Edgar Filing: KFORCE INC

Registration Statement Amendment No.1

As filed with the Securities and Exchange Commission on February 9, 2004

Registration No. 333-111566

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

FORM S-4

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

KFORCE INC.

(Exact name of registrant as specified in its charter)

Florida

7363

59-3264661

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer Identification No.)

1001 East Palm Avenue

Tampa, Florida 33605

(813) 552-5000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

David L. Dunkel

Chairman and Chief Executive Officer

Kforce Inc.

1001 East Palm Avenue

Tampa, Florida 33605

(813) 552-5000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copy to:


Robert J. Grammig, Esq.		Lawrence Calof, Esq.
Marni Morgan Poe, Esq.		Gibson, Dunn & Crutcher LLP
Holland & Knight LLP		1881 Page Mill Road
100 North Tampa Street, Suite 4100		Palo Alto, California 94304
Tampa, Florida 33602		Phone: (650) 849-5331
Phone: (813) 227-6502		Fax: (650) 849-5333
Fax: (813) 229-0134

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective time of the proposed merger described in the joint proxy statement/prospectus, which shall occur as soon as practicable after the effective date of this registration statement and the satisfaction or waiver of all conditions to the closing of such merger.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary joint proxy statement/prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary joint proxy statement/prospectus is not an offer to sell and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS

Subject to Completion, dated February 9, 2004

JOINT PROXY STATEMENT/PROSPECTUS

PROPOSED MERGER—YOUR VOTE IS VERY IMPORTANT

Dear Stockholders:

The boards of directors of Kforce Inc. and Hall, Kinion & Associates, Inc. have approved the acquisition of Hall Kinion by Kforce in a merger. In order to complete the merger, we must each obtain the approval of our stockholders. If the merger is completed, a wholly-owned subsidiary of Kforce will merge with and into Hall Kinion and Hall Kinion will become a wholly-owned subsidiary of Kforce. In the merger, Hall Kinion stockholders will receive, in exchange for shares of Hall Kinion common stock, an aggregate amount of fully paid and nonassessable shares of Kforce common stock based upon the exchange ratio. The exchange ratio is dependent on the Kforce stock market value. The Kforce stock market value is the average of the per share closing prices of Kforce common stock on the Nasdaq National Market over the 15 consecutive trading days ending on and including the third trading day prior to the date of the merger. If the Kforce stock market value is equal to or greater than $7.09, but less than $9.60, then the exchange ratio will equal .60, which will result in Hall Kinion stockholders receiving between $54.6 million and $74.4 million in Kforce common stock. If the Kforce stock market value is equal to or greater than $9.60, then the exchange ratio will be $5.75 divided by the Kforce stock market value, which will result in Hall Kinion stockholders receiving no less than approximately $74.4 million. If the Kforce stock market value is less than $7.09, then the exchange ratio will be $4.25 divided by the Kforce stock market value, which will result in Hall Kinion stockholders receiving no more than approximately $54.6 million. Assuming the Kforce stock market value were equal to $10.32, which was the average of the per share closing prices of Kforce common stock on the Nasdaq National Market over the 15 consecutive trading days ending on and including the third trading day prior to February 3, 2004, the exchange ratio would equal 0.557, which would result in Hall Kinion stockholders receiving approximately $74.4 million. We hope to complete the merger as soon as reasonably possible following the Hall Kinion and Kforce stockholder meetings. However, there may be some delay between the vote to approve the merger and when the merger is actually completed, during which time the price of Kforce common stock could decline. As a result, Hall Kinion stockholders will not know with certainty at the time they vote the value of the shares of Kforce common stock they will receive in the merger. Based on a Kforce stock market value of $10.32 and based on those assets and liabilities of Hall Kinion at September 28, 2003 and the pro forma adjustments on page F-3, the value of the identifiable assets, goodwill and liabilities of Hall Kinion to be acquired or assumed in the merger by Kforce would be $38.5 million, $76.8 million and $40.9 million, respectively. Kforce common stock is traded on the Nasdaq National Market under the symbol “KFRC.”

Subject to the limitations and qualifications summarized in “The Merger—Material United States Federal Income Tax Consequences” section of this document beginning on page 62, the merger will be tax-free to Kforce shareholders and Hall Kinion stockholders, except to the extent of any cash received by Hall Kinion stockholders in the merger.

Kforce has scheduled a special meeting of its shareholders on March 11, 2004, at 10:00 a.m. local time to vote on the merger proposal at its corporate headquarters located at 1001 East Palm Avenue, Tampa, Florida 33605, and Hall Kinion has scheduled a special meeting of its stockholders on March 11, 2004, at 11:00 a.m. local time to vote on the merger proposal at the law offices of Gibson, Dunn & Crutcher LLP located at One Montgomery Street, Suite 3100, San Francisco, California 94104. Regardless of the number of shares that you own or whether you plan to attend a meeting, it is important that your shares be represented and voted. Voting instructions are inside.

The Kforce board of directors has unanimously approved the merger agreement and determined that the merger agreement and the merger are advisable and in the best interests of Kforce and its shareholders. Accordingly, the Kforce board of directors recommends that Kforce shareholders vote to approve the issuance of shares of Kforce common stock pursuant to the merger agreement.

Similarly, the Hall Kinion board of directors has unanimously approved the merger agreement and determined that the merger agreement and the merger are advisable and in the best interests of Hall Kinion and its stockholders. Accordingly, the Hall Kinion board of directors recommends that Hall Kinion stockholders vote to adopt the merger agreement.

This document provides you with detailed information about the proposed merger. We encourage you to read this entire document carefully.

See “ Risk Factors” beginning on page 23 of this document for a discussion of various risks you should consider in evaluating the merger.

We believe that this merger will benefit each of our stockholders and we ask for your support in voting for the merger proposal at each company’s special meeting.

David L. Dunkel

Chairman and Chief Executive Officer

Kforce Inc.

Brenda C. Rhodes

Chairman and Chief Executive Officer

Hall, Kinion & Associates, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this joint proxy statement/prospectus or determined if this joint proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated February , 2004, and is first being mailed to Kforce shareholders and Hall Kinion stockholders on or about February , 2004.

KFORCE INC.

1001 EAST PALM AVENUE

TAMPA, FLORIDA 33605

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON MARCH 11, 2004

To Kforce Inc. Shareholders:

You are cordially invited to attend a special meeting of shareholders of Kforce Inc. for the following purposes:

•

To consider and vote on a proposal to approve the issuance of shares of Kforce common stock under an Agreement and Plan of Merger, dated as of December 2, 2003, as amended, among Kforce, Novato Acquisition Corporation, a wholly-owned subsidiary of Kforce, and Hall, Kinion & Associates, Inc. A copy of the merger agreement is attached as Annex A to the joint proxy statement/prospectus accompanying this notice; and

•

To transact other business as may properly be presented at the meeting or any postponements or adjournments of the meeting.

The date, time and place of the meeting are as follows:

March 11, 2004

10:00 a.m., local time

Kforce Inc.

1001 East Palm Avenue

Tampa, Florida 33605

Only shares of record at the close of business on February 9, 2004 are entitled to notice of and to vote at the meeting and any postponements or adjournments of the meeting. Kforce will keep at its offices in Tampa, Florida a list of shareholders entitled to vote at the meeting available for inspection for any purpose relevant to the meeting during normal business hours for the ten days before the meeting. As of February 9, 2004, there were shares of Kforce common stock outstanding. Each share of Kforce common stock is entitled to one vote on each matter properly brought before the meeting.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SUBMIT YOUR PROXY IN ANY ONE OF THE FOLLOWING WAYS:

•

USE THE TOLL-FREE TELEPHONE NUMBER SHOWN ON THE PROXY CARD;

•

USE THE INTERNET WEBSITE SHOWN ON THE PROXY CARD; OR

•

COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PAID ENVELOPE. IT REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.

You may revoke your proxy in the manner described in the accompanying joint proxy statement/prospectus. If you attend the special meeting of shareholders, you may vote your shares in person even if you have previously submitted a proxy.

The board of directors of Kforce unanimously recommends that you vote to approve the merger proposal, which is described in the accompanying joint proxy statement/prospectus.


By Order of the Board of Directors,


William L. Sanders Secretary

Tampa, Florida

February , 2004

HALL, KINION & ASSOCIATES, INC.

75 ROWLAND WAY, SUITE 200

NOVATO, CALIFORNIA 94945

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON MARCH 11, 2004

To Hall, Kinion & Associates, Inc. Stockholders:

You are cordially invited to attend a special meeting of stockholders of Hall, Kinion & Associates, Inc. for the following purposes:

•

To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of December 2, 2003, as amended, among Hall Kinion, Kforce Inc., and Novato Acquisition Corporation, a wholly-owned subsidiary of Kforce. A copy of the merger agreement is attached as Annex A to the joint proxy statement/prospectus accompanying this notice. Approval and adoption of the merger agreement will also constitute approval of the merger and the other transactions contemplated by the merger agreement; and

•

To transact other business as may properly be presented at the meeting or any postponements or adjournments of the meeting.

The date, time and place of the meeting are as follows:

March 11, 2004

11:00 a.m., local time

Law Offices of Gibson, Dunn & Crutcher LLP

One Montgomery Street

Suite 3100

San Francisco, California 94104

Only stockholders of record at the close of business on February 2, 2004 are entitled to notice of and to vote at the meeting and any postponements or adjournments of the meeting. Hall Kinion will keep at its offices in Novato, California a list of stockholders entitled to vote at the meeting available for inspection for any purpose relevant to the meeting during normal business hours for the ten days before the meeting. As of February 2, 2004, there were 12,589,428 shares of Hall Kinion common stock outstanding. Each share of Hall Kinion common stock is entitled to one vote on each matter properly brought before the meeting.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SUBMIT YOUR PROXY IN ANY ONE OF THE FOLLOWING WAYS:

•

USE THE TOLL-FREE TELEPHONE NUMBER SHOWN ON THE PROXY CARD;

•

USE THE INTERNET WEBSITE SHOWN ON THE PROXY CARD; OR

•

COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PAID ENVELOPE. IT REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.

You may revoke your proxy in the manner described in the accompanying joint proxy statement/prospectus. If you attend the special meeting of stockholders, you may vote your shares in person even if you have previously submitted a proxy.

The board of directors of Hall Kinion unanimously recommends that you vote to approve the merger proposal which is described in the accompanying joint proxy statement/prospectus.


By Order of the Board of Directors,


Martin A. Kropelnicki Secretary

Novato, California

February , 2004

TABLE OF CONTENTS


		Page
ADDITIONAL INFORMATION		1
QUESTIONS AND ANSWERS ABOUT THE MERGER		2
SUMMARY		5
The Companies		5
The Merger		6
What You Will Receive in the Merger		6
Ownership of Kforce After the Merger		7
Stockholder Votes Required		7
Conditions to the Consummation of the Merger		8
Termination of the Merger Agreement		9
Termination Fees		10
Recommendation of Kforce’s Board of Directors		10
Recommendation of Hall Kinion’s Board of Directors		11
Kforce’s Termination Rights		13
Opinion of Kforce’s Financial Advisor		13
Opinion of Hall Kinion’s Financial Advisor		13
Material United States Federal Income Tax Consequences		14
Accounting Treatment		14
Interests of Hall Kinion Directors and Officers in the Merger		14
Regulatory Clearances and Approvals		14
No Appraisal Rights		14
Quotation on the Nasdaq National Market		14
Kforce Selected Historical Consolidated Financial Data		15
Hall Kinion Selected Historical Consolidated Financial Data		16
Selected Unaudited Pro Forma Condensed Combined Financial Data		17
Comparative Per Share Data		19
Comparative Market Price and Dividend Information		21
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		22
RISK FACTORS		23
Risks Relating to the Proposed Merger		23
Risks Relating to the Business and Operations of Kforce Following the Merger		26
THE KFORCE SPECIAL MEETING		32
Time and Place of the Special Meeting		32
Purpose of the Special Meeting		32
Board of Directors Recommendation		32
Record Date; Stock Entitled to Vote; Quorum		32
Required Vote		33
Voting Agreements		33
Proxies; Voting and Revocation		33
Solicitation of Proxies		33
Stockholder Proposals For 2004 Annual Meeting		34
Rights of Appraisal		34
THE HALL KINION SPECIAL MEETING		35
Time and Place of the Special Meeting		35
Purpose of the Special Meeting		35
Board of Directors Recommendation		35
Record Date; Stock Entitled to Vote; Quorum		35
Required Vote		36
Statement of Shares held by Directors and Officers; Voting Agreements		36


		Page
Proxies; Voting and Revocation		36
Solicitation of Proxies		37
Stockholder Proposals		37
Rights of Appraisal		37
THE MERGER		38
General		38
Background of the Merger		38
Kforce’s Reasons for the Merger		42
Recommendation of the Kforce Board of Directors		44
Hall Kinion’s Reasons for the Merger		44
Recommendation of the Hall Kinion Board of Directors		45
Fairness Opinion of Financial Advisor to the Kforce Board of Directors		46
Fairness Opinion of Financial Advisor to the Hall Kinion Board of Directors		53
Material United States Federal Income Tax Consequences		62
Accounting Treatment		64
Regulatory Clearances and Approvals		65
No Appraisal Rights		65
Quotation on the Nasdaq National Market		65
Delisting and Deregistration of Hall Kinion Common Stock		65
Federal Securities Laws Consequences		65
THE MERGER AGREEMENT		66
The Merger		66
The Exchange Ratio and Treatment of Securities		66
Exchange of Certificates		67
Transfer of Shares		67
Representations and Warranties of Hall Kinion		68
Representations and Warranties of Kforce		69
Conduct of Hall Kinion’s Business Prior to the Merger		69
Conduct of Kforce’s Business Prior to the Merger		71
Stockholder Meetings		71
Reasonable Efforts		71
No Solicitation		72
Fees and Expenses		74
Directors and Officers Indemnification and Insurance		74
Nasdaq		74
Affiliates		74
Other Additional Agreements		74
Post Merger Compensation		75
Conditions to the Consummation of the Merger		75
Termination		77
Termination Fees		78
Amendment; Extension and Waiver		78
Related Agreements		79
INTERESTS OF CERTAIN PERSONS IN THE MERGER		81
Interests of Kforce Directors and Officers		81
Interests of Hall Kinion Directors and Officers		83
COMPARISON OF RIGHTS OF HOLDERS OF KFORCE COMMON STOCK AND HALL KINION COMMON STOCK		85
Capitalization		85
Voting Rights; Action in Lieu of Meeting		85
Notice		85
Special Meetings		86
Number, Election, Vacancy and Removal of Directors		86


		Page
Liability of Directors and Officers		86
Dividends		87
Charter Document Amendments		87
Merger		87
Rights Plan		88
Control Share Acquisitions		88
Certain Business Combinations		88
LEGAL MATTERS		89
EXPERTS		89
WHERE YOU CAN FIND MORE INFORMATION		89
INDEX TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS		F-1

Annex A Merger Agreement, as amended		A-1
Annex B Opinion of Kforce’s Financial Advisor		B-1
Annex C Opinion of Hall Kinion’s Financial Advisor		C-1

iii

ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates by reference important business and financial information about Kforce and Hall Kinion that is not included in or delivered with this document. See “Where You Can Find More Information” beginning on page 89.

You can obtain any of the documents incorporated by reference into this document from Kforce or Hall Kinion, respectively, or from the SEC’s website at http://www.sec.gov. Documents incorporated by reference are available from Kforce or Hall Kinion, respectively, without charge, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference into this document. You may obtain documents incorporated by reference into this document by requesting them in writing or by telephone from the applicable company as follows:

Kforce Inc.

1001 East Palm Avenue

Tampa, Florida 33605

Attention: Investor Relations

Telephone: (813) 552-5000

Hall, Kinion & Associates, Inc.

75 Rowland Way, Suite 200

Novato, California 94945

Attention: Investor Relations

Telephone: (415) 895-2200

If you would like to request documents incorporated by reference, please do so by March 1, 2004, to receive them before your company’s special meeting. Please be sure to include your complete name and address in your request. If you request any documents, we will mail them to you by first class mail, or another equally prompt means, within one business day after we receive your request.

This joint proxy statement/prospectus is accompanied by a copy of Hall Kinion’s Annual Report on Form 10-K for the fiscal year ended December 29, 2002, as filed with the SEC on March 31, 2003, and Hall Kinion’s latest Quarterly Report on Form 10-Q for the quarter ended September 28, 2003, as filed with the SEC on November 12, 2003. The enclosed 10-K and 10-Q of Hall Kinion include important business and financial information about Hall Kinion that is not included in this document. See “Where You Can Find More Information” beginning on page 89.

QUESTIONS AND ANSWERS ABOUT THE MERGER

Why are Kforce and Hall Kinion proposing the merger?

Kforce and Hall Kinion believe that the merger of Hall Kinion with Kforce will allow the combined company to leverage complementary strengths in technology and finance and accounting staffing services. Bringing together two strong brands will benefit current and prospective candidates and client customers and employees. We believe this combination should improve Kforce’s liquidity and trading fundamentals and create a stronger public company with better capital market access. During the past three years, Hall Kinion has experienced a substantial reduction in revenues, primarily as a result of the downturn in the high technology business sector, which had been the historical focus of Hall Kinion’s business. As a result, Hall Kinion has taken actions to reduce costs in order to match revenues and expenses. During recent years, the costs of being a public company have significantly increased. We believe the potential elimination of significant duplicate public company and executive, general and administrative costs will provide greater earnings and cash flow potential for the combined company, and ultimately greater value to each company’s stockholders. As a result of these and other factors, the Hall Kinion board of directors concluded that it was in the best interests of Hall Kinion stockholders for Hall Kinion to seek a merger with a larger company that could finance growth from the combination of the companies and achieve synergies from the integration of the companies’ executive, general and other administrative functions.

What do I need to do now?

After you carefully read this document, mail your signed proxy card in the enclosed return envelope, or submit your proxy by telephone or on the Internet, as soon as possible, so that your shares may be represented at your meeting. In order to ensure that your vote is recorded, please vote your proxy as instructed on your proxy card even if you currently plan to attend your company’s special meeting in person.

Why is my vote important?

If you do not return your proxy card or submit your proxy by telephone or through the Internet or vote in person at your company’s special meeting, it will be more difficult for Kforce and Hall Kinion to obtain the necessary quorum to hold their special meetings. In addition, if you are a Kforce shareholder, a failure to vote will reduce the number of affirmative votes required to approve the issuance of shares of Kforce common stock in the merger. If you are a Kforce shareholder and you “abstain” from voting, your abstention will reduce the number of affirmative votes required to approve the issuance of shares of Kforce common stock in the merger. If you are a Hall Kinion stockholder, a failure to vote, or an abstention from voting, will have the same effect as a vote against the adoption of the merger agreement.

If my shares are held in “street name” by my broker, will my broker vote my shares for me?

No. If you do not provide your broker with instructions on how to vote your “street name” shares, your broker will not be permitted to vote them on the adoption of the merger agreement by Hall Kinion stockholders or the approval of the issuance of shares of Kforce common stock in the merger. You should therefore be sure to provide your broker with instructions on how to vote your shares. Please check the voting form used by your broker to see if it offers telephone or Internet submission of proxies.

What if I fail to instruct my broker?

A:	If you fail to instruct your broker to vote your shares and the broker submits an unvoted proxy, the resulting broker “non-vote” will be counted toward a quorum at the respective special meeting but will not count as a

vote cast at the special meeting. With respect to the Kforce special meeting, broker “non-votes” will reduce the number of affirmative votes required to approve the issuance of shares of Kforce common stock in the merger. With respect to the Hall Kinion special meeting, broker “non-votes” will have the same effect as negative votes.

Can I change my vote after I have mailed my proxy card?

A:	Yes. You can change your vote at any time before your proxy is voted at your company’s special meeting. You can do this in any of the following ways:

•

timely delivery of a valid, later-dated proxy by mail, or a later-dated proxy by telephone or Internet;

•

if you are a Kforce shareholder, by timely delivery of a valid, later dated proxy by telephone by calling 1-877-PRX-VOTE (1-877-779-8683);

•

if you are a Kforce shareholder, by timely delivery of a valid, later dated proxy via the Internet at http://www.eproxyvote.com/kfrc;

•

if you are a Hall Kinion stockholder, by timely delivery of a valid, later dated proxy by telephone by calling 1-888-426-7035;

•

if you are a Hall Kinion stockholder, by timely delivery of a valid, later dated proxy via the Internet at http://www.proxyvoting.com/haki;

•

written notice to your company’s secretary before the special meeting that you have revoked your proxy; or

•

voting by ballot at either the Kforce special meeting or the Hall Kinion special meeting.

If you have instructed a broker to vote your shares, you must follow directions from your broker to change those instructions.

When and where are the special meetings?

The Kforce special meeting will take place on March 11, 2004, at its corporate headquarters located at 1001 East Palm Avenue, Tampa, Florida 33605 at 10:00 a.m. local time. The Hall Kinion special meeting will take place on March 11, 2004, at the law offices of Gibson, Dunn & Crutcher LLP located at One Montgomery Street, Suite 3100, San Francisco, California 94104, at 11:00 a.m. local time.

Q:	*How was the exchange ratio and the relevant collar determined?*

The exchange ratio of .60 was negotiated between the parties and reflects the parties’ views of the approximate relative worth of Kforce and Hall Kinion. The 15% collar was also a negotiated point which recognizes that there is likely to be some fluctuation in the market prices in the common stock of the two companies that would not warrant adjusting the consideration to be paid.

Should I send in my stock certificates now?

A:	No. After the merger is completed, Kforce will send Hall Kinion stockholders written instructions for exchanging their stock certificates. Kforce shareholders will keep their existing stock certificates.

When do you expect the merger to be completed?

A:	We are working to complete the merger by March 31, 2004. However, it is possible that factors outside of our control could require us to complete the merger at a later time or not complete it at all. We hope to

complete the merger as soon as reasonably possible following the Hall Kinion and Kforce stockholder meetings. However, there may be some delay between the vote to approve the merger and when the merger is actually completed.

Will Kforce shareholders receive any shares as a result of the merger?

A:	No. Kforce shareholders will continue to hold the Kforce shares they currently own.

Who do I call if I have questions about the special meetings or the merger?

A:	Kforce shareholders may call Michael Blackman, Vice President — Investor Relations, at (813) 552-5000.

Hall Kinion stockholders may call Martin A. Kropelnicki, Vice President, Chief Financial Officer and Secretary, at (415) 895-2200.

SUMMARY

This summary highlights material information in this joint proxy statement/prospectus and may not contain all of the information that is important to you. To understand the merger fully and for a more complete description of the legal terms of the merger, you should carefully read this document and the other documents to which we have referred you. See “Where You Can Find More Information” beginning on page 89 for more details. We have included page references directing you to a more complete description of each item presented in this summary.

The Companies

Kforce Inc.

1001 East Palm Avenue

Tampa, Florida 33605

(813) 552-5000

Headquartered in Tampa, Florida, Kforce is a full-service specialty staffing firm providing flexible and permanent staffing solutions for hiring organizations and career management for job seekers in the specialty skill areas of:

•

Information Technology;

•

Finance and Accounting;

•

Pharmaceutical;

•

HealthCare; and

•

Scientific.

Kforce was formed in August 1994 as a result of the combination of Romac & Associates, Inc. and three of its largest franchises. Following an Initial Public Offering in 1995, Kforce grew to 31 offices in 18 major markets. On April 20, 1998, Kforce consummated a merger whereby Source Services Corporation was merged into Kforce. The acquisition was accounted for using the pooling of interests method of accounting; accordingly, all historical results were restated to reflect the merger. Kforce now operates through 64 locations in over 40 markets and serves clients from Fortune 1000 as well as local and regional small to mid-size companies, with our largest ten clients representing approximately 14% of revenue in 2002.

Hall, Kinion & Associates, Inc.

75 Rowland Way, Suite 200

Novato, California 94945

(415) 895-2200

Hall, Kinion, The Talent Source^® for specialized professionals, delivers world-class talent on a contract and full-time basis to high-demand sectors. Hall Kinion finds, evaluates and places industry-specific Technology and Corporate Professionals.

Founded in 1991, Hall Kinion completed its initial public offering in 1997. Hall Kinion operates two divisions, both of which provide consultants and direct-hire talent: the Technology Professional Division places highly-skilled experts in positions ranging from software engineering to CTO into technology, financial services, healthcare, government and energy sectors; and the Corporate Professional Services Division (OnStaff) places specialists at all levels into real estate, financial services and healthcare sectors. Hall Kinion^®, The Talent Source^® and OnStaff^® are registered trademarks of Hall Kinion.

The Merger (Page 38)

In the merger, a wholly-owned subsidiary of Kforce, Novato Acquisition Corporation, will merge with and into Hall Kinion and Hall Kinion will become a wholly-owned subsidiary of Kforce. The merger agreement, as amended, is attached as Annex A to this joint proxy statement/prospectus and we encourage you to read it carefully.

What You Will Receive in the Merger (Page 66)

In the merger, Hall Kinion stockholders will receive, in exchange for shares of Hall Kinion common stock, an aggregate amount of fully paid and nonassessable shares of Kforce common stock based upon the exchange ratio. The exchange ratio is dependent on the Kforce stock market value. The Kforce stock market value is the average of the per share closing prices of Kforce common stock on the Nasdaq National Market over the 15 consecutive trading days ending on and including the third trading day prior to the date of the merger. If the Kforce stock market value is equal to or greater than $7.09, but less than $9.60, then the exchange ratio will equal .60, which will result in Hall Kinion stockholders receiving between $54.6 million and $74.4 million in Kforce common stock. If the Kforce stock market value is equal to or greater than $9.60, then the exchange ratio will be $5.75 divided by the Kforce stock market value, which will result in Hall Kinion stockholders receiving no less than approximately $74.4 million. If the Kforce stock market value is less than $7.09, then the exchange ratio will be $4.25 divided by the Kforce stock market value, which will result in Hall Kinion stockholders receiving no more than approximately $54.6 million. The exchange ratio and collar adjustments were determined by arms-length negotiation between Hall Kinion and Kforce after consultation by each of the parties with their respective financial and legal advisors. Assuming the Kforce stock market value is equal to $10.32, which was the average of the per share closing prices of Kforce common stock on the Nasdaq National Market over the 15 consecutive trading days ending on and including the third trading day prior to February 3, 2004, the exchange ratio would equal 0.557, which would result in Hall Kinion stockholders receiving approximately $74.4 million. We hope to complete the merger as soon as reasonably possible following the Hall Kinion and Kforce stockholder meetings. However, there may be some delay between the Hall Kinion stockholders vote to approve the merger and when the merger is actually completed, during which time the price of Kforce common stock could decline. As a result, Hall Kinion stockholders will not know with certainty at the time they vote the value of the shares of Kforce common stock they will receive in the merger. Based on a Kforce stock market value of $10.32 and based on those assets and liabilities of Hall Kinion at September 28, 2003 and the pro forma adjustments on page F-3, the value of the identifiable assets, goodwill and liabilities of Hall Kinion to be acquired or assumed in the merger by Kforce would be $38.5 million, $76.8 million and $40.9 million, respectively.

In addition, Hall Kinion stockholders will receive cash instead of any fractional shares of Kforce common stock to which they are otherwise entitled. The holders of shares of Hall Kinion common stock who would otherwise have been entitled to a fraction of a share of Kforce common stock pursuant to the merger agreement will receive cash in an amount equal to the product of the fractional interest of Kforce common stock the Hall Kinion stockholder would have been entitled to receive multiplied by the Kforce stock market value. For example, if a Hall Kinion stockholder would have been entitled to receive 0.5 shares of Kforce common stock and the Kforce stock market value were $10.32 per share, such Hall Kinion stockholder would receive $5.16 in cash in lieu of 0.5 shares of Kforce common stock. Hall Kinion and Kforce currently estimate that not more than $1,000 cash in the aggregate will likely be paid to holders of Hall Kinion common stock in lieu of fractional shares.

Each outstanding, unexercised and fully vested option to purchase Hall Kinion common stock with an exercise price less than (i) the Kforce stock market value multiplied by (ii) the exchange ratio will automatically be converted into the right to receive an aggregate amount of shares of Kforce common stock as if such option had been exercised on a “net-exercise basis” immediately prior to the closing of the merger. All other outstanding options will be automatically cancelled. The term “net-exercise basis” means that the number of Hall Kinion shares an option holder will be deemed to own will be decreased by the exercise price of such options and the

taxes required to be withheld as a result of the exercise. For example, if an individual has options to purchase 100 shares of Hall Kinion stock at $1.00 per share and at the time of the merger the Kforce stock market value is $10.32 per share, assuming a withholding tax rate of 29.6%, Kforce would issue the option holder 32 shares of Kforce common stock based on the following calculation: 100 Hall Kinion option shares multiplied by the exchange ratio of 0.557 equals 55.7 shares. The sum of the aggregate exercise price of $100 plus the withholding tax of $140.60 [($5.75-$1.00) x 100 shares x the assumed tax rate of 29.6%] equals $240.60. $240.60 divided by the Kforce stock market value of $10.32 equals 23.3 shares. The option holder would be entitled to receive 55.7 shares less 23.3 shares or 32.4 shares. Because Kforce will be paying cash in lieu of fractional shares, the option holder will receive 32 shares of Kforce common stock.

Assuming the Kforce stock market value were equal to $10.32, which was the average of the per share closing prices of Kforce common stock on the Nasdaq National Market over the 15 consecutive trading days ending on and including the third trading day prior to February 3, 2004, vested options to purchase 1,065,689 shares of Hall Kinion common stock would be “in-the-money” and would be converted into 176,023 shares of Kforce common stock.

The following table illustrates the aggregate merger consideration and aggregate number of shares of Kforce common stock that Hall Kinion stockholders will receive in the merger in exchange for all of the outstanding shares of Hall Kinion common stock, at different Kforce stock market values randomly selected by us. While there is no maximum number of shares of Kforce common stock to be issued in the merger, if the merger is consummated, Hall Kinion stockholders will receive no less than approximately $54.6 million and no more than approximately $74.4 million. Kforce has the right, under the terms of the merger agreement, to terminate the merger agreement if the Kforce stock market value is below $6.00. The number of shares in the far right column includes outstanding Hall Kinion options converted into Kforce shares.


Kforce Price	Exchange Ratio (rounded)	Implied Value Paid		Value Paid per Share		Kforce Shares Issued
$6.00	.708	$	54,618,375	$	4.25	9,103,062
$7.09	.600	$	54,695,514	$	4.25	7,714,459
$7.90	.600	$	61,251,986	$	4.74	7,753,416
$8.34	.600	$	64,701,720	$	5.00	7,758,000
$8.55	.600	$	66,367,759	$	5.13	7,762,311
$9.59	.600	$	74,467,903	$	5.75	7,765,162
$10.32	.557	$	74,393,350	$	5.75	7,208,658

Ownership of Kforce After the Merger

Kforce and Hall Kinion expect that the number of shares of Kforce common stock issued to Hall Kinion stockholders in the merger will constitute approximately 19.5% of the outstanding common stock of Kforce after the merger, based on the assumptions set forth in the pro forma condensed combined financial statements and assuming the conversion of all vested in-the-money options to purchase shares of Hall Kinion common stock into shares of Kforce common stock under the merger agreement.

Stockholder Votes Required (Pages 33 and 35)

For Kforce shareholders:

Approval of the proposal to issue shares of Kforce common stock in the merger requires the affirmative vote of holders of a majority of the shares of Kforce common stock present or represented by proxy and entitled to vote at the Kforce special meeting. Approval of the proposal to issue shares of Kforce common stock in the merger is a condition to the completion of the merger. Therefore, if shareholders wish to have the merger completed, they must approve the proposal.

On the record date, directors and executive officers of Kforce and their affiliates had the right to vote shares of Kforce common stock, representing approximately % of the shares of Kforce common stock outstanding on the record date. To Kforce’s knowledge, directors and executive officers of Kforce and their

affiliates intend to vote their common stock in favor of the proposal to issue shares of Kforce common stock in the merger.

Each of David L. Dunkel, Richard M. Cocchiaro, Joseph J. Liberatore, Ken W. Pierce, William L. Sanders and Howard W. Sutter, each a director and/or executive officer of Kforce, who as of December 19, 2003, beneficially owned shares of Kforce common stock representing approximately 31.59% of the voting power of Kforce, has entered into a voting agreement with Hall Kinion in which he has agreed to vote (i) in favor of the approval of the merger agreement, (ii) against any action that would result in any of the conditions of Hall Kinion’s obligations under the merger agreement not being fulfilled, (iii) against any action that would result in a breach by Kforce of any of its covenants, representations or warranties under the merger agreement, and (iv) against the election of a group of individuals to replace a majority or more of the individuals on the Kforce board of directors. A form of Kforce voting agreement is attached to this joint proxy statement/prospectus as part of Annex A. You should read it in its entirety.

For Hall Kinion Stockholders:

Adoption of the merger agreement requires the affirmative vote of at least a majority of the outstanding shares of Hall Kinion common stock. On the record date, directors and executive officers had the right to vote shares of Hall Kinion common stock, representing approximately 30.2% of the shares of Hall Kinion common stock outstanding and entitled to vote at the special meeting. To Hall Kinion’s knowledge, directors and executive officers of Hall Kinion and their affiliates intend to vote their common stock in favor of the adoption of the merger agreement.

Each of Brenda C. Rhodes, Jeffrey A. Evans, Herbert I. Finkelman, Rita S. Hazell, Todd J. Kinion, Martin A. Kropelnicki, Jon H. Rowberry, Jack F. Jenkins-Stark and Michael S. Stein, each a director and/or executive officer of Hall Kinion, who together beneficially own shares of Hall Kinion common stock representing approximately 30.2% of the voting power of Hall Kinion, has entered into a voting agreement with Kforce in which he or she has agreed to vote (i) in favor of the approval of the merger agreement, (ii) against any action that would result in any of the conditions of Kforce’s obligations under the merger agreement not being fulfilled, (iii) against any action that would result in a breach by Hall Kinion of any its covenants, representations or warranties under the merger agreement, and (iv) against (A) any third party acquisition proposal, or (B) the election of a group of individuals to replace a majority or more of the individuals on the Hall Kinion board of directors. A form of Hall Kinion voting agreement is attached to this joint proxy statement/prospectus as part of Annex A. You should read it in its entirety.

Conditions to the Consummation of the Merger (Page 75)

The completion of the merger depends on the satisfaction or waiver of a number of conditions set forth in the merger agreement, including, but not limited to, the following:

•

the approval of the merger and the adoption of the merger agreement by the stockholders of Hall Kinion and the approval of the issuance of the shares of Kforce common stock in the merger by the shareholders of Kforce;

•

the approval of the shares of Kforce common stock to be issued to Hall Kinion stockholders in the merger for trading on the Nasdaq National Market;

•

the registration statement of which this joint proxy statement/prospectus is a part being declared effective by the SEC and the absence of any stop order suspending the effectiveness of the registration statement;

•

the accuracy of all representations and warranties as of the date of the merger agreement and the closing date, as qualified in the merger agreement;

•

the performance or compliance in all material respects with all agreements and covenants set forth in the merger agreement;

•

the receipt of all consents and approvals of third parties as set forth in the merger agreement;

•

the absence of any law, temporary restraining order, injunction or other order issued by a court that has the effect of making the merger illegal or otherwise prohibiting the merger;

•

the expiration or termination of the waiting period applicable to the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and

•

the receipt by Kforce and Hall Kinion of a legal opinion that the merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

At any time prior to the effective time of the merger, Kforce and Hall Kinion may, to the extent legally allowed, extend the time for performance of any of the obligations or other acts set forth in the merger agreement, waive any inaccuracies in the representations or warranties set forth in the merger agreement and waive compliance with any of the agreements or conditions set forth in the merger agreement.

Kforce and Hall Kinion cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.

Termination of the Merger Agreement (Page 77)

Kforce and Hall Kinion may terminate the merger agreement by mutual written consent.

Either Kforce or Hall Kinion may terminate the merger agreement if:

•

the merger is not completed by April 30, 2004 but only if the party seeking termination did not fail to fulfill any obligation under the merger agreement that has been a material cause of the failure of the closing to occur on or before April 30, 2004;

•

any governmental entity issues a non-appealable final order permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the merger agreement or fails to issue an order necessary to satisfy a closing condition to the merger and such failure becomes final and non-appealable;

•

the other party materially breaches any of the representations or warranties set forth in the merger agreement, and such breach or failure cannot be cured before April 30, 2004;

•

the other party materially breaches any of its covenants or agreements set forth in the merger agreement, and such breach cannot be cured within 20 business days after written notice thereof;

•

under certain circumstances, Hall Kinion takes action with respect to or pursues an unsolicited third-party acquisition proposal that is or may be superior to the merger with Kforce; or

•

Hall Kinion stockholders do not approve the merger and adopt the merger agreement or Kforce shareholders do not approve the issuance of shares of Kforce common stock pursuant to the merger agreement.

Kforce may terminate the merger agreement if:

•

the Hall Kinion board of directors withdraws, modifies, qualifies or fails to make or reconfirm its recommendation to the Hall Kinion stockholders, or Hall Kinion willfully and materially breaches its obligation to call a stockholders meeting;

•

Hall Kinion willfully and materially breaches its non-solicitation obligations; or

•

between December 2, 2003 and the closing of the merger, the average of the closing sales prices of Kforce common stock on the Nasdaq National Market shall have been less than $6.00 per share for 15 consecutive trading days.

Hall Kinion may terminate the merger agreement if:

•

the Kforce board of directors withdraws, modifies, qualifies or fails to make its recommendation to the Kforce shareholders, or Kforce willfully and materially breaches its obligation to call a shareholders meeting.

Termination Fees (Page 78)

Termination of the merger by Kforce under specified circumstances, including if (i) Hall Kinion enters into or consummates a similar transaction with a third party, (ii) the Hall Kinion board of directors withdraws, modifies, qualifies or fails to make its recommendation to the Hall Kinion stockholders, or (iii) Hall Kinion materially breaches its obligation to call a stockholders meeting, could result in Hall Kinion being required to pay to Kforce a termination fee in an amount equal to $2.0 million. In addition to the termination fee, Hall Kinion must pay Kforce an amount equal to the difference, if any, between 3% of the transaction value paid to Hall Kinion’s stockholders by a third party and $2.0 million if: (i) at any time after the date of the merger agreement and before Hall Kinion’s stockholders approve the merger, a third party acquisition proposal with respect to Hall Kinion has been publicly announced or otherwise communicated to the stockholders of Hall Kinion; and (ii) prior to December 31, 2004, Hall Kinion or any of its subsidiaries enters into any definitive agreement with respect to, or consummates, any acquisition proposal. Such additional termination fee could discourage other companies from trying or proposing to combine with Hall Kinion.

Termination of the merger by Hall Kinion under specified circumstances, including if Kforce’s board of directors withdraws, modifies, qualifies or fails to make its recommendation to the Kforce shareholders, or Kforce materially breaches its obligation to call a shareholders meeting, could result in Kforce being required to pay to Hall Kinion a termination fee in the amount of $2.0 million.

Recommendation of Kforce’s Board of Directors (Page 43)

The Kforce board of directors has unanimously approved the merger agreement and the transactions contemplated thereby and has deemed the merger advisable and determined that the consideration to be paid by Kforce in the merger is fair and in the best interest of Kforce and its shareholders. The Kforce board of directors recommends that Kforce shareholders vote for the approval of the issuance of Kforce common stock in the merger.

In reaching its decision, the Kforce board of directors consulted with its management team and advisors and considered the proposed merger agreement and the transactions contemplated by the merger agreement. During the course of its deliberations, the Kforce board of directors considered a number of factors, including without limitation:

•

the high quality of the operational personnel and the compatibility of the cultures of the two companies;

•

the combination of executive, general and administrative functions;

•

elimination of Hall Kinion’s public company costs;

•

the consideration to be paid by Kforce in the merger;

•

the strategic and geographic fit of Kforce and Hall Kinion;

•

information concerning Kforce’s and Hall Kinion’s respective businesses, prospects, strategic business plans, financial performances and conditions, results of operations, technology positions, management and competitive positions;

•

the view of Kforce’s management as to the financial condition, results of operations and business of Kforce and Hall Kinion before and after giving effect to the merger, based on management’s due diligence, internal projections, publicly available earnings estimates and other publicly available information;

•

the opinion of Lehman Brothers to the effect that, as of the date of that opinion, and based upon and subject to the matters described in its opinion, the exchange ratio to be paid by Kforce pursuant to the merger agreement is fair to Kforce from a financial point of view;

•

information concerning historical and current market prices with respect to Kforce’s common stock and Hall Kinion’s common stock;

•

the likelihood of a successful integration and the successful operation of the combined company;

•

the shareholders’ view of the combined company;

•

the terms and conditions of the merger agreement, the voting agreements, and the affiliate agreements, including without limitation the termination fees; and

•

the likelihood that the merger will be completed.

During the course of its deliberations concerning the merger, the Kforce board of directors also identified and considered a variety of potentially negative factors that could materialize as a result of the merger, including, but not limited to:

•

the risk that the potential benefits of the merger may not be realized, including that the expected operating synergies might not be achieved;

•

the possibility that the merger might not be consummated and the effect of the public announcement of the merger on Kforce’s partners, customers and employees;

•

the risks associated with obtaining the necessary approvals required to complete the merger;

•

the transaction costs involved in connection with closing the merger;

•

the potential inability to realize certain Federal and state tax benefits through future income. No value will be assigned to the Hall Kinion deferred tax asset in the asset allocation;

•

the management efforts and costs required to complete the integration of the businesses and operations of the two companies following the merger;

•

the risk that sales of substantial amounts of Kforce common stock in the public market after the proposed merger could materially adversely affect the market price of Kforce common stock;

•

the risk that customers and other business partners of Hall Kinion might terminate their relationships as a result of the merger; and

•

the other risks described under the section entitled “Risk Factors” beginning on page 23.

Recommendation of Hall Kinion’s Board of Directors (Page 45)

The Hall Kinion board of directors has unanimously approved the merger agreement and the transactions contemplated thereby and believes that the terms of the merger agreement and the merger are fair to, and in the best interests of, Hall Kinion and its stockholders. The Hall Kinion board of directors recommends that the Hall Kinion stockholders approve the merger and adopt the merger agreement.

In reaching its decision, the Hall Kinion board of directors consulted with its management team and advisors and considered the proposed merger agreement and the transactions contemplated by the merger agreement. During the course of its deliberations, the Hall Kinion board of directors considered a number of factors, including without limitation:

•

current market prices for Hall Kinion common stock, the fluctuation in historical trading prices of the Hall Kinion common stock, the lack of liquidity in the market for Hall Kinion common stock, the inability to use Hall Kinion common stock at current price levels as consideration for acquisitions, which limits Hall Kinion’s growth potential, and the fact that the merger consideration includes a premium over the market price for Hall Kinion common stock on the last trading day before the merger was announced;

•

the greater liquidity of Kforce’s common stock following the merger as compared to Hall Kinion’s common stock;

•

the fact that Hall Kinion’s stockholders will have the opportunity to participate in the growth and opportunities of the combined company;

•

the likelihood that other offers or expressions of interest at prices higher than the merger consideration would have been expected to have surfaced prior to the execution of the merger agreement as a result of the marketing efforts conducted by Baird;

•

the Hall Kinion board of directors’ knowledge of Hall Kinion’s business, current financial condition and liquidity, the nature of the markets in which Hall Kinion competes and Hall Kinion’s position in those markets, Hall Kinion’s prospects for future growth as an independent company as compared with prospects as part of a larger enterprise; and the likelihood of further consolidation occurring in the industry and the effects of such consolidation;

•

the historical and potentially continuing downturn in technology spending, particularly by companies that historically had been part of Hall Kinion’s primary customer base, and the downturn in the demand for services in Hall Kinion’s OnStaff division;

•

the potential reduction in Hall Kinion’s liquidity under its line of credit as a result of decreased revenues, which results in a reduced borrowing base;

•

the potential synergies, cost savings and economies of scale resulting from the combined executive, general and administrative functions of the two companies following the merger;

•

Hall Kinion’s ability, subject to certain conditions, to respond to, and to accept, an unsolicited offer that is superior to the merger, if failing to do so would breach the fiduciary responsibilities of the Hall Kinion board of directors;

•

the fact that the merger is a tax-free reorganization, which will permit Hall Kinion stockholders to defer payment of capital gains taxes until they sell shares of Kforce common stock received in the merger;

•

the other terms of the merger agreement; and

•

the analyses and financial presentations to the Hall Kinion board of directors in connection with the Hall Kinion board of directors’ consideration of the merger, including the opinion of Baird that the exchange ratio to be received by the Hall Kinion stockholders was fair, from a financial point of view.

In addition to the positive factors summarized above, the Hall Kinion board of directors also considered the following negative factors in reaching its determination:

•

stock price decreases to less than $6.00 per share over a period of time prior to the closing of the merger and the effect of the public announcement of the merger on Hall Kinion’s sales, operating results, stock price and relations with employees and customers;

•

the risk that the potential benefits and synergies in the merger might not be fully realized;

•

the risk of a stock price decline in Kforce stock following the completion of the merger;

•

the costs and potential operational problems that may be incurred in the integration of the two companies’ operations;

•

the risks associated with diversion of management resources from operational matters for an extended period of time; and

•

the risks described under the section entitled “Risk Factors” beginning on page 23 of this joint proxy statement/prospectus.

Kforce’s Termination Rights (Page 77)

Kforce may terminate the merger agreement if the average of the closing share price of Kforce common stock on the Nasdaq National Market shall have been less than $6.00 per share for 15 consecutive trading days. Although a resolicitation of proxies from our shareholders is not required, Kforce has not concluded whether it would resolicit proxies if it has the opportunity to exercise its walk-away rights. Kforce’s determination of whether to proceed with the transaction in such a case will be based upon its board’s careful consideration, exercising its reasonable business judgment consistent with its fiduciary duties to Kforce’s shareholders, of the impact of the event triggering any walk-away rights on the valuation of Hall Kinion’s business in the merger and other strategic alternatives to the merger which may then be available to Kforce, as well as general market and industry conditions. Kforce’s board of directors reserves the right not to proceed with a resolicitation of proxies and to consummate the transaction if, taking into account its responsibilities, it determines that proceeding with the transaction is in its shareholders’ best interest.

Opinion of Kforce’s Financial Advisor (Page 46)

In connection with the merger, the Kforce board of directors received a written opinion from Lehman Brothers as to the fairness, from a financial point of view, to Kforce of the exchange ratio to be paid in the merger by Kforce. The full text of the Lehman Brothers written opinion, dated December 2, 2003, is attached to this joint proxy statement/prospectus as Annex B. Kforce and Hall Kinion encourage you to read this opinion carefully in its entirety for a description of the assumptions made, procedures followed, matters considered and limitations on the review undertaken. The Lehman Brothers opinion is addressed to the Kforce board of directors and does not constitute a recommendation to any shareholder with respect to any matters relating to the proposed merger.

Opinion of Hall Kinion’s Financial Advisor (Page 53)

In connection with the merger, the Hall Kinion board of directors received a written opinion from Robert W. Baird & Co. Incorporated as to the fairness, from a financial point of view, of the exchange ratio to be received in the merger by the holders of Hall Kinion common stock. The full text of the Robert W. Baird & Co. Incorporated written opinion, dated December 2, 2003, is attached to this joint proxy statement/prospectus as Annex C. Kforce and Hall Kinion encourage you to read this opinion carefully in its entirety for a description of the assumptions made, procedures followed, matters considered and limitations on the review undertaken. The Robert W. Baird & Co. Incorporated opinion is addressed to the Hall Kinion board of directors, and does not constitute a recommendation to any stockholder with respect to any matters relating to the proposed merger.

Material United States Federal Income Tax Consequences (Page 62)

The exchange of Hall Kinion common stock for Kforce common stock, other than cash paid for fractional shares, is intended to be tax-free to you for United States federal income tax purposes. Hall Kinion and Kforce will not be obligated to consummate the merger unless they receive legal opinions to the effect that the merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code. However, neither Kforce nor Hall Kinion has requested nor will either request a ruling from the Internal Revenue Service with regard to any of the tax consequences of the merger. If the Internal Revenue Service were to assert successfully that the merger is not a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code, then the exchange of Hall Kinion common stock for Kforce common stock would not be tax-free to you. Tax matters are very complicated and the tax consequences of the merger to you will depend on your own personal circumstances. You should consult your tax advisor for a full understanding of all of the federal, state, local and foreign income and other tax consequences of the merger to you.

Accounting Treatment (Page 64)

The merger will be accounted for as a purchase under accounting principles generally accepted in the United States of America.

Interests of Hall Kinion Directors and Officers in the Merger (Page 83)

Certain Hall Kinion directors and executive officers have interests in the merger that are different from, or are in addition to, those of other stockholders. These interests include: (i) the continued indemnification of current directors and officers of Hall Kinion; (ii) in the case of Brenda C. Rhodes and Rita S. Hazell, change of control payments in the amount of $1.1 million and $980,000 owed to them, respectively, as a result of the merger; (iii) in the case of Ms. Rhodes, Ms. Hazell, Martin A. Kropelnicki and David Healey, the acceleration of the vesting of certain stock options held by them; (iv) in the case of Ms. Rhodes, the acceleration of $1.05 million in compensation otherwise owed to her; and (v) in the case of Ms. Rhodes and Ms. Hazell, the acceleration of the forgiveness of approximately $302,000 and $58,000 of indebtedness owed to Hall Kinion by Ms. Rhodes and Ms. Hazell, respectively. The members of Hall Kinion’s board of directors were aware of, and considered the interests of, themselves and Hall Kinion’s executive officers in approving the merger and adopting the merger agreement.

Regulatory Clearances and Approvals (Page 65)

Kforce and Hall Kinion have notified and furnished information to the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the applicable waiting period has terminated. Although the waiting period has terminated, the Federal Trade Commission, the Antitrust Division, any state or any private party may challenge the merger at any time before or after its completion.

No Appraisal Rights (Page 65)

Stockholders are not entitled to appraisal rights in connection with the merger.

Quotation on the Nasdaq National Market (Page 65)

Kforce’s common stock is currently traded on the Nasdaq National Market under the symbol “KFRC.” It is a condition to the merger that the shares of Kforce common stock to be issued in the merger be approved for trading on the Nasdaq National Market subject to official notice of issuance.

Kforce Selected Historical Consolidated Financial Data

The selected consolidated historical financial information set forth below under the captions “Consolidated Statement of Operations Data” and “Consolidated Balance Sheet Data” for, and as of the end of, each of the fiscal years in the five-year period ended December 31, 2002, are derived from Kforce’s historical audited financial statements. The selected consolidated historical financial information set forth below for the nine-month periods ended September 30, 2003 and 2002 are derived from Kforce’s unaudited condensed consolidated historical financial statements, and in the opinion of Kforce’s management reflects all adjustments necessary for the fair presentation of this unaudited consolidated historical financial information. This information should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations of Kforce and the consolidated financial statements and notes thereto incorporated by reference into this joint proxy statement/prospectus. Historical results are not necessarily indicative of results to be expected for any future period.


	Year Ended December 31															Nine Months Ended September 30
	1998			1999			2000			2001			2002			2002			2003
	(In thousands, except per share amounts)
Consolidated Statement of Operations Data:
Net service revenues	$	685,704		$	754,710		$	805,020		$	658,417		$	513,547		$	390,040		$	369,847
Direct costs of services		394,123			432,079			443,464			406,017			345,585			260,904			254,776
Gross profit		291,581			322,631			361,556			252,400			167,962			129,136			115,071
Selling, general and administrative expenses		224,790			346,452			341,812			244,792			168,233			123,701			108,649
Depreciation and amortization		9,507			14,514			18,440			17,325			9,629			7,613			3,203
Merger, restructuring, and integration expense		26,122			—			—			—			—			—			—
Income (loss) from operations		31,162			(38,335	)		1,304			(9,717	)		(9,900	)		(2,178	)		3,219
Other (income) expense, net		(4,985	)		(942	)		113			4,460			3,206			1,529			898
Income (loss) before income taxes		36,147			(37,393	)		1,191			(14,177	)		(13,106	)		(3,707	)		2,321
Benefit (provision) for income taxes		(20,708	)		13,877			(1,474	)		2,089			(102	)		(1,527	)		(8	)
Income (loss) before cumulative effect of change in accounting principle		15,439			(23,516	)		(283	)		(12,088	)		(13,208	)		(2,180	)		2,329
Cumulative effect of change in accounting principle		—			—			—			—			(33,823	)		—			—
Net income (loss)	$	15,439		$	(23,516	)	$	(283	)	$	(12,088	)	$	(47,031	)	$	(2,180	)	$	2,329
Net income (loss) per share—basic	$	0.33		$	(0.53	)	$	(0.01	)	$	(0.38	)	$	(1.49	)	$	(0.07	)	$	0.08
Weighted average shares outstanding—basic		45,410			44,781			42,886			31,711			31,577			31,789			30,528
Net income (loss) per share—diluted	$	0.34		$	(0.53	)	$	(0.01	)	$	(0.38	)	$	(1.49	)	$	(0.07	)	$	0.08
Weighted average shares outstanding—diluted		47,318			44,781			42,886			31,711			31,577			31,789			30,964
	As of December 31,																		As of September 30,
	1998			1999			2000			2001			2002						2003
	(In thousands)
Consolidated Balance Sheet Data:
Working capital	$	135,348		$	86,310		$	70,885		$	43,083		$	32,126					$	38,447
Total assets	$	333,812		$	296,187		$	278,018		$	222,772		$	152,177					$	161,447
Total long-term debt	$	461		$	—		$	45,000		$	28,185		$	22,000					$	22,000
Stockholders’ equity	$	255,022		$	218,205		$	155,037		$	138,809		$	85,588					$	88,052

Hall Kinion Selected Historical Consolidated Financial Data

The selected consolidated historical financial information set forth below under the captions “Consolidated Statement of Operations Data” and “Consolidated Balance Sheet Data” for, and as of the end of, each of the fiscal years ended December 29, 2002, December 30, 2001, December 31, 2000, December 26, 1999 and December 27, 1998, are derived from Hall Kinion’s historical audited financial statements. The selected consolidated historical financial information set forth below for the nine-month periods ended September 28, 2003 and September 29, 2002 are derived from Hall Kinion’s unaudited consolidated historical financial statements, and in the opinion of Hall Kinion’s management reflects all adjustments necessary for the fair presentation of this unaudited consolidated historical financial information. This information should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations of Hall Kinion and the consolidated financial statements and notes thereto incorporated by reference into this joint proxy statement/prospectus. Historical results are not necessarily indicative of results to be expected for any future period.


	Fiscal Year Ended															Nine Months Ended
	1998			1999			2000			2001			2002			September 29, 2002			September 28, 2003
	(In thousands, except per share amounts)
Consolidated Statement of Operations Data:
Net service revenues	$	124,132		$	180,749		$	296,491		$	173,836		$	120,428		$	81,272		$	123,298
Cost of contract services		69,066			96,502			147,539			100,834			80,744			53,554			87,213
Gross profit		55,066			84,247			148,952			73,002			39,684			27,718			36,085
Selling, general and administrative expenses		45,339			67,827			120,905			91,952			43,705			30.770			33,937
Depreciation and amortization		1,945			2,905			4,588			4,868			3,702			2,731			2,425
Impairment of goodwill		—			—			—			26,736			15,478			—			—
Restructuring costs (income)		—			—			—			17,048			(6	)		(876	)		2,906
Income (loss) from operations		7,782			13,515			23,459			(67,602	)		(23,195	)		(4,907	)		(3,183	)
Other (income) expense, net		51			477			(1,615	)		(1,181	)		323			(278	)		267
Income (loss) before income taxes		7,731			13,038			25,074			(66,421	)		(23,518	)		(4,629	)		(3,450	)
Benefit (provision) for income taxes		(3,325	)		(5,382	)		(10,464	)		20,809			2,870			1,634			—
Net income (loss)	$	4,406		$	7,656		$	14,610		$	(45,612	)	$	(20,648	)	$	(2,995	)	$	(3,450	)
Net income (loss) per share—basic	$	0.47		$	0.75		$	1.18		$	(3.48	)	$	(1.66	)	$	(0.23	)	$	(0.27	)
Net income (loss) per share—diluted	$	0.43		$	0.71		$	1.10		$	(3.48	)	$	(1.66	)	$	(0.23	)	$	(0.27	)
Weighted average shares outstanding—basic		9,439			10,155			12,357			13,121			12,475			13,054			12,594
Weighted average shares outstanding—diluted		10,342			10,716			13,267			13,121			12,475			13,054			12,594

	As of Fiscal Year Ended																		As of September 28,
	1998			1999			2000			2001			2002						2003
	(In thousands)
Consolidated Balance Sheet Data:
Working capital	$	7,808		$	15,560		$	64,819		$	36,721		$	6,916					$	15,745
Total assets	$	55,976		$	76,554		$	139,821		$	89,459		$	74,906					$	70,474
Long-term liabilities	$	1,083		$	14,161		$	209		$	6,470		$	6,201					$	16,095
Stockholders’ equity	$	37,902		$	43,969		$	110,762		$	64,781		$	43,767					$	40,296

Selected Unaudited Pro Forma Condensed Combined Financial Data

The following selected unaudited pro forma condensed combined financial statements have been prepared to give effect to the proposed business combination of Kforce and Hall Kinion using the purchase method of accounting and the assumptions and adjustments described in the accompanying notes to the selected unaudited pro forma condensed combined financial statements contained elsewhere in this joint proxy statement. These pro forma statements were prepared as if the business combination of Kforce and Hall Kinion and Hall Kinion’s acquisition of OnStaff had been completed as of September 30, 2003 for balance sheet purposes and as of January 1, 2002 for statements of operations purposes.

The selected unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and are not necessarily indicative of the financial position or results of operations that would have actually been reported had the business combination occurred as of September 30, 2003 for balance sheet purposes and as of January 1, 2002 for statement of operations purposes, nor is it necessarily indicative of future financial position or results of operations. The selected unaudited pro forma condensed combined financial statements include adjustments, which are based upon preliminary estimates, to reflect the allocation of purchase price to the fair value of the acquired assets and assumed liabilities of Hall Kinion, before any integration adjustments. The final allocation of the purchase price will be determined after the completion of the business combination and will be based upon an independent valuation of the fair values of certain of the net tangible and intangible assets acquired as well as liabilities assumed. The selected unaudited pro forma condensed combined financial statements do not reflect any combination costs or operational synergies resulting from the merger. The selected unaudited pro forma condensed combined financial statements assume the conversion of all vested in-the-money options to purchase shares of Hall Kinion common stock into shares of Kforce common stock under the merger agreement.

Kforce and Hall Kinion expect to incur merger and integration charges as a result of combining the companies. Kforce and Hall Kinion also anticipate that the merger will provide the combined company with financial benefits that include reduced operating expenses and the opportunity to earn more revenue. The selected unaudited pro forma condensed combined financial data, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect these expenses or benefits and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the combined company would have been had Kforce and Hall Kinion actually been combined during the periods presented.

This selected unaudited pro forma condensed combined financial data should be read in conjunction with the selected historical consolidated financial data and the unaudited pro forma condensed combined financial statements and accompanying notes contained elsewhere in this joint proxy statement/prospectus and the separate historical consolidated financial statements and accompanying notes of Kforce and Hall Kinion incorporated by reference into this joint proxy statement/prospectus.


	Year Ended December 31, 2002			Nine Months Ended September 30, 2003
	(In thousands, except per share amounts)
Statement of Operations Data:
Net service revenues	$	656,562		$	493,145
Direct costs of services		442,003			341,989

Gross profit		214,559			151,156
Selling, general and administrative expenses		219,696			142,586
Restructuring costs, net		(6	)		2,906
Depreciation and amortization		14,265			5,907
Goodwill impairment		15,478			—

Loss from Operations		(34,874	)		(243	)
Other expense, net		3,460			949

Loss before income taxes		(38,334	)		(1,192	)
Income tax benefit		(2,869	)		(8	)

Net loss before change in accounting principle		(35,465	)		(1,184	)
Change in accounting principle		(33,823	)		—

Net loss		(69,288	)		(1,184	)
Other comprehensive loss:
Cash flow hedges, net of income tax benefit		—			(237	)

Comprehensive loss	$	(69,288	)	$	(1,421	)

Net loss per share—basic before change in accounting principle	$	(0.90	)	$	(0.04	)
Net loss per share—basic	$	(1.76	)	$	(0.04	)

Weighted average shares outstanding—basic		39,335			38,286
Net loss per share—diluted before change in accounting principle	$	(0.90	)	$	(0.04	)

Net loss per share—diluted	$	(1.76	)	$	(0.04	)

Weighted average shares outstanding—diluted		39,335			38,722

				As of September 30, 2003
				(In thousands)
Balance Sheet Data:
Working capital				$	30,092
Total assets					253,853
Total long-term debt					27,397
Stockholders’ equity				$	152,754

Comparative Per Share Data

The following tables present (a) the basic and diluted loss per common share and book value per share data for each of Kforce and Hall Kinion on a historical basis, (b) the historical basic and diluted loss per common share and book value per share for the combined company on a pro forma basis and (c) the historical basic and diluted loss per common share and book value per share for Kforce and Hall Kinion on an equivalent pro forma combined basis. Neither Kforce nor Hall Kinion declared any cash dividends for the periods presented below.

We calculate historical book value per share by dividing stockholders’ equity by the number of shares of common stock outstanding at September 30, 2003.

We calculate pro forma book value per share by dividing pro forma stockholders’ equity by the pro forma number of shares of Kforce common stock which would have been outstanding had the merger been consummated as of September 30, 2003. Pro forma combined net loss, pro forma stockholders’ equity and the pro forma number of shares of Kforce common stock outstanding have been derived from the unaudited pro forma condensed combined financial statements appearing elsewhere in this joint proxy statement/prospectus and assumes the conversion of all vested in-the-money options to purchase shares of Hall Kinion common stock into shares of Kforce common stock under the merger agreement.

Kforce and Hall Kinion expect to incur merger and integration charges as a result of combining the companies. Kforce and Hall Kinion also anticipate that the merger will provide the combined company with financial benefits that include reduced operating expenses and the opportunity to earn more revenue. The pro forma information, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect these expenses or benefits and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the combined company would have been had Kforce and Hall Kinion actually been combined during the periods presented.


	For the Year Ended December 31, 2002⁽¹⁾									For the Nine Months Ended September 30, 2003⁽¹⁾
Historical Kforce Inc.
Net income (loss) per common share—basic				$	(1.49	)							$	0.08
Net income (loss) per common share—diluted					(1.49	)								0.08
Book value per common share at period end					2.71									2.88

Historical Hall Kinion⁽¹⁾
Net income (loss) per common share—basic					(1.66	)								(0.27	)
Net income (loss) per common share—diluted					(1.66	)								(0.27	)
Book value per common share at period end					3.51									3.20

	For the Year Ended December 31, 2002									For the Nine Months Ended September 30, 2003
Exchange Ratio⁽⁸⁾		.557	⁽¹⁾⁽⁴⁾⁽⁸⁾		.600	⁽¹⁾⁽²⁾⁽⁸⁾		.708	⁽¹⁾⁽³⁾⁽⁸⁾		.557	⁽¹⁾⁽⁴⁾⁽⁸⁾		.600	⁽¹⁾⁽²⁾⁽⁸⁾		.708	⁽¹⁾⁽³⁾⁽⁸⁾

Pro forma combined per share⁽⁵⁾
Basic Net income (loss) per common share	$	(1.79	)	$	(1.76	)	$	(1.70	)	$	(0.04	)	$	(0.04	)	$	(0.04	)
Diluted Net income (loss) per common share		(1.79	)		(1.76	)		(1.70	)		(0.04	)		(0.04	)		(0.04	)
Book value per common share at period end⁽⁶⁾											4.29			3.99			3.61

Pro forma combined per Hall Kinion equivalent share⁽⁷⁾
Basic Net income (loss) per common share		(1.00	)		(1.06	)		(1.21	)		(0.02	)		(0.02	)		(0.03	)
Diluted Net income (loss) per common share		(1.00	)		(1.06	)		(1.21	)		(0.02	)		(0.02	)		(0.03	)
Book value per common share at period end											2.39			2.39			2.56

(1)	The historical amounts for Hall Kinion and the combined pro forma amounts for Hall Kinion and Kforce reflect historical amounts for Hall Kinion for the nine months ended September 28, 2003 and the twelve months ended December 29, 2002.

(2)

These calculations are based on an exchange ratio of 0.60 of a share of Kforce stock to be issued for each Hall Kinion share (or exchangeable stock option). This exchange ratio assumes an average share price for Kforce common stock of between $7.09 per share and $9.60 per share, which represents the floor and ceiling price within which the exchange ratio is fixed. If the average per share closing price of Kforce common stock for the 15 consecutive trading days ending on and including the third trading day preceding the closing date is less than $7.09 per share, the exchange ratio will be adjusted upward to an exchange ratio calculated by dividing $4.25 by the Kforce market value per share. If the average per share closing price of Kforce common stock exceeds $9.60 per share, the exchange ratio will be adjusted downward to an exchange ratio calculated by dividing $5.75 by the Kforce market value per share.

(3)

These calculations are based on an assumed Kforce average share price of $6.00 per share, which would result in an exchange ratio of .708 shares of Kforce stock for each Hall Kinion share (or exchangeable stock option). Kforce may terminate the merger agreement if the average of the closing sales prices of Kforce common stock on the Nasdaq National Market is less than $6.00 per share for 15 consecutive trading days. The pro forma per share data would not be materially impacted for Kforce stock market values between $6.00 and $7.09.

(4)

These calculations are based on an assumed Kforce average share price of $10.32 per share, which would result in an exchange ratio of .557 of a share of Kforce stock for each Hall Kinion share (or exchangeable stock option). The Kforce average share price of $10.32 per share is based on the average per share closing prices of Kforce common stock on the Nasdaq National Market over the 15 consecutive trading days ending on and including the third trading day prior to February 3, 2004.

(5)	Pro forma combined income from continuing operations per share is computed by dividing pro forma combined income from continuing operations by the sum of Kforce’s basic or diluted weighted average shares during the period plus the number of Kforce’s shares assumed to be issued in the merger .

(6)	Pro forma combined book value per share is computed by dividing pro forma shareholders’ equity by the number of shares of Kforce common stock outstanding as of September 30, 2003 plus the number of shares of Kforce common stock assumed to be issued in the merger .

(7)	Pro forma combined per equivalent Hall Kinion share amounts are computed by multiplying the exchange ratio by the corresponding pro forma per share amounts.

(8)	The total number of pro forma shares that would be outstanding under each of the exchange ratios is presented below. The amount of new Kforce shares issued is calculated by multiplying the exchange ratio by the estimated outstanding shares of Hall Kinion at closing.


	For the year ended December 31, 2002			For the nine months ended September 30, 2003
Exchange Ratio	.557	.600	.708	.557	.600	.708
	(in thousands)

Total	38,786	39,335	40,680	37,737	38,286	39,631
Kforce	31,577	31,577	31,577	30,528	30,528	30,528
New Kforce shares	7,209	7,758	9,103	7,209	7,758	9,103

Comparative Market Price and Dividend Information

Kforce common stock trades on the Nasdaq National Market under the symbol “KFRC.” Hall Kinion common stock trades on the Nasdaq National Market under the symbol “HAKI.”

The table below sets forth, for the Kforce fiscal quarters indicated, the high and low sale prices of Kforce and Hall Kinion common stock as reported on the Nasdaq National Market, in each case based on published financial sources.


	Kforce Common Stock				Hall Kinion Common Stock
	High		Low		High		Low
2001
1st Qtr	$	5.31	$	2.28	$	21.00	$	5.50
2nd Qtr		7.25		3.93		10.25		5.89
3rd Qtr		7.45		4.03		8.41		4.85
4th Qtr		6.40		3.15		8.97		4.64
2002
1st Qtr		6.40		4.05		9.95		6.50
2nd Qtr		6.20		3.77		12.00		6.00
3rd Qtr		6.05		2.55		9.14		4.80
4th Qtr		5.14		1.63		7.08		4.75
2003
1st Qtr		4.42		1.70		6.11		0.67
2nd Qtr		5.39		2.37		3.24		1.20
3rd Qtr		8.68		4.76		5.11		2.56
4th Qtr
2004
1st Qtr (through February 5, 2004)		10.99		8.86		5.49		4.92

The following table sets forth trading information for Kforce common stock and Hall Kinion common stock on December 1, 2003 and February 5, 2004. December 1, 2003 was the day preceding the date Kforce and Hall Kinion announced the signing of the merger agreement. February 5, 2004 was the last practicable trading day for which information was available before the date of this joint proxy statement/prospectus. We cannot assure you what the market price of the Kforce common stock will be at the merger date. The prices of each company’s common stock will fluctuate prior to the special meetings and the merger, and you should obtain current market quotations. The market price of Kforce common stock has fluctuated substantially in the past and could fluctuate substantially in the future. Those fluctuations may adversely affect the price of Kforce common stock and the value of the shares of Kforce common stock that Hall Kinion stockholders receive in the merger. Among other things, volatility in the price of Kforce common stock could mean that investors will not be able to sell their shares at or above the current market price of Kforce common stock. The volatility also could impair Kforce’s ability in the future to offer common stock as a source of additional capital or as consideration in the acquisition of other businesses.


	Kforce Common Stock		Hall Kinion Common Stock
Closing price on December 1, 2003	$	8.34	$	4.23
Closing price on February 5, 2004		10.39		5.26

Neither Kforce nor Hall Kinion has ever declared or paid cash dividends on its capital stock. Kforce does not anticipate paying cash dividends on its common stock in the foreseeable future.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Any statements in this document about expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “will continue,” “anticipate,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook.” Accordingly, these statements involve estimates, assumptions and uncertainties which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this document. The following cautionary statements identify important factors that could cause Kforce’s, Hall Kinion’s or the combined company’s actual results to differ materially from those projected in the forward-looking statements made in this document. Among the key factors that have a direct bearing on Kforce’s, Hall Kinion’s or the combined company’s results of operations are:

•

general economic and business conditions; the existence or absence of adverse publicity; changes in marketing and technology; changes in political, social and economic conditions;

•

competition in the staffing industry; general risks of the staffing industry;

•

success of acquisitions and operating initiatives; changes in business strategy or development plans; management of growth;

•

dependence on senior management; business abilities and judgment of personnel; availability of qualified personnel; labor and employee benefit costs;

•

ability to integrate effectively the two companies’ technology, operations and personnel in a timely and efficient manner;

•

ability of Kforce to retain and hire key executives, technical personnel and other employees;

•

ability of Kforce to manage its growth and the difficulty of successfully managing a larger, more geographically dispersed organization; and

•

the timing of, and regulatory and other conditions associated with, the completion of the merger and the ability of Kforce to combine operations and obtain operating synergies following the merger.

These factors and the risk factors referred to below could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by Kforce or Hall Kinion, and you should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made and neither Kforce nor Hall Kinion undertakes any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for Kforce or Hall Kinion to predict which will arise. In addition, neither Kforce nor Hall Kinion can assess the impact of each factor on Kforce’s, Hall Kinion’s or the combined company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

RISK FACTORS

You should carefully consider the following factors, in addition to the other information included elsewhere in this joint proxy statement/prospectus and the documents that Kforce has filed with the SEC and the Hall Kinion documents accompanying this joint proxy statement/prospectus, in considering what action to take in connection with the merger. Unless the context requires otherwise, the use of the combined company or Kforce refers to the combined company of Kforce and Hall Kinion after giving effect to the merger.

Risks Relating to the Proposed Merger

Kforce and Hall Kinion may not achieve the benefits they expect from the merger which may have a material adverse effect on the combined company’s business, financial and operating results.

Kforce and Hall Kinion entered into the merger agreement with the expectation that the merger will result in benefits to the combined company arising out of the combination of executive management, general and administration functions and facilities plus the elimination of costs relating to Hall Kinion’s status as a public reporting company. To realize any benefits from the merger, the combined company will face the following post-merger challenges:

•

expected cost savings and synergies from the merger may not be realized;

•

the management and employees of each company, particularly the sales force, may not be retained and assimilated as expected;

•

existing customers, strategic partners and suppliers of each company may not be retained; and

•

uniform standards, controls, procedures, policies and information systems between the two companies may not be successfully developed or maintained.

If the combined company is not successful in addressing these and other challenges, then the benefits of the merger may not be realized and, as a result, the combined company’s operating results and the market price of Kforce’s common stock may be adversely affected. These challenges, if not successfully met by the combined company, could result in possible unanticipated costs, diversion of management attention and loss of personnel. Neither Kforce nor Hall Kinion can assure you that the combined company will successfully integrate Hall Kinion’s business with Kforce’s, or profitably manage the combined company. Further, neither Kforce nor Hall Kinion can assure you that the growth rate of the combined company after the merger will equal the historical growth rates experienced by Kforce or Hall Kinion.

If the costs associated with the merger exceed the benefits, the combined company may experience adverse financial results.

Kforce and Hall Kinion will incur significant transaction costs as a result of the merger, including investment banking, legal and accounting fees, that may exceed their current estimates. In addition, Kforce and Hall Kinion expect that the combined company will incur consolidation and integration expenses which they cannot accurately estimate at this time. Actual transaction costs may substantially exceed Kforce’s and Hall Kinion’s current estimates and may affect the combined company’s financial condition and operating results negatively. If the benefits of the merger do not exceed the costs associated with the merger, including any dilution to Kforce’s shareholders resulting from the issuance of shares in connection with the merger, the combined company’s financial results could be adversely affected.

The market price of Kforce’s common stock may decline as a result of the merger.

The market price of Kforce’s common stock may decline as a result of the merger for a number of reasons, including if:

•

the integration of Kforce and Hall Kinion is not completed in a timely and efficient manner;

•

the combined company does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts;

•

the effect of the merger on the combined company’s financial results is not consistent with the expectations of financial or industry analysts; or

•

significant stockholders of Kforce or Hall Kinion decide to dispose of their stock following completion of the merger.

Sales of substantial amounts of Kforce common stock in the public market after the proposed merger could materially adversely affect the market price of Kforce common stock.

Kforce expects to issue a significant number of shares of Kforce common stock to Hall Kinion stockholders in the merger dependent on the Kforce stock market value at the time of closing of the merger. The sale of substantial amounts of Kforce common stock may result in significant fluctuations in the price of Kforce common stock and could cause Kforce’s common stock price to fall. The sale of these shares could also impair the combined company’s ability to raise capital through sales of additional common stock.

Failure to complete the merger could negatively impact the market price of Hall Kinion common stock and Kforce common stock.

The obligations of Hall Kinion and Kforce to complete the merger are subject to the satisfaction or waiver of certain conditions. See “The Merger Agreement — Conditions to the Consummation of the Merger” beginning on page 75 of this joint proxy statement/prospectus for a discussion of these conditions. If these conditions are not satisfied or waived, the merger may not be completed. If the merger is not completed for any reason, both Hall Kinion and Kforce may be subject to other material risks, including:

•

a negative effect on the stock trading price of Hall Kinion common stock and Kforce common stock to the extent that the current market price reflects a market assumption that the merger will be completed;

•

either party may be required to pay a termination fee — see “The Merger Agreement — Termination Fees” beginning on page 78 of this joint proxy statement/prospectus for a discussion of the termination fees; and

•

costs related to the merger, such as legal and accounting fees, must be paid even if the merger is not completed.

Certain of Hall Kinion’s officers and directors have interests different from yours that may influence them to support or approve the merger.

Certain directors and officers of Hall Kinion have pre-existing arrangements that may result in the realization of interests in the merger that are different from, or in addition to, yours, including the following:

•

because the merger will result in a sale and change of control of Hall Kinion, certain stock options held by Hall Kinion’s directors and officers will accelerate and immediately vest upon a change of control;

•

under existing Hall Kinion employment and similar agreements, and/or as confirmed in termination letter agreements, certain severance payments will be triggered as a result of the merger;

•

in the case of Brenda C. Rhodes, certain payments of compensation otherwise owed to her will be accelerated as a result of the merger; and

•

in the case of Ms. Rhodes and Rita S. Hazell, the forgiveness of certain outstanding indebtedness will be accelerated.

In addition, the following arrangements have been entered into in connection with the merger:

•

Kforce has agreed to cause the surviving corporation in the merger to indemnify each present and former Hall Kinion officer and director against liabilities arising out of such person’s services as an officer or director of Hall Kinion prior to the merger to the same extent as is currently available under Hall Kinion’s certificate of incorporation and bylaws; and

•

Kforce has agreed to cause the surviving corporation to maintain officers’ and directors’ liability insurance to cover any such liabilities for five years following the merger at a cost not to exceed $1.0 million.

For the above reasons, the directors and officers of Hall Kinion may have been more likely to support and recommend the approval of the merger agreement than if they did not hold these interests. As of December 2, 2003, Hall Kinion directors and executive officers beneficially held approximately 30.2% of the outstanding shares of Hall Kinion common stock. Hall Kinion stockholders should consider whether these interests may have influenced these directors and officers to support or recommend the merger. You should read more about these interests under “Interests of Certain Persons in Merger — Interests of Hall Kinion Directors and Officers” beginning on page 83.

Uncertainty regarding the merger and the effects of the merger could cause each company’s customers or strategic partners to delay or defer decisions.

Kforce’s and/or Hall Kinion’s customers and strategic partners, in response to the announcement of the merger, may delay or defer decisions regarding the use of the combined company’s services, which could have a material adverse effect on the business of the combined company or the relevant company if the merger is not completed.

Hall Kinion could lose an opportunity to enter into a merger or business combination with another party on more favorable terms as the merger agreement restricts Hall Kinion from soliciting such proposals.

While the merger agreement is in effect, subject to certain limited exceptions, Hall Kinion is restricted from entering into or soliciting, initiating or encouraging any inquiries or proposals that may lead to a proposal or offer for a merger with any persons other than Kforce. As a result of the restriction, Hall Kinion may lose an opportunity to enter into a transaction with another potential partner on more favorable terms. If Hall Kinion terminates the merger agreement to enter into another transaction, Hall Kinion likely would be required to pay a termination fee to Kforce that may make an otherwise more favorable transaction less favorable. See “The Merger Agreement — Termination Fees” of this joint proxy statement/prospectus beginning on page 78. In addition, if the merger agreement is terminated and the Hall Kinion board of directors determines that it is in the best interests of the Hall Kinion stockholders to seek a merger or business combination with another strategic partner, Hall Kinion cannot assure you that it will be able to find a partner offering terms equivalent or more attractive than the price and terms offered by Kforce.

Kforce and Hall Kinion may not be able to obtain the required regulatory approvals for completion of the merger.

Kforce and Hall Kinion cannot complete the merger until they give notification and furnish information to the Federal Trade Commission and the Antitrust Division of the Department of Justice and observe a statutory waiting period requirement. Kforce and Hall Kinion filed the required notification and report forms with the Federal Trade Commission and the Antitrust Division on December 17, 2003. At any time before or after the effective time of the merger, the Federal Trade Commission, the Antitrust Division or any state or competition authority of another country could take any action under the applicable antitrust or competition laws as it deems necessary or desirable. This action could include seeking to enjoin the completion of the merger. Private parties may also institute legal actions under the antitrust laws under some circumstances.

In considering the opinion by Baird to the Hall Kinion board of directors regarding the fairness of the exchange ratio, stockholders should be aware of potential conflicts of interest affecting Baird.

Baird was retained by Hall Kinion to act as its financial advisor for the proposed merger between Kforce and Hall Kinion. Hall Kinion stockholders should consider the potential conflict of interest in Baird representing

Hall Kinion when reviewing Baird’s opinion to the Hall Kinion board regarding the fairness of the exchange ratio. A significant portion of the fees related to the financial advisory services of Baird to Hall Kinion in connection with the proposed combination is contingent upon the consummation of the proposed merger and upon the total enterprise value. Baird has also performed investment banking services for Hall Kinion and for Kforce in the past.

Risks Relating to the Business and Operations of Kforce Following the Merger

The recent economic downturn has adversely affected the demand for our services.

Historically, the general level of economic activity has significantly affected the demand for employment services. As economic activity slows, the use of temporary and contract personnel tends to be curtailed before permanent employees are laid off. The recent economic downturn adversely affected the demand for temporary and contract personnel, which in turn had an adverse effect on our results of operations and our financial condition. Additionally, the use of search firms for permanent hires declined significantly. We expect that future economic downturns will continue to have similar effects. The recent economic downturn resulted in lessened demand for our services. There can be no assurance that demand will return to prior levels, and demand may continue to deteriorate.

In 2002 and a substantial portion of 2003 we experienced a continuation of the economic slowdown in the IT industry that reflected a slowdown in the rate of innovation in this industry and a general reduction in demand for personnel with expertise in leading hardware, software or networking technologies. It reduced the demand for our services. Reduction in demand for our services had a material negative impact on our business, operating results and financial condition.

In the real estate services industry we serve, the demand for professional personnel is strongly influenced by the volume of mortgage financing, both for new units and re-financings. The volume is very sensitive to interest rates and other general economic conditions. Increases in interest rates could have a significant negative impact on our business in this field.

Our liquidity may be adversely impacted by covenants in our credit facility.

In 2002, we amended the terms of our credit facility and increased our borrowing capacity to $100 million with a syndicate of four banks lead by Bank of America. We had approximately $22.0 million outstanding under this credit facility as of September 30, 2003. If the amount borrowed under this credit facility exceeds certain amounts, then a number of financial covenants become applicable. As of September 30, 2003, we had an additional $17.4 million of borrowing available without triggering these financial covenants. At no time during the existence of the credit facility have we ever triggered such covenants. If we were to trigger such financial covenants in the future and if we do not comply with them, such a breach of the credit facility covenants could materially adversely affect our liquidity and financial condition. Such lack of compliance could result, among other things, in the acceleration of all amounts borrowed under the credit facility.

We may not be able to recruit and retain qualified personnel.

We depend upon our ability to attract and retain personnel, particularly technical and professional personnel, who possess the skills and experience necessary to meet the staffing requirements of our clients. We must continually evaluate and upgrade our base of available qualified personnel to keep pace with changing client needs and emerging technologies. We expect competition for individuals with proven technical or professional skills for the foreseeable future. If qualified personnel are not available to us in sufficient numbers and upon economic terms acceptable to us, it could have a material detrimental effect on our business.

Our business, operating results and financial condition could be negatively impacted if demand for our services in any new geographic markets we enter is less than we anticipate, if our new offices are not profitable in a timely manner or if we fail to hire qualified employees.

Our growth depends in part on our ability to enter new vertical or geographic markets successfully. This expansion is dependent on a number of factors, including our ability to:

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develop, recruit and maintain a base of qualified professionals within a new geographic market;

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initiate, develop and sustain corporate client relationships in each new vertical or geographic market;

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attract, hire, integrate and retain qualified sales and sales support employees; and

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accurately assess the demand of a new market.

The addition of offices and entry into new geographic markets may not occur on a timely basis or achieve anticipated financial results. The addition of new offices and entry into new vertical or geographic markets typically result in increases in operating expenses, primarily due to increased employee headcount. Expenses are incurred in advance of forecasted revenue, and there is typically a delay before our new employees reach full productivity. Additionally, demand for our services in new markets that we enter might also be less than we anticipate. If we are unable to enter new vertical or geographic markets in a cost-effective manner or if demand for our services in new markets does not meet or exceed our forecasts, our business, operating results and financial condition could be negatively impacted. In 2001, 2002 and March 2003, we closed and consolidated offices to improve efficiency, and further closures or consolidation may occur depending on market and competitive conditions.

Our current market share may decrease as a result of limited barriers to entry by new competitors and our clients’ discontinuation of outsourcing their staffing needs.

We face significant competition in the markets we serve, and there are limited barriers to entry by new competitors. The competition among staffing services firms is intense. We compete for potential clients with providers of outsourcing services, systems integrators, computer systems consultants, other providers of staffing services, temporary personnel agencies, and search firms. A number of our competitors possess substantially greater resources than we do. From time to time we have experienced significant pressure from our clients to reduce price levels. During these periods, we may face increased competitive pricing pressures and may not be able to recruit the personnel necessary to fill our clients’ needs. We also face the risk that certain of our current and prospective clients will decide to provide similar services internally. There can be no assurance that we will continue to successfully compete.

We do not provide an “offshore” outsourcing solution.

Many staffing customers are now seeking an “offshore” solution to support their technology and business process function and as a result, a significant amount of technology and financial staffing may be replaced by “offshore” resources. We do not currently provide an “offshore” program and there can be no assurance that we will be able to compete successfully against the “offshore” solution providers or that we will not lose significant market share and revenue.

We rely on short-term contracts with most of our clients.

Because long-term contracts are not a significant part of our business, future results cannot be reliably predicted by considering past trends or extrapolating past results.

Decreases in patient occupancy at our healthcare clients’ facilities may adversely affect the profitability of our business.

Demand for our temporary healthcare staffing services is significantly affected by the general level of patient occupancy at our healthcare clients’ facilities. When a hospital’s occupancy increases, temporary employees are often added before full-time employees are hired. As occupancy decreases, clients may reduce their use of temporary employees before undertaking layoffs of their regular employees. We also may experience more competitive pricing pressure during periods of occupancy downturn. This reduction in occupancy could adversely affect the demand for our services and our profitability. There has been a significantly lessened demand for our healthcare staffing services in recent years. There can be no assurance that such demand will return to prior levels.

Competition for acquisition opportunities may restrict our future growth by limiting our ability to make acquisitions at reasonable valuations.

Our business strategy includes increasing our market share and presence in the staffing industry through strategic acquisitions of companies that complement or enhance our business. We have historically faced competition for acquisitions. In the future, this could limit our ability to grow by acquisitions or could raise the prices of acquisitions and make them less accretive or non-accretive to us. In addition, if we are unable to secure necessary financing to consummate an acquisition, we may be unable to complete desirable acquisitions.

We may face difficulties integrating future acquisitions into our operations and future acquisitions may be unsuccessful, involve significant cash expenditures or expose us to unforeseen liabilities.

We continually evaluate opportunities to acquire staffing companies that complement or enhance our business and frequently have preliminary acquisition discussions with some of these companies.

These acquisitions involve numerous risks, including:

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potential loss of key employees or clients of acquired companies;

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difficulties integrating acquired personnel and distinct cultures into our business;

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diversion of management attention from existing operations; and

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assumption of liabilities and exposure to unforeseen liabilities of acquired companies.

These acquisitions may also involve significant cash expenditures, debt incurrence and integration expenses that could have a material adverse effect on our financial condition and results of operations. Any acquisition may ultimately have a negative impact on our business and financial condition.

We depend on the proper functioning of our information systems.

We are dependent on the proper functioning of our information systems in operating our business. Our critical information systems used in our daily operations identify and match staffing resources and client assignments and perform billing and accounts receivable functions. Our information systems are protected through physical and software safeguards and we have backup remote processing capabilities. They are still vulnerable, however, to hurricanes, other storms, flood, fire, terrorist acts, earthquakes, power loss, telecommunications failures, physical or software break-ins, computer viruses and similar events. If our critical information systems fail or are otherwise unavailable, we would have to accomplish these functions manually, which could temporarily impact our ability to identify business opportunities quickly, to maintain billing and clinical records reliably, and to bill for services efficiently. In addition, we depend on third party vendors for certain functions whose future performance and reliability we can not warranty.

Our success depends upon retaining the services of our management team.

We are highly dependent on our management team. We expect that our continued success will largely depend upon the efforts and abilities of members of our management team. The loss of services of any key executive for any reason could have a material adverse effect upon us. Our success also depends upon our ability to identify, develop, and retain qualified operating employees, particularly management, client servicing, and candidate recruiting employees. We expend significant resources in recruiting and training our employees, and the pool of available applicants for these positions is limited. The loss of some of our operating management and client servicing and candidate recruiting employees could have an adverse effect on our operations, including our ability to establish and maintain client, candidate and professional and technical personnel relationships.

We face significant employment liability risk.

We employ and place people in the workplaces of other businesses. An inherent risk of such activity includes possible claims of errors and omissions, misuse of client proprietary information, misappropriation of funds, discrimination and harassment, employment of illegal aliens, theft of client property, other criminal activity, or torts and other claims. We have policies and guidelines in place to reduce our exposure to such risks. However, failure of any employee or personnel to follow these policies and guidelines may result in negative publicity, injunctive relief, and the payment by us of monetary damages or fines, or have other material adverse effects upon our business. Moreover, we could be held responsible for the actions at a workplace of persons not under our immediate control. To reduce our exposure, we maintain insurance covering general liability, workers’ compensation claims, errors and omissions, and employee theft. Due to the nature of our assignments, in particular, access to client information systems and confidential information, and the potential liability with respect thereto, we might not be able to obtain insurance coverage in amounts adequate to cover any such liability on acceptable terms. In addition, we face various employment-related risks not covered by insurance, such as wage laws and employment tax responsibility.

Significant legal actions, particularly relating to our healthcare staffing services, could subject us to substantial uninsured liabilities.

In recent years, healthcare providers have become subject to an increasing number of legal actions alleging malpractice, product liability or related legal theories. Many of these actions involve large claims and significant defense costs. In addition, we may be subject to claims related to torts or crimes committed by our employees or temporary staffing personnel. In some instances, we are required to indemnify clients against some or all of these risks. A failure of any of our employees or personnel to observe our policies and guidelines intended to reduce these risks, relevant client policies and guidelines or applicable federal, state or local laws, rules and regulations could result in negative publicity, payment of fines or other damages. To protect ourselves from the cost of these claims, we maintain professional malpractice liability insurance and general liability insurance coverage in amounts and with deductibles that we believe are appropriate for our operations. Our insurance coverage, however, may not cover all claims against us or continue to be available to us at a reasonable cost. If we are unable to maintain adequate insurance coverage, we may be exposed to substantial liabilities.

Currently we are unable to recruit enough nurses to meet our clients’ demands for our nurse staffing services, limiting the potential growth of our healthcare staffing business.

We rely on our ability to attract, develop, and retain nurses and other healthcare personnel who possess the skills, experience and, as required, licensure necessary to meet the specified requirements of our healthcare staffing clients. We compete for healthcare staffing personnel with other temporary healthcare staffing companies, as well as actual and potential clients, some of which seek to fill positions with either regular or temporary employees. Currently, there is a shortage of qualified nurses in most areas of the United States and competition for nursing personnel is increasing. At this time we do not have enough nurses to meet our clients’ demands for our nurse staffing services. This shortage of nurses limits our ability to grow our healthcare staffing business. Furthermore, we believe that the aging of the existing nurse population and declining enrollments in

nursing schools will result in further competition for qualified nursing personnel. Nurse staffing revenues have declined substantially over the past years and there can be no assurance that such revenues will return to prior levels.

If we become subject to material liabilities under our self-insured programs, our financial results may be adversely affected.

We provide workers compensation coverage through a program that is partially self-insured. In addition, we provide medical coverage to our employees through a partially self-insured preferred provider organization. If we become subject to substantial uninsured workers compensation or medical coverage liabilities, our financial results may be adversely affected.

We may be adversely affected by government regulation of the staffing business.

Our business is subject to regulation and licensing in many states. While we have had no material difficulty complying with regulations in the past, there can be no assurance that we will be able to continue to obtain all necessary licenses or approvals or that the cost of compliance will not prove to be material. If we fail to comply such failure could materially adversely affect Kforce.

We may be adversely affected by government regulation of the workplace.

Part of our business entails employing individuals on a temporary basis and placing such individuals in client’s workplaces. Increased government regulation of the workplace or of the employer-employee relationship could materially adversely affect us.

Adverse results in tax audits could result in significant cash expenditures or exposure to unforeseen liabilities.

We are subject to periodic federal, state and local income tax audits for various tax years. Although we attempt to comply with all taxing authority regulations, adverse findings or assessments made by the taxing authorities as the result of an audit could materially adversely affect us.

Future changes in reimbursement trends could hamper our clients’ ability to pay us.

Many of our healthcare clients are reimbursed under the federal Medicare program and state Medicaid programs for the services they provide. In recent years, federal and state governments have made significant changes in these programs that have reduced government rates. In addition, insurance companies and managed care organizations seek to control costs by requiring that healthcare providers, such as hospitals, discount their services in exchange for exclusive or preferred participation in their benefit plans. Future federal and state legislation or evolving commercial reimbursement trends may further reduce, or change conditions for, our clients’ reimbursement. Limitations on reimbursement could reduce our clients’ cash flow, hampering their ability to pay us. This situation could have a significant impact on our cash flow.

Our stock price may be volatile.

Our common stock is traded on the Nasdaq National Market under the symbol “KFRC.” The market price of our stock has fluctuated substantially in the past and could fluctuate substantially in the future, based on a variety of factors, including our operating results, changes in general conditions in the economy, the financial markets, the employment services industry, or other developments affecting us, our clients, or our competitors, some of which may be unrelated to our performance. Those fluctuations and demand for our services may adversely affect the price of our stock. It is possible that the stock price may reach a level where we lose our eligibility to remain listed on the Nasdaq National Market.

In addition, the stock market in general, especially the Nasdaq National Market tier along with market prices for staffing companies, have experienced volatility that has often been unrelated to the operating performance of these companies. These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our operating results.

Among other things, volatility in our stock price could mean that investors will not be able to sell their shares at or above the prices which they pay. The volatility also could impair our ability in the future to offer common stock as a source of additional capital or as consideration in the acquisition of other businesses.

Significant increases in payroll-related costs could adversely affect our business.

We are required to pay a number of federal, state, and local payroll and related costs, including unemployment taxes, workers’ compensation and insurance, FICA, and Medicare, among others, for our employees and personnel. Significant increases in the effective rates of any payroll related costs likely would have a material adverse effect upon us. Our costs could also increase as a result of health care reforms or the possible imposition of additional requirements and restrictions related to the placement of personnel. Recent federal and state legislative proposals have included provisions extending health insurance benefits to personnel who currently do not receive such benefits. We may not be able to increase the fees charged to our clients in a timely manner and in a sufficient amount to cover increased costs, if any such proposals are adopted.

Provisions in our articles, bylaws, and under Florida law may have certain anti-takeover effects.

Our articles of incorporation and bylaws and Florida law contain provisions that may have the effect of inhibiting a non-negotiated merger or other business combination. In particular, our articles of incorporation provide for a staggered board of directors and permit the removal of directors only for cause. Additionally, management may issue up to 15 million shares of preferred stock, and fix the rights and preferences thereof, without a further vote of the shareholders. In addition, certain of our officers have employment agreements containing certain provisions that call for substantial payments to be made to such officers upon any change in control. Certain of these provisions may discourage a future acquisition of Kforce, including an acquisition in which shareholders might otherwise receive a premium for their shares. As a result, shareholders who might desire to participate in such a transaction may not have the opportunity to do so. Moreover, the existence of these provisions may have a depressive effect on the market price of our common stock.

THE KFORCE SPECIAL MEETING

This joint proxy statement/prospectus is being furnished to you as part of the solicitation of proxies by the Kforce board of directors for use at the special meeting of Kforce shareholders to be held on March 11, 2004 and at any adjournment or postponement of the meeting. We are first mailing this joint proxy statement/prospectus, this notice of special meeting of shareholders and the enclosed proxy card to you on or about February , 2004.

Time and Place of the Special Meeting

The Kforce special meeting will be held at Kforce’s corporate headquarters located at 1001 East Palm Avenue, Tampa, Florida 33605, on March 11, 2004 at 10:00 a.m., local time.

Purpose of the Special Meeting

At the special meeting you will be asked to consider and approve a proposal to issue shares of Kforce common stock pursuant to the Agreement and Plan of Merger, dated as of December 2, 2003, as amended, by and among Kforce, Novato Acquisition Corporation, a wholly-owned subsidiary of Kforce, and Hall Kinion, pursuant to which Novato Acquisition Corporation will merge with and into Hall Kinion, with Hall Kinion as the surviving corporation. As a result of the merger, Hall Kinion will become a wholly-owned subsidiary of Kforce. In the merger, Hall Kinion stockholders will receive, in exchange for shares of Hall Kinion common stock, an aggregate amount of fully paid and nonassessable shares of Kforce common stock based upon the exchange ratio. The exchange ratio is dependent on the Kforce stock market value. The Kforce stock market value is the average of the per share closing prices of Kforce’s common stock on the Nasdaq National Market over the 15 consecutive trading days ending on and including the third trading day prior to the date of the merger. If the Kforce stock market value is equal to or greater than $7.09, but less than $9.60, then the exchange ratio will equal .60, which results in Hall Kinion stockholders receiving between $55.0 million and $75.0 million in Kforce common stock. The collar around the .60 exchange ratio represents a 15% increase and a 15% decrease in the $8.34 closing price of Kforce common stock on December 1, 2003, the day immediately prior to the execution of the merger agreement. If the Kforce stock market value is equal to or greater than $9.60, then the exchange ratio will be $5.75 divided by the Kforce stock market value. If the Kforce stock market value is less than $7.09, then the exchange ratio will be $4.25 divided by the Kforce stock market value.

Kforce knows of no other matters to be brought before the special meeting. If any matter incident to the conduct of the special meeting should be brought before the meeting, the persons named in the proxy card will vote in their discretion.

Board of Directors Recommendation

The Kforce board of directors has unanimously approved and adopted the merger agreement and the merger, has deemed them advisable and recommends a vote “FOR” approval of the issuance of shares of Kforce common stock pursuant to the merger agreement.

Record Date; Stock Entitled to Vote; Quorum

The Kforce board of directors has fixed the close of business on February 9, 2004 as the record date for the special meeting. Only holders of Kforce common stock on the record date will be entitled to vote at the special meeting and any adjournments or postponements thereof. At the record date, shares of Kforce common stock were outstanding and entitled to vote and were held by approximately shareholders of record.

The presence, in person or by proxy, of a majority of the outstanding shares of Kforce common stock is necessary to constitute a quorum at the special meeting. Abstentions and broker non-votes will be included in the determination of shares present at the special meeting for purposes of determining a quorum. Properly executed

proxies marked “abstain” will be deemed present for purposes of determining whether a quorum has been achieved. Proxies held by brokers in “street name” that are not voted on all proposals to come before the meeting shall also be deemed “present.”

Required Vote

Approval of the issuance of shares of Kforce common stock pursuant to the merger agreement requires the affirmative vote of at least a majority of the votes cast by the holders of Kforce common stock (in person or by proxy) at the special meeting. Failure to vote, abstentions and broker “non-votes” will not be deemed to be cast either “FOR” or “AGAINST” the issuance of shares of Kforce common stock pursuant to the merger agreement. However, because approval of the issuance of shares of Kforce common stock pursuant to the merger agreement requires only a majority of the votes cast at the special meeting, the failure to submit a proxy card or to vote in person at the special meeting, abstentions by a stockholder and broker non-votes all will have the effect of reducing the number of affirmative votes required to approve the issuance of shares of Kforce common stock in the merger.

Voting Agreements

Each of David L. Dunkel, Richard M. Cocchiaro, Joseph J. Liberatore, Ken W. Pierce, William L. Sanders and Howard W. Sutter, each a director and/or executive officer of Kforce, who as of December 19, 2003, beneficially owned shares of Kforce common stock representing approximately 31.59% of the voting power of Kforce, has entered into a voting agreement with Hall Kinion in which he has agreed to vote (i) in favor of the approval of the merger agreement, (ii) against any action that would result in any of the conditions of Hall Kinion’s obligations under the merger agreement not being fulfilled, (iii) against any action that would result in a breach by Kforce of any its covenants, representations or warranties under the merger agreement, and (iv) against the election of a group of individuals to replace a majority or more of the individuals on the Kforce board of directors. A form of Kforce voting agreement is attached to this joint proxy statement/prospectus as part of Annex A. You should read it in its entirety.

Proxies; Voting and Revocation

All shares of Kforce common stock represented by properly executed proxy cards received in time for the special meeting will be voted at the special meeting in the manner specified in such proxies. Shares of Kforce common stock represented by properly executed proxy cards that do not contain voting instructions with respect to approval of the issuance of shares of Kforce common stock pursuant to the merger agreement will be voted “FOR” approval of the issuance of shares of Kforce common stock pursuant to the merger agreement.

You may revoke or change your proxy at any time prior to it being voted by filing a written instrument of revocation or change with the corporate secretary of Kforce. You may also revoke your proxy by filing a duly executed proxy bearing a later date or by appearing at the special meeting in person, notifying the corporate secretary and voting by ballot at the special meeting. If you attend the special meeting, you may vote in person whether or not you have previously given a proxy, but your presence at the special meeting, without notifying the corporate secretary of Kforce, will not revoke a previously given proxy. In addition, if you beneficially hold shares of Kforce common stock that are not registered in your own name, you will need additional documentation from the record holder of such shares to attend and vote the shares personally at the special meeting. For further information on how to vote your shares, please contact Michael Blackman, Investor Relations, Kforce Inc., 1001 East Palm Avenue, Tampa, Florida 33605, at (813) 552-5000.

Solicitation of Proxies

Proxies will be solicited through the mail and directly by officers, directors and employees of Kforce not specifically employed for such purpose, without additional compensation. In addition to solicitation by mail,

Kforce’s directors, officers and employees may solicit proxies by telephone, fax, telegram, via the internet or in person. Kforce will reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding these proxy materials to the principals.

Stockholder Proposals For 2004 Annual Meeting

According to Rule 14a-8 under the Securities Exchange Act of 1934, some shareholder proposals may be eligible for inclusion in Kforce’s proxy statement for consideration at the 2004 annual meeting of shareholders. Any such proposal must be submitted in writing to William L. Sanders, Corporate Secretary, Kforce Inc., 1001 East Palm Avenue, Tampa, Florida 33605, by no later than March 18, 2004 to be included in the proxy statement for that meeting and must comply with the requirements of Rule 14a-8 of the Securities Exchange Act. However, if the date of the 2004 annual meeting of shareholders is changed by more than 30 days from the date of the previous year’s meeting, then the deadline is a reasonable time before Kforce begins to print and mail its proxy materials. Shareholders interested in submitting such a proposal are advised to contact knowledgeable counsel with regard to the detailed requirements of the applicable securities law.

The submission of a shareholder proposal or nomination that a shareholder seeks to include in Kforce’ proxy statement pursuant to Rule 14a-8 may be delivered to the corporate secretary of Kforce not less than 60 days prior to the date of an annual meeting, unless notice or public disclosure of the date of the meeting occurs less than 70 days prior to the date of such meeting, in which event, shareholders may deliver such notice not later than the 10th day following the day on which notice of the date of the meeting was mailed or public disclosure thereof was made. A shareholder’s submission must include certain specific information concerning the proposal or nominee, as the case may be, information as to the shareholder’s ownership of common stock of Kforce, and information relating to any financial interest the shareholder may have in the proposal, if any. Proposals or nominations not meeting these requirements will not be entertained at the annual meeting.

Rights of Appraisal

No Kforce shareholder will have appraisal rights in connection with the approval of the merger.

THE HALL KINION SPECIAL MEETING

This joint proxy statement/prospectus is being furnished to you as part of the solicitation of proxies by the Hall Kinion board of directors for use at the special meeting of Hall Kinion stockholders to be held on March 11, 2004 and at any adjournment or postponement of the meeting. We are first mailing this joint proxy statement/prospectus, this notice of special meeting of stockholders, the accompanying Form 10-K and Form 10-Q of Hall Kinion and the enclosed proxy card to you on or about February , 2004.

Time and Place of the Special Meeting

The Hall Kinion special meeting will be held at the law offices of Gibson, Dunn & Crutcher LLP located at One Montgomery Street, Suite 3100, San Francisco, California 94104 on March 11, 2004 at 11:00 a.m., local time.

Purpose of the Special Meeting

At the special meeting, you will be asked to consider and approve a proposal to adopt the Agreement and Plan of Merger, dated as of December 2, 2003, as amended, by and among Kforce, Novato Acquisition Corporation, a wholly-owned subsidiary of Kforce, and Hall Kinion, pursuant to which Novato Acquisition Corporation will merge with and into Hall Kinion, with Hall Kinion as the surviving corporation. As a result of the merger, Hall Kinion will become a wholly-owned subsidiary of Kforce. In the merger, Hall Kinion stockholders will receive, in exchange for shares of Hall Kinion common stock, an aggregate amount of fully paid and nonassessable shares of Kforce common stock based upon the exchange ratio. The exchange ratio is dependent on the Kforce stock market value. The Kforce stock market value is the average of the per share closing prices of Kforce’s common stock on the Nasdaq National Market over the 15 consecutive trading days on and including the third trading day prior to the date of the merger. If the Kforce stock market value is equal to or greater than $7.09, but less than $9.60, then the exchange ratio will equal .60, which results in Hall Kinion stockholders receiving between $55.0 million and $75.0 million in Kforce common stock. The collar around the .60 exchange ratio represents a 15% increase and a 15% decrease in the $8.34 closing price of Kforce common stock on December 1, 2003, the day immediately prior to the execution of the merger agreement. If the Kforce stock market value is equal to or greater than $9.60, then the exchange ratio will be $5.75 divided by the Kforce stock market value. If the Kforce stock market value is less than $7.09, then the exchange ratio will be $4.25 divided by the Kforce stock market value.

Hall Kinion knows of no other matters to be brought before the special meeting. If any matter incident to the conduct of the special meeting should be brought before the meeting, the persons named in the proxy card will vote in their discretion.

Board of Directors Recommendation

The Hall Kinion board of directors has unanimously approved and adopted the merger agreement and the merger, has deemed them advisable and recommends a vote “FOR” approval of the merger and adoption of the merger agreement.

Record Date; Stock Entitled to Vote; Quorum

The Hall Kinion board of directors has fixed the close of business on February 2, 2004 as the record date for the special meeting. Only holders of Hall Kinion common stock on the record date will be entitled to vote at the special meeting and any adjournments or postponements thereof. At the record date, 12,589,429 shares of Hall Kinion common stock were outstanding and entitled to vote and were held by approximately 58 stockholders of record.

The presence, in person or by proxy, of a majority of the outstanding shares of Hall Kinion common stock is necessary to constitute a quorum at the special meeting. Abstentions and broker non-votes will be included in the determination of shares present at the special meeting for purposes of determining a quorum.

Required Vote

Approval of the merger and adoption of the merger agreement requires the affirmative vote of the holders of a majority of the shares of Hall Kinion common stock outstanding on the record date. Failure to vote, abstentions and broker “non-votes” will not be deemed to be cast either “FOR” or “AGAINST” the merger agreement and the merger. However, because approval of the merger and adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Hall Kinion common stock, the failure to submit a proxy card or to vote in person at the special meeting, abstentions by a stockholder and broker non-votes all will have the same effect as a vote “AGAINST” the merger agreement and the merger. Approval and adoption of the merger agreement will also constitute approval of the merger and the other transactions contemplated by the merger agreement.

All other matters presented for approval at the special meeting will require the affirmative vote of the holders of a majority of the outstanding shares of Hall Kinion common stock present in person or represented by proxy at the Hall Kinion special meeting and entitled to vote. As a result, with respect to the other matters, if any, presented for approval at the special meeting, the failure to submit a proxy card or to be present in person at the special meeting, and any broker non-vote, all will reduce the number of affirmative votes required to approve such matters. Abstentions by a stockholder will have the same effect as a vote against such other matters.

Statement of Shares held by Directors and Officers; Voting Agreements

As of December 2, 2003, Hall Kinion directors and executive officers and their affiliates owned approximately 30.2% of the outstanding shares of Hall Kinion common stock. Each of Brenda C. Rhodes, Jeffrey A. Evans, Herbert I. Finkelman, Rita S. Hazell, Todd J. Kinion, Martin A. Kropelnicki, Jon H. Rowberry, Jack F. Jenkins-Stark and Michael S. Stein, each a director and/or executive officer of Hall Kinion, who beneficially own shares of Hall Kinion common stock representing approximately 30.2% of the voting power of Hall Kinion, has entered into a voting agreement with Kforce in which he or she has agreed to vote (i) in favor of the approval of the merger agreement, (ii) against any action that would result in any of the conditions of Kforce’s obligations under the merger agreement not being fulfilled, (iii) against any action that would result in a breach by Hall Kinion of any its covenants, representations or warranties under the merger agreement, and (iv) against (A) any third party acquisition proposal, or (B) the election of a group of individuals to replace a majority or more of the individuals on the Hall Kinion board of directors. A form of Hall Kinion voting agreement is attached to this joint proxy statement/prospectus as part of Annex A. You should read it in its entirety.

Proxies; Voting and Revocation

All shares of Hall Kinion common stock represented by properly executed proxy cards received in time for the special meeting will be voted at the special meeting in the manner specified in such proxies. Shares of Hall Kinion common stock represented by properly executed proxy cards that do not contain voting instructions with respect to approval of the merger and adoption of the merger agreement will be voted “FOR” approval of the merger and adoption of the merger agreement.

You may revoke or change your proxy at any time prior to its being voted by filing a written instrument of revocation or change with the corporate secretary of Hall Kinion. You may also revoke your proxy by filing a duly executed proxy bearing a later date or by appearing at the special meeting in person, notifying the corporate secretary and voting by ballot at the special meeting. If you attend the special meeting, you may vote in person whether or not you have previously given a proxy, but your presence at the special meeting, without notifying the corporate secretary of Hall Kinion, will not revoke a previously given proxy. In addition, if you beneficially hold

shares of Hall Kinion common stock that are not registered in your own name, you will need additional documentation from the record holder of such shares to attend and vote the shares personally at the special meeting. For further information on how to vote your shares, please contact Martin A. Kropelnicki, Vice President, Chief Financial Officer and Secretary, Hall, Kinion & Associates, Inc., 75 Rowland Way, Suite 200, Novato, California 94945, at (415) 895-2200.

Solicitation of Proxies

Proxies will be solicited through the mail and directly by officers, directors and employees of Hall Kinion not specifically employed for such purpose, without additional compensation. In addition to solicitation by mail, Hall Kinion’s directors, officers and employees may solicit proxies by telephone, fax, telegram, via the internet or in person. Hall Kinion will reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding these proxy materials to the principals.

Stockholder Proposals

If the merger is not completed, or if Hall Kinion elects to hold its 2004 annual meeting of stockholders before the merger is completed, Hall Kinion stockholders may present proposals for inclusion in Hall Kinion’s proxy statement for consideration at the 2004 annual meeting by submitting them in writing to the offices of Hall Kinion at 75 Rowland Way, Suite 200, Novato, California 94945 by no later than March 2, 2004. Proposals generally must comply with the requirements of Rule 14a-8 of the Securities Exchange Act. If the date of the 2004 annual meeting changes by more than 30 days, the proposal must have been received at Hall Kinion’s offices a reasonable time before Hall Kinion begins to print and mail its proxy materials. Stockholders interested in submitting such a proposal are advised to contact knowledgeable counsel with regard to the detailed requirements of the applicable securities law.

Rights of Appraisal

No Hall Kinion stockholder will have appraisal rights in connection with the merger.

THE MERGER

This section of the joint proxy statement/prospectus and the next section entitled “The Merger Agreement” beginning on page 66 describes the proposed merger. Although Kforce and Hall Kinion believe that the description in this section covers the material terms of the merger and the related transactions, this summary may not contain all of the information that is important to you. You should carefully read this entire joint proxy statement/prospectus and the other documents referred to in this joint proxy statement/prospectus for a more complete understanding of the merger.

General

The merger agreement, as amended, provides that, at the effective time of the merger, Novato Acquisition Corporation, a wholly-owned subsidiary of Kforce, will merge with and into Hall Kinion, with Hall Kinion continuing in existence as the surviving corporation. Hall Kinion stockholders will receive, in exchange for shares of Hall Kinion common stock, an aggregate amount of fully paid and nonassessable shares of Kforce common stock based upon the exchange ratio. The exchange ratio is dependent on the Kforce stock market value. The Kforce stock market value is the average of the per share closing prices of Kforce common stock on the Nasdaq National Market over the 15 consecutive trading days on and including the third trading day prior to the date of the merger. If the Kforce stock market value is equal to or greater than $7.09, but less than $9.60, then the exchange ratio will equal .60, which will result in Hall Kinion stockholders receiving between $54.6 and $74.4 million in Kforce common stock. The collar around the .60 exchange ratio represents a 15% increase and a 15% decrease in the $8.34 closing price of Kforce common stock on December 1, 2003, the day immediately prior to the execution of the merger agreement. If the Kforce stock market value is equal to or greater than $9.60, then the exchange ratio will be $5.75 divided by the Kforce stock market value, which will result in Hall Kinion stockholders receiving no less than approximately $74.4 million. If the Kforce stock market value is less than $7.09, then the exchange ratio will be $4.25 divided by the Kforce stock market value, which will result in Hall Kinion stockholders receiving no more than approximately $54.6 million. Upon completion of the merger, Hall Kinion will be a wholly-owned subsidiary of Kforce and market trading of Hall Kinion common stock will cease.

Background of the Merger

During the past three years, Hall Kinion has experienced a substantial reduction in revenues, primarily as a result of the downturn in the high technology business sector, which had been the historical focus of Hall Kinion’s business. Revenues for the year ended December 31, 2000 were approximately $296.0 million compared to revenues for the year ended December 31, 2002 of $120.0 million, a decrease of about 59%. As a result, Hall Kinion has taken actions to reduce costs in order to match revenues and expenses. Although the acquisition of OnStaff in 2002 resulted in a substantial increase in revenue during the first nine months of 2003, OnStaff revenues have recently declined as a result of the increase in interest rates and concurrent decline in home mortgage refinancings. During recent years, the costs of being a public company have significantly increased. Hall Kinion management as well as the Hall Kinion board of directors believed it would be a significant challenge to finance both short-term and long-term growth and maintain satisfactory levels of profitability at current revenue levels to ensure stockholder value. As a result of these and other factors, the Hall Kinion board of directors concluded that it was in the best interests of Hall Kinion stockholders for Hall Kinion to seek a merger with a larger company that could finance growth from the combination of the companies and achieve synergies from the integration of the companies’ executive, general and other administrative functions.

In March 2003, management of Hall Kinion was authorized by the Hall Kinion board of directors to negotiate an agreement with Baird to act as a financial advisor to Hall Kinion. While Baird’s engagement included seeking additional equity capital for Hall Kinion or a joint venture, its efforts were focused on locating a potential acquiror for all or a substantial portion of Hall Kinion’s business. In March 2003, management held initial meetings with Baird to discuss the marketing process and negotiated the terms of Baird’s engagement.

During early April 2003, Baird began making initial calls to potential acquirors, including Kforce. These calls were designed to determine the level of interest of the potential acquirors in an acquisition in the staffing industry, without identifying Hall Kinion as the target. Baird prepared, distributed and negotiated a confidentiality agreement with the companies that had indicated an interest in the opportunity. Kforce executed a confidentiality agreement on April 24, 2003.

On April 24, 2003, Baird made a presentation to the Hall Kinion board of directors. The report included a summary of its marketing plan for Hall Kinion, including the development of management presentations, the status of completing marketing materials, assembling due diligence information and documentation for a data room and making initial contact with potential acquirors. Baird reported it had made initial inquiries to 37 companies that possessed general business, operating and financial characteristics representative of the companies in the industry in which Hall Kinion operates and that were believed to have the financial capability to complete a transaction. As a result of the initial inquiries, confidentiality agreements were signed with 21 companies. The Hall Kinion board of directors did not address any particular transaction structure in April 2003. The board of directors intended to weigh any offer to acquire Hall Kinion with the risks and benefits of continuing as an independent entity.

On May 14, 2003, Hall Kinion placed the marketing process on hold to allow for completion of the second quarter of fiscal 2003. The delay would allow for the marketing materials to include second quarter results, which were expected to reflect the operational improvements resulting from earlier restructuring efforts.

On July 24, 2003, Hall Kinion and Baird restarted the marketing process by distributing marketing materials to potential acquirors that had executed confidentiality agreements, including Kforce, and initiating discussions with other potential acquirors. From August 18, 2003 through September 9, 2003, Hall Kinion made management presentations to potential acquirors that indicated an interest in acquiring Hall Kinion and provided due diligence information. These efforts led to oral and written indications of interest and due diligence requests from four companies, some of which were interested in Hall Kinion as a whole, and some of which were interested in portions of Hall Kinion’s business. On September 18, 2003, Kforce sent a letter to Baird outlining Kforce’s interest in acquiring Hall Kinion.

From September 18, 2003 through September 25, 2003, management of Hall Kinion and Baird reviewed the indications of interest, including the indication of interest from Kforce. Two of the parties were interested only in the Technology Professionals business and two of the parties were interested in Hall Kinion as a whole. On September 25, 2003, Baird made a presentation to the Hall Kinion board of directors regarding the indications of interest. The Hall Kinion board of directors concluded that it was in the best interests of stockholders to pursue a sale of the company as a whole. The Hall Kinion board of directors concluded, based on the information from Baird and management, that the terms of the indication of interest from Kforce provided the best potential transaction and authorized management and Baird to commence negotiations with Kforce. The initial indication of interest from Kforce included a merger with Hall Kinion at an exchange ratio of 0.66 shares of Kforce common stock for each share of Hall Kinion common stock and other terms, including termination rights and price collars.

During October and November 2003, David L. Dunkel, the Chairman and Chief Executive Officer of Kforce, and Brenda C. Rhodes, the Chairman and Chief Executive Officer of Hall Kinion, held a number of phone conversations discussing the rationale underlying a potential combination of the two companies, including similar client lists, complementary geographic locations, common cultural attributes, and compatible sales organizations. During the same period, William L. Sanders, the Chief Operating Officer and former Chief Financial Officer of Kforce, and Martin A. Kropelnicki, the Chief Financial Officer of Hall Kinion, discussed potential cost savings and other synergies that could arise from the merger of the two companies, including elimination of public company costs at Hall Kinion, systems integration (both front and back office, because both companies use PeopleSoft applications), savings from consolidating back office operations and duplicative insurance costs, consolidation of offices and elimination of corporate overhead.

On October 3, 2003 Messrs. Dunkel and Sanders met with representatives of Lehman Brothers to discuss the engagement of Lehman Brothers to issue a fairness opinion in connection with the merger. On October 8, 2003, Kforce engaged Lehman Brothers to issue the fairness opinion because of their experience and highly regarded reputation in the area of mergers and acquisitions and familiarity with Kforce and its industry.

Between September 25, 2003 and December 2, 2003, Hall Kinion and Kforce completed due diligence and negotiated the terms of the definitive agreement. During that time, Baird, the financial advisor to Hall Kinion and Lehman Brothers, who provided a fairness opinion to Kforce, completed due diligence.

During the week of October 6, 2003 Kforce continued to analyze Hall Kinion’s operations including the operations of Hall Kinion’s OnStaff division. Following this phase of due diligence, Kforce revised its initial offer by requesting an adjustment to the exchange ratio if Hall Kinion’s revenues in the fourth quarter were less than initially expected.

On October 13, 2003, the Hall Kinion special committee met to discuss the results of the Kforce due diligence review and the proposal to adjust the exchange ratio. Hall Kinion made a counter proposal to Kforce’s revised exchange ratio and also proposed that all outstanding options be converted into options to purchase Kforce common stock.

Kforce made a revised proposal to Hall Kinion on October 14, 2003, providing for a reduced initial exchange ratio and a further adjustment to the exchange ratio if Hall Kinion fourth quarter revenues were less than a specified amount. In addition, Kforce requested a termination right if Hall Kinion fourth quarter revenues were below $34.0 million and proposed that only vested in-the-money options would be converted into Kforce common stock on a “net-exercise basis.” Kforce proposed all out-of-the-money vested stock options and all unvested stock options would be cancelled.

On October 15, 2003, the Hall Kinion special committee met to discuss the revised Kforce proposal. As a result of the meeting further negotiations with Kforce were authorized;

On October 17, 2003, the Hall Kinion special committee met to discuss the results of the most recent negotiations and approved the revised exchange ratio proposal contained in the merger agreement, subject to review of draft agreements;

On October 23, 2003, the parties concluded that they could not reach an agreement at the time and terminated negotiations;

After the release of each party’s financial results for the third quarter, representatives of the parties had contact with each other over a period of several days and based on their re-evaluation of the potential combination between the parties, on November 7, 2003, the parties concluded that they should reopen negotiations;

On November 11, Kforce delivered a new term sheet, including an exchange ratio of .60, subject to a 15% collar. Kforce requested this exchange ratio as more appropriately reflecting the relative values of the two companies after the release of third quarter financial information. This was primarily due to the continued improvement in Kforce’s operating results and Kforce’s concerns about trends in the mortgage refinance industry and Hall Kinion’s OnStaff business. Thereafter, negotiations commenced regarding the new term sheet and the parties exchanged draft agreements and commenced negotiation of the agreements.

On November 13, 2003, the Hall Kinion special committee met to discuss the current term sheet and concluded that Hall Kinion should proceed with the negotiation of definitive agreements based on the proposed terms, which such draft definitive agreements would then be submitted to the full Hall Kinion board of directors;

On November 18, 2003, the Hall Kinion board of directors met to discuss the terms of the merger and related matters, and the results of Baird’s preliminary financial analyses. The Kforce proposal being considered included an exchange ratio of 0.6 shares of Kforce common stock for each share of Hall Kinion common stock,

with a collar at 15% above and below the closing price of Kforce common stock on the day before announcement of a transaction. Kforce would have the right to terminate the agreement if its stock fell below $6.00 per share at closing or if Hall Kinion failed to achieve fourth quarter revenues of $34.0 million. If the Kforce common stock fell outside of the collar range, the exchange ratio would be adjusted pursuant to a formula. The other terms were not substantially changed. Representatives of Baird discussed with the Hall Kinion board of directors the premium implied by the current term sheet. Baird discussed the results of its preliminary financial analyses related to the proposed transaction, and indicated that, based on the current term sheet, it believed that it would be able to provide a fairness opinion. The results of Baird’s preliminary financial analyses are not materially different from the results of the financial analyses later presented to the Hall Kinion board of directors on December 2, 2003. At the conclusion of this meeting, the Hall Kinion board of directors authorized management and Hall Kinion’s advisers to complete negotiation of definitive agreements for further consideration by the Hall Kinion board of directors. Negotiations continued for the remainder of November.

On December 1, 2003, the Kforce board of directors held a telephonic meeting to discuss the materials regarding the merger that Mr. Dunkel distributed to the members of the board on November 25, 2003. Such materials contained an overview of the business, major shareholder information, organizational profile, client and industry information and financial data. Mr. Dunkel, Mr. Sanders, Howard W. Sutter, Vice President of Kforce, and Derrell E. Hunter, Chief Financial Officer of Kforce, also made presentations to the Kforce board of directors of an analysis of the proposed transaction between Kforce and Hall Kinion. Representatives of Lehman Brothers distributed an analysis of the latest proposed transaction to the Kforce board of directors, including a summary of the terms, the strategic rationale that Lehman Brothers and management of Kforce had previously discussed, a valuation of Hall Kinion and a financial analysis of the proposed transaction, exchange ratios and a pro forma analysis of the potential combination. Representatives of Lehman Brothers delivered a verbal summary of its fairness opinion. Representatives of Holland & Knight LLP, Kforce’s counsel, also attended the meeting. The Kforce board discussed the fact that Kforce had previously identified six potential public company targets over a year before but that little progress had been made in discussions with such targets. The members of the Kforce board of directors acknowledged receipt and consideration of the proposed merger agreement and other written materials prepared by management and the Kforce board of directors’ legal obligations in connection with its consideration of the merger. The Kforce board of directors discussed, among other things, the belief that there might be significant synergies, an enhanced client base and greater cross-selling opportunities as a result of the merger. The Kforce board of directors approved the acquisition of Hall Kinion, subject to final negotiations by Kforce senior management and receipt of a written fairness opinion from Lehman Brothers. The Kforce board of directors also authorized Kforce’s officers to undertake all acts necessary or desirable to effect the merger.

A final written fairness opinion from Lehman Brothers that confirmed its oral opinion was delivered to the members of the Kforce board of directors on December 2, 2003.

On December 2, 2003, the Hall Kinion board of directors held a special meeting to discuss the terms of the draft merger agreement and the potential benefits and risks of the proposed acquisition by Kforce. Representatives of Gibson, Dunn & Crutcher LLP, Hall Kinion’s counsel (“Gibson Dunn”), and representatives of Baird also attended the meeting. The members of the Hall Kinion board of directors acknowledged receipt and consideration of written materials prepared by Gibson Dunn summarizing the terms of the proposed acquisition and the Hall Kinion board of directors’ legal obligations in connection with its consideration of the proposed merger. Representatives of Baird presented a summary of the transaction structure and a valuation analysis. Representatives of Gibson Dunn and Baird reviewed the terms of the merger agreement and the merger with the Hall Kinion board of directors. Representatives of Baird discussed Baird’s financial analyses of the transaction with the Hall Kinion board of directors and delivered its verbal opinion, which was subsequently confirmed by delivery to the Hall Kinion board of directors of a written opinion dated December 2, 2003, to the effect that, as of that date and based on and subject to the matters described in the opinion, the exchange ratio was fair, from a financial point of view, to Hall Kinion’s stockholders. The full text of Baird’s opinion, dated December 2, 2003, which describes the assumptions made, general procedures followed, matters considered and the limitations on

the scope of review conducted by Baird in rendering its opinion is attached as Annex C. Baird’s detailed analyses are summarized under “Fairness Opinion of Financial Advisor to Hall Kinion Board of Directors” commencing on page 53. These analyses included a comparison of the historical prices and trading activity of Hall Kinion’s common stock, Kforce’s common stock and certain other publicly traded companies deemed relevant by Baird; a comparison of the financial position, operating results and market trading multiples of Hall Kinion and Kforce and other publicly traded companies deemed relevant by Baird; a comparison of the proposed financial terms of the merger with the financial terms of other business combinations deemed relevant by Baird; a discounted cash flow analysis, and an analysis of potential pro forma effects of the merger. Following a thorough discussion of the proposed acquisition, the Hall Kinion board of directors voted unanimously to authorize the merger agreement and to recommend that the Hall Kinion stockholders approve and adopt the merger agreement and the merger.

On December 2, 2003, Hall Kinion and Kforce signed the merger agreement, and certain officers, directors and stockholders of Hall Kinion and Kforce signed and delivered the voting agreements, and at approximately 5:00 p.m. EST, Hall Kinion and Kforce issued a joint press release announcing the proposed acquisition.

On December 3, 2003, Kforce and Hall Kinion held a joint conference call to discuss the proposed merger.

Promptly following the announcement of the merger agreement, Kforce indicated that it wanted to commence introduction and orientation of Hall Kinion officers and mid-level management immediately, including holding meetings in Tampa, Florida. Consistent with its experience in the fourth quarter of previous years, which historically has the fewest number of billing days, Hall Kinion believed that it was important to maximize revenue generation in the fourth quarter of 2003. As a result, Hall Kinion was not willing to have its senior management and mid-level managers involved in off-site meetings, when it was critically important to achieve the minimum revenue target. After further negotiations between the parties between December 4, 2003 and December 9, 2003, Kforce concluded that Hall Kinion fourth quarter revenues would likely be reasonably close to $34 million, which would reflect a level of revenue sufficient for Kforce to proceed with the merger, and that it was of great importance that the combined company promptly commence integration processes. Accordingly, Hall Kinion agreed to cooperate with Kforce’s integration plan, and Kforce agreed to delete the $34 million revenue condition. In addition, the parties discussed arrangements with senior executives of Hall Kinion post-closing and agreed upon how severance compensation and other benefits would be handled in accordance with existing Hall Kinion employment agreements. See “Interests of Certain Persons in the Merger” on page 81 for detailed information regarding severance and other benefits to senior management of Hall Kinion following the merger. Finally, because Brenda Rhodes planned to resign at the closing of the merger, the parties concluded that integration efforts should be handled through Mr. Kropelnicki. On December 9, 2003, the respective boards of directors of Kforce, Hall Kinion, and Novato approved an amendment to the merger agreement covering the matters described above.

On December 31, 2003, the companies further amended the merger agreement to confirm certain agreements relating to the merger agreement, including the payment of completion bonuses by Kforce to certain Hall Kinion employees following consummation of the merger, termination of the Hall Kinion Deferred Compensation Plan by Hall Kinion on or before December 31, 2003 and payments of the amounts due thereunder, and the payment of severance and other benefits to Rita Hazell and Brenda Rhodes. See “Interests of Certain Persons in the Merger” on page 81 for detailed information regarding severance and other benefits to senior management of Hall Kinion following the merger.

Kforce’s Reasons for the Merger

The Kforce board of directors has unanimously approved the merger agreement and the transactions contemplated thereby and has determined that the terms of the merger and the merger agreement are fair and in the best interests of Kforce and its shareholders. The Kforce board of directors regularly reviews and discusses Kforce’s strategic plan and alternatives available for achieving Kforce’s strategic plan. During the course of its deliberations, the Kforce board of directors considered, with the assistance of management and its financial and other advisors, a number of business, financial, legal and other factors, including expected savings from the elimination of significant duplicate costs through:

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the combination of executive, general and administrative functions; and

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the elimination of Hall Kinion’s public company costs.

In the course of its deliberations, the Kforce board of directors reviewed with Kforce management and Kforce’s legal and financial advisors a number of additional factors that the Kforce board of directors deemed relevant, the most significant of which are the following:

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the high quality of the operational personnel and the compatibility of the cultures of the two companies;

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the consideration to be paid by Kforce in the merger;

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the strategic and geographic fit of Kforce and Hall Kinion;

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information concerning historical and current market prices with respect to Kforce’s common stock and Hall Kinion’s common stock;

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the likelihood of a successful integration and the successful operation of the combined company;

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the shareholders’ view of the combined company;

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the terms and conditions of the merger agreement, the voting agreements, and the affiliate agreements, including without limitation the termination fees; and

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the likelihood that the merger will be completed.

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the risk that the potential benefits of the merger may not be realized, including that the expected operating synergies might not be achieved;

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the possibility that the merger might not be consummated and the effect of the public announcement of the merger on Kforce’s partners, customers and employees;

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the risks associated with obtaining the necessary approvals required to complete the merger;

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the transaction costs involved in connection with closing the merger;

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the management efforts and costs required to complete the integration of the businesses and operations of the two companies following the merger;

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the risk that sales of substantial amounts of Kforce common stock in the public market after the proposed merger could materially adversely affect the market price of Kforce common stock;

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the risk that customers and other business partners of Hall Kinion might terminate their relationships as a result of the merger; and

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the other risks described under the section entitled “Risk Factors” beginning on page 23.

The Kforce board of directors concluded, however, that these negative factors could likely be managed or mitigated by Kforce or by the combined company or were unlikely to have a material impact on the merger or the combined company, and that, overall, the potentially negative factors associated with the merger were outweighed by the potential benefits of the merger.

The foregoing factors are not intended to be an exhaustive list of all factors considered. The Kforce board of directors conducted an overall analysis of the factors described above, including thorough discussion with and questioning of Kforce’s management and its legal and financial advisors. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Kforce board of directors found it impractical to, and did not, quantify or otherwise assign relative weights to the specific factors discussed above and considered in connection with its determination. In addition, the Kforce board of directors did not reach any specific conclusion with respect to each of the factors considered or any aspect of any particular factor. Moreover, the individual members of the Kforce board of directors may have accorded different values to different factors.

Recommendation of the Kforce Board of Directors

Taking into account all of the material facts, matters and information, including those described above, the Kforce board of directors believes that the merger and the other transactions contemplated by the merger agreement are advisable and fair to and in the best interests of Kforce and its shareholders. The Kforce board of directors unanimously recommends that Kforce’s shareholders vote “FOR” approval of the issuance of Kforce shares pursuant to the merger agreement.

Hall Kinion’s Reasons for the Merger

The Hall Kinion board of directors has determined that the acquisition of Hall Kinion by Kforce is advisable, fair to and in the best interests of Hall Kinion and its stockholders, has unanimously approved and adopted the merger agreement and the merger, and unanimously recommends that the Hall Kinion stockholders vote “FOR” approval and adoption of the merger agreement and the merger. In making its recommendation to the stockholders, the Hall Kinion board of directors considered a number of factors, the most significant of which are the following:

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current market prices for Hall Kinion common stock, the fluctuation in historical trading prices of the Hall Kinion common stock, the lack of liquidity in the market for Hall Kinion common stock, the inability to use Hall Kinion common stock at current price levels as consideration for acquisitions, which limits Hall Kinion’s growth potential, and the fact that the merger consideration included a premium of approximately 15% over the market price for Hall Kinion common stock on the last trading day before the merger was announced;

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the greater liquidity of Kforce’s common stock following the merger as compared to Hall Kinion’s common stock;

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the fact that Hall Kinion’s stockholders will have the opportunity to participate in the growth and opportunities of the combined company;

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the potential reduction in Hall Kinion’s liquidity under its line of credit as a result of decreased revenues, which results in a reduced borrowing base;

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the potential synergies, cost savings and economies of scale, estimated in the range of $9.5 million to $12 million which would be partially offset by amortization of identifiable intangibles, resulting from the combined executive, general and administrative functions of the two companies following the merger;

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the other terms of the merger agreement, including without limitation the termination fees; and

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In addition to the positive factors summarized above, the Hall Kinion board of directors also considered the following negative factors in reaching its determination:

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the possibility that the merger might not be consummated, the impact of the transaction costs incurred if the merger is not completed, the risks associated with potential fluctuations in the price of Kforce common stock prior to the closing of the merger, including Kforce’s right to terminate the merger if its stock price decreases to less than $6.00 per share over a period of time prior to the closing of the merger and the effect of the public announcement of the merger on Hall Kinion’s sales, operating results, stock price and relations with employees and customers;

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the risk that the potential benefits and synergies in the merger might not be fully realized;

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the risk of a stock price decline in Kforce stock following the completion of the merger;

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the costs and potential operational problems that may be incurred in the integration of the two companies’ operations;

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the risks associated with diversion of management resources from operational matters for an extended period of time; and

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the risks described under the section of this prospectus/proxy statement entitled “Risk Factors” beginning on page 23 of this joint proxy statement/prospectus.

The foregoing discussion of factors considered by the Hall Kinion board of directors is not exhaustive, but includes the material factors considered by the Hall Kinion board of directors in approving the merger and recommending that the Hall Kinion stockholders vote their shares in favor of the merger. The Hall Kinion board of directors did not find it practicable to, and did not quantify or otherwise assign relative weights to the specific factors considered in reaching its determination. Rather, the Hall Kinion board of directors made its determination based on the totality of the information available to it. The judgments of the individual members of the Hall Kinion board of directors may have been influenced to a greater or lesser extent by the different factors. In approving the merger, the Hall Kinion board of directors was aware of the interests of Hall Kinion’s management in the merger, as described under “Interests of Certain Persons in the Merger — Interests of Hall Kinion Directors and Officers” beginning on page 83.

Recommendation of the Hall Kinion Board of Directors

Taking into account all of the material facts, matters and information, including those described above, the Hall Kinion board of directors believes that the merger and the other transactions contemplated by the merger agreement are advisable and fair to and in the best interests of Hall Kinion and its stockholders. The Hall Kinion board of directors unanimously recommends that Hall Kinion’s stockholders vote “FOR” approval of the merger and adoption of the merger agreement.

Fairness Opinion of Financial Advisor to the Kforce Board of Directors

On December 2, 2003, Lehman Brothers rendered its opinion to the Kforce board of directors that as of such date and, based upon and subject to certain matters stated therein, the exchange ratio to be paid by Kforce in the merger is fair to Kforce from a financial point of view.

The summary of the Lehman Brothers opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion attached as Annex B to this joint proxy statement/prospectus. Kforce shareholders should read the opinion for a discussion of the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by Lehman Brothers in rendering its opinion.

The Lehman Brothers opinion was provided for the information and assistance of the Kforce board of directors in connection with its consideration of the merger. The Lehman Brothers opinion is not intended to be and does not constitute a recommendation to any shareholder of Kforce as to how such shareholder should vote in connection with the merger. Lehman Brothers was not requested to opine as to, and the Lehman Brothers opinion does not address, Kforce’s underlying business decision to proceed with or effect the merger, and the reasonableness of the change in control payments provided to certain members of Hall Kinion’s senior management.

In arriving at its opinion, Lehman Brothers reviewed and analyzed:

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the merger agreement and the specific terms of the merger;

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publicly available information concerning Kforce and Hall Kinion that Lehman Brothers believed to be relevant to its analysis, including Kforce’s Annual Reports on Form 10-K for the fiscal years ended December 31, 2002 and 2001, and Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30, and September 30, 2003 and Hall Kinion’s Annual Reports on Form 10-K for the fiscal years ended December 29, 2002 and December 30, 2001, and Quarterly Reports on Form 10-Q for the quarters ended March 30, June 29, and September 28, 2003;

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financial and operating information with respect to the business, operations and prospects of Hall Kinion furnished to Lehman Brothers by Hall Kinion and Kforce;

•

financial and operating information with respect to the business, operations and prospects of Kforce furnished to Lehman Brothers by Kforce, including a 2004 forecast prepared in October 2003 by the management of Kforce;

•

the trading histories of Hall Kinion’s and Kforce’s common stock from November 1, 2001 to December 1, 2003, and a comparison of those trading histories with each other and with those of other companies that Lehman Brothers deemed relevant;

•

a comparison of the respective historical financial results and present financial condition of Hall Kinion and Kforce with each other and with those of other companies that Lehman Brothers deemed relevant;

•

the relative contributions of Kforce and Hall Kinion to the historical and future financial performance of the combined company on a pro forma basis;

•

the pro forma impact of the merger on the current and future financial performance of Kforce, including the cost savings and operating synergies expected by the management of Kforce and Hall Kinion to result from a combination of the businesses of Kforce and Hall Kinion (the “Expected Synergies”), and the potential effect of the merger on Kforce’s pro forma earnings per share; and

•

a comparison of the financial terms of the merger with the financial terms of certain other transactions that Lehman Brothers deemed relevant.

In addition, Lehman Brothers had discussions with the management of Kforce and Hall Kinion concerning their respective businesses, operations, assets, financial condition and prospects and the revenue enhancements

and strategic benefits expected by management of Kforce to result from a combination of the businesses of Kforce and Hall Kinion. Lehman Brothers also undertook such other studies, analyses and investigations as it deemed appropriate.

In arriving at its opinion, Lehman Brothers assumed and relied upon the accuracy and completeness of the financial and other information used by it without assuming any responsibility for independent verification of such information and further relied upon the assurances of management of Kforce and Hall Kinion that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the financial projections of Hall Kinion prepared by Hall Kinion’s management, upon advice of Hall Kinion, Lehman Brothers assumed that such projections had been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Hall Kinion as to the future financial performance of Hall Kinion and Lehman Brothers relied upon such projections in performing its analysis. However, for the purpose of its analysis, Lehman Brothers also considered certain somewhat more conservative assumptions and estimates which resulted in certain adjustments to the projections provided by Hall Kinion. Lehman Brothers discussed these adjusted projections with the management of Kforce and they agreed with the appropriateness of the use of such adjusted projections, as well as the projections prepared by Hall Kinion, in performing the analysis. In addition, upon the advice of Kforce, Lehman Brothers assumed that the amount and timing of the Expected Synergies are reasonable and that the Expected Synergies will be realized substantially in accordance with such estimates. In arriving at its opinion, Lehman Brothers did not conduct a physical inspection of the properties and facilities of Kforce or Hall Kinion and did not make or obtain any evaluations or appraisals of the assets or liabilities of Kforce or Hall Kinion. The Lehman Brothers opinion necessarily was based upon market, economic and other conditions as they existed on, and were evaluated as of, the date of the Lehman Brothers opinion.

Lehman Brothers expressed no opinion as to the prices at which shares of Kforce common stock would trade following announcement of the merger, and its opinion should not be viewed as providing any assurance that the market value of the shares of Kforce common stock after consummation of the merger will be in excess of the market value of such shares at any time prior to announcement or consummation of the merger. Although Lehman Brothers evaluated the fairness, from a financial point of view, of the exchange ratio to be paid by Kforce in the merger, Lehman Brothers was not requested to, and did not recommend the specific exchange ratio to be paid by Kforce in the merger. The exchange ratio was determined through negotiations between Kforce and Hall Kinion. No limitation was imposed on Lehman Brothers with respect to the investigations made or procedures followed by Lehman Brothers in rendering its opinion.

In arriving at its opinion, Lehman Brothers did not ascribe a specific range of value to Kforce or Hall Kinion, but rather made its determination as to the fairness, from a financial point of view, to Kforce of the exchange ratio to be paid by Kforce in the merger on the basis of financial and comparative analyses described below. The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial and comparative analysis and the application of those methods to the particular circumstances, and therefore, such an opinion is not readily susceptible to summary description. Furthermore, in arriving at its opinion, Lehman Brothers did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Lehman Brothers believes that its analyses must be considered as a whole and that considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion. In its analyses, Lehman Brothers made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Kforce and Hall Kinion. None of Kforce, Hall Kinion, Lehman Brothers, or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses were not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth therein. In addition, analyses relating to the value of businesses do not purport to be appraisals or to reflect the prices at which businesses actually may be sold.

The following is a summary of the material financial and comparative analyses used by Lehman Brothers in connection with providing its opinion to the Kforce board of directors. Certain of the summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Lehman Brothers, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Accordingly, the analyses listed in the tables and described below must be considered as a whole. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying the Lehman Brothers opinion.

Historical Exchange Ratio Analysis

Lehman Brothers considered historical data concerning the relative trading prices and exchange ratios for Kforce and Hall Kinion from November 30, 2001 to December 1, 2003. The following table summarizes the results of this analysis.


Averaging Period		Historical Ratio of Hall Kinion/Kforce
2 Years		1.13
1 Year		0.66
6 Months		0.58
3 Months		0.53
1 Month		0.48
15 Day		0.49
As of 12/1/03		0.51
Merger Exchange Ratio		0.60

This analysis resulted in an implied exchange ratio range of 0.48 to 1.13 Kforce shares per Hall Kinion share, as compared to the exchange ratio in the merger of .60 Kforce shares per Hall Kinion share. Lehman Brothers concluded that, because the exchange ratio in the merger was within the implied exchange ratio range derived from the historical exchange ratio analysis that it performed, such analysis was supportive of its opinion as to the fairness, from a financial point of view, to Kforce of the exchange ratio to be paid by Kforce in the merger.

Contribution Analysis

Lehman Brothers utilized historical financial results, a 2004 forecast prepared in October 2003 by Kforce management and projections for Hall Kinion, including their respective revenue and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) to analyze relative contributions of Kforce and Hall Kinion to the revenue and EBITDA of the pro forma combined company. In performing the contribution analysis, Lehman Brothers made certain adjustments to the EBITDA of Hall Kinion in order to account for certain non-recurring items. Using the relative contributions derived from this analysis, Lehman Brothers then developed the implied equity ownership percentages shown below by adjusting for the net debt of Kforce and Hall Kinion. The results of this analysis are shown below.


	Relative Contribution Percentage		Implied Ownership Percentage
	Kforce	Hall Kinion	Kforce	Hall Kinion
Range of Relative Contribution Based on Revenue	75%-78%	25%-22%	78%-82%	22%-18%
Range of Relative Contribution Based on EBITDA	66%-74%	34%-26%	69%-77%	31%-23%
Merger Ownership Percentage			81%	19%

Based on the implied ownership ranges calculated in the contribution analysis, Lehman Brothers calculated an implied exchange ratio range of 0.57 to 1.15 Kforce shares per Hall Kinion share, as compared to the exchange ratio in the merger of .60 Kforce shares per Hall Kinion share. Lehman Brothers concluded that, because the exchange ratio in the merger was within the implied exchange ratio range derived from the analysis, such analysis was supportive of its opinion as to the fairness, from a financial point of view, to Kforce of the exchange ratio to be paid by Kforce in the merger.

Comparable Company Analysis

Using publicly available information, Lehman Brothers compared selected financial data of Hall Kinion with similar data of selected companies engaged in businesses considered by Lehman Brothers to be comparable to that of Hall Kinion. Specifically, Lehman Brothers included in its review of comparable companies the following companies: CDI Corp., Computer Horizons Corp., Kforce Inc., MPS Group, Inc., Resources Connection, Inc., Robert Half International, Inc., Spherion Corporation, and Volt Information Sciences, Inc.

For Hall Kinion, and each of the selected companies, Lehman Brothers calculated the ratios of enterprise value, calculated on the basis described below, to projected revenue and EBITDA for the periods ending December 31, 2003 and 2004. For the selected companies, Lehman Brothers used revenue estimates published by third party research providers. The enterprise value of each company was obtained by adding its short and long-term debt to the sum of the market value of its diluted common equity, the value of any preferred stock and the book value of any minority interest, and subtracting its cash and cash equivalents. Lehman Brothers then compared those ratios for the selected companies to similar ratios calculated for Hall Kinion based on the estimates for the Hall Kinion base case and the adjusted case. The adjusted case assumes lower overall revenue growth in 2004 (9.7% in base case vs. -3.1% in adjusted case) mainly to reflect the possibility of continued billable hour declines at OnStaff as anticipated by Kforce as a result of decreased mortgage refinancing activity.

The following table presents the revenue and EBITDA multiples for calendar year 2003 (“CY 2003”) and 2004 (“CY 2004”).


	CY 2003	CY 2004
Revenue Mean of Selected Companies	0.48x	0.46x
Revenue Median of Selected Companies	0.47x	0.46x
Revenue Merger—Hall Kinion base case	0.45x	0.41x
Revenue Merger—Hall Kinion adjusted case	0.45x	0.47x
EBITDA Mean of Selected Companies	21.3x	11.9x
EBITDA Median of Selected Companies	22.7x	12.8x
EBITDA Merger—Hall Kinion base case	23.5x	10.6x
EBITDA Merger—Hall Kinion adjusted case	23.5x	14.0x

Based on its judgment and knowledge of the staffing services sector, Lehman Brothers selected a range of multiples that were generally near the mean and median of the trading multiples of the comparable companies. Lehman Brothers applied the selected multiples to the corresponding data of Hall Kinion and derived an implied exchange ratio range of 0.50 to 0.73 Kforce shares per Hall Kinion share, as compared to the exchange ratio in the merger of .60 Kforce shares per Hall Kinion share. Lehman Brothers concluded that, because the exchange ratio in the merger was within the implied exchange ratio range derived from the analysis, such analysis was supportive of its opinion as to the fairness, from a financial point of view, to Kforce of the exchange ratio to be paid by Kforce in the merger.

However, because of the inherent differences between the business, operations, financial condition and prospects of Hall Kinion and the business, operations, financial conditions and prospects of the companies included in the comparable companies analysis, Lehman Brothers believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the comparable company analysis and accordingly also

made qualitative judgments concerning differences between the financial and operating characteristics of Hall Kinion and each of the companies included in the comparable company analysis that would affect the public trading values of each.

Comparable Transactions Analysis

The comparable transactions analysis provided a market benchmark based on the consideration paid in certain precedent transactions selected by Lehman Brothers. Lehman Brothers reviewed certain publicly available information on nine transactions involving target companies that Lehman Brothers deemed comparable to Hall Kinion. The following transactions were included in Lehman Brothers’ analysis:


Announcement Date	Acquirer Name	Target Name
Oct-03	CIBER, Inc.	SCB Computer Technology, Inc.
Sep-03	Hire Calling Holding Company	SOS Staffing Services, Inc.
Aug-02	Hall, Kinion & Associates, Inc.	OnStaff
Jun-02	Intellimark Holdings, Inc.	Technisource, Inc.
Aug-00	CORESTAFF Services	General Employment Service, Inc.
Jul-00	Randstad North America	Temps & Co.
Jun-00	COMSYS Information Technology Services, Inc.	Cotelligent, Inc. (Staffing Division)
Apr-00	Vedior NV	Acsys, Inc.
Jan-00	Manpower Inc.	Elan Group Ltd.

Lehman Brothers compared enterprise values in the selected transactions as multiples of last twelve month (“LTM”) revenue. All multiples were based on financial information publicly available at the time the relevant transactions were announced. The following table demonstrates the revenue multiples for the selected transactions as well as the implied multiple in the proposed merger:


		LTM Enterprise Value/Revenue Multiple
Mean of Selected Comparable Transactions		0.48x
Median of Selected Comparable Transactions		0.55x
Kforce/Hall Kinion Merger		0.50x

Based on its judgment and knowledge of the staffing services sector, Lehman Brothers selected a range of multiples that were generally near the mean and median of the multiples paid in the comparable transactions. Lehman Brothers applied the selected multiples to the corresponding data of Hall Kinion and derived an implied exchange ratio range of 0.46 to 0.76 Kforce shares per Hall Kinion share, as compared to the exchange ratio in the merger of .60 Kforce shares per Hall Kinion share. Lehman Brothers concluded that, because the exchange ratio in the merger was within the implied exchange ratio range derived from the analysis, such analysis was supportive of its opinion as to the fairness, from a financial point of view, to Kforce of the exchange ratio to be paid by Kforce in the merger.

However, because the reasons for and the circumstances surrounding each of the transactions analyzed were so diverse and because of the inherent differences between the business, operations, financial condition and prospects of Hall Kinion, on the one hand, and the business, operations, financial condition and prospects of the companies included in the comparable transactions group, on the other hand, Lehman Brothers believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the comparable transaction analysis and accordingly also made qualitative judgments concerning differences between the reasons for and the circumstances surrounding the merger and the transactions included in the comparable transaction analysis that would affect the acquisition values of Hall Kinion and the acquired companies.

Premiums Paid Analysis

Using publicly available information, Lehman Brothers reviewed the premiums paid, or proposed to be paid, in the case of transactions pending as of the date of the Lehman Brothers opinion, in 13 stock-for-stock acquisitions involving business services companies since February of 1998. The following table lists the transactions included in the analysis.


Acquiror		Target
Valueclick Inc.		Mediaplex Inc.
Aon Corporation		ASI Solutions Inc.
DoubleClick Inc.		Netcreations Inc.
TeleTech Holdings Inc.		Newgen Results Corporation
TMP Worldwide Inc.		HW Group PLC
Cordiant Communications Group		HealthWorld Corporation
AnswerThink Consulting Group		Think New Ideas Inc.
NCO Group Inc.		Compass International Services
Automatic Data Processing Inc.		Vincam Group Inc.
StaffMark Inc.		Robert Walters PLC
TMP Worldwide Inc.		Morgan & Banks Ltd.
TeleSpectrum Worldwide Inc.		CRW Financial Inc.
Platinum Technology Inc.		Mastering Inc.

Lehman Brothers calculated the premium per share paid by the acquirer compared to the share price of the target company for one day and one week prior to announcement of each transaction. The following table shows the one day and one week premiums in the precedent transactions compared to the premiums in the merger:


	One Day Premium		One Week Premium
Selected Transactions
Lower Quartile	8.6	%	15.8	%
Median	24.6	%	26.4	%
Mean	24.4	%	28.5	%
Upper Quartile	43.5	%	45.9	%
Merger
Based on Kforce 12/01/03 Price	18.3	%	30.0	%

Lehman Brothers applied premiums ranging from the lower quartile average to the upper quartile average of the precedent transactions to the closing share prices of Hall Kinion as of December 1, 2003 and November 24, 2003 and derived an implied exchange ratio range of 0.53 to 0.73 Kforce shares per Hall Kinion share, as compared to the exchange ratio in the merger of .60 Kforce shares per Hall Kinion share. Lehman Brothers concluded that, because the exchange ratio in the merger was within the implied exchange ratio range derived from the analysis, such analysis was supportive of its opinion as to the fairness, from a financial point of view, to Kforce of the exchange ratio to be paid by Kforce in the merger.

Discounted Cash Flow Analysis

The discounted cash flow analysis provided a net present value of the projected after-tax cash flows (defined as operating cash flow available after working capital, capital spending, tax and other operating requirements) based on the base case and adjusted case estimates for Hall Kinion for fiscal years 2004 through 2008. Utilizing the assumptions underlying these projections, Lehman Brothers extended the forecast period through 2013. Lehman Brothers calculated the present value of the stand-alone, unlevered, after-tax free cash flows that Hall Kinion could produce over the fiscal years 2004 through 2013. The assumptions that were used to determine 2004 through 2013 revenues implied a compound annual growth rate of 7.3% in the base case and 6.2% in the adjusted case. EBITDA margins in the base case improve from 3.9% in 2004 to 6.2% in 2008 and thereafter. In

the adjusted case, EBITDA margins are 3.4% in 2004, increasing to 6.3% in 2010, then declining to 6.1% in 2013. Lehman Brothers chose to extend the forecast period to 2013 in order to decrease the sensitivity of the discounted cash flow analysis to the assumptions used to calculate the terminal value, as described below. Lehman Brothers also estimated a range of terminal values as of 2013 calculated based on assumed 2013 terminal EBITDA multiples in the range of 6.0x to 8.0x. Lehman Brothers selected this terminal EBITDA multiple range based on its knowledge and estimates of sustainable trading ranges for public companies in the staffing services sector and acquisition multiples in the staffing services sector. The free cash flows for 2004 through 2013, as well as the estimated terminal values, were then discounted to present values using a discount rate range of 13.5% to 14.5%, which is based on Hall Kinion’s estimated weighted average cost of capital as well as the cost of capital of companies Lehman Brothers deemed comparable to Hall Kinion. Using the base case, this analysis indicated an overall stand-alone intrinsic value of Hall Kinion of between $4.36 and $5.64 per share. Based on this value range and Kforce’s closing stock price on December 1, 2003 of $8.34 per share, the corresponding implied exchange ratio was between 0.52 to 0.68 Kforce shares per Hall Kinion share. Using the adjusted case, the analysis indicated an overall stand-alone intrinsic value of Hall Kinion of between $3.61 and $4.72 per share and a corresponding implied exchange ratio of between 0.43 and 0.57 Kforce shares per Hall Kinion share.

Kforce management estimated the annual amount of Expected Synergies to be approximately $10 million (which would be partially offset by amortization of identifiable intangibles). Lehman Brothers adjusted this amount for taxes and non-cash items in order to determine the anticipated annual free-cash flow impact of the Expected Synergies, and then capitalized the free cash flow at a discount rate of 13.5%. The value of the Expected Synergies was then adjusted for the cash costs associated with the merger, the change of control severance costs and the amount that will accrue to Kforce stockholders based on Kforce’s pro forma ownership in the merger. Based on this analysis, Lehman Brothers calculated a present value of the Expected Synergies to Kforce stockholders of approximately $16.8 million. When the Expected Synergies value was added to the base case stand-alone value of Hall Kinion of between $4.36 and $5.64 per share, the total acquired value of Hall Kinion based on the discounted cash flow analysis was $5.67 to $6.95 per share. Based on this value range and Kforce’s closing stock price on December 1, 2003 of $8.34 per share, the corresponding implied exchange ratio was between 0.68 to 0.83 Kforce shares per Hall Kinion share. When the Expected Synergies value was added to the adjusted case stand-alone value of Hall Kinion of between $3.61 and $4.72 per share, the total acquired value of Hall Kinion based on the discounted cash flow analysis was $4.91 to $6.03 per share and the corresponding implied exchange ratio was between 0.59 to 0.72 Kforce shares per Hall Kinion share. Lehman Brothers concluded that, because the exchange ratio in the merger was below the implied exchange ratio range derived from the analysis using the base case, and within the implied exchange ratio range based on the adjusted case, the discounted cash flow analysis was supportive of its opinion as to the fairness, from a financial point of view, to Kforce of the exchange ratio to be paid by Kforce in the merger. The financial forecasts that underlie this analysis are subject to substantial uncertainty and, therefore, actual results may be substantially different.

Pro Forma Merger Analysis

Based on the 2004 forecast prepared in October 2003 by Kforce management and projections provided by Hall Kinion, and assuming the Expected Synergies are realized in accordance with management estimates, Lehman Brothers analyzed the expected pro forma impact of the merger on Kforce’s earnings per share for the fiscal year ending December 31, 2004. Lehman Brothers concluded that, based on its analysis that indicated 55.6% accretion to 2004 earnings per share under the management case and 37.6% accretion to 2004 earnings per share under the adjusted case, the merger would likely be accretive to Kforce’s earnings per share. The financial forecasts that underlie this analysis are subject to substantial uncertainty and, therefore, actual results may be substantially different. Lehman Brothers concluded that the pro forma merger analysis was supportive of its opinion as to the fairness, from a financial point of view, to Kforce of the exchange ratio to be paid by Kforce in the merger.

Lehman Brothers is an internationally recognized investment banking firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with

mergers and acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. The board of directors of Kforce selected Lehman Brothers because of its expertise, reputation, and familiarity with the businesses of Kforce and Hall Kinion, and because its investment banking professionals have substantial experience in transactions comparable to the merger.

As compensation for rendering the Lehman Brothers opinion in connection with the merger, Kforce paid Lehman Brothers a fee of $1.0 million and reimbursed Lehman Brothers approximately $13,000 for its out-of-pocket expenses incurred in connection with the merger. In addition, Kforce has agreed to indemnify Lehman Brothers for certain liabilities that may arise out of its engagement by Kforce and the rendering of the Lehman Brothers opinion.

In the ordinary course of its business, Lehman Brothers may trade in the equity securities of Kforce and Hall Kinion for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities.

Fairness Opinion of Financial Advisor to the Hall Kinion Board of Directors

On April 8, 2003, Hall Kinion retained Robert W. Baird & Co. Incorporated to act as its investment banker and financial advisor in connection with the identification of and negotiation with potential merger partners, and to render Baird’s opinion as to the fairness, from a financial point of view, of the exchange ratio to the holders of Hall Kinion common stock. On December 2, 2003, Baird rendered its opinion to the board of directors of Hall Kinion to the effect that, as of December 2, 2003 and based upon and subject to the various considerations described in the opinion, the exchange ratio of .60, was fair, from a financial point of view, to the holders of Hall Kinion common stock (other than Kforce and its affiliates).

The full text of Baird’s opinion, dated December 2, 2003, which describes the assumptions made, general procedures followed, matters considered and limitations on the scope of review conducted by Baird in rendering its opinion, is attached as Annex C to this proxy statement/prospectus and is incorporated in this document by reference. Baird’s opinion is directed only to the fairness, as of the date of the opinion and from a financial point of view, of the exchange ratio to the holders of Hall Kinion common stock (other than Kforce and its affiliates) and does not constitute a recommendation to you as to how you should vote with respect to the merger agreement. The summary of Baird’s opinion set forth below is qualified in its entirety by reference to the full text of the opinion attached as Annex C. Hall Kinion shareholders are urged to read the opinion carefully in its entirety.

In conducting its investigation and analysis and in arriving at its opinion, Baird reviewed information and took into account financial and economic factors it deemed relevant under the circumstances. In rendering its opinion, Baird, among other things:

•

reviewed certain internal information, primarily financial in nature, including projections, concerning the business and operations of Hall Kinion furnished to Baird for purposes of its analysis, as well as publicly available information including Hall Kinion’s recent filings with the SEC and equity analyst research reports prepared by various investment banking firms including Baird;

•

reviewed certain internal information, primarily financial in nature, concerning the business and operations of Kforce furnished to Baird for its analysis, as well as publicly available information including Kforce’s recent filings with the SEC and equity research reports prepared by various investment banking firms including Baird;

•

reviewed the merger agreement in the form presented to Hall Kinion’s board of directors;

•

compared the historical market prices and trading activity of Hall Kinion’s and Kforce’s common stock with those of certain other publicly traded companies Baird deemed relevant;

•

compared the financial position and operating results of Hall Kinion and Kforce with those of other publicly traded companies Baird deemed relevant and considered the market trading multiples of such companies;

•

compared the proposed financial terms of the merger with the financial terms of certain other business combinations Baird deemed relevant; and

•

reviewed certain potential pro forma effects of the merger.

Baird held discussions with members of Hall Kinion’s and Kforce’s respective senior management teams concerning Hall Kinion’s and Kforce’s historical and current financial condition and operating results, as well as the future prospects of Hall Kinion and Kforce, respectively. Baird also considered other information, financial studies, analyses and investigations and financial, economic and market data which Baird deemed relevant for the preparation of its opinion. As part of the services provided by Baird, Baird was asked to, and did solicit third-party indications of interest in acquiring all or any part of Hall Kinion. Hall Kinion and Kforce determined the exchange ratio in arms-length negotiations as part of a competitive bidding process. Hall Kinion did not place any limitation upon Baird with respect to the procedures followed or factors considered by Baird in rendering its opinion.

In arriving at its opinion, Baird assumed and relied upon the accuracy and completeness of all of the financial and other information that was publicly available or provided to Baird by or on behalf of Hall Kinion and Kforce. Baird was not engaged to independently verify any of this information. Baird assumed, with Hall Kinion’s consent, that:

•

all material assets and liabilities (contingent or otherwise, known or unknown) of Hall Kinion and Kforce were as set forth in their respective financial statements;

•

the merger will qualify as a tax-free reorganization for federal income tax purposes; and

•

the merger will be consummated in accordance with the terms set forth in the merger agreement, without any amendment thereto and without waiver by Hall Kinion or Kforce of any of the conditions to their respective obligations under the merger agreement.

Baird also assumed that the financial projections prepared by Hall Kinion’s senior management concerning Hall Kinion’s financial performance (the “Hall Kinion projections”) were reasonably prepared on bases reflecting the best available estimates and good faith judgments as to future performance of Hall Kinion. At the direction of Hall Kinion, Baird relied on a published equity research analyst report prepared by Baird for estimates of Kforce’s projected financial performance for fiscal years 2003 and 2004 (the “Kforce projections”). In conducting its review, Baird did not undertake nor obtain an independent evaluation or appraisal of any of the assets or liabilities, contingent or otherwise, of Hall Kinion or Kforce nor did it make a physical inspection of the properties or facilities of Hall Kinion or Kforce. Baird’s opinion necessarily was based upon economic, monetary and market conditions as they existed and could be evaluated on the date of its opinion, and did not predict or take into account any changes which may occur, or information which may become available, after the date of the opinion. Furthermore, Baird expressed no opinion as to the price or trading range at which any of Hall Kinion’s or Kforce’s securities (including Hall Kinion common stock and Kforce common stock) will trade following the date of Baird’s opinion.

The following is a summary of the material financial analyses performed by Baird in connection with rendering its opinion. Each of the following tables contained in this “Fairness Opinion of Financial Advisor to the Hall Kinion Board of Directors” section is qualified in its entirety by reference to the other disclosures contained in this section and to Baird’s opinion attached as Annex C to this joint proxy statement/prospectus.

Summary of Hall Kinion Implied Merger Multiples. Baird calculated the “implied equity value per share” reflected by the terms of the merger to be $5.04 for each share of Hall Kinion common stock. The implied equity values per share were obtained by multiplying the closing price per share of Kforce common stock of $8.40 on

November 25, 2003 by the exchange ratio of .60. Baird calculated the “implied total equity value” and “implied enterprise value” of Hall Kinion as a result of the merger to be $64.1 million and $77.1 million, respectively. The implied total equity value was obtained by multiplying the implied equity value per share by the total number of common shares outstanding as of November 5, 2003, plus each outstanding, unexercised and fully vested option to purchase Hall Kinion common stock with an exercise prices less than the Kforce stock market value multiplied by the exchange ratio, less gross proceeds from the exercise of those stock options. The implied enterprise value was obtained by adding Hall Kinion’s outstanding total debt, OnStaff earnout payment and the present value of the closed office lease expense to, and subtracting Hall Kinion’s cash and cash equivalents balances (as of October 31, 2003, as provided by Hall Kinion management) from, the implied total equity value.

In performing its analysis, Baird used, among other items, operating statistics exclusive of non-recurring items for Hall Kinion’s latest twelve months (“LTM”) ended September 30, 2003, with the exception of total debt and cash and cash equivalents balances which were as of October 31, 2003. Baird also used operating statistics for estimated 2003 and projected 2004. Baird calculated multiples of the implied enterprise value to Hall Kinion’s LTM revenue, earnings before interest, taxes, depreciation and amortization (“EBITDA”), and earnings before interest and taxes (“EBIT”) as well as estimated 2003 revenue, EBITDA, and EBIT and projected 2004 revenue, EBITDA, and EBIT, per the Hall Kinion projections. Baird also calculated multiples of the implied total equity value to Hall Kinion’s LTM net income and EPS as well as estimated 2003 net income and EPS and projected 2004 net income and EPS, per the Hall Kinion projections. The table below summarizes the results of this analysis and is qualified in its entirety by reference to other disclosures contained in this section and Baird’s opinion attached as Annex C to this proxy statement/prospectus.


	Implied Hall Kinion Merger Multiples
	LTM		2003		2004
Implied Enterprise Value / Revenue	0.47	x	0.49	x	0.44	x
Implied Enterprise Value / EBITDA	44.1		21.6		11.3
Implied Enterprise Value / EBIT	N/A		N/A		17.7
Implied Equity Value / Net Income	N/A		N/A		22.2
Implied Equity Value / EPS	N/A		N/A		22.7

Summary of Hall Kinion’s Valuation Premiums. Baird compared the premium to holders of Hall Kinion common stock represented by the implied equity value per share of $5.04 to the closing prices for Hall Kinion common stock on November 25, 2003 and on the dates one day, seven days, 30 days, 60 days, 90 days, 180 days and one year prior to November 25, 2003, as well as to the 52-week high and the 52-week low closing prices. Baird calculated that the implied equity value per share represented the following premiums to holders of Hall Kinion common stock;

a premium of 30.9% over the closing price of $3.85 for the Hall Kinion common stock one day prior to November 25, 2003;

a premium of 29.6% over the closing price of $3.89 for Hall Kinion common stock seven days prior thereto;

a premium of 8.2% over the closing price of $4.66 for Hall Kinion common stock 30 days prior thereto;

a premium of 25.4% over the closing price of $4.02 for Hall Kinion common stock 60 days prior thereto;

a premium of 19.4% over the closing price of $4.22 for Hall Kinion common stock 90 days prior thereto;

a premium of 86.0% over the closing price of $2.71 for Hall Kinion common stock 180 days prior thereto;

a discount of 12.2% to the closing price of $5.74 for Hall Kinion common stock one year prior thereto;

a discount of 27.4% to the 52-week high of $6.94 for Hall Kinion common stock prior thereto; and

a premium of 600.0% over the 52-week low of $0.72 for Hall Kinion common stock prior thereto.

Analysis of Selected Publicly Traded Hall Kinion Comparable Companies. Baird reviewed certain publicly available financial information as of the most recently reported period and stock market information as of November 25, 2003 for 14 publicly traded companies that Baird deemed relevant. The group of selected publicly traded staffing services companies is listed below:


Alternative Resources Corporation		MPS Group, Inc.
Analysts International Corporation		On Assignment, Inc.
Butler International, Inc.		RCM Technologies, Inc.
CDI Corporation		Robert Half International, Inc.
Computer Task Group, Inc.		Spherion Corporation
Hudson Highland Group, Inc.		TSR, Inc.
Kforce, Inc.		Volt Information Sciences, Inc.

Baird selected these companies based on its review of publicly traded companies that possessed general business, operating and financial characteristics representative of companies in the industry in which Hall Kinion operates. Baird noted that none of the companies reviewed is identical to Hall Kinion and that, accordingly, the analysis of these companies necessarily involves complex considerations and judgments concerning differences in the business, financial and operating characteristics of each company and other factors that affect the market values of these companies.

Baird also selected a subset of the group of 14 publicly traded companies that included eight companies that have a market capitalization of less than $175.0 million (“Small Cap”), as of November 25, 2003. The Small Cap group of selected publicly traded staffing services companies is listed below:


Alternative Resources Corporation		Hudson Highland Group, Inc.
Analysts International Corporation		On Assignment, Inc.
Butler International, Inc.		RCM Technologies, Inc.
Computer Task Group, Inc.		TSR, Inc.

Baird selected these companies based on its review of publicly traded companies that possessed general business, operating and financial characteristics representative of companies in the industry in which Hall Kinion operates and the market dynamics affecting smaller companies in the industry in which Hall Kinion operates. Baird noted that none of the companies reviewed is identical to Hall Kinion and that, accordingly, the analysis of these companies necessarily involves complex considerations and judgments concerning differences in the business, financial and operating characteristics of each company and other factors that affect the market values of these companies.

For each selected company, Baird calculated the implied equity value by multiplying the closing stock price of each company as of November 25, 2003, by the total number of outstanding shares on a diluted basis, utilizing the treasury method. In addition, Baird calculated enterprise value for each selected company by adding the book value of outstanding total debt, preferred stock and minority interests to, and subtracting cash and cash equivalents from, equity value. Baird then calculated multiples of enterprise value to each selected company’s latest quarter annualized (“LQA”) revenue, LTM revenue, EBITDA and EBIT, estimated 2003 revenue, EBITDA and EBIT and projected 2004 revenue, EBITDA and EBIT, exclusive of non-recurring items, as of the most recently reported period. Baird also calculated multiples of each selected company’s equity value per share to each selected company’s LTM EPS, estimated 2003 EPS and projected 2004 EPS, exclusive of non-recurring items. Estimated 2003 and projected 2004 statistics for the selected companies were based on publicly available equity research analyst reports. Baird then compared the trading multiples for the selected companies to relevant Hall Kinion implied merger multiples, as implied in the proposed merger, based on Hall Kinion’s operating results for the LQA and LTM periods ended September 30, 2003, and estimated 2003 and projected 2004. The

table below summarizes the results of the analysis and is qualified in its entirety by reference to the other disclosures contained in this section and Annex C of this proxy statement/prospectus.


	Implied Hall Kinion Merger Multiples		Implied Selected Public Comparable Company Trading Multiples
			All Comp. Companies								Small Cap Comp. Companies
			Low		Mean		Median		High		Low		Mean		Median		High
Enterprise Value Multiples:
LQA Revenue	0.46	x	0.12	x	0.49	x	0.37	x	1.83	x	0.12	x	0.33	x	0.36	x	0.47	x
LTM Revenue	0.47		0.12		0.49		0.36		1.90		0.12		0.31		0.35		0.42
2003 Revenue	0.49		0.29		0.53		0.50		0.83		N/M		N/M		N/M		N/M
2004 Revenue	0.44		0.28		0.50		0.47		0.77		N/M		N/M		N/M		N/M
LTM EBITDA	44.1	x	5.4	x	19.9	x	13.3	x	63.9	x	5.4	x	10.3	x	8.3	x	17.3	x
2003 EBITDA	21.6		15.2		31.5		30.5		47.3		N/M		N/M		N/M		N/M
2004 EBITDA	11.3		8.6		14.0		13.0		20.9		N/M		N/M		N/M		N/M
LTM EBIT	N/A		5.6	x	19.1	x	21.8	x	30.1	x	5.6	x	16.4	x	14.9	x	30.1	x
2003 EBIT	N/A		28.9		44.2		44.2		59.5		N/M		N/M		N/M		N/M
2004 EBIT	17.7	x	16.2		25.7		25.4		33.9		N/M		N/M		N/M		N/M
Equity Value Multiples:
LTM EPS	N/A		10.9	x	42.7	x	28.1	x	98.6	x	10.9	x	28.9	x	14.4	x	61.2	x
Cal. 2003 EPS	N/A		11.3		45.2		49.2		83.2		N/M		N/M		N/M		N/M
Cal. 2004 EPS	22.7	x	9.9		33.6		25.9		57.8		9.9		28.9		18.9		57.8

Based on the public company trading multiples, Baird analyzed the resulting implied exchange ratios derived from applying the selected comparable company valuation multiples to Hall Kinion’s LTM revenue, EBITDA, EBIT and EPS, estimated 2003 revenue, EBITDA, EBIT and EPS and projected 2004 revenue, EBITDA, EBIT and EPS. Baird derived an implied exchange ratio range of 0.07 to 2.76 Kforce shares per Hall Kinion share for the “All Comparable Companies” group and an implied exchange ratio range of 0.07 to 1.53 Kforce shares per Hall Kinion share for the “Small Cap Comparable Companies” group, as compared to the exchange ratio for the merger of 0.60 Kforce shares per Hall Kinion share. Baird concluded that, because the exchange ratio in the merger was within the implied exchange ratio range derived from the analysis, such analysis was supportive of its opinion as to the fairness, from a financial point of view, to the holders of Hall Kinion’s common stock of the exchange ratio to be paid by Kforce in the merger. The table below summarizes the results of the analysis and based upon the merger Exchange Ratio of .60. The analysis is qualified in its entirety by reference to the other disclosures contained in this section and Annex C of this proxy statement/prospectus.

Implied Selected Public

Comparable Company Trading Multiples⁽¹⁾

All Comp. Companies

Small Cap Comp. Companies

Low

Mean

Median

High

Low

Mean

Median

High

Enterprise Value Multiples:

LQA Revenue

0.07

0.64

0.45

2.74

0.07

0.39

0.44

0.62

LTM Revenue

0.07

0.62

0.43

2.76

0.07

0.35

0.40

0.51

2003 Revenue

0.31

0.66

0.61

1.11

N/M

2004 Revenue

0.33

0.69

0.65

1.14

N/M

LTM EBITDA

N/M

0.20

0.09

0.92

N/M

2003 EBITDA

0.39

0.93

0.90

1.46

N/M

2004 EBITDA

0.42

0.77

0.71

1.21

N/M

LTM EBIT

N/A

2003 EBIT

N/M

2004 EBIT

0.54

0.92

0.91

1.26

N/M

Equity Value Multiples:

LTM EPS

N/A

Calendar 2003 EPS

N/A

Calendar 2004 EPS

0.26

0.89

0.69

1.53

0.26

0.76

0.50

1.53

(1)	Based on a Kforce share price of $8.40 as of November 25, 2003.

Analysis of Selected Comparable Acquisition Transactions. Baird reviewed certain publicly available financial information for eight selected acquisition transactions, which Baird deemed relevant. The eight transactions reviewed were (acquiror / acquired company):

—

Management Group / The Judge Group, Inc.

—

Research Park Acquisition, Inc. / RWD Technologies, Inc.

—

Ohsea Holdings Limited / Professional Staff plc

—

Cravey, Green & Wahlen / AHL Services, Inc.

—

Intellimark Holdings, Inc. / Technisource, Inc.

—

Hall, Kinion & Associates, Inc. / OnStaff

—

Ciber, Inc. / Decision Consultants, Inc.

—

Aquent, Inc. / Renaissance Worldwide, Inc.

Baird chose these transactions based on its review of acquisition transactions that possessed general business, operating and financial characteristics representative of companies in the industry in which Hall Kinion operates. Baird noted that none of the selected transactions reviewed were identical to the merger. Accordingly, Baird noted that the analysis of comparable transactions necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics of Hall Kinion and other factors that would affect the acquisition value of comparable transactions including, among other factors, the general market conditions prevailing in the equity capital markets at the time of that transaction and the form of consideration used in the selected transactions.

For each selected transaction, Baird calculated multiples of enterprise value to each selected company’s LTM revenue and LTM EBITDA, exclusive of non-recurring items, as of the most recently reported period. Baird then compared the implied merger multiples for the selected transactions to relevant Hall Kinion implied merger multiples, as implied in the proposed merger, based on Hall Kinion’s operating results for LTM period ended September 30, 2003, and estimated 2003. The table below summarizes the results of these analyses and are qualified in their entirety by reference to the other disclosures contained in this section and Annex C of this proxy statement/prospectus.


	Implied Hall Kinion Merger Multiples				Implied Selected Acquisition LTM Multiples
	LTM		2003		Low		Mean		Median		High
Enterprise Value / Revenue	0.47	x	0.49	x	0.10	x	0.32	x	0.31	x	0.57	x
Enterprise Value / EBITDA	44.1		21.6		8.2		10.0		9.4		13.0

Based on implied selected acquisition multiples, Baird analyzed the resulting implied exchange ratios derived from applying the selected comparable acquisition valuation multiples to Hall Kinion’s LTM revenue and EBITDA and estimated 2003 revenue and EBITDA. Baird derived an implied exchange ratio range of 0.03 to 0.74 Kforce shares per Hall Kinion share, as compared to the exchange ratio in the merger of 0.60 Kforce shares per Hall Kinion share. Baird concluded that, because the exchange ratio in the merger was within the implied exchange ratio range derived from the analysis, such analysis was supportive of its opinion as to the fairness, from a financial point of view, to the holders of Hall Kinion’s common stock of the exchange ratio to be paid by Kforce in the merger. The table below summarizes the results of the analysis and is qualified in its entirety by reference to the other disclosures contained in this section and Annex C of this proxy statement/prospectus.

Implied Exchange Ratio(1)

Low

Mean

Median

High

LTM Revenue

0.03

0.36

0.34

0.74

2003 Revenue

0.03

0.35

0.33

0.72

LTM EBITDA

N/M

2003 EBITDA

0.15

0.21

0.19

0.31

(1)	Based on a Kforce share price of $8.40 as of November 25, 2003.

Baird also calculated the premiums paid for the equity in these transactions over the public market value of the equity at various times prior to the announcement of these transactions. Baird then compared the premiums of the selected acquisitions to the relevant Hall Kinion premiums implied in the merger based on Hall Kinion’s closing price one day, seven days, 30 days, 60 days, 90 days and 180 days prior to November 25, 2003. Additionally, Baird analyzed the 11 public company stock-for-stock mergers with enterprise values between $50.0 million and $100.0 million that were completed between January 1, 2002 and November 25, 2003. Baird then compared those premiums to the relevant Hall Kinion premiums implied in the merger based on Hall Kinion’s closing price one day, seven days, 30 days, 60 days, 90 days and 180 days prior to November 25, 2003. The table below summarizes the results of these analyses and are qualified in their entirety by reference to the other disclosures contained in this section and Annex C of this proxy statement/prospectus.


Premium	Implied Hall Kinion Transaction Premiums		Implied Selected Acquisition Premiums
			Selected Comparable Merger Transactions								Selected Stock-for-Stock Merger Transactions
			Low		Mean		Median		High		Low		Mean		Median		High
One-Day	30.9	%	16.7	%	73.8	%	51.7	%	167.9	%	(17.0	%)	33.1	%	19.2	%	113.4	%
Seven-Days	29.6	%	16.7	%	78.5	%	65.8	%	150.0	%	0.7	%	53.3	%	38.8	%	136.8	%
30-Days	8.2	%	16.7	%	75.8	%	56.0	%	157.7	%	(9.9	%)	76.2	%	66.1	%	171.9	%
60-Days	25.4	%	29.4	%	92.4	%	86.4	%	206.1	%	(7.4	%)	116.4	%	124.3	%	221.4	%
90-Days	19.4	%	25.5	%	72.0	%	68.5	%	128.4	%	(0.5	%)	109.1	%	64.3	%	284.6	%
180-Days	86.0	%	23.5	%	120.4	%	130.8	%	241.9	%	(25.6	%)	120.1	%	72.9	%	312.6	%

Discounted Cash Flow Analysis. Baird performed a discounted cash flow analysis of Hall Kinion on a stand alone basis using the Hall Kinion projections for calendar years 2004 through 2008 as provided by Hall Kinion, without taking into account any potential cost savings and synergies which may be realized following the merger. In that analysis, Baird assumed terminal value multiples of 0.30x to 0.40x revenue in calendar year 2008 and discount rates of 13.5% to 15.5%, which represent the estimated weighted average cost of capital for Hall Kinion. Given that Hall Kinion has a significant balance of net operating loss carryforwards (“NOLs”) currently on its balance sheet, Baird applied NOLs against any pre-tax earnings before interest, taxes and amortization in the tax expense calculation in the discounted cash flow analysis. That analysis produced a range of implied exchange ratios of 0.36 to 0.52 Kforce shares per Hall Kinion share, as compared to the exchange ratio in the merger of 0.60 Kforce shares per Hall Kinion share. Baird concluded that, because the exchange ratio in the merger was above the high end of the implied exchange ratio range derived from the analysis, such analysis was supportive of its opinion as to the fairness, from a financial point of view, to the holders of Hall Kinion’s common stock of the exchange ratio to be paid by Kforce in the merger.

Pro Forma Merger Analysis. Baird prepared a pro forma analysis of the financial impact of the merger. Baird compared the earnings per share of Kforce common stock, on a stand-alone basis, to the earnings per share of the common stock of the combined company on a pro forma basis for calendar year 2004, per the Hall Kinion projections. The analysis, based on the projections provided by Hall Kinion and assuming cost savings and operating synergies expected by the management of Hall Kinion and Kforce to result from a combination of the businesses of Hall Kinion and Kforce, indicated that the proposed transaction would be 56.1% accretive to Kforce shareholders on an earnings per share basis in calendar 2004. The results of the pro forma merger analysis are not necessarily indicative of future operating results or financial position. The actual results achieved by the combined company may vary from the projected results and the variations may be material. In conducting its analysis, Baird relied upon certain assumptions and projected earnings estimates described above for Hall Kinion and Kforce and the Hall Kinion projections.

Implied Exchange Ratio Analysis. Baird performed an analysis of the historical trading ratio between Hall Kinion common stock and Kforce common stock based on the closing market price per share of Hall Kinion

common stock relative to the closing market price per share of Kforce common stock for each trading day for the latest twelve-month period ended November 25, 2003. This analysis yielded a trading ratio of 0.46 on November 24, 2003 and an average historical trading ratio of 0.50 over the prior 30-day period, 0.54 over the prior 90-day period, 0.58 over the prior 180-day period and 0.67 over the latest one-year period. This analysis resulted in an implied exchange ratio range of 0.46 to 0.67 Kforce shares per Hall Kinion share, as compared to the exchange ratio in the merger of 0.60 Kforce shares per Hall Kinion share. Baird concluded that, because the exchange ratio in the merger was within the implied exchange ratio range derived from the analysis, such analysis was supportive of its opinion as to the fairness, from a financial point of view, to the holders of Hall Kinion’s common stock of the exchange ratio to be paid by Kforce in the merger.

Analysis of Selected Publicly Traded Kforce Comparable Companies. In order to assess the relative public market valuation of the Kforce common stock to be used by Kforce in exchange for Hall Kinion common stock, Baird reviewed certain publicly available financial information as of the most recently reported period and stock market information as of November 25, 2003 for 14 publicly traded companies that Baird deemed relevant. The group of selected publicly traded companies is listed below:


— Alternative Resources Corporation		— MPS Group, Inc.
— Analysts International Corporation		— On Assignment, Inc.
— Butler International, Inc.		— RCM Technologies, Inc.
— CDI Corporation		— Robert Half International, Inc.
— Computer Task Group, Inc.		— Spherion Corporation
— Hall, Kinion & Associates, Inc.		— TSR, Inc.
— Hudson Highland Group, Inc.		— Volt Information Sciences, Inc.

Baird chose these companies based on its review of publicly traded companies that possessed general business, operating and financial characteristics representative of companies in the industry in which Kforce operates. Baird noted that none of the companies reviewed is identical to Kforce and that, accordingly, the analysis of these companies necessarily involves complex considerations and judgments concerning differences in the business, financial and operating characteristics of each company and other factors that affect the market values of these companies.

Baird also selected a subset of the group of 14 publicly traded companies that included five companies that have a market capitalization of more than $175.0 million (“Large Cap”), as of November 25, 2003. The Large Cap group of selected publicly traded staffing services companies is listed below:


— CDI Corporation		— Spherion Corporation
— MPS Group, Inc.		— Volt Information Sciences, Inc.
— Robert Half International, Inc.

Baird selected these companies based on its review of publicly traded companies that possessed general business, operating and financial characteristics representative of companies in the industry in which Kforce operates and the market dynamics affecting larger companies in the industry in which Kforce operates. Baird noted that none of the companies reviewed is identical to Kforce and that, accordingly, the analysis of these companies necessarily involves complex considerations and judgments concerning differences in the business, financial and operating characteristics of each company and other factors that affect the market values of these companies.

For each selected company, Baird calculated the equity value by multiplying closing stock price of each company as of November 25, 2003, by the total number of outstanding shares on a diluted basis, utilizing the treasury method. In addition, Baird calculated enterprise value for each selected company by adding the book value of outstanding total debt, preferred stock and minority interests to, and subtracting cash and cash equivalents from, equity value. Baird then calculated multiples of enterprise value to each selected company’s

LQA revenue, LTM revenue, EBITDA and EBIT, estimated 2003 revenue, EBITDA and EBIT and projected 2004 revenue, EBITDA and EBIT exclusive of non-recurring items, as of the most recently reported period. Baird also calculated multiples of each selected company’s equity value per share to each selected company’s LTM EPS, estimated 2003 EPS and projected 2004 EPS, exclusive of non-recurring items. Estimated 2003 and projected 2004 statistics for the selected companies were based on publicly available equity analyst research reports. Baird then compared the trading multiples for the selected companies to relevant Kforce trading multiples based on Kforce’s operating results for the LTM period ended September 30, 2003, and estimated 2003 and projected 2004, per the Kforce projections. The table below summarizes the results of the analysis and is qualified in its entirety by reference to the other disclosures contained in this section and Annex C of this proxy statement/prospectus.


	Implied Kforce Trading Multiples		Implied Selected Public Comparable Company Trading Multiples
			All Comp. Companies								Large Cap Comp. Companies
			Low		Mean		Median		High		Low		Mean		Median		High
Enterprise Value Multiples:
LQA Revenue	0.54	x	0.12	x	0.47	x	0.36	x	1.83	x	0.16	x	0.73	x	0.56	x	1.83	x
LTM Revenue	0.54		0.12		0.47		0.35		1.90		0.17		0.75		0.56		1.90
2003 Revenue	0.54		0.29		0.49		0.41		0.83		0.29		0.56		0.56		0.83
2004 Revenue	0.51		0.28		0.47		0.41		0.77		0.28		0.52		0.52		0.77

LTM EBITDA	34.4	x	5.4	x	19.8	x	13.3	x	63.9	x	7.9	x	26.6	x	17.5	x	63.9
2003 EBITDA	30.5		15.2		29.8		22.3		47.3		18.6		37.2		45.8		47.3
2004 EBITDA	16.4		8.6		13.1		11.9		20.9		11.0		15.0		13.0		20.9

LTM EBIT	N/M		5.6	x	19.1	x	21.8	x	30.1	x	16.5	x	22.8	x	24.5	x	27.3	x
2003 EBIT	59.5	x	N/M		N/M		N/M		N/M		N/M		N/M		N/M		N/M
2004 EBIT	21.3		16.2		30.5		31.5		45.6		16.2		27.2		31.5		33.9

Equity Value Multiples:
LTM EPS	N/M		10.9	x	42.7	x	28.1	x	98.6	x	28.1	x	63.3	x	63.3	x	98.6	x
Cal. 2003 EPS	N/M		11.3		35.6		38.7		53.8		28.3		43.8		49.2		53.8
Cal. 2004 EPS	25.2	x	9.9		33.7		26.2		57.8		22.6		39.3		38.6		57.4

The foregoing is only a summary of the analyses performed by Baird and does not purport to be a complete description of its presentation to the Hall Kinion board of directors. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analyses or summary description. Baird believes that its analysis and the summary set forth above must be considered as a whole and that selecting portions of the analysis and of the factors considered by Baird, without considering the entire analysis and all factors, would create an incomplete view of the processes underlying the analysis conducted by Baird and its opinion. Baird did not attempt to assign specific weights to particular portions of the analysis. Any estimates contained in Baird’s analysis are not necessarily indicative of actual values, which may be significantly more or less favorable than as set forth in Baird’s analysis. Estimates of values of companies do not purport to be appraisals or necessarily to reflect the prices at which companies may actually be sold.

Baird, as part of its investment banking business, is regularly engaged in the evaluation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements, and valuations for estate planning, corporate and other purposes. Hall Kinion retained Baird because of its reputation and substantial experience and expertise in the valuation of businesses and their securities in connection with mergers and acquisitions.

In the ordinary course of business, Baird may from time to time trade in securities, including the securities of Hall Kinion or Kforce, for its own account and for accounts of its customers and, accordingly, may at any time hold a long or short position in these securities.

Pursuant to an engagement letter agreement dated April 8, 2003 between Hall Kinion and Baird, Hall Kinion agreed to pay Baird a non-refundable retainer fee of $50,000 fully creditable to the transaction fee; an additional fee of $300,000 payable upon delivery of its opinion, fully creditable to the transaction fee, regardless of the conclusions reached by Baird in such opinion; and a transaction fee, payable upon consummation of the merger, equal to 3.5% of total enterprise value up to $55.0 million, plus incentive compensation structure for total enterprise value in excess of $55.0 million, with a minimum transaction fee of $850,000. For purposes of calculating Baird’s transaction fee, total enterprise value will be determined by adding Hall Kinion’s outstanding total debt, OnStaff earnout payment and the present value of the closed office lease expenses to, and subtracting Hall Kinion’s cash and cash equivalents balances from, the implied total equity value at the time of consummation of the merger. Implied total equity value will be obtained by multiplying the implied equity value per share by the total number of common shares outstanding, plus each outstanding, unexercised and fully vested option to purchase Hall Kinion common stock with an exercise price less than the Kforce stock market value multiplied by the exchange ratio, less gross proceeds from the exercise of those stock options. As of December 2, 2003, the date of Baird’s fairness opinion to the Hall Kinion board of directors, assuming a Kforce price per share of $8.40, total enterprise value of Hall Kinion was equal to $77.1 million, implying a transaction fee of approximately $2.9 million. The implied transaction fee is an estimate of the actual transaction fee to be paid to Baird and depends upon the total equity value and total enterprise value as calculated at the consummation of the merger. In the engagement letter, which was negotiated between Hall Kinion and Baird, Hall Kinion has agreed to reimburse Baird for its reasonable out-of-pocket expenses which are estimated to be approximately $50,000. Hall Kinion has also agreed to indemnify Baird, its affiliates and their respective directors, officers, employees and agents and controlling persons against certain liabilities relating to or arising out of its engagement, including liabilities under the federal securities laws.

In the past, Baird has performed investment banking services for Hall Kinion, including acting as co-manager on Hall Kinion’s initial public offering, lead manager on Hall Kinion’s secondary offering in April 2000, and as Hall Kinion’s financial advisor in connection with its acquisition of OnStaff in 2002. Baird received its customary compensation in each of these transactions.

Material United States Federal Income Tax Consequences

The following is a summary discussion addressing the material U.S. federal income tax consequences of the merger generally applicable to Hall Kinion stockholders who hold their shares of Hall Kinion common stock as capital assets at the effective time of the merger and who exchange their shares for shares of Kforce common stock and, as applicable, cash in lieu of fractional shares of Kforce common stock in the merger. The discussion set forth below does not address all U.S. federal income tax considerations that may be relevant to Hall Kinion stockholders in light of their particular circumstances, and does not apply to the treatment of stock options or warrants in the merger or the treatment of Hall Kinion stockholders that are subject to special rules under U.S. federal income tax laws, such as:

•

foreign persons;

•

financial institutions, insurance companies, mutual funds, dealers in securities or foreign currencies, tax-exempt organizations and stockholders subject to the alternative minimum tax;

•

stockholders who hold Hall Kinion common stock as part of a hedge, straddle, constructive sale or conversion transaction, or other risk reduction arrangement;

•

stockholders who acquired their Hall Kinion common stock through stock option or stock purchase programs or otherwise as compensation; and

•

stockholders whose functional currency is not the U.S. dollar.

In addition, this discussion does not consider the tax treatment of Hall Kinion stockholders that hold their Hall Kinion shares through a partnership or other pass-through entity and it does not address the tax consequences of the merger under foreign, state or local tax laws or U.S. federal estate tax laws.

Hall Kinion stockholders are urged to consult their own tax advisors regarding the tax consequences of the merger to them based on their own circumstances, including the application and effect of U.S. federal, state, local and foreign tax laws.

The following discussion is based on interpretations of the Internal Revenue Code, applicable Treasury Regulations, judicial decisions and administrative rulings and practice, all as of the date of this proxy statement/prospectus, all of which are subject to change. Any such change could be applied retroactively and could affect the accuracy of the statements and conclusions set forth in this discussion and the tax consequences of the merger to Kforce, Hall Kinion and/or their respective stockholders. The following discussion is not binding on the Internal Revenue Service or a court and each are not precluded from asserting a contrary position.

Neither Kforce nor Hall Kinion has requested nor will either request a ruling from the Internal Revenue Service with regard to any of the tax consequences of the merger. Hall Kinion will receive an opinion from Gibson, Dunn & Crutcher LLP, counsel to Hall Kinion, or Holland & Knight LLP, counsel to Kforce, if Gibson, Dunn does not render such an opinion, that, as of the effective time of the merger, the merger will constitute a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code. Kforce will receive an opinion from Holland & Knight, or Gibson, Dunn if Holland & Knight does not render such an opinion, that, as of the effective time of the merger, the merger will constitute a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code.

It is a condition to the consummation of the merger that each of Gibson, Dunn & Crutcher LLP and Holland & Knight LLP render such opinion. The opinion will be based upon the assumption that the merger will take place in the manner described in the merger agreement, and also will assume the truth and accuracy of certain factual representations made by Kforce and Hall Kinion which are customarily given in transactions of this kind.

Qualification as a “reorganization” means that, subject to the limitations and qualifications set forth in this discussion, the following U.S. federal income tax consequences will result from the merger:

•

A Hall Kinion stockholder will not recognize gain or loss on the exchange of Hall Kinion common stock for Kforce common stock pursuant to the merger, except with respect to fractional shares, as discussed below;

•

The total initial tax basis of any Kforce stock received by a Hall Kinion stockholder in the merger, less any cash received for fractional shares, will be equal to the total tax basis of the Hall Kinion common stock exchanged therefor; and

•

The holding period of the Kforce common stock received by a Hall Kinion stockholder in the merger will include the holding period of the Hall Kinion common stock surrendered therefor.

Even if the merger did qualify as a reorganization, the receipt of Kforce common stock could be a taxable transaction if the Internal Revenue Service were to successfully assert that such stock was being issued in whole or in part in exchange for consideration other than Hall Kinion stock. In addition, opinions of counsel are not binding on the Internal Revenue Service or the courts. As a result, neither Kforce nor Hall Kinion can assure you that the conclusions contained in this discussion will not be challenged by the Internal Revenue Service or sustained by a court if challenged. If the Internal Revenue Service were to assert successfully that the merger is not a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, then each Hall Kinion stockholder would be required to recognize gain or loss equal to the difference between (i) the fair market value of the Kforce common stock received in the exchange and (ii) the stockholder’s tax basis in the Hall Kinion stock surrendered therefor. In such event, a Hall Kinion stockholder’s total initial tax basis in the Kforce common stock received would be equal to its fair market value at the effective time of the merger, and the stockholder’s holding period for the Kforce common stock would begin on the day after the merger. The gain or loss recognized would be long-term capital gain or loss if the Hall Kinion stockholder’s holding period for the Hall Kinion common stock was more than one year.

Cash Instead of Fractional Shares

Each Hall Kinion stockholder who receives cash in lieu of a fractional share of Kforce common stock in the merger will be treated as having received the fractional share interest in the merger and as having received cash in redemption of such fractional share interest. A Hall Kinion stockholder who receives cash instead of a fractional share of Kforce common stock generally will recognize gain or loss in an amount equal to the difference between (i) the amount of cash received instead of a fractional share and (ii) the portion of the stockholder’s basis in its Hall Kinion stock that is allocated to the fractional share. Such gain or loss will generally be capital gain or loss, and will be long-term capital gain or loss if the Hall Kinion stockholder held (or is treated as having held) the Hall Kinion shares for more than one year as of the effective time of the merger.

Backup Withholding of U.S. Federal Income Tax

A noncorporate holder of Hall Kinion shares may be subject to backup withholding with respect to the amount of cash, if any, received instead of fractional share interests unless the stockholder (i) provides a correct taxpayer identification number (which, for an individual stockholder, generally is the stockholder’s social security number) and certifies that he, she or it is not subject to backup withholding on the substitute W-9 that is included as part of the transmittal letter or (ii) otherwise is exempt from backup withholding. Backup withholding will not apply to a Hall Kinion stockholder who completes and signs the substitute Form W-9 that is included as part of the transmittal letter, or who otherwise proves to Kforce and its exchange agent that it is exempt from backup withholding. A Hall Kinion stockholder who does not provide a correct taxpayer identification number may be subject to penalties imposed by the Internal Revenue Service. Backup withholding is not an additional tax and may be claimed as a credit against a Hall Kinion stockholder’s federal income tax liability, provided that the required information is furnished to the Internal Revenue Service.

Reporting and Record Keeping

A Hall Kinion stockholder is required to retain records of the transaction, and to attach to the stockholder’s federal income tax return for the year of the merger a statement setting forth all relevant facts with respect to the non-recognition of gain or loss in the exchange. At a minimum, the statement must include (i) the stockholder’s tax basis in the Hall Kinion common stock surrendered and (ii) the fair market value, as of the time of the effective date of the merger, of the Kforce common stock received in the exchange therefor.

The preceding discussion does not purport to be a complete analysis of all potential tax consequences of the merger that may be relevant to a particular Hall Kinion stockholder. Holders of Hall Kinion common stock are urged to consult their own tax advisors regarding the specific tax consequences to them of the merger, including the applicability and effect of foreign, state, local and other tax laws.

Accounting Treatment

In accordance with United States generally accepted accounting principles, Kforce will account for the merger using the purchase method of accounting. Under this method of accounting, Kforce will record the market value of its common stock issued in connection with the merger and the amount of direct acquisition costs associated with the merger as the estimated purchase price of acquiring Hall Kinion. Kforce will allocate the estimated purchase price to certain of the net tangible and intangible assets acquired and liabilities assumed, based on their respective fair values at the date of the completion of the merger. Any excess of the estimated purchase price over those fair values will be accounted for as goodwill.

Intangible assets, currently estimated at $10.2 million, will generally be amortized over estimated useful lives of four years, resulting in an estimated accounting charge for amortization attributable to these items of approximately $2.5 million on an annual basis. Goodwill resulting from the merger will not be amortized but instead will be tested for impairment at least annually (more frequently if certain indicators are present). The

amount of the estimated purchase price allocated to goodwill, which is based on certain assumptions set forth in the pro forma condensed combined financial statements, is estimated to be between $60.0 and $70.0 million depending on the value of Kforce common stock on the date of the closing of the merger agreement. The final fair values of identified intangible assets and goodwill to be recorded from this transaction are dependent on the final management assumptions and conclusions based upon an independent valuation of certain of the acquired assets and may differ materially from our current estimates. If Kforce management should change the assumptions used in the allocation of the purchase price, amounts allocated to intangible assets with definite lives may increase significantly, which could result in a material increase in amortization of intangible assets. The amounts listed in this paragraph are only preliminary estimates. Actual amounts may differ significantly from these estimates.

Regulatory Clearances and Approvals

Kforce and Hall Kinion cannot complete the merger until they give notification and furnish information to the Federal Trade Commission and the Antitrust Division of the Department of Justice and observe a statutory waiting period requirement. Kforce and Hall Kinion filed the required notification and report forms with the Federal Trade Commission and the Antitrust Division on December 17, 2003. At any time before or after the effective time of the merger, and notwithstanding that the waiting period has terminated or the merger may have been consummated, the Federal Trade Commission, the Antitrust Division or any state could take such action under the applicable antitrust or competition laws as it deems necessary or desirable. This action could include seeking to enjoin the completion of the merger. Private parties may also institute legal actions under the antitrust laws under some circumstances.

No Appraisal Rights

Under Delaware law, no holder of Hall Kinion common stock will have any appraisal rights in connection with the merger.

Quotation on the Nasdaq National Market

It is a condition to the merger that the shares of Kforce common stock to be issued in the merger be approved for trading on the Nasdaq National Market subject to official notice of issuance.

Delisting and Deregistration of Hall Kinion Common Stock

If the merger is completed, Hall Kinion common stock will be delisted from the Nasdaq National Market and will be deregistered under the Securities Exchange Act of 1934, as amended.

Federal Securities Laws Consequences

The shares of Kforce common stock to be issued in the merger will be registered under the Securities Act of 1933, as amended. These shares will be freely transferable under the Securities Act, except for Kforce common stock issued to any person who is deemed to be an affiliate of Hall Kinion or Kforce. Persons who may be deemed to be affiliates include individuals or entities that control, are controlled by, or are under common control with Hall Kinion and include Hall Kinion’s officers and directors, as well as its principal stockholders. Hall Kinion’s affiliates may not sell their Kforce common stock acquired in the merger, except pursuant to:

•

an effective registration statement under the Securities Act covering the resale of those shares;

•

an exemption under paragraph (d) of Rule 145 under the Securities Act; or

•

any other applicable exemption under the Securities Act.

THE MERGER AGREEMENT

This section is a summary of the material terms and provisions of the merger agreement, as amended, a copy of which is attached as Annex A to this joint proxy statement/prospectus. The following description is not intended to be a complete description of all the terms of the merger agreement. You should refer to the full text of the merger agreement for details of the merger and the terms and conditions of the merger agreement. Kforce and Hall Kinion encourage you to carefully read the complete merger agreement for the precise legal terms of the merger agreement and other information that may be important to you. The merger agreement is hereby incorporated by reference into this joint proxy statement/prospectus.

The Merger

The merger agreement, as amended, provides that upon the closing, Novato Acquisition Corporation, referred to herein as Merger Sub, will be merged with and into Hall Kinion, with Hall Kinion as the surviving corporation. As a result of the merger, Hall Kinion will become a wholly-owned subsidiary of Kforce. The merger will become effective on the date of filing of a certificate of merger with the Secretary of State of the State of Delaware. This is referred to as the “effective time” of the merger. Following the merger, the certificate of incorporation and bylaws of Merger Sub will become the certificate of incorporation and bylaws of Hall Kinion, and the directors and officers of Merger Sub will become the directors and officers of Hall Kinion. In connection with the closing of the merger, certain members of Hall Kinion management will receive severance and other benefits which are described in detail under “Interests of Certain Persons in the Merger—Severance Arrangements”.

The Exchange Ratio and Treatment of Securities

At the effective time of the merger:

•

Hall Kinion stockholders will receive, in exchange for shares of Hall Kinion common stock, an aggregate amount of fully paid and nonassessable shares of Kforce common stock based upon the exchange ratio;

•

The exchange ratio is dependent on the Kforce stock market value. The Kforce stock market value is the average of the per share closing prices of Kforce common stock on the Nasdaq National Market over the 15 consecutive trading days ending on and including the third trading day prior to the date of the merger. The exchange ratio shall be determined as follows:

(1)

if the Kforce stock market value is equal to or greater than $7.09, but less than $9.60, then the exchange ratio will be .60, which results in Hall Kinion stockholders receiving between $54.6 million and $74.4 million in Kforce common stock. The collar around the .60 exchange ratio represents a 15% increase and a 15% decrease in the $8.34 closing price of Kforce common stock on December 1, 2003, the day immediately prior to the execution of the merger agreement;

(2)

if the Kforce stock market value is equal to or greater than $9.60, then the exchange ratio shall equal $5.75 divided by the Kforce stock market value, which results in Hall Kinion stockholders receiving no less than approximately $74.4 million; or

(3)

if the Kforce stock market value is less than $7.09, then the exchange ratio shall equal $4.25 divided by the Kforce stock market value, which will result in Hall Kinion stockholders receiving no more than approximately $54.6 million.

There may be some delay between the Hall Kinion stockholders vote to approve the merger and when the merger is actually completed, during which time the price of Kforce common stock could decline. As a result, Hall Kinion stockholders will not know with certainty at the time they vote the value of the shares of Kforce common stock they will receive in the merger.

•

shares of Hall Kinion common stock held in the treasury of Hall Kinion or that are owned by Hall Kinion or Kforce will be canceled and no Kforce common stock or other consideration will be delivered in exchange for this cancellation;

•

each outstanding and fully vested option to purchase Hall Kinion common stock issued and outstanding immediately prior to the effective time with an exercise price less than (i) the Kforce stock market value multiplied by (ii) the exchange ratio automatically will be converted into the right to receive an aggregate amount of fully paid and nonassessable shares of Kforce common stock as if such option had been exercised on a “net-exercise” basis immediately prior to the effective time;

•

all other outstanding options to purchase Hall Kinion common stock will be automatically terminated as of the effective time;

•

each share of Merger Sub issued and outstanding immediately prior to the effective time will be converted into one share of the surviving corporation; and

•

the exchange ratio will be adjusted to provide for any reclassification, recapitalization, stock split, split up, stock dividend, combination, exchange of shares or any similar transaction with respect to, or rights issued in respect of, Hall Kinion common stock or Kforce common stock occurring before the merger.

Exchange of Certificates

Promptly after the effective time of the merger, Kforce’s exchange agent will mail to each stockholder of record of Hall Kinion a letter of transmittal containing instructions for the surrender of certificates representing Hall Kinion common stock in exchange for certificates representing Kforce common stock.

Holders of Hall Kinion common stock should not send in their certificates until they receive a letter of transmittal from the exchange agent.

If any Hall Kinion stock certificate is lost, stolen or destroyed, a Hall Kinion stockholder must provide an appropriate affidavit of that fact. Kforce may require a Hall Kinion stockholder to deliver a bond as indemnity against any claim that may be made against Kforce with respect to any lost, stolen or destroyed certificate.

Kforce will not issue any fractional shares in the merger. Instead of issuing fractional shares of Kforce common stock, the holders of shares of Hall Kinion common stock who would otherwise have been entitled to a fraction of a share of Kforce common stock pursuant to the merger agreement will receive cash in an amount equal to the product of the fractional interest of Kforce common stock the Hall Kinion stockholder would have been entitled to receive multiplied by the Kforce stock market value. No interest will be paid or accrued on cash in lieu of fractional shares, if any. Hall Kinion and Kforce currently estimate that not more than $1,000 in the aggregate will likely be paid to holders of Hall Kinion common stock in lieu of fractional shares.

If, after twelve months from the effective time of the merger, a holder of shares of Hall Kinion common stock has not surrendered the stock certificates representing such shares to the exchange agent, then the holder of stock certificates representing Hall Kinion common stock may look only to Kforce to receive its shares of Kforce common stock, cash in lieu of fractional shares and any unpaid dividends and distributions on shares of Kforce common stock.

None of Kforce, Merger Sub, Hall Kinion or the exchange agent will be liable to any holder of a certificate formerly representing shares of Hall Kinion common stock for Kforce common stock, cash in lieu of fractional shares or any unpaid dividends and distributions properly delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.

Transfer of Shares

The stock transfer books of Hall Kinion will be closed immediately upon the effective time and no transfers of shares of Hall Kinion common stock will be made or recorded on the stock transfer books after the effective time of the merger.

Representations and Warranties of Hall Kinion

The merger agreement contains customary representations and warranties of Hall Kinion, subject to qualifications, with respect to itself and its subsidiaries, relating to, among other things, the following matters:

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corporate organization;

•

capitalization;

•

the corporate power and authority to execute, deliver and perform the merger agreement and to consummate the transactions contemplated by the merger agreement;

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the absence of conflicts between the charters, bylaws, agreements and applicable laws, on the one hand, and the merger agreement and the consummation of the transactions contemplated thereby, on the other hand;

•

the absence of any required governmental consents, approvals or authorizations other than those specified in the merger agreement with respect to the execution of the merger agreement and the consummation of the transactions contemplated by the agreement;

•

the timely filing of documents and the accuracy of information contained in documents filed with the SEC;

•

the absence of undisclosed liabilities;

•

the absence of material changes or events relating to the businesses of Hall Kinion and its subsidiaries since September 28, 2003;

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the absence of undisclosed pending or threatened material litigation;

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compliance with applicable laws and possession of permits;

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benefits plans and other employment-related matters;

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the existence, validity and status of contracts;

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compliance with environmental laws and regulations;

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intellectual property matters;

•

title to properties;

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insurance matters;

•

timely filing of tax returns and other tax-related matters;

•

the absence of actions that would prevent the merger from qualifying as a reorganization under Section 368 of the U.S. tax code;

•

the accuracy of information supplied by the parties in connection with this joint proxy statement/prospectus and the registration statement of which it is a part;

•

the absence of affiliate transactions except as disclosed in the merger agreement and the documents filed by Hall Kinion with the SEC;

•

the accuracy of information supplied with respect to customers and suppliers;

•

the inapplicability of state anti-takeover laws;

•

the receipt of an opinion from Robert W. Baird & Co. Incorporated, Hall Kinion’s financial advisor;

•

board approval of the merger agreement and the transactions contemplated thereby;

•

the absence of undisclosed broker’s and finder’s fees; and

•

the adequacy of cash flows to fund normal operations in the ordinary course of business.

Representations and Warranties of Kforce

The merger agreement also contains customary representations and warranties of Kforce, subject to qualifications, with respect to itself and its subsidiaries, relating to, among other things, the following matters:

•

corporate organization;

•

capitalization;

•

the corporate power and authority to execute, deliver and perform the merger agreement and the related agreements and to consummate the transactions contemplated by these agreements;

•

the timely filing of documents and the accuracy of information contained in documents filed with the SEC;

•

the absence of undisclosed liabilities;

•

the absence of material changes or events relating to the businesses of Kforce and its subsidiaries since October 1, 2003;

•

the absence of undisclosed pending or threatened material litigation;

•

compliance with applicable laws and possession of permits;

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employee benefit matters;

•

intellectual property matters;

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the accuracy of information supplied by the parties in connection with this joint proxy statement/prospectus and the registration statement of which it is a part;

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the accuracy of information supplied with respect to customers and suppliers;

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the receipt of an opinion from Lehman Brothers, Kforce’s financial advisor;

•

board approval of the merger agreement and the transactions contemplated thereby;

•

operations of Merger Sub;

•

the absence of undisclosed broker’s and finder’s fees; and

•

the validity of Kforce common stock to be issued in the merger.

Conduct of Hall Kinion’s Business Prior to the Merger

The merger agreement contains restrictions on Hall Kinion’s conduct of its business pending the effective time of the merger or the termination of the merger agreement. These restrictions are designed to prevent major changes in Hall Kinion until the merger takes place, except to the extent set forth in the merger agreement or consented to by Kforce. In general, Hall Kinion has agreed that it and each of its subsidiaries will:

•

conduct its operations in the ordinary course consistent with past practices; and

•

use its reasonable efforts to: (i) keep available the services of its current officers and other employees; and (ii) preserve its relationship with customers, suppliers, employees and others having business dealings with it.

Hall Kinion has further agreed that it and each of its subsidiaries will not, except to the extent set forth in the merger agreement or consented to by Kforce:

•

incur or commit to any capital expenditures or any other obligations or liabilities other than capital expenditures which individually or in the aggregate will not exceed $100,000;

•

incur or forgive any additional indebtedness, other than in the ordinary course under its existing line of credit;

•

enter into any transactions with affiliates;

•

declare or pay any dividend or other distribution on any of its capital stock;

•

split, combine or reclassify its common stock;

•

repurchase, redeem or otherwise acquire any of its capital stock or any capital stock of any subsidiary;

•

issue additional shares of or securities convertible into, or options or rights to acquire, any capital stock, except in certain specified cases;

•

amend its certificate of incorporation or bylaws;

•

adopt a plan of complete or partial liquidation, dissolution, merger consolidation, restructuring, recapitalization or other reorganization;

•

alter the corporate structure of any subsidiary;

•

pledge or otherwise subject to any lien, shares of capital stock of Hall Kinion or any subsidiary;

•

enter into, adopt, make or amend any employment contract or employee benefit plan;

•

pay or agree to pay any severance to any director, officer, employee or consultant, subject to certain exceptions or otherwise increase the compensation of or benefits to any director, officer or employee;

•

purchase, acquire, lease or license-in any material asset having a fair market value in excess of $100,000, other than in the ordinary course of business;

•

settle or compromise any tax liability or fail to file any tax returns when due;

•

enter into any licensing, distribution, sponsorship, advertising, merchant program or other similar contracts which provide for payments by Hall Kinion or any of its subsidiaries in excess of $50,000;

•

fail to make timely filings with the SEC;

•

take any action that would result in a failure to maintain the trading of Hall Kinion common stock on the Nasdaq National Market;

•

amend or terminate any insurance policy;

•

amend its credit facility with CIT Group/Business Credit, Inc.;

•

fail to pay when due, consistent with past practice, its financial obligations in the ordinary course of business;

•

acquire the assets or securities of any business or person;

•

sell, lease, or otherwise dispose of any of its assets, other than in the ordinary course of business consistent with past practices;

•

make any investment in any individual or entity other than its subsidiaries;

•

incur or assume any debt or guarantee the debt of others, other than in the ordinary course of business consistent with past practices;

•

materially change its accounting principles, practices or methods;

•

settle or compromise claims or proceedings in excess of $100,000;

•

amend or otherwise modify or terminate any material contract of Hall Kinion or any of its subsidiaries;

•

take any action or omit to take any action for the purpose of impeding the consummation of the merger agreement or any transaction contemplated by it; or

•

agree or commit to do any of the above.

Conduct of Kforce’s Business Prior to the Merger

The merger agreement also contains restrictions on the conduct of Kforce’s and its subsidiaries’ businesses pending the effective time of the merger or the termination of the merger agreement. In general, Kforce has agreed that it and each of its subsidiaries will conduct its business in the ordinary course of business consistent with past practices. Kforce has further agreed that it and each of its subsidiaries will not, except to the extent set forth in the merger agreement or consented to by Hall Kinion:

•

declare or pay any dividend or distribution on any of its capital stock prior to the effective time;

•

amend its articles of incorporation or bylaws in a manner that would likely adversely affect the common stock of Kforce;

•

take any action that would result in a failure to maintain trading of Kforce’s common stock on Nasdaq National Market;

•

fail to timely make any required filings with the SEC; or

•

take any action or omit to take any action for the purpose of impeding the consummation of the merger agreement or any transaction contemplated by it.

Stockholder Meetings

Hall Kinion has agreed to hold a special meeting of its stockholders to consider and vote upon approval of the merger and the adoption of the merger agreement. Kforce has agreed to hold a special meeting of its shareholders to consider and vote upon approval of the issuance of shares of Kforce common stock pursuant to the merger agreement.

Reasonable Efforts

Subject to the conditions and limitations specified in the merger agreement, the parties have agreed to use their reasonable efforts to:

•

take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate the merger and the other transactions contemplated by the merger agreement as soon as practicable;

•

prepare and file as promptly as practicable all documentation to effect all necessary applications, filings and other documents;

•

obtain all necessary consents, waivers, licenses, orders, registrations, approvals, permits, rulings, authorizations and clearances necessary or advisable to be obtained from any third party and/or governmental entity in order to consummate the merger or any of the other transactions contemplated by the merger agreement;

•

make any appropriate filing pursuant to the Hart-Scott-Rodino Antitrust Improvements Act and all other necessary filings with other governmental entities with respect to the merger;

•

defend any lawsuits or other legal proceedings challenging the merger agreement or the consummation of the transactions contemplated by the merger agreement; and

•

refrain from taking any action that would cause the merger to fail to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

No Solicitation

The merger agreement contains detailed provisions prohibiting Hall Kinion from seeking an alternative transaction. Under these no solicitation provisions, subject to certain exceptions described below, Hall Kinion has agreed that neither it nor any of its subsidiaries nor any of their respective officers and directors will:

•

initiate, solicit or knowingly encourage or facilitate any inquiries or the making of any proposal or offer with respect to, or a transaction to effect any of the following (each of which is referred to in this section as an “acquisition proposal”):

•

a merger, reorganization, share exchange, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving Hall Kinion or any of its subsidiaries;

•

any purchase or sale of assets having a fair market value in excess of 15% or more of the consolidated assets or 15% or more of the consolidated revenues of Hall Kinion;

•

any purchase or sale of, or tender offer or exchange offer for Hall Kinion’s equity securities that, if consummated, would result in a third party owning securities representing 15% or more of Hall Kinion’s common stock;

•

a plan of liquidation or the declaration or payment of an extraordinary dividend (whether in cash or other property);

•

the repurchase by Hall Kinion or any of its subsidiaries of more than 15% of the outstanding shares of Hall Kinion common stock;

•

the acquisition by Hall Kinion or any of its subsidiaries by merger, purchase of stock or assets, joint venture or otherwise of a direct or indirect ownership interest or investment in any person or business whose annual revenues or assets is equal to or greater than 20% of the annual revenues or assets of Hall Kinion and its subsidiaries, taken as a whole, for and at the 12 month period ended September 30, 2003; or

•

any other substantially similar transaction or series of related transactions that reasonably could be expected to result in the acquisition of a controlling interest in Hall Kinion.

•

have any discussion with or provide any confidential information or non-public data to any third party concerning any acquisition proposal, engage in any negotiation concerning any acquisition proposal or knowingly facilitate any effort or attempt to make or implement an acquisition proposal; or

•

approve or recommend, or propose publicly to approve or recommend, any acquisition proposal or execute or enter into, any letter of intent or agreement or obligation related to any acquisition proposal.

However, the merger agreement permits Hall Kinion to (i) comply with applicable law (including Rule 14d-9 and Rule 14e-2 promulgated under the Securities Exchange Act of 1934) with regard to an acquisition

proposal, or (ii) make any disclosure to Hall Kinion’s stockholders or any public announcement if, in the good faith judgment of the Hall Kinion board of directors, after consultation with outside counsel, failure to so disclose would be inconsistent with any applicable law, rule or regulation or any duty of the board of directors; provided that Hall Kinion shall not, except in accordance with the provisions described below, withdraw, modify or qualify their recommendations of the transactions contemplated by the merger agreement.

The merger agreement also permits Hall Kinion’s board of directors to (i) withdraw, modify or qualify its recommendations of the transactions contemplated by the merger agreement, (ii) engage in discussions or negotiations with, or provide information to, any third party in response to an unsolicited bona fide written acquisition proposal, or approve or recommend, or propose publicly to approve or recommend, any acquisition proposal, or approve, recommend, cause or permit the Company to enter into any letter of intent, agreement or obligation related to any acquisition proposal if, and only to the extent that:

•

the approval of Hall Kinion’s stockholders for the merger agreement and the merger shall not have been obtained;

•

Hall Kinion has advised Kforce in writing of the superior proposal (as defined below), specifying the terms and conditions of such superior proposal and identifying the person making such superior proposal;

•

Kforce does not within five days of receiving notice of the superior acquisition proposal, make an offer that the board of directors of Hall Kinion by a majority vote determines is to be at least as favorable to the Hall Kinion stockholders as the superior proposal; and

•

Hall Kinion has terminated the merger agreement in accordance with its terms and paid Kforce the related termination fees.

Before Hall Kinion may, in connection with an acquisition proposal, provide any information to a third party or enter into any discussions with a third party, it must:

•

promptly notify Kforce of inquiries, proposals or offers received by, any information requested from, or any discussions sought to be initiated or continued with any of its representatives;

•

have received a confidentiality agreement from such third party containing provisions that are at least as restrictive as the comparable provisions in the confidentiality agreement between Kforce and Hall Kinion; and

•

furnish only the information with respect to Hall Kinion of the same type and scope that Hall Kinion provided to Kforce and any other information provided that it is simultaneously provided to Kforce.

In addition, Hall Kinion has agreed, subject to any obligation of confidentiality to which it may be bound, to promptly keep Kforce informed of the status and terms of any inquiries, proposals or offers and the status and terms of any discussions or negotiations, including the identity of the party making such inquiry.

A “superior proposal” means a bona fide written proposal made by a third party (i) to acquire, directly or indirectly, for consideration consisting solely of cash and/or publicly-traded securities (including securities that will be publicly-traded immediately upon the consummation of such superior proposal), one hundred percent 100% of the outstanding Hall Kinion common stock, or all or substantially all of the assets of Hall Kinion; (ii) that contains terms and conditions that the board of directors of Hall Kinion by a majority vote determines in good faith to be more favorable to the Hall Kinion stockholders than the merger involving Kforce but in any event, the consideration paid must be at least 5% greater than that offered by Kforce; (iii) that the board of directors of Hall Kinion by a majority vote determines in its good faith judgment to be reasonably capable of being completed (taking into account all legal, financial, regulatory and other aspects of the proposal and the person making the proposal); (iv) that does not contain a “right of first refusal” or “right of first offer” with respect to any counter-proposal that Kforce might make; and (v) that does not contain any “due diligence” condition and for which any financing upon which it is conditioned is committed.

Fees and Expenses

Subject to the provisions relating to payment of termination fees, all expenses incurred in connection with the merger agreement will be paid by the party incurring such expenses.

Directors and Officers Indemnification and Insurance

The merger agreement provides that Kforce will indemnify and hold harmless, and advance expenses to all directors and officers of Hall Kinion any and all losses, claims, damages or liabilities arising out of or in connection with such person being an officer or director of Hall Kinion or any of its subsidiaries or in connection with the merger agreement or the transactions contemplated thereby. The surviving corporation will fulfill and honor all outstanding indemnification agreements between Hall Kinion and its officers and directors and any indemnification provisions under Hall Kinion’s certificate of incorporation or bylaws.

In addition, Hall Kinion will purchase at or prior to the effective time, a directors’ and officers’ insurance policy covering those Hall Kinion directors and officers covered by Hall Kinion’s existing insurance coverage, provided that the total cost of such insurance policy may not exceed $1.0 million.

Nasdaq

Kforce has agreed to use its reasonable best efforts to cause the Kforce common stock issued in the merger to be approved for listing on the Nasdaq National Market.

Affiliates

Hall Kinion has agreed to use its commercially reasonable efforts to obtain from each person who may be deemed an affiliate of Hall Kinion for purposes of Rule 145 under the Securities Act as soon as practicable an affiliate agreement substantially in the form attached as a part of Annex A to this joint proxy statement/prospectus.

Other Additional Agreements

Kforce and Hall Kinion have agreed as follows:

•

Hall Kinion and Kforce will promptly notify the other of (i) the occurrence or non-occurrence of any fact or event which would be reasonably likely to cause any representation or warranty contained in the merger agreement to be untrue or inaccurate in any material respect; or (ii) any material failure of Kforce or Hall Kinion, as the case may be, to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it;

•

Hall Kinion will take all actions reasonably necessary and desirable to terminate Hall Kinion’s employee benefit plans, employee stock purchase plan and deferred compensation plans effective at the effective time;

•

Hall Kinion will provide Kforce access to its employees such that Kforce may, among other things, offer continued employment and provide information to such employees;

•

Kforce will arrange for each participant in the Hall Kinion employee benefit plans who becomes a Kforce employee after the closing of the merger to be eligible to participate in the Kforce employee benefit plans and to receive thereunder benefits that are generally equivalent in the aggregate to those received by Kforce employees with similar positions and responsibilities and qualifications;

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Brenda C. Rhodes’ participation in the day-to-day operations of Hall Kinion, the integration process and the merger has been defined and limited, provided that Ms. Rhodes shall continue to discharge her duties as Chief Executive Officer for federal securities law purposes; and

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Kforce will assume after the closing the obligations of Hall Kinion to certain of its executive officers.

Post Merger Compensation

Certain Hall Kinion directors and executive officers will be compensated after the merger as follows:

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Brenda C. Rhodes will be entitled to a cash payment in the amount of $1.1 million, the acceleration of $1.05 million in compensation otherwise owed to her, the acceleration of the vesting of “in-the-money” options to purchase 100,320 shares of Hall Kinion common stock, the acceleration of the forgiveness of approximately $302,000 of indebtedness owed to Hall Kinion, lifetime medical and other insurance coverage for her and her family, title to her leased automobile, use of her office and administrative staff for the remainder of the five-year term of the lease, and a payment of $50,000 for unused vacation, sick leave and outplacement.

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Martin A. Kropelnicki will be entitled to a cash payment of $990,000, normal compensation and benefits so long as he remains as an employee of the combined entity, the acceleration of the vesting of “in-the-money” options to purchase 117,307 shares of Hall Kinion common stock, medical insurance and related benefits for a period of up to three years following the closing, title to his leased automobile and a payment of $50,000 for unused vacation, sick leave and outplacement.

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Rita S. Hazell will be entitled to a cash payment of $880,000, a bonus from Hall Kinion of $25,000 for her efforts in connection with the integration of Hall Kinion and Kforce, the acceleration of vesting of “in-the-money” options to purchase 110,924 shares of Hall Kinion common stock, the acceleration of the forgiveness of approximately $58,000 of indebtedness owed to Hall Kinion, medical insurance and related benefits for a period of up to three years following the closing, title to her leased automobile and a payment of $75,000 for unused vacation, sick leave and outplacement.

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David Healey will be entitled to a cash payment of $198,000, normal compensation and benefits so long as he remains as an employee of the combined entity, the acceleration of vesting of “in-the-money” options to purchase 5,124 shares of Hall Kinion common stock, medical insurance and related benefits for a period of one year following the closing, title to his leased automobile and a payment of $50,000 for unused vacation, sick leave and outplacement.

Conditions to the Consummation of the Merger

The respective obligations of Kforce and Hall Kinion to effect the merger are subject to the following conditions:

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the approval of the stockholders of Hall Kinion of the merger and the adoption of the merger agreement, and approval of the shareholders of Kforce of the issuance of Kforce common stock pursuant to the merger agreement;

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the absence of any law, temporary restraining order, injunction or other order issued by a court that has the effect of making the merger illegal or otherwise prohibiting consummation of the merger;

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the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act;

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no suspension in the trading of securities generally on the Nasdaq National Market or the New York Stock Exchange;

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no general moratorium on commercial banking activities by either federal or state authorities shall have been declared;

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no material outbreak or escalation of hostilities, acts of terrorism or other domestic or international calamity, crisis or change in political, financial or economic conditions or other material event materially affecting financial markets in the United States shall have occurred; and

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the registration statement of which this joint proxy statement/prospectus is a part shall have been declared effective, shall not be the subject of a stop order suspending the effectiveness of the registration statement, and no proceedings for that purpose shall have been initiated or threatened by the SEC.

Kforce’s obligations to effect the merger are subject to the following additional conditions:

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the representations and warranties of Hall Kinion in the merger agreement, shall be true and correct in all material respects when made and as of the closing date (except to the extent the representation and warranty speaks to another date, in which case are true and correct as of the other date), and Kforce shall have received a certificate of two executive officers of Hall Kinion to that effect;

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Hall Kinion shall have performed in all material respects all obligations required to be performed by it under the merger agreement, and Kforce shall have received a certificate of two executive officers of Hall Kinion to that effect;

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There shall not have been a material adverse effect on Hall Kinion;

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Kforce shall have received unaudited financial statements of Hall Kinion for the year ended December 28, 2003;

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Kforce shall have received certificates from the Chief Executive Officer and the Chief Financial Officer of Hall Kinion, substantially in the form of the certificates included in Hall Kinion’s most recent SEC filings under the Sarbanes-Oxley Act, certifying certain matters related to Hall Kinion’s unaudited financial statements;

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Each of Jeffrey A. Evans, Martin A. Kropelnicki, Brenda C. Rhodes, Rita S. Hazell and Todd J. Kinion shall have entered into a lock-up agreement; and

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Kforce shall have received from Holland & Knight LLP, counsel to Kforce, or Gibson, Dunn & Crutcher LLP, counsel to Hall Kinion if Holland & Knight LLP does not render such opinion, a written opinion to the effect that for federal income tax purposes, the merger will constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.

Hall Kinion’s obligations to effect the merger are subject to the following additional conditions:

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the representations and warranties of Kforce in the merger agreement, disregarding all qualifications and exceptions relating to materiality or material adverse effect, shall be true and correct when made and as of the closing date (except to the extent the representation and warranty speaks to another date, in which case are true and correct as of the other date), in each case except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on Kforce, and Hall Kinion shall have received a certificate of two executive officers of Kforce and one executive officer of Merger Sub to that effect;

•

Kforce shall have performed in all material respects all obligations required to be performed by it under the merger agreement, and Hall Kinion shall have received a certificate of two executive officers of Kforce and one executive officer of Merger Sub to that effect;

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There shall not have been a material adverse effect on Kforce;

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the shares of Kforce common stock to be issued in the merger and all other shares to be reserved for issuance in connection with the merger shall have been approved for listing on the Nasdaq National Market, subject to official notice of issuance; and

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Hall Kinion shall have received from Gibson, Dunn & Crutcher LLP, counsel to Hall Kinion, or Holland & Knight LLP, counsel to Kforce if Gibson, Dunn & Crutcher LLP does not render such opinion, a written opinion to the effect that for federal income tax purposes, the merger will constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.

Termination

The merger agreement provides that at any time prior to the effective time of the merger, and except as specifically provided in the merger agreement, whether before or after the Kforce special meeting or the Hall Kinion special meeting, the merger agreement may be terminated:

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by mutual written consent of Kforce and Hall Kinion;

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by either Kforce or Hall Kinion if:

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the merger has not been completed on or before April 30, 2004, provided that the party seeking termination did not fail to fulfill any obligation under the merger agreement that has been a material cause of, or resulted in, the failure of the closing to occur on or before April 30, 2004;

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any governmental entity issues an order, decree or ruling or takes any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the merger agreement and such order, decree, ruling or other action shall have become final and non-appealable; or

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Hall Kinion stockholders do not approve the merger and adopt the merger agreement at the Hall Kinion special meeting or Kforce shareholders do not approve the issuance of shares of Kforce common stock pursuant to the merger agreement at the Kforce special meeting.

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by Hall Kinion if:

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Kforce’s board of directors fails to recommend the approval of the issuance of Kforce common stock pursuant to the merger agreement by its shareholders or withdraws, modifies or qualifies such recommendation (or proposes to do any of them) in a manner adverse to Hall Kinion or takes any action or makes any statement in connection with its shareholder meeting inconsistent with such recommendation;

•

Kforce fails to call a shareholder meeting or mail its shareholders the joint proxy statement/prospectus pursuant to the terms of the merger agreement;

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Kforce breaches or fails to perform any of its representations or warranties, such that the conditions to closing are not capable of being satisfied on or before the termination date; or

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Kforce materially breaches any of its covenants or agreements set forth in the merger agreement, and such breach cannot be cured within 20 business days after written notice thereof.

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by Kforce if:

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Hall Kinion’s board of directors fails to recommend the adoption of the merger agreement by its stockholders or withdraws, modifies or qualifies such recommendation (or proposes to do any of them) in a manner adverse to Kforce or takes any action or makes any statement in connection with its stockholder meeting inconsistent with such recommendation;

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Hall Kinion willfully and materially breaches its obligations with respect to non-solicitation;

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Hall Kinion fails to call a stockholder meeting or mail its stockholders the joint proxy statement/prospectus pursuant to the terms of the merger agreement;

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Hall Kinion breaches or fails to perform any of its representations or warranties in the merger agreement, such that the conditions to closing are not capable of being satisfied on or before the termination date;

•

Hall Kinion materially breaches any of its covenants or agreements set forth in the merger agreement, and such breach is unable to be cured within 20 business days after written notice thereof; or

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Kforce has not concluded whether it would resolicit proxies if it has the opportunity to exercise its walk-away rights. Kforce’s determination of whether to proceed with the transaction in such a case will be based upon its board’s careful consideration, exercising its reasonable business judgment consistent with its fiduciary duties to Kforce’s shareholders, of the impact of the event triggering any walk-away rights on the valuation of Hall Kinion’s business in the merger and other strategic alternatives to the merger which may then be available to Kforce, as well as general market and industry conditions. Kforce’s board of directors reserves the right not to proceed with a resolicitation of proxies and to consummate the transaction if, taking into account its responsibilities, it determines that proceeding with the transaction is in its shareholders’ best interest.

Termination Fees

Hall Kinion has agreed to pay Kforce a termination fee of $2.0 million if:

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Kforce terminates the merger agreement as a result of Hall Kinion’s board of directors failing to recommend the adoption of the merger agreement by its stockholders or withdrawing, modifying or qualifying such recommendation (or proposing to do any of them) in a manner adverse to Kforce or taking any action or making any statement in connection with its stockholder meeting inconsistent with such recommendation;

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Kforce terminates the merger agreement as a result of Hall Kinion willfully and materially breaching its obligations with respect to non-solicitation; or

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Kforce terminates the merger agreement as a result of Hall Kinion failing to call a stockholder meeting or failing to mail its stockholders the joint proxy statement/prospectus pursuant to the terms of the merger agreement.

In addition, Hall Kinion will pay Kforce an amount equal to the difference, if any, between 3% of the transaction value paid to Hall Kinion’s stockholders in a third party acquisition proposal and $2.0 million if: (i) at any after the date of the merger agreement and before Hall Kinion’s stockholders approve the merger an acquisition proposal with respect to Hall Kinion has been publicly announced or otherwise communicated to the stockholders of Hall Kinion; and (ii) prior to December 31, 2004, Hall Kinion or any of its subsidiaries enters into any definitive agreement with respect to, or consummates, any acquisition proposals.

Kforce has agreed to pay Hall Kinion a termination fee of $2.0 million if:

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Hall Kinion terminates the merger agreement as a result of Kforce’s board of directors failing to recommend the approval of the issuance of Kforce common stock pursuant to the merger agreement by its shareholders or withdrawing, modifying or qualifying such recommendation (or proposing to do any of them) in a manner adverse to Hall Kinion or taking any action or making any statement in connection with its shareholder meeting inconsistent with such recommendation; or

•

Hall Kinion terminates the merger agreement as a result of Kforce failing to call a shareholder meeting or failing to mail its shareholders the joint proxy statement/prospectus pursuant to the terms of the merger agreement.

Amendment; Extension and Waiver

The parties may amend the merger agreement at any time before or after the approval of the proposals by the Hall Kinion stockholders. Following any such stockholder approval, no amendment shall be made which by law requires further approval by Hall Kinion stockholders (such as any amendment of the merger agreement that changes the amount or form of the consideration to be delivered to the Hall Kinion stockholders or any other material changes to the merger agreement) without such further approval. In the event that approval

of the Hall Kinion stockholders is not required to amend the merger agreement in a material fashion, the parties will notify the Hall Kinion stockholders by issuing a press release.

At any time prior to the effective time of the merger, the parties may, to the extent legally allowed:

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extend the time for the performance of any of the obligations or other acts of the other parties;

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waive any inaccuracies in the representations and warranties of the other parties contained in the merger agreement or in any document delivered pursuant to the merger agreement; and

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waive compliance by the other party with any of the agreements or conditions in the merger agreement.

Any extension or waiver described above will be valid if set forth in writing and signed on behalf of the waiving party.

Related Agreements

Hall Kinion Voting Agreements

Each of Brenda C. Rhodes, Jeffrey A. Evans, Herbert I. Finkelman, Rita S. Hazell, Todd J. Kinion, Martin A. Kropelnicki, Jon H. Rowberry, Jack F. Jenkins-Stark and Michael S. Stein, each a director and/or executive officer of Hall Kinion, has entered into a voting agreement with Kforce and has granted William L. Sanders, Howard W. Sutter and Derrell E. Hunter, each of whom is an executive officer of Kforce, an irrevocable proxy to vote all of the voting securities of Hall Kinion which are beneficially owned by each of them as follows:

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in favor of the approval of the merger agreement and the transactions contemplated thereby;

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against any action that would result in a breach in any respect of any covenant, representation or warranty, or any other obligation or agreement, of Hall Kinion under the merger agreement or of the stockholders under the Hall Kinion voting agreement;

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against any third party acquisition proposal; and

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against any change in a majority of the individuals who constitute the Hall Kinion board of directors.

As of December 19, 2003, Brenda C. Rhodes, Jeffrey A. Evans, Herbert I. Finkelman, Rita S. Hazell, Todd J. Kinion, Martin A. Kropelnicki, Jon H. Rowberry, Jack F. Jenkins-Stark and Michael S. Stein beneficially owned shares of Hall Kinion common stock representing in the aggregate approximately 30.2% of the voting power of the outstanding Hall Kinion common stock. The Hall Kinion voting agreements will terminate on the earlier of the termination of the merger agreement and the effective time of the merger. A form of Hall Kinion voting agreement is attached to this joint proxy statement/prospectus as part of Annex A. You should read it in its entirety.

Kforce Voting Agreements

Each of David L. Dunkel, Richard M. Cocchiaro, Joseph J. Liberatore, Ken W. Pierce, William L. Sanders and Howard W. Sutter, each a director and/or executive officer of Kforce, has entered into a voting agreement with Hall Kinion and has granted Brenda C. Rhodes and Martin A. Kropelnicki, each of whom is an executive officer of Hall Kinion, an irrevocable proxy to vote all of the voting securities of Kforce which are beneficially owned by each of them as follows:

•

in favor of the approval of the merger agreement and the transactions contemplated thereby;

•

against any action that would result in a breach in any respect of any covenant, representation or warranty, or any other obligation or agreement, of Kforce under the merger agreement or of the shareholders under the Kforce voting agreement; and

•

against any change in a majority of the individuals who constitute the Kforce board of directors.

As of December 19, 2003, David L. Dunkel, Richard M. Cocchiaro, Joseph J. Liberatore, Ken W. Pierce, William L. Sanders and Howard W. Sutter beneficially owned 9,683,293 shares of Kforce common stock in the aggregate, representing approximately 31.59% of the voting power of the outstanding Kforce common stock. The Kforce voting agreements will terminate on the earlier of the termination of the merger agreement and the effective time of the merger. A form of Kforce voting agreement is attached to this joint proxy statement/prospectus as part of Annex A. You should read it in its entirety.

Affiliate Agreements

Hall Kinion has agreed to use reasonable commercial efforts to cause each of its affiliates to execute an affiliate agreement prior to the effective time of the merger. Pursuant to the form of affiliate agreement, each affiliate will agree not to sell, transfer or otherwise dispose of Kforce common stock received in the merger in violation of the rules and regulations of the SEC promulgated under the Securities Act of 1933, as amended, and will acknowledge the resale restrictions imposed by Rule 145 under the Securities Act on shares of Kforce common stock to be received by such affiliate in the merger. In accordance with the affiliate agreement, Kforce will be entitled to place appropriate legends on these Hall Kinion stockholders’ certificates evidencing any Kforce common stock to be received by them. The form of the Hall Kinion affiliate agreement is attached to this joint proxy statement/prospectus as part of Annex A.

Lock-up Agreements

As required by the merger agreement, each of Brenda C. Rhodes, Rita S. Hazell and Todd J. Kinion will enter into a lock-up agreement with Kforce that prohibits each of them from selling more than 40,000 shares of Kforce common stock per day for a period of 180 days after the effective time of the merger. Each lock-up agreement will contain provisions customary for agreements of this type. Each of Jeffrey A. Evans and Martin A. Kropelnicki will enter into a similar lock-up agreement except that Messrs. Evans and Kropelnicki are prohibited from selling any shares of Kforce common stock for a period of 90 days after the effective time of the merger, and following the expiration of such 90-day period, Messrs. Evans and Kropelnicki will be prohibited from selling more than 40,000 shares of Kforce common stock per day for an additional period of 90 days. In addition to the restrictions set forth in the lock-up agreements, each of the above individuals will be subject to the restrictions of Rule 145 promulgated under the Securities Act of 1933, as amended. In general, for a period of one year following the consummation of the merger, Rule 145 will prohibit in any three month period the sale of Kforce common stock by such individuals in an amount exceeding the greater of: (i) one percent of the outstanding common stock of Kforce, or (ii) the average weekly trading volume of Kforce common stock during the four calendar weeks preceding the filing of a form specified by the SEC. A form of lock-up agreement that will be executed by each of the foregoing individuals is attached to this joint proxy statement/prospectus as part of Annex A. You should read it in its entirety.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Certain information regarding stock ownership, biographies, compensation and transactions of Kforce management and directors is included in Kforce’s annual report on Form 10-K at Items 10, 11, 12 and 13 and is incorporated herein by reference. See “Where You Can Find More Information” beginning on page 81.

Certain information regarding stock ownership of Hall Kinion management and directors is included in Hall Kinion’s most recent annual report on Form 10-K at Item 12 and is incorporated herein by reference. See “Where You Can Find More Information” beginning on page 89.

Interests of Kforce Directors and Officers

As of December 19, 2003, the directors and executive officers of Kforce collectively beneficially owned approximately 10,391,163 shares of Kforce common stock. These officers and directors may be deemed to have beneficial ownership either by themselves or with others.

Effect of the Merger on the Amount and Percentage of Certain Stockholders of Kforce

The following table shows the amount of Kforce common stock beneficially owned (unless otherwise indicated) as of February 5, 2004 by (1) any person who is known by Kforce to be the beneficial owner of more than 5% of the outstanding shares of Kforce common stock, (2) Kforce’s directors, (3) Kforce’s chief executive officer and Kforce’s three other highest paid executive officers for fiscal year 2003, and all of Kforce’s directors and executive officers as a group.

The percentage of beneficial ownership for the following table is based on 30,553,875 shares of Kforce common