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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
(RULE 14A-101)
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
CTB INTERNATIONAL CORP.
(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):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
Common stock, par value $0.01 per share.
(2) Aggregate number of securities to which transaction applies:
10,885,939 shares of common stock and options to purchase 959,938
shares of common stock.
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth amount on which the
filing fee is calculated and state how it was determined):
The filing fee was determined by multiplying 0.000092 by the
underlying value of the transaction of $143,612,331, which has
been calculated as the sum of (a) the product of 10,885,939
issued and outstanding shares of common stock and the merger
consideration of $12.75 per share, plus (b) $4,816,649 payable to
holders of outstanding options to purchase shares of common stock
in exchange for cancellation of those options immediately prior
to the effective time of the merger.
(4) Proposed maximum aggregate value of transaction: $143,612,331
(5) Total fee paid: $13,213
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PRELIMINARY COPIES
[LOGO CTB INTERNATIONAL CORP.]
CTB International Corp.
611 North Higbee Street
Milford, Indiana 46542-2000
/o/, 2002
Dear Shareholder:
We cordially invite you to attend a special meeting of shareholders of
CTB International Corp. to be held on /o/, 2002 at /o/ [a.m.] [p.m.], local
time, at /o/.
At the special meeting, we will ask you to consider and vote on a
proposal to approve the agreement and plan of merger we entered into on August
16, 2002 with Berkshire Hathaway Inc., or Berkshire, and its wholly owned
subsidiary, C Acquisition Corp., providing for the acquisition of CTB by
Berkshire. In the merger, C Acquisition Corp. will merge with and into CTB, and
each outstanding share of our common stock will be converted into the right to
receive $12.75 in cash, without interest. After the merger, CTB will be a wholly
owned subsidiary of Berkshire.
OUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE TERMS OF THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF CTB AND OUR SHAREHOLDERS.
ACCORDINGLY, OUR BOARD OF DIRECTORS HAS UNANIMOUSLY ADOPTED THE MERGER AGREEMENT
AND RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
We cannot complete the merger unless the merger agreement is approved
by the affirmative vote of a majority of all the votes entitled to be cast on
the approval of the merger agreement at a meeting at which a quorum consisting
of at least a majority of all the votes entitled to be cast on the approval of
the merger agreement is present. Certain of our shareholders, who together hold
more than a majority of our outstanding shares, have agreed to vote to approve
the merger agreement. WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE SPECIAL
MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD TO
ENSURE YOUR SHARES ARE REPRESENTED AT THE SPECIAL MEETING. If you do not send in
your proxy, do not instruct your broker to vote your shares or if you abstain
from voting, it will have the same effect as a vote against approval of the
merger agreement.
The enclosed proxy statement provides you with detailed information
about the merger and related matters. We urge you to read the proxy statement
carefully, including the annexes. If the merger agreement is approved and the
merger is completed, you will be sent written instructions for exchanging your
CTB common stock certificates for your cash payment. If you hold CTB common
stock certificates, please do not send your certificates until you receive these
instructions.
If you have any questions about the merger please call either Don J.
Steinhilber, our Chief Financial Officer and Treasurer, or Michael J. Kissane,
our General Counsel and Secretary, at (574) 658-4191.
On behalf of the board of directors, I thank you for your support and
appreciate your consideration of this matter.
Yours truly,
CTB INTERNATIONAL CORP.
Victor A. Mancinelli
President and Chief Executive Officer
THIS PROXY STATEMENT IS DATED /o/, 2002 AND IS FIRST BEING MAILED TO
SHAREHOLDERS ON OR ABOUT /o/, 2002.
[LOGO CTB INTERNATIONAL CORP.]
CTB International Corp.
611 North Higbee Street
Milford, Indiana 46542-2000
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON /o/, 2002
To the Shareholders of CTB International Corp.:
NOTICE IS HEREBY GIVEN that we will hold a special meeting of the
shareholders of CTB International Corp. on /o/, 2002, at [a.m.] [p.m.], local
time, at /o/, to consider and vote on a proposal to approve the Agreement and
Plan of Merger, dated as of August 16, 2002, among CTB International Corp.,
Berkshire Hathaway Inc. and C Acquisition Corp., a wholly owned subsidiary of
Berkshire Hathaway Inc., pursuant to which, upon the merger becoming effective,
each share of common stock, par value $0.01 per share, of CTB International
Corp. will be converted into the right to receive $12.75 in cash, without
interest. After the merger, CTB International Corp. will be a wholly owned
subsidiary of Berkshire Hathaway Inc.
Approval of the merger agreement requires the affirmative vote of a
majority of all the votes entitled to be cast on the approval of the merger
agreement at a meeting at which a quorum consisting of at least a majority of
all the votes entitled to be cast on the approval of the merger agreement is
present.
Only shareholders of record as of the close of business on /o/, 2002,
are entitled to notice of, and to vote at, the special meeting or any
adjournments or postponements of the meeting. The number of outstanding shares
of our common stock entitled to notice and to vote on /o/, 2002, was /o/. Each
shareholder is entitled to one vote for each share of our common stock held on
the record date. A shareholders' list will be available for inspection by any
shareholder entitled to vote at the special meeting beginning five (5) business
days before the date of the special meeting and continuing through the special
meeting.
Shareholders will not be entitled to dissenters' rights under the
Indiana Business Corporation Law.
A form of proxy and a proxy statement containing more detailed
information with respect to the matters to be considered at the special meeting,
including a copy of the merger agreement, accompany and form a part of this
notice. You should not send any certificates representing your CTB International
Corp. common stock with your proxy card.
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON,
PLEASE DATE AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. RETURNING YOUR PROXY CARD DOES NOT DEPRIVE YOU OF YOUR RIGHT
TO ATTEND THE MEETING AND TO VOTE YOUR SHARES IN PERSON. THANK YOU FOR ACTING
PROMPTLY.
By order of the Board of Directors,
Michael J. Kissane
Milford, Indiana Secretary
/o/, 2002
TABLE OF CONTENTS
Page
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING.................1
SUMMARY........................................................................3
The Parties to the Merger Agreement.........................................3
The Special Meeting.........................................................3
Shareholders Agreement......................................................4
Reasons for the Merger; Recommendation of Our Board of Directors............4
Opinions of Our Financial Advisors..........................................4
United States Federal Income Tax Consequences...............................5
Antitrust Matters...........................................................5
Interests of Certain Persons in the Merger..................................5
Dissenters' Rights..........................................................5
Conditions to the Merger....................................................5
Termination of the Merger Agreement.........................................6
Additional Information......................................................6
THE PARTIES TO THE MERGER AGREEMENT............................................7
CTB International Corp......................................................7
Berkshire Hathaway Inc......................................................7
C Acquisition Corp..........................................................7
THE SPECIAL MEETING............................................................8
Date, Time and Place........................................................8
Matters to Be Considered....................................................8
Record Date and Shares Entitled to Vote; Procedures for Voting; Quorum......8
Vote Required...............................................................8
Voting of Proxies...........................................................9
Revocability of Proxies.....................................................9
Proxy Solicitation.........................................................10
THE MERGER....................................................................11
Background of the Merger...................................................11
Purpose and Effects of the Merger..........................................13
Reasons for the Merger; Recommendation of Our Board of Directors...........14
Opinions of Our Financial Advisors.........................................16
United States Federal Income Tax Consequences..............................30
Interests of Certain Persons in the Merger.................................31
Dissenters' Rights.........................................................34
Shareholders Agreement.....................................................34
THE MERGER AGREEMENT..........................................................36
Structure and Effective Time...............................................36
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Merger Consideration.......................................................36
Stock Options..............................................................37
Articles of Incorporation and By-laws......................................37
Directors and Officers.....................................................37
Representations and Warranties.............................................37
Covenants Relating to the Conduct of Our Business..........................39
Additional Agreements......................................................40
No Solicitation of Transactions............................................41
Directors' and Officers' Indemnification...................................42
Employee Benefit Matters...................................................42
Conditions to the Merger...................................................43
Material Adverse Effect....................................................44
Termination of the Merger Agreement........................................44
Expenses...................................................................45
Amendment; Waiver..........................................................45
ACCOUNTING TREATMENT..........................................................46
ANTITRUST MATTERS.............................................................46
BENEFICIAL OWNERSHIP OF CTB COMMON STOCK......................................46
PRICE RANGE OF COMMON STOCK AND DIVIDENDS.....................................48
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.....................49
FUTURE SHAREHOLDER PROPOSALS..................................................49
WHERE YOU CAN FIND MORE INFORMATION...........................................49
ADDITIONAL INFORMATION........................................................50
ANNEX A - AGREEMENT AND PLAN OF MERGER.......................................A-1
ANNEX B - SHAREHOLDERS AGREEMENT.............................................B-1
ANNEX C - OPINION OF BEAR, STEARNS & CO. INC.................................C-1
ANNEX D - OPINION OF CREDIT SUISSE FIRST BOSTON CORPORATION..................D-1
ANNEX E - OPINION OF GEORGE K. BAUM & COMPANY................................E-1
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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING
Below are brief answers to frequently asked questions concerning the
proposed merger and the special meeting. These questions and answers do not, and
are not intended to, address all the information that may be important to you.
You should read the summary and the remainder of this proxy statement, including
all annexes, carefully.
1. Q: WHAT IS THE PROPOSED MERGER?
A: In the proposed merger, C Acquisition Corp., a wholly owned subsidiary
of Berkshire, will merge with and into us. CTB will survive the merger as a
wholly owned subsidiary of Berkshire, and our shares will cease to be
publicly traded. The merger agreement is attached to this proxy statement
as Annex A. We encourage you to read it carefully.
2. Q: WHAT WILL I RECEIVE IN THE MERGER?
A: Upon completion of the merger, you will be entitled to receive $12.75 in
cash in exchange for each share of CTB common stock that you own. In this
proxy statement, we refer to this cash payment as the merger consideration.
Each holder of an option to purchase our common stock will receive, in
exchange for the cancellation of the option, an amount in cash equal to the
excess, if any, of $12.75 over the exercise price per share of our common
stock subject to the option, multiplied by the number of shares of our
common stock subject to the option, net of any applicable withholding
taxes.
3. Q: WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
MERGER?
A: The receipt of cash for shares pursuant to the merger will be a taxable
transaction for United States Federal income tax purposes. In general, a
shareholder who receives cash in exchange for shares pursuant to the merger
will recognize gain or loss for United States Federal income tax purposes
equal to the difference, if any, between the amount of cash received and
the shareholder's adjusted tax basis in the shares exchanged for cash
pursuant to the merger. Because the tax consequences of the merger are
complex and may vary depending on your particular circumstances, we
recommend that you consult your tax advisor concerning the Federal (and any
state, local or foreign) tax consequences to you of the merger.
4. Q: WHAT IS THE VOTE REQUIRED TO APPROVE THE MERGER AGREEMENT?
A: Approval of the merger agreement requires the affirmative vote of a
majority of all the votes entitled to be cast on the approval of the merger
agreement, at a meeting at which a quorum exists. The presence, in person
or by proxy, of shares representing at least a majority of all the votes
entitled to be cast on the approval of the merger agreement is necessary to
constitute a quorum. Certain of our shareholders, who together hold more
than a majority of our outstanding shares, have agreed to vote to approve
the merger agreement.
5. Q: IS OUR BOARD OF DIRECTORS RECOMMENDING THAT I VOTE FOR THE MERGER
AGREEMENT?
A: Yes. After considering a number of factors, our board of directors
unanimously believes that the terms of the merger agreement are fair to and
in the best interests of CTB and our shareholders. Our board of directors
recommends that you vote FOR approval of the merger agreement.
6. Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A: We expect to complete the merger in the fourth quarter of 2002, as
quickly as possible after the special meeting and after all the conditions
to the merger are satisfied or waived, including expiration or termination
of the waiting period under the antitrust laws of the United States.
7. Q: WHAT DO I NEED TO DO NOW?
A: We urge you to read this proxy statement carefully, including its
annexes, consider how the merger would affect you as a shareholder and then
vote. After you read this proxy statement, you should complete, sign and
date your proxy card and mail it in the enclosed return envelope as soon as
possible, even if you plan to attend the special meeting in person, so that
your shares
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may be represented at the special meeting. If you sign, date and send in
your proxy card without indicating how you want to vote, all of your shares
will be voted FOR approval of the merger agreement.
8. Q: IF MY BROKER HOLDS MY SHARES IN "STREET NAME", WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will only be permitted to vote your shares if you provide
instructions to your broker on how to vote. You should follow the
procedures provided by your broker regarding the voting of your shares and
be sure to provide your broker with instructions on how to vote your
shares.
9. Q: WHAT IF I WANT TO CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY
CARD?
A: You can change your vote by sending a later-dated, signed proxy card or
a written revocation to the Secretary of CTB at CTB International Corp.,
611 North Higbee Street, Milford, Indiana 46542-2000, who must receive it
before your proxy has been voted at the special meeting, or by attending
the special meeting in person and voting. Your attendance at the special
meeting will not, by itself, revoke your proxy. It will only be revoked if
you actually vote at the special meeting. If you have instructed your
broker to vote your shares, you must follow the directions received from
your broker to change those voting instructions.
10. Q: WHAT HAPPENS IF I DO NOT SEND IN MY PROXY, IF I DO NOT INSTRUCT MY
BROKER TO VOTE MY SHARES OR IF I ABSTAIN FROM VOTING?
A: If you do not send in your proxy, do not instruct your broker to vote
your shares or if you abstain from voting, it will have the same effect as
a vote against approval of the merger agreement.
11. Q: WHAT IF THE MERGER IS NOT COMPLETED?
A: It is possible that the merger will not be completed. That might happen
if, for example, antitrust approval is not obtained. If that occurs,
neither Berkshire, C Acquisition Corp. nor any third party is under any
obligation to make or consider any alternative proposals regarding the
purchase of the shares of our common stock.
12. Q: SHOULD I SEND MY CTB COMMON STOCK CERTIFICATES NOW?
A: No. Do not send your CTB common stock certificates now. If we complete
the merger, you will receive written instructions for exchanging your CTB
common stock certificates for your merger consideration.
13. Q: MAY I EXERCISE DISSENTER'S RIGHTS IN THE MERGER?
A: No. Our shareholders are not entitled to exercise dissenter's or
appraisal rights, even if you vote against the merger agreement.
14. Q: WHERE CAN I FIND MORE INFORMATION ABOUT CTB AND BERKSHIRE?
A: CTB and Berkshire file periodic reports and other information with the
SEC. You may read and copy this information at the SEC's public reference
facilities. Please call the SEC at 1-800-SEC-0330 for information about
these facilities. This information is also available on the Internet site
maintained by the SEC at http://www.sec.gov. For a more detailed
description of the information available about CTB, see "Where You Can Find
More Information".
15. Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS OR WANT ADDITIONAL COPIES OF
DOCUMENTS?
A: If you have any questions about the merger or this proxy statement you
should call either Don J. Steinhilber, our Chief Financial Officer and
Treasurer, or Michael J. Kissane, our General Counsel and Secretary, at
(574) 658-4191. If you would like additional copies of this proxy
statement, or the proxy card, you should call Susan Hight, our Manager of
Corporate Communications, at (574) 658-4191.
2
SUMMARY
This summary, together with the preceding question and answer section,
highlights important information discussed in greater detail elsewhere in this
proxy statement. This summary includes parenthetical references to pages in
other portions of this proxy statement containing a more detailed description of
the topics presented in this summary. This summary may not contain all of the
information you should consider before voting on the merger agreement. To more
fully understand the merger, you should read carefully this entire proxy
statement and all of its annexes, including the merger agreement, which is
attached as Annex A, before voting on whether to approve the merger agreement.
THE PARTIES TO THE MERGER AGREEMENT (PAGE 7)
CTB INTERNATIONAL CORP.
CTB International Corp.
611 North Higbee Street
Milford, Indiana 46542-2000
(574) 658-4191
CTB, an Indiana corporation, is a leading designer, manufacturer and
marketer of agricultural equipment for efficient production of poultry, hogs and
eggs as well as storage systems that preserve the quality of grain and animal
feed.
Our common stock is traded on The Nasdaq Stock Market under the symbol
"CTBC."
BERKSHIRE HATHAWAY INC.
Berkshire Hathaway Inc.
1440 Kiewit Plaza
Omaha, Nebraska 68131
(402) 346-1400
Berkshire, a Delaware corporation, is a holding company that owns
subsidiaries engaged in a number of diverse businesses. Berkshire's most
important business is the property and casualty insurance business, which it
conducts on both a direct and reinsurance basis through a number of
subsidiaries.
Berkshire's common stock is traded on The New York Stock Exchange under the
symbols "BRK.A" and "BRK.B."
C ACQUISITION CORP.
C Acquisition Corp.
c/o Berkshire Hathaway Inc.
1440 Kiewit Plaza
Omaha, Nebraska 68131
(402) 346-1400
C Acquisition Corp. is an Indiana corporation and a wholly owned
subsidiary of Berkshire, formed solely for the purpose of facilitating the
merger.
THE SPECIAL MEETING (PAGE 8)
o Date, Time and Place (page /o/). The special meeting will take place
on /o/, 2002, at /o/[a.m.] [p.m.], local time, at /o/.
o Record Date and Shares Entitled to Vote; Quorum (page 8). The record
date for determining the holders of shares of our common stock
entitled to notice of, and to vote at, the special meeting is /o/,
2002. On the record date, /o/ shares of our common stock were
outstanding and entitled to vote on the proposal to approve the merger
agreement. The presence, in person or by proxy, of shares representing
at least a majority of all the votes entitled to be cast on the
approval of the merger agreement is necessary to constitute a quorum
for the transaction of business at the special meeting.
o Vote Required (page 8). Approval of the merger agreement requires
the
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affirmative vote of a majority of all the votes entitled to be cast on
the approval of the merger agreement. Each share of our common stock
is entitled to one vote. Certain of our shareholders, who together
hold more than a majority of our outstanding shares, have agreed to
vote to approve the merger agreement.
o Procedures for Voting (page 8). You may vote shares you hold of
record in either of two ways:
o by completing and returning the enclosed proxy card, or
o by voting in person at the special meeting.
If you hold shares of our common stock in "street name" through a
broker or other financial institution, you must follow the
instructions provided by the broker or other financial institution
regarding how to instruct it to vote those shares.
o Voting of Proxies (page 9). Shares of our common stock represented by
properly executed proxies received at or prior to the special meeting
that have not been revoked will be voted at the special meeting in
accordance with the instructions indicated on the proxies. Shares of
our common stock represented by properly executed proxies for which no
instruction is given will be voted FOR approval of the merger
agreement.
o Revocability of Proxies (page 9). Your proxy may be revoked at any
time before it is voted. If you complete and return the enclosed proxy
card but wish to revoke it, you must either (1) send a later-dated
proxy card relating to the same shares to our Secretary at or before
the special meeting, (2) file with our Secretary a written,
later-dated notice of revocation or (3) attend the special meeting and
vote in person. Please note that your attendance at the meeting will
not, by itself, revoke your proxy.
o Failure to vote. If you do not send in your proxy, do not instruct
your broker to vote your shares or if you abstain from voting, it will
have the same effect as a vote against approval of the merger
agreement.
SHAREHOLDERS AGREEMENT (PAGE 34)
As a condition to its entering into the merger agreement, Berkshire
required that American Securities Partners, L.P., ASP/CTB L.P., Caryl M.
Chocola, J. Christopher Chocola, Victor A. Mancinelli, Michael J. Kissane and
Don J. Steinhilber enter into a shareholders agreement with Berkshire agreeing
to vote shares representing in excess of 56.7% of the outstanding shares of our
common stock in favor of approval of the merger agreement. As a result, the vote
of these shareholders alone will be sufficient to approve the merger agreement.
The shareholders agreement is attached to this proxy statement as Annex B.
REASONS FOR THE MERGER; RECOMMENDATION OF OUR BOARD OF DIRECTORS (PAGE 14)
Our board of directors has unanimously adopted the merger agreement,
approved the transactions contemplated by the merger agreement and determined
that it is fair to and in the best interests of CTB and our shareholders that we
enter into the merger agreement and complete the merger on the terms and subject
to the conditions set forth in the merger agreement. OUR BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER
AGREEMENT.
OPINIONS OF OUR FINANCIAL ADVISORS (PAGE 16)
In connection with the proposed merger, each of our financial advisors,
Bear, Stearns & Co. Inc., Credit Suisse First Boston Corporation and George K.
Baum & Company delivered to our board of directors an opinion as to the
fairness, as of the date of the opinions, from a financial point of view, of the
$12.75 per share merger consideration to be received by holders of our common
stock. The full text of the
4
written opinions of our financial advisors, each dated August 16, 2002, are
attached to this proxy statement as Annexes C, D and E. We encourage you to read
these opinions carefully in their entirety for a description of the procedures
followed, assumptions made, matters considered and limitations on our financial
advisors' review. THE OPINIONS OF OUR FINANCIAL ADVISORS ARE ADDRESSED TO OUR
BOARD OF DIRECTORS AND DO NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER AS
TO ANY MATTERS RELATING TO THE MERGER.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES (PAGE 30)
The receipt of cash for shares pursuant to the merger will be a taxable
transaction for United States Federal income tax purposes. In general, a
shareholder who receives cash in exchange for shares pursuant to the merger will
recognize gain or loss for United States Federal income tax purposes equal to
the difference, if any, between the amount of cash received and the
shareholder's adjusted tax basis in the shares exchanged for cash pursuant to
the merger. If the shares exchanged constitute capital assets in the hands of
the shareholder, the gain or loss will be capital gain or loss and, generally
speaking, will be long-term capital gain or loss, if the shares have been held
by the shareholder for more than one year. The deductibility of capital losses
is subject to limitations.
BECAUSE THE TAX CONSEQUENCES OF THE MERGER ARE COMPLEX AND MAY VARY
DEPENDING ON YOUR PARTICULAR CIRCUMSTANCES, WE RECOMMEND THAT YOU CONSULT YOUR
TAX ADVISOR CONCERNING THE FEDERAL (AND ANY STATE, LOCAL OR FOREIGN) TAX
CONSEQUENCES TO YOU OF THE MERGER.
ANTITRUST MATTERS (PAGE 46)
The completion of the merger is subject to expiration or termination of the
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, referred to in this proxy statement as the HSR Act, and
the rules and regulations promulgated thereunder, and under any applicable
foreign antitrust law.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (PAGE 31)
When considering the recommendation of our board of directors, you should
be aware that some of our directors and executive officers have interests that
are different from, or in addition to, yours. These interests include, among
others, payments to some of our directors and executive officers in connection
with the completion of the merger, the payment of benefits to some of our
executive officers if their employment is terminated, cash payments in exchange
for cancellation of stock options held by our directors and executive officers
upon the completion of the merger, and indemnification of our directors and
executive officers against certain liabilities both before and after the merger.
DISSENTERS' RIGHTS (PAGE 34)
CTB shareholders are not entitled to dissenters' rights in connection with
the merger.
CONDITIONS TO THE MERGER (PAGE 43)
The completion of the merger depends on the satisfaction or waiver of a
number of conditions, including, but not limited to, the following:
o the approval of the merger agreement by our shareholders;
o expiration or termination of the applicable waiting period under the
HSR Act, the initial waiting period with respect to which is scheduled
to expire on September 28, 2002 and the obtaining of any necessary
consents or approvals required to consummate the merger under foreign
antitrust laws;
o absence of any legal restraint preventing the merger;
5
o accuracy of the parties' representations and warranties in the merger
agreement, subject to materiality qualifiers; and
o the performance by each party of its obligations under the merger
agreement in all material respects.
The obligations of Berkshire and C Acquisition Corp. to complete the merger
are also subject to there being no pending proceeding by any governmental entity
challenging the merger or seeking, among other things, to prohibit or limit the
ownership or operation by us, Berkshire or our and their affiliates of our or
their respective businesses or assets as a result of the merger.
TERMINATION OF THE MERGER AGREEMENT (PAGE 44)
We and Berkshire may mutually agree to terminate the merger agreement.
Either we or Berkshire may terminate the merger agreement if:
o the merger is not completed by January 31, 2003;
o a governmental entity has issued a permanent injunction or other order
or decree preventing the merger that is in effect and has become final
and nonappealable;
o approval of the merger agreement by our shareholders is not obtained
at the special meeting or adjournment or postponement of the special
meeting; or
o the other party breaches any of its representations, warranties or
covenants in the merger agreement, which breach is incurable or is not
cured within 30 business days of written notice of the breach.
ADDITIONAL INFORMATION (PAGE 50)
If you have questions about the merger or this proxy statement, you should
call either Don J. Steinhilber, our Chief Financial Officer and Treasurer, or
Michael J. Kissane, our General Counsel and Secretary, at (574) 658-4191. If you
would like additional copies of this proxy statement or the proxy card, you
should call Susan Hight, our Manager of Corporate Communications, at (574)
658-4191.
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THE PARTIES TO THE MERGER AGREEMENT
CTB INTERNATIONAL CORP.
We are an Indiana corporation and a leading designer, manufacturer and
marketer of agricultural equipment for efficient production of poultry, hogs and
eggs as well as storage systems that preserve the quality of grain and animal
feed.
Our principal executive office is located at 611 North Higbee Street,
Milford, Indiana 46542-2000, and our telephone number is (574) 658-4191.
Our common stock is traded on The Nasdaq Stock Market under the symbol
"CTBC."
BERKSHIRE HATHAWAY INC.
Berkshire, a Delaware corporation, is a holding company that owns
subsidiaries engaged in a number of diverse businesses. Berkshire's most
important business is the property and casualty insurance business, which it
conducts on both a direct and reinsurance basis through a number of
subsidiaries.
The principal executive office of Berkshire is located at 1440 Kiewit
Plaza, Omaha, Nebraska 68131, and its telephone number is (402) 346-1400.
Berkshire's common stock is traded on The New York Stock Exchange under
the symbols "BRK.A" and "BRK.B."
C ACQUISITION CORP.
C Acquisition Corp. is an Indiana corporation and a wholly owned
subsidiary of Berkshire. C Acquisition Corp. was formed solely for the purpose
of facilitating the merger.
The mailing address of C Acquisition Corp.'s principal executive office
is c/o Berkshire Hathaway Inc., 1440 Kiewit Plaza, Omaha, Nebraska 68131, and
its telephone number is (402) 346-1400.
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THE SPECIAL MEETING
DATE, TIME AND PLACE
We are furnishing this proxy statement to holders of our common stock
in connection with the solicitation of proxies by our board of directors for use
at the special meeting to be held on /o/, 2002, /o/ [a.m]. [p.m]., local time,
at /o/, and at any adjournments or postponements of the special meeting. This
proxy statement, the attached notice of special meeting and the accompanying
proxy card are first being sent or given to our shareholders on or about /o/,
2002.
MATTERS TO BE CONSIDERED
At the special meeting, holders of record of our common stock as of the
close of business on /o/, 2002, will consider and act on a proposal to approve
the Agreement and Plan of Merger dated as of August 16, 2002, among CTB,
Berkshire and C Acquisition Corp., referred to in this proxy statement as the
merger agreement, pursuant to which, upon the merger becoming effective, each
share of common stock, par value $0.01 per share, of CTB will be converted into
the right to receive $12.75 in cash, without interest. No other business will be
transacted at the special meeting other than possible postponements or
adjournments of the special meeting.
RECORD DATE AND SHARES ENTITLED TO VOTE; PROCEDURES FOR VOTING; QUORUM
Our board of directors has fixed the close of business on /o/, 2002, as
the record date for determining the holders of shares of our common stock who
are entitled to notice of, and to vote at, the special meeting. A shareholders'
list will be available for inspection by any shareholder entitled to vote at the
special meeting beginning five (5) business days before the date of the special
meeting and continuing through the special meeting. As of the record date, /o/
shares of our common stock were issued and outstanding. You are entitled to one
vote for each share of our common stock that you hold as of the record date.
If you are a record holder of shares of our common stock on the record
date, you may vote those shares of our common stock in person at the special
meeting or by proxy as described below under "Voting of Proxies." If you hold
shares of our common stock in "street name" through a broker or other financial
institution, you must follow the instructions provided by the broker or other
financial institution regarding how to instruct it to vote those shares.
The presence, in person or by proxy, of shares representing at least a
majority of all the votes entitled to be cast on the approval of the merger
agreement, is necessary to constitute a quorum for the transaction of business
at the special meeting.
VOTE REQUIRED
Under Indiana law, we are required to submit the merger agreement to
our shareholders for approval. Approval of the merger agreement requires the
affirmative vote of a majority of all the votes entitled to be cast on the
approval of the merger agreement. If you do not send in your proxy, do not
instruct your broker to vote your shares or if you abstain from voting, it will
have the same effect as a vote against the approval of the merger agreement.
American Securities Partners, L.P., ASP/CTB L.P., Caryl M. Chocola, J.
Christopher Chocola, Victor A. Mancinelli, Michael J. Kissane and Don J.
Steinhilber have agreed, under the terms of a shareholders agreement, to vote
shares representing in excess of 56.7% of the outstanding shares of our
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common stock in favor of approval of the merger agreement. As a result, the vote
of these shareholders alone will be sufficient to approve the merger agreement.
See "The Merger--Shareholders Agreement." For information with respect to the
beneficial ownership of our common stock by our directors and executive
officers, please see "Beneficial Ownership of CTB Common Stock."
VOTING OF PROXIES
Whether or not you plan to attend the special meeting in person, you
are requested to complete, sign, date and promptly return the enclosed proxy
card in the postage-prepaid envelope provided for this purpose to ensure that
your shares are voted. Shares of our common stock represented by properly
executed proxies received at or prior to the special meeting that have not been
revoked will be voted at the special meeting in accordance with the instructions
indicated on the proxies as to the proposal to approve the merger agreement and
in accordance with the judgment of the persons named in the proxies on all other
matters that may properly come before the special meeting. Shares of our common
stock represented by properly executed proxies for which no instruction is given
on the proxy card will be voted FOR approval of the merger agreement.
If the special meeting is postponed or adjourned, at any subsequent
reconvening of the special meeting, all proxies will be voted in the same manner
as these proxies would have been voted at the original convening of the special
meeting (except for any proxies that previously have been revoked or withdrawn
effectively), notwithstanding that they may have been effectively voted on the
same or any other matter at a previous meeting.
Please return your marked proxy card promptly so your shares can be
represented at the special meeting, even if you plan to attend the meeting in
person. PLEASE DO NOT SEND YOUR CTB COMMON STOCK CERTIFICATES NOW. AS SOON AS
REASONABLY PRACTICABLE AFTER THE EFFECTIVE TIME OF THE MERGER, THE PAYING AGENT
WILL MAIL A LETTER OF TRANSMITTAL TO YOU. YOU SHOULD SEND YOUR CTB COMMON STOCK
CERTIFICATES ONLY IN COMPLIANCE WITH THE INSTRUCTIONS THAT WILL BE PROVIDED IN
THE LETTER OF TRANSMITTAL.
REVOCABILITY OF PROXIES
You may revoke your proxy at any time prior to the time it is voted at
the special meeting. You may revoke your proxy by:
o executing a later-dated proxy card relating to the same shares and
delivering it to our Secretary before the taking of the vote at
the special meeting;
o filing with our Secretary, before the taking of the vote at the
special meeting, a written notice of revocation bearing a later
date than the proxy card; or
o attending the special meeting and voting in person (although
attendance at the special meeting will not, in and of itself,
revoke a proxy).
Any written revocation or subsequent proxy card should be delivered to
CTB International Corp., 611 North Higbee Street, Milford, Indiana 46542-2000,
Attention: Secretary, or hand delivered to our Secretary or his representative
before the taking of the vote at the special meeting.
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PROXY SOLICITATION
This proxy solicitation is being made on behalf of our board of
directors. We will solicit proxies initially by mail. Further solicitation may
be made by our directors, officers and employees personally, by telephone,
facsimile, e-mail, Internet or otherwise, but they will not be specifically
compensated for these services. Upon request, we will reimburse brokers,
dealers, banks or similar entities acting as nominees for their reasonable
expenses incurred in forwarding copies of the proxy materials to the beneficial
owners of the shares of our common stock they hold of record. We have retained
Equiserve Trust Company N.A. and Georgeson Shareholder Communications, Inc. to
assist us in the solicitation of proxies using the means referred to above, and
they will receive fees of up to approximately $5,000, in the aggregate, plus
reimbursement of out-of-pocket expenses. We and Berkshire have agreed to equally
share the expenses incurred in connection with printing, filing and mailing of
this proxy statement.
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THE MERGER
BACKGROUND OF THE MERGER
On March 18, 2002, we announced that we were exploring strategic
alternatives to enhance shareholder value, including the possible sale of our
entire company. In conjunction with this exploration, we retained each of Bear,
Stearns & Co. Inc., Credit Suisse First Boston Corporation and George K. Baum &
Company as financial advisors. Our board instructed management, with the
assistance of our financial advisors, to embark on a process designed to
determine the interest of prospective purchasers in entering into a strategic
transaction with us.
As part of this process our financial advisors, at our request,
contacted numerous strategic and financial prospective purchasers and informed
them that, upon their execution of a confidentiality agreement with us, we would
make available to them a confidential information memorandum. During April and
May 2002, 74 prospective purchasers executed confidentiality agreements. Each of
these prospective purchasers received a confidential information memorandum.
Each prospective purchaser that expressed an interest in remaining in the
process was asked to submit a preliminary indication of interest by May 21,
2002.
In early April, 2002, as part of the sale process, at our direction,
one of our financial advisors contacted Berkshire about their potential interest
in acquiring us. Berkshire indicated that it may have an interest in acquiring
us, but was not interested in participating in the sale process. We were
unwilling to halt the sale process with other prospective purchasers at that
time. Berkshire did not execute a confidentiality agreement or receive any
non-public information regarding us at that time.
On May 21, 2002, our financial advisors received eight preliminary
indications of interest in a possible transaction with us. All of these
indications of interest were from prospective financial purchasers. These
indications of interest, based on information then available to prospective
purchasers, ranged from $12.48 to $17.00 per share. All of these indications of
interest were conditioned on, among other things, (1) the ability to obtain
financing, (2) satisfactory completion of due diligence by prospective
purchasers and their financing sources and (3) no material adverse changes with
respect to us or markets generally.
After the submission of indications of interest, one of the prospective
purchasers was asked to withdraw from the process based on the relative weakness
of their indication of interest. Another prospective purchaser who provided an
indicative price per share that was below the average was advised that its
indication of interest was below average. This prospective purchaser then chose
to withdraw from the process. The remaining six prospective purchasers were
invited to participate in due diligence, including meetings with management,
site visits and access to a data room. After these meetings with management and
due diligence, three more prospective purchasers withdrew from the process. Each
of the remaining three prospective purchasers was informed that final bids were
due on July 23, 2002.
On July 23, 2002, our financial advisors received final bids from the
three remaining prospective purchasers. A meeting of our board was scheduled for
August 2, 2002. During the period between July 23 and August 2, our financial
advisors, at our request, asked the three remaining bidders to further refine
their bids. As so refined, these bids were for $15.75 per share, $14.00 per
share and $13.00 per share. All of these bids were conditioned on, among other
things, (1) the ability to obtain financing, (2) satisfactory completion of
additional due diligence, expected to take two to six weeks, (3) satisfactory
completion of employment and investment agreements with members of management,
(4) execution of a shareholder voting agreement with our largest shareholders,
(5) entering into a definitive agreement with us and (6) no material adverse
changes with respect to us or markets generally. In addition, none of the
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three bids had fully committed financing packages. To the extent financing
packages were provided, all of the financing commitments thereunder contained
numerous conditions, including no material disruption in the financial markets,
no material adverse change with respect to us or our industry generally,
satisfactory completion of due diligence and achievement of certain future
financial results. These financing packages also indicated that we would be
subject to numerous restrictive covenants after the acquisition that could limit
our growth. The $15.75 bid was in addition conditioned on the bidder
simultaneously completing an acquisition of one of our principal competitors.
This was a new condition and not part of this bidder's preliminary indication of
interest. In addition, this bidder did not propose a capital structure for its
acquisition of us and required four to six weeks of additional due diligence.
The $14.00 bid was also conditioned on transaction costs not exceeding a
specified amount and the bidder raising two thirds of the required equity to
acquire us from third parties, a process that could take up to six weeks after
selection as the favoured bidder and execution of an exclusivity agreement.
On August 2, 2002, our board met to discuss each of these bids in
detail. The board noted that (1) each of the bids was highly conditioned and (2)
each of the bids contained numerous steps prior to execution of definitive
agreements, including additional due diligence, negotiation of employment and
investment arrangements and negotiation of financing packages. Our financial and
legal advisors estimated that the time required to complete these items and
execute definitive agreements ranged from four to 12 weeks. Our board noted that
our industry is currently facing challenges, such as the drought in the midwest,
which could lead to the reduction of the bid prices or the inability of
prospective purchasers to obtain financing on terms indicated in the bids. Our
board also noted the substantial reduction in two of the bids when compared with
the relevant bidder's initial indication of interest. Our board was also advised
by our legal counsel that the $15.75 bid would be subject to significant
regulatory scrutiny because it was conditioned on the simultaneous acquisition
of one of our principal competitors and that obtaining regulatory clearance
without modifications to the transaction would be difficult and might not be
possible. The bidder submitting this bid was unwilling to proceed without such a
condition, thereby placing the regulatory risk on us. The board also considered
the effects that announcing but not consummating a transaction due to regulatory
constraints would have on our business and our shareholders. Finally, our board
noted that our two largest shareholders, American Securities and members of the
Chocola family, would not support a bid with such regulatory risks and
disfavored any bid that did not have a fully committed financing package.
Because of this, we were unable at this point to satisfy the condition of all
three bidders that our largest shareholders enter into a voting agreement
supporting the transaction.
At the August 2 board meeting, one of our financial advisors informed
the board that it had, at our direction, contacted Berkshire earlier that day to
see if it would be interested in exploring a transaction with us. Berkshire
responded that day by submitting a preliminary offer of $13.00 per share to be
adjusted downward for the cost of certain advisory fees triggered by the
transaction, subject only to a satisfactory meeting with our senior management.
Based on the foregoing, our board (1) instructed management to meet with
Berkshire, (2) instructed our financial advisors to inform the bidder that
submitted the $15.75 bid that we were unwilling to accept the regulatory risk
associated with its bid and would not proceed with the condition it proposed and
(3) instructed our financial advisors to seek further refinement of the two
remaining bids. The bidder which submitted the $15.75 bid was unwilling to
proceed without a condition that it successfully complete its other transaction.
On August 6, 2002, Warren Buffett, Chairman and Chief Executive Officer
of Berkshire, met with Victor A. Mancinelli, our President and Chief Executive
Officer, Don J. Steinhilber, our Chief Financial Officer and Treasurer, and one
of our financial advisors, at Berkshire's office in Omaha, Nebraska.
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Between August 7 and August 15, 2002, we negotiated and executed a
confidentiality agreement and discussed various matters relating to the proposed
transaction with Berkshire, and on August 15, 2002, the parties settled on a
price of $12.75 per share. This price reflected negotiations regarding the
amount of adjustment required with respect to advisory fees and further
adjustment for the greater time required to complete a statutory merger
preferred by Berkshire as opposed to a tender offer followed by a second step
merger as preferred by our largest shareholders. Berkshire also required that
our largest shareholders and certain members of our management execute a
shareholder voting agreement agreeing to support the transaction.
Our board met on August 16, 2002, to consider the proposed transaction
with Berkshire. Also present at this meeting were Don J. Steinhilber, our Chief
Financial Officer and Treasurer, and Michael J. Kissane, our General Counsel and
Secretary, as well as representatives of our outside financial and legal
advisors. Members of our senior management and our outside financial advisors
discussed with our board the proposed transaction and alternatives. Among other
matters, we reviewed our prior activities in our consideration of potential
strategic alternatives, including our discussions with parties other than
Berkshire. Our financial advisors noted that, as of the date of the meeting, to
their knowledge, no new material developments had occurred with respect to the
remaining two bids. Our senior management then reviewed the current state of our
business and industry. In this presentation, management reviewed certain
challenges facing the industry as a whole, including the adverse effect on crop
production levels and animal feed costs resulting from the drought in the
midwest and increasing steel prices. Management noted that, because of these
items, we probably would not meet non-public projections we had shared with
bidders other than Berkshire. Our outside legal counsel reviewed in detail the
principal terms and conditions of the proposed merger agreement, proposed
shareholders agreement and relevant aspects of applicable law regarding the
fiduciary duties of our board in connection with the proposed transactions.
In connection with these presentations, our board reviewed and
considered, among other things, (1) the sufficiency of the merger consideration,
(2) the fact that our obligations to complete the merger are subject only to
obtaining customary regulatory clearances and other customary conditions, (3)
the fact that Berkshire's obligation to complete the merger was not conditioned
on obtaining financing and that its bid was not subject to further due
diligence, (4) the fact that our largest shareholders supported the proposed
transaction and (5) the other principal terms of the proposed merger agreement.
Each of our financial advisors reviewed with the board the financial aspects of
the proposed merger and delivered to our board its opinion to the effect that,
as of August 16, 2002 and based on and subject to the matters described in its
opinion, the $12.75 per share cash consideration was fair, from a financial
point of view, to the holders of our common stock. After full discussion, our
board determined that it was fair to and in the best interests of us and our
shareholders that we enter into the merger agreement and complete the merger on
the terms and subject to the conditions set forth in the merger agreement.
Accordingly, our board adopted the merger agreement and approved the
transactions contemplated by the merger agreement and the shareholders
agreement.
We, Berkshire and C Acquisition Corp. executed the merger agreement
after the close of trading on The Nasdaq Stock Market on Friday, August 16,
2002. On Monday, August 19, 2002, we issued a press release publicly announcing
the proposed transaction.
PURPOSE AND EFFECTS OF THE MERGER
The principal purpose of the merger is to enable Berkshire to own all
of the equity interest in us and afford our shareholders the opportunity, upon
completion of the merger, to receive a cash price for their shares. The merger
will be accomplished by merging a wholly owned subsidiary of Berkshire with and
into us, and we will become the surviving corporation.
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The merger will terminate all equity interest in us held by our
shareholders and Berkshire will be the sole beneficiary of our earnings and
growth following the merger. Our common stock is currently registered under the
Securities Exchange Act of 1934, as amended, referred to as the Exchange Act,
and is listed for trading on The Nasdaq Stock Market under the symbol "CTBC."
Upon the completion of the merger, our common stock will be delisted from The
Nasdaq Stock Market and registration of our common stock under the Exchange Act
will be terminated.
As a result of the completion of the merger, as a shareholder, you will
be entitled to receive $12.75 for each share of our common stock that you own at
the effective time of the merger. Each holder of an option to purchase a share
of our common stock that is outstanding immediately prior to completion of the
merger will receive, in exchange for the cancellation of the option, an amount
in cash equal to the excess, if any, of $12.75 over the exercise price per share
of our common stock subject to the option, multiplied by the number of shares of
our common stock subject to the option, net of any applicable withholding taxes.
If any condition to the merger is not satisfied or waived, including
the necessary regulatory clearances, the merger will not be completed. In such
an event, you will not receive any cash or other consideration as result of
these transactions.
REASONS FOR THE MERGER; RECOMMENDATION OF OUR BOARD OF DIRECTORS
Our board of directors has unanimously adopted the merger agreement and
determined that the terms of the merger are fair to and in the best interests of
us and our shareholders.
In reaching its decision to adopt the merger agreement and to recommend
that our shareholders vote to approve the merger agreement, our board considered
a number of factors, including the following:
o OUR BUSINESS, CONDITION AND PROSPECTS. Our board considered
information with respect to our financial condition, results of
operations, business, competitive position and business strategy,
on both a historical and prospective basis, as well as current
industry, economic and market conditions. Further, our board
explored the possible alternatives to the merger, the range of
possible benefits to our shareholders of these alternatives and
the timing and likelihood of accomplishing the goal of any of
these alternatives.
o FORM OF MERGER CONSIDERATION. Our board considered the cash only
merger consideration to be received by our shareholders. Our board
considered the desirability of the liquidity and certainty of
value that an all-cash transaction would afford our shareholders.
o LIMITED CONDITIONALITY; TRANSACTION STRUCTURE. Our board also
considered the fact that the transaction is not conditioned on
obtaining financing and that the conditions to the completion of
the transaction were customary and, in the board's judgment,
likely to be satisfied. In addition, our board considered that the
proposed transaction could be completed much more quickly than any
other alternative transaction.
o POTENTIAL RISKS. Our board also considered a number of potential
risks, as well as related mitigating factors, in connection with
its evaluation of the merger. These risks included the potential
diversion of management resources from operational matters and the
opportunity costs associated with pursuing the proposed merger. In
weighing this factor, however, our board considered the
flexibility afforded by the interim operating covenants in the
merger agreement, relating, for example, to acquisitions, capital
expenditures, and indebtedness. Other risks considered by our
board included the fact that:
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o the merger agreement prohibits us from soliciting or entering
into any alternative transaction; and
o we would be required to conduct our business only in the
ordinary course consistent with past practice and subject to
operational restrictions prior to the completion of the
merger.
In the judgment of our board, however, these potential risks were
more than offset by the potential benefits of the merger discussed
above.
o OPINIONS OF OUR FINANCIAL ADVISORS. Our board considered the
opinions of each of our financial advisors to our board as to the
fairness, from a financial point of view, of the $12.75 per share
merger consideration to be received by the holders of our common
stock, as more fully described below in "Opinions of Our Financial
Advisors."
o ADDITIONAL CONSIDERATIONS. In the course of its deliberations on
the merger, our board consulted with members of our senior
management and our legal and financial advisors on various legal,
business and financial matters. Additional factors considered by
our board in determining whether to approve the merger agreement
included: (1) the current industry, economic and marketplace
conditions and trends; (2) the terms and conditions of the merger
agreement; (3) the likelihood and anticipated timing of receipt of
required regulatory approvals and satisfaction of all other
conditions; (4) the fact that our largest shareholders agreed to
support the proposed transaction; (5) the uncertainty of any
alternative transaction that would yield a superior value to our
shareholders; (6) the current and historical market price of our
common stock; (7) the expectation that Berkshire would provide job
opportunities through business growth, as well as various
commitments of Berkshire in the merger agreement with respect to
contractual benefits and compensation obligations to employees of
the surviving corporation; (8) Berkshire's reputation as a good
employer providing workers with both stable employment and
opportunities for advancement; (9) Berkshire's commitment and
reputation for taking a long-term approach to its investments,
unlike other investors who may seek short-term exit opportunities;
(10) the fact that we will not be subject to restrictive covenants
that may limit growth opportunities and operational flexibility;
(11) the expectation that termination of employees will not be
required as a result of the merger and the existence of severance
benefits under our severance policies if any of our employees are
terminated in connection with the merger; and (12) the
expectation that we would be permitted to continue, following the
merger, to support community activities in the geographic areas
of our business activity.
In addition, our board of directors considered the interests of our
directors and executive officers described in "The Merger-Interests of Certain
Persons in the Merger."
The above discussion is not intended to be exhaustive, but we believe
it addresses the material information and factors considered by our board of
directors in its consideration of the merger, including factors that support the
merger as well as those that may weigh against it. In view of the number and
variety of factors and the amount of information considered, our board of
directors did not find it practicable to make specific assessments of, quantify
or otherwise assign relative weights to the specific factors considered in
reaching its determination. In addition, our board of directors did not
undertake to make any specific determination as to whether any particular
factor, or any aspect of any particular factor, was favorable or unfavorable to
its ultimate determination, and individual members of our board of directors may
have given different weights to different factors.
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OUR BOARD OF DIRECTORS HAS UNANIMOUSLY ADOPTED THE MERGER AGREEMENT AND
UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER
AGREEMENT.
OPINIONS OF OUR FINANCIAL ADVISORS
In connection with the merger, our financial advisors, Bear, Stearns &
Co. Inc., Credit Suisse First Boston Corporation and George K. Baum & Company,
each delivered a written opinion, dated August 16, 2002, to our board of
directors that, as of that date and based on and subject to the matters
described in their respective opinions, the $12.75 per share merger
consideration to be received by holders of our common stock was fair to such
holders from a financial point of view. The full text of the separate written
opinions of Bear Stearns, Credit Suisse First Boston and George K. Baum &
Company, each dated August 16, 2002, are attached to this document as Annexes C,
D and E, respectively. We encourage you to read each opinion carefully in its
entirety for a description of the procedures followed, assumptions made, matters
considered and limitations on the review undertaken. THESE OPINIONS ARE
ADDRESSED TO OUR BOARD OF DIRECTORS AND DO NOT CONSTITUTE A RECOMMENDATION TO
ANY SHAREHOLDER AS TO ANY MATTER RELATING TO THE MERGER.
Bear, Stearns & Co. Inc.'s Opinion
Bear Stearns has acted as financial advisor to our board of directors
in connection with our review of strategic alternatives and the merger. In
connection with Bear Stearns' engagement as financial advisor, our board of
directors requested that Bear Stearns evaluate the fairness, from a financial
point of view, to the holders of our common stock, of the $12.75 per share cash
consideration to be received in the merger by holders of our common stock. On
August 16, 2002, Bear Stearns delivered its oral opinion, subsequently confirmed
in writing, to the effect that, as of the date of the Bear Stearns opinion and
based on and subject to the assumptions, limitations and qualifications set
forth therein, the $12.75 per share cash consideration to be received in the
merger by the holders of our common stock, was fair, from a financial point of
view, to such holders.
THE FULL TEXT OF BEAR STEARNS' WRITTEN OPTION, DATED AUGUST 16, 2002,
WHICH SETS FORTH THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED
AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY BEAR STEARNS, IS ATTACHED AS ANNEX C
TO THIS PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. THE SUMMARY OF
THE BEAR STEARNS OPINION SET FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE BEAR STEARNS OPINION. SHAREHOLDERS
ARE URGED TO, AND SHOULD, READ CAREFULLY THE BEAR STEARNS OPINION IN ITS
ENTIRETY IN CONJUNCTION WITH THIS PROXY STATEMENT.
The Bear Stearns opinion was provided for the information of our board
of directors in connection with its consideration of the merger and relates only
to the fairness, from a financial point of view, of the $12.75 per share cash
consideration to be received in the merger by the holders of our common stock.
The Bear Stearns opinion does not address any other aspect of the merger or any
related transaction or any other proposal, does not address our underlying
business decision to effect the merger, does not constitute a recommendation to
our board of directors, and does not constitute a recommendation to any
shareholder as to any matter relating to the merger.
Although Bear Stearns evaluated the fairness, from a financial point of
view, of the $12.75 per share cash consideration to be received in the merger by
the holders of our common stock, the amount and form of the merger consideration
was determined by the parties to the merger agreement through arm's-length
negotiations. We did not provide specific instructions to, or place any
limitations on, Bear Stearns with respect to the procedures to be followed or
factors to be considered by Bear Stearns in performing its analyses or rendering
the Bear Stearns opinion.
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In arriving at the Bear Stearns opinion, Bear Stearns:
o reviewed the merger agreement and related documents;
o reviewed our Annual Reports to Shareholders and Annual Reports on
Form 10-K for the years ended December 31, 1998 through December
31, 2001, our Quarterly Reports on Form 10-Q for the periods ended
March 31 and June 30, 2002 and our Reports on Form 8-K for the
three years ended August 16, 2002;
o reviewed certain operating and financial information, including
our management's projections for the four years ended December 31,
2005, prepared in February 2002 and thereafter sensitized to
reflect certain events and financial results subsequent to their
initial development, as so sensitized, referred to as the
Projections, provided to Bear Stearns by our management relating
to our business and prospects;
o reviewed our monthly operating results for January 2002 through
July 2002;
o met with certain members of our senior management to discuss our
business, operations, historical and projected financial results
and future prospects;
o reviewed the historical prices, trading multiples and trading
volumes of the shares of our common stock;
o reviewed the terms of recent acquisitions of companies which Bear
Stearns deemed generally relevant to us;
o reviewed publicly available financial data, stock market
performance data and trading multiples of companies which Bear
Stearns deemed generally relevant to us;
o performed discounted cash flow analyses based on the Projections;
and
o conducted such other studies, analyses, inquiries and
investigations as Bear Stearns deemed appropriate.
In the course of its review, Bear Stearns relied on and assumed,
without independent verification, the accuracy and completeness of the financial
and other information, including without limitation the Projections, provided by
us to Bear Stearns. With respect to the Projections provided by us to Bear
Stearns, Bear Stearns was advised that they were reasonably prepared on bases
reflecting the best currently available estimates and judgments of our
management (as of the date such projections were initially prepared and as
subsequently sensitized to reflect certain events and financial results
subsequent to their initial development) as to our expected future performance.
Bear Stearns did not assume any responsibility for the independent verification
of any of the information or of the Projections provided to it, or the
adjustment to such Projections, and Bear Stearns relied on the assurances of our
senior management that they were unaware of any facts that would make the
information or Projections provided to Bear Stearns incomplete or misleading.
Bear Stearns assumed that the merger would be consummated in a timely manner and
in accordance with the terms of the merger agreement without any limitations,
restrictions, conditions, amendments or modifications, regulatory or otherwise,
that collectively would have a material effect on us.
In arriving at the Bear Stearns opinion, Bear Stearns did not perform
or obtain any independent appraisal of our assets or liabilities, contingent or
otherwise, nor was Bear Stearns furnished with any appraisals. During the course
of its engagement, Bear Stearns was asked by our board of directors to solicit
indications of interest from various third parties regarding a potential
transaction with us. Bear Stearns reviewed with our board of directors several
proposals with a purchase price in excess of the $12.75 per share cash
consideration to be received by holders of our common stock and the issues
17
contained in each of those proposals, which could affect the achievability of
such proposals. Our board of directors determined not to proceed with the other
proposals for a number of reasons, as more fully described above in "Background
of the Merger", and Bear Stearns was advised of that fact. After consultation
with our board of directors about this decision, Bear Stearns did not consider
the other proposals. Bear Stearns was not asked to consider, and the Bear
Stearns opinion does not address, the relative merits of the merger as compared
to the other proposals or any alternative business strategies that might exist
for us or the effects of any other transaction in which we might engage. The
Bear Stearns opinion was necessarily based on information available to it, and
financial, economic, market and other conditions as they existed and could be
evaluated on the date of such opinion.
The following is a summary of the material analyses underlying the Bear
Stearns opinion dated August 16, 2002, delivered to our board of directors in
connection with the merger. The financial analyses summarized below include
information presented in tabular format. In order to fully understand Bear
Stearns' financial analyses, the tables must be read together with the text of
each summary. The tables alone do not constitute a complete description of the
financial analyses. Considering the data set forth in the tables below without
considering the full narrative description of the financial analyses, including
the methodologies and assumptions underlying the analyses, could create a
misleading or incomplete view of Bear Stearns' financial analyses.
HISTORICAL STOCK PRICE ANALYSIS. Using publicly available information,
Bear Stearns reviewed the historical closing prices of our common stock for
various periods prior to our announcement on March 18, 2002, that we had
retained Bear Stearns to evaluate strategic alternatives, including a possible
sale, and for the period subsequent to such announcement until August 15, 2002.
Bear Stearns observed that the $12.75 per share cash consideration to be
received in the merger by the holders of our common stock represented the
following premiums or (discounts) to the price as of the respective periods or
dates below:
AVERAGE IMPLIED
PRICE PREMIUM
------- -------
Period Prior to Announcement Date
2-years (March 14, 2000 - March 15, 2002) $ 8.92 42.9%
1-year (March 14, 2001 - March 15, 2002) $10.18 25.2%
6-months (September 17, 2001 - March 15, $11.42 11.6%
2002)
3-months (December 17, 2001 - March 15, 2002) $12.78 (0.3%)
1-day Prior to Announcement Date (March 15, $14.50 (12.1%)
2002)
Period Since Announcement
March 18, 2002 - August 15, 2002 $15.57 (18.1%)
18
COMPARISON TO SELECTED PUBLIC COMPANIES. Using publicly available
information, Bear Stearns reviewed and compared our financial and stock market
performance data to corresponding data of the following selected publicly traded
companies:
o Ag Services of America o Pilgrims Pride
o Cagle's o RDO Equipment
o Cal-Maine Foods o Sanderson Farms
o Gehl o Seaboard Corp.
o Lindsay Manufacturing Co. o Valmont Industries
For each of the selected companies, Bear Stearns reviewed certain
publicly available financial data, valuation statistics, financial ratios,
research reports, published earnings estimates for calendar year 2002 and stock
market information and calculated the ratios and multiples based on such
information, which data was adjusted, where applicable, for certain
extraordinary and non-recurring items. Bear Stearns compared enterprise values,
calculated as equity value plus debt, preferred stock and minority interests
less cash and cash equivalents, of the selected companies and us as multiples of
their respective latest 12 months and projected 2002 sales, earnings before
interest and taxes (EBIT), and earnings before interest, taxes, depreciation and
amortization (EBITDA). Bear Stearns also compared stock prices of the selected
companies and us as multiples of the calendar year 2001 and estimated calendar
year 2002 earnings per share, commonly referred to as the P/E ratio. In
addition, Bear Stearns compared equity values of the selected companies and us
as multiples of tangible book values, calculated as total stockholders' equity
less goodwill and other intangible assets.
All multiples were based on closing stock prices on August 15, 2002,
except in our case where the multiples were based on the $12.75 per share cash
consideration to be received in the merger. Estimated financial data for the
selected companies were based on publicly available research analysts' estimates
and, in our case, our estimated financial data. This analysis indicated the
following multiples for the selected companies based on their latest 12 months
and estimated 2002 sales, EBIT and EBITDA, calendar year 2001 and estimated
calendar year 2002 earnings per share, and tangible book value as compared to
our corresponding multiples implied by the cash consideration of $12.75 per
share:
ENTERPRISE VALUE/ EQUITY
------------------------------------------------------- VALUE/
SALES EBITDA EBIT CALENDAR YEAR P/E TANGIBLE
---------------- --------------- ---------------- ------- ------- BOOK
LTM 2002E LTM 2002E LTM 2002E 2001A 2002E VALUE
------ ------- ------ ------ ------ ------ ------- ------- --------
Harmonic Mean of Selected 0.40x 0.57x 6.9x 7.0x 10.4x 11.1x 9.4x 19.4x 0.7x
Companies (1)
High of Selected Companies 1.75 1.71 15.9 13.7 21.1 17.4 20.5 28.3 3.4
Low of Selected Companies 0.13 0.32 3.8 4.6 5.3 7.1 6.6 14.8 0.2
CTB - At $12.75 per Share 0.79 0.74 5.2 4.7 7.0 5.9 10.1 8.0 4.8
- ---------------------------
(1) "Harmonic Mean" represents the reciprocal of the arithmetic mean of the
reciprocals of a set of data points.
Bear Stearns principally utilized the selected companies that we have
historically identified in our proxy statements as in our peer group. The
utilized companies include agricultural and construction equipment manufacturers
and processors and marketers of food products. Bear Stearns noted that none of
the selected companies are in businesses substantially similar to ours and,
accordingly, any analysis of the selected companies is of limited applicability.
SELECTED MERGER AND ACQUISITIONS ANALYSIS. Using publicly available
information, Bear Stearns reviewed and analyzed the purchase prices, and
transaction multiples implied by the purchase prices,
19
proposed to be paid, at
the time of announcement, in the following eleven selected merger and
acquisition transactions:
ACQUIROR TARGET
- -------- ------
Thor Industries Keystone RV Company
Kohlberg & Co., LLC Katy Industries, Inc.
Saw Mill Capital Fund II, L.P./Management Group Jason Incorporated
Management Group Transportation Technologies Inc.
Vestar Capital Partners IV, L.P. Management Group Gleason Corporation
Hancor Holding LLC Jannock Vinyl Group
The GSI Group, Inc. David Manufacturing Co.
CTB International Corp. Butler Manufacturing Co. (Grain Systems Division)
CTB International Corp. Fancom Holding B.V.
American Securities Capital Partners CTB International Corp.
Management Group The GSI Group, Inc.
Bear Stearns compared enterprise values, calculated as the amount
proposed to be paid, at the time of announcement, in each transaction for the
equity of the target company, plus debt, preferred stock and minority interests,
less cash and cash equivalents, of the selected transactions and the merger as
multiples of latest 12 months sales, EBIT and EBITDA, as well as equity values,
calculated as the amount proposed to be paid, at the time of announcement, in
each transaction for the equity of the target company, of the selected
transactions and the merger as multiples of latest 12 months net income. All
multiples for the selected merger and acquisition transactions were based on
financial information available at the time of the announcement of the relevant
transaction and data for the latest 12 months preceding the date of announcement
of the transaction. Adjustments were made, where applicable, for certain
extraordinary and non-recurring items. This analysis indicated the following:
ENTERPRISE VALUE/LTM
EQ. VALUE / --------------------------------------------
NET INCOME SALES EBITDA EBIT
----------- ------ ------ -----
Harmonic Mean of Comparable Acquisitions 9.4x 0.59x 5.3x 7.2x
(1)
High of Comparable Acquisitions 16.4x 0.90x 6.6x 14.2x
Low of Comparable Acquisitions 4.6x 0.37x 4.0x 4.8x
CTB - At $12.75 per share 9.6x 0.79x 5.2x 7.0x
- ---------------------------------------
(1) "Harmonic Mean" represents the reciprocal of the arithmetic mean of the
reciprocals of a set of data points.
Bear Stearns noted that no company or transaction used in the foregoing
analysis is substantially similar to us or the proposed transaction. Therefore,
because of the lack of comparable merger and acquisition transactions, this
analysis is of limited applicability.
DISCOUNTED CASH FLOW ANALYSIS. Bear Stearns performed a discounted cash
flow analysis of us based on projections for fiscal years ending December 31,
2002, 2003, 2004 and 2005 provided by our management. Free cash flows for the
period beginning on June 30, 2002 and ending on December 31, 2005, were
discounted to June 30, 2002. Bear Stearns calculated free cash flow for each
period as tax-effected earnings before interest and taxes, plus depreciation and
amortization, less changes in working capital and capital expenditures. Bear
Stearns calculated the terminal value by applying a range of assumed growth
rates of 0.5% to 1.0% of projected fiscal year 2005 free cash flow into
perpetuity. Discount rates of 10.0% to 14.0% were chosen based on Bear Stearns'
estimate of our weighted average cost of capital. To calculate the aggregate net
present value of our equity, Bear Stearns subtracted
20
our total debt, minority interest, minus cash and cash equivalents as of June
30, 2002, from the sum of the present value of the projected free cash flows and
the present value of the terminal value.
As part of Bear Stearns' review of our operating and financial
information, including our management's projections for the four years ended
December 31, 2005, prepared in February 2002, we advised Bear Stearns that,
given certain events and financial results that have occurred subsequent to
their initial development, it is unlikely that we will achieve the projections
originally provided in February 2002. As a result, we informed Bear Stearns that
a reduced range of projections represent the most likely range of outcomes and
should be utilized to assess our future performance. Accordingly, Bear Stearns
performed a sensitivity case analysis based on the percentage of our projected
EBITDA provided to Bear Stearns by us. This analysis indicated an implied range
of our equity values of $7.75 to $19.38 per share.
OTHER ANALYSES. Bear Stearns conducted such other analyses as it deemed
appropriate, including reviewing our historical stock price performance,
reviewing our relative stock price performance versus various stock market
indices, reviewing available information regarding the holders of our common
stock, reviewing our historical and projected financial and operating data, and
comparing our historical monthly financial and operating data with that
underlying our projections.
In preparing the Bear Stearns opinion for our board of directors, Bear
Stearns performed a variety of financial and comparative analyses, including
those described above. The summary of Bear Stearns' analyses is not a complete
description of the analyses underlying the Bear Stearns opinion. The preparation
of a fairness opinion is a complex process and involves various judgments and
determinations as to the most appropriate and relevant assumptions and financial
analyses and the application of those methods to the particular circumstances
involved. The Bear Stearns opinion is therefore not necessarily susceptible to
partial analysis or summary description. In arriving at the Bear Stearns
opinion, Bear Stearns made qualitative judgments as to the significance and
relevance of each analysis and factor considered by it and did not attribute
particular weight to any one analysis or factor. Bear Stearns did not form an
opinion as to whether any individual analysis or factor, positive or negative,
considered in isolation, supported or failed to support the Bear Stearns
opinion. Accordingly, Bear Stearns believes that its analyses must be considered
as a whole and that selecting portions of its analyses and factors or of the
summary described above or focusing on information presented in tabular format,
without considering all analyses and factors or the narrative description of the
analyses, could create a misleading or incomplete view of the processes
underlying its analyses and opinion.
The analyses performed by Bear Stearns, particularly those based on
estimates, are not necessarily indicative of actual values or actual future
results, which may be significantly more or less favorable than those results
suggested by the analyses. In addition, analyses relating to the value of
businesses or securities do not purport to be appraisals or to reflect the
prices at which businesses or securities actually may be sold. Accordingly, Bear
Stearns' analyses are inherently subject to substantial uncertainty. The
analyses were prepared solely as part of Bear Stearns' analysis of the fairness,
from a financial point of view, of the $12.75 cash consideration to be received
in the merger by the holders of our common stock.
The Bear Stearns opinion and financial analyses performed by Bear
Stearns were only one of many factors considered by our board of directors in
their evaluation of the merger, and should not be
21
viewed as determinative of the views of our board of directors or our management
with respect to the cash consideration or the merger.
We engaged Bear Stearns based on its qualifications, expertise and
reputation in providing advice to companies with respect to transactions similar
to the merger. Bear Stearns has not been previously engaged by us or our board
of directors to provide any investment banking and financial advisory services
in connection with any mergers, acquisitions or business combinations or in
connection with any offerings of equity or debt. Bear Stearns is an
internationally recognized investment banking firm and, as part of its
investment banking activities, regularly engages in the valuation of businesses
and securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. In the ordinary course of business, Bear Stearns and its
affiliates may actively trade the equity and debt securities and/or bank debt of
CTB and/or Berkshire for Bear Stearns' own account and for the account of Bear
Stearns' customers and, accordingly, may at any time hold a long or short
position in such securities or bank debt.
Pursuant to the terms of our engagement letter with Bear Stearns dated
March 15, 2002, we have agreed to pay Bear Stearns a cash fee equal to the
greater of (i) $1,500,000 or (ii) 0.65% of the total consideration paid in the
merger, if the merger is completed. We have agreed to reimburse Bear Stearns for
all reasonable out-of-pocket expenses incurred by Bear Stearns in connection
with its engagement and the transaction, including the reasonable fees and
expenses of legal counsel and of any other consultant or advisor retained by
Bear Stearns. We have also agreed to indemnify Bear Stearns and related persons
against certain liabilities in connection with the engagement of Bear Stearns,
including liabilities under the federal security laws.
Credit Suisse First Boston Corporation's Opinion
Credit Suisse First Boston has acted as a financial advisor to us in
connection with the merger. We selected Credit Suisse First Boston based on
Credit Suisse First Boston's experience, expertise and reputation. Credit Suisse
First Boston is an internationally recognized investment banking firm and is
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, leveraged buyouts, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes.
In connection with Credit Suisse First Boston's engagement, we
requested that Credit Suisse First Boston evaluate the fairness, from a
financial point of view, to the holders of our common stock of the consideration
provided for in the merger. On August 16, 2002, at a meeting of our board of
directors held to evaluate the merger, Credit Suisse First Boston rendered to
our board of directors an oral opinion, which opinion was confirmed by delivery
of a written opinion dated August 16, 2002, to the effect that, as of that date
and based on and subject to the matters described in its opinion, the per share
merger consideration to be received by holders of our common stock was fair to
such holders from a financial point of view.
THE FULL TEXT OF CREDIT SUISSE FIRST BOSTON'S WRITTEN OPINION, DATED
AUGUST 16, 2002, TO OUR BOARD OF DIRECTORS, WHICH SETS FORTH, AMONG OTHER
THINGS, THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX D AND IS INCORPORATED
INTO THIS PROXY STATEMENT BY REFERENCE. HOLDERS OF OUR COMMON STOCK ARE
ENCOURAGED TO READ THIS OPINION CAREFULLY AND IN ITS ENTIRETY. CREDIT SUISSE
FIRST BOSTON'S OPINION IS ADDRESSED TO OUR BOARD OF DIRECTORS AND RELATES ONLY
TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE MERGER CONSIDERATION,
DOES NOT ADDRESS ANY OTHER ASPECT OF THE PROPOSED MERGER OR ANY RELATED
TRANSACTION AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER AS TO
ANY MATTER RELATING
22
TO THE MERGER. THE SUMMARY OF CREDIT SUISSE FIRST BOSTON'S OPINION IN THIS PROXY
STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE
OPINION.
In arriving at its opinion, Credit Suisse First Boston reviewed the
merger agreement and certain related documents, as well as certain publicly
available business and financial information relating to us. Credit Suisse First
Boston also reviewed certain other information relating to us, including
financial forecasts, provided by us to or discussed with Credit Suisse First
Boston, and met with our management to discuss our business and prospects.
Credit Suisse First Boston also considered certain financial and stock market
data with respect to us, and compared those data with similar data for other
publicly held companies in businesses similar to ours and considered, to the
extent publicly available, the financial terms of certain other business
combinations that in the past have been effected. Credit Suisse First Boston
also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria that it deemed
relevant.
In connection with its review, Credit Suisse First Boston did not
assume any responsibility for independent verification of any of the information
that was provided to or otherwise reviewed by it and relied on that information
being complete and accurate in all material respects. Credit Suisse First Boston
was advised, and assumed, that our financial forecasts were reasonably prepared
on bases reflecting the best currently available estimates and judgments of our
management as to our future financial performance. Credit Suisse First Boston
assumed, with our consent, that the merger would be consummated in its entirety
in accordance with the terms of the merger agreement, without waiver, amendment
or modification of any material term, condition or agreement. Credit Suisse
First Boston was not requested to make, and did not make, an independent
evaluation or appraisal of our assets or liabilities, contingent or otherwise,
and Credit Suisse First Boston was not furnished with any such evaluations or
appraisals.
Credit Suisse First Boston's opinion was necessarily based on
information available to it, and financial, economic, market and other
conditions as they existed and could be evaluated, on the date of Credit Suisse
First Boston's opinion. In connection with its engagement, Credit Suisse First
Boston was requested to solicit indications of interest from, and held
preliminary discussions with, third parties regarding the possible acquisition
of all or a part of us. Credit Suisse First Boston's opinion did not address the
relative merits of the merger as compared to other business strategies that
might have been available to us, nor did it address the underlying business
decision of our board of directors to proceed with the merger. Although Credit
Suisse First Boston evaluated the consideration in the merger from a financial
point of view, Credit Suisse First Boston was not requested to, and did not,
recommend the specific consideration payable in the merger, which consideration
was determined between us and Berkshire. No other limitations were imposed on
Credit Suisse First Boston with respect to the investigations made or procedures
followed in rendering its opinion.
In preparing its opinion to our board of directors, Credit Suisse First
Boston performed a variety of financial and comparative analyses, including
those described below. The summary of Credit Suisse First Boston's analyses
described below is not a complete description of the analyses underlying Credit
Suisse First Boston's opinion. The preparation of a fairness opinion is a
complex process involving various determinations as to the most appropriate and
relevant methods of financial analysis and the application of those methods to
the particular circumstances and, therefore, a fairness opinion is not readily
susceptible to partial analysis or summary description. In arriving at its
opinion, Credit Suisse First Boston made qualitative judgments as to the
significance and relevance of each analysis and factor that it considered.
Accordingly, Credit Suisse First Boston believes that its analyses must be
considered as a whole and that selecting portions of its analyses and factors or
focusing on information presented in tabular format, without considering all
analyses and factors or the narrative description of the analyses, could create
a misleading or incomplete view of the processes underlying its analyses and
opinion.
23
In its analyses, Credit Suisse First Boston considered industry
performance, general business, economic, market and financial conditions and
other matters, many of which are beyond our control. No company, transaction or
business used in Credit Suisse First Boston's analyses as a comparison is
identical to us or the proposed merger, and an evaluation of the results of
those analyses is not entirely mathematical. Rather, the analyses involve
complex considerations and judgments concerning financial and operating
characteristics and other factors that could affect the acquisition, public
trading or other values of the companies, business segments or transactions
analyzed. The estimates contained in Credit Suisse First Boston's analyses and
the ranges of valuations resulting from any particular analysis are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than those suggested
by the analyses. In addition, analyses relating to the value of businesses or
securities do not necessarily purport to be appraisals or to reflect the prices
at which businesses or securities actually may be sold. Accordingly, Credit
Suisse First Boston's analyses and estimates are inherently subject to
substantial uncertainty.
Credit Suisse First Boston's opinion and financial analyses were only
some of many factors considered by our board of directors in its evaluation of
the proposed merger and should not be viewed as determinative of the views of
our board of directors or management with respect to the proposed merger or the
consideration provided for in the merger agreement.
The following is a summary of the material financial analyses
underlying Credit Suisse First Boston's opinion delivered to our board of
directors in connection with the merger. THE FINANCIAL ANALYSES SUMMARIZED BELOW
INCLUDE INFORMATION PRESENTED IN TABULAR FORMAT. IN ORDER TO FULLY UNDERSTAND
CREDIT SUISSE FIRST BOSTON'S FINANCIAL ANALYSES, THE TABLES MUST BE READ
TOGETHER WITH THE TEXT OF EACH SUMMARY. THE TABLES ALONE DO NOT CONSTITUTE A
COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES. CONSIDERING THE DATA IN THE
TABLES BELOW WITHOUT CONSIDERING THE FULL NARRATIVE DESCRIPTION OF THE FINANCIAL
ANALYSES, INCLUDING THE METHODOLOGIES AND ASSUMPTIONS UNDERLYING THE ANALYSES,
COULD CREATE A MISLEADING OR INCOMPLETE VIEW OF CREDIT SUISSE FIRST BOSTON'S
FINANCIAL ANALYSES.
Credit Suisse First Boston performed a selected companies analysis, a
selected acquisitions analysis and a discounted cash flow analysis for us as
more fully described below. Based on these valuation methodologies, Credit
Suisse First Boston derived the following implied per share equity reference
range for our common stock as compared to the per share merger consideration:
IMPLIED PER SHARE EQUITY
REFERENCE RANGE PER SHARE MERGER CONSIDERATION
------------------------------ ------------------------------
$11.00 - $14.50 $12.75
SELECTED COMPANIES ANALYSIS. Using publicly available information,
Credit Suisse First Boston compared financial and operating data of the
following eight publicly traded companies, which were identified by us as
companies of similar size and in businesses similar to our business, with
corresponding data to us:
o AGCO Corporation
o Alamo Group, Inc.
o Blount International, Inc.
o Butler Manufacturing Company
o Gehl Company
o Lindsay Manufacturing Co.
o NCI Building Systems, Inc.
o Valmont Industries, Inc.
24
Credit Suisse First Boston reviewed enterprise values, calculated as
equity value plus net debt, as multiples of latest 12 months and, where
available, estimated calendar year 2002 revenue and enterprise values as
multiples of latest 12 months and, where available, estimated calendar year 2002
earnings before interest, taxes, depreciation and amortization, commonly
referred to as EBITDA. Credit Suisse First Boston also reviewed equity values as
multiples of latest 12 months tangible book value. Credit Suisse First Boston
then applied a range of selected multiples derived from the selected companies
to our corresponding financial data. All multiples were based on closing stock
prices on August 14, 2002. Estimated financial data for us were based on
internal estimates of our management and estimated financial data for the
selected companies were based on publicly available research analysts'
estimates. This analysis indicated an implied per share equity reference range
for us of $10.10 to $13.60.
SELECTED ACQUISITIONS ANALYSIS. Using publicly available information,
Credit Suisse First Boston reviewed the implied transaction multiples paid in
each of the following selected merger and acquisition transactions involving
companies that operate in industries comparable to our business:
ACQUIROR TARGET
-------- ------
o Ironbridge Acquisition Corp. Pitt-Des Moines, Inc.
o Reliance Steel & Aluminum Co. Pitt-Des Moines, Inc. (Steel Service Center
Division)
o Kohlberg & Co., LLC Katy Industries, Inc.
o SPX Corporation United Dominion Industries Limited
o Usinor Steel Corp. Arbed S.A.
o AGCO Corp. Ag-Chem Equipment Co., Inc.
o Investor Group Wolseley plc
o Heico Companies LLC Robertson-Ceco Corporation
o Carlisle Companies, Inc. Titan International, Inc. (Tire & Wheel Business)
o Crown Industries, Inc. Bush Hog LLC
o Saw Mill Capital LLC/Management Group Jason Inc.
o Deere & Co. Timberjack Group Oy
o Textron, Inc. OmniQuip International, Inc.
o Lehman Brothers Merchant Banking Partners LLC Blount International, Inc.
o Onex Corporation American Buildings Company
o The Carlyle Group Honsel AG
o NCI Building Systems, Inc. Metal Building Components, Inc.
o CTB International Corp. Grains Systems Division of Butler Manufacturing
Company
o CTB International Corp. Fancom Holding B.V.
o Euromax International Alumax, Inc. (Fabricated Products Division)
o Management Group The GSI Group Inc.
o American Securities Capital Partners LP CTB International Corp.
Credit Suisse First Boston compared transaction values in the selected
transactions as multiples of latest 12 months revenue, EBITDA and earnings
before interest and taxes. Credit Suisse First Boston then applied a range of
selected multiples derived from the selected transactions to the corresponding
financial data of CTB. All multiples for the selected transactions were based on
publicly available information at the time of the relevant transaction. This
analysis indicated an implied per share equity reference range for us of $12.20
to $17.20.
DISCOUNTED CASH FLOW ANALYSIS. Credit Suisse First Boston performed a
discounted cash flow analysis of our cash flows to calculate the estimated
present value of the stand-alone, unlevered, after-tax free cash flows that we
could generate over fiscal years 2002 through 2005. Credit Suisse First Boston
performed this analysis based on two scenarios, the CTB management case and an
alternative case. The CTB management case was based on internal estimates of our
projected performance by our management, which were subsequently revised
downward based on discussions with our management. The alternative
25
case projected cash flows through 2007 and was based on discussions with our
management, our historical performance and anticipated industry performance.
Credit Suisse First Boston calculated a range of estimated terminal
values for us by applying a range of perpetuity growth rates to projected
unlevered cash flows in the terminal years. The present value of the estimated
free cash flows and terminal values for each case were calculated using discount
rates ranging from 10.0% to 14.0%. This analysis indicated an implied per share
equity reference range for us of $9.00 to $15.00.
OTHER FACTORS. In the course of preparing its opinion, Credit Suisse
First Boston also reviewed the historical price performance and trading
characteristics of our common stock and the relationship between movements in
our common stock and movements in the Standard & Poor's 500 Index, the Standard
& Poor's Small Cap 600 Index and selected stock indices of companies in related
industries.
MISCELLANEOUS. We agreed to pay Credit Suisse First Boston a fee of
0.65% of the total consideration paid in the merger, if the merger is completed.
We have also agreed to reimburse Credit Suisse First Boston for its
out-of-pocket expenses, including fees and expenses of legal counsel and any
other advisor retained by Credit Suisse First Boston, and to indemnify Credit
Suisse First Boston and related parties against liabilities, including
liabilities under the Federal securities laws, arising out of its engagement.
Credit Suisse First Boston and its affiliates have in the past
provided, and may in the future provide, investment banking and financial
services to us and ASP/CTB, L.P., a shareholder of us, unrelated to the merger,
for which services Credit Suisse First Boston and its affiliates have received
and expect to receive compensation. Affiliates of Credit Suisse First Boston and
certain investment funds affiliated or otherwise associated with Credit Suisse
First Boston have investments in funds managed or advised by ASP/CTB, L.P. or
its affiliates. In the ordinary course of business, Credit Suisse First Boston
and its affiliates may actively trade in our securities and Berkshire's
securities for their own accounts and for the accounts of customers and,
accordingly, may at any time hold long or short positions in those securities.
George K. Baum & Company's Opinion
On August 16, 2002, George K. Baum & Company or GKB delivered certain
of its written analyses and its oral opinion to our board of directors to the
effect that, subject to the assumptions, procedures and limitations set forth
therein, as of such date, the consideration to be received by the holders of our
common stock pursuant to the terms and conditions set forth in the merger
agreement was fair from a financial point of view to the holders of our common
stock.
In connection with its opinion, GKB reviewed, among other things, the
terms and conditions describing or otherwise directly relating to the merger
consideration set forth in the merger agreement; certain publicly available
business and historical financial information relating to us, including without
limitation our Annual Reports, Forms 10-K, Forms 10-Q and other filings with the
SEC; current and historical market prices and trading volumes of our common
stock; certain internal financial information and other data relating to our
business and financial prospects, as well as estimates, financial forecasts and
analyses prepared by our management that are not publicly available; and the
process and background that led to the merger. GKB also has held discussions
with members of our senior management regarding our past and current business
operations, financial condition and future prospects. In addition, GKB compared
certain publicly available financial information and stock market data for us
with similar information for certain other companies that GKB believed to be
comparable in certain respects to us; reviewed the financial terms of certain
business combinations that GKB deemed to be similar in certain
26
respects to the merger; performed a discounted cash flow analysis of our
projected future free cash flows; reviewed the premium or discount paid under
the merger versus the historical trading performance of our common stock, and
performed such other studies and analyses as GKB deemed necessary or
appropriate.
In preparing its opinion, GKB relied upon and assumed the accuracy and
completeness of all the financial and other information that was publicly
available or provided to GKB by or on behalf of us, and was not engaged to
independently verify any such information. GKB did not undertake nor did it
obtain any independent evaluations or appraisals of any of our assets,
properties or liabilities, nor did GKB make any physical inspection of our
properties or assets. GKB has not been engaged to independently verify any legal
or accounting matters related to the merger.
THE FULL TEXT OF THE WRITTEN OPINION OF GKB, WHICH SETS FORTH
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN
CONNECTION WITH ITS OPINION, IS ATTACHED TO THIS PROXY STATEMENT AS ANNEX E AND
IS INCORPORATED HEREIN BY REFERENCE. SHAREHOLDERS ARE URGED TO AND SHOULD READ
CAREFULLY THE GKB OPINION IN ITS ENTIRETY IN CONJUNCTION WITH THIS PROXY
STATEMENT. GKB'S ANALYSIS AND OPINION WERE PREPARED FOR THE INFORMATION AND
ASSISTANCE OF OUR BOARD OF DIRECTORS IN CONNECTION WITH ITS DELIBERATIONS
REGARDING THE MERGER AND SUCH OPINION DOES NOT CONSTITUTE A RECOMMENDATION AS TO
HOW ANY HOLDER OF OUR COMMON STOCK SHOULD VOTE WITH RESPECT TO SUCH TRANSACTION.
GKB's opinion necessarily is based on the information made available to
GKB and the conditions and circumstances as they existed on August 16, 2002, and
can be evaluated only as of such date. Events occurring after the date of GKB's
opinion could materially affect the assumptions used in preparing its opinion.
GKB was not asked to, nor did it, express an opinion as to the effect of any
other transaction in which we might engage or the underlying business decision
of our board of directors to proceed with the merger. GKB's opinion addressed
only the fairness of the merger consideration from a financial point of view to
the holders of our common stock and did not address any other aspect of the
merger. In rendering its opinion, GKB assumed that each of the parties to the
merger agreement will comply with all material covenants and agreements set
forth in the merger agreement and related documents, as applicable, and that the
merger agreement will be validly consummated in accordance with its terms.
The preparation of a fairness opinion is a complex process involving
subjective judgments and is not necessarily susceptible to partial analysis or
summary description. In arriving at its opinion, GKB did not attribute any
particular weight to any analysis or factor it considered, but rather made
qualitative judgments as to the significance and relevance of each analysis and
factor. Accordingly, GKB's analysis must be considered as a whole. Selecting
portions of its opinion and factors considered by GKB, without considering all
the analysis and factors, could create a misleading or incomplete view of the
processes underlying such analyses and GKB's opinion. The description of the
analyses set forth herein does not purport to be a complete description of the
analyses underlying GKB's opinion.
The financial analyses summarized below include information presented
in tabular format. In order to fully understand GKB's financial analyses, the
tables must be read together with the text of each summary. The tables alone do
not constitute a complete description of the financial analyses. Considering the
data set forth in the tables below without considering the full narrative
description of the financial analyses, including the methodologies and
assumptions underlying the analyses, could create a misleading or incomplete
view of GKB's financial analyses. The following is a summary of the principal
analyses performed by GKB and reported to our board of directors and is
qualified in its entirety by reference to the full text of GKB's opinion.
27
COMPARABLE COMPANY ANALYSIS. No company utilized in the comparable
company analysis is directly comparable to us. Accordingly, an analysis of the
following results necessarily involves complex considerations and judgments
concerning the differences in financial and operating characteristics and other
factors that could affect the value of our common stock and other publicly
traded companies that GKB deemed comparable in certain respects to us.
GKB analyzed selected financial and operating data of us and the
following seven publicly traded companies: Alamo Group, Inc., Cal-Maine Foods,
Inc., Gehl Company, Lindsay Manufacturing Co., Pilgrim's Pride Corp., Sanderson
Farms, Inc. and Valmont Industries, Inc., collectively referred to in this
summary as the Comparable Companies. GKB selected the Comparable Companies based
on such companies' size and participation in either agriculture equipment
manufacturing or protein-related food processing. Due to our unique business
model and size, there are innate limitations in identifying directly comparable
publicly traded companies. Though similar in certain respects, there are
significant differences between the Comparable Companies and us. Due to the
differences in financial and operating characteristics of the Comparable
Companies, the comparable company analysis is not readily susceptible to summary
description.
GKB examined certain publicly available financial and stock market
trading data of the Comparable Companies to evaluate the Comparable Companies'
implied trading multiples of enterprise value (equity value plus total net debt,
preferred stock and minority interest) or equity value, as appropriate, to (i)
latest 12 months revenues, (ii) latest 12 months earnings, which are represented
by EBITDA (earnings before interest, taxes, depreciation and amortization), EBIT
(earnings before interest and taxes), and net income (earnings per share with a
multiple expressed as a "P/E", or share price/earnings per share); and (iii)
tangible book value (book value of stockholders' equity minus goodwill). The
merger consideration was used for purposes of computing valuation multiples for
us implied by the merger. The latest 12 months financial data for us was based
on our publicly reported financial results for the period ended June 30, 2002.
This analysis indicated the following revenue, earnings and tangible book value
multiples for the Comparable Companies as compared to our multiples implied by
the merger consideration of $12.75 per share:
TANGIBLE BOOK
REVENUE MULTIPLE EARNINGS MULTIPLES VALUE MULTIPLE
------------------- ---------------------------------------- --------------
ENTERPRISE VALUE/ ENTERPRISE VALUE/ EQUITY VALUE/
------------------------
LTM REVENUE LTM EBITDA LTM EBIT LTM P/E TANGIBLE BV
----------- ---------- -------- -------- -----------
CTB (Merger Consideration) 0.8x 5.2x 7.0x 8.9x 4.5x
COMPARABLE COMPANIES SUMMARY
Median 0.5x 7.5x 11.1x 16.5x 1.2x
Mean 0.7x 9.0x 12.4x 16.7x 1.6x
Low of Comparable Companies 0.3x 3.7x 5.2x 7.2x 0.6x
High of Comparable Companies 1.5x 15.4x 21.2x 25.0x 3.2x
COMPARABLE TRANSACTION ANALYSIS. No merger or acquisition transaction
utilized in the comparable transaction analysis is identical to the merger.
Accordingly, an analysis of the following results necessarily involves complex
considerations and judgments concerning differences in financial, operating and
other characteristics of us and the companies involved in the comparable
transactions.
GKB identified and performed an analysis of three merger and
acquisition transactions that occurred since July 1996 in the protein production
equipment and grain storage equipment industries.
28
The three transactions analyzed were The GSI Group Inc. acquisition of David
Manufacturing Co., CTB, Inc. acquisition of the Grains Systems Division of
Butler Manufacturing Company and the management buyout of The GSI Group, Inc.
For these transactions, GKB calculated multiples of enterprise value to latest
12 months revenues, EBITDA and EBIT. This analysis indicated the following
multiples as compared to our multiples implied by the merger consideration of
$12.75 per share:
REVENUE MULTIPLE EARNINGS MULTIPLES
-------------------------- ---------------------------------
ENTERPRISE VALUE/ ENTERPRISE VALUE/
LTM REVENUE LTM EBITDA LTM EBIT
-------------------------- ---------------------------------
CTB (Merger Consideration) 0.8x 5.2x 7.0x
COMPARABLE TRANSACTION SUMMARY
Median 0.7x 4.3x 4.8x
Mean 0.6x 4.3x 4.9x
Low of Comparable Companies 0.4x 4.0x 4.8x
High of Comparable Companies 0.7x 4.5x 5.0x
In addition, GKB reviewed multiples of enterprise value to EBITDA for
13 leveraged buyout acquisitions of general industrial companies with enterprise
values from $100 million to $250 million that occurred since January 2001 as
reported by Standard & Poor's Portfolio Management Data. For these transactions,
enterprise value to EBITDA ranged from 2.6x to 7.3x, with a mean of 5.4x. Our
value under the merger results in enterprise value to latest 12months EBITDA of
5.2x.
DISCOUNTED CASH FLOW ANALYSIS. GKB performed an analysis of the present
value of our projected future free cash flows. This analysis assumed we
continued as a going concern, where we remained independent and pursued our
current business plan. Our management prepared financial projections based on
detailed operating assumptions and estimates of market conditions for the third
and fourth quarter of fiscal year 2002 and for the fiscal years 2003, 2004 and
2005, and such projections were adjusted by our management to reflect their
estimate of the range of likely outcomes.
For purposes of this analysis, GKB calculated a terminal value for free
cash flows beyond our forecast period by applying terminal growth rates ranging
from 1.0% to 2.0%. Based on GKB's estimate of our weighted average cost of
capital, the free cash flows and terminal values were discounted to the present
using a range of discount rates from 11.0% to 14.0%. Based on these assumptions,
GKB calculated a range of values for our common stock from $8.18 to $18.59 per
share. Utilizing the midpoints of the range of terminal growth rates, the range
of discount rates and the range of our management's estimates for projected
financial results yields a value for our common stock of $12.65 per share, as
compared to the merger consideration of $12.75 per share.
ACQUISITION PREMIUM ANALYSIS. GKB performed an analysis of the premium
paid in the merger versus the volume-weighted average stock price of our common
stock prior to March 18, 2002, the day we announced we had engaged investment
banking firms to explore strategic alternatives. The merger consideration
provides a 66.5%, 43.5% and 21.2% premium over our weighted average stock price
for the three years, two years and one year prior to March 18, 2002,
respectively. The merger consideration provides a 2.0% discount to our weighted
average stock price for the one quarter prior to March 18, 2002.
FEE AND OTHER INFORMATION. GKB was selected as a financial advisor by
our board of directors in connection with the merger based upon its knowledge
and familiarity with us as well as GKB's
29
qualifications, expertise and reputation, including the fact that it is
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, private placements and valuations for corporate
and other purposes.
Pursuant to a letter agreement between us and GKB dated March 15, 2002,
upon consummation of the merger, GKB is entitled to total cash compensation of
$650,000. We have agreed to reimburse GKB for out-of-pocket expenses, including
without limitation fees and disbursements of legal counsel, and to indemnify GKB
and certain affiliates against certain liabilities relating to, or arising out
of, its engagement, including without limitation certain liabilities under
Federal securities laws. The terms of the fee arrangement with GKB, which are
customary in transactions of this nature, were negotiated at arm's length
between us and GKB, and our board of directors approved such arrangement. GKB
has previously rendered investment banking services to us for which GKB has
received customary compensation. Additionally, an officer of George K. Baum &
Company is an investor in American Securities Partners III, L.P., an affiliate
of American Securities Capital Partners, L.P.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the United States Federal income tax
consequences of the merger to our shareholders whose shares are converted into
the right to receive cash in the merger. The discussion does not purport to
consider all aspects of United States Federal income taxation that might be
relevant to our shareholders. The discussion is based on current provisions of
the Internal Revenue Code (generally speaking for investment purposes) of 1986,
as amended, or the Code, and existing, proposed and temporary regulations
promulgated thereunder and administrative and judicial interpretations thereof,
all of which are subject to change, possibly with retroactive effects. The
discussion applies only to shareholders in whose hands shares of our common
stock are capital assets within the meaning of Section 1221 of the Code and who
neither own (directly or indirectly) nor are deemed to own 5% or more of our
stock. This discussion does not apply to shares of common stock received
pursuant to the exercise of employee stock options or otherwise as compensation,
to shareholders who hold shares of our common stock as part of a hedging,
"straddle," conversion or other integrated transaction, or to certain types of
shareholders (such as insurance companies, tax-exempt organizations, financial
institutions, broker-dealers and traders) who may be subject to special rules.
This discussion does not discuss the United States Federal income tax
consequences of the merger to any shareholder who, for United States Federal
income tax purposes, is a United States expatriate, a non-resident alien
individual, a foreign corporation, a foreign partnership or a foreign estate or
trust, nor does it consider the effect of any foreign, state or local tax or any
United States Federal tax other than income tax.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH SHAREHOLDER SHOULD
CONSULT HIS OR HER OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES
DISCUSSED BELOW AND THE PARTICULAR TAX EFFECTS OF THE MERGER ON A BENEFICIAL
HOLDER OF SHARES OF OUR COMMON STOCK, INCLUDING THE APPLICATION AND EFFECT OF
THE ALTERNATIVE MINIMUM TAX, AND ANY STATE, LOCAL AND FOREIGN TAX LAWS AND OF
CHANGES IN SUCH LAWS.
Consequences of the Merger to CTB Shareholders
The exchange of shares of common stock for cash pursuant to the merger
will be a taxable transaction for United States Federal income tax purposes. In
general, a shareholder who receives cash in exchange for shares of common stock
pursuant to the merger will recognize capital gain or loss for United States
Federal income tax purposes in an amount equal to the difference, if any,
between the amount of cash received and the shareholder's adjusted tax basis in
the shares exchanged for cash pursuant to the
30
merger. Gain or loss will be determined separately for each block of shares
(i.e., shares acquired at the same cost in a single transaction) exchanged for
cash pursuant to the merger. Such gain or loss will be long-term capital gain or
loss provided that a shareholder's holding period for such shares of common
stock is more than one year at the time of completion of the merger. Certain
limitations apply to the use of a shareholder's capital losses.
Information Reporting and Backup Tax Withholding
Under the "backup withholding" provisions of United States Federal
income tax law, the paying agent for the merger may be required to withhold and
pay over to the Internal Revenue Service, referred to in this proxy statement as
the IRS, a portion of the amount of any payments you receive in connection with
the merger unless you (1) provide a correct taxpayer identification number
(which, if you are an individual, is your Social Security number) and any other
required information to the paying agent, or (2) are a corporation or come
within certain exempt categories and, when required, demonstrate this fact and
otherwise comply with applicable requirements of the backup withholding rules.
If you do not provide a correct taxpayer identification number, you may be
subject to penalties imposed by the IRS. Any amount withheld as backup
withholding does not constitute an additional tax and will be creditable against
your United States Federal income tax liability. If withholding results in an
overpayment of taxes, a refund may be obtained by filing a tax return with the
IRS. You should consult with your own tax advisor as to your qualification for
exemption from backup withholding and the procedure for obtaining such
exemption.
If you are a United States person (as defined for United States Federal
income tax purposes), you may prevent backup withholding by completing the IRS
Form W-9 that will be included with the letter of transmittal mailed to you by
the paying agent and submitting the completed IRS Form W-9 to the paying agent
when you submit your stock certificate(s) following the effective time of the
merger. Foreign shareholders should complete and sign the appropriate IRS Form
W-8 (a copy of which may be obtained from the paying agent) in order to avoid
backup withholding. Such shareholders should consult a tax advisor to determine
which IRS Form W-8 is appropriate. Please see the instructions in the letter of
transmittal for more details.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES OF THE MERGER, INCLUDING THE EFFECTS OF APPLICABLE STATE, LOCAL,
FOREIGN OR OTHER TAX LAWS.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of our board of directors, you should
be aware that some of our directors and executive officers may be deemed to have
interests in the merger that are different from, or in addition to, those of our
shareholders.
Sale Bonus and Severance Agreements
To ensure the retention of certain executive officers and key
individuals following our announcement on March 18, 2002, that we were
considering strategic alternatives to enhance shareholder value, including
exploring a potential merger, we entered into sale bonus agreements with J.
Christopher Chocola, our Chairman, Victor A. Mancinelli, our President and Chief
Executive Officer, and Paul DeCock, one of our executive officers, as well as
sale bonus and severance agreements with the following executive officers: Randy
S. Eveler, Michael J. Kissane, Mark A. Lantz, Donald C. Mueller, George W.
Murdoch, Douglas J. Niemeyer and Don J. Steinhilber. Each of those agreements
terminates if the merger has not occurred by March 18, 2003.
31
The sale bonus agreement with Mr. Chocola provides for the payment of a
bonus in the amount specified in his agreement upon completion of the merger.
The sale bonus agreement with Messrs. Mancinelli and DeCock and the sale bonus
and severance agreements with the other executive officers provide for the
payment of two bonuses in the amounts specified in each executive officer's
agreement. The first bonus is payable on completion of the merger. The second
bonus is payable if the executive officer remains continuously employed by the
surviving corporation and its subsidiaries through the six-month period
immediately following completion of the merger. The executive officer will also
be entitled to payment of an amount equal to the sum of the first and second
bonus (to the extent not otherwise paid) if the merger is completed and the
executive officer resigns for good reason (as defined in the agreement) or if
his employment is terminated by CTB for reasons other than cause (as defined in
the agreement), death or disability prior to completion of the merger (in the
case of Mr. Mancinelli, only if his employment terminates after the approval of
the merger agreement by our shareholders) or the expiration of the six-month
period following completion of the merger.
The sale bonus and severance agreements provide for the following
severance benefits to be provided to Messrs. Eveler, Kissane, Lantz, Mueller,
Murdoch, Niemeyer and Steinhilber if they resign for good reason or if their
employment is terminated by CTB for reasons other than cause, death or
disability during the 24-month period following completion of the merger: (1) in
the case of Messrs. Kissane and Steinhilber, a severance benefit equal to 18
times their monthly base salary, payable in 18 monthly installments, (2) in the
case of Messrs. Eveler, Lantz, Mueller, Murdoch and Niemeyer, a severance
benefit equal to 12 times their monthly base salary, payable in 12 monthly
installments and (3) payment of premiums (less the standard employee premium
contribution and applicable taxes) for COBRA continuation health coverage for
the duration of the period in which the executive officer receives the monthly
severance payments.
In connection with us exploring strategic alternatives, which could
result in a change of control, on August 9, 2002, we entered into an employment
agreement with Victor A. Mancinelli, our President and Chief Executive Officer,
to finalize and formalize the terms of his employment with us. Under Mr.
Mancinelli's employment agreement, if within two years following completion of
the merger or during the period following approval of the merger agreement by
our shareholders and prior to the completion of the merger, Mr. Mancinelli
terminates his employment for good reason (as defined in the employment
agreement) or his employment is terminated by CTB for reasons other than cause
(as defined in the employment agreement), death or disability (as defined in the
employment agreement), then Mr. Mancinelli will be entitled to receive the
following severance benefits: (1) a lump sum payment equal to three times his
annual average base salary during the previous three years and (2) continued
medical coverage during the 36-month period immediately following his
termination provided Mr. Mancinelli continues to pay his portion of the premiums
for such coverage. If Mr. Mancinelli's employment is terminated by us for
reasons other than cause, death or disability after the two-year period
following the completion of the merger, his severance benefits will be reduced
to a lump sum payment equal to one times his average base salary and continued
medical coverage for one year following his termination. Pursuant to the
employment agreement, Mr. Mancinelli is entitled to supplemental retirement
benefits that vest upon his termination of employment for any reason other than
for cause after the earlier of (1) the completion of the merger and (2) April
30, 2003. Payments and the acceleration of benefits by us to Mr. Mancinelli are
subject to limitation to the extent necessary to avoid the imposition of any
excise tax under the golden parachute provisions of Section 4999 of the U.S.
Internal Revenue Code. Mr. Mancinelli is subject to confidentiality covenants
during and after his employment with us as well as non-competition covenants
that continue in effect for two years after the date of his termination of
employment. We also agreed to issue 8,777 shares of our common stock to Mr.
Mancinelli pursuant to our 1999 Stock Incentive Plan as soon as practicable
after execution of his employment agreement with us. These shares were issued on
August 27, 2002.
32
We estimate that if the merger were completed in the fourth quarter of
2002 and the employment of all the executive officers were terminated
immediately following the merger by the surviving corporation without cause, the
total cash sale bonus and severance payments would be approximately as follows:
Mr. Chocola, $100,000; Mr. Mancinelli, $1,500,000 (plus a monthly supplemental
retirement benefit of $17,148 payable for 15 years, beginning when he is 62
years of age); Mr. DeCock, (Euro $)50,000; Mr. Eveler, $142,413; Mr. Kissane,
$296,314; Mr. Lantz, $242,526; Mr. Mueller, $162,200; Mr. Murdoch, $233,955; Mr.
Niemeyer, $220,832; and Mr. Steinhilber, $430,850.
Stock Options
The merger agreement provides that each option to acquire our common
stock granted under our 1999 Stock Incentive Plan or otherwise, that is
outstanding immediately prior to the completion of the merger, will be canceled
and the holder of the option will be entitled to receive a cash payment for each
share subject to the option equal to the excess, if any, of $12.75 over the
exercise price per share of the option, net of any applicable withholding taxes,
to be paid by the close of business on the day on which the merger is completed.
The following sets forth information with respect to stock options that
have an exercise price of less than $12.75, referred to as "In-the-Money" stock
options, held as of August 27, 2002, by our directors and executive officers:
NUMBER OF SHARES WEIGHTED AVERAGE
UNDERLYING EXERCISE PRICE OF
DIRECTORS AND "IN-THE-MONEY" "IN-THE-MONEY"
EXECUTIVE OFFICERS STOCK OPTIONS STOCK OPTIONS
------------------ ---------------- ----------------
J. Christopher Chocola................................. 72,560 $0.83
Chairman and Director
Larry D. Greene........................................ 28,140 $10.63
Director
Frank S. Hermance...................................... 28,140 $10.63
Director
Victor A. Mancinelli................................... 200,000 $6.75
President, Chief Executive Officer and Director
Don J. Steinhilber..................................... 58,048 $0.83
Vice President, Chief Financial Officer and Treasurer
Michael J. Kissane..................................... 21,768 $0.83
Vice President, General Counsel and Secretary
Randy S. Eveler........................................ 10,000 $9.60
Vice President and Corporate Controller of CTB
Mark A. Lantz.......................................... 78,048 $2.52
Vice President, Grain Systems Business of CTB
Donald C. Mueller...................................... 10,000 $9.05
Vice President, Poultry Production Systems of CTB
33
NUMBER OF SHARES
UNDERLYING WEIGHTED AVERAGE
DIRECTORS AND "IN-THE-MONEY" EXERCISE PRICE OF
EXECUTIVE OFFICERS STOCK OPTIONS STOCK OPTIONS
------------------ ---------------- ----------------
George W. Murdoch...................................... 12,093 $10.92
Executive Vice President, International Business of CTB
Douglas J. Niemeyer.................................... 10,000 $7.75
Vice President, Egg Production Systems of CTB
Directors' and Officers' Indemnification
Pursuant to the merger agreement, Berkshire shall, and shall cause the
surviving corporation to indemnify, defend and hold harmless each person who
prior to the effective time has been a director or executive officer of us or
any of our subsidiaries against any loss, claim, damage, cost, expense, fine,
liability, judgment or settlement (1) as a result of that person's position with
us and (2) relating to the merger agreement and the transactions contemplated by
the merger agreement. In the case of the surviving corporation, the
indemnification shall only be provided, however, to the extent permitted by
Indiana law. Furthermore, in the case of Berkshire, the indemnification shall
not be applicable if (1) it is finally determined that the acts or omissions
giving rise to the claim were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the claim, or (2) the
claim arose out of, is based upon or attributable to the gaining of any
financial profit or other advantage to which the person was not legally
entitled.
DISSENTERS' RIGHTS
Under the Indiana Business Corporation Law, our shareholders are not
entitled to dissent and receive the appraised fair value of their shares in
connection with the merger.
SHAREHOLDERS AGREEMENT
As a condition to its entering into the merger agreement, Berkshire
required that American Securities Partners, L.P., ASP/CTB L.P., Caryl M.
Chocola, J. Christopher Chocola, Victor A. Mancinelli, Michael J. Kissane and
Don J. Steinhilber enter into a shareholders agreement. The following summary of
the material provisions of the shareholders agreement is qualified in its
entirety by reference to the shareholders agreement, which is attached to this
proxy statement as Annex B and incorporated by reference in this section of the
proxy statement. We urge you to read carefully the full text of the shareholders
agreement. As of the record date for the special meeting, the operative terms of
the shareholders agreement covered in excess of 56.7% of the outstanding shares
of our common stock. Under the shareholders agreement, these parties, referred
to as the shareholder parties, have agreed:
o to vote in favor of the approval of the merger agreement, the
merger and each of the transactions contemplated by the merger
agreement; and
o to vote against:
o any merger agreement or merger (other than the merger
agreement and the merger with Berkshire), consolidation,
combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or
by us;
o any takeover proposal, as defined in the merger agreement,
including any proposal or offer to acquire 20% or more of our
assets or outstanding shares; or
o any amendment of our articles of incorporation or by-laws or
other proposal or transaction involving us or any of our
shareholders which would impede, frustrate, prevent or nullify
any provision of the merger agreement or change the voting
rights of our shareholders.
34
As a result, the vote of these shareholders in favor of the merger
agreement will alone be sufficient to approve the merger agreement.
In the shareholders agreement, the shareholder parties have agreed to
irrevocably grant to and appoint Berkshire, C Acquisition Corp. and any
individual designated by Berkshire as their proxy to vote all the shares of our
common stock subject to the shareholders agreement in favor of the merger
agreement and against any competing transaction. The shareholder parties have
also agreed not to sell, transfer, pledge, assign or otherwise dispose of any of
the subject shares or enter into any agreement, option or other arrangement or
understanding, other than under the shareholders agreement or the merger
agreement, with respect to the transfer or voting of the subject shares.
The shareholders agreement terminates upon the earlier of the effective
time of the merger or the termination of the merger agreement in accordance with
its terms. Termination of the shareholders agreement will not relieve the
parties from any liability for any breach of the shareholders agreement prior to
termination.
35
THE MERGER AGREEMENT
The following is a summary of the material terms of the merger
agreement. The summary is qualified in its entirety by reference to the merger
agreement, which is attached to this proxy statement as Annex A and incorporated
by reference in this section of the proxy statement. We urge you to read
carefully the full text of the merger agreement.
STRUCTURE AND EFFECTIVE TIME
The merger agreement provides that, following the approval of the
merger agreement by our shareholders and the satisfaction or waiver of the other
conditions to the merger, including receipt of requisite regulatory approvals, C
Acquisition Corp. will be merged with and into us, and we will be the surviving
corporation. The merger will become effective upon the filing of articles of
merger with the Secretary of State of the State of Indiana or at a later time
agreed to by the parties and specified in the articles of merger.
While we anticipate that the merger will be completed during the fourth
quarter of 2002, we cannot specify when, or assure you that, all conditions to
the merger will be satisfied or waived. We intend to complete the merger as
promptly as practicable subject to receipt of shareholder approval and all
requisite regulatory approvals.
MERGER CONSIDERATION
At the effective time of the merger, each issued and outstanding share
of our common stock, other than shares owned by us, any of our wholly owned
subsidiaries, Berkshire, C Acquisition Corp. or any of Berkshire's other wholly
owned subsidiaries, all of which will be canceled without consideration, will be
canceled and converted into the right to receive merger consideration of $12.75
in cash, without interest. Each holder of a certificate representing shares of
our common stock will cease to have any voting or other rights with respect to
those shares, except the right to receive merger consideration.
Prior to the effective time of the merger, Berkshire will designate a
bank or trust company reasonably satisfactory to us to act as paying agent for
the payment of merger consideration. After the effective time of the merger,
Berkshire will deliver to the paying agent, when and as needed, funds necessary
for the payment of merger consideration. As soon as practicable after the
effective time of the merger, the paying agent will mail a letter of transmittal
to you. The letter of transmittal will tell you how to surrender your CTB common
stock certificates in exchange for the $12.75 per share merger consideration.
Please do not send your CTB common stock certificates now. You should send them
only in compliance with the instructions that will be provided in the letter of
transmittal. In all cases, the merger consideration will be paid only in
accordance with the procedures set forth in the merger agreement and the letter
of transmittal.
Holders of common stock whose certificates are lost, stolen or
destroyed will be required to make an affidavit identifying the certificate or
certificates as lost, stolen or destroyed and, if required by Berkshire, to post
a bond in a reasonable and customary amount as directed by Berkshire to
indemnify against any claim that may be made against Berkshire with respect to
the certificates.
None of Berkshire, C Acquisition Corp., CTB, the surviving corporation
or the paying agent will be liable to any person in respect of any merger
consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
36
Berkshire, the surviving corporation, and the paying agent, as
applicable, shall be entitled to deduct and withhold from the consideration
otherwise payable to holders of shares of our common stock such amounts as are
required to be withheld under any tax laws.
STOCK OPTIONS
We have agreed to take such action as may be required so that each
holder of an option to purchase shares of our common stock that is outstanding
immediately prior to completion of the merger will be entitled to receive, in
exchange for the cancellation of the option, an amount in cash equal to the
excess, if any, of $12.75 over the exercise price per share of our common stock
subject to the option, multiplied by the number of shares of our common stock
subject to the option, net of any applicable withholding taxes.
ARTICLES OF INCORPORATION AND BY-LAWS
When the merger becomes effective, the articles of incorporation of C
Acquisition Corp., as in effect immediately prior to the effective time of the
merger, will be the articles of incorporation of the surviving corporation,
until thereafter changed or amended as provided therein or by applicable law.
The by-laws of C Acquisition Corp., as in effect immediately prior to the
effective time of the merger, will be the by-laws of the surviving corporation
until thereafter changed or amended as provided therein or by applicable law.
DIRECTORS AND OFFICERS
The directors of C Acquisition Corp. immediately prior to the effective
time of the merger will be the directors of the surviving corporation until
their respective successors are duly elected and qualified. Our officers
immediately prior to the effective time of the merger will be the officers of
the surviving corporation until their respective successors are duly elected and
qualified.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties with
respect to us and our subsidiaries relating to, among other things:
o organization, corporate power, capital structure and similar
corporate matters;
o authorization, execution, delivery, performance and enforceability
of the merger agreement and related matters;
o the absence of any violation of, or conflicts with, organizational
documents, laws or certain contracts, judgments, orders, laws or
regulations as a result of entering into the merger agreement or
completing the merger;
o the consents we are required to obtain and the filings we are
required to make in connection with the merger agreement and the
transactions contemplated by the merger agreement;
o the accuracy and completeness of the information contained in the
reports and financial statements that we file with the SEC, and
the compliance of our SEC filings with applicable requirements of
Federal securities laws;
37
o the accuracy and completeness of this proxy statement at the time
it is mailed to our shareholders and at the time of the special
meeting;
o the conduct of our business, and the absence of a material adverse
effect, since June 30, 2002;
o the absence, since June 30, 2002, of specified types of
distributions, changes in benefits or compensation, accounting
changes or changes in tax elections;
o adequacy of the governmental authorizations and permits needed to
conduct our business, compliance with applicable laws and
governmental orders, and the absence of legal proceedings that
would have a material adverse effect on us;
o absence of our default or breach under our material contracts;
o tax, environmental, labor and employment, employee welfare and
benefit plan matters;
o the shareholder vote required to approve the merger agreement;
o nonapplication of the business combination provisions of the
Indiana Business Corporation Law to the merger;
o the absence of undisclosed broker's fees; and
o the receipt by us of opinions from our financial advisors.
The merger agreement contains customary representations and warranties
by Berkshire and C Acquisition Corp. relating to, among other things:
o their organization, standing, corporate power and similar
corporate matters;
o the authorization, execution, delivery, performance and
enforceability of the merger agreement and related matters;
o the absence of any violation of, or conflicts with, organizational
documents, laws or contracts, judgments, orders, laws and
regulations as a result of entering into the merger agreement or
completing the merger;
o the consents Berkshire and C Acquisition Corp. are required to
obtain and the filings Berkshire and C Acquisition Corp. are
required to make in connection with the merger agreement and the
transactions contemplated by the merger agreement;
o the accuracy and completeness of the information supplied for
inclusion in this proxy statement;
o the creation of C Acquisition Corp. solely for the purpose of
engaging in the transactions contemplated by the merger agreement;
o the sufficiency of funds available to Berkshire to pay the merger
consideration and to consummate, on the terms contemplated by the
merger agreement, the merger and the other transactions
contemplated thereby; and
38
o the absence of undisclosed broker's fees.
The representations and warranties in the merger agreement are subject,
in some cases, to specified exceptions and qualifications. All of the
representations and warranties will expire at the effective time of the merger.
COVENANTS RELATING TO THE CONDUCT OF OUR BUSINESS
Except as contemplated by the merger agreement or consented to in
advance in writing by Berkshire, until the effective time of the merger, we have
agreed that we will (and will cause our subsidiaries to) carry on business in
the usual, regular and ordinary course substantially consistent with past
practice in all material respects and we will (and will cause our subsidiaries
to) use all reasonable efforts to preserve intact our business and third-party
relationships. In addition, we have agreed that we will not (and will not permit
any of our subsidiaries to) take any of the following actions, except as
expressly contemplated by the merger agreement or disclosed to Berkshire in the
disclosure schedule delivered to it prior to the signing of the merger
agreement, without Berkshire's prior written consent (such consent not to be
unreasonably withheld):
o enter into any material new line of business or incur any capital
expenditures, obligations or liabilities in connection with any
capital expenditures in excess of $6,100,000, in the aggregate;
o declare, set aside or pay any dividends on, or make any other
distributions in respect of, our or a subsidiary's capital stock,
other than dividends by any direct or indirect wholly owned
subsidiary of us to its parent;
o split, combine, or reclassify any capital stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of, or in substitution for, shares of capital stock;
o purchase, redeem or otherwise acquire any shares of capital stock;
o issue, deliver or sell or authorize the issuance, delivery or sale
of any shares of our or a subsidiary's capital stock, of any class
or any securities convertible into, or exchangeable for, or any
rights, warrants or options to acquire, any of those shares of
capital stock, or enter into any agreement to do so other than the
issuance of shares of our common stock upon the exercise of stock
options outstanding on the date of the merger agreement; or
o amend our or a subsidiary's articles of incorporation, by-laws or
organizational documents;
o acquire or agree to acquire by merger or otherwise any business,
business organization, or division thereof, or any assets, other
than inventory, supplies and raw materials in the ordinary course
of business consistent with past practice;
o sell, lease or otherwise dispose of, or subject to any
encumbrance, pledge or security interest, any material properties
or assets, except for sales of inventory and excess or obsolete
assets in the ordinary course of business consistent with past
practice;
o incur or guarantee any indebtedness for borrowed money, issue or
sell any debt securities or warrants or rights to acquire any debt
securities;
39
o take any action that would result in any of the representations or
warranties by us in the merger agreement becoming untrue in a
material respect or any of the conditions in the merger agreement
not being satisfied;
o amend or modify any of the arrangements with our financial
advisors; or
o authorize any of, or commit or agree to take any of, the actions
that are prohibited by our covenants in the merger agreement.
ADDITIONAL AGREEMENTS
In addition to our agreement to conduct our business in accordance with
the covenants described in "Covenants Relating to the Conduct of Our Business,"
the merger agreement contains agreements by us or by us and Berkshire to take
several other actions in anticipation of the merger as described below.
o PROXY STATEMENT. We and Berkshire have agreed to cooperate with
respect to amending or supplementing the proxy statement to
reflect material information discovered prior to the effective
time of the merger. Any filing of, or amendment or supplement to,
the proxy statement is subject to Berkshire's review and comment.
We have agreed to advise Berkshire of any comments, or requests
for further information, made by the SEC.
o ACCESS TO INFORMATION. We have agreed to afford to Berkshire and
its representatives reasonable access to our properties, books,
records and personnel and to furnish promptly to Berkshire a copy
of each report, schedule, registration statement and other
document we file or receive pursuant to the requirements of
Federal or state securities laws and other information concerning
our business, properties and personnel that Berkshire reasonably
requests.
o SHAREHOLDER MEETING. We have agreed to make arrangements for and
hold a shareholders' meeting as promptly as practicable after the
date of the merger agreement for the purpose of obtaining
shareholder approval of the merger agreement. We have further
agreed that we will, through our board of directors, recommend
that our shareholders approve the merger agreement.
o REASONABLE BEST EFFORTS. We and Berkshire have agreed that each of
us will (and will cause our subsidiaries) to use reasonable best
efforts to complete the merger, including using reasonable best
efforts to accomplish the following:
o obtaining any necessary consent, authorization, order or
approval of, or any exemption by, any governmental entity or
any other public or private third party which is required to
be obtained in connection with the merger and the transactions
contemplated by the merger agreement and the making or
obtaining of all necessary filings and registrations;
o defending any lawsuits or other legal proceedings challenging
the merger agreement; and
o the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and
to carry out the purposes of, the merger agreement.
o OTHER ACTIONS; ADVICE OF CHANGES. We and Berkshire have agreed not
(and we will not permit any of our subsidiaries) to take any
action that would result in the representations and warranties
in the merger agreement that are qualified as to materiality or
material adverse
40
effect becoming untrue, any of such representations and warranties
that are not so qualified becoming materially untrue or any of the
conditions to the merger not being satisfied, and we and Berkshire
will promptly advise each other of any change or event which would
cause or constitute a material breach of any of the
representations and warranties under the merger agreement.
o PUBLICITY. We, on one hand, and Berkshire and C Acquisition Corp.,
on the other hand, are generally required to give the other the
opportunity to review and comment upon, prior to issuing (or
permitting any affiliate to issue), any press release or other
public announcement or statement with respect to the merger
agreement or the transactions contemplated by the merger
agreement, except if the statement is required by law, any
national securities exchange or the National Association of
Securities Dealers, Inc.
NO SOLICITATION OF TRANSACTIONS
We have agreed that we will not, and will not permit our subsidiaries
to, nor shall we authorize any director, officer or employee of us or any of our
subsidiaries, or any investment bank, attorney or representative of us or our
subsidiaries to (and we have affirmatively told each of them not to), directly
or indirectly, solicit, initiate or encourage the submission of any proposal or
offer from any person (other than Berkshire or C Acquisition Corp.) relating to
any direct or indirect acquisition, in one transaction or a series of
transactions of (1) assets or businesses that constitute or represent 20% or
more of the assets of us and our subsidiaries, taken as a whole, (2) 20% or more
of the outstanding shares of our common stock or (3) 20% or more of the
outstanding shares of capital stock of, or other equity or voting interests in,
any of our subsidiaries directly or indirectly holding, individually or taken
together, the assets or businesses referred to in (1). Any such proposal is
referred to in this proxy statement as a takeover proposal.
We have also agreed that we will not, and will not permit any of our
subsidiaries to, nor shall we authorize any director, officer or employee of us
or any of our subsidiaries, or any investment bank, attorney or representative
of us or our subsidiaries to (and we have affirmatively told each of them not
to), directly or indirectly, enter into, continue or otherwise participate in
any discussions or negotiations regarding, or furnish to any person any
information with respect to, or otherwise cooperate in any way with, any
takeover proposal.
Our board of directors may not (1) withdraw (or modify in a manner
adverse to Berkshire) or propose publicly to withdraw (or so modify) its
recommendation that our shareholders approve the merger agreement and the
merger, (2) adopt or approve, or propose publicly to adopt or approve, any
takeover proposal or (3) cause or permit us to enter into any agreement,
referred to in this proxy statement as an acquisition agreement, constituting or
related to, or which is intended to or is reasonably likely to lead to, a
takeover proposal.
Even if we receive a takeover proposal that is superior to the terms of
the merger agreement we cannot terminate the merger agreement.
We must promptly advise Berkshire orally and in writing of any takeover
proposal or inquiry that we reasonably believe could lead to a takeover
proposal, the material terms and conditions of the takeover proposal or inquiry
and the identity of the person making the takeover proposal or inquiry. We must
keep Berkshire informed as to the status and details (including material
amendments or proposed amendments) of any takeover proposal or inquiry.
The merger agreement provides that it will not prohibit us from making
any disclosure to our shareholders if, in the good faith judgment of our board
of directors, after consultation with outside
41
counsel, failure to do so would be inconsistent with the board's obligations
under applicable law; provided that in no event may our board take or agree to
take any of the prohibited actions described above.
DIRECTORS' AND OFFICERS' INDEMNIFICATION
The merger agreement provides that Berkshire shall, and shall cause the
surviving corporation to, indemnify, defend and hold harmless each person who
prior to the effective time has been an officer, director, agent or employee of
CTB or any of its subsidiaries against any loss, claim, damage, cost, expense,
fine, liability, judgment or settlement (1) as a result of that person's
position with us and (2) relating to the merger agreement and the transactions
contemplated by the merger agreement. In the case of the surviving corporation,
the indemnification shall only be provided, however, to the extent permitted by
Indiana law. Furthermore, in the case of Berkshire, the indemnification shall
not be applicable if (1) it is finally determined that the acts or omissions
giving rise to the claim were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the claim, or (2) the
claim arose out of, is based upon or attributable to the gaining of any
financial profit or other advantage to which the person was not legally
entitled.
EMPLOYEE BENEFIT MATTERS
Berkshire has agreed that, for a period of one year after the effective
time of the merger, the surviving corporation will provide, to those of our and
our subsidiaries' employees who continue their employment after the effective
time of the merger for so long as they remain an employee for the year, benefits
that are no less favorable in the aggregate to each such employee than those in
effect immediately prior to the effective time of the merger. For one year after
the effective time of the merger, Berkshire has also agreed that the surviving
corporation will provide base salaries, annual commission and bonus
opportunities, and long-term incentive compensation opportunities to each
continuing employee that are no less favorable in the aggregate to each such
employee than those in effect immediately prior to the effective time of the
merger. The surviving corporation will allow continuing employees to utilize any
unused vacation or other time off to which they are entitled as of the time of
the merger in accordance with the terms of our and our subsidiaries' vacation
and other time off arrangements as in effect immediately prior to the merger,
without adverse amendment or modification. Berkshire has also agreed that the
surviving corporation will maintain our existing severance and termination
policies without adverse amendment or modification for one year after the
effective time of the merger. From and after the effective time of the merger,
the surviving corporation will honor and maintain all provisions in our and our
subsidiaries' benefit plans in accordance with their respective terms (as in
effect at the effective time of the merger) for vested benefits and other vested
or guaranteed amounts earned or accrued through the time of the merger. From and
after the effective time of the merger, the surviving corporation will honor in
accordance with their respective terms (as in effect at the time of the merger)
all our and our subsidiaries' employment and benefit agreements.
To the extent applicable, Berkshire has agreed that the continuing
employees' service with us or any of our subsidiaries will be recognized for all
purposes under any employee benefit plan sponsored by the surviving corporation
and in which the employees participate except to the extent such recognition of
service would result in a duplication of benefits. Berkshire has agreed that the
surviving corporation will waive any pre-existing condition limitation or
actively-at-work requirement under any welfare benefit plan in which the
continuing employees are eligible to participate to the extent such conditions
were satisfied under our welfare benefit plans and to provide each continuing
employee with credit for co-payments and deductibles paid prior to the effective
time of the merger.
Berkshire has acknowledged and agreed that the transactions
contemplated by the merger agreement when effected will constitute a "change in
control" for purposes of all our and our subsidiaries' benefit plans and
employment and benefit agreements. The continuation of benefits requirements
does not require the surviving corporation or Berkshire to provide equity
incentive compensation opportunities. Berkshire has agreed that it will take all
necessary shareholder action to permit each of the surviving corporation's
obligations in the merger agreement that are described above to be performed.
Subject to compliance with the requirements of the merger agreement that are
described above, the surviving
42
corporation may amend, modify or terminate any of our benefit plans and our
employment and benefit agreements in accordance with their terms and applicable
law.
In accordance with the requirements of the merger agreement, our board
has passed the necessary resolutions in connection with all outstanding options
under our 1999 Stock Incentive Plan and all other option agreements, to provide
that (1) each participant's options to purchase our common stock that are
outstanding immediately prior to the completion of the merger will terminate
immediately prior to the effective time of the merger in exchange for a cash
payment in an amount equal to the excess, if any, of $12.75 over the exercise
price per share of our common stock subject to the option, multiplied by the
number of shares of our common stock subject to the option and (2) our 1999
Stock Incentive Plan and all other options shall terminate at the effective time
of the merger.
CONDITIONS TO THE MERGER
Each party's obligation to complete the merger is subject to a number
of conditions, including the following:
o our shareholders must have approved the merger agreement;
o the U.S. antitrust review waiting period must have expired or been
terminated, and any other consents or approvals required to
consummate the merger (1) under any antitrust laws of the European
Union or any member state of the European Union or (2) under any
other foreign antitrust law, must have been obtained, except for
those the failure of which to be obtained would not have a
material adverse effect on us; and
o there must be no temporary restraining order, preliminary or
permanent injunction or other order or decree issued by any
government entity of competent jurisdiction in effect preventing
the completion of the merger.
The obligations of Berkshire and C Acquisition Corp. to complete the
merger are subject to additional conditions, including the following:
o as of closing, the representations and warranties made by us that
are qualified by material adverse effect must be true and correct,
and our representations and warranties that are not so qualified
must be true and correct, except where the failure to be true and
correct would not, individually or in aggregate, have a material
adverse effect on us. This condition will cease to apply on
September 19, 2002, with respect to our representation that since
June 30, 2002, there has not been a material adverse effect on us;
o we must have performed in all material respects our obligations
under the merger agreement; and
o there must not be pending any suit, action or proceeding brought
by any governmental entity (1) challenging the acquisition by
Berkshire or C Acquisition Corp. of any shares of our common
stock, seeking to restrain or prohibit the merger, or seeking to
obtain from us, Berkshire or any of our or Berkshire's affiliates
any damages that are material in relation to us and our
subsidiaries, taken as a whole, (2) seeking to prohibit or limit
the ownership or operation by us, Berkshire or any of our and
Berkshire's affiliates of any portion of the business or assets of
CTB, Berkshire or any of those affiliates, or to require us,
Berkshire or any of those affiliates to divest or hold separate
any portion of its business or assets, as a result of the merger
or any other transaction contemplated by the merger agreement,
43
(3) seeking to impose limitations on the ability of Berkshire to
acquire or hold, or exercise full rights of ownership of, any
shares of our common stock or (4) seeking to prohibit Berkshire
from effectively controlling the business or operations of us or
our subsidiaries.
Our obligation to complete the merger is subject to additional
conditions, including:
o as of closing, the representations and warranties made by
Berkshire and C Acquisition Corp. that are qualified by material
adverse effect must be true and correct, and their representations
and warranties that are not so qualified must be true and correct,
except where the failure to be true and correct would not,
individually or in aggregate, have a material adverse effect; and
o Berkshire and C Acquisition Corp. must have performed in all
material respects their obligations under the merger agreement.
MATERIAL ADVERSE EFFECT
Under the merger agreement, a material adverse effect on us means any
state of facts, change, effect, event, occurrence, or development that is, or is
reasonably likely to be, materially adverse to the business, results of
operations or financial condition of us and our subsidiaries, taken as a whole,
other than any change, effect, event or occurrence relating to or arising out
of:
o the economy or securities markets in general;
o the merger agreement or the transactions contemplated by the
merger agreement; or
o any industry currently engaged in by us, in general, and not
specifically relating to us or our subsidiaries.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated:
o by mutual written consent of Berkshire and us;
o by Berkshire or us if the merger is not completed by the outside
date of January 31, 2003;
o by Berkshire or us if any governmental entity of competent
jurisdiction shall have issued a permanent injunction or other
order or decree preventing the merger and such injunction, order
or decree has become final and nonappealable;
o by Berkshire or us if our shareholders do not approve the merger
agreement at the special meeting or any adjournment or
postponement of the special meeting;
o by Berkshire if we breach any of our representations, warranties
or covenants contained in the merger agreement, which breach (1)
would give rise to the failure of either of the first two
additional conditions to the obligations of Berkshire and C
Acquisition Corp. to complete the merger described in "Conditions
to the Merger" and (2) has not been or is incapable of being cured
by us within 30 business days after receipt of written notice from
Berkshire;
44
o by us if Berkshire breaches any of its representations, warranties
or covenants contained in the merger agreement, which breach (1)
would give rise to the failure of either of the two additional
conditions to our obligation to complete the merger described in
"--Conditions to the Merger" and (2) has not been or is incapable
of being cured by Berkshire within 30 business days after receipt
of written notice from us.
We have no ability to terminate the merger agreement, except for the
reasons outlined above, to accept an alternative transaction.
In the event of termination of the merger agreement by either party
under the merger agreement provisions described above, the merger agreement will
become void and have no effect; provided, however, that this will not relieve
any breaching party from liability for any prior intentional and material breach
of any of its representations, warranties, covenants or agreements under the
merger agreement.
EXPENSES
Whether or not the merger is completed, all costs and expenses incurred
in connection with the merger agreement and the transactions contemplated by the
merger agreement will be paid by the party incurring those costs or expenses,
except that filing fees and expenses incurred in connection with the
preparation, printing, filing and mailing of this proxy statement shall be
shared equally by Berkshire and us.
AMENDMENT; WAIVER
The merger agreement may be amended only by a written instrument signed
on behalf of each party. The merger agreement may be amended by the parties at
any time, except that once shareholder approval of the merger agreement has been
obtained, any amendment for which shareholder approval is required by law may
not be made without that further approval having been obtained. At any time
prior to the effective time of the merger, any party may, by means of a signed
written instrument, extend the time for the performance of any of the
obligations or other acts of the other parties, waive any inaccuracies in the
representations and warranties in the merger agreement or any document delivered
under the merger agreement or, subject to any required approval by our
shareholders under the circumstances described in the first sentence of this
paragraph, waive compliance with any of the agreements or conditions contained
in the merger agreement.
45
ACCOUNTING TREATMENT
The merger will be accounted for by Berkshire using the purchase method
of accounting. Under this method of accounting, the purchase price will be
allocated to the fair value of the net assets acquired. The excess purchase
price over the fair value of the assets acquired will be allocated to goodwill.
ANTITRUST MATTERS
The HSR Act provides that transactions such as the merger may not be
completed until certain information has been submitted to the Federal Trade
Commission and the Antitrust Division of the U.S. Department of Justice and the
specified waiting period has expired or has been terminated. We and Berkshire
made the required filings under the HSR Act on August 23, 2002 and August 26,
2002, respectively, and, therefore, expect the waiting period to expire on
September 28, 2002.
However, prior to that time, the Federal Trade Commission and the
Department of Justice may extend the waiting period by requesting from us and/or
Berkshire additional information or documentary material relevant to the merger.
If this request is made, the waiting period will be extended until the 30th day
after substantial compliance by us and Berkshire with the request. Thereafter,
the waiting period can be extended only by court order or by agreement of the
parties to the merger agreement.
Berkshire has determined that completion of the merger requires the
approval of the German Federal Cartel Office (FCO) under the Federal Republic of
Germany's Act Against Restraints of Competition 1957 (GWB), as amended. The GWB
provides that the merger may only be completed when the FCO has not objected to
the notified transaction or the applicable Phase I review period of one month
has expired. Berkshire submitted the required notification on /o/, 2002. We
expect that the FCO will grant approval to the notified transaction within the
initial Phase I review period, which expires on /o/, 2002. However, we cannot
rule out the possibility that the FCO will open an in-depth Phase II
investigation, which can last up to an additional three months.
It is possible that other state, local or foreign governmental entities
or third parties may seek to challenge the merger. In addition, it is possible
that governmental entities having jurisdiction over Berkshire and us may seek
regulatory concessions as conditions for granting approval of the merger. Under
the merger agreement, we have both agreed to use our reasonable best efforts to
take all actions to obtain all necessary regulatory and governmental approvals
necessary to complete the merger and to defend any lawsuits or other legal
proceedings challenging the merger agreement. Neither we nor Berkshire is
required to divest or enter into any licensing or similar arrangement with
respect to any assets or any portion of the business of Berkshire, CTB or any of
Berkshire's or our respective subsidiaries. While we do not expect the closing
of the merger to be prevented or materially delayed by any challenge by
regulatory authorities within or outside the United States, we can give no
assurance that the required regulatory approvals will be obtained on terms that
satisfy the conditions to completion of the merger or within the time frame
contemplated by Berkshire and us. See "The Merger Agreement--Conditions to the
Merger."
BENEFICIAL OWNERSHIP OF CTB COMMON STOCK
The following table sets forth information as of August 27, 2002, regarding
the beneficial ownership of our common stock by any persons, other than any of
our directors and executive officers, known to us from our records and from
reports filed with the SEC on Schedule 13D and/or 13G to be the beneficial owner
of more than 5% of our common stock. Unless otherwise indicated, the owner has
sole voting and investment power with respect to the shares indicated (other
than unissued securities, the ownership of which has been imputed to the owner).
46
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------- -------------------- ----------------
American Securities Partners G.P. (1)..... 4,127,189 36.3%
(Management) Corp.
The Chrysler Center
666 Third Avenue
29th Floor
New York, NY 10017-4011
Wynnefield Partners (2)................... 723,500 6.4%
450 Seventh Avenue
Suite 509
New York, NY 10123
ASP/CTB G.P. Corp. (3).................... 454,706 4.0%
The Chrysler Center
666 Third Avenue
29th Floor
New York, NY 10017-4011
- -------------------------------------------
(1) Shares of common stock shown as
beneficially owned by American Securities Partner G.P. (Management) Corp.
are owned of record by American Securities Partners, L.P., of which
American Securities Associates, L.P., is the sole general partner and
possesses sole voting and investment power. American Securities Partners
G.P. (Management) Corp. is the sole general partner of American Securities
Associates, L.P. and possesses sole voting and investment power.
(2) According to a Schedule 13G filed by Wynnefield Partners with the SEC on
January 25, 2001 which indicates as of December 27, 2000, Wynnefield
Partners Small Cap Value, L.P., Wynnefield Partners Small Cap Value,
L.P.I., Wynnefield Small Cap Value Offshore Fund, Ltd., and Channel
Partnership II, L.P. had sole voting power over 723,500 shares, shared
voting power over no shares, sole dispositive power over 723,500 shares and
shared dispositive power over no shares.
(3) Shares of common stock shown as beneficially owned by ASP/CTB G.P. Corp.
are owned of record by ASP/CTB L.P., of which ASP/CTB G.P. Corp. is the
sole general partner and as to which it possesses sole voting and
investment power.
The following table sets forth information regarding the beneficial
ownership of our common stock by each of our directors, the named executive
officers and all directors and executive officers as a group as of August 27,
2002. Unless otherwise indicated, the owner has sole voting and investment power
with respect to the shares indicated (other than unissued securities, the
ownership of which has been imputed to the owner).
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS
------------------------ -------------------- ----------------
Michael G. Fisch(2)(3).............. 4,581,895 40.3%
Charles D. Klein(2)(3).............. 4,581,895 40.3%
Caryl M. Chocola.................... 1,470,501 12.9%
J. Christopher Chocola.............. 760,371 6.7%
Victor A. Mancinelli................ 228,777 2.0%
Frank S. Hermance................... 16,698 *
Larry D. Greene..................... 12,698 *
Don J. Steinhilber.................. 113,707 1.0%
Mark A. Lantz....................... 56,352 *
George W. Murdoch................... 53,065 *
All directors and executive
47
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS
------------------------ -------------------- ----------------
officers as
a group (14 persons) ........... 7,367,367 64.9%
* Less than 1%.
(1) Includes the following shares that may be purchased pursuant to stock
options that are currently exercisable within 60 days: Mr. Chocola, 58,048;
Mr. Greene, 12,698; Mr. Hermance, 12,698; Mr. Mancinelli; 220,000; Mr.
Steinhilber, 53,536; Mr. Lantz, 43,536; Mr. Murdoch, 52,465; and all
directors and executive officers as a group, 472,493. Does not include
shares subject to stock options, which are not exercisable within 60 days,
but pursuant to the terms of the merger agreement will be canceled
immediately prior to completion of the merger in exchange for a cash
payment for each share subject to the option equal to the excess, if any,
of $12.75 over the exercise price per share subject to the option. See "The
Merger-Interests of Certain Persons in the Merger."
(2) Messrs. Klein and Fisch as shareholders of American Securities G.P.
(Management) Corp., may be deemed to have beneficial ownership of the
shares shown as beneficially owned by American Securities Partners G.P.
(Management) Corp. Such persons disclaim beneficial ownership of such
shares.
(3) Messrs. Klein and Fisch, as shareholders of ASP/CTB G.P. Corp., may be
deemed to have beneficial ownership of shares shown as beneficially owned
by ASP/CTB G.P. Corp. Such persons disclaim beneficial ownership of such
shares.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Our common stock is traded on The Nasdaq Stock Market under the symbol
"CTBC." The table below sets forth by quarter, since the beginning of our fiscal
year 2000, the high and low closing per-share sale price for our common stock on
The Nasdaq Stock Market.
MARKET PRICES
-------------------------------
HIGH LOW
------------ -------------
Fiscal Year 2000
First Quarter.................................................... $9.250 $6.188
Second Quarter................................................... $8.125 $6.500
Third Quarter.................................................... $8.250 $6.688
Fourth Quarter................................................... $8.875 $7.000
Fiscal Year 2001
First Quarter.................................................... $9.125 $7.313
Second Quarter................................................... $9.380 $8.520
Third Quarter.................................................... $10.210 $8.850
Fourth Quarter................................................... $11.500 $9.790
Fiscal Year 2002
First Quarter.................................................... $15.180 $10.750
Second Quarter................................................... $18.000 $15.000
Third Quarter through August 27, 2002............................ $15.460 $10.690
On August 16, 2002, the last full trading day prior to the public
announcement of the signing of the merger agreement, the closing price for our
common stock on The Nasdaq Stock Market was $14.67 per share. On August 27,
2002, the most recent practicable date prior to the printing of this proxy
statement, the closing price of our common stock on The Nasdaq Stock Market was
$12.70 per share.
We have not paid any dividends during the past two years.
The market price for our common stock is subject to fluctuation and
shareholders are urged to obtain current market quotations. We cannot give you
any assurances as to the future price of or market for our common stock.
48
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on various underlying assumptions and
expectations of management and are subject to risks and uncertainties which
could cause actual results to differ materially from those expressed in the
forward-looking statements. These risks and uncertainties include, but are not
limited to, general economic conditions; implementation of operational
improvements; execution of our growth strategy; conditions in the domestic hog
market; Russian imports of poultry; availability and pricing of raw materials,
such as steel; currency exchange rates; weather impact on grain production and
animal feed costs; achievement of anticipated earnings growth; pricing pressure
as a result of domestic and international market forces; the timing and
occurrence (or non-occurrence) of transactions; and events which may be subject
to circumstances beyond our control or the control of our subsidiaries.
Other factors and assumptions not identified above could also cause
actual results to differ materially from those set forth in the forward-looking
statements. Although our management believes these assumptions are reasonable,
we cannot assure you that they will prove correct. Accordingly, you should not
rely upon forward-looking statements as a prediction of actual results. Further,
we undertake no obligation to update forward-looking statements after the date
they are made or to conform the statements to actual results or changes in our
expectations.
The forward-looking statements should be read in conjunction with our
Annual Report on Form 10-K for the fiscal year ended December 31, 2001 and our
subsequent Quarterly Reports on Form 10-Q. Our reports on Form 10-K and Form
10-Q are on file with the SEC, and copies are available without charge upon
written request to our Manager of Corporate Communications at the address
provided in "Where You Can Find More Information."
All information contained in this proxy statement with respect to
Berkshire and C Acquisition Corp. has been supplied or confirmed by Berkshire.
FUTURE SHAREHOLDER PROPOSALS
If the merger is completed, there will be no public shareholders of CTB
and no public participation in any future meetings of our shareholders. However,
if the merger is not completed, we will hold a 2003 annual meeting of
shareholders. In that event:
o Rule 14a-8 under the Exchange Act requires that a shareholder
proposal intended to be included in the proxy statement for the
2003 annual meeting be received at our executive offices no later
than December 4, 2002. The proposal may be omitted from the annual
meeting proxy statement if the submitting shareholder does not
meet the applicable requirements under Rule 14a-8; and
o shareholder proposals for new business or suggestions for nominees
to the board of directors submitted outside of Rule 14a-8 must be
delivered to our Secretary at our principal executive offices no
earlier than February 5, 2003 and no later than March 7, 2003.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. The public may read and copy any materials we
file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The public may obtain information on the
49
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC also maintains an Internet site that contains reports, proxy and information
statements and other information regarding issuers, including CTB, that file
electronically with the SEC. The address of the SEC's Internet site is
http://www.sec.gov.
ADDITIONAL INFORMATION
To vote your shares, please complete, date, sign and return the
enclosed proxy card as soon as possible in the enclosed postage-prepaid
envelope. Please call either Don J. Steinhilber, our Chief Financial Officer and
Treasurer, or Michael J. Kissane, our General Counsel and Secretary, at (574)
658-4191, if you have any questions about this proxy statement or the merger or
need assistance with the voting procedures.
Requests for additional copies of this proxy statement or proxy cards
should be directed to us at the following address:
CTB International Corp.
611 North Higbee Street
Milford, Indiana 46542-2000
Attention: Manager of Corporate Communications
Telephone: (574) 658-4191
If you would like to request additional from us, please do so by /o/,
2002 in order to receive them before the special meeting.
You should rely only on the information contained in this proxy
statement. We have not authorized anyone to provide you with information that is
different from what is contained in this proxy statement. This proxy statement
is dated /o/, 2002. 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 the proxy statement to shareholders shall not create any implication to the
contrary.
50
ANNEX A
================================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of August 16, 2002
Among
BERKSHIRE HATHAWAY INC.
C ACQUISITION CORP.
and
CTB INTERNATIONAL CORP.
================================================================================
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TABLE OF CONTENTS
ARTICLE I
Definitions and Interpretation
Page
-----
SECTION 1.01. Certain Defined Terms.............................................................6
SECTION 1.02. Other Defined Terms...............................................................9
SECTION 1.03. Interpretation ..................................................................10
ARTICLE II
The Merger
SECTION 2.01. The Merger ......................................................................10
SECTION 2.02. Closing .........................................................................11
SECTION 2.03. Effective Time ..................................................................11
SECTION 2.04. Effects of the Merger............................................................11
SECTION 2.05. Articles of Incorporation and By-laws............................................11
SECTION 2.06. Directors .......................................................................12
SECTION 2.07. Officers ........................................................................12
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock..........................................................12
SECTION 3.02. Exchange of Certificates.........................................................13
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of the Company....................................16
SECTION 4.02. Representations and Warranties of Parent and Acquisition Sub.....................27
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ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Covenants of the Company.........................................................30
SECTION 5.02. Covenants of Parent and Acquisition Sub..........................................33
SECTION 5.03. No Solicitation .................................................................33
ARTICLE VI
Additional Agreements
SECTION 6.01. Preparation of the Proxy Statement...............................................34
SECTION 6.02. Access to Information............................................................35
SECTION 6.03. Company Shareholders Meeting.....................................................36
SECTION 6.04. Reasonable Best Efforts..........................................................36
SECTION 6.05. Benefits Matters.................................................................36
SECTION 6.06. Stock-Based Compensation.........................................................38
SECTION 6.07. Fees and Expenses................................................................39
SECTION 6.08. Indemnification and Exculpation..................................................39
SECTION 6.09. Transfer Taxes ..................................................................41
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation to Effect the Merger.......................42
SECTION 7.02. Conditions to Obligations of Parent and Acquisition Sub to Effect the Merger.....42
SECTION 7.03. Conditions to Obligation of the Company to Effect the Merger.....................44
SECTION 7.04. Frustration of Closing Conditions................................................44
ARTICLE VIII
Termination and Amendment
SECTION 8.01. Termination .....................................................................45
SECTION 8.02. Effect of Termination............................................................46
SECTION 8.03. Amendment .......................................................................46
SECTION 8.04. Extension; Waiver................................................................46
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver........................47
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ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties....................................47
SECTION 9.02. Notices .........................................................................47
SECTION 9.03. Counterparts ....................................................................48
SECTION 9.04. Entire Agreement; No Third-Party Beneficiaries; Rights of Ownership..............48
SECTION 9.05. Governing Law ...................................................................48
SECTION 9.06. Publicity .......................................................................49
SECTION 9.07. Assignment ......................................................................49
SECTION 9.08. Enforcement .....................................................................49
SECTION 9.09. Severability ....................................................................50
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AGREEMENT AND PLAN OF MERGER (this
"Agreement") dated as of August 16, 2002,
among BERKSHIRE HATHAWAY INC., a Delaware
corporation ("Parent"), C ACQUISITION CORP.,
an Indiana corporation and a wholly owned
subsidiary of Parent ("Acquisition Sub"),
and CTB INTERNATIONAL CORP., an Indiana
corporation (the "Company").
WHEREAS Parent and the respective Boards of Directors of
Acquisition Sub and the Company have approved the merger of Acquisition Sub with
and into the Company (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of common stock, par value $0.01 per share, of the Company ("Company
Common Stock"), other than the shares of Company Common Stock owned, directly or
indirectly, by Parent or the Company immediately prior to the Effective Time,
will be converted into the right to receive the Merger Consideration (as defined
in Section 3.01(c));
WHEREAS each issued and outstanding share of Company Common
Stock owned, directly or indirectly, by Parent or the Company immediately prior
to the Effective Time, will be canceled and retired;
WHEREAS concurrently with the execution and delivery hereof,
American Securities Partners, L.P., ASP/CTB L.P., Caryl M. Chocola, J.
Christopher Chocola, the other individuals party thereto (collectively, the
"Sellers"), Parent and Acquisition Sub, will enter into a shareholder agreement
and proxy (the "Shareholders Agreement") pursuant to which the Sellers will
agree, among other things, to take specified actions in furtherance of the
Merger;
WHEREAS the Board of Directors of the Company (i) has
determined that this Agreement, the Merger and the other transactions
contemplated hereby are fair to and in the best interests of the Company and its
shareholders, (ii) has adopted this Agreement and has approved the Merger, the
other transactions contemplated hereby and the
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transactions contemplated by the Shareholders Agreement and (iii) has
recommended that the shareholders of the Company approve this Agreement, the
Merger and the other transactions contemplated hereby; and
WHEREAS Parent, Acquisition Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties agree as follows:
ARTICLE I
Definitions and Interpretation
------------------------------
SECTION 1.01. Certain Defined Terms.
For purposes of this Agreement, the following terms shall have
the following meanings:
"affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person.
"business day" means any day on which banks are not required
or authorized to close in the City of New York.
"control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of a person,
whether through the ownership of voting securities, by contract or otherwise.
"Environmental Claim" means any written notice, claim, demand,
action, suit, complaint or proceeding by any person alleging liability arising
out of or relating to (A) the presence or Release of any Hazardous Materials or
(B) any violation of an Environmental Law or an Environmental Permit.
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"Environmental Laws" means all applicable federal, state and
local statutes, rules, regulations, ordinances, orders, judgments and decrees
relating to contamination, pollution or the protection of the environment.
"Environmental Permits" means all Company Permits required
under Environmental Laws necessary for the Company and its subsidiaries to
conduct their operations and businesses on the date of this Agreement.
"Hazardous Materials" means (A) any petroleum or petroleum
products, radioactive materials or wastes, asbestos in any form, urea
formaldehyde foam insulation and polychlorinated biphenyls and (B) any other
chemical, material, substance or waste that in relevant form or concentration is
prohibited, limited or regulated under any Environmental Law.
"material adverse effect" means, when used in connection with
the Company, any state of facts, change, effect, event, occurrence or
development that is, or is reasonably likely to be, materially adverse to the
business, results of operations or financial condition of the Company and its
subsidiaries, taken as a whole, other than any change, effect, event or
occurrence relating to or arising out of (A) the economy or securities markets
in general, (B) this Agreement or the transactions contemplated hereby or the
announcement thereof or (C) any industry currently engaged in by the Company, in
general, and not specifically relating to the Company or its subsidiaries;
"material adverse effect" means, when used in connection with Parent, any state
of facts, change, effect, event, occurrence or development that would, or is
reasonably likely to, prevent or materially impede or delay the consummation of
the Merger or the other transactions contemplated by this Agreement.
"person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
"Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal,
A-7
discharge, dispersal, leaching or migration into or through the environment.
"subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are not such voting interests, more than 50%
of the equity interests of which) is owned directly or indirectly by such first
person.
"Takeover Proposal" means any proposal or offer from any
person (other than Parent or the Acquisition Sub) relating to any direct or
indirect acquisition, in one transaction or a series of transactions, including
any merger, tender offer, exchange offer, stock acquisition, asset acquisition,
statutory share exchange, business combination, recapitalization, liquidation,
dissolution, joint venture or similar transaction, of (A) assets or businesses
that constitute or represent 20% or more of the assets of the Company and its
subsidiaries, taken as a whole, or (B) 20% or more of the outstanding shares of
Company Common Stock or capital stock of, or other equity or voting interests
in, any of the Company's subsidiaries directly or indirectly holding,
individually or taken together, the assets or businesses referred to in clause
(A) above.
"tax" (including, with correlative meaning, "taxes" and
"taxable") includes all forms of taxation, whenever created or imposed, and
whether domestic or foreign, and whether imposed by a national, federal, state,
provincial, local or other Governmental Entity, including all interest,
penalties and additions imposed with respect to such amounts.
"tax returns" means all domestic or foreign (whether national,
federal, state, provincial, local or otherwise) returns, declarations,
statements, reports, schedules, forms and information returns relating to taxes
and any amended tax return.
A-8
SECTION 1.02. Other Defined Terms. For purposes of this
Agreement, each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
"Acquisition Agreement" 5.03(b)
"Acquisition Sub" Preamble
"Agreement" Preamble
"Articles of Merger" 2.03
"Broker Agreements" 4.01(p)
"Certificate" 3.01(c)
"Closing" 2.02
"Closing Date" 2.02
"Code" 3.02(f)
"Company" Preamble
"Company Benefit Agreements" 4.01(l)
"Company Benefit Plans" 4.01(l)
"Company Common Stock" Recitals
"Company Disclosure Schedule" 4.01
"Company Filed SEC Documents" 4.01
"Company Option Agreements" 4.01(b)
"Company Permits" 4.01(g)
"Company Preferred Stock" 4.01(b)
"Company SEC Documents" 4.01(d)
"Company Shareholder Approval" 4.01(n)
"Company Shareholders Meeting" 4.01(c)(ii)
"Company Stock Incentive Plan" 4.01(b)
"Company Stock Options" 4.01(b)
"Confidentiality Agreement" 6.02
"Continuation Period" 6.05(a)
"Continued Employee" 6.05(a)
"Effective Time" 2.03
"ERISA" 4.01(l)
"Exchange Act" 4.01(c)(ii)
"GAAP" 4.01(d)
"Governmental Entity" 4.01(c)(ii)
"HSR Act" 4.01(c)(ii)
"IBCL" 2.01
"Indemnified Liabilities" 6.08(a)
"Indemnified Persons" 6.08(a)
"Lien" 4.01(c)(ii)
"Merger" Recitals
"Merger Consideration" 3.01(c)
"Outside Date" 8.01(b)(i)
"Parent" Preamble
"Paying Agent" 3.02
A-9
"Proxy Statement" 4.01(c)(ii)
"Securities Act" 4.01(d)
"Shareholders Agreement" Recitals
"SEC" 4.01(c)(ii)
"Sellers" Recitals
"Surviving Corporation" 2.01
SECTION 1.03. Interpretation. When a reference is made in this
Agreement to a party or to an Article, Section, Exhibit or Schedule, such
reference shall be to a party to, an Article or Section of, or an Exhibit or
Schedule to, this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. The term "or" when used in
this Agreement is not exclusive. All terms defined in this Agreement shall have
the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms. Any agreement, instrument or statute defined or referred to
herein or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (x) (in the case of agreements or instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and (y) all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
ARTICLE II
The Merger
----------
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Indiana
Business Corporation Law
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(the "IBCL"), Acquisition Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 2.03). Following the Merger, the separate
corporate existence of Acquisition Sub shall cease and the Company shall be the
surviving corporation (the "Surviving Corporation"). The Surviving Corporation
shall continue its existence under the laws of the State of Indiana under the
name "CTB International Corp.", and the Surviving Corporation shall succeed to
all the rights and obligations of the Company and Acquisition Sub in accordance
with the IBCL.
SECTION 2.02. Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be specified by the
parties (the "Closing Date"), which shall be no later than the second business
day following the satisfaction or waiver of the conditions set forth in Article
VII (other than those conditions that by their terms are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those conditions), at the
offices of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New
York, New York 10019, unless another time, date or place is agreed to in writing
by the parties.
SECTION 2.03. Effective Time. Prior to the Closing, the
Company shall prepare articles of merger incorporating the plan of merger in
accordance with Section 23-1-40-5 of the IBCL (the "Articles of Merger"), and as
soon as practicable on the Closing Date, the Company shall file the Articles of
Merger in accordance with the relevant provisions of the IBCL with the Secretary
of State of the State of Indiana. The Merger shall become effective upon the
filing of the Articles of Merger with the Secretary of State of the State of
Indiana in accordance with Section 23-1-40-5 of the IBCL or at such later time
as is agreed to by the parties and set forth in the Articles of Merger (the time
the Merger becomes effective being hereinafter referred to as the "Effective
Time").
SECTION 2.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 23-1-40-6 of the IBCL.
SECTION 2.05. Articles of Incorporation and By-laws.
(a) The articles of incorporation of the Acquisition
Sub as in effect immediately prior to the
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Effective Time shall be the articles of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or
by applicable law.
(b) The by-laws of the Acquisition Sub as in effect
immediately prior to the Effective Time shall be the by-laws of the
Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
SECTION 2.06. Directors. The directors of Acquisition Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation to hold office until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
SECTION 2.07. Officers. The officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation to hold office until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
ARTICLE III
Effect of the Merger on the Capital Stock of the
------------------------------------------------
Constituent Corporations; Exchange of Certificates
--------------------------------------------------
Section 3.01. Effect on Capital Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of the Company, Parent or Acquisition Sub:
(a) Capital Stock of Acquisition Sub. Each issued and
outstanding share of common stock of Acquisition Sub shall be converted into and
become one fully paid and nonassessable share of common stock, par value $0.01
per share, of the Surviving Corporation.
(b) Cancelation of Treasury Stock, Parent-Owned Stock and
Certain Other Stock. Each share of Company Common Stock that is owned by the
Company, any wholly owned subsidiary of the Company, Parent, Acquisition Sub or
any other wholly owned subsidiary of Parent, immediately prior to the Effective
Time shall automatically be canceled and
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retired and shall cease to exist and no consideration shall be delivered or
deliverable in exchange therefor.
(c) Conversion of Company Common Stock. Each share of
Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be canceled in accordance with
Section 3.01(b)) shall be converted into the right to receive $12.75 in
cash, without interest (the "Merger Consideration"). At the Effective
Time, all such shares shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and
each holder of a certificate that immediately prior to the Effective
Time represented any such shares (a "Certificate") shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration and any dividends to which such holder is entitled
pursuant to the proviso to the first sentence of Section 3.02(c).
SECTION 3.02. Exchange of Certificates.
(a) Paying Agent. When and as needed, Acquisition Sub
shall deposit or cause to be deposited (and Parent shall provide all
necessary funds and otherwise cause Acquisition Sub to deposit), with a
bank or trust company designated by Parent or Acquisition Sub (and
reasonably acceptable to the Company) to act as agent (the "Paying
Agent") for the holders of Company Common Stock, the funds to pay the
Merger Consideration to the holders of Company Common Stock who shall
become entitled thereto. Any interest or other income produced by the
investment of the Merger Consideration by the Paying Agent will be
payable to the Acquisition Sub or Parent, as Parent directs.
(b) Exchange Procedures. As soon as practicable after
the Effective Time, Parent shall cause the Paying Agent to mail to each
holder of record of a Certificate (i) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Paying Agent and which shall be in customary
form and contain customary provisions)
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and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Each holder of
record of a Certificate shall, upon surrender to the Paying Agent of
such Certificate, be entitled to receive in exchange therefor an
amount of cash equal to the product of the Merger Consideration and
the number of shares of Company Common Stock previously represented by
such Certificate, and the Certificate so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of Company Common
Stock which is not registered in the transfer records of the Company,
payment of the Merger Consideration may be made to a person other than
the person in whose name the Certificate so surrendered is registered
if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall
pay any transfer or other taxes required by reason of the payment of
the Merger Consideration to a person other than the registered holder
of such Certificate or establish to the satisfaction of Parent that
such tax has been paid or is not applicable. Subject to the proviso to
the first sentence of Section 3.02(c), until surrendered as
contemplated by this Section 3.02(b), each Certificate shall be deemed
at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration which the holder
thereof has the right to receive in respect of such Certificate
pursuant to this Article III. No interest shall be paid or will accrue
on any cash payable to holders of Certificates pursuant to the
provisions of this Article III.
(c) No Further Ownership Rights in Company Common Stock. All
cash paid upon the surrender of Certificates in accordance with the terms of
this Article III shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock formerly represented by
such Certificates, provided, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a record date prior to
the Effective Time which may have been declared or made by the Company in
accordance with the terms of this Agreement on or prior to the date of this
Agreement in respect of such
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shares of Company Common Stock that remain unpaid at the Effective Time. At the
close of business on the day on which the Effective Time occurs, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, any
Certificate is presented to the Surviving Corporation or the Paying Agent for
any reason, it shall be canceled against delivery of cash to the holder thereof
as provided in this Article III.
(d) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable and
customary amount as Parent may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying Agent shall deliver
in exchange for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect thereto.
(e) No Liability. None of Parent, Acquisition Sub, the
Company, the Surviving Corporation or the Paying Agent shall be liable to any
person in respect of any cash delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificate shall
not have been surrendered prior to the date on which any Merger Consideration
would otherwise escheat to or become the property of any Governmental Entity,
any such Merger Consideration shall, to the extent permitted by applicable law,
become the property of Parent, free and clear of all claims or interest of any
person previously entitled thereto.
(f) Withholding Rights. Parent, the Surviving Corporation and
the Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable to any holder of Company Common Stock pursuant to this
Agreement such amounts as may be required to be deducted and withheld with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended (the "Code"), or under any provision of state, local or
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foreign tax law. To the extent amounts are so withheld by Parent, the Surviving
Corporation or the Paying Agent, the withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of Company Common
Stock in respect of which the deduction and withholding was made.
ARTICLE IV
Representations and Warranties
------------------------------
SECTION 4.01. Representations and Warranties of the Company.
Except as set forth in the Company SEC Documents (as defined in Section 4.01(d))
filed and publicly available after December 31, 2001 and prior to the date of
this Agreement (the "Company Filed SEC Documents") or on the disclosure schedule
delivered by the Company to Parent prior to the execution of this Agreement (the
"Company Disclosure Schedule"), the Company represents and warrants to Parent
and Acquisition Sub as follows:
(a) Organization and Power. The Company and each of its
subsidiaries is duly organized and validly existing under the laws of its
jurisdiction of incorporation or organization, has all requisite corporate power
and authority to conduct its business as presently conducted and is duly
qualified and in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary, except where failures thereof, individually or in the aggregate,
would not have a material adverse effect on the Company. The Company has made
available to Parent true and complete copies of its articles of incorporation
and by-laws, in each case as amended through the date of this Agreement.
(b) Capital Structure. The authorized capital stock of the
Company consists of 40,000,000 shares of Company Common Stock and 4,000,000
shares of preferred stock, par value $0.01 per share, of the Company ("Company
Preferred Stock"). At the close of business on August 13, 2002, (A) 10,885,939
shares of Company Common Stock were issued and outstanding, (B) no shares of
Company Preferred Stock were issued and outstanding, (C) 1,000,000 shares of
Company Common Stock were reserved
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for issuance pursuant to the 1999 CTB International Corp. Stock Incentive Plan
(the "Company Stock Incentive Plan"), of which 372,000 shares were subject to
outstanding Company Stock Options (as defined below) and (D) 587,938 shares were
subject to other option agreements (the "Company Option Agreements"). Other than
as set forth above, at the close of business on August 13, 2002, there were no
shares of capital stock or other voting securities of the Company issued,
reserved for issuance or outstanding, and there were no options, warrants or
other rights to acquire from the Company any such stock or securities. Since
August 13, 2002, (x) there have been no issuances by the Company of shares of
capital stock or other voting securities of the Company other than issuances of
shares of Company Common Stock pursuant to the exercise of options granted
pursuant to the Company Stock Incentive Plan or the Company Option Agreements to
purchase Company Common Stock (collectively, the "Company Stock Options")
outstanding at such date and (y) there have been no issuances by the Company of
options, warrants or other rights to acquire shares of capital stock or other
voting securities from the Company. All outstanding shares of Company Common
Stock are, and any shares of Company Common Stock which may be issued upon the
exercise of Company Stock Options when issued will be, validly issued, fully
paid and nonassessable, and not subject to preemptive rights. Other than as set
forth above, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, derivative contracts or undertakings of any
kind to which the Company or any subsidiary of the Company is a party, or by
which the Company or any subsidiary of the Company is bound, obligating the
Company or any subsidiary of the Company to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or other voting
securities of the Company or of any subsidiary of the Company or obligating the
Company or any subsidiary of the Company to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement or
undertaking, or obligating the Company to make any payment based on or resulting
from the value or price or change in value or price of any such security,
option, warrant, call, right, commitment, agreement or undertaking. There are no
outstanding contractual obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any
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shares of capital stock of the Company or any of its subsidiaries.
(c) Authorization; Non-contravention. (i) The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and, subject to obtaining the Company Shareholder Approval (as defined in
Section 4.01(n)), to consummate the transactions contemplated hereby. The
execution and delivery by the Company of this Agreement and the consummation by
the Company of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of the Company, subject to obtaining
the Company Shareholder Approval with respect to the Merger. This Agreement has
been duly executed and delivered by the Company and, assuming this Agreement
constitutes a legal, valid and binding obligation of each of Parent and
Acquisition Sub, enforceable against each of Parent and Acquisition Sub in
accordance with its terms, this Agreement constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms (except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, or by principles governing the availability of
equitable remedies). The Board of Directors of the Company, at a meeting duly
called and held, duly unanimously adopted resolutions (A) determining that the
terms of the Merger and the other transactions contemplated hereby are fair to
and in the best interests of the Company and its shareholders, (B) adopting this
Agreement, (C) approving the terms of the Shareholders Agreement and (D)
recommending that the Company's shareholders approve this Agreement, which
resolutions have not been modified, supplemented or rescinded and remain in full
force and effect as of the date of this Agreement.
(ii) The execution and delivery by the Company of this
Agreement do not, and the consummation by the Company of the transactions
contemplated hereby will not, conflict with, or result in any breach or
violation of, or default (with or without notice or lapse of time or both)
under, or result in the termination of, or accelerate the performance required
by, or give rise to a right of termination, cancelation or acceleration of any
obligation under, or the creation of a claim, lien, encumbrance, pledge or
security
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interest (a "Lien") pursuant to, (A) the articles of incorporation or by-laws of
the Company or comparable organizational documents of any subsidiary of the
Company or (B) subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in the
following sentence, any loan or credit agreement, note, mortgage, indenture,
lease or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any subsidiary of the Company or their respective
properties or assets, in any case under this clause (B) which, individually or
in the aggregate, would have a material adverse effect on the Company. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality (a "Governmental Entity") is required
by or with respect to the Company or any subsidiary of the Company in connection
with the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby, except for
(A) the filing with the Securities and Exchange Commission (the "SEC") of (1) a
proxy statement relating to the meeting (the "Company Shareholders Meeting") of
the shareholders of the Company duly called and convened to consider the
approval of this Agreement (such proxy statement as amended or supplemented from
time to time, the "Proxy Statement"), and (2) such reports under the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "Exchange Act"), as may be required in connection with this
Agreement and the other transactions contemplated hereby, (B) the filing of the
Articles of Merger with the Secretary of State of the State of Indiana in
accordance with Section 23-1-40-5 of the IBCL and the filing of appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (C) filings required pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") and any other applicable filings and
approvals under similar foreign antitrust laws and regulations, (D) those
required under the rules and regulations of the Nasdaq National Market, (E)
filings necessary to satisfy the applicable requirements of state
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securities or "blue sky" laws, and (F) such other consents, approvals, orders,
authorizations, registrations, declarations and filings, the failure of which to
be obtained or made, individually or in the aggregate, would not have a material
adverse effect on the Company and would not prevent or materially impede or
delay the consummation of the transactions contemplated hereby.
(d) SEC Documents; Financial Statements; Undisclosed
Liabilities. The Company has filed all reports, schedules, forms, statements and
other documents required to be filed by the Company with the SEC since January
1, 2001 (the "Company SEC Documents"). As of their respective dates, the Company
SEC Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act"), or the Exchange Act, as the case may be,
applicable to such Company SEC Documents. None of the Company SEC Documents when
filed contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the Company
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto in effect at the time of filing, have been prepared in
accordance with generally accepted accounting principles ("GAAP") (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the Company Filed SEC
Documents or for liabilities incurred in connection with this Agreement or in
the ordinary course of business after the date of this Agreement, neither the
Company nor any of its subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) which,
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individually or in the aggregate, would have a material adverse effect on the
Company.
(e) Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in the
Proxy Statement will, at the date the Proxy Statement is first mailed to the
shareholders of the Company or at the time of the Company Shareholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act, except that no representation or
warranty is made by the Company with respect to statements made or incorporated
by reference therein based on information supplied by or on behalf of Parent or
Acquisition Sub specifically for inclusion or incorporation by reference
therein.
(f) Absence of Certain Changes or Events. Since June 30, 2002,
the Company has conducted its business only in the ordinary course, and during
such period there has not been:
(i) any state of facts, change, effect, event, occurrence or
development which, individually or in the aggregate, would have a
material adverse effect on the Company;
(ii) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect
to any shares of capital stock of the Company or any repurchase for
value by the Company of any shares of capital stock of the Company,
other than (A) in connection with the exercise of any Company Stock
Option where the exercise price thereof is paid in whole or in part in
the form of shares of Company Common Stock or (B) in connection with
the exercise of any Company Stock Option for purposes of satisfying tax
withholding obligations;
(iii) any split, combination or reclassification of any shares
of capital stock of the Company or any
A-21
issuance or the authorization of any issuance of any other securities
in respect of, in lieu of or in substitution for shares of capital
stock of the Company;
(iv) (A) any granting by the Company or any subsidiary of the
Company to any director or executive officer of the Company or any
subsidiary of the Company of any increase in compensation, except in
the ordinary course of business consistent with past practice or as
required to satisfy contractual obligations that are existing as of the
date of this Agreement, (B) any granting by the Company or any
subsidiary of the Company to any such director or executive officer of
any increase in severance or termination pay, except as required to
satisfy contractual obligations that are existing as of the date of
this Agreement, (C) any entry by the Company or any subsidiary of the
Company into any employment, severance or termination agreement with
any such director or executive officer, (D) other than as required by
law, any entry into or amendment in any material respect of, (1) any
collective bargaining agreement, except in connection with
renegotiations of any expired or expiring collective bargaining
agreement in the ordinary course of business, or (2) any Company
Benefit Plan, except in the ordinary course of business consistent with
past practice, or (E) any taking of any action to accelerate any rights
or benefits, or making of any material determinations not in the
ordinary course of business consistent with past practice, under any
collective bargaining agreement or Company Benefit Plan;
(v) any change in accounting methods, principles or practices
by the Company or any subsidiary of the Company materially affecting
the reported consolidated assets, liabilities or results of operations
of the Company, except insofar as may have been required by a change in
GAAP; or
(vi) any material election with respect to taxes by the
Company or any subsidiary of the Company or settlement or compromise by
the Company or any subsidiary of the Company of any material tax
liability or refund.
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(g) Compliance with Laws; Litigation. The Company and its
subsidiaries hold all permits, licenses, registrations, variances, exemptions,
authorizations, orders and approvals of all Governmental Entities (the "Company
Permits") that are required for them to own, lease or operate their properties
and assets and to carry on their businesses as presently conducted, and there
has occurred no default under any such Company Permit, except for failures to
hold Company Permits or defaults under Company Permits which, individually or in
the aggregate, would not have a material adverse effect on the Company. The
Company and its subsidiaries are in compliance with all applicable statutes,
laws, ordinances, rules, orders and regulations of any Governmental Entity,
except for instances of noncompliance which, individually or in the aggregate,
would not have a material adverse effect on the Company. There are no suits,
actions or proceedings pending or threatened, against the Company or any
subsidiary of the Company which, individually or in the aggregate, would have a
material adverse effect on the Company, nor are there any judgments, decrees,
injunctions, rules or orders of any Governmental Entity or arbitrator
outstanding against the Company or any subsidiary of the Company which,
individually or in the aggregate, are having a material adverse effect on the
Company. This Section 4.01(g) does not apply to environmental matters, tax
matters and labor and benefit matters, which are exclusively the subject of
Section 4.01(j), Section 4.01(h) and Sections 4.01(k) and (l), respectively.
(h) Taxes. The Company has timely filed all material tax
returns required to be filed by it, has timely paid (or caused to be timely
paid) all material taxes shown as due and payable on all such tax returns, and
has paid (or caused to be paid) all other material taxes as are due. No tax
return of the Company is under audit or examination by any taxing authority, and
no written notice of such an audit or examination has been received by the
Company, except for such audits or examinations which, individually or in the
aggregate, would not have a material adverse effect on the Company.
(i) Certain Agreements. Neither the Company nor any of its
subsidiaries is in breach of or default under any material agreement,
commitment, lease or other instrument to which it or any of its properties is
subject
A-23
and there has not occurred any event that, with the giving of notice or the
lapse of time or both, would constitute such a breach or default by the Company
or any of its subsidiaries or a breach thereof or default thereunder by any
other party thereto, except in all cases where such defaults or breaches,
individually or in the aggregate, would not have a material adverse effect on
the Company.
(j) Environmental Matters. Except for items referred to below
which, individually or in the aggregate, would not have a material adverse
effect on the Company:
(i) the Company and its subsidiaries are in compliance with
all Environmental Laws;
(ii) the Company and its subsidiaries have obtained and are in
compliance with all Environmental Permits;
(iii) there are no Environmental Claims pending or threatened
against the Company or any of its subsidiaries; and
(iv) none of the Company or any of its subsidiaries has
entered into or received any decree or order under, or is subject to
any judgment, decree or order pursuant to, any Environmental Law.
(k) Labor Matters. (i) There are no representation or
certification proceedings, or petitions seeking a representation proceeding,
pending or threatened to be brought or filed with the National Labor Relations
Board or any other labor relations tribunal or authority and (ii) there are no
organizing activities involving the Company or any of its subsidiaries with
respect to any group of employees of the Company or its subsidiaries, in the
case of each of clause (i) and (ii) which, individually or in the aggregate,
would have a material adverse effect on the Company.
(l) Benefit Plans; Benefit Agreements. (i) Section 4.01(l) of
the Company Disclosure Schedule sets forth a true and complete list of each
material "employee benefit plan" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and each other
material compensation, bonus, pension, profit sharing, deferred compensation,
stock
A-24
ownership, stock purchase, stock option, phantom stock, retirement, welfare,
collective bargaining, severance, disability, death benefit, hospitalization and
medical plan, program, policy or arrangement maintained or contributed to (or
required to be contributed to) for the benefit of any current or former
director, officer or employee of the Company or any of its subsidiaries and with
respect to which the Company or any of its subsidiaries would reasonably be
expected to have direct or contingent liability, other than statutorily mandated
benefit programs (the "Company Benefit Plans"). There exist no employment,
retention, deferred compensation, severance, termination or indemnification
agreements or arrangements between the Company or any of its subsidiaries, on
the one hand, and any current or former director, officer or employee of the
Company or any of its subsidiaries, on the other hand ("Company Benefit
Agreements").
(ii) (A) None of the Company Benefit Plans is a "multiemployer plan"
within the meaning of Section 3(37) of ERISA or is otherwise subject to
Title IV of ERISA, (B) none of the Company Benefit Plans (other than
coverage mandated under applicable law) provides retiree medical or
life insurance benefits to any person, (C) each Company Benefit Plan
has been administered in compliance with its terms and the applicable
provisions of ERISA, the Code and all other applicable laws, rules and
regulations except for any failures to so administer, individually or
in the aggregate, as would not have a material adverse effect on the
Company, (D) neither the Company nor any entity required to be treated
as a single employer with the Company under Section 414 of the Code has
any unsatisfied liabilities under Title IV of ERISA which, individually
or in the aggregate, would have a material adverse effect on the
Company, (E) there are no pending or threatened investigations, claims
or lawsuits in respect of any Company Benefit Plan which, individually
or in the aggregate, would have a material adverse effect on the
Company, and (F) except as provided in Section 6.06, no current or
former director, officer or employee of the Company or any of its
subsidiaries will become entitled to any material
A-25
payment, benefit or right, or any materially increased and/or
accelerated payment, benefit or right, as a result of the execution of
this Agreement or the consummation of the transactions contemplated
hereby.
(m) Subsidiaries. The Company has previously made available to
Parent a list of all the subsidiaries of the Company as of the date of this
Agreement and their respective jurisdictions of organization. All the shares of
capital stock of each of the subsidiaries of the Company are validly issued,
fully paid and nonassessable (in each jurisdiction that recognizes such legal
concept) and (except for directors' qualifying shares, if any) are owned by the
Company, another subsidiary of the Company or the Company and another subsidiary
of the Company, free and clear of all Liens. Except for the capital stock of its
subsidiaries, the Company does not own, directly or indirectly, any capital
stock or other ownership interest in any person.
(n) Vote Required. Under the IBCL and the Company's articles
of incorporation, this Agreement must be approved by the affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock (the
"Company Shareholder Approval"). The Company Shareholder Approval is the only
vote of the holders of any class or series of capital stock of the Company
necessary to approve this Agreement and the transactions contemplated hereby.
(o) State Business Combination Statutes. Sections 23-1-43-1
through 23-1-43-24 of the IBCL are not applicable to this Agreement, the Merger
and the other transactions contemplated hereby pursuant to Article IX, Section
9.4 of the articles of incorporation of the Company as in effect on the date of
this Agreement.
(p) Brokers. No broker, investment banker, financial advisor
or other person, other than Bear, Stearns & Co. Inc., Credit Suisse First Boston
Corporation and George K. Baum & Company, the fees and expenses of which will be
paid by the Company, is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on
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behalf of the Company. True and correct copies of the Company's arrangements
with Bear, Stearns & Co. Inc., Credit Suisse First Boston Corporation and George
K. Baum & Company (the "Broker Agreements") have been delivered to Parent prior
to the date of this Agreement.
(q) Opinion of Financial Advisor. The Company has received the
opinion of each of Bear, Stearns & Co. Inc., Credit Suisse First Boston
Corporation and George K. Baum & Company, dated as of the date of this
Agreement, to the effect that, as of the date of such opinion and based upon and
subject to the matters stated therein, the consideration to be received by
holders of Company Common Stock in the Merger is fair to such holders from a
financial point of view.
SECTION 4.02. Representations and Warranties of Parent and
Acquisition Sub. Parent and Acquisition Sub represent and warrant to
the Company as follows:
(a) Organization and Power. Each of Parent and Acquisition Sub
is a corporation duly organized, validly existing and, only in the case of
Parent is a corporation in good standing, under the laws of its jurisdiction of
incorporation. Each of Parent and Acquisition Sub has all requisite corporate
power and authority to conduct its business as presently conducted and is duly
qualified and in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary, except where failures thereof, individually or in the aggregate,
would not have a material adverse effect on Parent.
(b) Authorization; Non-contravention. Each of Parent and
Acquisition Sub has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery by Parent and Acquisition Sub of this Agreement and
the consummation by Parent and Acquisition Sub of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Parent and Acquisition Sub. This Agreement has been duly executed and
delivered by each of Parent and Acquisition Sub and, assuming this Agreement
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its
A-27
terms, this Agreement constitutes a legal, valid and binding obligation of each
of Parent and Acquisition Sub, enforceable against each of Parent and
Acquisition Sub in accordance with its terms (except, in each case, insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally,
or by principles governing the availability of equitable remedies). The
execution and delivery by Parent and Acquisition Sub of this Agreement does not,
and the consummation by Parent and Acquisition Sub of the transactions
contemplated hereby will not, conflict with, or result in any breach or
violation of, or default (with or without notice or lapse of time or both)
under, or result in the termination of, or accelerate the performance required
by, or give rise to a right of termination, cancelation or acceleration of any
obligation under, or the creation of a Lien pursuant to, (i) the certificate of
incorporation or by-laws (or other comparable organizational documents) of
Parent or Acquisition Sub or (ii) subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in the following sentence, any loan or credit agreement, note,
mortgage, indenture, lease or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent or Acquisition Sub or their
respective properties or assets, in any case under this clause (ii) which,
individually or in the aggregate, would have a material adverse effect on
Parent. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Parent or Acquisition Sub in connection with the execution and
delivery of this Agreement by Parent and Acquisition Sub or the consummation by
Parent and Acquisition Sub of the transactions contemplated hereby, except for
(A) the filing with the SEC of such reports under the Exchange Act as may be
required in connection with this Agreement and the other transactions
contemplated hereby, (B) the filing of the Articles of Merger with the Secretary
of State of the State of Indiana in accordance with Section 23-1-40-5 of the
IBCL and the filing of appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, (C) filings
required pursuant to the HSR Act and any other applicable filings and approvals
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under similar foreign antitrust laws and regulations and (D) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made, individually or in the
aggregate, would not have a material adverse effect on Parent.
(c) Information Supplied. None of the information supplied or
to be supplied by or on behalf of Parent or Acquisition Sub for inclusion or
incorporation by reference in the Proxy Statement will, at the date the Proxy
Statement is first mailed to shareholders of the Company or at the time of the
Company Shareholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(d) No Business Activities; No Ownership Interests. Since the
date of its incorporation, Acquisition Sub has not carried on any business or
conducted any operations other than the execution of this Agreement and the
performance of its obligations hereunder. Acquisition Sub does not have any
assets or liabilities nor does it own, directly or indirectly, any capital stock
or other ownership interest in any person.
(e) Brokers. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent.
(f) Financing. Parent has or will have available, prior to the
Effective Time, sufficient cash in immediately available funds to pay the
aggregate Merger Consideration pursuant to Article III and to consummate, on the
terms contemplated hereby, the Merger and the other transactions contemplated
hereby.
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ARTICLE V
Covenants Relating to Conduct of Business
-----------------------------------------
SECTION 5.01. Covenants of the Company. During the period from
the date of this Agreement until the Effective Time, the Company agrees as to
itself and its subsidiaries that (except as consented to in writing by Parent
(not to be unreasonably withheld), as expressly contemplated, required or
permitted by this Agreement or as set forth in the Company Disclosure Schedule):
(a) Ordinary Course; Capital Expenditures. The Company shall,
and shall cause each of its subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course substantially consistent
with past practice in all material respects and use all reasonable efforts to
preserve intact their present business organizations, maintain their rights and
franchises, keep available the services of their current officers and employees
and preserve their relationships with customers, suppliers and others having
business dealings with them to the end that their goodwill and ongoing
businesses shall be unimpaired at the Effective Time. The Company shall not, nor
shall it permit any of its subsidiaries to, enter into any material new line of
business, or incur or commit to any capital expenditures, or any obligations or
liabilities in connection with any capital expenditures, other than capital
expenditures and obligations or liabilities incurred or committed to that are
not in excess of $6,100,000, in the aggregate.
(b) Dividends; Changes in Stock. The Company shall not, nor
shall it permit any of its subsidiaries to (i) declare, set aside or pay any
dividends on, or make other distributions in respect of, any of its capital
stock, other than dividends and distributions by a direct or indirect wholly
owned subsidiary of the Company to its parent, (ii) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) purchase, redeem or otherwise acquire any shares of its
capital stock, other than (A) in connection with the exercise of any Company
Stock Option where the exercise price thereof is paid in whole or in part in the
form of
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shares of Company Common Stock and (B) in connection with the exercise of any
Company Stock Option for purposes of satisfying tax withholding obligations.
(c) Issuance of Securities. The Company shall not, nor shall
it permit any of its subsidiaries to, issue, deliver or sell, or authorize the
issuance, delivery or sale of, any shares of its capital stock of any class or
any securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any of the foregoing, or enter into any agreement with
respect to any of the foregoing, other than the issuance of Company Common Stock
upon the exercise of Company Stock Options that are outstanding on the date of
this Agreement.
(d) Governing Documents. The Company shall not amend or
propose to amend, nor shall it permit any of its subsidiaries to amend, its
articles of incorporation or by-laws or other comparable organizational
documents, except, in the case of any subsidiary of the Company, for such
amendments to its articles of incorporation or by-laws or other comparable
organizational documents that do not have an adverse effect on the Merger or the
other transactions contemplated by this Agreement.
(e) No Acquisitions. The Company shall not, nor shall it
permit any of its subsidiaries to, acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, any corporation, partnership, association
or other business organization or any division or business thereof (provided
that any wholly owned subsidiary of the Company may merge into or consolidate
with any other wholly owned subsidiary of the Company) or (ii) any assets,
except in the case of clause (ii) above, purchases of inventory, supplies and
raw materials in the ordinary course of business consistent with past practice.
(f) No Dispositions. The Company shall not, nor shall it
permit any of its subsidiaries to, sell, lease or otherwise dispose of, or
subject to any Lien, any properties or assets (including capital stock of
subsidiaries) which are material to the Company and its subsidiaries taken as a
whole, except sales of inventory
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and excess or obsolete assets in the ordinary course of business consistent with
past practice.
(g) Indebtedness. The Company shall not, nor shall it permit
any of its subsidiaries to, (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or warrants or rights to acquire any debt securities of the Company
or any of its subsidiaries, except for (i) short-term borrowings incurred in the
ordinary course of business, (ii) revolving credit borrowings under the
Company's existing credit and accounts receivable facilities, (iii) indebtedness
incurred in connection with the issuance of letters of credit for the account of
the Company in the ordinary course of business and drawings thereunder, (iv) the
guarantee by the Company or any of its wholly-owned subsidiaries of any
obligations of any wholly-owned subsidiary of the Company and (v) any
indebtedness or guarantees which are, individually or in the aggregate, not
material to the Company and its subsidiaries taken as a whole or (B) make loans,
advances or capital contributions to, or investments in, any person other than
the Company or any direct or indirect wholly owned subsidiary of the Company.
(h) Other Actions. The Company shall not, nor shall it permit
any of its subsidiaries to, take any action that would result in (i) any of the
representations and warranties of the Company set forth in this Agreement that
are qualified as to materiality or material adverse effect becoming untrue, (ii)
any of such representations and warranties that are not so qualified becoming
untrue in any material respect or (iii) any of the conditions to the Merger set
forth in Article VII not being satisfied. The Company shall not, nor shall it
permit any of its subsidiaries to, amend or modify any of the Broker Agreements
or enter into any similar arrangements.
(i) Advice of Changes. The Company shall advise Parent of any
change or event which would cause or constitute a material breach of any of its
representations and warranties contained in this Agreement.
(j) No General Authorization, Etc. The Company shall not, nor
shall it permit any of its subsidiaries to,
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authorize any of, or commit or agree to take any of, the actions that are
prohibited by the foregoing covenants.
SECTION 5.02. Covenants of Parent and Acquisition Sub. During
the period from the date of this Agreement until the Effective Time, each of
Parent and Acquisition Sub agrees that:
(a) Other Actions. It shall not take any action that would
result in (i) any of its representations and warranties set forth in this
Agreement that are qualified as to materiality or material adverse effect
becoming untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) any of the conditions
to the Merger set forth in Article VII not being satisfied.
(b) Advice of Changes. It shall advise the Company of any
change or event which would cause or constitute a material breach of any of its
representations or warranties contained in this Agreement.
SECTION 5.03. No Solicitation.(a) The Company shall not, nor
shall it permit any of its subsidiaries to, nor shall it authorize any director,
officer or employee of the Company or any of its subsidiaries or any investment
banker, attorney or other advisor or representative of the Company or any of its
subsidiaries to, directly or indirectly, (and it shall affirmatively direct each
of the foregoing not to) (i) solicit, initiate or encourage the submission of
any Takeover Proposal or (ii) enter into, continue or otherwise participate in
any discussions or negotiations regarding, or furnish to any person any
information with respect to, or otherwise cooperate in any way with, any
Takeover Proposal.
(b) The Board of Directors of the Company shall not (i)
withdraw (or modify in a manner adverse to Parent) or propose publicly to
withdraw (or modify in a manner adverse to Parent) the recommendation by such
Board of Directors of this Agreement or the Merger to the shareholders of the
Company, or resolve or agree to take any such action, (ii) adopt or approve, or
propose publicly to adopt or approve, any Takeover Proposal, or resolve or agree
to take any such action or (iii) cause or permit the Company to enter into any
letter of intent, memorandum of
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understanding, agreement in principle, acquisition agreement, merger agreement,
option agreement, joint venture agreement, partnership agreement or other
agreement (an "Acquisition Agreement") constituting or related to, or which is
intended to or would reasonably lead to, any Takeover Proposal or resolve or
agree to take any such action.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.03, the Company shall promptly advise
Parent orally and in writing of any Takeover Proposal or any inquiry, known to
the Board of Directors or the officers of the Company, that the Company
reasonably believes would lead to a Takeover Proposal, the material terms and
conditions of such Takeover Proposal or inquiry and the identity of the person
making any such Takeover Proposal or inquiry. The Company shall keep Parent
informed in all material respects as to the status and details (including
material amendments or proposed amendments) of any such Takeover Proposal or
inquiry.
(d) Nothing contained in this Section 5.03 shall prohibit the
Company from making any disclosure to the Company's shareholders if, in the good
faith judgment of the Board of Directors of the Company, after consultation with
counsel, failure to do so would create a risk of liability for breach of the
obligations of the Board of Directors of the Company under applicable law;
provided, however, that in no event shall the Company or its Board of Directors
or any committee thereof take, agree or resolve to take, any action prohibited
by Section 5.03(b).
ARTICLE VI
Additional Agreements
---------------------
SECTION 6.01. Preparation of the Proxy Statement. (a) As soon
as practicable following the date of this Agreement, the Company shall prepare
and file with the SEC the Proxy Statement. Each of the parties shall furnish all
information concerning itself and its affiliates that is required to be included
in the Proxy Statement or that is customarily included in proxy statements
prepared in connection with transactions of the
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type contemplated by this Agreement. The Company shall use its reasonable
efforts to cause the Proxy Statement to be mailed to the Company's shareholders
as promptly as practicable after filing with the SEC. No filing of, or amendment
or supplement to, the Proxy Statement will be made by the Company without
providing Parent the opportunity to review and comment thereon. The Company
shall advise Parent, promptly after it receives notice thereof, of any request
by the SEC for any amendment to the Proxy Statement or comments thereon and
responses thereto or requests by the SEC for additional information. If at any
time prior to the Effective Time any information relating to the Company or
Parent, or any of their respective directors, officers or affiliates, should be
discovered by the Company or Parent which should be set forth in an amendment or
supplement to the Proxy Statement, so that the Proxy Statement would not include
any misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information shall
promptly notify the other parties and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the
extent required by law, disseminated to the shareholders of the Company.
SECTION 6.02. Access to Information. The Company shall, and
shall cause each of its subsidiaries to, afford to Parent and to its officers,
employees, accountants, counsel and other representatives, reasonable access,
during normal business hours during the period prior to the Effective Time, to
their respective properties, books, records and personnel and, during such
period, the Company shall, and shall cause each of its subsidiaries to, furnish
promptly to Parent (a) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of federal or state securities laws and (b) such other information
concerning its business, properties and personnel as Parent may reasonably
request. All such information shall constitute Evaluation Material (as such term
is defined in the Confidentiality Agreement dated as of August 14, 2002, between
the Company and Parent (the "Confidentiality Agreement")) and shall be subject
thereto as provided therein, and Parent shall, and shall cause its advisors and
representatives who receive
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Evaluation Material to agree to, hold all such Evaluation Material in confidence
to the extent required by, and in accordance with, the terms of the
Confidentiality Agreement.
SECTION 6.03. Company Shareholders Meeting. The Company shall,
as promptly as practicable after the date of this Agreement, (a) duly call, give
notice of, convene and hold the Company Shareholders Meeting for the purpose of
obtaining the Company Shareholder Approval and (b) through its Board of
Directors, recommend to its shareholders that they grant the Company Shareholder
Approval.
SECTION 6.04. Reasonable Best Efforts. Subject to the terms
and conditions of this Agreement, each of the Company and Parent shall, and
shall cause its subsidiaries to, use its reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective the Merger and the other transactions
contemplated by this Agreement, including (i) the obtaining of any necessary
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and/or any other public or private third party which is
required to be obtained by such party or any of its affiliates in connection
with the Merger and the other transactions contemplated by this Agreement, and
the making or obtaining of all necessary filings and registrations with respect
thereto, including filings required under the HSR Act, (ii) the defending of any
lawsuits or other legal proceedings challenging this Agreement and (iii) the
execution and delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement.
SECTION 6.05. Benefits Matters. (a) For a period of one year
after the Effective Time (the "Continuation Period"), the Surviving Corporation
shall, provide benefits to each employee of the Company or its subsidiaries who
is or becomes an employee of the Surviving Corporation or its subsidiaries on
and after the Effective Time so long as he or she remains an employee during
such period (each, a "Continued Employee") that are no less favorable in the
aggregate to such Continued Employee than those in effect immediately prior to
the Effective Time for
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such Continued Employee. During the Continuation Period, the Surviving
Corporation shall provide base salaries, annual commission and bonus
opportunities, and long-term incentive compensation opportunities to each
Continued Employee which are no less favorable in the aggregate to such
Continued Employee than those in effect immediately prior to the Effective Time
for such Continued Employee. The parties acknowledge and understand that the
Surviving Corporation and Parent do not intend to provide equity incentive
compensation opportunities and that the foregoing obligations do not require the
provision of any such opportunities. With respect to any unused vacation or
other time off to which any Continued Employee is entitled as of the Effective
Time, pursuant to the terms of the vacation and other time off plans, programs,
policies and arrangements of the Company and its subsidiaries (as in effect
immediately prior to the Effective Time), the Surviving Corporation shall,
following the Effective Time, allow such Continued Employee to utilize such
vacation or other time off in accordance with such terms, without adverse
amendment or modification. During the Continuation Period, the Surviving
Corporation shall honor and continue the Company's severance and termination
plans, programs and policies as in effect immediately prior to the Effective
Time, without adverse amendment or modification. From and after the Effective
Time, the Surviving Corporation shall honor and maintain all provisions in the
Company Benefit Plans in accordance with their respective terms (as in effect at
the Effective Time), for vested benefits and other vested or guaranteed amounts
earned or accrued through the Effective Time.
(b) From and after the Effective Time, the Surviving
Corporation shall honor in accordance with their respective terms (as in effect
at the Effective Time), all Company Benefit Agreements. Parent acknowledges and
agrees that the transactions contemplated by this Agreement when effected shall
constitute a "change in control" for purposes of all Company Benefit Plans and
Company Benefit Agreements.
(c) Subject to compliance with this Section 6.05, nothing
herein shall limit or prevent the Surviving Corporation from amending, modifying
or terminating any Company Benefit Plans or Company Benefit Agreements in
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accordance with the terms of such Company Benefit Plans and Company Benefit
Agreements and applicable law.
(d) To the extent applicable, with respect to any employee
benefit plan maintained by the Surviving Corporation, for all purposes,
including determining eligibility to participate, level of benefits, benefit
accrual and vesting, service by Continued Employees with the Company or any of
its subsidiaries (or any predecessor employer of an employee of the Company or
any of its subsidiaries, to the extent service with such predecessor employer is
recognized by the Company or any of its subsidiaries) shall be treated as
service with the Surviving Corporation or any of its subsidiaries; provided,
however, that such service need not be recognized to the extent that such
recognition would result in any duplication of benefits.
(e) To the extent applicable, the Surviving Corporation shall
waive, or cause to be waived, any pre-existing condition limitation or
actively-at-work requirement under any welfare benefit plan maintained by the
Surviving Corporation in which Continued Employees (and their eligible
dependents) will be eligible to participate from and after the Effective Time,
except to the extent that such pre-existing condition limitation or
actively-at-work requirement would have been applicable under the comparable
welfare benefit plan of the Company or its subsidiaries immediately prior to the
Effective Time. To the extent applicable, the Surviving Corporation shall
credit, or cause to be credited, the dollar amount of all expenses incurred by
each Continued Employee (and his or her eligible dependents) during the plan
year in which the Effective Time occurs for purposes of satisfying such year's
deductible and co-payment limitations under the relevant welfare benefit plans
in which they participate from and after the Effective Time.
(f) Parent shall take all necessary shareholder action to
permit each of the obligations of the Surviving Corporation in this Section 6.05
to be performed.
SECTION 6.06. Stock-Based Compensation. (a) As soon as
reasonably practicable following the date of this Agreement, the Board of
Directors of the Company (or, if appropriate, any committee administering the
Company Stock
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Incentive Plan) shall adopt resolutions or take such other actions as may be
required to adjust the terms of all outstanding Company Stock Options, whether
vested or unvested, as necessary to provide that each Company Stock Option
outstanding immediately prior to the Effective Time shall be canceled effective
immediately prior to the Effective Time, with the holder thereof becoming
entitled to receive an amount in cash equal to (i) the excess, if any, of (1)
the Merger Consideration over (2) the exercise price per share of Company Common
Stock subject to such Company Stock Option, multiplied by (ii) the number of
shares of Company Common Stock for which such Company Stock Option shall not
theretofore have been exercised. As of the Effective Time, the Company Stock
Incentive Plan shall terminate and all rights under any provision of any other
plan, program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any subsidiary of the
Company shall be canceled. The Company shall take all actions necessary to
ensure that, after the Effective Time, no person shall have any right under the
Company Stock Incentive Plan or any other plan, program or arrangement with
respect to equity securities of the Company, or any subsidiary of the Company.
(b) All amounts payable pursuant to Section 6.06(a) shall be
subject to any required withholding of taxes or proof of eligibility of
exemption therefrom and shall be paid without interest by the close of business
on the day on which the Effective Time occurs.
SECTION 6.07. Fees and Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs or expenses, except that filing fees and expenses incurred in
connection with the preparation, printing, filing and mailing of the Proxy
Statement shall be shared equally by Parent and the Company.
SECTION 6.08. Indemnification and Exculpation. (a) From and
after the Effective Time, Parent shall, and shall cause the Surviving
Corporation to, indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date of this Agreement or who becomes such
prior to the Effective Time, an officer, director,
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agent, fiduciary or employee of the Company or any of its subsidiaries (the
"Indemnified Persons") against (i) any and all losses, claims, damages, costs,
expenses, fines, liabilities or judgments or amounts that are paid in settlement
with the approval of the indemnifying party (which approval shall not be
unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director, officer, agent,
fiduciary or employee of the Company or any of its subsidiaries whether
pertaining to any action or omission existing or occurring at or prior to the
Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities"), and (ii) all Indemnified Liabilities
based in whole or in part on, or arising in whole or in part out of, or
pertaining to this Agreement or the transactions contemplated hereby; provided,
however, that in the case of the Surviving Corporation such indemnification
shall only be to the fullest extent a corporation is permitted under the IBCL to
indemnify its own directors, officers, agents, fiduciaries and employees, and in
the case of Parent, such indemnification shall not be limited by the IBCL but
such indemnification shall not be applicable to any claims made against the
Indemnified Persons (A) if a judgment or other final adjudication established
that their acts or omissions were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the cause of action so
deliberated or (B) arising out of, based upon or attributable to the gaining in
fact of any financial profit or other advantage to which they were not legally
entitled. Parent and the Surviving Corporation, as the case may be, will pay all
expenses of each Indemnified Person in advance of the final disposition of any
such action or proceeding, in the case of the Surviving Corporation only to the
fullest extent permitted by law upon receipt of any undertaking contemplated by
Section 23-1-37-10 of the IBCL. Without limiting the foregoing, in the event any
such claim, action, suit, proceeding or investigation is brought against any
Indemnified Person (whether arising before or after the Effective Time), (i) the
Indemnified Persons may retain counsel satisfactory to them and Parent and the
Surviving Corporation, (ii) Parent shall, and shall cause the Surviving
Corporation to, pay all reasonable fees and expenses of such counsel for the
Indemnified Persons promptly as statements therefor are received and
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(iii) Parent shall, and shall cause the Surviving Corporation to, use all
reasonable efforts to assist in the vigorous defense of any such matter,
provided that neither Parent nor the Surviving Corporation shall be liable for
any settlement of any claim effected without its written consent, which consent,
however, shall not be unreasonably withheld. Any Indemnified Person wishing to
claim indemnification under this Section 6.08(a), upon learning of any such
claim, action, suit, proceeding or investigation, shall notify Parent and the
Surviving Corporation (but the failure so to notify an indemnifying party shall
not relieve it from any liability which it may have under this Section 6.08(a)
except to the extent such failure materially prejudices such party), and shall
deliver to Parent and the Surviving Corporation the undertaking contemplated by
Section 23-1-37-10 of the IBCL. The Indemnified Persons as a group may retain
only one law firm to represent them with respect to each such matter unless
there is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Persons.
(b) The parties agree that the provisions of this Section 6.08
are (i) intended to be for the benefit of, and shall be enforceable by, each
Indemnified Person and each Indemnified Person's heirs and representatives and
(ii) in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract or
otherwise.
SECTION 6.09. Transfer Taxes. Parent shall pay any state,
local, foreign or provincial tax (including penalties and interest imposed in
connection therewith) which is attributable to the transfer of the beneficial
ownership of the Company's or the Company's subsidiaries' real property, if any,
payable in connection with the consummation of the Merger, and any state, local,
foreign or provincial tax (including penalties and interest imposed in
connection therewith) which is attributable to the transfer of Company Common
Stock pursuant to this Agreement.
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ARTICLE VII
Conditions Precedent
--------------------
Section 7.01. Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction or waiver at or prior to the Effective Time of
the following conditions:
(a) Company Shareholder Approval. The Company Shareholder
Approval shall have been obtained.
(b) Antitrust. The waiting period applicable to the Merger
under the HSR Act shall have expired or been terminated. Any other consents or
approvals required to consummate the Merger (i) under any antitrust law of the
European Union or any member nation of the European Union or (ii) under any
other foreign antitrust law shall have been obtained, except in the case of
clause (ii) for those the failure of which to be obtained would not have a
material adverse effect on the Company.
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order or decree
issued by any Governmental Entity of competent jurisdiction enjoining or
otherwise preventing the consummation of the Merger shall be in effect.
SECTION 7.02. Conditions to Obligations of Parent and
Acquisition Sub to Effect the Merger. The obligations of Parent and Acquisition
Sub to effect the Merger is subject to the satisfaction of the following
conditions unless waived by Parent and Acquisition Sub:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement (i) to the extent
qualified by material adverse effect, shall be true and correct and
(ii) to the extent not qualified by material adverse effect, shall be
true and correct, except that this clause (ii) shall be deemed
satisfied so long as any failures of such representations and
warranties to be true and correct would not, individually or in the
aggregate, have a material adverse effect on the Company, in each of
cases (i) and (ii), as of the
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Closing Date as though made on and as of the Closing Date (except to
the extent any such representations and warranties expressly relate to
an earlier date, in which case as of such earlier date), and Parent
shall have received a certificate to such effect signed on behalf of
the Company by its chief executive officer or its chief financial
officer. Notwithstanding anything to the contrary, the condition
specified in this Section 7.02(a) shall not apply to the
representation and warranty made in Section 4.01(f)(i) on or after
September 19, 2001.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing
Date, and Parent shall have received a certificate to such effect
signed on behalf of the Company by its chief executive officer or its
chief financial officer.
(c) No Litigation. There shall not be pending any suit, action
or proceeding that has a substantial likelihood of success brought by
any Governmental Entity (i) challenging the acquisition by Parent or
Acquisition Sub of any shares of Company Common Stock, seeking to
restrain or prohibit the consummation of the Merger, or seeking to
obtain from the Company, Parent or any of their respective affiliates
any damages that are material in relation to the Company and its
subsidiaries, taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Parent or any of their
respective affiliates engaged in a line of business currently engaged
in by the Company or its affiliates of any portion of the business or
assets of the Company, Parent or any such affiliate, or to require any
such person to divest or hold separate any portion of its business or
assets, as a result of the Merger or any of the other transactions
contemplated by this Agreement, (iii) seeking to impose limitations on
the ability of Parent to acquire or hold, or exercise full rights of
ownership of, any shares of Company Common Stock, including the right
to vote the Company Common Stock on all matters properly presented to
the shareholders of the Company or (iv) seeking to prohibit Parent from
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effectively controlling the business or operations of the Company and
its subsidiaries.
SECTION 7.03. Conditions to Obligation of the Company to
Effect the Merger. The obligation of the Company to effect the Merger is subject
to the satisfaction of the following conditions unless waived by the Company:
(a) Representations and Warranties. The representations and
warranties of Parent and Acquisition Sub set forth in this Agreement
(i) to the extent qualified by material adverse effect, shall be true
and correct and (ii) to the extent not qualified by material adverse
effect, shall be true and correct, except that this clause (ii) shall
be deemed satisfied so long as any failures of such representations and
warranties to be true and correct do not, individually or in the
aggregate, have a material adverse effect on Parent, in each of cases
(i) and (ii), as of the Closing Date as though made on and as of the
Closing Date (except to the extent any such representations and
warranties expressly relate to an earlier date, in which case as of
such earlier date), and the Company shall have received a certificate
to such effect signed on behalf of Parent by an officer of Parent.
(b) Performance of Obligations of Parent and Acquisition Sub.
Each of Parent and Acquisition Sub shall have performed in all material
respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and the Company shall have
received a certificate to such effect signed on behalf of Parent by an
officer of Parent.
SECTION 7.04. Frustration of Closing Conditions. None of
Parent, Acquisition Sub or the Company may rely on the failure of any condition
set forth in Section 7.01, 7.02 or 7.03, as the case may be, to be satisfied if
such failure was caused by such party's failure to use its reasonable best
efforts to consummate the Merger and the other transactions contemplated by this
Agreement.
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ARTICLE VIII
Termination and Amendment
-------------------------
SECTION 8.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after the Company
Shareholder Approval is received:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company upon written notice to the
other party:
(i) if the Merger shall not have been consummated on
or before January 31, 2003 (the "Outside Date"), unless the
failure to consummate the Merger is the result of a material
breach of this Agreement by the party seeking to terminate
this Agreement;
(ii) if any Governmental Entity of competent
jurisdiction shall have issued a permanent injunction or other
order or decree enjoining or otherwise preventing the
consummation of the Merger and such injunction or other order
or decree shall have become final and nonappealable; or
(iii) if, upon a vote at a duly held Company
Shareholders Meeting, the Company Shareholder Approval shall
not have been obtained;
(c) by Parent if the Company shall have breached any of its
representations, warranties or covenants contained in this Agreement,
which breach (i) would give rise to the failure of a condition set
forth in Section 7.02(a) or 7.02(b) and (ii) has not been or is
incapable of being cured by the Company within 30 business days after
its receipt of written notice thereof from Parent; or
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(d) by the Company if Parent shall have breached any of its
representations, warranties or covenants contained in this Agreement,
which breach (i) would give rise to the failure of a condition set
forth in Section 7.03(a) or 7.03(b) and (ii) has not been or is
incapable of being cured by Parent within 30 business days after its
receipt of written notice thereof from the Company.
SECTION 8.02. Effect of Termination. In the event of
termination of this Agreement by either Parent or the Company as provided in
Section 8.01, this Agreement shall forthwith become void and have no effect,
and, except to the extent that such termination results from the intentional and
material breach by a party of any of its representations, warranties, covenants
or agreements set forth in this Agreement, there shall be no liability or
obligation on the part of Parent, Acquisition Sub or the Company, except with
respect to Section 4.01(p), Section 4.02(e), the second sentence of Section
6.02, Section 6.07, this Section 8.02 and Article IX (other than Section 9.06),
which provisions shall survive such termination.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties at any time before or after the Company Shareholder Approval is
received, provided that after receipt of the Company Shareholder Approval, no
amendment shall be made which by law requires further approval by the
shareholders of the Company without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties.
SECTION 8.04. Extension; Waiver. At any time prior to the
Effective Time, the parties may, to the extent legally allowed, (a) extend the
time for the performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) subject to
the proviso to the first sentence of Section 8.03, waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. The failure of any party
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to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of those rights.
SECTION 8.05. Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section 8.01, an
amendment of this Agreement pursuant to Section 8.03 or an extension or waiver
pursuant to Section 8.04 shall, in order to be effective, require, in the case
of Acquisition Sub or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors to the extent permitted by law.
ARTICLE IX
General Provisions
------------------
SECTION 9.01. Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9.01 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
SECTION 9.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (with written confirmation) or sent by overnight or same-day courier
(providing proof of delivery) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to the Company, to:
CTB International Corp.
611 North Higbee Street
Milford, IN 46542-2000
Attention: Victor A. Mancinelli
Facsimile: (219) 658-3472
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with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Ronald Cami, Esq.
Facsimile: (212) 474-3700.
(b) if to Parent or Acquisition Sub, to:
Berkshire Hathaway Inc.
1440 Kiewit Plaza
Omaha, Nebraska 68131
with a copy to:
Munger, Tolles & Olson LLP
355 S. Grand Avenue
Los Angeles, California 90071
Attention: Robert E. Denham
Facsimile: (213) 687-3702
SECTION 9.03. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party.
SECTION 9.04. Entire Agreement; No Third-Party Beneficiaries;
Rights of Ownership. This Agreement, together with the Confidentiality
Agreement, (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, provided that the Confidentiality
Agreement (other than Sections 4 and 7 thereof, which shall be of no further
force or effect) shall survive the execution and delivery of this Agreement, and
(b) other than Sections 6.06 and 6.08 of this Agreement, is not intended to
confer upon any person other than the parties any rights or remedies hereunder.
SECTION 9.05. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the
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laws of the State of Indiana, without regard to any principles of conflicts of
law of such State.
SECTION 9.06. Publicity. Except as otherwise permitted by this
Agreement or required by law or obligations pursuant to any listing agreement
with any national securities exchange or the National Association of Securities
Dealers, Inc., none of Parent, Acquisition Sub or the Company shall, or shall
permit any of their respective affiliates to, issue or cause the publication of
any press release or other public announcement or statement with respect to this
Agreement or the transactions contemplated hereby without first giving an
opportunity to review and comment upon such press release or other public
announcement or statement to the Company, in the case of Parent or Acquisition
Sub, or Parent, in the case of the Company. The parties agree that the initial
press release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.
SECTION 9.07. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by any of the parties (whether by operation of law or
otherwise) without the prior written consent of the other parties, and any such
purported assignment that is not so consented to shall be null and void. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
SECTION 9.08. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any federal court
located in the State of Indiana or in any Indiana state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties (a) consents to submit itself to the personal
jurisdiction of any federal court located in the State of Indiana or any Indiana
state court in the event
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any dispute arises out of this Agreement or any of the transactions contemplated
by this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(c) agrees that it will not bring any action relating to this Agreement or any
transaction contemplated by this Agreement in any court other than any federal
court located in the State of Indiana or any Indiana state court, unless it is
unable to bring such action in an Indiana court as a result of the denial of
jurisdiction by such courts and (d) waives any right to trial by jury with
respect to any action related to or arising out of this Agreement or any
transaction contemplated by this Agreement.
SECTION 9.09. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule or
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
IN WITNESS WHEREOF, each party has duly executed this
Agreement, all as of the date first above written.
BERKSHIRE HATHAWAY INC.,
by: /s/ Marc D. Hamburg
-------------------
Name: Marc D. Hamburg
Title: Vice President and
Chief Financial Officer
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C ACQUISITION CORP.,
by: /s/ Marc D. Hamburg
-------------------
Name: Marc D. Hamburg
Title: President
CTB INTERNATIONAL CORP.,
by: /s/ Victor A. Mancinelli
------------------------
Name: Victor A. Mancinelli
President and Chief
Executive Officer
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ANNEX B
================================================================================
SHAREHOLDERS AGREEMENT AND PROXY
Dated as of August 16, 2002,
Among
BERKSHIRE HATHAWAY INC.,
C ACQUISITION CORP.,
AMERICAN SECURITIES PARTNERS, L.P.,
ASP/CTB L.P.,
CARYL M. CHOCOLA,
J. CHRISTOPHER CHOCOLA
and
the other shareholders party hereto
================================================================================
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TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions and Interpretation
SECTION 1.01. Certain Defined Terms....................................................................5
SECTION 1.02. Certain Terms Defined in the Merger Agreement............................................5
SECTION 1.03. Interpretation...........................................................................5
ARTICLE II
Representations and Warranties of Each Shareholder
SECTION 2.01. Organization and Standing................................................................6
SECTION 2.02. Authorization; Execution and Delivery; Enforceability....................................6
SECTION 2.03. No Conflicts; Consents...................................................................7
SECTION 2.04. Such Shareholder's Shares................................................................8
SECTION 2.05. Information for Proxy Statement..........................................................8
SECTION 2.06. Acknowledgment...........................................................................9
ARTICLE III
Representations and Warranties of Parent and Acquisition Sub
SECTION 3.01. Organization and Standing................................................................9
SECTION 3.02. Authorization; Execution and Delivery; Enforceability....................................9
SECTION 3.03. No Conflicts; Consents..................................................................10
ARTICLE IV
Covenants of Each Shareholder
SECTION 4.01. Agreement to Vote.......................................................................11
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SECTION 4.02. Irrevocable Proxy.......................................................................12
SECTION 4.03. Prohibition on Transfer of Shares.......................................................12
SECTION 4.04. No Solicitations........................................................................13
SECTION 4.05. Reasonable Best Efforts.................................................................13
SECTION 4.06. Actions by Board........................................................................13
ARTICLE V
Termination
ARTICLE VI
General Provisions
SECTION 6.01. Nonsurvival of Representations and Warranties...........................................14
SECTION 6.02. Notices. ...............................................................................14
SECTION 6.03. Counterparts. ..........................................................................14
SECTION 6.04. Entire Agreement; No Third-Party Beneficiaries..........................................14
SECTION 6.05. Governing Law. .........................................................................14
SECTION 6.06. Publicity. .............................................................................15
SECTION 6.07. Assignment. ............................................................................15
SECTION 6.08. Enforcement. ...........................................................................15
SECTION 6.09. Severability. ..........................................................................16
SECTION 6.10. Amendments. ............................................................................16
SECTION 6.11. Expenses. ..............................................................................16
SECTION 6.12. Additional Matters......................................................................16
SECTION 6.13. Parent Actions..........................................................................17
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ANNEX B
SHAREHOLDERS AGREEMENT AND PROXY (this "Agreement") dated as
of August 16, 2002 among BERKSHIRE HATHAWAY INC., a Delaware
corporation ("Parent"), C ACQUISITION CORP., an Indiana
corporation ("Acquisition Sub"), American Securities
Partners, L.P., ASP/CTB L.P., Caryl M. Chocola, J.
Christopher Chocola and the other parties listed on Schedule
A hereto (each such party on such Schedule A, a
"Shareholder" and, collectively, the "Shareholders").
WHEREAS each Shareholder is the owner of the number of shares
of common stock, $0.01 par value, of [COLONEL], an Indiana corporation (the
"Company"), set forth opposite the name of such Shareholder on Schedule A (such
class of stock sometimes referred to herein as the "Company Common Stock", and
the shares of Company Common Stock owned, from time to time, by each
Shareholder, including such shares of Company Common Stock that such Shareholder
acquires after the date hereof and during the term of this Agreement, are
hereinafter referred to as such "Shareholder's Shares");
WHEREAS Parent, Acquisition Sub and the Company propose to
enter into an Agreement and Plan of Merger dated as of the date hereof (as the
same may be amended or supplemented, the "Merger Agreement"); and
WHEREAS as a condition to their willingness to enter into the
Merger Agreement, Parent and Acquisition Sub have required that each of the
Shareholders enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties agree as follows:
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ARTICLE I
Definitions and Interpretation
SECTION 1.01. Certain Defined Terms. For purposes of this Agreement,
each of the following terms is defined in the Section set forth opposite such
term:
Term Section
"Acquisition Sub" Preamble
"Agreement" Preamble
"Company" Recitals
"Company Common Stock" Recitals
"Competing Transaction" 4.01(c)
"Entity Shareholder" 2.01
"Merger Agreement" Recitals
"Parent" Preamble
"Shareholder" Preamble
"Shareholder's Designee" 6.06
"Shareholder's Shares" Recitals
"Transfer" 4.04
SECTION 1.02. Certain Terms Defined in the Merger Agreement. Terms
used but not defined herein shall have the meanings assigned to such terms in
the Merger Agreement.
SECTION 1.03. Interpretation. When a reference is made in this
Agreement to a party or to an Article, Section, Exhibit or Schedule, such
reference shall be to a party to, an Article or Section of, or an Exhibit or
Schedule to, this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. The term "or" when used in
this Agreement is not exclusive. All terms defined in this Agreement shall have
the defined meanings when used in any
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certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement and in the Merger
Agreement are applicable to the singular as well as the plural forms of such
terms. Any agreement, instrument or statute defined or referred to herein or in
any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (x) (in the case of agreements or instruments) by waiver or consent
and (in the case of statutes) by succession of comparable successor statutes and
(y) all attachments thereto and instruments incorporated therein. References to
a person are also to its permitted successors and assigns.
ARTICLE II
Representations and Warranties of Each Shareholder
Each Shareholder, severally and not jointly, represents and warrants
to Parent and Acquisition Sub as of the date hereof in respect of himself,
herself or itself as follows:
SECTION 2.01. Organization and Standing. In the case of a Shareholder
that is a corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity (an "Entity
Shareholder"), such Entity Shareholder is duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization.
SECTION 2.02. Authorization; Execution and Delivery; Enforceability.
(a) In the case of an Entity Shareholder, (i) such Entity Shareholder has all
requisite power and authority to execute, deliver and perform this Agreement, to
appoint Parent, Acquisition Sub or any nominee thereof as his, her or its proxy
pursuant to Section 4.02 and to consummate the transactions contemplated hereby
and (ii) the execution and delivery of this Agreement, the appointment of Parent
and Acquisition Sub and any nominee thereof as his, her or its proxy and the
consummation of the transactions contemplated hereby, in each case by such
Entity Shareholder, have been duly
B-6
authorized by all necessary action on the part of such Entity Shareholder.
(b) This Agreement has been duly executed and delivered by such
Shareholder, and assuming this Agreement constitutes a legal, valid and binding
obligation of each of Parent and Acquisition Sub, enforceable against each of
Parent and Acquisition Sub in accordance with its terms, this Agreement
constitutes the legal, valid and binding obligation of such Shareholder,
enforceable against such Shareholder in accordance with its terms (except, in
each case, insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies). There is no other beneficial owner of any of such Shareholder's
Shares or other beneficiary or holder of any other interest in any of such
Shareholder's Shares whose consent is required for the execution and delivery of
this Agreement or for the consummation by such Shareholder of the transactions
contemplated hereby.
SECTION 2.03. No Conflicts; Consents. The execution and delivery by
such Shareholder of this Agreement do not, and the consummation of the
transactions contemplated hereby by such Shareholder will not, conflict with, or
result in any breach or violation of, or default (with or without notice or the
lapse of time or both) under, or result in the termination of, or accelerate the
performance required by, or give rise to a right of termination, cancellation or
acceleration of any obligation under, or the creation of a Lien pursuant to, (i)
in the case of an Entity Shareholder, such Entity Shareholder's organizational
documents or (ii) subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations and filings referred to in
the following sentence, any loan or credit agreement, note, mortgage, indenture,
lease or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to such Shareholder or his, her or its properties or assets, in any
case under this clause (ii) which, individually or in the aggregate, would
prevent, delay or impair the consummation of the transactions contemplated by
this Agreement by such
B-7
Shareholder. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to such Shareholder, in connection with the execution and delivery of
this Agreement by such Shareholder or the consummation by such Shareholder of
the transactions contemplated hereby, other than filings or notices required by
the Exchange Act.
SECTION 2.04. Such Shareholder's Shares. (a) Such Shareholder is the
beneficial owner of the shares of Company Common Stock as set forth opposite
such Shareholder's name on Schedule A hereto, has good and marketable title to
such Shareholder's Shares, free and clear of any Liens, proxies, voting trusts
or agreements, understanding or arrangements, except for (i) those agreements
listed on Schedule B and (ii) any restrictions or proxies arising hereunder and
restrictions imposed by securities laws.
(b) Such Shareholder does not own beneficially or of record any shares
of capital stock of the Company other than the number of shares of Company
Common Stock set forth opposite such Shareholder's name on Schedule A hereto.
(c) There are no options, rights to acquire or any agreements to which
such Shareholder is a party relating to such Shareholder's Shares, other than
(i) those agreements listed on Schedule B and (ii) those set forth in this
Agreement.
SECTION 2.05. Information for Proxy Statement. None of the information
relating to such Shareholder and its affiliates provided in writing to Parent by
or on behalf of such Shareholder or its affiliates specifically for inclusion in
the Proxy Statement will at the time the Proxy Statement is filed with the SEC
or is first published, sent or given to shareholders of the Company, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
B-8
SECTION 2.06. Acknowledgment. Such Shareholder, on behalf of itself
and its affiliates, acknowledges and agrees that neither it nor they shall be
paid or shall otherwise be entitled to any broker's, finder's, financial
advisor's, or other similar fee or commission in connection with the
transactions contemplated hereby or by the Merger Agreement.
ARTICLE III
Representations and Warranties of Parent and Acquisition Sub
Parent and Acquisition Sub hereby represent and warrant to each
Shareholder as follows:
SECTION 3.01. Organization and Standing. (a) Parent and Acquisition
Sub are each a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation.
SECTION 3.02. Authorization; Execution and Delivery; Enforceability.
(a) Each of Parent and Acquisition Sub has all requisite power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, in each case by
each of Parent and Acquisition Sub, have been duly authorized by all necessary
action on the part of each of Parent and Acquisition Sub.
(b) This Agreement has been duly executed and delivered by each of
Parent and Acquisition Sub, and assuming that this Agreement is a legal, valid
and binding obligation of each Shareholder, enforceable against each Shareholder
in accordance with its terms, this Agreement constitutes the legal, valid and
binding obligation of each of Parent and Acquisition Sub, enforceable against
Parent and Acquisition Sub in accordance with its terms (except, in each case,
insofar as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
B-9
generally, or by principles governing the availability of equitable remedies).
SECTION 3.03. No Conflicts; Consents. The execution and delivery by
each of Parent and Acquisition Sub of this Agreement do not, and the
consummation of the transactions contemplated hereby by each of Parent and
Acquisition Sub will not, conflict with, or result in any breach or violation
of, or default (with or without notice or lapse of time or both) under, or
result in the termination of, or accelerate the performance required by, or give
rise to a right of termination, cancellation or acceleration of any obligation
under, or the creation of a Lien pursuant to, (i) the articles of incorporation
or by-laws of either Parent or Acquisition Sub or (ii) subject to obtaining or
making the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in the following sentence, any loan or
credit agreement, note, mortgage, indenture, lease or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to either Parent
or Acquisition Sub or their respective properties or assets, in any case under
this clause (ii) which, individually or in the aggregate, would prevent, delay
or impair the consummation of the transactions contemplated by this Agreement by
either Parent or Acquisition Sub. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is
required by or with respect to either Parent or Acquisition Sub in connection
with the execution and delivery of this Agreement by either Parent or
Acquisition Sub or the consummation by either Parent or Acquisition Sub of the
transactions contemplated hereby, other than filings, notices, approvals,
conformations, consents, declarations or decisions (A) required by the HSR Act
and any other applicable filings and approvals under similar foreign antitrust
laws and regulations and (B) required by the Exchange Act and state securities
and takeover laws.
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ARTICLE IV
Covenants of Each Shareholder
Each Shareholder, severally and not jointly, covenants and agrees as
follows:
SECTION 4.01. Agreement to Vote. (a) At any Company Shareholder
Meeting or any adjournment thereof, or any other circumstances upon which a
vote, consent or other approval (including by written consent) with respect to
the Merger Agreement or the Merger is sought, such Shareholder shall vote (or
cause to be voted), or shall consent, execute a consent or cause a consent to be
executed in respect of, such Shareholder's Shares in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
of the terms thereof and each of the other transactions contemplated by the
Merger Agreement. Each Shareholder hereby approves of the transactions
contemplated hereby and the Merger Agreement.
(b) In furtherance and not in derogation of the foregoing, at the
request of Parent, such Shareholder shall use all reasonable efforts, and shall
cooperate in all respects with Parent, Acquisition Sub and the Company, (i) to
satisfy any legal, regulatory or other stock exchange requirements that apply to
approving the Merger, the Merger Agreement and the other transactions
contemplated by the Merger Agreement by written consent pursuant to Section
23-1-29 of the IBCL and (ii) subject to satisfaction of the foregoing, to effect
a written consent satisfying the requirements of Section 23-1-29 of the IBCL in
favor of the adoption and approval (for purposes of Section 23-1-40-3 of the
IBCL) of the Merger, the Merger Agreement and each of the other transactions
contemplated by the Merger Agreement.
(c) At any meeting of the shareholders of the Company or at any
adjournment thereof, or in any other circumstances upon which a vote, consent or
other approval (including by written consent) is sought, such Shareholder shall
vote (or cause to be voted), or shall consent, execute a consent or cause a
consent to be executed in respect of, such Shareholder's Shares against (i) any
merger agreement or merger (other than the Merger Agreement
B-11
and the Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of or
by the Company, (ii) any Takeover Proposal and (iii) any amendment of the
Company's articles of incorporation or by-laws or other proposal or transaction
involving the Company or any of its subsidiaries, which amendment or other
proposal or transaction would in any manner impede, frustrate, prevent or
nullify any provision of the Merger Agreement or change in any manner the voting
rights of any class of the capital stock of the Company (each of the foregoing
in clause (i), (ii) or (iii) above, a "Competing Transaction"). Such Shareholder
shall not commit or agree to take any action inconsistent with the foregoing.
Such Shareholder hereby revokes all prior proxies or powers of attorney with
respect to any of such Shareholder's Shares.
SECTION 4.02. Irrevocable Proxy. Such Shareholder hereby irrevocably
grants to, and appoints, Parent, Acquisition Sub, and any other individual
designated in writing by Parent, until the termination of this Agreement
pursuant to Article V, an irrevocable proxy, coupled with an interest, and as
such Shareholder's attorney-in-fact (with full power of substitution), for and
in the name, place and stead of the Shareholder, with respect to all such
Shareholder's Shares, to vote such Shareholder's Shares or grant or execute a
consent or approval, at any meeting of shareholders of the Company or in any
other circumstances upon which their vote, consent or other approval is sought
(i) in favor of the Merger and any transactions contemplated by, or necessary or
desirable to consummate the transactions contemplated by, the Merger Agreement
and the adoption of the Merger Agreement and (ii) against any Competing
Transaction. Such irrevocable proxy is executed and intended to be irrevocable
in accordance with the provisions of Section 23-1-30-2 of the IBCL. Such
Shareholder agrees that this Agreement, including the provisions of this Article
IV will be recorded in the books and records of the Company.
SECTION 4.03. Prohibition on Transfer of Shares. Except pursuant to
this Agreement or as set forth in Schedule C, such Shareholder shall not,
without the prior written consent of Parent, (i) sell, transfer, pledge, assign
or otherwise dispose of (including by gift)
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(collectively, "Transfer"), or enter into any agreement, option or other
arrangement (including any profit sharing arrangement) or understanding with
respect to the Transfer of such Shareholder's Shares to any person other than
pursuant to the Merger or (ii) enter into any voting arrangement, whether by
proxy, voting agreement or otherwise, with respect to such Shareholder's Shares.
Such Shareholder shall not commit or agree to take any of the foregoing actions.
SECTION 4.04. No Solicitations. Such Shareholder shall not, nor shall
it authorize or permit any director, officer or employee of, or any investment
banker, attorney or other adviser or representative of, such Shareholder to,
(and shall affirmatively direct each of the foregoing not to) (i) solicit,
initiate or encourage the submission of a Takeover Proposal or (ii) enter into,
continue or otherwise participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to, or otherwise cooperate
in any way with, any Takeover Proposal.
SECTION 4.05. Reasonable Best Efforts. Such Shareholder shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by the Merger Agreement and this Agreement.
SECTION 4.06. Actions by Board. No action taken by the Board of
Directors of the Company shall modify, alter, change or otherwise affect the
obligations of such Shareholder hereunder.
ARTICLE V
Termination
This Agreement shall terminate upon the earliest of, (i) the Effective
Time and (ii) the termination of the Merger Agreement in accordance with its
terms (including any amendments thereto), other than with respect to the
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liability of any party for breach hereof prior to such termination.
ARTICLE VI
General Provisions
SECTION 6.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 6.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 6.02. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with written confirmation) or sent by overnight or same-day courier
(providing proof of delivery) to Parent or Acquisition Sub in accordance with
Section 10.02 of the Merger Agreement and to the Shareholders at their
respective addresses set forth on Schedule A hereto (or at such other address
for a party as shall be specified by like notice).
SECTION 6.03. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party.
SECTION 6.04. Entire Agreement; No Third-Party Beneficiaries. This
Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and (b) is not intended to confer upon any
person other than the parties any rights or remedies hereunder.
SECTION 6.05. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Indiana, without regard
to any principles of conflicts of law of such State.
B-14
SECTION 6.06. Publicity. Except as otherwise permitted by this
Agreement or required by law or obligations pursuant to any listing agreement
with any national securities exchange or the National Association of Securities
Dealers, Inc., none of Parent, Acquisition Sub or any of the Shareholders shall,
or shall permit any of their respective affiliates to, issue or cause the
publication of any press release or other public announcement or statement with
respect to this Agreement or the transactions contemplated hereby without first
giving an opportunity to review and comment upon such press release or other
public announcement or statement to the Shareholder's Designee, in the case of
Parent or Acquisition Sub, or Parent, in the case of the Shareholders. For
purposes of this Section 6.06, the "Shareholder's Designee" shall be American
Securities Capital Partners, L.P. The parties agree that the initial press
release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.
SECTION 6.07. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by any of the parties (whether by operation of law or
otherwise) without the prior written consent of the other parties, and any such
purported assignment that is not so consented to shall be null and void. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
SECTION 6.08. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any federal court located in the
State of Indiana or any Indiana state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties (a) consents to submit itself to the personal jurisdiction of any
federal court located in the State of
B-15
Indiana or any Indiana state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court, (c) agrees that it will not
bring any action relating to this Agreement or any transaction contemplated by
this Agreement in any court other than any federal court located in the State of
Indiana or any Indiana state court, unless it is unable to bring such action in
an Indiana court as a result of the denial of jurisdiction by such courts and
(d) waives any right to trial by jury with respect to any action related to or
arising out of this Agreement or any transaction contemplated by this Agreement.
SECTION 6.09. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 6.10. Amendments. This Agreement may not be amended except by
an instrument in writing signed by each of the parties hereto.
SECTION 6.11. Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense.
SECTION 6.12. Additional Matters. From time to time, at the request of
Parent or Acquisition Sub and without further consideration, each Shareholder
shall execute and deliver, or cause to be executed and delivered,
B-16
to Parent and Acquisition Sub such documents in order to consummate the
transactions contemplated by this Agreement.
SECTION 6.13. Parent Actions. Parent shall cause Acquisition Sub to
perform each of its obligations hereunder.
B-17
IN WITNESS WHEREOF, each party has duly executed this Agreement, all
as of the date first written above.
BERKSHIRE HATHAWAY INC.,
by
/s/ Marc D. Hamburg
---------------------------
Name: Marc D. Hamburg
Title: Vice President and
Chief Financial Officer
C ACQUISITION CORP.,
by
/s/ Marc D. Hamburg
---------------------------
Name: Marc D. Hamburg
Title:President
AMERICAN SECURITIES PARTNERS,L.P.,
by: AMERICAN ASSOCIATES,
L.P., its General
Partner
by: AMERICAN SECURITIES
PARTNERS G.P.
(Management) CORP, its
General Partner
by:
/s/ Michael Fisch
---------------------------
Name: Michael Fisch
Title:President
B-18
ASP/CTB, L.P.,
by: ASP/CTB G.P. CORP.,
its General Partner
by:
/s/ Michael Fisch
---------------------------
Name: Michael Fisch
Title:President
CARYL M. CHOCOLA,
by:
/s/ Caryl M. Chocola
---------------------------
J. CHRISTOPHER CHOCOLA,
by:
/s/ J. Christopher Chocola
---------------------------
VICTOR A. MANCINELLI,
by:
/s/ Victor A. Mancinelli
---------------------------
MICHAEL J. KISSANE
by:
/s/ Michael J. Kissane
---------------------------
B-19
DON J. STEINHILBER
by:
/s/ Don J. Steinhilber
---------------------------
B-20
SCHEDULE A
----------
Number of Shares of
Name and Address Company
of Shareholder Common Stock Owned
-------------- ------------------
American Securities Capital Partners, L.P. 4,127,189
ASP/CTB L.P. 454,706
Caryl M. Chocola 1,470,501
J. Christopher Chocola 702,323
Victor A. Mancinelli 8,777
Michael J. Kissane 52,816
Don J. Steinhilber 60,171
B-21
SCHEDULE B
Agreements relating to the voting rights associated with the Shareholders'
Shares:
1. Stockholders Agreement dated as of January 4, 1996 between CTB Holdings,
Inc. and the individuals party thereto.
2. Board Representation Agreement dated as of January 4, 1996 among American
Securities Capital Partners, L.P., J. Christopher Chocola, Caryl Chocola
and CTB Holdings, Inc.
Options, rights to acquire, or agreements relating to the Shareholders' Shares:
1. Stockholders Agreement dated as of January 4, 1996 between CTB Holdings,
Inc. and the individuals party thereto.
2. Board Representation Agreement dated as of January 4, 1996 among American
Securities Capital Partners, L.P., J. Christopher Chocola, Caryl Chocola
and CTB Holdings, Inc.
B-22
SCHEDULE C
----------
1. American Securities Capital Partners, L.P. and/or ASP/CTB L.P. may
transfer, prior to the Closing Date, up to in the aggregate 700,000 shares
of Company Common Stock to charitable foundations.
B-23
ANNEX C
[LETTERHEAD OF BEAR, STEARNS & CO. INC.]
August 16, 2002
The Board of Directors
CTB International Corp.
611 N. Higbee Street
P.O. Box 2000
Milford, Indiana 46542-2000
Ladies and Gentlemen:
We understand that CTB International Corp. ("CTB") and Berkshire Hathaway
("Berkshire") intend to enter into an Agreement and Plan of Merger, dated as of
August 16, 2002 (the "Agreement") among Berkshire, C Acquisition Corp., a
wholly-owned subsidiary of Berkshire, and CTB, which will provide, among other
things, for the merger (the "Merger") of C Acquisition Corp. with and into CTB.
Pursuant to the Merger, CTB will become a wholly-owned subsidiary of Berkshire,
and each outstanding share of common stock, par value $0.01 per share ("CTB
Common Stock"), other than the shares of CTB Common Stock owned, directly or
indirectly, by Berkshire or CTB immediately prior to the effective time, will be
converted into the right to receive $12.75 per share in cash. The cash amount
pursuant to the Merger is herein defined as the "Consideration to be Received".
You have asked us to render our opinion as to whether the Consideration to be
Received is fair, from a financial point of view, to the holders of CTB Common
Stock.
In the course of performing our review and analyses for rendering this opinion,
we have:
o reviewed the Agreement;
o reviewed CTB's Annual Reports to Shareholders and Annual Reports on Form
10-K for the years ended December 31, 1998 through December 31, 2001, its
Quarterly Reports on Form 10-Q for the periods ended March 31 and June 30,
2002 and its Reports on Form 8-K for the three years ended the date hereof;
o reviewed certain operating and financial information, including
management's projections for the four years ended December 31, 2005,
prepared in February 2002 and thereafter sensitized to reflect certain
events and financial results subsequent to their initial development (as so
sensitized, the "Projections"), provided to us by management relating to
CTB's business and prospects;
o reviewed the monthly operating results of CTB for January 2002 through July
2002;
o met with certain members of CTB's senior management to discuss CTB's
business, operations, historical and projected financial results and future
prospects;
o reviewed the historical prices, trading multiples and trading volumes of
the shares of CTB Common Stock;
o reviewed the terms of recent acquisitions of companies which we deemed
generally comparable to CTB;
o reviewed publicly available financial data, stock market performance data
and trading multiples of companies which we deemed generally comparable to
CTB;
C-1
CTB International Corp.
August 16, 2002
Page 2
o performed discounted cash flow analyses based on the Projections; and
o conducted such other studies, analyses, inquiries and investigations as we
deemed appropriate.
We have relied upon and assumed, without independent verification, the accuracy
and completeness of the financial and other information, including without
limitation the Projections, provided to us by CTB. With respect to the
Projections, we have relied on representations that they have been reasonably
prepared on bases reflecting the best available estimates and judgments of the
senior management of CTB (as of the date such projections were initially
prepared and as subsequently sensitized to reflect certain events and financial
results subsequent to their initial development) as to the expected future
performance of CTB. We have not assumed any responsibility for the independent
verification of any such information or of the Projections provided to us, or
the adjustment to such Projections, and we have further relied upon the
assurances of the senior management of CTB that they are unaware of any facts
that would make the information and Projections provided to us incomplete or
misleading.
In arriving at our opinion, we have not performed or obtained any independent
appraisal of the assets or liabilities (contingent or otherwise) of CTB, nor
have we been furnished with any such appraisals. During the course of our
engagement, we were asked by the Board of Directors to solicit indications of
interest from various third parties regarding a transaction with CTB. We and
CTB's legal counsel have reviewed with the Board of Directors several proposals
with a potential purchase price in excess of the Consideration to be Received
(the "Other Proposals") and the issues contained in each of those proposals,
which could affect the achievability of such proposals and therefore, after
consultation with the Board of Directors, did not consider the Other Proposals
in light of such issues. We have assumed that the Merger will be consummated in
a timely manner and in accordance with the terms of the Agreement without any
limitations, restrictions, conditions, amendments or modifications, regulatory
or otherwise, that collectively would have a material effect on CTB.
We have acted as a financial advisor to CTB in connection with the Merger and
will receive a customary fee for such services, a substantial portion of which
is contingent on successful consummation of the Merger. In the ordinary course
of business, Bear Stearns and its affiliates may actively trade the equity and
debt securities and/or bank debt of CTB and/or Berkshire for our own account and
for the account of our customers and, accordingly, may at any time hold a long
or short position in such securities or bank debt.
C-2
CTB International Corp.
August 16, 2002
Page 3
It is understood that this letter is intended for the benefit and use of the
Board of Directors of CTB and does not constitute a recommendation to the Board
of Directors or shareholders of CTB as to how to vote in connection with the
Merger. This opinion does not address CTB's underlying business decision to
pursue the Merger, the relative merits of the Merger as compared to the Other
Proposals or any alternative business strategies that might exist for CTB or the
effects of any other transaction in which CTB might engage. This letter is not
to be used for any other purpose, or be reproduced, disseminated, quoted from or
referred to at any time, in whole or in part, without our prior written consent;
provided, however, that this letter may be included in its entirety in any proxy
material to be distributed to the holders of CTB Common Stock in connection with
the Merger. Our opinion is subject to the assumptions and conditions contained
herein and is necessarily based on economic, market and other conditions, and
the information made available to us, as of the date hereof. We assume no
responsibility for updating or revising our opinion based on circumstances or
events occurring after the date hereof.
Based on and subject to the foregoing, it is our opinion that, as of the date
hereof, the Consideration to be Received is fair, from a financial point of
view, to the holders of CTB Common Stock.
Very truly yours,
BEAR, STEARNS & CO. INC.
By:
---------------------------------
Senior Managing Director
C-3
ANNEX D
[LETTERHEAD OF CREDIT SUISSE FIRST BOSTON CORPORATION]
August 16, 2002
Board of Directors
CTB International Corp.
State Road 15 North, P.O. Box 2000
Milford, IN 46542
Members of the Board:
You have asked us to advise you with respect to the fairness to the holders of
the common stock, par value of $0.01 per share ("Company Common Stock"), of CTB
International Corp. (the "Company"), from a financial point of view, of the Cash
Consideration (as defined below) set forth in the Agreement and Plan of Merger,
dated as of August 16, 2002 (the "Merger Agreement"), among Berkshire Hathaway
Inc. ("Berkshire"), C Acquisition Corp., a wholly owned subsidiary of Berkshire
("Merger Sub"), and the Company. The Merger Agreement provides for, among other
things, the merger of Merger Sub with and into the Company (the "Merger"),
pursuant to which the Company will become a wholly owned subsidiary of Berkshire
and each outstanding share of Company Common Stock will be converted into the
right to receive $12.75 per share, net to the seller in cash (the "Cash
Consideration").
In arriving at our opinion, we have reviewed the Merger Agreement and certain
related documents, as well as certain publicly available business and financial
information relating to the Company. We also have reviewed certain other
information relating to the Company, including financial forecasts, provided to
or discussed with us by the Company, and have met with the management of the
Company to discuss the business and prospects of the Company. We also have
considered certain financial and stock market data of the Company, and we have
compared those data with similar data for publicly held companies in businesses
similar to the Company, and we have considered, to the extent publicly
available, the financial terms of certain other business combinations and other
transactions which in the past have been effected. We also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria which we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
such information being complete and accurate in all material respects. We have
been advised, and have assumed, that the financial forecasts for the Company
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the management of the Company as to the future
financial performance of the Company and the other matters covered thereby. We
have also assumed, with your consent, that the Merger will be consummated in
accordance with the terms of the Merger Agreement, without waiver, amendment or
modification of any material term, condition or agreement therein. We have not
been requested to make, and have not made, an independent evaluation or
appraisal of the assets or liabilities (contingent or otherwise) of the Company,
nor have we been furnished with any such evaluations or appraisals. Our opinion
is
D-1
necessarily based upon information available to us, and financial, economic,
market and other conditions as they exist and can be evaluated, on the date
hereof. In connection with our engagement, we were requested to solicit
indications of interest from, and held preliminary discussions with, third
parties regarding the possible acquisition of all or a part of the Company. Our
opinion does not address the relative merits of the Merger as compared to other
business strategies that might be available to the Company, nor does it address
the underlying business decision of the Company to proceed with the Merger.
We have acted as financial advisor to the Company in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon the consummation of the Merger. We and our affiliates have in
the past provided, and may in the future provide, investment banking and
financial services to the Company and ASP/CTB, L.P., a stockholder of the
Company ("ASP"), unrelated to the proposed Merger, for which services we have
received, and expect to receive, compensation. Affiliates of CSFB and certain
investment funds affiliated or otherwise associated with CSFB have investments
in funds managed or advised by ASP or its affiliates. In the ordinary course of
business, we and our affiliates may actively trade the securities of the Company
and Berkshire for our own and such affiliates' accounts and for the accounts of
customers and, accordingly, may at any time hold long or short positions in such
securities.
It is understood that this letter is for the information of the Board of
Directors of the Company in connection with its evaluation of the Merger and
does not constitute a recommendation to any stockholder as to how any such
stockholder should vote or act with respect to any matter relating to the
Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Cash Consideration to be received in the Merger by the holders of
Company Common Stock is fair to such holders from a financial point of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
D-2
ANNEX E
[LETTERHEAD OF GEORGE K. BAUM & COMPANY]
August 16, 2002
PERSONAL & CONFIDENTIAL
Board of Directors
CTB International Corp.
611 North Higbee Street
Milford, IN 46542-2000
Gentlemen:
You have requested our opinion as to the fairness, from a financial
point of view, to the holders of common stock (the "Common Stock") of CTB
International Corp., an Indiana corporation (the "Company"), of the
consideration to be received by such stockholders pursuant to the terms and
conditions set forth in the Agreement and Plan of Merger dated as of August 16,
2002 (the "Merger Agreement") by and among the Company, Berkshire Hathaway Inc.,
a Delaware corporation ("Parent"), and C Acquisition Corp., an Indiana
corporation and wholly owned subsidiary of Parent ("Acquisition Sub").
Pursuant to the Merger Agreement, the Company and the Acquisition Sub
shall consummate a merger (the "Merger") pursuant to which (i) the Acquisition
Sub shall be merged with and into the Company and the Company shall be the
successor or surviving corporation in the Merger (the "Surviving Corporation"),
and (ii) each share of the Company's Common Stock (other than the shares held by
the Company, any wholly owned subsidiary of the Company, Parent, or any wholly
owned subsidiary of Parent, including Acquisition Sub) shall be converted into
the right to receive an amount equal to $12.75 per share, without interest (the
"Merger Consideration").
George K. Baum & Company, as part of its investment banking business,
is engaged in the valuation of businesses and their securities in connection
with mergers and acquisitions, private placements and valuations for estate,
corporate and other purposes. We have acted as a financial advisor to the Board
of Directors of the Company in connection with the Merger and will receive a fee
for our services, which is contingent upon consummation of the Merger. In
addition, the Company has agreed to reimburse us with respect to certain
reasonable out-of-pocket expenses, including without limitation fees and
disbursements of legal counsel, and to indemnify us and certain affiliates
against certain liabilities relating to, or arising out of, our engagement,
including without limitation certain liabilities under federal securities laws.
We have previously rendered investment banking services to the Company for which
we have received customary compensation. Additionally, an employee of George K.
Baum & Company is an investor in American Securities Partners III, L.P., an
affiliate of American Securities Capital Partners, L.P.
Our opinion addresses only the fairness of the Merger Consideration
from a financial point of view to the holders of the Company's Common Stock and
does not address any other aspect of the Merger, including the Company's
underlying business decision to effect the Merger, or tax consequences. We have
not been engaged to independently verify any legal or accounting matters
relative to the Merger Agreement, advice with respect to such matters having
been provided by the Company's legal and accounting advisors. Our opinion does
not constitute a recommendation to any holder of the Company's
E-1
Page 2
August 16, 2002
Common Stock as to how to vote with respect to the Merger. In rendering our
opinion, we have assumed that each of the parties to the Merger Agreement will
comply with all material covenants and agreements set forth in the Merger
Agreement and related documents, as applicable, and that the Merger will be
validly consummated in accordance with its terms.
In connection with our opinion, we have, among other things:
(i) Reviewed the terms and conditions describing or otherwise
directly relating to the Merger Consideration set forth in the
Merger Agreement;
(ii) Reviewed certain publicly available business and historical
financial information relating to the Company, including without
limitation the Company's Annual Reports, Forms 10-K, Forms 10-Q
and other filings with the SEC;
(iii) Reviewed current and historical market prices and trading volumes
of the Company's Common Stock;
(iv) Reviewed certain internal financial information and other data
relating to the businesses and financial prospects of the
Company, as well as estimates, financial forecasts and analyses
prepared by the management of the Company that are not publicly
available;
(v) Conducted discussions with members of the senior management of
the Company;
(vi) Reviewed publicly available financial and stock market data with
respect to certain companies that we believe to be comparable in
certain respects to the Company;
(vii) Reviewed the financial terms of certain business combinations
that we deemed to be similar in certain respects to the Merger;
(viii) Reviewed certain historical data relating to premiums paid in
mergers and acquisitions of publicly traded companies;
(ix) Reviewed the process and background that led to the Merger; and
(x) Conducted such other financial studies, analyses and
investigations, and considered such other information that we
deemed necessary or appropriate.
For purposes of our opinion, we relied upon and assumed, without
independent verification of the same, the accuracy and completeness of the
financial and other information made available to us. We have not undertaken any
independent evaluations or appraisals of any of the Company's assets, properties
or liabilities, nor have we made any physical inspection of the properties or
assets of the Company for such purposes. We have relied upon and assumed,
without independent verification, that the information provided by the Company,
including projections and related analyses and judgments thereto, reflected the
best currently available estimates and judgments of the Company's management as
to the recent and likely future performance of the Company or otherwise as to
the matters covered thereby. In rendering our opinion, we express no view as to
the reasonableness of such forecasts and projections or the assumptions and
judgments on which they are based. We also have relied on the assurances of the
Company's management that they were not aware of any information or fact that
would make the information provided to us incomplete or misleading.
E-2
Our opinion is based upon the information available to us and the facts
and circumstances as they exist, including economic, market and other conditions
as in effect on the date of the opinion. Events occurring after such date could
materially affect the assumptions used in preparing our opinion, and we
undertake no duty or obligation and have no duty or obligation to update or
amend our opinion or otherwise advise the Company, or any other party or person
of the occurrence of any such events. The description of the analyses set forth
herein does not purport to be a complete description of the analyses underlying
our opinion. The preparation of a fairness opinion is a complex process
involving subjective judgments and is not necessarily susceptible to partial
analysis or summary description. In arriving at our opinion, we do not attribute
any particular weight to any analysis or factor we considered, but rather made
qualitative judgments as to the significance and relevance of each analysis and
factor. Accordingly, our analysis must be considered as a whole. Selecting
portions of our opinion and factors considered by us, without considering all
the analysis and factors, could create a misleading or incomplete view of the
processes underlying such analyses and our opinion.
It is understood that the opinion expressed herein is for the benefit
and use of the Board of Directors of the Company in connection with, and for
purposes of, its evaluation of the Merger. This opinion may not be disclosed,
referred to or communicated (in whole or in part) to any third party for any
purpose whatsoever except with our written consent in each instance and except
that this opinion may be referred to in any proxy or information statement,
offer to purchase or similar communications with stockholders of the Company
pursuant to the Securities Act of 1933 (the "Securities Act") or the Securities
Exchange Act of 1934 (the "Exchange Act") so long as any such reference to the
opinion or us is in a form reasonably acceptable to us. This opinion may be
included in its entirety in any filing made by the Company in respect of the
Merger with the SEC and any proxy or information statement, offer to purchase or
similar communications with stockholders of the Company pursuant to the
Securities Act or the Exchange Act, so long as this opinion is reproduced in
full in such filing, and any description of, or reference to, us or a summary of
this opinion and/or the related analysis in such filing is in a form reasonably
acceptable to us.
Based upon and subject to the foregoing, we are of the opinion that, as
of the date hereof, the proposed Merger Consideration is fair, from a financial
point of view, to the holders of Common Stock of the Company.
Very truly yours,
George K. Baum & Company
--------------------------
By: John R. Martin
Managing Director
E-3
[LOGO]
CTB INTERNATIONAL CORP.
SPECIAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the special meeting of shareholders
of CTB International Corp. The meeting will be held on [&], 2002, at
[&][a.m.][p.m.], local time, at [&].
Please mark the boxes on the proxy card to indicate how your shares
should be voted. Sign and return your proxy as soon as possible in the enclosed
postpaid envelope. TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS, JUST SIGN AND DATE THE PROXY CARD WHERE INDICATED - NO BOXES
NEED TO BE CHECKED.
Votes are tabulated by Equiserve Trust Company N.A., CTB's transfer
agent. Any comments noted on the proxy card or an attachment will be forwarded
to the Secretary of CTB by Equiserve Trust Company N.A. Please indicate if you
have comments by marking the appropriate box.
--------------------------
Michael J. Kissane
Secretary
CTB INTERNATIONAL CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF SHAREHOLDERS ON /&/, 2002
The undersigned hereby appoints /&/, /&/ and /&/ and
each of them with the power of substitution and revocation, as attorneys and
proxies to appear and vote all shares of CTB International Corp. common stock
held by the undersigned at the Special Meeting of Shareholders of CTB
International Corp. to be held on /&/, 2002 and at any and all adjournments
thereof, and the undersigned hereby instructs said proxies to vote as indicated
on all matters referred to on the reverse side and described in the proxy
statement for the meeting, and in accordance with their judgment on all other
matters that may properly come before the meeting.
All proxies will vote as specified on the reverse side. IN THE ABSENCE
OF SPECIFIC INSTRUCTIONS, PROXIES WILL VOTE FOR THE APPROVAL OF THE AGREEMENT
AND PLAN OF MERGER. To vote FOR the Board of Directors' recommendations, just
sign and date the reverse side - no boxes need be checked.
(To Be Signed on Reverse Side)
Please date, sign and mail your
proxy card back as soon as possible.
CTB INTERNATIONAL CORP.
Special Meetings of Shareholders
/&/, 2002
Please detach and mail envelope provided.
------------------------------------------------------------------------------
Please mark your votes as in this example. [X]
THE BOARD OF DIRECTORS OF CTB INTERNATIONAL CORP. RECOMMENDS THAT YOU
VOTE FOR THE FOLLOWING PROPOSAL:
To approve the Agreement and Plan of Merger, dated as of August 16, 2002,
among CTB International Corp, Berkshire Hathaway Inc. and C Acquisition
Corp., a wholly owned subsidiary of Berkshire Hathaway Inc., pursuant to
which, upon the merger becoming effective, each share of common stock,
par value $0.01 per share, of CTB International Corp. will be converted
into the right to receive $12.75 in cash, without interest.
FOR[ ] AGAINST[ ] ABSTAIN[ ]
Mark box at right if an address change [ ]
or comment has been made.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD USING THE ENCLOSED ENVELOPE:
Signature:________________________ Date:________________________
Signature:________________________ Date:________________________
Note: Please sign name(s) exactly as appearing hereon. When signing as attorney,
executor, administrator, or other fiduciary, please give your full title as
such. Joint owners should each sign personally.