FROZEN FOOD EXPRESS INDUSTRIES INC

On July 12, 2013, FFE Transportation Services, Inc., Lisa Motor Lines, Inc., Conwell Corporation, and FFE Logistics, Inc. (the "Borrowers"), and the Company and certain of its subsidiaries (the "Guarantors"), executed the Fourth Amendment (the "Credit Agreement Amendment") to the Company's secured committed credit facility (as amended, the "Credit Agreement").

Under the Credit Agreement, the Company was required to meet a minimum fixed charge coverage ratio if the borrowing availability fell below $7 million at any point in time. The Credit Agreement Amendment amends the Credit Agreement such that the Company must meet a minimum fixed charge coverage ratio if (i) as of any date from the closing date of the Credit Agreement through and including September 30, 2013, the availability is less than $6 million for a period of three consecutive days or is less than $5.5 million for any day; (ii) as of any date from October 1, 2013 through and including December 31, 2013, the availability is less than $7 million for a period of three consecutive days or is less than $6.5 million for any day; (iii) as of any date from January 1, 2014 through and including March 31, 2014 the availability is less than $9 million; or (iv) as of any date on or after April 1, 2014, the availability is less than $10 million. Each availability amount is subject to certain adjustments related to the sale of real estate by the Borrowers.

On July 19, 2013, a putative class action lawsuit challenging the Merger, captioned Wheeler v. Frozen Food Express Industries, Inc., Civil Action No. 3:13-CV-2823, was filed in the United States District Court, Northern District of Texas, Dallas Division (the "Wheeler Litigation").  The Wheeler Litigation was subsequently amended on July 24, 2013.  On July 29, 2013, another putative class action lawsuit challenging the Merger, captioned Britvich v. Frozen Food Express Industries, Inc., Civil Action No. 3:13-CV-2943, was filed in the United States District Court, Northern District of Texas, Dallas Division (the "Britvich Litigation" and,  together with the Wheeler Litigation, the "Shareholder Litigation").  The Wheeler Litigation and the Britvich Litigation are substantially identical in their alleged causes of action. The Shareholder Litigation was filed against the Company, the individual members of the board of directors, Duff Brothers Capital Corporation ("Purchaser") and Duff Brothers Subsidiary, Inc. ("Merger Sub"). The Shareholder Litigation generally alleges, among other things, that the members of the board of directors breached their fiduciary duties of care and loyalty owed to the Company's shareholders by failing to take steps to maximize the value to be paid to the Company's shareholders and taking steps to avoid competitive bidding, failing to properly value the Company, entering into the Merger Agreement containing preclusive deal protection devices, approving the proposed Merger for inadequate consideration, ignoring certain alleged conflicts of interest in connection with the Merger and for making materially inadequate disclosures and material disclosure omissions. The Shareholder Litigation also alleges that all defendants issued a solicitation/recommendation statement on Schedule 14D-9 that violates Sections 14(d)(4) and 14(e) of the Securities Exchange Act of 1934, as amended,  because it allegedly omits material facts.  The Shareholder Litigation also alleges claims for aiding and abetting such alleged breaches of fiduciary duties against the Company, Purchaser and Merger Sub. The plaintiffs in the Shareholder Litigation generally seek, among other relief, declaratory and injunctive relief concerning the alleged breaches of fiduciary duty, injunctive relief prohibiting consummation of the proposed Merger, damages and attorneys' fees and costs, and other forms of relief. The Company believes the Shareholder Litigation is without merit.

The merger with Parent is subject to customary closing conditions and is contingent upon the tender of a sufficient number of shares held by our current shareholders pursuant to the cash tender offer. Neither we nor Parent can assure you that the merger will occur. In the event that the merger is not consummated, we will be subject to significant costs, including legal, accounting and advisory fees related to the merger, which must be paid even if the merger is not completed, and the payment of a $1.15 million termination fee, plus reimbursement of certain costs, to Parent under certain circumstances. If the tender offer is not consummated, the market price of our common stock will likely decline because the current market price of our common stock reflects a positive market assumption that the merger will be completed.  Further, our stock price will likely further decline if affiliates of Parent that beneficially own approximately 5.8% of our outstanding shares of common stock decide to sell off their position. In addition, a significant portion of our outstanding shares of common stock is likely owned by investment funds that pursue a "merger arbitrage" strategy that would likely sell off in the event that the tender offer is not consummated, which would likely result in an adverse effect on our stock price.

On July 12, 2013, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Duff Brothers Capital Corporation, a Texas corporation ("Parent"), and Duff Brothers Subsidiary, Inc., a Texas corporation and direct, wholly owned subsidiary of Parent ("Merger Sub").

Pursuant to the Merger Agreement, upon the terms and subject to the conditions thereof, Parent has commenced a tender offer (the "Offer") to acquire all of the outstanding shares of common stock, par value $1.50 per share, of the Company (the "Common Stock") not already owned by Parent or its affiliates at a purchase price of $2.10 per share, net to the seller thereof in cash (the "Offer Price"), without interest and subject to any required withholding of taxes.  The Merger Agreement provides that the initial offer period of the Offer will expire at midnight (Eastern time) on the twentieth business day following the commencement of the Offer, subject to certain extension rights and obligations set forth in the Merger Agreement. Subject to the terms and conditions of the Merger Agreement, promptly after the later of (i) twenty business days and (ii) the earliest date as of which the Minimum Condition (as defined in the Merger Agreement) has been satisfied and each other offer condition has been satisfied, or waived by Parent, Parent will consummate the Offer.

The Merger Agreement provides that after consummation of the Offer, and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the "Merger") and the Company will become an indirect, wholly-owned subsidiary of Parent. In the Merger, each outstanding share of Company Common Stock that was not tendered pursuant to the Offer (other than shares of Common Stock owned by the Company, Parent or Merger Sub or any of their affiliates or shares held by shareholders who properly demand appraisal) will be converted into the right to receive cash in an amount equal to the Offer Price, subject to any required withholding of taxes and without interest. The closing of the Merger is subject to approval of the Merger by the holders of two-thirds of the outstanding shares of Common Stock; however, if Parent holds at least 90% of the outstanding shares of Common Stock immediately prior to the Merger, and Parent elects to contribute all shares it holds to Merger Sub, Merger Sub may effect the Merger as a short-form merger pursuant to Section 10.006 of the Texas Business Organizations Code, without additional approval by the Company's shareholders. Otherwise, the Company would hold a special shareholders' meeting to obtain shareholder approval of the Merger. The Merger is also conditioned upon the absence of certain legal restraints and the acceptance of payment by Parent of all the shares of Company Common Stock validly tendered and not withdrawn pursuant to the Offer.