As filed with the Securities and Exchange Commission on July , 1996
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
CONTINENTAL AMERICAN TRANSPORTATION, INC.
(Exact name of Registrant as specified in its Charter )
COLORADO 4213 84-1089599
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization) Classification Code Number)Identification No.)
495 Lovers Lane Road
Calhoun, Georgia 30701
(706) 629-8682
(Address, including zip code, and telephone number,
including area code of registrant's principal executive offices)
Erik Bailey, Chief Financial Officer
Continental American Transportation, Inc.
495 Lovers Lane Road
Calhoun, Georgia 30701
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Joseph J. Tomasek, Esq.
75-77 North Bridge Street
Somerville, New Jersey 08876
(908)429-0030
Approximate date of commencement of the proposed sale to the public:
From time to time after this registration statement becomes effective.
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, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [X]
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 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
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Calculation of Registration Fee
Title of Each Class Amount to Proposed Proposed Amount of
of Securities to be be Registered Maximum Maximum Registra-
Registered Offering Aggregate tion Fee
Price Per Offering
Share(1) Price
Common Stock (2) 1,810,000 Shares $7.50 $12,075,000 $4,164.00
Common Stock (3) 750,000 Shares $7.50 $ 5,625,000 $1,940.00
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(g)(1), on the basis of the highest price at which the
Warrant(s) may be exercised, i.e., $7.50 per share.
(2) Common Stock reserved for issuance upon exercise of the 16 Warrants, which
have exercise prices ranging from $.25 to $7.50 to purchase 1,810,000
Common Shares which are exercisable from time to time, in whole or in part.
The 16 Warrants are not being registered herein and are exercisable from
time to time, in whole or in part, at any time during the period from June
28, 1996 through the 12-month period commencing upon the effective date of
this Registration Statement with respect to 15 Warrants, and from November
28, 1996 through the last day of the thirty-six (36) month period beginning
on the date this Registration Statement is declared effective by the
Securities and Exchange Commission with respect to 1 Warrant.
(3) Common Stock to be registered on behalf of the Selling Securityholders,
Herr's Motor Express, Inc., Robert R. Herr, Wayne S. Herr. and Charles B.
Prater.
(ii)
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CONTINENTAL AMERICAN TRANSPORTATION, INC.
CROSS REFERENCE SHEET
Pursuant to item 501(4) of Regulation S-B
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1. Forepart of the Registration Facing page of Registration Statement;
Statement and Outside Front Cross Reference Sheet; Outside Front
Cover Page of Prospectus Cover Page of Prospectus
Inside Front Cover Page of Prospectus;
2. Inside Front and Outside Back Outside Back Cover Page of Prospectus;
Cover Pages of Prospectus Additional Information;
Incorporation of Certain Documents by
Reference
Prospectus Summary; Risk Factors
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed Prospectus Summary; Use of Proceeds
Charges
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Not Applicable
6. Dilution Prospectus Summary; Selling
Securityholders and Relationship
between the Company and the Selling
7. Selling Security Holders Securityholders; Plan of Distribution
Prospectus Summary; Plan of
8. Plan of Distribution Distribution
Prospectus Summary; Description of
Securities
9. Description of Securities Legal Opinions; Experts
to be Registered
10. Interests of Named Experts Additional Information; Incorporation
and Counsel of certain Documents by Reference;
Prospectus Summary; Selling
11. Material Changes Securityholders and Relationship
between the Company and the Selling
Securityholders
12. Incorporation of Certain Additional Information; Incorporation
Information by Reference of certain Documents by Reference
13. Disclosure of Commission Not Applicable
on Indemnnification for
Securities Act Liabilities
(iii)
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SUBJECT TO COMPLETION; DATED JULY , 1996
PROSPECTUS
CONTINENTAL AMERICAN TRANSPORTATION, INC.
1,810,000 Common Shares Issuable upon
exercise of 16 Common Stock Purchase Warrants
750,000 Common Shares
This Prospectus relates to the issuance and the offer and sale
by certain of the securityholders of Continental American
Transportation, Inc., a Colorado Corporation (the "Company" and the
"Selling Securityholders", respectively) of (a) up to 1,810,000
shares of common stock, no par value, (the "Common Shares") of the
Company issuable upon the exercise of sixteen (16) non-redeemable
common stock purchase warrants (the "Warrants") and (b) 750,000
Common Shares held of record by certain Selling Securityholders,
all of whom are named in the "Selling Securityholders and
Relationship between the Company and the Selling Securityholders"
section of this Prospectus. The Warrants are exercisable from time
to time, in whole or in part, at any time during the period from
June 28, 1996, and terminating twelve (12) months following the
effective date of this Registration Statement with respect to 15 of
the Warrants and from November 28, 1996 through the last day of the
thirty-six (36) month period beginning on the date this
Registration Statement, of which this Prospectus forms a part, is
declared effective by the Securities and Exchange Commission with
respect to one (1) Warrant.
The Warrants entitle their holders to purchase between six
thousand (6,000) and six hundred thousand (600,000) Common Shares
for prices between $.25 and $7.50 per share.
The Common Shares are quoted on the Electronic Bulletin Board
of the National Association of Securities Dealers, Inc. under the
symbol "COAW". On July 23, 1996 the closing bid quotation price of
the Common Shares was $2.375.
The Selling Securityholders directly, through agents
designated from time to time or through dealers or underwriters
also to be designated, may sell the securities offered for sale by
the Selling Securityholders pursuant to this Prospectus (all such
securities being referred to herein as the "Securities") from time
to time on terms to be determined at the time of sale. To the
extent required, the specific Securities to be sold, the purchase
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price, the public offering price, the names of any such agents,
dealers or underwriters and any applicable commissions or discounts
with respect to a particular offer will be set forth in an
accompanying Prospectus supplement. The distribution of the
Securities of the Selling Securityholders may be effected in one or
more transactions that may take place on the over-the-counter
market, including ordinary broker's transactions, privately
negotiated transactions or through sales to one or more dealers for
resale of such securities as principals, at market prices
prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and
customary or specifically negotiated brokerage fees, commissions or
discounts may be paid by the Selling Securityholders in connection
with such sales.
The Selling Securityholders and any broker-dealers, agents or
underwriters that participate with the Selling Securityholders in
the distribution of the Securities may be deemed to be
"Underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Act"), and any commissions received by them and any
profit on the resale of the Securities purchased by them may be
deemed to be underwriting commissions or discounts under the Act.
See "Plan of Distribution" for certain indemnification
arrangements.
The purchase of the securities offered by this prospectus
involves a substantial degree of risk. Prospective investors
should carefully consider the factors set forth under "Risk
Factors."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE 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 July , 1996
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AVAILABLE INFORMATION
The Company has filed a Registration Statement on Form S-3
(together with all amendments thereto referred to as the
"Registration Statement") under the Act, with the Securities and
Exchange Commission (the "Commission") covering the Common Shares
issuable upon the exercise of the Warrants and certain Common
Shares held of record by certain named Selling Securityholders.
This Prospectus does not contain all the information set forth or
incorporated by reference in the Registration Statement and the
exhibits and schedules relating thereto, certain portions of which
have been omitted as permitted by the rules and regulations of the
Commission. For further information with respect to the Company
and the Securities offered by this Prospectus, reference is made to
the Registration Statement and the exhibits and schedules thereto
which are on file at the offices of the Commission and may be
obtained upon payment of the fee prescribed by the Commission, or
may be examined without charge at the offices of the Commission.
Statements contained in this Prospectus or in any document
incorporated by reference in this Prospectus as to the contents of
any contract or other documents referred to are not necessarily
complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the
Registration Statement or such other document, each such statement
being qualified in all respects by such reference.
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files periodic reports, proxy
statements and other information with the Commission. The
Registration Statement, as well as such periodic reports, proxy
statements and other information, 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; Suite
1400, Northwest Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661; and 7 World Trade Center, New York, New York 10048.
Copies of such material can also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No.
0-18729) pursuant to the Exchange Act are incorporated herein by
reference:
1. The Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1995;
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2. The Company's Quarterly Reports on Form 10-QSB for the
fiscal quarters ended September 30, 1995, December 31, 1995 and
March 31, 1996;
3. The Company's Current Report filed on Form 8-K with the
Securities and Exchange Commission on or about April 8, 1996,
Amendment No. 1 to said Current Report filed with the Commission on
or about April 23, 1996 and Amendment No. 2 to said Current Report
filed with the Commission on June 17, 1996; and
4. The description of Common Stock contained in the
Company's Form 10 Registration Statement, filed with the Commission
on August 1, 1990.
All documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part of this Prospectus
from the date of filing thereof. Any statement contained in a
document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other
subsequently filed document which 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 will provide without charge to each person to whom
a copy of this Prospectus is delivered, upon the written or verbal
request of any such person, a copy of any or all of the documents
which have been incorporated herein by reference, other than
exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such
documents should be directed to Continental American
Transportation, Inc., 495 Lovers Lane Road, Calhoun, Georgia 30701,
Attention: Secretary, Telephone (706)629-8682.
This Prospectus relates to the offer and sale by the Selling
Securityholders of up to 1,810,000 Common Shares issuable upon the
exercise of the 16 Warrants and 750,000 Common Shares held of
record by certain of the Selling Securityholders. Unless otherwise
indicated, no effect is given in this Prospectus to the exercise of
stock options to purchase any Common Shares reserved for issuance
under the Company's Stock Option Plan; (the "Options"). See "Risk
Factors-Outstanding Options."
The Company will furnish to holders of its Common Shares
annual reports containing audited financial statements. The
Company may also distribute quarterly reports containing unaudited
financial information for the first three quarters of each fiscal
year.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and the financial statements which have been
incorporated by reference in this Prospectus. As used in this
Prospectus, the "Company" refers to Continental American
Transportation, Inc.
THE COMPANY
The Company and its subsidiaries are principally engaged in
the business of operating a full, non-union truckload carrier fleet
throughout the Continental United States. Since its acquisition of
Carpet Transport, Inc., effective February 29, 1996, the Company's
primary business is focused on serving the transportation and
distribution needs of the carpet manufacturing industry located in
the southeastern corridor of the United States. The Company
utilizes approximately 850 tractors and 1,500 trailers in its
transportation business. In addition, the Company maintains 18
truck terminals throughout the Country to facilitate distribution
of customer shipments and to provide regional maintenance service
for its revenue equipment. The terminals located in Baton Rouge,
Louisiana, Orlando and Tampa, Florida are Company-owned while it
leases the other 15 terminals.
The Company has approximately 1,100 employees, of which
approximately 800 are drivers. Most of the Company's personnel
work at its corporate headquarters and main operating facility
located in Calhoun, Georgia (the "Calhoun Operations Center") which
is situated 70 miles north of the City of Atlanta. Owned by the
Company, the Calhoun Operations Center provides an aggregate 122
loading bays and includes separate facilities for tractor, trailer
and tire maintenance; two office buildings house the Company's
management, dispatch and clerical personnel and other structures
provide designated areas for driver recruitment and training,
doctor's offices and security.
The Company, through its subsidiary, Chase Brokerage, Inc.,
also operates a nationwide freight brokerage business located in
its Company-rented Palatka, Florida facility.
The Company is a Colorado corporation organized in 1983 under
the name MAS Ventures, ltd. The Company's principal executive
office is located at 495 Lovers Lane Road, Calhoun, Georgia 30701,
telephone number, (706)629-8682.
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The Offering
Securities Offered
Hereby..........
1,810,000 Common Shares issuable upon
the exercise of 16 Warrants. Each
Warrant is exercisable from time to
time and in whole or in part to
purchase between 6,000 and 600,000
Common Shares at prices ranging from
$.25 to $7.50 per share at any time,
with respect to 15 of the Warrants,
during the period from their date of
grant, June 28, 1996, and terminating
twelve (12) months following the
effective date of this Registration
Statement, and from November 28, 1996
through the last day of the thirty-six
(36) month period following the
effective date of this Registration
Statement with respect to 1 Warrant
(the "Warrant Exercise Period"). See
"Description of Securities." The 16
Warrants are not being registered
hereunder. See "Description of
Securities".
750,000 Common Shares held of record
by certain Selling Securityholders.
See "Selling Securityholders and
Relationship Between the Company and
the Selling Securityholders".
Common Shares Currently
Outstanding.......
4,377,469 shares.
Common Shares Issuable Upon Exercise
of the Warrants......
1,810,000 shares.
Estimated proceeds to
the Company..........
If the holders of the 16 Warrants
offered hereby elect to exercise their
Warrants, the estimated gross proceeds
to the Company would be approximately
$3,231,250 if exercised during the
Warrant Exercise Period. The expenses
of this offering are estimated to be
approximately $21,604.
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Use of Proceeds.............
Proceeds from the exercise of the
Warrants offered hereby will be added
to the Company's working capital and
will be used for general corporate
purposes. There can be no assurance
that any Warrants will be exercised
and that any proceeds will be received
by the Company. All of the proceeds
from the sale of Common Shares offered
hereby will be received by the Selling
Securityholders. The Company will not
receive any of the proceeds from the
sale of such Common Shares.
Selling Securityholders........
The Warrants and the Common Shares
issuable upon the exercise thereof:
Affililated Services, Inc., Ocean
Marketing Corp., Pyramid Holdings,
Inc., Universal Solutions, Inc.,
Global Financial Group, Inc., Mr. Ken
Lucas, Mr. Craig Scott, Mr. Glenn
Kennedy, Mr. Kevin Miller, Mr. Scott
Sieck, Novaya, Vicbor, Meridian
Holdings, Inc., Mr. Arden Brown,
Christie & Company and Explorer
Financial Services, Inc. In addition,
Herr's Motor Express, Inc., Mr. Robert
R. Herr, Mr. Wayne S. Herr and Charles
B. Prater are selling an aggregate of
750,000 Common Shares.
See "Selling Securityholders and
Relationship between the Company and
the Selling Securityholders."
NASD Symbol........
"COAW" - Common Shares
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RISK FACTORS
The purchase of the securities offered hereby involves a
substantial degree of risk. Prospective Investors should carefully
consider, among other matters, the following risks and other
factors before making a decision to purchase the securities being
offered hereby.
Recruitment and Retention of Qualified Drivers
Competition to recruit qualified drivers is extremely intense,
and the Company occasionally has experienced difficulty attracting
and retaining a sufficient number of qualified drivers to operate
its rapidly expanding fleet. Although the Company currently
retains an adequate number of drivers for its current business,
there is a chronic, industry-wide shortage of qualified drivers.
There can be no assurance that the shortage of qualified drivers
will not affect the Company's operations and profitability in the
future. Difficulty in attracting or retaining qualified drivers
would materially adversely affect the Company's operations and
ability to grow.
Business Cycles and Industry-Wide Cost Increases
The Company has little or no control over economic factors
such as fuel prices and taxes, insurance costs, liability claims,
interest rate fluctuations, fluctuation in the resale value of
revenue equipment, economic recessions and customers' shipping
demands. Significant increases or rapid fluctuations in fuel
prices, interest rates or increases in insurance costs or liability
claims, to the extent not offset by increases in freight rates,
would adversely affect the Company's operating results,
profitability and expansion. Economic recessions or downturns in
customers' business cycles or shipping demands could also have a
materially adverse effect upon the growth and profitability of the
Company. If the resale value of the Company's revenue equipment
were to decline, the Company could be forced to retain some of its
equipment longer, with a resulting increase in operating expenses
for maintenance and repairs.
Capital Requirements; Leverage
The Company historically has relied upon debt and operating
leases to finance new revenue equipment, and it has granted its
lenders a lien on substantially all of the Company's assets. If in
the future the Company were unable to borrow sufficient funds,
enter into acceptable operating lease arrangements or raise
additional equity, the resulting capital shortage would adversely
affect the Company's growth and profitability. The Company
currently is highly leveraged and has a debt-to-capitalization
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ratio higher than many of its competitors. As of March 31, 1996,
the Company had a ratio of long-term debt to capitalization of
approximately 6.5 to 1%.
Competition
The trucking industry is extremely competitive and includes
regional, inter-regional and national truckload carriers, none of
which dominates the market. The Company also competes with
alternative forms of transportation, such as railroads, rail-truck
intermodel and air-freight intermodal service. This competition
historically has created downward pressure on the truckload
industry's pricing structure. The Company competes with a number
of trucking companies that have greater financial resources,
operate more revenue equipment and transport more freight than the
Company.
Dependence on Key Personnel
The Company's success depends in large part upon a number of
key management personnel. The loss of the services of one or more
of its management personnel, in particular Timothy Holstein, the
Company's President and Chief Executive Officer, or Erik Bailey,
the Company's Chief Financial Officer, could have a material
adverse effect on the Company.
Government Regulation
Truckload carriers are subject to regulation by various
federal and state agencies, including the Interstate Commerce
Commission ("ICC") and the United States Department of
Transportation ("DOT"). These regulatory authorities exercise
broad powers, generally governing activities such as authorization
to engage in motor carrier operations, operational safety,
accounting systems, rates and charges, certain mergers,
consolidations and acquisitions as well as financial reporting.
The Company is also subject to regulations promulgated by the
Environmental Protection Agency ("EPA") and similar state agencies
with respect to fuel storage tanks. Although the Company believes
that its operatins are in material compliance with current laws and
regulations, there can be no assurance that current regulatory
requirements will not change, that currently unforeseen
environmental incidents will not occur or that contamination or
past noncompliance with environmental laws, will not be discovered
on properties on which the Company has operated.
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Self-Insured Claims
The Company is self-insured for personal injury, collision and
comprehension damage and property damage up to a maximum limit of
$1,000,000 per occurrence, and for collision, comprehensive and
cargo liability up to a combined limit of $ 100,000 per occurrence.
If the Company were to experience numerous claims in significant
amounts for which it is self-insured, or if significant increases
in insurance costs should occur and could not be offset by higher
freight rates, the Company's results of operations could be
materially adversely affected.
Proceeds of the Offering
The Company will not receive any of the proceeds of the
offering of Securities by the Selling Securityholders. Only the
proceeds from the exercise of the Warrants will be received by the
Company. There can be no assurance that any Warrants will be
exercised and that any proceeds will be received by the Company.
Dividends
The Company has not paid and does not anticipate paying cash
dividends on its Common Shares in the foreseeable future, but it
intends to retain its earnings, if any, for use in its business.
Control of Company to Remain with Existing Stockholders
Timothy Holstein, Erik Bailey and Brian Henninger, the
officers and directors of the Company, collectively own 1,305,718
Company Common Shares, representing approximately 30% of
all the issued and outstanding Company Common Shares as of July 23,
1996. Assuming they were to act collectively, Messrs. Holstein,
Bailey and Henninger would likely be able to continue to determine
the affairs and policies of the Company.
Shares Eligible for Future Sale
With the exception of the 519,897 Common Shares held by Erik
Bailey, the 739,521 Common Shares held by Timothy Holstein, and the
46,300 Common Shares held by director and officer Brian Henninger
whose total includes options to purchase 36,000 Common Shares, and
approximately 975,358 shares issued in certain transactions, which
are "restricted securities" as that term is defined under Rule 144
promulgated under the Act, all of the currently outstanding Common
Shares are now eligible or shortly will be eligible for sale in the
public market. The Company is unable to predict the effect that
sales made under Rule 144 or otherwise may have upon the then
prevailing market prices of the Common Shares or Warrants, although
such sales may depress such prices. Mr. John Christie, a former
officer and director of the Company, owns approximately 62,440
Common Shares which he will be able to sell on the open market
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under Rule 144 without volume limitations when and if he is deemed
a "non-affiliate" of the Company as such term is defined under Rule
144: the Company cannot predict the effect on the then prevailing
market prices of the Common Shares or Warrants if this invididual
proceeds to sell his shares.
Outstanding Options
The Company has granted options to purchase 36,000 Common
Shares representing the remaining balance of stock options
available under the Company's 1994 Stock Incentive Plan. In
addition, the Company has issued seven (7) Warrants to purchase
610,000 shares of Common Stock which are exercisable until October
27, 1996. If the foregoing options are exercised and/or the
foregoing Warrants are exercised, the percentage of Common Shares
held by the stockholders will be reduced accordingly.
Penny Stock Regulations.
If the Common Stock becomes subject to the existing or
proposed regulations on penny stocks, the market liquidity for the
Common Stock could be materially adversely affected by limiting the
ability of broker-dealers to sell the Common Stock and the ability
of stockholders to sell their Common Stock in the secondary market.
The Commission recently has adopted rules that regulate broker-
dealer practices in connection with transactions in "penny stocks."
Penny stocks generally are equity securities with a price of less
than $5.00 (other than securities registered on certain national
securities exchanges or quoted on Nasdaq, provided that current
price and volume information with respect to transactions in such
securities is provided by the exchange or system). The penny stock
rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prepared by the issuer that
provides information about penny stocks and the nature and level of
risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the
penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements
showing the market value of each penny stock held in the customer's
account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer
orally or in writing prior to effecting the transaction and must be
given to the customer in writing before or with the customer's
confirmation. In addition, the penny stock rules require that
prior to a transaction in a penny stock not otherwise exempt from
such rules, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the
customer and receive the customer's written agreement to the
transaction. These disclosure requirements may have the effect of
reducing the level of trading activity in the secondary market for
a security that becomes subject to the penny stock rules. If the
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Common Stock becomes subject to the penny stock rules, purchasers
in this offering may find it more difficult to sell such Common
Stock.
USE OF PROCEEDS
If the holders of the 16 Warrants offered hereby elect to
exercise their Warrants, the estimated gross proceeds to the
Company would be approximately $3,231,250. The expenses of this
offering are estimated to be approximately $21,604.
Proceeds from the exercise of Warrants will be added to the
Company's working capital and will be used to fund the continued
growth of the Company and for general corporate purposes. There
can be no assurance that any Warrants will be exercised and that
any proceeds will be received by the Company.
All of the proceeds from the sale of Common Shares offered
hereby will be received by the Selling Securityholders. The
Company will not receive any of the proceeds from the sale of such
Common Shares.
COMMON SHARE PRICE RANGE
The Common Shares are traded on the Electronic Bulletin Board
of the National Association of Securities Dealers, Inc. under the
trading symbol "COAW".
The following table sets forth the high and low bid prices for
the Common Shares for the period which commenced June 19, 1995, the
date the Company's Common Shares were qualified for trading on the
Electronic Bulletin Board, for the fiscal year end date, June 30,
1995, and for the quarters ended September 30, 1995, December 31,
1995, March 31, 1996, and June 30, 1996 based on transaction data
as reported by NASD:
Common Shares
Fiscal Year Ended High Low
June 30, 1995 $ .375 $ .25
September 30, 1995 $12.14 $ .97
December 31, 1995 $ 6.55 $1.58
March 31, 1996 $ 3.87 $2.49
June 30, 1996 $ 4.75 $2.25
The closing bid quotation price of the Common Shares on July
23, 1996 was $2.375.
As of July 23, 1996, there were 286 holders of record of the
Common Shares. The Company believes that there were approximately
280 beneficial shareholders of the Common Shares as of such date.
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The Company has paid no cash dividends on its Common Shares
since its inception. Any future declaration of cash dividends will
depend upon the Company's earnings, financial condition, capital
requirements and other relevant factors. The Company does not
intend to pay cash dividends in the foreseeable future, but intends
to retain its earnings, if any, for use in its business.
SELLING SECURITYHOLDERS AND RELATIONSHIP BETWEEN THE COMPANY AND
THE SELLING SECURITYHOLDERS
Because the Selling Securityholders may offer all or some part
of the Securities pursuant to this Prospectus and because this
offering is not being underwritten on a firm commitment basis, no
estimate can be given as to the amount of securities to be offered
for sale by the Selling Securityholders upon termination of this
offering. See "Plan of Distribution." To the extent legally
required, the specific amount of Securities to be sold by the
Selling Securityholders in connection with a particular offer will
be set forth in an accompanying supplement to this Prospectus.
The following table sets forth the amount and type of
Securities offered by this Prospectus which are owned by such
Selling Securityholders.
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WARRANTS COMMON
(and Common Shares SHARES
issuable upon
exercise of such
NAME Warrants)
Affiliated Services, Inc. 1 0
Ocean Marketing Corp. 1 0
Pyramid Holdings, Inc. 1 0
Universal Solutions, Inc. 1 0
Global Financial Group, Inc. 1 0
Ken Lucas 1 0
Craig Scott 1 0
Glenn Kennedy 1 0
Kevin Miller 1 0
Scott Sieck 1 0
Novaya 1 0
Vicbor 1 0
Meridian Holdings, Inc. 1 0
Arden Brown 1 0
Christie & Company 1 0
Explorer Financial Services, Inc. 1 0
Wayne S. Herr 0 50,000
Robert R. Herr 0 50,000
Herr's Motor Express, Inc. 0 150,000
Charles B. Prater 0 500,000
===============================================================================
14
<PAGE>
Based upon information provided by the Selling
Securityholders, each Selling Securityholder owns that number of
Common Shares or Warrants, as appropriate, indicated in the table
above. The historical relationship between the Selling
Securityholders and the Company is described below.
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 20,000,000 Common Shares,
no par value, of which 4,377,469 shares are currently outstanding.
After this offering, there will be 4,377,469 Common Shares
outstanding, assuming no exercise of Options and Warrants.
Holders of Common Shares are entitled to dividends when, as
and if declared by the Board of Directors out of funds legally
available therefor. However, the Company does not anticipate
paying dividends on its Common Shares in the foreseeable future,
but intends to retain its earnings, if any, for use in its
business.
Holders of Common Shares are entitled to cast one vote for
each share held at all stockholder meetings for all purposes,
including the election of directors. The holders of a majority of
the Common Shares issued and outstanding and entitled to
vote,constitute a quorum at all meetings of stockholders and the
vote of the holders of a majority of Common Shares present at such
a meeting will decide any question brought before each meeting,
except for certain actions such as amendments to the Company's
certificate of incorporation, mergers or dissolutions which require
the vote of the holders of a majority of the outstanding Common
Shares.
Upon liquidation or dissolution, the holder of each
outstanding Common Share will be entitled to share equally in the
assets of the Company legally available for distribution to such
stockholder after the payment of all debts and other liabilities
and after distribution to preferred stockholders legally entitled
thereto.
No holder of Common Shares has a preemptive or preferential
right to purchase or subscribe for any part of any unissued or any
additional authorized stock or any securities of the Company
convertible into shares of its stock. The outstanding Common
Shares are, and the shares offered hereby will be fully paid and
nonassessable.
15
<PAGE>
Warrants
The Warrants were issued in consideration of past services
rendered to the Company by the Selling Securityholders and two (2)
Warrants pursuant to the terms of agreements by and between the
Company and the Selling Securityholders, dated February 22, 1996
and June 28, 1996; the 750,000 Company Common Shares are being
registered herein pursuant to the terms of two agreements, dated
February 29, 1996 and August 22, 1995, respectively, by and between
the Company and the Selling Securityholders. For a complete
description of the terms of these Agreements, reference is made to
Exhibit 4(d) to the Registration Statement of which this Prospectus
forms a part. See "Additional Information" and "Incorporation of
Certain Documents by Reference." Generally, each Warrant entitles
the registered holder to purchase from the Company from between
6,000 to 600,000 Common Shares at exercise prices of between $.25
and $7.50 per share during the period commencing upon their grant
date, June 28, 1996 and continuing for the twelve month period
following the effective date of the Registration Statement with
respect to 15 of the Warrants, and for 1 Warrant, from November 28,
1996 through the last day of the thirty-six (36) month period
beginning on the effective date of this Registration Statement, of
which this Prospectus forms a part.
The Company has no other securities issued and outstanding
other than its Common Shares.
Directors' Liability
As authorized by the Colorado Corporation Law (the "CCL"), the
Company's Articles of Incorporation (the "Company Certificate")
provides that no director or officer of the Company shall be
personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director except in the
event such director or officer is adjudged in the subject action,
suit or proceeding to be liable for (i) gross negligence (ii) or
willful misconduct. The effect of the provisions in the Company
Certificate is to eliminate the rights of the Company and its
stockholders (through stockholders' derivative suits on behalf of
the Company) to recover monetary damages against a director for
breach of the fiduciary duty of care as a director except in the
situations described in clauses (i) and (ii) above. This provision
does not limit nor eliminate the rights of the Company or of any
stockholder to seek non-monetary relief such as an injunction or
rescission in the event of a breach of director's duty of care.
Transfer Agent and Registrar
The transfer agent and registrar for the Common Shares and
Warrants is United Stock Transfer, located at 13275 East Fremont
Place, Suite 302, Englewood, Colorado 80112.
16
<PAGE>
PLAN OF DISTRIBUTION
The Company
Sixteen (16) Warrants were issued by the Company to the
Selling Securityholders as of June 28, 1996. Between 6,000 and
600,000 Common Shares are issuable by the Company upon the exercise
of each of the 16 Warrants for an aggregate of 1,810,000 Common
Shares. No persons have been engaged to solicit or will be
compensated for soliciting, the exercise of the Warrants.
The Selling Securityholders
Any or all of the Securities may be sold from time to time to
purchasers directly by the Selling Securityholders. Alternatively,
the Selling Securityholders may from time to time offer the
Securities through underwriters, dealers or agents who may receive
compensation in the form of underwriting discounts, concessions or
commissions from the Selling Securityholders and/or the purchasers
of Securities for whom they may act as agents. The Selling
Securityholders and any such underwriters, dealers or agents that
participate in the distribution of Securities may be deemed to be
underwriters under the Act, and any profit on the sale of the
Securities by them and any discounts, commissions or concessions
received by them may be deemed to be underwriting discounts and
commissions under the Act. The Securities may be sold from time to
time in one or more transactions at a fixed offering price, which
may be changed, or at varying prices determined at the time of sale
or at negotiated prices. The distribution of securities by the
Selling Securityholders may be effected in one or more transactions
that may take place on the over-the-counter market, including
ordinary broker's transactions, at privately-negotiated prices.
Usual and customary or specifically negotiated brokerage fees,
discounts and commissions may be paid by the Selling
Securityholders in connection with such sales of securities.
At the time a particular offer of Securities is made, to the
extent required, a supplement to this Prospectus will be
distributed (or, if required, a post-effective amendment to the
Registration Statement of which this Prospectus is a part will be
filed) which will identify and set forth the aggregate amount of
Securities being offered and the terms of the offering, including
the name or names of any underwriters, dealers or agents, the
purchase price paid by any underwriter for Securities purchased
from the Selling Securityholders, any discounts, commissions and
other items constituting compensation from the Selling
Securityholders and/or the Company and any discounts, commissions
or concessions allowed or disallowed or paid to dealers, including
the proposed selling price to the public. In addition, an
underwritten offering will require clearance by the National
Association of Securities Dealers of the underwriter's compensation
17
<PAGE>
arrangements. The Company will not receive any of the proceeds
from the sale by the Selling Securityholders of the Securities
offered hereby. All of the filing fees and or the expenses of this
Registration Statement will be borne in full by the Company, other
than any fees or expenses of counsel to the Selling Securityholders
and underwriting fees, discounts and commissions relating to this
offering.
Under applicable rules and regulations under the Exchange Act,
any person engaged in a distribution of the Securities may not
simultaneously engage in market making activities with respect to
the Securities for a period of two business days prior to the
commencement of such distribution. In addition and without
limiting the foregoing, the Selling Securityholders will be subject
to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including without limitation Rules 10b-6
and 10b-7, which provisions may limit the timing of purchases and
sales of the Securities by the Selling Securityholders.
In order to comply with certain states' securities laws, if
applicable, the Securities will be sold in such jurisdiction only
through registered or licensed brokers or dealers. In certain
states the Securities may not be sold unless the Securities have
been registered or qualified for sale in such state, or unless an
exemption from registration or qualification is available and is
obtained.
LEGAL OPINIONS
The legality of the Warrants and the Common Shares issuable
upon exercise of the Warrants has been passed upon for the Company
by Joseph J. Tomasek, Esq., Somerville, New Jersey.
EXPERTS
The financial statements incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K for the
year ended June 30, 1995, have been audited by Rosenberg Rich Baker
Berman & Company, independent auditors, as stated in their reports,
which are incorporated hereby by reference, and have been so
incorporated in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
18
<PAGE>
No dealer, salesman or any other
person has been authorized to give any
information or to make an
representation other than those
contained in this Prospectus, and, if
given or made, such information or
representations must not be relied
upon as having been authorized by the
Company or the Underwriter. This
Prospectus does not constitute an
offer to sell or a solicitation or an
offer to buy, by any person in any
jurisdiction in which it is unlawful
for such person to make such offer or
solicitation. Neither the delivery of
this Prospectus nor any offer,
solicitation or sale made hereunder
shall, under any circumstances, create
any implication that the information
herein is correct as of any time
subsequent to the date of this
Prospectus.
TABLE OF CONTENTS
Page
Available Information ............ 3
Incorporation of Certain Documents
by Reference.................... 3
Prospectus Summary................ 5
Risk Factors...................... 8
Use of Proceeds................... 12
Common Share Price Range.......... 12
Selling Securityholders and
Relationship between the
Company and the Selling
Securityholders.................. 13
Description of Securities.......... 15
Plan of Distribution............... 17
Legal Opinions..................... 18
Experts............................ 18
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
1,810,000 Common Shares Issuable Upon
Exercise of 16 Common Stock
Purchase Warrants
750,000 Common Shares
P R O S P E C T U S
July , 1996
19
<PAGE>
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses relative to this
offering, all of which are to be borne by the Registrant. Expenses
other than filing fees are estimated.
Filing Fee - Securities and Exchange Commission . $ 6,104.00
Filing Fee - NASD . . . . . . . . . . . . . . . . $ 0
Accounting Fees and Expenses: . . . . . . . . . . $ 1,000.00
Legal Fees and Expenses . . . . . . . . . . . . . $ 7,500.00
Printing Fees . . . . . . . . . . . . . . . . . . $ 2,000.00
Miscellaneous . . . . . . . . . . . . . . . . . . $ 5,000.00
Total Expenses . . . . . . . . . . . . . . . . . $21,604.00
Item 15. Indemnification of Directors and Officers
As authorized by the Colorado Corporation law (the "CCL"), the
Company's Articles of Incorporation (the "Company Certificate")
provides that no director or officer of the Company shall be
personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director except in the
event such director or officer is adjudged in the subject action,
suit or proceeding to be liable for (i) gross negligence (ii) or
willful misconduct. The effect of the provisions in the Company
Certificate is to eliminate the rights of the Company and its
stockholders (through stockholders' derivative suits on behalf of
the Company) to recover monetary damages against a director for
breach of the fiduciary duty of care as a director except in the
situations described in clauses (i) and (ii) above. This provision
does not limit nor eliminate the rights of the Company or of any
stockholder to seek non-monetary relief such as an injunction or
rescission in the event of a breach of director's duty of care.
20
<PAGE>
Item 16. Exhibits Page
4(a) Specimen of Common Stock Certificate. 26
4(b) Specimen of Warrant certificate. 27
4(d) Agreement, dated as of February 22, 1996,
by and between Continental American
Transportation, Inc. and Meridian Holdings,
Inc.; Agreement to Modify Purchase
Agreements and Security Agreement, dated
August 22, 1995, by and between Continental
American Transportation, Inc., Herr's Motor
Express, Inc., Robert R. Herr, Wayne S. Herr,
Timothy Holstein and Erik Bailey, and
Consulting Agreement, dated June 28, 1996,
by and between Continental American
Transportation, Inc. and Explorer Financial
Services, Inc. 34
5 Opinion of Joseph J. Tomasek, Esq. 58
23(a) Consent of Joseph J. Tomasek, Esq.
(contained in the opinion of counsel
filed as Exhibit 5 hereto).
23(b) Consent of Rosenberg Rich Baker
Berman & Company. 60
24 Power of Attorney (included in Part II
of this Registration Statement).
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement:
(i) To include any Prospectus required by
section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or
events which, individually or together, represent a fundamental
change in the information in the Registration Statement; and
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total 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
21
<PAGE>
pursuant to Rule 424(b) if, in the aggregate, the changes in the
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 additional or changed
material information on the plan of distribution not previously
disclosed in the Registration Statement or any material change to
such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and 1(ii) do
not apply if the Registration Statement is on Form S-3, and the
information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference
in the Registration Statement.
2. That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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.
4. That, for purposes of determining any liability
under the Securities Act of 1933, treat the information omitted
from the form of prospectus filed as part of this Registration
Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by Registrant under Rule 424(b)(1) under the
Securities Act of 1933 as part of this Registration Statement as of
the time the Commission declared it effective.
5. That, for purposes of determining any liability
under the Securities Act of 1933, treat each post-effective
amendment that contains a form of prospectus as a new Registration
Statement for the securities offered in the Registration Statement,
and that offering of the securities at that time shall be deemed to
be the initial bona fide offering thereof.
6. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
22
<PAGE>
the Registrant of expenses incurred or paid by a director, officer
or controlling persons of the Registrant 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 Registrant 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 Act and will be governed by the final adjudication of such
issue.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, the Registrant certifies that it has reasonable
grounds to believe that it meets all 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 Calhoun, State of Georgia, on this 23rd day of July,
1996.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein
Chairman of the Board,
President and Chief Executive officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes
and appoints Timothy Holstein, Erik Bailey and Brian Henninger and
each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any
and all amendments (including 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, and hereby grants to such
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 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 of any of them, or their or
his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof. Pursuant to the requirements of the Securities
Act of 1933, this Registration Statement has been signed below by
the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Title Date
s/Timothy Holstein
Timothy Holstein Chairman of the Board,
President, Chief Executive
Officer and Director July 23, 1996
s/Erik Bailey
Erik Bailey Vice President,
Chief Financial Officer July 23, 1996
and Director
s/Brian Henninger
Brian Henninger Secretary and
Director July 23, 1996
catfms-3.2 updated 7/24/96
24
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
Number Exhibit Description Page Number
4(a) Specimen of Common Stock Certificate. 26
4(b) Specimen of Warrant certificate. 27
4(d) Agreement, dated as of February 22, 1996,
by and between Continental American
Transportation, Inc. and Meridian Holdings,
Inc.; Agreement to Modify Purchase
Agreements and Security Agreement, dated
August 22, 1995, by and between Continental
American Transportation, Inc., Herr's Motor
Express, Inc., Robert R. Herr, Wayne S. Herr,
Timothy Holstein and Erik Bailey, and
Consulting Agreement, dated June 28, 1996,
by and between Continental American
Transportation, Inc. and Explorer Financial
Services, Inc. 34
5 Opinion of Joseph J. Tomasek, Esq. 58
23(a) Consent of Joseph J. Tomasek, Esq.
(contained in the opinion of counsel
filed as Exhibit 5 hereto).
23(b) Consent of Rosenberg Rich Baker
Berman & Company. 60
24 Power of Attorney (included in Part II
of this Registration Statement).
25
<PAGE>
S P E C I M E N
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
Number Shares
INCORPORATED UNDER THE LAWS OF THE STATE OF COLORADO
AUTHORIZED: 20,000,000 SHARES, NO PAR VALUE SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 210836 20 1
This Certifies That
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, NO PAR VALUE OF
Continental American Transportation, Inc.
transferable only on the books of this Corporation in person or by attorney
upon surrender of this Certificate properly endorsed. This Certificate and the
shares represented hereby are issued and shall be subject to all the provisions
of the Certificate of Incorporation, as amended, to all of which the holder by
acceptance hereby assents.
IN WITNESS WHEREOF, the said Corporation has caused
this Certificate to be endorsed by the facsimile signatures of its duly
authorized officers and to be sealed with the facsimile seal of the Corporation.
This Certificate is not valid unless duly countersigned by the Transfer Agent.
Dated:
s/Erik L. Bailey s/Timothy Holstein
TREASURER (S E A L) PRESIDENT
Countersigned:
UNITED STOCK TRANSFER, INC.
13275 E. Fremont Place, Suite 302
Englewood, CO 80112-9692
BY
Transfer Agent & Registrar -
Authorized Signature
26
<PAGE>
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF CAN ONLY
BE TRANSFERRED IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE SOLD, TRANSFERRED,
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT, UNLESS, IN
THE OPINION OF COUNSEL TO THE COMPANY, SUCH REGISTRATION IS NOT THEN
REQUIRED.
This warrant will be void after the Expiration Date provided hereunder.
COMMON STOCK PURCHASE WARRANT
to subscribe for and purchase common stock of
CONTINENTAL AMERICAN TRANSPORTATION, INC.
This is to certify that, subject to the provisions of this
Common Stock Purchase Warrant (the "Warrant") and for value
received, , the registered holder hereof, or
its registered assignees (the "Holder"), is entitled to purchase up
to a total of ( ) fully paid and non-
assessable shares of common stock, subject to adjustment as set
forth herein (the "Warrant Shares"), of CONTINENTAL AMERICAN
TRANSPORTATION, INC., a Colorado corporation, 495 Lovers Lane Road,
Calhoun, Georgia 30701 (the "Company") at the exercise prices and
for that number of Warrant Shares as follows:
Number of Warrant Shares Exercise Price(s)
subject to adjustment as set forth herein (the "Share Exercise
Price"), at any time or times and in whole or in part for a period
commencing upon grant ("the Effective Date") and terminating at
5:00 p.m., New York City time, on that date (the "Expiration Date")
that is the last day of a twelve (12) month period beginning on the
date on which the registration statement which includes the Warrant
Shares is declared effective by the United States Securities and
Exchange Commission (the "Exercise Period"). This Warrant is not
redeemable by the Company.
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR WARRANT SHARES
1.1. The rights represented by this Warrant may be exercised
in whole or in part (but not as to a fractional share), at any time
or from time to time during the Exercise Period, upon presentation
and surrender of this Warrant to the Company, at its principal
office as set forth hereinabove, or at such other place as the
Company may designate by notice in writing to the Holder,
accompanied by the Form of Subscription attached hereto, fully
executed, together with payment of the applicable Share Exercise
Price for each Warrant Share then purchased. Such payment shall be
made, in cash, certified or bank check, wire transfer or cashiers
check, payable to the Company. This Warrant shall be deemed to
have been exercised immediately prior to the close of business on
the date on which this Warrant shall have been surrendered to the
Company together with full payment for the Warrant Shares
purchased, and the person entitled to receive the securities
deliverable upon such exercise shall be treated for all purposes as
the Holder thereof with respect to such number of Warrant Shares
<PAGE>
issuable upon such exercise.
1.2. Notwithstanding any other provision hereof, the Company
shall not be required to issue fractional shares of common stock
upon the exercise of this Warrant. If any fraction of a share
would, except for the provisions hereof, be issuable upon the
exercise of this Warrant, then: (a) if the fraction of a share
otherwise issuable is equal to or less than one-half, the Company
shall round down and issue only the largest whole number of shares
of common stock to which the Holder is otherwise entitled, or (b)
if the fraction of a share otherwise issuable is greater than one-
half, the Company shall round up and issue one additional share of
common stock in addition to the largest whole number of shares of
common stock to which the Holder is otherwise entitled.
1.3. The Holder of this Warrant by acceptance hereof expressly
waives any right to receive a fractional Warrant or fractional
Warrant Shares upon the exercise or exchange of this Warrant.
2. RESERVATION OF WARRANT SHARES; LISTING; PAYMENT OF TAXES
2.1. The Company covenants that there shall at all times be
reserved for issuance upon exercise of this Warrant such number of
shares of authorized common stock as shall be subject hereto. The
Company covenants that all Warrant Shares issuable upon the
exercise of this Warrant shall be duly and validly issued, fully
paid and non-assessable and free from any taxes, liens and
encumbrances thereon with respect to the issuance thereto.
2.2. The Company shall pay all documentary, stamp, or similar
taxes or other governmental charges that may be imposed with
respect to the issuance of the Warrant, or the delivery of the
Warrant Shares upon the exercise of the Warrant.
3. EXCHANGE, ASSIGNMENT, OR LOSS OF WARRANT
3.1. This Warrant is exchangeable for other warrants of
different denomination, without expense, other than as provided
elsewhere herein, at the option of the Holder upon presentation and
surrender hereof to the Company, entitling the Holder to purchase
in the aggregate the same number of Warrant Shares purchasable
hereunder.
3.2. In the event of the theft, destruction, loss or
mutilation of this Warrant, upon receipt by the Company of evidence
satisfactory to it of such loss, theft, destruction or mutilation
and, in the case of loss, theft or destruction, of such
indemnification as the Company may in its discretion impose, and in
the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver a new warrant of
like tenor and date.
3.3. The term "Warrant" as used herein includes any warrants
issued in substitution for or in replacement of the Warrant, or
into which this Warrant may be divided or exchanged.
2
<PAGE>
4. RIGHTS OF THE HOLDER
The Holder shall not, by virtue hereof, be entitled to any
rights of a shareholder in the Company, either at law or equity.
The rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the
extent set forth herein.
5. ADJUSTMENT OF NUMBER OF WARRANT SHARES DELIVERABLE AND
EXERCISE PRICE
5.1. The number of Warrant Shares received upon exercise of
this Warrant and the Share Exercise Price shall be subject to
adjustment, as set forth below.
5.1.(a) In case the Company shall thereafter (i) pay a
dividend or make distribution of its common stock, (ii) subdivide
its outstanding common stock into a greater number of shares, (iii)
combine its outstanding common stock into a smaller number of
shares or (iv) issue any stock by reclassification of its common
stock, then and in such event, there shall be a proportional
adjustment in the Share Exercise Price and in the number of Warrant
Shares (or other securities, if any) issuable upon the exercise of
this Warrant so that the Holder shall be entitled thereafter to
receive the number of Warrant Shares, at the same aggregate cost,
that the Holder would have received immediately following this
action had this Warrant been exercised immediately prior thereto.
An adjustment made pursuant to this subsection shall become
effective immediately after the record date in the case of a
dividend or distribution and shall become immediately effective
after the effective date in the case of a subdivision or
reclassification.
5.1.(b) No adjustment in the securities issuable shall
be made unless such adjustment would require an increase or
decrease of at least 5% in both the number of Warrant Shares
otherwise issuable and the Share Exercise Price; provided, however,
that any adjustments that, by reason of this subsection, are not
required to be made shall be carried forward and accounted for in
connection with the calculation of any subsequent adjustments. All
calculations under this section shall be made to the nearest one-
hundredth (1/100) of a Share, but in no event shall the Company be
obligated to issue fractional shares upon the exercise of this
Warrant.
5.1.(c) In the event that as a result of an adjustment
made pursuant hereto, the Holder shall become entitled to receive
any securities of the Company other than Warrant Shares, then
thereafter the number of such securities shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions contained in subsection
(a) and in this subsection.
5.2. In case of (i) any reclassification or change of Warrant
Shares or other securities issuable on exercise of this Warrant
(other than a change in par value or as result of a subdivision or
combination), or (ii) any consolidation or merger of the Company
3
<PAGE>
with or into another corporation or company (other than a merger in
which the Company is the continuing corporation and that does not
result in any reclassification or change of the then-outstanding
shares of common stock or other securities issuable upon exercise
of the Warrant other than a change in par value or a subdivision or
combination of the common stock), or (iii) any sale or conveyance
to another corporation of all or substantially of all the Company's
assets, then, if this Warrant is outstanding, as a condition of
such reclassification, change, consolidation, merger, sale or
conveyance, the Company, or such successor or purchasing
corporation, as the case may be, shall make lawful and adequate
provision whereby the Holder shall receive, on exercise of this
Warrant, the kind and amount of securities and property receivable
upon such reclassification, change, consolidation, merger, sale or
conveyance as such Holder would have received had exercise of this
Warrant occurred prior to such reclassification, change,
consolidation, merger, sale or conveyance. Such provisions shall
include provision for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in
this section.
5.3. Before taking any action that would cause an adjustment
increasing the then par value of the Warrant Shares above the Share
Exercise Price, the Company shall have the right to take any
corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue
fully paid and non-assessable Warrant Shares at such adjusted Share
Exercise Price.
5.4. (i) Upon any adjustment of the Share Exercise Price
required to be made pursuant to this Section, within 30 days
thereafter, the Company shall cause to be mailed to the Holder
written notice thereof, which notice shall be accompanied by a
certificate of the Company's independent public accountants,
stating the adjusted Share Exercise Price and the adjusted number
of Warrant Shares purchasable or the kind and amount of any
securities or property purchasable upon exercise of a Warrant, as
the case may be, and setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based,
which certificate shall be conclusive evidence of the correctness
of such adjustment. Such notice may be given in advance and
included as part of the notice required to be mailed under the
provisions hereof.
(ii) In case at any time (A) the Company shall declare
any dividend upon its common stock payable otherwise than in cash
or in shares of common stock; or (B) the Company shall offer for
subscription to the holders of its outstanding shares of common
stock any additional shares of any class or any other securities
convertible into shares of stock or any rights to subscribe
thereto; or (C) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or a sale of
all or substantially all of the assets of the Company, or a
consolidation or a merger of the Company with another corporation
(other than a merger in which the Company is the continuing
corporation, and which does not result in any reclassification or
change of the then-outstanding shares or other capital stock
issuable upon exercise of this Warrant other than a change in par
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<PAGE>
value or a subdivision or combination of such exercise of this
Warrant other than a change in par value or a subdivision or
combination of such shares); or (D) there shall be a voluntary or
involuntary dissolution, liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall cause to
be mailed to the Holder, at the earliest practicable time (and in
any event not less than 20 days before any record date or other
date set for definitive action), written notice of the date on
which the books of the Company shall close or a record shall be
taken for such dividend, distribution of, or grant of subscription
rights, or such reorganization, reclassification, sale,
consolidation, merger, dissolution, liquidation, or winding up
shall take place, as the case may be. Such notice shall also set
forth such facts as shall indicate the effect of such action (to
the extent such effect may be known at the date of such notice) on
the kind and amount of the shares of stock and other securities and
property deliverable upon exercise of this Warrant. Such notice
shall also specify the date as of which the record holders shall
participate in said dividend, distribution, or subscription rights
or shall be entitled to exchange their shares for securities or
other property deliverable upon such reorganization,
reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be (on which date, in
the event of voluntary or involuntary dissolution, liquidation or
winding up of the Company, the right to exercise this Warrant shall
terminate).
(iii) Without limiting the obligation of the Company to
provide notice to the Holder of corporate actions hereunder, it is
agreed that failure of the Company to give notice shall not
invalidate such corporate action of the Company.
6. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933
6.1. This Warrant or the Warrant Shares or any other security
issued or issuable upon exercise of this Warrant may not be offered
or sold except in conformity with the Securities Act of 1933, as
amended, and then only against receipt of an agreement of such
person to whom such offer or sale is made to comply with the
provisions of this Section with respect to any resale or other
dispositions of such securities; except that such agreement shall
not be required with respect to the Warrant Shares issuable upon
exercise of this Warrant.
6.2. The Holder agrees that, prior to the disposition of this
Warrant, the Holder shall give written notice to the Company,
expressing his intention as to such disposition. Promptly upon
receiving such notice, the Company shall present copies thereof to
its counsel. If, in the opinion of such counsel, the proposed
disposition does not require registration of this Warrant, under
the Securities Act of 1933, as then in force, or any similar
federal or state statute then in force, the Company shall, as
promptly as practicable, notify the Holder of such opinion,
whereupon the Holder shall be entitled to dispose of this Warrant,
all in accordance with the terms of the notice delivered by the
Holder to the Company.
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<PAGE>
6.3. The Company may cause a legend in substantially the form
that follows to be set forth on this Warrant and certificate
representing any security issued or issuable upon exercise of this
Warrant (except for securities then registered under the Securities
Act of 1933) unless counsel for the Company is of the opinion as to
any such certificate that such legend is unnecessary:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE CAN ONLY BE
TRANSFERRED IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
SOLD, TRANSFERRED, OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT, UNLESS, IN THE OPINION OF COUNSEL TO
THE COMPANY, SUCH REGISTRATION IS NOT THEN REQUIRED.
7. REGISTRATION OF SECURITIES
7.1. The Company hereby agrees to file a registration
statement to register the Warrant Shares as soon as practicable
following the delivery hereof. In addition, the Company will
undertake to comply with the various states securities laws and
regulations with respect to the registration of the Warrant Shares
referred to herein. The Company undertakes to make available for
review and comment by the Holder hereof, on a timely basis and
prior to submission with any regulatory agency, copies of the
registration statement.
7.2. At all times following registration of the Warrant Shares
and continuing until 12 months following the earlier of either the
exercise in full of the Warrant or the expiration date, the Company
shall maintain and be current on all filing with the United States
Securities and Exchange Commission, appropriate state securities
departments and, as may be required, with the National Association
of Securities Dealers, Inc. and/or national or regional stock
exchanges necessary to allow the Warrant Shares to be freely
tradable in the public market.
7.3. The Company hereby acknowledges that time is of the
essence in respect to the registration of the Warrant Shares and
agrees that in the event the Warrant Shares are not registered and
qualified for public sale pursuant to an effective registration
statement within ninety (90) days from the date hereof (the
"Default Date"), then:
7.3.(a) Commencing on the Default Date and continuing
until the Warrant Shares are registered and qualified, the Company
shall pay interest to the Holder at an annual rate of ten percent
(10%), paid quarterly in cash, computed on the Comparable Value of
the Warrant Shares. As used herein, "Comparable Value of the
Warrant Shares" shall mean for each Warrant Share (whether or not
such Warrant Shares have then been issued upon the exercise of the
Warrant) the average of the high and low bid price of the Company's
publicly-traded common stock for the last date such prices are
available prior to each date of payment.
7.3.(b) Commencing on the Default Date and continuing
until the Warrant Shares are registered and qualified, the Holder
shall have the right from time to time to require the Company to
purchase all or some of the Warrant Shares (the amount and times to
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<PAGE>
be determined by the Holder) for an amount equal to the Comparable
Value of the Warrant Shares ("the Put"). Upon each exercise of the
Put, the Company shall pay to the order of Holder within 30 days
the full amount of the Comparable Value of the Warrant Shares for
so many of the Warrant Shares then put to the Company, whether or
not such Warrant Shares have then been issued upon the exercise of
the Warrant. The Company shall continue to compute and pay
interest as provided herein on the Warrant Shares which have been
put until payment for such Warrant Shares has been made in full.
7.3.(c) In the event that the Securities and Exchange
Commission does not declare the registration statement effective
within 45 days of filing through no fault of the Company, then the
Default Date shall be extended until the registration statement is
declared effective, provided, however, that the Company shall have
filed the registration statement with the Securities and Exchange
Commission not later than 45 days following the date of this
Agreement.
8. APPLICABLE LAW
This Warrant shall be governed by, and construed in accordance
with, the laws of the State of Colorado.
9. NOTICE
Any notices or certificates required to be given or sent by
the Company to the Holder and by the Holder to the Company shall be
deemed delivered if in writing and delivered personally or sent by
certified mail, to the Holder, addressed in the name and at the
address of such Holder appearing in the records of the Company,
and, if to the Company, addressed to it at the address appearing on
page one of this Warrant. The Company may change its address by
written notice to the Holder, and the Holder may change its address
by written notice to the Company.
10. SURVIVAL
The various rights and obligations of the Holder and of the
Company as set forth herein shall survive the exercise and
surrender of this Warrant as applicable.
11. AMENDMENTS, WAIVERS, TERMINATIONS
This Warrant and the provisions hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by
the party against whom enforcement of such change, waiver,
discharge or termination is sought.
12. DESCRIPTIVE HEADINGS
The descriptive headings of the several Sections of this
Warrant are inserted for convenience only and do not constitute a
part of this Warrant.
7
<PAGE>
IN WITNESS WHEREOF, Continental American Transportation, Inc.
has caused this Common Stock Purchase Warrant to be signed in its
name and on its behalf and its corporate seal to be affixed hereon
by its duly authorized officers.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
[SEAL] By:
Timothy Holstein, President
Dated:
catcomst.aff
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<PAGE>
AGREEMENT
THIS AGREEMENT is made and entered into as of the 22nd day of
February, 1996, by, between and among CONTINENTAL AMERICAN
TRANSPORTATION, INC., ("Company") and MERIDIAN HOLDINGS, INC.
("Placing Agent" or "Meridian"), and International Escrow Agents,
Inc., a Florida corporation ("Escrow Agent").
1. The Company hereby retains Placing Agent and Placing
Agent accepts to be retained, for a period or 45 days commencing on
the day following the date of this Agreement, as the Company's
exclusive Placing Agent in connection with placing the Company's
Securities (defined below) under Regulation S of the United States
Securities Act ("Regulation S"), as more specifically described
below. (Company agrees not to undertake any other Regulation S
offering during the first 45 days from this date.) Placing Agent
agrees to use its best efforts to place the securities on the
following terms and conditions, or on such terms and conditions as
may be amended and agreed to by all parties hereto in writing from
time to time:
SECURITY: Convertible Debenture issued by Company
(unsecured) ("Debentures" or "Securities")
AMOUNT: An amount up to $2,000,000, U.S. (all currency
references herein are in U.S. dollars)(the Company,
at its discretion may agree to increase the amount
subject to available investors);
DENOMINATIONS: The Debentures shall be denominated in increments
of $100,000;
MATURITY & The Debentures shall bear interest at a rate of 10%
INTEREST per annum based on a 365 day year with principal
due 5 years from issuances. Interest is payable in
cash by the Company to the Debenture holder only if
the Debenture has been held (not converted) one
calendar year. Interest is payable by the Company
one year from the date of the Closing(s) (which are
described below). If any of the Debentures are
converted prior to one year from the date of
closing, the Company is not obligated to pay
interest on such Debentures;
CONVERSION: The Debenture holders may convert the Debentures,
at their discretion, into the Common Shares of the
Company at any time after the Debentures have been
<PAGE>
issued under terms to be provided in a Subscription
Agreement. The Debenture holders may convert the
Debentures: (1) a conversion at either price per
share that is 20% less than the closing average bid
price of the Company's shares for the five trading
days prior to conversion or (2) a conversion price
per share that is 120% of the closing average bid
price of the Company's shares for the five trading
days prior to the Closing of this transaction;
DOCUMENTATION: All documentation to facilitate the placing of the
securities contemplated herein, including but not
limited to the Subscription Agreement and legal
opinion to issue shares shall be drawn by the
Company's Securities law counsel. The Company
shall instruct its counsel as well s its registrar
and transfer agent to coordinate with Escrow Agent
to facilitate the issuance of the Debentures.
Meridian shall be responsible for its legal fees
and such other fees and for the fee of the Escrow
Agent--if Escrow Agent is not paid its fee or
Meridian fails to otherwise honor its fee agreement
with Escrow Agent, Escrow Agent shall be released
of any obligation hereunder.
CLOSINGS: The Closing(s) of the placement shall occur in the
offices of Escrow Agent (when all parties are
satisfied that the terms and conditions hereof have
been satisfied); and
DISPOSITION If converted into Common Stock, each investor may
OF ANY COMMON only sell the shares as permitted by law, and as
STOCK: follows: up to 50% of the shares owned 45 days
after the respective Closing Date and the balance
75 days after the Closing Date;
2. Upon a Closing, the Company shall compensate Meridian the
following Placement Fees:
CASH: 10% of the gross amount raised payable from escrow
upon Closing. Such amount shall be disbursed in
accordance with disbursement instructions set forth
directly to, and acceptable to, Escrow Agent by the
Company and agreed upon in writing by Meridian.
WARRANT: The Company shall simultaneously upon closing,
issue a stock purchase warrant (the "Warrant") to
Meridian for the purchase of 100,000 shares of its
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<PAGE>
Common Stock. The Warrant shall be exercisable and
expire in accordance with the following schedule:
===============================================================================
No. of Exercise Price Exercise Term Start Expire Date
Shares Following
Closing
- ---------------------------------------------------------------------------
60,000 $2.50 per share 6 mos. after issue 24 mos. after
- ---------------------------------------------------------------------------
20,000 $5.00 per share 12 mos. after issue 30 mos. after
- ---------------------------------------------------------------------------
20,000 $7.50 per share 15 mos. after issue 36 mos. after
===========================================================================
3. The Company agrees to register for sale (at its expense)
the underlying common stock with the Securities Exchange Commission
("Commission"), as promptly as practicable upon the issuance of the
Warrant.
4. The Warrant shall be transferable at the option of
Meridian, and shall have anti-dilution provisions for stock
dividend splits, mergers, sale of substantially all of the
Company's assets, and for other unusual events other than employee
benefit and stock option plans of the Company.
5. In the event Meridian is successful in placing the
Debentures, the Company shall use its best efforts to provide
priority to Meridian to act as its exclusive placing agent for
other financing the Company may undertake under Regulation S for a
period of three years.
6. The Company shall make available to Meridian and any
potential investor identified by Meridian any due diligence
information requested in connection with this offering as long as
such information is public information.
7. In the event the Company issues any private offerings for
financings in the future during two years from this date, and in
the event any of the investors introduced to the Company by
Meridian (Meridian's Participants) participate in any such offering
by the Company, the Company shall pay to Meridian upon any related
Closings and from the closing proceeds, a fee equal to 10% of the
gross proceeds provided by Meridian's Participants.
8. Indemnification. The Company agrees to indemnify and
holds harmless Meridian and its affiliates, and Escrow Agent, and
the respective directors, officers, partners, agents and employees
and each other person, if any, controlling such parties and any of
its affiliates (collectively "the Meridian Parties"), to the full
extent lawful, from and against all losses, claims, damages,
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<PAGE>
liabilities and expenses incurred by them (including attorneys'
fees and disbursements) that result from actions taken or omitted
to be taken (including any untrue statements made or any statements
omitted to be made) by the Company, its agents or employees or
other affiliates. Meridian will indemnify and hold harmless the
Company and the respective directors, officers, agents and
employees of the Company (the "Company Parties") from and against
all losses, claims, damages, liabilities and expenses that result
from bad faith, gross negligence or unauthorized representations of
Meridian. Each person or entity seeking indemnification hereunder
shall promptly notify the Company, or Meridian as applicable, of
any loss, claim, damage or expense for which the Company or
Meridian as applicable, may become liable pursuant to this Section,
shall not pay, settle or acknowledge liability under any such claim
without consent of the party liable for indemnification, which
consent shall not be unreasonably withheld, and shall permit the
Company or Meridian, as applicable, a reasonable opportunity to
cure any underlying problem or to mitigate actual or potential
damages. The scope of this indemnification between Meridian and
the Company shall be limited to, and pertain only to certain
transactions contemplated or entered into pursuant only to this
Agreement.
No indemnification rights against Escrow Agent shall
apply.
The party from whom indemnification is sought, as
applicable, shall have the opportunity to defend any claim for
which it may be liable hereunder, provided it notifies the party
claiming the right, as to indemnification within 15 days of notice
of the claim in writing, which claim must be submitted promptly by
the claimant.
The rights stated pursuant to the preceding two
paragraphs shall be in addition to any rights that Meridian, the
Company, or any other person entitled to indemnification may have
in common law or otherwise including, but not limited to, any right
to contribution.
9. Status of Meridian. Meridian (and Escrow Agent) shall be
deemed to be independent contractor(s) and, except as expressly
provided or authorized in this Agreement, shall have no authority
to act for or represent the Company.
10. Other Activities of Meridian. The Company recognizes
that Meridian now renders and may continue to render financial
consulting and other investment banking services to other companies
which may or may not conduct business and activities similar to
those of the Company. Meridian shall not be required to devote its
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<PAGE>
full time and attention to the performance of its duties under this
Agreement, but shall devote only so much of its time and attention
as it deems reasonable or necessary for such purposes.
11. ESCROW AGENT. The parties acknowledge that Escrow Agent
does not act as legal counsel to any party as to this Agreement, or
the investors. Escrow Agent shall not be liable for any reason
whatsoever for any action or inaction with respect to any decline
in the value of any Securities (including common stock). The
Escrow Agent hereunder shall be purely ministerial in nature. In
the event the Escrow Agent places the monies and/or Securities
delivered to Escrow Agent (collectively "Pledged Documents"), which
may be done by Escrow Agent at any time and for any reason
whatsoever, in the registry of the Circuit Court in and for Broward
County, Florida, and files an action of interpleader naming the
Company and Meridian, Escrow Agent's obligations and liabilities
hereunder and in connection herewith shall be released (Escrow
Agent shall have the exclusive right, in its sole discretion, to
undertake such interpleader action notwithstanding anything).
Meridian and Company, jointly and severally, notwithstanding
anything, shall indemnify and hold Escrow Agent harmless from any
expenses incurred including, but not limited to, all costs and
expenses incurred by Escrow Agent in connection with the filing of
such action, and reasonable attorneys' fees and costs for Escrow
Agent's attorney(s) through any appeals. Escrow Agent shall not be
held liable for any matter or thing, except for Escrow Agent's
gross negligence or willful misconduct. The Escrow Agent shall not
be obligated to inquire as to the form, execution and sufficiency
or validity of any instruments, or to inquire as to the identify,
authority or rights of any person executing or delivering the same
to Escrow Agent. It is agreed that Escrow Agent shall have a full
discretion as to whom it may retain as legal counsel (or counsels)
to protect its interests (including retaining itself as a law
firm). In the event the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or
demands from any of the parties hereto or from third persons with
respect to the Pledged Documents held hereunder, which in its sole
opinion are in conflict with any provision of this Agreement, it
shall be entitled, in its sole discretion, to refrain from any
action until it shall be directed otherwise in writing by all the
parties hereto or by a final order or judgment of a court of
competent jurisdiction. This Section shall survive any termination
of this Agreement, and shall not be effected by Section 29 herein.
12. WAIVER. No waiver is enforceable unless in writing
and signed by such waiving party, and any waiver shall not be
construed as a waiver by any other party or of any other or
subsequent breach.
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13. AMENDMENTS. This Agreement may be amended only by
the mutual consent of all of the parties hereto in writing.
14. ASSIGNMENT AND BINDING EFFECT. Neither this
Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any party hereto without the prior written
consent of the other parties hereto. This Agreement shall be
binding upon and for the benefit of the parties hereto and their
respective heirs, permitted successors, assigns and/or delegates.
15. INTEGRATION AND CAPTIONS. This Agreement includes
the entire understanding of the parties hereto with respect to the
subject matter hereof. The captions herein are for convenience and
shall not control the interpretation of this Agreement.
16. LEGAL REPRESENTATION. Each party has been
represented by independent legal counsel in connection with this
Agreement, or each has had the opportunity to obtain independent
legal counsel and has waived such right.
17. CONSTRUCTION. he execution hereof, each party
acknowledges and agrees having had the opportunity to review,
negotiate and approve all of the provisions of this Agreement, and
the parties waive the normal rule of construction that any
ambiguities in this Agreement shall be construed against the party
that drafted the Agreement.
18. NOTICES. All notices, requests, demands or other
communications required or permitted hereunder shall be in writing
and shall be deemed to have been duly given when delivered by hand
or mailed registered and certified mail, return receipt requested,
and postage prepaid:
If to the Company: Continental American
Transportation, Inc.
Attention: President
495 Lovers Lane Road
Calhoun, Georgia 30701
If to Meridian: Meridian Holdings, Inc.
Attn: President
1575 West Commercial Blvd.
Suite 36B
Fort Lauderdale, FL 33309
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<PAGE>
If to the Escrow Agent: International Escrow Agents,
Inc.
1700 Los Olas Boulevard
Penthouse III
Fort Lauderdale, FL 33301
except if any party later designates any other address by written
notification of same to all of the other parties.
19. COOPERATION. The parties agree to execute such
reasonable necessary documents upon advice of legal counsel in
order to carry out the intent and purpose of this Agreement as set
forth hereinabove.
20. HAND-WRITTEN PROVISIONS. Any hand-written
provisions hereon, if any, or attached hereto, which have been
initialed by all of the parties hereto, shall control all
typewritten provisions in conflict therewith.
21. FEES, COSTS AND EXPENSES. Each of the parties
hereto acknowledges and agrees to pay, without reimbursement from
the other party(ies), the fees, costs and expenses incurred by each
such party incident to this Agreement.
22. CONSENTS AND AUTHORIZATIONS. By the execution
hereinbelow, each party acknowledges and agrees that each such
party has the full right, power, legal capacity and authority to
enter into this Agreement, and the same constitutes a valid and
legally binding Agreement of each such party in accordance with the
terms, conditions and other provisions contained herein.
23. GENDER AND NUMBER. Unless the context otherwise
requires, references in this Agreement in any gender shall be
construed to include all other genders, references in the singular
shall be construed to include the plural, and references in the
plural shall be construed to include the singular.
24. SEVERABILITY. In the event any one or more of the
provisions of this Agreement shall be deemed unenforceable by any
court of competent jurisdiction for any reason whatsoever, this
Agreement shall be construed as if such unenforceable provision had
never been contained herein.
25. CONTROL. Nothing contained herein shall be deemed
to require the Company to take any action contrary to its
Certificate of Incorporation or By-Laws, or any applicable statute
or regulation, or to deprive its Board of Directors of their
responsibility for any control of the conduct of the affairs of the
Company.
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<PAGE>
26. WAIVER. No waiver is enforceable unless in writing
and signed by such waiving party, and any waiver shall not be
construed as a waiver by any other party or of any other or
subsequent breach.
27. AMENDMENTS. This Agreement may not be amended
unless by the mutual consent of all of the parties hereto in
writing.
28. GOVERNING LAW. This Agreement shall be governed by
the laws of the State of Florida, without reference to conflict of
laws principles, and the sole venue for any action arising
hereunder shall be Broward County, Florida.
29. ARBITRATION. Any dispute or claim by Meridian or
by the Company against the other shall only be resolved by binding
arbitration to be held in Broward County, State of Florida, under
the rules of the American Arbitration Association in Florida.
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<PAGE>
30. COUNTERPARTS. This Agreement may be executed in
counterparts.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above. This document is
effective via facsimile and in counterparts.
WITNESSES: CONTINENTAL AMERICAN
TRANSPORTATION, INC.
_______________________ BY: s/Erik L. Bailey
_______________________ ITS: Vice President, Chief Financial Officer
MERIDIAN HOLDINGS, INC.
_______________________
BY: s/Barry Patterson
_______________________
ITS: President
ESCROW AGENT:
INTERNATIONAL ESCROW AGENTS,
INC.
________________________
BY: s/Richard Rossi
________________________
ITS: President
catwarnt.mer
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<PAGE>
AGREEMENT TO MODIFY PURCHASE AGREEMENTS AND SECURITY AGREEMENT
This Agreement is dated August 22, 1995 by and among HERR's
MOTOR EXPRESS, INC. ("Herr's"), CONTINENTAL AMERICAN
TRANSPORTATION, INC. ("CAT"), ROBERT R. HERR, WAYNE S. HERR,
TIMOTHY HOLSTEIN ("Holstein") and ERIK BAILEY ("Bailey").
Background:
Herr's, CAT, Bailey and Holstein entered into an Asset
Purchase Agreement dated June 19, 1995 pursuant to which CAT
agreed to purchase certain assets from Herr's for the purchase
price of $800,000 and the issuance of 150 common shares
of CAT, and the repayment of certain HMX, Inc. officer loans (the
"HMX Agreement").
On June 30, 1995, Robert R. Herr, Wayne S. Herr, and CAT
entered into a Lease Agreement for the lease of terminal at
Quarryville, Pennsylvania, pursuant to which CAT agreed to
reimburse Herr for leasehold improvements.
On June 30, 1995, the parties hereto entered into an Escrow
Agreement (the "Escrow Agreement") pursuant to which Barley,
Snyder, Senft & Cohen ("Escrow Agent") was directed to hold all
of the documents in escrow pending payment of the amounts as
described above. The parties extended the closing of the escrow
until July 14, 1995. In accordance with the terms of the Escrow
Agreement, Robert R. Herr and Wayne S. Herr each received 25,000
shares of CAT on July 14, 1995. The Escrow Agreement also
provided that 50,000 shares of CAT be delivered to Herr's to
extend the closing until July 28, 1995. Although closing of escrow
did not occur by July 28, 1995, the 50,000 shares of CAT
have not been issued to Herr's as of this date.
The parties have agreed (i) to modify the Purchase Agreement
to provide for a payment of the purchase price by certified check
or wire transfer of funds and by promissory note, (ii) to modify
the HMX Agreement to provide for payment by promissory note,
(iii) to modify the Lease to provide for reimbursement of the
leasehold improvements by promissory note, and (iv) to modify the
Escrow Agreement to extend the date of closing of escrow.
<PAGE>
The purpose of this agreement is to set forth the terms of
the above modifications and the parties' agreement to extend the
closing of the escrow until the date hereof.
NOW, THEREFORE, intending to be legally bound, the parties
agree as follows:
1. The Purchase Agreement is hereby modified to provide
that the $800,000 purchase price set forth in Paragraph 2.1(a) of
the Purchase Agreement shall be payable $450,000.00 by wire
transfer of funds on the date hereof, and the balance due of
$350,000.00 shall be evidenced by a promissory note in the form
attached as Exhibit A. Of the $450,000 received, $400,000 shall
be disbursed to Herr's on this date and $50,000 shall be held by
Escrow Agent pending completion of CAT's arrangements to have
titles to 10 Trailmobiles acquired from Herr's released as
collateral security with ITT. CAT shall complete its
arrangements by either paying down a portion of the ITT debt
assumed by it, or pledging additional security to ITT. This
accomplished, CAT shall pay this amount to Herr's on that date.
CAT shall execute and deliver to Herr's a promissory note in the
amount of $50,000.00 to evidence its obligations. On August 22,
1995, the 150,000 shares in CAT held according to the Escrow
Agreement shall be delivered to Herr's.
2. The HMX Agreement is hereby modified to provide that
the partial payment of shareholder loans of $104,000.00 due at
closing pursuant to Paragraph 2 of the HMX Agreement shall be
evidenced by a promissory note in the form attached hereto as
Exhibit B. On August 22, 1995, CAT shall issue 25,000 shares of
CAT to Robert R. Herr and 25,000 shares of CAT to Wayne S. Herr.
3. The Lease is hereby modified to provide that the
$200,000 reimbursement for leasehold improvements described in
paragraph 7 of the Summary Sheet for the lease shall be evidenced
by a promissory note in the form attached hereto as Exhibit C.
4. CAT agrees that it will register under the Securities Act
of 1933 up to an aggregate of 100,000 shares in CAT received by
Herr's, Robert R. Herr and Wayne S. Herr, in connection with
these transactions, such registration statement to be filed with
the Securities and Exchange Commission on or before December 31,
1995 and agrees that those shares may be sold, transferred or
otherwise transferred by the holder of such shares when the
Registration Statement is declared effective by the Securities
and Exchange Commission. CAT also agrees to file with the
Securities Commissioner, State of Pennsylvania any and all
documents and to take whatever steps are necessary to qualify such
shares for sale under the Blue Sky laws of the State of
Pennsylvania on and after such date. Herr's, Robert R. Herr and
<PAGE>
Wayne S. Herr shall notify CAT which shares it desires to have
registered and have the right to sell. The remaining shares in
CAT issued in connection with these transactions shall continue
to be restricted as set forth in the Purchase Agreement and the
HMX Agreement.
5. Herr's will not require CAT to transfer 50,000 in CAT
shares to Herr's as required by the Escrow Agreement for CAT's
failure to close escrow on July 28, 1995. Robert R. Herr and
Wayne S. Herr shall retain the CAT shares issued to them on July
14, 1995.
6. Except as hereinabove amended, the Purchase Agreement,
the HMX Agreement, the Lease, and the Escrow Agreement, shall
continue in full force and effect in accordance with their
respective terms.
7. This agreement constitutes the entire agreement of the
parties regarding the modifications to the Purchase Agreement,
the HMX Agreement, the Lease and the Escrow Agreement, and
supersedes all correspondence and other communication, written or
oral, regarding the subject matter hereof.
8. Upon execution and delivery of this Agreement and the
promissory notes, the Escrow Agent is directed to deliver the
Escrow Documents, as that term is defined in the Escrow
Agreement, to the parties entitled thereto except for the titles
to tractor/trailers which shall be held by Herr's, Robert R. Herr
and Wayne S. Herr as security for payment of the promissory
notes. CAT shall execute any and all documents necessary for such
Herr's, Wayne S. Herr, and Robert R. Herr to obtain a lien on
such tractor/trailers. Herr's is authorized to sell such
tractors/trailers as may be agreed by Herr's and CAT, on CAT's
behalf, and the proceeds of the sales shall be applied first to
any interest due and then to the principal balance due pursuant
to the promissory notes. Herr's shall hold such titles until all
the promissory notes are paid in full, at which time, the balance
of the titles to the tractors and trailers held by Herr's shall
be delivered to CAT pursuant to the terms of the Purchase
Agreement. This Agreement is intended to grant to Herr's a
security interest in and to the tractors and trailers, and the
titles hereto, conveyed by Herr's to CAT effective June 30, 1995,
notwithstanding the fact that the titles to the tractors and
trailers may continue to be held in Herr's name until the titles
and registrations for such tractors/trailers are transferred
to CAT. Should any of the titles and registrations be transferred
to CAT prior to payment in full of the promissory note, CAT shall
grant a first lien on the title to Herr's, Robert R. Herr and
Wayne S. Herr until such time as the amounts due under the
promissory notes are paid in full.
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement
under seal the day and year first above written.
HERR'S MOTOR EXPRESS, INC.
By: s/Wayne S. Herr, President
Attest:
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: s/Timothy Holstein, Pres.
Attest: s/Erik Bailey
s/Robert R. Herr
Robert R. Herr
s/Wayne S. Herr
Wayne S. Herr
s/Erik Bailey
Erik Bailey
s/Timothy Holstein
Timothy Holstein
catherag.s-3
<PAGE>
PROMISSORY NOTE
$350,000.00 Lancaster, Pennsylvania
, 1995
The undersigned intending to be legally bound, promises to
pay to the order of HERR'S MOTOR EXPRESS, INC., on August 28,
1995, without demand or offset, the sum of Three Hundred Fifty
Thousand and 00/100 Dollars ($350,000.00), with no interest. In
the event that payment is not made when due, interest at the rate
of twelve percent (12%) per annum shall accrue on the outstanding
principal sum from August 28, 1995 until paid.
Payment shall be made by certified check or wire transfer of
funds. Payable at 349 Buck Road, Quarryville, Pennsylvania or at
such other place as directed by the holder of this note,.
The undersigned hereby irrevocably authorizes and empowers
any attorney or any court of record of Pennsylvania or elsewhere
at any time to appear for and to confess judgment against the
undersigned for the above sum, interest, costs and an attorney's
commission of five (5%) percent for collection added, and waives
and releases all errors and all relief from any all present and
future stay or exemption laws.
This note shall bind and the benefits of this note shall
inure to the undersigned and the payee and their respective
successors and assigns.
IN WITNESS WHEREOF, this note is executed under seal the day
and year set forth above.
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: s/Timothy Holstein, Pres.
Attest: s/Erik Bailey
Exhibit A
catherag.s-3
<PAGE>
PROMISSORY NOTE
$104,000.00 Lancaster, Pennsylvania
, 1995
The undersigned intending to be legally bound, promises to
pay to the order of Robert R. Herr and Wayne S. Herr on September
11, 1995, without demand or offset, the sum of One Hundred Four
Thousand and 00/100 Dollars ($104,000.00), with no interest. In
the event that payment is not made when due, interest at the rate
of twelve percent (12%) per annum shall accrue on the outstanding
principal sum from September 12, 1995 until paid.
Payment shall be made by certified check or wire transfer of
funds. Payable at 349 Buck Road, Quarryville, Pennsylvania or at
such other place as directed by the holder of this note,.
The undersigned hereby irrevocably authorizes and empowers
any attorney or any court of record of Pennsylvania or elsewhere
at any time to appear for and to confess judgment against the
undersigned for the above sum, interest, costs and an attorney's
commission of five (5%) percent for collection added, and waives
and releases all errors and all relief from any all present and
future stay or exemption laws.
This note shall bind and the benefits of this note shall
inure to the undersigned and the payee and their respective heirs
and assigns.
IN WITNESS WHEREOF, this note is executed under seal the day
and year set forth above.
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: s/Timothy Holstein, Pres.
Attest: s/Erik Bailey
Exhibit B
catherag.s-3
<PAGE>
PROMISSORY NOTE
$200,000.00 Lancaster, Pennsylvania
, 1995
The undersigned intending to be legally bound, promises to
pay to the order of Robert R. Herr and Wayne S. Herr, without
demand or offset, the sum of Two Hundred Thousand and 00/100
Dollars ($200,000.00), payable of follows: $100,000 on August 28,
1995 and $100,000 on September 11, 1995, with no interest. In
the event that either or both of the payments are not made when
due, interest at the rate of twelve percent (12%) per annum shall
accrue on the outstanding principal sum from the date due until
paid.
Payment shall be made by certified check or wire transfer of
funds. Payable at 349 Buck Road, Quarryville, Pennsylvania or at
such other place as directed by the holder of this note,.
The undersigned hereby irrevocably authorizes and empowers
any attorney or any court of record of Pennsylvania or elsewhere
at any time to appear for and to confess judgment against the
undersigned for the above sum, interest, costs and an attorney's
commission of five (5%) percent for collection added, and waives
and releases all errors and all relief from any all present and
future stay or exemption laws.
This note shall bind and the benefits of this note shall
inure to the undersigned and the payee and their respective heirs
and assigns.
IN WITNESS WHEREOF, this note is executed under seal the day
and year set forth above.
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: s/Timothy Holstein, Pres.
Attest: s/Erik Bailey
Exhibit C
catherag.s-3
<PAGE>
CONSULTING AGREEMENT effective as of the 28th day of June,
1996 by and between CONTINENTAL AMERICAN TRANSPORTATION, INC. (the
"Company") and EXPLORER FINANCIAL SERVICES, INC., 601B Webster
Avenue, Winter Park, Florida 32789, or its assignees
("Consultant").
WHEREAS, the Company is a public company; and
WHEREAS, Consultant is in the business of assisting public
companies in financial relations; and
WHEREAS, the Company desires to retain Consultant to provide
certain specified services for the Company.
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
1. DUTIES AND INVOLVEMENT
1.1. The Company hereby engages Consultant to provide
financial and public relations services. Such services will
generally include advice to and consulting with the Company's
management concerning marketing surveys, investor profile
information, methods of expanding investor support and increasing
investor awareness of the Company and its products and/or services.
Consultant will also provide additional services to the Company,
including broker relations, assisting in the preparation and format
of due diligence meetings, and attendance at conventions and trade
shows.
1.2. Consultant acknowledges that neither it nor any of its
employees or affiliates is an officer, director, or agent of the
Company, that in rendering advice or recommendations to the Company
it is not and will not be responsible for any management decisions
on behalf of the Company and that it is not authorized or empowered
to commit the Company to any recommendation or course of action.
The Company represents that Consultant does not have, through stock
ownership or otherwise, the power to control the Company nor to
exercise any dominating influence over its management.
2. TERMS
This Agreement shall continue until twelve (12) months from
date of execution.
3. COMPENSATION
As total and complete consideration for the services to be
provided by Consultant to the Company, the Company hereby grants to
Consultant the following:
<PAGE>
3.1. Consultant or its designee shall receive a warrant in the
form attached hereto ("the Warrant") to purchase up to a total of
six hundred thousand (600,000) shares of the Company's common stock
(the "Warrant Shares") at the following exercise prices:
(i) 300,000 Warrant Shares at the exercise price of $.25 per
Warrant Share; and
(ii) 300,000 Warrant Shares at the exercise price of $2.50 per
Warrant Share.
The Warrant and the Warrant Shares shall be subject to the
registration provisions contained in this Agreement.
3.1.(a) The Warrant may be exercised from time to time and
in whole or in part for a period commencing upon grant and
terminating twelve (12) months following registration of the
Warrant Shares as provided for in this Agreement.
3.1.(b) The Warrant shall be issued to Consultant upon the
signing of this Agreement. In the event this Agreement is
terminated for any reason whatsoever, the Warrant referred to
herein shall remain in full force and effect with respect to any
Warrant Shares which were exercised or which remain exercisable
under the Warrant and Consultant shall have the right to the
retention of the Warrant and the Warrant Shares in consideration of
goods provided and for services performed.
4. SERVICES NOT EXCLUSIVE
Consultant shall devote such of its time and effort necessary
to the discharge of its duties hereunder. The Company acknowledges
that Consultant is engaged in other business activities and that it
will continue such activities during the term of this Agreement.
Consultant shall not be restricted from engaging in other business
activities during the term of this Agreement.
5. CONFIDENTIALITY
Consultant acknowledges that it may have access to
confidential information regarding the Company and its business.
Consultant agrees that it will not, during or subsequent to the
terms of this Agreement, divulge, furnish, or make accessible to
any person (other than with the written permission of the Company)
any knowledge or information or plans of the Company with respect
to the Company or its business, including, but not limited to, the
products of the Company, whether in the concept or development
stage or being marketed by the Company on the effective date of
this Agreement or during the term hereof.
2
<PAGE>
6. COVENANT NOT TO COMPETE
During the term of this Agreement, Consultant warrants,
represents and agrees that it will not compete directly with the
Company in the Company's primary industry or related fields.
7. REGISTRATION OF SECURITIES
7.1. The Company agrees to file a registration statement to
register Warrant Shares upon the earlier of thirty (30) days from
the date hereof or as soon as practicable after the date of this
Agreement. In addition, the Company will undertake to comply with
the various states securities laws and regulations with respect to
the registration of the Warrant Shares referred to herein.
7.2. At all times following registration of the Warrant Shares
and continuing until the earlier of either the exercise in full of
the Warrant or the Expiration Date, the Company shall maintain and
be current on all filings with the United States Securities and
Exchange Commission, appropriate state securities departments and,
as may be required, with the National Association of Securities
Dealers, Inc. and/or national or regional stock exchanges necessary
to allow the Warrant Shares to be freely tradable in the public
market.
7.3. The Company hereby acknowledges that time is of the
essence in respect to the registration of the Warrant Shares and
agrees that in the event the Warrant Shares are not registered and
qualified for public sale pursuant to an effective registration
statement within ninety (90) days from the date of this Agreement
("Default Date"), then:
7.3.(a) Commencing on the Default Date and continuing
until the Warrant Shares are registered and qualified as provided
herein, the Company shall pay interest to Consultant at an annual
rate of ten percent (10%), paid quarterly in cash, computed on the
Comparable Value of the Warrant Shares. As used herein,
"Comparable Value of the Warrant Shares" shall mean for each
Warrant Share (whether or not Warrant Shares have then been issued
upon the exercise of the Warrant) the average of the high and low
bid price of the Company's publicly-traded common stock for the
last date such prices are available prior to each date of payment.
7.3.(b) Commencing on the Default Date and continuing
until the Warrant Shares are registered and qualified as provided
herein, Consultant shall have the right from time to time to
require the Company to purchase all or some of the Warrant Shares
(the amount and times to be determined by Consultant) for an amount
equal to the Comparable Value of the Warrant Shares ("the Put").
Upon each exercise of the put, the Company shall pay to the order
of Consultant within 30 days the full amount of the Comparable
Value of the Warrant Shares for so many of the Warrant Shares then
3
<PAGE>
put to the Company, whether or not Warrant Shares have then been
issued upon the exercise of the Warrant. The Company shall
continue to compute and pay interest as provided herein on the
Warrant Shares which have been put until payment for such Warrant
Shares has been made in full.
7.3.(c) In the event that the Securities and Exchange
Commission does not declare the registration statement effective
within 45 days of filing through no fault of the Company, then the
Default Date shall be extended until the registration statement is
declared effective, provided, however, that the Company shall have
filed the registration statement with the Securities and Exchange
Commission not later than 65 days following the date of this
Agreement.
8. INVESTMENT REPRESENTATION
The Company represents and warrants that it has provided
Consultant access to all information available to the Company
concerning its condition, financial and otherwise, its management,
its business and its prospects. The Company represents that it has
provided Consultant with a copy of the Company's most recent Form
10-K or Form 10-KSB and any subsequent filing required or filed
under the rules and regulations promulgated under the Securities
Act of 1933, as amended (the "Act"), or the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), if any (the "Disclosure
Documents"). Consultant acknowledges that it is aware that because
of the Company's financial position and other factors, the
acquisition of the Warrant Shares to be issued to Consultant
involves a high degree of risk, including the risk that Consultant
may lose its entire investment in the Warrant Shares. Consultant
further represents that it and its advisors have been afforded the
opportunity to discuss the Company with its management. The
Company represents that it has and will continue to provide
Consultant with any information or documentation necessary to
verify the accuracy of the information contained in the Disclosure
Documents and will promptly notify consultant upon the filing of
any registration statement or other periodic reporting documents
filed pursuant to the Act or the Exchange Act. The Company
represents that, notwithstanding securities listed in this
Agreement, it does not currently have any of its securities in
registration and further agrees to refrain from offering for sale
any additional securities of the Company and from filing any
additional registration statements during the term of this
Agreement without the written consent of Consultant, which consent
shall not be unreasonably withheld.
9. ASSIGNMENT
This Agreement may not be assigned by either party hereto
without the written consent of the other but shall be binding upon
the successors of the parties.
4
<PAGE>
10. ARBITRATION
Any dispute, controversy or claim between the Company and
consultant arising out of or related to this Agreement, or breach
thereof, shall be settled by arbitration, which shall be conducted
in accordance with the rules of the American Arbitration
Association then in effect and conducted in the City of Atlanta and
State of Georgia. Any award made by such arbitrators shall be
binding and conclusive for all purposes thereof, may include
injunctive relief, as well as orders for specific performance and
may be entered as a final judgment in any court of competent
jurisdiction. No arbitration arising out of or relating to this
Agreement shall include, by consolidation or joinder or in any
other manner, parties other than the Company or Consultant and
other persons substantially involved in common questions of fact or
law whose presence is required if complete relief is to be afforded
in arbitration. The costs and expenses of such arbitration shall
be borne in accordance with the determination of the arbitrators
and may include reasonable attorney's fees. Each party hereby
further agrees that service of process may be made upon it by
registered or certified mail or personal service at the address
provided for herein.
11. INDEMNIFICATION
11.1. The Company agrees to indemnify and hold harmless
Consultant and its agents and employees against any losses, claims,
damages or liabilities, joint or several, to which Consultant or
any such other person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions, suits or proceedings in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the registration statement, any
preliminary prospectus, the prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and will reimburse Consultant or any such other person
for any legal or other expenses reasonably incurred by Consultant
or any such other person in connection with investigating or
defending any such loss, claim, damage, liability, or action, suit
or proceeding; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission in the registration statement, any preliminary prospectus,
the prospectus, or any such amendment or supplement, made in
reliance upon and in conformity with written information furnished
to the Company by Consultant specifically for use in the
preparation thereof. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
5
<PAGE>
11.2. Consultant will indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed
the registration statement and each person, if any, who controls
the Company within the meaning of the Act against any losses,
claims, damages or liabilities to which the Company or any such
other person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or
actions, suits, or proceedings in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of
any material fact contained in the registration statement, any
preliminary prospectus, the prospectus, or any amendment or
supplement thereto, or arise out of or are based on the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not
misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission
in the registration statement, any preliminary prospectus, the
prospectus, or any such amendment or supplement, was made in
reliance upon and in conformity with written information furnished
to the Company by Consultant specifically for use in the
preparation thereof, and will reimburse any legal or other expenses
reasonably incurred by the Company or any such other person in
connection with investigating or defending any such loss, claim,
damage, liability, or action, suit or proceeding. This indemnity
agreement will be in addition to any liability which Consultant may
otherwise have.
11.3. Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, suit or
proceeding, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party of the commencement thereof,
but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified
party otherwise than under this Section. In case any such action,
suit or proceeding is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and, to
the extent it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal
or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs
of investigation.
6
<PAGE>
12. NOTICES
All notices required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly
given: (i) two (2) hours after delivered personally to the party
to be notified; or (ii) three (3) business days after deposited in
the U.S. mail, postage paid via registered or certified mail,
return receipt requested. Notices to the Company shall be
addressed to its president at its principal executive office and to
Consultant to its president at its principal executive office, or
to such other addresses as either party may designate upon at least
ten days' notice to the other party.
13. GOVERNING LAW
This Agreement shall be constructed by and enforced in
accordance with the laws of the State of Colorado.
14. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement
between the parties. There are no other agreements, conditions or
representations, oral or written, express or implied, with regard
thereto. This Agreement may be amended only in writing signed by
both parties.
15. NON-WAIVER
A delay or failure by either party to exercise a right under
this Agreement, or a partial or single exercise of that right,
shall not constitute a waiver of that or any other right.
16. HEADINGS
Headings in this Agreement are for convenience only and shall
not be used to interpret or construe its provisions.
17. COUNTERPARTS
This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall
constitute one and the same agreement.
18. BINDING EFFECT
The provisions of this Agreement shall be binding upon the
parties, their successors and assigns.
7
<PAGE>
19. SEVERABILITY
If any provisions of this Agreement, except paragraphs 1, 3
and 7, or application thereof to any person or circumstance shall
be deemed or held to be invalid, illegal or unenforceable to any
extent, the remainder of this Agreement shall not be affected and
the application of such affected provisions shall be enforced to
the greatest extent possible under law.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement to be effective as of the day and year
first written above.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
By s/Timothy Holstein
Timothy Holstein
EXPLORER FINANCIAL SERVICES, INC.
By s/Christopher Bailey
Christopher Bailey, President
catwarnt.efs
8
<PAGE>
LAW OFFICES OF
JOSEPH J. TOMASEK
ATTORNEY AT LAW
75-77 North Bridge Street
Somerville, New Jersey 08876
July 25, 1996
Board of Directors
Continental American Transportation, Inc.
1822 Spruce Street
Philadelphia, Pennsylvania 19103
Gentlemen:
I have acted as special counsel to you (the "Company") in
connection with the Registration Statement on Form S-3, the
"Registration Statement") pertaining to the registration of up to
1,810,000 shares of the Company's Common Stock, no par value,
purchasable upon the exercise of 16 non-redeemeable Common Stock
purchase warrants being offered by certain Warrant holders of the
Company (the "Warrants" and "Common Shares").
In that connection, I have examined originals, or copies
certified or otherwise identified to our satisfaction, of such
documents, corporate records and other instruments as we have
deemed necessary for the purposes of this opinion, including the
following: (a) the Articles of Incorporation and Bylaws of the
Company, as amended and (b) resolutions adopted by the Board of
Directors of the Company at a meeting held on June 28, 1996.
For purposes of this opinion, I have assumed the authenticity
of all documents submitted to me as originals, the conformity to
the originals of all documents submitted to me as copies. I have
also assumed the genuiness of the signatures of persons signing all
documents in connection with which this opinion is rendered, the
authority of such persons signing on behalf of the parties thereto
other than the Company, and the due authorization, execution and
delivery of all documents by the parties thereto other than the
Company.
Based on the foregoing, I am of the opinion that:
(1) The Company is a corporation validity existing and in
good standing under the laws of the State of Colorado.
(2) When, as and if the Form S-3 Registration Statement of
the Company to be filed with the Securities and Exchange Commission
on July 26, 1996 becomes effective pursuant to the provisions of
the Securities Act of 1933, as amended, and subject to compliance
with applicable state securities laws, the Shares will be duly
authorized and validly issued.
<PAGE>
Board of Directors
Continental American
Transportation, Inc.
July 25, 1996
Page -2-
I hereby consent to the filing of this opinion as exhibit 5 to
the Registration Statement, and to the reference to me under the
section entitled "Legal Opinions" in the Registration Statement.
Very truly yours,
s/Joseph J. Tomasek
Joseph J. Tomasek, Esq.
cats-3-2.bod
<PAGE>
Rosenberg Rich Baker Berman & Company
380 Foothill Road
Bridgewater, New Jersey 08807
Independent Auditors' Consent
To the Board of Directors and Stockholders of
Continental American Transportation, Inc. and Subsidiaries
We consent to the incorporation by reference in the Registration
Statement of Continental American Transportation, Inc. and
Subsidiaries (the "Company") on Form S-3, to be filed with the
Securities and Exchange Commission on July 25, 1996 (the
"Registration Statement") and of (1) our report dated September 21,
1995, appearing in the Annual Report on Form 10-K of the Company
for the year ended June 30, 1995; (2) our reports dated March 1,
1996 appearing in Amendment No. 2 to the Company's Current Report
on Form 8-K filed with the Securities and Exchange Commission on
June 17, 1996, and; (3) to the reference to us under the heading
"Experts" in the Prospectus, which is part of the Registration
Statement.
ROSENBERG RICH BAKER BERMAN & COMPANY
s/Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
July 25, 1996
audconsn.s-3
