ZRBA Zareba Systems (MM)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

Filed by the Registrant þ

Filed by a Party other than the Registrant o

Check the appropriate box:

þ		Preliminary Proxy Statement
o		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Under Section 240.14a-12

Zareba Systems, Inc.

(Name of Registrant as Specified in Its Charter)

Payment of Filing Fee (Check the appropriate box):

o		No fee required.
þ		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, $0.01 par value, of Zareba Systems, Inc.
	(2)		Aggregate number of securities to which transaction applies: 2,498,779 shares of common stock and 122,325 options to purchase shares of common stock
	(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: The proposed maximum aggregate value of the transaction for purposes of calculating the filing fee only is $23,080,103. The filing fee was determined by adding (a) the product of (i) the 2,498,779 shares of common stock that are proposed to be retired in the merger and (ii) the merger consideration of $9.00 per share of common stock, plus (b) $591,092 expected to be paid upon cancellation of all outstanding stock options.
	(4)		Proposed maximum aggregate value of transaction: $23,080,103. The payment of the filing fee, calculated in accordance with Exchange Act Rule 0-11(c)(1), was calculated by multiplying the total consideration by 0.0000713.
	(5)		Total fee paid: $1,645.61.

o		Fee paid previously with preliminary materials.
o		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	(1)		Amount Previously Paid:
	(2)		Form, Schedule or Registration Statement No.:
	(3)		Filing Party:
	(4)		Date Filed:

, 2010

Dear Shareholder:

     You are cordially invited to attend a special meeting of the shareholders of Zareba Systems, Inc. to be held on           , 2010, at            local time, at           .

     At this meeting, you will be asked to consider and vote upon a proposal to approve and adopt the merger agreement entered into by Zareba with Woodstream Corporation and WDST, Inc., a wholly-owned subsidiary of Woodstream, and the merger of WDST, Inc. with and into Zareba, with Zareba continuing as the surviving corporation.

     If the merger is completed, you will receive $9.00 in cash for each share of Zareba common stock you own.

     A special committee of the independent directors of Zareba was established by the board of directors of Zareba, and the special committee and the board of directors each unanimously approved the merger and the merger agreement. The special committee and the board of directors have each determined that the merger agreement and the merger are advisable, fair to and in the best interests of Zareba and its shareholders. Therefore, the special committee and the board of directors each recommends that you vote in favor of the merger agreement and the merger.

     The attached notice of meeting and proxy statement describe the proposed merger and the merger agreement. We urge you to read these materials carefully.

     The merger is an important decision for Zareba and its shareholders. Whether you own a few shares or many, it is important that your shares are represented. If you cannot attend the special meeting in person, you may vote your shares by internet, telephone, or by completing and signing the accompanying proxy card and promptly returning it in the envelope provided.

The proxy statement is dated           , 2010, and is first being mailed to
Zareba shareholders beginning on or about            , 2010.

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON            , 2010

     

To the Shareholders of Zareba Systems, Inc.:

     A special meeting of shareholders of Zareba Systems, Inc., a Minnesota corporation, will be held on           ,           , 2010, at            a.m., local time, at         ,        for the following purposes:

	1.		To consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger, dated as of January 11, 2010, by and among Zareba Systems, Inc., Woodstream Corporation, and WDST, Inc., and the merger pursuant to which WDST will merge with and into Zareba as provided in the merger agreement.
	2.		To approve adjournments of the meeting, if necessary, to solicit additional proxies if there are insufficient votes to approve the merger agreement.

     Approval and adoption of the merger agreement and the merger requires the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of Zareba common stock entitled to vote at the special meeting. Only shareholders of record at the close of business on           , 2010 will be entitled to notice of, and to vote at, the special meeting and any adjournments thereof. Shareholders are entitled to one vote for each share of Zareba common stock held of record on that date.

     We have described the merger agreement and the merger in the accompanying proxy statement, which you should read in its entirety before voting. A copy of the merger agreement is attached as Annex A to the proxy statement.

     All of Zareba’s directors and executive officers have indicated to us that they and their affiliates intend to vote their shares of Zareba common stock, representing approximately % of Zareba common stock outstanding as of the record date, in favor of the merger agreement and the merger. None of our directors or executive officers has entered into any voting agreements relating to the merger.

     If you do not vote in favor of approving and adopting the merger agreement and the merger, and you otherwise comply with the applicable statutory procedures of Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act, you will be entitled to dissenters’ rights in connection with the merger, and you will be entitled to receive, in lieu of the $9.00 per share merger consideration, payment in cash of the “fair value” of your shares of Zareba common stock, which may be higher or lower than $9.00 per share. A copy of these provisions of the Minnesota Business Corporation Act is included as Annex C to this proxy statement. We also refer you to the information included under the heading “Dissenters’ Rights” in this proxy statement.

      Your vote is very important. Whether or not you expect to attend the special meeting in person, Zareba urges you to submit your proxy as promptly as possible by (1) accessing the internet website specified on your enclosed proxy card, (2) calling the telephone number specified on your enclosed proxy card or (3) completing, signing and dating the enclosed proxy card and returning it in the postage-paid envelope provided. If you are a shareholder of record and submit a proxy by returning a signed proxy card by mail, your shares will be voted at the special meeting as you indicate on your proxy card. If no instructions are indicated on your proxy card, your shares will be voted “FOR” each of the foregoing proposals. If you do not vote your shares by proxy or in person, it will have the same effect as a vote “AGAINST” the merger. You can revoke your proxy at any time before it is exercised by giving written notice to an officer of Zareba, submitting

another proxy, or attending the special meeting, revoking your earlier proxy through written notice to an officer of Zareba and then voting in person. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished to you by such record holder. If you have any questions about the merger or need assistance voting your shares, please call Georgeson Inc., which is assisting Zareba with the solicitation of proxies, toll-free at (800) 509-1082. Banks and brokers may call collect at (212) 440-9800.

      Zareba’s special committee and its board of directors unanimously recommend that you vote “FOR” the approval and adoption of the merger agreement and the merger and “FOR” the adjournment of the special meeting, if necessary, to solicit additional proxies.

          , 2010
Minneapolis, Minnesota

TABLE OF CONTENTS

		Page
Summary Term Sheet			1
Questions and Answers about the Merger and the Special Meeting			6
Cautionary Statement Concerning Forward-Looking Statements			10
Information Concerning the Special Meeting			11
The Merger			14
The Merger Agreement			39
Common Stock Market Price and Dividend Information			56
Dissenters’ Rights			57
Adjournment of the Special Meeting			60
Security Ownership of Principal Shareholders and Management of Zareba			61
Shareholder Proposals			63
Where You Can Find More Information			63
ANNEXES
Annex A      Agreement and Plan of Merger, dated as of January 11, 2010, by and among Zareba Systems, Inc.,                  Woodstream Corporation, and WDST, Inc.
Annex B      Opinion of Greene Holcomb & Fisher LLC
Annex C      Dissenters’ Rights — Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act.

      Unless the context otherwise requires, the terms “we,” “us,” “our” and “Zareba” in this proxy statement refer to Zareba Systems, Inc. and its subsidiaries. We refer to Woodstream Corporation as “Woodstream” and WDST, Inc. as “Woodstream’s merger subsidiary” in this proxy statement.

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

Q:		What is the proposed transaction?
A.		Woodstream will acquire Zareba through the merger of Woodstream’s merger subsidiary with and into Zareba. Zareba will continue as the surviving corporation after the merger and will be a privately-held, wholly-owned subsidiary of Woodstream.
Q:		What will I receive in the merger?
A:		You will be entitled to receive $9.00 in cash for each share of Zareba common stock you own at the effective time of the merger, unless you exercise and perfect your dissenters’ rights.
Q:		What will happen to the market for Zareba common stock after the merger?
A:		At the effective time of the merger, trading in Zareba common stock on the Nasdaq Capital Market will cease. Price quotations for Zareba common stock will no longer be available and the registration of Zareba common stock, and Zareba’s reporting obligations, under the Securities Exchange Act of 1934 will terminate.
Q:		Why are the special committee and the board of directors recommending that I vote in favor of the merger agreement and the merger?
A:		Zareba’s special committee and its board of directors have determined that the terms of the merger agreement and the merger are advisable, fair to and in the best interests of Zareba and its shareholders. Accordingly, the special committee and the board of directors each unanimously approved the merger agreement and the merger and recommend that you vote to approve the merger agreement and the merger. For more information, we refer you to “The Merger—Background of the Merger,” “—Reasons for the Merger” and “—Recommendation of the Special Committee and the Board of Directors.”
Q:		What is the special committee?
A:		On June 24, 2009, Zareba’s board of directors formed a special committee of its independent directors, Michael L. Bochert, Eugene W. Courtney and William R. Franta, in connection with Zareba’s proposed deregistration transaction, and subsequently gave the special committee authority to take all appropriate actions with respect to the merger agreement. The special committee was not subject to any direction or control by the board of directors with respect to the special committee’s consideration of, or any action concerning, the merger agreement. For more information, we refer you to “The Merger — Background of the Merger.”
Q:		What will happen to my Zareba stock options?
A:		If you own options to purchase shares of Zareba common stock at the effective time of the merger, you will be entitled to receive for each option, regardless of whether such option is then exercisable, an amount in cash determined by multiplying: (1) the excess, if any, of $9.00 over the per share exercise price of that option, by (2) the number of shares that could be acquired upon exercise of that option. The net amount you will receive, however, will be reduced to the extent of any federal and state income and payroll tax withholding that is due.

Q:		What are the tax consequences of the merger?
A:		The exchange of your shares for cash in the merger will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under state, local, foreign and other tax laws. For more information, we refer you to “The Merger — Certain Material U.S. Federal Income Tax Considerations.” We encourage you to consult with your own tax advisor with any questions you may have on the tax consequences of the merger, especially if you own Zareba stock options.
Q:		When do you expect the merger to be completed?
A:		We are working to complete the merger as quickly as possible. Assuming we obtain shareholder approval, we expect to complete the merger within one business day after the special meeting.
Q:		When and where is the special meeting?
A:		The special meeting of shareholders will be held on           , 2010, at           , local time, at           located at           .
Q:		Who can vote at the special meeting?
A:		Shareholders of record as of the close of business on            , 2010.
Q:		How many shares need to be represented at the meeting?
A:		The holders of thirty-three and one-third percent (33-1/3%) of the outstanding shares entitled to vote at the special meeting must be present in person or represented by proxy to constitute a quorum for the transaction of business. If you vote by proxy or in person at the special meeting, you will be considered part of the quorum.
Q:		How do I vote?
A:		If you are a shareholder of record, you may vote by granting a proxy or in person at the special meeting. You may vote by proxy via internet, telephone, or mail:

	•		By Internet or Telephone — If you have internet or telephone access, you may submit your proxy by following the voting instructions on your proxy card no later than p.m., Central Standard Time, on , 2010. If you vote by internet or telephone, you need not return your proxy card.
	•		By Mail — You may vote by mail by signing and dating your proxy card and mailing it in the envelope provided. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), you should indicate your name and title or capacity.

Q:		If my shares are held in “street name” by my broker, will my broker vote my shares for me?
A:		Your broker will not have discretionary power to vote your shares on the merger agreement and the merger. Your broker will vote your shares only if you provide him or her with

		instructions on how to vote. Any failure to instruct your broker on how to vote on the proposal to approve and adopt the merger agreement and the merger will have the effect of a vote “against” the merger agreement and the merger. You should follow the directions provided by your broker on how to instruct your broker to vote your shares.
Q:		May I change my vote?
A:		Yes. Whether you have voted by mail, internet, or telephone, you may revoke your proxy and change your vote any time before the special meeting by:

	•		giving written notice of your revocation to an officer of Zareba;
	•		voting by internet or telephone at a later time;
	•		submitting a duly executed proxy card bearing a later date to an officer of Zareba; or
	•		attending the special meeting, filing a revoking instrument with an officer of Zareba prior to the vote, and then voting in person.

Q:		What does it mean if I receive more than one proxy card?
A:		If you have shares that are registered in different names and/or are in more than one account, you will receive more than one proxy card. If you vote by mail, please sign and return each proxy card or, if you vote by internet or telephone, please vote once for each proxy card you receive to ensure that all of your shares are voted.
Q:		How many votes are required to approve and adopt the merger agreement and the merger?
A:		Approval and adoption of the merger agreement and the merger requires the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the shares of Zareba common stock outstanding as of            , 2010. A failure to vote or to provide your broker with instructions on how to vote, or a vote to abstain will have the same effect as a vote “against” the merger agreement and the merger.
Q:		Do I have dissenters’ appraisal rights?
A:		Yes. Shareholders who do not vote in favor of the merger agreement and the merger and who otherwise comply with all of the requirements of Minnesota law, as explained under the heading “Dissenters’ Rights” in this proxy statement and in Annex C to this proxy statement, will be entitled to dissenters’ appraisal rights to receive the statutorily determined “fair value” of their shares.
Q:		What happens if I sell my Zareba shares before the special meeting?
A:		The record date for the special meeting is earlier than the expected date of the merger. If you transfer your Zareba shares after the record date, but before the effective time of the merger, you will retain your right to vote at the special meeting but the right to receive the $9.00 in cash per share will pass to the person to whom you transferred your shares.

Q:		What do I need to do now?
A:		Please vote your shares by internet, telephone, or by completing, signing, dating, and returning the enclosed proxy card as soon as possible to ensure that your shares are represented at the special meeting.
Q:		Should I send in my Zareba stock certificates now?
A:		No. Shortly after the merger is completed, the disbursing agent will send you written instructions explaining how to exchange your Zareba stock certificates for cash. DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR PROXY.
Q:		Who can help answer my other questions?
A:		If you have any questions about the special meeting or the merger, or need assistance voting your shares, please call Georgeson Inc., which is assisting Zareba with the solicitation of proxies, toll-free at (800) 509-1082. Banks and brokers may call collect at (212) 440-9800.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

     This proxy statement and the documents to which we refer you in this proxy statement contain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements. Such forward-looking statements are based upon current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The forward-looking statements contained in this proxy statement include statements concerning the proposed merger. These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. For example, if Zareba does not receive the required shareholder approval or fails to satisfy other conditions to closing, the merger will not be consummated. All forward-looking statements included in this proxy statement are based on information available to Zareba on the date hereof. Zareba undertakes no obligation (and expressly disclaims any such obligation) to update forward-looking statements made in this proxy statement to reflect events or circumstances after the date of this proxy statement or to update reasons why actual results could differ from those anticipated in such forward-looking statements.

INFORMATION CONCERNING THE SPECIAL MEETING

Date, Time and Place

     This proxy statement is furnished in connection with the solicitation of proxies by Zareba’s special committee and its board of directors for a special meeting of shareholders to be held on                    ,           , 2010, at        , local time, at           .

Purpose

     At the special meeting, you will be asked to consider and vote upon a proposal to approve and adopt the merger agreement and the merger. A copy of the merger agreement is attached as Annex A to this proxy statement.

     To review the background and reasons for the merger in greater detail, we refer you to the information under the heading “The Merger—Background of the Merger,” and “—Recommendation of the Special Committee and the Board of Directors; Reasons for the Merger.”

     You are also being asked to vote on a proposal to adjourn the special meeting, if necessary, in order to allow for the solicitation of additional proxies if there are insufficient votes at the time of the meeting to approve the merger agreement and the merger. For a discussion of matters related to this proposal, see “Adjournment of the Special Meeting.”

Record Date; Shareholders Entitled to Vote

     We have fixed the close of business on      , 2010 as the record date for the determination of shareholders entitled to notice of, and to vote at, the special meeting. As of that date, there were            shares of Zareba common stock outstanding and eligible to vote. Each share of Zareba common stock is entitled to one vote on each matter to be voted on at the special meeting.

Quorum Requirement

     The presence at the special meeting, in person or by proxy, of thirty-three and one-third percent (33-1/3%) of the shares of Zareba common stock issued and outstanding and eligible to vote will constitute a quorum for the transaction of business at the special meeting. Abstentions are counted as present and entitled to vote for purposes of determining a quorum.

Vote Required

     Assuming a quorum is represented at the special meeting, either in person or by proxy, the proposal to approve and adopt the merger agreement and the merger requires the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the shares of Zareba common stock outstanding as of the record date.

     Shares voted as abstaining on the proposed merger agreement and the merger or that are not voted will be treated the same as votes against the merger agreement and the merger.

Security Ownership of Management

     All of Zareba’s directors and executive officers have indicated to us that they and their affiliates intend to vote their shares of Zareba common stock in favor of the merger agreement and the merger. As a result of these indications, approximately      % of Zareba common stock outstanding as of the record date of the special meeting will be voted by our directors and executive officers and their respective affiliates in favor of approval and adoption of the merger agreement and the merger. None of our directors or executive officers has entered into any voting agreements relating to the merger agreement or the merger.

Broker Non-Votes

     A “broker non-vote” occurs when a broker, bank or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Broker non-votes will have the same effect as votes against the merger agreement and the merger. We strongly urge all beneficial owners to direct their brokers or nominees to vote their shares by following the instructions provided in the voting instructions that they receive from their broker or other nominee, because a broker non-vote will have the effect of a vote against the merger agreement and the merger.

Proxies

     This proxy statement is being mailed to our shareholders beginning on or about           , 2010 in connection with the solicitation of proxies by the special committee and the board of directors for use at the special meeting.

     Your vote is important. A proxy card is enclosed for your use. You are solicited on behalf of the special committee and the board of directors to vote your shares by internet, telephone, or by completing, signing, dating and returning the proxy card in the accompanying envelope. No postage is required if mailed within the United States.

     Proxies will be voted as specified by you. If you grant a proxy without voting instructions, your shares will be voted in favor of the approval and adoption of the merger agreement and the merger. The special committee and the board of directors recommend that you vote FOR the merger agreement and the merger.

      Shareholders should NOT send share certificates with their proxy cards. If the merger is completed, shareholders will be mailed a transmittal letter form following the completion of the merger with instructions for use in effecting the surrender of certificates in exchange for the merger consideration.

Revocation of Proxies

     Any shareholder giving a proxy may revoke it at any time prior to its use at the special meeting by:

	•		giving written notice of your revocation to an officer of Zareba;
	•		voting by internet or telephone at a later time;
	•		filing a duly executed proxy bearing a later date with an officer of Zareba; or

•

appearing at the special meeting, filing a revoking instrument with an officer of Zareba prior to the vote, and then voting in person.

     Simply attending the special meeting will not constitute revocation of a proxy. If your shares are held in “street name,” you should follow the instructions of your broker, bank or other nominee regarding revocation or change of proxies.

Proxy Solicitation Costs

     The cost of soliciting proxies, including the preparation, assembly and mailing of proxies and soliciting material, as well as the cost of forwarding this material to the beneficial owners of Zareba common stock will be borne by Zareba. Zareba’s directors and officers may, without compensation other than their regular compensation, solicit proxies by telephone, facsimile, telegraph or personal conversation. Zareba may reimburse brokerage firms and others for expenses in forwarding proxy materials to the beneficial owners of Zareba common stock.

     Zareba has also made arrangements with Georgeson Inc. to assist in its solicitation of proxies for the special meeting and in communicating with shareholders regarding the merger agreement and the merger. Zareba has agreed to pay Georgeson Inc. a fee of approximately $10,000, plus reasonable out-of-pocket expenses for its services.

Dissenters’ Rights

     Under applicable Minnesota law, if you do not vote to approve the merger agreement and the merger and if you follow certain procedures in lieu of receiving the merger consideration, you have the right to receive payment in cash for the “fair value” of your shares of Zareba common stock. If you are seeking to exercise your statutory dissenters’ rights, you must follow certain procedures as outlined in Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act, or the MBCA. Merely voting against the merger agreement and the merger will not preserve your rights. The statutory procedures for perfecting dissenters’ rights under Minnesota law are described in the section entitled “The Merger — Dissenters’ Rights” beginning on page 57. The relevant sections of the MBCA governing this process are reprinted in their entirety and attached to this document as Annex C.

THE MERGER

Background of the Merger

     The following is a summary of the meetings, negotiations, material contacts and discussions between Zareba and Woodstream that preceded the execution of the merger agreement, as well as the material contacts Zareba had with third parties concerning a potential strategic transaction with Zareba.

     In recent years, Zareba has derived minimal benefits from being an SEC-reporting company. Its common stock has failed to attract significant interest from institutional investors or market research attention, which could have created a more active and liquid market for the common stock. Relatively low trading volume of Zareba’s shares and its low market capitalization have reduced the traditional liquidity benefits of being a public company to its shareholders. Zareba does not believe that it would be likely to make use of the advantages for raising capital, effecting acquisitions or other purposes that its status as a reporting company may offer. In addition, Zareba incurs substantial direct and indirect costs associated with compliance with the filing and reporting requirements imposed on public companies.

     In light of these circumstances, Zareba’s management from time to time in the past 24 months has considered exploring the termination of the registration of Zareba’s common stock under the Exchange Act, with the view that such termination would relieve Zareba of the administrative burden, cost and competitive disadvantages associated with filing reports and otherwise complying with the requirements imposed under the Exchange Act.

     In addition, Zareba’s management and board of directors have from time to time engaged in discussions with third parties or received inquiries or preliminary proposals relating to potential mergers or acquisitions of the company or its assets, but the board of directors determined that none of these prospective transactions would be likely to be completed on the terms proposed or would be in the best interests of the company or its shareholders on the terms discussed or proposed, and in each case the board of directors reaffirmed its position that the company was not for sale.

     Woodstream was one of the parties that periodically expressed an interest in acquiring Zareba. At various times starting in 2006, Woodstream or affiliates of Woodstream expressed an interest in a business combination with Zareba, but no particular price or terms were offered in any of these communications until June 3, 2009, as discussed below. In each of these instances, the board of directors considered Woodstream’s inquiry and the board’s conclusion and any response made to Woodstream was that the company was not for sale, and neither the board of directors nor management engaged in any negotiations or substantive discussions with Woodstream.

     At a board of directors meeting held on February 12, 2009, management suggested that potentially terminating Zareba’s Exchange Act registration be added as an item of discussion at the board’s strategic planning meetings to be held in May 2009. The board authorized management to collect information about this process.

     At the Zareba board’s meetings to address strategic planning held on May 13 and 14, 2009, the board discussed the following potential strategic alternatives for the company: continued operations as a public-reporting company; a sale of the company; acquisitions of businesses and/or product lines; dispositions of current company businesses and/or product lines; and terminating Zareba’s Exchange Act registration. Management presented the board with preliminary information regarding the process to terminate the

registration. The board of directors authorized management to collect additional information about this process.

     On June 3, 2009, Woodstream sent a letter to the board of directors proposing to purchase all of Zareba’s outstanding stock for $5.00 per share, subject to certain contingencies, but not contingent on Woodstream obtaining financing for the transaction. The board of directors considered Woodstream’s inquiry and, on June 18, 2009, Dale A. Nordquist, Zareba’s President and Chief Executive Officer, sent a letter to Harry E. Whaley, the President and Chief Executive Officer of Woodstream, stating that Zareba was not for sale at the time but that if the Zareba board of directors determined that the company was for sale, Woodstream would be one of the parties contacted.

     At a meeting held by telephone conference begun on June 17, 2009 and continued on June 24, 2009, the Zareba board of directors engaged in continued discussion regarding terminating the Exchange Act registration. The board of directors unanimously agreed to further investigate a deregistration transaction and formed a special committee consisting of Michael Bochert, Eugene Courtney and William Franta, Zareba’s independent directors, to consider and collect additional information regarding the process of reducing the number of shareholders to below 300 and subsequently delisting Zareba’s common stock from Nasdaq and terminating the registration of Zareba’s common stock under the Exchange Act. The board of directors placed no restrictions on the authority of the special committee to consider, approve or disapprove a deregistration transaction. The special committee was directed to explore the reverse split method and other alternative methods to accomplish deregistration and to engage in discussions with professional advisors relating to the deregistration transaction.

     At a meeting of the special committee held on June 24, 2009, immediately after the board of directors meeting on the same day, the special committee authorized management to proceed with preparing materials in anticipation of a potential transaction, including a Schedule 13E-3 and related documents. Following this meeting, management authorized Zareba’s legal counsel, Fredrikson & Byron, P.A., referred to in this proxy statement as “Fredrikson,” to begin preparing preliminary drafts of these documents, and the special committee reviewed proposals from four investment banks. The special committee then approved a proposal from Greene Holcomb and Fisher LLC, referred to in this proxy statement as “GH&F,” which is an independent investment banking firm with expertise in business and security valuations and rendering fairness opinions in connection with mergers, acquisitions and other corporate transactions. On July 4, 2009, the special committee signed an engagement letter with GH&F.

     On July 14, 2009, representatives of GH&F met with Mr. Nordquist and Jeff Mathiesen, Zareba’s Chief Financial Officer, for preliminary conversations relating to a proposed transaction and due diligence matters, and Zareba provided GH&F with various materials for review.

     On July 27, 2009, the special committee held a meeting attended by Messrs. Nordquist and Mathiesen and representatives of GH&F and Fredrikson. GH&F provided an overview of the financial analysis to be undertaken by GH&F and the special committee discussed a proposed timeline for future meetings and a potential transaction.

     On August 4, 2009, the special committee held a meeting attended by Messrs. Nordquist and Mathiesen and representatives of GH&F and Fredrikson. GH&F presented the special committee and management with preliminary valuation analyses that GH&F would use in rendering a fairness opinion with respect to a transaction, and the special committee members asked questions regarding the analyses. After the meeting, the special committee met independently and discussed issues relating to the proposed transaction. The special committee proposed that Zareba undertake a reverse stock split transaction with a split ratio of 1-for-250, in which all shareholders who hold fewer than 250 shares prior to the split would

receive cash for their fractional shares following the split at a price of $5.20 per pre-split share, which proposed transaction is referred to in this proxy statement as the “deregistration transaction,” subject to receipt of a fairness opinion from GH&F, which was requested from GH&F following the meeting. Shareholders who owned fewer than 250 shares of Zareba’s common stock on a pre-split basis, estimated to hold approximately 2.5% of Zareba’s outstanding shares at the time, would no longer have been shareholders of the company following completion of the deregistration transaction.

     On August 7, 2009, the special committee held a meeting attended by a representative of Fredrikson to further discuss the proposed deregistration transaction. The Fredrikson representative provided a summary of the process in considering the deregistration transaction to date, including a discussion of fiduciary duties of the special committee and the board, alternative methods to accomplish the objectives of the proposed deregistration transaction, and the effects of the proposed deregistration transaction, and participated in a question and answer session with the special committee regarding those topics. The special committee also discussed issues relating to the advantages and disadvantages of the proposed deregistration transaction, alternatives to the company, and the fairness to shareholders cashed out in such a transaction and the remaining shareholders. Following this discussion, Messrs. Nordquist and Mathiesen and representatives of GH&F joined the meeting. GH&F presented the special committee with its fairness opinion and supporting materials, and GH&F answered questions from the special committee. The valuation analyses in GH&F’s presentation were the same analyses in GH&F’s August 4, 2009 presentation, except that the August 7, 2009 presentation contained updated stock market and industry information available as of that later date and reflected the proposed stock split ratio and $5.20 per share price. GH&F confirmed that the full board of directors could rely upon its fairness opinion. The special committee then determined the deregistration transaction would be fair and in the best interests of Zareba and its shareholders and approved the deregistration transaction, including the fairness of the amount to be paid to shareholders whose stock would be cashed out, and resolved to recommend the deregistration transaction to the full board of directors.

     Following the meeting of the special committee, the full Zareba board of directors held a meeting to discuss the conclusions and recommendations of the special committee. The board of directors engaged in a discussion regarding the special committee’s recommendation, including the special committee’s deliberation process, the advantages and disadvantages of the proposed deregistration transaction to Zareba and its shareholders, the fairness of the proposed deregistration transaction to all shareholders, the consideration to be paid to shareholders who hold less than 250 shares of Zareba’s common stock, and the expected effects of the deregistration transaction. Following this discussion, the board of directors unanimously adopted and approved the deregistration transaction as recommended by the special committee.

     On August 12, 2009, Zareba filed a Schedule 13E-3 and related documents with the SEC with respect to the deregistration transaction and issued a press release announcing the transaction.

     On August 13, 2009, Woodstream sent Zareba a written proposal to purchase all of the issued and outstanding stock of Zareba at a price of $5.50 per share, subject to certain contingencies, but not contingent on Woodstream obtaining financing for the transaction.

     Following conversations between Messrs. Nordquist and Whaley, the Zareba board of directors met on August 18, 2009 to consider this proposal. The Zareba board of directors concluded that it would be in the best interests of the company and its shareholders to continue to pursue its business plan, including the deregistration transaction, reaffirmed its position that the company was not for sale at that time, and declined Woodstream’s proposal. The Zareba board of directors reaffirmed that if it decided that it would be in the best interests of the shareholders to sell the company, it would do so in a process intended to

realize the best transaction for the shareholders and other constituents, and a private negotiation with Woodstream was not that process. The Zareba board of directors also said it believed that, should it determine in the future that the company was for sale, the interests of the company’s employees, customers and communities, which are factors a board of directors may expressly consider in any sale of a Minnesota corporation, may be better served by a transaction involving someone other than Woodstream, due to the customer and product overlap between Zareba and Woodstream. On August 19, 2009, Mr. Nordquist sent a letter to Mr. Whaley declining Woodstream’s proposal and stating that it was not suggesting or encouraging Woodstream to make any further proposal because the company is not for sale, but that if Woodstream withdrew its proposal, Zareba would contact Woodstream should the board of directors decide that Zareba was for sale.

     On August 19, 2009, Mr. Whaley sent a letter to Mr. Nordquist, restating Woodstream’s interest in acquiring Zareba at $5.50 per share and stating that it believed it had a greater potential strategic alignment with Zareba than any other potential acquiror and, therefore, was best suited to acquire Zareba.

     On each of August 20, 2009 and September 1, 2009, Zareba filed an amended Schedule 13E-3 and related documents with the SEC with respect to the deregistration transaction.

     On September 8, 2009, Woodstream sent Zareba a written proposal increasing the price at which it proposed to purchase all of the issued and outstanding stock of Zareba to $6.50 per share. Woodstream indicated that it would be prepared to increase its offer beyond $6.50 per share if Zareba gave Woodstream access to management and non-public information. Woodstream also indicated that its offer was not contingent on Woodstream obtaining financing for the transaction, that it expected to be able to quickly complete confirmatory due diligence, and that it would propose a merger agreement on customary terms for the sale of a public company the size of Zareba.

     Prior to September 10, 2009, the members of the special committee and other directors had several informal communications in response to Woodstream’s then most recent proposal. On September 10, 2009, at a special meeting of the Zareba board of directors, based on the recommendation by the special committee, the board of directors decided to terminate the deregistration transaction process and to undertake a review of the company’s strategic alternatives to enhance shareholder value. The board of directors directed management to explore with GH&F an engagement to assist the board of directors in its strategic alternatives process.

     On September 10, 2009, Zareba filed an amended Schedule 13E-3 with the SEC to terminate the deregistration transaction process and issued a press release that it would review its strategic alternatives.

     On September 16, 2009, Zareba entered into an engagement letter with GH&F to act as Zareba’s financial advisor in its exploration of strategic alternatives. Mr. Nordquist informed Mr. Whaley of this engagement on September 17, 2009.

     In connection with the decision of the Zareba board of directors to explore strategic alternatives, Zareba’s compensation committee discussed the possibility of a change in control of the company and the uncertainty that this might cause, which might result in the departure or distraction of key management employees to the detriment of Zareba’s operations and shareholders. As a result, the compensation committee decided to consider adopting change in control agreements for Zareba’s executive officers. Following the recommendation of the compensation committee, on September 25, 2009, Zareba entered into executive severance agreements with its three executive officers. For descriptions of these agreements, see “Interests of Certain Persons in the Merger” below.

     Beginning in September 2009 and continuing through October 2009, GH&F and representatives of Zareba management contacted 20 parties that GH&F and Zareba management identified as the parties that would most likely be interested in a transaction with Zareba. As a result of this process, four parties other than Woodstream, all of which would have been strategic buyers, expressed an interest in having meetings to explore the possibility of a strategic transaction. Representatives of Zareba management conducted in-person or telephonic meetings with all four of these parties through early November 2009, three of which executed confidentiality agreements to receive confidential information regarding Zareba. The other contacted parties chose not to meet with Zareba or otherwise explore a transaction.

     During this period, Zareba and GH&F had communications with Woodstream, but Woodstream and Zareba were not able to agree on the terms of a confidentiality agreement. Accordingly, at this time Zareba did not make any of the due diligence information available to Woodstream that was made available to the three parties that signed confidentiality agreements with Zareba.

     On October 16, 2009, the Zareba board of directors held a special meeting to discuss the status of the strategic alternatives process.

     On October 27, 2009, Woodstream sent Zareba a letter reaffirming its proposal to acquire Zareba for $6.50 per share, not contingent on Woodstream obtaining financing for the transaction, with the possibility of increasing the price as previously indicated.

     On October 30, 2009, the Zareba board of directors held a special meeting to discuss the status of the strategic alternatives process. Representatives of GH&F presented an update on their efforts.

     On November 2, 2009, one of the four parties with whom Zareba had a meeting in October, referred to in this proxy statement as “Party A,” submitted a proposal to acquire Zareba for $6.10 per share, subject to completion of due diligence and approval from Party A’s shareholders. On November 8, 2009, in response to discussions with GH&F, Party A indicated that it believed further due diligence would support a revised offer by Party A of between $6.50 and $7.00 per share.

     On November 6, 2009, William Blair & Company, LLC, Woodstream’s financial advisor, Mr. Whaley and other Woodstream representatives met in Minneapolis with GH&F, Mr. Nordquist and Mr. Mathiesen to discuss Zareba, but Zareba did not make any confidential information available to Woodstream at this time.

     On November 11, 2009, another of the four parties with whom Zareba had a meeting in October, referred to in this proxy statement as “Party B,” submitted a proposal to acquire Zareba for $7.20 per share, subject to Party B obtaining sufficient financing, completion of due diligence, approval from Party B’s shareholders, and a $100,000 termination fee payable to Party B should Zareba terminate discussions with Party B in favor of a superior offer prior to the expiration of the exclusivity period requested by Party B. Party B subsequently dropped the termination fee requirement.

     Following discussions with GH&F, on November 12, 2009, Woodstream submitted a revised proposal of $7.75 per share, not contingent on Woodstream obtaining financing for the transaction, and Party B increased its proposal to $7.60 per share, still subject to Party B obtaining sufficient financing. That same day, the Zareba board of directors held a special meeting to discuss the status of the strategic alternatives process. Representatives of GH&F presented an update on their efforts.

     Following discussions with GH&F, on November 13, 2009, Party B indicated in writing an increase in its proposal to $7.85 per share, still subject to Party B obtaining sufficient financing.

     Following discussions with GH&F, on November 16, 2009, Party A reiterated its original proposal of $6.10 per share.

     Following discussions with GH&F, on November 18, 2009, Woodstream submitted a revised proposal of $8.25 per share, not contingent on Woodstream obtaining financing for the transaction.

     On November 20, 2009, the Zareba board of directors held a special meeting to discuss the status of the strategic alternatives process. Representatives of GH&F presented an update on their efforts. It appeared that Woodstream and Party B were the only interested parties that would continue in the strategic alternatives process, as each continued to increase its prior offer. The board of directors discussed with GH&F the respective abilities of Woodstream and Party B to pay the funds necessary to complete a transaction and other issues relating to each proposal. The board of directors authorized management to enter into an appropriate exclusivity agreement, as between Woodstream and Party B, with the party that, in the opinion of GH&F and management, made the highest obtainable offer for Zareba’s stock.

     On November 21, 2009, following discussions with GH&F, Party B submitted a revised proposal of $8.40 per share, still subject to Party B obtaining sufficient financing.

     On November 21, 2009, Woodstream indicated to GHF that it was prepared to increase its proposal to $9.00 per share, not contingent on Woodstream obtaining financing for the transaction. On November 23, 2009, Woodstream sent a letter confirming the $9.00 price and drafts of proposed exclusivity and confidentiality agreements, indicating that it was prepared to immediately enter into the exclusivity agreement. That same day, the Zareba directors informally confirmed their authorization to management to enter into both proposed agreements based on the $9.00 price, and Zareba and Woodstream executed the exclusivity and confidentiality agreements.

     Beginning on November 25, 2009, representatives of Woodstream and its advisors were granted access to certain confidential information of Zareba and began their formal due diligence review of Zareba, which continued until execution of the proposed merger agreement.

     On November 30, 2009, Woodstream’s legal counsel, Faegre & Benson LLP, sent Fredrikson an initial draft of the merger agreement. Zareba, Woodstream and their respective legal and financial advisors subsequently negotiated the terms of the merger agreement. Throughout this period, the members of Zareba’s board of directors reviewed each draft of the merger agreement, discussed the drafts informally and at the meetings described below, and provided input to Fredrikson on the terms and conditions and other issues relating to the merger agreement.

     On December 16, 2009, the Zareba board of directors held a special meeting to discuss the status of the strategic alternatives process. At this meeting, the board affirmed that the special committee would continue to serve with respect to the proposed transaction with Woodstream.

     Between December 16, 2009 and January 11, 2010, Woodstream completed its due diligence review and the parties finalized the terms of the proposed merger agreement.

     On the morning of January 11, 2010, the Zareba special committee and board of directors held a special meeting to discuss the proposed merger with Woodstream. Members of Zareba management and representatives of Fredrikson and GH&F also attended the meeting. The special committee and board of directors reviewed the strategic alternatives process, including the parties who made proposals to acquire

the company and the developments leading up to the proposed merger with Woodstream. GH&F reviewed with the special committee and the board of directors its financial analysis of the merger consideration in the merger agreement and delivered its opinion to the effect that, as of that date and based on and subject to the matters described in the opinion, the merger consideration to be received by the holders of Zareba common stock was fair, from a financial point of view, to such holders. The special committee and the board of directors confirmed with Fredrikson that the terms of the merger agreement were substantially the same as the last draft that they reviewed. After discussion, the special committee and the board of directors each voted unanimously to approve and adopt the merger agreement with Woodstream and to recommend that Zareba shareholders vote to approve and adopt the merger agreement and the merger.

     The boards of directors of Woodstream and its merger subsidiary, and Woodstream as the sole shareholder of its merger subsidiary, approved the merger agreement and the merger with Zareba by written actions effective January 11, 2010.

     On the afternoon of January 11, 2010, Zareba and Woodstream executed the merger agreement and publicly announced the execution of the merger agreement.

Recommendation of the Special Committee and the Board of Directors; Reasons for the Merger

     At the special meeting of the Zareba special committee and board of directors held on January 11, 2010, the special committee and the board of directors each determined that the merger was advisable, fair to and in the best interests of Zareba and its shareholders and unanimously approved and adopted the merger agreement. Accordingly, the Zareba special committee and board of directors each recommends that Zareba shareholders vote “FOR” approval and adoption of the merger agreement and the merger at the special meeting.

     In evaluating the proposed merger, the Zareba special committee and board of directors consulted with Zareba’s management and legal and financial advisors. In reaching their decision to approve and adopt the merger agreement, and to recommend that Zareba shareholders vote to approve and adopt the merger agreement and the merger, the special committee and board of directors considered a variety of factors weighing in favor of the merger, including the factors listed below:

	•		the merger consideration of $9.00 per share. The special committee and board of directors understood that the closing price of Zareba common stock ranged from $1.22 to $5.36 in the 52 weeks prior to January 11, 2010, was $2.00 six months prior to January 8, 2010, was $2.45 twelve months prior to January 8, 2010, was $4.73 on January 8, 2010, the last trading day prior to the approval of the merger agreement, was $2.10 on August 12, 2009, the last trading day prior to the public announcement of the deregistration transaction, and was $3.97 on September 10, 2009, the last trading day prior to the public announcement by Zareba that it was reviewing its strategic alternatives;
	•		the fact that the merger consideration represents a premium of over 90% to Zareba’s closing share price on January 8, 2010, the last trading day prior to the approval of the merger agreement;
	•		the opinion and presentation of GH&F on January 11, 2010 to the special committee and board of directors as to the fairness, from a financial point of view, of the merger consideration to be received by the holders of Zareba common stock, as more fully described below under the caption “—Opinion of Financial Advisor to Zareba”;

	•		the regular evaluation of strategic alternatives by Zareba’s board of directors and the board’s familiarity with Zareba’s business, operations, financial condition, competitive position, business strategy and prospects, and general industry, economic and market conditions, including the inherent risks and uncertainties in Zareba’s business, in each case on a historical, current and prospective basis;
	•		the strategic alternatives process conducted by Zareba and the possible alternatives to the merger (including the possibility of continuing to operate Zareba as an independent company), the range of possible benefits to Zareba shareholders of such alternatives relative to Zareba’s prospects as an independent company, and the timing and likelihood of accomplishing the goal of any such alternatives;
	•		the fact that GH&F, a qualified and independent financial advisor, assisted the board of directors in its process of exploring strategic alternatives;
	•		the judgment of the board of directors, based upon the process leading to the merger agreement, that Woodstream’s offer was the best available alternative for Zareba’s shareholders;
	•		the fact that the merger is not subject to a financing condition; and
	•		the terms of the merger agreement that provide that, under certain circumstances and subject to certain conditions, Zareba can furnish information to and conduct negotiations with a third party in connection with an unsolicited potential superior proposal for a business combination or acquisition of Zareba.

     The Zareba special committee and board of directors also considered potential risks relating to the merger, including the following:

	•		the risks and costs to Zareba if the merger does not close, the significant distractions that Zareba’s management and other employees will experience during the pendency of the merger, and the transaction costs that will be incurred even if the merger is not consummated;
	•		following the merger, Zareba’s shareholders will cease to participate in any future earnings and growth of Zareba and will cease to benefit from any future increases in the value of Zareba;
	•		the fact that an all-cash transaction generally would be a taxable transaction to Zareba’s shareholders for U.S. federal income tax purposes;
	•		the customary restrictions on the conduct of Zareba’s business prior to the completion of the merger, requiring Zareba to conduct its business in all material respects only in the ordinary course, subject to specific limitations, which may delay or prevent Zareba from undertaking business opportunities that may arise pending completion of the merger;
	•		the provision in the merger agreement requiring Zareba to pay a termination fee in the amount of $800,000, plus reimbursement of expenses of up to $200,000, if the merger agreement is terminated under certain circumstances; and
	•		the possibility that, notwithstanding the provisions of the merger agreement permitting Zareba to change its recommendation to support a superior proposal, the termination fee payable upon

Zareba’s execution of a definitive agreement for an alternative transaction or the consummation of an alternative transaction, or the requirement that Zareba submit the merger to a shareholder vote even if its board of directors has changed its recommendation, might discourage other parties that might have an interest in a business combination with, or an acquisition of, Zareba.

     The foregoing discussion addresses the material factors considered by the Zareba special committee and board of directors in their consideration to approve and adopt the merger agreement, including factors that support the merger as well as those that may weigh against it. In view of the variety of factors and the amount of information considered, the Zareba special committee and board of directors did not find it practicable to quantify or otherwise assign relative weights to, and did not make specific assessments of, the specific factors considered in reaching its determination. The determination to approve and adopt the merger agreement was made after consideration of all of the factors as a whole and the foregoing discussion does not necessarily contain all of the factors considered by the Zareba special committee or board of directors as a whole or by individual directors. In addition, individual members of the Zareba special committee and board of directors may have given different weights to different factors.

Opinion of Greene Holcomb & Fisher LLC

     Zareba retained GH&F to act as its financial advisor in connection with its exploration of strategic alternatives and, if requested, to render to the special committee and the board of directors an opinion as to the fairness, from a financial point of view, of the $9.00 per share to be received by holders of Zareba common stock in the merger.

     On January 11, 2010, GH&F delivered to the special committee and the board of directors its oral opinion, subsequently confirmed in writing, that as of that date and based upon and subject to the assumptions, factors and limitations set forth in the written opinion and described below, the $9.00 per share is fair, from a financial point of view, to the holders of Zareba common stock, excluding Woodstream and its affiliates.

     The full text of GH&F’s written opinion is attached to this proxy statement as Annex B, and the summary of the opinion set forth in this section is qualified in its entirety by reference to that opinion. We urge our shareholders to read the GH&F opinion carefully in its entirety for a complete statement of the considerations and procedures followed, factors considered, findings, assumptions and qualifications made, the bases for and methods of arriving at these findings, limitations on the review undertaken in connection with the opinion, and judgments made or conclusions undertaken by GH&F in reaching its opinion.

     While GH&F rendered its opinion and provided certain analyses to the special committee and the board of directors, GH&F was not requested to, and did not make, any recommendation to the special committee or the board of directors as to the specific form or amount of the consideration to be received by shareholders in the merger. GH&F’s written opinion, which was directed to the special committee and the board of directors, addresses only the fairness, from a financial point of view, of the consideration per share to be paid to holders of Zareba common stock in the merger, and does not address Zareba’s underlying business decision to proceed with, or effect, the merger, or the relative merits of the merger compared to any alternative business strategy or transaction in which Zareba might engage. As noted elsewhere in this proxy statement, GH&F’s opinion to the special committee and the board of directors was one of many factors taken into consideration by the special committee and the board of directors in making their determination to approve the merger agreement and the merger.

     In arriving at its opinion, GH&F, among other things:

	•		reviewed a draft dated January 8, 2010, of the merger agreement;
	•		reviewed publicly available financial and other data regarding Zareba, including Zareba’s quarterly report on Form 10-Q for the quarter ended September 30, 2009; Zareba’s annual reports on Form 10-K for the years ending June 30, 2007, 2008 and 2009; and Zareba’s proxy statement dated October 3, 2008;
	•		reviewed internal financial projections for Zareba for the years ending June 30, 2010, 2011, 2012, 2013 and 2014 (the “Projections”), all as prepared and provided to GH&F by Zareba’s management;
	•		reviewed draft unaudited financial results of Zareba for the five months ended November 30, 2009;
	•		performed discounted cash flow analyses based on the Projections;
	•		met with members of Zareba’s management to discuss Zareba’s business, operations, historical and projected financial results and future prospects;
	•		reviewed the historical prices, trading multiples and trading volumes of Zareba common stock;
	•		reviewed publicly available financial data, stock market performance data and trading multiples of companies that GH&F deemed generally comparable to Zareba; and
	•		conducted such other studies, analyses, inquiries and investigations as GH&F deemed appropriate.

     The following is a summary of the material analyses and other information that GH&F prepared and relied on in delivering its opinion to the special committee and the board of directors. This summary includes information presented in tabular format. In order to understand fully the financial analyses used by GH&F, these tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Except as otherwise noted, the quantitative information which follows, to the extent that it is based on market data, is based on market data as it existed on or before January 8, 2010, and is not necessarily indicative of current market conditions.

Zareba Financial Projections

     GH&F’s analysis used and relied upon the Projections summarized in the table below.

Financial Projections for the Five Years Ending June 30, 2014
(Prepared and provided to GH&F by Zareba’s Management)

(Dollars in thousands)

Fiscal year ending June 30		2010				2011				2012				2013				2014
Revenues		$	32,990			$	35,351			$	38,151			$	41,576			$	45,518
Earnings Before Interest and Taxes			1,966				2,270				2,428				2,608				2,803
Earnings Before Interest, Taxes, Depreciation and Amortization			2,633				2,794				2,952				3,132				3,360

     Zareba does not, as a matter of course, make available to the public its financial projections. However, Zareba’s management prepared the Projections to present a hypothetical view of future operating results in connection with the deregistration transaction, as updated subsequent to the termination of the deregistration transaction, and for use by the special committee, the board of directors and by GH&F in its fairness opinion. The Projections were not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the Securities and Exchange Commission, U.S. generally accepted accounting principles, or the guidelines established by the American Institute of Certified Public Accountants with respect to the preparation and presentation of projected financial information. The Projections presented, to the best of management’s knowledge and belief, the hypothetical future financial performance of Zareba, subject to the following key assumptions: (i) Zareba will focus on its existing markets and products; (ii) the market size and potential for Zareba’s products will experience modest growth; (iii) Zareba will achieve projected sales growth through a combination of leveraging existing products and distribution channels, product line enhancements and targeted entry into new geographic markets; (iv) Zareba will make modest investments to grow sales and enhance product offerings; (v) Zareba will be able to maintain and achieve margin assumptions through product cost reductions and improvements and price increases to customers as appropriate; and (vi) Zareba’s operating costs will include the continued costs of public company reporting and compliance, with no effect given to the completion of the merger. The Projections were prepared in good faith at the time they were made; however, the Projections are hypothetical estimates of Zareba’s future financial performance, and you should not assume that the projections will remain accurate or reflective of management’s view as of any future date. This information is not fact and should not be relied upon as being indicative of future results, and we caution readers of this proxy statement not to place any reliance on the projected financial information. The Projections are included solely for the purpose of giving Zareba’s shareholders access to the same non-public information that was provided to the special committee, the board of directors and GH&F.

Zareba Market Analysis

     GH&F reviewed general background information concerning Zareba, including recent financial and operating results and outlook, Zareba’s stock price and volume over selected periods and Zareba’s stock closing price over the prior twelve months. GH&F presented the recent common stock trading information contained in the following table:

Closing Prices:
January 8, 2010		$	4.73
1 Day Prior			4.51
1 Week Prior			4.54
4 Weeks Prior			4.47
3 Months Prior			4.92
6 Months Prior			2.00
12 Months Prior			2.45
52-Week High			5.36
52-Week Low			1.22

Trading Range Analysis

     GH&F analyzed the $9.00 per share against recent historical closing price ranges for Zareba’s common stock. In the one month prior to January 8, 2010, Zareba’s stock price closed at a price per share ranging from $4.39 to $4.72. In the three months prior to January 8, 2010, Zareba’s stock price closed at a price per share ranging from $4.39 to $5.19. In the six months prior to January 8, 2010, Zareba’s stock price closed at a price per share ranging from $2.02 to $5.36.

Premiums Paid Analysis

     GH&F reviewed publicly available information for selected transactions completed between January 1, 2006 and January 8, 2010 with transaction values of $10 million to $300 million to determine the implied premiums (discounts) payable in the transactions over recent stock closing prices prior to announcement of the transaction, including the one-day prior, one-week prior and four-weeks prior closing prices. It selected these transactions by searching SEC filings, public company disclosures, press releases, industry and popular press reports, databases and other sources. The transactions include all industry types except for oil and gas, real estate investment trusts and banking industries, and only transactions in which greater than 90% of the target was acquired. Share repurchases and hostile transactions were excluded.

     GH&F performed its analysis on 237 transactions. Based on the premiums (discounts) paid in these transactions, GH&F derived implied equity values per share of Zareba common stock ranging from a low of $3.43 to a high of $20.04, with median implied per share values of $6.09 to $6.13 and mean implied per share values of $6.63 to $6.80.

     The following table summarizes the premiums or (discounts) paid in these transactions, the premium implied by the $9.00 price per share used in the merger, Zareba’s historical stock prices used in the analysis and the implied per share values.

						One				Four
Historical Period		One Day				Week				Week
Premiums/Discounts:
Low			(17.7	%)			(14.5	%)			(23.2	%)
Mean			47.1				48.3				52.0
Median			35.0				35.0				37.1
High			344.4				300.0				307.8
Premium Implied by $9.00 per share			99.6	%			98.2	%			101.3	%
Zareba Stock Price		$	4.51			$	4.54			$	4.47
Implied Equity Value Per Share:
Low		$	3.71			$	3.88			$	3.43
Mean			6.63				6.73				6.80
Median			6.09				6.13				6.13
High			20.04				18.16				18.23

     The following table identifies the target companies involved in the 237 transactions included in GH&F’s analysis.

Ablest Inc		Document Sciences Corp		Manatron Inc		Renovis Inc
ACR Group Inc		EasyLink Services Corp		Manugistics Group Inc		Restoration Hardware Inc
AirNet Systems Inc		Educational Insights Inc		Marsh Supermarkets Inc		Rita Medical Systems Inc
Allergy Research Group Inc		eGene Inc		Max & Erma’s Restaurants Inc		Rotonics Manufacturing Inc
American Bank Note Holographic		Emageon Inc		Meadow Valley Corp		Sands Regent
American Technical Ceramics		Embarcadero Technologies Inc		Memry Corp		SBS Technologies Inc
Analex Corp		Embrex Inc		MetaSolv Inc		Segue Software Inc
Angelica Corp		Endocare Inc		Metromedia International Group		Sentigen Holding Corp
Applied Imaging Corp		Enpath Medical Inc		Micro Linear Corp		SGX Pharmaceuticals Inc
Applied Innovation Inc		EP MedSys Inc		Microtek Medical Holdings Inc		SigmaTel Inc
Artemis Intl Solutions Corp		ESS Technology Inc		Mikron Infrared Inc		Sipex Corp
Aspect Medical Systems Inc		Everlast Worldwide Inc		Mity Enterprises Inc		SiRF Technology Holdings Inc
Avanex Corp		Excelligence Learning Corp		Mobius Management Systems Inc		SM&A
Back Yard Burgers Inc		E-Z-EM Inc		Moldflow Corp		Smith & Wollensky Rntnt Grp
BancTec Japan Inc		Factory Card Outlet & Party		Monterey Gourmet Foods Inc		Smithway Motor Xpress Corp
Barrier Therapeutics Inc		Farrel Corp		Morton Industrial Group Inc		Somera Communications Inc
BAT Indonesia Tbk PT		FCStone Group Inc		Mossimo Inc		Somerset Ent Income Fund
Bio-Lok International Inc		Featherlite Inc		Motive Inc		Sorbent Technologies Corp
Blair Corp		Firearms Training Systems Inc		Mpower Holding Corp		Sorun Corp
Borland Software Corp		Friendly Ice Cream Corp		Napster Inc		Southern Energy Homes Inc
Boston Communications Group		Gensym Corp		National Home Health Care Corp		Specialized Health Prod Intl
Burke-Parsons-Bowlby Corp		Gevity HR Inc		Natrol Inc		SpectraLink Corp
CAM Commerce Solutions Inc		Gibraltar Packaging Group Inc		Navigant International Inc		Sports Resorts Intl Inc
Canyon Resources Corp		Golden Cycle Gold Corp		Neon Communications Group Inc		Sportsmans Guide Inc
Captaris Inc		Goldleaf Finl Solutions Inc		NetManage Inc		Stingray Copper Inc
Carreker Corp		Golf Galaxy Inc		Netopia Inc		Stratagene Corp
Carrier Access Corp		GVI Security Solutions Inc		Netsmart Technologies Inc		Strategic Distribution Inc
Castelle Inc		Hector Communications Corp		Nevada Chem Inc		Stratos International Inc
Castle Gold Corp		HemoSense Inc		New Brunswick Scientific Co		Synplicity Inc
Catalyst Semiconductor Inc		Hidefield Gold PLC		NewWest Gold Corp		SYS Technologies Inc
Catapult Communications Corp		Hifn Inc		Niagara Corp		Talk America Holdings Inc
Celebrate Express Inc		High Plains Uranium Inc		NWH Inc		Targanta Therapeutics Corp
Centillium Communications Inc		HireRight Inc		NYFIX Inc		Target Logistics Inc
CFC International Inc		Hi-Shear Technology Corp		Oilgear Co		TB Woods Corp
Champps Entertainment Inc		I-Many Inc		Onyx Software Corp		Terayon Communication Sys Inc
Checkers Drive-In Restaurants		Indus International Inc		Opinion Research Corp		TouchStone Software Corp
Cherokee International Corp		Industrial Rubber Products Inc		Optio Software Inc		Traffic.com Inc
CIMNET Inc		InFocus Corp		Optium Corp		Traffix Inc

Clayton Holdings Inc		Inforte Corp		Outlook Group Corp		Transmeta Corp
Click Commerce Inc		Integrated Alarm Svcs Grp Inc		Packaging Dynamics Corp		Tumbleweed Communications Corp
Cohesant Technologies Inc		International Aluminum Corp		Packeteer Inc		Turbochef Technologies Inc
Coley Pharmaceutical Group Inc		International Electronics Inc		PearlStreet Ltd		Tut Systems Inc
Collins Industries Inc		InterVideo Inc		Pemstar Inc		Tutogen Medical Inc
CompuDyne Corpo		Intraware Inc		PeopleSupport Inc		Valera Pharmaceuticals Inc
Concorde Career Colleges Inc		Iomai Corp		Pharmacopeia Inc		Vantagemed Corp
Corillian Corp		Iomed Inc		Pharsight Corp		Venture Catalyst Inc
Cornerstone Therapeutics Inc		Iomega Corp		Photon Dynamics Inc		vFinance Inc
Cossette Inc		Isotis Inc		Pomeroy IT Solutions Inc		VistaCare Inc
Cost-U-Less Inc		I-trax Inc		Portal Software Inc		VitalStream Holdings Inc
CPAC Inc		Kangaroo Media Inc		Power Med Interventions Inc		Vodavi Technology Inc
Credence Systems Corp		Kintera Inc		Printronix Inc		Warrantech Corp
Criticare Systems Inc		Knape & Vogt Manufacturing Co		Procon MultiMedia AG		WatchGuard Technologies Inc
CryoCor Inc		Knova Software Inc		Provena Foods Inc		Web.com Inc
Cutter & Buck Inc		Kosan Biosciences Inc		Quovadx Inc		Wellco Enterprises Inc
Cytogen Corp		LESCO Inc		Radiologix Inc		Westaff Inc
Datastream Systems Inc		Lifecore Biomedical Inc		Radyne Corp		WJ Communications Inc
DIC Entertaiment Holdings Inc		Loudeye Corp		Raindance Communications Inc		Woodhead Industries Inc
Digital Fusion Inc		Lowrance Electronics Inc		Reinhold Industries Inc		Xenogen Corp
DocuCorp International Inc		Main Street Restaurant Group		RemedyTemp Inc		ZEVEX International Inc
						Zomax Inc

Discounted Cash Flow Analysis

     GH&F performed a discounted cash flow analysis for Zareba in which it calculated the present value of the projected hypothetical future cash flows of Zareba based on the Projections. In the discounted cash flow analysis, GH&F estimated a range of theoretical values for Zareba based on the net present value of Zareba’s implied annual cash flows and a terminal value for Zareba in 2014 calculated based upon a multiple of EBITDA (earnings before interest, taxes, depreciation and amortization). GH&F applied a range of discount rates of 13% to 17% and a range of terminal value multiples of 5.0x to 7.0x. GH&F determined EBITDA multiples by considering growth rates of comparable companies and information on trading multiples of comparable companies and transaction multiples of comparable transactions. In addition, GH&F considered the nature of Zareba’s business, the size of Zareba relative to the comparable companies, Zareba’s position in its industry and GH&F’s recent experience in the mergers and acquisitions marketplace. Discount rates were based on the weighted average cost of capital for comparable companies, business specific risk, the issues associated with maintaining and growing Zareba’s business as projected in the financial information provided by Zareba’s management, Zareba’s size relative to its peers and other relevant factors.

     This analysis resulted in implied per share values of Zareba common stock ranging from a low of $4.54 and a high of $6.71.

Comparable Company Analysis

     GH&F analyzed financial information and valuation ratios relating to 10 publicly traded companies involved in farm machinery and equipment, electronic components and electrical machinery, equipment and supplies with market capitalizations between $10 million and $300 million, and deemed by GH&F to be comparable to Zareba. GH&F excluded public companies that did not meet these criteria. This group comprised Art’s-Way Manufacturing Co., Inc., Coleman Cable, Inc., Eurodrip SA, Exel Industries SA, Jewett-Cameron Trading Co. Ltd., Magal Security Systems Ltd., Preformed Line Products Co., Salcomp Plc, SL Industries Inc. and Ultralife Corp. GH&F applied the resulting multiples of selected valuation data to derive implied equity values per share of Zareba common stock. All multiples were based on closing stock prices on January 8, 2010. All forward-looking data is based on publicly available research analyst estimates. This analysis produced implied per share values for Zareba ranging from a low of $2.44 to a high of $11.97, with the median implied per share values of $5.76 to $6.68 and mean implied per share values of $5.28 to $6.89.

     The following table summarizes the multiples of the selected valuation data, the multiples implied by the $9.00 price per share used in the transaction, Zareba’s financial information used in the analysis and the implied per share values. In the table, “LTM” means the twelve months ended November 30, 2009. Zareba financial information was provided by Zareba’s management.

		LTM				2009				2010				LTM				2009				2010
		Revenue				Revenue				Revenue				EBITDA				EBITDA				EBITDA
Comparable Company Multiples:
Low			.22x				.32x				.30x				3.17x				4.01x				3.49x
Mean			.60				.52				.49				6.08				5.58				6.12
Median			.58				.54				.51				6.43				6.28				5.70
High			1.03				.80				.78				7.67				6.45				9.62
Multiple Implied by $9.00 per share			.78x				.77x				.70x				9.27x				9.37x				8.80x
Zareba Financial Information (in millions of dollars):		$	30.8			$	30.8			$	34.2			$	2.6			$	2.5			$	2.7
Implied Equity Value Per Share:
Low		$	2.44			$	3.56			$	3.80			$	2.93			$	3.73			$	3.44
Mean			6.89				6.01				6.27				5.84				5.28				6.21
Median			6.68				6.20				6.54				6.19				5.97				5.76
High			11.97				9.25				10.03				7.41				6.14				9.85

Comparable Acquisition Analysis

     GH&F reviewed 19 acquisition transactions involving acquired businesses that GH&F deemed comparable to Zareba. It selected these transactions by searching SEC filings, news stories, press releases, industry and popular press reports, databases and other sources and by applying the following criteria:

	•		Transactions where the target had one of the following SIC codes: 3523 (farm machinery and equipment); 3679 (electronic components); 3690 (miscellaneous electrical machinery, equipment and supplies); and 3699 (electrical equipment and supplies);
	•		Transaction value greater than $10 million and less than $300 million;
	•		Public and private targets in which greater than 90% of the company was acquired;
	•		Transactions that were announced between January 1, 2004 and January 8, 2010; and
	•		Transactions with target companies that GH&F deemed similar to Zareba’s business.

     GH&F excluded transactions that did not meet these criteria or for which information was not available, and excluded repurchases, minority interest acquisitions and hostile transactions.

     The following table identifies the acquiring and target companies involved in the 19 transactions included in GH&F’s analysis.

Acquiring Company		Target Company
Sequoia Capital; Francisco Partners		Dmatek Ltd.
Ametek Inc.		Elgar Electronics Corporation
Exel Industries		Hardi International A/S
Ultralife Batteries Inc.		Stationary Power Services Inc
Curtiss-Wright Corp.		Benshaw, Inc.
Deere & Co		LESCO Inc
Jain Irrigation Systems Ltd.		Aquarius Brands, Inc.
Ag Growth International Inc.		Hansen Manufacturing Corp.
SL Industries, Inc.		MTE Corporation
TAC AB		Invensys Building Systems, Inc.
Ultralife Batteries Inc.		McDowell Research, Ltd.
Lindsay Manufacturing Co.		Barrier Systems, Inc.
The Black & Decker Corporation		Vector Products, Inc.
Central Garden & Pet Co.		Farnam Companies, Inc.
SL Industries, Inc.		Ault Inc.
Central Garden & Pet Co		Pets International Ltd
Ag Growth International Inc.		Edwards Group of Cos
C&D Technologies Inc.		Datel, Inc.
William Blair Capital; Norwest Equity		Airpax Corporation

     GH&F applied the resulting multiples of selected valuation data to derive implied equity values per share of Zareba common stock ranging from a low of $3.38 to a high of $25.41, with median implied per share values of $7.91 based on revenues and $13.88 based on EBITDA, each for the twelve months ended November 30, 2009, and mean implied per share values of $8.11 based on revenues and $13.71 based on EBITDA, each for the twelve months ended November 30, 2009.

     The following table summarizes the multiples of the selected valuation data, the multiple implied by the $9.00 price per share used in the merger, Zareba’s financial information used in the analysis and the implied per share values. In the table, “LTM” means the twelve months ended November 30, 2009. Zareba financial information was provided by Zareba’s management.

		LTM				LTM
		Revenue				EBITDA
Comparable Transaction Multiples:
Low			.30x				5.14x
Mean			1.18				8.37
Median			1.19				8.16
High			2.17				12.63
Multiple Implied by $9.00 per share			.78x				9.27x
Zareba Financial Information (in millions of dollars):		$	30.8			$	2.6
Implied Equity Value Per Share:
Low		$	3.38			$	4.90
Mean			13.71				8.11
Median			13.88				7.91
High			25.41				12.31

     In reaching its conclusion as to the fairness of the price per share and in its presentation to the special committee and board of directors, GH&F did not rely on any single analysis or factor described above, assign relative weights to the analyses or factors considered by it, or make any conclusion as to how the results of any given analysis, taken alone, supported its opinion. The preparation of a fairness opinion is a complex process and not necessarily susceptible to partial analysis or summary description. GH&F believes that its analyses must be considered as a whole and that selection of portions of its analyses and of the factors considered by it, without considering all of the factors and analyses, would create a misleading view of the processes underlying the opinion.

     The analyses of GH&F are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by the analyses. Analyses relating to the value of companies do not purport to be appraisals or valuations or necessarily reflect the price at which companies may actually be sold. No company or transaction used in any analysis for purposes of comparison is identical to Zareba or the merger. Accordingly, an analysis of the results of the comparisons is not mathematical; rather, it involves complex considerations and judgments about

differences in the companies to which Zareba was compared and other factors that could affect the public trading value of the companies.

     In arriving at its opinion, GH&F relied upon and assumed, without independent verification, the accuracy and completeness of the financial and other information provided to or discussed with GH&F by Zareba or obtained by GH&F from public sources, including, without limitation, the Projections referred to above. GH&F relied on representations that the Projections had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the senior management of Zareba as to the expected future performance of Zareba. GH&F did not assume any responsibility for the independent verification of any such information, including, without limitation, the Projections, and GH&F further relied upon the assurances of Zareba’s senior management that they were unaware of any facts that would make the information provided to GH&F, including the Projections, incomplete or misleading. GH&F assumed that there had been no material changes in the assets, financial condition, results of operations, business or prospects of Zareba since the date of the last financial statements made available to GH&F. GH&F also assumed that Zareba was not a party to any material pending transaction, including external financing, recapitalizations, acquisitions or merger discussions, other than the merger.

     In arriving at its opinion, GH&F did not perform or obtain any independent appraisal of the assets or liabilities (contingent or otherwise) of Zareba, nor was GH&F furnished with any appraisal. GH&F expressed no opinion regarding the liquidation value of Zareba. In addition, GH&F did not undertake an independent analysis of any outstanding, pending or threatened litigation, material claims, possible unasserted claims or other contingent liabilities to which Zareba or any of its affiliates is a party or may be subject. At Zareba’s direction and with its consent, GH&F made no assumption concerning, and therefore did not consider, the potential effects of any such litigation, claims, possible assertions of claims, or the outcomes or damages arising out of any such matters. During the course of its engagement, GH&F was asked by the Zareba board of directors to solicit indications of interest from various third parties regarding a merger with or an acquisition of Zareba, and GH&F considered the results of this solicitation in rendering its opinion.

     GH&F assumed that all the necessary governmental and regulatory approvals and consents required for the merger would be obtained and that the merger would be consummated in a timely manner without any limitations, restrictions, conditions, amendments or modifications, regulatory or otherwise, that collectively (i) would have a material adverse effect on Zareba or the contemplated benefits to Zareba of the merger or (ii) would otherwise change the amount of the merger consideration. GH&F did not express any opinion as to the price or range of prices at which the shares of Zareba common stock may trade subsequent to the announcement of the merger.

     GH&F, 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 corporate and other purposes. GH&F previously acted as financial advisor to Zareba in connection with the proposed deregistration transaction described in this proxy statement, and received fees of approximately $70,000 in connection with that engagement. GH&F is currently acting as financial advisor to Zareba in connection with the merger, for which Zareba has agreed to pay GH&F a fee of approximately $700,000 that is contingent on the consummation of the merger. In addition, Zareba paid GH&F a nonrefundable fee of $150,000 when GH&F rendered its opinion to the special committee and board of directors, which fee will be credited against the contingent fee amount. Zareba has also agreed to reimburse GH&F for certain expenses, which shall not exceed $35,000 in the aggregate without Zareba’s approval, and to indemnify GH&F against certain liabilities arising out of the engagement. GH&F may seek to provide Zareba and its affiliates certain investment banking and other services unrelated to the merger in the future.

     GH&F’s analysis and opinion were intended for the benefit and use of the special committee and the board of directors in connection with the merger. GH&F’s opinion did not constitute a recommendation to the special committee, the board of directors or Zareba’s shareholders as to how to vote in connection with their consideration of the merger. GH&F’s opinion did not address Zareba’s underlying business decision to pursue the merger, the relative merits of the merger as compared to any alternative business strategies that might exist for Zareba or the effects of any other transaction in which Zareba might engage. GH&F’s opinion does not express an opinion regarding the fairness of the amount or nature of the compensation that is being paid in the merger to any of Zareba’s officers, directors or employees, or class of such persons, relative to the compensation to the public shareholders of Zareba.

     GH&F’s opinion is subject to the assumptions and conditions contained therein and is necessarily based on economic, market and other conditions, and the information made available to GH&F, as of the date of its opinion. Events occurring after the date thereof could materially affect the assumptions used in preparing, and the conclusions reached in, that opinion. GH&F assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances or events occurring after the date of the opinion.

Effects of the Merger

      Legal Effects under Minnesota Law . At the effective time of the merger, Woodstream’s merger subsidiary will merge with and into Zareba and Zareba will continue as the surviving corporation and as a wholly-owned subsidiary of Woodstream. As the surviving corporation after the merger, Zareba will have all the property, rights and powers of Zareba and Woodstream’s merger subsidiary before the merger, and it will be liable for all of the debts, liabilities and obligations of Zareba and Woodstream’s merger subsidiary before the merger. After the merger, the separate corporate existence of Woodstream’s merger subsidiary will cease.

      Articles of Incorporation and Bylaws of the Surviving Corporation . The articles of incorporation and bylaws of Woodstream’s merger subsidiary in effect immediately prior to the effective time of the merger will be the articles of incorporation and bylaws of the surviving corporation.

      Directors and Officers of the Surviving Corporation . The directors and officers of Woodstream’s merger subsidiary immediately prior to the effective time of the merger will be the initial directors and officers of the surviving corporation.

      Exchange of Securities . At the effective time of the merger,

	•		each share of Zareba common stock issued and outstanding (other than dissenting shares) will be cancelled and converted into the right to receive $9.00 in cash, without interest;
	•		each share of Zareba common stock for which dissenters’ rights have been exercised and perfected will be treated as described under the heading “Dissenters’ Rights” in this proxy statement; and
	•		each share of common stock of Woodstream’s merger subsidiary will be converted into one share of common stock of the surviving corporation in the merger.

     At the effective time of the merger, holders of unexercised options to purchase shares of Zareba common stock will be entitled to receive with respect to each option, regardless of whether such option is then exercisable, an amount in cash equal to: (1) the excess, if any, of $9.00 over the per share exercise

price of the option, multiplied by (2) the number of shares of Zareba common stock issuable upon exercise of the option immediately prior to the completion of the merger. Holders of options will be subject to withholding of income or payroll taxes, as applicable.

      Effects on Nasdaq Listing and Exchange Act Registration . Upon completion of the merger, Zareba common stock will be delisted from the Nasdaq Capital Market and price quotations will no longer be available. Zareba common stock is currently registered under the Securities Exchange Act of 1934, or the Exchange Act. Following the merger, registration of Zareba common stock under the Exchange Act will be terminated, and Zareba will be relieved of its obligation to comply with the public reporting requirements of the Exchange Act. Accordingly, Zareba will no longer be required to file periodic reports with the SEC, such as annual reports on Form 10-K, quarterly reports on Form 10-Q or current reports on Form 8-K. In addition, Zareba will no longer be subject to the proxy rules in Regulation 14A and the short-swing trading profit provisions of Section 16 of the Exchange Act.

Interests of Zareba’s Directors and Officers in the Merger

     In considering the recommendation of the special committee and the board of directors to approve and adopt the merger agreement and the merger, you should be aware that some of Zareba’s directors and officers have interests in the merger or have relationships, including those referred to below, that may 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 that have been described in this proxy statement under the heading “The Merger—Reasons for the Merger.”

      Ownership of Zareba Stock. Most of our directors and executive officers own Zareba common stock and, like our shareholders, will be entitled to receive merger consideration for their shares. We refer you to the information included elsewhere in this proxy statement under the heading “Security Ownership of Principal Shareholders and Management of Zareba” for information regarding our current directors and executive officers and their share ownership in Zareba.

      Ownership of Zareba Stock Options. Several of our directors and executive officers hold options to purchase shares of Zareba common stock. Our directors and executive officers will, like the other holders of Zareba stock options, be entitled to receive cash in exchange for the cancellation of their stock options pursuant to the terms of the merger agreement. The following table shows the number of stock options held by each of our directors and executive officers and the amounts each of these directors and officers will receive with respect to their Zareba stock options upon completion of the merger:

						Amount to Be Paid Upon
Name of Director or		Number of				Completion of the
Executive Officer		Options				Merger
Michael L. Bochert			5,025			$	36,582
Eugene W. Courtney			10,025			$	25,592
Donald G. Dalland			4,875			$	24,375
William R. Franta			20,000			$	98,075
John A. Grimstad			20,000			$	98,075
Dale A. Nordquist			50,025			$	267,743
Total			109,950			$	550,442

     Any amounts actually paid to these directors and executive officers for the cancellation of their stock options will be reduced by any applicable federal and state income and payroll tax withholdings.

      Executive Severance Agreements. On September 25, 2009, Zareba entered into Executive Severance Agreements (the “Severance Agreements”) with Dale A. Nordquist, President and Chief Executive Officer, Jeffrey S. Mathiesen, Chief Financial Officer, and Donald J. Dalland, Vice President, Engineering and Operations (each, an “Executive”). Each of the Severance Agreements provides that in the event of the termination of the Executive by Zareba without “Cause” (as defined in the Severance Agreements and described below) or resignation by the Executive for “Good Reason” (as defined in the Severance Agreements and described below) within 12 months after the effective time of a change of control, the Executive will receive a continuation of base pay and health insurance benefits for an 18 month period following termination. No continuation of payments or benefits will occur if the termination is for Cause. The merger will constitute a change of control under the Severance Agreements.

     Under the Severance Agreements, “Cause” will be deemed to exist if the Executive: (i) commits any act constituting a felony, or other criminal act involving moral turpitude; (ii) materially breaches Zareba’s policies or materially fails, neglects or refuses to perform any of the material duties of the position in which the Executive is employed by Zareba; (iii) materially breaches the Severance Agreement; (iv) engages in willful, intentional or gross misconduct that materially and adversely affects Zareba’s reputation or is contrary to the best interests of Zareba; or (v) becomes disabled and unable to perform on a full-time basis the material duties of the position in which the Executive is employed by Zareba.

     “Good Reason” will exist under the Severance Agreements if: (i) there is a material reduction or diminution in the Executive’s base salary, authority, duties or responsibilities (or the authority, duties or responsibilities of the Executive’s supervisor) as in effect immediately prior to the effective time of the merger; or (ii) Zareba requires the Executive to change the location at which he performs services to a location that is greater than 25 miles from the Executive’s job location at the effective time of the merger.

     Based on base salary and health benefit levels in effect on January 11, 2010, the date the merger agreement was signed, and assuming each Executive will experience a termination of employment other than for Cause at the effective time of the merger, or terminates his employment for Good Reason, each Executive will be entitled to receive the following cash severance payments and heath insurance benefits in connection with the termination of his employment (to be paid pro rata over the 18 months following the termination):

						Estimated Value of
Name of		Cash Severance				Health Insurance
Executive Officer		Payments				Benefits
Donald G. Dalland		$	276,473			$	17,298
Jeffrey S. Mathiesen		$	279,617			$	24,341
Dale A. Nordquist		$	294,975			$	24,341
Total		$	851,065			$	65,980

      Executive Employment Agreements. On June 30, 2008, Zareba entered into an Employment Agreement with Mr. Nordquist, of which the provisions relating to severance benefits have been superseded by the terms of the Severance Agreements summarized above. Zareba has not entered into employment agreements with any other employees, including Messrs. Dalland and Mathiesen.

      2010 Management Incentive Plan. Prior to entering into the merger agreement, Zareba established for Messrs. Dalland, Mathiesen, and Nordquist an incentive program applicable to the fiscal year ending June 30, 2010. Incentive amounts are based on quarterly performance benchmarks relating to revenue, operating income and, in the case of Mr. Dalland, progress on a specified product development project.

For purposes of this program, the calculation of operating income excludes expenses relating to the consideration and pursuit of the merger and other strategic alternatives. The maximum aggregate payments for fiscal 2010 based on these quarterly performance benchmarks is $194,756. In addition, there is a discretionary incentive pool of $56,809 for fiscal 2010, to be awarded by the board of directors when and if it determines to be appropriate in its sole discretion and after consultation with the compensation committee.

     In January 2010, Zareba’s board of directors awarded (i) an aggregate of $26,373 in incentive payments based on performance during the first quarter of fiscal 2010, and (ii) an aggregate of $56,809 in discretionary incentive payments. The performance awards and half of the discretionary awards were paid by Zareba in January 2010. The remaining half of the discretionary awards will be paid in February 2010, along with payment of incentive awards based on performance during the second quarter of fiscal 2010, the amount of which the board of directors intends to determine at its February meeting.

      Indemnification. The merger agreement provides that all rights to indemnification, expense advancement and reimbursement existing in favor of, and all exculpations of the personal liability of, our current directors, officers and employees contained in Zareba’s current articles of incorporation and bylaws with respect to matters occurring before the effective time of the merger will continue for a period of six years after the effective time of the merger. Woodstream has also agreed under the merger agreement that for six years following the completion of the merger, it will cause the surviving corporation to maintain in effect either the current directors’ and officers’ liability insurance (or as much coverage as may be purchased for 200% of the current annual premium paid by Zareba for such insurance coverage) or a run-off policy with respect to the current policy of directors’ and officers’ liability insurance maintained by Zareba.

      Relationship with Outside Legal Counsel. John A. Grimstad, a member of our board of directors since 1996 and our Secretary since 1995, is also Vice President and shareholder of Fredrikson & Byron, P.A., our principal outside legal counsel. Fredrikson & Byron has served as legal advisor to Zareba in connection with the merger.

Certain Material U.S. Federal Income Tax Consequences

     The following discussion is a summary of certain material United States federal income tax consequences of the merger to Zareba, Woodstream and Zareba shareholders whose shares of Zareba common stock are held as capital assets and converted into the right to receive $9.00 cash in the merger. Because this discussion is a summary, it does not include an analysis of all potential federal income or other tax effects of the merger.

     For example, this summary:

	•		does not consider the effect of any applicable state, local or foreign tax laws;
	•		does not address all aspects of federal income taxation that may affect particular shareholders in light of their particular circumstances including, without limitation, the alternative minimum tax;
	•		is not intended for shareholders that may be subject to special federal income tax rules, such as:

	Ø		insurance companies and banks;
	Ø		tax-exempt organizations;
	Ø		financial institutions or broker-dealers;
	Ø		shareholders who hold their Zareba common stock as part of a hedge, straddle or conversion transaction;
	Ø		shareholders who acquired their Zareba common stock pursuant to the exercise of an employee stock option or otherwise as compensation; and
	Ø		shareholders who are neither citizens nor residents of the United States or that are foreign corporations, foreign partnerships, foreign estates or foreign trusts as to the United States;

	•		does not address tax consequences to holders of Zareba stock options; and
	•		does not address, except as expressly provided below, the tax consequences to Woodstream, any of its subsidiaries or any person who would be treated as constructively owning Zareba common stock immediately after the merger by reason of the attribution rules of Section 318 of the Internal Revenue Code.

     This summary assumes that shareholders have held their Zareba common stock as a “capital asset” under the Internal Revenue Code. Generally, a “capital asset” is property held for investment.

     This summary is based on the current provisions of the Internal Revenue Code, applicable Treasury Regulations, judicial authorities and administrative rulings and practice, as in effect on the date hereof. It is possible that the Internal Revenue Service will take a contrary view with respect to the issues discussed herein. Neither Zareba nor Woodstream nor any of their affiliates or subsidiaries, respectively, has sought or intends to seek a ruling from the Internal Revenue Service with respect to any aspect of the merger. Future legislative, judicial or administrative changes or interpretations could alter or modify the statements and conclusions set forth in this section. Any of these changes or interpretations could be retroactive and could affect the tax consequences of the merger to you.

      You should consult your own tax advisor with respect to the particular tax consequences of the merger, including the applicability and effect of any state, local or foreign tax laws, and of changes in applicable tax laws.

      Treatment of Zareba and Woodstream. For federal income tax purposes, the merger will be treated as a purchase by Woodstream of all of the common stock of Zareba that it did not previously own. Accordingly, neither Zareba nor Woodstream or its subsidiaries are expected to incur any material U.S. federal income tax consequences as a result of the merger.

      Treatment of Holders of Zareba Common Stock. The conversion of your shares of Zareba common stock into the right to receive $9.00 cash in the merger, or pursuant to the exercise of your dissenters’ rights, will be fully taxable to you for U.S. federal income tax purposes. Subject to the assumptions and limitations described above, you will recognize a capital gain or loss equal to the difference between:

	•		the amount of cash you receive in the merger; and
	•		your tax basis in your shares of Zareba common stock in respect of which that cash was received.

     Generally, your tax basis in your shares of Zareba common stock will be equal to what you paid for your shares. The amount, character and timing of such gain or loss generally will be determined separately with respect to each block of Zareba common stock owned by you.

     If you are an individual,

	•		any capital gain recognized upon conversion of your shares in the merger will be taxable at a maximum U.S. federal income tax capital gains rate of 15% if you have held your shares for more than one year at the time of the merger; gain on shares held for one year or less generally will be subject to taxation at ordinary income tax rates (with a current U.S. federal income tax maximum rate of 35%); and
	•		any capital loss recognized upon the conversion of your shares in the merger may only be offset against capital gains or up to $3,000 per year of ordinary income, and any excess capital loss may be carried forward to subsequent years to the extent unused.

      Backup Withholding. You may be subject to federal backup withholding up to the rate of 28% with respect to the gross proceeds you receive from the conversion of your Zareba common stock in the merger unless you:

	•		are a corporation or other exempt recipient and, when required, establish this exemption; or
	•		provide your correct taxpayer identification number, certify that you are not currently subject to backup withholding and otherwise comply with applicable requirements of the backup withholding rules.

     If after the merger you do not provide the disbursing agent with your correct taxpayer identification number or any other documents or certifications required by the Internal Revenue Service, including among others, a Form W-9 or a substitute for this Form, you may be subject to penalties imposed by the Internal Revenue Service. Any amount withheld under these backup withholding rules will be creditable against your federal income tax liability. The disbursing agent will report to you and to the Internal

Revenue Service the amount of any reportable payment made to you (including payments made to you pursuant to the merger) and any amount withheld pursuant to the merger.

     THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT A COMPLETE ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX CONSEQUENCES RELEVANT TO ZAREBA SHAREHOLDERS. ZAREBA SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE MERGER TO THEM IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.

Regulatory Requirements

     We are not aware of any federal, state or local regulatory requirements that must be complied with or approvals that must be obtained prior to consummation of the merger pursuant to the merger agreement, other than compliance with applicable federal and state securities laws and the filing of articles of merger with the Secretary of State of the State of Minnesota in accordance with the MBCA after the approval and adoption of the merger agreement by Zareba shareholders.

Fees and Expenses

     Whether or not the merger is completed, in general, all fees and expenses incurred in connection with the merger will be paid by the party incurring those fees and expenses. Zareba may be obligated to pay Woodstream a termination fee of $800,000 if the merger agreement is terminated under specific circumstances, including termination by Zareba in connection with a superior competing transaction. In addition, Zareba has agreed to reimburse Woodstream up to $200,000 for various fees and expenses if obligated to pay a termination fee. See “The Merger Agreement — Termination Fees.”

THE MERGER AGREEMENT

Payment for Shares

     Wells Fargo Bank, N.A., or the disbursing agent, will act as the agent for payment of the merger consideration to the holders of Zareba common stock. At or before the effective time of the merger, Woodstream or Woodstream’s merger subsidiary will deposit or cause to be deposited with the disbursing agent for the benefit of Zareba’s shareholders, cash in an aggregate amount equal to the product of (i) the number of shares of Zareba common stock issued and outstanding immediately before the effective time of the merger (other than any dissenting shares and any shares then held of record by Woodstream, Woodstream’s merger subsidiary, any other direct or indirect subsidiary of Woodstream, or any direct or indirect subsidiary of Zareba), pro-rated for any fractional shares of common stock, and (ii) the $9.00 per share merger consideration (such amount being hereinafter referred to as the “fund”).

     Instructions with regard to the surrender of certificates formerly representing shares of Zareba common stock, together with the letter of transmittal to be used for that purpose, will be mailed to Zareba’s shareholders by the disbursing agent as soon as practicable after the effective time of the merger. As soon as practicable following receipt from the shareholder of a duly executed letter of transmittal, together with (i) in the case of shares of Zareba common stock represented by a certificate, receipt of any such certificate and (ii) in the case of shares of Zareba common stock held in book-entry form, the receipt of an agent’s message, and any other items specified by the letter of transmittal, the disbursing agent will pay to such shareholder an amount equal to the product of the number of shares of Zareba common stock represented by such certificates remitted by the shareholder or agent’s message (in each case pro-rated for any fractional shares of Zareba common stock) and the $9.00 per share merger consideration, without interest and less any applicable withholding tax.

     No transfer of shares of Zareba common stock will be made on the stock transfer books of the surviving corporation after the effective time of the merger. After the effective time of the merger, previous shareholders will have no rights with respect to shares of common stock of Zareba except to receive the merger consideration or statutory dissenters’ rights if they have properly demanded and not withdrawn or lost such rights.

     Any amount remaining in the fund after six months after the effective time of the merger may be refunded to Woodstream at its option, and any previous shareholders of Zareba who have not theretofore surrendered their shares in exchange for the merger consideration will be entitled to payment of the merger consideration only from the surviving corporation, without any interest thereon.

     If payment with respect to any shares of Zareba common stock is to be made to a person other than the person in whose name the certificate or shares in book entry form is registered, the person requesting the payment will pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of the certificates or shares in book entry form surrendered.

     SHAREHOLDERS OF ZAREBA SHOULD NOT FORWARD THEIR STOCK CERTIFICATES TO THE DISBURSING AGENT WITHOUT A LETTER OF TRANSMITTAL AND SHOULD NOT RETURN THEIR STOCK CERTIFICATES WITH THE ENCLOSED PROXY.

Treatment of Stock Options

     Immediately before the effective time of the merger, and without any action on the part of any option holder, each outstanding option to acquire any shares of Zareba common stock (whether or not exercisable) will be deemed to have vested and will be canceled. The holder of each stock option will be entitled to receive from Zareba, after the effective time of the merger, with respect to each share of Zareba

common stock into which the option is exercisable and subject to applicable withholding, cash in an amount equal to the $9.00 per share merger consideration minus the per-share exercise price of the option.

Shares Held by Dissenters

     Each outstanding share of Zareba common stock that is held of record or beneficially owned by a person who has properly exercised and preserved and perfected dissenters’ rights with respect to such share under the MBCA, and has not withdrawn or lost such rights will not be converted into or represent the right to receive the merger consideration, but instead will be treated in accordance with the MBCA unless and until such person effectively withdraws or loses such persons’ right to payment under the MBCA. Each person holding of record or beneficially owning dissenting shares will be entitled only to such rights as are granted under the MBCA. See “Dissenters’ Rights.”

Conditions to Consummation of the Merger

      Conditions to Woodstream’s and Woodstream’s Merger Subsidiary’s Obligations . The obligations of Woodstream and Woodstream’s merger subsidiary to effect the merger are subject to the fulfillment or waiver, to the extent permitted by law, at or before the effective time of the merger, of the following conditions:

	•		Zareba’s representations and warranties in the merger agreement being true and correct as of the date of the merger agreement and the effective time of the merger, subject to the applicable materiality or material adverse effect standard contained in the merger agreement;
	•		Zareba’s compliance in all material respects with the agreements and obligations in the merger agreement required to be performed by it;
	•		the approval of the merger agreement and the merger by Zareba’s shareholders by the vote required by the MBCA and Zareba’s articles of incorporation;
	•		the absence of any suit, action, investigation, inquiry, or other proceeding brought by any governmental authority that is reasonably likely to restrain or prohibit the consummation of the transactions contemplated by the merger agreement or require rescission of the merger agreement or the transactions contemplated by the merger agreement or result in material damages, directly or indirectly, to Woodstream or the surviving corporation if the transactions contemplated by the merger agreement are consummated, and the absence of any injunction, preliminary restraining order, or other writ, order, judgment, or decree of any nature issued by a court or governmental authority directing that any of the transactions contemplated by the merger agreement not be completed or any statute, rule or regulation enacted or promulgated that makes completion of any of the transactions contemplated by the merger agreement illegal;
	•		the absence, since the date of the merger agreement, of any change, effect, event, occurrence, state of facts, development, or condition (financial or otherwise) of any character that has had or could reasonably be expect to have a material adverse effect, which is defined in the merger agreement to mean any change, effect, event, occurrence, state of facts, development, or condition that, individually or in the aggregate with all other changes, effects, events, occurrences, states of facts, developments, or conditions:

o

is materially adverse to the business, operations, results of operations, properties, assets, liabilities, or condition (financial or otherwise) of Zareba and its subsidiaries, taken as a whole; except that none of the following will be taken into account in determining whether there has been or could reasonably be expected to be a material adverse effect: (1) any change generally relating to the economy or securities, financial or capital markets of the United States or generally affecting the industries in which Zareba and its subsidiaries operate, or changes in political conditions, that does not have a materially disproportionate effect on Zareba and its subsidiaries relative to other affected persons in the industries in which Zareba and its subsidiaries operate; (2) any acts of terrorism or war (whether or not declared), the outbreak of hostilities, or natural disasters, that do not have a materially disproportionate effect on Zareba and its subsidiaries relative to other affected persons in the industries in which Zareba and its subsidiaries operate; (3) any adverse change resulting from compliance with the terms of, or the taking of any action required by, the merger agreement; (4) changes in the law or accounting regulations or principles or interpretations thereof; (5) any change in Zareba’s stock price or trading volume, or any failure by Zareba to meet any internal or published projections, forecasts or revenue or earnings predictions (although the facts or occurrences giving rise or contributing to such change in stock price or trading volume or such failure to meet projections, forecasts or predictions may be deemed to constitute, or be taken into account in determining whether there has been or will be, a material adverse effect); or (6) changes as a result of any action consented to in writing by Woodstream; or

o

would materially impair the consummation of the merger or any of the other transactions contemplated by the merger agreement;

	•		before or at the time of the shareholders’ vote on the merger, the holders of not more than 10% of the issued and outstanding shares of Zareba common stock will have taken actions necessary to entitle them to statutory dissenters’ rights under the MBCA;
	•		the cancellation of all outstanding options to acquire shares of Zareba common stock;
	•		the receipt, filing, taking or making of all consents, approvals, actions and notices of or to any governmental authority required of Woodstream, Woodstream’s merger subsidiary, Zareba or any of Zareba’s subsidiaries to complete the merger, the failure of which to be obtained or taken is reasonably expected to materially impair the ability of the parties to complete the merger;
	•		the termination of the rights granted to shareholders of Zareba under the rights agreement to which Zareba is a party without any rights issued thereunder becoming exercisable; and
	•		the entry by Zareba into an agreement with JPMorgan Chase Bank, N.A. pursuant to which Woodstream or Zareba may, immediately after the effective time of the merger, pay without penalty all amounts owing under Zareba’s credit facility, and the termination of Zareba’s credit facility and the release of all mortgages, liens and encumbrances thereunder upon payment of all amounts owing under the credit facility.

      Conditions to Zareba’s Obligation . The obligation of Zareba to effect the merger is subject to the fulfillment or waiver, to the extent permitted by law, at or before the effective time of the merger of the following conditions:

	•		Woodstream’s and Woodstream’s merger subsidiary’s representations and warranties in the merger agreement being true and correct as of the date of the merger agreement and the effective time of the merger, except for inaccuracies that are not reasonably likely to impair completion of the merger;
	•		Woodstream’s and Woodstream’s merger subsidiary’s compliance in all material respects with the agreements and obligations in the merger agreement required to be performed by it;
	•		the approval of the merger agreement and the merger by Zareba’s shareholders by the vote required by the MBCA and Zareba’s articles of incorporation;
	•		the absence of any injunction, preliminary restraining order, or other writ, order, judgment, or decree of any nature issued by a court or governmental authority directing that any of the transactions contemplated by the merger agreement not be completed or any statute, rule or regulation enacted or promulgated that makes completion of any of the transactions contemplated by the merger agreement illegal; and
	•		the receipt, filing, taking or making of all consents, approvals, actions and notices of or to any governmental authority required of Woodstream, Woodstream’s merger subsidiary, Zareba or any of Zareba’s subsidiaries to complete the merger, the failure of which to be obtained or taken is reasonably expected to materially impair the ability of the parties to complete the merger.

     We cannot provide assurance as to when or if all of the conditions to the merger can or will be satisfied or waived by the appropriate party. As of the date of this document, we have no reason to believe that any of these conditions will not be satisfied.

Representations and Warranties

      Representations and Warranties of Zareba . Zareba makes various representations and warranties in the merger agreement with respect to us and our subsidiaries that are subject, in some cases, to disclosures and specified exceptions and qualifications. Our representations and warranties relate to, among other things:

	•		corporate matters, including due organization and qualification;
	•		capitalization;
	•		authority relative to the execution and delivery of, and performance of obligations under, the merger agreement;
	•		consents, approvals and filings required to consummate the merger;
	•		reports filed with the SEC since July 1, 2006 and the financial statements included therein;
	•		internal accounting controls and disclosure controls and procedures;
	•		matters relating to this proxy statement;

	•		compliance with listing and governance rules of the Nasdaq Capital Market;
	•		undisclosed liabilities;
	•		the conduct of our business, and the absence of certain changes in our business, since June 30, 2009;
	•		tax matters;
	•		title to, leasehold interests in, and the condition of certain real property and other material property;
	•		matters relating to material contracts;
	•		intellectual property matters;
	•		pending or threatened litigation;
	•		compliance with applicable laws and regulations;
	•		licenses and permits;
	•		employee benefit plans and other employee benefit matters;
	•		employee and labor matters;
	•		environmental matters;
	•		supplier and customer matters;
	•		insurance matters;
	•		anti-takeover provisions;
	•		shareholder voting requirements;
	•		transactions with affiliates and other related persons;
	•		obligations to brokers and finders; and
	•		the fairness opinion of Greene Holcomb & Fisher LLC.

     You should be aware that these representations and warranties made by us to Woodstream were made only for purposes of the merger agreement and as of specific dates, are solely for the benefit of the parties to the merger agreement, may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purpose of allocating contractual risk between the parties to the merger agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to our shareholders. Shareholders should not rely on the representations, warranties and covenants or any

description thereof as characterizations of the actual state of facts or condition of Woodstream, Zareba, or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in public disclosures by Woodstream or Zareba.

      Representations and Warranties of Woodstream . Woodstream makes various representations and warranties in the merger agreement with respect to it and its subsidiaries that are subject, in some cases, to disclosures and specified exceptions and qualifications. Woodstream’s representations and warranties relate to, among other things:

	•		corporate matters, including due organization and qualification;
	•		authority relative to the execution and delivery of, and performance of obligations under, the merger agreement;
	•		consents, approvals and filings required to consummate the merger;
	•		information to be supplied to us by Woodstream and Woodstream’s merger subsidiary for use in this proxy statement;
	•		the availability of sufficient funds to deliver the merger consideration;
	•		pending and threatened litigation;
	•		obligations to brokers and finders; and
	•		ownership of our stock.

     You should be aware that these representations and warranties made by Woodstream to us may be subject to important qualifications set forth in the merger agreement, and do not purport to be accurate as of the date of this proxy statement or provide factual information about Woodstream or Woodstream’s merger subsidiary to our shareholders.

Conduct of Business Pending the Merger

     Zareba has undertaken customary covenants that place restrictions on it and its subsidiaries until the effective time of the merger. Zareba has agreed to use its reasonable best efforts to preserve intact in all material respects its business organization, assets, and technology and those of its subsidiaries, to maintain its rights and those of its subsidiaries, and to preserve for itself and for the surviving corporation the present relationships of Zareba and its subsidiaries with persons having significant business dealings with Zareba or any of its subsidiaries, and Zareba has agreed to use reasonable efforts to keep available to itself and to the surviving corporation the services of the present officers and employees of Zareba and its subsidiaries. Zareba has also agreed to, and to cause each of its subsidiaries to, except as otherwise consented to in writing by Woodstream, conduct its business and operations in the ordinary course consistent with past practice.

     Except as consented to in writing by Woodstream, Zareba will not:

•

amend its articles of incorporation or bylaws, except as required in connection with the merger;

	•		increase or, except as required in connection with the merger, decrease the number of authorized shares of its capital stock;
	•		split, combine, or reclassify any shares of its capital stock or make any other changes in its equity capital structure;
	•		purchase, redeem, or cancel for value, or permit any of its subsidiaries to purchase, redeem, or cancel for value, directly or indirectly, any shares of capital stock or other equity securities of Zareba or any of its subsidiaries or any options or other rights to purchase any such capital stock or other equity securities, or any securities convertible into or exchangeable for any such capital stock or other equity securities, except as otherwise contemplated by the merger agreement;
	•		declare, set aside, or pay, or permit any of its subsidiaries to declare, set aside, or pay, any dividend or other distribution or payment in cash, stock, or property, except for certain dividends between subsidiaries of Zareba and Zareba or other wholly-owned subsidiaries of Zareba; or
	•		designate any class or series of shares of Zareba capital stock or increase the number of shares designated as Series A preferred stock.

     Zareba has also agreed not to, or to permit any of its subsidiaries to, except as otherwise consented to in writing by Woodstream:

	•		issue, grant, sell, or pledge (except as required under the terms of Zareba’s credit facility with JP Morgan Chase Bank, N.A.) any shares of capital stock or other equity securities of Zareba or any of its subsidiaries (other than the issuance of shares of Zareba common stock upon the exercise of options) or any options, warrants, or other rights to purchase any such capital stock or other equity securities or any securities convertible into or exchangeable for any such capital stock or other equity securities or rights based upon the value of any such capital stock or other equity securities, or reprice or otherwise amend the terms of any options or any rights under the associates stock purchase plan;
	•		purchase, lease, or otherwise acquire any assets or properties, other than those the fair value of which do not exceed $50,000 (if denominated in U.S. dollars) or £35,000 (if denominated in U.K. pounds) in the aggregate, and other than inventory and supplies acquired in the ordinary course of business consistent with past practice;
	•		sell, lease, encumber, mortgage, or otherwise dispose of any material assets or properties, other than inventory and obsolete equipment disposed of in the ordinary course of business consistent with past practice or as required under the terms of Zareba’s credit facility;
	•		waive, release, grant, license, or transfer any rights of material value or modify or change in any material respect any existing license, contract, or other document or agreement, other than in the ordinary course of business consistent with past practice;
	•		incur any indebtedness, other than indebtedness of Zareba to its wholly owned subsidiaries or of a wholly owned subsidiary to Zareba or its other wholly owned subsidiaries and

			indebtedness in the ordinary course of business under Zareba’s credit facility in an amount not to exceed the sum of $3,000,000 plus costs related to the due diligence and negotiation of the merger and the merger agreement and the preparation and distribution of this proxy statement, solicitation of proxies and the shareholders’ meeting to vote on the merger agreement and the merger at any time outstanding that may, by its terms, be prepaid without penalty at or prior to closing of the merger;
	•		incur any other liability or obligation, other than in the ordinary course of business consistent with past practice, or assume, guarantee, endorse (other than endorsements of checks in the ordinary course of business) or otherwise as an accommodation become responsible for the obligations of others (except Zareba and its subsidiaries);
	•		except as otherwise required by the merger agreement or as required by applicable law, enter into any new employee benefit plan or any new employment, severance, or consulting agreement, amend any existing employee benefit plan or any existing employment, severance, or consulting agreement, pay any bonus in connection with the transactions contemplated by the merger agreement, or grant any increases in compensation or benefits to directors or officers of Zareba or, other than pursuant to customary salary and employee benefit administration in the ordinary course of business consistent with past practice, to any other employees of Zareba; or hire any employees of Zareba except in the ordinary course of business and on terms consistent with past practice;
	•		enter into, extend, renew, modify, or amend any collective bargaining agreement;
	•		enter into any other material transaction, other than in the ordinary course of business consistent with past practices;
	•		make any tax election (except as required by applicable law) or settle or compromise any material tax liability;
	•		change any accounting principles used by it, unless required by generally accepted accounting principles;
	•		settle any litigation, proceedings, or material claims other than those arising in the ordinary course of business;
	•		enter into any agreement with any affiliate or related person of Zareba, other than agreements solely with Zareba and its wholly owned subsidiaries;
	•		incur any expenses relating to due diligence, negotiation of the merger and the merger agreement, the preparation and distribution of this proxy statement, the solicitation of proxies, or the meeting of Zareba shareholders to vote on the merger agreement and the merger, collectively, in an amount that exceeds $1,200,000; or
	•		enter into any contract, agreement, commitment, or arrangement with respect to any of the foregoing.

Additional Agreements

      Mutual Agreements . The parties have also agreed to take several other actions in the merger agreement, such as:

	•		to use their reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary or proper and advisable to ensure that the conditions to closing are satisfied and to complete the merger;
	•		to use their reasonable best efforts to obtain all material consents of third parties and governmental authorities, and to make all governmental filings necessary to complete the transactions contemplated by the merger agreement;
	•		to consult with each other before issuing any press release or making any public statements with respect to the merger before the effective time of the merger; and
	•		to coordinate with each other with respect to all communications to the customers and suppliers of Zareba and its subsidiaries relating to the merger agreement.

      Zareba Agreements . In addition, Zareba has agreed to take certain actions, including the following:

	•		to give Woodstream prompt written notice upon receipt by Zareba at any time before the effective time of the merger of any notice of intent to demand dissenters’ rights under the MBCA and any withdrawal of such notice;
	•		to convene a special meeting of Zareba shareholders for the purpose of voting on the approval of the merger agreement and the merger and, unless Zareba’s board of directors otherwise determines in good faith in the exercise of its fiduciary duties, to solicit proxies in connection with the meeting in favor of such approval and otherwise use its reasonable best efforts to secure the approval of Zareba shareholders required to effect the merger;
	•		to provide access to its offices and certain information regarding Zareba and its subsidiaries to Woodstream and its authorized representatives;
	•		to amend its employee benefit plans to conform with applicable laws after the merger, and to take any actions necessary to terminate those employee benefits plans that Woodstream requests to be terminated;
	•		to cause each outstanding option to acquire shares of Zareba common stock to be canceled in respect of a cash payment as described above in “—Treatment of Stock Options” and to terminate the associates stock purchase plan immediately prior to the effective time of the merger, including the cancellation of all outstanding options granted under that plan, and refund all amounts credited to the bookkeeping accounts of participants under that plan;
	•		to notify Woodstream of the occurrence or nonoccurrence of any event that could be reasonably expected to have a material adverse effect, caused any representation or warranty of Zareba contained in the merger agreement to be untrue in any material respect, or caused any failure of Zareba to comply in all material respects with or satisfy in all material respects

			any covenant, condition or agreement to be complied with or satisfied by Zareba under the merger agreement; and
	•		to take any actions necessary to fully vest the account balance under Zareba’s 401(k) plan for all participants who were employees of Zareba immediately before the effective time of the merger.

      Woodstream Agreements . Woodstream has also agreed to take, or refrain from taking, certain actions, including:

	•		not to use any confidential information obtained from Zareba pursuant to the merger agreement for any purpose unrelated to the completion of the merger or the operation of Zareba following completion of the merger; and
	•		for a period of six years after the effective time of the merger:

	o		to cause all rights of indemnification, expense advance and reimbursement, and exculpation existing in favor of any director, officer or employee of Zareba or any of its subsidiaries immediately before the effective time of the merger as provided in Zareba’s articles of incorporation or bylaws or governing documents of any of its subsidiaries to survive with respect to matters occurring at or before the effective time of the merger;
	o		to cause the surviving corporation to maintain in effect the current provisions regarding indemnification of directors, officers and employees contained in the articles of incorporation or bylaws (or provisions no less advantageous to persons who were directors, officer or employees immediately prior to the merger) and to indemnify the directors, officers and employees of Zareba and its subsidiaries to the fullest extent provided by applicable law against any judgments, penalties, fines, settlements and reasonable expenses in connection with any threatened, pending or completed proceeding to which such person is, or is threatened to be, made a party by reason of the former or present official capacity of such person; and
	o		to cause the surviving corporation to maintain in effect either the current directors’ and officers’ liability insurance (or as much coverage as may be purchased for 200% of the current annual premium paid by Zareba for such insurance coverage) or a run-off policy with respect to the current policy of directors’ and officers’ liability insurance maintained by Zareba.

Employee Matters

     The merger agreement provides that the surviving corporation will have sole discretion over the hiring, promotion, retention, firing and other terms and conditions of the employment of employees of the surviving corporation or any of its subsidiaries, except that an employee will be given credit for continuous service with Zareba or any of its affiliates before the effective time of the merger for purposes of determining eligibility and vesting under each employee benefit plan that Woodstream, the surviving corporation or any of their respective subsidiaries provides to such employees after the effective time of the merger.

     Woodstream has agreed to take certain other actions with respect to employee matters, such as:

	•		to, and to cause the surviving corporation to, satisfy and honor certain employment and severance agreements; and
	•		to continue Zareba’s benefit plans or, upon termination of the benefit plans, to, with respect to employees of Zareba as of the effective time of the merger who continue as employees of the surviving corporation:

	o		for a period of two years after the effective time of the merger, provide employee benefit plans and arrangements to those employees while employed by the surviving corporation that are no less favorable in the aggregate than those provided to similarly situated employees of the surviving corporation;
	o		provide that each of those employees will have the use of any amounts in their flexible spending accounts;
	o		extend participation to those employees and their dependents and beneficiaries to any corresponding employee welfare benefit plan maintained by Woodstream, the surviving corporation, or any of its successors, and use reasonable best efforts to waive all limitations as to preexisting conditions, exclusions and waiting periods and actively-at-work requirements with respect to such plans (to the extent permitted by applicable law and the applicable plans) and provide those employees with credit for co-payments and deductibles paid under the corresponding plan (to the extent permitted by applicable law and the applicable plans); and
	o		provide access to COBRA continuation coverage to applicable employees and their dependents and beneficiaries at the individual’s expense.

Acquisition Proposals by Third Parties

     Until the earlier of the effective time of the merger or termination of the merger agreement, Zareba has agreed that it and its officers, directors, employees, financial advisers, legal counsel, representatives, agents and subsidiaries will not, directly or indirectly:

	•		solicit, seek, initiate, or encourage any inquiries or proposals that constitute, or would be reasonably likely to lead to, a proposal or offer for a merger, consolidation, arrangement, or other business combination involving Zareba or any of its subsidiaries, a sale of substantial assets of Zareba and its subsidiaries, taken as a whole (other than the sale or other disposition of inventory or obsolete equipment in the ordinary course of business consistent with past practice), a sale of shares of capital stock of Zareba or any of its subsidiaries (including by way of a tender offer or takeover bid), or any similar transaction involving Zareba or any of its subsidiaries, other than the transactions contemplated by the merger agreement;
	•		engage in discussions or negotiations with third parties regarding any acquisition proposals, or afford access to the properties, books, records, or personnel of Zareba or any of its subsidiaries to any third party that is considering making or has made an acquisition proposal;
	•		enter into any letter of intent, agreement in principle, or other agreement, arrangement, or understanding with respect to an acquisition proposal; or

•

otherwise agree to or recommend any acquisition proposal.

     However, before the approval of the merger agreement and the merger at the special meeting of Zareba shareholders, Zareba may furnish non-public information or afford access to the properties, books, records, or personnel of Zareba or any of its subsidiaries to, or enter into discussion or negotiations with, any third party in connection with an acquisition proposal if and only to the extent that:

	•		Zareba’s board of directors, in the exercise of its fiduciary duties, determines in good faith (after consultation with Zareba’s financial adviser and outside legal counsel) that the acquisition proposal is, or is reasonably likely to result in, a superior proposal;
	•		the acquisition proposal was not solicited, sought, initiated or encouraged in violation of the merger agreement; and
	•		before furnishing any non-public information, affording access to properties, books, records, or personnel, or entering into discussions or negotiations, Zareba received from the third party an executed confidentiality agreement with terms no less favorable to Zareba than those contained in the confidentiality agreement between Zareba and Woodstream.

     Zareba has agreed:

	•		to cease immediately all existing activities, discussions and negotiations with any third parties conducted before the date of the merger agreement with respect to any acquisition proposals;
	•		not to release any third party from, or waive any provision of, any confidentiality or standstill agreement to which it is a party, unless Zareba’s board of directors determines in good faith (after consulting with Zareba’s financial adviser and outside legal counsel) that such action is required for the board to comply with its fiduciary duties;
	•		to notify Woodstream immediately after receipt by Zareba or its advisers of any acquisition proposal or any request for non-public information or access to the properties, books, records, or personnel of Zareba or any of its subsidiaries; and
	•		to keep Woodstream informed, on a current basis, of the status of any discussions or negotiations regarding any acquisition proposal and the terms being discussed or negotiated (including changes or amendments thereto).

     As used in the merger agreement, “superior proposal” means:

	•		a bona fide written proposal made by a third party involving a majority of the fair value of Zareba’s assets or a majority of Zareba’s common stock;
	•		that specifies a price per share to be paid for Zareba common stock that is in excess of the $9.00 per share merger consideration;
	•		that was not solicited, sought, initiated or encouraged by Zareba in violation of the merger agreement; and

•

that, in the good faith judgment of Zareba’s board of directors (after consulting with Zareba’s financial adviser and outside legal counsel), taking into account, to the extent deemed appropriate by Zareba’s board of directors in the exercise of its fiduciary duties, the legal, financial, regulatory, and other aspects of the acquisition proposal and the third party making such proposal (including the absence of committed financing to the extent financing is a condition to the consummation of the third-party transaction and other conditions to consummation):

	o		if accepted, is reasonably likely to be consummated; and
	o		if consummated, would result in a transaction that is more favorable to Zareba’s shareholders (in their capacity as shareholders), from a financial point of view, than the merger.

     Zareba’s board of directors may withdraw, qualify or adversely modify its approval and recommendation of the merger agreement and the merger only if it determines in good faith (after consultation with Zareba’s financial adviser and outside legal counsel) that it is required to do so in order to comply with its fiduciary duties under Minnesota Law. If Zareba’s board of directors determines in good faith in the exercise of its fiduciary duties (after consultation with Zareba’s financial adviser and outside legal counsel) not to recommend or continue to recommend the merger agreement and the merger because of a superior proposal if Woodstream does not match the superior proposal, then:

	•		Zareba will, at least five business days before Zareba’s board of directors may take such action not to recommend or continue to recommend the merger agreement and the merger, give Woodstream written notice of the superior proposal and furnish Woodstream with a copy of the definitive agreement Zareba is prepared to execute following termination of the merger agreement and afford a reasonable opportunity to Woodstream within the five-business-day period to make such adjustments to the merger agreement as would enable Zareba’s board of directors to maintain its recommendation of the merger agreement and the merger to Zareba’s shareholders; and
	•		Zareba’s board of directors will not withdraw, qualify or adversely modify its approval and recommendation of the merger agreement because of the superior proposal if Woodstream submits to Zareba during the five-business-day period a legally binding, executed offer to enter into an amendment to the merger agreement reflecting adjustments to enable Zareba’s board of directors to maintain its recommendation of the merger agreement and the merger, unless Zareba’s board of directors will have determined in good faith (after consultation with Zareba’s financial adviser and outside legal counsel) that the transactions contemplated by the merger agreement, as modified, would not, if consummated, result in a transaction that is at least as favorable to Zareba’s shareholders (in their capacity as shareholders) from a financial point of view as the superior proposal.

     Zareba’s board of directors may recommend, approve, accept or agree to a superior proposal only if the merger agreement will have been, or is, concurrently terminated by Woodstream or Zareba or by Woodstream and Zareba in accordance with the terms of the merger agreement and the payment of the termination fees described below will have been made.

     Zareba’s obligation to call and hold the shareholders’ meeting and to submit the approval of the merger agreement and the merger to a vote of Zareba’s shareholders at the meeting will not be affected by the announcement or commencement of, or Zareba’s receipt of, an acquisition proposal or by any

withdrawal, qualification or adverse modification of Zareba’s board of directors’ approval and recommendation of the merger agreement and the merger.

Termination of the Merger Agreement

      General .

     Zareba and Woodstream may agree to terminate the merger agreement before the effective time of the merger by mutual written consent. In addition, either Zareba or Woodstream may unilaterally terminate the merger agreement if:

	•		the merger has not been consummated on or before August 31, 2010, unless such failure of consummation is due to failure by the party seeking to terminate the merger agreement to comply in all material respects with, or the material breach by such party of, the terms, provisions, covenants, and agreements contained in this Agreement; or
	•		the shareholders of Zareba fail to approve the merger agreement and the merger by the vote required by the MBCA and Zareba’s articles of incorporation at the first meeting of shareholders called for that purpose or any adjournment thereof.

      Termination of the Merger Agreement by Woodstream.

     Woodstream may terminate the merger agreement if:

	•		any of the conditions to its and Woodstream’s merger subsidiary’s obligations to effect the merger becomes impossible to fulfill, other than for reasons totally within the control of Woodstream or Woodstream’s merger subsidiary, and has not been waived in writing by Woodstream;
	•		Zareba fails to call or hold the shareholders’ meeting to vote on the approval of the merger agreement and the merger, to solicit proxies in connection with such meeting in favor of approval of the merger agreement and the merger, or to conduct the vote to approve the merger agreement and the merger at the meeting or any adjournment thereof, in each case in compliance with the merger agreement;
	•		Zareba’s board of directors fails to recommend the merger to Zareba’s shareholders or makes, or publicly announces an intent to make, a withdrawal, qualification, or adverse modification of its approval and recommendation of the merger agreement and the merger;
	•		Zareba’s board of directors or any committee thereof accepts, recommends, approves, or agrees to, or makes a determination to accept, recommend, approve or agree to, an acquisition proposal or any proposal for a third-party transaction;
	•		Zareba enters into any agreement for a third-party transaction; or
	•		Zareba materially breaches its obligations not to solicit acquisition proposals.

     As used in the merger agreement, “third-party transaction” means:

	•		an acquisition after the date of the merger agreement of 10% or more of the total equity interests of Zareba or 25% or more, on a fair-market-value basis, of the total assets of Zareba and its subsidiaries on a consolidated basis;
	•		the adoption by Zareba of a plan of liquidation or dissolution;
	•		the repurchase of, or recapitalization involving, 10% or more of Zareba’s outstanding equity interests; or
	•		the payment of an extraordinary dividend or other distribution on Zareba common stock equal to 10% or more of the common stock’s then-current market price.

      Termination of the Merger Agreement by Zareba .

     Zareba may terminate the merger agreement if any of the conditions to its obligation to effect the merger becomes impossible to fulfill, other than for reasons totally within the control of Zareba, and has not been waived in writing by Zareba.

      Effect of Termination

     If the merger agreement is terminated as described above, no party to the merger agreement will have any liability or further obligation to any other party to the merger agreement except, if applicable, to pay the termination fee and expense reimbursement described below or except with respect to a material breach of the merger agreement by a party to the merger agreement.

      Termination Fee

     Under certain circumstances Zareba is required to pay to Woodstream a termination fee of $800,000 and to reimburse Woodstream’s transaction expenses in an amount of up to $200,000. The termination fee and expense reimbursement would become payable if the merger agreement is terminated under any of the following circumstances:

•

Woodstream terminates the merger agreement because:

	o		Zareba fails to call or hold the shareholders’ meeting, to solicit proxies in connection with such meeting, or to conduct the vote to approve the merger agreement and the merger at the meeting, in each case in compliance with the merger agreement;
	o		Zareba’s board of directors fails to recommend the merger to Zareba’s shareholders or makes, or publicly announces an intent to make, a withdrawal, qualification, or adverse modification of its approval and recommendation of the merger agreement and the merger;
	o		Zareba’s board of directors or any committee thereof accepts, recommends, approves, or agrees to, or makes a determination to accept, recommend, approve or agree to, an acquisition proposal or any proposal for a third-party transaction;
	o		Zareba enters into any agreement for a third-party transaction; or

o

Zareba materially breaches its obligations not to solicit acquisition proposals; or

•

The merger agreement is terminated:

o

for one of the following reasons:

	§		by Zareba or Woodstream because the closing date has failed to occur on or before August 1, 2010 or because the shareholders of Zareba fail to approve the merger agreement and the merger; or
	§		by Woodstream because before or at the time of the shareholders’ vote on the merger the holders of more than 10% of the issued and outstanding shares of Zareba common stock will have taken actions necessary to entitle them to statutory dissenters’ rights under the MBCA; and

o

both of the following occur:

	§		after execution and before termination of the merger agreement an acquisition proposal is made; and
	§		within 12 months after termination of the merger agreement Zareba or any of its subsidiaries enters into a definitive agreement for a third-party transaction and consummates such transaction.

Amendment of the Merger Agreement

     The merger agreement may be amended, modified, or supplemented by written agreement of Woodstream, Woodstream’s merger subsidiary and Zareba at any time before the effective time of the merger with respect to any of the terms contained in the merger agreement, except that after the shareholder meeting, the merger consideration may not be decreased and the form of merger consideration may not be altered without the approval of Zareba’s shareholders.

Expenses

     Except as described in “—Termination of the Merger Agreement” and “—Termination Fee,” in general, all costs and expenses incurred in connection with the merger agreement will be paid by the party incurring such expenses.

COMMON STOCK MARKET PRICE AND DIVIDEND INFORMATION

56

DISSENTERS’ RIGHTS

     Sections 302A.471 and 302A.473 of the MBCA entitle any holder of Zareba common stock as of the record date for the special meeting, in lieu of receiving the payment to which such shareholder would otherwise be entitled pursuant to the merger agreement, to dissent from the merger and obtain payment in cash for the “fair value” of the shares of stock held by such shareholder. ANY SHAREHOLDER CONTEMPLATING THE EXERCISE OF THESE DISSENTERS’ RIGHTS SHOULD REVIEW CAREFULLY THE PROVISIONS OF SECTIONS 302A.471 AND 302A.473 OF THE MINNESOTA BUSINESS CORPORATION ACT (COPIES OF WHICH ARE ATTACHED AS ANNEX C TO THIS PROXY STATEMENT), PARTICULARLY THE SPECIFIC PROCEDURAL STEPS REQUIRED TO PERFECT SUCH RIGHTS. SUCH RIGHTS WILL BE LOST IF THE PROCEDURAL REQUIREMENTS OF SECTION 302A.473 ARE NOT FULLY AND PRECISELY SATISFIED.

     Set forth below (to be read in conjunction with the full text of Section 302A.473 appearing in Annex C to this proxy statement) is a brief description of the procedures relating to the exercise of dissenters’ rights. The following description does not purport to be a complete statement of the provisions of Section 302A.473 and is qualified in its entirety by reference thereto.

     Under Section 302A.473, Subd. 3, a holder of Zareba common stock (as of the record date for the special meeting) who wishes to exercise dissenters’ rights (a “dissenter”) must file with Zareba (at Zareba Systems, Inc., 13705 26th Avenue N., Suite 102, Minneapolis, Minnesota 55441, Attention: John A. Grimstad, Secretary), before the vote on the merger, a written notice of intent to demand the “fair value” of Zareba’s shares owned by the shareholder. IN ADDITION, THE SHAREHOLDER MUST NOT VOTE HIS OR HER SHARES IN FAVOR OF THE MERGER. A VOTE AGAINST THE MERGER WILL NOT IN ITSELF CONSTITUTE SUCH A WRITTEN NOTICE AND A FAILURE TO VOTE WILL NOT AFFECT THE VALIDITY OF A TIMELY WRITTEN NOTICE. HOWEVER, THE SUBMISSION OF A BLANK PROXY WILL CONSTITUTE A VOTE IN FAVOR OF THE MERGER AND A WAIVER OF STATUTORY DISSENTERS’ RIGHTS.

     If the merger is approved by Zareba’s shareholders, Zareba will send to all dissenters who filed the necessary notice of intent to demand the fair value of their shares and who did not vote their shares in favor of the merger a notice containing certain information required by Section 302A.473, Subd. 4, including without limitation (i) the address to which a dissenter must send a demand for payment and certificates representing shares in order to obtain payment for such shares and the date by which they must be received and (ii) a form to be used to certify the date on which the dissenter (or the beneficial owner on whose behalf the dissenter dissents) acquired such shares of stock (or an interest in them) and to demand payment. In order to receive the fair value of the shares under Section 302A.473, a dissenter must demand payment and deposit certificates representing shares within 30 days after such notice from Zareba is given. Under Minnesota law, notice by mail is given by Zareba when deposited in the United States mail. A SHAREHOLDER WHO FAILS TO MAKE DEMAND FOR PAYMENT AND TO DEPOSIT CERTIFICATES AS REQUIRED BY SECTION 302A.473, SUBD. 4, WILL NOT BE A DISSENTER AND WILL LOSE THE RIGHT TO RECEIVE THE FAIR VALUE OF HIS OR HER SHARES UNDER SUCH SECTION NOTWITHSTANDING THE TIMELY FILING OF NOTICE OF INTENT TO DEMAND PAYMENT UNDER SECTION 302A.473, SUBD. 3, BUT WILL BE ENTITLED TO THE MERGER CONSIDERATION OF $9.00 PER SHARE PAYABLE UNDER THE MERGER AGREEMENT, WHICH MAY BE MORE OR LESS THAN OR EQUAL TO THE FAIR VALUE OF THE SHARES DETERMINED UNDER MINNESOTA STATUTES SECTION 302A.473.

     Except as provided below, if demand for payment and deposit of stock certificates is duly made by a dissenter with Zareba as required by the notice, then after the effective time of the merger or the receipt of the demand, whichever is later, Zareba will pay the dissenter an amount which Zareba estimates to be the fair value of the dissenter’s shares of common stock, with interest, if any. For the purpose of a dissenter’s appraisal rights under Sections 302A.471 and 302A.473, “fair value” means the value of the shares of common stock immediately before the effective date of the merger and “interest” means interest commencing five days after the effective date of the merger until the date of payment, calculated at the statutory interest rate. The payment must be accompanied by (i) Zareba’s closing balance sheet and statement of income for a fiscal year ending not more than 16 months before the effective time of the merger and Zareba’s latest available interim financial statements and (ii) a brief description of the method used by Zareba to reach such estimate.

     If the dissenter believes the payment received from Zareba is less than the fair value of the shares of common stock, with interest, if any, such dissenter must give written notice to Zareba of his or her own estimate of the fair value of the shares of common stock, with interest, if any, within 30 days after the date of Zareba’s remittance, and must demand payment of the difference between his or her estimate and Zareba’s remittance. If the dissenter fails to give written notice of such estimate to Zareba within the 30-day time period, such dissenter will be entitled only to the amount remitted by Zareba.

     Zareba may withhold such remittance with respect to shares of common stock for which the dissenter demanding payment was not the registered owner (or the person on whose behalf such dissenter acts was not the beneficial owner) as of the first public announcement date of the merger (the “public announcement date”). As to each such dissenter who has validly demanded payment, following the effective time or the receipt of demand, whichever is later, Zareba will mail its estimate of the fair value of such dissenter’s shares of common stock and offer to pay this amount with interest, if any, to the dissenter upon receipt of such dissenter’s agreement to accept this amount in full satisfaction. If such dissenter believes that Zareba’s offer is for less than the fair value of the shares of common stock, with interest, if any, such dissenter must give written notice to Zareba of his or her own estimate of the fair value of the shares of common stock, with interest, if any, and demand payment of this amount within 30 days after the mailing of Zareba’s offer. If the dissenter fails to give written notice of such estimate to Zareba within the 30-day time period, such dissenter will be entitled only to the amount offered by Zareba.

     If Zareba and the dissenter (including both a dissenter who purchased shares of common stock on or prior to the public announcement date and a dissenter who purchased shares of common stock after the public announcement date who have complied with their respective demand requirements) cannot settle the dissenter’s demand within 60 days after Zareba receives the dissenter’s estimate of the fair value of his or her shares of common stock, then Zareba will file a petition in a court of competent jurisdiction in Hennepin County, Minnesota, requesting that the court determine the statutory fair value of common stock with interest, if any. All dissenters whose demands are not settled within the applicable 60-day settlement period will be made parties to this proceeding.

     The court will then determine whether each dissenter in question has fully complied with the provisions of Section 302A.473, and for all dissenters who have fully complied and not forfeited statutory dissenters’ rights, will determine the fair value of the shares, taking into account any and all factors the court finds relevant (including, without limitation, the recommendation of any appraisers which may have been appointed by the court), computed by any method or combination of methods that the court, in its discretion, sees fit to use, whether or not used by Zareba or a dissenter. The fair value of the shares as determined by the court is binding on all shareholders and may be less than, equal to or greater than the $9.00 per share price to be paid if the merger is completed. Each dissenter is entitled to judgment in cash for the amount by which the fair value of the shares of common stock as determined by the court, plus interest, exceeds the estimated payment previously remitted by Zareba to the dissenter. However, under

the statute, dissenters are not liable to Zareba for the amount, if any, by which payments remitted by Zareba to the dissenters exceed the fair value of such shares determined by the court, plus interest. The costs and expenses of this court proceeding will be assessed against Zareba, except that the court may assess part or all of those costs and expenses against a dissenter whose action in demanding payment is found to be arbitrary, vexatious or not in good faith. Under Section 302A.471, Subd. 2, beneficial owners of shares who desire to exercise statutory dissenters’ rights themselves must obtain and submit the registered owner’s written consent at or before the time they file the notice of intent to demand fair value.

     If the court finds that Zareba has failed to comply substantially with Section 302A.473, the court also may assess against Zareba such fees and expenses, if any, of attorneys and experts as the court deems equitable. Such fees and expenses may also be assessed against any person who has acted arbitrarily, vexatiously or not in good faith in bringing the proceeding, and may be awarded to a party injured by those actions.

     Under Section 302A.471, Subd. 2, a holder of Zareba common stock may not assert dissenters’ rights with respect to less than all of the shares of common stock registered in the shareholder’s name, unless the shareholder dissents with respect to all shares beneficially owned by another person and discloses the name and address of such other person.

     Under Section 302A.471, Subd. 4, a holder of Zareba common stock has no right at law or equity to set aside the adoption of the merger agreement or the consummation of the merger, except if such adoption or consummation is fraudulent with respect to such shareholder or Zareba.

ADJOURNMENT OF THE SPECIAL MEETING

     Zareba is asking its shareholders to vote on a proposal to adjourn the special meeting, if necessary, in order to allow for the solicitation of additional proxies if there are insufficient votes at the time of the meeting to approve the merger agreement. The proposal requires the affirmative vote of holders of a majority of the shares of our common stock represented in person or by proxy at the special meeting and entitled to vote thereat.

     Shares voted as abstaining on the proposal will have the same effect as a vote against the proposal to adjourn the special meeting. Broker non-votes will have no effect on the proposal to adjourn the special meeting. If your shares are held in “street name” by a broker, and you do not instruct your broker on how to vote on the proposal to adjourn the special meeting, your broker will not have discretionary authority to vote your shares on the proposal. If you grant a proxy without voting instructions, your shares will be voted in favor of the proposal to adjourn the special meeting. The special committee and the board of directors recommend that you vote FOR the proposal to adjourn the special meeting, if necessary, in order to allow for the solicitation of additional proxies if there are insufficient votes at the time of the meeting to approve the merger agreement.

SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
AND MANAGEMENT OF ZAREBA

PRINCIPAL SHAREHOLDERS

     The following table provides information concerning the only persons known to us to be the beneficial owners of more than 5% of our outstanding common stock as of January 27, 2010.

     Unless otherwise indicated in the footnotes to the table, each shareholder named in the table has sole voting and investment power with respect to the shares of common stock set forth opposite the shareholder’s name. We have based our calculation of the percentage of beneficial ownership on 2,498,779 shares of common stock outstanding on January 27, 2010.

		Number of Shares
Name and Address of Beneficial Owner		Beneficially Owned				Percent of Class
Duane Schiefelbein 1670 Robert Street, P.O. Box 357 West St. Paul, MN 55118-3919			177,084	(1)			7.1	%
Woodland Investment Company 4400 State Highway 360, Grapevine, TX 76051			258,000	(2)			10.3	%
Heartland Advisors, Inc. 789 North Water Street, Milwaukee, WI 53202			176,167	(3)			7.1	%
Nicole F. Kohl Gift Trust 4400 State Highway 360, Grapevine, TX 76051			135,000	(4)			5.4	%

MANAGEMENT SHAREHOLDINGS

     The following table sets forth the beneficial ownership of our common stock as of January 27, 2010 by (i) each director, (ii) each executive officer, and (iii) all directors and executive officers as a group.

     Unless otherwise indicated in the footnotes to the table, each shareholder named in the table has sole voting and investment power with respect to the shares of common stock set forth opposite the shareholder’s name. We have based our calculation of the percentage of beneficial ownership on 2,498,779 shares of common stock outstanding on January 27, 2010.

		Number of Shares
Name of Officer or Director		Beneficially Owned (1)				Percent of Class
Dale A. Nordquist		50,673 (2)					2.0	%
Michael L. Bochert		5,025 (3)					*
Eugene W. Courtney		10,025 (4)					*
William R. Franta		20,000 (5)					*
John A. Grimstad		45,875 (6)					1.8	%
Donald J. Dalland		11,699 (7)					*
Jeffrey S. Mathiesen			2,318				*
Officers and Directors as a Group (7 persons)		145,615 (8)					5.6	%

(1)		Under the rules of the Securities and Exchange Commission, an individual is also deemed to beneficially own shares which are not outstanding but which the individual has the right to acquire as of January 27, 2010 or within 60 days of such date. Such shares not outstanding but so deemed beneficially owned are treated as outstanding when determining the percent of the class owned by the particular individual and when determining the percent owned by the group.
(2)		Includes 20,025 shares which may be purchased by Mr. Nordquist upon exercise of options which are exercisable within 60 days of January 27, 2010.
(3)		Represents 5,025 shares which may be purchased by Mr. Bochert upon exercise of options which are exercisable within 60 days of January 27, 2010.
(4)		Represents 10,025 shares which may be purchased by Mr. Courtney upon exercise of options which are exercisable within 60 days of January 27, 2010.
(5)		Represents 20,000 shares which may be purchased by Mr. Franta upon exercise of options which are exercisable within 60 days of January 27, 2010.
(6)		Includes 3,300 shares held by Mr. Grimstad’s wife and 20,000 shares which may be purchased by Mr. Grimstad upon exercise of options which are exercisable within 60 days of January 27, 2010.
(7)		Includes 4,875 shares which may be purchased by Mr. Dalland upon exercise of options which are exercisable within 60 days of January 27, 2010.
(8)		Includes 79,950 shares which may be purchased by officers and directors upon exercise of options which are exercisable within 60 days of January 27, 2010.

SHAREHOLDER PROPOSALS