UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934 (AMENDMENT NO.           )

 

Filed by the Registrant þ

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

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

 

ABLEST INC.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ABLEST INC.
1511 N. Westshore Blvd., Suite 900
Tampa, Florida 33607

 

PROPOSED CASH MERGER — YOUR VOTE IS VERY IMPORTANT

 

May 11, 2007

 

Dear Fellow Stockholder:

You are cordially invited to attend a special meeting of stockholders of Ablest Inc. to be held on Thursday, June 7, 2007 starting at 10:00 a.m., local time, at Ablest’s corporate headquarters located at 1511 N. Westshore Blvd., Suite 900, Tampa, Florida 33607.

At the special meeting, you will be asked to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of April 4, 2007, by and among Koosharem Corporation, Select Acquisition, Inc., a wholly-owned subsidiary of Koosharem, and Ablest, pursuant to which Select Acquisition will merge with and into Ablest. Koosharem is the holding company of Select Remedy, a professional staffing organization with approximately 280 offices throughout North America. If the merger agreement is adopted and the merger is completed, you will be entitled to receive $11.00 in cash, without interest and less any applicable withholding tax, for each share of Ablest common stock you own, as more fully described in the enclosed proxy statement.

Our board of directors, after careful consideration of a variety of factors, including the unanimous recommendation of a special committee consisting of all of the independent members of our board of directors, has unanimously determined that the merger agreement and the transactions contemplated thereby are advisable and fair to, and in the best interests of Ablest and its stockholders, and approved the merger agreement, the merger and the other transactions contemplated thereby. Accordingly, our board of directors unanimously recommends that you vote “FOR” the adoption of the merger agreement.

Your vote is very important, regardless of the number of shares of common stock you own. We cannot complete the merger unless the merger agreement is adopted by the affirmative vote of a majority of the outstanding shares of our common stock. The failure of any stockholder to vote on the proposal to adopt the merger agreement will have the same effect as a vote against the adoption of the merger agreement. Members of the Heist Family who collectively own approximately 50.4% of the shares of Ablest common stock entitled to vote on the adoption of the merger agreement have entered into a voting agreement, pursuant to which they have agreed to vote in favor of the adoption of the merger agreement. Accordingly, the proposal will be approved without the vote of any other stockholder.

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

Whether or not you plan to attend the special meeting, please complete, date, sign and return, as promptly as possible, the enclosed proxy card in the accompanying reply envelope. If you attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted.

Thank you in advance for your cooperation and continued support.

 

Sincerely,

 

 

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the merger, passed upon the merits or fairness of the merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

 

This proxy statement is dated May 11, 2007 and is first being mailed to stockholders of Ablest on or about May 14, 2007.

 

ABLEST INC.
1511 N. Westshore Blvd., Suite 900
Tampa, Florida 33607

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held On June 7, 2007

 

To the Stockholders of

ABLEST INC.:

 

A special meeting of stockholders of Ablest Inc., a Delaware corporation (“Ablest” or the “Company”), will be held at the Company’s corporate headquarters located at 1511 N. Westshore Blvd., Suite 900, Tampa, Florida 33607, on June 7, 2007, at 10:00 a.m., local time, for the following purposes:

 

(1) To consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of April 4, 2007, among the Company, Koosharem Corporation (“Parent”) and Select Acquisition, Inc. (“Merger Sub”), as it may be amended from time to time, which provides for, among other things, the merger of Merger Sub with and into the Company, with the Company surviving as a wholly-owned subsidiary of Parent; and

 

(2) To transact any other business that may properly come before the special meeting or any adjournment or postponement thereof.

 

The foregoing items of business are more fully described in the proxy statement accompanying this Notice. The board of directors of the Company has fixed the close of business on April 24, 2007 as the record date for the determination of stockholders entitled to notice of and to vote at the special meeting.

 

ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. YOU ARE URGED TO SIGN, DATE AND OTHERWISE COMPLETE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. IF YOU ATTEND THE MEETING AND WISH TO DO SO, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON EVEN IF YOU HAVE SIGNED AND RETURNED YOUR PROXY CARD.

 

By order of the board of directors,

 

Nolan B. Gardner
Corporate Secretary

 

Tampa, Florida

May 11, 2007

 

TABLE OF CONTENTS

 

 

The following section provides brief answers to some commonly asked questions regarding the special meeting and the proposed merger. This section is not intended to contain all of the information that is important to you. You are urged to read the entire proxy statement carefully, including the information in the appendices.

 

 

 

John Horan

Chief Financial Officer

Ablest Inc.

1511 N. Westshore Blvd., Suite 900

Tampa, Florida 33607

Telephone: (813) 830-7700

email: jhoran@ablest.com

 

SUMMARY

	•	Parties to the Merger.

	•	Ablest is a Delaware corporation formed on February 3, 2000. Ablest supplies more than 37,000 field employees and consultants to approximately 2,000 businesses annually through 60 locations in the Eastern and Southwestern United States.
	•	Koosharem Corporation is the holding company of Select Remedy (“Select”). Founded in Santa Barbara, California in 1985, Select, with annual revenues of approximately $1.1 billion, currently operates approximately 280 offices throughout North America. Select is focused on delivering human capital workforce solutions in various business sectors.
	•	Select Acquisition, Inc. is a Delaware corporation formed on April 2, 2007 for the sole purpose of acquiring all of the fully diluted capital stock of Ablest. See “The Parties to the Merger” on page 7.

	•	The Merger.  You are being asked to adopt the merger agreement providing for the acquisition of Ablest by Parent. Pursuant to the merger agreement, Merger Sub will merge with and into Ablest, which we refer to herein as the merger. Ablest will be the surviving corporation in the merger and a wholly-owned subsidiary of Parent. See “The Merger Agreement — Structure of the Merger” on page 30.
	•	Board Recommendation.  The Company’s board of directors recommends that Ablest’s stockholders vote “FOR” the adoption of the merger agreement, including the merger. See “The Merger — Recommendation of the Special Committee of the Company’s Board of Directors and Reasons for the Merger” beginning on page 15.
	•	Merger Consideration.  If the merger is completed, you will be entitled to receive $11.00 in cash, without interest and less any applicable withholding tax, for each share of Ablest common stock that you own. We refer to this amount in this proxy statement as the merger consideration. However, shares held by stockholders who have properly demanded and perfected statutory appraisal rights will not be so converted. See “The Merger Agreement — Consideration to be Received in the Merger” on page 31.
	•	Treatment of Outstanding Options.  Each option to acquire Ablest common stock not exercised before the merger, whether or not then vested or exercisable, will be cancelled and converted into a right to receive an amount of cash equal to the amount by which $11.00 exceeds the exercise price per share of Ablest common stock subject to the option multiplied by the total number of shares of stock subject to such option, which payment will be subject to applicable withholding taxes. See “The Merger Agreement — Consideration to be Received in the Merger — Stock Options” on page 31.
	•	Treatment of Outstanding Restricted Stock.  At the effective time of the merger, all outstanding shares of Ablest restricted stock will be converted into the right to receive an amount of cash equal to $11.00 per share, without interest and less applicable withholding taxes.
	•	Procedure for Receiving Merger Consideration.  As soon as reasonably practicable after the effective time of the merger, an exchange agent appointed by Parent will mail a letter of transmittal and instructions to all Ablest stockholders. The letter of transmittal and instructions will tell you how to surrender your Ablest common stock certificates in exchange for the merger consideration. You should

		not return any stock certificates you hold with the enclosed proxy card, and you should not forward your stock certificates to the exchange agent without a letter of transmittal. See “The Merger Agreement — Payment Procedures” beginning on page 32.

	•	Reasons for the Merger.  The purpose of the merger for the Company is to enable its stockholders to immediately realize the value of their investment in the Company through their receipt of the per share merger consideration of $11.00 in cash, which represents a substantial premium over the current and historical market prices of the Company’s common stock, including a premium of approximately 49% to the $7.40 closing price of the Company’s common stock on the American Stock Exchange on April 3, 2007, the last trading day before public disclosure of the Company’s entering into the merger agreement. For this reason, and the reasons discussed under “The Merger — Recommendation of the Special Committee of the Company’s Board of Directors and Reasons For the Merger,” the board of directors has determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of the Company and its stockholders and unanimously recommends that Ablest stockholders adopt the merger agreement. See “The Merger — Recommendation of the Special Committee of the Company’s Board of Directors and Reasons For the Merger” beginning on page 15.

	•	Financing of the Merger.  Parent will fund the merger and the related transactions, including the payment of related transaction costs, charges, fees and expenses, with a combination of debt financing and available cash. On May 3, 2007, Parent entered into a commitment letter with Bank of the West, pursuant to which and subject to the conditions set forth therein, Bank of the West has committed to provide to Parent an aggregate of $30.0 million, which will be available to fund the merger and related transactions. Parent estimates that the total amount of funds necessary to complete the proposed merger and related transactions is approximately $35.0 million, which includes approximately $32.5 million to be paid to the Company’s stockholders and holders of other equity-based interests in the Company. The consummation of the merger is not conditioned on Parent receiving the proceeds contemplated by the commitment letter. See “The Merger — Financing of the Merger” beginning on page 28.

	•	Conditions to Closing.  Before we can complete the merger, a number of conditions must be satisfied or waived (to the extent permitted by law), including receipt of Company stockholder approval and the absence of any law or order prohibiting the transaction. The obligation of Parent and Merger Sub to effect the merger is additionally subject to:

	•	the Company’s representations and warranties in the merger agreement regarding the capitalization of the Company being true and correct (except for immaterial inaccuracies) as of the date of the merger agreement and as of the effective time of the merger;
	•	the Company’s remaining representations and warranties in the merger agreement being true and correct as of the date of the merger agreement and as of the effective time of the merger (except where the failure to be true and correct would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Company);
	•	the Company’s performance in all material respects of its obligations under the merger agreement;
	•	the Company’s delivery of certain third party consents to the merger transaction; and
	•	the absence of any suits, actions or proceedings that would reasonably be expected to prohibit the merger.

	•	the representations and warranties of Parent and Merger Sub being true and correct as of the date of the merger agreement and the effective time of the merger (except where the failure to be true and correct would not, individually or in the aggregate, reasonably be expected to have a material adverse

		effect on the ability of Parent and Merger Sub to consummate the transactions contemplated by the merger agreement); and

	•	the performance by Parent and the Merger Sub of their obligations under the merger agreement.

	•	Solicitation of Other Offers.  Until 11:59 p.m., Eastern Time, on April 19, 2007, we were permitted to initiate, solicit and encourage acquisition proposals, and to participate in discussions or negotiations with respect to acquisition proposals or otherwise furnish non-public information upon the execution of one or more confidentiality agreements.

	•	knowingly solicit, initiate or encourage any inquiries or proposals regarding an acquisition proposal;
	•	provide any non-public information to any person in connection with an acquisition proposal or engage in any discussions or negotiations regarding an acquisition proposal; or
	•	approve or recommend or propose to approve or recommend an acquisition proposal or any agreement, understanding or arrangement relating to an acquisition proposal.

	•	at any time after the date of the merger agreement and prior to the approval of the merger agreement by our stockholders, we are permitted to furnish information with respect to the Company to any person making an acquisition proposal and participate in discussions or negotiations with such person, provided that our board of directors (or any committee thereof) (i) concludes that such acquisition proposal is more favorable to our stockholders than the proposal contemplated by the merger agreement, (ii) concludes that the failure to furnish information or negotiate with such person would be inconsistent with our board’s fiduciary duties, (iii) receives an executed confidentiality agreement prior to furnishing any information to such person, and (iv) notifies Parent promptly of such acquisition proposal.

	•	Termination of the Merger Agreement.  Ablest, Parent and Merger Sub may agree in writing to terminate the merger agreement at any time without completing the merger, even after the stockholders of Ablest have adopted the merger agreement. The merger agreement may also be terminated in certain other circumstances, including:

	•	By mutual written consent of the Boards of Directors of Parent, Merger Sub and the Company;
	•	By either Parent and Merger Sub or the Company if the merger is not consummated before the nine-month anniversary of the date of the merger agreement, although this right will not be available to a party whose failure to perform its obligations under the merger agreement has been the principal cause of or resulted in the failure of the merger to be consummated by the nine month anniversary;
	•	By either Parent and Merger Sub or the Company if a court or other governmental entity has issued a final order or statute prohibiting the merger;
	•	By either Parent and Merger Sub or the Company if the Company does not obtain the requisite stockholder approval at the special meeting of stockholders;
	•	By Parent and Merger Sub if the Company’s board of directors withdraws or modifies its approval or recommendation of the merger agreement, including the merger, or has approved or recommended a competing acquisition proposal to the Company’s stockholders; or fails to hold the Company

		Stockholder’s Meeting within 90 days after this Proxy Statement was cleared by the SEC (unless such failure is due primarily to events or circumstances outside of the Company’s direct control);

	•	By either Parent and Merger Sub or the Company if the other party has breached its representations or warranties or agreements, which breach would result in the failure of a condition to the terminating party’s obligation to close, and the breach is not curable by the nine-month anniversary of the date of the merger agreement; or
	•	By the Company if the Company’s board of directors determines to pursue a superior proposal from a third party, after the Company has provided Parent three business days to revise the terms of the merger agreement and negotiate in good faith with the Company with respect thereto, and simultaneously with such termination the Company enters into a definitive acquisition, merger or similar agreement to effect the superior proposal, and the Company pays the termination fee within the requisite time period.

	•	Termination Fees and Expenses.

	•	The Company will be required to pay Parent a fee of $1.0 million if the merger agreement is terminated:

	(1)	by the Company in order to enter into another acquisition agreement with a third party which the Company’s board of directors believes constitutes a “superior proposal” from a third party;
	(2)	by Parent and Merger Sub because (a) the Company’s board of directors withdraws or modifies its approval or recommendation of the merger or the merger agreement due to the board of directors approving or recommending a competing acquisition proposal, or (b) the Company fails to call and hold the stockholders’ meeting within 90 days after the proxy statement is cleared by the Securities and Exchange Commission (the “SEC”) (and such failure is not due primarily to events or circumstances outside of the Company’s direct control); or
	(3)	by any party due to (a) the failure to obtain stockholder approval or (b) because the merger has not been consummated by the nine-month anniversary of the date of the merger agreement, if at the time of such termination a competing acquisition proposal has been publicly made and not withdrawn, and within 12 months after such termination the Company enters into a definitive agreement with respect to a competing transaction (which is subsequently consummated) or an acquisition of the Company is completed.

	•	Opinion of Raymond James & Associates, Inc.  In connection with the merger, the special committee of the Ablest board of directors, on behalf of the Company, retained Raymond James & Associates, Inc., which we refer to as Raymond James, as its financial advisor. In deciding to approve the merger agreement, the special committee of the Company’s board of directors considered the oral opinion of Raymond James provided to the special committee on April 4, 2007, subsequently confirmed in writing, that, as of the date of the opinion and based upon and subject to the assumptions and limitations set forth in the opinion, the merger consideration to be received by the holders of the Company’s common stock in the merger (other than Select and its affiliates) was fair, from a financial point of view, to such holders (other than Select and its affiliates). The full text of the written opinion of Raymond James, dated April 4, 2007, which sets forth the assumptions made, general procedures followed, matters considered and limitations on the scope of review undertaken by Raymond James in rendering its opinion, is attached as Annex C to this proxy statement and is incorporated by reference into this proxy statement. See “The Merger — Opinion of Raymond James & Associates, Inc. — Financial Advisor to the Company” beginning on page 17.
	•	Record Date and Voting.  You are entitled to vote at the special meeting if you owned shares of Ablest common stock at the close of business on April 24, 2007, the record date for the special meeting. Each

		outstanding share of our common stock on the record date entitles the holder to one vote on the proposal to adopt the merger agreement. As of the record date, there were 2,925,104 shares of common stock of Ablest entitled to be voted. See “The Special Meeting — Record Date and Quorum” on page 9.

	•	Stockholder Vote Required to Adopt the Merger Agreement.  For us to complete the merger, stockholders holding at least a majority of our common stock outstanding at the close of business on the record date must vote “FOR” the adoption of the merger agreement, including the merger. Under the terms of a voting agreement (which would terminate upon the termination of the merger agreement), the holders of a majority of our outstanding shares of common stock have agreed to vote their respective shares for the adoption of the Agreement and Plan Merger. Their shares represent more than the number of votes necessary to adopt the Agreement and Plan of Merger at the special meeting even if you and every other stockholder of the Company vote against the adoption of the Agreement and Plan of Merger. See “The Special Meeting — Vote Required” beginning on page 9 and “The Voting Agreement” beginning on page 44.
	•	Share Ownership of Directors and Executive Officers.  As of April 24, 2007, the record date for the special meeting, the directors and executive officers of Ablest held and are entitled to vote, in the aggregate, 1,369,752 shares of our common stock, representing approximately 46.8 percent of the outstanding shares of our common stock (or 1,423,752 shares, representing approximately 48.7 percent of the outstanding shares, including shares underlying options exercisable within 60 days of the record date). One of Ablest’s directors, who beneficially owns in excess of 42.2% of Ablest’s shares entitled to vote on the adoption of the merger agreement, has entered into a voting agreement to support the transaction. Like all our other stockholders, our directors and executive officers will be entitled to receive $11.00 per share in cash for each of their shares of Ablest common stock (including shares of restricted stock), and all of their outstanding stock options will be cashed out as described above, whether or not then vested and exercisable. See “The Special Meeting — Vote Required” beginning on page 9, “The Merger — Interests of the Company’s Directors and Executive Officers” beginning on page 22 and “The Voting Agreement” beginning on page 44.
	•	Interests of the Company’s Directors and Executive Officers in the Merger.  In considering the recommendation of our board of directors, you should be aware that our directors and executive officers may have interests in the merger that are different from, or in addition to, their interests as a stockholder, and that may present actual or potential conflicts of interest. Such interests include (i) severance payments and other benefits payable to executive officers upon a qualifying termination of employment pursuant to employment agreements, (ii) the accelerated vesting of certain equity awards for certain directors and officers and (iii) rights to continued indemnification and insurance coverage after the merger for acts or omissions occurring prior to the merger. In addition, a number of our executive officers may, prior to the closing of the merger, enter into new arrangements with Parent regarding employment with the surviving corporation. See “The Merger — Interests of the Company’s Directors and Executive Officers” beginning on page 22.
	•	Tax Consequences.  The merger will be a taxable transaction to you if you are a U.S. person. For U.S. federal income tax purposes, your receipt of cash (whether as merger consideration or pursuant to the proper exercise of appraisal rights) in exchange for your shares of Ablest common stock generally will cause you to recognize a gain or loss measured by the difference, if any, between the cash you receive in the merger and your adjusted tax basis in your shares of Ablest common stock. Under U.S. federal income tax law, you may be subject to information reporting on cash received pursuant to the merger unless an exemption applies. Backup withholding may also apply (currently at a rate of 28 percent) with respect to the amount of cash received pursuant to the merger, unless you provide proof of an applicable exemption or a correct taxpayer identification number, and otherwise comply with the applicable requirements of the backup withholding rules. You should consult your own tax advisor for a full understanding of how the merger will affect your federal, state and local and/or non-U.S. taxes. See “The Merger — Material U.S. Federal Income Tax Consequences” beginning on page 28.

	•	Appraisal Rights.  Delaware law provides you, as a stockholder, with statutory appraisal rights in the merger. This means that you are entitled to have the fair value of your shares determined by the Delaware Court of Chancery and to receive payment based on that valuation. The ultimate amount you receive in an appraisal proceeding may be less or more than, or the same as, the amount you would have received under the merger agreement. To exercise your appraisal rights, you must submit a written demand for appraisal to the Company before the vote is taken on the merger agreement at the special meeting, you must not vote in favor of the adoption of the merger agreement and you must otherwise comply with the applicable requirements of Section 262 of the General Corporation Law of the State of Delaware. Your failure to follow exactly the procedures specified under Delaware law will result in the loss of your appraisal rights. See “Dissenters’ Rights of Appraisal” on page 46 and Annex D — Section 262 of the General Corporation Law of the State of Delaware.

	•	Market Price of Ablest Common Stock.  Our common stock is listed on the American Stock Exchange under the trading symbol “AIH.” On April 3, 2007, which was the last trading day before the announcement of the execution of the merger agreement, the Company’s common stock closed at 7.40 per share. On May 7, 2007, the last practicable trading day before the date of this proxy statement, the Company’s common stock closed at $10.94 per share.

 

Ablest Inc.

1511 N. Westshore Blvd., Suite 900

Tampa, Florida 33607

(813) 830-7700

 

Ablest Inc., a Delaware corporation, which supplies more than 37,000 field employees and consultants to approximately 2,000 businesses annually through 60 locations in the Eastern and Southwestern United States.

 

Koosharem Corporation

3820 State Street

Santa Barbara, California 93105

(805) 882-2202

 

Koosharem Corporation is the holding company of Select. Founded in Santa Barbara, California in 1985, Select, with annual revenues of approximately $1.1 billion, currently operates approximately 280 offices throughout North America. Select is focused on delivering human capital workforce solutions in various business sectors.

 

Select Acquisition, Inc.

3820 State Street

Santa Barbara, California 93105

(805) 882-2202

 

Select Acquisition, Inc., a Delaware corporation, was formed on April 2, 2007 for the sole purpose of completing the merger with Ablest. Select Acquisition, Inc. is a wholly-owned subsidiary of Koosharem Corporation.

 

This proxy statement contains forward-looking statements that involve risks and uncertainties, including, but not limited to, statements concerning the ability of Ablest to successfully complete the merger. These statements relate to expectations concerning matters that are not historical facts. Words such as “projects,” “believes,” “anticipates,” “will,” “estimates,” “plans,” “expects,” “intends,” and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements are based on the current expectations, assumptions, estimates and projections about the Company and the industries in which the Company operates. These forward-looking statements involve known and unknown risks that may cause Ablest’s actual results and performance to be materially different from the future results and performance stated or implied by the forward-looking statements. In light of the significant uncertainties inherent in the forward-looking information included in this discussion, the inclusion of such information should not be regarded as a representation by the Company or any other person that Ablest’s objectives or plans will be achieved. Important factors which could cause our actual results to differ materially from those expressed or implied in the forward-looking statements are detailed in filings with the Securities and Exchange Commission made from time to time by the Company, including our periodic filings on Forms 10-K, 10-Q and 8-K and the following:

 

 

You should not place undue reliance on forward-looking statements. We cannot guarantee any future results, levels of activity, performance or achievements. The statements made in this proxy statement represent our views as of the date of this proxy statement, and it should not be assumed that the statements made herein remain accurate as of any future date. Moreover, we assume no obligation to update forward-looking statements or update the reasons actual results could differ materially from those anticipated in forward-looking statements, except as required by law.

 

This proxy statement is being furnished to Ablest’s stockholders as part of the solicitation of proxies by Ablest’s board of directors for use at the special meeting to be held at the Company’s corporate headquarters located at 1511 N. Westshore Blvd., Suite 900, Tampa, Florida 33607, on Thursday, June 7, 2007, at 10:00 a.m., local time. The purpose of the special meeting is to consider and vote upon a proposal to adopt the merger agreement, which will constitute approval of the merger and the other transactions contemplated by the merger agreement, and to transact any other business that may properly come before the special meeting or any adjournment or postponement thereof. Our stockholders must adopt the merger agreement for the merger to occur. A copy of the merger agreement is attached to this proxy statement as Annex A and is incorporated by reference herein.

 

The board of directors of Ablest, upon the unanimous recommendation of a special committee of independent directors, has approved and declared advisable the merger, the merger agreement and the transactions contemplated by the merger agreement and has declared that the merger, the merger agreement and the transactions contemplated by the merger agreement are fair to, advisable and in the best interests of, the Company and its stockholders. The board of directors recommends that the Company’s stockholders vote “FOR” the adoption of the merger agreement, including the merger.

 

The holders of record of our common stock as of the close of business on April 24, 2007, the record date for the special meeting, are entitled to receive notice of, and to vote at, the special meeting. On the record date, there were 2,925,104 shares of our common stock outstanding.

 

The holders of a majority of the outstanding shares of our common stock on the record date represented in person or by proxy will constitute a quorum for purposes of the special meeting. A quorum is necessary to hold the special meeting. Any shares of common stock held in treasury by the Company are not considered to be outstanding for purposes of determining whether a quorum is present. Once a share is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment of the special meeting. If a quorum is not present, the special meeting may be adjourned from time to time without further notice, if the time and place of the adjourned meeting are announced at the meeting, until a quorum is obtained.

 

Adoption of the merger agreement, including the merger, requires the affirmative vote of the holders of a majority of our common stock entitled to vote as of the record date. Each outstanding share of our common stock on the record date entitles the holder to one vote on this proposal.

 

As of the record date, the directors and executive officers of the Company owned, in the aggregate, 1,369,752 shares of the common stock (or 1,423,752 shares, including shares underlying options exercisable within 60 days of the record date). These shares represent approximately 46.8 percent of the Ablest common stock entitled to vote on the adoption of the merger agreement. The Company expects that all of these shares will be voted in favor of the proposal to adopt the merger agreement.

 

Members of the Heist Family (including Charles H. Heist, III, Ablest’s Chairman of the Board), who collectively own approximately 50.4% of the shares of Ablest common stock entitled to vote on the adoption of the merger agreement, have entered into a voting agreement, pursuant to which they have agreed to vote in favor of the adoption of the merger agreement.

 

If you are a stockholder of record and submit a proxy by mail, your shares will be voted at the special meeting as you indicate on your proxy card. If no instructions are indicated on your proxy card, your shares of

the Company’s common stock will be voted “FOR” the adoption of the merger agreement and on any other matter considered at the meeting as the persons named as proxies in their discretion decide.

 

If your shares are held in street name by your broker, bank or other nominee, you should instruct your broker how to vote your shares using the instructions provided by your broker. If you have not received voting instructions or require further information regarding such voting instructions, contact your broker, bank or other nominee for directions on how to vote your shares. Brokers who hold shares in street name for customers may not be permitted to exercise their voting discretion with respect to the approval of the proposal before the special meeting and in such instance, absent specific instructions from the beneficial owner of such shares, are not empowered to vote such shares with respect to the adoption of the merger agreement. Such shares will constitute “broker non-votes.” Shares of common stock held by persons attending the special meeting but not voting, or shares for which the Company has received proxies with respect to which holders have abstained from voting, will be considered abstentions. Abstentions and broker non-votes will be treated as shares that are present and entitled to vote at the special meeting for purposes of determining whether a quorum exists, but will have the same effect as a vote “AGAINST” adoption of the merger agreement.

 

You may revoke your proxy at any time before the vote is taken at the special meeting. To revoke your proxy, you must either advise our Corporate Secretary in writing, submit a proxy dated after the date of the proxy you wish to revoke or attend the special meeting and vote your shares in person. Attendance at the special meeting will not by itself constitute revocation of a proxy.

 

Please note that if you have instructed your broker to vote your shares, the options for revoking your proxy described in the paragraph above do not apply and instead you must follow the directions provided by your broker to change these instructions.

 

Ablest does not expect that any matter other than the adoption of the merger agreement will be brought before the special meeting. If, however, any other matter is properly presented at the special meeting (or any adjournment or postponement thereof), the persons appointed as proxies will have authority to vote the shares represented by duly executed proxies in accordance with their discretion.

 

The Company will pay the cost of this proxy solicitation. In addition to soliciting proxies by mail, directors, officers and employees of Ablest may solicit proxies personally and by telephone, facsimile or other electronic means of communication. These persons will not receive additional or special compensation for such solicitation services. The Company will, upon request, reimburse brokers, banks and other nominees for their expenses in sending proxy materials to their customers who are beneficial owners and obtaining their voting instructions.

 

In late 2006, the Company’s board of directors evaluated various strategic alternatives for the Company. In November 2006, in connection with such evaluation, the board of directors met with several investment banking firms, including Raymond James, to discuss possible strategic opportunities for the Company.

 

On January 18, 2007, the board of directors of the Company held a special meeting, at which all board members were present and a representative of Foley & Lardner LLP, outside corporate counsel to the Company, also participated. At this meeting, Charles H. Heist, III, the Company’s Chairman of the Board, informed the other board members that he, Kurt R. Moore, the Company’s President and Chief Executive Officer, and Donald A. Burton, on behalf of two limited partnerships that are long-term investors in the Company (collectively, the “Management Group”), intended to make a proposal to purchase all of the outstanding shares of Ablest common stock and take the Company private. Recognizing that a possible sale transaction with the Management Group would raise significant potential conflict of interest concerns, the board of directors of the Company established a special committee, comprised of the four independent directors of the Company — Richard W. Roberson, Ronald K. Leirvik, Donna R. Moore and Charles E. Scharlau — and delegated to the special committee the power and authority (including without limitation, the power to select and retain professional advisors at the Company’s expense) to evaluate any proposal by the Management Group and any other strategic alternatives that may be available to the Company.

 

Immediately following the board meeting on January 18, 2007, the special committee held a special meeting, at which the Management Group delivered a proposal to acquire all of the Company’s publicly-held common stock for $7.50 per share in cash (the “Management Group Proposal”). The Management Group reviewed the principal terms and conditions of the Management Group Proposal with the special committee and provided the special committee with a proposed form of agreement and plan of merger. The special committee thereafter discussed the retention of professional advisors to assist the committee in fulfilling its responsibilities.

 

On January 23, 2007, the Company publicly announced the formation of the special committee and the receipt of the Management Group Proposal. Subsequent to this announcement, D. Stephen Sorensen, Chairman and Chief Executive Officer of Parent, contacted W. David Foster, the Company’s former President and Chief Executive Officer and a current director of the Company, and Mr. Roberson, the Chairman of the special committee, to discuss Parent’s interest in pursuing a possible transaction with the Company. Mr. Sorensen confirmed Parent’s interest in a possible transaction with Ablest in a letter to the special committee, dated January 29, 2007.

 

On January 31, 2007, the special committee held a special meeting, at which all of the members of the committee were present (either in person or by telephone) and a representative of Foley & Lardner LLP also participated. At this meeting, the special committee, among other things, considered the principal terms of the Management Group Proposal (including the proposed agreement and plan of merger), discussed Parent’s potential interest in a possible transaction with the Company and engaged Foley & Lardner LLP as legal counsel. The special committee also met with representatives of Raymond James and determined to retain Raymond James to act as financial advisor to the special committee, subject to the negotiation of an appropriate engagement letter. As part of its discussions, the special committee reviewed carefully with its advisors its fiduciary duties under the Delaware General Corporation Law. The special committee also discussed with its advisors the valuation of the Company relative to comparable companies.

 

On February 1, 2007, at the direction of the special committee, Mr. Roberson and a representative of Foley & Lardner LLP met with the members of the Management Group and their legal counsel to discuss the Management Group Proposal and the proposed agreement and plan of merger.

 

On February 5, 2007, Foley & Lardner LLP, at the direction of the special committee, distributed a draft confidentiality agreement to Parent and its corporate legal counsel, Skadden, Arps, Slate, Meagher & Flom LLP. On February 14, 2007, after some negotiation, the Company and Parent executed such agreement.

Subsequently, Ablest began providing confidential information to Parent and its representatives about the Company and its business.

 

On February 8, 2007, the special committee met telephonically, with all committee members and a representative of Foley & Lardner LLP participating, to discuss, among other things, the results of the meeting with the Management Group and ongoing discussions with Parent. The special committee directed Mr. Roberson and representatives of Foley & Lardner, LLP to continue to pursue discussions with both the Management Group and Parent.

 

On February 20, 2007, the special committee held a special meeting, at which all of the members were present and representatives of Raymond James and Foley & Lardner LLP also participated. At this meeting, the special committee formally engaged Raymond James as its financial advisor to render a fairness opinion in connection with a possible transaction involving the Company. The special committee also met telephonically with members of Parent’s management and a representative of Skadden, Arps, Slate, Meagher & Flom LLP, at which time Parent delivered a proposal to acquire all of the outstanding common stock of the Company for between $8.50 and $10.50 per share in cash, subject to completion of due diligence and certain other qualifications and conditions. Parent also sought an exclusivity period during which to conduct further due diligence and negotiate a possible definitive merger agreement. The special committee rejected Parent’s request for an exclusivity period but unanimously determined to pursue further discussions with Parent regarding a potential sale transaction. The special committee continued its discussions with its advisors regarding the valuation of the Company, the desirability of further efforts to “shop” the Company in light of the prior public disclosure of receipt of the Management Group Proposal and the formation of the special committee to evaluate such proposal and other strategic alternatives for the Company, and the likelihood that such efforts would result in Parent withdrawing its proposal. Thereafter, the special committee determined to pursue further discussions with both the Management Group and Parent. Following this meeting, discussions between representatives of the special committee and Parent continued, and Parent proceeded with its due diligence investigation of Ablest and its business.

 

On February 28, 2007, the special committee met telephonically, with all of the committee members present and a representative of Foley & Lardner LLP also participating. At this meeting, the special committee reviewed the status of negotiations with both Parent and the Management Group, including pricing considerations. The special committee also further considered the merits of “shopping” the Company to other potential strategic and financial buyers.

 

On March 5, 2007, the special committee held a special meeting, at which all of the members of the committee were present and Mr. Foster and representatives of Raymond James and Foley & Lardner LLP also participated. Given the existence of the Management Group Proposal and resulting concerns expressed by Parent and its representatives regarding Company management’s ability to oversee objectively Parent’s due diligence investigation, the special committee determined to engage the services of Mr. Foster to assist in such capacity. The special committee reviewed with Mr. Foster and representatives of Raymond James the status of ongoing negotiations with Parent and the Management Group. In addition, the special committee and its advisors discussed other potential strategic buyers for the Company. The special committee, in consultation with Raymond James and Mr. Foster, concluded that a financial buyer would be unlikely to step forward with a higher offer, unless it already had a portfolio company engaged in the staffing business. The special committee once again discussed the merits of formally “shopping” the Company, including the timing of undertaking such a process, given the status of negotiations with Parent. The special committee also considered the Company’s recent financial performance, and the potential impact of such performance on the process being undertaken by the special committee.

 

On March 6, 2007, the special committee and Foley & Lardner LLP received a proposed form of agreement and plan of merger and related voting agreement from Skadden, Arps, Slate, Meagher & Flom LLP, and commenced reviewing these documents. On March 7, 2007, in connection with the Company’s release of its financial results for the fiscal year ended December 31, 2006, the special committee publicly disclosed that it was continuing to evaluate the Management Group Proposal, as well as an indication of interest received from an unnamed potential third-party acquirer, which was Parent. On March 13, 2007, the special committee

held a special telephonic meeting, at which all of the members of the special committee were present and Mr. Foster and a representative of Foley & Lardner LLP also participated. The special committee, among other things, reviewed and discussed the draft agreement and plan of merger and voting agreement. Mr. Foster also reported to the special committee regarding Parent’s due diligence investigation.

 

On March 15, 2007, the special committee held a special meeting, at which all of the members of the committee were present and Mr. Foster and a representative of Foley & Lardner LLP also participated. The special committee considered various issues relating to the proposed agreement and plan of merger and related voting agreement submitted by Parent. Thereafter, representatives of Raymond James and representatives of Parent, including D. Stephen Sorensen, Chairman and Chief Executive Officer, Paul Sorensen, President, and Melissa Porter, Chief Sales Officer and Executive Vice President, joined the meeting. Parent’s representatives delivered a revised proposal to acquire all of the outstanding common stock of the Company for $11.00 per share in cash. The parties thereafter discussed various matters regarding a proposed transaction, including due diligence and financing for the transaction. Upon the completion of Parent’s presentation, the special committee and its financial and legal advisors reviewed the terms and conditions of Parent’s revised proposal, as well as Parent’s ability to finance the proposed transaction.

 

On March 19, 2007, the special committee met telephonically, with all the members of the special committee present and Mr. Foster and a representative of Foley & Lardner LLP also participating. At this meeting the special committee discussed, among other things, the Management Group’s position regarding the revised offer from Parent, the possible interest of another third-party strategic buyer (“Party A”) in a potential transaction with the Company, and further discussions regarding the conduct of a market survey, either prior to or after signing a definitive agreement. The special committee authorized Mr. Roberson and Foley & Lardner LLP to negotiate a confidentiality agreement with Party A. On March 22, 2007, Party A entered into a confidentiality agreement with the Company. Subsequent thereto, on March 26, 2007 the financial advisor to Party A submitted to the special committee an initial written indication of interest to acquire all of the outstanding shares of the Company for a fully-diluted enterprise value of between $26.0 million and $32.0 million. Later that same day, after discussions with Mr. Roberson and a representative of Foley & Lardner LLP, Party A submitted a revised written indication of interest to acquire all of the outstanding shares of the Company for a fully-diluted enterprise value of $35.0 million to $40.0 million. On March 27, 2006, Mr. Roberson and a representative of Foley & Lardner LLP spoke telephonically with the financial advisor to Party A. During this conversation, Mr. Roberson expressed the special committee’s concerns regarding Party A’s ability to finance a proposed transaction involving the Company.

 

On March 28, 2007, the special committee held a special meeting, at which all of the committee members were present (either in person or telephonically) and representatives of Raymond James and Foley & Lardner LLP, as well as Mr. Foster, also participated. At this meeting, the special committee received an in-depth presentation of Raymond James regarding its opinion of the fairness of the proposed transaction with Parent. In addition, Foley & Lardner LLP provided the special committee with a detailed overview of the terms and conditions of the proposed merger agreement, including the principal outstanding issues, such as the break-up fee amount, closing conditions and termination provisions. After further discussion regarding the terms to the proposed transaction with Parent, the special committee directed Mr. Roberson and Foley & Lardner LLP to continue negotiations with Parent and its representatives.

 

Thereafter, the special committee discussed the possible retention of Hyde Park Capital Advisors, LLC, an investment banking services firm based in Tampa, Florida, to conduct a post-signing market survey in the event the Company were to enter into a definitive merger agreement with Parent. The special committee met with representatives of Hyde Park Capital to discuss such potential engagement. After lengthy discussions regarding Hyde Park Capital’s qualifications and experience, the special committee unanimously determined to engage Hyde Park Capital, subject to the negotiation of an appropriate engagement letter. On March 30, 2007, the special committee executed an engagement letter with Hyde Park Capital.

 

Next, the special committee discussed the latest proposal received from the financial advisor to Party A. Late in the evening of March 27, 2007, Mr. Roberson received a new proposal from Party A to acquire the Company for a fully diluted enterprise value of $36.0 million in cash. This proposal was submitted in response

to the special committee’s request that Party A indicate a single price point as opposed to a range. Such proposal also indicated that a verbal commitment had been received from a new financing source. The special committee discussed the terms of this proposal at length, including its views as to the ability of Party A to finance the proposed transaction. After further discussion, the special committee determined to move forward with negotiations with Parent, but to insist upon reasonable post-signing solicitation rights under the merger agreement.

 

On March 30, 2007, the special committee held a telephonic special meeting, at which all committee members were present and representatives of Hyde Park Capital, Foley & Lardner LLP and Mr. Foster also participated. The special committee reviewed the status of continued negotiations with Parent, including a reduction in the applicable break-up fee. The special committee instructed Hyde Park Capital to contact Parent and its potential financing sources to confirm Parent’s ability to finance the merger. The special committee also discussed the latest proposal received from Party A, including the draft commitment letter from a possible financing source. The special committee discussed its concerns regarding Party A’s ability to finance a possible transaction with the Company, as well as the impact pursuing such an alternative potential transaction could have on the proposed transaction with Parent.

 

On April 3, 2007, the special committee held a telephonic special committee meeting at which all committee members were present and representatives of Raymond James, Hyde Park Capital, and Foley & Lardner LLP, as well as Mr. Foster, also participated. Foley & Lardner LLP reviewed with the special committee the changes to the merger agreement since the last special committee meeting at which the terms of such proposed agreement were reviewed in detail. Raymond James also updated its preliminary analysis of its opinion of the fairness of the proposed transaction with Parent from the presentation made to the committee on March 28, 2007. Later in the day, on April 3, 2007, the special committee held another telephonic special meeting, at which all committee members were present and representatives of Raymond James, Hyde Park Capital and Foley & Lardner LLP, as well as Mr. Foster, also participated. The special committee discussed with representatives of Hyde Park Capital the process for the market survey to be undertaken in the event a definitive merger agreement were to be entered into with Parent. Hyde Park Capital also reported on its discussions with Parent and its financing sources and confirmed that it was comfortable with Parent’s ability to finance the merger. Messrs. Roberson and Foster and Foley & Lardner LLP updated the special committee on the status of negotiations regarding the definitive merger agreement, the preparation of the related disclosure letter, and the remaining due diligence requests made by Parent.

 

On the morning of April 4, 2007, the special committee held a telephonic special meeting, at which all committee members were present and representatives of Raymond James, Hyde Park Capital, and Foley & Lardner LLP, as well as Mr. Foster, also participated. Foley & Lardner LLP reviewed with the committee the changes to the merger agreement since the last special committee meeting. Raymond James then rendered to the special committee an oral opinion, which opinion was subsequently confirmed in writing, to the effect that as of that date and based upon and subject to the matters described in its opinion, the merger consideration was fair, from a financial point of view, to the holders of the Company’s common stock (other than Parent and Merger Sub and their respective subsidiaries). Following discussion and questions by the special committee members to Raymond James and Foley & Lardner LLP, the special committee, by unanimous action, approved and declared advisable the merger agreement, including the merger, and determined to recommend that the Company’s board of directors approve and adopt the merger agreement, including the merger.

 

Immediately following the adjournment of the special committee meeting on April 4, 2007, the Company’s board of directors held a telephonic special meeting, at which all board members were present and representatives of Raymond James, Hyde Park Capital and Foley & Lardner LLP also participated. After reviewing the merger agreement and upon receipt of the recommendation of the special committee regarding the approval and adoption of the merger agreement, the Company’s board of directors, by unanimous action, approved and declared advisable the merger agreement, including the merger, and resolved to recommend that the Company’s shareholders adopt the merger agreement, including the merger.

 

Thereafter, on the morning of April 4, 2007, the Company, Parent and Merger Sub executed the merger agreement, and the Company and Parent issued a joint press release announcing the entry into the merger agreement.

 

From April 4, 2007 through April 19, 2007, the special committee, with the assistance of its financial advisor, Hyde Park Capital, conducted a market survey in an effort to solicit potential superior proposals. During this period, Hyde Park Capital contacted, on behalf of the special committee, approximately 70 potential strategic and financial buyers that Hyde Park Capital, in collaboration with Mr. Roberson and Mr. Foster, had determined likely possessed the means and resources to complete an acquisition of the Company. Ultimately, none of the identified parties evidenced a serious interest in acquiring the Company at a valuation competitive with the price provided for in the merger agreement, or at all, with the exception of Party A, which had previously submitted a proposal to acquire all of the Company’s outstanding shares for a fully-diluted enterprise valuation of $36 million. At the behest of the special committee, Hyde Park Capital sought to confirm Party A’s ability to finance a possible transaction with Ablest, but was unable to do so to its or the special committee’s satisfaction. On April 10, 2007, April 17, 2007 and April 20, 2007, the special committee held special telephonic meetings, at which all committee members were present and representatives of Company management, Hyde Park Capital, Raymond James and Foley & Lardner LLP, as well as Mr. Foster, also participated. At these meetings, Hyde Park Capital reviewed with the special committee the status and results of the ongoing market survey process. At the April 17, 2007 meeting, Hyde Park Capital informed the special committee that the contemplated financing for the proposal by Party A had not materialized and, thus, that Party A was no longer interested in pursuing a possible transaction with the Company.

 

The board of directors of Ablest, on the unanimous recommendation of a special committee of independent directors, determined that the terms of the merger agreement, including the merger consideration of $11.00 in cash per share common stock, and the merger are advisable and fair to, and in the best interests of, the stockholders of the Company.

 

The board of directors unanimously recommends that stockholders vote “FOR” the adoption of the merger agreement, including the merger.

 

In the course of reaching its decision to approve the merger agreement, the special committee of the Company’s board of directors consulted with the Company’s financial and legal advisors, reviewed a significant amount of information and considered the following material factors:

 

 

 

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

 

 

After considering these factors, our board of directors, upon the unanimous recommendation of the special committee, concluded that the positive factors relating to the merger agreement and the merger outweighed the negative factors. In view of the wide variety of factors considered by our board of directors and the special committee, neither our board of directors nor the special committee found it practicable to quantify or otherwise assign relative weights to the foregoing factors. In addition, individual members of our board of directors and the special committee may have assigned different weights to various factors. Our board of directors approved and recommends the adoption of the merger agreement, including the merger, based upon the totality of the information presented to and considered by it.

 

After consideration, the Company’s board of directors:

 

 

The special committee of the Company’s board of directors retained Raymond James & Associates, Inc. (“Raymond James”) as financial advisor on February 20, 2007. In connection with that engagement, the special committee requested that Raymond James evaluate the fairness, from a financial point of view, of the consideration to be received by the holders, exclusive of Parent and Merger Sub, of Ablest’s outstanding common stock (the “Stockholders”), pursuant to the merger, in exchange for each of the outstanding shares of common stock of the Company.

 

At the April 4, 2007, meeting of the Special Committee, Raymond James gave its opinion that, as of such date and based upon and subject to various qualifications and assumptions described with respect to its opinion, the merger consideration to be received by the Stockholders of the Company pursuant to the merger agreement was fair, from a financial point of view, to the Stockholders.

 

The full text of the written opinion of Raymond James, dated April 4, 2007, which sets forth assumptions made, matters considered, and limits on the scope of review undertaken, is attached as Annex C to this document. The summary of the opinion of Raymond James set forth in this document is qualified in its entirety by reference to the full text of such opinion.

 

Stockholders are urged to read this opinion in its entirety. Raymond James’s opinion, which is addressed to the special committee, is directed only to the fairness, from a financial point of view, of the merger consideration to be received by the Stockholders in connection with the proposed merger. Raymond James’s opinion does not constitute a recommendation to any Stockholder as to how such stockholder should vote at the special meeting of the Company’s stockholders, and does not address any other aspect of the proposed merger or any related transaction.

 

In connection with rendering its opinion, Raymond James, among other:

 

 

In connection with its review, Raymond James assumed and relied upon the accuracy and completeness of all information supplied or otherwise made available to Raymond James by the Company, Parent or any other party, and did not undertake any duty or responsibility to verify independently any of such information.

Raymond James has not made or obtained an independent appraisal of the assets or liabilities (contingent or otherwise) of the Company. With respect to financial forecasts and other information and data provided to or otherwise reviewed by or discussed with Raymond James, Raymond James assumed that such forecasts and other information and data were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of management, and relied upon each party to advise Raymond James promptly if any information previously provided became inaccurate or was required to be updated during the period of its review.

 

In rendering its opinion, Raymond James assumed that the merger would be consummated on the terms described in the merger agreement. Furthermore, Raymond James assumed, in all respects material to its analysis, that the representations and warranties of each party contained in the merger agreement were true and correct, that each party will perform all of the covenants and agreements required to be performed by it under the merger agreement and that all conditions to the consummation of the merger will be satisfied without being waived. Raymond James also assumed that all material governmental, regulatory or other consents and approvals will be obtained and that, in the course of obtaining any necessary governmental, regulatory or other consents and approvals, or any amendments, modifications or waivers to any documents to which the Company is a party, as contemplated by the merger agreement, no restrictions will be imposed or amendments, modifications or waivers made that would have any material adverse effect on the Company. In its financial analyses, Raymond James assumed the merger consideration had a value of $11.00 in cash per share of the Company’s common stock. Raymond James expressed no opinion as to the underlying business decision to effect the merger, the structure or tax consequences of the merger agreement, or the availability or advisability of any alternatives to the merger. In the capacity of rendering the opinion, Raymond James reviewed the terms of the merger agreement and offered no judgment as to the negotiations resulting in such terms.

 

In conducting its investigation and analyses and in arriving at its opinion, Raymond James took into account such accepted financial and investment banking procedures and considerations as it deemed relevant, including the review of: (i) historical and projected revenues, operating earnings, net income and capitalization of the Company and certain other publicly held companies in businesses Raymond James believed to be comparable to the Company; (ii) the current and projected financial position and results of operations of the Company; (iii) the historical market prices and trading activity of the common stock of the Company; (iv) financial and operating information concerning selected business combinations which Raymond James deemed comparable in whole or in part; and (v) the general condition of the securities markets.

 

The following summarizes the material financial analyses presented by Raymond James to the special committee at its meeting on April 4, 2007 which material was considered by Raymond James in rendering the opinion described below. No company or transaction used in the analyses described below is directly comparable to the Company, Parent or the contemplated merger.

 

Trading Analysis.  Raymond James analyzed historical closing prices of the Company and compared them to the value of the proposed merger consideration. The results of this analysis are summarized below:

 

 

Comparable Public Companies Analysis.  Raymond James analyzed the relative valuation multiples of seven publicly-traded staffing companies, including:

 

 

 

Raymond James calculated various financial multiples for each company, including (i) enterprise value (market value plus debt, less cash) compared to both revenue and earnings before interest, taxes, depreciation and amortization, or EBITDA, for the most recent actual twelve months results, referred to as LTM, as well as to Wall Street estimates for both revenue and EBITDA for the calendar year ending December 31, 2007, referred to as 2007E, and (ii) equity value per share compared to earnings per share, using the LTM results as well as Wall Street estimates for the selected companies for 2007E. The estimates published by Wall Street research analysts were not prepared in connection with the merger or at Raymond James’s request and may or may not prove to be accurate. Raymond James reviewed the minimum, mean, median and maximum relative valuation multiples of the selected public companies and compared them to corresponding valuation multiples for the Company implied by the merger consideration. The results of the selected public companies analysis are summarized below:

 

 

Furthermore, Raymond James applied the minimum, mean, median and maximum relative valuation multiples for each of the metrics to the Company’s actual and projected financial results and determined the implied equity price per share of the Company’s common stock and then compared those implied equity values per share to the merger consideration of $11.00 per share. The results of this are summarized below:

 

 

Precedent Transactions Analysis.  Raymond James analyzed publicly available information relating to selected acquisitions of staffing companies and prepared a summary of the relative valuation multiples paid in these transactions. The selected transactions used in the analysis included:

 

Raymond James examined valuation multiples of transaction enterprise value compared to the target companies’ revenue and EBITDA, in each case for twelve months ended prior to the transaction, where such information was publicly available. Raymond James reviewed the minimum, mean, median and maximum relative valuation multiples of the selected transactions and compared them to corresponding valuation multiples for the Company implied by the merger consideration. Furthermore, Raymond James applied the minimum, mean, median and maximum relative valuation multiples to the Company’s actual last twelve months revenue to determine the implied equity price per share and then compared those implied equity values per share to the merger consideration of $11.00 per share. The results of the selected transactions analysis are summarized below:

 

 

In addition, Raymond James applied the minimum, mean, median and maximum relative valuation multiples to the Company’s actual last twelve months EBITDA to determine the implied equity price per share and then compared those implied equity values per share to the merger consideration of $11.00 per share. The results of the selected transactions analysis are summarized below:

 

 

Premiums Paid Analysis.  Raymond James analyzed the stock price premiums paid in 37 merger and acquisition transactions announced in the previous 18 months with enterprise value at announcement ranging from $10 million to $100 million, excluding transactions in the finance and real estate industries. Raymond James measured each transaction price per share relative to each target’s closing price per share one day, one week and one month prior to announcement of the transaction. Raymond James compared the minimum, mean, median and maximum premiums paid from this set of transactions to the Company’s merger consideration expressed as a premium relative to the closing stock price of the Company on April 3, 2007; March 27, 2007; March 13, 2007; and January 22, 2007 (one day prior to the Company receiving an offer of $7.50 per share from a group of existing investors). The results of the transaction premium analysis are summarized below:

 

Furthermore, Raymond James applied the minimum, mean, median and maximum premiums for each of the metrics to the Company’s actual corresponding closing stock prices to determine the implied equity price per share and then compared those implied equity values per share to the merger consideration of $11.00 per share. The results of this comparison are summarized below:

 

 

Discounted Cash Flow Analysis.  Raymond James analyzed the discounted present value of the Company’s projected free cash flows for the years ending December 31, 2007 through 2016 on a standalone basis. Raymond James used unleveraged free cash flows, defined as earnings before interest, after taxes, plus depreciation, plus amortization, less capital expenditures, less investment in working capital.

 

The discounted cash flow analysis was based on projections of the financial performance of the Company that represented the best available estimates and judgment of management. Raymond James used calendar year 2016 as the final year for the analysis and applied multiples, ranging from 6.0x to 8.0x, to calendar 2016 EBITDA in order to derive a range of terminal values for the Company in 2016.

 

The projected unleveraged free cash flows and terminal values were discounted using rates ranging from 19.0% to 21.0%, which reflected the weighted average after-tax cost of debt and equity capital associated with executing the Company’s business plan. The resulting range of present enterprise values was adjusted by the Company’s current capitalization and divided by the number of diluted shares outstanding in order to arrive at a range of present values per share of the Company. Raymond James reviewed the range of per share prices derived in the discounted cash flow analysis and compared them to the price per share for the Company implied by the merger consideration. The results of the discounted cash flow analysis are summarized below:

 

 

Additional Considerations.  The preparation of a fairness opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. Raymond James believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering the analyses taken as a whole, would create an incomplete view of the process underlying the analyses set forth in its opinion. In addition, Raymond James considered the results of all such analyses and did not assign relative weights to any of the analyses, but rather made qualitative judgments as to significance and relevance of each analysis and factor, so the ranges of valuations resulting from any particular analysis described above should not be taken to be Raymond James’s view of the actual value of the Company.

 

In performing its analyses, Raymond James made numerous assumptions with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond the control of the Company. The analyses performed by Raymond James are not necessarily indicative of actual values, trading values or actual future results which might be achieved, all of which may be significantly more or less favorable than suggested by such analyses. Such analyses were provided to the Company’s board of directors and were prepared solely as part of Raymond James’s analysis of the fairness, from a financial point of view, to the holders of the Company’s common stock of the consideration to be received by such holders in connection with the proposed merger. The analyses do not purport to be appraisals or to reflect the prices at which companies may actually be sold, and such estimates are inherently subject to uncertainty. The opinion of Raymond James was one of many factors taken into consideration by the

Company’s board of directors in making its determination to approve the merger. Consequently, the analyses described above should not be viewed as determinative of the Company’s board of directors’ or management’s opinion with respect to the value of the Company. The Company placed no limits on the scope of the analysis performed, or opinion expressed, by Raymond James.

 

Raymond James’s opinion was necessarily based upon market, economic, financial and other circumstances and conditions existing and disclosed to it on April 3, 2007 and any material change in such circumstances and conditions may affect Raymond James’s opinion, but Raymond James does not have any obligation to update, revise or reaffirm that opinion.

 

For services rendered in connection with the delivery of its opinion, the Company paid Raymond James a customary investment banking fee upon delivery of its opinion. The Company also agreed to reimburse Raymond James for its expenses incurred in connection with its services, including the fees and expenses of its counsel, and will indemnify Raymond James against certain liabilities arising out of its engagement.

 

Raymond James is actively involved in the investment banking business and regularly undertakes the valuation of investment securities in connection with public offerings, private placements, business combinations and similar transactions. In the ordinary course of business, Raymond James may trade in the securities of the Company for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities.

 

In considering the recommendation of the Company’s board of directors with respect to the merger, you should be aware that some of the Company’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of the Company’s stockholders generally. These interests may present them with actual or potential conflicts of interest, and these interests, to the extent material, are described below. The Company’s board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and the merger. The consummation of the merger will constitute a “change of control” for purposes of each of the plans and agreements described below.

 

Pre-Existing Employment Agreements and Other Arrangements

 

Employment Agreement with Mr. Moore

 

Kurt R. Moore serves as President and Chief Executive Officer of the Company pursuant to an employment agreement entered into on January 1, 2007, that provides for his employment through January 1, 2009. If a change in control of the Company occurs prior to January 2, 2009, then his employment term is extended until the second anniversary of the date of the change in control.

 

Under the agreement, Mr. Moore is compensated at a base salary rate of $300,000 for 2007. For each calendar year thereafter, his salary will be determined by the Company’s Compensation Committee, but in no event shall it be less than the annual salary that was payable to him for the preceding calendar year. Mr. Moore is eligible to participate in any bonus program implemented for senior executives of the Company, with pertinent terms and goals to be established by the Company’s Compensation Committee.

 

The Company may terminate Mr. Moore’s employment with cause immediately or without cause with 30 days advance notice. Mr. Moore may terminate his employment with the Company at any time with 30 days advance notice.

 

If Mr. Moore’s employment is terminated as a result of his death or disability, the Company is obligated to continue to pay his salary and provide him with medical benefits for the lesser of twelve months or the balance of the term remaining under the employment agreement (but for a minimum of six months). If his employment is terminated by the Company without cause other than within two years following a change in control of the Company, or by him due to a material breach of the agreement by the Company or because he is required, following a change in control of the Company, to relocate more than 40 miles from the Company’s headquarters, then the Company is obligated to continue to pay Mr. Moore his salary and provide him with certain benefits for a period equal to the lesser of the remainder of the term of the agreement or twelve months, and to pay him

within 30 days of the date of termination an amount equal to his target bonus opportunity for the year in which termination occurs. If required by Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), payment of the severance may be delayed for a period of six months after his termination of employment.

 

If within two years after a change in control of the Company, Mr. Moore’s employment is terminated by the Company without cause, or by Mr. Moore due to a material reduction in his duties or responsibilities within 12 months following the change in control, he will be entitled to an amount equal to two times his annual salary in effect on the date of termination.

 

Upon any such termination within two years after a change in control, the Company will provide Mr. Moore with a package of benefits, for a period of twelve months following his termination, substantially similar to those he was receiving prior to the date of termination (or prior to the change in control, if greater). The Company will also vest and accelerate the exercise date of all unvested stock options, if any, that are outstanding on the date of such termination, and such options shall remain exercisable for the duration of their original terms. Finally, if the change in control compensation would constitute an excess parachute payment as defined in Section 280G of the Code, such compensation will be reduced to the largest amount that will result in no portion of the termination payments under the employment agreement being subject to the excise tax imposed by Section 4999 of the Code or being disallowed as deductions to the Company under Section 280G of the Code.

 

No change in control compensation is due upon Mr. Moore’s voluntary termination without good reason, retirement, death or disability.

 

Mr. Moore’s agreement contains provisions relating to noncompetition and nonsolicitation of the Company’s employees during the term of the agreement and for two years following termination of employment, except where the termination is by the Company without cause or by Mr. Moore as a result of a material breach of the agreement by the Company.

 

Employment Agreement with Mr. Horan

 

John Horan serves as Vice President and Chief Financial Officer pursuant to an employment agreement entered into on April 17, 2006, that provides for his employment from May 15, 2006 through April 17, 2008. If a change in control of the Company occurs prior to April 17, 2008, then his employment term is extended until the second anniversary of the date of the change in control.

 

Under the agreement, Mr. Horan is compensated at a base salary of $165,600 for 2007. For each year thereafter, his salary will be determined by the Compensation Committee, but in no event will it be less than the annual salary that was payable to him for the preceding calendar year. Mr. Horan is eligible to participate in any bonus program implemented for senior executives of the Company, with pertinent terms and goals to be established by the Compensation Committee.

 

The Company may terminate Mr. Horan’s employment with cause immediately or without cause with 30 days advance notice. Mr. Horan may terminate his employment with the Company at any time with 30 days advance notice.

 

If Mr. Horan’s employment is terminated as a result of his death or disability, the Company is obligated to continue to pay his salary and provide him with medical benefits for the lesser of twelve months or the balance of the term remaining under the employment agreement (but for a minimum of six months). If his employment is terminated by the Company without cause other than within two years following a change in control of the Company, or by him due to a material breach of the agreement by the Company, the Company is obligated to continue to pay Mr. Horan his salary and provide him with certain benefits for a period equal to the lesser of the remainder of the term of the agreement or twelve months, and to pay him within 30 days of the date of termination an amount equal to his target bonus opportunity for the year in which termination occurs. If required by Code Section 409A, payment of the severance may be delayed for a period of six months after his termination of employment.

If within two years after a change in control of the Company, Mr. Horan’s employment is terminated by the Company without cause, he will be entitled to an amount equal to two times his annual base salary in effect on the date of termination.

 

Upon any such termination within two years after a change in control, the Company will provide Mr. Horan with a package of benefits, for a period of twelve months following his termination, substantially similar to those he was receiving prior to the date of termination (or prior to the change in control, if greater). The Company will also vest and accelerate the exercise date of all unvested stock options, if any, that are outstanding on the date of such termination, and such options shall remain exercisable for the duration of their original terms. If the change in control compensation would constitute an excess parachute payment as defined in Section 280G of the Code, such compensation will be reduced to the largest amount that will result in no portion of the termination payments under the employment agreement being subject to the excise tax imposed by Section 4999 of the Code or being disallowed as deductions to the Company under Section 280G of the Code.

 

No change in control compensation is due upon Mr. Horan’s voluntary termination without good reason, retirement, death or disability.

 

Mr. Horan’s agreement contains provisions relating to noncompetition and nonsolicitation of the Company’s employees during the term of the agreement and for two years following termination of employment except where the termination is by the Company without cause or by Mr. Horan as a result of a material breach of the agreement by the Company.

 

Employment Agreement with Mr. Heist

 

Charles H. Heist serves as Chairman of the Board of Directors pursuant to an employment agreement entered into on January 1, 2007, that provides for his employment through January 1, 2009. If a change in control of the Company occurs prior to January 2, 2009, then his employment term is extended until the second anniversary of the date of the change in control.

 

Under the agreement, Mr. Heist is compensated at a base salary of $232,800 for 2007. For each year thereafter, his salary will be determined by the Compensation Committee, but in no event will it be less than the annual salary that was payable to him for the preceding calendar year. Mr. Heist is eligible to participate in any bonus program implemented for senior executives of the Company, with pertinent terms and goals to be established by the Compensation Committee.

 

The Company may terminate Mr. Heist’s employment with cause immediately or without cause with 30 days advance notice. Mr. Heist may terminate his employment with the Company at any time with 30 days advance notice.

 

If Mr. Heist’s employment is terminated as a result of his death or disability, the Company is obligated to continue to pay his salary and provide him with medical benefits for the lesser of twelve months or the balance of the term remaining under the employment agreement (but for a minimum of six months). If his employment is terminated by the Company without cause other than within two years following a change in control of the Company, or by him due to a material breach of the agreement by the Company or because he is required, following a change in control of the Company, to relocate more than 40 miles from the Company’s headquarters, then the Company is obligated to continue to pay Mr. Heist his salary and provide him with certain benefits for a period equal to the lesser of remainder of the term of the agreement or twelve months, and to pay him within 30 days of the date of termination an amount equal to his target bonus opportunity for the year in which termination occurs. If required by Code Section 409A, payment of the severance may be delayed for a period of six months after his termination of employment.

 

If within two years after a change in control of the Company, Mr. Heist’s employment is terminated by the Company without cause, or by Mr. Heist due to a material reduction in his duties or responsibilities within 12 months following the change in control, he will be entitled to an amount equal to two times his annual base salary in effect on the date of termination.

 

Upon any such termination within two years after a change in control, the Company will provide Mr. Heist with a package of benefits, for a period of twelve months following his termination, substantially similar to those he was receiving prior to the date of termination (or prior to the change in control, if greater). The Company will also vest and accelerate the exercise date of all unvested stock options, if any, that are outstanding on the

date of such termination, and such options shall remain exercisable for the duration of their original terms. If the change in control compensation would constitute an excess parachute payment as defined in Section 280G of the Code, such compensation will be reduced to the largest amount that will result in no portion of the termination payments under the employment agreement being subject to the excise tax imposed by Section 4999 of the Code or being disallowed as deductions to the Company under Section 280G of the Code.

 

No change in control compensation is due upon Mr. Heist’s voluntary termination without good reason, retirement, death or disability.

 

Mr. Heist’s agreement contains provisions relating to noncompetition and nonsolicitation of the Company’s employees during the term of the agreement and for two years following termination of employment except where the termination is by the Company without cause or by Mr. Heist as a result of a material breach of the agreement by the Company.

 

Employment Agreement with Mr. Gardner

 

Nolan B. Gardner serves as Vice President of Human Resources pursuant to an employment agreement entered into on January 1, 2006, that provides for his employment through January 1, 2008. If a change in control of the Company occurs prior to January 2, 2009, then his employment term is extended until the second anniversary of the date of the change in control.

 

Under the agreement, Mr. Gardner is compensated at a base salary of $110,000 for 2007. For each year thereafter, his salary will be determined by the Compensation Committee, but in no event will it be less than the annual salary that was payable to him for the preceding calendar year. Mr. Gardner is eligible to participate in any bonus program implemented for senior executives of the Company, with pertinent terms and goals to be established by the Compensation Committee.

 

The Company may terminate Mr. Gardner’s employment with cause immediately or without cause with 30 days advance notice. Mr. Gardner may terminate his employment with the Company at any time with 30 days advance notice.

 

If Mr. Gardner’s employment is terminated as a result of his death or disability, the Company is obligated to continue to pay his salary and provide him with medical benefits for the lesser of twelve months or the balance of the term remaining under the employment agreement (but for a minimum of six months). If his employment is terminated by the Company without cause other than within two years following a change in control of the Company, or by him due to a material breach of the agreement by the Company, then the Company is obligated to continue to pay Mr. Gardner his salary and provide him with certain benefits for a period equal to lesser of the remainder of the term of the agreement or twelve months, and to pay him within 30 days of the date of termination an amount equal to his target bonus opportunity for the year in which termination. If required by Code Section 409A, payment of the severance may be delayed for a period of six months after his termination of employment.

 

If within two years after a change in control of the Company, Mr. Gardner’s employment is terminated by the Company without cause, he will be entitled to an amount equal to two times his annual base salary in effect on the date of termination.

 

Upon any such termination within two years after a change in control, the Company will provide Mr. Gardner with a package of benefits, for a period of twelve months following his termination, substantially similar to those he was receiving prior to the date of termination (or prior to the change in control, if greater). The Company will also vest and accelerate the exercise date of all unvested stock options, if any, that are outstanding on the date of such termination, and such options shall remain exercisable for the duration of their original terms. If the change in control compensation would constitute an excess parachute payment as defined in Section 280G of the Code, such compensation will be reduced to the largest amount that will result in no portion of the termination payments under the employment agreement being subject to the excise tax imposed by Section 4999 of the Code or being disallowed as deductions to the Company under Section 280G of the Code.

 

No change in control compensation is due upon Mr. Gardner’s voluntary termination without good reason, retirement, death or disability.

 

Mr. Gardner’s agreement contains provisions relating to noncompetition and nonsolicitation of the Company’s employees during the term of the agreement and for two years following termination of employment except where the termination is by the Company without cause or by Mr. Gardner as a result of a material breach of the agreement by the Company.

 

Indemnification Agreements

 

On February 17, 2005, the Company entered into an indemnification agreement with each of Charles H. Heist, Ronald K. Leirvik, W. David Foster, Donna R. Moore, Richard W. Roberson and Charles E. Scharlau, as members of the board of directors of the Company, and Kurt R. Moore, as a member of the board of directors of the Company and as an executive officer (the “Indemnification Agreements”). In general, the Indemnification Agreements provide the directors and executive officers listed above with contractual rights to indemnification and advancement or reimbursement of expenses to the fullest extent permitted by Delaware law in connection with any and all expenses, judgments, fines, ERISA excise taxes, penalties, and amounts paid in settlement incurred by the directors or executive officers as a result of their service to, and actions on behalf of, the Company. The Company’s Certificate of Incorporation currently provides that the Company is required to indemnify its officers and directors to the fullest extent allowable under applicable law.

 

Treatment of Stock Options

 

As of April 24, 2007, there were 54,000 shares of the Company’s common stock subject to stock options granted under the Company’s equity incentive plans to our current directors. Each outstanding stock option that remains unexercised as of the effective time of the merger, whether or not the option is vested or exercisable, will be cancelled, and the holder of such stock option that has an exercise price of less than $11.00 will be entitled to receive a cash payment, without interest and less applicable withholding taxes, equal to the product of:

 

 

The following table summarizes the vested and unvested Company stock options with exercise prices of less than $11.00 (options with exercise prices in excess of $11.00 per share are not included because they will be cancelled for no consideration) held by our directors as of April 24, 2007 and the approximate consideration that each of them will receive pursuant to the merger agreement in connection with the cancellation of their options, based on the weighted average exercise prices of the options, assuming that the options are not exercised before the effective time of the merger:

 

 

Treatment of Restricted Stock

 

As of April 24, 2007, there were approximately 11,436 shares of the Company’s common stock represented by restricted stock awards held by the Company’s directors and executive officers. At the effective time of the merger, all such shares of restricted stock will become fully vested and all restrictions on such shares shall lapse.

 

The following table summarizes the restricted stock awards held by the Company’s directors and executive officers as of April 24, 2007 and the approximate consideration that each of them will receive pursuant to the merger agreement (assuming no exercise of appraisal rights) for such awards:

 

 

Possible Continued Employment of Certain Executive Officers

 

Some employees of the Company, including some of the Company’s executive officers, will remain employed by the surviving corporation following the merger unless their employment is terminated or they resign. As of the date of this proxy statement, none of the Company’s executive officers has entered into any agreements with Parent or its affiliates regarding employment with the surviving corporation. Although no such agreements currently exist, the Company’s executive officers who remain with the surviving corporation following the merger may, prior or after the closing of the merger, enter into new arrangements with Parent or its affiliates (which may amend their existing agreements) regarding employment with the surviving corporation. Executive officers who continue working for the surviving corporation or its affiliates, or who resign voluntarily without good reason, might not qualify to receive some of the benefits described above.

 

Indemnification and Insurance

 

The merger agreement provides that Parent will, and will cause the surviving corporation to, indemnify and hold harmless each current and former director, officer, employee and agent (but as to employees and agents, only to the extent required by applicable law or the Company’s Certificate of Incorporation) of the Company (the “indemnified parties”) against any liabilities, damages, costs or other amounts (including reasonable attorneys’ fees) paid in connection with any claim, action, suit, proceeding or investigation arising out of or pertaining to any acts or omissions occurring at or prior to the effective time of the merger to the fullest extent permitted by the General Corporation Law the State of Delaware or provided under the Company Certificate of Incorporation and By-Laws in effect on the date of the merger agreement, including, to the extent permitted by law, liabilities arising under the Securities Exchange Act of 1934 (the “Exchange Act”). The surviving corporation will, for a period of not less than six years, continue in effect the indemnification provisions currently provided by Ablest’s Certificate of Incorporation and the By-Laws in effect on April 4, 2007.

 

Prior to the effective time of the merger, the Company will obtain a noncancellable six-year “Extended Reporting Period/Discovery Period” officers’ and directors’ liability insurance policy (the “tail policy”) on terms and conditions no less advantageous to the indemnified parties, than the existing directors’ and officers’ liability (and fiduciary) insurance maintained by the Company, covering, without limitation, the transactions contemplated hereby. Parent shall cause the surviving corporation after the effective time to maintain such policy in full force and effect, for its full term, and to continue to honor its respective obligations under the tail policy. Additionally, the surviving corporation will continue in effect the indemnification provisions provided by the Certificate of Incorporation and By-Laws of the Company as of April 4, 2007 for a period of not less than six years following the effective time.

 

These provisions are intended to be for the benefit of, and are enforceable by, the indemnified parties and their heirs and personal representatives and will be binding on Parent and the surviving corporation and its successors and assigns.

 

Parent will fund the merger and the related transactions, including the payment of related transaction costs, charges, fees and expenses, with a combination of debt financing and available cash. On May 3, 2007, Parent entered into a commitment letter with Bank of the West, pursuant to which and subject to the conditions set forth therein, Bank of the West has committed to provide to Parent an aggregate of $30.0 million, which will be available to fund the merger and related transactions. Parent estimates that the total amount of funds necessary to complete the proposed merger and related transactions is approximately $35.0 million, which includes approximately $32.5 million to be paid to the Company’s stockholders and holders of other equity-based interests in the Company. The consummation of the merger is not conditioned on Parent receiving the proceeds contemplated by the commitment letter.

 

The following discussion summarizes certain material U.S. federal income tax consequences of the merger that are generally applicable to United States holders (as defined below) of Ablest common stock. This discussion is based on currently existing provisions of the Code, existing and proposed Treasury Regulations promulgated under the Code, and current administrative rulings and court decisions, all of which are subject to change, possibly with retroactive effect. The following discussion does not purport to consider all aspects of U.S. federal income taxation that might be relevant to our stockholders. This discussion does not address state, local or foreign tax consequences that may be applicable to the parties specified in the first sentence of this paragraph, and such parties should consult their own tax advisors with respect to such consequences.

 

The following discussion applies only to United States holders (as defined below) of Ablest common stock who hold such shares as capital assets. This discussion may not apply to United States holders who may be subject to special treatment under the Code, such as banks and other financial institutions, insurance companies, tax-exempt investors, regulated investment companies, real estate investment trusts, persons subject to the alternative minimum tax, persons who hold their Ablest common stock as part of a position in a “straddle” or as part of a “hedging” or “conversion” transaction, persons who are deemed to sell their Ablest common stock under the constructive sale provisions of the Code, stockholders that elect to use a mark-to-market method of accounting for their securities holdings, persons that have a functional currency other than the U.S. dollar, persons who acquired Ablest common stock pursuant to the exercise of employee stock options or other compensation arrangements, expatriates, S corporations, entities classified as partnerships for U.S. federal income tax purposes or stockholders who hold Ablest common shares as dealers. All such United States holders should consult their own tax advisors concerning the U.S. federal income tax consequences of the merger to their particular situations.

 

Tax matters are very complex and the tax consequences of the merger to you will depend on the facts of your particular situation. You should consult your tax advisor for a full understanding of the tax consequences of the merger to you, including the federal, state, local and foreign tax consequences of the merger.

 

If a partnership holds Ablest common stock, the tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner of a partnership holding Ablest common stock should consult his, her or its tax advisors regarding the tax consequences to him, her or it of the merger.

 

For purposes of this discussion, a “United States holder” means a holder that is (1) a natural person who is a citizen or resident of the United States for federal income tax purposes, (2) a corporation (or other entity treated as an association taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state, (3) an estate, the income of which is subject to U.S. federal income taxation regardless of its source, or (4) a trust if (a) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial

decisions of the trust, or (b) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

 

United States Holders

 

In general, United States holders of Ablest common stock who receive cash in exchange for their shares pursuant to the merger will recognize gain or loss for U.S. federal income tax purposes equal to the difference, if any, between their adjusted tax basis in their shares and the amount of cash received. If a stockholder holds Ablest common stock as a capital asset, the gain or loss should generally be a capital gain or loss. If the stockholder has held the shares for more than one year, the gain or loss should generally be a long-term gain or loss. The deductibility of capital losses is subject to limitations. Gain or loss must be calculated separately for each block of Ablest common stock exchanged for cash in the merger.

 

In general, stockholders who receive cash in connection with the exercise of their dissenters’ rights will recognize gain or loss. Any stockholder considering exercising statutory dissenters’ rights should consult with his or her own tax advisor.

 

United States holders of Ablest common stock may be subject to backup withholding at a rate of [28] percent on cash payments received in exchange for shares in the merger or received upon the exercise of appraisal rights. Backup withholding generally will apply only if the stockholder fails to furnish a correct social security number or other taxpayer identification number, or otherwise fails to comply with applicable backup withholding rules and requirements. Corporations generally are exempt from backup withholding. United States holders should complete and sign the substitute Form W-9 that will be part of the letter of transmittal to be returned to the paying agent following the completion of the merger to provide the information and certification necessary to avoid backup withholding.

 

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowable as a refund or a credit against a United States holder’s federal income tax liability provided the required information is timely furnished to the IRS.

 

This summary of certain material U.S. federal income tax consequences is for general information only and is not intended to constitute a complete description of all tax consequences relating to the merger. Stockholders are urged to consult their tax advisors with respect to the application of U.S. federal income tax laws to their particular situations as well as any tax consequences arising under the U.S. federal estate or gift tax rules, or under the laws of any state, local, foreign or other taxing jurisdiction.

 

 

We estimate that we will incur, in connection with the sale of the Company, transaction-related fees and expenses totaling approximately $1.0 million. This amount consists of the following estimated fees and expenses:

 

 

None of these costs and expenses will reduce the $11.00 per share merger consideration payable to holders of Ablest common stock or the amount payable to stock option holders.

 

In addition, if the merger agreement is terminated under certain circumstances, Ablest will be obligated to pay a termination fee of $1.0 million as directed by Parent. See “The Merger Agreement — Termination Fees and Expenses.”

 

 

If the merger is completed, our common stock will be delisted from the American Stock Exchange and deregistered under the Exchange Act and we will no longer file periodic reports with the SEC on account of our common stock.

 

This section of the proxy statement describes the material provisions of the merger agreement, but does not purport to describe all the provisions of the merger agreement. We urge you to read the full text of the merger agreement because it is the legal document that governs the merger. The merger agreement attached as Annex A and incorporated by reference into this document has been included to provide you with information regarding its terms. Capitalized terms used but not defined herein shall have the meaning given them in the merger agreement. It is not intended to provide any other factual information about us. Such information can be found elsewhere in this proxy statement and in the other public filings we make with the Securities and Exchange Commission, which are available without charge at www.sec.gov.

 

The merger agreement contains representations and warranties we, on the one hand, and Parent and Merger Sub, on the other hand, have made to each other as of specific dates. These representations and warranties have been made for the benefit of the other parties to the merger agreement and may be intended not as statements of fact but rather as a way of allocating the risk to one of the parties if those statements prove to be incorrect. In addition, the assertions embodied in our representations and warranties are qualified by information in a confidential disclosure letter that we have provided to Parent in connection with signing the merger agreement. While we do not believe that these schedules contain information required to be publicly disclosed by us under the applicable securities laws other than information that has already been so disclosed, the disclosure letter does contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the attached merger agreement. Accordingly, you should not rely on the representations and warranties as current characterizations of factual information about us, since they were made as of specific dates, may be intended merely as a risk allocation mechanism between us and Parent, and are modified in important part by the underlying disclosure letter.

 

If all of the conditions to the merger are satisfied or waived in accordance with the merger agreement, Merger Sub, a wholly-owned subsidiary of Parent created solely for the purpose of engaging in the transactions contemplated by the merger agreement, will merge with and into Ablest. The separate corporate existence of Merger Sub will cease, and Ablest will survive the merger and will become a wholly-owned subsidiary of Parent. We sometimes refer to Ablest after the merger as the surviving corporation.

 

At the effective time of the merger, Merger Sub will merge with and into Ablest. Upon completion of the merger, Merger Sub will cease to exist as a separate entity and Ablest will continue as the surviving corporation. All of Ablest’s and Merger Sub’s properties, assets, rights, privileges, immunities, powers and purposes, and all of their liabilities, obligations and penalties, will become those of the surviving corporation. Following the completion of the merger, Ablest’s common stock will be delisted from the American Stock Exchange and deregistered under the Exchange Act.

 

The effective time of the merger will occur at the time that we file a Certificate of Merger with the Secretary of State of the State of Delaware on or following the closing date of the merger. The closing date will occur no later than the later of the first business day following the satisfaction or waiver of the conditions set forth in the merger agreement. Ablest intends to complete the merger as promptly as practicable, subject to receipt of stockholder approval and satisfaction (or waiver) of all other conditions to the completion of the merger. We refer to the time at which the merger is completed as the effective time. Although Ablest expects to complete the merger prior to June 30, 2007, we cannot specify when, or assure you that, Ablest and Parent will satisfy or waive all conditions to the merger.

 

At the effective time of the merger, the Certificate of Incorporation of the surviving corporation will be amended and restated in its entirety to be identical to the Certificate of Incorporation of Merger Sub, as in effect immediately prior to the effective time, until thereafter properly amended, provided that, at the effective time, Article I of the Certificate of Incorporation of the surviving corporation will be amended and restated to read “The name of the corporation is Ablest Inc.”

 

At the effective time of the merger, the By-Laws of the surviving corporation will be amended and restated in their entirety to be identical to the By-Laws of Merger Sub, as in effect immediately prior to the effective time, until thereafter properly amended, provided that, at the effective time, the title of the By-Laws of the surviving corporation will be amended and restated to read “By-Laws of Ablest Inc.”

 

The initial directors of the surviving corporation will be the directors of Merger Sub immediately following the merger. Ablest’s officers will be the initial officers of the surviving corporation immediately following the merger.

 

Outstanding Shares of Common Stock

 

At the effective time of the merger, each share of our common stock issued and outstanding immediately before the effective time of the merger will automatically be cancelled and converted into the right to receive $11.00 in cash, other than shares of common stock:

 

 

Restricted Stock

 

The merger agreement provides that, at the effective time of the merger, all shares of Ablest common stock that are subject to vesting and transfer and other restrictions under the Ablest Inc. Restricted Stock Plan, the Non-Employee Directors’ Equity Rights Plan or any other Company restricted stock plan, or granted other than pursuant to a Company restricted stock plan, shall become fully vested and all restrictions on such shares shall lapse.

 

Stock Options

 

The merger agreement provides that at the effective time of the merger, each stock option that is outstanding before the effective time under the Non-Employee Directors’ Stock Option Plan or any other Company stock option plan, or granted other than pursuant to a Company stock option plan, will be cancelled and converted into the right to receive cash (subject to applicable withholding taxes) equal to (1) the excess, if any, of $11.00 per share over the per share exercise or purchase price of such outstanding stock option, multiplied by (2) the number of shares underlying such option.

 

Before the effective time of the merger, Parent will appoint an exchange agent that will pay the merger consideration in exchange for certificates representing shares of the Company’s common stock or non-certificated shares represented by book entry (“Book-Entry Shares”). At the effective time of the merger, the surviving corporation will deposit with the exchange agent an amount of cash equal to the aggregate merger consideration. The exchange agent will pay the per share merger consideration, less any applicable withholding taxes, to Ablest’s stockholders promptly following the exchange agent’s receipt of the stock certificates (or Book-Entry Shares) and a properly completed letter of transmittal. No interest will be paid or accrued on the cash payable upon the surrender or any such stock certificate (or Book-Entry Share). Any funds that have not been distributed within one year after the effective time of the merger will be distributed to the surviving corporation and stockholders who have not complied with the instructions to exchange their certificates (or Book-Entry Shares) will be entitled to look only to the surviving corporation for payment of the applicable per share merger consideration, without interest.

 

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

 

The exchange agent and the surviving corporation will be entitled to deduct and withhold from the consideration otherwise payable to any holder of the Company’s common stock any applicable withholding taxes that it is required to deduct and withhold with respect to making such payment under the Code, or any other applicable state, local or foreign tax law. Ablest stockholders are entitled to assert appraisal rights instead of receiving the merger consideration. For a description of these appraisal rights, see “Dissenters’ Rights of Appraisal” below beginning on page 46.

 

The representations and warranties that Ablest made to Parent and Merger Sub in the merger agreement relate to, among others things:

 

 

 

In addition, each of Parent and Merger Sub made representations and warranties to Ablest regarding, among others:

 

 

From the date of the merger agreement through the effective time of the merger, unless Parent and Merger Sub have otherwise agreed in writing, Ablest has agreed to operate in the ordinary course consistent with past practice and use its commercially reasonable efforts to preserve substantially intact its business organizations, to keep available the services of the present officers, employees and consultants of Ablest, to preserve the present relationships of Ablest with customers, clients, suppliers and other persons with which Ablest have significant business relations, and to pay all applicable taxes when due and payable.

 

During the same period, Ablest has also agreed that, subject to certain exceptions, it will not take certain actions without the prior written consent of Parent, which consent will not be unreasonably withheld, delayed or conditioned. Such prohibited actions include, among others:

 

 

 

Ablest agreed that, promptly after the execution of the merger agreement, it would prepare and file with the SEC a preliminary proxy statement, together with a form of proxy. Ablest further agreed that promptly after the proxy statement and form of proxy were cleared with the SEC it would mail the definitive proxy statement and form of proxy to its stockholders.

 

Parent and Merger Sub agreed to cooperate with Ablest in connection with the preparation of the proxy statement including, but not limited to, furnishing to the Company any and all information regarding Parent, Merger Sub and their respective affiliates as may be required to be disclosed in the proxy statement.

 

Ablest will take all action necessary in accordance with applicable law and its Certificate of Incorporation and By-Laws to call, hold and convene a meeting of its stockholders to consider the adoption of the merger agreement, including the merger, as soon as practicable after the execution of the merger agreement. Except where the Board’s recommendation in favor of the adoption of the merger agreement, including the merger, has been withdrawn in accordance with the merger agreement, Ablest will use commercially reasonable efforts to solicit proxies in favor of the adoption of the merger agreement, including the merger until such time, if any, as the Ablest Board (or any committee thereof) shall withdraw or change its recommendation with respect to the merger. The merger agreement provides that the proxy statement will include the recommendation of the board of directors that the stockholders adopt the merger agreement, subject to the exceptions described below under “Acquisition Proposals.”

 

The merger agreement provides that, until 11:59 p.m. on April 19, 2007, Ablest was permitted to:

 

 

 

The merger agreement provides that from April 20, 2007 (the “Nonsolicitation Commencement Date”) until the effective time of the merger or nine months from execution of the merger agreement (whichever is earlier), Ablest will not, and will use commercially reasonable efforts to cause its officers, directors, employees, advisors and agents not to, directly or indirectly:

 

 

However, before the adoption of the merger agreement, including the merger, by the Company’s stockholders, Ablest would be permitted to engage in discussions or negotiations with, or provide any non-public information to a third party if the Company receives a bona fide acquisition proposal that is made after the date of the merger agreement, if (i) Ablest’s board of directors (or any committee thereof) concludes in good faith (after consultation with its legal and financial advisors) that the terms of the proposal are more favorable to the Company’s stockholders than the terms of the merger with Parent and Merger Sub; (ii) Ablest’s board of directors (or any committee thereof) determines in good faith, after consulting with its financial advisors, that the proposal is or is reasonably likely to lead to a superior proposal; and (iii) Ablest’s board of directors (or any committee thereof) concludes in good faith that the failure to engage in discussions or negotiations with the third party with respect to such acquisition proposal would be inconsistent with its fiduciary obligations under applicable law. Before furnishing information with respect to itself to any person making a competing acquisition proposal, Ablest must enter into a confidentiality agreement with such third party on terms no more favorable to the third party than those contained in the confidentiality agreement between Ablest and Parent. Prior to providing any non-public information or data to any third party, Ablest must promptly notify Parent of any such inquiry, proposal or offer received by, and any such information requested from, or any such discussions or negotiations sought to be initiated or continued with the Company, or any of their officers, directors, employees, advisors or agents. The notice must include the material terms and conditions of the proposal and the identity of the person making the proposal, and thereafter, Ablest has agreed to keep Parent reasonably informed, on a reasonably prompt basis, of the status of such discussions or negotiations and will promptly notify Parent if a superior proposal has been made.

 

Until such time as Ablest’s stockholders adopt the merger agreement, Ablest’s board of directors (or any committee thereof) may, if it concludes in good faith (after consultation with its legal advisors) that failure to do so would be inconsistent with its obligations to comply with its fiduciary duties under applicable law, withdraw its recommendation of the merger, but only at a time that is after the third business day following Parent’s receipt of written notice from Ablest advising Parent of its intention to do so. However, until the merger agreement has been terminated in accordance with its terms, the Company will comply with its

obligations to prepare and file a proxy statement, hold a stockholder meeting and to use commercially reasonable efforts to solicit from stockholders proxies in favor of the merger and to take any action necessary or advisable to secure any vote or consent of stockholders required by the Delaware General Corporation Law to effect the merger, regardless of whether Ablest’s board of directors (or any committee thereof) withdraws, modifies or changes its recommendation regarding the merger agreement or recommends any other offer or proposal.

 

Nothing in the merger agreement prohibits Ablest from disclosing to its stockholders a position with respect to a competing transaction proposal required by Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure to the Company’s stockholders if the board of directors (or any committee thereof) concludes in good faith, after consultation with its legal advisors, that the failure to take such would be inconsistent with its fiduciary obligations to the stockholders under applicable law, provided that neither Ablest nor its board of directors (nor any committee thereof) will approve or recommend, or propose publicly to approve or recommend, an acquisition proposal unless Ablest has terminated the merger agreement in accordance with the terms thereof.

 

A “competing acquisition proposal” means any proposal, in each case other than the merger with Parent and Merger Sub or as otherwise specifically contemplated by the merger agreement, relating to (i) any merger, consolidation, share exchange, business combination, recapitalization or other similar transaction or series of related transactions involving the Company in which the holders of the voting stock of the Company immediately prior to such transaction do not own 50% or more of the voting stock of the continuing or surviving entity or the parent company of such entity, immediately after such transaction; (ii) any direct or indirect purchase or sale, lease, exchange, transfer or other disposition of the assets of the Company constituting a majority of the total assets of the Company or accounting for a majority of the total revenues of the Company in any one transaction or in a series of transactions; (iii) any direct or indirect purchase or sale of or tender offer, exchange offer or any similar transaction or series of related transactions engaged in by any person involving more than 25% of the outstanding shares of Company Common Stock; or (iv) any other substantially similar transaction or series of related transactions that would reasonably be expected to prevent or materially impair or delay the consummation of the transactions contemplated by the merger agreement.

 

A “superior proposal” means any proposal or offer made by a third party to acquire, directly or indirectly, by merger, consolidation or otherwise, for consideration consisting of cash and/or securities, at least a majority of the shares of the Company Common Stock then outstanding or all or substantially all of the assets of the Company and otherwise on terms and conditions, taken as a whole, which the Ablest board of directors (or any committee thereof) concludes in good faith (after consultation with its legal and financial advisors) are more favorable to the Company’s stockholders than the merger with Parent and Merger Sub.

 

Ablest will afford Parent and Parent’s accountants, counsel and other representatives and any anticipated source of financing, reasonable access at all reasonable times to its directors, officers, employees and other representatives, and to all reasonably required information systems, contracts, books and records, and will make available or furnish all reasonably required financial, operating and other data and information. Ablest has agreed to use its commercially reasonable efforts to cooperate with Parent regarding the planning and implementation of Parent’s integration and rationalization program to be implemented commencing at the closing of the merger.

 

Each of Parent and Merger Sub agrees that it will, and will direct its affiliates and each of their respective officers, directors, employees, financial advisors, consultants and agents to hold in strict confidence all data and information obtained by them from the Company in accordance with the Confidentiality Agreement dated February 14, 2007 between the Company and Parent.

 

The parties to the merger agreement have agreed not to issue any press release or otherwise make any public statements or announcements with respect to the merger and the other transactions contemplated by the

merger agreement without the prior written consent of the other party, which consent will not be unreasonably conditioned, withheld or delayed, except as may be required by applicable law or any listing agreement with, or the policies of, a national securities exchange in which case the party proposing to issue the press release or announcement will use its reasonable efforts to consult with the other parties before any such issuance, to the extent practicable.

 

Each party to the merger agreement has agreed to coordinate and cooperate with each other and use commercially reasonable efforts to comply with all legal requirements by making all filings, notices, petitions, statements or submissions of information required by any governmental entity (whether domestic or foreign) in connection with the merger.

 

Each party to the merger agreement has agreed to give prompt notice to the other parties if any representation or warranty made by it contained in the merger agreement has become untrue or inaccurate or there has been any failure by it to materially comply with or satisfy any covenant, condition or agreement if the closing conditions related to such party’s representations and warranties or covenants would not be satisfied. The notice called for under this provision will not limit or otherwise affect the remedies available under the merger agreement to any of the parties sending or receiving such notice. Upon the request of Parent, Ablest has agreed to give written notice as promptly as practicable after receiving such a request setting forth all resignations by or terminations of certain individuals employed by the Company.

 

Subject to limitations on indemnification contained in the Delaware General Corporation Law and Ablest’s Certificate of Incorporation and By-Laws, following the effective time, Parent will cause the surviving corporation to indemnify and hold harmless each of the current and former directors, officers, employees and agents (but as to employees and agents, only to the extent required by applicable law or the Certificate of Incorporation of the Company) of Ablest, referred to herein as the indemnified parties, against any costs or expenses, judgments, liabilities and amounts paid in connection with any claim, action, suit, proceeding or investigation arising out of or pertaining to any acts or omissions occurring at or prior to the effective time of the merger, to the fullest extent permitted by the Delaware General Corporation Law (or any other applicable law) or provided under the Company’s Certificate of Incorporation or By-Laws as in effect on the date the merger agreement was executed. In the event of any such claim, action, suit, proceeding or investigation, (i) Parent will cause the surviving corporation to pay the reasonable fees and expenses of counsel selected by the surviving corporation, and reasonably satisfactory to the indemnified parties, promptly as statements therefor are received and (ii) Parent will cause the surviving corporation to cooperate in the defense of any such matter; provided, however, that neither Parent nor the surviving corporation will be liable for any settlement effected without its prior written consent (which consent will not be unreasonably withheld, delayed or conditioned); and, further provided, that, in the absence of a conflict of interest, neither Parent nor the surviving corporation will be obliged to pay the fees and disbursements of more than one counsel for all indemnified parties in any single action. Notwithstanding the foregoing, neither Parent nor the surviving corporation will be required to indemnify any indemnified party to the extent that such indemnification is impermissible under applicable law.

 

Prior to the Effective Time, the Company shall obtain a noncancellable six-year “Extended Reporting Period/Discovery Period” officers’ and directors’ liability insurance policy (the “tail policy”) on terms and conditions no less advantageous to the indemnified parties, than the existing directors’ and officers’ liability (and fiduciary) insurance maintained by the Company, covering, without limitation, the transactions contemplated by the merger agreement, including the merger. Parent shall cause the surviving corporation after the effective time to maintain such policy in full force and effect for its full term and to continue to honor its obligations thereunder.

 

The Certificate of Incorporation and By-Laws of the surviving corporation will, for a period of not less than six years from the effective time, contain the indemnification provisions provided in Ablest’s Certificate of Incorporation and By-Laws as in effect on April 4, 2007.

 

These provisions are intended to be for the benefit of, and are enforceable by, the indemnified parties and their heirs and personal representatives and will be binding on Parent and the surviving corporation and its successors and assigns.

 

From and after the effective time of the merger, Parent has agreed to cause the surviving corporation to honor in accordance with their terms all existing employment, severance, consulting and salary continuation agreements between the Company and any current or former officer, director, employee or consultant of the Company or group of such officers, directors, employees or consultants. To the extent permitted by law, applicable tax qualification requirements and certain other limitations, each person party to any such agreement will receive service credit for purposes of eligibility to participate and vesting (but not for benefit accrual purposes) for employment, compensation and employee benefit plan purposes with the Company prior to the effective time.

 

If any takeover statute enacted under state or federal law will become applicable to the merger or any of the other transactions contemplated by the merger agreement, each of the Company, Parent and Merger Sub and the board of directors of each of the Company, Parent and Merger Sub have agreed to grant such approvals and take such actions as are necessary so that the merger and the other transactions contemplated by the merger agreement may be consummated as promptly as practicable on the terms contemplated by the merger agreement and otherwise use commercially reasonable efforts to eliminate or minimize the effects of such statute or regulation on the merger and the other transactions contemplated by the merger agreement.

 

In connection with any litigation which may be brought against the Company or its directors or officers relating to the transactions contemplated by the merger agreement, the Company has agreed to keep Parent and Merger Sub, and any counsel which Parent and Merger Sub may retain at their own expense, informed of the status of such litigation and will provide Parent’s and Merger Sub’s counsel the right to participate in the defense of such litigation to the extent Parent and Merger Sub are not otherwise a party thereto, and the Company has agreed that it will not enter into any settlement or compromise of any such litigation without Parent’s and Merger Sub’s prior written consent, which consent will not be unreasonably withheld or delayed.

 

Each of the Company, Parent and Merger Sub has agreed to cooperate with each other in taking, or causing to be taken, all actions necessary to delist Ablest’s common stock from the American Stock Exchange and to terminate registration under the Exchange Act, provided that such delisting and termination will not be effective until after the effective time of the merger.

 

Ablest’s, Parent’s and Merger Sub’s respective obligations to effect the merger are subject to the satisfaction or waiver of the following conditions:

 

 

In addition, the obligations of Parent and Merger Sub to effect the merger is subject to the satisfaction or waiver of the following conditions:

 

 

In addition, Ablest’s obligation to effect the merger is subject to the satisfaction or waiver of the following conditions:

 

 

 

The merger agreement may be terminated and the merger may be abandoned at any time before the effective time, whether before or after the stockholders have adopted the merger agreement, as follows:

 

 

 

 

In the event of termination of the merger agreement as described above in “Termination of the Merger Agreement,” the merger agreement will terminate (except for certain specified provisions), without any liability on the part of any party or its directors, officers or stockholders, except to the extent that such termination results from the willful and material breach by a party of any of its representations, warranties, covenants or agreements set forth in the merger agreement, in which case such breaching party will be fully liable for any and all liabilities, damages and expenses incurred or suffered by the other party (including reasonable attorneys’ fees) as a result of such breach. No termination of the merger agreement will affect the obligations of the parties contained in the confidentiality agreement, all of which obligations will survive termination of the merger agreement in accordance with their terms. Other than as described above, all fees, costs and expenses incurred in connection with the merger agreement and the transactions contemplated thereby will be paid by the party incurring such fees, costs and expenses.

 

The Company has agreed to pay Parent a $1.0 million termination fee within two business days (or sooner, if required by the merger agreement) if the merger agreement is terminated:

 

 

The parties may amend the merger agreement at any time before the effective time of the merger, provided, however, after stockholder approval has been obtained, the parties may not amend the merger agreement which would reduce the amount or change the type of consideration into which each share of the Company’s common stock will be converted upon consummation of the merger.

 

At any time before the effective time of the merger, any party to the merger agreement may, to the extent legally allowed, (1) extend the time for the performance of any obligation or other acts required by the merger agreement, (2) waive any inaccuracy in the representations and warranties contained in the merger agreement or in any document delivered pursuant to the merger agreement, and (3) waive compliance with any agreement or condition contained in the merger agreement for the benefit of such person. Any extension or waiver must be set forth in writing. The failure or delay of any party to assert any of its rights under the merger agreement will not constitute a waiver of those rights and single or partial exercise of rights does not preclude further exercise of any right.

 

No party may assign either the merger agreement or any of its rights, interests, or obligations under the merger agreement, except that Merger Sub may, with the prior written consent of the Company (which consent shall not be unreasonably withheld), assign all or any of its rights under the merger agreement to an affiliate of Merger Sub, provided that no such assignment will relieve the assigning party of its obligations under the merger agreement if such assignee does not perform such obligations.

 

Each party has acknowledged that money damages would be both incalculable and an insufficient remedy for any breach of the merger agreement by such party and that any such breach would cause the other party hereto irreparable harm. Accordingly, each party has agreed that, in the event of any breach or threatened breach of the provisions of the merger agreement by such party, the other party will be entitled to seek equitable relief without the requirement of posting a bond or other security, including in the form of injunctions and orders for specific performance.

 

This section of the proxy statement describes the material provisions of the voting agreement entered into by Charles H. Heist, III, Chairman of Ablest’s board of directors, and certain other members of the Heist family, but it does not purport to describe all the provisions of the voting agreement. We urge you to read the full text of the voting agreement, which is attached as Annex B and incorporated by reference into this proxy statement.

 

Concurrently with the execution and delivery of the merger agreement, Charles H. Heist, III, Karen L. Heist, Victoria Hall, Dixie Lea Clark, Kelli Ann Heist, Rebecca Lynn Heist, and certain family trusts for which Charles H. Heist, III, Victoria Hall and/or Dixie Lea Clark serve as trustees, entered into a voting agreement with Parent and Merger Sub. On April 4, 2007, these stockholders together owned approximately 50.4% of Ablest’s shares entitled to vote on the adoption of the merger agreement. These shares represent more than the number of votes necessary to adopt the merger agreement at the special meeting even if you and every other stockholder of the Company vote against the adoption of the merger agreement.

 

Each stockholder made representations and warranties to Parent regarding, among other matters:

 

 

In addition, each of Parent and Merger Sub made representations and warranties to the stockholders regarding, among other matters:

 

 

The stockholders signing the voting agreement agreed, among other things, to vote their shares of our common stock in favor of the adoption of the merger agreement, including the merger, at any meeting of our stockholders at which such matter is considered, and at every adjournment or postponement thereof, and, except with the written consent of Parent and Merger Sub, against any company acquisition proposal as described above under “The Merger Agreement — Acquisition Proposals.” The stockholders agreed not to enter into any agreement or commitment with any person the effect of which would be inconsistent with or violative of such provisions.

 

The stockholders signing the voting agreement also agreed not to, directly or indirectly, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any agreement, option or other arrangement with respect to, or consent to a transfer of, or reduce his, hers or its risk in a constructive sale with respect to any of their respective shares other than pursuant to the terms of the merger agreement. A constructive sale means a short sale with respect to any of the shares covered by the voting agreement, entering into or acquiring an offsetting derivative contract with respect to any of those shares, entering into or acquiring a futures or forward contract to deliver any of those shares, or entering into any other or derivate transaction that has the effect of materially changing the economic benefits and risk of ownership. The stockholders also agreed not to, directly or indirectly, grant any proxies (other than in a manner consistent with their voting obligations described above), deposit any of their shares into any voting trust, or enter into any voting arrangement with respect to any of their shares other than pursuant to the terms of the voting agreement or in a manner consistent with their obligations under the voting agreement. Each of the stockholders further agreed not to commit or agree to take any of the foregoing actions or to take any action that may reasonably be expected to have the effect of preventing, impeding, interfering with or adversely affecting his, hers or its ability to perform its obligations under the voting agreement. These transfer restrictions are subject to customary exceptions for intestate transfers or transfers in connection with estate and charitable planning purposes, so long as the transferee executes a counterpart to the voting agreement.

 

The stockholders signing the voting agreement agreed not to make or participate in, directly or indirectly, a “solicitation” (as that term is used in the rules of the SEC) of proxies or powers of attorney or similar rights to vote, or seek to advise or influence any person with respect to the voting of, any shares of Ablest common stock intended to facilitate any company acquisition proposal or to cause stockholders of the Company not to vote and approve and adopt the merger agreement.

 

The voting agreement provides that it will terminate (i) upon the approval and adoption of the merger agreement at the stockholders’ meeting, (ii) upon the termination of the merger agreement in accordance with its terms, (iii) at any time upon notice by Parent to the stockholders entering into the voting agreement, (iv) or upon the nine-month anniversary of the date of the voting agreement.

 

To the extent permitted by applicable law, each stockholder entering into the voting agreement agreed to waive any rights of appraisal or rights to dissent from the merger that he, she or it may have under applicable law.

 

Under the Delaware General Corporation Law (the “DGCL”), you have the right to dissent from the merger and to receive payment in cash for the fair value of your Ablest common stock as determined by the Delaware Court of Chancery, together with a fair rate of interest, if any, as determined by the court, in lieu of the consideration you would otherwise be entitled to pursuant to the merger agreement. These rights are known as appraisal rights. The Company’s stockholders electing to exercise appraisal rights must comply with the provisions of Section 262 of the DGCL in order to perfect their rights. The Company will require strict compliance with the statutory procedures.

 

The following is intended as a brief summary of the material provisions of the Delaware statutory procedures required to be followed by a stockholder in order to dissent from the merger and perfect appraisal rights. This summary, however, is not a complete statement of all applicable requirements and is qualified in its entirety by reference to Section 262 of the DGCL, the full text of which appears in Annex D to this proxy statement. Failure to precisely follow any of the statutory procedures set forth in Section 262 of the DGCL may result in a termination or waiver of your appraisal rights.

 

Section 262 requires that stockholders be notified that appraisal rights will be available not less than 20 days before the stockholders’ meeting to vote on the merger. A copy of Section 262 must be included with such notice. This proxy statement constitutes the Company’s notice to its stockholders of the availability of appraisal rights in connection with the merger in compliance with the requirements of Section 262. If you wish to consider exercising your appraisal rights, you should carefully review the text of Section 262 contained in Annex D since failure to timely and properly comply with the requirements of Section 262 will result in the loss of your appraisal rights under the DGCL.

 

Pursuant to Section 262 of the DGCL, if you elect to demand appraisal of your shares, you must satisfy each of the following conditions:

 

 

If you fail to comply with either of these conditions and the merger is completed, you will be entitled to receive the cash payment for your shares of common stock as provided for in the merger agreement, but you will have no appraisal rights with respect to your shares of common stock.

 

All demands for appraisal should be addressed to Ablest Inc., 1511 N. Westshore Blvd., Suite 900, Tampa, Florida 33607, Attention: Corporate Secretary, and must be delivered before the vote on the merger agreement is taken at the special meeting and should be executed by, or on behalf of, the record holder of the shares of our common stock. The demand must reasonably inform the Company of the identity of the stockholder and the intention of the stockholder to demand appraisal of his, her or its shares.

 

To be effective, a demand for appraisal by a holder of our common stock must be made by, or in the name of, such registered stockholder, fully and correctly, as the stockholder’s name appears on his or her stock certificate(s). Beneficial owners who do not also hold the shares of record may not directly make appraisal demands to the Company. The beneficial holder must, in such cases, have the registered owner, such as a broker or other nominee, submit the required demand in respect of those shares.  If shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of a demand for appraisal should be made by or for the fiduciary; and if the shares are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand should be executed by or for all joint owners.

An authorized agent, including an authorized agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, he or she is acting as agent for the record owner. A record owner, such as a broker, who holds shares as a nominee for others, may exercise his or her right of appraisal with respect to the shares held for one or more beneficial owners, while not exercising this right for other beneficial owners. In that case, the written demand should state the number of shares as to which appraisal is sought. Where no number of shares is expressly mentioned, the demand will be presumed to cover all shares held in the name of the record owner.

 

If you hold your shares of common stock in a brokerage account or in other nominee form and you wish to exercise appraisal rights, you should consult with your broker or the other nominee to determine the appropriate procedures for the making of a demand for appraisal by the nominee.

 

Pursuant to Section 262 of the DGCL, within 10 days after the effective time of the merger, the surviving corporation must give written notice that the merger has become effective to each Company stockholder who has properly filed a written demand for appraisal and who did not vote in favor of the merger agreement. At any time within 60 days after the effective time, any stockholder who has demanded an appraisal has the right to withdraw the demand and to accept the cash payment specified by the merger agreement for his or her shares of common stock. Within 120 days after the effective date of the merger, any stockholder who has complied with Section 262 shall, upon written request to the surviving corporation, be entitled to receive a written statement setting forth the aggregate number of shares not voted in favor of the merger agreement and with respect to which demands for appraisal rights have been received and the aggregate number of holders of such shares. Such written statement will be mailed to the requesting stockholder within 10 days after such written request is received by the surviving corporation or within 10 days after expiration of the period for delivery of demands for appraisal, whichever is later. Within 120 days after the effective time, either the surviving corporation or any stockholder who has complied with the requirements of Section 262 may file a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares held by all stockholders entitled to appraisal. Upon the filing of the petition by a stockholder, service of a copy of such petition shall be made upon the surviving corporation. The surviving corporation has no obligation to file such a petition in the event there are dissenting stockholders. Accordingly, the failure of a stockholder to file such a petition within the period specified could nullify the stockholder’s previously written demand for appraisal.

 

If a petition for appraisal is duly filed by a stockholder and a copy of the petition is delivered to the surviving corporation, the surviving corporation will then be obligated, within 20 days after receiving service of a copy of the petition, to provide the Chancery Court with a duly verified list containing the names and addresses of all stockholders who have demanded an appraisal of their shares and with whom agreements as to the value of their shares have not been reached by the surviving corporation. After notice to dissenting stockholders who demanded appraisal of their shares, the Chancery Court is empowered to conduct a hearing upon the petition, and to determine those stockholders who have complied with Section 262 and who have become entitled to the appraisal rights provided thereby.

 

After determination of the stockholders entitled to appraisal of their shares of our common stock, the Chancery Court will appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger, together with a fair rate of interest, if any. When the value is determined, the Chancery Court will direct the payment of such value, with interest thereon accrued during the pendency of the proceeding, if the Chancery Court so determines, to the stockholders entitled to receive the same, upon surrender by such holders of those shares.

 

In determining fair value, the Chancery Court is required to take into account all relevant factors. You should be aware that the fair value of your shares as determined under Section 262 could be more than, the same as, or less than the value that you are entitled to receive under the terms of the merger agreement.  You should also be aware that opinions by financial advisors as to the fairness from a financial point of view of the consideration payable in a merger are not opinions as to fair value under Section 262.

 

Costs of the appraisal proceeding may be imposed upon the surviving corporation and/or the stockholders participating in the appraisal proceeding by the Chancery Court as the Chancery Court deems equitable in the circumstances. Upon the application of a stockholder, the Chancery Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts, to be charged pro rata against the value of all shares entitled to appraisal. Any stockholder who had demanded appraisal rights will not, after the effective time of the merger, be entitled to vote shares subject to that demand for any purpose or to receive payments of dividends or any other distribution with respect to those shares, other than with respect to payment as of a record date prior to the effective time of the merger; however, if no petition for appraisal is filed within 120 days after the effective time of the merger, or if the stockholder delivers a written withdrawal of his or her demand for appraisal and an acceptance of the terms of the merger within 60 days after the effective time of the merger, then the right of that stockholder to appraisal will cease and that stockholder will be entitled to receive the cash payment for shares of his, her or its common stock pursuant to the merger agreement. Any withdrawal of a demand for appraisal made more than 60 days after the effective time of the merger may only be made with the written approval of the surviving corporation and must, to be effective, be made within 120 days after the effective time.

 

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

 

Since May 1, 2001, our common stock has been traded on the American Stock Exchange under the symbol “AIH.” The following table sets forth the high and low sales prices of our common stock for the periods indicated as reported by the American Stock Exchange:

 

 

On April 3, 2007, the last trading day before the public announcement of the execution of the merger agreement, the closing sale price for Ablest common stock as reported on the American Stock Exchange was $7.40 per share. On May 7, 2007, the last practicable trading day before the mailing of this proxy statement, the closing sale price for Ablest common stock as reported on the American Stock Exchange was $10.94 per share. Stockholders should obtain a current market quotation for Ablest common stock before making any decision with respect to the merger. As of April 24, 2007, there were an estimated 550 holders of the Company’s common stock (of which, 453 are holders of record).

 

The Company has not declared or paid cash dividends on its common stock since the commencement of trading of our common stock on the American Stock Exchange, and the Company does not anticipate that it will do so in the foreseeable future. The present policy of the Company is to retain earnings for use in its operations and the expansion of its business. Under the merger agreement, we have agreed not to pay any cash dividends on our capital stock before the closing of the merger or the termination of the merger agreement.

 

The table below sets forth the following information as of April 24, 2007: (i) the number of shares of the Company’s common stock beneficially owned by those known by the Company to be beneficial owners of more than five percent (5%) of the outstanding shares of the Company’s common stock; and (ii) the number of shares of the Company’s common stock beneficially owned by each director and executive officer of the Company, and by all directors and executive officers of the Company as a group. On April 24, 2007, there were 2,925,104 shares of Ablest common stock outstanding. Unless otherwise stated, and except for voting powers held jointly with a person’s spouse and shares held in trust, the persons and entities named in the table below generally have sole voting and investment power with respect to all shares shown as beneficially owned by them. All information with respect to beneficial ownership is based on filings made by the respective beneficial owners with the SEC or information provided to the Company by such beneficial owners.

 

 

 

 

If the merger is completed, we will not hold an annual meeting of stockholders in 2007. If the merger is not completed, you will continue to be entitled to attend and participate in our annual meetings of stockholders and we will hold a 2007 annual meeting of stockholders, in which case stockholder proposals will be eligible for consideration for inclusion in the proxy statement and form of proxy for our 2007 annual meeting of stockholders in accordance with Rule 14a-8 under the Exchange Act.

 

Pursuant to Exchange Act Rule 14a-8, because we anticipate that any 2007 annual meeting will be held more than 30 days after the anniversary of the 2006 annual meeting of stockholders, stockholder proposals for the 2007 Annual Meeting must be received in writing at the principal executive offices of Ablest a reasonable time before we begin to print and mail our proxy materials to be considered for inclusion in our proxy materials relating to such meeting.

 

In addition, our By-Laws require that we be given advance notice of stockholder nominations for election to our board of directors and of other matters which stockholders wish to present for action at an annual meeting of stockholders. The required notice must be delivered to our Corporate Secretary at our principal offices not less than 90 days and not more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders. Your notice must also contain specific information set forth in our By-Laws. As of the date of this proxy statement, the Company has not received any stockholder proposals for consideration at our 2007 annual meeting of stockholders.

 

A nomination or other proposal will be disregarded if it does not comply with the above procedure and any additional requirements set forth in our By-Laws. Please note that these requirements are separate from the SEC’s requirements to have your proposal included in our proxy materials. All proposals and nominations should be sent to Ablest Inc., 1511 N. Westshore Blvd., Suite 900, Tampa, Florida 33607, Attention: Corporate Secretary.

 

The SEC has implemented a rule permitting companies and brokers, banks or other intermediaries to deliver a single copy of a proxy statement to households at which two or more beneficial owners reside. This method of delivery, which eliminates duplicate mailings, is referred to as “householding.” Beneficial owners sharing an address who have been previously notified by their broker, bank or other intermediary and have consented to householding, either affirmatively or implicitly by not objecting to householding, will receive only one copy of this proxy statement. The Company will deliver promptly upon written or oral request a separate copy of the proxy statement to a stockholder at a shared address to which a single copy of the proxy statement was delivered. Requests for additional copies of the proxy statement, and requests that in the future separate proxy statements be sent to stockholders who share an address, should be directed in writing to Ablest Inc., 1511 N. Westshore Blvd., Suite 900, Tampa, Florida 33607, Attention: Corporate Secretary, or by calling

our Corporate Secretary at (813) 830-7700. In addition, stockholders who share a single address but receive multiple copies of the proxy statement may request that in the future they receive a single copy by contacting Ablest’s Corporate Secretary at the address and phone number set forth in the prior sentence.

 

As of the date of this proxy statement, our board of directors is not aware of any other business to be presented at the special meeting. If other matters do properly come before the special meeting, or any adjournment or postponement thereof, it is the intention of the persons named in the proxy to vote on such matters in accordance with their discretion.

 

Ablest files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission.

 

You may read and copy any reports, statements or other information filed by Ablest at the Securities and Exchange Commission public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Ablest’s filings with the Securities and Exchange Commission are also available to the public from commercial document retrieval services and at the website maintained by the Securities and Exchange Commission located at: http://www.sec.gov.

 

Our public filings are also available free of charge on our web site at http://www.ablest.com. You may request a copy of these filings, at no cost, by writing to or telephoning us at the following address:

 

Ablest Inc.

1511 N. Westshore Blvd., Suite 900

Tampa, Florida 33607

Attention: Corporate Secretary

(813) 830-7700

 

If you would like to request documents, please do so by May 28, 2007 in order to receive them before the special meeting.

 

This proxy statement does not constitute an offer to sell or to buy, or a solicitation of an offer to sell or to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is not lawful to make any offer or solicitation in such jurisdiction.

 

No persons have been authorized to give any information or to make any representations other than those contained in this proxy statement and, if given or made, such information or representations must not be relied upon as having been authorized by us or any other person. This proxy statement is dated May 11, 2007. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date, and the mailing of this proxy statement to stockholders shall not create any implication to the contrary.

 

 

AGREEMENT AND PLAN OF MERGER
BY AND AMONG
KOOSHAREM CORPORATION,
SELECT ACQUISITION, INC.
AND
ABLEST INC.
DATED AS OF APRIL 4, 2007

 

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INDEX OF DEFINED TERMS