UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
MAY 27, 2003
------------
(Date of the earliest event reported)
CANNON EXPRESS, INC.
--------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 1-13917 71-0650141
-------- ------- ----------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1457 EAST ROBINSON AVENUE, P.O. BOX 364, SPRINGDALE, ARKANSAS 72765
-------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(479) 751-9209
(Registrant's telephone number,
including area code)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
On May 27, 2003, Arizona Diversified Equity, LLC, a Nevada limited
liability company ("Arizona Diversified Equity"), based in Phoenix, Arizona,
acquired 1,934,486 shares (the "Purchased Shares") of common stock of the
Company, or all of the outstanding stock ownership interest in Cannon Express,
Inc. (the "Company") of Dean G. Cannon and Rose Marie Cannon (the "Cannons"),
the former principal shareholders and members of the board of directors of the
Company, pursuant to the terms and conditions of a Stock Purchase Agreement (the
"Stock Purchase Agreement") by and between Arizona Diversified Equity and the
Cannons, dated as of May 21, 2003.
Arizona Diversified Equity paid the Cannons the sum of $100,000 in cash
to acquire the Purchased Shares. The Purchased Shares constitute, and at the
closing of the Stock Purchase Agreement, Arizona Diversified Equity became the
beneficial owner of, approximately 60% of the issued and outstanding common
stock of the Company. As a result of the transactions contemplated by the Stock
Purchase Agreement, Arizona Diversified Equity became the principal controlling
shareholder of the Company.
In connection with the closing of the Stock Purchase Agreement, the
entire board of directors and the chief executive officer and president of the
Company resigned from their respective positions with the Company. The new board
of directors will consist of John W. Pacheco, Gary F. Pryor, John M.
Schottenstein and Michael Miola. Mr. Pacheco may be deemed to be an affiliate of
Arizona Diversified Equity. Messrs. Pryor, Schottenstein and Miola may be deemed
to be independent directors, for purposes of the listing rules of the American
Stock Exchange and it is anticipated that they will serve as members of the
Company's Audit, Compensation and Nominating and Corporate Governance
Committees. It is anticipated that Mr. Miola will chair the Audit Committee and
the Compensation Committee and that one of the other independent members of the
board of directors will chair the Nominating and Corporate Governance Committee.
Mr. Pacheco will also serve as the interim Chief Executive Officer of the
Company and James T. Schnoes has been appointed as the new President of the
Company. The Company has not yet entered into any compensation arrangements with
any of the new directors or with Mr. Pacheco or Mr. Schnoes, in their respective
capacities as interim Chief Executive Officer and President. The biographies of
these people are set forth below in this Report.
Further, in connection with the closing of the Stock Purchase
Agreement, the Company entered into a Settlement and Termination Agreement (the
"Termination Agreement") with CFOex, Inc. ("CFOex"), pursuant to which the
Company terminated its existing management agreement with CFOex and canceled the
outstanding options previously granted to CFOex to purchase up to 1,500,000
shares of the Company's common stock. In connection with the Termination
Agreement and the cancellation of the stock options, the Company paid $100,000
to CFOex and has agreed to pay an additional $300,000 to CFOex within one year
from the closing. The $300,000 payment may be accelerated in the event the
Company or any of its subsidiaries enters into certain merger or acquisition
transactions or raises at least $3,000,000 in a traditional equity private
placement before the end of the one-year period. Further, the Company, the
2
Cannons, Arizona Diversified Equity and Mr. Pacheco each entered into mutual
releases with CFOex and the principals of CFOex, including Bruce W. Jones,
Calvin R. Turner, Jr. and James T. Schnoes. Messrs. Jones and Turner also
resigned as executive officers and employees of the Company. Mr. Schnoes has
been appointed to serve as the President of the Company and Duane Wormington
will remain as the Company's Chief Financial Officer.
The following sets forth certain biographical information concerning
the Company's new directors, Chief Executive Officer and President:
JOHN W. PACHECO, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER. Mr.
Pacheco founded Diversified Equity Financial Corporation, a national investment
firm specializing in the acquisition management, growth and development of
operating companies and commercial real estate properties, in 1979. Mr. Pacheco
has served as its President and Chief Executive Officer since its establishment.
Diversified Equity Financial Corporation and its subsidiaries and affiliates
have purchased, restructured, renovated and sold operating companies,
multi-family apartment complexes, retail shopping centers, hotel and motel
complexes and office buildings throughout the United States. Mr. Pacheco is the
President and sole director of American Building Management Corporation, the
managing member of Nevada Diversified Equity, LLC. Nevada Diversified Equity,
LLC is the managing member of Arizona Diversified Equity, the Company's
principal and controlling shareholder. Mr. Pacheco received a Juris Doctor
degree from the Franklin Pierce Law Center in 1976, a Master of Arts degree in
International Law and World Politics from Trinity College Graduate School of
Political Science in 1973 and a Bachelor of Science degree in Business
Administration from the University of Connecticut in 1972.
JAMES T. SCHNOES, PRESIDENT. Mr. Schnoes has had a twenty-year career
spanning positions in both the financial services and transportation industries.
He has held several executive positions including Chief Financial Officer for
Clicklogistics Inc., Chief Financial Officer for Charger Inc. and Senior Vice
President, Finance/Treasurer for J.B. Hunt Transports, Inc. Mr. Schnoes earned
his bachelor degree in Finance from Michigan State University and also attended
the University of Chicago Business School.
GARY F. PRYOR, DIRECTOR. Mr. Pryor is the Senior Managing Director of
the Arizona office of Hunter Wise Financial Group LLC, and its wholly owned
broker dealer, Hunter Wise Securities LLC, an NASD/SIPC member firm. Hunter Wise
provides investment banking and corporate finance services for small to medium
sized public companies and middle market privately held businesses. Mr. Pryor
was a principal in a corporate finance/merchant banking firm founded by him in
New York City, which assisted middle market companies with strategic planning,
mergers, acquisitions and capital sourcing. During that time, Mr. Pryor served
as the lead transaction specialist on numerous such projects throughout the
United States, Europe and Africa and specialized in retail and institutional
food and beverage capitalization and sales/exit facilitation. He is well known
throughout the food industry as one of the founders of the "Home Meal
Replacement" industry. Mr. Pryor started his corporate finance career with J.P.
Morgan. He served as an officer in the Fixed Income Securities Department of
J.P. Morgan's Commercial Bank Management Program. He received a Bachelor of Arts
degree in Government from St. Lawrence University and the University of Nairobi,
Kenya.
3
MICHAEL MIOLA, DIRECTOR. Mr. Miola is the co-Chairman of Northstar
Financial Services Group, a mutual fund financial services company. He is also
the Chairman of the Advisor1 Series Trust, a group of mutual funds with
approximately $100 million in assets. Mr. Miola is the managing member and Chief
Financial Officer of Silverleaf Partners, LLC, a brokerage company, a director
and Chief Financial Officer of Imperial Rubber Holdings, Inc., a recycled rubber
product importer and manufacturer, the Chief Executive Officer of Aqua Terra
Systems, LLC, an agricultural polymer company and a director and Chief Financial
Officer of SilverLeaf Products, Inc., a film production company. From 1983 to
2001, Mr. Miola founded and served as the Chief Executive Officer of American
Data Services, a mutual fund service organization servicing over 150 mutual
funds with assets in excess of $6 billion. In 1998, Mr. Miola was featured in
the annual mutual fund edition of Forbes Magazine as the mutual fund organizer
to watch. Mr. Miola graduated Cum Laude from Fordham University's College of
Business in 1974 with a Bachelor of Science degree.
JOHN M. SCHOTTENSTEIN, DIRECTOR. Mr. Schottenstein is experienced in
the development and leasing and rehabilitation of projects and has directed the
management of over 9,000,000 square feet of retail, office and industrial
projects throughout the United States. Mr. Schottenstein is the President and
Chief Executive Officer of NAI Horizon-AZ, a national commercial real estate
services firm. Since 1994, Mr. Schottenstein has invested in various real estate
investments and currently has ownership in approximately 1,500,000 square feet
of office, industrial, medical and retail space. Prior to this time, Mr.
Schottenstein served in various management positions for certain property
management and development companies. Mr. Schottenstein received a Bachelor of
Science degree in Business Administration from Ohio State University in 1978.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
99.1 Stock Purchase Agreement by and between Arizona
Diversified Equity, LLC, a Nevada limited liability company and Dean G.
Cannon and Rose Marie Cannon, dated as of May 21, 2003.
99.2 Settlement and Termination Agreement by and among Cannon
Express, Inc., CFOex, Inc., Arizona Diversified Equity, LLC, a Nevada
limited liability company, John W. Pacheco, Bruce W. Jones, James T.
Schnoes, Calvin R. Turner, Jr. and Dean and Rose Marie Cannon, dated as
of May 21, 2003.
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CANNON EXPRESSS, INC.
Dated: June 2, 2003 By: /S/ JOHN W. PACHECO
--------------------
John W. Pacheco
Chief Executive Officer
5
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
99.1 Stock Purchase Agreement by and between Arizona Diversified
Equity, LLC, a Nevada limited liability company and Dean G.
Cannon and Rose Marie Cannon, dated as of May 21, 2003
99.2 Settlement and Termination Agreement by and among Cannon
Express, Inc., CFOex, Inc., Arizona Diversified Equity, LLC, a
Nevada limited liability company, John W. Pacheco, Bruce W.
Jones, James T. Schnoes, Calvin R. Turner, Jr. and Dean and
Rose Marie Cannon, dated as of May 21, 2003.
6