EXHIBIT 10.4
LOCK-UP AGREEMENT
December 19, 1996
Xxxxx Xxxxxx Incorporated COMFORCE Corporation
1285 Avenue of the Americans 0000 Xxxxxx Xxxxxx
Xxx Xxxx, X.X. 00000 Lake Success, 11042
Ladies and Gentlemen:
Each of the undersigned understands that COMFORCE Corporation, a
Delaware corporation (the "Company"), proposes to enter into an underwriting
agreement with Xxxxx Xxxxxx Incorporated, as the representative of the several
underwriters as may thereafter be listed in a schedule thereto (collectively,
the "Underwriters") relating to a proposed public offering (the "Public
Offering") of shares of the common stock of the Company, par value $.01 per
share (the "Shares" or the "Common Stock"). In this connection, the Company
intends to file with the Securities and Exchange Commission (the "Commission") a
Registration Statement on Form S-1 (the "Registration Statement") to register
Shares for the Public Offering, including Shares to be issued by the Company and
Shares offered for resale by existing stockholders of the Company.
Subject to the restrictions hereinafter set forth, the Company will
register for resale under the Registration Statement 200,000 shares of the
Company's Common Stock held by Fill-Mor Holding, Inc. and 180,000 shares of the
Company's Common Stock held by ARTRA GROUP Incorporated (collectively, the
"Registration Shares"). In consideration thereof, each of the undersigned hereby
agrees that, without the prior written consent of the Underwriters and the
Company, it will not, during the period from the date hereof until 180 days
after the date of the effective date of the Registration Statement (the
"Effective Date") (1) offer, pledge to sell, announce the intention to sell,
sell, issue, contract to sell, sell any option or contract to purchase, purchase
any option or contact to sell, grant any option, right or warrant to purchase,
or otherwise transfer or dispose of, directly or indirectly, (i) the
Registration Shares except pursuant to the Public Offering or (ii) any shares of
Common Stock of the Company held by it which are not Registration Shares (other
than shares subsequently purchased after the date hereof by either of the
undersigned in open market purchases) (the "Lock-up Shares"), or (2) enter into
any swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise.
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During the period from 181 days to 270 days after the Effective Date,
each of the undersigned may sell up to 33% of the Lock-up Shares. During the
period from 271 days to 360 days after the Effective Date, each of the
undersigned may sell (i) any Lock-up Shares that it was permitted to, but did
not, sell pursuant to the preceding sentence and (ii) 33% of the remaining
Lock-up Shares. From and after 361 days after the Effective Date, each of the
undersigned may sell all remaining Lock-up Shares.
Notwithstanding the preceding paragraph, this lock-up agreement shall
not prohibit any transfer or other disposition by either of the undersigned
involving any of the following: (1) a transfer or disposition of shares of
Common Stock as a bona fide gift; or (2) a pledge of Common Stock as collateral
so long as (i) the pledgee is not a registered broker-dealer and (ii) the
pledged shares shall not be placed in street name, shall not be loaned (or made
available to any broker-dealer to be loaned) to any person who maintains or
proposes to maintain a short position in the Company's securities; provided, in
each case, that the transferee, pledges or other person receiving such shares
shall be subject to all of the restrictions set forth in this lock-up agreement
and, if required by the Company, shall agree in writing to be bound by such
provisions.
Each of the undersigned hereby represents and warrants that it has full
power and authority to enter into this lock-up agreement, and that, upon
request, will execute any additional documents necessary or desirable in
connection with the enforcement hereof. All authority herein conferred or agreed
to be conferred and any obligations of each of the undersigned shall be binding
upon its successors and assigns.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this lock-up agreement.
Each of the undersigned further agrees that, if required by the Company, an
appropriate restrictive legend in substantially the form attached hereto as
Exhibit A and a stop transfer order restricting transfer of the shares of Common
Stock in violation of the terms of this lock-up agreement may be imposed with
respect to all shares of Common Stock which are subject to this lock-up
agreement, provided that any such legend shall be removed upon termination of
the restrictions imposed hereby.
Each of the undersigned understands that the Company and the
Underwriters will not enter into an underwriting agreement or proceed with the
Public Offering except in reliance upon this lock-up agreement. Each of the
undersigned understands and agrees that, if an underwriting agreement does not
become effective on or before April 30, 1997, if the Company earlier announces
publicly that the Public Offering has been abandoned, or if an underwriting
agreement shall terminate or be terminated prior to payment for and delivery of
the Registration Shares included for resale in the Registration Statement, each
of the undersigned and the Company shall be released from all obligations under
this lock-up agreement; provided, however, that if the Company enters into an
underwriting agreement with a lead underwriter other than Xxxxx Xxxxxx
Incorporated or if the Underwriters do not permit either of the undersigned to
fully
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include the Registration Shares in the Registration Statement, this lock-up
agreement shall nonetheless continue in effect and shall be enforceable by the
Company and the Underwriters as they may be constituted, except that in no event
shall the number of either of the undersigned's Registration Shares be reduced
(i) except on a proportional basis with all persons whose shares are to be
included in the Registration Statement offer for resale or (ii) by more than 50%
of the number of Registration Shares provided herein for inclusion in the
Registration Statement.
Notwithstanding the foregoing, if an underwriting agreement does not
become effective on or before March 15, 1997, Fill-Mor Holding, Inc. shall be
released from its obligations with respect to this lock-up agreement with
respect to such number of shares as are necessary to be sold to discharge its
obligations to Manufacturer's Bank, currently aggregating approximately $2.5
million (the "Manufacturer's Loan"); provided, however, that no shares shall be
released from this lock-up agreement to pay any amounts then due and payable
(after the expiration of any grace periods) under the Manufacturer's Loan unless
the Company shall have failed, after being given at least five business days'
notice, to purchase (at the then current market price) any shares proposed to be
sold to pay the amounts then due under the Manufacturer's Loan or to otherwise
cause the Manufacturer's Loan not to be in default.
Each of the undersigns agrees that the provisions of this lock-up
agreement shall also be binding upon its successors or assigns, as the case may
be.
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