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Filed Pursuant to Rule 424(b)(5)
Registration No. 333-40331
PROSPECTUS SUPPLEMENT
(To Prospectus Dated December 12, 1997)
CENTURY BUSINESS SERVICES, INC.
1,785,714 SHARES OF COMMON STOCK AND
900,000 COMMON STOCK WARRANTS
This prospectus supplement relates to 1,785,714 shares of common stock and
warrants to purchase an additional 900,000 shares of common stock that we are
offering to Jackson National Life Insurance Company at an aggregate price of
$25,000,000. This offering will result in $24,975,000 aggregate net proceeds
(after deducting estimated expenses) to us.
Our common stock is traded on the Nasdaq National Market under the symbol
"CBIZ".
THIS INVESTMENT INVOLVES RISK. CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON
PAGE S-4 OF THIS PROSPECTUS SUPPLEMENT.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the common stock or warrants or passed
upon the adequacy or accuracy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is March 5, 1999.
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IN MAKING YOUR INVESTMENT DECISION, YOU SHOULD RELY ONLY ON THE
INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR CONTAINED OR REFERRED TO
IN THE ACCOMPANYING PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU
WITH ANY OTHER INFORMATION. IF YOU RECEIVE ANY UNAUTHORIZED INFORMATION, YOU
MUST NOT RELY ON IT.
ANY STATEMENT CONTAINED IN A DOCUMENT REFERRED TO IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TO BE CONSIDERED MODIFIED OR
REPLACED TO THE EXTENT THAT A STATEMENT CONTAINED HEREIN OR IN ANY OTHER
SUBSEQUENTLY FILED DOCUMENT MODIFIES OR REPLACES SUCH STATEMENT. ANY STATEMENT
SO MODIFIED OR REPLACED IS NOT TO BE CONSIDERED, EXCEPT AS SO MODIFIED OR
REPLACED, TO BE A PART OF THIS PROSPECTUS SUPPLEMENT.
WE ARE OFFERING TO SELL OUR COMMON STOCK AND WARRANTS ONLY IN PLACES
WHERE SALES ARE PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THESE DOCUMENTS.
---------------------
TABLE OF CONTENTS
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Page
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PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary............................................. S-3
Risk Factors.............................................................. S-4
Use of Proceeds........................................................... S-5
Price Range of Common Stock............................................... S-5
Dividend Policy........................................................... S-5
Description of Common Stock and Warrants.................................. S-6
Plan of Distribution...................................................... S-6
Legal Matters............................................................. S-6
Experts................................................................... S-6
PROSPECTUS
The Company............................................................... 3
Use of Proceeds........................................................... 4
Ratio of Earnings to Fixed Charges........................................ 4
Description of Debt Securities............................................ 4
Description of Common Stock............................................... 7
Description of Warrants................................................... 8
Plan of Distribution...................................................... 8
Legal Matters............................................................. 10
Experts................................................................... 10
Available Information..................................................... 10
Incorporation of Certain Documents by Reference........................... 11
</TABLE>
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PROSPECTUS SUPPLEMENT SUMMARY
The following summary highlights information contained elsewhere in
this prospectus supplement or the accompanying prospectus. It may not contain
all of the information that you should consider before investing in our common
stock and warrants. For a more complete discussion of the information you
should consider before investing in our common stock and warrants, you should
read this entire prospectus supplement, including the section entitled "Risk
Factors," which sets forth important factors that could affect our business,
operations and financial results, the accompanying prospectus and the documents
referred to in the prospectus.
THE COMPANY
Century Business Services, Inc. is a diversified services company
which, acting through its subsidiaries, provides professional outsourced
business services primarily to small and medium-sized businesses, as well as
individuals, governmental entities, and not-for-profit enterprises throughout
the United States.
We offer integrated services in the following areas:
o accounting, tax, valuation, and advisory services
o benefits administration and insurance services
o human resources and payroll services
o performance consulting services
o specialty insurance
Our clients typically have fewer than 500 employees and prefer to focus
their resources on the operation of their core business while allowing us 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 with regard to their primary
business without the distraction of providing administrative functions.
Our goal is to be the nation's premier provider of outsourced business
services to small and medium-sized companies. Our strategies to achieve this
include:
o providing clients with a broad range of high quality services;
o expanding locally by increasing (a) the number of clients we
serve and (b) the number of services we provide to existing
clients; and
o expanding nationally through an aggressive acquisition program.
Century is incorporated under the laws of the State of Delaware. The
address of our principal executive offices is 6480 Rockside Woods Boulevard
South, Suite 330, Cleveland, Ohio 44131, and our telephone number is (216)
447-9000.
Additional information concerning us and our subsidiaries is included
in our reports filed with the Securities and Exchange Commission and other
documents referred to in this prospectus supplement and the accompanying
prospectus.
S-3
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RISK FACTORS
The following are factors that may affect our actual operating results
and could cause results to differ materially from those in any forward-looking
statements. There may be other factors, and new risk factors may emerge in the
future. You should carefully consider the specific factors set forth below, as
well as the other information contained elsewhere in this prospectus supplement
and the information and risk factors contained or referred to in the
accompanying prospectus, before making an investment in the common stock and
warrants.
YOU MAY NOT BE ABLE TO EXERCISE THE WARRANTS UNDER STATE AND FEDERAL SECURITIES
LAWS.
The warrants may not be exercised to purchase shares of our common
stock unless at the time of exercise we have an effective registration statement
on file with the Securities and Exchange Commission and an available prospectus
covering such shares of common stock. We have agreed to use our best efforts to
have all such shares of common stock so registered at all times prior to the
expiration of the applicable exercise period and to make available a current
prospectus relating to them. However, there can be no assurance that we will be
able to maintain an effective registration statement or make available a current
prospectus relating to such shares of common stock at all such times. If an
effective registration statement or current prospectus is not available when you
want to exercise the warrants, applicable securities laws will prohibit exercise
until such time that an effective registration statement and current prospectus
become available. In addition, no warrants shall be exercisable in any state
where such exercise would be unlawful.
A MARKET FOR OUR WARRANTS MAY NOT DEVELOP OR BE SUSTAINED.
The warrants will be new securities for which there is currently no
market. We do not intend to apply for listing of the warrants on any securities
exchange or to seek approval for quotation through any automated quotation
system. An active public market for our warrants may not develop or be sustained
after this offering. If an active market for the warrants does not develop, the
market price and liquidity of the warrants will be adversely affected.
WE HAVE SHARES ELIGIBLE FOR FUTURE SALE THAT COULD ADVERSELY AFFECT THE PRICE OF
OUR COMMON STOCK.
Future sales or issuances of common stock, or the perception that sales
could occur, could adversely affect the market price of our common stock and
dilute the percentage ownership held by our stockholders. We cannot be sure when
sales will occur, how many shares will be sold, or the effect that sales may
have on the market price of our common stock. As of March 4, 1999, we have
registered under the Securities Act the following shares of common stock for the
following purposes:
o approximately 37,953,889 shares are registered for resale
from time to time by selling stockholders under various shelf
registration statements;
o $125 million in shares of our common stock, debt securities,
and warrants to purchase common stock or debt securities, are
registered for sale from time to time by us to the public under
our universal shelf registration statement, including the $25
million in shares of common stock and warrants offered by this
prospectus supplement; and
o approximately 3,937,495 shares are registered for sale from
time to time by us in connection with acquisitions under our
acquisition shelf registration statement.
All of these shares may be sold at any time.
S-4
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USE OF PROCEEDS
The net proceeds from this offering are estimated to be approximately
$24,975,000, after deducting estimated expenses. The net proceeds will be added
to our general funds to be used for general corporate purposes, working capital
requirements and the cash portion of acquisitions. Pending such application, the
net proceeds may be invested in short-term marketable securities.
PRICE RANGE OF COMMON STOCK
Our common stock is listed on the Nasdaq National Market under the
symbol "CBIZ". The following table sets forth, for the periods indicated, the
high and low sale prices per share (as adjusted for all stock splits to date) as
reported on the Nasdaq National Market.
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HIGH LOW
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YEAR ENDED DECEMBER 31, 1997:
First Quarter................................................ $15.13 $ 9.88
Second Quarter............................................... $11.50 $ 7.88
Third Quarter................................................ $11.75 $ 7.88
Fourth Quarter............................................... $17.25 $ 8.75
YEAR ENDED DECEMBER 31, 1998:
First Quarter................................................ $18.25 $13.94
Second Quarter............................................... $20.19 $16.38
Third Quarter................................................ $25.38 $17.50
Fourth Quarter............................................... $20.38 $ 8.88
YEAR ENDED DECEMBER 31, 1999:
First Quarter through March 3, 1999.......................... $15.25 $10.50
</TABLE>
As of February 2, 1999, there were approximately 10,090 shareholders of
record of our common stock.
DIVIDEND POLICY
We have not paid cash dividends on our common stock since April 27,
1995, and we do not anticipate paying cash dividends in the foreseeable future.
Our board of directors decides on the payment and level of dividends on common
stock. The board's decision is based on our results of operations and financial
condition among other things. In addition, our credit facility contains
restrictions on our ability to pay dividends. We currently intend to retain
future earnings to finance the ongoing operations and growth of the business.
Any future determination as to our dividend policy will be made at the
discretion of our board of directors and will depend on a number of factors,
including our future earnings, capital requirements, financial condition and
future prospects, restrictions on dividend payments pursuant to any of our
credit or other agreements and such other factors as our board of directors may
deem relevant.
S-5
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DESCRIPTION OF COMMON STOCK AND WARRANTS
A description of our common stock is set forth and referred to in the
accompanying prospectus.
The warrants represent a new issue of securities by us. Each warrant
will give you the right to purchase one share of our common stock at any time
prior to its expiration at the exercise prices set forth below:
PER SHARE NUMBER OF
EXPIRATION DATE EXERCISE PRICE WARRANTS
--------------- -------------- ---------
Three years after issuance $20.00 300,000
Four years after issuance $25.00 300,000
Five years after issuance $30.00 300,000
The warrants are entitled to the benefit of adjustments in their respective
exercise prices and in the number of shares of common stock or other securities
deliverable upon exercise in the event of a stock dividend, stock split,
combination, reclassification, exchange, substitution, reorganization, merger,
consolidation, sale of assets or sales below current market value.
PLAN OF DISTRIBUTION
We will offer and sell the 1,785,714 shares of common stock and
warrants to purchase an additional 900,000 shares of common stock to Jackson
National in a negotiated transaction under the terms of a purchase agreement
dated as of March 5, 1999. We have not engaged any underwriters, agents, brokers
or dealers in connection with this transaction. Thus, we will not pay any
underwriting discounts, commissions, fees or other items constituting
compensation to any underwriters, agents, brokers or dealers in connection with
this transaction. The common stock will be listed on the Nasdaq National Market;
however, there is not an established market for the warrants and we will not
seek to list the warrants on any securities exchange.
In connection with the purchase agreement, you have agreed not to sell,
assign, transfer or pledge your shares of common stock, warrants or shares of
common stock issuable upon exercise of the warrants without our consent for a
period of two years with respect to 892,857 shares of common stock and 450,000
warrants, or shares of common stock issued upon exercise of such warrants, and
for a period of one year with respect to all 1,785,714 shares of common stock
and 900,000 warrants, and the shares of common stock issued upon exercise of
such warrants. According to the terms of such lockup agreement, however, you may
sell all of such securities upon the occurrence of certain events relating to
the ownership and operation of our business.
LEGAL MATTERS
The validity of the common stock and warrants offered hereby has been
passed upon by Akin, Gump, Strauss, Hauer & Feld, L.L.P. Rick L. Burdick, a
partner of Akin, Gump, Strauss, Hauer & Feld, L.L.P., is a director of Century
and is the beneficial owner of 3,500 shares of common stock, warrants to
purchase 5,534 shares of common stock and options to purchase 50,000 shares of
common stock.
EXPERTS
Our consolidated and combined financial statements and schedules as of
December 31, 1998 and 1997, and for each of the years in the three year period
ended December 31, 1998 are incorporated by reference in the accompanying
prospectus in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference therein, upon the authority of said firm
as experts in accounting and auditing.
S-6
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PROSPECTUS
DECEMBER 12, 1997
$125,000,000
INTERNATIONAL ALLIANCE SERVICES, INC.
DEBT SECURITIES
COMMON STOCK
WARRANTS
International Alliance Services, Inc. (the "Company" or "IASI") may offer
and issue from time to time (i) debt securities of the Company ("Debt
Securities"), consisting of debentures, notes, bonds and other unsecured
evidences of indebtedness in one or more series, (ii) shares of common stock,
par value $.01 per share of the Company ("Common Stock"), and (iii) warrants to
purchase Debt Securities or Common Stock ("Warrants"). The foregoing securities
are collectively referred to as the "Securities." Any Securities may be offered
with other Securities or separately. The Securities will be offered at an
aggregate initial offering price not to exceed $125,000,000.
SEE "RISK FACTORS" IN THE ACCOMPANYING PROSPECTUS SUPPLEMENT FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE SECURITIES.
Certain terms of any Debt Securities in respect of which this Prospectus is
being delivered will be set forth in an accompanying Prospectus Supplement
including, without limitation, the specific designation, aggregate principal
amount, purchase price, currency of payment, denomination, maturity, interest
rate (which may be fixed or variable) and time of payment of interest (if any),
guarantees thereof (if any), terms (if any) for the subordination, redemption,
purchase or conversion thereof, listing (if any) on a securities exchange,
additional or different covenants and events of default, and any other material
terms of the Debt Securities. The purchase price of any Common Stock in respect
of which this Prospectus is being delivered will be set forth in an accompanying
Prospectus Supplement. The Prospectus Supplement will also contain information,
where applicable, about certain United States federal income tax considerations
relating to the Securities covered by the Prospectus Supplement.
The Company's Common Stock is quoted on The Nasdaq National Market under
the symbol "IASI." Any Common Stock offered hereby will be listed, subject to
official notice of issuance, on The Nasdaq National Market.
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 Securities may be sold on a negotiated or competitive bid basis to or
through underwriters or dealers designated from time to time or to other
purchasers directly or through agents designated from time to time. Certain
terms of any offering and sale of the Securities, including, where applicable,
the names of the underwriters, dealers or agents, if any, the principal amount
or number of shares to be purchased, the purchase price of the Securities, the
proceeds to the Company from such sale and any applicable commissions, discounts
and other items constituting compensation of such underwriters, dealers or
agents will also be set forth in an accompanying Prospectus Supplement.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
<PAGE> 8
THE COMPANY
OVERVIEW
IASI 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 65 Company
offices in 25 states, as well as through its subsidiary Comprehensive Business
Services ("Comprehensive"), a franchisor of accounting services with
approximately 250 franchisee offices located in 40 states. As of December 9,
1997, the Company served approximately 60,000 clients, of which approximately
24,000 are served through the Comprehensive franchisee network. Management
estimates that its clients employ over 800,000 employees, including 240,000
employed by clients of the Comprehensive franchise network.
The Company's clients typically have fewer than 500 employees, and prefer
to focus their scarce resources on operational competencies while allowing IASI
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 existing insurance
platform. From November 1, 1996 through September 30, 1997, the Company acquired
the businesses of 23 companies representing over $90 million in revenues. The
Company's acquisition program typically focuses on (i) market entry acquisitions
in which the Company establishes a significant presence in a city or (ii)
follow-on acquisitions of additional service providers in areas where the
Company's presence is established, increasing the number of clients served and
services offered in such markets. 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 IASI 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 has completed from October 1, 1997 through
December 9, 1997, or has announced as pending, an additional 20 acquisitions
representing over $78 million in revenues.
The outsourced business services industry in which the Company currently
operates is highly fragmented with approximately 600,000 outsourcing
establishments collectively generating approximately $300 billion in annual
revenue and has grown at a compound annual rate in excess of 9% since 1992. The
Company believes that this growth reflects the following trends: (i) more
companies are now utilizing outsourced business services, (ii) companies that
have traditionally used a limited amount of outsourced business services are now
utilizing a broader array of such services, and (iii) the number of small and
medium sized businesses in the United States continues to grow.
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.
Effective December 31, 1997, the name of the Company will be changed to
"Century Business Services, Inc.", and the symbol of the Company will be changed
to "CBIZ." The Company's principal executive offices are located at 10055 Sweet
Valley Drive, Valley View, Ohio 44125, and its telephone number is (216)
447-9000.
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USE OF PROCEEDS
Unless a Prospectus Supplement indicates otherwise, the net proceeds to be
received by the Company from the issue and sale from time to time of the
Securities will be added to the general funds of the Company to be used for
general corporate purposes, working capital requirements and the cash portion of
acquisitions. Pending such application, such net proceeds may be invested in
short-term marketable securities. Each Prospectus Supplement will contain
specific information concerning the use of proceeds from the sale of Securities
to which it relates.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's historical ratio of earnings
to fixed charges for the three years ended December 31, 1996, and the nine
months ended September 30, 1996 and 1997:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------- -------------
1994 1995 1996 1996 1997
------ ----- ------ ----- ----
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Ratio(1)..................................... 187.3 78.6 113.3 463.0 41.8
</TABLE>
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(1) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of pretax income from continuing operations adjusted to exclude
interest expense. Fixed charges consist of interest expense on capitalized
lease obligations and debt borrowings.
DESCRIPTION OF DEBT SECURITIES
The following sets forth certain general terms and provisions of the
Indenture (as defined herein) under which the Debt Securities are to be issued.
The particular terms of the Debt Securities will be set forth in a Prospectus
Supplement relating to such Debt Securities.
The Debt Securities are to be issued under one or more Indentures, as
amended or supplemented from time to time (the "Indenture"), to be entered into
between the Company, the guarantors (as defined below), if any, and Star Bank,
N.A., as trustee, (together with any other trustee(s) chosen by the Company,
qualified to act as such under the Trust Indenture Act of 1939, as amended (the
"TIA") and appointed in a supplemental indenture with respect to a particular
series, the "Trustee"). The form of Indenture has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part and will be
available for inspection at the corporate trust office of the Trustee, or as
described above under "Available Information." The Indenture is subject to, and
governed by, the TIA. The Company will execute an Indenture if and when the
Company issues any Debt Securities. The statements made hereunder relating to
the Indenture and the Debt Securities to be issued thereunder are summaries of
certain provisions thereof and do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all provisions of the
Indenture (including those terms made a part of the Indenture by reference to
the TIA) and such Debt Securities. Capitalized terms used but not defined herein
shall have the respective meanings set forth in the Indenture. References below
to an "Indenture" are deemed to constitute a reference to the applicable
Indenture under which a particular series of Debt Securities is issued.
GENERAL
The Debt Securities will be unsecured obligations of the Company. The Debt
Securities may be issued in one or more series. Specific terms of each series of
Debt Securities will be contained in authorizing resolutions or a supplemental
indenture relating to that series. There will be Prospectus Supplements relating
to particular series of Debt Securities. Each Prospectus Supplement will
describe, as to the Debt Securities to which it relates: (i) the title of the
Debt Securities; (ii) any limit upon the aggregate principal amount of a series
of Debt Securities which may be issued; (iii) the date or dates on which
principal of the Debt Securities will be payable and the amount of principal
which will be payable; (iv) the rate or rates (which may be fixed or
4
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variable) at which the Debt Securities will bear interest, if any, as well as
the dates from which interest will accrue, the dates on which interest will be
payable and the record date for the interest payable on any payment date; (v)
the currency or currencies in which principal, premium, if any, and interest, if
any, will be paid; (vi) the place or places where principal, premium, if any,
and interest, if any, on the Debt Securities will be payable and where Debt
Securities which are in registered form can be presented for registration of
transfer or exchange and the identification of any depository or depositories
for any global debt securities; (vii) any provisions regarding the right of the
Company to redeem or purchase Debt Securities or of holders to require the
Company to redeem Debt Securities; (viii) the right, if any, of holders of the
Debt Securities to convert them into stock or other securities of the Company,
including any provisions intended to prevent dilution of the conversion rights
or otherwise; (ix) any provisions by which the Company will be required or
permitted to make payments to a sinking fund which will be used to redeem Debt
Securities or a purchase fund which will be used to purchase Debt Securities;
(x) the percentage of the principal amount at which Debt Securities will be
issued and, if other than the full principal amount thereof, the percentage of
the principal amount of the Debt Securities which is payable if maturity of the
Debt Securities is accelerated because of a default; (xi) the terms, if any,
upon which Debt Securities may be subordinated to other indebtedness of the
Company; (xii) any additions to, modifications of or deletions from the terms of
the Debt Securities with respect to Events of Default or covenants or other
provisions set forth in the Indenture; and (xiii) any other material terms of
the Debt Securities, which may be different than the terms set forth in this
Prospectus.
Each Prospectus Supplement will describe, as to the Debt Securities to
which it relates, any guarantees (the "Guarantees") by certain direct and
indirect subsidiaries of the Company which may guarantee the Debt Securities
(the "Guarantors"), including the terms of subordination, if any, of any such
Guarantee.
EVENTS OF DEFAULT AND REMEDIES
An Event of Default with respect to any series of Debt Securities is
defined in the Indenture as being (i) default for a period of 30 days in payment
of any interest on any Debt Security of such series when it becomes due and
payable, (ii) default in payment of the principal of (or premium, if any), on
any of the Debt Securities of such series at its maturity (iii) default in the
deposit of any sinking fund payment, when and as due by the terms of any Debt
Security of such series, (iv) default by the Company or any Guarantor for a
period of 60 days after notice in the observance or performance of any other
covenants in the Indenture relating to such series, and (v) certain events
involving bankruptcy, insolvency or reorganization of the Company or certain
Guarantors.
The Indenture provides that if any Event of Default has occurred and is
continuing with respect to any series of Debt Securities, the Trustee or the
holders of not less than 25% in principal amount of such series of Debt
Securities then outstanding may declare the principal of all the Debt Securities
of such series to be due and payable immediately. However, the holders of a
majority in principal amount of the Debt Securities of such series then
outstanding by written notice to the Trustee and the Company may waive any Event
of Default (other than any Event of Default in payment of principal or interest
or in respect of certain covenants) with respect to such series of Debt
Securities. Holders of a majority in principal amount of the then outstanding
Debt Securities of any series may rescind an acceleration with respect to such
series and its consequences (except an acceleration due to nonpayment of
principal or interest on such series) if the rescission would not conflict with
any judgment or decree and if all existing Events of Default with respect to
such series have been cured or waived.
The holders of a majority in principal amount of the Debt Securities of any
series then outstanding will have the right to direct the time, method and place
of conducting any proceedings for any remedy available to the Trustee with
respect to such series, subject to certain limitations specified in the
Indenture.
DEFEASANCE OF INDENTURE
The Indenture permits the Company and the Guarantors to terminate all of
their respective obligations under the Indenture as they relate to any
particular series of Debt Securities, other than the obligation to pay interest,
if any, on and the principal of the Debt Securities of such series and certain
other obligations, at any
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time by (i) depositing in trust with the Trustee, under an irrevocable trust
agreement, money or U.S. Government Obligations in an amount sufficient to pay
principal of and interest, if any, on the Debt Securities of such series to
their maturity, and (ii) complying with certain other conditions, including
delivery to the Trustee of an opinion of counsel or a ruling received from the
Internal Revenue Service to the effect that holders will not recognize income,
gain or loss for federal income tax purposes as a result of the Company's
exercise of such right and will be subject to federal income tax on the same
amount and in the same manner and at the same times as would have been the case
otherwise.
In addition, the Indenture permits the Company and the Guarantors to
terminate all of their respective obligations under the Indenture as they relate
to any particular series of Debt Securities (including the obligations to pay
interest, if any, on and the principal of the Debt Securities of such series and
certain other obligations), at any time by (i) depositing in trust with the
Trustee, under an irrevocable trust agreement, money or U.S. government
obligations in an amount sufficient to pay principal of and interest, if any, on
the Debt Securities of such series to their maturity, and (ii) complying with
certain other conditions, including delivery to the Trustee of an opinion of
counsel or a ruling received from the Internal Revenue Service to the effect
that holders will not recognize income, gain or loss for federal income tax
purposes as a result of the Company's exercise of such right and will be subject
to federal income tax on the same amount and in the same manner and at the same
times as would have been the case otherwise, which opinion of counsel is based
upon a change in the applicable federal tax law since the date of the Indenture.
TRANSFER AND EXCHANGE
A holder will be able to transfer or exchange Debt Securities only in
accordance with the provisions of the Indenture. The registrar may require a
holder, among other things, to furnish appropriate endorsements and transfer
documents, and to pay any taxes and fees required or permitted by the Indenture.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indenture, the Debt Securities or the
Guarantees of a particular series may be amended or supplemented with the
consent (which may include consents obtained in connection with a tender offer
or exchange offer for Debt Securities) of the holders of at least a majority in
principal amount of the Debt Securities of such series then outstanding, and any
existing Default under, or compliance with any provision of the Indenture
relating to a particular series of Debt Securities may be waived (other than any
continuing Default or Event of Default in the payment of interest on or the
principal of such Debt Securities) with the consent (which may include consents
obtained in connection with a tender offer or exchange offer for Debt
Securities) of the holders of a majority in principal amount of the Debt
Securities of such series then outstanding. Without the consent of any holder,
the Company and the Trustee may amend or supplement the Indenture, the Debt
Securities or the Guarantees to (i) evidence the succession of another Person to
the Company, (ii) add to the covenants of the Company or to surrender a right or
power of the Company, (iii) add any additional Events of Default, (iv) provide
for Debt Securities in bearer form, (v) make any changes when no Debt Securities
are outstanding or that do not apply to any Debt Securities previously entitled
to such benefit, (vi) evidence the succession of another Trustee, or (vii) cure
any ambiguity, defect or inconsistency.
Without the consent of each holder affected, the Company and the Trustee
may not (i) reduce the amount of Debt Securities of such series whose holders
must consent to an amendment, supplement or waiver, (ii) reduce the rate of or
change the time for payment of interest, (iii) reduce the principal of or change
the fixed maturity of any Debt Security or alter the provisions with respect to
redemptions or mandatory offers to repurchase Debt Securities pursuant to
certain covenants set forth in the Indenture, (iv) make any Debt Security
payable in money other than that stated in the Debt Security, (v) modify the
ranking or priority of the Debt Securities or any Guarantee, (vi) release any
Guarantor from any of its obligations under its Guarantee or the Indenture
otherwise than in accordance with the Indenture, or (vii) waive a continuing
default in the payment of principal of or interest on the Debt Securities.
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<PAGE> 12
The right of any holder to participate in any consent required or sought
pursuant to any provision of the Indenture (and the obligation of the Company to
obtain any such consent otherwise required from such holder) may be subject to
the requirement that such holder shall have been the holder of record of any
Debt Securities with respect to which such consent is required or sought as of a
date identified by the Trustee in a notice furnished to holders in accordance
with the terms of the Indenture.
CONCERNING THE TRUSTEE
In the ordinary course of its business, Star Bank, N.A., the Trustee,
provides, and may continue to provide, services to the Company as transfer agent
for the Common Stock of the Company and is a party to the Company's Credit
Agreement dated as of October 3, 1997. The Indenture contains certain
limitations on the rights of the Trustee, if it becomes a creditor of the
Company, to obtain payment of claims in certain cases or to realize on certain
property received in respect of any such claim as security or otherwise. The
Trustee will be permitted to engage in other transactions; however, if it
acquires any conflicting interest, it must eliminate such conflict or resign.
The Indenture provides that if an Event of Default occurs and is not cured,
the Trustee will be required, in the exercise of its power, to use the degree of
care of a prudent person in similar circumstances in the conduct of its own
affairs. The Trustee may refuse to perform any duty or exercise any right or
power under the Indenture, unless it receives indemnity, satisfactory to it,
against any loss, liability or expense.
GOVERNING LAW
The Indenture, the Debt Securities and the Guarantees will be governed by
the laws of the State of New York without giving effect to principles of
conflict of laws.
DESCRIPTION OF COMMON STOCK
The Company's authorized capital stock is 100,000,000 shares of Common
Stock, par value $.01 per share. As of December 1, 1997, 40,978,934 shares of
Common Stock were outstanding.
Holders of shares of Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. There are no
cumulative voting rights with respect to the election of directors. Accordingly,
the holder or holders of a majority of the outstanding shares of Common Stock
will be able to elect the entire Board of Directors of the Company. Holders of
Common Stock have no preemptive rights and are entitled to such dividends as may
be declared by the Board of Directors of the Company out of funds legally
available therefor. The Common Stock is not entitled to any sinking fund,
redemption or conversion provisions. On liquidation, dissolution or winding up
of the Company, the holders of Common Stock are entitled to share ratably in the
net assets of the Company remaining after the payment of all creditors, if any.
The outstanding shares of Common Stock are duly authorized, validly issued,
fully paid and nonassessable. The transfer agent and registrar for the Common
Stock is Star Bank, N.A.
The Company currently has the following provisions in its bylaws which
could be considered to be "anti-takeover" provisions: (i) a bylaw requiring the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock or two-thirds of the other directors to remove a director and (ii)
a bylaw limiting the persons who may call special meetings of stockholders to
the Board of Directors or the President of the Company. These provisions may
have the effect of delaying stockholder actions with respect to certain business
combinations and the election of new members to the Board of Directors. As such,
the provisions could have the effect of discouraging open market purchases of
the Company's Common Stock because they may be considered disadvantageous by a
stockholder who desires to participate in a business combination or elect a new
director.
The Company is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law. In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of
the Company's outstanding voting stock) from engaging in a "business
combination" with the Company for three years following the date that person
became an interested stockholder unless:
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<PAGE> 13
(i) before that person became an interested stockholder, the Board of Directors
of the Company approved the transaction in which the interested stockholder
became an interested stockholder or approved the business combination; (ii) upon
completion of the transaction that resulted in the interested stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the Company outstanding at the time the transaction
commenced (excluding stock held by persons who are both directors and officers
of the Company or by certain employee stock plans); or (iii) on or following the
date on which that person became an interested stockholder, the business
combination is approved by the Company's Board and authorized at a meeting of
stockholders by the affirmative vote of the holders of at least 66 2/3% of the
outstanding voting stock of the Company (excluding shares held by the interested
stockholder). A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
DESCRIPTION OF WARRANTS
The Company may issue Warrants, including Warrants to purchase Debt
Securities or Common Stock as well as other types of Warrants. Warrants may be
issued independently or together with any Debt Securities or Common Stock and
may be attached to or separate from such Debt Securities or Common Stock. Each
series of Warrants will be issued under a separate warrant agreement (each a
"Warrant Agreement") to be entered into between the Company and a warrant agent
("Warrant Agent"). The Warrant Agent will act solely as an agent of the Company
in connection with the Warrants of such series and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Warrants.
The applicable Prospectus Supplement will describe the following terms of
the Warrants in respect of which this Prospectus is being delivered: (i) the
title of such Warrants; (ii) the aggregate number of such Warrants; (iii) the
price or prices at which such Warrants will be issued; (iv) the designation,
aggregate principal amount and terms of the Debt Securities or Common Stock
purchasable upon exercise of such Warrants; (v) if applicable, the designation
and terms of the Debt Securities with which such Warrants are issued and the
number of such Warrants issued with each such Debt Security; (vi) if applicable,
the date on and after which such Warrants and the related Debt Securities will
be separately transferable; (vii) the price at which the Debt Securities or
Common Stock purchasable upon exercise of such Warrants may be purchased; (viii)
the date on which the right to exercise such Warrants shall commence and the
date on which such right shall expire; (ix) if applicable, the minimum or
maximum amount of such Warrants which may be exercised at any one time; (x) if
applicable, any index or formula used to determine the amount of payments of
principal of and any premium and interest on Debt Securities purchasable upon
exercise of Warrants; (xi) information with respect to book-entry procedures, if
any; (xii) if applicable, a discussion of certain United States Federal income
tax considerations; and (xiii) any other terms of such Warrants, including
terms, procedures and limitations relating to the exchange and exercise of such
Warrants.
PLAN OF DISTRIBUTION
The Company may offer and sell the Securities to or through underwriters or
dealers, and also may offer and sell the Securities directly to other purchasers
or through agents.
Each Prospectus Supplement will set forth the terms of the offering of the
particular series of Securities to which the Prospectus Supplement relates,
including the name or names of any underwriters, dealers or agents, the purchase
price or prices of the Securities, the proceeds to the Company from the sale of
such series of Securities, the use of such proceeds, any initial public offering
price or purchase price of such series of Securities, any underwriting discount
or commission, any discounts, concessions or commissions allowed or reallowed or
paid by any underwriters to other dealers, any commissions paid to any agents
and the securities exchanges, if any, on which such Securities will be listed.
Any initial public offering price or purchase price and any discounts,
concessions or commissions allowed or reallowed or paid by any underwriter to
other dealers may be changed from time to time.
8
<PAGE> 14
Sales of Common Stock offered pursuant to any Prospectus Supplement may be
effected from time to time in one or more transactions through The Nasdaq
National Market, or in negotiated transactions or any combination of such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, or at other negotiated prices.
In connection with distributions of Common Stock or otherwise, the Company
may enter into hedging transactions with broker-dealers in connection with which
such broker-dealers may sell Common Stock registered hereunder in the course of
hedging through short sales the positions they assumed with the Company.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company or from purchasers of Securities for whom
they may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and any profit on the resale of Securities by
them may be deemed to be underwriting discounts and commissions under the
Securities Act. Any such underwriter or agent will be identified, and any such
compensation received from the Company will be described, in the applicable
Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Securities may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agent to solicit
offers by certain institutions to purchase Debt Securities or Common Stock or
Warrants to purchase Debt Securities or Common Stock from the Company pursuant
to contracts providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases such institutions must be
approved by the Company. The obligations of any purchaser under any such
contract will be subject to the condition that the purchase of the offered Debt
Securities or Common Stock shall not at the time of delivery be prohibited under
the laws of the jurisdiction to which such purchaser is subject. The
underwriters and such other agents will not have any responsibility in respect
of the validity or performance of such contracts.
The Company may grant underwriters who participate in the distribution of
Common Stock an option to purchase additional Common Stock to cover
over-allotments, if any.
The place and date of delivery for the Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Securities in respect of which this Prospectus is being delivered (other than
Common Stock) will be a new issue of securities, will not have an established
trading market when issued and will not be listed on any securities exchange.
Any underwriters or agents to or through whom such Securities are sold by the
Company for public offering and sale may make a market in such Securities, but
such underwriters or agents will not be obligated to do so and may discontinue
any market making at any time without notice. No assurance can be given as to
the liquidity of the trading market for any such Securities.
Certain of the underwriters and their affiliates may from time to time
perform various commercial banking and investment banking services for the
Company, for which customary compensation is received.
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<PAGE> 15
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for the
Company by Akin, Gump, Strauss, Hauer & Feld, L.L.P. Rick L. Burdick, a partner
of Akin, Gump, Strauss, Hauer & Feld, L.L.P., is a director of the Company and
is the beneficial owner of 62,500 shares of Common Stock (including options and
warrants to purchase Common Stock).
EXPERTS
The consolidated and combined financial statements of International
Alliance Services, Inc. and its subsidiaries as of December 31, 1996 and 1995,
and for each of the years in the three year period ended December 31, 1996, have
been incorporated by reference herein 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.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder, and, in accordance therewith, files reports,
proxy and information statements and other information with the Securities and
Exchange Commission (the "Commission"). These reports, proxy and information
statements and other information concerning the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission'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 Commission at prescribed rates through its Public Reference Section at
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
site on the World Wide Web at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants such as
the Company that file electronically with the Commission. Such material is also
available for inspection at the offices of The National Association of
Securities Dealers, Inc. (the "NASD"), 1735 K Street, N.W., Washington, D.C.
20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Securities offered hereby
(including all amendments and supplements thereto, the "Registration
Statement"). This Prospectus, which constitutes 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 Commission. For further information with respect to the
Company and such Securities, reference is made to the Registration Statement,
including the documents and exhibits filed or incorporated as a part thereof.
Statements contained herein concerning the provisions of certain documents are
not necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference. The Registration Statement and the exhibits thereto can be
inspected and copied at the public reference facilities and regional offices of
the Commission and at the offices of the NASD referred to above.
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<PAGE> 16
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are incorporated 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, 1996; (ii) all other reports filed pursuant to
Section 13(a) or 15(d) of the Exchange Act since December 31, 1996, specifically
including the Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997, and September 30, 1997, respectively, and the
Company's Current Reports on Form 8-K dated February 19, 1997 (as amended on
Form 8-K/A filed on April 2, 1997), April 3, 1997, April 21, 1997, and July 23,
1997 (as amended on Form 8-K/A dated October 3, 1997), respectively; and (iii)
the Company's Proxy Statement dated April 1, 1997 relating to the 1997 Annual
Meeting of Stockholders held May 6, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering shall be deemed to be incorporated by reference
in this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document or information incorporated or
deemed to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document that also is, or is
deemed to be, incorporated herein by reference, 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,
including any beneficial owner, to whom a copy of this Prospectus is delivered,
upon the written or oral request of such person, a copy of any and all of the
documents or information referred to above that has been or may be incorporated
by reference in this Prospectus (excluding exhibits to such documents unless
such exhibits are specifically incorporated by reference). Requests should be
directed to Corporate Secretary, International Alliance Services, Inc., 10055
Sweet Valley Drive, Valley View, Ohio 44125, telephone (216) 447-9000.
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NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
TO ANY PERSON IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS AND THE ACCOMPANYING
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company................................ 3
Use of Proceeds............................ 4
Ratio of Earnings to Fixed Charges......... 4
Description of Debt Securities............. 4
Description of Common Stock................ 7
Description of Warrants.................... 8
Plan of Distribution....................... 8
Legal Matters.............................. 10
Experts.................................... 10
Available Information...................... 10
Incorporation of Certain Documents by
Reference................................ 11
</TABLE>
================================================================================
================================================================================
$125,000,000
INTERNATIONAL ALLIANCE
SERVICES, INC.
DEBT SECURITIES
COMMON STOCK
WARRANTS
------------------------
PROSPECTUS
------------------------
December 12, 1997
================================================================================
<PAGE> 18
CENTURY BUSINESS SERVICES, INC.
1,785,714 SHARES OF COMMON STOCK AND
900,000 COMMON STOCK WARRANTS
------------------
PROSPECTUS SUPPLEMENT
March 5, 1999
