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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 20, 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 (I.R.S. Employer Identification
Incorporation or Organization) Number)
10055 SWEET VALLEY DRIVE
VALLEY VIEW, OHIO 44125
(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
10055 SWEET VALLEY DRIVE
VALLEY VIEW, OHIO 44125
(216) 447-9000
(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. | |
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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. | |
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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TITLE OF SHARES TO BE REGISTERED AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
REGISTERED (1) AGGREGATE PRICE PER AGGREGATE OFFERING REGISTRATION FEE
SHARE (1) PRICE
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Common Stock, par value $0.01 per share 5,723,922 shares $16.75 $95,875,694 $28,284
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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
February 18, 1998
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 TO 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 BY 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 February 20, 1998
PROSPECTUS
5,723,922 SHARES
CENTURY BUSINESS SERVICES, INC.
Common Stock
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This Prospectus relates to an aggregate of 5,723,922 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. The Shares are being registered under the Securities Act of 1933, as
amended (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. Any transfer taxes payable on any
Shares and any commissions and discounts payable to underwriters, agents or
dealers shall be paid by the Selling Stockholders.
The Common Stock is quoted on Nasdaq under the symbol "CBIZ." On
February 18, 1998, the last reported sale price for the Common Stock as reported
by Nasdaq was $17.00 per share. The Company had 47,408,618 shares of Common
Stock issued and outstanding as of February 19, 1998.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH
UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
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.
The date of this Prospectus is ___________ ___, 1998
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TABLE OF CONTENTS
Available Information ................................................. 2
Incorporation of Certain Documents by Reference ....................... 3
The Company ........................................................... 4
Risk Factors .......................................................... 6
Use of Proceeds ....................................................... 11
Selling Stockholders .................................................. 12
Plan of Distribution .................................................. 14
Legal Matters ......................................................... 15
Experts ............................................................... 15
Uncertainty of Forward Looking Statements ............................. 15
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (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, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the SEC's regional offices located at Citicorp Center, Suite 1400, 500 West
Madison Street, Room 3190, Chicago, Illinois 60661 and at Seven World Trade
Center, 13th Floor, New York, New York 10048. 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. Such
documents also may be obtained through the 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 CBIZ 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 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
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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 April 1, 1997
relating to the 1997 Annual Meeting of Stockholders held May
6, 1997.
(iii) the Company's Current Report on Form 8-K dated February 20,
1998.
Also incorporated by reference into this Prospectus are the following
documents filed by CBIZ with the SEC pursuant to the Securities Act:
(a) the Company's Registration Statement on Form S-4 filed with
the SEC on November 14, 1997, as amended by Amendment No. 1
thereto filed with the SEC on December 9, 1997.
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 this Prospectus 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 written or oral 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. Written or oral requests for such copies should be directed to
Century Business Services, Inc., 6480 Rockside Woods Blvd., South, Suite 330,
Cleveland, Ohio 44131, Attention: Investor Relations, telephone number (216)
447- 9000.
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THE COMPANY
Century is a diversified services company which, acting through its
subsidiaries, provides outsourced business services, including specialty
insurance services, to small and medium sized commercial enterprises 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 82 Company offices in 26 states, as well as
through its subsidiary Comprehensive Business Services, Inc. ("Comprehensive"),
a franchisor of accounting services with approximately 250 franchisee offices
located in 40 states. As of December 31, 1997, the Company served approximately
60,000 clients, of which approximately 24,000 were served through the
Comprehensive franchisee network. Management estimates that the Company's
clients employ over one million employees, including 240,000 employed by clients
of the Comprehensive franchisee network.
In October 1996, Century completed two acquisitions pursuant to which
it acquired, through a reverse merger, Century Surety Company ("CSC") and its
subsidiaries (together with CSC, the "CSC Group"), which includes three
insurance companies, and Commercial Surety Agency, Inc. d/b/a Century Surety
Underwriters ("CSU"), an insurance agency that markets surety bonds.
In December 1996, the Company acquired SMR & Co. Business Services
("SMR"). Through SMR, Century provides a wide range of outsourced business
services, including information technology consulting, tax return preparation
and compliance, tax planning, business valuation, human resource management,
succession and estate planning, personal financial planning and employee benefit
program design and administration to individuals and small and medium sized
commercial enterprises primarily in Ohio. 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 existing specialty insurance platform.
During 1997, the Company acquired the businesses of 39 companies
representing over $134 million in annualized revenues at the time of
acquisition. The majority of these acquisitions have been accounted for under
the purchase method of accounting. The Company anticipates future significant
acquisitions will be accounted for, when possible, under the pooling of
interests method of accounting. During 1997, the Company's acquisitions resulted
in significant increases in goodwill, and the Company anticipates that such
increases will continue as a result of future acquisitions. The excess of cost
over the fair value of net assets of businesses acquired (goodwill) was
approximately $89.9 million at December 31, 1997, representing approximately 31%
of the Company's total assets. The Company amortizes goodwill on a straight line
basis over periods not exceeding 30 years.
The Company has completed from December 31, 1997 through February 17,
1998, or has publicly announced as pending, an additional seven acquisitions
representing over $46 million in annualized revenues. These acquisitions are not
included in the results of operations for the period ended December 31, 1997.
The Company believes that substantial additional acquisition opportunities exist
in the outsourced business services industry.
The Company's strategy is to grow aggressively as a diversified
services company by expanding its recently acquired outsourced business services
and specialty insurance operations through internal growth and additional
acquisitions in such industries.
Century was formed as a Delaware corporation in 1987 under the name
Stout Associates, Inc. and primarily supplied hazardous waste services. In 1992,
the Company was acquired by Republic Industries, Inc. ("RII"). In April 1995,
RII effected a spin-off of its hazardous waste operations through a distribution
of common stock to the stockholders of record of RII. At such time, the Company
was named "Republic Environmental Services, Inc." and
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was traded on the Nasdaq National Market under the symbol "RESI". In June 1996,
the Company changed its name to "International Alliance Services, Inc." and
began trading under the symbol "IASI" in anticipation of the merger with the CSC
Group and CSU. The name change signaled a new direction for the Company away
from its hazardous waste business. In furtherance of its strategic redirection
towards business services, the Company successfully divested its hazardous waste
operations in two separate transactions completed in July and September 1997. On
December 23, 1997, the Company changed its name to Century Business Services,
Inc. and began trading under the symbol "CBIZ".
The principal executive office of Century is located at 10055 Sweet
Valley Drive, Valley View, Ohio, 44125, and its telephone number is (216)
447-9000. In March 1998, the Company's principal executive office will be
relocated to 6480 Rockside Woods Blvd., South, Suite 330, Cleveland, Ohio 44131.
Its telephone number will remain the same.
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RISK FACTORS
In addition to the other information set forth and incorporated by reference in
this Prospectus, prospective purchasers of the Shares should consider carefully
the following risk factors in evaluating an investment in the Company.
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 terms favorable to the Company 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, 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 established a bank line of credit and
maintains a universal shelf registration 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 at such times and on such
terms that the Company deems acceptable.
ABILITY TO MANAGE GROWTH AND INTEGRATE RECENTLY ACQUIRED BUSINESSES
The Company's business has grown significantly in size and complexity
over the past year, 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. The excess of cost over the fair value of net assets of
businesses acquired (goodwill) was approximately $89.9 at December 31, 1997,
representing approximately 31% of the
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Company's total assets. The Company amortizes goodwill on a straight line basis
for periods not exceeding 30 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 may be necessary.
Although at December 31, 1997, the net unamortized balance of intangible assets
is 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. There can be no
assurance that the Company's insurance will cover all such liabilities or, if it
does, that the coverage for such liabilities will be adequate. 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
government 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 that the Company's 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
arrangement 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
market place. The Company competes with these large providers, in-house employee
services departments, local outsourcing companies and independent consultants.
In addition, the Company may also 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 lead to the
consolidation of some of the industries' largest companies. Competition is
particularly acute among smaller specialty carriers like the Company because the
market niches exploited by these carriers 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. Accordingly, 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
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. 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. There can be no assurance that the precautions 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 losses 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. The Company has reviewed and
continues to review its computer equipment and software systems with regard to
"Year 2000" problems. The Company has formulated a plan and methodology for
addressing "Year 2000" problems and is currently implementing such plan. "Year
2000" problems, if they were to occur, could have a material adverse effect on
the Company's business, financial condition and results of operations.
INADEQUATE PRICING RISK OF INSURANCE
During 1997, approximately 35% of the Company's revenues were from its
specialty insurance services. The primary risk of any insurance carrier is the
risk of inadequate pricing, which is a problem that manifests itself in the form
of an unexpectedly high level of claims after policy issuance. 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 results of operations.
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UNANTICIPATED LOSSES DUE TO INADEQUATE RESERVE ESTIMATES
When claims are made under insurance policies written by the Company,
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 December 31, 1997,
were approximately $50.7 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 insurance policy and surety bond exposures.
The Company uses a reserving system which it believes will enable it to
meet its 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.
INADEQUATE REINSURANCE PROTECTION OF INSURANCE LIABILITIES
The Company depends heavily on reinsurers to assume a substantial
portion of the insurance liability 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
performance, 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.
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
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11
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.
MARKET REVERSES IN INVESTED ASSET PORTFOLIO
Investment of the Company's 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 effect on the Company's business,
financial condition and results of operations.
CONTROL BY EXISTING STOCKHOLDERS
As of February 13, 1998, the Company's executive officers, directors
and principal stockholders beneficially owned an aggregate of 35,882,759 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 56.0% of the outstanding shares of
Common Stock. In addition, as of said date, Messrs. DeGroote and Huizenga
beneficially owned an aggregate of 22,691,556 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, but excluding 500,000
shares for which Mr. DeGroote has subscribed subject to stockholder approval),
constituting approximately 37.9% 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.
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.
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 Shares will be sold
and the effect such sales may have on the market price of the Company's Common
Stock. As of the date of this Prospectus, the Company has registered under the
Securities Act an aggregate of 43,222,803 shares of the Company's 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
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12
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 the Company's Common Stock to be issued from time to time in
connection with acquisitions. In addition, 23,444,558 shares of the Company's
Common Stock, which include shares issuable upon the exercise of warrants,
remain subject to various lock-up agreements. The terms of such lock-up
agreements will expire with respect to 15,193,232 of such shares prior to
December 31, 1998, and the Company is obligated to register such shares under
the Securities Act for resale from time to time. Such securities may or may not
be subject to resale restrictions in accordance with the Securities Act and the
regulations promulgated thereunder. As such restrictions lapse or if such shares
are registered for sale to the public, such securities may be sold to the
public. In the event of the issuance and subsequent resale of a substantial
number of shares of the Company's Common Stock, or a perception that such sales
could occur, there could be a material adverse effect on the prevailing market
price of the Company's Common Stock.
NO DIVIDENDS
Since April 27, 1995, the Company has not paid cash dividends on its
Common Stock, 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. The payment of dividends in the future 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..
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 to be sold by Selling Stockholders. Any transfer taxes payable on any
Shares and any commissions and discounts payable to underwriters, agents or
dealers shall be paid by the Selling Stockholders.
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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 February 19, 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 or a portion of the
Shares at any time and from time to time after the date hereof, the exact number
of Shares that each Selling Stockholder may retain upon completion of the
Offering cannot be determined at this time. 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) REGISTERED ARE SOLD)(1)
--------------------- -----------------------
NUMBER OF SHARES
PERCENT BEING REGISTERED IN PERCENT
NAME SHARES OF TOTAL THE OFFERING SHARES OF TOTAL
Massachusetts Mutual Life Insurance Company(2) 231,000(3) * 231,000 -- --
Massachusetts Mutual Corporate Value Partners
Limited (2) 69,000(3) * 69,000 -- --
Victory Ventures LLC 115,000(3) * 115,000 -- --
Putnam Variable Trust - Putnam VT Voyager
Fund(4) 176,100(3) * 176,100 -- --
Putnam Diversified Equity Fund (4) 26,500(3) * 26,500 -- --
Putnam Voyager Fund II (4) 50,600(3) * 50,600 -- --
Putnam Voyager Fund (4) 746,800(3) 1.6 746,800 -- --
Gabelli International Limited 50,000(3) * 50,000 -- --
Whitier Trust Co. 100,000(3) * 100,000 -- --
Network Fund III, Ltd. (5) 70,000(3) * 70,000 -- --
Network Fund IV, LLC (5) 30,000(3) * 30,000 -- --
Chilton QP Investment Partners, L.P. (6) 11,630(3) * 11,630 -- --
Chilton Opportunity Trust, L.P. (6) 8,665(3) * 8,665 -- --
Chilton Opportunity International (BVI) Ltd. (6) 10,310(3) * 10,310 -- --
Chilton International (BVI) Ltd. (6) 89,980(3) * 89,980 -- --
Chilton Investment Partners, L.P. (6) 79,415(3) * 79,415 -- --
Clarke H. Bailey 10,000(3) * 10,000 -- --
Robert L. Egan 10,000(3) * 10,000 -- --
Straus-Spelman L.P. (7) 17,000(3) * 17,000 -- --
Straus Partners L.P. (7) 83,000(3) * 83,000 -- --
Willametta K. Day Foundation 40,000(3) * 40,000 -- --
Oscar Investment Fund, L.P. 20,000(3) * 20,000 -- --
Kobrick Offshore Fund, Ltd. (8) 1,700(3) * 1,700 -- --
Kobrick Fund, L.P. (8) 43,800(3) * 43,800 -- --
Kobrick-Cendant Capital Fund (8) 27,600(3) * 27,600 -- --
Kobrick-Cendant Emerging Growth Fund (8) 26,900(3) * 26,900 -- --
Cascade Investment LLC 500,000(3) 1.1 500,000 -- --
Drake & Company 100,000(3) * 100,000 -- --
Hathaway Partners Investment L.P. 30,000(3) * 30,000 -- --
Warburg Pincus Emerging Growth Fund 400,000(3) * 400,000 -- --
IDS Life Managed Fund, Inc. 750,000(3) 1.6 750,000 -- --
Zeke L.P. 100,000(3) * 100,000 -- --
Berrard Holdings Limited Partnership 100,000(3) * 100,000 -- --
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BENEFICIAL OWNERSHIP
AFTER OFFERING
BENEFICIAL OWNERSHIP (ASSUMING ALL SHARES
PRIOR TO OFFERING (1) REGISTERED ARE SOLD)(1)
--------------------- -----------------------
NUMBER OF SHARES
PERCENT BEING REGISTERED IN PERCENT
NAME SHARES OF TOTAL THE OFFERING SHARES OF TOTAL
Porter Partners, L.P. 75,000(3) * 75,000 -- --
Aaron Fleck 100,000(3) * 100,000 -- --
Lancaster Investment Partners, L.P. 150,000(3) * 150,000 -- --
South Ferry Building Company 46,000(3) * 46,000 -- --
Aaron Wolfson 4,000(3) * 4,000 -- --
Millisor & Nobil Co., L.P.A 384,615 * 96,154 288,461 *
Marvin B. Basil (9) 64,513 * 9,676 54,837 *
Eleanor A. Basil (9) 64,513 * 9,676 54,837 *
Connie B. Freeman (10) 29,204 * 4,381 24,823 *
Paul K. Freeman (10) 179,204 * 154,381 24,823 *
Scott D. Chapman 49,255 * 12,314 36,941 *
Roy Simmons 49,255 * 12,314 36,941 *
Ralph M. Daniel, Jr 274,423 * 274,423 -- --
J. Michael Meador 274,423 * 274,423 -- --
Frederick Bass 401,258 * 240,755 160,503 *
Gary A. Nagler 225,708 * 135,425 90,283 *
- -----------------
* Less than 1%.
(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) Each of these entities has a common investment advisor, which may be
deemed to be the beneficial owner of all of the shares held by such
entities.
(3) Acquired from CBIZ and certain selling stockholders through a private
placement on February 6, 1998.
(4) Each of these entities has a common investment advisor, which may be
deemed to be the beneficial owner of all of the shares held by such
entities.
(5) Each of these entities has a common investment advisor, which may be
deemed to be the beneficial owner of all of the shares held by such
entities.
(6) Each of these entities has a common investment advisor, which may be
deemed to be the beneficial owner of all of the shares held by such
entities.
(7) Each of these entities has a common investment advisor, which may be
deemed to be the beneficial owner of all of the shares held by such
entities.
(8) Each of these entities has a common investment advisor, which may be
deemed to be the beneficial owner of all of the shares held by such
entities.
(9) Marvin and Eleanor Basil are married and each of them may be deemed to
beneficially own the shares of the other.
(10) Connie and Paul Freeman are married and each of them may be deemed to
beneficially own the shares of the other.
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PLAN OF DISTRIBUTION
The Shares may be sold or distributed from time to time by or for the
account of the Selling Stockholders, or their pledgees on behalf of the Selling
Stockholder, 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. 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, 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 Shares may be sold from time to time by the Selling Stockholders,
or by pledgees, donees, transferees or other successors in interest. 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 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, 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 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 Rule 10b-5 and Regulation M, which
provisions 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. Any transfer taxes payable on any
Shares and any commissions and discounts payable to underwriters, agents or
dealers shall be paid by the Selling Stockholders.
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.
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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 62,500 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, 1996 and 1995 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 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.
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. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. Among the key factors that may have a direct bearing on the Company's
results of operations and financial condition 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.
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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....................... $ 28,284
Printing Costs ..................................................... 10,000
Legal Fees and Expenses ............................................ 100,000
Miscellaneous ...................................................... 1,716
--------
Total ......................................................... $140,000
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. Section 145 further provides that any 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. 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, or for unlawful stock purchases or redemptions, or (iv)
for any transaction from which the director derived an improper personal
benefit.
Article VII of the Amended and Restated Bylaws of the Company 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
II-1
18
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 Amended and Restated 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; or (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 Amended and restated Bylaws of the Company 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 which, 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 Amended and Restated 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 does not currently maintain a separate insurance policy
relating to its directors and officers; however, the Company is currently
considering purchasing and maintaining an insurance policy under which the
directors and officers of the Company would be 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 DESCRIPTION
NUMBER -----------
------
*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 --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
(filed as Exhibit 4.1 to the Company's Registration
Statement on Form 10, Commission File No. 0-25890 and
incorporated herein by reference)
*4.2 --Promissory Note, dated October 18, 1996, in the original
aggregate principal amount of $4.0 million 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
23.3 --Consent of KPMG Peat Marwick LLP
23.4 --Consent of KPMG Peat Marwick LLP
23.5 --Consent of KPMG Peat Marwick LLP
23.6 --Consent of KPMG Peat Marwick LLP
23.7 --Consent of KPMG Peat Marwick LLP
23.8 --Consent of KPMG Peat Marwick LLP
23.9 --Consent of Altschuler, Melvoin and Glasser LLP
23.10 --Consent of Gelfond Hochstadt Pangburn & Co.
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:
II-3
20
(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) which, 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 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;
(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 the Offering.
(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;
(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
21
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 the City of Valley View, State of Ohio, on February 19,
1998.
CENTURY BUSINESS SERVICES, INC.
By: /s/ GREGORY J. SKODA
----------------------------------------
Gregory J. Skoda
Executive Vice President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Michael G. DeGroote and Gregory J. Skoda, and
each of them, with the power to act without the other, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him in his name, place and stead, in any and all capacities,
to sign on his behalf individually and in each capacity stated below any or all
amendments or post-effective amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their substitutes, may
lawfully 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 February 19, 1998.
SIGNATURE TITLE
- --------- -----
/s/ MICHAEL G. DEGROOTE President, Chief Executive Officer, Chairman of the
- ---------------------------------------------- Board and Director (Principal Executive Officer)
Michael G. DeGroote
/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
22
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
NUMBER -----------
------
*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 --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
(filed as Exhibit 4.1 to the Company's Registration
Statement on Form 10, Commission File No. 0-25890 and
incorporated herein by reference)
*4.2 --Promissory Note, dated October 18, 1996, in the original
aggregate principal amount of $4.0 million 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
23.3 --Consent of KPMG Peat Marwick LLP
23.4 --Consent of KPMG Peat Marwick LLP
23.5 --Consent of KPMG Peat Marwick LLP
23.6 --Consent of KPMG Peat Marwick LLP
23.7 --Consent of KPMG Peat Marwick LLP
23.8 --Consent of KPMG Peat Marwick LLP
23.9 --Consent of Altschuler, Melvoin and Glasser LLP
23.10 --Consent of Gelfond Hochstadt Pangburn & Co.
24.1 --Power of Attorney (included in the signature page of this
Registration Statement)
- ---------------
* Previously filed.
1
Exhibit 5.1
[AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. LETTERHEAD]
February 20, 1998
Century Business Services, Inc.
10055 Sweet Valley Drive
Valley View, Ohio 44125
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 from time to time, the "Securities Act"),
for the registration of the sale from time to time of an aggregate of 5,723,922
shares of common stock, par value $0.01 per share, of the Company (the
"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. 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, the Shares have been duly and validly authorized and are
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.
2
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
Century Business Services, Inc.
February 20, 1998
Page 2
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.
Very truly yours,
/s/ AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
---------------------------------------------
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
Registration Statement.
KPMG PEAT MARWICK LLP
Cleveland, Ohio
February 20, 1998
1
EXHIBIT 23.3
The Board of Directors
Health Administrative Services, Inc.
We consent to the inclusion of our report dated January 28, 1998, with respect
to the balance sheet of Health Administration Services, Inc. as of December 18,
1997, and the related statements of income, changes in stockholders' equity and
cash flows for the period from January 1, 1997 to December 18, 1997, which
report appears in the Form 8-K of Century Business Services, Inc. dated
February 20, 1998.
KPMG PEAT MARWICK LLP
Houston, Texas
February 20, 1998
1
EXHIBIT 23.4
To the Stockholders
Smith & Radigan, P.C.:
We consent to the inclusion of our report dated February 6, 1998, with respect
to the balance sheet of Smith & Radigan, P.C. as of December 3, 1997, and the
related statements of operations and retained earnings and cash flows for the
period January 1, 1997 through December 3, 1997, which report appears in the
Form 8-K of Century Business Services, Inc. dated February 20, 1998.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
February 20, 1998
1
EXHIBIT 23.5
The Board of Directors
Robert D. O'Byrne and Associates, Inc. and
The Grant Nelson Group, Inc.
We consent to the inclusion of our report dated February 13, 1998, with respect
to the combined balance sheet of Robert D. O'Byrne and Associates, Inc. and The
Grant Nelson Group as of December 31, 1997, and the related combined statements
of operations, stockholders' equity, and cash flows for the year then ended,
which report appears in the Form 8-K of Century Business Services, Inc. dated
February 20, 1998.
KPMG PEAT MARWICK LLP
Kansas City, Missouri
February 20, 1998
1
EXHIBIT 23.6
The Board of Directors
Zelenkofske, Axelrod & Co., Ltd.:
We consent to the inclusion of our report dated February 6, 1998, with respect
to the balance sheet of Zelenkofske, Axelrod & Co., Ltd. as of June 30, 1997,
and the related statements of operations and retained earnings, and cash flows
for the three months then ended, which report appears in the Form 8-K of Century
Business Services, Inc. dated February 20, 1998.
KPMG PEAT MARWICK LLP
Philadelphia, Pennsylvania
February 20, 1998
1
EXHIBIT 23.7
The Board of Directors
Shenkin Kurtz Baker & Co., P.C.:
We consent to the inclusion of our report dated January 26, 1998, with respect
to the consolidated balance sheet of Shenkin Kurtz Baker & Co., P.C. and
subsidiary as of December 7, 1997, and the related consolidated statements of
income, stockholders' equity, and cash flows for the period from January 1, 1997
to December 7, 1997, which report appears in the Form 8-K of Century Business
Services, Inc. dated February 20, 1998.
KPMG PEAT MARWICK LLP
Denver, Colorado
February 20, 1998
1
EXHIBIT 23.8
The Board of Directors
Comprehensive Business Services, Inc.:
We consent to the inclusion of our report dated August 7, 1997, with respect
to the balance sheet of Comprehensive Business Services, Inc. (a wholly owned
subsidiary of Franchise Services, Inc.) as of December 31, 1996, and the related
statements of operations and cash flows for the year then ended, which report
appears in the Form 8-K of Century Business Services, Inc. dated February 20,
1998.
KPMG PEAT MARWICK LLP
Costa Mesa, California
February 19, 1998
1
EXHIBIT 23.9
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the inclusion of our report dated February 12, 1997, with
respect to the consolidated balance sheet of VALUATION COUNSELORS GROUP, INC.
AND ITS WHOLLY OWNED SUBSIDIARY as of December 31, 1996, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended, which report appears in the 8-K of Century Business
Services, Inc. dated February 20, 1998.
ALTSCHULER, MELVOIN AND GLASSER LLP
Chicago, Illinois
February 20, 1998
1
EXHIBIT 23.10
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-3 and Prospectus of Century Business Services, Inc., of our report dated
May 20, 1997 with respect to the consolidated financial statements of
Environmental Safety Systems, Inc. for the year ended December 31, 1996, which
appears in the Form 8-K dated February 20, 1998, of Century Business Services,
Inc.
GELFOND HOCHSTADT PANGBURN & CO
Denver, Colorado
February 20, 1998
