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SECURITIES AND EXCHANGE COMMISSION
the Securities Exchange Act of 1934
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to §240.14a-12 |
þ | No fee required. | |
o | 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: | ||
(2) | Aggregate number of securities to which transaction applies: | ||
(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): | ||
(4) | Proposed maximum aggregate value of transaction: | ||
(5) | Total fee paid: | ||
o | Fee paid previously with preliminary materials. | |
o | 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: | ||
(2) | Form, Schedule or Registration Statement No.: | ||
(3) | Filing Party: | ||
(4) | Date Filed: | ||
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3399 South Lakeshore Drive, Suite 225
Saint Joseph, Michigan 49085
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1. | The issuance of the Securities, which will constitute an issuance of securities convertible into or exercisable for a number of shares of Company common stock in excess of 20% of our presently outstanding common stock, and thus requires the approval of stockholders in accordance with NYSE Amex Rule 713; | |
2. | An amendment to the certificate of incorporation of the Company (as amended, the “Company Certificate”) to increase the number of authorized shares of Company common stock to 150,000,000 shares; | |
3. | An amendment to the Company Certificate to give effect to a4-for-1 reverse stock split of the Company common stock; | |
4. | An amendment to the Company Certificate providing that any vacancy on our Board of Directors shall be filled by the remaining directors or director (consistent with our existing by-laws); and | |
5. | The 2011 Omnibus Incentive Compensation Plan, to be implemented following the closing. |
AND IS FIRST BEING MAILED TO STOCKHOLDERS ON OR ABOUT AUGUST 4, 2011.
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3399 South Lakeshore Drive, Suite 225
Saint Joseph, Michigan 49085
TO BE HELD ON SEPTEMBER 1, 2011
1. | To approve the issuance to Jacobs Private Equity, LLC (“JPE”) and the other investors party to the Investment Agreement, dated as of June 13, 2011 (the “Investment Agreement”), for $75,000,000 in cash, of (i) 75,000 shares of Series A Convertible Perpetual Preferred Stock of the Company (the “Preferred Stock”), which are initially convertible into an aggregate of 42,857,143 shares of Company common stock at a conversion price of $1.75 per share (subject to adjustment in connection with the Reverse Stock Split (as defined below)), and (ii) warrants to purchase 42,857,143 shares of Company common stock at an exercise price of $1.75 per share (subject to adjustment in connection with the Reverse Stock Split) (the “Warrants”, and together with the Preferred Stock, the “Securities”); | |
2. | To approve an amendment to the certificate of incorporation of the Company (as amended, the “Company Certificate”) to increase the number of authorized shares of Company common stock to 150,000,000 shares; | |
3. | To approve an amendment to the Company Certificate to give effect to a4-for-1 reverse stock split of the Company common stock (the “Reverse Stock Split”); | |
4. | To approve an amendment to the Company Certificate providing that any vacancy on our Board of Directors shall be filled by the remaining directors or director; | |
5. | To adopt the 2011 Omnibus Incentive Compensation Plan (the “Plan”); |
6. | To approve an amendment to the Company Certificate to change the name of the Company to XPO Logistics, Inc.; |
7. | To approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt Proposals 1 through 5; and |
8. | To transact such other business as may properly come before the special meeting or any adjournment or postponement thereof. |
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PROPOSAL 2 – AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMPANY COMMON STOCK TO 150,000,000 SHARES | 63 |
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Q: | Why did I receive these proxy materials? | |
A: | We are providing these proxy materials in connection with the solicitation by our Board of Directors of proxies to be voted at the special meeting in connection with the transactions contemplated by the Investment Agreement (such transactions, collectively, the “Proposed Transaction”), as further described in this proxy statement. | |
Q: | What items of business will be voted on at the special meeting? |
A: | The business expected to be voted on at the special meeting is a series of Proposals related to the Proposed Transaction, described in detail in this proxy statement. |
Q: | What is the Proposed Transaction? | |
A: | The Investment Agreement with JPE and the other investors party thereto (including by joinders thereto) (collectively with JPE, the “Investors”) provides for an aggregate investment by the Investors of up to $150,000,000 in cash in the Company (including amounts payable upon exercise of the Warrants). Pursuant to the Investment Agreement, at the closing, the Investors will invest an aggregate of $75,000,000 in cash into the Company in return for the Company’s issuance of: |
• 75,000 shares of Preferred Stock, which shares will initially be convertible into 42,857,143 shares of Company common stock at an initial conversion price of $1.75 per share of Company common stock (before giving effect to the contemplated Reverse Stock Split, and subject to customary anti-dilution adjustments); the Preferred Stock carries an annual cash dividend of 4% and will generally vote together with the Company common stock on an “as-converted” basis on all matters; and |
• Warrants to purchase 42,857,143 shares of Company common stock at an initial exercise price of $1.75 per share (before giving effect to the Reverse Stock Split, and subject to customary anti-dilution adjustments); the Warrants will be exercisable for 10 years. |
We refer to the foregoing transactions as the “Equity Investment”. | ||
In addition, in connection with the Equity Investment, among other things: | ||
• The number of authorized shares of Company common stock will be increased to 150,000,000; |
• The Company common stock will undergo the Reverse Stock Split; |
• The Company Certificate will be amended to provide that any vacancy on our Board of Directors shall be filled by the remaining directors or director (consistent with our by-laws as currently in effect); | ||
• The Company will implement a new Omnibus Incentive Compensation Plan; and | ||
• The Board of Directors will be reconstituted such that: (i) there will be eight directors, (ii) one of such directors will be James Martell, our current Chairman (or a replacement acceptable to JPE), (iii) seven of such directors will be designated by JPE (including Bradley Jacobs, the Managing Member of JPE), (iv) each standing committee of the Board will be reconstituted in a manner reasonably acceptable to JPE and (v) Bradley Jacobs will become the Chairman of the Board; and JPE will have certain ongoing Board nomination rights tied to its equity interest in the Company. |
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Following the closing Mr. Jacobs will become the Company’s Chief Executive Officer. |
Q: | What was the market price of our common stock upon the signing of the Investment Agreement and upon the mailing of this proxy statement? |
A: | On June 13, 2011, which was the last trading day before we entered into the Investment Agreement, the closing price of the Company common stock was $2.19 per share. On August 3, 2011, which was the last trading day before this proxy statement was mailed, the closing price of the Company common stock was $3.36 per share. |
Q: | What will I receive in the Proposed Transaction? | |
A: | You will not receive any consideration in the Proposed Transaction. Your shares of Company common stock will remain outstanding following the closing of the Proposed Transaction, and you will continue to participate as a stockholder by virtue of such shares. | |
Q: | What percentage of the Company’s voting stock will the Investors own upon completion of the Proposed Transaction? |
A: | As of the record date, there were 33,011,561 shares of Company common stock outstanding, plus outstanding options to purchase an additional 3,267,750 shares of Company common stock. Based upon the number of shares of Company common stock outstanding on the record date, and excluding any shares issuable upon the exercise of currently outstanding options, the Investors would have held in the aggregate approximately 56.5% of the total voting power of the Company’s capital stock before giving effect to the exercise of any Warrants, and approximately 72.2% of the total voting power of the Company’s capital stock after giving effect to the exercise of all of the Warrants. Because the Preferred Stock votes on an “as converted” basis, the conversion of the Preferred Stock into Company common stock will not reduce the general voting power of the Investors allocable to the Preferred Stock upon its issuance. The Reverse Stock Split will not affect the relative percentage of the voting power held by any stockholder or any of the Investors (except as a result of any cash paid in lieu of fractional shares in connection with the Reverse Stock Split). |
Q: | Where and when is the special meeting? |
A: | The special meeting will be held in the Express-1, Inc. Training Center located at 441 Post Road, Buchanan, MI 49107, at 9:00 a.m., Eastern Daylight Time, on September 1, 2011. To obtain directions to be able to attend the special meeting and vote in person please contact Becky Scamehorn, Accounting Manager, at (269) 695-4953. |
Q: | What vote is required to approve the Proposals? |
A: | The issuance of the Securities (Proposal 1) and the adoption of the Plan (Proposal 5) require the affirmative vote of a majority of the shares of Company common stock voting thereon at a meeting at which a quorum is present. The amendment to increase the number of authorized shares of Company common stock (Proposal 2), the amendment to give effect to the Reverse Stock Split (Proposal 3), the amendment to provide that vacancies on the Board of Directors shall be filled by the remaining directors or director (Proposal 4) and the amendment to effect the Company name change (Proposal 6) require the affirmative vote of a majority of the shares of Company common stock outstanding at the close of business on the record date. The approval of the adjournment of the special meeting (Proposal 7) requires the affirmative vote of a majority of the shares of Company common stock present and entitled to vote at the special meeting, whether or not a quorum is present. If the Company’s stockholders fail to approve any of Proposals 1 through 5, the Proposed Transaction will not occur. |
Q: | What are my voting choices? | |
A: | You may vote “FOR” or “AGAINST” or you may “ABSTAIN” from voting on any Proposal to be voted on at the special meeting. Your shares will be voted as you specifically instruct. If you sign your proxy or voting instruction card without giving specific instructions, your shares will be voted in |
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accordance with the recommendations of our Board of Directors and in the discretion of the proxy holders on any other matters that properly come before the meeting. Because Proposals 2, 3, 4 and 6 require the affirmative vote of a majority of the shares of Company common stock outstanding at the close of business on the record date, an abstention on any such Proposal will have the same effect as a vote against such Proposal. The failure of the Company’s stockholders to approve any of Proposals 1 through 5 will prevent the Company from consummating the Proposed Transaction and effecting the Company name change. |
Q: | How does the Company’s Board of Directors recommend that I vote? |
A: | Our Board of Directors, after careful consideration and acting on the unanimous recommendation of a special committee composed entirely of independent directors, recommends that our stockholders vote“FOR”the approval of each of Proposals 1 through 6 and“FOR”Proposal 7 to approve the adjournment of 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 each of Proposals 1 through 5. |
James Martell, our current Chairman, is an Investor in the Equity Investment and is expected to continue as a member of the Board of Directors following the closing of the Equity Investment, and consequently he recused himself from the Board’s approval of the Proposed Transaction and recommendation of the Proposals. |
You should read “The Proposed Transaction—Background of the Proposed Transaction” and “The Proposed Transaction—Reasons for the Proposed Transaction” for a discussion of the factors that our special committee and Board of Directors considered in deciding to recommend the approval of the Proposals. In addition, in considering the recommendation of the special committee and the Board of Directors in connection with the Proposed Transaction, you should be aware that some of the Company’s directors and executive officers may have interests that are different from, or in addition to, the interests of our stockholders generally. See “The Proposed Transaction—Interests of the Company’s Directors and Executive Officers in the Proposed Transaction”, beginning on page 35. |
Q: | Who can attend and vote at the special meeting? |
A: | All stockholders of record as of the close of business on August 1, 2011, the record date for the special meeting, are entitled to receive notice of and to attend and vote at the special meeting, or any postponement or adjournment thereof. If you wish to attend the special meeting and your shares of Company common stock are held in an account at a broker, dealer, commercial bank, trust company or other nominee (i.e., in “street name”), you will need to bring a copy of your voting instruction card or statement reflecting your share ownership as of the record date. “Street name” holders who wish to vote at the special meeting will need to obtain a proxy from the broker, dealer, commercial bank, trust company or other nominee that holds their shares of Company common stock. Seating will be limited at the special meeting. Admission to the special meeting will be on a first-come, first-served basis. |
Q: | How will our directors and executive officers vote on the Proposals? |
A: | Our directors and current executive officers have informed us that, as of the date of this proxy statement, they intend to vote all of their shares of Company common stock in favor of the approval of each of the Proposals. In particular, each of Michael Welch, Chief Executive Officer and a director of the Company, and Daniel Para, an officer and director of the Company, entered into voting agreements with JPE, pursuant to which they have agreed, in their capacities as stockholders of the Company and subject to the terms of such agreements, to, among other things, vote their shares of Company common stock in favor of the Proposals, and have granted JPE a proxy in respect of their shares of Company common stock in connection therewith. As of August 1, 2011, the record date for the special meeting, and excluding any shares issuable upon the exercise of currently outstanding options, our directors and current executive officers owned, in the aggregate, 4,289,917 shares of Company common stock, or collectively approximately 13.0% of the outstanding shares of Company common stock. |
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Q: | What do I need to do now? | |
A: | We urge you to read this proxy statement carefully, including its annexes, and to consider how the Proposed Transaction affects you. Then just mail your completed, dated and signed proxy card in the enclosed return envelope as soon as possible so that your shares can be voted at the special meeting of our stockholders. Holders of record may also vote by telephone or the internet by following the instructions on the proxy card. | |
Q: | What happens if I do not respond or if I respond and fail to indicate my voting preference or if I abstain from voting? |
A: | If you fail to sign, date and return your proxy card or fail to vote by telephone or internet as provided on your proxy card, your shares of Company common stock will not be counted towards establishing a quorum for the special meeting, which requires holders representing a majority of the outstanding shares of Company common stock to be present in person or by proxy. If you respond and do not indicate your voting preference, we will count your proxy as a vote in favor of the approval of each of the Proposals. Because Proposals 2, 3, 4 and 6 require the affirmative vote of a majority of the shares of Company common stock outstanding at the close of business on the record date, the failure to vote on any such Proposal will have the same effect as a vote against such Proposal. The failure of the Company’s stockholders to approve any of Proposals 1 through 5 will prevent the Company from consummating the Proposed Transaction and effecting the Company name change. |
Q: | If my shares are held in “street name” by my broker, dealer, commercial bank, trust company or other nominee, will such broker or other nominee vote my shares for me? |
A: | You should instruct your broker or other nominee on how to vote your shares using the instructions provided by such broker or other nominee. Absent specific voting instructions, brokers or other nominees who hold shares of Company common stock in “street name” for customers are prevented by NYSE Amex rules from exercising voting discretion in respect of non-routine or contested matters. The Company expects that NYSE Amex will evaluate the Proposals to be voted on at the special meeting to determine whether each Proposal is a routine or non-routine matter. Shares not voted by a broker or other nominee because such broker or other nominee does not have instructions or cannot exercise discretionary voting power with respect to one or more Proposals are referred to as “broker non-votes”. Such broker non-votes may not be counted for the purpose of determining the presence of a quorum at the special meeting in the absence of a routine Proposal. In addition, because Proposals 2, 3, 4 and 6 require the affirmative vote of a majority of the shares of Company common stock outstanding at the close of business on the record date, a broker non-vote with respect to any of Proposals 2, 3, 4 or 6 will have the same effect as a vote against such Proposal. Therefore, it is important that you instruct your broker or other nominee on how to vote your shares of Company common stock held in “street name” in accordance with the voting instructions provided by such broker or other nominee, because the failure of the Company’s stockholders to approve any of Proposals 1 through 5 will prevent the Company from consummating the Proposed Transaction. |
Q: | How do I vote my shares held in the Company’s Employee Stock Ownership Plan? |
A: | The trustee of the plan will vote your plan shares as you direct on your proxy card. If you do not vote your plan shares or if you sign and return a proxy card but fail to indicate how you wish to vote, the trustee will vote your plan shares in accordance with the direction of the plan’s named fiduciary, unless it is contrary to applicable law to do so. You must complete, sign and return your proxy card, or vote by phone or through the internet, no later than 1:00 a.m., Eastern Daylight Time, on September 1, 2011, for the shares represented by the proxy to be voted in the manner directed therein. |
Q: | Can I change my vote after I have mailed my proxy card? | |
A: | Yes. Whether you attend the special meeting or not, you may revoke a proxy at any time before your proxy is voted at the special meeting. You may do so by properly delivering a later-dated proxy either by mail, the internet or telephone or by attending the special meeting in person and voting. You also |
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may revoke your proxy by delivering a notice of revocation to the Company (Attention: Chief Executive Officer, 3399 South Lakeshore Drive, Suite 225, Saint Joseph, Michigan 49085) prior to the vote at the special meeting. If you hold your shares through a broker, dealer, commercial bank, trust company or other nominee, you should follow the instructions of such broker or other nominee regarding revocation of proxies. | ||
Q: | Am I entitled to appraisal rights? | |
A: | No. You will have no right under Delaware law to seek appraisal of your shares of Company common stock in connection with the Proposed Transaction. | |
Q: | What is “householding” and how does it affect me? | |
A: | We have adopted a procedure approved by the Securities and Exchange Commission (“SEC”) called “householding”. Under this procedure, stockholders of record who have the same address and last name will receive only one copy of our Notice of Special Meeting and proxy statement, unless one or more of these stockholders notifies us that they wish to continue receiving individual copies. This procedure will reduce our printing costs and postage fees. Stockholders who participate in householding will continue to receive separate proxy cards. | |
If you are eligible for householding, but you and other stockholders of record with whom you share an address currently receive multiple copies of our Notice of Special Meeting and proxy statement, or if you hold stock in more than one account, and in either case you wish to receive only a single copy of each of these documents for your household, you may contact our transfer agent, Computershare at: | ||
Computershare | ||
7530 Lucerne Drive, Suite 305 | ||
Cleveland, OH 44130 | ||
(440) 239-7361 | ||
In addition, this proxy statement, the accompanying Notice of Special Meeting and the proxy card are available on the internet at www.envisionreports.com/XPO2. | ||
If you participate in householding and wish to receive a separate copy of this Notice of Special Meeting and proxy statement, or if you do not wish to participate in householding and prefer to receive separate copies of these documents in the future, please contact Computershare as indicated above. | ||
If your shares of Company common stock are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you should also call such broker or other nominee for additional information. | ||
Q: | Can I obtain an electronic copy of proxy material? |
A: | Yes, this proxy statement, the accompanying Notice of Special Meeting and the proxy card are available on the internet at www.envisionreports.com/XPO2. |
Q: | Who can help answer my other questions? | |
A: | If you have more questions about the Proposed Transaction or the Proposals, you should contact the Company at(269) 429-9761. If you have questions regarding voting, you should contact the proxy solicitation agent, Innisfree M&A Incorporated (“Innisfree”), toll-free at (888) 750-5834. If your shares of Company common stock are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you should also call such broker or other nominee for additional information. |
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• | The issuance of the Securities, which will constitute an issuance of securities convertible into or exercisable for a number of shares of Company common stock in excess of 20% of our presently outstanding common stock, and thus requires the approval of stockholders in accordance with NYSE Amex Rule 713 (Proposal 1); | |
• | An amendment to the Company Certificate to increase the number of authorized shares of Company common stock to 150,000,000 shares (Proposal 2); |
• | An amendment to the Company Certificate to give effect to the Reverse Stock Split (Proposal 3); |
• | An amendment to the Company Certificate providing that any vacancy on our Board of Directors shall be filled by the remaining directors or director (consistent with our existing by-laws) (Proposal 4); and | |
• | To adopt the Plan (Proposal 5). |
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• | the risk that the Proposed Transaction is not completed; | |
• | the possibility that alternative takeover proposals will or will not be made; | |
• | the amount of fees and expenses related to the Proposed Transaction; | |
• | the effect of the announcement of the Proposed Transaction on our business relationships; | |
• | the diversion of management’s attention from ongoing business concerns; | |
• | the inability of the Company to identify suitable acquisition candidates, integrate acquisitions or access the capital markets or otherwise fail to execute its business plan after closing; | |
• | changes in business and economic conditions and other adverse conditions in our markets; | |
• | increased competition could lead to negative pressure on our pricing and the need for increased marketing; | |
• | our inability to maintain, establish or renew relationships with customers, whether due to competition or other factors; | |
• | the Investment Agreement’s contractual restrictions on the conduct of the business prior to the completion of the Proposed Transaction; | |
• | our operating results and business generally, including our ability to retain key employees; and | |
• | other risks set forth in the Company’s filings with the SEC, which filings are available without charge at www.sec.gov. |
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• | the per share price contemplated by the Proposed Transaction was a reasonable discount to the Company’s market price in light of JPE’s business strategy, JPE’s ability to effectuate its business strategy, the stated use of proceeds and the higher multiples received by mid-cap and large-cap public companies in the Company’s industry; | |
• | the financial analyses presented to the special committee by BB&T and shared with the Board of Directors, as well as the opinion of BB&T that the Proposed Transaction represents a superior potential outcome for the Company’s stockholders relative to the other possible alternatives; | |
• | the financial analyses presented to the special committee by Ladenburg and shared with the Board of Directors, as well as the opinion of Ladenburg, dated June 12, 2011, to the special committee, which expressly allows reliance on the opinion by those members of the Board of Directors who are not members of the special committee, to the effect that, as of that date, and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations set forth therein, the Proposed Transaction is fair, from a financial point of view, to the Company’s stockholders; the full text of the written opinion of Ladenburg is attached as Annex B to this proxy statement; | |
• | the possible alternatives to the Proposed Transaction, including an alternative sales process or continuing as a standalone company with or without additional bolt-on acquisitions, which alternatives the special committee evaluated with the assistance of Ladenburg and BB&T and determined were less favorable to the Company’s stockholders than the Proposed Transaction given the potential risks, rewards and uncertainties associated with those alternatives; | |
• | the extensive efforts made by the Company and its advisors over a period of many months to solicit interest on the part of potential acquirors of the Company, with the result that BB&T spoke to approximately 50 potentially interested parties; | |
• | the expectation that the market price of the Company’s shares would increase significantly following announcement of the Proposed Transaction and allow existing stockholders to sell their shares at a premium to the then-current market price; | |
• | the fact that the Company’s stockholders would have the ability to share in any upside that might result from any future improved performance on the part of the Company; | |
• | the reputation of JPE and Mr. Jacobs; | |
• | the Company’s business, operations, financial condition, strategy and prospects, as well as the risks involved in achieving those prospects, the nature of the third-party logistics industry, and general industry, economic and market conditions, both on an historical and on a prospective basis; | |
• | the likelihood that the Proposed Transaction would be completed based on, among other things (not in any relative order of importance): |
• | the absence of a financing condition in the Investment Agreement; | |
• | the likelihood and anticipated timing of completing the Proposed Transaction in light of the scope of the conditions to completion, including the absence of significant required regulatory approvals; and | |
• | the ability of JPE and Mr. Jacobs to complete the Proposed Transaction, raise funds in follow-on offerings and complete accretive acquisitions on a large-scale basis; |
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• | the other terms of the Investment Agreement and related agreements, including: |
• | the Company’s ability, at any time from and after the execution of the Investment Agreement but prior to the time the Company’s stockholders adopt the Proposals, to consider and respond to an unsolicited written acquisition proposal, to furnish confidential information to the person making such a proposal and to engage in discussions or negotiations with the person making such a proposal, if the special committee, prior to taking any such actions, determines in good faith that such acquisition proposal either constitutes a superior proposal or could reasonably be expected to lead to a superior proposal; | |
• | the Board of Directors’ ability (acting upon the recommendation of the special committee), under certain circumstances, to withhold, withdraw, qualify or modify its recommendation that its stockholders vote to adopt the Proposals; | |
• | the Company’s ability, under certain circumstances, to terminate the Investment Agreement in order to enter into an agreement providing for a superior acquisition proposal, provided that the Company complies with its obligations relating to the entering into of any such agreement and concurrently with the termination of the Investment Agreement pays to JPE a termination fee determined in accordance with the Investment Agreement, in connection with an agreement for a superior acquisition proposal, plus up to $1 million of JPE’s expenses; and | |
• | the termination fee and expenses payable to JPE under certain circumstances, including as described above, in connection with a termination of the Investment Agreement, which the special committee concluded were reasonable in the context of termination fees and expenses payable in comparable transactions and in light of the overall terms of the Investment Agreement, including the total consideration. |
• | the fact that the special committee is comprised of three independent directors who are not affiliated with JPE or the other Investors and are not employees of the Company or any of its subsidiaries; |
• | the fact that, other than their receipt of Board of Directors and special committee fees (which are not contingent upon the consummation of the Proposed Transaction or the special committee’s or the Board’s recommendation of the Proposed Transaction) and their interests described under “The Proposed Transaction—Interests of the Company’s Directors and Executive Officers in the Proposed Transaction” on page 35, members of the special committee do not have interests in the Proposed Transaction different from, or in addition to, those of the Company’s unaffiliated stockholders; |
• | the fact that the determination to engage in discussions related to the Proposed Transaction and the consideration and negotiation of the price and other terms of the Proposed Transaction was conducted entirely under the oversight of the members of the special committee without the involvement of any director who is affiliated with the Investors or is a member of the Company’s management and without any limitation on the authority of the special committee to act with respect to any alternative transaction or any related matters; | |
• | the recognition by the special committee that it had the authority not to recommend the approval of the Proposed Transaction or any other transaction; | |
• | the special committee’s extensive negotiations with JPE, which, among other things, resulted in an increase in the effective price from $1.65 to $1.75 per share and resulted in significantly better contractual terms than initially proposed by JPE, including the ability of the Company to terminate the Investment Agreement upon the receipt of superior proposal for all or substantially all of the Company and entry into an agreement with respect to same; the capping of JPE’s reimbursable expenses at $1 million; and the elimination of the cashless exercise provision from the Warrants; |
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• | the fact that the special committee was advised by BB&T, as financial advisor, and R&A, as legal advisor, and the fact that the special committee requested and received from Ladenburg an opinion (based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations set forth therein), as of June 12, 2011, with respect to the fairness of the Proposed Transaction to the Company’s stockholders from a financial point of view; and | |
• | the fact that the terms and conditions of the Investment Agreement and related agreements were designed to allow the Company to change its recommendation to the Company’s stockholders or terminate the Investment Agreement entirely, upon receipt of a superior proposal, depending on the nature of the superior proposal. |
• | the risk that the Proposed Transaction might not be completed in a timely manner or at all; | |
• | the restrictions on the conduct of the Company’s business prior to the completion of the Equity Investment, which may delay or prevent the Company from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of the Company pending completion of the Equity Investment; | |
• | the risks and costs to the Company if the Proposed Transaction does not close, including the diversion of management and employee attention, potential employee attrition and the potential disruptive effect on business and customer relationships; | |
• | the possibility that the up to $1 million in JPE’s expenses plus the applicable termination fee payable by the Company upon the termination of the Investment Agreement could discourage other potential acquirors from making a competing bid to acquire the Company; and | |
• | if the Proposed Transaction is not completed, the Company will be required to pay its own expenses associated with the Investment Agreement, the Equity Investment and the other transactions contemplated by the Investment Agreement as well as, under certain circumstances, pay JPE a termination feeand/or reimburse JPE’s expenses (up to a $1 million cap), in connection with the termination of the Investment Agreement. |
• | has determined that the Proposed Transaction and the related Proposals are advisable and in the best interests of the Company and its stockholders; |
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• | recommends that the Company’s stockholders vote “FOR” the approval of the issuance of the Securities (Proposal 1), the amendment to increase the number of authorized shares of Company common stock (Proposal 2), the amendment to give effect to the Reverse Stock Split (Proposal 3), the amendment to provide that vacancies on the Board of Directors shall be filled by the remaining directors or director (Proposal 4), the adoption of the Plan (Proposal 5) and the amendment to effect the Company name change (Proposal 6); and |
• | if necessary and appropriate, recommends the approval of the adjournment of the special meeting to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt Proposals 1 through 5 (Proposal 7). |
• | Reviewed a draft of the Investment Agreement dated as of June 10, 2011; | |
• | Reviewed a draft of the Certificate of Designation of the Preferred Stock as of June 10, 2011; | |
• | Reviewed a draft of the Warrant Certificate as of June 10, 2011; |
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• | Reviewed publicly available financial information and other data with respect to the Company that it deemed relevant, including its Annual Report onForm 10-K for the year ended December 31, 2010 and its Quarterly Report onForm 10-Q for the quarter ended March 31, 2011; | |
• | Reviewed non-public information and other data with respect to the Company, including financial projections for the five-year period ending December 31, 2015 (the “Standalone Projections”), and other internal financial information and management reports; | |
• | Reviewed financial projections prepared by the Company and BB&T, assuming one bolt-on acquisition per year starting in 2012 (“Standalone with Acquisitions Projections”); | |
• | Reviewed financial projections assuming the Proposed Transaction takes place (“JPE Projections”); | |
• | Reviewed and analyzed the Proposed Transaction’s pro forma impact on the Company’s outstanding securities and stockholder ownership; | |
• | Considered the historical financial results and present financial condition of the Company; | |
• | Reviewed certain publicly available information concerning the trading of, and the trading market for, the Company’s common stock; | |
• | Reviewed and analyzed the Company’s projected unlevered free cash flows derived from the Standalone Projections and prepared a discounted cash flow analysis; | |
• | Reviewed and analyzed certain financial characteristics of publicly-traded companies that were deemed to have characteristics comparable to the Company; | |
• | Reviewed and analyzed certain financial characteristics of target companies in transactions where such target company was deemed to have characteristics comparable to that of the Company; | |
• | Reviewed and compared the terms of the Proposed Transaction to the terms of certain private investments in public equity (“PIPE”) and follow-on offering transactions; | |
• | Reviewed and discussed with the Company’s management, other Company representatives, JPE and BB&T certain financial and operating information furnished by them, including the Standalone Projections, Standalone with Acquisitions Projections and JPE Projections (collectively, the “Projections”); and | |
• | Performed such other analyses and examinations as were deemed appropriate. |
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• | Security discount/premium | |
• | Coupon | |
• | Warrant coverage | |
• | Warrant discount/premium |
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• | CH Robinson Worldwide Inc. | |
• | Expeditors International of Washington Inc. |
• | Landstar System Inc. | |
• | Uti Worldwide Inc. | |
• | Hub Group Inc. | |
• | Forward Air Corp. | |
• | Roadrunner Transportation Systems, Inc. | |
• | Echo Global Logistics, Inc. | |
• | Quality Distribution Inc. | |
• | Universal Truckload Services Inc. | |
• | Pacer International Inc. |
• | AutoInfo Inc. | |
• | US1 Industries Inc. |
Enterprise Value Multiple of | Mean | Median | High | Low | ||||||||||||
LTM EBITDA – All Comparables | 11.1 | x | 11.7 | x | 17.8 | x | 5.1 | x | ||||||||
LTM EBITDA – Small-Cap Comparables | 5.8 | x | 5.8 | x | 6.6 | x | 5.1 | x |
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Target | Acquiror | |
DBA Distribution Services, Inc. | Radiant Logistics, Inc.(OTCPK:RLGT) | |
Wim Bosman Holding B.V. | Mainfreight Limited(NZSE:MFT) | |
Dynamex Inc. | TransForce Inc.(TSX:TFI) | |
Morgan Southern, Inc. | Roadrunner Transportation Systems(NYSE:RRTS) | |
Total Logistic Control LLC | Ryder Integrated Logistics Inc. | |
ATC Technology Corporation | Laxey Partners Ltd. | |
Mar-Ter Spedizioni S.p.A. | Mid Industry Capital SpA (BIT:MIC) | |
Summit Logistics International | Toll Holdings Ltd. | |
Air Tiger Express Companies, Inc. | Kawasaki Kisen Kaisha Ltd. (TSE:9107) | |
Livingston International Income Fund | Sterling Partners; CPP Investment Board | |
RayTrans Distribution Services, Inc. | Echo Global Logistics, Inc. (NasdaqGS:ECHO) | |
Adcom Express, Inc. | Radiant Logistics, Inc. (OTCPK:RLGT) | |
LGT Logistics Holding AB | Axcel Industriinvestor A/S | |
J Martens AS | Kuehn & Nagel International AG (SWX:KNIN) | |
ATS Andlauer Transportation Services Limited Partnership | Andlauer Management Group Inc. | |
ELI-Logistik GmbH | Wincanton plc (LSE:WIN) | |
Alloin Transports | Kuehne & Nagel International AG (SWX:KNIN) | |
ABX LOGISTICS Worldwide S.A./N.V. | DSV A/S (CPSE:DSV) | |
CrossGlobe Group | Pine Creek Partners | |
Service Express, Inc. | Forward Air Solutions, Inc. | |
Transera International Logistics Ltd. | CH Robinson Worldwide Inc. (NasdaqGS:CHRW) | |
Compagnie Européenne de Prestations Logistiques SAS | Arcapita Bank B.S.C.(c); European Capital Ltd. | |
Groupe Malherbe | Natixis Investissement Partners | |
Pinch Holdings, Inc. | Forward Air Corp. | |
Concert Group Logistics, Inc. | Express-1 Expedited Solutions, Inc.(AMEX:XPO) |
Multiple of Enterprise Value to | Mean | Median | High | Low | ||||||||||||
LTM revenue | 0.69 | x | 0.49 | x | 3.33 | x | 0.18 | x | ||||||||
LTM EBITDA | 7.7 | x | 6.9 | x | 13.9 | x | 4.5 | x |
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• | the number of outstanding shares of Company common stock is based upon the number outstanding as of the record date of August 1, 2011; |
• | the Preferred Stock is immediately converted at the closing; | |
• | the Warrants are immediately exercised at the closing; and | |
• | no options for the purchase of Company common stock will be exercised. |
Number | ||||||||||||||||||||||||||||||||||||||||
of Shares | ||||||||||||||||||||||||||||||||||||||||
Number of | of | Common Stock Owned | ||||||||||||||||||||||||||||||||||||||
Shares of | Preferred | Common Stock Owned | Number of | Common Stock Owned | Assuming Conversion of all | |||||||||||||||||||||||||||||||||||
Common | Stock | Assuming Conversion | Warrants | Assuming Exercise of | Preferred Stock and Exercise | |||||||||||||||||||||||||||||||||||
Name | Stock Owned | Owned | of all Preferred Stock | Owned | all Warrants | of all Warrants | ||||||||||||||||||||||||||||||||||
# of Shares | % of | # of Shares | % of | # of Shares of | % of | |||||||||||||||||||||||||||||||||||
of Common | Common | of Common | Common | Common | Common | |||||||||||||||||||||||||||||||||||
Stock | Stock | Stock | Stock | Stock | Stock | |||||||||||||||||||||||||||||||||||
Investors | 38,160 | 75,000 | 42,895,303 | 56.5 | 42,857,143 | 42,895,303 | 56.5 | 85,752,446 | 72.2 | |||||||||||||||||||||||||||||||
Other Stockholders | 32,973,401 | 0 | 32,973,401 | 43.5 | 0 | 32,973,401 | 43.5 | 32,973,401 | 27.8 | |||||||||||||||||||||||||||||||
Total | 33,011,561 | 75,000 | 75,868,704 | 42,857,143 | 75,868,704 | 118,725,847 | ||||||||||||||||||||||||||||||||||
• | the accelerated vesting of option awards held by our directors and executive officers under certain circumstances, in each case following consummation of the Equity Investment; |
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• | in the case of executive officers, the receipt of certain severance payments and benefits upon termination of employment under certain circumstances following consummation of the Equity Investment; and |
• | in the case of Messrs. Michael Welch, John Welch and Para, the grant of new option awards. |
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• | a lump-sum payment equal to the sum of (a) one year’s base salary and (b) the greater of (1) the executive officer’s performance-based bonus payments for the year preceding the date of termination or (2) the executive officer’s average annual performance-based bonus during the two years immediately preceding the termination; and |
• | one year of continued benefits for the executive officer and his dependents under all health, dental, disability, accident and life insurance plans or arrangements in which the executive officer or his dependents were participating immediately prior to the date of the executive officer’s termination. |
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• | a lump-sum payment equal to the sum of(a) 18-months’ base salary and (b) the greater of (1) Mr. Para’s performance-based bonus payments for the year preceding the date of termination or (2) Mr. Para’s average annual performance-based bonus during the two years immediately preceding the date of termination; and |
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• | 18-months’ continued benefits for Mr. Para and his dependents under all health, dental, disability, accident and life insurance plans or arrangements in which Mr. Para or his dependents were participating immediately prior to the date of Mr. Para’s termination. |
Number of | Number of Shares | |||||||||||
Shares of | of Common Stock | Aggregate | ||||||||||
Preferred | Subject to | Purchase | ||||||||||
Director | Stock(1) | Warrants(2) | Price | |||||||||
James J. Martell | 725 | 414,286 | $ | 725,000 |
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(1) | Shares of Preferred Stock have an initial conversion price of $1.75 per share of Company common stock, without giving effect to the Reverse Stock Split. Giving effect to the Reverse Stock Split, shares of Preferred Stock have an initial conversion price of $7.00 per share of Company common stock. |
(2) | Share numbers in this column do not give effect to the Reverse Stock Split. The initial exercise price of the Warrants is $1.75 per share of Company common stock, without giving effect to the Reverse Stock Split. Giving effect to the Reverse Stock Split, the initial exercise price of the Warrants is $7.00 per share of Company common stock. |
Perquisites and | ||||||||||||||||||||
Name | Cash ($)(1) | Equity ($) | Benefits ($)(2) | Total ($) | ||||||||||||||||
Executive Officers | ||||||||||||||||||||
Michael R. Welch – | 391,900 | 88,827(3 | ) | 5,909 | 486,636 | |||||||||||||||
President and Chief | ||||||||||||||||||||
Executive Officer | ||||||||||||||||||||
John D. Welch – Chief | 256,000 | 34,886(3 | ) | 5,717 | 296,603 | |||||||||||||||
Financial Officer | ||||||||||||||||||||
Employee Director | ||||||||||||||||||||
Daniel Para – Director, | 407,300 | 102,857(3 | ) | 7,926 | 518,083 | |||||||||||||||
President and Chief | ||||||||||||||||||||
Executive Officers of | ||||||||||||||||||||
Concert Group Logistics, | ||||||||||||||||||||
Inc. | ||||||||||||||||||||
Non-employee Directors | ||||||||||||||||||||
James J. Martell | 24,255(4 | ) | 24,255 | |||||||||||||||||
Jay N. Taylor | 25,022(4 | ) | 25,022 | |||||||||||||||||
Calvin (Pete) R. Whitehead | 24,017(4 | ) | 24,017 | |||||||||||||||||
Jennifer H. Dorris | 34,994(4 | ) | 34,994 | |||||||||||||||||
John F. Affleck–Graves | 22,890(4 | ) | 22,890 | |||||||||||||||||
(1) | As described above, the cash payments to the named executive officers and Mr. Para consist of (a) a lump-sum payment equal to the sum of the employee’s one year’s base salary, in the case of Messrs. Michael Welch and John Welch, or 18-months’ base salary, in the case of Mr. Para, and (b) the greater of (1) hisperformance-based bonus payments for the year preceding the date of termination or (2) his average annual bonus during the two years immediately preceding the termination payment, in each case, payable upon a qualifying termination of employment following the consummation of the Equity Investment. The salary and bonus components of the cash severance, respectively, for each employee are as follows: (i) Mr. Michael Welch — $240,000 and $151,900; (ii) Mr. John Welch — $180,000 and $76,000; and (ii) Mr. Para — $240,000 and $47,300. The cash payments are “double-trigger” in that they |
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are payable upon a qualifying termination of the executive officer’s employment within one year following consummation of the Proposed Transaction. These cash payments are based on each employee’s base salary as of August 1, 2011 and bonus payments made with respect to 2010 and 2009. As a result, if the employee’s base salary or bonus payment increases prior to the date the employee’s employment is terminated, actual payment to the employee may be greater than set forth in this table. |
(2) | The amounts in this column represent the aggregate incremental cost to the Company with respect to continued health and welfare benefits to be provided to the employee and his dependents for a period of one year, in the case of Messrs. Michael Welch and John Welch, or 18 months, in the case of Mr. Para, following a qualifying termination of employment within one year following consummation of the Proposed Transaction. The Company has assumed, for purposes of the calculation, that the costs to the Company for the relevant period will be the same as the costs to the Company for 2010. |
(3) | As described above, the equity amounts for Messrs. Michael Welch, John Welch and Para consist of accelerated vesting of unvested option awards, which is “single-trigger” in that, pursuant to their amended employment agreements, unvested options granted prior to June 13, 2011 and held by our executive officers and Mr. Para as of consummation of the Equity Investment will vest and become immediately exercisable upon consummation of the Equity Investment. The value of the option awards is based on the average per share closing price of Company common stock over the five business days following public announcement of the Proposed Transaction, or $2.772. As a result, if the per share price of Company common stock increases prior to the date the holder exercises the option award, the actual equity amount may be greater than set forth in this table. |
(4) | As described above, the equity amounts for our non-employee directors consist of accelerated vesting of unvested option awards, which is “double-trigger” in that it will occur immediately upon cessation of services on the board for any reason, in each case, within one year following consummation of the Proposed Transaction. Pursuant to the Investment Agreement, with the exception of Mr. James Martell, the service of each of the Company’s current directors will terminate upon the consummation of the Proposed Transaction and their outstanding options will vest and become exercisable at such time. The value of the option awards is based on the average per share closing price of Company common stock over the five business days following public announcement of the Proposed Transaction, or $2.772. As a result, if the per share price of Company common stock increases prior to the date the holder exercises the option award, the actual equity amounts may be greater than set forth in this table. |
Resulting Consideration | ||||||||
Number of Shares Underlying | from Vested Option | |||||||
Name | Vested Option Awards(#)(1) | Awards($)(2) | ||||||
Executive Officers | ||||||||
Michael Welch | 425,000 | 784,033 | ||||||
John Welch | 45,111 | 64,742 | ||||||
Directors | ||||||||
Daniel Para(1) | 57,639 | 93,393 | ||||||
James J. Martell | 284,722 | 493,125 | ||||||
Jay N. Taylor | 181,944 | 335,878 | ||||||
Calvin (Pete) R. Whitehead | 184,722 | 339,633 | ||||||
Jennifer H. Dorris | 178,472 | 329,656 | ||||||
John F. Affleck–Graves | 160,417 | 243,460 |
(1) | Share numbers in this column do not give effect to the Reverse Stock Split. |
(2) | The value of the option awards is based on the average per share closing price of the Company common stock over the five business days following public announcement of the Proposed Transaction, or $2.772. |
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As a result, if the per share price of Company common stock increases prior to the date the holder exercises the option award, actual equity amounts may be greater than set forth in this table. |
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• | exercise discretion in agreeing to amendments to the Investment Agreement; | |
• | exercise discretion in executing and delivering waivers in connection with the transactions contemplated by the Investment Agreement; | |
• | exercise discretion in making necessary agreements in connection with the Investment Agreement; and | |
• | communicate to, and receive communications from, the Company on behalf of the Investors. |
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• | our and our subsidiaries’ proper organization, good standing and corporate power to operate our businesses; | |
• | our certificate of incorporation and by-laws and those of our subsidiaries; | |
• | the absence of encumbrances on our capital stock; | |
• | the due issuance of the Preferred Stock; | |
• | our capitalization, including in particular the number of shares of preferred stock, common stock and stock options outstanding and the status of our indebtedness; | |
• | our corporate power and authority to enter into the Investment Agreement and to consummate the transactions contemplated thereby; | |
• | the absence of any violation of or conflict with our organizational documents, applicable law or certain agreements as a result of entering into the Investment Agreement and consummating the transactions contemplated thereby; | |
• | required consents and approvals of governmental entities as a result of the transactions contemplated by the Investment Agreement; | |
• | our SEC filings since January 1, 2009 and the financial statements contained therein; | |
• | our implementation of certain internal controls over financial reporting and a system of disclosure controls as required by the Exchange Act and the Sarbanes-Oxley Act; | |
• | the accuracy and completeness of information supplied by us in this proxy statement; | |
• | the absence of certain changes and events, including any “material adverse effect”, since January 1, 2011; | |
• | the absence of litigation or outstanding court orders against us; | |
• | material and certain other specified contracts; | |
• | our possession of all licenses and permits necessary to operate our properties and carry on our business; | |
• | employment and labor matters affecting us, including matters relating to our employee benefit plans; | |
• | tax matters; | |
• | environmental matters; | |
• | real property owned and leased by us and title to assets; | |
• | our intellectual property; | |
• | our compliance with the Foreign Corrupt Practices Act of 1977, as amended; | |
• | the absence of any application of Section 203 of the DGCL or other state takeover laws; | |
• | the required vote of our stockholders in connection with the approval of the transactions contemplated by the Investment Agreement; | |
• | the absence of undisclosed broker’s fees; | |
• | receipt by us of a fairness opinion from Ladenburg Thalmann & Co. Inc.; |
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• | our insurance arrangements; and | |
• | our compliance with applicable securities laws in conjunction with the offer and sale of the Securities (including applicable exemptions from registration under the Securities Act of 1933, as amended, and the rules promulgated by the SEC thereunder). |
• | general legal, market, economic or political conditions affecting the industry in which the Company operates, provided that such conditions do not disproportionately affect the Company and its subsidiaries, taken as a whole, in relation to other companies in the industry in which the Company operates; | |
• | changes affecting general worldwide economic or capital market conditions (including changes in interest or exchange rates), provided that such changes do not disproportionately affect the Company and its subsidiaries, taken as a whole, in relation to other companies in the industry in which the Company operates; | |
• | the pendency or announcement of the Investment Agreement or the anticipated consummation of the Equity Investment, including any reaction of any customer, employee, supplier, service provider, partner or other constituency to the identity of the Investors or any of the transactions contemplated by the Investment Agreement; | |
• | any decrease in the market price or trading volume of the Company common stock (except that the underlying cause or causes of any such decrease may be deemed to constitute, in and of itself or themselves, a “material adverse effect” and may be taken into consideration when determining whether there has occurred a “material adverse effect”); | |
• | the Company’s failure to meet any internal or published projections, forecasts or other predictions or published industry analyst expectations of financial performance (except that the underlying cause or causes of any such failure may be deemed to constitute, in and of itself or themselves, a “material adverse effect” and may be taken into consideration when determining whether there has occurred a “material adverse effect”); | |
• | any change in GAAP which occurs or becomes effective after the date of the Investment Agreement; | |
• | actions or omissions of the Company or any of its subsidiaries taken with the prior written consent of JPE; and | |
• | any natural disaster, any act or threat of terrorism or war anywhere in the world, any armed hostilities or terrorist activities anywhere in the world, any threat or escalation of armed hostilities or terrorist activities anywhere in the world to the extent they do not disproportionately affect the Company and its subsidiaries, taken as a whole, in relation to other companies in the industry in which the Company operates. |
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• | their proper organization and good standing; | |
• | their corporate or other power and authority to enter into the Investment Agreement and to consummate the transactions contemplated by the Investment Agreement; | |
• | the accuracy and completeness of information supplied by them in this proxy statement; | |
• | the sufficiency of their available funds at closing to consummate the Equity Investment; | |
• | matters relating to the absence of any application of Section 203 of the DGCL; | |
• | their status as “accredited investors”; | |
• | the appropriate advice obtained and the due diligence investigation made with respect to the Investment Agreement and the transactions contemplated thereby; and | |
• | their understanding of the limitations on transfers and other restrictions on the Securities they will receive pursuant to the Equity Investment. |
• | conduct our business in the ordinary course in all material respects; and | |
• | use commercially reasonable efforts to keep available the services of our and our subsidiaries’ current officers and employees, and preserve our assets, technology and current relationships with customers, suppliers and other persons with whom we have material business dealings. |
• | declare or pay any dividends or make other distributions with respect to our or our subsidiaries’ capital stock; | |
• | split, combine, reclassify, redeem, purchase or otherwise acquire any of our or our subsidiaries’ capital stock; | |
• | modify any term of our or our subsidiaries’ indebtedness; | |
• | issue, deliver, sell, pledge or otherwise encumber any of our or our subsidiaries’ equity interests, or securities convertible into, exchangeable for or exercisable for, or any options, warrants, calls or other rights to acquire, any of our or our subsidiaries’ equity interests; | |
• | adopt or implement any stockholder rights plan or similar arrangement; | |
• | amend or propose to amend our or our subsidiaries’ organizational documents; | |
• | acquire any business or business entity or any division thereof, or any other assets other than immaterial assets acquired in the ordinary course of business; | |
• | sell, lease, license, sell and lease back, mortgage or encumber or otherwise dispose of any of our or our subsidiaries’ material properties or assets, except in the ordinary course of business; | |
• | repurchase, prepay or incur any indebtedness, or make loans, advances or capital contributions to or investments in any other person; | |
• | incur or commit to incur any capital expenditures that are individually in excess of $200,000 or in the aggregate are in excess of $500,000; |
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• | settle or satisfy any claims, actions or proceedings, other than in the ordinary course of business, for amounts not in excess of $200,000 or waive any material benefits of, or modify in any adverse respect, or fail to enforce, any confidentiality, standstill or similar contract; | |
• | enter into any lease or sublease of real property or modify in any material respect or exercise any right to renew any lease or sublease of real property, or acquire any interest in real property; | |
• | modify or amend in any material respect or terminate any material contracts or waive any right to enforce rights or claims thereunder; | |
• | increase, adopt, terminate or amend compensation, retention, severance or benefit plan arrangements, or grant any award thereunder; | |
• | form any subsidiary; | |
• | enter into any contract which will conflict with the Proposed Transaction or otherwise result in any violation or breach under such contract upon consummation of the Proposed Transaction or give rise to any loss or the creation of any material encumbrance as a result of the Proposed Transaction; | |
• | take any action or fail to take any action which would be expected to result in any representation or warranty becoming untrue; | |
• | adopt or enter into any collective bargaining agreement or other labor union contract; | |
• | write down the book value of any material assets or make changes to financial or tax accounting practices except as required by GAAP or applicable law; | |
• | engage in any trade loading practices or other promotional sales or discount activity with the effect of accelerating to prior fiscal quarters sales to the trade that would otherwise be expected to occur in subsequent fiscal quarters; | |
• | engage in any practice which would have the effect of postponing to subsequent fiscal quarters payments by the Company or any of its subsidiaries that would otherwise be expected to be made in prior fiscal quarters; | |
• | engage in any promotional sales otherwise outside the ordinary course of business or inconsistent with past practice; | |
• | enter into, extend or renew any contract pursuant to which the Company or any of its subsidiaries agrees not to compete with any person in any area or to engage in any activity or business that is material to the Company and its subsidiaries, or containing any provisions contemplating a “change in control” or similar event with respect to the Company or one or more of its subsidiaries, including provisions requiring consent or approval of any person in the event of a change in control or otherwise having the effect of providing that the consummation of the transactions contemplated by the Investment Agreement will materially conflict with such contract or give rise under such contract to any right of termination or other adverse right; or | |
• | authorize or commit, resolve or agree to take any of the foregoing actions. |
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• | solicit, initiate, knowingly encourage or take any action to knowingly facilitate any takeover proposal or inquiry or the making of any proposal that could reasonably be expected to lead to a takeover proposal; or | |
• | enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish any information to any person or otherwise cooperate with any person with respect to, any takeover proposal. |
• | assets or businesses representing 15% or more of the total revenue, net income, EBITDA or assets of the Company and its subsidiaries, taken as a whole; or | |
• | 15% or more of the outstanding shares of Company common stock or of any class of capital stock of, or other equity or voting interests in, one or more subsidiaries of the Company which, in the aggregate, directly or indirectly hold assets or businesses representing 15% or more of the total revenue, net income, EBITDA or assets of the Company and its subsidiaries, taken as a whole. |
• | if consummated, would result in the offering person (or, in the case of a direct merger between such person and the Company, the stockholders of such person) acquiring, directly or indirectly, 50% or more of the voting power of the capital stock of the Company or 50% or more of the assets of the Company and its subsidiaries, taken as a whole; and | |
• | in the good faith judgment of the Board of Directors (acting upon the affirmative recommendation of the special committee) (after consultation with its financial advisor and outside legal counsel), (i) is more favorable to the holders of Company common stock than the Equity Investment from a financial point of view (taking into account all of the terms and conditions of such proposal and the Investment Agreement (including any changes to the terms of the Investment Agreement proposed by the Investors in response to such superior proposal or otherwise)) and (ii) is reasonably capable of being completed, taking into account all financial, legal, regulatory and other aspects of such proposal. |
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• | withdraw or modify in a manner adverse to the Investors, or propose publicly to withdraw or modify in a manner adverse to the Investors, the approval, recommendation or declaration of advisability by the Board of Directors or any such committee of the transactions contemplated by the Investment Agreement; or | |
• | approve, recommend or declare advisable, or propose publicly to approve, recommend or declare advisable, any takeover proposal. |
• | in response to a “superior proposal” or an “intervening event”, effect an adverse recommendation change; or | |
• | in response to a “superior acquisition proposal”, cause the Company to enter into a definitive agreement to consummate such superior acquisition proposal and concurrently terminate the Investment Agreement; |
• | the Board of Directors has first provided prior written notice to JPE that it is prepared to take such action, which notice must, in the case of a superior proposal, attach the most current version of any written agreement relating to the superior proposal, and, in the case of an intervening event, attach information describing the intervening event; and | |
• | JPE does not make, within three business days after the receipt of such notice, a proposal that would, in the good faith judgment of the Board of Directors (acting upon the affirmative recommendation of the special committee) (after consultation with its financial advisor and outside legal counsel), cause the offer previously constituting a superior proposal to no longer constitute a superior proposal, or obviate the need for an adverse recommendation change as a result of an intervening event (and any amendment or modification of such superior proposal requires a new notice and a new three business day period). |
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• | no less than a majority of the members of the Board of Directors for so long as JPE owns Preferred Stock, Company common stock or other voting securities, or Warrants exercisable for such securities, representing, in the aggregate, no less than 33% of the total voting power of the capital stock of the Company, calculated on a fully-diluted basis; and | |
• | no less than 25% of the members of the Board of Directors for so long as JPE owns Preferred Stock, Company common stock or other voting securities, or Warrants exercisable for such securities, representing, in the aggregate, less than 33% but greater than or equal to 20% of the total voting power of the capital stock of the Company, calculated on a fully-diluted basis. |
• | Proposals 1 through 5 shall have been approved by the stockholders; |
• | any waiting period applicable to the transactions contemplated by the Investment Agreement under the HSR Act shall have been terminated or shall have expired, and any other approval under any other applicable antitrust or similar law shall have been obtained or terminated or shall have expired (the Company has determined that no antitrust approval is necessary in connection with the Equity Investment); and | |
• | no temporary restraining order, preliminary or permanent injunction or other judgment issued by any court of competent jurisdiction or other legal restraint or prohibition that has the effect of preventing, prohibiting or making illegal the consummation of the Equity Investment shall be in effect. |
• | the representations and warranties made by the Company in the Investment Agreement that are qualified by materiality or material adverse effect must be true and correct and the representations and warranties which are not so qualified must be true and correct in all material respects, in each case as of the date of the Investment Agreement and on the date of the closing with the same effect as though made on the closing date (except that those representations and warranties that speak as of a specified date will be determined as of such date); | |
• | the Company has performed in all material respects all obligations required to be performed by it under the Investment Agreement at or prior to the closing; | |
• | there being no litigation brought or threatened by any governmental entity challenging or seeking to restrain the consummation of the transactions contemplated by the Investment Agreement or seeking to obtain damages in relation thereto, or seeking to limit the Investors’ ability to acquire |
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and exercise full ownership rights of any Warrants, shares of Preferred Stock or Company common stock, or any legal restraint in effect that could reasonably be expected to result in any such effects; |
• | all material governmental consents and approvals required to effect the Equity Investment have been obtained; | |
• | since the date of the Investment Agreement, no material adverse effect or any state of facts, change, development, event, effect, condition, occurrence, action or omission that is reasonably likely to have a material adverse effect has occurred; | |
• | the Certificate of Designation has been duly adopted by us and duly filed with the Secretary of State of the State of Delaware; | |
• | we have executed and delivered the Registration Rights Agreement in a form reasonably acceptable to JPE; and | |
• | there being no stop order or suspension of trading in effect with respect to our common stock. |
• | the representations and warranties of each Investor in the Investment Agreement that are qualified by materiality must be true and correct and the representations and warranties which are not so qualified must be true and correct in all material respects, in each case as of the date of the Investment Agreement and on the date of the closing with the same effect as though made on the closing date (except that those representations and warranties that speak as of a specified date will be determined as of such date); and | |
• | each Investor has performed in all material respects all obligations required to be performed by it under the Investment Agreement at or prior to closing. |
• | by either JPE or the Company if: |
• | the closing has not occurred on or before December 13, 2011, provided that such right to terminate will not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Equity Investment to occur on or before such date and such action or failure to act constitutes a breach of the Investment Agreement; | |
• | certain legal restraints shall be in effect and shall have become final and nonappealable; or |
• | the stockholders meeting in respect of the Proposed Transaction shall have been held and the stockholders shall not have approved Proposals 1 through 5 at such meeting or at any adjournment or postponement of such meeting; |
• | by JPE prior to the receipt of approval by the stockholders of Proposals 1 through 5 if an adverse recommendation change has occurred; |
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• | by JPE if: |
• | there is a breach by the Company of its representations, warranties, covenants or agreements in the Investment Agreement such that the closing conditions would not be satisfied, and that is incapable of being cured within 30 business days of such breach, or if capable of being cured, the Company does not commence to cure such breach within 10 business days after its receipt of written notice of such breach; or | |
• | certain legal restraints shall be in effect and shall have become final and nonappealable; |
• | by the Company if there is a breach by any Investor of its representations, warranties, covenants or agreements in the Investment Agreement such that the closing conditions would not be satisfied, and that is incapable of being cured by the Investor or JPE within 30 business days of such breach, or if capable of being cured, the Investor or JPE does not commence to cure such breach within 10 business days after receipt of written notice of such breach; or |
• | by the Company prior to the receipt of approval by the stockholders of Proposals 1 through 5 in order to enter into a definitive agreement to consummate a “superior acquisition proposal”. |
• | by JPE due to an adverse recommendation change made in connection with a “superior proposal”; or | |
• | by the Company in order to enter into a definitive agreement to consummate a “superior acquisition proposal”. |
• | by JPE due to an adverse recommendation change made other than in connection with a “superior proposal”; or |
• | by either JPE or the Company due to the failure of the closing to occur on or prior to December 13, 2011 or because the stockholders meeting was held and Proposals 1 through 5 were not approved at such meeting, or by JPE due to a breach of the Investment Agreement by the Company, in each case in circumstances in which: |
• | prior to such termination, a takeover proposal was made to the Company or its stockholders or any person publicly announced an intention (whether or not conditional and whether or not withdrawn) to make a takeover proposal or a takeover proposal otherwise became publicly known; and | |
• | prior to the date that is nine months after such termination, the Company or any of its subsidiaries enters into any definitive contract to consummate any takeover proposal or any takeover proposal is consummated (solely for purposes of this bullet, the term “takeover proposal” has the meaning set forth above, except that all references to 15% are deemed references to 50%). |
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• | by the mutual written consent of the Company and JPE; |
• | by either JPE or the Company due to the failure of the closing to occur on or prior to December 13, 2011 or because the stockholders meeting was held and Proposals 1 through 5 were not approved at such meeting (in each case, other than in circumstances involving a takeover proposal in which the termination fee described above is payable), or due to certain legal restraints having come into effect and becoming final and nonappealable; or |
• | by the Company as a result of an Investor breach. |
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Company Common Stock | ||||||||
High | Low | |||||||
Fiscal Year 2009: | ||||||||
1st Quarter | $1.15 | $0.67 | ||||||
2nd Quarter | $0.95 | $0.77 | ||||||
3rd Quarter | $0.96 | $0.81 | ||||||
4th Quarter | $1.29 | $0.91 | ||||||
Fiscal Year 2010: | ||||||||
1st Quarter | $1.65 | $1.22 | ||||||
2nd Quarter | $1.56 | $1.26 | ||||||
3rd Quarter | $1.88 | $1.24 | ||||||
4th Quarter | $2.82 | $1.99 | ||||||
Fiscal Year 2011: | ||||||||
1st Quarter | $3.03 | $2.12 | ||||||
2nd Quarter | $3.32 | $2.07 | ||||||
3rd Quarter (through August 3, 2011) | $4.25 | $3.09 |
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NUMBER OF AUTHORIZED SHARES OF COMPANY COMMON STOCK TO 150,000,000 SHARES
Before | ||||||||||||
Reverse Stock | After Reverse | |||||||||||
Split (But | Stock Split | |||||||||||
Company Common | After Increase | and Increase | ||||||||||
Stock – Shares: | August 1, 2011 | in Authorized) | in Authorized | |||||||||
Outstanding | 33,011,561 | 33,011,561 | 8,252,762 | |||||||||
Treasury Shares | 180,000 | 180,000 | 45,000 | |||||||||
Reserved for 2001 Stock Option Plan | 4,626,238 | 4,626,238 | 1,156,560 | |||||||||
Underlying the Preferred Stock | — | 42,857,143 | 10,714,286 | |||||||||
Underlying the Warrants | — | 42,857,143 | 10,714,286 | |||||||||
Potential outstanding | 37,817,799 | 123,532,085 | 30,882,894 | |||||||||
Available for future issuance | 62,182,201 | 26,467,915 | 119,117,106 | |||||||||
Total authorized | 100,000,000 | 150,000,000 | 150,000,000 | |||||||||
Shares available for issuance as a percentage of potential shares outstanding | 164% | 21% | 386% |
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REVERSE STOCK SPLIT OF COMPANY COMMON STOCK
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Before | ||||||||||||
Reverse Stock | After Reverse | |||||||||||
Split (But | Stock Split | |||||||||||
Company Common | After Increase | and Increase | ||||||||||
Stock – Shares: | August 1, 2011 | in Authorized) | in Authorized | |||||||||
Outstanding | 33,011,561 | 33,011,561 | 8,252,762 | |||||||||
Treasury Shares | 180,000 | 180,000 | 45,000 | |||||||||
Reserved for 2001 Stock Option Plan | 4,626,238 | 4,626,238 | 1,156,560 | |||||||||
Underlying the Preferred Stock | — | 42,857,143 | 10,714,286 | |||||||||
Underlying the Warrants | — | 42,857,143 | 10,714,286 | |||||||||
Potential outstanding | 37,817,799 | 123,532,085 | 30,882,894 | |||||||||
Available for future issuance | 62,182,201 | 26,467,915 | 119,117,106 | |||||||||
Total authorized | 100,000,000 | 150,000,000 | 150,000,000 | |||||||||
Shares available for issuance as a percentage of potential shares outstanding | 164% | 21% | 386% |
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• | a citizen or resident of the United States; | |
• | a corporation (or other entity taxed as a corporation for U.S. Federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof; | |
• | an estate the income of which is subject to U.S. Federal income tax regardless of its source; or | |
• | a trust (A) if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more “U.S. person” (as defined in the Code) have the authority to control all substantial decisions of the trust or (B) that has a valid election in effect to be treated as a U.S. person. |
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VACANCIES ON THE BOARD OF DIRECTORS TO BE FILLED BY THE REMAINING DIRECTORS
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• | Recipients of Performance Compensation Awards. The Committee would, in its sole discretion, designate within the first 90 days of a performance period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) the participants who would be eligible to receive performance compensation awards in respect of such performance period. The Committee would also determine the length of performance periods, the types of awards to be issued, the performance criteria that would be used to establish the performance goals, the kinds and levels of performance goals and any objective performance formula used to determine whether a performance compensation award had been earned for the performance period. | |
• | Performance Criteria Applicable to Performance Compensation Awards. The performance criteria would be limited to the following: (1) share price, (2) net income or earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization), (3) operating income, (4) earnings per share (including specified types or categories thereof), (5) cash flow (including specified types or categories thereof), (6) cash flow return on capital, (7) revenues (including specified types or categories thereof), (8) return on shareholders’ equity, (9) return on investment or capital, (10) return on assets, (11) gross or net profitability/profit margins, (12) objective measures of productivity or operating efficiency, (13) costs (including specified types or categories thereof), (14) budgeted expenses (operating and capital), (15) market share (in the aggregate or by segment), (16) level of amount of acquisitions, (17) economic value-added, (18), enterprise value, (19) book value, (20) working capital, (21) safety and accident rates and (22) days sales outstanding. These performance criteria would be permitted to be applied on an absolute basis or be relative to one or more peer companies or indices or any combination thereof or, if applicable, be computed on an accrual or cash accounting basis. The performance goals and periods could vary from participant to participant and from time to time. To the extent required under Section 162(m) of the Code, the Committee would, within the first 90 days of the applicable performance period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), define in an objective manner the method of calculating the performance criteria it selected to use for the performance period. | |
• | Modification of Performance Goals. The Committee would be permitted to adjust or modify the calculation of performance goals for a performance period in the event of, in anticipation of, or in recognition of, any unusual or extraordinary corporate item, transaction, event or development or |
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any other unusual or nonrecurring events affecting the Company, any of its affiliates, subsidiaries, divisions or operating units (to the extent applicable to such performance goal) or its financial statements or the financial statements of any of its affiliates, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles, law or business conditions, so long as that adjustment or modification did not cause the performance compensation award to fail to qualify as “performance-based compensation” under Section 162(m) of the Code. |
• | Requirements to Receive Payment for 162(m) Awards. Except as otherwise permitted by Section 162(m) of the Code, in order to be eligible for payment in respect of a performance compensation award for a particular performance period, participants would be required to be employed by us on the last day of the performance period, the performance goals for such period would be required to be satisfied and certified by the Committee and the performance formula would be required to determine that all or some portion of the performance compensation award had been earned for such period. | |
• | Negative Discretion. The Committee would be permitted to, in its sole discretion, reduce or eliminate the amount of a performance compensation award earned in a particular performance period, even if applicable performance goals had been attained and without regard to any employment agreement between us and a participant. | |
• | Limitations on Committee Discretion. Except as otherwise permitted by Section 162(m) of the Code, in no event could any discretionary authority granted to the Committee under the Plan be used to grant or provide payment in respect of performance compensation awards for which performance goals had not been attained, increase a performance compensation award for any participant at any time after the first 90 days of the performance period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) or increase a performance compensation award above the maximum amount payable under the underlying award. | |
• | Form of Payment. Performance compensation awards (other than restricted shares, RSUs and other stock-based awards) would be payable in cash or in restricted stock, RSUs or fully vested shares of equivalent value and would be paid on the terms determined by the Committee in its discretion. Any shares of restricted stock or RSUs would be subject to the terms of the Plan or any successor equity compensation plan and any applicable award agreement. The number of shares of restricted stock, RSUs or fully vested shares that is equivalent in value to a particular dollar amount would be determined in accordance with a methodology specified by the Committee within the first 90 days of a plan year (or, if shorter, the maximum period allowed under Section 162(m) of the Code). |
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• | any options and SARs outstanding as of the date the change of control was determined to have occurred would become fully exercisable and vested, as of immediately prior to the change of control; | |
• | all performance units, cash incentive awards and other awards designated as performance compensation awards would be paid out as if the date of the change of control were the last day of the applicable performance period and “target” performance levels had been attained; and | |
• | all other outstanding awards would automatically be deemed exercisable or vested and all restrictions and forfeiture provisions related thereto would lapse as of immediately prior to such change of control. |
• | during any period of 12 consecutive calendar months, a change in the composition of a majority of the board of directors, as constituted on the first day of such period, that was not supported by a majority of the incumbent board of directors; | |
• | consummation of certain mergers or consolidations of the Company with any other corporation following which the Company’s stockholders hold 50% or less of the combined voting power of the surviving entity; | |
• | the stockholders approve a plan of complete liquidation or dissolution of the Company; or | |
• | an acquisition by any individual, entity or group of beneficial ownership of a percentage of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors that was equal to or greater than 50%. |
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Number of Securities | ||||||||||||
Remaining | ||||||||||||
Available for Future | ||||||||||||
Issuance | ||||||||||||
Under Equity | ||||||||||||
Number of Securities to be | Weighted-Average | Compensation | ||||||||||
Issued Upon Exercise of | Exercise Price of | Plans (Excluding | ||||||||||
Outstanding Options, | Outstanding Options, | Securities | ||||||||||
Warrants and Rights | Warrants and Rights | Reflected in Column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders | 3,005,250 | $ | 1.18 | 2,122,446 | ||||||||
Equity compensation plans not approved by security holders | 0 | 0 | 0 | |||||||||
Total | 3,005,250 | $ | 1.18 | 2,122,446 |
(1) | Share numbers and exercise prices in this table do not give effect to the Reverse Stock Split. |
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Express-1 Expedited Solutions, Inc., 2011 Omnibus Incentive Compensation Plan
Number of | ||||||||||
Name and Principal Position | Dollar Value ($)(1) | Units(2) | ||||||||
Michael R. Welch, Chief Executive Officer | N/A | — | ||||||||
John D. Welch, Chief Financial Officer | N/A | — | ||||||||
All Current Executive Officers as a Group (two persons) | N/A | — | ||||||||
All Current Directors (other than Executive Officers) as a Group (six persons) | N/A | — | ||||||||
All Current Employees (other than Executive Officers) as a Group (211 persons) | $ | — | 150,000 | (3) | ||||||
(1) | Dollar value will be based upon the fair market value, as defined in the Plan, of the Company’s common stock on the date of grant. |
(2) | Share numbers in this column do not give effect to the Reverse Stock Split. |
(3) | Amount represents stock options to purchase 25,000 shares that will be granted to each of two employees in January 2012 pursuant to their respective employment agreements, and stock options to purchase 100,000 shares that will be granted to one employee upon consummation of the Equity Investment pursuant to his employment agreement. The stock options will have an exercise price per share equal to the closing price of a share of the Company’s common stock as reported by the applicable national stock exchange or quotation system on which the shares may be listed or quoted on the business day immediately preceding the date of grant, with respect to the 25,000 stock options that will be granted to each of the two employees in January 2012, and on the date of grant, with respect to the 100,000 options that will be granted to the one employee upon consummation of the Equity Investment. |
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TO CHANGE THE NAME OF THE COMPANY TO XPO LOGISTICS, INC.
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Fees Earned or | Options | |||||||||||
Name | Paid in Cash | Awards(2) | Total | |||||||||
Daniel Para | $ | 0 | $ | 0 | $ | 0 | ||||||
James J. Martell | $ | 30,000 | $ | 11,950 | $ | 41,950 | ||||||
Jay N. Taylor | $ | 5,500 | $ | 15,910 | $ | 21,410 | ||||||
Calvin (Pete) R. Whitehead | $ | 40,000 | $ | 11,950 | $ | 51,950 | ||||||
Jennifer H. Dorris | $ | 22,000 | $ | 11,640 | $ | 33,640 | ||||||
John F. Affleck–Graves | $ | 6,000 | $ | 11,950 | $ | 17,950 |
(1) | Compensation information for those members of the Board of Directors who are also considered named executive officers of the Company is disclosed in the section “Executive Compensation — Summary Compensation Table”. | |
(2) | Amounts shown are the aggregate grant date fair value of option awards computed in accordance with Accounting Standards Codification (“ASC”) Topic 718 “Compensation-Stock Compensation”. For a further discussion of the assumptions used in the calculation of the 2010 grant date fair values for option awards pursuant to ASC 718, please see “Financial Statements—Notes to Consolidated Financial Statements—Footnote No. 1 Stock Option Plan” of the Company’s Annual Report onForm 10-K for the year ended December 31, 2010. As of December 31, 2010, the number of outstanding option awards held by each of our directors (other than our named executive officers) was as follows: Mr. Martell—300,000 option awards; Mr. Taylor—200,000 option awards; Mr. Whitehead—200,000 option awards; Ms. Dorris—200,000 option awards; Mr. Affleck-Graves—175,000 option awards; and Mr. Para—125,000 option awards, 25,000 of which were granted to Mr. Para in connection with his service on our Board of Directors. |
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Nonequity | ||||||||||||||||||||||||||||
Incentive Plan | Option | All Other | Total | |||||||||||||||||||||||||
Salary(1) | Bonus(2) | Compensation(3) | Awards(4) | Compensation(5) | Compensation | |||||||||||||||||||||||
Name and Position | Year | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Michael R. Welch | 2010 | 205,000 | 30,000 | 151,900 | 27,900 | 4,000 | 418,800 | |||||||||||||||||||||
Chief Executive Officer | 2009 | 200,000 | — | — | — | 5,800 | 205,800 | |||||||||||||||||||||
John D. Welch(6) | 2010 | 130,000 | 20,000 | 76,000 | 27,500 | 1,000 | 254,500 | |||||||||||||||||||||
Chief Financial Officer | 2009 | 122,000 | — | — | 2,900 | 124,900 |
(1) | Included in this column is the base salary paid to the named executive officers during each year. | |
(2) | Included in this column is a discretionary cash bonus paid to the named executive officers for 2010. For Mr. Michael Welch, the $30,000 discretionary bonus was in lieu of $30,000 that was historically paid into a non-qualified deferred compensation plan, which the Company decided to terminate. For Mr. John Welch, the $20,000 discretionary bonus was made to compensate him for the additional duties and responsibilities he performed during 2010 when he became our Interim Chief Financial Officer. | |
(3) | Included in this column is the performance-based annual cash bonus awards earned in 2009 and 2010. The Company’s annual bonus plan is further detailed in the narrative following the Summary Compensation Table. | |
(4) | Included in this column are the awards of stock options based upon the Company’s performance. In 2009, the named executive officers did not receive any option awards. Amounts shown are the aggregate grant date fair value of option awards computed in accordance with ASC 718 and represent 60,000 and 50,000 option awards granted to Mr. Michael Welch and Mr. John Welch, respectively. For a further discussion of the assumptions used in the calculation of the 2010 grant date fair values for option awards pursuant to ASC 718, please see “Financial Statements—Notes to Consolidated Financial Statements—Footnote No. 1 Stock Option Plan” of the Company’s Annual Report onForm 10-K for the year ended December 31, 2010. | |
(5) | Included in this column is other compensation items paid to the named executive officers. Components of the other compensation are further detailed in the subsequent table titled “All Other Compensation”. | |
(6) | John Welch was appointed as the Chief Financial Officer of the Company on January 1, 2011. Prior to the appointment, he held the position of Interim Chief Financial Officer from April 19, 2010 to December 31, 2010. He served as the Corporate Controller prior to that appointment. |
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Matching | ||||||||||||||||
Contributions | ||||||||||||||||
Perquisites and | to Retirement | |||||||||||||||
Other Personal | and 401(k) | |||||||||||||||
Benefits(1) | Plans(2) | Total | ||||||||||||||
Name | Year | $ | $ | $ | ||||||||||||
Michael R. Welch | 2010 | 4,000 | — | 4,000 | ||||||||||||
Chief Executive Officer | 2009 | 4,000 | 1,800 | 5,800 | ||||||||||||
John D. Welch | 2010 | 1,000 | — | 1,000 | ||||||||||||
Chief Financial Officer | 2009 | 1,000 | 1,900 | 2,900 |
(1) | Included in this column are primarily amounts for cell phone reimbursements, automobile allowances and club dues. | |
(2) | Included in this column are matching contributions to the Company’s 401(k) plan. Only amounts contributed directly by the employee are eligible for matching contributions and these matches are identical to those available to other employees. |
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Option Awards(1) | ||||||||||||||||||||||||
Number of | Number of | |||||||||||||||||||||||
Securities | Securities | |||||||||||||||||||||||
Underlying | Underlying | Option | ||||||||||||||||||||||
Unexercised | Unexercised | Exercise | Option | |||||||||||||||||||||
Option Grant | Number | Options (#) | Options (#) | Price | Expiration | |||||||||||||||||||
Name | Date | Granted | Exercisable | Unexercisable | ($) | Date | ||||||||||||||||||
Michael R. Welch | 8/9/2004 | 500,000 | 500,000 | — | 1.45 | 8/9/2014 | ||||||||||||||||||
Chief Executive Officer | 7/1/2005 | 100,000 | 100,000 | — | 0.57 | 7/1/2015 | ||||||||||||||||||
2/28/2006 | 50,000 | 50,000 | — | 0.79 | 2/28/2016 | |||||||||||||||||||
2/7/2007 | 60,000 | 60,000 | — | 1.48 | 2/7/2017 | |||||||||||||||||||
1/16/2008 | 60,000 | 58,333 | 1,667 | 0.98 | 1/16/2018 | |||||||||||||||||||
12/12/2008 | 150,000 | 100,000 | 50,000 | 0.92 | 12/13/2018 | |||||||||||||||||||
7/1/2010 | 60,000 | 8,333 | 51,667 | 1.26 | 7/1/2020 | |||||||||||||||||||
John D. Welch | 2/7/2007 | 10,000 | 10,000 | — | 1.48 | 2/7/2017 | ||||||||||||||||||
Chief Financial Officer | 1/16/2008 | 11,500 | 11,181 | 319 | 0.98 | 1/16/2018 | ||||||||||||||||||
3/2/2010 | 50,000 | 12,500 | 37,500 | 1.45 | 3/2/2020 |
(1) | All stock option awards vest monthly over a three-year period following the date of the grant, except for the stock options granted to Mr. Michael Welch in 2004, which vested monthly over a five-year period following the date of grant. |
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Amount and | ||||||||
Nature of | ||||||||
Beneficial | Percentage | |||||||
Name/Address of Beneficial Owner | Ownership | of Class | ||||||
5% Stockholders: | ||||||||
Archon Capital Management, LLC(1) | 1,709,173 | 5.2 | % | |||||
Federated Investors, Inc.(2) | 4,333,194 | 13.1 | % | |||||
Jacobs Private Equity, LLC(3) | 4,363,634 | 13.0 | % | |||||
Bradley Jacobs(4) | 4,363,634 | 13.0 | % | |||||
Named Executive Officers: | ||||||||
Michael R. Welch(5) | 1,300,622 | 3.9 | % | |||||
John D. Welch(6) | 220,767 | * | ||||||
Employee Director: | ||||||||
Daniel Para(7) | 3,063,012 | 9.3 | % | |||||
Non-Employee Directors: | ||||||||
James J. Martell(8) | 324,271 | * | ||||||
Jay N. Taylor(9) | 349,133 | 1.1 | % | |||||
Calvin R. (Pete) Whitehead(10) | 211,111 | * | ||||||
Jennifer H. Dorris(11) | 184,861 | * | ||||||
John F. Affleck-Graves(12) | 171,806 | * | ||||||
Executive Officers and Directors as a Group | 5,825,583 | 16.9 | % | |||||
(8 People) |
* | Less than 1% |
(1) | Archon Capital Management LLC is located at 1301 Fifth Avenue, Suite 3008, Seattle, WA 98101. |
(2) | Federated Investors, Inc. is located at Federated Investors Tower, 5800 Corporate Dr., Pittsburgh, PA 15222. |
(3) | Pursuant to the Voting Agreements, JPE was granted a proxy with respect to the shares of Company common stock owned by Michael Welch and Daniel Para. Therefore, JPE and Bradley Jacobs (JPE’s Managing Member) have shared voting power with respect to the shares of Company common stock subject to such Voting Agreements. Furthermore, JPE may be deemed to be the beneficial owner of, and Mr. Jacobs may be deemed to be the indirect beneficial owner of, the shares subject to such Voting Agreements. Both JPE and Bradley Jacobs expressly disclaim beneficial ownership of such shares subject to the Voting Agreements. Such amount excludes unvested options that will become subject to the Voting Agreements as they vest in Mr. Daniel Para and Mr. Michael R. Welch. The address for JPE and Bradley Jacobs is 350 Round Hill Road, Greenwich, CT 06831. |
(4) | See footnote 3. |
(5) | Includes 430,833 shares underlying options to purchase common stock exercisable from $0.57 to $1.48 per share and expiring at dates between July 1, 2015 and July 1, 2020. Pursuant to the Voting Agreement between JPE and Michael R. Welch, JPE has the right to vote Michael Welch’s shares of Company common stock with respect to the Proposals. |
(6) | Includes 46,500 shares underlying options to purchase common stock exercisable from $0.98 to $1.48 per share and expiring at dates between February 7, 2017 and March 2, 2020. |
(7) | Includes 61,111 shares underlying options to purchase common stock exercisable from $0.97 to $1.26 per share and expiring at dates between January 29, 2019 and July 1, 2020. Pursuant to the Voting Agreement between JPE and Daniel Para, JPE has the right to vote Daniel Para’s shares of Company common stock with respect to the Proposals. |
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(8) | Includes 286,111 shares underlying options to purchase common stock exercisable from $0.74 to $1.35 per share and expiring at dates between July 15, 2015 and January 29, 2020. |
(9) | Includes 183,333 shares underlying options to purchase common stock exercisable from $0.67 to $1.65 per share and expiring at dates between December 12, 2015 and March 26, 2020 |
(10) | Includes 186,111 shares underlying options to purchase common stock exercisable from $0.74 to $1.35 per share and expiring at dates between December 12, 2015 and January 29, 2020. |
(11) | Includes 179,861 shares underlying options to purchase common stock exercisable from $0.74 to $1.42 per share and expiring at dates between December 12, 2015 and July 1, 2020 |
(12) | Includes 161,806 shares underlying options to purchase common stock exercisable from $1.00 to $1.34 per share and expiring at dates between November 25, 2016 and January 29, 2020. |
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• | our Annual Report onForm 10-K for the fiscal year ended December 31, 2010; | |
• | our Quarterly Report onForm 10-Q for the quarter ended March 31, 2011; and |
• | our Current Reports onForm 8-K filed on June 13, 2011, June 14, 2011, June 22, 2011 and July 22, 2011. |
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Among
JACOBS PRIVATE EQUITY, LLC,
THE OTHER INVESTORS PARTY HERETO
and
EXPRESS-1 EXPEDITED SOLUTIONS, INC.
Dated as of June 13, 2011
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ARTICLE I The Equity Investment | ||||||||
Section 1.01. | Purchase | A-1 | ||||||
Section 1.02. | Investor Representative | A-1 | ||||||
ARTICLE II The Closing | ||||||||
Section 2.01. | Closing | A-2 | ||||||
Section 2.02. | Issuance of and Payment for Securities | A-2 | ||||||
Section 2.03. | Actions to be Taken at the Closing | A-3 | ||||||
Section 2.04. | Defaulting Investor | A-3 | ||||||
ARTICLE III Representations and Warranties | ||||||||
Section 3.01. | Representations and Warranties of the Company | A-3 | ||||||
Section 3.02. | Representations and Warranties of the Investors | A-17 | ||||||
ARTICLE IV Covenants | ||||||||
Section 4.01. | Conduct of Business | A-19 | ||||||
Section 4.02. | No Solicitation | A-22 | ||||||
Section 4.03. | Legend | A-24 | ||||||
ARTICLE V Additional Agreements | ||||||||
Section 5.01. | Preparation of the Proxy Statement; Stockholders Meeting | A-24 | ||||||
Section 5.02. | Access to Information; Confidentiality | A-26 | ||||||
Section 5.03. | Reasonable Best Efforts; Consultation and Notice | A-26 | ||||||
Section 5.04. | Fees and Expenses | A-28 | ||||||
Section 5.05. | Public Announcements | A-29 | ||||||
Section 5.06. | Board Representation Rights | A-30 | ||||||
Section 5.07. | Adjustment of Stock Options | A-31 | ||||||
Section 5.08. | Engagement of Independent Registered Public Accounting Firm | A-31 | ||||||
Section 5.09. | Listing | A-31 | ||||||
Section 5.10. | Reservation of Shares | A-31 | ||||||
Section 5.11. | Indemnification, Exculpation and Insurance | A-31 | ||||||
ARTICLE VI Conditions Precedent | ||||||||
Section 6.01. | Conditions to Each Party’s Obligation to Effect the Equity Investment | A-32 | ||||||
Section 6.02. | Conditions to Obligations of the Investors | A-32 | ||||||
Section 6.03. | Conditions to Obligation of the Company | A-33 | ||||||
Section 6.04. | Frustration of Closing Conditions | A-33 | ||||||
Section 6.05. | Investor Representative Cure | A-33 |
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ARTICLE VII Termination, Amendment and Waiver | ||||||||
Section 7.01. | Termination | A-34 | ||||||
Section 7.02. | Effect of Termination | A-34 | ||||||
Section 7.03. | Amendment | A-35 | ||||||
Section 7.04. | Extension; Waiver | A-35 | ||||||
ARTICLE VIII General Provisions | ||||||||
Section 8.01. | Nonsurvival of Representations and Warranties | A-35 | ||||||
Section 8.02. | Notices | A-35 | ||||||
Section 8.03. | Definitions | A-36 | ||||||
Section 8.04. | Exhibits; Interpretation | A-37 | ||||||
Section 8.05. | Counterparts | A-38 | ||||||
Section 8.06. | Entire Agreement; No Third-Party Beneficiaries | A-38 | ||||||
Section 8.07. | Governing Law | A-38 | ||||||
Section 8.08. | Assignment | A-38 | ||||||
Section 8.09. | Consent to Jurisdiction; Service of Process; Venue | A-38 | ||||||
Section 8.10. | WAIVER OF JURY TRIAL | A-38 | ||||||
Section 8.11. | Enforcement | A-39 | ||||||
Section 8.12. | Consents and Approvals | A-39 | ||||||
Section 8.13. | Severability | A-39 | ||||||
SCHEDULE I | Investors | A-41 | ||||||
EXHIBIT A | Preferred Stock Certificate of Designation | A-42 | ||||||
EXHIBIT B | Warrant Certificate | A-56 | ||||||
EXHIBIT C | Summary of Principal Registration Rights Provisions | A-70 | ||||||
EXHIBIT D | The 2011 Omnibus Incentive Compensation Plan | A-72 |
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Term | Section | |||
409A Authorities | 3.01(o | )(viii) | ||
Acquisition Agreement | 4.02(b | ) | ||
Adverse Recommendation Change | 4.02(b | ) | ||
Affiliate | 8.03(a | ) | ||
Agreement | Preamble | |||
Average Equity Value | 8.03(b | ) | ||
Bankruptcy and Equity Exception | 3.01(f | ) | ||
Baseline Financials | 3.01(g | )(i) | ||
Benefit Agreements | 3.01(i | )(i) | ||
Benefit Plans | 3.01(m | )(i) | ||
Certificate of Amendment | 8.03(c | ) | ||
Certificate of Designation | 3.01(c | ) | ||
Change Notice | 4.02(b | ) | ||
Closing | 2.01 | |||
Closing Date | 2.01 | |||
Code | 8.03(d | ) | ||
Commonly Controlled Entity | 3.01(m | )(i) | ||
Company | Preamble | |||
Company Bylaws | 3.01(a | ) | ||
Company Certificate | 3.01(a | ) | ||
Company Common Stock | Preamble | |||
Company Indemnitees | 5.11(a | ) | ||
Company Letter | 3.01 | |||
Company Personnel | 3.01(i | )(i) | ||
Company Preferred Stock | 3.01(d | )(i) | ||
Company SEC Documents | 3.01(g | )(i) | ||
Company Stock Plan | 3.01(d | )(i) | ||
Contract | 3.01(f | ) | ||
DGCL | 1.01 | |||
Environmental Claims | 3.01(n | ) | ||
Environmental Law | 3.01(n | ) | ||
Environmental Permits | 3.01(n | ) | ||
Equity Equivalents | 3.01(d | )(iii) | ||
Equity Investment | 1.01 | |||
ERISA | 3.01(o | )(i) | ||
Exchange Act | 3.01(f | ) | ||
FCPA | 3.01(s | ) | ||
Filed SEC Documents | 3.01 | |||
GAAP | 3.01(g | )(i) | ||
Governmental Entity | 3.01(f | ) |
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Term | Section | |||
Grant Date | 3.01(d | )(iii) | ||
Hazardous Materials | 3.01(n | ) | ||
HSR Act | 3.01(f | ) | ||
indebtedness | 3.01(d | )(iv) | ||
Intellectual Property | 3.01(r | )(iv) | ||
Intervening Event | 4.02(b | ) | ||
Investor | Preamble | |||
Investor Representative | Preamble | |||
Investor Representative Appointee | 5.06(a | ) | ||
Investor Representative Expenses | 5.04(a | ) | ||
Investors | Preamble | |||
IRS | 3.01(o | )(i) | ||
Judgment | 3.01(f | ) | ||
knowledge | 8.03(e | ) | ||
Law | 3.01(f | ) | ||
Legal Restraints | 6.01(c | ) | ||
Liens | 3.01(b | ) | ||
Material Adverse Effect | 8.03(f | ) | ||
Material Contract | 3.01(k | )(ii) | ||
Nondisclosure Agreement | 4.02(a | ) | ||
Nonqualified Deferred Compensation Plan | 3.01(o | )(viii) | ||
Omnibus ICP | 3.01(f | ) | ||
Pension Plan | 3.01(o | )(i) | ||
Permits | 3.01(l | ) | ||
Permitted Liens | 3.01(k | )(i)(E) | ||
person | 8.03(g | ) | ||
Preferred Stock | Preamble | |||
Proxy Statement | 3.01(f | ) | ||
Purchase Price | 2.02 | |||
Re-Audit Engagement | 5.08 | |||
Release | 3.01(n | ) | ||
Releasee | 1.02(b | ) | ||
Releasees | 1.02(b | ) | ||
SEC | 3.01(f | ) | ||
Securities | Preamble | |||
Securities Act | Preamble | |||
SOX | 3.01(g | )(ii) | ||
Special Committee | Preamble | |||
Specified Contracts | 3.01(k | )(i) | ||
Stock Options | 3.01(d | )(i) | ||
Stockholder Approvals | 3.01(u | ) |
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Term | Section | |||
Stockholders Meeting | 5.01(c | ) | ||
Subsidiary | 8.03(h | ) | ||
Superior Acquisition Proposal | 4.02(a | ) | ||
Superior Proposal | 4.02(a | ) | ||
Takeover Proposal | 4.02(a | ) | ||
Tax | 8.03(i | ) | ||
Tax Return | 8.03(j | ) | ||
Taxing Authority | 8.03(k | ) | ||
Termination Date | 7.01(b | )(i) | ||
Termination Fee | 5.04(b | ) | ||
Voting Agreements | Preamble | |||
Warrants | Preamble |
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Attention: | Clint J. Gage, Esq. |
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by | /s/ Bradley S. Jacobs |
Title: | Managing Member |
by | /s/ Michael R. Welch |
Title: | Chief Executive Officer |
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(as amended)
Number of | Number of Shares | |||||||||||
Shares of | of Common Stock | |||||||||||
Preferred | Subject to | Aggregate | ||||||||||
Investor(1) | Stock(2) | Warrants(3) | Purchase Price | |||||||||
Jacobs Private Equity, LLC | 67,500 | 38,571,428 | $ | 67,500,000 | ||||||||
Theodore R. Jacobs | 1,000 | 571,429 | $ | 1,000,000 | ||||||||
Taha, LLC | 750 | 428,571 | $ | 750,000 | ||||||||
James Martell | 725 | 414,286 | $ | 725,000 | ||||||||
Michael G. Jesselson 12/18/80 Trust & Michael G. Jesselson 4/8/71 Trust | 725 | 414,286 | $ | 725,000 | ||||||||
Christopher Tsai | 725 | 414,286 | $ | 725,000 | ||||||||
Springer Wealth Management LLC | 650 | 371,429 | $ | 650,000 | ||||||||
Sharon Jacobs Brown & Ronald B. Brown | 500 | 285,714 | $ | 500,000 | ||||||||
Chris Andersen | 350 | 200,000 | $ | 350,000 | ||||||||
Adrian Kingshott | 300 | 171,429 | $ | 300,000 | ||||||||
Jay Novik | 250 | 142,857 | $ | 250,000 | ||||||||
Ben Gordon | 200 | 114,286 | $ | 200,000 | ||||||||
Albert J. Jacobs Trust | 200 | 114,286 | $ | 200,000 | ||||||||
Charlotte S. Jacobs Trust | 200 | 114,286 | $ | 200,000 | ||||||||
Fred Bratman | 150 | 85,714 | $ | 150,000 | ||||||||
Michael Kneeland | 150 | 85,714 | $ | 150,000 | ||||||||
William Harrison | 125 | 71,429 | $ | 125,000 | ||||||||
Eli Dominitz | 100 | 57,143 | $ | 100,000 | ||||||||
Martin Flumenbaum | 100 | 57,143 | $ | 100,000 | ||||||||
Tong Yu | 100 | 57,143 | $ | 100,000 | ||||||||
Charles Cahn III | 50 | 28,571 | $ | 50,000 | ||||||||
Robert Nardone | 50 | 28,571 | $ | 50,000 | ||||||||
Michael Nervik Trust | 50 | 28,571 | $ | 50,000 | ||||||||
Lucy Peterson | 50 | 28,571 | $ | 50,000 | ||||||||
75,000 | 42,857,143 | $ | 75,000,000 |
(1) | Except for Jacobs Private Equity, LLC, each Investor made a party to the Investment Agreement by a Joinder dated June 13, 2011. | |
(2) | Shares of Preferred Stock shall have an initial conversion price of $1.75 per share of Company Common Stock, without giving effect to the 4:1 reverse stock split. Giving effect to the 4:1 reverse stock split, shares of Preferred Stock shall have an initial conversion price of $7.00 per share of Company Common Stock. | |
(3) | Share numbers in this column do not give effect to the 4:1 reverse stock split. The initial exercise price of the Warrants shall be $1.75 per share of Company Common Stock, without giving effect to the 4:1 reverse stock split. Giving effect to the 4:1 reverse stock split, the aggregate number of shares of Company Common Stock initially subject to the Warrants shall be 10,714,286 shares, and the initial exercise price of the Warrants shall be $7.00 per share of Company Common Stock. |
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SERIES A CONVERTIBLE PERPETUAL PREFERRED STOCK OF
EXPRESS-1 EXPEDITED SOLUTIONS, INC.
General Corporation Law of the State of Delaware
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EXPRESS-1 EXPEDITED SOLUTIONS, INC.
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* | The signature must correspond with the name as written upon the face of the Warrant Certificate in every particular, without alteration or any change whatsoever. |
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Parties: | Express-1 Expedited Solutions, Inc., Jacobs Private Equity, LLC and the other Investors listed on Schedule I to the Investment Agreement.4 | |
Demand Registration Rights: | At any time on or after the Closing Date, Investors or transferees thereof (including any pledgee holding any of the following as collateral or temporarily upon foreclosure of the underlying obligation) (each, a “Holder”) holding Registrable Securities representing no less than a majority of the Company Common Stock constituting Registrable Securities or issuable upon conversion of Preferred Stock or exercise of Warrants constituting Registrable Securities (the “Majority Holders”) may request registration, by giving written notice thereof to the Company, of the sale of the Registrable Securities held by the Holders. “Registrable Securities” means shares of Preferred Stock, Warrants and shares of Company Common Stock issued or issuable upon conversion of the Preferred Stock or upon exercise of the Warrants, in each case other than any such securities that are then freely transferable without registration by the Holder thereof pursuant to Rule 144 under the Securities Act without limitation as to volume, manner of sale or other restrictions under Rule 144. The Company shall then use reasonable best efforts to (i) file a registration statement registering such Registrable Securities as promptly as reasonably practicable and in any event within 30 days (if on Form S-3) or 45 days (if on Form S-1) and (ii) have such registration statement declared effective as promptly as reasonably practicable thereafter (subject to customary exceptions). The Majority Holders may request a total of three demand registrations. | |
Piggyback Registration Rights: | If the Company registers its securities on a registration statement that permits the inclusion of the Registrable Securities, the Company shall give the Investor Representative prompt written notice thereof (subject to certain exceptions to be agreed). The Company shall then include on such registration statement all Registrable Securities requested to be included therein (subject to certain exceptions to be agreed). | |
Expenses of Registration and Selling: | All expenses incurred in connection with the registration or sale of the Registrable Securities shall be borne by the Company, with the exception of brokers’ discounts or commissions on the sale of the Registrable Securities. | |
Suspension of Sales: | The Holders shall discontinue selling Registrable Securities during scheduled black-out periods or upon request of the Company for the purpose of avoiding certain adverse disclosures (which requests shall not be made (i) more than three times during any one-year period or (ii) for any period exceeding 45 days individually or 90 days in the aggregate for any fiscal year). In all events the Company shall permit resumption of such sales as promptly as reasonably practicable. | |
Indemnification: | The Company shall indemnify the Holders against losses related to material misstatements and omissions. Each Holder shall indemnify the Company against losses related to material misstatements and omissions made in reliance on information furnished by such Holder expressly for use in a registration statement. |
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Obligations of the Company: | The Company shall have certain other customary obligations, including requirements to file necessary amendments and supplements with the SEC, notify the Investor Representative of certain events relating to registration statements, enter into customary underwriting agreements and cause Company Common Stock to be listed on a national securities exchange. | |
Holder Information: | The Holders shall furnish certain information (regarding themselves, the Registrable Securities and the intended method of disposition) to the Company to effect each registered offering. | |
Rule 144 Reporting: | To permit the sale of Registrable Securities without registration, the Company shall use its best efforts to maintain compliance with the periodic filing requirements of the Exchange Act. |
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4400 Biscayne Boulevard, 14TH Floor
Miami, FL 33137
Phone 305·572·4200 u Fax 305·572·4220
MEMBER NYSE, NYSE Amex,FINRA, SIPC
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Express-1 Expedited Solutions Inc.
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• | Reviewed a draft of the Investment Agreement dated as of June 10, 2011. | |
• | Reviewed a draft of the Certificate of Designation of the Preferred Stock as of June 10, 2011. | |
• | Reviewed a draft of the Warrant as of June 10, 2011. | |
• | Reviewed publicly available financial information and other data with respect to the Company that we deemed relevant, including its Annual Report onForm 10-K for the year ended December 31, 2010 and its Quarterly Report onForm 10-Q for the quarter ended March 31, 2011. | |
• | Reviewed non-public information and other data with respect to the Company, including financial projections for the five-year period ending December 31, 2015 (the “Standalone Projections”), and other internal financial information and management reports. | |
• | Reviewed financial projections prepared by the Company and BB&T Capital Markets (“BB&T”), assuming one bolt-on acquisition per year starting in 2012 (“Standalone with Acquisitions Projections”). | |
• | Reviewed financial projections assuming the Transaction takes place (“JPE Projections”) | |
• | Reviewed and analyzed the Transaction’s pro forma impact on the Company’s outstanding securities and stockholder ownership. | |
• | Considered the historical financial results and present financial condition of the Company. | |
• | Reviewed certain publicly available information concerning the trading of, and the trading market for, the Company’s common stock. | |
• | Reviewed and analyzed the Company’s projected unlevered free cash flows derived from the Standalone Projections and prepared a discounted cash flow analysis. | |
• | Reviewed and analyzed certain financial characteristics of publicly-traded companies that were deemed to have characteristics comparable to the Company. | |
• | Reviewed and analyzed certain financial characteristics of target companies in transactions where such target company was deemed to have characteristics comparable to that of the Company. | |
• | Reviewed and compared the terms of the Transaction to the terms of certain private investments in public entities (“PIPE”) and follow-on offering transactions. | |
• | Reviewed and discussed with the Company’s management, other Company representatives, JPE, and BB&T certain financial and operating information furnished by them, including the Standalone Projections, Standalone with Acquisitions Projections, and JPE Projections (collectively, the “Projections”). | |
• | Performed such other analyses and examinations as were deemed appropriate. |
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EXPRESS-1 EXPEDITED SOLUTIONS, INC. MMMMMMMMMMMMMMM C123456789 IMPORTANT SPECIAL MEETING INFORMATION 000004 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE SACKPACK 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext MR A SAMPLE Electronic Voting Instructions DESIGNATION (IF ANY) You can vote by Internet or telephone! ADD 1 Available 24 hours a day, 7 days a week! ADD 2 ADD 3 methods Instead of outlined mailing below your proxy, to vote you your may proxy. choose one of the two voting ADD 4 VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. MMMMMMMMM ADD 5 ADD 6 Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Daylight Time, on September 1, 2011. Vote by Internet• Log on to the Internet and go to www.envisionreports.com/XPO2• Follow the steps outlined on the secured website. Vote by telephone• Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada any time on a touch tone telephone. There is NO CHARGE to you for the call. Using a black ink pen, mark your votes with an X as shown in X• Follow the instructions provided by the recorded message. this example. Please do not write outside the designated areas. Special Meeting Proxy Card 1234 5678 9012 345 3IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 A Proposals — The Board of Directors recommends a vote FOR each Proposal. Proposals 1 though 5 are conditioned on each other and Proposal 6 is conditioned on Proposals 1 through 5. If Proposals 1 through 5 are not approved by the Company’s stockholders, the proposed equity investment will not be consummated. + For Against Abstain 1. To approve the issuance to Jacobs Private Equity, LLC and the other investors party to the Investment Agreement, dated as of June 13, 2011, for $75,000,000 in cash, of (i) 75,000 shares of Series A Convertible Perpetual Preferred Stock of the Company, which are initially convertible into an aggregate of 42,857,143 shares of Company common stock at a conversion price of $1.75 per share (subject to adjustment in connection with the Reverse Stock Split (as defined below)), and (ii) warrants to purchase 42,857,143 shares of Company common stock at an exercise price of $1.75 per share (subject to adjustment in connection with the Reverse Stock Split). 2. To approve an amendment to the certificate of incorporation of the Company (the “Company Certificate”) to increase the number of authorized shares of Company common stock to 150,000,000 shares. 3. To approve an amendment to the Company Certificate to give effect to a 4-for-1 reverse stock split of the Company common stock (the “Reverse Stock Split”). 4. To approve an amendment to the Company Certificate providing that any vacancy on our Board of Directors shall be filled by the remaining directors or director. 5. To adopt the 2011 Omnibus Incentive Compensation Plan. 6. To approve an amendment to the Company Certificate to change the name of the Company to XPO Logistics, Inc. 7. To approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt Proposals 1 through 5. B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please date and sign as name appears hereon. When signing as Executor, Administrator, Trustee, Guardian or Attorney, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized corporate officer. If a partnership, please sign in partnership name by authorized person. Joint owners should each sign. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MMMMMMM1 U P X 1 1 8 7 6 9 1 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 01CW7G |
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YOUR VOTE IS IMPORTANT Regardless of whether you plan to attend the Special Meeting of Stockholders, you can be sure your shares are represented at the meeting by promptly returning your proxy in the enclosed envelope. 3IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 PROXY/VOTING INSTRUCTION FORM — EXPRESS-1 EXPEDITED SOLUTIONS, INC. + PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 1, 2011 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF EXPRESS-1 EXPEDITED SOLUTIONS, INC. The undersigned holder of shares of Common Stock of EXPRESS-1 EXPEDITED SOLUTIONS, INC., a Delaware corporation, hereby appoints Michael R. Welch with full power of substitution, the proxy and attorney of the undersigned, to vote as specified hereon at the Special Meeting of Stockholders of the Company to be held at the Express-1, Inc. Training Center located at 441 Post Road, Buchanan, Michigan 49107, on September 1, 2011 at 9:00 a.m., Eastern Daylight Time, and at any adjournments or postponements thereof, with all powers (other than the power to revoke the proxy or vote the proxy in a manner not authorized by the executed form of proxy on the reverse side hereof) that the undersigned would have if personally present at the Meeting, to act in the undersigned’s discretion upon any other matter or matters that may properly be brought before the Meeting and to appear and vote all the shares of Common Stock of the Company that the undersigned may be entitled to vote. The undersigned hereby acknowledges receipt of the accompanying Proxy Statement and hereby revokes any proxy or proxies heretofore given by the undersigned relating to the Meeting. IMPORTANT NOTICE TO PARTICIPANTS IN THE EMPLOYEE STOCK OWNERSHIP PLAN The undersigned, a participant in the Express-1 Expedited Solutions, Inc. Employee Stock Ownership Plan, hereby directs Horizon Trust & Investment Management as Trustee to vote in person or by proxy all Common Shares of Express-1 Expedited Solutions, Inc. credited to the undersigned’s account(s) under the Plan on the record date at the Special Meeting of Stockholders of the Company to be held on Thursday, September 1, 2011 and at any adjournment thereof, as indicated on the reverse. This proxy may be revoked at any time prior to the voting thereof. UNLESS OTHERWISE MARKED, THIS PROXY WILL BE VOTED AS IF MARKED FOR THE PROPOSALS LISTED ON THE REVERSE SIDE. PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. (TO BE SIGNED ON THE REVERSE SIDE) C Non-Voting Items Change of Address — Please print new address below. IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A — C ON BOTH SIDES OF THIS CARD. + |