UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT
(DATE OF EARLIEST EVENT REPORTED)
SEPTEMBER 23, 1996
COUNTRY WIDE TRANSPORT SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COMMISSION FILE NUMBER 0-23360
DELAWARE 95-4105996
(STATE OR OTHER JURISDICTION (IRS EMPLOYER IDENTIFICATION
OF INCORPORATION OR ORGANIZATION) NUMBER)
325 NORTH COTA STREET
CORONA, CALIFORNIA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
91720
(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
(909) 549-6000
Item 5. OTHER SIGNIFICANT MATTERS
Country Wide Transport Services, Inc. signed a letter of intent to be
acquired by Continental American Transportation, Inc. The acquisition will be
affected through an exchange of common stock (five shares of Country Wide for
one share of American). The letter of intent is subject to a definitive
agreement, approval of the parties Board of Directors, confirmation that the
transaction can be treated as a pooling of interests, approval of all applicable
regulatory agencies and the approval of both parties shareholders.
Item 7.(c) EXHIBITS.
Letter of intent follows.
Continental American Transportation, Inc.
495 Lovers Lane Road
Calhoun, Georgia 30701
September 6, 1996
PERSONAL AND CONFIDENTIAL
VIA TELECOPY AND OVERNIGHT DELIVERY
Mr. Timothy Lepper
President and Chief Executive Officer
Country Wide Transport Services, Inc.
325 North Cota Street
Corona, California 91720
RE: Proposed Acquisition by Continental
American Transportation, Inc.
("Continental")
Dear Mr. Lepper:
This letter sets forth our understanding of the intent of the parties
concerning the possible acquisition of Country Wide Transport Services, Inc.
("Country Wide") through an exchange of shares and warrants with Continental as
more fully explained below. The further purpose of this letter is to
acknowledge that Continental and Country Wide have reached an agreement in
principle based upon our prior discussions and that we will move forward with
the proposed transaction in good faith.
The proposed terms of the purchase transaction are as follows:
1. GENERAL . Country Wide has a capitalization of 15,000,000 shares
authorized, 5,000,000 of which are preferred stock, $.01 par value per share,
with no such shares issued and outstanding, and; 10,000,000 of which shares are
common shares, $.02 par value per share, with 4,800,487 of such shares issued
and outstanding as of March 31, 1996. Continental has a capitalization of
30,000,000 shares authorized, 10,000,000 of which are preferred stock, $1.00 par
value per share, with no such shares issued and outstanding, and; 20,000,000 of
which shares are common shares, no par value, with 4,377,469 of such shares
issued and outstanding as of July 19, 1996.
The acquisition of Country Wide will be effected through an exchange of our
companies' common shares pursuant to which the shareholders of Country Wide
shall deliver all of Country Wide's issued and outstanding common shares (the
"Country Wide Shares") to Continental in exchange for shares of Continental's
Common Stock and warrants to purchase additional Common Stock, on the basis of
(x) one (1) share of Continental's Common Stock for five (5) Country Wide Shares
as well as (y) one (1) Continental warrant for each twenty (20) Country Wide
Shares so exchanged (the "Acquisition"). Each of the Continental warrants (the
"Warrant(s)") shall entitle its holder to purchase one (1) Common Share of
Continental at the exercise price of $4.25 during an exercise period to be
negotiated and subject to earlier expiration as described below; in the event
the average trading price per share of Continental's Common Stock is $5.00 or
more over any thirty (30) consecutive trading day period during the Warrant
exercise period, the Warrant holders shall have thirty (30) days thereafter to
exercise such Warrants which shall terminate automatically at 5:00 PM, Eastern
time, on the 30th day of such period if not exercised. We acknowledge that the
share exchange rate is based upon a preliminary review of various materials
provided by you and upon our review of certain public documents.
2. DUE DILIGENCE. The Acquisition is subject to the results of our
independent due diligence investigation and business review of Country Wide,
which agrees to give reasonable access to Continental and its representatives
with respect to its books and records, legal documents, and other material
aspects of its business and affairs and to furnish us and our representatives
with such additional information with respect to its business and affairs as we
and our representatives shall from time to time request. On a mutually
agreeable basis, Country Wide will make available to us access to its business
sites, lawyers, accountants, customers and employees. Conjunctively,
Continental will provide the same access to Country Wide and its representatives
concerning its due diligence review of Continental and its business. Each party
shall bear its own expenses to perform their respective due diligence review.
Continental acknowledges that upon the consummation of the closing it shall pay
an investment banking/finders fee to Raymond James & Associates and hereby
agrees to indemnify Country Wide from and against any liability that may arise
out of such relationship.
3. CONFIDENTIALITY OF INFORMATION. Each party will hold in strict
confidence all information concerning the business and affairs of the other
party obtained from the other party (the "Confidential Material"), use such
Confidential Material solely for the purpose of evaluating the subject
transaction and only make available such information to such officers, employees
and representatives (including legal and accounting representatives) as is
necessary to evaluate the subject transactions or as may be required by law or
regulation or to comply with the applicable requirements of any governmental
agency. Confidential Material does not, however, include any such information
which (I) is or becomes generally available to the public other than as a result
of a disclosure by the receiving party, (ii) was know to the receiving party on
a non-confidential basis prior to its disclosure by the disclosing party, or
(iii) becomes available to the receiving party on a non-confidential basis from
a source other than the disclosing party or its agents, provided that such
source is not bound by a confidentiality agreement with the disclosing party
known to the receiving party. If the subject transaction contemplated are not
consummated, each party will return or destroy all information so obtained. All
parties further agree that they will consult with each other before issuing any
press release or otherwise making any public statements with respect to the
subject transactions contemplated in this agreement, and shall not issue any
such press release or make any such public statement prior to such consultation
or, after such consultation, if any party is not reasonably satisfied with the
text of such release or statement.
4. EXCLUSIVITY. In consideration of the time, expense, and effort which
will be incurred by Continental in evaluating the subject transaction, neither
Country Wide or its officers, directors or representatives will solicit or
encourage offers from, or provide Confidential Material to any other party with
respect to the sale of assets, stock or other interests in the businesses of
Country Wide. Country Wide agrees to promptly notify Continental if it receives
an unsolicited offer or solicitation of interest to buy assets, stock, or other
interest in the business of Country Wide.
5. CONDITIONS. Any obligations of the parties to consummate the
Acquisition will be subject to, among other things, (a) the receipt of the
unanimous approvals of the parties' respective Boards of Directors, (b)
confirmation by the parties' respective auditors that the transactions can be
treated as a pooling of interests pursuant to generally accepted accounting
principles under the Internal Revenue Code of 1986, as amended, (c) the receipt
of all approvals from applicable regulatory agencies (d) the receipt of the
respective approvals of Country Wide's and Continental's shareholders, (e) the
receipt by Continental of the written resignations of all the members of the
Board of Directors of Country Wide and its subsidiaries, (f) the assumption by
Continental of the employment agreements of Timothy Lepper and Wayne N. Parry,
(g) the normal warranties, representations and covenants that shall include (I)
no material change in the financial condition of Country Wide and (ii) no
issuances of equity or increases in debt above a to-be-negotiated threshold, and
(h) the filing by Continental of a registration statement on Form S-4 with the
Securities and Exchange Commission ("SEC") registering the Continental Common
Shares to be issued in the Acquisition, as well as those Continental Common
Shares underlying the Warrants, and its being declared effective by the SEC.
6. TERMINATION. If the parties are unable to agree on the terms and
conditions of a definitive agreement of Acquisition by October 15, 1996, then
this letter shall expire, and except as set forth in the following sentence, and
subject to paragraphs 3 and 7 of this agreement, neither party shall have any
further rights, duties or obligations hereunder, it is however agreed that
either party may request that the termination date be extended to October 30,
1996, any such request will not be unreasonably withheld. If Country Wide is
offered during this period a transaction by another party that Country Wide
believes is a more favorable transaction for its shareholders and the Board of
Directors of Country Wide, in the exercise of its fiduciary duty, decides to
proceed with the new party, Country Wide may terminate this letter by notifying
Continental in writing, reimbursing Continental for its out-of-pocket expenses
in connection with the transactions and paying Continental a break-up fee of
$1,000,000.
7. NO ORAL MODIFICATIONS. This agreement cannot be changed, modified,
altered or amended in any way, other than in writing signed by all parties.
This agreement supersedes any and all prior agreements, understandings and
contracts between the parties, whether oral or written, including but not
limited to those previously issued agreements issued by Continental and dated
August 29, 1996, and August 14, 1996. In the event any dispute arises under the
terms of this agreement, both parties agree to submit any such dispute or any
claim arising hereunder to arbitration in the City of Atlanta, State of Georgia,
under the applicable rules of the American Arbitration Association.
If the foregoing meets with your approval, please return the enclosed
counterpart signed where indicated and our accountants and other advisors will
commence their due diligence investigation and our respective attorneys shall
proceed to prepare a definitive purchase agreement. Except as set forth in
paragraphs 3, 4 and 6, which shall be binding upon execution of this letter,
this letter shall not constitute a binding legal commitment to close the subject
transaction contemplated above until execution and delivery by the parties of a
definitive agreement of Acquisition incorporating the terms hereof. We agree
that this letter shall be governed by the laws of the State of Delaware.
In further acknowledgment of our mutual concerns, please note that if we
have not received a fully executed copy of this letter by 5:00 PM, Eastern Time,
on September 10, 1996 we will consider our proposal to have been rejected and it
will be deemed withdrawn without further notice or other action on our part.
Very truly yours,
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: S/Timothy Holstein
-------------------------
Timothy Holstein
Chairman of the Board,
President and Chief
Executive Officer
ACKNOWLEDGED, APPROVED AND CONFIRMED:
COUNTRY WIDE TRANSPORT SERVICES, INC.
By: S/Timothy Lepper
--------------
Timothy Lepper
President and Chief
Executive Officer
cat-CWTS.3 (updated 9/6/96)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
COUNTRY WIDE TRANSPORT SERVICES, INC.
Registrant
Date: September 23, 1996 S/Timothy Lepper
--------------
Timothy Lepper
President