UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Rule 14a-101)

Filed by the Registrant þ

Filed by a Party other than the Registrant o

Check the appropriate box:

þ		Preliminary Proxy Statement
o		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Pursuant to §240.14a-12

DYNAMEX INC.

Not Applicable

Payment of Filing Fee (Check the appropriate box):

o		No fee required.
þ		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

	(1)		Title of each class of securities to which transaction applies:
			Common Stock, par value $0.01 per share
	(2)		Aggregate number of securities to which transaction applies:
			9,725,426 shares of the Company’s common stock; 324,556 options to acquire shares of the Company’s common stock with an exercise price below $25.00; 30,386 restricted shares of the Company’s common stock (excluding the restricted stock granted by the board of directors of the Company on September 24, 2010); and performance units of the Company with respect to 64,848 shares of the Company’s common stock (excluding the performance units granted by the board of directors of the Company on September 24, 2010).
	(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
			Solely for the purpose of calculating the registration fee, the underlying value of the transaction was calculated as the sum of (A) 9,725,426 shares of the Company’s common stock, multiplied by $25.00 per share; (B) 324,556 options to acquire common stock with an exercise price below $25.00 multiplied by approximately $7.49 per option (which is the difference between $25.00 and the $17.51 weighted average exercise price of such options); (C) 30,386 restricted shares of the Company’s common stock, multiplied by $25.00 per share; and (D) 64,848 shares of the Company’s common stock issuable in respect of the outstanding performance units, multiplied by $25.00 per share (the amounts listed under clause (C) and (D) exclude the restricted stock and performance units granted by the board of directors of the Company on September 24, 2010).
	(4)		Proposed maximum aggregate value of transaction:
			$247,948,710
	(5)		Total fee paid:

$28,786.85

o		Fee paid previously with preliminary materials.
þ		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

	(1)		Amount Previously Paid:
			$14,971.80
	(2)		Form, Schedule or Registration Statement No.:
			Schedule 14A
	(3)		Filing Party:
			Dynamex Inc.
	(4)		Date Filed:
			October 29, 2010

 

 

[          ], 20[  ]

 

Dear Stockholder:

 

We cordially invite you to attend a special meeting of stockholders of Dynamex Inc., a Delaware corporation, which we refer to as the Company, to be held on [          ], 2011 at [  ] a.m. local time, at the offices of the Company, 5429 LBJ Freeway, Suite 900, Dallas, Texas.

 

On December 14, 2010, the Company entered into an Agreement and Plan of Merger, dated as of December 14, 2010 (which agreement, as it may be amended from time to time, being referred to herein as the merger agreement), providing for the acquisition of the Company by TransForce Inc. (which we refer to as TransForce or Parent). At the special meeting, you will be asked to consider and vote upon a proposal to adopt the merger agreement. If the merger contemplated by the merger agreement is completed, you will be entitled to receive $25.00 in cash, without interest, less any applicable withholding taxes, for each share of the Company’s common stock owned by you (unless you have properly exercised your appraisal rights with respect to your shares).

 

On October 1, 2010, the Company entered into a merger agreement with affiliates of Greenbriar Equity Group LLC which was subsequently amended on November 30, 2010 (as amended, the Greenbriar merger agreement). Prior to entering into the merger agreement with TransForce, the Company terminated the Greenbriar merger agreement in accordance with its terms. The per share merger consideration offered pursuant to the merger agreement with TransForce represents a premium of approximately 63% to the closing price of the Company’s common stock on October 1, 2010, the last trading day prior to the public announcement of the Greenbriar merger agreement, a premium of approximately 17.6% over the consideration provided by the initial Greenbriar merger agreement and a premium of approximately 4.17% to the merger consideration provided by the amended Greenbriar merger agreement.

 

The board of directors of the Company, acting upon the unanimous recommendation of the special committee, which is comprised entirely of independent members of the board of directors of the Company, has unanimously determined that the merger referred to in the merger agreement is fair to, and in the best interests of, the Company and its stockholders and approved and declared advisable the merger agreement and the merger and the other transactions contemplated by the merger agreement. The board of directors of the Company made its determination after consultation with its independent legal and financial advisors and consideration of a number of factors. The board of directors of the Company recommends that you vote “FOR” approval of the proposal to adopt the merger agreement and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

 

Your vote is very important. Approval of the proposal to adopt the merger agreement requires the affirmative vote of holders of a majority of the outstanding shares of the Company’s common stock entitled to vote thereon. Whether or not you plan to attend the special meeting, please complete, date, sign and return, as promptly as possible, the enclosed proxy card in the accompanying pre-paid reply envelope, or submit your proxy by telephone or the Internet. If you attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. The failure to vote will have the same effect as a vote against approval of the proposal to adopt the merger agreement.

 

If your shares of the Company’s common stock are held in “street name” by your bank, broker, trustee or other nominee, your bank, broker, trustee or other nominee will be unable to vote your shares of the Company’s common stock without instructions from you. You should instruct your bank, broker, trustee or other nominee to vote your shares of the Company’s common stock, following the procedures provided by your bank, broker, trustee or other nominee. The failure to instruct your bank, broker, trustee or other nominee to vote your shares of the Company’s common stock “FOR” approval of the proposal to adopt the merger agreement will have the same effect as voting against the proposal to adopt the merger agreement.

 

The accompanying proxy statement provides you with detailed information about the special meeting, the merger agreement and the merger. A copy of the merger agreement is attached as Annex A to the proxy statement. We encourage you to read the entire proxy statement and its annexes, including the merger agreement, carefully. You may also obtain additional information about the Company from documents we have filed with the Securities and Exchange Commission.

 

If you have any questions or need assistance voting your shares of the Company’s common stock, please contact our proxy solicitor, D.F. King & Co., Inc., by telephone toll-free at 888-887-0082 (banks, brokers, trustees or other nominees can call collect at 212-269-5550) or by email at dynamex@dfking.com.

 

Thank you in advance for your cooperation and continued support.

 

Sincerely,

 

-s- James L. Welch

James L. Welch

President and Chief Executive Officer

 

The proxy statement is dated [          ], 20[  ], and is first being mailed to our stockholders on or about [          ], 2011.

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE PROPOSED MERGER, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

 

DYNAMEX INC.

5429 LBJ Freeway, Suite 1000

Dallas, Texas 75240

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON
[          ], 2011

 

 

 

 

By Order of the Board of Directors,

 

-s- Richard K. McClelland

 

Richard K. McClelland

Chairman of the Board of Directors

 

Dated: [          ], 20[  ]

Dallas, Texas

 

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE ACCOMPANYING PRE-PAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE OR THE INTERNET. IF YOU ARE A STOCKHOLDER OF RECORD AND ATTEND THE SPECIAL MEETING AND VOTE IN PERSON, YOUR VOTE BY BALLOT WILL REVOKE ANY PROXY PREVIOUSLY SUBMITTED.

 

TABLE OF CONTENTS

 

 

 

SUMMARY

	•	approximately $248 million to pay our stockholders (and holders of options, restricted stock and performance units) the amounts due to them under the merger agreement; and
	•	approximately $15 million to pay related fees and expenses in connection with the transactions contemplated by the merger agreement.

	•	the vesting and cash-out of all vested and unvested stock options held by certain of our executive officers and directors, which will result in an aggregate cash payment to such executive officers and directors of approximately $2,143,920, based on holdings as of December 28, 2010, and assuming that the merger is completed on March 1, 2011;
	•	the lapsing of all restrictions and cash-out of all shares of restricted stock held by certain of our executive officers and directors (other than certain shares of restricted stock granted under existing plans on September 24, 2010), which will result in an aggregate cash payment to our executive officers and directors of approximately $739,400, based on holdings as of December 28, 2010, and assuming that the merger is completed on March 1, 2011;
	•	the vesting and cash-out of all performance units held by certain of our executive officers (other than certain performance units granted under existing plans on September 24, 2010), which will result in an aggregate cash payment to our executive officers and directors of approximately $1,621,200, based on holdings as of December 28, 2010, and assuming that the merger is completed on March 1, 2011;
	•	pursuant to the retention agreement with Ray E. Schmitz, and assuming the merger is completed on March 1, 2011 and he experiences a termination of employment without cause, or if he elects to terminate his employment under certain circumstances, after the date the merger is completed, Mr. Schmitz will be entitled to the payment of a lump sum severance amount and 18-month continuation of certain of his employee benefits, which will result in an aggregate cash payment to Mr. Schmitz of approximately $1,035,000 (exclusive of the estimated value of the continuation of certain of Mr. Schmitz’s employee benefits); and
	•	the receipt by each of the members of the special committee of a fee in the amount of $10,000 per month (pro rated for partial months) from June 15, 2010 until such time as the special committee is dissolved (as determined by the board of directors) for such member’s services on the special committee, whether or not the merger occurs.

	•	Common Stock.  At the effective time of the merger, each share of the Company’s common stock issued and outstanding (except for shares of the Company’s common stock held by the Company, Parent or Merger Sub, and shares held by stockholders who have properly exercised appraisal rights) will convert into the right to receive the per share merger consideration of $25.00 in cash, without interest, less any applicable withholding taxes.
	•	Options.  At the effective time of the merger, each outstanding option will become fully vested and will be cancelled and terminated and converted into the right to receive cash equal to the excess of the per share merger consideration of $25.00 over the exercise price payable in respect of the Company’s common stock issuable under such option.
	•	Restricted Stock.  At the effective time of the merger, all restrictions on each share of outstanding restricted stock, other than restricted stock granted under existing plans on September 24, 2010, will immediately lapse as of the closing of the merger, and such shares will be converted into the right to receive the per share merger consideration of $25.00 in cash, less any applicable withholding taxes.
	•	Performance Units.  At the effective time of the merger, each outstanding performance unit, other than certain performance units granted under existing plans on September 24, 2010, will automatically vest in accordance with the terms of the applicable award agreement and plan document and be settled (i) in the Company’s common stock and converted into the right to receive the per share merger consideration of $25.00 in cash or (ii) to the extent permitted thereby, in cash by the surviving corporation on the date of the closing of the merger.

	•	by either the Company or Parent, if:

	•	the merger has not been consummated on or before May 31, 2011 (but this right to terminate will not be available to a party if the failure to consummate the merger on or before May 31, 2011 was primarily due to the failure of such party to perform any of its obligations under the merger agreement);
	•	a law, injunction, judgment or ruling, which we collectively refer to as a restraint, resulting in enjoining, restraining, preventing or prohibiting the consummation of the merger or making the consummation of the merger illegal has become final and nonappealable (but this right to terminate will not be available to a party if the issuance of a restraint was primarily due to the failure of a party to perform its obligations under the merger agreement); or
	•	our stockholders’ meeting has been held and completed and our stockholders have not adopted the merger agreement at such meeting or any adjournment or postponement of such meeting.

	•	by Parent, if:

	•	we have materially breached or failed to perform any of our representations, warranties, covenants or other agreements in the merger agreement, which breach or failure to perform (i) would give rise to a failure of the condition to Parent’s and Merger Sub’s obligation to close the merger and (ii) cannot be cured by the Company by the earlier of (x) 20 days following receipt of written notice from Parent of such breach or failure or (y) May 31, 2011; or

	•	(i) our board of directors (a) fails to recommend to our stockholders that the stockholders adopt the merger agreement, which we refer to as the Company recommendation, or fails to include the Company recommendation in this proxy statement; (b) changes, qualifies, withholds, withdraws or modifies (or publicly proposes to do so), in a manner adverse to Parent, the Company recommendation; (c) takes formal action or makes any recommendation or public statement in connection with a tender offer or exchange offer, other than a recommendation against such offer or other permitted communications; or (d) adopts, approves or recommends (or publicly proposes to do so) a takeover proposal; (ii) at any time prior to the adoption of the merger agreement by our stockholders, our board of directors has failed to recommend against any takeover proposal or failed to reaffirm the Company recommendation within five business days after the public announcement of any takeover proposal and the receipt of a request to do so from Parent; (iii) we enter into an agreement with respect to any takeover proposal; (iv) we fail to call our stockholders’ meeting or fail to prepare and mail the proxy statement in accordance with the merger agreement and such breach remains uncured for 10 business days after our receipt of written notice thereof from Parent; or (v) we or our board of directors has publicly announced an intention to do any of the foregoing.

	•	by the Company, if:

	•	Parent or Merger Sub have materially breached or failed to perform any of their representations, warranties, covenants or agreements in the merger agreement, which breach or failure to perform (i) would give rise to a failure of a condition to the Company’s obligation to close the merger and (ii) cannot be cured by Parent by the earlier of (x) 20 days following receipt of written notice from the Company of such breach or failure or (y) May 31, 2011; or
	•	at any time prior to the adoption of the merger agreement by our stockholders, in order to concurrently enter into an agreement with respect to any takeover proposal that constitutes a superior

		proposal, if (i) the Company has complied in all material respects with our obligations described in the section entitled “The Merger Agreement — No Solicitation of Takeover Proposals” beginning on page 62 of this proxy statement and (ii) prior to or concurrently with such termination, we pay Parent the termination fee discussed in the section entitled “The Merger Agreement — Termination Fees” beginning on page 70 of this proxy statement.

 

The following questions and answers are intended to address briefly some commonly asked questions regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that may be important to you as a Company stockholder. Please refer to the “Summary” and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement, which you should read carefully. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions under “Where You Can Find More Information” beginning on page 80 of this proxy statement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Because the affirmative vote required to approve the proposal to adopt the merger agreement is based upon the total number of outstanding shares of the Company’s common stock, if you fail to submit a proxy or vote in person at the special meeting, or you abstain, or you do not provide your bank, broker, trustee or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement.

 

 

Assuming a quorum is present, abstaining will not have an effect on the proposal to adjourn the special meeting. If a quorum is not present, abstaining will have the same effect as a vote “AGAINST” approval of the proposal to adjourn the special meeting.

 

If your shares of the Company’s common stock are held through a bank, broker, trustee or other nominee and you do not instruct your bank, broker, trustee or other nominee to vote your shares of the Company’s common stock, your shares of the Company’s common stock will not be voted, but this will not have an effect on the proposal to adjourn the special meeting, regardless of whether or not a quorum is present.

 

 

 

 

If you are a beneficial owner, please refer to the instructions provided by your bank, broker, trustee or other nominee to see which of the above choices are available to you. Please note that if you are a beneficial owner and wish to vote in person at the special meeting, you must provide a legal proxy from your bank, broker, trustee or other nominee.

 

A control number, located on your proxy card, is designed to verify your identity and allow you to vote your shares of the Company’s common stock, and to confirm that your voting instructions have been properly recorded, when voting over the Internet or by telephone. Please be aware that if you vote over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible.

 

Even if you plan to attend the special meeting, we request that you complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying pre-paid reply envelope or submit your proxy by telephone or the Internet prior to the special meeting to ensure that your shares of the Company’s common stock will be represented at the special meeting if you are unable to attend.

 

 

If your shares of the Company’s common stock are held through a bank, broker, trustee or other nominee, you are considered the “beneficial owner” of shares of the Company’s common stock held in “street name.” In that case, this proxy statement has been forwarded to you by your bank, broker, trustee or other nominee who is considered, with respect to those shares of the Company’s common stock, the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker, trustee or other nominee how to vote your shares of the Company’s common stock by following their instructions for voting.

 

 

 

If you properly sign your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted “FOR” approval of the proposal to adopt the merger agreement and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement.

 

 

For the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies, you may vote “FOR,” “AGAINST,” or “ABSTAIN.” Assuming a quorum is present, abstaining will not have an effect on the proposal to adjourn the special meeting. If a quorum is not present, abstaining will have the same effect as a vote “AGAINST” approval of the proposal to adjourn the special meeting. Broker non-votes will not have an effect on the proposal, regardless of whether or not a quorum is present.

 

 

These should each be voted and/or returned separately in accordance with the instructions provided in this proxy statement in order to ensure that all of your shares of the Company’s common stock are voted.

 

 

 

This proxy statement, and the documents to which we refer you in this proxy statement, contain forward-looking statements that involve numerous risks and uncertainties. The statements contained in this proxy statement that are not purely historical are forward-looking statements within the meaning of Section 21E of the Exchange Act, including, without limitation, statements regarding the expected benefits and closing of the proposed transaction and the Company’s expectations, beliefs and intentions. All forward looking statements included in this proxy statement are based on information available to the Company on the date hereof. There are forward-looking statements throughout this proxy statement, including, without limitation, under the headings “Summary,” “Questions and Answers about the Special Meeting and the Merger,” “Proposal 1 — The Merger,” “Opinion of Stephens, Financial Advisor,” “Financing of the Merger,” “Regulatory Approvals,” and “Litigation Related to the Merger.” In some cases, you can identify forward-looking statements by terminology such as “may,” “can,” “will,” “could,” “expects,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” or variations of such words, similar expressions, or the negative of these terms or other comparable terminology. No assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on our results of operations or financial condition. Accordingly, actual results may differ materially and adversely from those expressed in any forward-looking statements. There are various important factors that could cause actual results to differ materially from those in any such forward-looking statements, many of which are beyond our control. In addition to other factors and matters contained or incorporated in this document, these statements are subject to risks, uncertainties, and other factors, including among others:

 

 

and other risks as are mentioned in reports filed by the Company with the SEC from time to time, including our most recent filing on Form 10-K. See “Where You Can Find More Information” beginning on page 80 of this proxy statement. We do not undertake any obligation to publicly release any revision to any forward-looking statements contained in this proxy statement to reflect events, changes and circumstances occurring after the date of this proxy statement or to reflect the occurrence of unanticipated events. Caution should be taken that these factors could cause the actual results to differ from those stated or implied in this proxy statement.

 

Dynamex Inc..

5429 LBJ Freeway, Suite 1000

Dallas, Texas 75240

(214) 560-9000

 

Dynamex Inc., which we refer to as the Company, we or us, is a Delaware corporation headquartered in Dallas, Texas. We are a leading provider of same-day delivery and logistic services in the United States and Canada. References to the Company, we or us in this proxy statement include the Company and our subsidiaries on a consolidated basis. For more information about the Company, please visit our website at www.dynamex.com. Our website is provided as an inactive textual reference only. The information provided on our website is not part of this proxy statement, and therefore is not incorporated by reference. See also “Where You Can Find More Information” beginning on page 80. The Company’s common stock is publicly traded on the Nasdaq Global Select Market under the symbol “DDMX”.

 

TransForce Inc.

8801 Trans-Canada Highway, Suite 500

Saint-Laurent (Quebec) H4S 1Z6

Canada

(514) 331-4200

 

TransForce Inc., which we refer to as Parent, is a Canadian corporation headquartered in Montréal, Québec, Canada. Parent is the leader in Canada’s transportation and logistics industry. Upon consummation of the proposed merger, the Company will be an indirect wholly-owned subsidiary of Parent. For more information about Parent, please visit their website at www.transforce.ca. Parent’s website is provided as an inactive textual reference only. The information provided on Parent’s website is not part of this proxy statement, and therefore is not incorporated by reference. Parent’s shares are listed on the Toronto Stock Exchange under the symbol “TFI”.

 

TransForce Acquisition Corp.

c/o TransForce Inc.

8801 Trans-Canada Highway, Suite 500

Saint-Laurent (Quebec) H4S 1Z6

Canada

(514) 331-4200

 

TransForce Acquisition Corp., which we refer to as Merger Sub, is a Delaware corporation that is an indirect wholly-owned subsidiary of Parent and was organized solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement. Merger Sub has not conducted any activities to date other than activities incidental to its formation and in connection with the transactions contemplated by the merger agreement. Under the terms of the merger agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation. Upon consummation of the proposed merger, Merger Sub will cease to exist.

 

This proxy statement is being furnished to our stockholders as part of the solicitation of proxies by the board of directors for use at the special meeting to be held on [          ], 2011 at [          ] a.m. local time, at the offices of the Company, 5429 LBJ Freeway, Suite 900, Dallas, Texas, or at any adjournment or postponement thereof. At the special meeting, holders of the Company’s common stock will be asked to approve the proposal to adopt the merger agreement and to approve the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement.

 

Our stockholders must approve the proposal to adopt the merger agreement in order for the merger to occur. If our stockholders fail to adopt the merger agreement, the merger will not occur. A copy of the merger agreement is attached as Annex A to this proxy statement, which we encourage you to read carefully in its entirety.

 

We have fixed the close of business on [          ], 20[          ] as the record date for the special meeting, and only holders of record of the Company’s common stock on the record date are entitled to vote at the special meeting. You are entitled to receive notice of, and to vote at, the special meeting if you owned shares of the Company’s common stock at the close of business on the record date. On the record date, there were [          ] shares of the Company’s common stock outstanding and entitled to vote. Each share of the Company’s common stock entitles its holder to one vote on all matters properly coming before the special meeting.

 

A majority of the shares of the Company’s common stock outstanding at the close of business on the record date and entitled to vote at the meeting, present in person or represented by proxy, at the special meeting constitutes a quorum for the purposes of the special meeting. Shares of the Company’s common stock represented at the special meeting but not voted, including shares of the Company’s common stock for which a stockholder directs an “abstention” from voting, as well as “broker non-votes” (as described below), will be counted for purposes of establishing a quorum. A quorum is necessary to transact business at the special meeting. Once a share of the Company’s common stock is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment of the special meeting. However, if a new record date is set for the adjourned special meeting, then a new quorum will have to be established. In the event that a quorum is not present at the special meeting, it is expected that the special meeting will be adjourned or postponed to solicit additional proxies.

 

You are entitled to attend the special meeting only if you were a holder of the Company’s common stock as of the close of business on [          ], 20[          ], which we refer to as the record date, or hold a valid proxy for the special meeting. Since seating is limited, admission to the special meeting will be on a first-come, first-served basis. You should be prepared to present photo identification for admittance. If you are not a stockholder of record but hold shares through a bank, broker, trustee or other nominee (i.e., in “street name”), you should provide proof of beneficial ownership as of the record date, such as your most recent account statement prior to the record date, a copy of the voting instruction card provided by your bank, broker, trustee or other nominee, or similar evidence of ownership.

 

The adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of the Company’s common stock entitled to vote thereon. For the proposal to adopt the merger agreement, you may vote “FOR,” “AGAINST,” or “ABSTAIN.” Abstentions will not be counted as votes cast in favor of the proposal to adopt the merger agreement, but will count for the purpose of

determining whether a quorum is present. If you fail to submit a proxy or vote in person at the special meeting, or if you abstain, or you do not provide your bank, broker, trustee or other nominee with instructions, as applicable, it will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

 

If your shares of the Company’s common stock are registered directly in your name with our transfer agent, Computershare Investor Services, you are considered, with respect to those shares of the Company’s common stock, the “stockholder of record.” This proxy statement and proxy card have been sent directly to you by the Company.

 

If your shares of the Company’s common stock are held through a through a bank, broker, trustee or other nominee, you are considered the “beneficial owner” of shares of the Company’s common stock held in street name. In that case, this proxy statement has been forwarded to you by your bank, broker, trustee or other nominee who is considered, with respect to those shares of the Company’s common stock, the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker, trustee or other nominee how to vote your shares by following their instructions for voting.

 

Brokers who hold shares in street name for customers have the authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are precluded from exercising their voting discretion with respect to approving non-routine matters such as the proposal to adopt the merger agreement and, as a result, absent specific instructions from the beneficial owner of such shares of the Company’s common stock, brokers are not empowered to vote those shares of the Company’s common stock, which we refer to generally as broker non-votes. These broker non-votes will be counted for purposes of determining a quorum, but will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement.

 

Assuming a quorum is present at the special meeting, the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies requires the vote of a majority of the votes cast by stockholders present in person or represented by proxy and entitled to vote at the special meeting. If a quorum is not present at the special meeting, approval of a proposal to adjourn the special meeting will require the affirmative vote of the majority of shares present in person or represented by proxy at the special meeting and entitled to vote on the proposal.

 

For the proposal to adjourn the special meeting, if necessary or appropriate, you may vote “FOR,” “AGAINST,” or “ABSTAIN.” Assuming a quorum is present, if your shares of the Company’s common stock are present at the special meeting but are not voted on this proposal, or if you have given a proxy and abstained on this proposal, or there are broker non-votes on the issue, the shares of the Company’s common stock not voted will not be counted in respect of and will not have an effect on, the proposal to adjourn the special meeting. Assuming a quorum is not present, if your shares of the Company’s common stock are present at the special meeting but are not voted on this proposal, or if you have given a proxy and abstained on this proposal, this will have the same effect as if you voted “AGAINST” the proposal; however, if there are broker non-votes on the issue this will not have an effect on, the proposal to adjourn the special meeting.

 

If you are a stockholder of record, you may have your shares of the Company’s common stock voted on matters presented at the special meeting in any of the following ways:

 

 

If you are a beneficial owner, you will receive instructions from your bank, broker, trustee or other nominee that you must follow in order to have your shares of the Company’s common stock voted. Those instructions will identify which of the above choices are available to you in order to have your shares voted.

Please note that if you are a beneficial owner and wish to vote in person at the special meeting, you must provide a legal proxy from your bank, broker, trustee or other nominee.

 

A control number, located on your proxy card, is designed to verify your identity and allow you to vote your shares of the Company’s common stock, and to confirm that your voting instructions have been properly recorded, when voting over the Internet or by telephone. Please be aware that if you vote over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible.

 

Please refer to the instructions on your proxy or voting instruction card to determine the deadlines for voting over the Internet or by telephone. If you choose to vote by mailing a proxy card, your proxy card must be received by the Corporate Secretary of the Company by the time the special meeting begins. Please do not send in your stock certificates with your proxy card. When and if the merger is completed, a separate letter of transmittal will be mailed to you that will enable you to receive the per share merger consideration in exchange for your stock certificates.

 

If you vote by proxy, regardless of the method you choose to vote, the individuals named on the enclosed proxy card, and each of them, with full power of substitution, or your proxies, will vote your shares of the Company’s common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of the Company’s common stock should be voted for, against, or to abstain from voting on all, some or none of the specific items of business to come before the special meeting.

 

If you properly sign and submit your proxy card but do not mark the boxes showing how your shares of the Company’s common stock should be voted on a matter, the shares of the Company’s common stock represented by your properly signed proxy will be voted “FOR” approval of the proposal to adopt the merger agreement and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement.

 

If you have any questions or need assistance voting your shares, please contact our proxy solicitor, D.F. King & Co., Inc., by telephone toll-free at 888-887-0082 (banks, brokers, trustees or other nominees can call collect at 212-269-5550) or by email at dynamex@dfking.com.

 

IT IS IMPORTANT THAT YOU VOTE YOUR SHARES OF THE COMPANY’S COMMON STOCK PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE ACCOMPANYING PRE-PAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE OR THE INTERNET. STOCKHOLDERS WHO ATTEND THE SPECIAL MEETING MAY REVOKE THEIR PROXIES AND VOTE BY BALLOT AT THE SPECIAL MEETING.

 

Any stockholder of record entitled to vote at the special meeting may submit a proxy by telephone, over the Internet, or by returning the enclosed proxy card in the accompanying pre-paid reply envelope, or may vote in person at the special meeting. If your shares of the Company’s common stock are held in “street name” by your bank, broker, trustee or other nominee, you should instruct your bank, broker, trustee or other nominee on how to vote your shares of the Company’s common stock using the instructions provided by your bank, broker, trustee or other nominee. If you fail to submit a proxy or vote in person at the special meeting, or abstain, or you do not provide your bank, broker, trustee or other nominee with instructions, as applicable, your shares of the Company’s common stock will not be voted on the proposal to adopt the merger agreement, which will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement.

 

You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting at a later date through any of the methods available to you, by giving written notice of revocation to our Corporate Secretary, which must be received by the Corporate Secretary by

the time the special meeting begins, or by voting by ballot at the special meeting. Attending the special meeting, by itself, is not enough to revoke a proxy. If you are a beneficial owner and wish to revoke your voting instructions, you should follow the instructions provided by your bank, broker, trustee or other nominee.

 

Although it is not currently expected, the special meeting may be adjourned or postponed for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement. Other than an announcement to be made at the special meeting of the time, date and place of an adjourned meeting, any adjournment may be made without notice (if the adjournment is not for more than 30 days and a new record date has not been fixed). Any adjournment or postponement of the special meeting for the purpose of soliciting additional proxies will allow the Company’s stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned or postponed.

 

We are working towards completing the merger as soon as possible. Assuming timely satisfaction or waiver of conditions to the merger, we anticipate that the merger will be completed in the first quarter of calendar 2011. If our stockholders vote to approve the proposal to adopt the merger agreement, the merger will become effective as promptly as practicable following the satisfaction or waiver of the other conditions to the merger. See the sections entitled “The Merger Agreement — Closing” and “The Merger Agreement — Effective Time” beginning on page 56 of this proxy statement.

 

Stockholders are entitled to appraisal rights under the DGCL in connection with the merger. This means that you are entitled to have the fair value of your shares of the Company’s common stock determined by the Delaware Court of Chancery and to receive cash payment based on that valuation instead of receiving the per share merger consideration. The ultimate amount you receive in an appraisal proceeding may be less than, equal to or more than the amount you would have received under the merger agreement.

 

To exercise your appraisal rights, you must submit a written demand for appraisal to the Company before the vote is taken on the proposal to adopt the merger agreement and you must not vote in favor of the proposal to adopt the merger agreement. Your failure to follow exactly the procedures specified under the DGCL may result in the loss of your appraisal rights. See the section entitled “Appraisal Rights” beginning on page 72 and the text of the Delaware appraisal rights statute reproduced in its entirety as Annex C to this proxy statement. If you hold your shares of the Company’s common stock through a bank, broker, trustee or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker, trustee or other nominee to determine the appropriate procedures for the making of a demand for appraisal by the nominee. In view of the complexity of the procedures specified under the DGCL, stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors.

 

The Company has engaged D.F. King & Co., Inc. to assist in the solicitation of proxies for the special meeting. The Company estimates that it will pay D.F. King & Co., Inc. a fee of approximately $10,000.00, plus $5.00 per each call made to or received from stockholders of the Company. The Company will reimburse D.F. King & Co., Inc. for reasonable out-of-pocket expenses and will indemnify D.F. King & Co., Inc. and its affiliates against all losses, claims, damages, liabilities, disbursements and reasonable out-of-pocket expenses. The Company may also reimburse banks, brokers, trustees, nominees and other fiduciaries representing beneficial owners of shares of the Company’s common stock for their expenses in forwarding soliciting materials to beneficial owners of the Company’s common stock and in obtaining voting instructions from those

owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

If you have more questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact our proxy solicitor, D.F. King & Co., Inc., by telephone toll-free at 888-887-0082 (banks, brokers, trustees or other nominees can call collect at 212-269-5550) or by email at dynamex@dfking.com.

 

This discussion of the merger is qualified in its entirety by reference to the merger agreement, which is attached to this proxy statement as Annex A. You should read the entire merger agreement carefully as it is the legal document that governs the merger.

 

The merger agreement provides that Merger Sub will merge with and into the Company. The Company will be the surviving corporation in the merger and will continue to do business following the merger. As a result of the merger, the Company will cease to be a publicly-traded company. You will not own any shares of the capital stock of the surviving corporation.

 

In the merger, each outstanding share of the Company’s common stock (other than shares of the Company’s common stock held by Parent or Merger Sub or shares of the Company’s common stock held by stockholders who have properly demanded appraisal rights under the DGCL with respect to such shares, if any, and common stock owned by the Company, which we refer to collectively as the excluded shares) will be converted into the right to receive the per share merger consideration of $25.00 in cash, without interest, less any applicable withholding taxes.

 

As part of their ongoing activities, the Company’s board of directors and the Company’s senior management have regularly evaluated the Company’s continuing business operations and growth as an independent company, as well as long-term strategic alternatives, including prospects for mergers and acquisitions, each with a view towards maximizing stockholder value. These evaluations consider all aspects of the Company’s business and its financial performance and condition, including relations with the Company’s principal customers, its prospects for new business with existing customers and business with new customers, and the potential deployment of the Company’s available cash and borrowing capacity for potential acquisitions and working capital requirements for organic growth.

 

During the Fall of 2009, the Company considered an acquisition of another company within the Company’s industry, and in connection with that process explored a variety of options that might be available to finance the acquisition. Among the options considered was a potential investment in the Company. In exploring this option, the Company’s financial advisor, Stephens Inc., which we refer to as Stephens, contacted six private equity firms and the Company held discussions with four of those private equity firms, one of which was Greenbriar.

 

At a meeting of the Company’s board of directors, held on November 5, 2009, Stephens, which had been engaged by the Company pursuant to an engagement letter dated October 16, 2009 to act as financial advisor in connection with the proposed acquisition, provided the board of directors with an overview of indications of interest to provide equity financing that had been received from two private equity firms, one of which was Greenbriar. The board of directors concluded that the Company should continue discussions with Greenbriar, and the Company entered into a confidentiality agreement with Greenbriar on November 10, 2009.

 

From mid-November until mid-December 2009, Greenbriar participated in multiple discussions with the Company’s senior management regarding the Company’s business and financial strategy, those of the target and the prospects of the combined operations. Greenbriar, the Company’s senior management and Stephens jointly participated in a management presentation hosted by the target on November 12, 2009. The Company submitted a non-binding indication of interest on December 11, 2009, which included a source of financing provided, in part, by Greenbriar. The Company was informed on December 22, 2009 that the target was not willing to further consider the Company’s overtures in its sales process.

 

On February 10, 2010, Mr. James Welch, a director and the Company’s Chief Executive Officer, met with a representative of Greenbriar where Greenbriar expressed interest in continuing a relationship with the Company despite the discontinuance of the proposed acquisition of the target. Greenbriar also expressed

interest in a potential investment in or acquisition of the Company. Mr. Welch advised Greenbriar that he would inform the board of directors of Greenbriar’s interest in the Company.

 

On March 2, 2010, at a meeting of the board of directors, Mr. Welch discussed his meeting with a representative from Greenbriar and described Greenbriar’s interest to continue a relationship with the Company and/or its interest in a possible investment in or acquisition of the Company. The board of directors advised senior management to (i) re-establish communications with Stephens to request that Stephens provide the board of directors an analysis of the value of the Company and (ii) arrange a meeting with Greenbriar.

 

On March 29, 2010, certain members of the board of directors and the Company’s senior management had a meeting with representatives from Stephens to discuss certain strategic alternatives of the Company, including potential acquisitions that could be pursued by the Company. On March 30, 2010, certain members of the board of directors and the Company’s senior management met with representatives of Greenbriar and Greenbriar expressed its interest in participating with the Company in potential acquisitions by the Company and in the possibility of Greenbriar acquiring the Company.

 

On April 5, 2010, a telephonic meeting of the board of directors was held with certain of the Company’s senior management and a representative of Weil, Gotshal & Manges LLP, the Company’s special legal counsel, in attendance. The representative from Weil provided an overview of the board of directors’ duties and responsibilities in respect of its consideration of any proposal received from a third party to acquire the Company. Certain members of the board of directors then provided a summary of their earlier meeting with Greenbriar and the board of directors determined to allow Greenbriar access for due diligence to determine the extent of its interest in the Company.

 

On April 7, 2010, the Company entered into a confidentiality agreement with Greenbriar in connection with discussions regarding one or more alternatives to enhance the Company’s stockholder value.

 

On April 8, 2010, a telephone conference was held between the Company’s senior management and Greenbriar for the purpose of outlining Greenbriar’s due diligence review. During the month of April 2010, eight site visits were made by Greenbriar and/or its consultants to Company locations, and between April 16, 2010 and June 2, 2010, the Company’s senior management provided additional financial and operational data, responded to inquiries made by Greenbriar and participated in various diligence meetings and telephone conferences with Greenbriar and their advisors.

 

On April 29, 2010, certain of the Company’s senior management met with representatives of Stephens to discuss a stand-alone acquisition strategy of the Company and on May 1, 2010, the board of directors convened a telephonic meeting to discuss the recent conversations with Greenbriar. At that meeting, the board of directors determined to instruct Stephens to complete a financial valuation of the Company, including identifying potential incremental acquisitions that might be available and otherwise would be consistent with the Company’s business strategy. At this meeting, the board of directors also evaluated Greenbriar’s request to meet with management of the Company. However, because the discussions were still in the preliminary stages, the board of directors determined to deny Greenbriar’s request, which Mr. Welch subsequently communicated to Greenbriar.

 

On June 2, 2010, the board of directors convened a telephonic meeting to discuss the status of the discussions with Greenbriar. At this meeting, Mr. Welch and Mr. Ray Schmitz, the Company’s Chief Financial Officer, led the board of directors through a discussion of the Company’s current financial performance, together with a summary of alternate growth strategies for the Company over the next three to five years, assuming varying levels of organic growth and acquisition opportunities, and the challenges that the Company would face in executing its strategy. Also at this meeting, Stephens led a discussion of the analysis that they had provided to the board of directors in advance of the meeting regarding their views on the Company’s potential organic growth and acquisition strategies and the potential market reaction under certain scenarios. Following Stephens’ presentation, and discussion among the members of the board of directors, the board of directors, in an executive session of the members of the board of directors in which Mr. Welch was not present, determined that the Company should not continue to pursue a potential transaction with Greenbriar at

this time, and rather should focus management’s time and attention on aggressively pursuing its business strategy in the near term. Mr. Welch then communicated this determination to a representative of Greenbriar.

 

On June 9, 2010, Greenbriar submitted to Mr. Richard McClelland, the Company’s chairman of the board of directors, an unsolicited, non-binding proposal to acquire the Company for $20.00 per share of common stock, subject to the satisfactory results of its due diligence, the negotiation of a definitive merger agreement, and receipt by it of debt financing for the proposed transaction.

 

On June 10, 2010, the board of directors convened a telephonic meeting to discuss Greenbriar’s June 9 proposal. The board of directors discussed the Greenbriar proposal, as well as potential alternative courses of action for the Company in the event that it decided not to pursue the transaction proposed by Greenbriar. At the request of the board of directors, representatives from Weil then provided an overview of the board of directors’ duties and responsibilities in respect of its consideration of Greenbriar’s proposal to acquire the Company. The board of directors then went into executive session and, after discussion, determined to adjourn the meeting until June 15, 2010 to permit further consideration of the Greenbriar proposal by each director.

 

On June 15, 2010, the board of directors reconvened in executive session to discuss Greenbriar’s June 9, 2010 proposal. The board of directors discussed a draft response to Greenbriar’s proposal, but decided to defer further discussion on the topic until after Stephens could provide the board of directors with additional information with regard to the valuation of the Company. At this meeting the board of directors created a special committee, which we refer to as the special committee, comprised of Mr. Craig Lentzsch and Mr. Steve Smiley, to review and evaluate, and if applicable, participate in the negotiation of and make recommendations to the board of directors with respect to, a potential sale of the Company to Greenbriar. In appointing the special committee, the board of directors determined that neither Mr. Lentzsch nor Mr. Smiley had any relationships with either the Company or Greenbriar that would interfere with their consideration of a potential transaction.

 

By a letter dated June 17, 2010, the Company formally engaged Stephens to serve as financial advisor to the board of directors, and any of its committees as directed by the board of directors, in connection with a possible sale transaction.

 

On June 22, 2010, the special committee participated in a telephone conference with Greenbriar during which the special committee requested that Greenbriar provide an outline of any remaining due diligence that would be required in order for Greenbriar to be able to complete a possible transaction with the Company. The following day, Greenbriar submitted a letter to the special committee outlining such remaining diligence.

 

From June 22, 2010 to June 29, 2010, the special committee had several telephone conferences and meetings with Weil and Stephens to discuss the contents of Greenbriar’s diligence letter and to review an updated analysis of the Company’s valuation prepared by Stephens.

 

On June 29, 2010, the board of directors held a telephonic meeting for the purpose of further considering Greenbriar’s June 9 proposal, as well as a formal response to that proposal. The special committee updated the board of directors on their activities and communications since the June 15 meeting of the board of directors. At this meeting, representatives of Stephens led a discussion of the updated valuation materials that had been prepared for the board of directors at the request of the special committee. In addition, at the request of the board of directors, representatives from Weil led the board of directors through a discussion of the proposed due diligence process outlined in Greenbriar’s June 23 letter, as well as the contents of a potential response to Greenbriar’s proposal. Following Stephens’ and Weil’s presentations, and further discussion among the full board of directors, the special committee recommended that the board of directors authorize it to continue negotiations with Greenbriar with the goal of seeking a higher price per share. The board of directors unanimously authorized the special committee to continue negotiations as recommended.

 

On June 30, 2010, the special committee had a telephone conference with representatives of Greenbriar during which the special committee informed Greenbriar that its offer of $20.00 per share of common stock was inadequate, and that the Company would be willing to entertain discussions of a transaction at a price per share that was more reflective of the value of the Company. The special committee also denied Greenbriar’s request to permit Greenbriar’s potential lenders to attend meetings with the Company’s management and to

extend exclusivity to Greenbriar until there was an agreement in principle with respect to price and other material terms. The special committee further agreed to facilitate meetings with management so that Greenbriar could further consider its valuation of the Company.

 

During the month of July 2010, Greenbriar submitted additional due diligence requests to which the Company responded, and the parties agreed upon a schedule for Greenbriar’s meeting with the Company’s senior management.

 

On July 14, 2010, representatives from Greenbriar met with members of the Company’s senior management, including Mr. Welch, Mr. Schmitz and Maynard Skarka, the Company’s Chief Operating Officer. Stephens, Mr. Smiley and Mr. Lentzsch attended the meeting as well. The meetings with the Company’s senior management included discussions on sales and marketing strategy, operations, the Company’s independent contractor model and the Company’s financials.

 

On July 16, 2010, Greenbriar requested a telephonic conference with the Company and Stephens to discuss its valuation of the Company and the additional factors to consider in determining whether to increase its proposed offer price.

 

On July 19, 2010, in advance of a call scheduled with Greenbriar and Jefferies & Company, Inc., Greenbriar’s financial advisor, which we refer to as Jefferies, for July 20, 2010, the special committee met by telephone with representatives from Weil and Stephens to discuss expectations with regard to Greenbriar’s response. At the request of the special committee, Stephens presented to the special committee updated valuation materials with respect to the Company, which materials were discussed on the call among the members of the special committee and Stephens.

 

On July 20, 2010, the special committee, Weil and Stephens participated in a telephone conference with Greenbriar and Jefferies to discuss Greenbriar’s and the Company’s views with regard to valuation, the parties’ respective considerations in arriving at these valuations, and expectations regarding process.

 

During the remainder of July 2010, certain members of the Company’s senior management, the special committee, Stephens, Greenbriar and Jefferies continued to have discussions regarding due diligence, including due diligence with respect to the Company’s customer relations.

 

On August 3, 2010, representatives from Greenbriar had a telephone conference with the special committee to discuss the terms of the non-binding proposal to acquire the Company that Greenbriar planned to submit to the Company later in the day. As discussed on the telephone conference with the special committee, later on the day of August 3, 2010, Greenbriar submitted a non-binding proposal to acquire the Company for $21.00 per share of common stock. The proposal from Greenbriar provided for (i) a 20 day “go-shop” period, (ii) a break-up fee payable by the Company in the amount of 2% of the transaction value (plus reimbursement of expenses) during the “go-shop” period and 4% (plus reimbursement of expenses) during the no-shop period and (iii) a reverse break-up fee payable by Greenbriar in the amount of 2.5% of the transaction value if Greenbriar failed to close as a result of its debt financing being unavailable at the closing. The proposal was subject to confirmatory due diligence and negotiation of a mutually satisfactory definitive merger agreement, in customary form for private equity sponsored acquisitions of public companies.

 

On August 5, 2010, the board of directors held a telephonic meeting to discuss Greenbriar’s August 3, 2010 proposal. At this meeting, the special committee briefed the board of directors with regard to its discussions with Greenbriar and Stephens regarding valuation. In addition, representatives from Weil provided the board of directors with an overview of (i) the terms of the potential transaction from a legal perspective, (ii) the process for moving forward with a transaction should the board of directors choose to do so and (iii) “go-shop” periods, break-up fees and reverse break-up fees for other comparable public transactions. Representatives from Stephens made a presentation to the board of directors regarding its view of Greenbriar’s modified proposal from a financial perspective. Following discussion, the board of directors unanimously instructed the special committee to continue to negotiate with Greenbriar for a higher price per share, which, after discussions with Weil and Stephens with regard to the other terms included in Greenbriar’s proposal, including the proposed break-up fee and reverse break-up fee amounts, the special committee communicated

to Greenbriar on August 10, 2010. Greenbriar indicated that it would need to discuss the Company’s response internally and revert back.

 

On August 11, 2010, representatives from Stephens participated in a telephone conference with representatives of Jefferies to discuss valuation of the Company.

 

On August 12, 2010, Greenbriar and the special committee participated in a telephone conference on which Greenbriar indicated that its final and best offer for the Company would be $21.25 per share, subject to confirmatory due diligence. Greenbriar indicated on this call that, assuming the parties could agree on valuation, an agreement could be reached on the other principal terms and conditions that had been the subject of the parties discussions — namely, the length of the “go-shop” period, the amount of the break-up fees and reverse break-up fees, and the circumstances under which the reverse break-up fee would be payable. The special committee indicated that it would consider Greenbriar’s revised offer and revert to Greenbriar after discussing the proposal with the board of directors.

 

On August 17, 2010, in advance of a meeting of the board of directors scheduled for later that morning, the special committee met by telephone with representatives from Weil to further discuss the valuation of the Company and Greenbriar’s final offer.

 

On August 17, 2010, the board of directors met telephonically to discuss Greenbriar’s final proposal. The special committee summarized its discussions with Greenbriar concerning its $21.25 per share proposal. After discussion, the chairman of the board of directors solicited the opinion of each member of the board of directors and from the members of management present at the meeting as to the adequacy of Greenbriar’s proposal and the transaction generally. The board of directors then discussed the other material terms and conditions contained in Greenbriar’s proposal, and changes that would be required to those terms and conditions in the event agreement could be reached on valuation, including establishing a “go-shop” period of at least 40 days, reaching agreement on break-up fees payable by the Company in an amount not to exceed 2% of the transaction value during the “go-shop” period and 3% during the no-shop period (in each case without expense reimbursement), and reaching agreement on reverse break-up fees payable by Greenbriar in the amount of 3.75% of the transaction value in the event Greenbriar fails to close as a result of its debt financing not being available and 6% in the event Greenbriar fails to close and is in material breach of its obligations under the agreement (including in the event it fails to close notwithstanding that the debt financing is otherwise available). Following an executive session of the board of directors, during which the non-employee directors engaged in further discussion of the Greenbriar proposal, Mr. Welch re-joined the meeting and the board of directors unanimously resolved to authorize the special committee to negotiate an agreement for the acquisition of the Company by Greenbriar at a price of $21.25 per share of common stock, subject to the further review and approval of the board of directors.

 

On August 17, 2010, following the meeting of the board of directors, the special committee participated in a telephone conference with Greenbriar during which the special committee stated that they would be willing to engage in discussions with respect to a transaction with Greenbriar at price of $21.25 per share, contingent on the parties coming to agreement on the other terms, including agreement with regard to the scope of Greenbriar’s remaining due diligence prior to the execution of a merger agreement, the length of the “go-shop” period and the amount of the break-up fees and reverse break-up fees payable pursuant to the transaction.

 

During the remainder of August 2010, the special committee and Greenbriar held a series of telephone conferences during which the parties discussed the material terms of an agreement, and on August 24, 2010, the parties reached agreement in principle with respect to (i) a “go-shop” period of 40 days, (ii) a break-up fee payable by the Company of 2% of the transaction value (with no expense reimbursement) during the “go-shop” period and 3% (with no expense reimbursement) during the no-shop period and (iii) a two-tiered reverse break-up fee payable by Greenbriar of 3.75% of the transaction value for a failure to close as a result of Greenbriar’s debt financing not being available at closing and 6% in the event Greenbriar fails to close and is in material breach of its obligations under the agreement (including in the event it fails to close notwithstanding that the debt financing is otherwise available).

On August 25, 2010, the special committee convened a telephone conference with Weil and Stephens to discuss next steps for the transaction, including preparation and negotiation of the merger agreement and related disclosure schedules. The special committee also directed Stephens to establish an electronic dataroom and populate it with the due diligence materials that would be required by Greenbriar and any other potential bidder that may participate in the “go-shop” process.

 

On August 26, 2010, representatives from the Company, Stephens, Weil, Greenbriar and Hughes Hubbard & Reed LLP, counsel to Greenbriar, participated in a telephone conference on which Greenbriar requested that the Company grant to Greenbriar a 30-day period of exclusivity during which the Company would negotiate exclusively with Greenbriar, and late in the day on August 27, 2010, the Company entered into an exclusivity agreement with Greenbriar that provided for exclusive negotiations until September 27, 2010, subject to a fiduciary out for unsolicited bona fide transaction proposals received by the Company.

 

Commencing August 27, 2010 and continuing through October 1, 2010, the Company, with the assistance from representatives of Stephens and Weil, populated an electronic data room to provide due diligence information to Greenbriar and its representatives, and, on August 27, 2010, Greenbriar and its representatives were provided access to the data room.

 

On September 1, 2010, Weil distributed an initial draft of the merger agreement with affiliates of Greenbriar, or the Greenbriar merger agreement, to Hughes Hubbard. Also on September 1, 2010, representatives from Greenbriar met with members of the Company’s management and representatives of Stephens in Dallas, Texas to prepare for a meeting to be held the following day in the Dallas offices of Weil with potential lenders to Greenbriar.

 

On September 2, 2010, representatives from Greenbriar held a meeting for potential lenders to Greenbriar in respect of the proposed transaction at the Dallas offices of Weil. Members of the Company’s management attended and made presentations to the prospective lenders at the meeting. Representatives from Stephens and Weil were also in attendance and Mr. Smiley and Mr. McClelland participated by telephone conference. Following the lender presentation, certain of the lenders, representatives from Greenbriar and Stephens and members of the Company’s management visited one of the Company’s business centers in Dallas.

 

On September 6, 2010, Hughes Hubbard sent a revised draft of the Greenbriar merger agreement to Weil.

 

On September 7, 2010, members of the Company’s management participated in a due diligence meeting with representatives from Greenbriar, Ernst & Young, Greenbriar’s accountants, and Stephens at the offices of Stephens in Dallas, Texas. Members of the Company’s management also participated in a due diligence meeting relating to the Company’s information technology systems with Ernst & Young and representatives from Greenbriar. Additionally, on September 7, 2010, Weil distributed a draft of the limited guarantee, as referred to in the Greenbriar merger agreement, to Hughes Hubbard.

 

On September 8, 2010, members of the Company’s management participated in telephone conferences regarding (i) tax and employee benefits diligence with representatives from Ernst & Young and (ii) insurance diligence with representatives from Marsh & McLennan Companies, Greenbriar’s insurance advisors.

 

On September 9, 2010, members of the Company’s management and Mr. Lentzsch participated in a meeting with representatives from Scopelitis, Garvin, Light, Hanson & Feary, special legal counsel to Greenbriar, to discuss the Company’s independent contractor model. Representatives from Greenbriar were also present at the meeting. Additionally, during the afternoon of September 9, 2010, Weil had a telephone conference with Hughes Hubbard to discuss the draft Greenbriar merger agreement distributed by Hughes Hubbard on September 6, 2010. Immediately after the telephone conference, Weil updated the special committee on the results of the negotiations. During the evening of September 9, 2010, Weil distributed a revised draft of the Greenbriar merger agreement to Hughes Hubbard.

 

From September 9, 2010 until September 29, 2010, the Company participated in various follow-up due diligence meetings and telephone conferences with representatives of Greenbriar, Hughes Hubbard and other Greenbriar advisors.

On September 10, 2010, representatives from Greenbriar held a meeting for potential lenders to Greenbriar in respect of the transaction with the Company at the offices of Weil in Dallas, Texas. Members of the Company’s senior management attended and presented at the meeting. Mr. Lentzsch and representatives from Stephens and Weil were also in attendance, and Mr. Smiley participated by telephone conference. Following the lender presentation, certain of the lenders, representatives from Greenbriar and Stephens and members of the Company’s management visited one of the Company’s business centers in Dallas.

 

On September 15, 2010, representatives from Weil and Hughes Hubbard had a telephone conference to discuss outstanding issues on the Greenbriar merger agreement, the status of due diligence and the limited guarantee. From that day until the Greenbriar merger agreement and related transaction documents were executed on the afternoon of October 1, 2010, the parties and their respective representatives negotiated the terms of the definitive documents (including, without limitation, the Greenbriar merger agreement, disclosure schedules, limited guarantees and debt and equity commitment letters) and exchanged drafts of such definitive documents. Significant issues discussed included, but were not limited to, the conditions to closing of the Greenbriar merger agreement, the circumstances under which the termination fees would be payable, the definition of superior proposal, the definition of material adverse effect and restrictions on the Company’s ability to engage in certain activities between signing and closing. During the same period, representatives of Greenbriar continued their due diligence investigation of the Company.

 

On September 17, 2010, the special committee had a telephone conference with Weil and Stephens to discuss the material open issues of the Greenbriar merger agreement, which included, among other items, the termination provisions of the Greenbriar merger agreement, the definition of material adverse effect and superior proposal and the restrictions on the Company’s ability to engage in certain activities between signing and closing.

 

On September 21, 2010, Hughes Hubbard distributed a revised draft of the Greenbriar merger agreement and a list of open material issues to Weil.

 

On September 22, 2010, the special committee convened a meeting with representatives from Weil to discuss open issues in the Greenbriar merger agreement and regarding the proposed transaction generally.

 

On September 23, 2010, Mr. Welch met in New York with certain representatives from Greenbriar to discuss the business and opportunities of the Company.

 

On the morning of September 24, 2010, the special committee had a telephone conference with representatives from Greenbriar to discuss open issues remaining in the Greenbriar merger agreement. After discussion, the special committee and Greenbriar agreed to reconvene the meeting in the afternoon to revisit the remaining open issues. At 12:00 p.m. Central Time on September 24, 2010, the special committee held a telephone conference with representatives from Weil and Stephens to discuss the resolution of certain open issues on the Greenbriar merger agreement and to discuss the remaining open issues. At 4:00 p.m. Central Time on September 24, 2010, the special committee had another telephone conference with representatives from Greenbriar to discuss and resolve additional open issues in the Greenbriar merger agreement. Immediately after the meeting with Greenbriar concluded, the special committee held another telephone conference with representatives from Weil to discuss the resolution of open issues discussed with representatives from Greenbriar. Following the meeting, a draft of the Greenbriar merger agreement incorporating the discussions between the special committee and representatives from Greenbriar was delivered to Hughes Hubbard by Weil.

 

On September 24, 2010 and on September 25, 2010, Hughes Hubbard delivered drafts of the debt commitment letter and equity commitment letters to Weil.

 

All parties to the transaction worked through the weekend of September 25 and 26, 2010 to negotiate and finalize the Greenbriar merger agreement, the limited guarantees, the debt commitment letter, the equity commitment letters and related transaction documents, including several extended telephone conversations and negotiations during this period.

 

At 4:00 pm Central Time on September 26, 2010, representatives from Weil had a telephone conference with representatives from Hughes Hubbard to discuss the last remaining issues concerning the Greenbriar

merger agreement and the disclosure schedules to the Greenbriar merger agreement. Immediately after the telephone conference, representatives from Weil updated the special committee on the outstanding issues, which primarily related to the closing conditions in the Greenbriar merger agreement. The special committee concluded that it would call a full meeting of the board of directors the following morning to determine its course of action regarding the remaining issues.

 

On September 27, 2010, the board of directors convened a telephonic meeting at which the special committee provided the board of directors with an update on the status of the transaction generally, and certain issues that had arisen in the Greenbriar merger agreement negotiations, the disclosure schedules, and the terms of the debt commitment letter and equity commitment letters. At this meeting, the board of directors, on recommendation of the special committee, authorized the special committee to provide Greenbriar until the end of the day on Friday, October 1, 2010, to finalize its due diligence and come to agreement on all remaining issues. The board of directors also determined not to formally extend Greenbriar’s 30-day exclusivity period, which was set to expire at 11:59 p.m. Eastern Time on September 27, 2010.

 

The special committee, Weil, Greenbriar and Hughes Hubbard negotiated and finalized the terms of the Greenbriar merger agreement, disclosure schedules, the debt commitment letter, the equity commitment letters, the limited guarantees and other transaction documents, and on October 1, 2010, the board of directors and its legal and financial advisors met to review the proposed Greenbriar merger agreement. The special committee discussed the process it had undertaken to negotiate a transaction with Greenbriar, including the Greenbriar merger agreement and other definitive documents. Representatives from Weil reviewed with the board of directors its fiduciary duties, the terms of the Greenbriar merger agreement, the terms of the debt commitment letter, the terms of the equity commitment letters and the terms of the limited guarantees. The board of directors asked questions of Weil throughout its presentation. Representatives from Stephens presented the board of directors with its financial analyses of the proposed transaction with Greenbriar. The board of directors asked questions throughout the presentation. Stephens then delivered the board of directors its opinion that, as of October 1, 2010, and based upon and subject to the factors and assumptions set forth in such opinion, the $21.25 per share in cash to be received by the holders of outstanding shares of the Company’s common stock pursuant to the Greenbriar merger agreement was fair from a financial point of view to the Company’s public stockholders. The members of the special committee unanimously recommended to the board of directors that it approve the Greenbriar merger agreement and the merger with an affiliate of Greenbriar. The board of directors then voted unanimously to approve the Greenbriar merger agreement and the merger with an affiliate of Greenbriar on the terms set forth therein.

 

Immediately after the conclusion of the board meeting on October 1, 2010, DashNow Holding Corp., DashNow Acquisition Corp. and the Company executed the Greenbriar merger agreement and the Company and Greenbriar issued a joint press release announcing the execution of the Greenbriar merger agreement.

 

The Greenbriar merger agreement provided that, until 12:01 p.m., New York City time, on November 10, 2010, the Company would be allowed to initiate, solicit and encourage takeover proposals from third parties and to provide non-public information and participate in discussions and negotiate with third parties with respect to takeover proposals. At the direction of the board of directors, Stephens conducted this “go-shop” process on behalf of the Company.

 

Beginning on October 1, 2010, pursuant to the “go-shop” provision of the Greenbriar merger agreement, representatives of Stephens began contacting potential buyers that were believed to be capable of, and might be interested in, consummating an acquisition of the Company at a price greater than $21.25 per share. Representatives of Stephens contacted 129 separate parties, including 38 potential strategic buyers, one of which was Parent, and 91 potential financial buyers. Of the 129 parties contacted, 7 parties (of which 1 was a potential strategic buyer and 6 were potential financial buyers), including Parent, entered into confidentiality agreements and were given access to confidential information regarding the Company.

 

During the “go-shop” period, the Company and its representatives continued to work to consummate the transactions contemplated by the Greenbriar merger agreement in light of the uncertain outcome of the “go-shop” process and as required by the Greenbriar merger agreement. Among the actions taken by the Company

and its representatives in connection with the Greenbriar merger agreement, the Company filed for and received antitrust clearance under the HSR Act and prepared and filed a preliminary proxy statement with the SEC.

 

During the “go-shop” period, the special committee periodically met with representatives from Stephens and Weil for updates on the activities of the Company’s representatives related to the “go-shop” process.

 

On November 3, 2010 members of Parent’s management met with a member of the special committee and members of the Company’s senior management in Dallas, Texas and discussed various diligence matters. Representatives from Weil and Stephens were present at the meeting.

 

On November 9, 2010, prior to the end of the “go-shop” period, Parent submitted a written, non-binding indication of interest regarding a potential acquisition of the Company, which stated that Parent was prepared to acquire the Company at a price per share of $23.50 in cash. Later in the day on November 9, 2010, a telephonic meeting of the board of directors was held. Certain of the Company’s senior management and representatives of Weil and Stephens were in attendance. At the meeting, the board of directors resolved to designate Parent as an “excluded party” as such term is defined in the Greenbriar merger agreement.

 

On November 10, 2010, the Company sent a notice to Greenbriar notifying it that Parent had submitted a written “takeover proposal” as such term is defined in the merger agreement and that the board of directors had designated Parent as an “excluded party” and intended to continue to engage in discussions and negotiations with Parent with respect to the takeover proposal beyond the conclusion of the “go-shop” period. The notice included copies of all written materials provided by Parent (including a copy of the takeover proposal submitted by Parent) and a summary of the reasons for determining that Parent was an “excluded party”.

 

Commencing on November 10, 2010 and continuing until November 22, 2010, representatives from Parent continued their due diligence investigation of the Company and the special committee and the Company’s advisors participated in various diligence meetings and telephone conferences with Parent and its advisors.

 

On November 16, 2010, Morgan, Lewis & Bockius LLP, United States legal counsel to Parent, which we refer to as Parent’s U.S. legal counsel, sent Weil an initial draft of a merger agreement, which we refer to as the merger agreement, which was based on the Greenbriar merger agreement except that it revised or added certain provisions, including, among other things, (i) increasing the merger consideration to be received by the Company’s stockholders to $23.50 per share, (ii) eliminating the reverse break-up fee, (iii) providing the Company with the right of specific performance under certain circumstances and (iv) including language pursuant to which Parent agreed to dispose of, hold separate or divest itself of all or any portion of its business or assets in order to eliminate any impediment to closing the merger transaction with respect to laws relating to competition and restrictive trade practices.

 

On November 17, 2010, the Company sent the merger agreement to Greenbriar and Hughes Hubbard as required by the Greenbriar merger agreement.

 

On November 18, 2010, Weil had a telephone conference with the special committee regarding the draft merger agreement. Later that day, Weil sent a revised draft of the merger agreement to Parent’s U.S. legal counsel. The revised draft included a provision that the Company may seek damages from Parent that may include the loss of premium to the Company’s stockholders.

 

On November 22, 2010, Parent delivered a formal binding offer, which we refer to as the Formal Proposal, for the acquisition of all of the outstanding shares of the Company in a merger transaction in which the Company’s stockholders would receive $23.50 in cash per share of the Company’s common stock on the terms set forth in the draft merger agreement sent by Parent’s U.S. legal counsel on November 16, 2010 to Weil, which included substantially all of the changes set forth in the revised draft sent by Weil on November 18, 2010. The Formal Proposal included a copy of the merger agreement which was fully executed by all parties other than the Company and provided that it would remain open until 6:00 p.m. New York City time on December 1, 2010.

On November 23, 2010, a telephonic meeting of the board of directors was held at which the board of directors determined that the Formal Proposal constituted a “superior proposal” as such term is defined in the Greenbriar merger agreement. Also on November 23, 2010, the Company sent a notice to Greenbriar notifying it that the board of directors had determined that the Formal Proposal constituted a “superior proposal” and that the four business day period had commenced during which the Company would be required to negotiate with Greenbriar to enable Greenbriar to revise the terms of the Greenbriar merger agreement and related agreements such that the Formal Proposal would no longer constitute a “superior proposal.” Included with the notice was a copy of the Formal Proposal.

 

On November 26, 2010, Greenbriar delivered a proposed amendment to the Greenbriar merger agreement that, among other things, increased the merger consideration to be received by the Company’s stockholders to $23.50 per share. Greenbriar also submitted revised equity commitment letters, which included increased equity commitments from affiliates of Greenbriar, and revised limited guarantees.

 

Commencing on November 26, 2010 and continuing until November 28, 2010, the Company and Greenbriar and their respective representatives negotiated the terms of the amendment to the Greenbriar merger agreement, the revised equity commitment letters and the limited guarantees. During this time period, the members of the special committee and the Company’s advisors participated in numerous telephone conferences.

 

On the afternoon of November 29, 2010, Parent submitted a revised formal binding offer (including a copy of the merger agreement, which was fully executed by all parties other than the Company), which we refer to as the Revised Formal Proposal, for the acquisition of all of the outstanding shares of the Company in a merger transaction in which the Company’s stockholders would receive $24.00 in cash per share of the Company’s common stock. The Revised Formal Proposal indicated that it would remain open until 11:59 p.m. New York City time on December 6, 2010. Also on November 29, 2010, the Company sent a notice to Greenbriar notifying Greenbriar that the Company had received the Revised Formal Proposal and that a new four business day period had commenced during which the Company would be required to negotiate with Greenbriar to enable it to further revise the terms of the Greenbriar merger agreement (including the proposed amendment to the Greenbriar merger agreement) and related agreements such that the Revised Formal Proposal would no longer constitute a “superior proposal.” Included with the notice was a copy of the Revised Formal Proposal.

 

On November 30, 2010, Greenbriar submitted a revised amendment to the Greenbriar merger agreement that, among other things, increased the merger consideration to be received by the Company’s stockholders to $24.00 per share, increased the termination fee payable by the Company to $7.7 million, increased the reverse break-up fee payable by affiliates of Greenbriar if the merger fails to close because the debt financing is unavailable to $14.3 million, increased the reverse break-up fee payable by affiliates of Greenbriar if the Greenbriar merger agreement is terminated as the result of Greenbriar’s material breach to $21.4 million and provided the Company the right of specific performance under certain circumstances, which together with the Greenbriar merger agreement we refer to as the Revised Greenbriar Proposal. Greenbriar also submitted revised equity commitment letters, which included increased equity commitments up to $175 million from affiliates of Greenbriar, and amended and restated limited guarantees. Later in the morning on November 30, 2010, the board of directors and its legal and financial advisors held a telephonic meeting to review the Revised Greenbriar Proposal and the Revised Formal Proposal. Weil and the special committee discussed the process they had undertaken in respect of the two proposals, including the negotiations with Greenbriar with respect to the Revised Greenbriar Proposal. The board of directors considered whether, in light of the Revised Greenbriar Proposal, the Revised Formal Proposal continued to constitute a “superior proposal.” The board of directors considered the terms and conditions of the Revised Greenbriar Proposal and the Revised Formal Proposal as well as the relative risks associated with each and concluded that the Revised Formal Proposal no longer constituted a “superior proposal.” The factors considered by the board of directors included, among other things, the estimated time required to consummate each proposal and the relative certainty and timing of closing, taking into account requisite remaining regulatory approvals and the status of DashNow Holding Corp.’s debt financing. Representatives from Stephens then delivered to the board of directors its oral opinion that, based upon and subject to the factors and assumptions set forth in a written opinion to be delivered to the

board of directors after the meeting, the $24.00 per share in cash to be received by the holders of outstanding shares of the Company’s common stock pursuant to the Revised Greenbriar Proposal was fair from a financial point of view to the Company’s public stockholders. The members of the special committee unanimously recommended to the board of directors that it approve the revised amendment to the Greenbriar merger agreement. The board of directors then voted unanimously to approve the revised amendment to the Greenbriar merger agreement on the terms set forth therein.

 

Later in the day on November 30, 2010, DashNow Holding Corp., DashNow Acquisition Corp. and the Company executed the revised amendment to the Greenbriar merger agreement (which, as amended, we continue to refer to as the Greenbriar merger agreement), and the Company issued a press release announcing the execution of the revised amendment to the Greenbriar merger agreement.

 

On December 6, 2010, Parent delivered a new formal binding offer, which we refer to as the Final Proposal, for the acquisition of all of the outstanding shares of the Company in a merger transaction in which the Company’s stockholders would receive $25.00 in cash per share of the Company’s common stock. The Final Proposal included a copy of the merger agreement which was fully executed by all parties other than the Company and provided that it would remain open until 11:59 p.m. New York City time on December 13, 2010.

 

On December 7, 2010, a telephonic meeting of the board of directors was held at which the board of directors determined that the Final Proposal constituted a “superior proposal” as such term is defined in the Greenbriar merger agreement. Immediately after the board meeting and at the request of the Company, Parent revised its Final Proposal to provide that it would remain open until 11:59 a.m. New York City time on December 14, 2010. Also on December 7, 2010, the Company sent a notice to Greenbriar notifying it that the board of directors had determined that the Final Proposal constituted a “superior proposal” and that the four business day period had commenced during which the Company would be required to negotiate with Greenbriar to enable Greenbriar to revise the terms of the Greenbriar merger agreement and related agreements such that the Final Proposal would no longer constitute a “superior proposal.” Included with the notice was a copy of the Final Proposal.

 

On December 13, 2010, Greenbriar informed the Company that it would not be increasing the merger consideration under the Greenbriar merger agreement or making any other changes to the Greenbriar merger agreement.

 

On the morning of December 14, 2010, the board of directors and its legal and financial advisors held a telephonic meeting to review the Final Proposal. The board of directors unanimously determined that the Final Proposal continued to constitute a “superior proposal” as compared to the terms of the Greenbriar merger agreement. Representatives from Stephens presented the board of directors with its financial analyses of the proposed transaction with Parent. Stephens then delivered the board of directors its opinion that, as of December 14, 2010, and, based upon and subject to the factors and assumptions set forth in such opinion, the $25.00 per share in cash to be received by the holders of outstanding shares of the Company’s common stock pursuant to the TransForce merger agreement was fair from a financial point of view to the Company’s public stockholders. The full text of the written opinion of Stephens, dated December 14, 2010, which sets forth the assumptions made, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B to this proxy statement. The members of the special committee unanimously recommended to the board of directors that it approve the merger with TransForce, the TransForce merger agreement and the termination of the Greenbriar merger agreement. The board of directors then voted unanimously to approve the merger and the TransForce merger agreement on the terms set forth therein and the termination of the Greenbriar merger agreement.

 

Later in the day on December 14, 2010, the Company sent notice to Greenbriar terminating the Greenbriar merger agreement and paid the termination fee to DashNow Holding Corp. in the amount of $7,729,106. Concurrently with the termination of the Greenbriar merger agreement, the Company executed the TransForce merger agreement, which had been executed by Parent and Merger Sub at the time of its delivery of the Final Proposal. Thereafter, the Company issued a press release announcing the merger, the execution of TransForce merger agreement and the termination of the Greenbriar merger agreement.

 

Special Committee

 

The special committee, consisting solely of non-employee independent directors and acting with the advice and assistance of the Company’s legal and financial advisors, evaluated and negotiated the acquisition proposal by Parent, including the terms and conditions of the merger agreement. The special committee determined that the TransForce merger agreement is superior to the Greenbriar merger agreement and the merger is fair to and in the best interests of the Company and its stockholders, approved and declared it advisable to enter into the merger agreement and unanimously recommended that the board of directors (i) approve the execution, delivery and performance of the merger agreement and the transactions contemplated by the merger agreement, including the merger, and (ii) resolve to recommend that the stockholders of the Company adopt the merger agreement and the transactions contemplated by the merger agreement, including the merger.

 

In the course of reaching its determination, the special committee considered the following factors and potential benefits of the merger, each of which the members of the special committee believed supported its decision:

 

 

 

 

 

 

• the terms of the merger agreement and the related agreements, including:

 

 

 

 

 

 

The special committee also considered a variety of risks and other potentially negative factors concerning the merger agreement and the merger, including the following:

 

 

 

This discussion summarizes the material factors considered by the special committee in its consideration of the merger but is not meant to be an exhaustive list of the factors considered by the special committee. After considering these factors, the special committee concluded that the positive factors relating to the merger agreement and the merger significantly outweighed the potential negative factors. In view of the wide variety of factors considered by the special committee, and the complexity of these matters, the special committee did not find it practicable to quantify or otherwise assign relative weights to the foregoing factors. In addition, individual members of the special committee may have assigned different weights to various factors. The special committee unanimously approved and recommended the merger agreement and the merger based upon the totality of the information presented to and considered by it. The special committee believes that the merger is fair to, and in the best interests of, the Company and its stockholders.

 

Board of Directors

 

The board of directors, acting upon the unanimous recommendation of the special committee, unanimously determined that merger agreement is superior to the Greenbriar merger agreement, that the Greenbriar merger agreement should be terminated, and that the required termination fee should be paid to DashNow Holding Corp. The board of directors, acting upon the unanimous recommendation of the special committee, also unanimously (i) determined that the merger, the merger agreement and the other transactions contemplated by the merger agreement are fair to, and in the best interests of, the Company and its stockholders, and declared it advisable to enter into the merger agreement; (ii) approved the execution and delivery of the merger agreement, the performance by the Company of its covenants and agreements contained in the merger agreement and the consummation of the transactions contemplated thereby, including the merger, upon the terms and subject to the conditions contained in the merger agreement; and (iii) resolved to recommend that the stockholders adopt the merger agreement and directed that such matter be submitted for consideration of the stockholders of the Company at the special meeting.

 

In reaching these determinations, the board of directors considered (i) a variety of business, financial and market factors; (ii) the financial presentation of Stephens, including the written opinion of Stephens to the board of directors dated December 14, 2010 as to the fairness, from a financial point of view, to the Company’s public stockholders of the consideration to be received as a result of the merger; (iii) each of the positive and negative factors considered by the special committee in its unanimous recommendation, as described above; and (iv) the unanimous recommendation of the special committee.

 

The foregoing discussion summarizes the material factors considered by the board of directors in its consideration of the merger. In view of the wide variety of factors considered by the board of directors, and

the complexity of these matters, the board of directors did not find it practicable to quantify or otherwise assign relative weights to the foregoing factors. In addition, individual members of the board of directors may have assigned different weights to various factors. The board of directors unanimously approved and recommended the merger agreement and the merger based upon the totality of the information presented to and considered by it.

 

The board of directors believes that the merger is fair to, and in the best interests of, the Company and its stockholders and recommends that the stockholders adopt the merger agreement. The board of directors recommends that you vote “FOR” the adoption of the merger agreement.

 

Stephens was retained to assist the Company in analyzing potential strategic alternatives that may lead to a possible sale and, in such capacity, acted as the financial advisor to the Company. As part of its engagement, the Company requested the opinion of Stephens as to the fairness, from a financial point of view, to the Company’s public stockholders of the $25.00 per share cash consideration to be received by the Company’s public stockholders in the merger pursuant to the merger agreement. For the purposes of Stephens’ opinion, the “public stockholders” of the Company means the holders of outstanding shares of the Company’s common stock, other than Parent and its directors, officers and affiliates and the directors, officers, managers and affiliates of the Company. On December 14, 2010, Stephens delivered its oral opinion to the board of directors of the Company and subsequently confirmed in a written opinion, dated December 14, 2010, that, as of that date and based upon and subject to the assumptions, procedures, factors, limitations and qualifications stated in its written opinion, the $25.00 per share cash consideration to be received by the Company’s public stockholders was fair, from a financial point of view, to the public stockholders.

 

Stephens provided the opinion described above for the information and assistance of the board of directors in connection with its consideration of the approval of the merger agreement. The terms of the merger agreement, including the amount and form of the consideration payable pursuant to the merger agreement to the Company’s public stockholders, were determined through negotiations between the Company and TransForce, and were approved by the board of directors. Stephens did not recommend the amount or form of consideration payable pursuant to the merger agreement. Stephens has consented to the inclusion within the proxy statement of its opinion and the description of its opinion appearing under this subheading “Opinion of Stephens, Financial Advisor.” The full text of the written opinion of Stephens, dated December 14, 2010, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion is attached as Annex B to this proxy statement.

 

Stephens’ opinion does not address the merits of the underlying decision by the Company to enter into the merger agreement, the merits of the merger as compared to other alternatives potentially available to the Company or the relative effects of any alternative transaction in which the Company might engage, nor is it intended to be a recommendation to any person as to how to vote on the proposal to adopt the merger agreement. In addition, except as explicitly set forth in Stephens’ opinion, Stephens was not asked to address, and Stephens’ opinion does not address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of the Company other than the public stockholders. Stephens was not asked to express any opinion, and does not express any opinion, as to the fairness of the amount or nature of the compensation to any of the Company’s officers, directors or employees, or to any group of such officers, directors or employees, relative to the compensation to other shareholders of the Company. Stephens’ fairness opinion committee has approved Stephens’ opinion.

 

In connection with its opinion, Stephens has:

 

 

 

As described within the proxy statement under “The Merger — Background of the Merger,” subsequent to rendering its opinion and following the public announcement of the initial merger agreement with Greenbriar on October 1, 2010 (“initial Greenbriar merger agreement”), at the direction of the board of directors, Stephens aggressively solicited the interest of other third parties with respect to a possible business combination transaction with the Company in accordance with the terms of the merger agreement.

 

In rendering its opinion, Stephens relied on the accuracy and completeness of the information and financial data provided to it by the Company and of the other information reviewed by it in connection with the preparation of its opinion, and Stephens’ opinion is based upon such information. Stephens has not assumed any responsibility for independent verification of the accuracy or completeness of any of such information or financial data. The management of the Company has assured Stephens that they are not aware of any relevant information that has been omitted or remains undisclosed to Stephens. Stephens has not assumed any responsibility for making or undertaking an independent evaluation or appraisal of any of the assets or liabilities of the Company or Parent, and it has not been furnished with any such evaluations or appraisals; nor has it evaluated the solvency or fair value of the Company or Parent under any laws relating to bankruptcy, insolvency or similar matters. Stephens has not assumed any obligation to conduct any physical inspection of the properties or facilities of the Company. With respect to the financial forecasts for fiscal 2011-2015 prepared by the management of the Company, Stephens has assumed they have been reasonably prepared and reflected the best currently available estimates and judgments of the management of the Company as to the future financial performance of the Company. Stephens’ opinion is necessarily based upon market, economic, and other conditions as they existed and could be evaluated, and on the information made available to them, as of the date of its opinion. Stephens has also assumed that the representations and warranties contained in the merger agreement and all related documents are true, correct and complete in all material respects.

 

The following is a summary of the material financial analyses performed and material factors considered by Stephens in connection with its opinion. Stephens performed certain procedures, including each of the financial analyses described below, and reviewed with the board of directors the assumptions upon which the analyses were based, as well as other factors. Although the summary does not purport to describe all of the analyses performed or factors considered by Stephens within this regard, it does set forth those considered by Stephens to be material in arriving at its opinion. The order of the summaries of analyses described does not represent the relative importance or weight given to those analyses by Stephens. It should be noted that in arriving at its opinion, Stephens did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Stephens believes that its analysis must be considered as a whole and that considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion.

 

Premium Analysis.  Stephens analyzed the consideration to be received by holders of the Company’s common stock pursuant to the merger agreement in relation to the consideration to be received pursuant to the

initial Greenbriar merger agreement, the amended Greenbriar merger agreement, the closing price of the Company’s common stock on September 28, 2010 (prior to announcement of the initial Greenbriar merger agreement), and the average closing prices of the Company’s common stock for the 7-day, 30-day and year-to-date (“YTD”) periods ended September 28, 2010. This analysis indicated that the price per share to be paid to the holders of shares of the Company’s common stock pursuant to the merger agreement represented a premium of:

 

 

Implied Transaction Multiples.  Stephens calculated select implied transaction multiples for the Company based upon the merger and financial information provided by Company management. Stephens calculated an implied equity value by multiplying $25.00 by the aggregate number of shares of the Company’s common stock on a fully diluted basis (including restricted stock, performance units and stock options on a net exercise basis). Stephens then calculated an implied enterprise value based on the implied equity value plus (i) indebtedness, minus (ii) cash, cash equivalents and marketable securities, which we refer to as Enterprise Value. As used within the description of Stephens’ financial analyses, “EBITDA” means earnings before interest, taxes, depreciation and amortization, “EBIT” means earnings before interest and taxes, “EPS” means earnings per share, “LTM” means last twelve months, and “CY” means calendar year; provided that EBITDA, EBIT and EPS have been adjusted to reflect non-recurring expenses. Unless otherwise noted, for the purposes of this section, “The Merger — Opinion of Stephens, Financial Advisor,” EBITDA, EBIT and EPS of the Company have been adjusted to reflect $4.4 million and $3.8 million of non-recurring expenses identified by the management of the Company for the LTM and CY periods, respectively.

 

The results of these analyses are summarized in the table below:

 

 

Comparable Companies Analysis.  Stephens analyzed the public market statistics of certain comparable companies to the Company and examined various trading statistics and information relating to those companies. Stephens selected the companies below because their businesses and operating profiles are reasonably similar to the Company. No selected company identified below is identical to the Company. A complete analysis involves complex considerations and qualitative judgments concerning differences in financial and operating characteristics of the selected companies and other factors that could affect the public trading values of those selected companies. Mathematical analysis (such as determining the mean or the median) is not in itself a meaningful method of using selected company data.

In choosing similar companies to analyze, Stephens selected the following companies:

 

 

Stephens examined the historical market trading multiples of the selected companies to the Company, including the average market trading multiples of Enterprise Value to LTM EBITDA and of price to LTM EPS for the 2-year and 5-year periods ending September 28, 2010. Stephens noted the historical disparity between the market trading multiples of the selected companies and the Company.

 

The results of these analyses are summarized in the table below:

 

 

In addition, Stephens examined the market trading multiples for each company based on the September 28, 2010 closing price and information publicly available at that time, including the multiple of Enterprise Value to LTM and estimated CY 2010 EBITDA and of price to LTM and estimated CY 2010 EPS. For the purposes of the September 28, 2010 trading multiples for the Company presented below, EBITDA and EPS of the Company have been adjusted to reflect $2.6 million and $1.8 million of non-recurring expenses for the LTM and CY periods, respectively. Stephens noted the disparity between the market trading multiples of the selected companies and the Company. Additionally, Stephens noted the market trading multiples of the selected companies based on December 10, 2010 closing prices.

 

The results of these analyses are summarized in the table below:

 

Based on this data and its understanding of the relative operating, financial and trading characteristics of the selected comparable companies and of the Company, Stephens derived a range for the implied value per share of the Company’s common stock of $18.31–$26.79. Stephens noted that the merger consideration of $25.00 per share for the Company’s common stock was within the range.

 

Comparable Transactions Analysis.  Stephens reviewed the financial terms of selected logistics services acquisition transactions announced since January 1, 2002. The following transactions were reviewed by Stephens (in each case, the first named company was the acquiror and the second named company was the acquired company and the transaction date is noted parenthetically):

 

 

Stephens considered these selected logistics services acquisition transactions to be reasonably similar, but not identical, to the merger. A complete analysis involves complex considerations and qualitative judgments concerning differences in the selected transactions and other factors that could affect the transaction values in those selected transactions to which the merger is being compared. Mathematical analysis (such as determining the mean or the median) is not in itself a meaningful method of using selected transaction data.

 

For the selected transactions listed above, Stephens used publicly available financial information to determine the multiple of Enterprise Value to LTM EBITDA and of Enterprise Value to LTM EBIT.

 

 

Based on this data, its understanding of the relative operating and financial characteristics of the target company and of the Company, and its understanding of the market, economic and other conditions as they existed as of the date of the selected transactions and of its opinion, Stephens derived an implied value range

of approximately $19.06–$23.66 per share of the Company’s common stock. Stephens noted that the merger consideration of $25.00 per share for the Company’s common stock was above the range.

 

Discounted Cash Flow Analysis.  Stephens performed a discounted cash flow analysis on the Company using projections developed by management for fiscal years 2011–2015. The projections included assumptions, among others, of revenue increasing at a compound annual growth rate of 7.3% from fiscal year 2010 to 2015 and EBITDA margins expanding from 5.7% in fiscal year 2010 to 8.3% in 2015. Utilizing these projections, Stephens calculated a range of implied price per share based upon the discounted net present value of the sum of the projected stream of unlevered free cash flows for the nine months ending July 31, 2011 and years ending July 31, 2012 to July 31, 2015 and a projected terminal value at July 31, 2015. Stephens considered discount rates ranging from 18.0% to 20.0% (based on a weighted average cost of capital analysis) and EBITDA exit multiples ranging from 7.0–9.0x. The weighted average cost of capital was determined by the sum of (a) the market value of equity as a percentage of the total market value of the Company’s capital multiplied by the Company’s estimated cost of equity, and (b) the market value of debt as a percentage of the total market value of the Company’s capital multiplied by the Company’s estimated after-tax market cost of debt. The Company’s estimated cost of equity was calculated using the Capital Asset Pricing Model which took into account the risk free rate, the Company’s beta, betas of comparable companies, and applicable risk premia. Utilizing the ranges of discount rates and exit multiples, Stephens derived an implied valuation range of $22.44–$28.19. Stephens noted that the merger consideration of $25.00 per share for the Company’s common stock was within the range.

 

Leveraged Buyout Analysis.  Stephens performed a leveraged buyout analysis on the Company using projections developed by management for fiscal years 2011–2015, adjusted for annual public company expenses of approximately $1.0 million. This analysis calculates current values for the Company based on the value that a hypothetical new equity investor would be willing to pay for the Company in order to generate acceptable internal rates of return. Based on a range of target internal rates of return of 25.0% to 35.0% for the hypothetical equity investor, a range of leverage of 3.0–4.0x LTM EBITDA and a five-year EBITDA exit multiple of 8.0x, the analysis yielded values for the Company’s common stock of $18.15–$23.55. Stephens noted that the merger consideration of $25.00 per share for the Company’s common stock was above the range.

 

Premiums Paid Analysis.  Stephens performed a premiums paid analysis based upon the premiums paid in 75 precedent public merger and acquisition transactions. The transactions utilized within the analysis were completed or announced between December 10, 2008 and December 10, 2010 and involved U.S. targets with pre-deal market capitalization greater than $50 million, transaction value between $100 million and $1 billion, and LTM EBITDA greater than $0. The analysis excluded targets in the oil, gas and consumable fuels, banking and real estate industries. In the premiums paid analysis, Stephens analyzed the premiums paid based on (i) the closing stock price of the target one day prior to announcement of the transaction; (ii) the average of the closing stock prices of the target for the seven days prior to announcement of the transaction; and (iii) the average of the closing stock prices of the target for the thirty days prior to announcement of the transaction. The means for the one day, seven day average and thirty day average premiums were 38.0%, 36.7% and 40.3%, respectively.

In addition, Stephens calculated the percentage of the examined transactions completed where the premium paid was between 0 and 100% in 10% increments. The results of this analysis are set forth below:

 

 

Stephens noted that the merger consideration of $25.00 per share represented a premium of 62.5% over the closing share price of the Company on September 28, 2010, a premium of 65.2% over the average of the closing share prices of the 7 days prior to September 28, 2010 and a premium of 85.8% over the average of the closing share prices of the 30 days ended September 28, 2010.

 

Historical Trading Analysis.  Stephens analyzed the historical daily closing prices per share of the Company’s common stock for the one-year period ending September 28, 2010. Stephens noted that during this period, the 52-week low (reached on June 29, 2010) and 52-week high (reached on October 22, 2009) closing prices per share of the Company’s common stock were $12.15 and $19.66, respectively. Stephens further noted that the merger consideration of $25.00 per share for the Company’s common stock was above the upper end of the 52-week range for the closing prices per share of the Company’s common stock for the one-year period ended September 28, 2010.

 

As part of Stephens’ investment banking business, Stephens regularly issues fairness opinions and is continually engaged in the valuation of companies and their securities in connection with business reorganizations, private placements, negotiated underwritings, mergers and acquisitions and valuations for estate, corporate and other purposes. Stephens is familiar with the Company and regularly provides investment banking services to the Company and issues research reports regarding the Company. During the two years preceding September 28, 2010, Stephens provided investment banking services to the Company, but did not receive investment banking revenues from the Company. Stephens expects to pursue future investment banking services assignments from participants in the merger. In the ordinary course of business, Stephens and its affiliates at any time may hold long or short positions, and may trade or otherwise effect transactions as principal or for the accounts of customers, in debt or equity securities or options on securities of the Company or of any other participant in the merger.

 

Fee Arrangements

 

The Company retained Stephens based on its qualifications and expertise and its reputation as a nationally recognized investment banking firm. Pursuant to a letter agreement dated June 17, 2010, Stephens received a fee of $600,000 for the delivery of its opinion on October 1, 2010, a fee in the amount of $50,000 for the delivery of its opinion on November 30, 2010 and a fee of $600,000 for its opinion delivered on December 14, 2010. Under the terms of the June 17, 2010 letter agreement, Stephens will be entitled to receive an additional fee of approximately $2.4 million upon consummation of the merger. The Company has also agreed to reimburse Stephens for certain of its out-of-pocket expenses (including fees and expenses of its counsel)

reasonably incurred by it in connection with its services and will indemnify Stephens against potential liabilities arising out of its engagement, including certain liabilities under the U.S. federal securities laws.

 

While the Company provides public guidance in September or October of each year for its financial performance for the subsequent fiscal year, and periodically updates such guidance during the course of the subsequent fiscal year, it does not, as a matter of course, publicly disclose financial projections as to future financial performance, earnings or other results for longer than one year. The Company is especially cautious of making financial projections for periods longer than one fiscal year due to unpredictability of the underlying assumptions and estimates. However, in connection with the evaluation of a possible transaction involving the Company, the Company’s senior management prepared and provided to Parent, the board of directors, the special committee and Stephens certain non-public financial projections covering multiple years that were not prepared with a view toward public disclosure. The financial projections were utilized by Stephens, at the direction of the Company, for purposes of the financial analyses it rendered to the special committee and the board of directors during the process of evaluating the merger and its analyses in connection with its opinion. See “The Merger — Opinion of Stephens, Financial Advisor” beginning on page 40.

 

A summary of these financial projections is not being included in this proxy statement to influence your decision whether to vote for or against the proposal to adopt the merger agreement, but because these financial projections were made available to Parent, the board of directors, the special committee and Stephens. The inclusion of these projections or any other projections provided in connection with the transaction should not be regarded as a representation by the Company, Merger Sub, the board of directors, the special committee, Parent, Stephens or any other person that it considered, or now considers, the projections to be necessarily representative of actual future results.

 

The Company believes that the assumptions its senior management used as a basis for the projections were reasonable at the time the projections were prepared, given information the Company’s senior management had at the time. However, except to the extent required by applicable federal securities laws, the Company does not intend, and expressly disclaims any responsibility, to update or otherwise revise the projections to reflect circumstances existing after the date when prepared or to reflect the occurrence of future events even in the event that any of the assumptions underlying the projections are shown to be in error. The assumptions upon which these projections were based are subjective in many respects and are subject to various interpretations.

 

Although the projections are presented with numerical specificity, the projections reflect numerous assumptions with respect to industry performance, general business, economic, market, regulatory and financial conditions and other matters, all of which are difficult to predict and many of which are beyond the Company’s control. The projections are also subject to significant uncertainties in connection with changes to the Company’s business and its financial condition and results of operations, and include numerous estimates and assumptions related to the Company’s business that are inherently subject to significant economic, political and competitive uncertainties, including those factors described under “Risk Factors” incorporated herein by reference from the Company’s 10-K, filed on September 22, 2010, all of which are difficult to predict and many of which are beyond the Company’s control. As a result, although the projections set forth below were prepared in good faith based upon assumptions believed to be reasonable at the time the projections were prepared, there can be no assurance that the projected results will be realized or that actual results will not be significantly higher or lower than projected. Since the projections below cover multiple years, such information by its nature becomes less reliable with each successive year. For the foregoing reasons, the inclusion of projections in this proxy statement should not be regarded as an indication that such projections will be necessarily predictive of actual future events, and they should not be relied on as such.

 

The projections were not prepared with a view to compliance with published guidelines of the SEC regarding projections, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or GAAP. Furthermore, the Company’s independent auditor has not examined, compiled or otherwise applied procedures to the projections and,

accordingly, assumes no responsibility for, and expresses no opinion on, them. The Company has made no representation to Parent, Merger Sub or any other person in the merger agreement or otherwise concerning these financial projections.

 

The financial projections are forward-looking statements. For information on factors that may cause the Company’s future financial results to materially vary, see “Cautionary Statements Concerning Forward-Looking Information” beginning on page 18 of this proxy statement.

 

The following is a summary of the financial projections prepared by the Company’s senior management and provided to Parent, the board of directors, the special committee and Stephens:

 

 

Note: The financial projections were developed as of July 8, 2010, and:

 

• exclude the impact from any future acquisitions;

 

• include certain non-recurring charges of approximately $0.3 million in fiscal year 2011;

 

• include estimated annual public company expenses of approximately $1.3 million; and

 

 

(1) Annual revenue growth, net of estimated customer churn, is assumed to be approximately 7.9% in fiscal year 2011 and approximately 7.2% in the years thereafter.

 

(2) EBITDA is defined as income excluding interest, taxes, depreciation and amortization. EBITDA is presented because management believes that it is a widely accepted and useful financial indicator regarding our results of operations. Management believes EBITDA assists in analyzing and benchmarking the performance and value of our business. Although our management uses EBITDA as a financial measure to assess the performance of our business compared to that of others in our industry, the use of EBITDA is limited because it does not include certain costs that are material in amount, such as interest, taxes, depreciation and amortization, which are necessary to operate our business. EBITDA is not a recognized term under generally accepted accounting principles and, when analyzing our operating performance, investors should use EBITDA in addition to, not as an alternative for, operating income, net income and cash flows from operating activities.

 

(3) Earnings per share for all periods are based on diluted shares outstanding as of July 31, 2010.

 

Readers of this proxy statement are cautioned not to place undue reliance on the summary of the financial projections set forth above. No one has made or makes any representation to you regarding the information included in these projections or the future financial results of the Company.

 

We anticipate that the total amount of funds necessary to complete the merger will be approximately $263 million, in the aggregate, comprised of:

 

 

 

These payments are expected to be funded by Parent from its cash on hand and committed funding under its credit facilities.

 

In considering the recommendation of our board of directors that you vote to adopt the merger agreement, you should be aware that certain of our directors and executive officers have financial interests in the merger that are different from, or in addition to, those of our stockholders generally. The board of directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of the Company. For the purposes of all of the agreements and plans described below, the completion of the transactions contemplated by the merger agreement will constitute a change in control.

 

Equity Compensation and Incentive Awards

 

At the effective time of the merger, (i) each outstanding option to purchase shares of the Company’s common stock that is outstanding and unexercised as of immediately prior to the effective time of the merger, whether vested or unvested, will automatically vest and be converted into the right to receive a cash payment equal to the number of shares of the Company’s common stock subject to such option multiplied by the amount (if any) by which $25.00 exceeds the exercise price per share of such option, less any applicable withholding taxes, (ii) the restrictions on each share of restricted stock (other than the shares of restricted stock granted under existing plans on September 24, 2010, which will be cancelled without payment) will lapse and be converted into the right to receive a cash payment equal to $25.00, less any applicable withholding taxes and (iii) each outstanding performance unit (other than performance units granted under existing plans on September 24, 2010, which will be cancelled without payment) will vest and each share of the Company’s common stock issued in respect of the performance units will be converted into the right to receive a cash payment equal to $25.00, less any applicable withholding taxes.

 

The following table sets forth, as of December 28, 2010, the equity compensation award holdings of the Company’s directors and executive officers and the gross value of such holdings assuming the merger is completed:

 

 

 

 

 

Retention Agreements

 

We previously entered into retention agreements with Ray E. Schmitz, our Chief Financial Officer, and several other non-executive employees of the business. Mr. Schmitz’s retention agreement provides for the payment of certain severance amounts if Mr. Schmitz’s employment is terminated without “cause” after a change in control. Under Mr. Schmitz’s agreement, any (i) material diminution of the scope of his duties and responsibilities for the Company, (ii) reduction in his base salary and employee benefits or (iii) required relocation of more than 30 miles, gives Mr. Schmitz the right to terminate his employment with the Company and such termination is deemed to be a termination by the Company without “cause”.

 

In the event of a qualifying termination during the term of Mr. Schmitz’s retention agreement, Mr. Schmitz is entitled to receive: (i) a lump sum payment equal to two times the sum of (a) his annualized base salary as of the date of such termination and (b) an amount equal to the greater of: (x) his target bonus during either of the two years preceding the change in control or (y) his target bonus for the year in which he was terminated; (ii) continued participation in all life, health and disability benefits and programs in which he was a participant immediately prior to such termination of employment, for a period terminating on the earlier of (a) 18 months after the date of such termination and (b) his obtaining full-time employment with a new employer; and (iv) a gross-up payment for the excise taxes imposed under Section 4999 of the Internal Revenue Code, if any, plus any federal, state or local income tax or excise tax amount upon the gross up payment.

 

Based on Mr. Schmitz’s compensation level as of December 28, 2010, and assuming that the merger is completed on March 1, 2011, and Mr. Schmitz experiences a qualifying termination thereafter, the amount of the cash severance payment (including the applicable target bonus payment) that would be payable to Mr. Schmitz is approximately $1,035,000, and the estimated value of the life, health and disability benefits and programs he would continue to receive is $19,482.

 

Arrangements with the Surviving Corporation

 

As of the date of this proxy statement, we have been advised that no members of our current management team have entered into any agreement, arrangement or understanding with Parent, Merger Sub or their affiliates regarding employment with, or the right to convert into or reinvest or participate in the equity of, the surviving corporation or Parent or any of its subsidiaries.

 

Certain members of our current management team may continue to be employed by the Company following the merger and some of these members may enter into new arrangements with Parent or its affiliates, regarding future employment. Parent and its affiliates have not entered into, or negotiated the terms of, any such arrangements with any members of our management, and Parent’s and Merger Sub’s obligations to consummate the merger are not conditioned upon entry into any such arrangements with members of our management team.

 

Except as disclosed in this proxy statement, there is no present or proposed material agreement, arrangement, understanding or relationship between Parent, Merger Sub, or any of their respective executive officers, directors, controlling persons or subsidiaries, on the one hand, and the Company or any of its executive officers, directors, controlling persons or subsidiaries, on the other hand.

 

Indemnification and Insurance

 

Parent has agreed to, and has agreed to cause the Company and the surviving corporation to, (i) until six years after the effective time of the merger or, if longer, until all claims for indemnification in respect of any claims made prior to the end of such six year period have been finally resolved, (a) indemnify and hold harmless our present and former directors and officers against all claims, liabilities, losses, damages, judgments, fines, penalties, costs (including amounts paid in settlement or compromise) and reasonable

expenses (including reasonable fees and expenses of legal counsel) in connection with any claim, suit, action, proceeding or investigation (whether civil, criminal, administrative or investigative), whenever asserted, based on or arising out of the fact that such director or officer was a director or officer of the Company or our subsidiaries (or acts or omissions by such director or officer in his capacity as a director, officer, employee or agent of the Company or such subsidiary or taken at the request of the Company or such subsidiary) at or prior to the effective time of the merger (including in connection with the merger agreement or the transactions contemplated by the merger agreement) to the fullest extent permitted by law and (b) advance to such present and former directors and officers all such expenses that are incurred to the fullest extent permitted by law, and (ii) assume all obligations of the Company and our subsidiaries to our present and former directors and officers in respect of indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the effective time of the merger as provided in our governing documents and our indemnification agreements with our present or former directors and officers. From and after the effective time of the merger until six years after the effective time of the merger or, if longer, until all claims for indemnification in respect of any claims made prior to the end of such six year period have been finally resolved, Parent will cause the certificate of incorporation and by-laws of the surviving corporation to contain provisions no less favorable to our present and former directors and officers with respect to limitation of liability and indemnification of directors and officers than those set forth in the merger agreement and our governing documents as of the date of the merger agreement, which provisions will not be amended, repealed or otherwise modified in a manner that would adversely affect the rights of our present and former officers and directors.

 

The merger agreement provides that at our election, (i) we may obtain, prior to the effective time of the merger, a “tail” insurance policy with a claims period of at least six years from the effective time of the merger with respect to the directors’ and officers’ liability insurance in amount and scope no less favorable than our existing policy for claims arising from facts or events that occurred on or prior to the effective time of the merger at a cost that does not exceed 250% of the annual premium currently paid by the Company for directors’ and officers’ insurance or (ii) Parent will provide or cause the surviving corporation to provide, for at least six years after the effective time of the merger, our present and former directors and officers who are insured under our current directors’ and officer’s insurance and indemnification policy with an insurance and indemnification policy that provides coverage for events occurring at or prior to the effective time of the merger that is no less favorable than our existing policy. However, Parent and the surviving corporation are not required to pay an aggregate amount in excess of 250% of the annual premium currently paid by the Company for such insurance and if the annual premiums of such insurance coverage exceed 250% of the annual premium currently paid, Parent or the surviving corporation will be obligated to obtain a policy with the greatest coverage available for a cost not exceeding such amount.

 

Continued Salary and Benefits

 

For a period of six months following the effective time of the merger, Parent has agreed to cause the surviving corporation and its subsidiaries to:

 

• provide employees of the Company and its subsidiaries during their employment:

 

 

 

Special Committee Fees

 

In accordance with the resolutions of the board of directors, each member of the special committee is entitled to receive as compensation a fee in the amount of $10,000 per month (pro rated for partial months) from June 15, 2010 until such time as the special committee is dissolved (as determined by the board of directors), whether or not the merger occurs.

 

The merger will be accounted for as a “purchase transaction” for financial accounting purposes.

 

The following is a summary of the material U.S. federal income tax consequences of the merger to U.S. holders (as defined below) whose shares of the Company’s common stock are converted into the right to receive cash in the merger. This summary does not purport to consider all aspects of U.S. federal income taxation that might be relevant to our stockholders. For purposes of this discussion, we use the term “U.S. holder” to mean a beneficial owner of shares of the Company’s common stock that is, for U.S. federal income tax purposes:

 

 

If a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds common stock, the tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. A partner of a partnership holding common stock should consult the partner’s tax advisor regarding the U.S. federal income tax consequences of the merger to such partner.

 

This discussion is based upon the Internal Revenue Code of 1986, as amended, which we refer to in this proxy statement as the Code, and Treasury regulations, Internal Revenue Service rulings and judicial decisions now in effect, all of which are subject to change (possibly with retroactive effect) or different interpretations. The discussion applies only to beneficial owners who hold shares of the Company’s common stock as capital assets within the meaning of Section 1221 of the Code, and does not apply to shares of the Company’s common stock received in connection with the exercise of employee stock options or otherwise as compensation, stockholders who hold an equity interest, actually or constructively, in Parent or the surviving corporation after the merger, stockholders who validly exercise their rights under the DGCL to object to the merger or to certain types of beneficial owners who may be subject to special rules (such as insurance companies, banks, tax-exempt organizations, financial institutions, broker-dealers, partnerships, S corporations or other pass-through entities, mutual funds, traders in securities who elect the mark-to-market method of accounting, stockholders subject to the alternative minimum tax, stockholders that have a functional currency other than the U.S. dollar or stockholders who hold common stock as part of a hedge, straddle, constructive sale or conversion transaction). This discussion also does not address the U.S. tax consequences to any stockholder who, for U.S. federal income tax purposes, is a non-resident alien individual, foreign corporation, foreign partnership or foreign estate or trust, and does not address the receipt of cash in connection with the cancellation of options to purchase shares of the Company’s common stock or any other matters relating to equity compensation or benefit plans. This discussion does not address any aspect of state, local, foreign, estate or gift tax laws.

Exchange of Shares of the Company’s Common Stock for Cash Pursuant to the Merger Agreement

 

The exchange of shares of the Company’s common stock for cash in the merger will be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder whose shares of the Company’s common stock are converted into the right to receive cash in the merger will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received with respect to such shares (determined before the deduction of any applicable withholding taxes) and the U.S. holder’s adjusted tax basis in such shares. A U.S. holder’s adjusted tax basis will generally equal the price the U.S. holder paid for such shares. Gain or loss will be determined separately for each block of shares of the Company’s common stock (i.e., shares of the Company’s common stock acquired at the same cost in a single transaction). Such gain or loss will be long-term capital gain or loss provided that the U.S. holder’s holding period for such shares of the Company’s common stock is more than 12 months at the time of the completion of the merger. Long-term capital gains of non-corporate U.S. holders recognized in taxable years before January 1, 2013 are eligible for a maximum tax rate equal to 15%. There are limitations on the deductibility of capital losses.

 

Backup Withholding and Information Reporting

 

Backup withholding of tax may apply to cash payments to which a non-corporate U.S. holder is entitled under the merger agreement, unless the U.S. holder or other payee provides a taxpayer identification number, certifies that such number is correct, and otherwise complies with the backup withholding rules. Each of our U.S. holders should complete and sign, under penalty of perjury, the Substitute Form W-9 included as part of the letter of transmittal that will be sent promptly after the completion of the merger (but in no event more than five business days thereafter) and return it to the paying agent, in order to provide the information and certification necessary to avoid backup withholding, unless an exemption applies and is established in a manner satisfactory to the paying agent.

 

Backup withholding is not an additional tax. Any amounts withheld from cash payments to a U.S. holder pursuant to the merger under the backup withholding rules will be allowable as a refund or a credit against such U.S. holder’s U.S. federal income tax liability provided the required information is timely furnished to the Internal Revenue Service.

 

Cash payments made pursuant to the merger will also be subject to information reporting unless an exemption applies.

 

The U.S. federal income tax consequences described above are not intended to constitute a complete description of all tax consequences relating to the merger. Because individual circumstances may differ, each stockholder should consult the stockholder’s tax advisor regarding the applicability of the rules discussed above to the stockholder and the particular tax effects to the stockholder of the merger in light of such stockholder’s particular circumstances, the application of federal, state, local and foreign tax laws, and, if applicable, the tax consequences of the receipt of cash in connection with the cancellation of options, restricted stock and/or performance units, including the transactions described in this proxy statement relating to our other equity compensation and benefit plans.

 

Under the terms of the merger agreement, the merger cannot be completed until the waiting period (and any extension thereof) applicable to the merger under the HSR Act and any other applicable foreign competition, merger control, antitrust or similar law has been terminated or has expired.

 

Completion of the merger is subject to clearance under (i) the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, or the HSR Act, (ii) the Competition Act (Canada), R.S.C. 1985, c. C-34 and regulations thereto, as amended, or the Competition Act, and (iii) the Canada Transportation Act, 1996, c.10 and regulations thereto, as amended, or the Transportation Act.

 

Under the HSR Act, and the rules promulgated thereunder by the Federal Trade Commission, or the FTC, the merger cannot be completed until each of the Company and Parent file a notification and report form with

the FTC and the Antitrust Division of the Department of Justice, or the DOJ, under the HSR Act and the applicable 30-day waiting period has expired or been terminated. The Company and Parent filed such notification and report forms on December 21, 2010 and each requested early termination of the waiting period. Although no extension is anticipated in connection with the merger, the initial 30-day waiting period may be extended by the DOJ or FTC through the issuance of a request for additional information and documentary materials (so-called “Second Request”) which will toll the initial waiting period until Parent and the Company certify their substantial compliance with the Second Request. After Parent and the Company substantially comply with the Second Request, the merger will be subject to an additional 30-day waiting period and the merger cannot be completed until this waiting period has expired or been terminated.

 

Under the Competition Act, the merger cannot be completed until the parties receive from the Commissioner, in respect of the merger, an advance ruling certificate, or an ARC, pursuant to Section 102 of the Competition Act, or a “no action letter” indicating that the Commissioner has determined that she does not at that time intend to make an application for an order under Section 92 of the Competition Act. In the event that neither an ARC nor a “no action letter” is issued or received, the 30-day waiting period under Section 123 of the Competition Act must expire without the issuance of a supplementary information request, in which case the Company and Parent would be in a legal position to close under the Competition Act, despite the non-issuance of an ARC or “no-action letter.” Where a supplementary information request is issued, the waiting period is extended until 30 days after both parties comply with it, unless an ARC or a “no-action letter” is issued before such time. The Company and Parent filed the applicable pre-merger notification forms on December 21, 2010. Parent filed a request for an ARC on December 17, 2010.

 

Under the Transportation Act, the merger cannot be completed until a notice has been received from the Canadian Minister of Transport that the merger does not raise issues with respect to the public interest as it relates to national transportation, which notice may be issued within an initial 42 day review period. Further review periods apply where such a notice is not issued within the initial 42 day review period. The Company and Parent filed the applicable materials under the Transportation Act on December 21, 2010.

 

Notwithstanding the regulatory filing requirements under the HSR Act, the Competition Act and the Transportation Act, Parent has agreed that it will sell or otherwise dispose of, hold separate, or divest itself of all or any portion of the business or assets of the Company or its subsidiaries to eliminate any impediment that may be asserted under any law governing competition, monopolies or restrictive trade practices.

 

At any time before or after consummation of the merger, notwithstanding the termination or expiration of the waiting period under the HSR Act, the DOJ or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the merger or seeking divestiture of substantial assets of the Company or Parent. At any time before or after the completion of the merger, and notwithstanding the termination or expiration of the waiting period under the HSR Act, any state could take such action under antitrust laws as it deems necessary or desirable in the public interest as it relates to national transportation. Such action could include seeking to enjoin the completion of the merger or seeking divestiture of substantial assets of the Company or Parent. Private parties may also seek to take legal action under antitrust laws under certain circumstances.

 

At any time before or within one year of the consummation of the merger, notwithstanding the waiver or expiration of the waiting period under the Competition Act, the Commissioner of Competition could take such action under the Competition Act as she deems necessary or desirable to avoid a prevention or lessening, or likely prevention or lessening, of competition substantially in any relevant market, including seeking to enjoin the completion of the merger or seeking divestiture of substantial assets of the Company or Parent. At any time before the consummation of the merger, the Minister of Transport, Infrastructure and Communities could take such action under the Canada Transportation Act as he deems necessary or desirable in the public interest. Such action could include enjoining the completion of the merger or seeking revisions to the merger to address any public interest concerns.

 

There can be no assurance as to the absence of any litigation challenging the regulatory approvals described above. There can also be no assurance that the DOJ, the FTC, or any other governmental entity or

any private party will not attempt to challenge the merger on antitrust grounds, and, if such a challenge is made, there can be no assurance as to its result.

 

To the Company’s knowledge, there is no pending litigation against the merger. On October 19, 2010, a putative class action petition was filed in the District Court of Dallas County, Texas, challenging the proposed transaction announced on October 1, 2010, by which DashNow Acquisition Corp. and DashNow Holding Corp. would acquire the Company. We refer to this transaction as the prior proposed transaction. On November 10, 2010, an amended petition was filed. In this action challenging the prior proposed transaction, styled Kaner v. Welch et al., No. 10-13845 (298th Judicial District Court), the plaintiff purports to bring the action on behalf of the public stockholders of the Company and seeks, among other things, an order enjoining the consummation of the prior proposed transaction and awarding the plaintiff fees and costs. In the amended petition, the plaintiff alleges that our directors breached their fiduciary duties, by, among other things, allegedly failing to engage in an honest and fair sale process. The amended petition also alleges that the disclosures contained in the October 29, 2010 preliminary proxy are incomplete and/or materially misleading. The amended petition further alleges that the Company, DashNow Acquisition Corp. and DashNow Holding Corp. aided and abetted the directors’ purported breaches.

 

Our current deadline to respond to the amended petition is January 21, 2011. On November 9, 2010, the plaintiff filed a motion seeking expedited proceedings and discovery. That motion is currently set for hearing on January 6, 2011. The Company believes that the claims asserted in the Kaner action are without merit and intends to vigorously defend the action.

 

The following summary describes the material terms of the merger agreement but does not purport to describe all of the terms of the merger agreement. This summary of the merger agreement is qualified by reference to the full text of the merger agreement, a copy of which is attached as Annex A, and is incorporated by reference into, this proxy statement. The merger agreement has been included to provide you with information regarding its terms. We encourage you to read the merger agreement carefully and in its entirety because it is the legal document that governs the merger. It is not intended to provide you with any factual information about us. Such information can be found elsewhere in this proxy statement and in the public filings we make with the SEC, as described in the section entitled, “Where You Can Find More Information,” beginning on page 80 of this proxy statement.

 

The Merger

 

The merger agreement provides for the merger of Merger Sub with and into the Company upon the terms and subject to the conditions set forth in the merger agreement. As the surviving corporation, the Company will continue to exist following the merger.

 

Closing

 

The closing of the merger will take place no later than the fourth business day following the date on which the conditions to the closing of the merger (described in the section entitled “The Merger Agreement — Conditions to the Merger” beginning on page 67 of this proxy statement) have been satisfied or waived (other than the conditions that by their nature are to be satisfied at the closing of the merger, but subject to the fulfillment or waiver of those conditions), unless another date is agreed to in writing by Parent and the Company.

 

Effective Time

 

The effective time of the merger will occur upon the filing of a certificate of merger with the Secretary of State of the State of Delaware (or at such later date as we and Parent may agree and specify in the certificate of merger).

 

Directors and Officers of Surviving Corporation

 

The board of directors of the surviving corporation will, from and after the effective time of the merger, consist of the directors of Merger Sub until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal. The officers of the Company at the effective time of the merger will, from and after the effective time of the merger, be the officers of the surviving corporation until their successors have been duly appointed and qualified or until their earlier death, resignation or removal.

 

Organizational Documents of Surviving Corporation

 

The certificate of incorporation of the surviving corporation will be in the form of the certificate of incorporation of Merger Sub (except with respect to the name of the Company), until amended in accordance with its terms or by applicable law. The bylaws of the surviving corporation will be in the form of the bylaws of Merger Sub (except with respect to the name of the Company) until amended in accordance with the merger agreement or by applicable law.

 

Effect of the Merger on the Capital Stock of the Parties

 

At the effective time of the merger,

 

 

 

Shares of the Company’s common stock owned by stockholders who have perfected and not withdrawn a demand for, or lost the right to, appraisal rights under the DGCL will be cancelled without payment of the per share merger consideration. Such stockholders will instead be entitled to the appraisal rights provided under the DGCL as described in the section entitled “Appraisal Rights” beginning on page 72 of this proxy statement.

 

Exchange and Payment Procedures

 

As soon as practicable following the effective time of the merger, Parent will deposit, or will cause to be deposited, with the paying agent a cash amount necessary for the paying agent to make payment of the aggregate per share merger consideration to the holders of shares of the Company’s common stock.

 

Not later than five business days after the effective time of the merger, each record holder of shares of the Company’s common stock will be sent a letter of transmittal and instructions describing how the stockholder may exchange his, her or its shares of the Company’s common stock for the per share merger consideration promptly after the completion of the merger.

 

You should not return your stock certificates with the enclosed proxy card, and you should not forward your stock certificates to the paying agent without a letter of transmittal.

 

You will not be entitled to receive the per share merger consideration until you deliver a duly completed and validly executed letter of transmittal to the paying agent. If your shares are certificated, you must also surrender your stock certificate or certificates to the paying agent along with your letter of transmittal.

 

No interest will be paid or accrued on the cash payable as the per share merger consideration. Parent, the surviving corporation and the paying agent will be entitled to deduct and withhold any applicable taxes from the per share merger consideration. Any amount that is withheld and paid over to the appropriate taxing authority will be deemed to have been paid to the person with regard to whom it is withheld.

 

From and after the effective time of the merger, there will be no transfers on our stock transfer books of shares of the Company’s common stock that were outstanding immediately prior to the effective time of the merger. If, after the effective time of the merger, any person presents to the surviving corporation any certificates for any reason, such certificates must be cancelled and exchanged for the per share merger consideration as provided above to the extent that the per share merger consideration has not already been paid in respect of the shares of the Company’s common stock represented by such certificates.

 

Any portion of the per share merger consideration deposited with the paying agent that remains unclaimed by former record holders of the Company’s common stock nine months after the effective time of the merger will be delivered to the surviving corporation. Record holders of the Company’s common stock who have not complied with the above-described exchange and payment procedures will thereafter only look to Parent and the surviving corporation for payment of the per share merger consideration. None of the surviving corporation, Parent or the paying agent will be liable to any person for any cash delivered to a public official pursuant to any applicable abandoned property, escheat or other similar laws.

 

If you have lost a certificate, or if it has been stolen or destroyed, then before you will be entitled to receive the per share merger consideration, you must make an affidavit of the loss, theft or destruction, and if required by Parent, post a bond in an amount sufficient to provide a full indemnity against any claim that may be made against it with respect to such certificate. These procedures will be described in the letter of transmittal that you will receive, which you should read carefully in its entirety.

Company Stock Options; Other Equity Awards

 

Options

 

At the effective time of the merger, each outstanding option will be cancelled and terminated and converted into the right to receive cash equal to the excess, if any, of the per share merger consideration over the exercise price payable in respect of the Company’s common stock issuable under such option.

 

Restricted Stock

 

At the effective time of the merger, all restrictions and conditions on each outstanding share of restricted stock granted under our Amended and Restated 1996 Stock Option Plan and our 2008 Equity Compensation Plan, other than restricted stock granted under existing plans on September 24, 2010, will immediately lapse as of, and conditioned upon, the closing of the merger, and the restricted stock will be converted into the right to receive the per share merger consideration.

 

Performance Units

 

At the effective time of the merger, each outstanding performance unit granted under our Amended and Restated 1996 Stock Option Plan and our 2008 Equity Compensation Plan, other than certain performance units granted under existing plans on September 24, 2010, will automatically vest in accordance with the terms of the applicable award agreement and plan document and be settled (i) in the Company’s common stock, which will be converted into the right to receive the per share merger consideration, or (ii) to the extent permitted by the applicable award agreement or plan document, in cash by the surviving corporation on the date of the closing of the merger.

 

Representations and Warranties

 

We made customary representations and warranties in the merger agreement that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement, in the disclosure schedules to the merger agreement or, subject to certain exception, in certain documents filed with the SEC. These representations and warranties relate to, among other things:

 

 

 

Many of our representations and warranties made in the merger agreement are qualified by a material adverse effect standard. For purposes of the merger agreement, “material adverse effect” means any change, event, occurrence or effect which has had or would reasonably be expected to have a material adverse effect on the results of operations, condition (financial or otherwise), business, assets or liabilities of the Company and our subsidiaries, taken as a whole; provided, however, that none of the following will constitute a material adverse effect:

 

 

 

 

 

 

provided, that the exceptions provided in the first three sub-bullet points immediately above do not disproportionately affect the Company and our subsidiaries.

 

“Material adverse effect” also means any change, event, occurrence or effect which would reasonably be expected to materially impair the ability of the Company to perform our obligations under the merger agreement or prevent or materially delay the consummation of the merger.

 

The merger agreement also contains customary representations and warranties made by Parent and Merger Sub that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement. The representations and warranties of Parent and Merger Sub relate to, among other things:

 

 

The representations and warranties in the merger agreement of each of the Company, Parent and Merger Sub will terminate upon the consummation of the merger or the termination of the merger agreement pursuant to its terms, except that any provision in the merger agreement which contemplates performance after the effective time of the merger will survive indefinitely, including certain provisions regarding exchange of stock certificates, indemnification and insurance, fees and expenses and employee matters.

 

Stockholders’ Meeting

 

We agreed to establish a record date for, call, give notice of, convene and hold a meeting of our stockholders for the purpose of obtaining stockholder approval of the merger agreement. Subject to the provisions of the merger agreement described in the section entitled “The Merger Agreement — No Solicitation of Takeover Proposals” beginning on page 62 of this proxy statement, the board of directors will recommend

that our stockholders vote to adopt the merger agreement. We may adjourn or postpone the stockholders’ meeting to the extent necessary to ensure that any required supplement or amendment to this proxy statement is provided to our stockholders or, if as of the time for which the stockholders’ meeting is originally scheduled there are insufficient shares of the Company’s common stock represented to constitute a quorum necessary to conduct business at such meeting.

 

Conduct of Our Business Pending the Merger

 

Under the merger agreement, we have agreed that, subject to certain exceptions in the merger agreement or as required by applicable law or as contemplated by the disclosure schedules to the merger agreement, between December 14, 2010 and the effective time of the merger, unless Parent gives its consent (which, in certain cases, will not be unreasonably withheld or delayed), we and our subsidiaries will conduct our business in all material respects in the ordinary course of business consistent with past practice, comply in all material respects with applicable laws and the Company’s material contracts, and use our commercially reasonable efforts to preserve intact our business organization and the goodwill of those having business relationships with us and retain the services of our present officers and key employees, so that our goodwill and ongoing business will be unimpaired at the effective time of the merger.

 

Subject to certain exceptions set forth in the merger agreement and the disclosure schedules to the merger agreement, between December 14, 2010 and the effective time of the merger we will not, and we will not permit our subsidiaries to:

 

 

 

No Solicitation of Takeover Proposals

 

From and after the date of the merger agreement, we and our subsidiaries and representatives agreed to cease any solicitation, encouragement, discussions or negotiations with any persons that were ongoing with respect to any takeover proposal and with any persons who made or indicated an intention to make a takeover proposal and request that such persons promptly return or destroy all confidential information concerning the Company and our subsidiaries. From and after date of the merger agreement until the effective time of the merger or, if earlier, the termination of the merger agreement, we, our subsidiaries and our representatives may not, directly or indirectly:

 

 

Notwithstanding the foregoing, at any time on or after date of the merger agreement and prior to the time our stockholders adopt the merger agreement, if the Company receives a bona fide written unsolicited takeover proposal from any person that did not result from a breach of the merger agreement, and if our board of directors, prior to taking any action described below, determines in good faith after consultation with independent financial advisors and outside legal counsel that (i) failure to take action would violate the directors’ fiduciary duties to our stockholders and (ii) the takeover proposal either constitutes a superior proposal or is reasonably likely to result in a superior proposal, we may:

 

 

Following the date of the merger agreement, we must keep Parent reasonably informed of material developments, discussions or negotiations regarding any takeover proposal on a current basis and provide to

Parent within 24 hours (i) a written summary of the terms of any takeover proposal not made in writing and (ii) copies of any written materials provided by any person making a takeover proposal.

 

Except as permitted by the merger agreement, our board of directors may not (i) fail to recommend the merger to our stockholders or fail to include the recommendation in the proxy statement, (ii) change, qualify, withhold, withdraw or modify (or publicly propose to do so), in a manner adverse to Parent, its recommendation to our stockholders that the stockholders adopt the merger agreement, (iii) take any action or make any recommendation or public statement in connection with a tender offer or exchange offer other than a recommendation against such offer or a temporary “stop, look and listen” communication by the board of directors, (iv) adopt, approve or recommend to our stockholders a takeover proposal, (v) authorize the Company to enter into any agreement with respect to a takeover proposal or (vi) terminate the merger agreement in order to enter into an agreement with respect to a takeover proposal. However, prior to the time our stockholders adopt the merger agreement, our board of directors may effect a change of recommendation or terminate the merger agreement in order to enter into an agreement with respect to a takeover proposal if, prior to taking such action, our board of directors determines in good faith, after consultation with independent financial advisors and outside legal counsel, that (i) failure to do so would violate the directors’ fiduciary duties to our stockholders and (ii) the takeover proposal constitutes a superior proposal. In the case of any change of recommendation that is the result of a superior proposal or termination of the merger agreement by us to enter into an agreement with respect to a superior proposal:

 

 

Except to the extent provided in certain provisions of the merger agreement, nothing in the provisions of the merger agreement relating to takeover proposals prevents us from complying with our disclosure obligations under U.S. federal or state law with regard to a takeover proposal, including taking and disclosing to our stockholders a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A under the Exchange Act.

 

For purposes of the merger agreement, “takeover proposal” means any inquiry, proposal or offer from any person or group with respect to any (i) acquisition of assets of the Company and our subsidiaries equal to more than 20% of the Company’s consolidated assets or to which more than 20% of the Company’s revenues or earnings on a consolidated basis are attributable, (ii) acquisition of more than 20% of the Company’s outstanding common stock, (iii) tender offer or exchange offer that if consummated would result in any person beneficially owning more than 20% of the Company’s outstanding common stock, (iv) merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company or (v) any combination of the foregoing if the sum of the percentage of consolidated assets, consolidated revenues or earnings and the Company’s common stock involved is more than 20%, in each case, other than the transactions contemplated by the merger agreement.

“Superior proposal” means any bona fide written takeover proposal (i) that includes consideration per share of the Company’s common stock that is greater than the per share merger consideration and that the board of directors has determined in its good faith judgment (after consultation with independent financial advisors and outside legal counsel) is reasonably likely to be consummated in accordance with its terms without unreasonable delay, taking into account all legal, regulatory and financial aspects of the proposal (including certainty of financing) and the person making the proposal, and if consummated, would result in a transaction more favorable to our stockholders from a financial point of view than the transaction contemplated by the merger agreement (including any changes to the terms of the merger agreement proposed by Parent in response to such proposal or otherwise) and (ii) accompanied by executed customary financing commitments from recognized financing sources not subject to any due diligence conditions and that, together with available cash, are sufficient to fund the cash portion of such takeover proposal; provided that for purposes of the definition of “superior proposal,” the references to 20% in the definition of takeover proposal will be deemed references to 50%.

 

Agreement to Use Commercially Reasonable Efforts

 

We and Parent will cooperate and use our respective commercially reasonable efforts to promptly take or cause to be taken all actions and do or cause to be done all things necessary, proper or advisable to cause the conditions to closing to be satisfied and to consummate the merger and the other transactions contemplated by the merger agreement in the most expeditious manner practicable and to prepare and file promptly and fully all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents (including effecting the regulatory filings under applicable antitrust laws) and obtain all approvals, consents, expirations of waiting periods, registrations, permits, authorizations and other confirmations from any governmental authority or third party necessary, proper and advisable to consummate the transactions contemplated by the merger agreement.

 

We and Parent agreed to make a filing pursuant to the HSR Act and all applicable foreign antitrust laws with respect to the transactions contemplated by the merger agreement within five business days of the date of the merger agreement and use commercially reasonable efforts to supply as promptly as practicable any additional information that may be requested necessary to cause the expiration or termination of the waiting periods under the HSR Act and all applicable foreign antitrust laws.

 

We and Parent also agreed, subject to certain exceptions, to use commercially reasonable efforts to:

 

 

Parent and its affiliates are also obligated to sell or otherwise dispose of, hold separate (through the establishment of a trust or otherwise), or divest itself of all or any portion of the business or assets of the

Company or our subsidiaries to eliminate any impediment that may be asserted under any law governing competition, monopolies or restrictive trade practices.

 

Parent will pay all fees associated with the filings made by Parent, Merger Sub and the Company in accordance with this covenant.

 

Termination of the Company’s Credit Facility

 

The Company has agreed to use commercially reasonable efforts to obtain such consents, approvals, authorizations and instruments which may be reasonably requested by Parent or Merger Sub in connection with the termination of its credit facility at the effective time of the merger, including customary payoff letters, lien releases and instruments of termination or discharge.

 

Other Covenants and Agreements

 

Public Announcements

 

The parties agreed that the initial press release with respect to the execution of the merger agreement would be a joint press release to be agreed upon by Parent and the Company. We and Parent agreed not to issue any further public announcement with respect to the merger without the prior consent of the other party, except as required by law or agreement with the Nasdaq Stock Market LLC or the Toronto Stock Exchange as determined in the good faith judgment of the party proposing to make such public announcement.

 

Access to Information; Confidentiality

 

We agreed to give Parent and its representatives reasonable access during normal business hours to our properties, books, contracts, commitments, records, correspondence, officers, employees, accountants, counsel, financial advisors and other representatives. We also agreed to furnish to Parent a copy of each report filed pursuant to securities laws, communications received from the SEC and all other information concerning our business, properties and personnel as Parent reasonably requests. Neither the Company nor our subsidiaries are obligated to provide any such access or information to the extent that it would (x) require disclosure by the Company or such subsidiary of information subject to attorney-client privilege, (y) conflict with confidentiality obligations to which the Company or such subsidiary is bound, or (z) violate any applicable laws (including antitrust laws); provided that this does not limit the obligation of the Company to promptly (and in any event within 24 hours) provide to Parent any material non-public information provided orally and any non-public information provided in writing, in each case concerning the Company or our subsidiaries that is provided to any person pursuant to the merger agreement which was not previously provided to Parent or its representatives. Parent and its representatives will hold information received from us pursuant to this covenant in confidence.

 

Notification of Certain Matters

 

We and Parent agreed to give prompt notice to the other of (i) notices or communications received from governmental authorities in connection with the merger or from any person or entity alleging that its consent is required for the merger, (ii) proceedings commenced or threatened relating to the merger, (iii) the discovery of facts or circumstances that would make any representation or warranty that is qualified as to materiality or material adverse effect to be untrue and that is not so qualified to be untrue in any material respect and (iv) any material failure of that party to comply with a covenant under the merger agreement. However, the parties agreed that the delivery of any notice pursuant to this covenant will not cure a breach of other provisions of the merger agreement or limit the remedies available to the party receiving notice.

 

Indemnification; Directors’ and Officers’ Insurance

 

From and after the effective time of the merger, (i) until six years after the effective time of the merger or, if longer, until all claims for indemnification in respect of any claims made prior to the end of such six year period have been finally resolved, Parent and the surviving corporation will (a) indemnify and hold

harmless our present and former directors and officers against all claims, liabilities, losses, damages, judgments, fines, penalties, costs (including amounts paid in settlement or compromise) and reasonable expenses (including reasonable fees and expenses of legal counsel) in connection with any claim, suit, action, proceeding or investigation (whether civil, criminal, administrative or investigative), whenever asserted, based on or arising out of the fact that a director or officer was a director or officer of the Company or our subsidiaries (or acts or omissions by a director or officer in his capacity as a director, officer, employee or agent of the Company or such subsidiary or taken at the request of the Company or such subsidiary) at or prior to the effective time of the merger (including in connection with the merger agreement or the transactions contemplated by the merger agreement) to the fullest extent permitted by law and (b) advance to such present and former directors and officers all such expenses that are incurred to the fullest extent permitted by law, and (ii) Parent will assume all obligations of the Company and our subsidiaries to our present and former directors and officers in respect of indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the effective time of the merger as provided in our governing documents and our indemnification agreements with our present or former directors and officers. From and after the effective time of the merger until six years after the effective time of the merger or, if longer, until all claims for indemnification in respect of any claims made prior to the end of such six year period have been finally resolved, Parent will cause the certificate of incorporation and by-laws of the surviving corporation to contain provisions no less favorable to our present and former directors and officers with respect to limitation of liability and indemnification than those set forth in the merger agreement and our governing documents as of the date of the merger agreement, which provisions will not be amended, repealed or otherwise modified in a manner that would adversely affect the rights of our present and former officers and directors.

 

At our election, (i) we may obtain prior to the effective time of the merger a “tail” insurance policy with a claims period of at least six years from the effective time of the merger with respect to the directors’ and officers’ liability insurance in amount and scope no less favorable than our existing policy for claims arising from facts or events that occurred on or prior to the effective time of the merger at a cost that does not exceed 250% of the annual premium currently paid by the Company for directors’ and officers’ insurance or (ii) Parent will provide or cause the surviving corporation to provide, for at least six years after the effective time of the merger, our present and former directors and officers who are insured under our current directors’ and officer’s liability insurance with an insurance and indemnification policy that provides coverage for events occurring at or prior to the effective time of the merger that is no less favorable than our existing policy. However, Parent and the surviving corporation are not required to pay in excess of 250% of the annual premium currently paid by the Company for such insurance and if the annual premiums of such insurance coverage exceed 250% of the annual premium currently paid, Parent or the surviving corporation will be obligated to obtain a policy with the greatest coverage available for a cost not exceeding such amount.

 

The present and former directors and officers of the Company will have the right to enforce the provisions of the merger agreement relating to their indemnification. If Parent or the surviving corporation assigns, transfer or conveys all of its properties and assets to any person, then proper provision must be made so that the successors and assigns of Parent and the surviving corporation assume all of the above indemnity obligations. If any action is made against any of our former directors or officers on or prior to the sixth anniversary of the effective time of the merger, the above indemnity provisions will continue in effect until the final disposition of the action.

 

Securityholder Litigation

 

We agreed to give Parent the opportunity to participate in the defense or settlement of any securityholder litigation against us and/or our directors relating to the merger and not to settle that securityholder litigation without Parent’s consent.

 

Fees and Expenses

 

Except as otherwise specified in the merger agreement, all fees and expenses incurred in connection with the merger agreement, the merger and the other transactions contemplated by the merger agreement will be

paid by the party incurring the fees or expenses, whether or not the merger and the other transactions contemplated by the merger agreement are consummated.

 

Section 16 Matters

 

We agreed to take all steps reasonably requested by any party to the merger agreement to cause dispositions of our equity securities pursuant to the merger by each individual who is a director or officer of the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act to the extent permitted by law.

 

Employee Benefit Matters

 

Parent agreed to, for a period of six months immediately following the closing of the merger, cause the surviving corporation and its subsidiaries to provide employees of the Company and our subsidiaries during their employment with the same level of base salary in effect on the date of the closing of the merger and employee benefit plans, programs, contracts and arrangements, other than equity-based plans, that are no less favorable, in the aggregate, than similar employee benefit plans, programs, contracts and arrangements provided by the Company and our subsidiaries prior to the closing of the merger. Parent will recognize the service of our employees prior to the date of the closing of the merger as service with Parent in connection with any tax-qualified pension plan, 401(k) savings plan, welfare benefits plans and policies maintained by Parent which is made available following the closing of the merger for purposes of vesting or eligibility.

 

Parent agreed to (i) waive, or cause its insurance carriers to waive, all limitations as to pre-existing and at-work conditions, if any, with respect to participation and coverage requirements applicable to our employees under any welfare benefit plan made available to our employees following the closing to the same extent as under any similar type of plan applicable to our employees prior the closing and (ii) provide credit to our employees for any co-payments, deductibles and out-of-pocket expenses paid by such employees under the employee benefit plans, programs and arrangements during the portion of the relevant plan year including the date of the closing of the merger.

 

Conditions to the Merger

 

The respective obligations of the Company, Parent and Merger Sub to effect the merger are subject to the satisfaction (or waiver, if permissible under applicable law) of the following conditions:

 

 

The obligations of Parent and Merger Sub to effect the merger are also subject to the satisfaction (or waiver, if permissible under applicable law) of the following additional conditions:

 

 

 

Our obligation to effect the merger is subject to the satisfaction (or waiver, if permissible under applicable law) of the following additional conditions:

 

 

None of the parties may rely on the failure of any condition set forth above to be satisfied if such failure was caused by that party’s failure to use its commercially reasonable efforts to consummate the merger as required by the merger agreement.

 

Termination

 

We and Parent may, by mutual written consent, terminate the merger agreement and abandon the merger at any time prior to the effective time of the merger, whether before or after the adoption of the merger agreement by our stockholders.

 

The merger agreement may also be terminated and the merger abandoned at any time prior to the effective time of the merger whether before or after the adoption of the merger agreement by our stockholders (except as noted below) as follows:

 

 

 

 

 

 

 

 

Effect of Termination

 

If the merger agreement is terminated, the terminating party must give written notice to the other parties. Upon such notice, the merger agreement will become null and void, except for certain provisions, including the provision discussed in the section entitled “The Merger Agreement — Termination Fees” below. Upon termination, the parties will have no liability, except we may be liable for termination fees, and nothing will relieve any party for any willful and material breach of the merger agreement.

Termination Fees

 

Company Termination Fee

 

Under certain circumstances, we may be obligated to pay Parent a termination fee equal to $7,729,106. The occurrence of the following events will result in our obligation to pay Parent the applicable termination fee described above:

 

 

Remedies

 

The Company, Parent and Merger Sub are entitled to injunctions to prevent breaches of the merger agreement and to specifically enforce the terms and provisions of the merger agreement, in addition to any other remedy to which they are entitled at law or in equity.

In the event of a willful and material breach of the merger agreement by Parent or Merger Sub, the Company’s measure of damages may include the loss of the economic benefits of the transactions to the Company’s stockholders and holders of options, whether or not the merger agreement was validly terminated.

 

Parent’s receipt of a termination fee will not relieve us of liability for losses or damages suffered or incurred by Parent or Merger Sub in connection with the merger agreement, the merger or any matter forming the basis for termination in the event of any willful and material breach by the Company of the merger agreement.

 

Amendment or Supplement

 

At any time prior to the effective time of the merger, the parties to the merger agreement may amend or supplement the merger agreement, whether before or after the stockholder approval, by written agreement of the parties and by action of their respective boards of directors. However, following stockholder approval, the parties may not amend the provisions of the merger agreement in any manner which would require further approval by our stockholders under applicable law without such approval.

 

Under the DGCL, if you do not wish to accept the per share merger consideration provided for in the merger agreement, you have the right to seek appraisal of your shares of the Company’s common stock and, if the merger is completed, to receive payment in cash for the fair value of your shares of the Company’s common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be fair value. The “fair value” of your shares of the Company’s common stock as determined by the Delaware Court of Chancery may be more or less than, or the same as, the $25.00 per share that you are otherwise entitled to receive under the terms of the merger agreement. These rights are known as appraisal rights. The Company’s stockholders who elect to exercise appraisal rights must not vote in favor of the proposal to adopt the merger agreement and must comply with the provisions of Section 262 of the DGCL, or Section 262, in order to perfect their rights. Strict compliance with the statutory procedures in Section 262 is required. Failure to follow precisely any of the statutory requirements may result in the loss of your appraisal rights.

 

This section is intended as a brief summary of the material provisions of the Delaware statutory procedures that a stockholder must follow in order to seek and perfect appraisal rights. This summary, however, is not a complete statement of all applicable requirements, and it is qualified by reference to Section 262, the full text of which appears in Annex C to this proxy statement. The following summary does not constitute any legal or other advice, nor does it constitute a recommendation that stockholders exercise their appraisal rights under Section 262.

 

Section 262 requires that where a merger agreement is to be submitted for adoption at a meeting of stockholders, the stockholders be notified that appraisal rights will be available not less than 20 days before the stockholder meeting to vote on the merger. A copy of Section 262 must be included with such notice. This proxy statement constitutes the Company’s notice to our stockholders that appraisal rights are available in connection with the merger, in compliance with the requirements of Section 262. If you wish to consider exercising your appraisal rights, you should carefully review the text of Section 262 contained in Annex C to this proxy statement. Failure to comply timely and properly with the requirements of Section 262 will result in the loss of your appraisal rights under the DGCL.

 

If you elect to demand appraisal of your shares of the Company’s common stock, you must satisfy each of the following conditions:

 

 

If you fail to comply with either of these conditions and the merger is completed, you will be entitled to receive payment for your shares of the Company’s common stock as provided for in the merger agreement, but you will have no appraisal rights with respect to your shares of the Company’s common stock. A holder of shares of the Company’s common stock wishing to exercise appraisal rights must hold of record the shares of the Company’s common stock on the date the written demand for appraisal is made and must continue to hold the shares of the Company’s common stock of record through the effective time of the merger, because appraisal rights will be lost if the shares of the Company’s common stock are transferred prior to the effective time of the merger. Voting against or failing to vote for the proposal to adopt the merger agreement by itself does not constitute a demand for appraisal within the meaning of Section 262. A proxy that is submitted and does not contain voting instructions will, unless revoked, be voted in favor of the proposal to adopt the merger agreement, and it effectively will constitute a waiver of the stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights must either submit a proxy containing instructions to vote against the

proposal to adopt the merger agreement or abstain from voting on the proposal to adopt the merger agreement. The written demand for appraisal must be in addition to and separate from any proxy or vote on the proposal to adopt the merger agreement.

 

All demands for appraisal should be addressed to Dynamex Inc., 5429 LBJ Freeway, Suite 1000, Dallas, Texas 75240, Attention: Corporate Secretary, and must be delivered before the stockholder vote is taken to approve the proposal to adopt the merger agreement at the special meeting, and should be executed by, or on behalf of, the record holder of the shares of the Company’s common stock. The demand must reasonably inform the Company of the identity of the stockholder and the intention of the stockholder to demand appraisal of his, her or its shares of the Company’s common stock.

 

To be effective, a demand for appraisal by a stockholder of the Company’s common stock must be made by, or in the name of, the registered stockholder, fully and correctly, as the stockholder’s name appears on the Company’s stock ledger. The demand cannot be made by the beneficial owner if he or she does not also hold the shares of the Company’s common stock of record. The beneficial holder must, in such cases, have the registered owner, such as a bank, broker, trustee or other nominee, submit the required demand in respect of those shares of the Company’s common stock. If you hold your shares of the Company’s common stock through a bank, broker, trustee or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker, trustee or other nominee to determine the appropriate procedures for the making of a demand for appraisal by the bank, broker, trustee or other nominee.

 

If shares of the Company’s common stock are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of a demand for appraisal should be made in that capacity. If the shares of the Company’s common stock are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand should be executed by or for all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, he or she is acting as agent for the record owner. A record owner, such as a broker, who holds shares of the Company’s common stock as a nominee for others, may exercise his or her right of appraisal with respect to the shares of the Company’s common stock held for one or more beneficial owners, while not exercising this right for other beneficial owners. In that case, the written demand should state the number of shares of the Company’s common stock as to which appraisal is sought. Where no number of shares of the Company’s common stock is expressly mentioned, the demand will be presumed to cover all shares of the Company’s common stock held in the name of the record owner.

 

Within ten days after the effective time of the merger, the surviving corporation in the merger must give written notice that the merger has become effective to each of the Company’s stockholders who has properly filed a written demand for appraisal and who did not vote in favor of the proposal to adopt the merger agreement. At any time within 60 days after the effective time of the merger, any stockholder who has not commenced an appraisal proceeding or joined a proceeding as a named party may withdraw the demand for appraisal and accept the cash payment specified by the merger agreement for that stockholder’s shares of the Company’s common stock by delivering to the surviving corporation a written withdrawal of the demand for appraisal. However, any attempt to withdraw the demand for appraisal made more than 60 days after the effective time of the merger will require written approval of the surviving corporation. Unless the demand for appraisal is properly withdrawn by a stockholder within 60 days after the effective date of the merger, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, with approval conditioned upon the terms as the Court deems just. If more than 60 days have elapsed since the effective time of the merger and either the surviving corporation does not approve a request to withdraw a demand for appraisal or the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding, the stockholder will be entitled to receive only the appraised value determined in any appraisal proceeding, which value could be less than, equal to or more than the consideration offered pursuant to the merger agreement.

 

Within 120 days after the effective time of the merger, but not thereafter, either the surviving corporation or any stockholder who has complied with the requirements of Section 262 and is entitled to appraisal rights

under Section 262 may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares of the Company’s common stock held by all stockholders entitled to appraisal. Upon the filing of the petition by a stockholder, service of a copy of the petition must be made upon the surviving corporation. The surviving corporation has no obligation to file a petition, and holders should not assume that the surviving corporation will file a petition. Accordingly, the failure of a stockholder to file a petition within the period specified could nullify the stockholder’s previous written demand for appraisal. In addition, within 120 days after the effective time of the merger, any stockholder who has properly filed a written demand for appraisal and who did not vote in favor of the proposal to adopt the merger agreement, upon written request, will be entitled to receive from the surviving corporation, a statement setting forth the aggregate number of shares of the Company’s common stock not voted in favor of the proposal to adopt the merger agreement and with respect to which demands for appraisal have been received and the aggregate number of holders of shares of the Company’s common stock. The statement must be mailed to the requesting stockholder within ten days after written request has been received by the surviving corporation. A person who is the beneficial owner of shares of the Company’s common stock held either in a voting trust or by a nominee on behalf of a person may, in the person’s own name, file a petition or request from the surviving corporation for the statement.

 

If a petition for appraisal is duly filed by a stockholder and a copy of the petition is delivered to the surviving corporation, then the surviving corporation will be obligated, within 20 days after receiving service of a copy of the petition, to file with the Delaware Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares of the Company’s common stock and with whom agreements as to the value of their shares of the Company’s common stock have not been reached. After the Delaware Register in Chancery gives notice of the time and place of the hearing to stockholders who have demanded appraisal, if notice is ordered by the Delaware Court of Chancery, the Delaware Court of Chancery is empowered to conduct a hearing upon the petition and to determine those stockholders who have complied with Section 262 and who have become entitled to the appraisal rights provided by Section 262. The Delaware Court of Chancery may require stockholders who have demanded appraisal for their shares of the Company’s common stock and who hold stock represented by certificates to submit their stock certificate(s) to the Delaware Register in Chancery for notation of the pendency of the appraisal proceedings, and if any stockholder fails to comply with that direction, the Delaware Court of Chancery may dismiss the proceedings as to that stockholder.

 

After determination of the stockholders entitled to appraisal of their shares of the Company’s common stock, the Delaware Court of Chancery will appraise the shares of the Company’s common stock, determining their fair value as of the effective time of the merger after taking into account all relevant factors exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value. When the value is determined, the Delaware Court of Chancery will direct the payment of value upon surrender to the Company by those stockholders of the certificate(s) representing their shares of the Company’s common stock. Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective time of the merger and the date of payment of the judgment.

 

You should be aware that an investment banking opinion as to fairness from a financial point of view is not necessarily an opinion as to fair value under Section 262. Although we believe that the per share merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery and stockholders should recognize that an appraisal could result in a determination of a value higher or lower than, or the same as, the per share merger consideration. Moreover, we do not anticipate offering more than the per share merger consideration to any stockholder exercising appraisal rights and reserve the right to assert, in any appraisal proceeding, that, for purposes of Section 262, the “fair value” of a share of the Company’s common stock is less than the per share merger consideration. In determining “fair value,” the Delaware Court of Chancery is required to take into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors

that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court has stated that in making this determination of fair value the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts which could be ascertained as of the date of the merger which throw any light on future prospects of the merged corporation. Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware Supreme Court construed Section 262 to mean that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.”

 

Costs of the appraisal proceeding may be determined by the Delaware Court of Chancery and imposed upon the surviving corporation and the stockholders participating in the appraisal proceeding by the Delaware Court of Chancery, as it deems equitable in the circumstances. However, costs do not include attorneys’ and expert witness fees. Each stockholder is responsible for his, her or its attorneys’ and expert witness fees, although, upon the application of a stockholder, the Delaware Court of Chancery may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts used in the appraisal proceeding, to be charged pro rata against the value of all shares of the Company’s common stock entitled to appraisal. Any stockholder who demanded appraisal rights will not, after the effective time of the merger, be entitled to vote shares of the Company’s common stock subject to that demand for any purpose or to receive payments of dividends or any other distribution with respect to those shares of the Company’s common stock, other than with respect to dividends or distributions payable to stockholders of record as of a record date prior to the effective time of the merger. However, if no petition for appraisal is filed within 120 days after the effective time of the merger, or if the stockholder delivers a written withdrawal of the stockholder’s demand for an appraisal and an acceptance of the merger within 60 days after the effective time of the merger, then the right of that stockholder to appraisal will cease and that stockholder will be entitled to receive the $25.00 per share cash payment (without interest) for his, her or its shares of the Company’s common stock pursuant to the merger agreement.

 

In view of the complexity of Section 262 of the DGCL, Company’s stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors.

MARKET PRICES OF THE COMPANY’S COMMON STOCK AND DIVIDEND INFORMATION

 

The Company’s common stock is listed for trading on the Nasdaq Global Select Market under the symbol “DDMX.” The table below shows, for the periods indicated, the price range of the Company’s common stock, as reported on the Nasdaq Global Select Market. Our fiscal year ends on July 31 each year.

 

 

The closing price of the Company’s common stock on the Nasdaq Global Select Market on October 1, 2010, the last trading day prior to the public announcement of the execution of the Greenbriar merger agreement, was $15.31 per share of the Company’s common stock. On [          ], 20[  ], the most recent practicable date before this proxy statement was mailed to our stockholders, the closing price for the common stock on the Nasdaq Global Select Market was $[     ] per share of the Company’s common stock. You are encouraged to obtain current market quotations for common stock in connection with voting your shares of the Company’s common stock.

 

We have never declared or paid cash dividends on the Company’s common stock, and the terms of the merger agreement provide that, from the date of the merger agreement until the effective time of the merger, we may not declare, set aside or pay any dividends on shares of the Company’s common stock.

 

The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of December 28, 2010 for (i) each person known by the Company to own beneficially more than 5% of the Company’s common stock, (ii) each of our directors, (iii) our principal executive officer, principal financial officer and each of our other three most highly compensated executive officers, and (iv) all directors and executive officers of the Company as a group. Except as otherwise indicated, beneficial ownership includes both voting and investment power.

 

The following table does not include restricted stock and performance units granted to certain members of management on September 24, 2010. Such equity awards will be cancelled if the merger is consummated.

 

 

 

 

 

If the merger is completed, the Company’s common stock may be delisted from the Nasdaq Global Select Market and deregistered under the Exchange Act and, if so, we will no longer file periodic reports with the SEC on account of the Company’s common stock. In addition, if the merger is completed, the Company’s common stock will no longer be publicly-traded.

 

If we fail to receive a sufficient number of votes to adopt the merger agreement, we may propose to adjourn the special meeting for the purpose of soliciting additional proxies to adopt the merger agreement. We currently do not intend to propose adjournment of our special meeting if there are sufficient votes to adopt the merger agreement.

 

Assuming a quorum is present at the special meeting, approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies requires the vote of a majority of the votes cast by stockholders present in person or represented by proxy and entitled to vote at the special meeting. If a quorum is not present at the special meeting, approval of a proposal to adjourn the special meeting will require the affirmative vote of the majority of shares present in person or represented by proxy at the special meeting and entitled to vote on the proposal.

 

Our board of directors recommends that you vote “FOR” the proposal to adjourn the special meeting to solicit additional proxies if there are insufficient votes at the time of the meeting to adopt the merger agreement.

 

Our board of directors currently knows of no other business that will be presented for consideration at the special meeting. Nevertheless, should any business other than that set forth in the notice of special meeting of stockholders properly come before the meeting or any adjournment or postponement thereof, the enclosed proxy confers discretionary authority to vote with respect to matters, including matters that our board of directors does not know, a reasonable time before proxy solicitation, are to be presented at the meeting. If any of these matters are presented at the meeting, or any adjournment or postponement thereof, then the proxy holders named in the enclosed proxy card will vote in accordance with their judgment.

 

If the merger is completed, we will not have public stockholders and there will be no public participation in any future meeting of stockholders. However, if the merger is not completed, or if we are otherwise required to do so under applicable law, we would hold a 2010 annual meeting of stockholders at a date and time to be determined in the future. If the merger is not consummated, any stockholder proposals intended to be presented pursuant to Rule 14a-8 under the Exchange Act for inclusion in our proxy statement and accompanying proxy card for our next annual meeting must have been delivered to, or mailed to and received at, our principal office at 5429 LBJ Freeway, Suite 1000, Dallas, Texas 75240 by July 27, 2010 (unless the date of our 2010 annual meeting of stockholders is changed by more than 30 days from the date of our 2009 annual meeting of stockholders, in which case the deadline is a reasonable time before we mail our proxy materials) and have met the requirements of Rule 14a-8.

 

The SEC has adopted rules that permit companies and intermediaries (e.g., banks, brokers, trustees or other nominees) to satisfy the delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies. Each stockholder who participates in householding will continue to receive a separate proxy card. Under Delaware law, stockholders must consent to “householding” and any stockholder who fails to object in writing to the corporation within 60 days of having been given written notice by the corporation of its intent to “household” is deemed to have consented to “householding.”

 

A number of brokers with account holders who are our stockholders will be “householding” our proxy materials. A single proxy statement report will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue

until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement, please notify your bank, broker, trustee or other nominee and direct a written request to Investor Relations, Dynamex Inc., 5429 LBJ Freeway, Suite 1000, Dallas, Texas 75240 or an oral request by telephone at (214) 560-9000. If any stockholders in your household wish to receive a separate copy of this proxy statement, they may call or write to Investor Relations and we will promptly provide additional copies. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request “householding” of their communications should contact their bank, broker, trustee or other nominee.

 

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public at the SEC website at www.sec.gov. You also may obtain free copies of the documents we file with the SEC, including this proxy statement, by going to the Investor Relations page of our corporate website at www.dynamex.com. Our website address is provided as an inactive textual reference only. The information provided on our website, other than copies of the documents listed below that have been filed with the SEC, is not part of this proxy statement, and therefore is not incorporated herein by reference.

 

Statements contained in this proxy statement, or in any document incorporated by reference in this proxy statement regarding the contents of any contract or other document, are not necessarily complete and each statement is qualified by reference to that contract or other document filed as an exhibit with the SEC. The SEC allows us to “incorporate by reference” into this proxy statement documents we file with the SEC. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this proxy statement, and later information that we file with the SEC will update and supersede that information. We incorporate by reference the documents listed below and any documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement and before the date of the special meeting.

 

 

Any person, including any beneficial owner, to whom this proxy statement is delivered may request copies of proxy statements and any of the documents incorporated by reference in this document or other information concerning us, without charge, by written or telephonic request directed to Dynamex Inc., 5429 LBJ Freeway, Suite 1000, Dallas, Texas 75240, Attn: Corporate Secretary or by telephone at (214) 560-9000, on the Investor Relations page of our corporate website at www.dynamex.com; or from our proxy solicitor, D.F. King & Co., Inc., by telephone toll-free at 888-887-0082 (banks, brokers, trustees or other nominees can call collect at 212-269-5550) or by email at dynamex@dfking.com; or from the SEC through the SEC website at the address provided above. Documents incorporated by reference are available without charge, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference into those documents.

THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE A PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE YOUR SHARES OF THE COMPANY’S COMMON STOCK AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED [          ], 20[  ]. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.

 

EXECUTION VERSION

 

 

 

 

AGREEMENT AND PLAN OF MERGER
Dated as of December 14, 2010
among
TRANSFORCE INC.
TRANSFORCE ACQUISITION CORP.
and
DYNAMEX INC.

 

 

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