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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 23, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CENTURY BUSINESS SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 22-2769024
(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
6480 ROCKSIDE WOODS BOULEVARD SOUTH
SUITE 330
CLEVELAND, OHIO 44131
(216) 447-9000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
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GREGORY J. SKODA
EXECUTIVE VICE PRESIDENT
6480 ROCKSIDE WOODS BOULEVARD SOUTH
SUITE 330
CLEVELAND, OHIO 44131
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent for Service)
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With a copy to:
SETH R. MOLAY, P.C.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
1700 PACIFIC AVENUE, SUITE 4100
DALLAS, TEXAS 75201
(214) 969-2800
Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]____________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
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Common stock, par value $0.01
per share................... 949,716 shares $20.375 $19,350,464 $5,709
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(1) Estimated pursuant to Rule 457(c) solely for the purpose of calculating the
amount of the registration fee based on the average of the high and low
prices of the Common Stock reported by the Nasdaq National Market on
September 17, 1998.
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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 THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may neither be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall neither constitute an offer to sell or the
solicitation of any offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
Subject To Completion, Dated September 23, 1998
PROSPECTUS
949,716 SHARES
CENTURY BUSINESS SERVICES, INC.
COMMON STOCK
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This Prospectus relates to an aggregate of 949,716 shares (the "Shares") of
common stock, par value $0.01 per share ("Common Stock"), of Century Business
Services, Inc. ("Century" or the "Company"), a Delaware corporation formerly
known as International Alliance Services, Inc., which may be offered from time
to time (the "Offering") by persons (the "Selling Stockholders") who have
acquired such Shares in certain private equity offerings and certain
acquisitions of businesses by the Company not involving a public offering,
including 17,394 Shares which may be offered for sale by certain of the Selling
Stockholders who may acquire such Shares pursuant to the exercise of certain
warrants. The Shares are being registered under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the "Securities
Act"), on behalf of the Selling Stockholders to permit the public sale or other
distribution of the Shares.
The Shares may be sold or distributed from time to time by or for the
account of the Selling Stockholders, or by their pledgees on behalf of the
Selling Stockholders, in transactions (which may involve crosses and block
transactions) on the Nasdaq National Market ("Nasdaq") or any national
securities exchange or U.S. inter-dealer quotation system of a registered
national securities association on which the Shares are then listed, in the
over-the-counter market, in one or more privately negotiated transactions
(including sales pursuant to pledges), through the writing of options on the
Shares, in a combination of such methods of distribution or by any other legally
available means. This Prospectus also may be used, with the Company's consent,
by donees of the Selling Stockholders, or by other persons acquiring Shares who
wish to offer and sell such Shares under circumstances requiring or making
desirable its use. Such methods of sale may be conducted by the Selling
Stockholders at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at prices otherwise negotiated. The Selling
Stockholders may effect such transactions directly, or indirectly through
broker-dealers or agents acting on their behalf and, in connection with such
sales, such broker-dealers or agents may receive compensation in the form of
commissions or discounts from the Selling Stockholders and/or the purchasers of
the Shares for whom they may act as agent or to whom they sell Shares as
principal or both (which commissions or discounts might be in excess of
customary commissions). To the extent required, the Company will file, during
any period in which offers or sales are being made, one or more supplements to
this Prospectus to set forth the names of donees of Selling Stockholders and any
other material information with respect to the plan of distribution not
previously disclosed. See "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares offered hereby. The Company will bear all expenses incident to the
registration of the Shares under federal and state securities laws and the sale
of the Shares hereunder other than expenses incident to the delivery of the
Shares to be sold by the Selling Stockholders, including any transfer taxes
payable on any Shares and any commissions and discounts payable to underwriters,
agents or dealers.
The Common Stock is quoted on Nasdaq under the symbol "CBIZ." On September
22, 1998, the last reported sale price for the Common Stock as reported by
Nasdaq was $20.9375 per share. The Company had 62,109,420 shares of Common Stock
issued and outstanding as of September 15, 1998.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH
UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is , 1998.
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THE COMPANY
Century is a diversified services company that is a leading provider of
outsourced business services to small and medium sized companies throughout the
United States. The Company provides integrated services in the following areas:
accounting systems, advisory and tax; employee benefits design and
administration; human resources; information technology systems; payroll;
specialty insurance; valuation; and workers' compensation. These services are
provided through a network of over 130 Company offices in 29 states, as well as
through its subsidiary, Century Small Business Solutions, Inc. ("Century Small
Business Solutions"), a franchisor of accounting services with approximately 650
franchisee offices located in 47 states. As of September 1998, the Company
served approximately 102,000 clients, of which approximately 54,000 are served
through the Century Small Business Solutions franchisee network. Management
estimates that the Company's clients employ over one million employees,
including 400,000 employed by clients of the franchise network. For the six
month period ended June 30, 1998, no one client of the Company represented over
1% of the Company's revenues.
The Company's clients typically have fewer than 500 employees and focus
their resources on operational competencies while allowing Century to provide
non-core administrative functions. In many instances, outsourcing administrative
functions allows clients to enhance productivity, reduce costs and improve
service, quality and efficiency. Depending on a client's size and capabilities,
it may choose to utilize all or a portion of the Company's broad array of
services, which it typically accesses through a single Company representative.
Pursuant to a strategic redirection of the Company initiated in November
1996, the Company began its acquisition program to expand its operations rapidly
in the outsourced business services industry from its
then-existing insurance platform. The Company seeks to acquire profitable,
well-run companies and to continue to employ their existing management teams,
providing them with incentive by utilizing restricted Century Common Stock for a
large portion of the consideration for the acquisitions. The Company believes
that substantial additional acquisition opportunities exist throughout the
United States for several reasons, including the highly fragmented nature of the
industry, the advantages of economies of scale and the desire of many long-time
owners for liquidity.
The Company's goal is to be the nation's premier provider of outsourced
business services to small and medium sized companies. The Company's strategies
to achieve this goal include: (i) continuing to provide clients with a broad
range of high quality services; (ii) continuing to expand locally through
internal growth by increasing the number of clients it serves and increasing the
number of services it provides to existing clients; and (iii) continuing to
expand nationally through an aggressive acquisition program.
The principal executive office of Century is located at 6480 Rockside Woods
Boulevard South, Suite 330, Cleveland, Ohio 44131, and its telephone number is
(216) 447-9000.
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RISK FACTORS
Prospective investors in the Common Stock should carefully evaluate all of
the information contained in this Prospectus and the information incorporated
herein by reference and, in particular, the following before making an
investment in the Common Stock.
ACQUISITION STRATEGY RISKS
The Company intends to continue to grow significantly through the
acquisition of additional strategic and complementary businesses. However, there
can be no assurance that the Company will be able to identify appropriate
acquisition candidates or, to the extent identified, acquire such additional
businesses on satisfactory terms or at all. In addition, the Company expects to
face competition for acquisition candidates, which may limit the number of
appropriate acquisition opportunities and may lead to higher acquisition prices.
Furthermore, acquisitions involve a number of special risks, including possible
adverse effects on the Company's operating results, diversion of management's
attention, failure to retain key personnel of the acquired business and risks
associated with unanticipated events or liabilities, some or all of which could
have a material adverse effect on the Company's business, financial condition
and results of operations. As a result, there can be no assurance that
businesses acquired in the future will achieve anticipated revenues and
earnings.
FINANCING OF ACQUISITIONS
The timing, size and success of the Company's acquisition efforts and the
associated capital commitments cannot be readily predicted. The Company
currently intends to finance future acquisitions by using shares of its Common
Stock for a significant portion of the consideration to be paid. In the event
that the Common Stock does not maintain a sufficient market value, or potential
acquisition candidates are otherwise unwilling to accept Common Stock as part of
the consideration for the sale of their businesses, the Company may be required
to utilize more of its cash resources, if available, in order to maintain its
acquisition program. If the Company does not have sufficient cash resources, its
growth could be limited unless it is able to obtain additional capital through
debt or equity financing. The Company has recently amended its bank line of
credit to $100 million to fund its working capital and acquisition needs;
however, there can be no assurance that the Company will be able to maintain the
line of credit, access the public securities markets or obtain other financing
for its acquisition program on terms that the Company deems acceptable.
ABILITY TO MANAGE GROWTH
The Company's business has grown significantly in size and complexity over
the past two years, placing significant demands on the Company's management
systems, internal controls and financial and physical resources. In order to
meet such demands, the Company intends to continue to hire new employees and
invest in new equipment and make other capital expenditures. In addition, the
Company expects that it will need to further develop its financial and
managerial controls and reporting systems and procedures to accommodate any
future growth. Failure to expand any of the foregoing areas in an efficient
manner could have a material adverse effect on the Company's business, financial
condition and results of operations. The Company is currently in the process of
integrating recent acquisitions with the Company's business and, in doing so,
will need to manage various businesses and their employees in geographically
diverse areas. There can be no assurance that the Company can successfully
integrate any acquired business into the Company without substantial costs,
delays or other operational or financial problems. Moreover, any inability to
manage growth effectively could have a material adverse effect on the Company's
business, financial condition and results of operations.
RISKS RELATED TO INTANGIBLE ASSETS
Recent acquisitions have resulted in significant increases in goodwill, and
the Company anticipates that such increases will continue as a result of future
acquisitions. Goodwill, which relates to the excess of cost over the fair value
of net identifiable assets of businesses acquired, was approximately $167.9
million at June 30,
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1998, representing approximately 36.9% of the Company's total assets. The
Company amortizes goodwill on a straight-line basis for periods not exceeding 40
years. There can be no assurance that the value of intangible assets will ever
be realized by the Company. On an ongoing basis, the Company makes an evaluation
of whether events and circumstances indicate that all or a portion of the
carrying value of intangible assets may no longer be recoverable, in which case
an additional charge to earnings will be necessary. Although at June 30, 1998
the net unamortized balance of intangible assets was not considered to be
impaired, any future determination requiring the write-off of a significant
portion of unamortized intangible assets could have a material adverse effect on
the Company's business, financial condition and results of operations.
RISKS ASSOCIATED WITH PROFESSIONAL SERVICE PROVIDERS
The Company's employee benefits and pension administration and tax services
are subject to various risks resulting from errors and omissions in processing
and filing benefit and pension plan forms and tax returns in accordance with
governmental regulations and the respective plans. The Company processes data
received from employees and employers and may be subject to liability for any
late or misfiled plan forms or tax returns. In addition, failure to properly
file plan forms or tax returns could have a material adverse effect on the
Company's reputation and adversely affect its relationships with existing
clients and its ability to gain new clients. The Company's employee benefits and
pension administration and tax services are also dependent upon governmental
regulations, which are subject to continuous change that could reduce or
eliminate the need for such services. In addition, the Company's other
professional business services, including accounting, valuation and financial
planning, entail an inherent risk of professional malpractice and other similar
claims.
The Company maintains errors and omissions insurance coverage that it
believes will be adequate both as to risks and amounts. Although management
believes its insurance coverage amounts are adequate, there can be no assurance
that the Company's actual future claims will not exceed the coverage amounts. If
the Company experiences a large claim on its insurance, the rates for such
insurance may increase. The Company's ability to incorporate such increases into
service fees to clients could be constrained by contractual arrangements with
clients. As a result, such insurance rate increases could have a material
adverse effect on the Company's business, financial condition and results of
operations.
COMPETITION
The outsourced business services industry has been highly competitive in
recent years. This has resulted in the consolidation of many companies and
strategic alliances across industry lines. Competition is particularly acute
among small and medium sized providers because larger providers or strategic
alliances with larger providers can create service and price distortions in the
marketplace. The Company competes with these large providers, in-house employee
services departments, local outsourcing companies and independent consultants.
In addition, the Company may compete with marketers of related services and
products that may offer outsourced business services in the future. In recent
years, competition in the specialty insurance industry has led to the
consolidation of some of the industry's largest companies. Competition is
particularly acute among smaller, specialty carriers like the Company because
the market niches exploited by the Company are small and can be penetrated by a
larger carrier that elects to cut prices or expand coverage.
The Company has also experienced, and expects to continue to experience,
competition from new entrants into its markets. Increased competition could
result in pricing pressures, loss of market share and loss of clients, any of
which could have a material adverse effect on the Company's business, financial
condition and results of operations. Many of the Company's competitors have
longer operating histories and significantly greater financial, technical,
marketing and other resources than the Company, including name recognition with
current and potential customers. New competitors or alliances among competitors
may emerge and rapidly acquire significant market share. There can be no
assurance that the Company will be able to compete successfully against current
and future competitors, or that competitive pressure faced by the Company will
not have a material adverse effect on its business, financial condition and
results of operations.
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NEED TO ATTRACT AND RETAIN EXPERIENCED PERSONNEL
The Company's success depends to a significant degree on its ability to
attract and retain experienced employees. There is substantial competition for
experienced personnel, which the Company expects to continue. Many of the
companies with which the Company competes for experienced personnel have greater
financial and other resources than the Company. In the future, the Company may
experience difficulty in recruiting and retaining sufficient numbers of
qualified personnel. The inability of the Company to attract and retain
experienced personnel could have a material adverse effect on its business,
financial condition and results of operations.
DEPENDENCE ON KEY PERSONNEL
The Company depends and will continue to depend in the foreseeable future
on the services of its executive officers and key employees with extensive
experience and expertise in the outsourced business services industry. The
ability of the Company to retain its officers and key employees is important to
the success of the Company. The loss of key personnel, whether by resignation or
otherwise, could have a material adverse effect on the Company. The Company does
not maintain key personnel insurance on any of its officers or employees.
RELIANCE ON INFORMATION PROCESSING SYSTEMS AND YEAR 2000 COMPLIANCE
The Company's business depends, in part, upon its ability to store,
retrieve, process and manage significant databases and, periodically, to expand
and upgrade its information processing capabilities. The Company primarily
utilizes personal computers and laptops connected to a local area network to
satisfy its information processing requirements. Interruption or loss of the
Company's information processing capabilities through loss of stored data,
security breach, breakdown or malfunction of computer equipment or software
systems, telecommunications failure, conversion difficulties or damage to the
Company's computer equipment or software systems could have a material adverse
effect on the Company's business, financial condition and results of operations.
Currently, the Company is reviewing its internal information management and
other systems in order to identify and modify any products, services or systems
that are not Year 2000 compliant. Until recently, many computer programs were
written to store only two digits of year-related date information in order to
make the storage and manipulation of such data more efficient. Programs which
use two-digit date fields, however, may not be able to distinguish between such
years as 1900 and 2000. In certain situations, this date limitation could result
in system failures or miscalculations, potentially causing disruptions of
business processes or system operations.
The Company has been and continues to review the potential overall impact
of such Year 2000 risks on the Company's business, financial condition and
results of operations. To date, the Company has not encountered any material
Year 2000 problems with its computer systems or any other equipment. Based on
its ongoing survey of such risks for the Company, its subsidiaries and recently
acquired businesses, management estimates that the total cost of the Company's
Year 2000 compliance activities will be approximately $1.0 to $2.0 million. This
estimate assumes that all businesses that have been and that may be acquired in
the future by the Company will not have significant Year 2000 compliance issues.
However, there can be no assurance that actual compliance costs will fall within
the range of this estimate, that any future acquisition of a business will not
require substantial Year 2000 compliance expenditures or that precautions that
the Company has taken to protect itself from or minimize the impact of such
events will be adequate. Any damage to the Company's data information processing
system, failure of telecommunications links or breach of the security of the
Company's computer systems could result in an interruption of the Company's
operations or other loss which may not be covered by the Company's insurance.
Any such event could have a material adverse effect on the Company's business,
financial condition and results of operations.
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RISK OF INADEQUATE PRICING OF INSURANCE
The primary risk of any insurance carrier is the risk of inadequate
pricing, which is the risk that the premiums charged for insurance and insurance
related products are insufficient to cover the costs associated with the
distribution of such products. These costs include claim and loss costs, loss
adjustment expenses, acquisition expenses and other corporate expenses. The
Company utilizes a variety of actuarial and qualitative methods to set price
levels. Ultimately, however, pricing depends upon an evaluation of prior
experience as a predictor of future experience. Events or trends that have not
occurred in the past may not be anticipated for the future and, therefore, could
result in inadequate pricing leading to elevated levels of losses. Such losses,
if they were to occur, could have a material adverse effect on the Company's
business, financial condition and result of operations.
UNANTICIPATED LOSSES DUE TO INADEQUATE RESERVE ESTIMATES
When insurance claims are made, the ultimate amount of liability cannot be
determined until claims are paid to the satisfaction of the insured or until
litigation finally determines liability in disputed cases. Since the process of
litigation and settlement can continue for years, the Company can only assess
its ultimate liability (and the ultimate expense of litigating disputed issues)
by estimation. These estimates, or reserves for losses and loss adjustment
expense (which, as of June 30, 1998, were approximately $55.5 million), are,
like prices, determined by a variety of actuarial and qualitative methods based
on prior experience. There can be no assurance that such reserves will be
sufficient to cover the ultimate liabilities of the Company for policy and bond
exposures.
The Company uses a reserving system which it believes will enable it to
meet claims obligations. Due to the nature of some of the coverages written,
claims may be presented which may not be settled for many years after they are
incurred; thus, subjective judgments as to the ultimate exposure to losses are
an integral and necessary component of the loss reserving process. The Company
regularly reviews reserves, using a variety of statistical and actuarial
techniques to analyze current claim costs, frequency and severity data, and
prevailing economic, social and legal factors. Reserves established in prior
years are adjusted as dictated by changes in loss experience and as new
information becomes available. An integral part of the reserve policy of the
Company includes a reserve for incurred but not reported ("IBNR") losses. There
can be no assurance that the assumptions upon which reserves are based are valid
or will be valid in the future. To help assure the adequacy of its IBNR reserves
and individual case reserves, the Company submits to an annual review by
professional actuaries who test reserve adequacy with a variety of sophisticated
mathematical models. In recent years, such actuaries have certified that reserve
levels of the Company are adequate. There can be no assurance, however, that the
modeling techniques of these actuaries will correctly forecast the adequacy of
the Company's reserves. The inadequacy of the Company's insurance reserves may
result in unanticipated losses which could have a material adverse effect on its
business, financial condition and results of operations.
CHANGE IN GOVERNMENTAL REGULATION
The Company is affected by legislative law changes with respect to its
provision of payroll, employee benefits and pension plan administration, tax,
accounting and workers' compensation design and administration services.
Legislative changes may expand or contract the types and amounts of business
services that are required by individuals and businesses. There can be no
assurance that future laws will provide the same or similar opportunities to
provide business consulting and management services to individuals and
businesses that are provided today by existing laws.
The Company is also affected by both judicial and legislative law changes
with respect to its specialty insurance business. Judicial expansion of terms of
coverage can increase risk coverage beyond levels contemplated in the
underwriting and pricing process. In addition, surety bond coverages that are
established by statute may be adversely affected by legislative or
administrative changes of law. When government agencies change the threshold for
requiring surety, the demand for surety bonds is directly affected. An increase
in the threshold for requiring surety could have a material adverse effect on
the Company's business, financial condition and results of operations.
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INADEQUATE REINSURANCE PROTECTION OF INSURANCE LIABILITIES
The Company depends heavily on reinsurers to assume a substantial portion
of the exposures underwritten by it. Failure by one or more reinsurers (who are
assuming risks from many sources over which the Company has no control) could
have a material adverse effect on the Company's business, financial condition
and results of operation, since the Company would then be obligated to pay all
or a portion of the failed reinsurer's portion of losses. Moreover, the adequacy
of reinsurance (even assuming the solvency of all reinsurers) is a matter of
estimation. As with pricing and reserving, procurement of reinsurance is
premised upon assumptions about the future based upon past experience.
Unanticipated events or trends could produce losses inadequately covered by
reinsurance which could have a material adverse effect on the Company's
business, financial condition and results of operations.
MARKET REVERSES IN INVESTED INSURANCE-RELATED ASSET PORTFOLIO
Investment of the Company's insurance-related assets is critical to the
maintenance of the Company's solvency and profitability. The Company maintains a
policy of investing primarily in debt instruments of government agencies and
corporate entities with quality ratings of A or better, and diversifying
investments sufficiently to minimize the risk of a substantial reverse or
default in any one investment. These policies are articulated by a written
policy statement and overseen by a formal investment committee of senior Company
officials. The Company also employs professional investment advisers to counsel
it on matters of policy as well as individual investment transactions, although
these advisers have no discretionary authority to deploy the Company's assets.
Notwithstanding these measures, an aggregation of serious reverses or defaults
in the investment portfolio could have a material adverse affect on the
Company's business, financial condition and results of operations.
VOLATILITY OF TRADING PRICE
The quoted price of the Common Stock could fluctuate widely in response to
variations in the Company's quarterly operating results, changes in earnings
estimates by securities analysts, changes in the Company's business and changes
in general market or economic conditions. In addition, in recent years, the
stock market has experienced extreme price and volume fluctuations which have
significantly affected the quoted prices of the securities of many growth
companies without regard to their specific operating performance. Such market
fluctuations could have a material adverse effect on the quoted price of the
Common Stock.
CONTROL BY EXISTING STOCKHOLDERS
As of September 15, 1998, the Company's executive officers, directors and
principal stockholders beneficially owned an aggregate of 31,133,725 shares of
Common Stock of the Company (including shares that may be acquired upon exercise
of options or warrants within 60 days after the date of this Prospectus),
constituting approximately 45.45% of the outstanding shares of Common Stock.
Included in such amount are an aggregate of 22,391,556 shares of Common Stock of
the Company (including shares that may be acquired upon exercise of options or
warrants within 60 days after the date of this Prospectus) beneficially owned by
Messrs, DeGroote and Huizenga, constituting approximately 31.68% of the
outstanding shares of the Common Stock. Accordingly, such persons are in a
position to have significant influence with regard to or control actions that
require the consent of the holders of a majority of the Company's outstanding
voting stock, including the election of directors.
ANTI-TAKEOVER EFFECT OF DELAWARE GENERAL CORPORATION LAW
Certain provisions of the Delaware General Corporation Law may discourage
takeover attempts that have not been approved by the Board of Directors.
POSSIBLE DEPRESSING EFFECT OF FUTURE SALES OF THE COMPANY'S COMMON STOCK
Future sales of Common Stock, or the perception that such sales could
occur, could adversely affect the market price of the Company's Common Stock.
There can be no assurance as to when, and how many of, the
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shares will be sold and the effect such sales may have on the market price of
the Common Stock. As of the date of this Prospectus, the Company has registered
under the Securities Act an aggregate of 44,172,519 shares of the Common Stock
for resale by certain selling stockholders from time to time under this and
certain other shelf registration statements. In addition, the Company has
registered under the Securities Act pursuant to a universal shelf registration
statement an aggregate of $125 million of the Company's Common Stock, debt
securities and warrants to purchase Common Stock or debt securities to be
offered from time to time to the public and has registered pursuant to an
acquisition shelf registration statement an aggregate of 7,729,468 shares of
Common Stock to be offered from time to time in connection with certain of its
acquisitions. The Company has 32,698,064 shares of Common Stock, which include
shares issuable upon the exercise of outstanding warrants, that are subject to
various lock-up agreements. The terms of such lock-up agreements will expire
with respect to 19,423,602 of such shares by December 31, 1998, at which time
the Company is obligated to register such shares under the Securities Act for
resale, unless such shares may be sold without registration pursuant to Rule 144
of the Securities Act or otherwise. As such restrictions lapse or if such shares
are registered for sale to the public, such securities may be sold to the
public.
NO DIVIDENDS
The payment and level of dividends on Common Stock are subject to the
discretion of the Board of Directors of the Company. The payment of dividends
will depend upon business decisions that will be made by the Board of Directors
of the Company from time to time based upon the results of operations and
financial condition of the Company and its subsidiaries and such other
considerations as the Board of Directors considers relevant. In addition, the
Company's credit facility contains restrictions on the Company's ability to pay
dividends. The Company has not paid cash dividends on its Common Stock since
April 27, 1995, and the Company's Board of Directors does not anticipate paying
cash dividends in the foreseeable future. The Company currently intends to
retain future earnings to finance the ongoing operations and growth of the
business.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares offered hereby. The Company will bear all expenses incident to the
registration of the Shares under federal and state securities laws and the sale
of the Shares hereunder other than expenses incident to the delivery of the
Shares, including any transfer taxes payable on any Shares and any commissions
and discounts payable to underwriters, agents or dealers.
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10
SELLING STOCKHOLDERS
The following table sets forth the name of each Selling Stockholder, the
number of shares of Common Stock beneficially owned by each Selling Stockholder
as of September 15, 1998, and the number of Shares registered hereby that each
Selling Stockholder may offer and sell pursuant to this Prospectus. However,
because the Selling Stockholders may offer all, some or none of the Shares at
any time and from time to time after the date hereof, and because the offering
contemplated by this Prospectus is currently not being underwritten, no estimate
can be given as to the number of Shares that will be held by each Selling
Stockholder upon or prior to completion of the Offering. To the knowledge of the
Company, none of the Selling Stockholders has had any material relationship with
the Company except as set forth in the footnotes to the following table and as
more fully described elsewhere in this Prospectus (including the information
incorporated by reference in this Prospectus).
BENEFICIAL OWNERSHIP
AFTER OFFERING
BENEFICIAL OWNERSHIP (ASSUMING ALL SHARES
PRIOR TO OFFERING(1) NUMBER OF REGISTERED ARE SOLD)(1)
--------------------- SHARES BEING -----------------------
PERCENT REGISTERED PERCENT
NAME SHARES OF TOTAL IN THE OFFERING SHARES OF TOTAL
---- --------- -------- --------------- ---------- ---------
Auster, Robert J. .................. 63,970 * 15,993 47,977 *
Boomer, Richard..................... 40,960 * 8,192 32,768 *
Brabender, Timothy T. .............. 28,617 * 28,617 -- --
Burnett, Gary....................... 40,960 * 8,192 32,768 *
Carroll, John F. ................... 264,423 * 264,423 -- --
Carroll, Pamela S. ................. 117,139 * 117,139 -- --
Donahoe, Michael T. ................ 225,062 * 56,266 168,796 *
Donahoe, William W. ................ 75,021 * 18,755 56,266 *
Gauen, Stephen E. .................. 144,827 * 21,724 123,103 *
Gordon, Ross C. .................... 149,265 * 37,316 111,949 *
Harrell, James...................... 75,021 * 18,755 56,266 *
Hillyer, Richard D. ................ 144,827 * 21,724 123,103 *
Hintz, Thomas....................... 40,960 * 8,192 32,768 *
King, IV, Charles H.(2)............. 139,182(3) * 3,697(4) 135,485 *
King, Patricia(2)................... 139,182(3) * 3,697(4) 135,485 *
King, V, Charles H. ................ 15,000(4) * 5,000(4) 10,000 *
Lott, Layne......................... 18,000 * 15,000 3,000 *
Love, James P. ..................... 133,267 * 39,980 93,287 *
Love, John C. ...................... 38,820 * 11,646 27,174 *
Love, Michael P. ................... 36,827 * 11,048 25,779 *
Love, Paul T. ...................... 17,575 * 5,272 12,303 *
Love, Robert J. .................... 226,490 * 67,947 158,543 *
Marks, Janice A. ................... 40,960 * 8,192 32,768 *
McGohan, P. Scott................... 28,617 * 28,617 -- --
McGohan, Patrick L. ................ 28,617 * 28,617 -- --
Reinert, Russell L.................. 40,960 * 8,192 32,768 *
Rogers, Michael V. ................. 40,960 * 8,192 32,768 *
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BENEFICIAL OWNERSHIP
AFTER OFFERING
BENEFICIAL OWNERSHIP (ASSUMING ALL SHARES
PRIOR TO OFFERING(1) NUMBER OF REGISTERED ARE SOLD)(1)
--------------------- SHARES BEING -----------------------
PERCENT REGISTERED PERCENT
NAME SHARES OF TOTAL IN THE OFFERING SHARES OF TOTAL
---- --------- -------- --------------- ---------- ---------
Schindler, Amy King................. 15,000(4) * 5,000(4) 10,000 *
Sher, Harlan........................ 152,381 * 22,857 129,524 *
Suttman, Michael J. ................ 28,617 * 28,617 -- --
Tuckerman, Thomas................... 152,381 * 22,857 129,524 *
--------- ------- ---------
TOTALS:................... 2,703,888 949,716 1,754,172
--------- ------- ---------
- ---------------------
* Less than one percent.
(1) Shares of Common Stock that are not outstanding but that may be acquired by
a person upon exercise of options or warrants within 60 days after the date
of this Prospectus are deemed outstanding for the purpose of computing the
number of shares and the percentage of outstanding shares beneficially owned
by such person; however, such shares are not deemed outstanding for the
purpose of computing the percentage of outstanding shares beneficially owned
by any other person.
(2) Charles H. King, IV and Patricia King are married and each of them may be
deemed to beneficially own the shares of the other.
(3) Includes 11,090 shares of Common Stock issuable upon exercise of outstanding
warrants.
(4) All such shares of Common Stock are issuable upon exercise of outstanding
warrants.
PLAN OF DISTRIBUTION
The Shares may be sold or distributed from time to time by or for the
account of the Selling Stockholders, or by pledgees, donees, transferees or
other successors in interest, in transactions (which may involve crosses and
block transactions) on Nasdaq or any national securities exchange or U.S.
inter-dealer quotation system of a registered national securities association on
which the Shares are then listed, in the over-the-counter market, in one or more
privately negotiated transactions (including sales pursuant to pledges), through
the writing of options on the Shares, in a combination of such methods of
distribution or by any other legally available means. The Selling Stockholders
may also loan or pledge the Shares registered hereunder to a broker-dealer and
the broker-dealer may sell the Shares so loaned or upon a default the
broker-dealer may effect sales of the pledged Shares pursuant to this
Prospectus. The Shares may also be transferred by each Selling Stockholder in
other ways not involving market makers or established trading markets, including
directly by gift, distribution or other transfer without consideration, and upon
any such transfer the transferee would have the same right of sale as such
Selling Stockholder under this Prospectus.
This Prospectus also may be used, with the Company's consent, by donees of
the Selling Stockholders, or by other persons acquiring Shares and who wish to
offer and sell such Shares under circumstances requiring or making desirable its
use. Such methods of sale may be conducted by the Selling Stockholders at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at prices otherwise negotiated. The Selling Stockholders may
effect such transactions directly, or indirectly through broker-dealers or
agents acting on their behalf and, in connection with such sales, such
broker-dealers or agents may receive compensation in the form of commissions or
discounts from the Selling Stockholders and/or the purchasers of the Shares for
whom they may act as agent or to whom they sell Shares as principal or both
(which commissions or discounts might be in excess of customary commissions). To
the extent required by applicable law, the Company will file, during any period
in which offers or sales are being made, one or more supplements to this
Prospectus to set forth the names of donees of Selling Stockholders and any
other material information with respect to the plan of distribution not
previously disclosed.
The Selling Stockholders and any such underwriters, brokers, dealers or
agents that participate in such distribution may be deemed to be "underwriters"
within the meaning of the Securities Act, and any discounts,
10
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commissions or concessions received by any such underwriters, brokers, dealers
or agents might be deemed to be underwriting discounts and commissions under the
Securities Act. Neither the Company nor the Selling Stockholders can presently
estimate the amount of such compensation. The Company knows of no existing
arrangements between any Selling Stockholder and any other Selling Stockholder,
underwriter, broker, dealer or other agent relating to the sale or distribution
of the Shares.
Under applicable rules and regulations under the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (the
"Exchange Act"), any person engaged in a distribution of any of the Shares may
not simultaneously engage in market activities with respect to the Common Stock
except in accordance with applicable law. In addition and without limiting the
foregoing, the Selling Stockholders will be subject to applicable provisions of
the Exchange Act; including without limitation Regulation M, which may limit the
timing of purchases and sales of any of the Shares by the Selling Stockholders.
All of the foregoing may affect the marketability of the Common Stock.
The Company will not receive any of the proceeds from the sale of the
Shares offered hereby. The Company will bear all expenses incident to the
registration of the Shares under federal and state securities laws and the sale
of the Shares hereunder other than expenses incident to the delivery of the
Shares to be sold by the Selling Stockholders, including any transfer taxes
payable on any Shares and any commissions and discounts payable to underwriters,
agents or dealers.
In order to comply with certain states' securities laws, if applicable, the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states the Common Stock may not be
sold unless the Common Stock has been registered or qualified for sale in such
state or an exemption from registration or qualification is available and is
complied with.
LEGAL MATTERS
The validity of the Shares offered hereby has been passed upon for the
Company by Akin, Gump, Strauss, Hauer & Feld, L.L.P. ("Akin Gump"). Mr. Rick L.
Burdick, a partner with Akin Gump, is a director of the Company and is the
beneficial owner of 59,034 shares of Common Stock (including options and
warrants to purchase shares of Common Stock).
EXPERTS
The financial statements and schedules of Century Business Services, Inc.
as of December 31, 1997 and 1996 and for each of the years in the three-year
period ended December 31, 1997, have been incorporated by reference herein and
in the registration statement of which this Prospectus is a part in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
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UNCERTAINTY OF FORWARD LOOKING STATEMENTS
Certain statements and information in this Prospectus (including documents
incorporated herein by reference, see "Incorporation of Certain Documents by
Reference") constitute forward-looking statements within the meaning of the
Federal Private Securities Litigation Reform Act of 1995. Such forward-looking
statements are typically punctuated by words or phrases such as "anticipate,"
"estimate," "projects," "management believes," "the Company believes" and words
or phrases of similar import. Such statements are subject to certain risks,
uncertainties or assumptions. If one or more of these risks or uncertainties
materialize, or if underlying assumptions prove incorrect, actual results may
vary materially from those anticipated, estimated or projected. Although the
Company believes that the assumptions upon which such forward-looking statements
are based are reasonable, it can give no assurance that such assumptions will
prove to be correct. Among the key factors that may have a direct bearing on the
Company's results of operations and financial condition ("Cautionary Factors")
are: (i) Century's ability to grow through acquisitions of strategic and
complementary businesses; (ii) Century's ability to finance such acquisitions;
(iii) Century's ability to manage growth; (iv) Century's ability to integrate
the operations of acquired businesses; (v) Century's ability to attract and
retain experienced personnel; (vi) Century's ability to store, retrieve, process
and manage significant databases; (vii) Century's ability to manage pricing of
its insurance products and adequately reserve for losses; (viii) the impact of
current and future laws and governmental regulations affecting Century's
operations; and (ix) market fluctuations in the values or returns on assets in
Century's investment portfolios. All forward-looking statements in this
Prospectus are expressly qualified by the Cautionary Factors.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files reports, proxy and information
statements and other information with the Securities and Exchange Commission
(the "SEC"). The reports, proxy and information statements and other information
concerning the Company can be inspected and copied at the public reference
facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, Tel. (202) 942-7040, and at the SEC's regional offices
located at Citicorp Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661, Tel. (312) 353-7390, and at Seven World Trade Center, 13th
Floor, New York, New York 10048, Tel. (212) 748-8000. Copies of such material
can also be obtained from the SEC at prescribed rates through the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549,
Tel. (202) 942-7040. Such documents may also be obtained through the Internet
website maintained by the SEC at http://www.sec.gov. Century Common Stock is
listed on Nasdaq. Such reports, proxy statements and other information relating
to Century may also be inspected at the offices of Nasdaq at 1735 K Street,
N.W., Washington, D.C. 20006.
The Company has filed with the SEC a Registration Statement on Form S-3
under the Securities Act with respect to the Shares (such registration
statement, including all amendments and supplements thereto, is hereinafter
referred to as the "Registration Statement"). This Prospectus, which forms a
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement, certain parts of which have been omitted in
accordance with the rules and regulations of the SEC. Statements contained in
this Prospectus as to the contents of any contract, agreement or other document
are not necessarily complete and in each instance reference is made to the copy
of such contract, agreement or other document filed as an exhibit to the
Registration Statement or incorporated herein by reference, and each such
statement is deemed qualified in its entirety by such reference. The
Registration Statement and exhibits thereto may be inspected without charge at
the public reference facilities maintained by the SEC, regional offices of the
SEC and offices of the SEC and Nasdaq referred to above, and copies thereof may
be obtained from the SEC at prescribed rates.
No person has been authorized to give any information or to make any
representations other than those contained in or incorporated by reference in
this Prospectus in connection with the offer made by this Prospectus, and, if
given or made, such information or representation must not be relied upon as
having been authorized by the Company or the Selling Stockholders. Neither the
delivery of this Prospectus nor any sale
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made hereunder shall under any circumstances create an implication that there
has been no change in the affairs of the Company since the date hereof. This
Prospectus does not constitute an offer to sell or the solicitation of an offer
to buy any security other than the Shares of Common Stock offered hereby, nor
does it constitute an offer to sell or a solicitation of an offer to buy any
shares of Common Stock by anyone in any jurisdiction in which such offer or
solicitation is not authorized, or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company (File No. 0-25890) with the
SEC pursuant to the Exchange Act, are incorporated herein by reference and made
a part of this Prospectus:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(ii) the Company's Schedule 14A Proxy Statement dated March 26, 1998
relating to the Annual Meeting of Stockholders;
(iii) the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998;
(iv) the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998; and
(v) the Company's Schedule 14A Proxy Statement dated August 24, 1998
relating to a Special Meeting of Stockholders.
All reports and other documents filed by the Company with the SEC pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the
initial filing of the Registration Statement and prior to the termination of the
offering, shall be deemed incorporated by reference in this Prospectus and to be
a part hereof from the date of filing of such documents. Any statement contained
in this Prospectus or in a document incorporated or deemed to be incorporated by
reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained in this
Prospectus or in any other subsequently filed document that also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon the request of such person, a
copy of any or all of the documents incorporated by reference herein, other than
the exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates. Requests for such copies should be directed to Century Business
Services, Inc., 6480 Rockside Woods Boulevard South, Suite 330, Cleveland, Ohio
44131, Attention: Investor Relations, telephone number (216) 447-9222.
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================================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
The Company............................. 2
Risk Factors............................ 3
Use of Proceeds......................... 8
Selling Stockholders.................... 9
Plan of Distribution.................... 10
Legal Matters........................... 11
Experts................................. 11
Uncertainty of Forward Looking
Statements............................ 12
Available Information................... 12
Incorporation of Certain Documents by
Reference............................. 13
================================================================================
================================================================================
949,716 SHARES
CENTURY BUSINESS
SERVICES, INC.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
SEPTEMBER , 1998
================================================================================
16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14 -- OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses, other than
underwriting discounts and commissions, payable by the Registrant in connection
with the issuance and distribution of the securities being registered hereby.
Securities and Exchange Commission Filing Fee............... $ 5,709
Printing Costs.............................................. $ 5,000
Legal Fees and Expenses..................................... $10,000
Miscellaneous............................................... $ 4,291
-------
Total............................................. $25,000
ITEM 15 -- INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") empowers a Delaware corporation to indemnify any person who was or is a
party, or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation) by
reason of the fact that such person is or was an officer or director of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation or of another corporation or other enterprise at the former
corporation's request, in an action by or in the right of the corporation to
procure an enterprise at the former corporation's request, in an action by or in
the right of the corporation to procure a judgment in its favor under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in defense
of any action referred to above, or in defense of any claim, issue or matter
therein, the corporation must indemnify such person against the expenses
(including attorneys' fees) which such person actually and reasonably incurred
in connection therewith. With respect to indemnification of current directors
and officers, Section 145 provides that any such indemnification shall be made
by the corporation only as authorized in each specific case upon a determination
that indemnification of such person is proper because he has met the applicable
standard of conduct by the (i) stockholders, (ii) board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, (iii) committee of directors who are not parties to
such action, suit or proceeding designated by majority vote by such
disinterested directors even if less than a quorum or (iv) independent legal
counsel, if there are no such disinterested directors, or if such disinterested
directors so direct. With respect to former directors and officers and other
employees or agents, Section 145 provides that indemnification may be made by
any person having corporate authority to act on the matter, including those
persons who are authorized by statute to determine whether to indemnify
directors and officers. Section 145 further provides that indemnification
pursuant to its provisions is not exclusive of other rights of indemnification
to which a person may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise.
The Amended and Restated Certificate of Incorporation, as amended, of the
Company entitles the Board of Directors to provide for indemnification of
directors and officers to the fullest extent provided by law, except for
liability (i) for any breach of director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends, (iv) for unlawful stock purchases or redemptions or (v)
for any transaction from which the director derived an improper personal
benefit.
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Article VII of the Amended and Restated Bylaws of the Company (the
"Bylaws") provides that to the fullest extent and in the manner permitted by the
laws of the State of Delaware and specifically as is permitted under Section 145
of the DGCL, the Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
other than an action by or in the right of the Company, by reason of the fact
that such person is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with such action, suit, or proceeding if such person acted in good
faith and in a manner he reasonably believed to be in and not opposed to the
best interests of the Company and with respect to any criminal action or
proceeding, such person had no reasonable cause to believe his conduct was
unlawful. Determination of an action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that a person did not act in good faith and
in a manner such person reasonably believed to be in and not opposed to the best
interests of the Company, and with respect to any criminal action or proceeding,
had reasonable cause to believe his conduct was lawful.
The Bylaws provide that any decision as to indemnification shall be made:
(a) by the Board of Directors of the Company by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding;
(b) if such a quorum is not obtainable, or even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion; or (c) by the stockholders. The Board of Directors of the Company may
authorize indemnification of expenses incurred by an officer or director in
defending a civil or criminal action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding. Indemnification pursuant to
these provisions is not exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise and shall continue as to a person who
has ceased to be a director or officer. The Company may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Company.
Further, the Bylaws provide that the indemnity provided will be extended to
the directors, officers, employees and agents of any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger that, if its separate existence has continued, would have had power and
authority to indemnify its directors, officers, and employees or agents so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of the Bylaws with respect to the resulting or
surviving corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
The Company currently maintains a separate insurance policy relating to its
directors and officers, under which policy such directors and officers are
insured, within the limits and subject to the limitations of the policy, against
certain expenses in connection with the defense of certain claims, actions,
suits or proceedings, and certain liabilities which might be imposed as a result
of such claims, actions, suits or proceedings, which may be brought against them
by reason of being or having been such directors or officers.
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ITEM 16 -- EXHIBITS
The following Exhibits are filed as part of this Registration Statement:
EXHIBIT
NUMBER DESCRIPTION
------- -----------
*3.1 -- Amended and Restated Certificate of Incorporation of the
Company (filed as Exhibit 3.1 to Registration Statement
on Form 10, Commission File No. 0-25890 and incorporated
herein by reference)
*3.2 -- Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of the Company dated October
18, 1996 (filed as Exhibit 3.2 to Annual Report on Form
10-K for the fiscal year ended December 31, 1996 and
incorporated herein by reference)
*3.3 -- Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of the Company effective
October 23, 1997 (filed as Exhibit 3.3 to Annual Report
on Form 10-K for the fiscal year ended December 31, 1997
and incorporated herein by reference)
3.4 -- Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of the Company effective
September 10, 1998
*3.5 -- Amended and Restated Bylaws of the Company (filed as
Exhibit 3.2 to Registration Statement on Form 10,
Commission File No. 0-25890 and incorporated herein by
reference)
4.1 -- Form of Stock Certificate of Common Stock of the Company
*4.2 -- Promissory Note, dated October 18, 1996, in the original
aggregate principal amount of $4.0 million (and with
$400,000 currently outstanding), issued by the Company
payable to Alliance Holding (filed as Exhibit 99.7 to the
Company's Current Report on Form 8-K dated October 18,
1996 and incorporated herein by reference)
*4.3 -- Form of Warrant for the purchase of the Company's Common
Stock (filed as Exhibit 4.3 to Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 and
incorporated herein by reference)
5.1 -- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
23.1 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in Exhibit 5.1)
23.2 -- Consent of KPMG Peat Marwick LLP
24.1 -- Power of Attorney (included in the signature page of this
Registration Statement)
- ---------------------
* Previously filed.
ITEM 17 -- UNDERTAKINGS
(a) The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) that, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the
II-3
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form of prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in the Registration
Statement;
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of this Registration Statement.
(b) The undersigned Company hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Company's
annual report pursuant to Section 13(a) or section 15(d) of the Exchange Act
that is incorporated by reference in this Registration Statement shall be deemed
to be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit, or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-4
20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Cleveland, Ohio, on September 23, 1998.
CENTURY BUSINESS SERVICES, INC.
By: /s/ GREGORY J. SKODA
----------------------------------
Gregory J. Skoda
Executive Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Gregory J. Skoda his attorney-in-fact,
with the power of substitution, for him in any and all capacities, to sign any
amendments to this Registration Statement, (including post-effective amendments
and amendments thereto) and any registration statement relating to the same
offering as this Registration Statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact, or his substitute or substitutes, may
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 23, 1998.
SIGNATURE TITLE
--------- -----
/s/ MICHAEL G. DEGROOTE President, Chief Executive Officer, Chairman
- ----------------------------------------------------- of the Board and Director (Principal
Michael G. Degroote Executive Officer)
/s/ GREGORY J. SKODA Executive Vice President and Director
- -----------------------------------------------------
Gregory J. Skoda
/s/ CHARLES D. HAMM, JR. Chief Financial Officer and Treasurer
- ----------------------------------------------------- (Principal Accounting and Financial Officer)
Charles D. Hamm, Jr.
/s/ RICK L. BURDICK Director
- -----------------------------------------------------
Rick L. Burdick
/s/ JOSEPH S. DIMARTINO Director
- -----------------------------------------------------
Joseph S. DiMartino
/s/ HARVE A. FERRILL Director
- -----------------------------------------------------
Harve A. Ferrill
/s/ HUGH P. LOWENSTEIN Director
- -----------------------------------------------------
Hugh P. Lowenstein
/s/ RICHARD C. ROCHON Director
- -----------------------------------------------------
Richard C. Rochon
II-5
21
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
*3.1 -- Amended and Restated Certificate of Incorporation of the
Company (filed as Exhibit 3.1 to Registration Statement
on Form 10, Commission File No. 0-25890 and incorporated
herein by reference)
*3.2 -- Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of the Company dated October
18, 1996 (filed as Exhibit 3.2 to Annual Report on Form
10-K for the fiscal year ended December 31, 1996 and
incorporated herein by reference)
*3.3 -- Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of the Company effective
October 23, 1997 (filed as Exhibit 3.3 to Annual Report
on Form 10-K for the fiscal year ended December 31, 1997
and incorporated herein by reference)
3.4 -- Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of the Company effective
September 10, 1998
*3.5 -- Amended and Restated Bylaws of the Company (filed as
Exhibit 3.2 to Registration Statement on Form 10,
Commission File No. 0-25890 and incorporated herein by
reference)
4.1 -- Form of Stock Certificate of Common Stock of the Company
*4.2 -- Promissory Note, dated October 18, 1996, in the original
aggregate principal amount of $4.0 million (and with
$400,000 currently outstanding), issued by the Company
payable to Alliance Holding (filed as Exhibit 99.7 to the
Company's Current Report on Form 8-K dated October 18,
1996 and incorporated herein by reference)
*4.3 -- Form of Warrant for the purchase of the Company's Common
Stock (filed as Exhibit 4.3 to Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 and
incorporated herein by reference)
5.1 -- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
23.1 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in Exhibit 5.1)
23.2 -- Consent of KPMG Peat Marwick LLP
24.1 -- Power of Attorney (included in the signature page of this
Registration Statement)
- ---------------------
* Previously filed.
1
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
CENTURY BUSINESS SERVICES, INC.
Century Business Services, Inc. a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), does hereby certify as
follows:
1. That the first paragraph of Article Four of the Certificate of
Incorporation of the Corporation is hereby amended and restated in its
entirety as follows:
"ARTICLE FOUR
The total number of shares of all classes of stock which this
Corporation shall have authority to issue is 250,000,000 shares,
consisting of 250,000,000 shares of Common Stock, $.01 par value per
share. The aggregate par value of all shares of all classes of stock
that this Corporation has authority to issue is $2,500,000.00."
2. That said amendments to this Certificate of Amendment to the
Certificate of Incorporation of the Corporation were duly adopted in
accordance with the provisions of Section 242 of the General Corporation
Law of the State of Delaware.
3. That this Certificate of Amendment to the Certificate of
Incorporation shall become effective upon filing with the Secretary of
State of the State of Delaware.
THE UNDERSIGNED, being the Executive Vice President of this Corporation,
hereby declares and certifies that this Certificate of Amendment to the
Certificate of Incorporation of Century Business Services, Inc. is his act and
deed and the facts herein stated are true, and accordingly has hereunto set his
hand this 10th day of September, 1998.
CENTURY BUSINESS SERVICES, INC.
By: /s/ GREGORY J. SKODA
----------------------------------
Gregory J. Skoda
Executive Vice President
1
EXHIBIT 4.1
[NUMBER] CENTURY BUSINESS SERVICES [SHARES]
CBIZ
INCORPORATED UNDER THE LAWS SEE REVERSE FOR
OF THE STATE OF DELAWARE CERTAIN DEFINITIONS
CUSIP 156490 10 4
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE $.01, OF
CENTURY BUSINESS SERVICES, INC.
transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this Certificate properly
endorsed. This certificate and the shares evidenced hereby are issued under and shall be subject to all of the provisions of the
Articles of Incorporation of the Corporation and any amendments thereto, copies of which are on file with the Corporation and the
Transfer Agent to all of which the holder by acceptance hereof, assents. This Certificate is not valid until countersigned by the
Transfer Agent and registered by the Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signature of its duly authorized officers.
Dated:
CERTIFICATE OF STOCK
/s/ BARBARA A. RATIGLIANO /s/ [ILLEGIBLE]
CORPORATE SECRETARY CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
[SEAL}
COUNTERSIGNED AND REGISTERED:
STAR BANK, N.A.
(Cincinnati, Ohio) TRANSFER AGENT
BY AND REGISTRAR
AUTHORIZED SIGNATURE
CENTURY BUSINESS SERVICES, INC.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO
REQUESTS, A STATEMENT OF THE DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES
THEREOF WHICH THE COMPANY IS AUTHORIZED TO ISSUE AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. ANY SUCH REQUEST
IS TO BE ADDRESSED TO THE SECRETARY OF THE COMPANY OR TO THE TRANSFER AGENT OR
CO-TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE.
- --------------------------------------------------------------------------------
The following abbreviations when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ____________ Custodian _________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right
of survivorship and not as under Uniform Gifts to Minors
tenants in common Act __________________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received, __________________ hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING
ZIP OR POSTAL CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of the Common Stock represented by the within certificate, and does hereby
irrevocably constitute and appoint _____________________________________________
______________________Attorney to transfer the said shares on the books of the
within named Corporation with full power of substitution in the premises.
Dated:________________
X____________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
1
EXHIBIT 5.1
[AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. LETTERHEAD]
September 23, 1998
Century Business Services, Inc.
6480 Rockside Woods Boulevard South
Suite 330
Cleveland, Ohio 44131
Ladies and Gentlemen:
We have acted as counsel to Century Business Services, Inc., a Delaware
corporation (the "Company"), in connection with the filing of a registration
statement on Form S-3 filed on the date hereof (the "Registration Statement")
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act"), for the registration of the sale from time to time of (i) an
aggregate of 932,322 shares (the "Shares") of common stock, par value $0.01 per
share, of the Company ("Common Stock") and (ii) an aggregate of 17,394 shares of
Common Stock issuable upon exercise of outstanding warrants of the Company to
purchase Common Stock ("Warrant Shares").
We have, as counsel, examined originals or copies, certified or otherwise
identified to our satisfaction, of such corporate records, agreements, documents
and other instruments, and such certificates or comparable documents of public
officials and of officers and representatives of the Company, and have made such
inquiries of such officers and representatives as we have deemed relevant and
necessary as a basis for the opinion hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents. In
addition, we have assumed that the Shares have been, and that the Warrant Shares
will be, issued for at least the par value thereof. As to all questions of fact
material to this opinion that have not been independently established, we have
relied upon certificates or comparable documents of officers and representatives
of the Company.
Based upon such examination and representations, we advise you that, in our
opinion, (i) the Shares have been duly and validly authorized and are validly
issued, fully paid and non-assessable and (ii) when the Warrant Shares are
issued and delivered upon exercise pursuant to the terms of the applicable
warrant agreements, such Warrant Shares will have been duly and validly
authorized and will be validly issued, fully paid and non-assessable.
The foregoing opinion is limited to the corporate laws of the State of
Delaware, and we express no opinion as to the effect on the matters covered by
this letter of any other law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In addition, we consent to the reference to us under the
caption "Legal Matters" in the prospectus.
This opinion is rendered solely to you in connection with the above matter.
This opinion may not be relied upon by you for any other purpose or relied upon
by or furnished to any other person without our prior written consent.
Sincerely yours,
AKIN, GUMP, STRAUSS, HAUER
& FELD, L.L.P
1
EXHIBIT 23.2
The Board of Directors
Century Business Services, Inc.
We consent to the use of our reports incorporated herein by reference and
to the reference to our firm under the heading "Experts" in the Prospectus.
KPMG PEAT MARWICK LLP
Cleveland, Ohio
September 21, 1998
