Exhibit (e) (2)
INTERESTS OF CERTAIN PERSONS IN THE MERGERS; CERTAIN IBP BENEFIT PLANS; AND
CONTINUED OWNERSHIP OF IBP AFTER THE MERGER
GENERAL
In considering the recommendation of the special committee and the board
of directors, you should be aware that certain of IBP's officers and directors
have interests in the merger or have certain relationships, including those
referred to below, that present actual or potential, or the appearance of actual
or potential, conflicts of interest in connection with the merger. The special
committee and the board of directors were aware of these actual or potential
conflicts of interest and considered them along with other matters described
under "--Recommendation of the Special Committee and the Board of Directors;
Purpose and Reasons for the Merger."
CONTINUING OWNERSHIP
Immediately prior to the merger, Robert L. Peterson, Richard L. Bond and
certain other members of IBP management are expected to acquire shares of
Rawhide Holdings common stock both for cash and in exchange for shares of IBP
common stock valued at $22.25 per share.
It is contemplated that certain management and officers of IBP and its
subsidiaries will be offered the opportunity to retain all or a portion of their
interest in IBP after the merger becomes effective. Just before the merger
becomes effective, such management and officers who so elect are expected to
exchange a portion of their shares of IBP common stock valued at $22.25 per
share for newly authorized shares of Rawhide Holdings common stock. The process
of exchanging some of their shares of IBP common stock for Rawhide Holdings
shares would allow them to retain an equity interest through the merger without
suffering adverse tax consequences.
Robert L. Peterson currently intends to exchange $2,500,000 in cash and
467,200 shares of IBP common stock he already owns for Rawhide Holdings common
stock. Richard L. Bond currently intends to exchange $1,500,000 in cash and
8,350 shares of IBP common stock he already owns for Rawhide Holdings common
stock.
In addition, following the merger, it is contemplated that equity plans
and other incentives relating to IBP's equity securities will be made available
to some of IBP's employees (including the members of IBP management referred to
above). It is contemplated that the equity plans will involve the opportunity to
invest directly in the common stock of Rawhide Holdings and the availability of
non-recourse loans to participating employees.
MANAGEMENT INVESTMENT PROGRAM
Rawhide Holdings expects to adopt a program under which members of
management may purchase up to a total of 8% of the common stock of Rawhide
Holdings (excluding warrants and options) at $22.25 per share. It is
contemplated that non-recourse loans to purchase a portion of the common stock
available for purchase under this program will be made available to members of
management. The opportunity to purchase shares under the management investment
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program will be allocated among members of management by Robert L. Peterson,
subject to the reasonable approval of DLJMB.
NEW OPTION PLAN
Rawhide Holdings expects to adopt a new option plan, to take effect as of
the effective time of the merger, under which options to purchase up to a total
of 10% of the common stock of Rawhide Holdings (excluding warrants and options)
will be available for award to members of management at $22.25 per share. Of the
options to be awarded under the plan, 60% will vest based on the lapse of time,
at the fifth anniversary of the effective time of the merger (or, if sooner,
upon a change in control), provided the optionee remains an employee as of that
date. The remaining 40% of options available for award under the plan will vest
based on achievement of specified EBITDA targets for the five fiscal years after
the effective time of the merger. Options under the new option plan will be
allocated by Robert L. Peterson, subject to the reasonable approval of DLJMB.
TREATMENT OF EXISTING OPTIONS, PHANTOM EQUITY PROGRAM
Certain directors, officers and employees have previously received options
to acquire shares of IBP common stock under various IBP stock plans. At the
effective time of the merger, all outstanding options will be cancelled. In
general, each option with an exercise price of less than $22.25 held by such
individuals will be cashed out at the effective time of the merger, in the
amount of the difference between $22.25 and the exercise price of the option,
multiplied by the number of shares to which the option relates. No payment will
be made with respect to any option with an exercise price greater than or equal
to $22.25. Certain members of management are expected to be given the
opportunity, in advance of the effective time of the merger, to waive the right
to this cash payment and to elect instead to convert that right into "phantom"
shares of common stock, as further described below.
The table below shows the number of options currently held by each of
IBP's executive officers and directors, and all other individuals as a group,
and the amounts to be paid to these individuals at the effective time of the
merger in exchange for cancellation of these options, assuming none of such
individuals elected to convert their right to receive those amounts into phantom
shares of common stock.
NAME OUTSTANDING PAYMENT AT
OPTIONS* EFFECTIVE TIME
----------- --------------
INDEPENDENT DIRECTORS:
John S. Chalsty.............................. 6,500 $45,531.00
Wendy L. Gramm............................... 6,500 $43,281.25
John Jacobson, Jr............................ 2,500 $5,781.25
Martin A. Massengale......................... 3,000 $4,531.25
Michael L. Sanem............................. 2,500 $5,781.25
Jo Ann R. Smith.............................. 4,300 $19,131.25
EXECUTIVE OFFICERS:
Richard L Bond............................... 218,020 $1,155,155.00
Randy Devening............................... 22,000 $110,250.00
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Craig J. Hart................................ 32,890 $148,732.50
Eugene D. Leman.............................. 145,200 $866,987.50
Robert L. Peterson........................... 420,000 $2,608,125.00
Larry Shipley................................ 87,660 $352,620.00
ALL OTHER INDIVIDUALS AS A GROUP................ 4,025,714 $19,920,921.63
* INCLUDES BOTH IN AND OUT OF THE MONEY OPTIONS
The actual amounts to be paid to these persons will be reduced by any
applicable federal and state income and payroll tax withholding.
Certain members of IBP's senior management team to be designated by Robert
L. Peterson are expected to be offered an irrevocable election to either receive
the cash-out of their option values as described above, or instead to convert
the right to that cash-out into "phantom" common shares. If a member of
management makes this election, he or she will be awarded a number of phantom
shares with a value equal to the cash amount to which he would have been
entitled in connection with his or her options, as described above. Each phantom
share will represent an unfunded, contractual obligation on the part of Rawhide
Holdings to issue the holder a common share at the earlier of the fifth
anniversary of the effective time of the merger, in limited circumstances on the
holder's termination of employment, or an initial public offering. Each phantom
share will be immediately fully vested upon the date of grant.
TREATMENT OF EXISTING RESTRICTED SHARES
Certain officers and employees have received restricted shares of IBP
common stock under various IBP stock plans. Vesting of all restricted shares
will accelerate upon the effective time of the merger and, unless they elect
otherwise as described below, the holders will receive merger consideration on
the same basis as all other shareholders of IBR. If the holder of restricted
shares so elects, the merger consideration to which he or she would otherwise be
entitled will not be paid at the effective time of the merger, but will instead
be deferred under the terms of IBP's Retirement Income Plan, a nonqualified
deferred compensation arrangement.
PUT AND CALL RIGHTS
It is contemplated that members of management will have the right to sell,
or "put," their shares of Rawhide Holdings common stock to Rawhide Holdings upon
termination of employment under certain circumstances. For example, upon an
executive's death or disability or retirement on or after the later of his or
her 65th birthday and the sixth anniversary of the effective time of the merger,
the executive (or his or her estate) may sell all shares purchased under the
management investment program and new option plan described above to Rawhide
Holdings at fair market value. Members of management also have the right to put
(and, in some cases, Rawhide Holdings has the right to call) their shares upon
termination of employment for other reasons. The existence of these rights, and
the prices at which they may be exercised, depend upon the plan or program under
which the shares were acquired and the circumstances of termination of
employment.
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EMPLOYMENT AGREEMENTS
It is contemplated that Rawhide Acquisition will enter into employment
agreements with Robert L. Peterson and Richard L Bond, which will become
effective upon the completion of the merger.
Mr. Peterson's new employment agreement is expected to have a term of five
years, during the first two years of which he will serve as Chief Executive
Officer and receive annual salary of $1 million, and during the last three years
of which he will serve as Chairman of the board of directors of Rawhide Holdings
and receive annual salary of $500,000, adjusted for inflation. The agreement is
also expected to provide for a one-time grant to Mr. Peterson, as of the
effective time of the merger, of restricted common stock of Rawhide Holdings
with a value of $21 million (valued at $22.25 per share). This restricted stock
will vest as to 20% per year over the five-year period beginning on the
effective time of the merger. In addition, Mr. Peterson will be eligible for
awards under the new option plan described above, and for annual bonuses at the
discretion of the board of directors of Rawhide Holdings. The agreement is
expected to provide that if Mr. Peterson is involuntarily terminated without
"cause", voluntarily terminates for "good reason," as those terms are defined in
the agreement, or dies or becomes disabled, he will receive a lump sum payment
equal to five times his annual base salary for the prior calendar year and full
vesting of restricted stock and any unvested time-vesting options. "Good reason"
will be defined to include the failure by the board of directors of Rawhide
Holdings to follow Mr. Peterson's good faith recommendation as to two or more
significant policy decisions during the term of his agreement.
Mr. Bond's new employment agreement is expected to be similar to Mr.
Peterson's, except that:
- during the first two years of the agreement's term Mr. Bond will
serve as Chief Operating Officer, and during the last three years he
will serve as Chief Executive Officer;
- Mr. Bond will receive an annual salary of $800,000 during the first
year of the agreement's term, $900,000 during the second year, and
$1 million, adjusted for inflation, during the remaining three
years;
- Mr. Bond will receive a minimum annual bonus of 0.3% of the
surviving corporation's operating earnings (as adjusted consistent
with his current bonus plan) during the first year of the
agreement's term, 0.4% during the second year, and 0.5% during each
of the remaining three years;
- Mr. Bond is not entitled to an award of restricted stock; and
- the definition of "good reason" under Mr. Bond's agreement does not
include the board's failure to follow recommendations by Mr.
Peterson, but does include enhanced protection against demotion or
reduction in Mr. Bond's responsibilities following a departure by
Mr. Peterson for good reason.
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The following table illustrates the amount of the lump sum payments that
Messrs. Peterson and Bond would be entitled to receive under the agreements
described above if their employment were terminated within six months after the
effective date of the merger:
AMOUNT OF
EXECUTIVE PAYMENT
--------- -------
Robert L. Peterson.............................. $5.0 million
Richard L. Bond................................. $4.0 million
OTHER SEVERANCE AGREEMENTS
Rawhide Acquisition is also expected to enter into severance agreements
with four other executives, to be designated by Mr. Peterson. These agreements
will provide for benefits upon termination similar to the severance benefits
provided under Mr. Bond's employment agreement, as described above, except that
the cash lump sum to be paid upon termination of employment will be equal to two
times the executive's annual base salary.
OTHER BENEFIT AGREEMENTS
It is contemplated that a transaction bonus pool totaling $6 million will
be made available for allocation among the members of management immediately
after the effective time of the merger. Awards from the bonus pool will be
allocated by Mr. Peterson, subject to the reasonable approval of DLJMB.
In addition, for a period of at least five years following the effective
time of the merger, Rawhide Holdings has agreed to maintain employee benefits
and cash compensation providing substantially comparable value, in the
aggregate, to the employee benefits and cash compensation currently provided by
IBP to its employees. During the 30-month period beginning at the effective time
of the merger, the Chief Executive Officer of Rawhide Holdings will have the
right to direct that its Retirement Income Plan, a nonqualified deferred
compensation arrangement, be terminated and the benefits under the plan
immediately distributed.
OTHER EMPLOYMENT ARRANGEMENTS
The merger agreement provides that, for a period of at least one year
following the effective time of the merger, Rawhide Holdings will cause IBP and
its subsidiaries to provide benefits to their respective employees (other than
those represented for purposes of collective bargaining) which will, in the
aggregate, be comparable to those currently provided by IBP and its subsidiaries
to its employees (other than any stock option or other equity based incentive
plan currently provided by IBP).
INDEMNIFICATION AND INSURANCE
Pursuant to the merger agreement, for six years after the closing date of
the merger, Rawhide Holdings will cause the surviving corporation to indemnify
and hold harmless IBP's present and former officers and directors for acts or
omissions occurring before the close of the merger to the extent provided under
IBP's articles of incorporation and by-laws in effect as of
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the date of the merger agreement. For six years after the close of the merger,
Rawhide Holdings will cause the surviving corporation to provide officers' and
directors' liability insurance for acts or omissions occurring before the close
of the merger covering each such person currently covered by IBP's officers' and
directors' liability insurance policy on terms with respect to coverage and
amount no less favorable than those of such policy in effect on October 1, 2000;
provided, that if the cost of such insurance on a per annum basis exceeds 200%
of the amount per annum IBP paid in its last fiscal year, then Rawhide Holdings
will cause the surviving corporation to provide only such coverage as is
available at a cost of 200% of such amount.
TRANSACTIONS IMMEDIATELY PRIOR TO THE MERGER
Immediately prior to the merger:
- DLJMB will purchase some of the shares of IBP common stock owned by
ADM, Booth Creek and Jeffrey J. Joyce for $22.25 per share.
- ADM, Booth Creek and Jeffrey J. Joyce will acquire shares of Rawhide
Holdings common stock in exchange for their remaining shares of IBP
common stock valued at $22.25 per share, and may also acquire senior
discount debentures of Rawhide Holdings and warrants to acquire
Rawhide Holdings common stock for cash.
- DLJMB will purchase shares of Rawhide Holdings common stock, senior
discount debentures of Rawhide Holdings and warrants to acquire
Rawhide Holdings common stock. The purchase price will be payable in
cash and in shares of IBP common stock valued at $22.25 per share.
- Robert L. Peterson, Richard L. Bond and certain other members of IBP
management will acquire shares of Rawhide Holdings common stock. The
purchase price will be payable in cash and in shares of IBP common
stock valued at $22.25 per share.
CONSEQUENCES OF THE MERGER
Pursuant to the merger agreement, following approval of the merger
proposal and subject to the fulfillment or waiver of certain conditions, Rawhide
Acquisition will be merged with IBP, and IBP will continue as the surviving
company in the merger and a wholly-owned subsidiary of Rawhide Holdings. As a
result of the merger, you will be entitled to receive $22.25 in cash for each of
your shares of IBP common stock outstanding at the time of the merger, shares of
IBP common stock held by Rawhide Holdings will be cancelled and each share of
common stock of Rawhide Acquisition will be converted into one share of common
stock of IBP, the surviving corporation.
Following the merger, IBP's shareholders (excluding ADM, Booth Creek and
Jeffrey J. Joyce, as well as Robert L. Peterson, Richard L. Bond and certain
other members of IBP management) will cease to participate in IBP's future
earnings or growth or benefit from any increases, if any, in the value of IBP
stock. As a result of the merger, approximately 61.3% of
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Rawhide Holdings common stock outstanding immediately after the merger will be
owned by DLJMB, 24.5% by ADM, 4.4% by Booth Creek and Jeffrey J. Joyce, and 9.8%
by Robert L. Peterson, Richard L. Bond and certain other members of IBP
management.
IBP's common stock will be delisted from the New York Stock Exchange and
will not be eligible for listing or trading on any exchange. IBP common stock is
currently registered under the Securities Exchange Act of 1934. Following the
merger, registration of IBP common stock under the Exchange Act will be
terminated, and, other than as a result of IBP issuing any registered
indebtedness, IBP will be relieved of the obligation to comply with the public
reporting requirements of the Exchange Act.
At the effective time of the merger, options to purchase common stock
under IBP's stock option plans will be cancelled, and the holders of such
options will have the right to receive an amount of cash equal to $22.25 less
the per share exercise price of that option, with all "out of the money" options
terminated. See "Special Factors--Interests of Certain Persons in the Merger;
Certain Company Benefit Plans; and Continued Ownership of IBP."
The Certificate of Incorporation of IBP in effect immediately before the
merger will remain IBP's Certificate of Incorporation immediately after the
merger; however, the bylaws of Rawhide Holdings will be the bylaws of IBP
immediately after the merger, in each case until amended in accordance with
applicable law.
IBP's executive officers immediately before the merger will remain as
IBP's executive officers immediately after the merger. Rawhide Acquisition's
directors immediately prior to the merger will become IBP's directors
immediately after the merger.
PLANS FOR IBP AFTER THE MERGER
EXTRAORDINARY CORPORATE TRANSACTIONS
Except as described in this proxy statement, IBP has not, and IBP has been
advised by Rawhide Holdings and DLJMB that they have not, approved any:
- specific plans or proposals for any extraordinary corporate
transaction involving IBP, as the surviving company after the
completion of the merger;
- sale or transfer of a material amount of assets currently held by
IBP after the completion of the merger; or
- specific plans or arrangements regarding the repayment of the
financing of the merger consideration, except that DLJMB may reduce
its equity participation in IBP to the extent of (i) any equity
participation by employees following the completion of the merger or
(ii) any equity participation by one or more institutional
co-investors.
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MANAGEMENT
IBP has been advised by Rawhide Holdings and DLJMB that it intends to
retain IBP's senior management in comparable positions after the merger. Rawhide
Acquisition will enter into employment agreements which will become effective
upon the completion of the merger. See "--Interests of Certain Persons in the
Merger; Certain IBP Benefit Plans; and Continued Ownership of IBP After the
Merger." It is contemplated that after the merger, the board of directors of
Rawhide Holdings will consist of nine members, including Robert L. Peterson and
Richard L. Bond. The remaining directors of Rawhide Holdings will include five
individuals to be designated by DLJMB, one individual to be designated by Booth
Creek, and one individual to be designated by ADM.
SHARE OWNERSHIP
IBP has been advised by DLJMB that after the merger it intends to hold its
shares of capital stock of IBP (through Rawhide Holdings) for long-term
investment.
CAPITALIZATION
The equity capitalization of the surviving company following the merger is
expected to consist of common stock, 100% of which will be owned by Rawhide
Holdings. The equity capitalization of Rawhide Holdings following the merger is
expected to consist of a single class of common stock and warrants to acquire
common stock.
RIGHT TO CHANGE PLANS
Although DLJMB believes it is unlikely, it reserves the right to change
its plans at any time. Accordingly, DLJMB may elect to sell, transfer or
otherwise dispose of all or any portion of the shares of capital stock owned by
it after the merger or may decide that the surviving company should sell,
transfer or otherwise dispose of all or any portion of its assets in each case
to one or more of its affiliates or to any other parties as warranted by future
conditions. Although each of Rawhide Holdings and DLJMB believes it is unlikely,
they reserve the right to make whatever personnel changes to the present
management of IBP they deem necessary after completion of the merger.
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THE MERGER AGREEMENT
On October 1, 2000, IBP entered into the merger agreement with Rawhide
Holdings and Rawhide Acquisition. The following is a summary of the material
provisions of the merger agreement. Because it is a summary, it does not include
all of the information that is included in the merger agreement. The text of the
merger agreement, which is attached as Appendix A to this proxy statement, is
incorporated into this section by reference. We encourage you to read the merger
agreement carefully in its entirety.
THE MERGER
Upon effectiveness of the merger, Rawhide Acquisition will be merged with
IBP, and IBP will continue as the surviving company and a wholly-owned
subsidiary of Rawhide Holdings. In connection with the merger, you will be
entitled to receive $22.25 in cash for each of your shares of IBP common stock
outstanding at the time of the merger.
As the surviving company after the merger, IBP will have all the property,
rights and powers of both Rawhide Acquisition and IBP before the merger, and it
will be liable for all of the debts, liabilities and obligations of both Rawhide
Acquisition and IBP before the merger. After the merger, the separate corporate
existence of Rawhide Acquisition will cease.
TIME OF CLOSING
The merger will close as soon as possible after satisfaction or waiver of
the conditions to the merger. To complete the merger, Rawhide Acquisition and
IBP will file a certificate of merger with the Secretary of State of the State
of Delaware.
EXCHANGE AND PAYMENT PROCEDURES
IBP will appoint an exchange agent to handle the exchange of its share
certificates in the merger for cash. Soon after the merger becomes effective,
the exchange agent will mail to you a letter of transmittal and instructions
explaining how to exchange your share certificates for cash. Upon surrender to
the exchange agent of a valid share certificate and a properly completed letter
of transmittal, along with such other documents as the exchange agent may
reasonably require, you will be entitled to receive $22.25 in cash per share.
Until surrendered in this manner, each share certificate will represent only the
right to receive the merger consideration.
You should not send your stock certificates now. You should send them only
after you receive a letter of transmittal from the exchange agent. A letter of
transmittal will be mailed to you soon after the merger becomes effective.
Any merger consideration made available to the exchange agent that remains
unclaimed by IBP shareholders for six months after the time the merger becomes
effective will be returned to IBP, as the surviving company after the merger,
and any IBP shareholders who have not by that time made an exchange must then
look to the surviving company for payment of their claim for merger
consideration. Amounts unclaimed after two years will be kept by IBP, subject to
state unclaimed property laws.
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TRANSFERS OF SHARES
No transfers of shares of IBP common stock will be made on IBP share
transfer books after the merger becomes effective.
TREATMENT OF STOCK OPTIONS
At the time the merger becomes effective, the merger agreement provides
that all outstanding options to purchase shares of IBP common stock, including
options exercisable for more than $22.25 per share, will be cancelled. In
exchange, optionholders will receive, whether or not their options have vested,
an amount determined by multiplying (1) the excess, if any, of $22.25 over the
exercise price per share of the option by (2) the number of shares subject to
the option.
REPRESENTATIONS AND WARRANTIES
In the merger agreement, IBP has represented and warranted certain matters
to Rawhide Holdings. These include representations and warranties relating to:
- its organization, standing and similar corporate matters;
- its authorization to enter into the merger agreement;
- regulatory consents;
- non-contravention of its agreements;
- its capital structure;
- its subsidiaries;
- the accuracy of its SEC filings;
- its financial statements;
- the accuracy of information contained in this proxy statement;
- the absence of certain changes or events since the date of its most
recent annual financial statements filed with the SEC;
- the absence of material undisclosed liabilities;
- the absence of pending or threatened material litigation;
- filing of tax returns and payment of taxes;
- existence of benefit plans and employment matters;
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- compliance with applicable laws;
- possession of required material permits;
- ownership of or rights to use its intellectual property;
- environmental liabilities and compliance with environmental laws;
- finders' fees and expenses;
- the inapplicability of certain restrictions of Delaware law; and
- the absence of a shareholder rights plan.
The merger agreement also contains representations and warranties of
Rawhide Holdings relating to, among other things:
- its organization, standing and similar corporate matters;
- its authorization to enter into the merger agreement;
- non-contravention of its agreements;
- the accuracy of information supplied by Rawhide Holdings in
connection with this proxy statement;
- finders' fees and expenses;
- financing commitments in connection with the merger;
- ownership of shares of IBP common stock;
- the proposed equity commitment of the proposed shareholders of
Rawhide Holdings; and
- agreements between Rawhide Holdings, Rawhide Acquisition or DLJMB,
on the one hand, and any director, officer, employee or stockholder
of IBP, on the other hand.
The representations and warranties in the merger agreement do not survive
the closing of the merger or termination of the merger agreement.
COVENANTS OF IBP
IBP has undertaken certain covenants in the merger agreement. The
following summarizes the more significant of these covenants:
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INTERIM CONDUCT OF IBPS BUSINESS
From October 1, 2000 until the merger becomes effective, IBP has agreed to
conduct its businesses in the ordinary course and consistent with past practice.
IBP has also agreed to use its reasonable best efforts to preserve its business
and relationships with third parties and employees.
IBP has also agreed to certain specific restrictions during this period,
which are subject to the exceptions described in the merger agreement. These
include restrictions on:
- amending its organizational documents;
- making significant acquisitions, disposals and investments;
- incurring significant debt;
- making significant loans;
- making significant capital expenditures;
- splitting, combining or reclassifying its stock or declaring
dividends;
- adopting new employee compensation arrangements or materially
increasing employee compensation or benefits;
- approving any new labor agreements;
- paying unusual claims; and
- changing its tax elections or settling any material income tax
liability.
IBP has also agreed not to commit to do any of these things.
NO SOLICITATION
IBP and its subsidiaries and its officers, directors, employees and
advisors have agreed not to take action to solicit, initiate, encourage or
facilitate the making of any acquisition proposal. An acquisition proposal means
any offer or proposal for, or any indication of interest in, any acquisition or
purchase of securities representing more than 50% of IBP's voting power, or a
substantial portion of its assets, or any merger, reorganization, consolidation,
share exchange, business combination or similar transaction involving IBP or its
subsidiaries.
Restricted actions include:
- soliciting or encouraging the submission of any acquisition proposal
or agreeing to endorse any acquisition proposal;
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- engaging in discussions or negotiations with any potential bidder,
or disclosing non-public information relating to IBP or its
subsidiaries; or
- granting any waiver or release under any standstill or similar
agreement with respect to any of IBP's equity securities.
However, if IBP receives an unsolicited acquisition proposal which IBP's
board of directors determines in good faith is reasonably likely to be superior
to the merger, and IBP delivers prior written notice to Rawhide Holdings, IBP
may:
- furnish non-public information pursuant to a confidentiality
agreement to the offeror;
- engage in discussions or negotiations with the offeror; and
- Withdraw or modify the recommendation of IBP's board of directors
contained in this proxy statement.
COVENANTS RELATING TO THE SPECIAL MEETING AND PROXY MATERIALS
IBP has agreed to call a special meeting to vote on the merger agreement
and the merger. IBP has also agreed that its directors will recommend approval
and adoption of the merger agreement and the merger by IBP's shareholders and
that they will not withdraw their recommendation. This obligation is subject to
IBP's rights discussed above.
The merger agreement provides that IBP must prepare and mail this proxy
statement quickly, use its reasonable best efforts to obtain shareholder
approval for the merger and related matters and comply with all legal
requirements at the special meeting.
CERTAIN OTHER COVENANTS
IBP has agreed that before the merger becomes effective it will provide
evidence to Rawhide Holdings that, except as requested by Rawhide Holdings,
IBP's current directors will resign when the merger becomes effective.
COVENANTS OF RAWHIDE HOLDINGS
Rawhide Holdings has also undertaken certain covenants in the merger
agreement. The following summarizes the more significant of these covenants.
SEC FILINGS
Rawhide Holdings has agreed to file a transaction statement with the SEC
relating to the merger, as required by the SEC's Rule 13e-3 under the Securities
Exchange Act of 1934. The information included in this proxy statement is
intended to comply with Rule 13e-3.
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CERTAIN EMPLOYEE MATTERS
Rawhide Holdings has also agreed that for at least one year from the time
of the merger, it will cause IBP, as the surviving company of the merger, and
IBP's subsidiaries to provide benefits to its employees (other than those
represented for purposes of collective bargaining) comparable to those currently
provided by IBP and its subsidiaries. This does not apply to any stock option or
other equity based incentive plan currently provided by IBP.
INDEMNIFICATION AND INSURANCE OF IBP'S DIRECTORS AND OFFICERS
Rawhide Holdings has also agreed to cause IBP, as the surviving company
after the merger, to indemnify its present and former officers and directors
against matters occurring before the merger became effective. This obligation
lasts for a period of six years after the close of the merger. Rawhide Holdings
has also agreed that for six years after the closing date of the merger, it will
cause IBP, as the surviving company, to use its best efforts to provide
officers' and directors' liability insurance for each person currently covered
by IBP's officers' and directors' liability insurance policy on terms no less
favorable than IBP's current policy. However, if the cost of such insurance on a
per annum basis exceeds 200% of the amount per annum IBP paid in its last fiscal
year, then Rawhide Holdings will cause IBP, as the surviving company, to provide
only such coverage as is available at the cost of 200% of such amount.
FINANCING
Rawhide Holdings has also agreed to use its reasonable best efforts to
obtain the financing required to complete the merger.
ACQUISITIONS OF IBP COMMON STOCK
Rawhide Holdings also agreed that neither it nor Rawhide Acquisition will
acquire any shares of IBP common stock prior to the closing of the merger, other
than any acquisitions from ADM, Booth Creek or Jeffrey J. Joyce.
ADDITIONAL AGREEMENTS
Both parties to the merger agreement have agreed to use their reasonable
best efforts to do or cause to be done anything necessary or advisable to
consummate the merger and related transactions. The parties have also agreed to
cooperate with each other in relation to certain matters, including making the
necessary SEC filings, obtaining regulatory and other consents and making public
announcements.
CONDITIONS
MUTUAL CLOSING CONDITIONS
Both parties' obligations to consummate the merger are subject to the
satisfaction or, if legally permissible, waiver at or before the time the merger
becomes effective of the following conditions:
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- the approval by IBP shareholders of the merger proposal;
- the expiration of the HSR Act waiting period;
- the absence of any legal prohibition preventing completion of the
merger; and
- the receipt of approvals of any governmental body in relation to the
merger.
ADDITIONAL CLOSING CONDITIONS FOR RAWHIDE HOLDINGS' AND RAWHIDE
ACQUISITION'S BENEFIT
Rawhide Holdings' and Rawhide Acquisition's obligations to complete the
merger are subject to the following additional conditions:
- the material performance by IBP of its obligations under the merger
agreement;
- IBP's representations and warranties being accurate as of the
closing date of the merger to the extent specified in the merger
agreement;
- there being no proceeding by any governmental body, among other
things, challenging, delaying or prohibiting the merger or requiring
IBP, as the surviving company after the merger, to dispose of a
material portion of its assets;
- the receipt by Rawhide Holdings of documents relating to IBP's
standing and authority to enter into the merger agreement;
- the availability to Rawhide Holdings and Rawhide Acquisition of
sufficient funds to complete the merger;
- the holders of no more than 5% of outstanding IBP common stock
exercising their dissenters' rights;
- IBP's total net indebtedness not being more than $1.5 billion at
closing; and
- IBP shall not have revalued any of its assets if the effect of such
revaluation would reasonably be expected to be a material adverse
effect on IBP.
ADDITIONAL CLOSING CONDITIONS FOR IBPS BENEFIT
IBP's obligation to complete the merger is subject to the following
additional conditions:
- Rawhide Holdings' and Rawhide Acquisition's material performance of
their obligations under the merger agreement;
- Rawhide Holdings' representations and warranties being accurate as
of the closing date of the merger to the extent specified in the
merger agreement;
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- the board of directors receiving advice that when the merger becomes
effective, IBP, as the surviving company, will not become insolvent,
will not be left with unreasonably small capital, will not have
incurred debts beyond its ability to pay such debts as they mature
and its capital will not become impaired; and
- the merger agreement must be approved by the holders of a majority
of the shares of IBP common stock voting at the special meeting,
other than shares owned beneficially by ADM, Booth Creek, Jeffrey J.
Joyce, Robert L. Peterson or Richard L. Bond, or any of their
affiliates.
This last condition may be waived by IBP, provided that it gives written
notice of such waiver to the stockholders at least 10 business days prior to the
special meeting.
TERMINATION OF THE MERGER AGREEMENT
RIGHT TO TERMINATE
The merger agreement may be terminated at any time before the closing in
any of the following ways:
(a) by mutual written consent of IBP and Rawhide Holdings;
(b) by either IBP or Rawhide Holdings if the merger is not
completed by March 31, 2001. However, the party seeking to terminate for
this reason must not be in breach of its obligations under the merger
agreement in any material respect;
(c) by either IBP or Rawhide Holdings if completion of the
merger is illegal or prohibited;
(d) by Rawhide Holdings if the board of directors withdraws,
modifies or amends in a manner adverse to Rawhide Holdings their approval
or recommendation of the merger or certain related matters, or if it
recommends or endorses an alternative transaction, or if IBP fails to mail
the proxy statement in a timely fashion or fails to include the
recommendation of its board of directors in such proxy statement;
(e) by IBP if the board of directors authorizes it to enter into
another transaction that is superior to the merger in the manner set out
in the merger agreement and IBP pays Rawhide Holdings the $59 million
termination fee described below. However, IBP can only terminate the
merger agreement in these circumstances if it has notified Rawhide
Holdings of the material terms of the alternative transaction at least
three business days prior to entering into such transaction and permitted
Rawhide Holdings to make a new offer during such period which shall be
considered by the special committee of the board of directors in good
faith; and
(f) by either IBP or Rawhide Holdings if IBP's shareholders do not
approve the merger agreement and the merger.
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If the merger agreement terminates, it will become void. However,
termination will not affect the rights of either party against the other for
breach of the merger agreement. Also, certain obligations survive termination of
the agreement, including the obligation to pay the fees described under
"Termination Fees" below and certain confidentiality obligations.
TERMINATION FEES
IBP has agreed to pay Rawhide Holdings $59 million in cash if the merger
agreement is terminated by IBP or Rawhide Holdings for the reasons described in
(d) or (e) above.
IBP must also pay Rawhide Holdings $59 million in cash if all of the
following events occur:
- the merger agreement is terminated by either IBP or Rawhide Holdings
because IBP's shareholders do not approve the merger at the special
meeting or the merger is not completed by March 31, 2001;
- at the time of such termination or the special meeting, as the case
may be, there is an alternative transaction proposal outstanding
from a third party which is superior to the merger; and
- within 6 months of the termination of the merger agreement, IBP
enters into the alternative transaction or another transaction that
is superior to such alternative transaction.
EXPENSES
Upon termination of the merger agreement for the reasons described in (d),
(e) or (f) above, IBP shall reimburse Rawhide Holdings and its affiliates for
all of their out-of-pocket fees and expenses incurred by them, up to a maximum
reimbursement amount of $7.5 million.
Except as described above, all costs and expenses incurred in connection
with the merger agreement will be paid by the party incurring those costs or
expenses.
AMENDMENTS; WAIVERS
Any provision of the merger agreement may be amended or waived before the
merger becomes effective. After approval of the merger agreement by IBP
shareholders, no amendment or waiver (including of any condition of the merger)
can be made that alters the consideration to be received for IBP common stock or
that would adversely affect the rights of IBP shareholders, without their
further approval. In addition, IBP cannot waive the condition to the merger that
the merger agreement and the merger be approved by IBP stockholders as described
under "Conditions-Additional Closing Conditions for IBP's Benefit" above, unless
it gives at least 10 business days' notice to IBP stockholders of its intention
to waive such condition.
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THE VOTING AGREEMENT
On October 1, 2000, Rawhide Holdings and Rawhide Acquisition entered into
a voting agreement with ADM, Booth Creek and Jeffrey J. Joyce. The following is
a summary of the material provisions of the voting agreement. Because it is a
summary, it does not include all of the information that is included in the
voting agreement. The text of the voting agreement, which is attached as
Appendix B to this proxy statement, is incorporated into this section by
reference. You should read the voting agreement carefully in its entirety.
SCOPE OR AGREEMENT
The voting agreement relates to 3,644,923 shares of IBP common stock owned
by Booth Creek, 643,030 shares owned by Mr. Joyce and 12,951,400 owned by ADM.
TRANSFER OF SHARES
During the period covered by the voting agreement, ADM, Booth Creek and
Mr. Joyce have each agreed that, in the event of any transfer of their IBP
shares, they will require the transferee of such shares to execute and deliver
to Rawhide Holdings and Rawhide Acquisition an agreement identical in form to
the voting agreement. Subject to the preceding sentence, ADM, Booth Creek and
Mr. Joyce are free to transfer their IBP shares as they deem appropriate.
VOTING; PROXY
ADM, Booth Creek and Mr. Joyce have agreed to vote their IBP shares to
approve the merger proposal. This obligation relates to any shareholder meetings
or adjournments or actions by written consent when the merger proposal is voted
on. They have also agreed that for the period covered by the voting agreement
they will not vote their IBP shares in favor of any other merger, consolidation,
sale of assets, reorganization, recapitalization, liquidation or winding up, or
any other extraordinary transaction. They have also agreed not to vote their IBP
shares in favor of any action that would either frustrate the purpose of or
prevent or delay completion of the transactions contemplated by the merger
agreement. They have irrevocably agreed to appoint Rawhide Holdings as their
proxy to vote their IBP shares in this manner.
NO SOLICITATION; NO EXERCISE OF DISSENTERS' RIGHTS
ADM, Booth Creek and Mr. Joyce have agreed that they will not during the
period covered by the agreement:
- take any action to solicit, initiate or encourage an alternative
acquisition transaction;
- engage in negotiations or discussions with or disclose any
non-public information relating to IBP or any of its subsidiaries to
any potential bidder;
- provide access to the properties, books or records of IBP or any of
its subsidiaries; or
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- otherwise assist, facilitate or encourage any potential bidder.
In addition, they have agreed not to exercise any rights to dissent or
appraisal with respect to their IBP shares and the merger.
TERMINATION
The voting agreement will terminate at the time the merger becomes
effective, the date of any substantive amendment to the merger agreement which
has not been approved in writing by ADM, Booth Creek and Mr. Joyce or when the
merger agreement is terminated, whichever happens earlier.
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MANAGEMENT OF IBP FOLLOWING THE MERGER
BOARD OF DIRECTORS
It is contemplated that immediately prior to the merger the Board of
Directors of Rawhide Holdings will consist of nine members, including Messrs.
Peterson and Bond. The remaining directors of Rawhide Holdings will include five
individuals to be designated by DLJMB, one individual to be designated by Booth
Creek, and one individual to be designated by ADM. The Board of Directors of
Rawhide Acquisition will be identical to that of Rawhide Holdings. Rawhide
Acquisition's directors immediately before the merger will become the surviving
company's directors after the merger.
EXECUTIVE OFFICERS
Pursuant to the merger agreement, the executive officers of IBP at
the effective time of the merger will be the executive officers of the surviving
company. For additional information regarding the executive officers of IBP, see
"Current Management of IBP."
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of November 17, 2000, to the knowledge of IBP, no person
beneficially owned 5% or more of any class of the outstanding voting securities
of IBP, except as follows:
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
-------------- ------------------- ---------- --------
Common Stock...... Archer-Daniels-Midland Company 12,951,400(l) 12.3%
("ADM")
4666 Faries Parkway
Decatur, IL 62526
Common Stock...... Brandes Investment Partners, L.P. 9,633,297(2) 9.1%
12750 High Bluff Drive
San Diego, CA 92130
Common Stock...... Smithfield Foods, Inc. 6,714,341(3) 6.4%
200 Commerce Street
Smithfield, VA 23430
---------------------
(1) ADM has shared investment power over 12,951,400 shares, and shared voting
power over 12,951,400 shares, according to its Schedule 13D dated October
3, 2000, and filed with the Securities and Exchange Commission.
(2) Brandes Investment Partners, L.P.; Brandes Investment Partners Inc.;
Brandes Holdings, L.P.; Charles H. Brandes; Glenn R. Carlson; and
Jeffrey A. Busby have shared investment power over 9,633,297 shares, and
shared voting power over 9,633,297 shares, according to the Schedule 13D
dated October 27, 2000, and filed with the Securities and Exchange
Commission.
(3) Smithfield Foods, Inc. has sole investment power over 6,714,341 shares,
sole voting power over 6,714,341 shares, and shared voting power over
250,000 shares, according to the Amendment No. 1 to Schedule 13D dated
November 17, 2000, and filed with the Securities and Exchange Commission.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of November 17, 2000, beneficial
ownership of IBP common stock, the sole class of IBP stock, for each director of
IBP, and for each executive officer, and for all directors and executive
officers of IBP as a group. Unless otherwise indicated, the persons named below
have sole voting and investment power with respect to the common stock shown as
beneficially owned by them.
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NUMBER OF
SHARES
AND NATURE
OF PERCENT
BENEFICIAL OF
NAME OR BENEFICIAL OWNER - POSITION WITH IBP OWNERSHIP(1) CLASS
-------------------------------------------- ------------ -------
Richard L. Bond-- Director and Executive Officer..... 117,010 *(2)
John S. Chalsty-- Director........................... 7,400 *
R. Randolph Devening-- Executive Officer............. 0 *
Wendy L. Gramm-- Director............................ 4,900 *
Craig J. Hart-- Executive Officer.................... 26,339 *
John J. Jacobson, Jr.-- Director..................... 12,600 *
Eugene D. Leman-- Director and Executive Officer..... 159,417 *
Martin A. Massengale-- Director...................... 2,375 *
Robert L. Peterson-- Director and Executive Officer.. 743,002 *
Michael L. Sanem-- Director.......................... 60,600 *
Larry Shipley-- Executive Officer.................... 67,524 *
Jo Ann R. Smith-- Director........................... 6,500 *
All Directors and Executive Officers As a 1,207,667 1.1%
Group (12 Persons)................................
---------------------------
(1) This number includes stock options granted pursuant to the IBP 1987
Stock Option Plan, the IBP 1993 Stock Option Plan, the 1996 Stock
Option Plan and the IBP Directors Stock Option Plan, and which are
exercisable as of October 1, 2000, or within 60 days thereafter: Mr.
Bond 108,660; Mr. Chalsty 4,900; Dr. Gramm 4,900; Mr. Hart 20,522; Mr.
Jacobson 600; Mr. Leman 88,200; Dr. Massengale 1,300; Mr. Peterson
276,000; Mr. Sanem 600; Mr. Shipley 45,004; and Ms. Smith 2,700.
(2) Less than 1% of IBP's common stock.
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RAWHIDE ENTITIES AND DLJMB
RAWHIDE ENTITIES
Rawhide Holdings, a Delaware corporation, was organized for purposes
of acting as a holding company of IBP after completion of the merger. Rawhide
Acquisition, also a Delaware Corporation, was organized for the sole purpose of
completing the merger. Neither Rawhide Holdings nor Rawhide Acquisition has
carried on any activities to date other than those incident to their formation
and completion of the merger. All of the outstanding capital stock of Rawhide
Acquisition is owned by Rawhide Holdings. All of Rawhide Holdings' voting
securities are now owned by DLJ Merchant Banking Partners III, L.P. ("DLJMB
III"), a Delaware limited partnership, and subsequently will be held by ADM,
Booth Creek, Messrs. Joyce, Peterson and Bond, certain members of IBP management
and certain DLJMB funds, which, in addition to DLJMB III, will include: DLJ
Offshore Partners III, C.V., a Netherlands Antilles limited partnership
("Offshore III"), DLJMB Funding III, Inc., a Delaware corporation ("Funding
III") and DLJ ESC II, L.P., a Delaware limited partnership ("ESC II").
DLJMB III
DLJMB III is a Delaware limited partnership which makes
investments for long term appreciation. DLJ Merchant Banking III, L.P., a
Delaware limited partnership ("MBIII LP"), is the Associate General Partner
of Partners III. DLJ Merchant Banking III, Inc., a Delaware corporation
("MBIII Inc."), is the Managing General Partner of DLJMB III. MBIII LP and
MBIII Inc. make all of the investment decisions on behalf of DLJMB III.
OFFSHORE III
Offshore III is a Netherlands Antilles limited partnership which
makes investments for long term appreciation. MBIII LP is the Associate
General Partner of Offshore III. MBIII Inc. is the Advisory General Partner
of Offshore III. MBIII LP and MBIII Inc. make all of the investment
decisions on behalf of Offshore III.
MBIII LP
MBIII LP is a Delaware limited liability company and is a registered
investment adviser. As the Associate General Partner of DLJMB III and Offshore
III, MBIII LP, in conjunction with MBIII Inc., participates in investment
decisions made on behalf of these entities. MBIII Inc. is the managing member of
MBIII LP.
MBIII INC.
MBIII Inc. is a Delaware corporation and is a registered
investment adviser. As the Managing General Partner of DLJMB III, and the
Advisory General Partner of Offshore III, MBIII Inc. is responsible for the
day to day management of these entities and, in conjunction with MBIII LP,
participates in investment decisions made on behalf of these entities. MBIII
Inc. is a wholly owned subsidiary of DLJ Capital Investors, Inc., a Delaware
corporation ("DLJCI").
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ESC II
ESC II is a Delaware limited partnership and "employee securities
company" as defined in the Investment Company Act of 1940, as amended. DLJ LBO
Plans Management Corporation, a Delaware corporation ("LBO"), as the Managing
General Partner of ESC II, makes all of the investment decisions on behalf of
ESC II.
LBO
LBO is a Delaware corporation and a registered investment advisor.
LBO is a wholly owned subsidiary of DLJCI. As the Managing General Partner of
ESC II, LBO is responsible for the day-to-day management of ESC II.
FUNDING III
Funding III is a Delaware corporation which makes investments for
long term appreciation generally side-by-side with DLJMB III. Funding III is a
wholly owned subsidiary of DLJCI.
DLJCI
DLJCI is a Delaware corporation and is a holding company. DLJCI is a
wholly owned subsidiary of Credit Suisse First Boston (USA), Inc., a Delaware
corporation ("CSFB-USA").
CSFB-USA
As of November 3, 2000, CSFB-USA, formerly known as Donaldson,
Lufkin & Jenrette, Inc., became a wholly owned subsidiary of Credit Suisse First
Boston, Inc., a Delaware corporation ("CSFBI"). CSFB-USA directly owns all of
the capital stock of DLJCI. CSFB-USA, acting on its own behalf or through its
subsidiaries, is a registered broker/dealer and registered investment advisor
engaged in investment banking, institutional trading and research, investment
management and financial and correspondent brokerage services.
CREDIT SUISSE GROUP
Credit Suisse Group ("CSG") is a corporation formed under the laws
of Switzerland. The principal business of CSG is acting as a holding company for
a global financial services group with five distinct specialized business units
that are independently operated. CSG and its consolidated subsidiaries are
comprised of (a) the Credit Suisse First Boston business unit that engages in
corporate and investment banking, trading (equity, fixed income and foreign
exchange), private equity investment and derivatives businesses on a worldwide
basis, (b) the Credit Suisse Asset Management business unit that provides asset
management and investment advisory services to institutional investors
worldwide, (c) the Credit Suisse Private Banking business unit that engages in
the global private banking business, (d) the Credit Suisse business unit that
engages in the Swiss domestic banking business and (e) the Winterthur business
unit that engages in the global insurance business.
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CSFBI is a majority owned subsidiary of Credit Suisse First Boston,
a Swiss bank (the "Bank"). CSG is the ultimate parent company of the Bank and
CSFBI.
ADDRESSES OF DLJMB RELATED ENTITIES
The address of the principal business and office of each of DLJMB
III, Offshore III, Funding III, MBIII LP, MBIII Inc., ESC II, LBO and DLJCI and
CSFB-USA is 277 Park Avenue, New York, New York 10172.
The address of the principal business and office of CSG is
Paradeplats 1, Postfach 8, CH-8070, Zurich, Switzerland. The address of the
Bank's registered head office is Uetlibergstrasse 231, PO Box 900, CH-8045
Zurich, Switzerland. The address of the principal business and office of CSFBI
is Eleven Madison Avenue, New York, New York 10010.
PREVIOUS CONVICTIONS OR CIVIL PROCEEDINGS
During the past two years, none of the above-named DLJMB related
parties (the "DLJMB Related Entities"), and none of their respective executive
officers or directors has been (1) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (2) a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws.
PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS; COMMON STOCK OWNERSHIP
During the past five years, the DLJMB Related Entities have not had
any negotiations, transactions or material contacts with IBP or any of its
subsidiaries concerning any merger, consolidation, acquisition, tender offer or
other acquisition of any class of IBP's securities, election of IBP's directors
or sale of other transfer of a material amount of the assets of IBP other than
those previously described with respect to DLJMB, Rawhide Holdings and Rawhide
Acquisition and other than commercial or investment banking transactions in the
ordinary course of business. Other than as a result of the voting agreement, or
pursuant to brokerage, investment advisory or investment activities of the DLJMB
Related Entities and their affiliates in the ordinary course of business, there
have been no transactions in IBP common stock effected during the past 60 days
by the DLJMB Related Entities or by any executive officer or director of any
DLJMB Related Entity. The DLJMB Related Entities will incur no expenses in
connection with the merger apart from those incurred by DLJMB, Rawhide Holdings
and Rawhide Acquisition previously described.
As a result of the voting agreement, each of the DLJMB Related
Entities may be deemed to beneficially own the 17,239,353 shares of IBP common
stock, representing approximately 16.33% of IBP common stock outstanding, that
are subject to that agreement. Each of the DLJMB Related Entities disclaims
ownership of such IBP common stock. In addition, in the ordinary course of their
respective businesses, certain subsidiaries of CSFB-USA hold an aggregate of
approximately 295,741 shares of IBP common stock, in each case in investment
advisory, proprietary trading and brokerage accounts. Except as previously
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<PAGE>
described, the DLJMB Related Entities have no interest in IBP
securities or contracts, arrangements or understandings with respect
thereto.
RAWHIDE HOLDINGS AND RAWHIDE ACQUISITION
The names of the directors and the names and titles of the executive
officers of Rawhide Holdings and of Rawhide Acquisition as of the date of this
proxy statement, and their principal occupations, are set forth below. Neither
any of these persons, Rawhide Holdings nor Rawhide Acquisition has been (1)
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (2) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, United States
federal or state securities laws or a finding of any violation with respect to
such laws. Each of the directors or executive officers of Rawhide Holdings and
Rawhide Acquisition is a citizen of the United States of America, and has his
principal business address is 277 Park Avenue, New York, New York 10172.
NAME PRESENT PRINCIPAL OCCUPATION
---- ----------------------------
Ari Benacerraf...... Director, President and Treasurer, Rawhide Holdings;
Director, President and Treasurer, Rawhide Acquisition;
Principal, DLJ Merchant Banking III, Inc. Mr. Benacerraf
joined DLJ in 1995.
OhSang Kwon......... Director, Vice President and Secretary, Rawhide Holdings;
Director, Vice President and Secretary, Rawhide
Acquisition; Vice President, DLJ Merchant Banking III,
Inc. Mr. Kwon joined DLJ in 1997. From 1995 to 1997, Mr.
Kwon was an associate with the law firm Davis, Polk &
Wardwell, 450 Lexington Avenue, New York, New York 10017.
The principal offices of Rawhide Holdings, Rawhide Acquisition and
DLJMB are located at 277 Park Avenue, New York, New York 10172. Their telephone
number is (212) 892-3000.
Neither Rawhide Holdings nor Rawhide Acquisition has any operations,
other than those incident to their formation and completion of the merger, or
owns any real property. Except for those actions described under "Special
Factors--Shareholder Lawsuits Challenging the Merger", there are no pending
legal proceedings to which Rawhide Holdings or Rawhide Acquisition is a party or
which relate to their respective property.
FEES
Donaldson, Lufkin & Jenrette Securities Corporation, an affiliate of
CSPB-USA, is expected to receive a fee of $15.0 million in cash from Rawhide
Holdings upon completion of the merger related to merger and acquisition
advisory work performed for Rawhide Holdings and DLJMB. In addition, affiliates
of Donaldson, Lufkin & Jenrette Securities Corporation are expected to receive
customary placement fees in connection with the financing of the merger, which
are expected to be approximately $69.0 million.
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ARCHER-DANIELS-MIDLAND COMPANY
ARCHER-DANIELS-MIDLAND COMPANY
Archer-Daniels-Midland Company, or ADM, a Delaware corporation, is
engaged in the business of procuring, transporting, storing, processing and
merchandising agricultural commodities and products. The address of the
principal business office for ADM is 4666 Faries Parkway, Box 1470, Decatur,
Illinois 62525. The business telephone number for ADM is 217-424-5200.
PREVIOUS CONVICTIONS OR CIVIL PROCEEDINGS
During the past five years, except as set forth below, ADM has not
been (1) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (2) a party to any judicial or administrative
proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal
or state securities laws, or a finding of any violation of federal or state
securities laws. On October 15, 1996, ADM pled guilty to a two count information
in the Northern District of Illinois pursuant to an agreement with the
Department of Justice. This information states that ADM engaged in
anticompetitive conduct in connection with the sale of lysine and citric acid.
In connection with its agreement ADM paid the United States a fine of $70
million with respect to lysine and $30 million with respect to citric acid. On
May 27, 1998, ADM pled guilty to a three count indictment in the Federal Court
of Canada pursuant to an agreement with Director of Investigation and Research
and the Attorney General of Canada. The indictment alleged that ADM engaged in
anticompetitive conduct in connection with lysine and citric acid. ADM paid a
fine of $16 million (Canadian Dollars).
PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS; COMMON STOCK OWNERSHIP
During the past five years ADM has not had any negotiations,
transactions or material contacts with IBP or any of its subsidiaries concerning
any merger, consolidation, acquisition, tender offer or other acquisition of any
class of the subject company's securities, election of IBP's directors or sale
or other transfer of a material amount of the assets of IBP other than those
previously described. There have been no transactions in IBP common stock
effected by ADM, or by any of ADM's executive officers or directors, during the
past 60 days. ADM beneficially owns 12,951,400 shares of IBP common stock,
representing approximately 12.27% of the IBP common stock outstanding.
ADM DIRECTORS AND EXECUTIVE OFFICERS
The names of the directors and the names and titles of the executive
officers of ADM as of the date of this proxy statement, and their principal
occupations, are set forth below. All of the persons named below have been
executive officers of their respective companies or employed as otherwise
specified below for at least the last five years. Except as set forth below,
each of the directors or executive officers of ADM is a citizen of the United
States of America, and has a principal business address of 4666 Faries Parkway,
Box 1470, Decatur, Illinois 62525. None of these persons has been (1) convicted
in a criminal proceeding during the last five years
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(excluding traffic violations or similar misdemeanors) or (2) a party to any
judicial or administrative proceeding during the past five years (except for
matters that were dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
NAME FOR LAST FIVE YEARS
---- --------------------------------------------
D. O. Andreas........ Chairman Emeritus of the Board of ADM.
G. Allen Andreas..... Chairman of the Board of Directors from January 1999.
Chief Executive Officer from July 1997. President from
July 1997 to February 1999. Counsel to the Executive
Committee from September 1994 to July 1997. Vice
President from 1988 to July 1997.
John R. Block........ Member of the Board of ADM. President, Food
Distributors International (a trade association whose
members are independent wholesale grocers and food
service distributors). Business address: 201 Park
Washington Court, Falls Church, VA 22046
Richard Burt......... Member of the Board of ADM. Chairman of IEP Advisors,
LLP (a direct investment and advisory services
organization). Mr. Burt is also the Chairman of Weirton
Steel Corporation. Until 1994, Mr. Burt was a partner
with McKinsey & Company, specializing in international
business strategy and telecommunications, at which time
he became Chairman of International Equity Partners, a
Washington consulting firm, and later in 1998 formed IEP
Advisors, LLP of which he serves as Chairman. Business
address: 1101 Connecticut Ave., N.W, Suite 804,
Washington, D.C. 20036.
Mollie Hale Carter... Member of the Board of ADM. Chairman, Sunflower Bank
and Vice President, Star A, Inc. (a farming and ranching
operation). Ms. Carter was a Senior Investment Officer
for the John Hancock Mutual Life Insurance Company from
1987 until 1997 at which time she became Chairman of
Sunflower Bank in Salina, Kansas and Vice President of
Star A, Inc. Business address: 2090 S. Ohio, Salina,
KS 67401.
G. O. Coan........... Member of the Board of ADM. Chief Executive Officer of
Gold Kist Inc. (a farmer-owned cooperative). Business
address: PO. Box 2210, Atlanta, GA 30301.
Herman de Boon....... Member of the Board of ADM. Chief Executive Officer of
Royal Cebeco Group (an international agri-food
cooperative). Business address: CEBECO Handelsraad, 31
Blaak, Rotterdam, Netherlands 3000. Mr. de Boon is a
citizen of the Netherlands.
F. Ross Johnson...... Member of the Board of ADM. Chairman of RJM Group, Inc.
(an international management and advisory
organization). Business address: 200 Galleria Parkway,
Suite 970, Atlanta, GA 30339. Mr. Johnson is a citizen
of Canada.
28
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PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
NAME FOR LAST FIVE YEARS
---- --------------------------------------------
D. J. Mimran......... Member of the Board of ADM. Chief Executive Officer of
Groupe Mimran and President of Eurafrique, Sometra and
Cavpa (international grain trading companies). Mr.
Mimran is a citizen of France.
M. Brian Mulroney.... Member of the Board of ADM. Senior Partner in the law
firm of Ogilvy Renault. Business address: 1981 Avenue
McGill College, Suite 1100, Montreal, Quebec, Canada H3A
3Cl. Mr. Mulroney is a citizen of Canada.
Robert S. Strauss.... Member of the Board of ADM. Partner in the law firm of
Akin, Gump, Strauss, Hauer & Feld. Business address:
1333 New Hampshire Ave., N.W, Washington, D.C. 20036.
J. K. Vanier......... Member of the Board of ADM. Chief Executive Officer,
Western Star Ag. Resources, Inc. (investments and
livestock). Business address: Box 58, Salina, KS 67401.
O. G. Webb........... Member of the Board of ADM. Farmer. Former Chairman of
the Board and President, GROWMARY, Inc. (a farmer-owned
cooperative). Business address: P.O. Box 2500,
Bloomington, IL 61702.
Andrew Young......... Member of the Board of ADM. Chairman of GoodWorks
International (a specialty consulting group).
Ambassador Young served as Vice Chairman of the Law
Companies Group, an engineering and environmental
consulting company, from January 1990 until 1996 when he
retired from this position to serve as Co-Chairman of
the Atlanta Committee for the Olympic Games. In January
1997, Ambassador Young was appointed as Co-Chairman of
GoodWorks International and in 1998 was appointed
Chairman of that company. Business address: 303
Peachtree St., N.E., Suite 4800, Atlanta, GA 30308.
Martin L. Andreas.... Senior Vice President from 1989. Assistant to the Chief
Executive from 1989.
Charles P. Archer.... Treasurer from October 1992.
Maureen K. Ausura.... Vice President from June 2000. Senior Vice President,
Human Resources, of Giant Eagle, Inc. (a supermarket
operator) from 1996. Giant Eagle is located at 101
Kappa Dr., Pittsburgh, PA 15238. Various senior
personnel positions with Campbell Soup Company (a food
manufacturer) from 1984. Campbell Soup is located at
Campbell Place, Camden, NJ 08103-1799.
Lewis W. Batchelder.. Group Vice President from July 1997. Senior Vice
President of ADM/Growmark. Various grain merchandising
positions since 1971.
Howard E. Buoy....... Group Vice President from January 1993.
29
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William H. Camp...... Group Vice President and President, North American
Oilseed Processing Division from April 2000. Group Vice
President and President, South American Oilseed
Processing Division from March 1999 to April 2000. Vice
President from April 1993 to March 1999.
Mark J. Cheviron..... Vice President from July 1997. Vice President of
Corporate Security and Administrative Services since May
1997. Director of Security since 1980.
Larry L. Cunningham.. Senior Vice President from February 2000. Consultant
for ADM from October 1999 to February 2000. Group Vice
President and President of ADM Corn Processing Division
from October 1996 to October 1999. President of ADM
Food Additives Division from October 1998 to October
1999. Vice President from July 1993 to October 1996.
Anthony P. Delio..... Vice President from May 2000. President of ADM Protein
Specialties Division from October 1999. President of
ADM Nutraceutical Division from May 1999. Various
senior product development positions with Mars, Inc (a
candy maker) from 1980. Mars is located at 6885 Elm
St., McLean, VA 22101.
Dennis C. Garceau.... Vice President from April 1999. President of ADM
Technical Services Department. Various senior
engineering positions from 1969.
Craig L. Hamlin...... Senior Vice President from June 2000. Group Vice
President from October 1994 to June 2000. President of
ADM Milling from 1989.
Edward A. Harjehausen President of ADM Corn Processing Division from July
2000. President of ADM BioProducts and Food Additives
From October 1999 to July 2000. Vice President from
October 1992.
Burnell D. Kraft..... Senior Vice President from July 1997. Group Vice
President from January 1993 to July 1997. President of
ADM/Growmark, ADM/Countrymark and Tabor Grain Co.
Paul L. Krug, Jr..... Vice President from 1991 and President of ADM Investor
Services.
John E. Long......... Vice President from July 1996. President of ADM
Research Division from 1992 to March 2000. Various
senior research positions from 1975.
Michael Lusk......... Vice President from November 1999 Senior Vice President
with International Risk Management Group, an insurance
broker, from 1989. International Risk Management is
located at Metro Park, 99 Wood Avenue South, Iselin, NJ,
08830-4114.
John D. McNamara..... President from February 1999. Group Vice President and
President of North American Oilseed Processing Division
from July 1997 to February 1999. President of ADM
Agri-Industries since 1992. Mr. McNamara is a citizen
of Canada.
30
<PAGE>
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
NAME FOR LAST FIVE YEARS
---- --------------------------------------------
Steven R. Mills...... Vice President from February 2000. Controller from
October 1994.
Stephen W. Minder.... Corporate Compliance Officer from July 1997. Various
senior internal audit positions since 1990.
Paul B. Mulhollem.... Senior Vice President from October 1999. Group Vice
President from July 1997 to October 1999. Vice
President from January 1996 to July 1997. Managing
Director of ADM International, Ltd., from 1993.
Brian E. Peterson.... Group Vice President and Managing Director of ADM
International, Ltd., from October 1999. Vice President
from January 1996 to October 1999. President of ADM
Protein Specialties Division from February 1999 to
October 1999. President of ADM BioProducts Division
from 1995 to October 1999.
Raymond V. Preiksaitis Group Vice President from July 1997. Vice President--
Management Information Systems from 1988 to July 1997.
John G. Reed......... Vice President from 1982.
Richard R. Reising... Senior Vice President from July 1997. Vice President,
Secretary and General Counsel from 1991 to 1997.
John D. Rice......... Senior Vice President from February 2000. Group Vice
President and President, North American Oilseed
Processing Division from February 1999 to February
2000. Vice President from 1993 to 1999. President of
ADM Food Oils Division from December 1996 to February
2000.
Kenneth A. Robinson.. Vice President from January 1996. Vice President of ADM
Processing Division from 1985.
Douglas J. Schmalz... Vice President and Chief Financial Officer from 1986.
David J. Smith....... Vice President, Secretary and General Counsel from July
1997. Assistant General Counsel from 1995 to 1997.
Assistant Secretary from 1988 to 1997. Member of the
Law Department since 1981.
Stephen H. Yu........ Vice President from January 1996. Managing Director of
ADM Asia-Pacific, Ltd., from 1993.
31
<PAGE>
BOOTH CREEK AND JEFFREY J. JOYCE
BOOTH CREEK PARTNERS LIMITED III, LLLP
Booth Creek Partners Limited III, LLLP, or Booth Creek, is a
Colorado limited liability limited partnership. Booth Creek was organized
for the purpose of holding shares in Corporate Brand Foods America, Inc., or
CBFA, which was acquired by IBP in February 2000. George N. Gillett Jr. and
his wife, Rose Gillett, are the general partners of Booth Creek Partners
Limited III, LLLP. Mr. Gillett's four sons are the limited partners of Booth
Creek. Mr. Gillett is sole owner of Booth Creek Management Corporation, an
investment management company, and is its Chief Executive Officer and sole
director. The address of the principal business and office of Booth Creek,
Mr. Gillett and Mrs. Gillett is 1000 South Frontage Road, West, Suite 100,
Vail, Colorado 81657.
JEFFREY J. JOYCE
Jeffrey J. Joyce has served as Executive Vice President of Booth
Creek Management Corporation and several of its affiliates since 1994. The
business address of Mr. Joyce is 1950 Spectrum Circle, Suite 400, Marietta,
Georgia 30067.
PREVIOUS CONVICTIONS OR CIVIL PROCEEDINGS
During the past five years, none of Booth Creek, Mr. Gillett, Mrs.
Gillett or Mr. Joyce has been (1) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (2) a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws.
PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS; COMMON STOCK OWNERSHIP
In January 1999, Corporate Brand Foods America, Inc., or CBFA, began
discussions with IBP and other meat suppliers in connection with a proposal to
create a strategic alliance for purchasing raw materials. In August 1999, IBP
initiated discussions with CBFA which resulted in the acquisition of CBFA by IBP
on February 7, 2000. As a result of this transaction in exchange for their
respective equity interests in CBFA, Booth Creek received 3,644,923 shares of
IBP common stock and Mr. Joyce received 643,030 shares. Both Mr. Gillett, in his
capacity as then-Chairman of the Board of CBFA, and Mr. Joyce, in his capacity
as then-President of CBFA, participated in the negotiation of this transaction.
Except as previously described, during the past five years Booth
Creek, Mr. Gillett, Mrs. Gillett and Mr. Joyce have not had any negotiations,
transactions or material contacts with IBP or any of its subsidiaries
concerning any merger, consolidation, acquisition, tender offer or other
acquisition of any class of IBP's securities, election of IBP's directors or
sale or other transfer of a material amount of assets of IBP other than those
previously described and other than commercial transactions in the ordinary
course of business. There have been no transactions in IBP common stock
effected during the past 60 days by any of Booth Creek, Mr. Gillett, Mrs.
Gillett or Mr. Joyce.
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<PAGE>
Booth Creek beneficially owns 3,644,923 shares of IBP common
stock, representing approximately 3.45% of IBP common stock outstanding. As
general partners of Booth Creek, Mr. and Mrs. Gillett may be deemed to
beneficially own the IBP common stock held by Booth Creek. Mr. Joyce
beneficially owns 643,030 shares of IBP common stock, representing
approximately 0.61% of IBP common stock outstanding. Except as previously
described, Booth Creek, Mr. Gillett, Mrs. Gillett or Mr. Joyce have no
interest in IBP securities or contracts, arrangements or understandings with
respect thereto.
FEES
As compensation for advisory services performed by Booth Creek in
connection with the exploration of strategic alternatives for improving IBP's
stock price and the development of the merger proposal, see "Special
Factors--Background of the Merger", Booth Creek is expected to receive a fee of
$3,750,000 in cash from Rawhide Holdings upon completion of the merger.
33
