplemental
staffing basis. PrO Unlimited, Inc. ("PrO Unlimited(TM)") provides confidential
employee conversion and consulting services enabling client companies to utilize
the services of former 1099 independent contractors and consultants. Employee
conversion results in the employment of former 1099 independent contractors and
consultants by PrO Unlimited and the assignment of these persons to work as
supplemental staffers for clients of PrO Unlimited. LabForce of America, Inc.
("LabForce(R)") provides laboratory professionals, including chemists,
biologists, engineers and other supplemental scientific support personnel to a
broad range of industries.
Temporary Help Industry Servicing Company, Inc. ("THISCO(R)") and its
subsidiary, Brentwood Service Group(R), Inc. ("Brentwood"), provide confidential
financing and perform certain payroll, billing and back office services for
Associated Offices. These functions are performed under contract for a service
charge.
At March 1, 1996, Uniforce Licensees operated 36 licensed offices and
Uniforce operated 14 Company-owned offices, LabForce operated 12 offices, PrO
Unlimited 6 offices and Uniforce Information Services 4 offices. Some of the
LabForce and PrO Unlimited offices occupied space shared with Uniforce offices.
At that date, THISCO and Brentwood serviced 124 Associated Offices. In addition
to its Headquarters (which will be relocated to Woodbury, New York from New Hyde
Park, New York in April 1996), the
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Company maintains a Southeastern Regional office in Boca Raton, Florida and a
Midwestern Regional Office in Overland Park, Missouri. These offices are
responsible for the Company's operations in these areas and, together with the
Headquarters office, the servicing of Uniforce licensed and Company-owned
offices. The Company also maintains an Administrative and Operating Office in
Cleveland, Tennessee, which is responsible for servicing the clients of
Brentwood, and an Operating Office in Atlanta, Georgia, which is responsible for
servicing the IS clients of Uniforce Information Services/Brannon & Tully.
References herein to "Uniforce" are references to Uniforce Staffing Services,
Inc. and its Licensees. References to the "Company" are references to Uniforce
Services, Inc. and its subsidiaries.
UNIFORCE
Uniforce offices furnish a variety of skilled and semi-skilled
supplemental staffing services in the categories described below.
In 1995, general and automated office, technical and professional
services accounted for approximately 81% of the total revenues derived from the
sale of supplemental staffing services, and light industrial services accounted
for approximately 19% of such revenues.
Uniforce obtains clients through the efforts of the Company's and its
Licensees' own sales personnel, direct mail solicitation and referrals from
other clients. The Company also
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administers public relations programs and advertising campaigns using the
slogans, "Workstyles To Fit Your Lifestyle(R)," "Always There When You Need
Us(TM)," "Your Search for Excellence is Over!(R)," "Work When You Want To
Work(R)," "Get Ahead in Style(R)," "The Productivity People(R)" and
"Productivity Through People(R)." Supplemental staffers are recruited primarily
through local media advertising and through referrals from other temporary
staffers.
Although the Company does not consider its business to be seasonal,
the number of days worked by certain supplemental staffing personnel,
principally in light industrial tasks, and resultant revenues varies from
quarter to quarter, as a result of holidays and adverse weather conditions.
INFORMATION SERVICES AND TECHNICAL SERVICES
Uniforce furnishes highly skilled Information Technology professionals
as consultants, programmers, systems analysts, project managers, network
specialists and software engineers as well as in various other specialized
capacities to a variety of industries.
The Company supplies various levels of skilled workers for Computer
Aided Drafting and Design (CAD), Computer Aided Manufacturing (CAM), drafting,
design, electronic component assembly, wiring and soldering to high-tech and
manufacturing.
AUTOMATED OFFICE SERVICES
These Uniforce temporary staffers are skilled individuals who perform
word processing, data processing, data entry and personal computer operations.
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GENERAL OFFICE SERVICES
Uniforce temporary staffers perform as secretaries, typists,
receptionists, clerical assistants and records management clerks, as well as in
other general office categories.
MEDICAL OFFICE SUPPORT
Uniforce provides supplemental staffers for general medical office
support functions that include, but are not limited to, secretarial, payroll,
medical billing, medical transcribing and general clerical functions.
MARKETING
Uniforce supplemental staffers assist in product demonstration,
telemarketing and new product sampling, and provide general staff support at
trade shows and conventions.
LEGAL AND ACCOUNTING
Uniforce legal staffers serve as legal secretaries/ typists,
paralegals, law clerks, librarians and in other law- related areas. Uniforce
provides supplemental staffers for general accounting services and other
finance-related tasks, such as bookkeeping, recordkeeping and credit and
collection.
LIGHT INDUSTRIAL
Uniforce provides both skilled and semi-skilled employees to
supplement its clients' regular work forces in manufacturing plants, warehouses,
distribution centers, retail outlets, hotels and convention centers. Uniforce
staffers assist in shipping and receiving, packing, general assembly, inventory
and hospitality services.
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LICENSED OFFICES
Licensees have the exclusive right to open and maintain one or more
offices within a designated territory, using the Uniforce name and service
marks, and the "Uniforce System," consisting of marketing programs, operating
methods, forms, advertising and promotional materials. Company-owned branch
offices and licensed offices are generally not operated in the same territory.
All new Licensees receive initial training at the Company's training
center, supplemented by written and videotaped training materials used at the
Licensees' offices. Thereafter, ongoing advisory service and support is provided
to each office by the Company's Headquarters and Regional Headquarters staff.
Licensees recruit supplemental staffers and promote their services to
both existing and new clients obtained through the Licensees' marketing efforts.
Performance of the supplemental staffers and overall service quality is the
direct responsibility of Licensees. As they are ultimately responsible for the
collection of accounts receivable, Licensees must conform to strict credit and
collection practices structured by the Company.
The Company and its Licensees share the gross profits from each
Uniforce office. Licensing agreements have a perpetual term. However, Uniforce
may terminate a license for material breach by a Licensee or for other
significant good cause as prescribed in the agreements. In addition, at any time
after 18 months, a Licensee (other than one granted a license under the
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Affiliation Licensing Program) may surrender the license and withdraw from the
supplemental staffing service business in the territory or, upon payment to
Uniforce of an amount based on a predetermined formula, assume and continue the
operation of the business independently of Uniforce, the Uniforce name and the
Uniforce System. Affiliation Licensing Program Licensees generally must wait
five or 10 years from commencement of operations under the Uniforce name before
exercising this option. In either event, if a Licensee exercises this option,
the Company may then license a new office or operate a Company-owned office in
the territory.
The Company grants licenses to operate Uniforce Services offices and
presently offers several different licensing programs. Under the first, licenses
are granted to individuals who, with the assistance of the Company, open new
supplemental staffing offices. The second is the Company's Regional Licensing
Program, under which qualified Licensees agree to open and operate at least two
Uniforce offices in different areas over a predetermined period of time. The
third is the Company's Affiliation Licensing Program, which integrates
established independent supplemental staffing services into the Uniforce system
and includes an inducement payment to qualified candidates. The fourth is the
Uni-Free(TM) Start-Up Program, which is available to experienced supplemental
staffing service executives. Under this last program, Uniforce does not charge
an initial license fee and offers limited financial assistance to qualified
Licensees.
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BRANNON & TULLY/UNIFORCE INFORMATION SERVICES
These highly skilled professionals perform as programmers, systems
analysts, technical writers, database analysts, project managers, application
developers, software engineers, and LAN/WAN (Local Area Network/Wide Area
Network) specialists. In 1995, the Company began using the name Uniforce
Information Services to designate services provided by this subsidiary.
LABFORCE
LabForce provides supplemental scientific staffing support to the
scientific community. Uniforce offices are also given the opportunity to sell
this product line. LabForce provides services nationwide to companies involved
in pharmaceutical, environmental, biotech and processing businesses. LabForce
staffers include highly specialized professional chemists, biologists, lab
instrumentation operators and technicians.
PRO UNLIMITED
PrO Unlimited provides consulting and conversion services to client
companies that require assistance in complying with regulations regarding the
use of 1099 independent contractors and returning retirees. Using its SCORE
1099(TM) software system, it offers client companies consulting services
incorporating a proprietary liability and risk scoring system to assess the
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likelihood of a client's independent contractor being reclassified as an
employee by a governmental authority.
THISCO/BRENTWOOD
THISCO and Brentwood offer unlimited supplemental staff payroll
financing and/or total back office services to Associated Offices. THISCO and
Brentwood's back office services include the providing of various management
reports and analysis, payment of all federal, state and local payroll taxes and
preparation and filing of quarterly and annual payroll tax returns for the
temporary staffers placed by independently owned Associated Offices. Customized
paychecks and invoices are provided to the clients of the Associated Offices in
the name of the Associated Office. Clients of the Associated Offices remit
payment to the Company.
SUPPORT SERVICES
The Company's Headquarters is staffed by a team of personnel
professionals who provide various support services to Licensees, their staffs
and supplemental staffers, and to the various subsidiaries of the Company and
Associated Offices. The Company maintains an accounting and data processing
service center that prepares supplemental staffer payrolls and client billing,
assists in accounts receivable collection and furnishes computerized management
information and analysis to Uniforce offices, Company clients and Associated
Offices. Licensees are
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assigned a Field Service Representative to provide on-site and telephonic
assistance in developing the office to its full potential. Licensees, and in
some instances, their in-house staff members, receive training at the Company's
training center. In addition, periodic seminars are conducted for Licensees and
managers. The Company provides ongoing training, orientation and bi-monthly
topical video update programs that are distributed to all Uniforce offices for
use by in-house and supplemental staffers. The Company's Marketing Department
prepares and distributes programs and promotional literature designed to attract
and educate clients to the benefits of using Uniforce, LabForce, PrO Unlimited,
THISCO and Brentwood services and to recruit personnel for such subsidiaries.
The Company maintains various regional administrative and sales offices
throughout the country that seek new Licensees to expand the Uniforce network
and new clients for the services of Brannon & Tully, THISCO, Brentwood, PrO
Unlimited and LabForce.
EMPLOYEES
The Company currently has approximately 200 employees at its
Headquarters, its Regional Headquarters, Company-owned offices and in the
offices of its various subsidiaries. Licensees' offices generally employ two to
four in-house employees, depending upon the size of the office. Supplemental
staffers may be employed and paid by the Company or by Licensees, depending upon
arrangements with each Licensee. All employees of the Company are covered by
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workers' compensation and general liability insurance and by a fidelity bond.
The Company encourages long term relationships with its supplemental staffers
through their participation in its 401(k) plan. During 1995, the Company,
Uniforce, its Licensees, PrO Unlimited, LabForce and the Associated Offices
provided supplemental staffing services of approximately 74,000 persons.
COMPETITION
The supplemental staffing industry is highly competitive. Competition
is encountered from national, regional and local personnel services in
attracting licensees, employees and clients. Certain national temporary service
companies, such as Kelly Services, Inc., Olsten Corporation, Manpower, Inc. and
Adia Services, Inc., are substantially larger in size than the Company and
possess substantially greater operational, financial and personnel resources.
The Company believes that its initial and ongoing training program,
focused on the Licensee, its in-house staff and staffers located at
Company-owned facilities, has helped it achieve significant results in the past.
No assurance can be given that this will continue to be the case.
The Company believes that niche marketing, quality service, high
caliber professional temporary employees, proper pricing, value added services
and the range of services offered by it are the principal competitive factors
that enable it to compete
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effectively within local markets. The Company views its rate structure as
competitive with those of others in the industry.
PrO Unlimited has principally regional or local competition with no
one company directly competing against it in the national marketplace. LabForce
has as its principal competitor Lab Support, Inc. In financial and back office
support services, the Company's principal competitors are Career Horizons, Inc.,
Damian Services Corporation and TempFunds America, Inc. Brannon & Tully's
competes both with national and regional providers of IS professionals.
While the Company has experienced competitive pressures in its
business, it believes that being a national provider with centralized support
services has enabled it to distribute the costs associated with its businesses
among its Licensees, Company-owned facilities and Associated Offices.
GOVERNMENTAL REGULATION
The primary business of the Company is not subject to governmental
regulation. The sale of franchises or licenses, however, is subject to such
regulation, both by the Federal Trade Commission and a number of states. The
Company believes that it is in compliance with all material requirements of
Federal and state laws applicable to the sale of franchises or licenses in those
states in which it has engaged in marketing licenses.
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TRADEMARKS
The Company holds United States service mark registrations for the
name "Uniforce(R)" (with logo design), "Your Search for Excellence is Over!(R),"
"Work When You Want To Work(R)," "Get Ahead In Style(R)," "The Productivity
People(R)," "Productivity Through People(R)," "Employers Overload(R),"
"THISCO(R)," "Brentwood Service Group(R)," "LabForce(R)," "PrO Unlimited(R),"
"Workstyles To Fit Your Lifestyle(R)" and "Brannon & Tully(R)." The Company also
holds United States trademark registrations for "Skill Wiz(R)" (a program for
the testing of automated office skills of temporary personnel), "Fax A Temp(R)"
(a system for obtaining job requests and other client information via telecopier
equipment), "Factfile(R)" (a system for organizing detailed facts regarding
client requirements), "Unimation(R)" (a specialized program providing a full
range of office automation services), "OA Templine(R)" (a software support,
800-number hotline for supplemental staffers on assignment), "Careertemp
Club(R)" (with logo design) (a program providing a wide range of benefits to
career temporary employees), "Uni-Free(R)," (a licensing program described
above), and "Get Up and Go(R)" (a program that allows supplemental staffers the
mobility to transfer from a Uniforce office in one city to one in another city).
The Company has applied for trademark registration of "Uniskill," "Brentware,"
"Thiskill" (specialized software) and "SCORE 1099." The Company has also
obtained certain New York State service marks, service mark registrations for
"Uniforce" (with logo design), THISCO and Payroll Options Unlimited in Canada,
Tempfunds U.K. in the United
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Kingdom, and has applied for a service mark registration for "Uniforce" in
Brazil.
RECENT DEVELOPMENTS
On December 11, 1995, the Company commenced an offer (the "Offer") to
purchase up to 1,250,000 shares of its Common Stock (the "Shares") at $11.25 per
share, net to the seller in cash. An aggregate of 1,401,080 Shares was tendered
pursuant to the Offer, which provided for proration in the event of
oversubscription. On Wednesday, January 10, 1996, the Company purchased
1,250,000 Shares for aggregate consideration of $14,062,500, which, after giving
effect to certain costs and expenses of the Offer, resulted in a reduction of
stockholders' equity of approximately $14,160,000 subsequent to year-end. At
March 1, 1996, there were 2,981,763 shares of Common Stock outstanding.
ITEM 2. PROPERTIES.
The following table sets forth at March 1, 1996 the principal use and
location, approximate floor space, annual rental and lease expiration date of
the Company's principal facilities. Licensee facilities are not included.
Lease
Principal Use and Approximate Annual Expiration
Location Square Feet Rental Date
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Executive Office 15,370 $194,235(1) 4/30/95
New Hyde Park, NY
Executive Office 23,360 443,840(2) 5/31/06
Woodbury, NY
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Regional Service and 2,897 36,355(1)(3) 11/09/99
Operating Office
Boca Raton, FL
Administrative and 6,425 42,020 12/31/97
Operating Office
Cleveland, TN
Operating Office 5,500 82,560 4/18/99
Atlanta, GA
(1) Additional rent is payable in the event of increases in taxes and/or
operating costs.
(2) The lease provides for annual rental increases of approximately
$20,000.
(3) Commencing February 1, 1996, the Company subleased a substantial
portion of these premises and reduced its annual rental by
approximately $60,000.
ITEM 3. LEGAL PROCEEDINGS.
NCCI ET AL. V. UNIFORCE TEMPORARY PERSONNEL, INC., ET AL.
On April 26, 1994, National Council on Compensation Insurance, Inc.,
National Workers Compensation Insurance, Inc., National Workers Compensation
Reinsurance Pool, Insurance Company of North America, The Travelers Insurance
Company and Liberty Mutual Insurance Company (collectively, the "NCCI
Plaintiffs") filed an action in the Circuit Court, Palm Beach County, Florida
(the "Circuit Court") against the Company, certain of its subsidiaries, John
Fanning, Rosemary Maniscalco and Harry Maccarrone, executive officers of the
Company, and other unrelated parties. In June 1994 the NCCI Plaintiffs filed an
amended complaint in the action and in October 1995 a second amended complaint.
In the second amended complaint, the NCCI Plaintiffs added several defendants
including Gordon Robinett, a director of
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the Company and the Company's former Vice-President of Finance, and the
Company's independent public auditors. The NCCI Plaintiffs allege causes of
action for breach of contracts of insurance, negligence, fraud, conspiracy to
defraud, and fraudulent inducement. The NCCI 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 NCCI Plaintiffs seek an audit, accounting
and damages in an unspecified amount not less than $11,500,000.
At a regularly scheduled case management conference held on February
23, 1996, the Circuit Court ordered that if the NCCI Plaintiffs elect to file a
third amended complaint, they must do so on or before May 17, 1996. Thereafter,
the Circuit Court will consider motions to dismiss the complaint.
Discovery is now ongoing. The Company denies the claims of the NCCI
Plaintiffs and believes that it has substantial defenses, counterclaims and
setoffs thereto.
In June 1994, the Company and Uniforce Services, Inc. (the "Uniforce
Plaintiffs") filed an action in the United States District Court for the
Southern District of Florida, West Palm Beach Division, against the National
Council on Compensation Insurance, the National Workers' Compensation
Reinsurance Pool and others (the "NCCI Defendants"). The action alleged
monopolization, attempts to monopolize, restraint of trade, conspiracy on the
part of the NCCI Defendants, as well as violation of the constitutional
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rights of the Uniforce Plaintiffs. The complaint sought treble damages in an
unspecified amount. The NCCI Defendants filed an answer in the action denying
its allegations and setting forth affirmative defenses, and filed a motion for
summary judgment addressing the antitrust issues pleaded by the Uniforce
Plaintiffs, which motion was subsequently granted by the court. The Company has
appealed the judgment which, upon advice of counsel, it believed to be erroneous
as a matter of law. Oral argument of the appeal was heard by the Eleventh
Circuit Court of Appeals on March 11, 1996 and the matter is currently sub
judice.
In June 1994, various subsidiaries of the Company filed an action in
the New York Supreme Court, Nassau County, against Liberty Mutual Ins. Co.,
Insurance Company of North American a/k/a CIGNA and The Travelers Corp.
insurance companies. The action alleges mismanagement by the carriers of the
plaintiffs' workers' compensation programs and seeks unspecified damages
aggregating approximately $10,000,000. The defendants have filed an answer in
the action denying its allegations and setting forth affirmative defenses. The
parties are currently conducting discovery.
Management believes that the ultimate outcome of these actions will
not have a material adverse effect upon the financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names and ages of executive
officers of the Company and the offices held by each.
NAME AGE TITLE
John Fanning 64 Chairman of the Board and
President
Rosemary Maniscalco 55 Executive Vice President
Harry V. Maccarrone 48 Vice President - Finance and
Treasurer
Diane J. Geller 42 Secretary
Each executive officer holds office at the pleasure of the Board of
Directors and until his or her successor has been elected and qualifies.
John Fanning, founder of the Company, has served as President and a
director since 1961, the year in which the Company's first office was opened.
Mr. Fanning entered the employment field in 1954, when he founded the Fanning
Personnel Agency, Inc., his interest in which he sold in 1967 to devote his
efforts solely to the Company's operations. He also founded and served as the
first president of the Association of Personnel Agencies of New York.
Rosemary Maniscalco joined the Company as Sales and Marketing
Coordinator in December 1981. In June 1982, her duties were expanded to include
direction of the Company's license marketing efforts, as well as the development
of marketing concepts. In 1983, she was appointed the Company's Director of
Corporate Development, in May 1984, she was elected Executive Vice
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President and in June 1992, she was designated Chief Operating Officer.
Harry V. Maccarrone joined the Company in December 1988 as Assistant
Vice President - Finance. He has served as Vice President - Finance, Treasurer
and the Company's Chief Financial Officer since May 1989. He also served as
Secretary from April 1989 through March 1990.
Diane J. Geller joined the Company in July 1989 as Counsel and was
elected Secretary in March 1990. She served as Vice President and General
Counsel of American Medical and Life Insurance Co., an insurer, from April 1986
through July 1989.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.
MARKET INFORMATION
The Company's Common Stock, $.01 par value, is traded on the NASDAQ
National Market (ticker symbol: UNFR). The following table sets forth, for the
two most recent fiscal years, the high and low closing bid prices for the Common
Stock, as reported by NASDAQ.
BID PRICES
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YEAR END DECEMBER 31, 1994 HIGH LOW
- -------------------------- ---- ---
First Quarter 9-1/2 6-1/8
Second Quarter 13-1/2 8
Third Quarter 14 10-1/4
Fourth Quarter 13 10
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BID PRICES
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YEAR END DECEMBER 31, 1995 HIGH LOW
- -------------------------- ---- ---
First Quarter 10-1/8 9
Second Quarter 11-1/4 8
Third Quarter 9-5/8 8-3/4
Fourth Quarter 11 8-3/4
DIVIDENDS
During 1994, cash dividends of $.12 per share were paid on the Common
Stock. During 1995, the Company paid quarterly cash dividends on shares of its
Common Stock at the quarterly rate of $.03 per share for the first three
quarters. Subsequent to December 31, 1995, the Board of Directors declared a
quarterly cash dividend of $.03 per share for the quarter ended December 31,
1995, which was paid on February 13, 1996 to holders of record on February 5,
1996. The Company expects to continue to pay comparable cash dividends for the
foreseeable future.
NUMBER OF SHAREHOLDERS
As of March 1, 1996, there were 210 holders of record of the Company's
Common Stock. The Company believes that there are in excess of 2,100 beneficial
owners of the Company's Common Stock additional to such holders of record.
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ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Consolidated
Summary Earnings Data
System-wide sales (1) $307,069 $249,759 $170,491 $153,295 $136,024
Total revenues 134,471 115,181 86,142 82,925 91,641
Earnings from operations 6,444 4,846 2,331 1,658 1,445
Net earnings 3,563 2,951 1,493 1,144 1,225
Net earnings per share $ 0.83 $ 0.65 $ 0.35 $ 0.26 $ 0.28
Weighted average number of
shares outstanding 4,311 4,553 4,307 4,348 4,404
</TABLE>
<TABLE>
<CAPTION>
At December 31,
-----------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C>
Consolidated
Balance Sheet Data(2)
Working capital $ 29,181 $ 19,281 $ 17,508 $ 16,661 $ 15,104
Total assets 50,596 41,496 30,235 28,040 26,809
Long-term debt 11,676 2,800 -- -- --
Total liabilities 26,436 18,384 9,527 8,189 7,211
Stockholders' equity $ 24,160(3) $ 23,112 $ 20,708 $ 19,852 $ 19,598
</TABLE>
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(1) System-wide sales are the Company sales of Uniforce Services, Inc. and
its subsidiaries, as well as sales of Associated Offices serviced
through Brentwood Group and THISCO(R).
(2) Certain reclassifications have been made to the previous years'
consolidated balance sheet data to conform to the current years'
presentation.
(3) As a result of the subsequent event described in Note 10 of Notes to
Consolidated Financial Statements, stockholders' equity was reduced by
approximately $14,160,000 subsequent to year-end.
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<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
GENERAL
The following table sets forth, for the years indicated, the
percentages that certain income and expense items bear to the total revenues of
the Company:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Sales of supplemental staffing services 93.9 94.2 95.0
Service revenues and fees 6.1 5.8 5.0
----- ----- -----
Total revenues 100.0 100.0 100.0
----- ----- -----
Costs and expenses:
Cost of supplemental staffing services 73.0 72.7 73.7
Licensees' share of gross margin 7.0 8.6 10.2
General and administrative 14.5 13.7 12.4
Depreciation and amortization .7 .8 1.0
----- ----- -----
Total costs and expenses 95.2 95.8 97.3
----- ----- -----
Earnings from operations 4.8 4.2 2.7
Other income (expense):
Interest - net (.5) (.1) .1
Other income (expense) - - -
----- ----- -----
Earnings before provision for income 4.3 4.1 2.8
taxes
Provision for income taxes 1.6 1.5 1.1
----- ----- -----
NET EARNINGS 2.7 2.6 1.7
===== ===== =====
</TABLE>
-22-
<PAGE>
1995 COMPARED TO 1994
Total revenues increased by 16.7% from $115,180,734 in 1994 to
$134,471,332, in 1995. Sales of supplemental staffing services increased by
16.4% or $17,781,850 in 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 IS contract professionals. This company now
operates under the trade name of Brannon & Tully/Uniforce Information Services.
This acquisition contributed $25,528,957 of sales in 1995 as compared to
$12,445,869 for the period from April 18, 1994 to December 31, 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 sales of PrO Unlimited increased by $9,915,331 in 1995 as compared to 1994.
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 22.5% from $6,694,742 in 1994
to $8,203,490 in 1995. Service revenues and fees generated
-23-
<PAGE>
by THISCO and Brentwood increased by $1,015,084 in 1995 compared to 1994. Also
contributing to this increase were certain licensee service revenues and fees
which increased by $493,664 in 1995 as compared to 1994.
In addition, system-wide sales, which include sales of Associated
Offices serviced by THISCO and Brentwood, increased by 22.9%, from $249,758,846
in 1994 to $307,068,836 in 1995. The Company intends to continue to expand this
portion of its business through THISCO and Brentwood.
Cost of supplemental staffing services was 77.7% of sales of
supplemental staffing services during 1995 as compared to 77.2% in 1994. The
higher percentage in 1995 was the result of increased sales by PrO Unlimited,
which have a high percentage of payroll expense in relation to sales.
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
$28,105,271 and $24,719,266 for 1995 and 1994, respectively. Licensees' share of
gross margin was 33.7% for 1995 as compared to 40.0% in 1994. The lower share as
a percentage of 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 PrO Unlimited for which there are limited distributions.
General and administrative expenses increased by 23.6% or $3,719,790
in 1995 as compared to 1994. As a percentage of revenues, general and
administrative expenses were 14.5% and 13.7% for 1995 and 1994, respectively.
These increases resulted
-24-
<PAGE>
principally from compensation and overhead 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 legal
fees relating to the litigation described in Item 3. Legal Proceedings. In
addition, the provision for possible losses on receivables, notes receivable and
other assets increased in 1995 as compared to 1994.
Net interest expense increased by $600,602 during 1995. The increase
in 1995 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.
There was no material difference in the effective income tax rate in
1995 as compared to 1994.
As a result of the factors discussed above, net earnings increased by
20.8% from $2,950,751 in 1994 to $3,563,393 in 1995.
1994 COMPARED TO 1993
Total revenues increased by 33.7% from $86,142,004 in 1993 to
$115,180,734 in 1994. Sales of supplemental staffing services increased by 32.6%
or $26,667,792 in 1994 as compared to 1993. These increases, in part, resulted
from an improvement in general economic conditions favorably affecting the
supplemental staffing industry and the Company. As a result, same office sales
increased during the current periods compared to last year. In addition, sales
by the Company's subsidiaries, PrO Unlimited and LabForce continued to increase
as the Company emphasized the marketing of
-25-
<PAGE>
these services. Further contributing to the increase in sales was the Company's
acquisition in April 1994 of certain assets of Brannon & Tully, Inc., a provider
of Information Services contract professionals. This acquisition contributed
$12,445,869 of sales since April 18, 1994 and has had a favorable impact on the
Company's results of operations and its ability to develop higher margin
professional 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.
Service revenues and fees increased by 54.8% or $2,370,938 as compared
to 1993. This reflects increased service revenues and fees generated by existing
and new clients of THISCO and Brentwood, two of the Company's subsidiaries. In
addition, system-wide sales, which include sales of associated offices serviced
by THISCO and Brentwood increased by 46.5%, from $170,491,415 in 1993 to
$249,758,846 in 1994. The Company intends to continue to expand this portion of
its business through THISCO and Brentwood.
Cost of supplemental staffing services was 77.2% of sales of
supplemental staffing services during 1994 as compared to 77.6% during 1993. The
lower percentage in 1994 was the result of the acquisition of Brannon & Tully in
April 1994, which has a
-26-
<PAGE>
relatively high gross margin, offset by PrO Unlimited which has a high
percentage of payroll expense in relation to sales.
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
$24,719,266 and $18,328,712 for 1994 and 1993, respectively. Licensees' share of
gross margin was 40.0% for 1994 as compared to 48.0% in 1993. The lower share as
a percentage of gross margin in 1994 is due, in part, to a higher level of sales
relating to Company-owned offices for which there are no related Licensee
distributions, and to PrO Unlimited for which there are limited distributions.
General and administrative expenses increased by 47.6% or $5,074,519
in 1994 as compared to 1993. As a percentage of revenues, general and
administrative expenses were 13.7% and 12.4% for 1994 and 1993, respectively.
These increases resulted principally from expenses relating to the acquisition
of Brannon & Tully and growth experienced at PrO Unlimited and LabForce. Further
contributing to the increase were higher expenses relating to payroll and
recruiting costs with respect to permanent staff.
Net interest income (expense) decreased by $277,872 during 1994. This
decrease was a result of interest income on notes receivable from Licensees
being more than offset by higher interest expense on the Company's working
capital credit facility and loan agreement. A portion of these loan facilities
were utilized in April 1994 for the acquisition of certain assets of Brannon &
Tully.
-27-
<PAGE>
There was no material difference in the effective income tax rate in
1994 as compared to 1993.
As a result of the factors discussed above, net earnings increased by
97.6% from $1,493,121 in 1993 to $2,950,751 in 1994.
FINANCIAL CONDITION
As of December 31, 1995, the Company's working capital increased to
$29,180,891, as compared to $19,281,230 at December 31, 1994. This increase was
due primarily to the continued profitable operations of the Company and the
incurrence of long-term borrowings under the new Credit Facility described
below, which were used to repay short-term borrowings under the Company's prior
credit facilities. These factors were offset by the Company's repurchase of
shares of its Common Stock, the acquisition of fixed assets and the payment of
the cash dividends. Funding and service fees receivables increased by $6,451,758
to $20,918,753 during 1995. This increase is due principally to the increased
service revenues and fees generated by THISCO and Brentwood.
During 1995, the Company paid quarterly cash dividends on shares of
its Common Stock at the quarterly rate of $.03 per share for the first three
quarters. Subsequent to December 31, 1995, the Board of Directors declared a
quarterly cash dividend of $.03 per share for the quarter ended December 31,
1995, which was paid on February 13, 1996 to holders of record on February 5,
1996.
On December 8, 1995, the Company entered in an agreement with a
financial institution creating a three-year $35,000,000 credit facility (the
"Credit Facility"). The Credit Facility comprises a term loan in the amount of
$3,000,000 (the "Term Loan") to be paid
-28-
<PAGE>
in monthly installments of $62,500 in 1996, $83,333 in 1997 and $104,167 in
1998, with the balance outstanding due on December 1, 1998, and a $32,000,000
revolving credit facility (the "Revolving Facility"), which expires on December
1, 1998. The Company may borrow against the Revolving Facility up to 85% of
eligible accounts receivable and eligible service and funding fees receivable.
The Term Loan bears interest at the Company's election at either the lender's
floating base rate plus .25%, or LIBOR (London Interbank Offered Rate) plus
2.25%. Borrowings under the Revolving Facility bear interest at the Company's
election at either the lender's floating base rate, or LIBOR plus 2.125%.
Borrowings under the Credit Facility are secured by a first priority security
interest in all owned and after-acquired real and personal property of the
Company.
At December 31, 1995, the Company had outstanding borrowings of
$3,000,000 under the Term Loan bearing interest at an average rate of 8.0% and
$9,000,000 of borrowings under the Revolving Facility bearing interest at an
average rate of 8.1%.
The Credit Facility contains a variety of affirmative and negative
covenants of types customary in an asset-based lending facility, including those
relating to reporting requirements, maintenance of records, properties and
corporate existence, compliance with laws, incurrence of other indebtedness and
liens, restrictions on certain payments and transactions and extraordinary
corporate events. The Credit Facility also contains financial covenants relating
to maintenance of levels of minimal tangible net worth, EBITDA (earnings before
interest, taxes, depreciation and amortization), net income and fixed charge
coverage and restricting
-29-
<PAGE>
the amount of capital expenditures. In addition, the Credit Facility contains
certain events of default of types customary in an asset-based lending facility.
Generally, if the Credit Facility is terminated (i) during the first nine months
of its term, a fee of 1% of the amount thereof is payable, or (ii) during the
succeeding nine months of its term, a fee of .5% of the amount thereof is
payable. The Company was in compliance with all covenants at December 31, 1995.
Prior to December 8, 1995, the Company had maintained with two banks,
a working capital credit facility and a revolving credit and term loan facility.
Amounts outstanding under these facilities were repaid with borrowings available
under the Credit Facility.
In January 1996, the Company successfully completed its offer to
purchase 1,250,000 shares of its common stock at $11.25 net per share. The total
amount required to purchase such shares was $14,062,500, exclusive of related
fees and other expenses. The purchase price and related expenses were funded
with borrowings available under the Credit Facility. As a result of the
transaction, the Company's stockholders equity was reduced by approximately
$14,160,000 subsequent to year-end.
The Company is moving its corporate headquarters in April 1996. The
cost of the move, including purchases of fixed assets, will be approximately
$800,000 and will be financed from cash flow from operations and financing from
the Credit Facility. The Company believes that internally generated cash flow
and funding from the Credit Facility will be adequate to meet current operating
requirements. The Company intends to expand its business through the further
development of higher margin professional services as
-30-
<PAGE>
well as through PrO Unlimited 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 internal expansion will also be
financed from its cash flow and available borrowings under the Credit Facility.
The magnitude of future acquisitions will determine whether they can be financed
in the same manner or whether additional external sources of financing will be
required. While the Company believes that such sources would be available on
terms satisfactory to it, there can be no assurance in this regard.
In October 1995, the Financial Accounting Standards Board (FASB)
issued Statement No. 123, "Accounting for Stock-Based Compensation," which must
be adopted by the Company in 1996. The Company has elected not to implement the
fair value based accounting method for employee stock options, but has elected
to disclose commencing in 1996 the pro forma net income and earnings per share
as if such method had been used to account for stock- based compensation cost as
described in Statement No. 123.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
-31-
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
See Part I, Item 4. "Executive Officers of the Company." Other
information required by this item is incorporated by reference from the
Company's definitive proxy statement to be filed not later than April 29, 1996
pursuant to Regulation 14A of the General Rules and Regulations under the
Securities Exchange Act of 1934 ("Regulation 14A").
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated by reference
from the Company's definitive proxy statement to be filed not later than April
29, 1996 pursuant to Regulation 14A.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item is incorporated by reference
from the Company's definitive proxy statement to be filed not later than April
29, 1996 pursuant to Regulation 14A.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is incorporated by reference
from the Company's definitive proxy statement to be filed not later than April
29, 1996 pursuant to Regulation 14A.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K.
(a)(1) Consolidated Financial Statements: see the Index to Consolidated
Financial Statements.
-32-
<PAGE>
(2) Financial Statement Schedules: see the Index to Consolidated Financial
Statements.
(3) Exhibits:
3(a) Certificate of Incorporation of the Company, filed on January 11, 1984,
incorporated by reference to Exhibit 3.1 to Registration Statement on
Form S-18 (SEC File No. 2-89218-NY) of the Company (the "Form S-18").
3(b) Certificate of Merger of Uniforce Temporary Personnel, Inc. and the
Company, filed on January 23, 1984, incorporated by reference to
Exhibit 3.2 to the Form S-18.
3(c) Amendment to Certificate of Incorporation of the Company, filed on
February 15, 1984, incorporated by reference to Exhibit 3.3 to the Form
S-18.
3(d) Amendment to Certificate of Incorporation of the Company, filed on May
20, 1987, incorporated by reference to Exhibit 3(d) to Registration
Statement on Form S-2 (SEC File No. 33-17934) of the Company (the "Form
S-2").
3(e) Amendment to Certificate of Incorporation of the Company, filed on May
17, 1988, incorporated by reference to Exhibit 3 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1988.
*3(f) Amendment to Certificate of Incorporation of the Company, filed on
August 21, 1995. The Certificate of Incorporation and all amendments
thereto are restated in their entirety and filed herewith pursuant to
Rule 102(c) of Regulation S-T.
-33-
<PAGE>
3(g) By-Laws of the Company as amended through March 10, 1987, incorporated
by reference to Exhibit 3 to the Company's Current Report on Form 8-K
dated March 18, 1987.
10(a) Incentive Stock Option Plan of the Company, as amended through March 9,
1993, incorporated by reference to Exhibit 10(a) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992 (the
"1992 10-K").
10(b) 1985 Stock Option Plan of the Company, as amended through December 7,
1993, incorporated by reference to Exhibit 10(b) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1993 (the
"1993 10-K").
10(c) Licensee Stock Option Plan of the Company, incorporated by reference to
Exhibit 10(d) to the Form S-2.
10(d) Amendment dated December 7, 1993 to 1991 Stock Option Plan (the "Plan")
of the Company, incorporated by reference to Exhibit 10(d) to the 1993
10-K. The Plan, as amended through March 9, 1993, is incorporated by
reference to Exhibit 10(d) of the 1992 10-K.
10(e) Directors Stock Option Plan, incorporated by reference to Exhibit 10(x)
to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (the "1994 10-K").
10(f) Employment Agreement dated as of January 26, 1984, as amended May 10,
1984, January 5, 1989 and January 10, 1992, between the Company and
John Fanning (the "Fanning Agreement"), incorporated by reference to
Exhibit 10.3 to the Form S-18, Exhibit 28.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1984
-34-
<PAGE>
(the "March 1984 10-Q"), Exhibit 10(f) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1988 (the "1988 10-K") and
Exhibit 10(f) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 (the "1991 10-K").
10(g) Amendment dated March 15, 1994 to the Fanning Agreement, incorporated
by reference to Exhibit 10(t) to the 1993 10-K.
10(h) Amendment dated April 26, 1994 to the Fanning Agreement, incorporated
by reference to Exhibit 10(a) to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1994.
10(i) Amended and Restated Employment Agreement dated as of May 1, 1993
between the Company and Rosemary Maniscalco (the "Maniscalco
Agreement"), incorporated by reference to Exhibit (a) to the Company's
Quarterly Report on Form 10- Q for the quarter ended June 30, 1993.
10(j) Amendment dated September 30, 1994 to the Maniscalco Agreement,
incorporated by reference to Exhibit 10(a) to the September 1994 10-Q.
10(k) Amendment dated December 8, 1995 to the Maniscalco Agreement.
10(l) Agreement of Lease dated October 8, 1976 between Gordon Evergreen Corp.
and Uniforce Services, Inc. as amended by Agreement dated December 2,
1976, Agreement dated as of May 23, 1978, Agreement dated February 22,
1979, Agreement dated March 24, 1980 and Agreement dated April
-35-
<PAGE>
21, 1983 (the "Lease Agreement"), incorporated by reference to Exhibit
10.6 to the Form S-18.
10(m) Amendment, Modification and Extension dated as of April 25, 1985 to the
Lease Agreement, incorporated by reference to Exhibit 10(h) to the
Company's Annual Report on Form 10-K for the year ended December 31,
1985.
10(n) Amendment to Lease Agreement dated January 31, 1991, incorporated by
reference to Exhibit 10(j) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1990.
10(o) Amendment to Lease Agreement dated as of February 1, 1992, incorporated
by reference to Exhibit 10(l) to the 1991 10-K.
10(p) Amendment to Lease Agreement dated as of March 31, 1994, incorporated
by reference to Exhibit 10(k) to the 1994 10-K.
10(q) Loan and Security Agreement, dated as of December 8, 1995, by and among
the Registrant as Guarantor, the Subsidiaries of the Registrant Named
Therein, as Borrowers and Cross-Guarantors, the Lenders Named Therein,
as Lenders, and Heller, as Agent and as a Lender, incorporated by
reference to Exhibit (b) to the Registrant's Schedule 13E-4, dated
December 11, 1995.
10(r) Employment Agreement dated as of April 18, 1994 by and between the
Company and Vinson A. Brannon, incorporated by reference to Exhibit
10(a) to the Company's Current Report on Form 8-K dated April 18, 1994.
-36-
<PAGE>
*10(s) Agreement of Lease, dated January 15, 1996, by and between Industrial
Research & Associates Co. and Uniforce Staffing Services, Inc.
*21 Subsidiaries of the Company.
*23 Consent to the incorporation by reference in the Company's Registration
Statements on Forms S-3 and S-8 of the independent auditors' report
included herein.
*27 Financial Data Schedule.
- ---------------------------------
* Filed herewith.
(b) Reports on Form 8-K: The Registrant filed a Current Report on
Form 8-K dated December 21, 1995 reporting under Item 5
thereof the commencement of a partial self- tender for its
Common Stock and its entry into a new credit facility.
-37-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
Town of North Hempstead, State of New York, on the 28th day of March, 1996.
UNIFORCE SERVICES, INC.
By: /s/ John Fanning
---------------------------------------
John Fanning,
Chairman of the Board,
President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John Fanning, Rosemary Maniscalco and
Harry V. Maccarrone his true and lawful attorney-in-fact, each acting alone,
with full power of substitution and resubstitution for him and in his name,
place and stead, in any and all capacities to sign any and all amendments to
this report, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorneys-in-fact or their
substitutes, each acting alone, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this report has been duly signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chairman of the Board,
President and Chief
/s/ John Fanning Executive Officer March 28, 1996
- ----------------------------
(John Fanning)
Executive Vice President,
Chief Operating Officer and
/s/ Rosemary Maniscalco Director March 28, 1996
- ----------------------------
(Rosemary Maniscalco)
Vice President-Finance,
Treasurer, Principal
Financial and Chief
Accounting Officer and
/s/ Harry V. Maccarrone Director March 28, 1996
- ----------------------------
(Harry V. Maccarrone)
/s/ John H. Brinckerhoff III Director March 28, 1996
- ----------------------------
(John H. Brinckerhoff III)
/s/ Gordon Robinett Director March 28, 1996
- ----------------------------
(Gordon Robinett)
/s/ Daniel Raynor Director March 28, 1996
- ----------------------------
(Daniel Raynor)
/s/ Joseph A. Driscoll Director March 28, 1996
- ----------------------------
(Joseph A. Driscoll)
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1995 and 1994
(With Independent Auditors' Report Thereon)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Uniforce Services, Inc.:
We have audited the accompanying consolidated balance sheets of Uniforce
Services, Inc. and subsidiaries as of December 31, 1995 and 1994 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, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Uniforce Services,
Inc. and subsidiaries at December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1995 in conformity with generally accepted accounting
principles.
As discussed in the notes to the consolidated financial statements, the Company
adopted the provisions of the Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes," in
1993.
KPMG PEAT MARWICK LLP
Jericho, New York
March 8, 1996
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1995 and 1994
<TABLE>
<CAPTION>
Assets 1995 1994
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,444,859 7,298,823
Accounts receivable (net of allowance for doubtful accounts of
$167,000 and $105,000 in 1995 and 1994, respectively) 14,827,862 11,818,740
Funding and service fees receivable (net of allowance for doubtful
accounts of $402,000 and $179,000 in 1995 and 1994,
respectively) 20,918,753 14,466,995
Current maturities of notes receivable from licensees (net of
allowance for possible loss of $67,000 and $109,000 in 1995
and 1994, respectively) 132,258 399,714
Prepaid expenses and other current assets 1,270,268 501,088
Deferred income taxes 347,149 379,771
----------- -----------
Total current assets 43,941,149 34,865,131
----------- -----------
Notes receivable from licensees (net of current maturities
and allowance for possible loss of $92,000 and $76,000 in 1995 and
1994, respectively) 182,642 277,767
Fixed assets - net 2,125,413 1,294,550
Deferred costs and other assets (net of accumulated amortization of
$1,685,970 and $2,059,914 in 1995 and 1994, respectively) 821,244 1,336,284
Cost in excess of fair value of net assets acquired (net of
accumulated amortization of $335,954 and $139,120 in 1995 and
1994, respectively) 3,525,741 3,722,576
----------- -----------
$50,596,189 41,496,308
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Loan payable $ 750,000 3,500,000
Payroll and related taxes payable 7,540,947 7,007,921
Payable to licensees and clients 2,025,563 1,910,111
Income taxes payable 351,690 --
Accrued expenses and other liabilities 4,092,058 3,165,869
----------- -----------
Total current liabilities 14,760,258 15,583,901
----------- -----------
Loan payable - non-current 11,250,000 2,800,000
Capital lease obligation - non-current 426,109 --
Stockholders' equity:
Common stock $.01 par value, authorized 10,000,000 shares;
issued 4,991,213 and 4,946,813 shares in 1995 and 1994,
respectively 49,912 49,468
Additional paid-in capital 7,789,598 7,411,572
Retained earnings 23,990,043 20,952,594
----------- -----------
31,829,553 28,413,634
Treasury stock, at cost, 829,500 and 578,750 shares in
1995 and 1994, respectively (7,669,731) (5,301,227)
----------- -----------
Total stockholders' equity 24,159,822 23,112,407
----------- -----------
$50,596,189 41,496,308
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Earnings
Years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Sales of supplemental staffing services $ 126,267,842 108,485,992 81,818,200
Service revenues and fees 8,203,490 6,694,742 4,323,804
------------- ------------ -----------
Total revenues 134,471,332 115,180,734 86,142,004
Cost of supplemental staffing services 98,162,571 83,766,726 63,489,488
Licensees' share of gross margin 9,473,431 9,895,870 8,792,547
General and administrative 19,450,728 15,730,938 10,656,419
Depreciation and amortization 940,668 941,196 872,621
------------- ------------ -----------
Total costs and expenses 128,027,398 110,334,730 83,811,075
------------- ------------ -----------
Earnings from operations 6,443,934 4,846,004 2,330,929
Other income (expense):
Interest and dividends - net of interest expense
of $889,484, $259,348 and $33,611 in 1995,
1994 and 1993, respectively (727,980) (127,378) 150,494
Other income (expense) 29,439 7,125 (70,302)
------------- ------------ -----------
Earnings before provision for income taxes 5,745,393 4,725,751 2,411,121
Provision for income taxes 2,182,000 1,775,000 918,000
------------- ------------ -----------
Net earnings $ 3,563,393 2,950,751 1,493,121
============= ============ ===========
Weighted average number of shares outstanding 4,311,358 4,553,303 4,307,078
============= ============ ===========
Net earnings per share $ .83 .65 .35
============= ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Common stock Additional Total
------------ paid-in Retained Treasury stockholders'
Shares Par Value capital earnings stock equity
------ --------- ------- -------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 4,717,493 $ 47,175 $ 5,799,935 $ 17,558,414 $ (3,553,829) $ 19,851,695
Common stock issued 3,950 39 24,210 -- -- 24,249
Cash dividend declared ($.12 per share) -- -- -- (516,640) -- (516,640)
Stock option compensation expense -- -- 18,000 -- -- 18,000
Treasury stock acquired -- -- -- -- (162,312) (162,312)
Net earnings -- -- -- 1,493,121 -- 1,493,121
--------- ------------ ------------ ------------ ------------ -------------
Balance at December 31, 1993 4,721,443 47,214 5,842,145 18,534,895 (3,716,141) 20,708,113
Common stock issued 225,370 2,254 1,399,303 -- -- 1,401,557
Cash dividend declared ($.12 per share) -- -- -- (533,052) -- (533,052)
Stock option compensation expense -- -- 18,000 -- -- 18,000
Tax benefit of disqualifying
dispositions -- -- 152,124 -- -- 152,124
Treasury stock acquired -- -- -- -- (1,585,086) (1,585,086)
Net earnings -- -- -- 2,950,751 -- 2,950,751
--------- ------------ ------------ ------------ ------------ ------------
Balance at December 31, 1994 4,946,813 49,468 7,411,572 20,952,594 (5,301,227) 23,112,407
Common stock issued 44,400 444 259,806 -- -- 260,250
Cash dividend declared ($.12 per share) -- -- -- (525,944) -- (525,944)
Stock option compensation expense -- -- 18,000 -- -- 18,000
Tax benefit of disqualifying
dispositions -- -- 100,220 -- -- 100,220
Treasury stock acquired -- -- -- -- (2,368,504) (2,368,504)
Net earnings -- -- -- 3,563,393 -- 3,563,393
--------- ------------ ------------ ------------ ------------ ------------
Balance at December 31, 1995 4,991,213 $ 49,912 $ 7,789,598 $ 23,990,043 $ (7,669,731) $ 24,159,822
--------- ------------ ------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
Cash flows from operating activities:
<S> <C> <C> <C>
Net earnings $ 3,563,393 2,950,751 1,493,121
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Depreciation and amortization 940,668 941,196 872,859
Deferred income taxes 32,622 175,000 (30,000)
Provision for possible losses on receivables 583,998 140,651 203,848
Provision for possible losses on notes
receivable and other assets 247,165 (258,599) 153,337
Stock option compensation expense 18,000 18,000 18,000
(Increase) in accounts receivable (3,137,221) (1,203,381) (1,630,068)
(Increase) in funding and service fees receivable (6,907,658) (5,164,472) (795,291)
(Increase) decrease in prepaids and other assets (769,180) (44,131) 294,574
Increase in payroll and related taxes payable 533,026 799,426 1,606,045
Increase in payable to licensees and clients 115,452 414,379 151,865
Increase (decrease) in income taxes payable 451,910 (217,336) (104,846)
Increase in accrued expenses and other 843,043 1,713,010 374,775
liabilities ----------- ---------- ----------
Net cash provided (used) by operating activities (3,484,782) 264,494 2,608,219
----------- ---------- ----------
Cash flows from investing activities:
Acquisition of certain assets of Brannon & Tully -- (3,204,772) --
Purchase of receivables in connection with the
acquisition of Brannon & Tully -- (1,301,595) --
Notes receivable from licensees (163,741) (391,557) (339,251)
Repayments on notes receivable from licensees 548,748 638,749 820,089
Repayment on note receivable from officer -- -- 50,000
(Increase) in deferred costs and other assets (134,358) (121,950) (903,915)
Purchases of fixed assets (669,970) (591,796) (439,765)
----------- ---------- ----------
Net cash (used) by investing activities $ (419,330) (4,972,921) (812,842)
----------- ---------- ----------
</TABLE>
(Continued)
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from financing activities:
Principal payments on capital lease obligations $ (15,654) -- --
Borrowings under loans payable 15,700,000 6,300,000 --
Principal payments on loans payable (10,000,000) -- (1,000,000)
Proceeds from issuance of common stock 260,250 670,307 24,249
Cash dividends paid (525,944) (533,052) (516,640)
Purchase of treasury stock (2,368,504) (1,585,086) (162,312)
------------ ------------ ------------
Net cash provided (used) by financing
activities 3,050,148 4,852,159 (1,654,703)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents (853,964) 143,742 140,674
Cash and cash equivalents at beginning of year 7,298,823 7,155,081 7,014,407
------------ ------------ ------------
Cash and cash equivalents at end of year $ 6,444,859 7,298,823 7,155,081
============ ============ ============
Supplemental disclosures:
Cash paid for:
Interest $ 590,524 131,328 33,611
============ ============ ============
Income taxes, net of refunds $ 1,690,040 1,835,734 1,052,846
============ ============ ============
</TABLE>
Non-cash Financing Activities:
During 1994, 127,720 shares of the Company's common stock, with an aggregate
market value of $731,250 were issued in connection with the purchase of certain
assets of Brannon & Tully.
During 1995, the Company entered into a capital lease for new software in the
amount of $524,909.
See accompanying notes to consolidated financial statements.
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
(1) DESCRIPTION OF BUSINESS
Uniforce Services, Inc., together with its subsidiaries, (the Company)
provides supplemental personnel services to businesses, educational
institutions, professional and service organizations, federal, state and
local governmental agencies and others in the United States. The Company
has selected specialized product lines within several of its licensed and
company owned offices to provide skilled Information Services (IS)
professional employees, office automation specialists and medical office
support. The Company also supplies financial, payroll and billing support
services to independent supplemental staffing services. Subsidiaries of
the Company also provide temporary laboratory staffing support to the
scientific community; and provide confidential employee conversion and
consulting services which enable client companies to utilize the services
of former independent contractors and consultants.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
Uniforce Services, Inc. and its majority and wholly-owned
subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation.
(b) LICENSING FEES
The Company recognizes revenue from initial licensing fees when it
has performed substantially all its obligations under its licensing
agreement.
(c) DEPRECIATION AND AMORTIZATION
Depreciation and amortization of fixed assets is computed on a
straight-line method over the estimated useful lives of the assets.
Leasehold improvements are amortized over the lesser of their
estimated useful lives or the respective lease periods.
Intangible assets, which include covenants not to compete and
territorial rights acquired, are being amortized over their estimated
useful life ranging from five to ten years using the straight-line
method. The unamortized balance is included in deferred costs and
other assets in the accompanying consolidated balance sheets.
(Continued)
1
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(d) DEFERRED LICENSE ACQUISITION COSTS
The Company has executed contracts for affiliation with existing
supplemental staffing service companies. Such contracts require the
Company to pay an affiliation fee which is amortized on a
straight-line method over the minimum terms of the affiliation
agreements which are generally five or ten years. In addition, the
Company has paid similar fees for existing supplemental staffing
service companies acquired by the Company's licensees. Under these
arrangements, the Company has agreed to pay, on behalf of its
licensees, one-half of the acquisition cost. Such costs are amortized
on a straight-line basis over five or ten years. Amortization of
deferred licensee acquisition costs amounted to $129,530, $183,649
and $216,601 in 1995, 1994 and 1993, respectively.
(e) INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" (Statement 109), in the first
quarter of 1993. Statement 109 was adopted on a prospective basis and
did not have any impact on the Company's financial statements at
adoption. Deferred income taxes are recognized for temporary
differences between the financial reporting basis and tax basis of
assets and liabilities.
(f) EARNINGS PER SHARE
Earnings per share amounts are determined using the weighted average
number of common shares and dilutive common share equivalents
(options) outstanding.
(g) CASH AND CASH EQUIVALENTS
For purposes of presenting the consolidated statements of cash flows,
the Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
(h) USE OF ESTIMATES
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(i) FINANCIAL INSTRUMENTS
The fair values of all financial instruments classified as current
assets or liabilities approximate their respective carrying values
because of the short maturity of those instruments. The fair value of
the Company's bank loans approximates book value since the interest
rates are prime-based and accordingly are adjusted for market rate
fluctuations.
(Continued)
2
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(j) RECLASSIFICATIONS
Certain reclassifications have been made to the 1993 and 1994
financial statements to conform to the 1995 presentation.
(3) ACQUISITION
On April 18, 1994, the Company acquired certain assets of Brannon & Tully,
Inc., a provider of IS (Information Systems) contract professionals. The
purchase price totaled $3,881,250 and consisted of $3,150,000 in cash and
the issuance of 127,720 shares of Common Stock of the Company. Pursuant to
a separate agreement, the Company also acquired certain accounts
receivable, with recourse, for $1,301,595. The cash portion of the
purchase price and the accounts receivable acquired were financed through
borrowings available under the Company's credit facility.
This acquisition has been accounted for as a purchase and accordingly, the
purchase price was allocated to assets based on the estimated fair value
as of the date of the acquisition. The excess of the consideration paid
over the estimated fair value of assets acquired in the amount of
$3,781,925 has been recorded as cost in excess of fair value of net assets
acquired (goodwill) and is being amortized over 20 years on the
straight-line method. The Company assesses the recoverability of
unamortized goodwill using the undiscounted projected future earnings from
the related businesses.
The operating results of Brannon & Tully, Inc. have been included in the
consolidated statement of earnings from the purchase date. The following
unaudited pro forma consolidated results of operations assume the
acquisition of Brannon & Tully, Inc. occurred on January 1, 1993:
December 31,
------------
1994 1993
---- ----
Revenues $118,826,683 $ 96,413,355
Net earnings 3,181,632 1,800,551
Earnings per share $ .69 $ .41
============ ============
The pro forma results of operations are not necessarily indicative of the
actual results of operations that would have occurred had the acquisition
occurred at the beginning of the period or of results which may occur in
the future.
One of the former principals of Brannon & Tully, Inc. entered into an
employment agreement with the Company. His employment agreement was for a
term of five years, but could be terminated by either party at any time
after one year, upon not less than 90 days notice. Beginning in 1995, the
employment agreement provided for incentive compensation based upon
improvements in gross profits relating to certain offices to which the
officer rendered employment services and provided active assistance. The
amount of incentive compensation earned in 1995 under the agreement was
$370,172. The employment agreement was terminated during 1995.
(Continued)
3
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(4) FIXED ASSETS
Fixed assets are stated at cost as follows:
<TABLE>
<CAPTION>
Dec. 31, Dec. 31, Estimated
1995 1994 useful life
---- ---- -----------
<S> <C> <C> <C>
Computer equipment $ 2,050,173 1,335,976 5-8 years
Computer software 670,605 98,074 3-5 years
Furniture, fixtures, office
equipment and other 1,480,125 1,460,414 5-15 years
Leasehold improvements & signs 488,099 464,654 Life of lease
----------- ---------
4,689,002 3,359,118
Less accumulated depreciation and
amortization 2,563,589 2,064,568
----------- ---------
$ 2,125,413 1,294,550
-========== =========
</TABLE>
Depreciation and amortization expense on fixed assets amounted to
$364,025, $291,751 and $257,055 for the years ended December 31, 1995,
1994 and 1993, respectively.
(5) LOAN PAYABLE
On December 8, 1995, the Company entered into an agreement with a
financial institution creating a three-year $35,000,000 credit facility
(the "Credit Facility"). The Credit Facility comprises a term loan in the
amount of $3,000,000 (the "Term Loan") to be paid in monthly installments
of $62,500 in 1996, $83,333 in 1997 and $104,167 in 1998, with the balance
outstanding due on December 1, 1998 and a $32,000,000 revolving credit
facility (the "Revolving Facility") which expires on December 1, 1998 .
The Company may borrow against the Revolving Facility up to 85% of
eligible accounts receivable and eligible service and funding fees
receivable. The Term Loan bears interest at the Company's election at
either the lender's floating base rate plus .25%, or LIBOR (London
Interbank Offered Rate) plus 2.25%. Borrowings under the Revolving
Facility bear interest at the Company's election at either the lender's
floating base rate, or LIBOR plus 2.125%. Borrowings under the Credit
Facility are secured by a first priority security interest in all owned
and after-acquired real and personal property of the Company.
At December 31, 1995, the Company had outstanding borrowings of $3,000,000
under the Term Loan bearing interest at an average rate of 8.0% and
$9,000,000 of borrowings under the Revolving Facility bearing interest at
an average rate of 8.1%.
The Credit Facility contains a variety of affirmative and negative
covenants of types customary in an asset-based lending facility including,
among other things, minimum net worth and profitability levels, with which
the Company is in compliance as of December 31, 1995.
(Continued)
4
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
The Credit Facility was used to repay existing indebtedness as described
below and to finance the offer to purchase the Company's common stock in
January 1996 as described in Note 10.
Prior to December 8, 1995, the Company maintained, with two banks, a
working capital credit facility and a revolving credit and term loan
facility. The working capital credit facility represented an open line of
credit of up to $12,000,000 (increased from $10,000,000, effective in
November 1995), borrowings under which were payable on demand. Outstanding
borrowings bore interest, at the Company's option, at the banks' prime
rate or at a rate 120 basis points above the banks' LIBOR Rate. This
working capital credit facility was terminated on December 8, 1995. In
addition, the Company maintained a revolving credit and term loan
agreement which provided for 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 borrowings) was
terminated.
(6) INCOME TAXES
In February 1992, the Financial Accounting Standards Board issued
Statement No. 109. The Company had previously adopted Statement of
Financial Accounting Standards No. 96, "Accounting for Income Taxes" which
required the liability approach with respect to deferred tax balances and
the current adjustment for changes in statutory tax rates. The Company
adopted Statement 109, which also requires the liability approach with
respect to deferred tax balances, during the first quarter of 1993.
The components of the provision (benefit) for Federal and state income
taxes are as follows:
1995 1994 1993
---- ---- ----
Federal:
Current $1,868,000 1,384,000 810,000
Deferred 27,000 151,000 (25,000)
State:
Current 282,000 216,000 138,000
Deferred 5,000 24,000 (5,000)
---------- ---------- ----------
$2,182,000 1,775,000 918,000
========== ========== ==========
(Continued)
5
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Income tax expense differed from that which would have resulted by
applying the statutory Federal income tax rates to earnings before
provision for income taxes as a result of the following items:
<TABLE>
<CAPTION>
1995 1994 1993
-------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Expected tax on pretax
earnings $ 1,953,000 34.0% $ 1,607,000 34.0% $ 820,000 34.0%
Tax-exempt interest and
qualified dividends (5,000) (.1) (13,000) (.3) (13,000) (.5)
State taxes, net of Federal
income tax benefit 189,000 3.3 158,000 3.4 88,000 3.6
Other, net 45,000 .8 23,000 .5 23,000 1.0
----------- ---- ----------- ---- ----------- ----
Income tax provision $ 2,182,000 38.0% $ 1,775,000 37.6% $ 918,000 38.1%
=========== ==== =========== ==== =========== ====
</TABLE>
The tax effect of temporary differences which give rise to significant
portions of deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
Dec. 31, 1995 Dec. 31, 1994
------------- -------------
<S> <C> <C>
Notes receivable, due primarily to allowances
for possible loss $142,356 177,272
Receivables, due primarily to allowances
for doubtful accounts 212,148 113,339
Accrued expenses not currently deductible -- 30,816
Accelerated depreciation for tax purposes (61,240) 27,975
Other 53,885 30,369
-------- -------
$347,149 379,771
======= =======
</TABLE>
(7) EMPLOYMENT AGREEMENTS AND TRANSACTIONS
The Company has employment agreements with two of its officers providing
for, among other things, their continued employment through December 31,
1996. In addition, the agreements provide for incentive compensation which
is based upon the Company's pre-tax earnings. Incentive compensation
earned in 1995 was $221,298 and in 1994 was $263,677. No incentive
compensation was earned in 1993.
The Company previously held a promissory note from an officer of the
Company. This note resulted from an August 1990 transaction whereby the
Company loaned the officer $200,000 at an interest rate of 8% which was
fully repaid in 1993.
(Continued)
6
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
During 1993, the Company purchased for corporate use a condominium from an
officer of the Company for $152,500. The purchase price was based on an
independent appraisal.
(8) STOCK OPTIONS
During 1991, the Board of Directors of the Company approved the 1991 Stock
Option Plan (the 1991 Plan) which provides for the issuance of up to
500,000 stock options to officers and employees of the Company. Each
option granted pursuant to the 1991 Plan shall be designated at the time
of grant as either an "incentive stock option" or as a "non-qualified
stock option."
In addition, the Company maintains two employee stock option plans, and a
non-qualified stock option plan for its licensees. The plans (except for
options designated as non-qualified stock options) provide for options to
be granted at 100% of the fair market value of the Company's common stock
and provide that the exercise price of options may not be less than 110%
of such fair market value in the case of an employee owning 10% or more of
the voting power of the Company's stock. At the time options are granted,
the Company may impose a waiting period before options can be exercised.
Non-qualified stock options may not be granted at less than 75% of the
fair market value of the Company's common stock at the date of grant.
During 1991, non-qualified stock options with respect to 90,000 shares
were granted under the 1991 Plan at 75% of the fair market value of the
Company's common stock on the date of the grant. The grant resulted in
compensation expense of $180,000 to be allocated to current and future
periods as earned. Additional paid-in capital has been credited to the
extent of aggregate compensation earned since the grant of $85,500.
In 1995 the stockholders of the Company approved the Directors' Stock
Option Plan (the Directors Plan) which permits the granting of a maximum
of 100,000 stock options to its outside Directors. The purpose of the plan
is to secure for the Company and its stockholders the benefits arising
from stock ownership by its outside Directors.
(Continued)
7
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
At December 31, 1995, an aggregate of 533,078 shares of common stock has
been reserved for issuance under the plans. The plans' activities have
been summarized as follows:
<TABLE>
<CAPTION>
Outstanding Option price
options per share
<S> <C> <C> <C>
December 31, 1992 368,425 $6.00 - 11.55
Options granted 180,600 5.75 - 6.00
Options exercised (3,950) 5.75 - 6.25
Options lapsed/canceled (10,500) 5.75
-------
December 31, 1993 534,575 5.75 - 11.55
Options granted 41,878 10.25 - 11.75
Options exercised (97,650) 5.75 - 10.50
Options lapsed/canceled (18,800) 5.75 - 10.50
-------
December 31, 1994 460,003 5.75 - 11.75
Options granted 2,500 8.25
Options exercised (44,400) 5.75 - 6.25
Options lapsed/canceled (89,553) 6.25 - 11.55
-------
December 31, 1995 328,550 $5.75 - 11.75
========
</TABLE>
See Note 10 for a description of additional options granted in connection
with the subsequent event.
Optionees have made disqualifying dispositions of common stock which had
been acquired through the exercise of incentive and non-qualified stock
options. As a result of the disqualifying dispositions, the Company
receives a tax benefit for the difference between the option price and the
fair market value of its common stock. The benefit in 1993 was not
material. The benefit of $100,220 and $152,124 in 1995 and 1994,
respectively, has been reflected in the accompanying consolidated
statements of stockholders' equity.
In October of 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 123, "Accounting for Stock-Based Compensation," which must
be adopted by the Company in 1996. The Company has elected not to
implement the fair value based accounting method for employee stock
options, but has elected to disclose, commencing in 1996, the pro forma
net income and earnings per share as if such method had been used to
account for stock-based compensation cost as described in Statement No.
123.
(9) COMMITMENTS AND CONTINGENCIES
In April 1994, various prior insurance carriers and their not-for-profit
trade association filed an action against the Company, its officers and
various other parties. The Plaintiffs allege breach of contract and tort
causes of action for underpayment of premiums. The Company's motion to
dismiss the action has not yet
(Continued)
8
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
been decided and the Company continues to deny the validity of the claims
of the Plaintiffs. Further, the Company intends to assert substantial
claims in opposition to the claims of the Plaintiffs. Additionally, the
Company and its subsidiaries have filed suit against the trade association
alleging various anti-trust allegations and against various prior worker
compensation carriers alleging claims mismanagement. Management believes
that the ultimate outcome of these matters will not have a material
adverse effect upon the financial position of the Company.
In January 1996, various vendors of training films filed an action against
the Company. The plaintiffs allege that the Company improperly used and/or
copied plaintiffs' tapes. Motions have been filed to have the plaintiffs'
claims dismissed and/or severed. Management intends to vigorously defend
the claims and believes that the claims will not have a material adverse
effect upon the financial position of the Company.
The Company is obligated under various leases for office space and
equipment through 2000. Net rental expense for the years ended 1995, 1994
and 1993 amounted to approximately $871,000, $734,000 and $606,000,
respectively.
In January 1996, the Company entered into a 10 year lease for 23,360
square feet of space at $19.00 per square foot relating to the relocation
of its corporate headquarters.
Following is a schedule of total minimum lease payments under
noncancelable operating leases as of December 31, 1995, including the
lease entered into in January 1996:
1996 $ 785,577
1997 816,948
1998 813,273
1999 694,559
2000 514,991
Thereafter 3,130,988
---------
Total minimum lease payments $6,756,336
(10) SUBSEQUENT EVENTS
On December 11, 1995, the Company made an offer to purchase for cash up to
1,250,000 shares of its Common Stock at $11.25 net per share (the Offer).
The 1,250,000 shares that the Company offered to purchase represented
approximately 30% of the Shares outstanding as of December 11, 1995. In
January 1996, the Offer was successfully completed.
(Continued)
9
<PAGE>
UNIFORCE SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
The total amount required to purchase the 1,250,000 shares was
$14,062,500, exclusive of related fees and other expenses. The purchase
price and related expenses were funded with available borrowings under the
Credit Facility. As a result of the repurchase of shares, the Company's
stockholders equity will be reduced by approximately $14,160,000.
In January 1996, the Company entered into arrangements with two of its
officers. Under such arrangements, the executive officers are entitled to
receive cash bonuses aggregating $1,041,018 payable to the extent of 10%
thereof three years after consummation of the Offer, to the extent of 30%
thereof four years after consummation of the Offer and as to the balance
thereof five years after consummation of the Offer, provided that the
recipient is then employed by the Company. The executive officers were
granted options to purchase an aggregate of 92,535 shares of Common Stock,
such options to vest in installments through January 1999. The exercise
price of such options was $11.25 per share. The cash bonus installments
and option installments are subject to acceleration in the event of death,
merger of the Company, sale of all or substantially all of the Company's
assets or a change of control of the Company.
10
Exhibit 3(f)
CERTIFICATE OF INCORPORATION
OF
UTPI CORP.
Under Section 402 of the Business Corporation Law
The undersigned, being a natural person of at least 18 years
of age and acting as the incorporator of the Corporation hereby being formed
under the Business Corporation Law of the State of New York, certifies:
FIRST: The name of the Corporation shall be UTPI
CORP.
SECOND: The Corporation is formed for the following
purposes:
To engage in any lawful act or activity for which a
corporation may be organized under the New York Business
Corporation Law, provided that the Corporation is not formed
to engage in any act or activity which requires the consent of
any State official, department, board, agency or other body.
THIRD: The office of the Corporation shall be
located in the Town of North Hempstead, County of Nassau, State of New York.
FOURTH: The aggregate number of shares which the
Corporation shall have authority to issue is 5,002,500 shares, to consist of
5,000,000 shares, $.01 par value per share, all of which are of the same class
and all of which are designated as
<PAGE>
common shares (the "Common Stock") and 2,500 shares, $.01 par value per share,
all of which are of the same class and all of which are designated as preferred
stock (the "Preferred Stock").
FIFTH: The powers, preferences, restrictions and
rights granted to or imposed on the respective classes of stock
are as follows:
(a) Each share of Common Stock shall have one vote for all
corporate purposes, with no cumulative voting rights.
(b) The Preferred Stock shall not entitle any holder thereof
to vote at any meeting of shareholders of the Corporation, or otherwise to
participate in any action taken by the Corporation or the shareholders thereof,
whether by consent in writing or otherwise.
(c) The holders of Preferred Stock shall be entitled to
receive out of the earnings or net profits of the Corporation, at the time
legally available for the declaration of dividends, but only when declared by
the Board of Directors, noncumulative dividends at the rate of 5% of the par
value thereof per annum, and no more, payable as the Board of Directors shall
determine, before any dividend shall be set apart or paid on the Common Stock
for such year. After the full noncumulative dividend as aforesaid for the then
current dividend period shall have been declared, paid or set apart for payment
to the holders of Preferred Stock, the holders of Common Stock of the
Corporation shall be entitled to receive, pro rata to the exclusion of the
-2-
<PAGE>
holders of Preferred Stock, such dividends as, from time to time, may be
declared by the Board of Directors.
(d) In the event of any liquidation, dissolution, or
winding-up of the Corporation, whether voluntary or involuntary, the holders of
the Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to its shareholders, whether from
capital, surplus, or earnings, an amount equal to the par value of the Preferred
Stock plus all accrued and unpaid dividends thereon, before any distribution of
the assets shall be made to the holders of the Common Stock and, thereafter, the
holders of the Common Stock shall be entitled, to the exclusion of the holders
of the Preferred Stock, to share ratably in all assets of the Corporation
remaining after such payment to the holders of the Preferred Stock. If, upon
such liquidation, dissolution or winding-up of the Corporation, the assets of
the Corporation shall not be sufficient to permit the payment in full to the
holders of the Preferred Stock of the preferential amounts provided for herein,
then the entire assets of the Corporation shall be distributed ratably among the
holders of the Preferred Stock. Notwithstanding the foregoing provisions, no
distribution of assets among the holders of the Preferred Stock and the holders
of the Common Stock shall be required in the event of a consolidation, merger,
lease or sale which does not, in fact, result in the liquidation or winding-up
of the Corporation or its business.
-3-
<PAGE>
(e) The Preferred Stock shall, at the option of the respective
holders thereof, be convertible into fully paid and non-assessable shares of
Common Stock, at the rate of 100 shares of Common Stock for each share of
Preferred Stock surrendered, upon surrender to the Corporation of the
certificates of the Preferred Stock so to be converted, duly assigned in blank
for transfer. Notwithstanding the foregoing, the Corporation shall not accept
for conversion any shares of the Preferred Stock unless and until, for the
twelve-month period commencing on the first day of the first month immediately
following the closing of the sale, pursuant to an effective registration
statement under the Securities Act of 1933, as amended, of shares of Common
Stock (the "Public Sale"), the consolidated earnings of the Corporation and its
subsidiaries before (i) deduction of or allowance or provision for taxes based
on income and (ii) any extraordinary gain or loss, equals or exceeds $1.44 per
share of Common Stock on a fully-diluted basis, i.e., after giving effect to the
conversion of all shares of Preferred Stock and any other securities convertible
into Preferred Stock, but without giving effect to the exercise of any
over-allotment option granted to any underwriter in connection with the Public
Sale, as determined by the Corporation's independent public accountants. Shares
of Preferred Stock converted into Common Stock shall not be reissued but shall
be cancelled.
(f) So long as any shares of the Preferred Stock remain
outstanding, the Corporation shall reserve and keep
-4-
<PAGE>
available out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of the Preferred Stock, the full number of
shares of Common Stock deliverable upon the conversion of the Preferred Stock
from time to time outstanding.
(g) In case of any combination or change of the Preferred
Stock or Common Stock into a different number of shares of the same or any other
class or classes, or in case of any consolidation or merger of the Corporation
with or into another corporation, or in case of any sale or conveyance to
another corporation of the property of the Corporation as an entity or
substantially as an entity, the aforesaid conversion rate shall be appropriately
adjusted so that the rights of the holders of the Preferred Stock and Common
Stock will not be diluted as a result of such combination, change,
consolidation, merger, sale or conveyance.
SIXTH: No holder of the Common Stock or Preferred Stock of
this Corporation shall, by reason of his shareholdings, have any preemptive
right to purchase, subscribe to, or have first offered to him any shares of any
class of the Corporation, presently or subsequently authorized, or any notes,
debentures, bonds, or other securities of the Corporation convertible into, or
carrying options or warrants to purchase shares of any class, presently or
subsequently authorized (whether or not the issuance of any such shares, or such
notes, debentures, bonds, or other securities, would adversely affect the
dividend or voting rights
-5-
<PAGE>
of such shareholder), other than such rights, if any, as the Board of Directors,
in its discretion, from time to time may grant, and at such prices as the Board
of Directors in its discretion may fix, and the Board of Directors may issue
shares of any class of the Corporation, or any notes, debentures, bonds or other
securities convertible into, or carrying options or warrants to purchase shares
of any class without offering any such shares of any class, either in whole or
in part, to the existing shareholders of any class.
SEVENTH: The Secretary of State of the State of New York is
designated as the agent of the Corporation upon whom process in any action or
proceeding against the Corporation may be served. The post office address to
which the Secretary of State shall mail a copy of any process against the
Corporation served upon him is: c/o Golenbock and Barell, 645 Fifth Avenue, New
York, New York 10022, Attention: Donald D. Shack, Esq.
EIGHTH: The Corporation shall, to the fullest extent permitted
by Sections 722, 723 and 724 of the New York Business Corporation Law, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said sections from and against any and all
of the expenses, liabilities or other matters referred to in or covered by said
sections, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, vote of stockholders or directors or otherwise, both as
to action in his
-6-
<PAGE>
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person.
IN WITNESS WHEREOF, the undersigned has executed and
acknowledged this certificate this 9th day of January, nineteen hundred and
eighty-four.
/s/ Barbara S. Shapiro
----------------------
Barbara S. Shapiro
c/o Golenbock and Barell
645 Fifth Avenue
New York, New York 10022
-7-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the date hereinafter set forth, before me personally came
Barbara A. Shapiro, to me known, and known to me to be the person described in
and who executed the foregoing Certificate, and she acknowledged to me that she
executed the same.
Dated: January 9, 1984
/s/ Cathleen D. Cole
--------------------
Notary Public
<PAGE>
CERTIFICATE OF MERGER
OF
UNIFORCE TEMPORARY PERSONNEL, INC.
AND
UTPI CORP.
INTO
UTPI CORP.
Under Section 904 of the Business Corporation Law
We, the undersigned, being the President and Secretary of
UNIFORCE TEMPORARY PERSONNEL, INC., a New York corporation, and the Incorporator
of UTPI CORP., a New York corporation, do hereby certify:
1. A Plan of Merger setting forth the terms and conditions of
the merger of the below-named constituent corporations has been adopted by the
boards of directors of each such constituent corporation.
2. (a) The name of each constituent corporation is
as follows: UNIFORCE TEMPORARY PERSONNEL, INC., formed under the
name "Fann-Temps, Inc.", and UTPI CORP.
(b) The name of the surviving corporation is
UTPI CORP.
3. Uniforce Temporary Personnel, Inc. has authorized
1,000,000 shares of Common Stock, $.01 par value per share, all
of which are entitled to vote, and of which 504,839 shares are
outstanding, and UTPI Corp. has authorized 5,000,000 shares of
<PAGE>
Common Stock, $.01 par value per share, all of which are entitled to vote, and
none of which is issued and outstanding, and 2,500 shares of Preferred Stock,
$.01 par value per share, none of which is entitled to vote, and none of which
is issued and outstanding.
4. Upon the effective date of the merger, the Certificate of
Incorporation of UTPI Corp. shall be amended so
that Paragraph First shall read as follows:
"FIRST: The name of the Corporation shall be UNIFORCE
TEMPORARY PERSONNEL, INC."
5. The merger shall be effective immediately upon the
filing of this Certificate by the Department of State.
6. (a) The Certificate of Incorporation of Uniforce
Temporary Personnel, Inc. was filed on September 21, 1961 under
the name "Fann-Temps, Inc."
(b) The Certificate of Incorporation of UTPI
Corp. was filed on January 11, 1984.
7. The merger was authorized at a meeting of shareholders by
the vote of the holders of not less than two-thirds of all outstanding shares of
Uniforce Temporary Personnel, Inc. entitled to vote thereon. There being no
shareholders of record of UTPI Corp. and no subscription for shares of capital
stock having been accepted, the merger was authorized by the written consent of
the sole incorporator of UTPI Corp.
-2-
<PAGE>
IN WITNESS WHEREOF, we have duly executed this Certificate and
affirm that the statements contained herein are true under the penalties of
perjury this 11th day of January, 1984.
UNIFORCE TEMPORARY PERSONNEL, INC.
By:/s/ John Fanning
----------------
John Fanning, President
By:/s/ Gordon Robinett
-------------------
Gordon Robinett, Secretary
UTPI CORP.
By:/s/ Barbara A. Shapiro
-------------------------
Barbara A. Shapiro, Sole Incorporator
-3-
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
UNIFORCE TEMPORARY PERSONNEL, INC.
(Under Section 805 of the Business Corporation Law)
We, the undersigned, the President and Secretary,
respectively, of UNIFORCE TEMPORARY PERSONNEL, INC., a New York corporation (the
"Corporation"), hereby certify:
1. The name of the Corporation is UNIFORCE TEMPORARY
PERSONNEL, INC. and the name under which it was formed was "UTPI Corp."
2. The Certificate of Incorporation of the
Corporation was filed on January 11, 1984.
3. The Certificate of Incorporation is amended as authorized
by Section 801 of the Business Corporation Law to remove the class of Preferred
Stock from the Corporation's authorized shares.
4. To accomplish the foregoing amendment, Paragraphs FOURTH
and FIFTH are hereby deleted in their entirety and the following new Paragraphs
FOURTH and FIFTH are substituted in lieu thereof:
"FOURTH: The aggregate number of
shares which the Corporation shall
have authority to issue is 5,000,000
shares, $.01 par value per share, all
of which are of the same class and all
of which are designated as common
shares (the "Common Stock")."
<PAGE>
"FIFTH" Each share of Common Stock
shall have one vote for all corporate
purposes, with no cumulative voting
rights. Each share of Common Stock
shall have equal rights on
dissolution, corporate distribution
and for all other corporate purposes."
5. The reference to Preferred Stock contained in
Paragraph SIXTH of the Certificate of Incorporation is hereby deleted.
6. The amendment to the Certificate of Incorporation
was authorized by the vote of the holders of a majority of all
outstanding shares entitled to vote thereon at a meeting of
shareholders.
IN WITNESS WHEREOF, we have duly executed this Certificate of
Amendment and affirm that the statements contained herein are true under the
penalties of perjury this 10th day of February, 1984.
/s/ John Fanning
--------------------------
John Fanning, President
/s/ Gordon Robinett
--------------------------
Gordon Robinett, Secretary
-2-
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
UNIFORCE TEMPORARY PERSONNEL, INC.
(Under Section 805 of the Business Corporation Law)
We, the undersigned, the President and Secretary,
respectively, of UNIFORCE TEMPORARY PERSONNEL, INC., a New York corporation (the
"Corporation"), hereby certify:
1. The name of the Corporation is UNIFORCE TEMPORARY
PERSONNEL, INC. and the name under which it was formed was "UTPI Corp."
2. The Corporation's Certificate of Incorporation was
filed by the Department of State of the State of New York on
January 11, 1984.
3. The Certificate of Incorporation is amended as
authorized by Section 801 of the Business Corporation Law as follows:
(a) To add a new sentence to Paragraph Eighth of
the Certificate of Incorporation so that Paragraph Eighth shall
read in its entirety as follows:
"EIGHTH: The personal liability of the
directors of the Corporation to the
Corporation or its shareholders for
damages for any breach of duty as a
director, is hereby eliminated to the
fullest extent permitted by the
Business Corporation Law of the State
of New York, as the same may be
amended and supplemented. The
Corporation shall, to the fullest
extent permitted by
<PAGE>
Sections 722, 723 and 724 of the New
York Business Corporation Law, as the
same may be amended and supplemented,
indemnify any and all persons whom it
shall have power to indemnify under
said sections from and against any and
all of the expenses, liabilities or
other matters referred to in or
covered by said sections, and the
indemnification provided for herein
shall not be deemed exclusive of any
other rights to which those
indemnified may be entitled under any
by-law, agreement, vote of
stockholders or directors or
otherwise, both as to action in his
official capacity and as to action in
another capacity while holding such
office, and shall continue as to a
person who has ceased to be a
director, office,r employee or agent
and shall inure to the benefit of the
heirs, executors and administrators of
such person."
4. The foregoing amendment to the Certificate of Incorporation
was authorized by the affirmative vote of all of the directors of the
Corporation at a meeting duly held, at which meeting a quorum was present and
voting throughout, followed by the affirmative vote of the holders of at least a
majority of the outstanding shares of Common Stock of the Corporation entitled
to vote thereon at a meeting of the shareholders duly held, at which meeting a
quorum was present and voting throughout.
IN WITNESS WHEREOF, we have duly executed this Certificate of
Amendment and affirm that the statements contained herein are true under the
penalties of perjury this 12th day of May, 1988.
/s/ John Fanning
-----------------------
John Fanning, President
/s/ Joan Phillips
------------------------
Joan Phillips, Secretary
-2-
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
UNIFORCE TEMPORARY PERSONNEL, INC.
(Under Section 805 of the Business Corporation Law)
We, the undersigned, the President and Secretary, respectively,
of UNIFORCE TEMPORARY PERSONNEL, INC. (the "Corporation"), do hereby certify:
1. The name of the Corporation is UNIFORCE TEMPORARY
PERSONNEL, INC. and the name under which it was formed was "UTPI CORP."
2. The Certificate of Incorporation of the
Corporation was filed on January 11, 1984.
3. The Certificate of Incorporation is amended as authorized
by Section 801 of the Business Corporation Law to increase the aggregate number
of shares of Common Stock which the Corporation shall have authority to issue.
4. To accomplish the foregoing amendment, Paragraph FOURTH of
the Certificate of Incorporation is hereby deleted in its entirety and the
following Paragraph FOURTH is hereby substituted in lieu thereof:
"FOURTH: The aggregate number of
shares which the Corporation shall
have authority to issue is 10,000,000
shares, $.01 par value per share, all
of which are the same class and all of
which are designated as common shares
(the "Common Stock")."
<PAGE>
5. The foregoing amendment to the Certificate of Incorporation
was authorized by the affirmative vote of all of the directors of the
Corporation at a meeting duly held, at which meeting a quorum was present and
voting throughout, following by the affirmative vote of the holders of at least
a majority of the outstanding shares of the Corporation entitled to vote thereon
at a meeting of the shareholders duly held, at which meeting a quorum was
present and voting through.
IN WITNESS WHEREOF, we have duly executed this Certificate of
Amendment and affirm that the statements contained herein are true under the
penalties of perjury this 14th day of May, 1987.
/s/ John Fanning
--------------------------
John Fanning, President
/s/ Gordon Robinett
--------------------------
Gordon Robinett, Secretary
-2-
<PAGE>
CERTIFICATE OF CHANGE
OF
UNIFORCE TEMPORARY PERSONNEL, INC.
(Under Section 805-A of the Business Corporation Law)
The undersigned, being the President and Secretary,
respectively, of Uniforce Temporary Personnel, Inc., do hereby certify and set
forth:
1. The name of the corporation is Uniforce Temporary
Personnel, Inc. (the "Corporation"). The Corporation was formed
under the name UTPI Corp.
2. The Certificate of Incorporation of the Corporation
was filed by the Department of Sate on the 11th day of January, 1984.
3. The Certificate of Incorporation of the
Corporation is hereby changed as follows:
Paragraph Seventh of the Certificate of
Incorporation, which sets forth a designation of the Secretary
of State as agent of the Corporation upon whom process against
it may be served and the post office address to which the
Secretary of State shall mail a copy of any process against it
served upon him, is hereby changed to be and read as follows:
"SEVENTH: The Secretary of State of the
State of New York is hereby designated
the agent of this Corporation upon whom
process against this Corporation may be
served. The post office address to
which the Secretary of State shall mail
a copy of any process against this
Corporation served upon him as agent of
this corporation to: Olshan Grundman
Frome & Rosenzweig, 505 Park Avenue, New
York, New York 10022, Attention: David
J. Adler, Esq.
4. This change to the Certificate of Incorporation of
the Corporation was authorized by the Board of Directors under Business
Corporation Law ss.803(b).
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and signed
this certificate this 10th day of December, 1991, affirming that the statements
made herein are true under penalties of perjury.
/s/ John Fanning
--------------------------
John Fanning, President
/s/ Diane J. Geller
--------------------------
Diane J. Geller, Secretary
-2-
<PAGE>
CERTIFICATE OF CHANGE
OF
UNIFORCE TEMPORARY PERSONNEL, INC.
(Under Section 805-A of the Business Corporation Law)
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
UNIFORCE TEMPORARY PERSONNEL, INC.
(Under Section 805 of the Business Corporation Law)
Olshan Grundman Frome & Rosenzweig
505 Park Avenue
New York, New York 10022-1170
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
UNIFORCE TEMPORARY PERSONNEL, INC.
(Under Section 805 of the Business Corporation Law)
We, the undersigned, the President and Secretary,
respectively, of UNIFORCE TEMPORARY PERSONNEL, INC., a New York corporation (the
"Corporation"), hereby certify:
1. The name of the Corporation is UNIFORCE TEMPORARY
PERSONNEL, INC. and the name under which it was formed was "UTPI
Corp."
2. The Corporation's Certificate of Incorporation was
filed by the Department of State of the State of New York on
January 11, 1984.
3. The amendment of the Certificate of Incorporation of
the Corporation to be effected by this Certificate of Amendment is
to change the name of the Corporation from "Uniforce Temporary
Personnel, Inc." to "Uniforce Services, Inc."
4. To effect the foregoing amendment, Article First of the
Certificate of Incorporation of the Corporation, relating to the name of the
Corporation, is deleted in its entirety and the following Article First is
inserted in its place:
"FIRST: The name of the corporation is "Uniforce
Services, Inc." (the "Corporation").
<PAGE>
5. The foregoing amendment to the Certificate of Incorporation
was authorized by the affirmative vote of all of the directors of the
Corporation at a meeting duly held, at which meeting a quorum was present and
voting throughout, followed by the affirmative vote of the holders of at least a
majority of the outstanding shares of Common Stock of the Corporation entitled
to vote thereon at a meeting of the shareholders duly held, at which meeting a
quorum was present and voting throughout.
IN WITNESS WHEREOF, we have duly executed this Certificate of
Amendment and affirm that the statements contained herein are true under the
penalties of perjury this 6th day of June, 1995.
/s/ John Fanning
--------------------------
John Fanning, President
/s/ Diane J. Geller
--------------------------
Diane J. Geller, Secretary
-2-
INDUSTRIAL & RESEARCH ASSOCIATES CO.
LANDLORD
WITH
UNIFORCE STAFFING SERVICES, INC.
TENANT
AGREEMENT OF LEASE
Premises - 415 Crossways Park Drive
Woodbury, New York 11797
<PAGE>
TABLE OF CONTENTS
ARTICLE PAGE
I DEMISE 1
II TERM 2
III BASIC RENT - ADDITIONAL RENT 4
IV UTILITIES AND SERVICES 6
V LANDLORD'S WORK, REPAIR AND MAINTENANCE 7
VI CHANGES AND ALTERATIONS - SURRENDER OF 9
DEMISED PREMISES
VII COMPLIANCE WITH ORDERS, ORDINANCES, ETC. 11
VIII MECHANIC'S LIENS 12
IX INSPECTION OF DEMISED PREMISES BY LANDLORD 13
X RIGHT TO PERFORM COVENANTS 14
XI DAMAGE OR DESTRUCTION 15
XII CONDEMNATION 18
XIII BANKRUPTCY OR OTHER DEFAULT 21
XIV CUMULATIVE REMEDIES - NO WAIVER 30
XV SUBORDINATION 31
XVI QUIET ENJOYMENT 32
XVII NOTICES 33
XVIII DEFINITION OF CERTAIN TERMS, ETC. 34
XIX INVALIDITY OF PARTICULAR PROVISIONS 35
XX COVENANTS TO BIND AND BENEFIT RESPECTIVE PARTIES 36
XXI INSURANCE 37
XXII USE, ASSIGNMENT OR SUBLETTING 38
XXIII RULES AND REGULATIONS 40
XXIV LANDLORD'S LIABILITY 41
XXV ENTIRE AGREEMENT 42
XXVI CERTIFICATES 43
<PAGE>
XXVII SECURITY 44
XXVIII BROKER 45
XXIX SIGNS 46
XXX HOLDING OVER 47
XXXI ENVIRONMENTAL REPRESENTATION 48
EXHIBITS
Demised Premises "A"
Building Site Plan "B"
Work Letter "C"
Cleaning Specifications "D"
Rules & Regulations "E"
<PAGE>
THIS INDENTURE OF LEASE made the 15th day of January, 1996 by
and between INDUSTRIAL & RESEARCH ASSOCIATES CO., a co- partnership, with
offices at 7600 Jericho Turnpike, Woodbury, New York 11797, hereinafter referred
to as the "LANDLORD" and UNIFORCE STAFFING SERVICES, INC., with offices at 1335
Jericho Turnpike, New Hyde Park, New York 11040, hereinafter referred to as the
"TENANT".
W I T N E S S E T H
WHEREAS, the LANDLORD is the owner in fee of the premises
hereinafter demised
NOW, THEREFORE, LANDLORD and TENANT covenant and agree as
follows:
ARTICLE I
DEMISE
Section 1.1 The LANDLORD, for and in consideration of the
rents, covenants and agreements hereinafter reserved and contained herein,
hereby leases and TENANT does hereby take and hire, upon and subject to the
covenants and conditions hereinafter expressed which the TENANT agrees to keep
and perform, the premises shown on the floor plan annexed hereto as Exhibit "A",
hereinafter called the "Demised Premises" consisting of 23,360 square feet
rentable in the building as shown on the Plan annexed hereto and marked Exhibit
"B", situated at 415 Crossways Park Drive, Woodbury, New York 11797, together
with
1
<PAGE>
the right to use, in common with other tenants of the LANDLORD in this and other
buildings, the parking area shown on Exhibit "B" (hereinafter called "parking
area") for the parking of automobiles of employees, customers, invitees or
licensees of the TENANT and other tenants of the LANDLORD. TENANT shall be
entitled to twelve (12) reserved parking spaces as noted on Exhibit "B".
2
<PAGE>
ARTICLE II
TERM
Section 2.1 The basic term of this lease (hereinafter referred
to as the "Term") shall commence within five (5) days from the date the LANDLORD
gives notice to the TENANT that the LANDLORD has substantially completed the
work set forth on the Work Letter attached hereto as EXHIBIT "C". LANDLORD
represents that LANDLORD shall use reasonable commercial efforts to
substantially complete the Demised Premises in the time frame noted in Section
2.4. The term "substantially completed" as used herein shall be deemed to mean
so complete as to allow the TENANT to enter the Demised Premises and conduct its
normal business operations therein even though there may be minor items of
decoration or construction to be completed. At the time of the commencement of
the lease the LANDLORD shall have received a temporary or permanent Certificate
of Occupancy for the Demised Premises (unless any work to be done therein, by
the TENANT shall prevent the issuance of either such Certificate of Occupancy)
and the air conditioning, heating, plumbing and electrical systems in the
Demised Premises in the building shall be in working order and the said Demised
Premises shall be free of debris.
After the LANDLORD substantially completes the Demised
Premises, the TENANT shall provide a "punch list" to the LANDLORD of any open
items of construction to be completed and LANDLORD shall complete said "punch
list" items within thirty days of receipt.
Section 2.2 The term of this lease shall be for ten
(10) years and two (2) months.
3
<PAGE>
The term "lease year" as used herein or "year" as used herein,
shall mean a twelve (12) month period. The first lease year shall commence on
the date of the term hereof, but if such date of commencement shall be a date
other than the first day of a month, the first lease year shall commence on the
first day of the month following the month in which the term of the lease
commences. Each succeeding lease year during the term hereof shall commence on
the anniversary date of the first lease year.
Section 2.3 Immediately following the determination of the
commencement date of the term of this lease, the LANDLORD and the TENANT, at the
request of either party, shall execute an agreement in recordable form, setting
forth both the dates of the commencement of the term of this lease and the date
of the termination hereof.
Section 2.4 The parties expect that the term of this lease
will commence on the 1st day of April, 1996, and end on the 31st day of May,
2006. In the event, however, that the LANDLORD is unable to substantially
complete the work set forth on Exhibit "C" by reason of strikes, inability to
obtain materials, governmental regulations, acts of God or other matters beyond
LANDLORD's control then and in that event the provisions of Section "2.1" shall
control the commencement of the term hereof.
Notwithstanding anything to the contrary herein, provided that
the lease and all associated documents are executed by the 15th day of January,
1996 and all finishes and special requirements as per #11 of Exhibit C are
finalized by the 29th day of January, 1996, the TENANT shall have the option,
but not
4
<PAGE>
the obligation, to cancel this lease should the LANDLORD be unable to deliver
the Demised Premises substantially completed by the 15th day of May, 1996.
TENANT shall notify the LANDLORD in writing of TENANT'S intention to cancel this
lease no later than the 1st day of May, 1996. LANDLORD shall immediately respond
to the TENANT of LANDLORD's ability to deliver the Demised Premises by the 15th
day of May, 1996 and provided LANDLORD shall substantially complete the Demised
Premises by the 15th day of May, 1996, TENANT's notification to the LANDLORD
shall be of no further force and effect. Should the lease have to be cancelled
all monies paid to the LANDLORD by the TENANT shall be returned within 30 days
of the cancellation and neither party shall have any further obligation to each
other and the lease shall be null and void.
ARTICLE III
BASIC RENT - ADDITIONAL RENT
Section 3.1 Commending two (2) months after the rent
commencement date, the TENANT shall pay to the LANDLORD an Annual Basic Rent to
INDUSTRIAL & RESEARCH ASSOCIATES CO. at P.O. Box 9020, Hicksville, New York
11802-9020 in equal monthly installments in advance of or on the first day of
each month without notice and demand and without abatement, deduction or set-off
of any amount whatsoever as per the following schedule:
TERM BASIC ANNUAL RENT MONTHLY RENT
06/01/96-05/31/97 $443,840.00 $36,986.67
06/01/97-05/31/98 $463,969.00 $38,641.33
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06/01/98-05/31/99 $483,552.00 $40,296.00
06/01/99-05/31/2000 $503,408.00 $41,950.67
06/01/00-05/31/01 $523,264.00 $43,605.33
06/01/01-05/31/02 $543,120.00 $45,260.00
06/01/02-05/31/03 $562,976.00 $46,914.67
06/01/03-05/31/04 $582,832.00 $48,469.33
06/01/04-05/31/05 $602,688.00 $50,224.00
06/01/05-05/31/06 $622,544.00 $51,878.67
The fractional rent, if any, from the rent commencement date (as above provided)
to the date of the first day of the following month shall be paid by the TENANT
to the LANDLORD within five (5) days after the rent commencement date. The
LANDLORD acknowledges receipt of $147,946.68 representing the rent for the first
four (4) full months for which rent is due hereunder.
Section 3.2 In the event that LANDLORD or any major tenant of
the building should contest any taxes or assessments levied against the
building, the TENANT agrees to cooperate but is not obligated to contribute to
any expenses incurred by the LANDLORD in any such proceeding or action.
Section 3.3 Rent and Additional Rent shall be payable in
lawful money of the United States to the LANDLORD at P.O. Box 9020, Hicksville,
New York 11802-9020, or at such other place as the LANDLORD may from time to
time designate, in advance, without notice, demand, offset or deduction except
as specifically set forth herein. In the event any payment of Basic Rent or
Additional Rent shall not be made to LANDLORD within ten days of the due date
hereof there shall be added to the amount a sum
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equal to five percent of the unpaid items to help to defray LANDLORD'S
additional costs for additional bookkeeping and other costs in connection
therewith.
Notwithstanding the above, TENANT shall be permitted one late
payment per year without any penalties accruing until LANDLORD gives notice to
the TENANT and TENANT'S time to cure said default has expires.
ARTICLE 1V
UTILITIES AND SERVICES
Section 4.1 TENANT shall pay for all energy used or consumed
in the Demised Premises, including energy used for HVAC. TENANT shall contract
directly with the utility company for same (gas and electric). LANDLORD
represents that the meters servicing the Demised Premises are only for the use
of the TENANT.
Section 4.2 LANDLORD shall supply, at LANDLORD'S own cost and
expense, water to the building of which the Demised Premises form a part for
office building consumption.
Section 4.3 The LANDLORD covenants to provide and pay for
cleaning services by LANDLORD's cleaner as per the Cleaning Specifications
attached hereto and made a part hereof as Exhibit "D".
Section 4.4 TENANT agrees to give at least seven days' prior
written notice to LANDLORD of the date of any relocation into or final move out
of, and the time thereof and TENANT shall
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use the loading areas designated by LANDLORD for such moving and deliveries, and
to otherwise abide by the Rules established by LANDLORD as respect deliveries to
or moving into or out of the Demised Premises. TENANT shall supply at TENANT'S
cost and expense protective coverings to protect the floors and walls of the
Building when moving into or out of the Demised Premises or when receiving or
sending any bulky or heavy materials.
ARTICLE V
LANDLORD'S WORK, REPAIR AND MAINTENANCE
Section 5.1 The LANDLORD agrees at its own cost and expense to
do the work relating to the Demised Premises in accordance with the plans and
Work Letter attached hereto, as Exhibits "A" and "C" respectively.
Section 5.2 TENANT may have its workmen commence work in the
Demised Premises prior to the substantial completion of LANDLORD'S work,
provided that such workmen do not in any manner interfere with or impede
LANDLORD'S workers. In the event that TENANT'S workers shall interfere with or
impede LANDLORD'S workers, then upon notice from LANDLORD, TENANT will
immediately remove its workers from the Demised Premises. TENANT'S entry into
the Demised Premises for the purpose of making TENANT'S installations shall not
be deemed a waiver of any of the TENANT'S rights under the lease, nor shall the
same be deemed an acceptance of the work to be done by the LANDLORD hereunder.
Section 5.3 The TENANT covenants throughout the term of this
lease, at the TENANT'S sole cost and expense to take good
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care of the interior of the Demised Premises and keep the same in good order and
condition and to make all repairs therein except (i) as provided in Section
"5.4" hereof and (ii) for reasonable wear and tear.
Section 5.4 The LANDLORD covenants throughout the term of this
lease, at the LANDLORD'S sole cost and expense, to make all structural repairs
to the building in which the Demised Premises are located and shall also
maintain and keep in good repair the building's sanitary, plumbing, electrical,
sprinklers, heating, air conditioning and other systems servicing or located, in
or passing through the Demised Premises, other than
(i) To any systems, facilities and equipment
installed on behalf of the TENANT; and
(ii) To any of the improvements to the interior of
the Demised Premises undertaken and completed by the TENANT; and
(iii) Any repairs which are necessitated by any
act or omission of the TENANT, its agents, servants, employees or invitees,
which repairs TENANT shall make at its own cost and expense.
Section 5.5 Except as expressly provided otherwise in this
lease, there shall be no allowance to the TENANT or diminution of rent and no
liability on the part of the LANDLORD by reason of inconvenience, annoyance or
injury to business arising from the making of any repairs, alterations,
additions or improvements in or to any portion of the building, on the Demised
Premises, in the parking area, or in and to the fixtures, appurtenances and
equipment thereof. The LANDLORD agrees to do any work to be done by it in such a
manner as not to unreasonably interfere with the TENANT'S use of the Demised
Premises.
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ARTICLE VI
CHANGES AND ALTERATIONS -- SURRENDER OF DEMISED PREMISES
Section 6.1 The TENANT shall have the right, at any time and
from time to time, during the term of this lease to make such nonstructural
changes and alterations to the Demised Premises as the TENANT shall deem
necessary or desirable. However, all changes and alterations must be made with
the written consent of the LANDLORD, which shall not be unreasonably withheld or
delayed, and any alterations affecting HVAC and electrical work, including
lighting, must be done by the LANDLORD at TENANT'S sole cost and expense, which
cost shall be commercially competitive.
Section 6.2 Except as noted in Article XXIX, the TENANT agrees
not to place any signs on the roof or on or about the inside or outside of the
building in which the Demised Premises are situated, except for signs inside of
the Demised Premises which may not be seen from the outside.
Section 6.3 All improvements and alterations made or installed
by or on behalf of the TENANT, shall immediately upon completion of installation
thereof be and become the property of the LANDLORD without payment therefore by
the LANDLORD, with the exception of TENANT'S trade fixtures, which TENANT may
remove provided TENANT restores any damage caused by said removal.
Section 6.4 The TENANT shall, upon the expiration of earlier
termination of this lease, surrender to the LANDLORD the Demised
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Premises, together with all alterations and replacement thereto, in good order
and condition, except for reasonable wear and tear or damage by fire or
casualty.
If the TENANT shall make any alterations or changes or
additions to the Demised Premises, after the commencement of the term of this
lease, and LANDLORD shall desire the same to be removed upon the expiration of
the term hereof, then upon LANDLORD'S giving notice to the TENANT of its desire
to have the same removed, the TENANT will remove the same prior to the
expiration of the term hereof at TENANT'S sole cost and expense and TENANT will,
at its own cost and expense, restore the premises to the condition which they
were in just prior to the commencement of the term hereof, normal wear and tear
and damage by fire excepted. Said notice to remove and restore shall be given to
the TENANT along with the permission to the TENANT to make such additions and/or
alterations.
Section 6.5 In connection with any alterations to the Demised
Premises done by TENANT including decorating, prior to any work being commenced,
TENANT shall supply to LANDLORD: (i) liability insurance from the Contractor
doing the work in an amount not less than Two Million Dollars (inclusive of any
umbrella policy), naming LANDLORD as an additionally named insured; (ii)
evidence that all workers doing work in the demised premises are covered by
Workmen's Compensation Insurance; (iii) an agreement from TENANT's contractor to
remove all debris from the premises shown on Exhibit "B" after 6:00 P.M. at the
end of each day's work. In the event TENANT'S contractor shall fail to
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remove debris on a daily basis, as hereinabove provided after one days' notice
by the LANDLORD, LANDLORD may order said contractors off the premises and refuse
them access to the Building thereafter.
ARTICLE VII
COMPLIANCE WITH ORDERS, ORDINANCES, ETC.
Section 7.1 The TENANT covenants throughout the term of this
lease and any renewals hereof, at the TENANT'S sole cost and expense, to comply
with all laws and ordinances and the orders and requirements of all federal,
state and municipal governments and appropriate departments, commissions, boards
and officers thereof, which may be applicable to the TENANT'S particular use or
occupancy of the Demised Premises. TENANT shall only be responsible for
non-structural alterations.
Section 7.2 The TENANT shall have the right to contest by
appropriate legal proceedings, in the name of the TENANT or the LANDLORD or
both, but without cost or expense to the LANDLORD, the validity of any law,
ordinance, order or requirement of the nature referred to in Section "7.1"
hereof. Provided such noncompliance does not subject the LANDLORD to any
criminal liability for failure so to comply therewith, the TENANT may postpone
compliance therewith until the final determination of any proceedings, provided
that all such proceedings shall be prosecuted with all due diligence and
dispatch, and if any lien or charge is incurred by reason of noncompliance, the
TENANT may
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nevertheless make the contest aforesaid and delay compliance as aforesaid,
provided that the TENANT indemnifies the LANDLORD against any loss or injury by
reason of such noncompliance or delay therein.
Section 7.3 LANDLORD covenants and agrees that at the time of
the commencement of the term of this lease the Demised Premises shall comply
with all laws, ordinances and regulations applicable thereto.
ARTICLE VIII
MECHANIC'S LIENS
Section 8.1 The TENANT covenants not to suffer or permit any
mechanic's liens to be filed against the fee interest of the LANDLORD nor
against TENANT'S leasehold interest in the Demised Premises by reason of work,
labor, services or materials supplied or claimed to have been supplied to the
TENANT or any contractor, subcontractor or any other party or person acting at
the request of the TENANT, or anyone holding the Demised Premises or any part
thereof through or under the TENANT. TENANT agrees that in the event any
mechanic's lien shall be filed against the fee interest of the LANDLORD or
against the TENANT'S leasehold interest the TENANT shall, within thirty (30)
days after receiving notice of the filing thereof, cause the same to be
discharged of record by payment, deposit, bond or order of a court of competent
jurisdiction or otherwise.
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If TENANT shall fail to cause such lien to be discharged or
bonded with the period aforesaid, then in addition to any other right or reedy,
LANDLORD may, but shall not be obligated to, discharge the same by paying the
amount claimed to be due, by procuring the discharge of such lien by deposit by
bonding proceedings, and in any such event, LANDLORD shall be entitled, if
LANDLORD so elects, to compel the prosecution of any action for the foreclosure
of such lien by the lienor and to pay the amount of the judgment in favor of the
lienor with interest, costs and allowances. Any amount so paid by LANDLORD and
all reasonable costs and expenses incurred by LANDLORD or the fee owner in
connection therewith, including but not limited to premiums on any bonds filed
and attorneys' fees, shall constitute Additional Rental payable by TENANT under
this lease and shall be paid by TENANT to LANDLORD within ten days of demand
therefor.
ARTICLE IX
INSPECTION OF DEMISED PREMISES BY LANDLORD
Section 9.1 The TENANT agrees to permit the LANDLORD and the
authorized representatives of the LANDLORD to enter the Demised Premises at all
reasonable times during TENANT'S usual business hours for the purpose of (a)
inspecting the same, and (b) making any necessary repairs to the Demised
Premises.
Section 9.2 The LANDLORD is hereby given the right during
TENANT'S usual business house to enter the Demised Premises to exhibit the same
for the purpose of sale or mortgage and, during the last six (6) months of the
initial term or at
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anytime if the TENANT defaults in any of the terms, covenants and conditions of
this lease, to exhibit the same to prospective tenants for the purposes of
renting.
Section 9.3 With regard to Sections 9.1 and 9.2, except for
the case of an emergency situation, LANDLORD shall, if possible, give reasonable
notice to TENANT of LANDLORD'S intention to inspect the premises or to make
repairs and shall use commercially reasonable efforts not to unduly disrupt
TENANT'S operations.
ARTICLE X
RIGHT TO PERFORM COVENANTS
Section 10.1 The Tenant covenants and agrees that if the
TENANT shall at any time fail to make any payment or perform any other act on
its part to be made or performed under this lease, the LANDLORD, after the
expiration of any time limitation set forth in this lease (except in cases of
emergency) may, but shall not be obligated to, make such payment or perform such
other act to the extent the LANDLORD may deem reasonably desirable, and in
connection therewith to pay reasonable expenses and employ counsel. All sums so
paid by the LANDLORD and all expenses in connection therewith shall be deemed
additional rent hereunder and be payable to the LANDLORD on the first day of the
next month and the LANDLORD shall have the same rights and remedies for the
nonpayment thereof as in the case of default in the payment of the basic rent
reserved hereunder.
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ARTICLE XI
DAMAGE OR DESTRUCTION
Section 11.1 A. If the Demised Premises or any part thereof
shall be damaged by fire or other casualty, TENANT shall give immediate notice
thereof the LANDLORD and this lease shall continue in full force and effect
except as hereinafter set forth.
B. If the Demised Premises are partially damaged
or rendered partially unusable by fire or other casualty, the damages thereto
shall be repaired by and at the expense of LANDLORD to the extent that said
damages include those installations originally installed by LANDLORD pursuant to
the Floor Plan and Work Letter attached hereto known as Exhibits "A" and "C"
respectively.
C. If the Demised Premises are totally damaged or
rendered wholly unusable by fire or other casualty, then the LANDLORD shall have
the right to elect not to restore the same as hereinafter provided.
D. If the Demised Premises are rendered wholly
unusable or (whether or not the Demised Premises are damaged in whole or in
part) if the building shall be so damaged that LANDLORD shall decide to demolish
it or not to rebuild it, then, in any of such events, LANDLORD may elect to
terminate this lease or rebuild by written notice to TENANT given within ninety
(90) days after such fire or casualty specifying a date for the expiration of
the lease or rebuilding, which date shall not be
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more than sixty (60) days after the giving of such notice. Upon the date
specified in a notice termination the term of this lease shall expire as fully
and completely as if such date were the date set forth above for the termination
of this lease and TENANT shall forthwith quit, surrender and vacate the premises
without prejudice however, to LANDLORD'S rights and remedies against TENANT
under the lease provisions in effect prior to such termination, and any rent
owing shall be paid up to the date of destruction and any payments of rent made
by TENANT which were on account of any period subsequent to such date shall be
returned to TENANT. Unless LANDLORD shall serve a termination notice as provided
for herein, LANDLORD shall make the repairs and restorations under the
conditions of "B" and "C" hereof, with all reasonable expedition subject to
delays due to adjustment of insurance claims, labor troubles and causes beyond
LANDLORD'S control.
Notwithstanding anything contained to the contrary herein,
should the Demised Premises not be restored within 210 days of fire or other
casualty, then the TENANT shall have the option of canceling this lease
agreement provided the TENANT gives the LANDLORD fifteen (15) days prior written
notice of the TENANT'S intention to cancel this lease. Should the LANDLORD feel
that the Demised Premises will be substantially restored within said fifteen
(15) day period, LANDLORD shall respond in writing to the TENANT and the
TENANT'S notice to the LANDLORD shall be null and void and of no further force
and effect.
E. Nothing contained hereinabove shall relieve
TENANT from liability that may exist as a result of damage from
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fire or other casualty. Notwithstanding the foregoing, each party shall look
first to any insurance in its favor before making any claim against the other
party for recovery for loss or damage resulting from fire or other casualty, and
to the extent that such insurance is in force and collectable and to the extent
permitted by law, LANDLORD and TENANT each hereby releases and waives all right
of recovery against the other or any one claiming through or under each of them
by way of subrogation or otherwise. LANDLORD and TENANT'S insurance policies
shall contain a clause providing that such a release or waiver shall not
invalidate the insurance and also, provided that such policy can be obtained
without additional premiums. In the event that there are additional premiums for
such waiver of subrogation, the party in whose favor such waiver is intended
shall have the option to either pay the additional premium or waive the
condition that the other's policy contain the same. TENANT acknowledges that
LANDLORD will not carry insurance on TENANT'S furniture and/or furnishings or
any fixtures or equipment, improvements, or appurtenances removable by TENANT
and agrees that LANDLORD will not be obligated to repair any damage thereto or
replace the same.
F. TENANT hereby waives the provisions of Section
227 of the Real Property Law and agrees that the provisions of this article
shall govern and control in lieu thereof.
Section 11.2 The TENANT shall not knowingly do or permit to be
done any act or thing upon the Demised Premises, which will invalidate or be in
conflict with fire insurance policies covering the building of which Demised
Premises form a
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part, and fixtures and property therein. The TENANT shall at its expense comply
with all rules, orders, regulations or requirements of the New York Board of
Fire Underwriters, or any other similar body, which may be applicable to the the
TENANT'S use and occupancy of the Demised Premises, provided that the necessity
for such compliance results from the use and occupancy of the Demised Premises
by the TENANT, and shall not do, or permit anything to be done, in or upon the
Demised Premises or bring or keep anything therein, or use the Demised Premises
in a manner which shall increase the rate of fire insurance on the building of
which the Demised Premises form a part, or on the property located therein, over
that in effect when the lease commenced, unless the TENANT shall reimburse the
LANDLORD, as additional rent hereunder, for that part of all insurance premiums
thereafter paid by the LANDLORD, which shall have been charged because of such
failure or use by the TENANT, and shall make such reimbursement upon the first
day of the month following written receipt of notice of such outlay by the
LANDLORD and evidence of the payment thereof. TENANT'S proposed usage, as noted
in Article XXII, shall not increase the building's insurance rates.
Section 11.3 Notwithstanding anything to the contrary
contained in this lease, during any period after damage or destruction and until
the premises have been restored, the TENANT shall be entitled to an abatement of
rent and additional rent for the unusable portion of the Demised Premises, on a
square foot basis.
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ARTICLE XII
CONDEMNATION
Section 12.1 If the whole of the Demised Premises shall be
taken for any public or quasi-public use by any lawful power or authority by
exercise of the right of condemnation or eminent domain, or by agreement between
LANDLORD and those having the authority to exercise such right (hereinafter
called "Taking"), the term of this lease and all rights of TENANT hereunder,
except as hereinafter provided, shall cease and expire as of the date of vesting
of title as a result of the Taking and the rent or additional rent paid for a
period after such date shall be refunded to TENANT upon demand.
Section 12.2 In the event of the Taking of less than the whole
of the demised premises, or the whole or part of the parking area, this lease
shall cease and expire in respect of the portion of the Demised Premises and/or
the parking area taken upon vesting of title as a result of the Taking, and, if
the Taking results in the portion of the Demised Premises remaining after the
Taking being inadequate, in the judgement of TENANT, for the efficient,
economical operation of the TENANT'S business conducted at such time in the
Demised Premises, TENANT may elect to terminate this lease by giving notice to
LANDLORD of such election not more than forty-five (45) days after the actual
Taking by the condemning authority, stating the date of termination, which date
of termination shall be not more than thirty (30) days after the date on which
such notice to LANDLORD
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is given, and upon the date specified in such notice to LANDLORD, this lease and
the term hereof shall cease and expire. If TENANT does not elect to terminate
this lease aforesaid:
(i) The new rent payable under this lease shall
be the product of the basic rent payable under this lease multiplied by a
fraction, the numerator of which is the net rentable area of the Demised
Premises remaining after the Taking, and the denominator of which is the net
rentable area of the Demised Premises immediately preceding the Taking, and
(ii) The net award for the Taking shall be paid
to and first used by LANDLORD, subject to the rights of mortgagee, to restore
the portion of the Demised Premises and the building remaining after the Taking
to substantially the same condition and tenantability (hereinafter called the
"Pre-Taking Condition") as existed immediately preceding the date of the Taking.
Section 12.3 In the event of a Taking of less than the whole
of the Demised Premises which occurs during the period of two (2) years next
preceding the date of expiration of the term of this lease, LANDLORD or TENANT
may elect to terminate this lease by giving notice to the other party to this
lease of such election, not more than forty-five (45) days after the actual
Taking by the condemning authority, stating the date of termination, which date
of termination shall be not more than thirty (30) days after the date on which
such notice of termination is given, and upon the date specified in such notice,
this lease and the term hereof shall cease and expire and all rent and
additional rent paid under this lease for a period after
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such date of termination shall be refunded to TENANT upon demand. On or before
such date of termination, TENANT shall vacate the Demised Premises, and any of
TENANT'S property remaining in the Demised Premises subsequent to such date of
termination shall be deemed abandoned by TENANT and shall become the property of
LANDLORD.
Section 12.4 In the event of a Taking of the Demised Premises
or any part thereof, and whether or not this lease is terminated, TENANT shall
have no claim against LANDLORD or the condemning authority for the value of the
unexpired term of this lease, but:
(i) TENANT may interpose and prosecute in any
proceedings in respect of the Taking, independent of any claim of LANDLORD, a
claim for the reasonable value of TENANT'S fixtures and
(ii) A claim for TENANT'S moving expenses.
ARTICLE XIII
BANKRUPTCY OR OTHER DEFAULT
Section 13.1 A. Events of Bankruptcy. The following shall be
Events of Bankruptcy under this lease:
(i) TENANT'S becoming insolvent, as the term is defined in
Title 11 of the United States Code, entitled Bankruptcy, 11 U.S.C. Sec. 101 et
seq. (the "Bankruptcy Code") or under the insolvency laws of New York State;
(ii) The appointment of a Receiver of Custodian for any or all
of TENANT'S property or assets;
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(iii) The filing of a voluntary petition under the provisions
of the Bankruptcy Code or Insolvency Laws:
(iv) The filing of an involuntary petition against TENANT as
the subject debtor under the Bankruptcy Code or Insolvency Laws, which is either
not dismissed within sixty days of filing, or results in the issuance of an
order for relief against the debtor, whichever is later; or,
(v) TENANT'S making or consenting to an assignment for the
benefit of creditors of a common law composition of creditors.
B. Landlord's Remedies.
(i) Termination of Lease. Upon the occurrence of an Event of
Bankruptcy, LANDLORD shall have the right to terminate this lease by giving
thirty days prior written notice to TENANT, provided, however, that this Section
"13.1 (B) (i)" shall have no effect while a case in which TENANT is the subject
debtor under the Bankruptcy Code is pending, unless TENANT or its Trustee in
bankruptcy is unable to comply with the provisions of Sections "13.1 (B) (V)'
and '13.1 (B) (vi)' below. If TENANT or its Trustee is unable to comply with
Sections "13.1 (B) and (v)" and "13.1 (B) (vi)" below, this lease shall
automatically cease and terminate, and TENANT shall be immediately obligated to
quit the premises upon the giving of notice pursuant to this Section "13.1 (B)
(i)". Any other notice to quit, or notice of LANDLORD'S intention to re-enter is
hereby expressly waived. If LANDLORD elects to terminate this lease, everything
contained in this lease on the part of LANDLORD to be done and performed shall
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cease without prejudice, subject, however, to the right of LANDLORD to recover
from TENANT all rent and any other sums accrued up to the time of termination or
recovery of possession by LANDLORD, whichever is later, and nay other monetary
damages or loss of reserved rent sustained by LANDLORD.
(ii) Suit for Possession. Upon termination of this lease
pursuant to Section "13.1 (B) (i)", LANDLORD may proceed to recover possession
under any by virtue of the provisions of the laws of the State of New York, or
by such other proceedings, including re-entry and possession, as may be
applicable.
(iii) Reletting of Premises. Upon termination of this lease
pursuant to Section "13.1 (B) (i)", the premises may be relet by LANDLORD for
such rent and upon such terms as are not unreasonable under the circumstances,
and if the full rental reserved under this lease (and any of the costs,
expenses, or damages indicated below shall not be realized by LANDLORD, TENANT
shall be liable for all reasonable damages sustained by LANDLORD, including,
without limitation, deficiency in rent, reasonable attorneys' fees, brokerage
fees, and expenses of placing the premises in the first class rentable
condition. LANDLORD, in putting the premises in good order or preparing the same
for re- rental may, at LANDLORD'S option, make such alterations, repairs, or
replacements in the premises as LANDLORD, in LANDLORD'S reasonable sole
judgment, considers advisable and necessary for the purpose of reletting the
premises, and the making of such alterations, repairs, or replacements shall not
operate or be construed to release TENANT from liability hereunder as aforesaid.
LANDLORD shall in no event be liable in any way
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whatsoever for failure to relet the premises, and in no event shall TENANT be
entitled to receive any excess, if any, of such net rent collected over the sums
payable by TENANT to LANDLORD hereunder.
(iv) Monetary Damages. Any damage or loss of rent sustained by
LANDLORD as a result of an Event of Bankruptcy may be recovered by LANDLORD, at
LANDLORD'S option, at the time of the reletting, or in separate actions, from
time to time, as said damage shall have been made more easily ascertainable by
successive relettings, or, in a single proceeding deferred until the expiration
of the term of this lease (in which event TENANT hereby agrees that the cause of
action shall not be deemed to have accrued until the date of expiration of said
term) or in a single proceeding prior to either the time of reletting or the
expiration of the term of this lease, in which event TENANT agrees to pay
LANDLORD the difference between the present value of the rent reserved under
this lease on the date of breach, discounted at eight percent per annum, and the
fair market rental value of the Demised Premises on the date of breach. In the
event TENANT becomes the subject debtor in a case under the Bankruptcy Code the
provisions of this Section "13.1 (B) (iv)" may be limited by the limitations of
damage provisions of the Bankruptcy Code.
(v) Assumption or Assignment by Trustee. In the event TENANT
becomes the subject debtor in a case pending under the Bankruptcy Code,
LANDLORD'S right to terminate this lease pursuant to this Section "13.1" shall
be subject to the rights of the Trustee in Bankruptcy to assume or assign this
lease. The
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Trustee shall not have the right to assume or assign this lease unless the
Trustee: (a) Promptly cures all defaults under this lease, (b) promptly
compensates LANDLORD for monetary damages incurred as a result of such default,
and (c) provides adequate assurance of future performance.
(vi) Adequate Assurance of Future Performance. LANDLORD and
TENANT hereby agree in advance that adequate assurance of future performance, as
used in Section "13.1 (B) (v)" above, shall mean that all of the following
minimum criteria must be met:
(a) The Trustee must pay to LANDLORD, at the time the next
payment of rent is then due under this lease, in addition to such payment of
rent, an amount equal to the next three month's rent due under this lease, said
amount to be held by LANDLORD in escrow until either the Trustee or TENANT
defaults in its payment of rent or other obligations under this lease (whereupon
LANDLORD shall have the right to draw such escrow funds) or until the expiration
of this lease (whereupon the funds shall be returned to the Trustee or Tenant);
(b) The TENANT or Trustee must agree to pay to the LANDLORD,
at any time the LANDLORD is authorized to and does draw on the funds escrowed
pursuant to Section "13.1 (B) (vi) (a)" above, the amount necessary to restore
such escrow account to the original level required by said provision;
(c) Tenant must pay its estimated pro-rata share of the cost
of all services provided by LANDLORD (whether directly or through agents or
contractors, if the cost of such service is the responsibility of the TENANT or
is to be passed through to TENANT) in advance of the performance or provision of
such services;
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(d) The Trustee must agree that TENANT'S business shall be
conducted in a first class manner, and that no liquidating sales, auctions, or
other non-first class business operations shall be conducted on the premises;
(e) The Trustee must agree that the use of the premises as
stated in this lease will remain unchanged;
(f) The Trustee must agree that the assumption or assignment
of this lease will not violate or affect the rights of other tenants of the
LANDLORD.
(vii) Failure to Provide Adequate Assurance. In the event
TENANT is unable to:
(a) cure its defaults; or
(b) reimburse LANDLORD for its monetary damages; or
(c) pay the rent due under this lease, on time (or within five
days of the due date); or,
(d) meet the criteria and obligations imposed by Section "13.1
(B) (vi)" above; then TENANT agrees in advance that it has not met its burden to
provide adequate assurance of future performance, and this lease may be
terminated by LANDLORD in accordance with Section "13.1 (B) (i)" above.
Section 13.2 Default of TENANT
A. Events of default. The following shall be events
of default under this lease.
(i) TENANT'S failure to pay any monthly installment of Basic
Annual Rent or Additional Rent, the amount of which has been ascertained, within
ten days after notice of such failure from LANDLORD.
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(ii) TENANT'S failure to make any other payment required under
this lease i such failure shall continue beyond ten days after LANDLORD'S notice
that the same has not been paid.
(iii) TENANT'S violation or failure to perform any of the
other terms, conditions, covenants or agreements herein made by TENANT if such
violation or failure continues for a period of five days if it affects other
tenants of the building or ten days in all other cases, after LANDLORD'S written
notice thereof to TENANT, provided that no such notice shall be required if
TENANT has received a similar notice within one hundred eighty days of such
violation or failure.
(iv) In the event of any violation or failure to perform a
covenant as contemplated in Section '13.2(A) (iii)', and if such covenant cannot
be performed within the said five day or ten day period, whichever the case may
be, then and in that even , providing TENANT has promptly commenced to cure such
violation and is diligently proceeding with the cure the time within which
TENANT may cure the same shall be extended to such reasonable time as may be
necessary to cure the same with all due diligence.
B. If an Event of Default as hereinabove specified in Section
'13.2(A) (i), (ii) or (iii)' shall occur, and shall not be cured within the time
period specified in LANDLORD's notice, or as to a default provided for in
Section '13.2(A) (iii)' if same shall recur within 180 days of LANDLORD'S last
notice of same or if TENANT has commenced a cure but fails to diligently proceed
with same after five (5) days notice from LANDLORD then:
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(i) LANDLORD may give TENANT a five day notice of its
intention to end the term of this lease, and thereupon, at the expiration of
said five day period, this lease shall expire as fully and completely as if the
day were the date herein originally fixed for the expiration of the term, and
TENANT shall then quit and surrender the premises to LANDLORD but TENANT shall
continue to remain liable as hereinafter provided; or, (ii) LANDLORD, without
prejudice to any other right or remedy of LANDLORD, held hereunder or by
operation of law, and notwithstanding any waiver of any breach of a condition or
Event of Default hereunder, may, at its option and without further notice,
re-enter the Demised Premises or dispossess TENANT and any legal representative
or successor of TENANT or other occupant of the premises by summary proceedings
or other appropriate suit, action or proceeding or otherwise and remove his, her
or its effects and hold the Demised Premises as if this lease had not been made;
and TENANT hereby expressly waives the service of notice of intention to
re-enter or to institute legal proceedings to that end.
Section 13.3 Notwithstanding such default, re-entry,
expiration and/or dispossession by summary proceedings or otherwise, as provided
in Section '13.2' above, TENANT shall continue liable during the full period
which would otherwise have constituted the balance of the term hereof, and shall
pay as liquidated damages at the same times as the Basic Annual Rent and
Additional Rent and other charges become payable under the terms hereof, a sum
equivalent to the Basic Annual Rent and Additional
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Rent and other charges reserved herein (less only the net proceeds of reletting
as hereinafter provided), and LANDLORD may rent the Demised Premises either in
the name of LANDLORD may rent the Demised Premises either in the name of
LANDLORD or otherwise, reserving the right to rent the Demised Premises for a
term of terms which may be less than or exceed the period which would otherwise
have been the balance of the term of this lease without releasing the original
TENANT from any liability, applying any monies collected, first to the expense
of resuming or obtaining possession, next to restoring the premises to a
rentable condition, and then to the payment of any brokerage commissions and
legal fees in connection with the reletting of the Demised Premises and then to
the payment of the Basic Annual Rent, Additional Rent and other charges due and
to grow due to LANDLORD hereunder, together with reasonable legal fees of
LANDLORD therefore.
Section 13.4 LANDLORD and TENANT do hereby mutually waive
trial by jury in any action, proceeding or counterclaim brought by either
LANDLORD or TENANT against the other with regard to any matters whatsoever
arising out of or in any way connected with this lease, the relationship of
LANDLORD and TENANT, and TENANT'S use or occupancy of the Demised Premises,
provided such waiver is not prohibited by any laws of the State of New York. Any
action or proceeding brought by either party hereto against the other, directly
or indirectly, arising out of this agreement (except for a summary proceeding),
shall be brought in a court in the County in which the Demised Premises are
located and all motions in any such action shall be made in such County.
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Section 13.5 TENANT hereby agrees that in any action or
summary proceeding brought by LANDLORD for the recovery of Basic Annual Rent or
Additional Rent, it will not interpose any non-compulsatory counter-claim or
set-off nor will TENANT seek to consolidate or join for trial any such action or
proceeding with any other action or proceeding.
Section 13.6 If TENANT shall default in the observance or
performance of any term or covenant on TENANT'S part to be observed or performed
under or by virtue of any of the terms or provisions in this article of this
lease, LANDLORD may immediately or at any time thereafter and without notice
perform the same for the account of TENANT and if LANDLORD makes any
expenditures or incurs any obligations for the payment of money in connection
therewith including, but not limited to, attorneys' fees in instituting,
prosecuting or defending any action or proceeding such sums paid or obligations
incurred with interest and costs shall be deemed to be additional rent hereunder
and the sum shall be due immediately upon LANDLORD incurring same and may be
included as an item of additional rent in any summary proceeding instituted by
the LANDLORD.
Section 13.7 In the event of any default by the TENANT or
LANDLORD hereunder and either shall commence any action or other proceeding
against the other in which the other shall be successful, or which shall be
settled by the payment of a sum of money to the successful party by the
unsuccessful party, the unsuccessful party agrees to reimburse the successful
party for reasonable attorneys' fees in connection with such action or
proceeding.
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ARTICLE XIV
CUMULATIVE REMEDIES -- NO WAIVER
Section 14.1 The specific remedies to which the LANDLORD or
the TENANT may resort under the terms of this lease are cumulative and are not
intended to be exclusive of any other remedies or means or redress of which they
may be lawfully entitled in case of any beach or threatened breach by either of
them of any provision of this lease. The failure of the LANDLORD to insist in
any one or more cases upon the strict performance of any of the covenants of
this lease, or to exercise any option herein contained, shall not be construed
as a waiver or relinquishment for the future of such covenant or option. A
receipt by the LANDLORD of rent with knowledge of the breach of any covenant
thereof shall not be deemed a waiver of such breach, and no waiver, change,
modification or discharge by either party hereto of any provision in this lease
shall be deemed to have been made or shall be effective unless expressed in
writing and signed by both the LANDLORD and the TENANT. In addition to the other
remedies in this lease provided, the LANDLORD shall be entitled to restraint by
injunction of any violation, or attempted or threatened violation, of any of the
covenants, conditions or provisions of this lease or to a decree compelling
performance of any such covenants, conditions or provisions.
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ARTICLE XV
SUBORDINATION
Section 15.1 It is hereby expressly agreed that this lease and
all rights of the TENANT hereunder shall be subject and subordinate at all times
to any mortgages and any renewals, replacements, extensions of modifications
thereof which may now be or shall hereafter become liens on the Demised Premises
or the land and building of which the same form a part. The TENANT agrees that
at any time upon ten (10) days' written notice the TENANT will execute and
deliver to the LANDLORD a subordination agreement confirming the provisions of
this article. Failure of TENANT to execute and deliver such agreement shall not
affect the subordination provided for hereunder.
Section 15.2 This lease is specifically made subordinate to a
mortgage give to Crossways Capital II and notwithstanding whether or not any
formal subordination agreement is executed, this lease shall at all times be
subordinate to any replacements, extensions, modifications or consolidations
thereof.
ARTICLE XVI
QUIET ENJOYMENT
Section 16.1 The LANDLORD covenants and agrees that the
TENANT, upon paying the basic rent and all other charges
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herein provided and observing and keeping the covenants, agreements and
conditions of this lease on its party to be kept, shall and may peaceably and
quietly hold, occupy and enjoy the Demised Premises during the term of this
lease.
ARTICLE XVII
NOTICES
Section 17.1 All notices, demands and requests which may or
are required to be given by either party to the other shall be in writing. All
notices, demands and requests by the LANDLORD to the TENANT shall be deemed to
have been properly given if sent by United States registered or certified mail,
postage prepaid or overnight carrier, such as Federal Express, addressed to the
TENANT at the Demised Premises or Temporary Demised Premises, or at such other
place as the Tenant may from time to time designate in a written notice to the
LANDLORD. All notices, demands and requests by the TENANT to the LANDLORD shall
be deemed to have been properly given if sent by United States registered or
certified mail, or overnight carrier such as Federal Express, postage prepaid,
addressed to the LANDLORD at the address first above written, or at such other
place as the LANDLORD may from time to time designate in a written notice to the
TENANT. Notices to the TENANT may be given by the attorney for the LANDLORD with
the same force and effect as if given by the LANDLORD. Notices, demands and
requests which shall be served upon LANDLORD or TENANT in the manner aforesaid
shall be
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deemed to have been served or given for all purposes under this Lease at the
time such notice, demand or requests shall be received or returned by Post
Office or by an overnight carrier, such as Federal Express, as having been
"refused" or "undeliverable".
ARTICLE XVIII
DEFINITION OF CERTAIN TERMS, ETC.
Section 18.1 The captions of this lease are for convenience
and reference only and in no way define, limit or describe the scope or
intention of this lease or in any way affect this lease.
Section 18.2 The term "TENANT" as referred to hereunder shall
refer to this TENANT and any successor or assignee of this TENANT.
Section 18.3 The term "LANDLORD" as used hereunder shall mean
only the owner for the time being of the land and building of which the Demised
Premises form a part, so that in the event of any sale or sales, or in the event
of a lease of said land and building this LANDLORD shall be and hereby is
entirely free and relieved of all covenants and obligations thereafter accruing
hereunder, of LANDLORD hereunder and it shall be deemed and construed without
further agreement between the parties, or their successors in interest, that the
purchaser or lessee of the building has agreed to carry out all of the terms and
covenants and obligations of the LANDLORD hereunder.
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ARTICLE XIX
INVALIDITY OF PARTICULAR PROVISIONS
Section 19.1 If any term or provision of this lease or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this lease, or the application of
such term of provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this lease shall be valid and be enforced to the fullest
extent permitted by law.
ARTICLE XX
COVENANTS TO BIND AND BENEFIT RESPECTIVE PARTIES
Section 20.1 It is further covenanted and agreed by and
between the parties hereto that the covenants and agreements herein contained
shall bind and inure to the benefit of the LANDLORD, its successors and assigns,
and the TENANT, its successors and assigns, subject to the provisions of this
lease.
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ARTICLE XXI
INSURANCE
Section 21.1 TENANT shall at all times during the term hereby
carry Public Liability Insurance for the Demised Premises naming LANDLORD as an
additional insured with combined single limits of $3,000,000.00 each occurrence
and $3,000,000.00 aggregate for bodily injury and property damage.
Section 21.2 Prior to taking possession, TENANT shall deliver
to the LANDLORD a certificate of the insurance company authorized to do business
in the State of New York with a Bests rating of B+ or better, certifying that
the aforesaid liability policy is in full force and effect. A certificate
evidencing the renewal of such liability insurance policy shall be delivered to
the LANDLORD at least twenty (20) days before the expiration thereof and each
such renewal certificate shall include the LANDLORD as an additional insured.
TENANT may carry aforesaid insurance as a part of a blanket policy provided,
however, that a certificate thereof naming the LANDLORD as an additional insured
is delivered to the LANDLORD as aforesaid. Such policy of insurance of
certificate shall also provide that said insurance may not be canceled unless
ten (10) days' notice is given to the LANDLORD prior to such cancellation and
that the insurance as to the interest of the LANDLORD shall not be invalidated
by any act or neglect of the TENANT.
Section 21.3 TENANT shall prior to doing any work in the
Demised Premises obtain any and all permits necessary therefore and will provide
Worker's Compensation Insurance and Liability Insurance in the limits provided
for in Section "21.1" hereof.
Section 21.4 LANDLORD represents the LANDLORD'S cleaning
contractor shall be bonded and insured.
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ARTICLE XXII
USE, ASSIGNMENT OR SUBLETTING
Section 22.1 The TENANT agrees to use the premises for general
offices and related uses and for no other purpose.
Section 22.2 Unless the LANDLORD shall have given its consent
thereto, this lease may not be assigned not may the Demised Premises be sublet
in whole or in part. Such approval will not be unreasonably withheld or delayed.
In determining the reasonableness, the LANDLORD shall take into consideration
the use to which the sub-tenant will put the space and the nature of the
sub-tenant's business in order to maintain the integrity of the building as a
whole.
Section 22.3 Notwithstanding anything herein to the contrary,
LANDLORD shall have the right of first refusal to recapture the leased premises
or any part thereof, prior to any sublet or assignment. In the event TENANT
shall desire to assign or sublet this lease, TENANT shall provide written notice
of same to LANDLORD. LANDLORD shall, within thirty (30) days of receipt of such
notice, notify TENANT as to whether or not LANDLORD desires to recapture the
Demised Premises. In the event that LANDLORD shall elect to recapture the
Demised Premises or any part thereof, provided same is the part that the TENANT
desires to sublet, it shall be deemed that the space is recaptured by the
LANDLORD on the thirtieth (30th) day following LANDLORD's notice
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to TENANT of its election. Within said thirty (30) day period, TENANT shall
remove all of TENANT'S effects and personal property therefrom. If LANDLORD
shall elect not to recapture the Demised Premises of any part thereof, TENANT
may after prior written consent of the LANDLORD, whose consent shall not be
unreasonably withheld or delayed, assign or sublet the Demised Premises subject
to Section 22.4.
Section 22.4 In the event that TENANT shall assign this lease
and shall receive any consideration therefore in excess of Basic Annual Rent and
Additional Rents therein, one-half of such consideration shall be paid to the
LANDLORD as additional rent. In the event TENANT shall sublet any of the space
demised hereunder and the rent and/or additional rent reserved under any such
sublease shall be in excess of the rent provided for hereunder, TENANT shall pay
to the LANDLORD, as additional rent, as and when same is collected, one-half the
difference between the rent and additional rent reserved herein and the rent and
additional rent reserved in such sublease.
Section 22.5 In the event that any sub-tenant should hold over
in the premises beyond the expiration of the term of this lease, the TENANT
hereunder shall be responsible to the LANDLORD for all Basic Annual Rent and
Additional Rent until the premises are delivered to the LANDLORD in the
condition provided for in this lease.
Section 22.6 TENANT shall pay LANDLORD'S reasonable legal fees
with reference to approving any assignment and assumption agreement.
Section 22.7 TENANT shall have the right to use the Demised
Premises in common with TENANT'S subsidiaries and affiliates.
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ARTICLE XXIII
RULES AND REGULATIONS
Section 23.1 The TENANT agrees that it will abide by the rules
and regulations attached hereto as Exhibit "E" and any reasonable amendments or
additions thereto, provided the same are uniform as to all tenants. LANDLORD
will not discriminate in the enforcement of any rules and regulations. In the
event of a conflict between the lease and the rules and regulations, the lease
shall govern.
ARTICLE XXIV
LANDLORD'S LIABILITY
Section 24.1 In the event that the LANDLORD shall default
under the terms of this lease and the TENANT shall recover a judgement against
the LANDLORD by reason of such default or for any reason arising out of the
tenancy or use of the premises by the TENANT or the lease of the premises to the
TENANT, the LANDLORD'S liability hereunder shall be limited to the LANDLORD'S
interest in the land and building of which the Demised Premises form a part and
no further and the TENANT agrees that in any proceeding to collect such
judgement, the TENANT'S right to recovery shall be limited to the LANDLORD'S
interest in the land and building of which the Demised Premises form a part.
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ARTICLE XXV
ENTIRE AGREEMENT
Section 25.1 This instrument contains the entire agreement
between the parties hereto and the same may not be changed, modified or altered
except by a document in writing executed and acknowledged by the parties hereto.
ARTICLE XXVI
CERTIFICATES
Section 26.1 Upon request by the LANDLORD or the TENANT, the
TENANT or the LANDLORD agrees to execute any certificate or certificates
evidencing the commencement date of the term of the lease and the fact that the
lease is in full force and effect, if such is the case, and that there are no
set-offs or other claims against the other or stating those claims which either
might have against the other.
Section 26.2 Upon request by the LANDLORD, the TENANT agrees
to execute a memorandum of this lease in recordable form which memorandum shall
set forth the commencement dates of the lease and the lease and the
subordination of the lease to a permanent first mortgage to be held by Crossways
Capital II or other institutional lender.
ARTICLE XXVII
SECURITY
Section 27.1 TENANT shall deposit with LANDLORD the sum of
$36,986.67 as security for the faithful performance and observance by TENANT of
the terms, provisions and conditions of this lease. It is agreed that in the
event TENANT defaults in respect of any of the terms, provisions and conditions
of this
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lease, including but not limited to the payment of rent and additional rent,
LANDLORD may use, apply or retain the whole or any part of the security so
deposited to the extent required for the payment of any rent and additional rent
or any other sum as to which TENANT is in default or for any reason of TENANT'S
default in respect of any of the terms, covenants and conditions of this lease,
including but not limited to any damages or deficiency in the reletting of the
premises, whether such damages or deficiency in the reletting of the premises,
whether such damages or deficiency accrued before or after summary proceedings
or other re-entry by LANDLORD. In the event that TENANT shall fully and
faithfully comply with all of the terms, provisions, covenants and conditions of
this lease, the security shall be returned to TENANT after the date fixed as the
end of the lease and after delivery of entire possession of the Demised Premises
to LANDLORD. In the event of a sale of the land and building, LANDLORD shall
have the right to transfer the security to the vendee provided notice is sent to
the TENANT of such transfer and LANDLORD shall thereupon be released by TENANT
from all liability for the return of such security; and the TENANT agrees to
look to the new LANDLORD solely for the return of said security; and it is
agreed that the provisions hereof shall apply to every transfer or assignment
made of the security to a new LANDLORD. TENANT further covenants that it will
not assign or encumber or attempt to assign the monies deposited herein as
security and that neither LANDLORD not its successors or assigns shall be bound
by any such assignment, encumbrance, attempted assignment or attempted
encumbrance. Provided TENANT is not in default under the terms, covenants and
conditions of this lease, all applicable security monies shall be returned
within thirty (30) days of the expiration of this lease.
ARTICLE XXVIII
BROKER
Section 28.1 TENANT represents that it dealt only with
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Steven Fine Associates Inc., as broker in connection with this transaction at
415 Crossways Park Drive, Woodbury, New York and TENANT agrees to indemnify
LANDLORD against any claims or expenses which the LANDLORD may incur by reason
of the TENANT having dealt with any other broker in connection with this
transaction at 415 Crossways Park Drive, Woodbury, New York.
LANDLORD represents that Steven Fine Associates, Inc.
represented to the LANDLORD that they were authorized to negotiate on behalf of
Uniforce Services, Inc. and LANDLORD will further represent that it dealt only
with Steven Fine Associates, Inc. as broker in connection with this transaction
at 415 Crossways Park Drive and LANDLORD agrees to indemnify TENANT against any
claims or expenses which the TENANT may incur by reason of the LANDLORD having
dealt with any other broker in connection with this transaction at 415 Crossways
Park Drive, Woodbury, New York.
ARTICLE XXIX
SIGNS
Section 29.1 TENANT, at TENANT'S sole cost and expense shall
be responsible for all signage associated with TENANTS'S use and occupancy of
the Demised Premises.
Section 29.2 TENANT shall not maintain or display any sign,
lettering or lights on the exteriors of the Demised Premises, unless approved by
LANDLORD in writing. TENANT may provide and maintain a proper sign or signs on
the exterior of the Demised Premises of such size, color, design and location as
approved by LANDLORD. No rights to use of the outer walls or the roof of the
Demised Premises are granted to TENANT without LANDLORD'S written consent.
TENANT shall be liable for any damages or injuries to the
structure and building occasioned by such signs or installation or removal
thereof.
Section 29.3 LANDLORD agrees that it will not withhold its
consent to a sign similar to other signs on buildings owned by LANDLORD in the
Nassau Crossways International Plaza.
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Section 29.4 TENANT shall, at its own cost and expense, obtain
any governmental approvals necessary for any sign installed by TENANT in
accordance with the other provisions of the Article.
ARTICLE XXX
HOLDING OVER
Section 30.1 TENANT covenants that it will vacate the Premises
immediately upon the expiration or sooner termination of this lease. If the
TENANT retains possession of the Premises or any part thereof after the
termination of the term, the TENANT shall pay the LANDLORD Annual Basic Rent at
150% of the monthly rate specified in Section 3.1 for the time the TENANT thus
remains in possession and, in addition thereto, shall pay the LANDLORD for all
reasonable damages, consequential as well as direct, sustained by reason of the
TENANTS'S retention of possession. If the TENANT remains in possession of the
Premises, or any part thereof , after the termination of term, such holding over
shall, at the election of the LANDLORD expressed in a written notice to the
TENANT and not otherwise, constitute a renewal of this lease for six months. The
provisions of this Section do not exclude the LANDLORD'S rights of re-entry or
any other right hereunder, including without limitation, the right to refuse
150% of the monthly rent and instead to remove TENANT through summary
proceedings for holding over beyond the expiration of the term of this lease.
ARTICLE XXXI
ENVIRONMENTAL REPRESENTATION
Section 31.1 In the event the New York State Department of
Environmental Conservation, The Federal Environmental Protection Agency or the
Nassau County Health Department shall determine that there exists an
environmental
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condition in the building of which the Demised Premises form a part which makes
the building uninhabitable (unless such condition has been caused by the
TENANT), then unless LANDLORD shall correct such condition within five (5)
business days of the receipt of notice thereof, TENANT may, within five (5)
after the expiration of such five (5) business day period, notify LANDLORD that
TENANT is canceling this Lease effective thirty (30) days from the date of such
notice. TENANT shall vacate the Demised Premises on or before the end of such
thirty (30) day.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals
the day and year first above written.
INDUSTRIAL & RESEARCH ASSOCIATES CO.
BY:________________________________
UNIFORCE STAFFING SERVICES, INC.
BY:________________________________
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EXHIBIT - C
WORK LETTER
UNIFORCE STAFFING SERVICE INC.
415 CROSSWAYS PARK WEST
WOODBURY, NY 11797
December 1, 1995
Revised January 5, 1996
1. PARTITIONING
All partitions provided by the Landlord shall consist of 5/8" gypsum board
applied to 2-1/2" metal studs and shall extend to the underside of the
acoustical ceiling grid, except the partions of the board room, computer room
and production area which shall extend to the underside of the slab above. Sound
attenuating insulation shall be provided where indicated on the plan attached.
Demising partitions shall consist of 5/8" gypsum board applied to 2 1/2" metal
studs 16" o/c. with sound attenuating insulation and shall extend from the
concrete floor slab to the underside of the floor above. The amount of such
partitioning shall be as indicated on the plan attached.
Fire rated enclosures of all columns, air shafts and emising partitions shall be
constructed in occurrence with the requirements of the New York State Uniform
Fire Prevention and Building Code.
2. DOORS AND BUCKS
All new interior doors of the office area shall be 3'-0" x 7'-0" solid core wood
doors with stain grade birch veneers and knock down metal door bucks, except,
doors of the reception area, board room and executive suite which shall be 3'-0"
x 8'-0" solid core birch veneers, this shall include door numbers 100, 1010,
103, 104, 105, 108, 112 to 118. Landlord shall furnish and install building
standard lever hardware (stain chrome finish) and wall stops on all new and/or
existing doors. This hardware shall conform to the requirements of the Americans
With Disability Act. A maximum of five locksets shall be provided as part of
this workletter. New entrance vestibule shall include two (2) pair of 3-0" x
7'-0" aluminum and glass doors, transom and sidelights as indicate don the plan
attached.
3. PAINTING AND FINISHES
All partitions provided by the Landlord shall be painted with light colors only,
using Benjamin Moore flat paint. Type I vinyl wallcovering shall be furnished
and installed where noted on the plan attached, which shall include the
reception area, board room, two (2) executive offices and secretarial area,
kitchen, toilets, and executive corridor. Ceramic tile shall be furnished and
installed on the wet walls of the two (2) gang toilets.
46
<PAGE>
All selections shall be made from Landlord's building standard samples.
4. FLOORING
Landlord shall furnish and install upgraded carpeting with an installed
allowance of $15.50 per square yard throughout the Demised Premises except,
carpeting with an installed allowance of $17.50 per square yard, shall be
furnished and installed where indicated on the plan attached, this shall include
the reception are, board room, two (2) executive offices and secretarial are,
and executive corridor. Landlord shall include the installation of an 18" carpet
border in the board room. all partitions provided by the landlord shall receive
4" vinyl cove base unless otherwise indicated in this workletter. Vinyl
composition floor title shall be furnished and installed in the kitchen area,
file room and production are. Ceramic floor tile and 4" ceramic cove base shall
be furnished and installed in the private toilets and gang toilets. All sections
shall be made from Landlord s building standard samples.
Landlord shall furnish and install a used 24" x 24" raised computer flooring
with entrance ramp and railings. This system shall include 8" pedestals and a
maximum of 20 cut outs.
5. CEILING
Landlord shall furnish and install a new 2'-0" x 4'-0" suspended acoustical
ceiling grid with Armstrong Second Look II tile throughout the Demised Premises,
except, Armstrong 705, 2'-0" x 2'-0" directional fissured tile, with tegular
edges shall be furnished and installed where indicated on the plan attached.
Gypsum board soffits and fascias shall be furnished and install where indicated
on the plan. Finish on all ceiling tiles and grid shall be white.
6. ELECTRIC
Landlord shall furnish and install the new building standard electric outlets
and circuitry in accordance with the National Electrical Code and as per plan
attached. Landlord shall power wire Tenant's movable partitions as indicated on
the plan attached and computer room equipment indicated on specification sheets
attached. Power wiring of the e Tenant's equipment is not included unless
outlined in this exhibit or indicated on plan attached. All internal wiring and
outlets associated with the movable portions shall be furnished and install by
the Tenant at the Tenant's sole cost and expense.
All wiring and related equipment for the Tenants's telephone, computer,
security, closed circuit television and other systems shall be furnished and
installed by the Tenant at the Tenants's sole cost and expense.
47
<PAGE>
7. LIGHTING
Landlord shall furnish and install 2'x4' and/or 2'x2' fluorescent lighting
fixtures with first lamps throughout the Demised Premises. These fixtures shall
be furnished and installed with either prismatic, 1 1/2" x 1 1/2" paracube or
deep cell parabolic lenses as indicated on the plan attached. All lighting
fixtures in exterior offices and/or open spaces are to be placed parallel or
perpendicular to the front of this building at the Landlord's option. The
purpose being that all lighting appear uniform when viewed from the exterior.
Individual offices and/or open areas shall be separately switched and
controlled. Landlord shall furnish and install exit signs and emergency lighting
in accordance with industry standards. In addition, Landlord shall furnish and
install recessed incandescent high hat fixtures where indicated on the plan
attached.
Tenant shall supply and Landlord shall install wall sconces where indicated on
the plan attached with electrical power and switching where indicated on the
plan attached.
8. HEATING, VENTILATION AND AIR CONDITIONING
Landlord shall furnish and install a new heating, ventilation and air
conditioning system through out the Demised Premises, in addition to a hot water
baseboard heating system. This system shall include gas fired heating and
electric cooling. Landlord shall furnish and install Honeywell T-7300
thermostats and remote sensors. The general design criteria for air conditing
shall be 74 degrees F. inside when the outside temperature is 95 degrees F.
Heating shall provide 70 degrees inside when the outside temperature is 5
degrees F. In addition, Landlord shall furnish and install a dedicated 5 ton
cooling unit for the computer room area.
Rooftop exhaust fans shall be furnished and installed by the Landlord for the
gang toilets, kitchen and in the production area for the sealer unit. Individual
exhaust fans shall be furnished and installed in the three (3) private toilets.
Hot water baseboard heat shall be furnished and install at exterior perimeter
curtain wall only.
9. SPRINKLERS
Landlord shall furnish and install a wet pipe fire sprinkler throughout the
Demised Premises. The shall include building standard chrome, pendant type
sprinkler heads, installed in accordance with industry standards.
10. MISCELLANEOUS
Landlord shall furnish and install the following items as indicated on the plans
attached:
1. Building standard window treatment on all exterior windows.
2. Coat closet shall receive one (1) melamine shelf and stainless
steel rod.
48
<PAGE>
3. Building standard upper and lower kitchen cabinets
with counter top, sink, hot and cold water in the
lunch room and executive areas.
4. Building standard toilet accessories shall include
toilet partitions, toilet paper holder, mirror,
sanitary napkin disposal, and soap dispenser.
5. One (1) 4'x8' plywood panel for mounting of telephone
equipment in the telephone closet.
6. Construct a Formica reception desk and countertop at the front
entrance and executive suite.
7. Interior glazing for sidelights and transom windows with 1/2"
aluminum stops and 1/4" clear glass.
8. Motorized overhead garage door with three button controls.
9. Glass block in computer room.
10. One (1) exterior window with insulated glass in the marketing
office.
11. Buffet Countertop in Board Room.
Tenant shall provide and install the following items at the Tenant's sole cost
and expense:
1. All furniture and equipment, including and secretarial work
stations unless otherwise indicated in this exhibit.
2. All signage and interior directories.
3. All built-in cabinetry work including bookshelves.
4. Fire and smoke detection system.
5. Appliances and vending machines.
6. Movable partitions, workstation, and work surfaces.
11. NOTES
Tenant shall provide to the Landlord, within fourteen (14) working days from he
signing of this agreement, all finishes and special requirements for electrical
outlets indicated, blocking or finishes so as not to delay the construction
schedule.
All subcontracts hired by the Tenant shall coordinate schedules and moves with
the Landlord's office to ensure a smooth and controlled construction sequence.
All revisions, changes orders and/or delays caused as a result of modification
by the Tenant and or consultants shall be paid by the Tenant and shall not
modify the date of possession and the commencement of rent payments by the
Tenant.
All work of this construction shall be completed during normal business hours.
Tenant shall review and approve the layout of floor tracks prior to erection of
metal studs. Tenant may at this time only make minor revision to this layout
without additional cost, providing such revisions do not increase the overall
amount of partitioning work.
49
<PAGE>
12. TENANT EXTRAS
At the option of the Tenant, the following items and related cost shall be paid
by the Tenant and shall be included as part of this work letter:
Door 103 and 112 to be a pair of 3'-0" x 8'-0" twelve (12) light
French doors with wire pulls. ADD $6,655.00
Construction of one (1) additional executive toilets indicated located
at door 107 and 109. ADD $7,260.00
Installation of 12" x 12" imitation marble tiles in the reception area
and entrance foyer and toilet other executive suite and on the face of
the decorative light column. Total area shall not exceed 600 square
feet. ADD $8,566.00
Payment for all extras shall be paid upon completion of work.
END OF SECTION
50
<PAGE>
Exhibit "D"
The following is a summary of duties to be performed by our personnel during
their tour of duty at the above mentioned location including the demised
Premises:
HOURS:
Our employees will report to work at the close of regular office hours
after 5 P.M., five nights each week, with the exception of all legal
holidays. At the termination of their duties, they will extinguish all
lights, close all windows, set electrical protection devices, and lock
all doors.
GENERAL CLEANING - FIVE NIGHTS WEEKLY:
Sweep all composition flooring with treated dust mops, if any.
Empty all waste and trash receptacles. Remove contents to receptacles
provided by the building for further disposal.
Empty and clean all ashtrays.
Wash and rinse terrazzo floors, main lobby and entrance area with
neutral cleaner, if any.
Vacuum all carpeting in building. Spot clean if necessary.
Sweep staircase and landing. Wash as necessary.
Spot clean fingermarks from walls, doors, trim, light switches and fire
exits.
PERIODIC CLEANING:
Perform hi-dusting of all walls, overhead pipes, ledges,
air-conditioning louvers and ducts twice each year.
Sweep entrances to building daily.
Police parking lot and remove paper and debits twice each week.
WINDOW CLEANING:
Wash all windows in the building on the outside and inside every four
months. First floor lobby once every month.
Clean glass entrance doors daily.
51
<PAGE>
All safety regulations will be rigidly adhered to as prescribed by New
York Labor Department. Ladders and safety belts are constantly inspected
to prevent
accidents.
Clean and sanitize water fountains.
Wash and clean all glass, directory board glass, telephone booth and
entrance doors.
Keep all metals and Formica interiors an exteriors of all elevator
walls, doors and frames in a clean condition.
Maintain all walls in main lobby and hallways in a clean condition.
Clean all lights and glass in lobby once every week.
Our personnel will be instructed to submit to our office any condition
of faulty equipment, plumbing, locks, electrical appliances, evidence of
vermin or any other irregularities.
LAVATORIES - FIVE NIGHTS WEEKLY:
Sweep, wash and disinfect all lavatory floors throughout the entire
building each night.
Empty all wastepaper and sanitary disposal cans and remove to a
designated area for removal.
Scour and disinfect all toilets bowls, urinals and hand basins.
Wash and disinfect and dry all toilets seats.
Maintain all metal pipes, bright work, mirrors, shelves, cabinets and
dispensers in a clean condition.
Keep toilet partitions and tile walls in a clean condition.
Refill all toilet tissue, hand soap, hand towels and sanitary napkin
dispensers as required.
Machine scrub and rinse all tile washroom floors, as required, each
month.
52
<PAGE>
EXHIBIT "E"
RULES AND REGULATIONS
TENANT and TENANT'S servants, employees, agents, visitor and licensees shall
observe faithfully and comply strictly with the rules and regulations, as
follows:
1. The sidewalks, entrances, passages, courts, elevators, stairways,
corridors or halls of the building, shall not be obstructed or encumbered by any
TENANT or used for any purpose other than ingress and egress to and from the
Demised Premises.
2. No awnings or other projections shall be attached to the outside walls
of the building without the prior written consent of the LANDLORD. No curtains,
blinds, shades or screens shall be attached to or hung in, or used in connection
with, any window or door of the Demised Premises, without the prior written
consent of the LANDLORD. No curtains, blinds, shades or screens shall be
attached to or hung in, or used in connection with, any window or door of the
Demised Premises, without the prior written consent of the LANDLORD. The TENANT
shall install such blinds or draperies as the LANDLORD shall designate, which
shall be of a quality, type, design and color and attached in a manner
designated by the LANDLORD.
3. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any TENANT of any part of the outside of the
Demised Premises or the windows thereof, or building without the prior written
consent of the LANDLORD. In the event of the violation of the foregoing by the
TENANT, LANDLORD may remove same without any liability, and may charge the
expense incurred by such removal to the TENANT or TENANTS violating this rule.
4. The doors between the Demised Premises and the halls, passageways or
other public places in the building, shall not be covered or obstructed by any
TENANT, nor shall any bottles, parcels or other articles be placed on the window
sills.
5. No showcases or other articles shall be put in front of or affixed to
any part of the exterior of the building, not placed in the halls, corridors or
vestibules.
53
<PAGE>
6. The water and wash closets and other plumbing fixtures shall not be
used for any other purposes other than those for which they were constructed,
and no sweepings, rubbish, rags or other substances shall be throw therein.
7. No TENANT shall mark, paint, drill into or in any way deface any part
of the exterior of the Demised Premises, or the building of which they form a
part. No boring, cutting or stringing of wires on the exterior of the Demised
Premises shall be permitted except with the prior written consent of the
LANDLORD, and as the LANDLORD may direct. LANDLORD agrees that such consent
and/or direction shall not be unreasonably withheld or delayed.
8. No bicycles or vehicles of any kind shall be brought into or kept in
or about the Demised Premises, and no cooking shall be done, except by use of a
microwave, or permitted by any TENANT on the Demised Premises, except that
TENANT or TENANT'S employees may make coffee, tea, etc., in the employees'
lounge area. No TENANT shall allow the smoking of cigars and/or pipes by
employees or invites within the building or within the Demised Premises. In
addition, no TENANT shall allow the smoking of cigarettes by employees or
invites in public hallways, corridors or vestibules within the building. No
TENANT shall cause any objectionable odors to be produced upon and to permeate
from the Demised Premises.
9. No space in the building shall be used for manufacturing or for the
storage of merchandise that will be sold at auction.
10. No TENANT shall make any disturbing noises or disturb or interfere
with occupants of this or neighboring buildings or premises, whether by the use
of any musical instruments, radio, talking machines, unmusical noises,
whistling, singing, or in any other way. No TENANT shall throw anything out of
the doors, windows, or skylights, or down the passageways.
11. No TENANT or any of the TENANT'S servants, employees or agents, shall
at any time bring or keep upon the Demised Premises any inflammable, explosive
fluid, chemical or substance.
54
<PAGE>
Notwithstanding the above, TENANT shall be permitted to keep normal and usual
cleaning fluids and office supplies within the Demised Premises so long as said
fluids and supplies do not violate any environmental laws and are kept in
manufacturer's approved containers.
12. Each TENANT must, upon the termination of his tenancy, restore to the
LANDLORD all keys of stores offices, and toilet rooms, either furnished to or
otherwise procured by, such TENANT.
13. No TENANT shall engage or pay any employees on the Demised Premises
except those actually working for such TENANT on the Demised Premises.
14. This Section Deleted.
15. Each TENANT before closing and leaving the Demised Premises at any
time shall see that windows are closed.
16. The premises shall not be used for lodging or sleeping or for any
immoral or illegal purpose.
17. The requirements of TENANTS will be attended to only upon application
at the office of the building. Employees of the LANDLORD shall not perform any
work or do anything outside of their regular duties, unless under special
instruction from the office of the LANDLORD.
18. Canvassing, soliciting and peddling in the buildings is prohibited and
each TENANT shall use its best efforts to prevent the same.
19. There shall not be used in any space, either by any TENANT or by
jobbers or others, in the delivery or receipt of merchandise, any hand trucks,
except those equipped with rubber tires and side guards.
20. No aerial shall be erected on the roof or exterior walls of the
Demised Premises, or on the grounds.
21. TENANT agrees to comply with all such rules and regulations upon ten
(10) days notice to TENANT from LANDLORD, unless same shall be submitted to
arbitration.
22. No radio or television or other similar device shall be used which can
be heard by other tenants of the building. No aerial shall be erected on the
roof or exterior walls of the premises, or on the ground.
55
<PAGE>
23. No TENANT shall cover the floors of the Demised premises with any
material other than carpeting of a similar grade to that originally installed by
the LANDLORD.
24. TENANT agrees to comply with all such rules and regulations upon
notice to TENANT from LANDLORD or upon posting of same in such place within the
building as LANDLORD may designate. Said posted shall take place in the rear
lobby of the building.
25. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any TENANT, nor shall any changes be made in existing
locks or the mechanics thereof. Each TENANT must, upon the termination of his
tenancy, restore to the LANDLORD all keys of offices and toilet rooms, either
furnished to, or otherwise procured by such TENANT and in the event of the loss
of any keys, so furnished, such TENANT shall pay to the LANDLORD the cost
thereof. TENANT shall, with prior written notice to the LANDLORD, be permitted
to install a security system. TENANT shall provide access to the LANDLORD to the
Demised Premises at all times for repairs and for LANDLORD'S cleaning service.
26. This Section Deleted.
27. No TENANT shall occupy or permit any portion of the premises demised
to him to be occupied as an office for a public stenographer or typist, or for
the possession, storage, manufacture, or sale of liquor, narcotics, dope,
tobacco in any form, or as a barber or manicure shop, or pay any employees on
the Demised Premises, except those actually working for such TENANT on said
Premises, nor advertise for laborers giving an address at said premises.
28. No TENANT shall purchase spring water, ice, towels or other like
service from any company or persons not approved by the LANDLORD. LANDLORD
agrees not to unreasonably withhold its approval of any such vendor.
29. LANDLORD shall have the right to prohibit any advertising by any
TENANT, which in LANDLORD'S opinion, tends to impair the reputation of the
building or its desirability as a building for offices, and upon written notice
from LANDLORD, TENANT shall refrain from or discontinue such advertising, except
for sublease advertising.
56
<PAGE>
30. TENANT agrees that extraordinary waste, such as crates, cartons,
boxes, furniture and equipment, construction debris, etc., shall be removed from
the Real Property by TENANT, at TENANT'S own costs and expense. At no time shall
TENANT place any waste of any kind in any public areas. If TENANT shall place
any waste in the public areas, the parties agree that everything so placed is
abandoned and of no value to TENANT, and LANDLORD may have the same removed and
disposed of at TENANT'S expense. This remedy is in addition to any other
remedies the LANDLORD may have therefor.
31. Wastepaper baskets used in conjunction with Tenant's Demised Premises
may be filled with paper products only. No liquids or other items may be
disposed of in same.
57
Exhibit 21
Subsidiary Jurisdiction of Incorporation
---------- -----------------------------
Uniforce Staffing Services, Inc. New York
Temporary Help Industry Servicing Company, Inc. New York
Brentwood Service Group, Inc. New York
E.O. Operations Corp. New York
E.O. Servicing Co., Inc. New York
Tempfunds International, Inc. New York
UTS of Delaware, Inc. Delaware
UTS Corp. of Minnesota Minnesota
USI Inc. of California California
PrO Unlimited, Inc. New York
Uniforce Payrolling Services, Inc. New York
THISCO of Canada, Inc. New York
LabForce of America, Inc. New York
Uniforce MIS Services of Georgia, Inc. Georgia
Uniforce Medical Office Support, Inc. New York
Computer Consultants Funding & Support, Inc. New York
Uniforce Information Services, Inc. New York
Professional Staffing Funding & Support, Inc. New York
Staffing Industry Funding & Support, Inc. New York
The Board of Directors
Uniforce Services, Inc.:
We consent to incorporation by reference in the Registration Statements (No.
2-97262, 33-6617, 33-6176, 33-47831, 33-58449 and 33-26350) on Form S-8 and
Registration Statement (No. 33-18856) on Form S-3 of Uniforce Services, Inc. of
our report dated March 8, 1996, relating to the consolidated balance sheets of
Uniforce Services, Inc. and subsidiaries as of December 31, 1995 and 1994 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, 1995
which report appears in the December 31, 1995 annual report on Form 10-K of
Uniforce Services, Inc.
Our report refers to a change in the method of accounting for income taxes.
KPMG PEAT MARWICK LLP
Jericho, New York
March 22, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNIFORCE'S
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 6,444,859
<SECURITIES> 0
<RECEIVABLES> 36,788,689
<ALLOWANCES> 727,174
<INVENTORY> 0
<CURRENT-ASSETS> 43,941,149
<PP&E> 4,689,003
<DEPRECIATION> 2,563,590
<TOTAL-ASSETS> 50,596,189
<CURRENT-LIABILITIES> 14,760,258
<BONDS> 0
0
0
<COMMON> 49,912
<OTHER-SE> 24,109,910
<TOTAL-LIABILITY-AND-EQUITY> 50,596,189
<SALES> 0
<TOTAL-REVENUES> 134,471,332
<CGS> 0
<TOTAL-COSTS> 128,027,398
<OTHER-EXPENSES> (29,439)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 727,980
<INCOME-PRETAX> 5,745,393
<INCOME-TAX> 2,182,000
<INCOME-CONTINUING> 3,563,393
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,563,393
<EPS-PRIMARY> 0.83
<EPS-DILUTED> 0.83
</TABLE>
