SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)*
X WLR FOODS, INC.
(Name of Issuer)
COMMON STOCK
X NO PAR VALUE
(Title of Class of Securities)
X 929286 10 2
(CUSIP Number)
Cuddy International Corporation
465 Richmond Street
Suite 600
London, Ontario
N6A 5PA Canada
Attn: Brian A. Cram
X Tel No.: (519) 679-3971
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
X July 27, 1994
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule
13D, and is filing this statement because of Rule 13d-1 (b)(3) or
(4), check the following box. X
Check the following box if a fee is being paid with the statement.
X<PAGE>
CUSIP No. 929286 10 2 13D Page 2 of 16 Pages
1 NAME OF REPORTING CUDDY FARMS, INC.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)X
(b)X
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) X
6 CITIZENSHIP OR PLACE OF ORGANIZATION
North Carolina
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
6 shares
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
6 shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES* X
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
less than 1%
14 TYPE OF REPORTING PERSON*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!<PAGE>
CUSIP No. 929286 10 2 13D Page 3 of 16 Pages
1 NAME OF REPORTING PERSON CUDDY INTERNATIONAL CORPORATION
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)X
(b)X
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) X
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ontario
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
7SOLE VOTING POWER
0
8 SHARED VOTING POWER
7 shares
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
7 shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
7 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES* X
13 PERCENT OF CLASS REPRESENTED BY AMOUNT
IN ROW (11)
less than 1%
14 TYPE OF REPORTING PERSON*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!<PAGE>
CUSIP No. 929286 10 2 13D Page 4 of 16 Pages
1 NAME OF REPORTING PERSON A.M. CUDDY
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) X
(b) X
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) X
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canadian
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
7 shares
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
7 shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
7 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES* X
13 PERCENT OF CLASS REPRESENTED BY AMOUNT
IN ROW (11)
less than 1%
14 TYPE OF REPORTING PERSON*
IN
* SEE INSTRUCTIONS BEFORE FILLING
OUT!<PAGE>
Item 1. Security and Company.
The class of equity securities to which this statement relates
is the shares (the "Shares") of Common Stock, no par value, of WLR
Foods, Inc., a Virginia corporation (the "Company"). The principal
executive offices of the Company are located at P.O. Box 7000,
Broadway, Virginia 22815.
Item 2. Identity and Background.
This statement is being filed jointly by Cuddy Farms, Inc., a
North Carolina corporation ("Cuddy"), Cuddy International
Corporation, an Ontario corporation ("Cuddy International"), and
Dr. A. M. Cuddy, a Canadian citizen ("A.M. Cuddy"). Cuddy, Cuddy
International and A. M. Cuddy are referred to herein collectively
as the "Reporting Persons." The Reporting Persons are filing this
statement jointly as they may be deemed to be a "group" within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended. A joint filing agreement among the Reporting Persons
is attached hereto as Exhibit A.
The principal business of Cuddy is turkey production and
processing. The principal business address of Cuddy is P.O. Box
247, Marshville, North Carolina 28103-0247. The principal
business of Cuddy International is to act as a holding company.
The principal occupation of A.M. Cuddy is Chairman of Cuddy
International. The address of the principal business and the
principal office of A.M. Cuddy and Cuddy International is 465
Richmond Street, Suite 600, London, Ontario N6A 5P4 Canada. The
name, business address, present principal occupation or employment,
and citizenship of each director and executive officer of each of
Cuddy and Cuddy International is set forth on Schedule I.
Cuddy is controlled by A.M. Cuddy by virtue of (i) his control
of Cuddy Group Limited, an Ontario corporation ("Limited"), which
is the sole stockholder of Cuddy International, which in turn is
the holder of voting stock of Cuddy, (ii) his position as sole
trustee of the 1979 Cuddy Trust which owns 100% of A.M.C. Family
Holdings, an Ontario corporation ("Holdings"), which in turn is the
holder of voting stock of Cuddy, and (iii) his direct ownership of
voting stock of Cuddy. A.M. Cuddy directly and indirectly controls
approximately 49.4% of the voting stock of Cuddy, which is the
largest single block of voting stock of Cuddy. The principal
business of Limited and of Holdings is to act as a holding company.
The address of the principal business and the principal office of
Limited and Holdings is 465 Richmond Street, Suite 600, London,
Ontario N6A 5P4 Canada.
During the last five years, none of the Reporting Persons,
Limited, Holdings nor, to the best of the knowledge of any of the
Reporting Persons, any of the persons listed on Schedule I attached
hereto, has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or has been a party to
a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to the Asset Purchase Agreement described in Item 4,
Cuddy has agreed, among other things, to sell to the Company
substantially all the assets of Cuddy's turkey processing division
for $73.3 million, $42.5 million of which is payable in cash and
the balance to be issued in Shares.
Item 4. Purpose of Transaction.
On July 27, 1994, the Company entered into an Asset Purchase
Agreement ("Asset Purchase Agreement"), of same date, with Cuddy,
Cuddy International and Wampler-Longacre, Inc., the Company's
wholly-owned subsidiary ("Wampler-Longacre"). The closing (the
"Closing") of the transactions contemplated by the Asset Purchase
Agreement is to be within three (3) business days after Hart-Scott-
Rodino clearance is obtained.
Pursuant to the terms of the Asset Purchase Agreement, the
Company and Wampler-Longacre will acquire substantially all of the
assets of Cuddy's turkey processing division, including, without
limitation, its processing facility, further processing facility,
feed mill, three turkey grow-out farms, a leasehold interest in a
second further processing facility, a partnership interest in a
cold storage and distribution facility and all working capital,
machinery, fixtures, equipment and other tangible personal property
for, and inventory in, such facilities (the "Assets").
The purchase price for the Assets is $73.3 million, subject to
adjustment, $42.5 million of which is payable in cash and the
balance to be issued in Shares. The number of Shares issued will
be based on a ten-day, pre-closing weighted average stock market
value, subject to a floor of $24 per Share and a ceiling of $28 per
Share. The Agreement provides for certain post-closing adjustments
which are not expected to be material.
The Shares issued in this transaction will not be registered
under the Securities Act of 1933, as amended, and will be subject
to a Voting Trust Agreement by and among the Company, Cuddy and an
independent corporate trustee. The Voting Trust Agreement will
terminate upon the earlier of (a) the fourth anniversary of the
Closing date; (b) the date on which a business acquisition by the
Company occurs in which in excess of five percent (5%) of its then
outstanding Shares is issued without voting and transfer
restrictions similar to the Voting Trust Agreement and Cuddy's
stock ownership in the Company after such acquisition is less than
five percent (5%) of the total outstanding Shares; or (c) the date
on which a "Change of Control" in the Company occurs. For purposes
of the Voting Trust Agreement, a Change of Control means the
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of more than 30 percent (30%) of either the then outstanding
Shares or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors. During the term of the Voting Trust
Agreement, the trustee will vote in accordance with the
recommendation of the Company's Board of Directors, as it exists at
the time of the vote of the Company's shareholders, or if there is
no recommendation, as directed by the registered holder of the
voting trust certificate representing the Shares held by the
trustee. Unless otherwise agreed to in writing by the Company, the
voting trust certificates are not transferable except that (a) the
holder thereof may pledge, mortgage or otherwise encumber the
certificates and (b) the holder thereof may transfer the
certificates to Cuddy International or a wholly-owned subsidiary of
Cuddy International. Any transferee shall also be subject to the
Voting Trust Agreement. After termination of the Voting Trust
Agreement, Cuddy will have certain demand and incidental
registration rights.
Upon the closing of the transaction contemplated by the Asset
Purchase Agreement, Cuddy, Cuddy International, A.M.C. Family
Holdings, Ltd. and A.M. Cuddy (the "Cuddy Group") will enter into
a Non-Competition and Name Use Agreement by which the Cuddy Group
will covenant not to compete with Wampler-Longacre in the business
of poultry production for processing, further processing or
marketing of processed poultry products (exclusive of production of
eggs and poults) (the "Protected Business") in the geographical
area in the continental United States in which Wampler-Longacre or
its affiliates currently conduct business. Sales to certain
existing customers of the Cuddy Group are excluded. The Company
will pay Cuddy $500,000 in cash at Closing in consideration of this
Agreement. Pursuant to the Non-Competition and Name Use Agreement,
Cuddy will also grant Wampler-Longacre a five (5)-year exclusive
right and license to the "Cuddy" name within the continental United
States for the Protected Business. The Non-Competition and Name
Use Agreement contains "standstill" provisions by which the Cuddy
Group agrees, for so long as the Voting Trust Agreement is not
terminated, not to: solicit proxies or participate in an election
contest relating to election of the directors; act together with
others to acquire, hold or vote Shares; purchase or otherwise
acquire Shares; or act alone or together with any person to
acquire, or propose a business combination with, the Company.
The Asset Purchase Agreement also requires Cuddy and Wampler-
Longacre, before Closing, to enter into certain administrative,
supply and processing agreements.
The Asset Purchase Agreement provides that a Cuddy
representative will be appointed to the Company's Board of
Directors who shall serve until the next annual meeting of
shareholders and shall be recommended by the Company's Board of
Directors for election at such meeting. The Closing is subject to
customary "due diligence" conditions and contains mutual
indemnifications except that Cuddy and Cuddy International (the
"Cuddy Corporations") shall not be required to indemnify the
Company and Wampler-Longacre (collectively, "Wampler") for losses
not in excess of $250,000. The Voting Trust further requires WLR
Foods to indemnify Cuddy and the trustee for losses, including
legal fees and expenses, in connection therewith.
The parties to the Agreement also signed separate
indemnification agreements, mutually agreeing to certain
indemnifications. On the part of the Cuddy Corporations,
indemnification of Wampler and their respective officers,
directors, employees, shareholders, partners, agents, legal counsel
and accountants is required in connection with certain possible
litigation relating to stockholder and employee complaints. On the
part of the Company, indemnification of the Cuddy Corporations and
their respective officers, directors, employees, shareholders,
partners, agents, legal counsel and accountants is required in
connection with pending or possible litigation relating to the
efforts of Tyson Foods, Inc., or any other bidder which commences
its bid on or prior to June 30, 1995, to gain control of the
Company. Both agreements terminate upon final termination of all
actions, suits, proceedings or investigations relating to the
respective litigations. The indemnification agreements also
provide that the parties release each other with respect to all
matters except those arising out of, based upon or in connection
with, a breach of the Asset Purchase Agreement (or any other
agreement entered into in connection therewith).
Except as set forth above, as of the date hereof the Reporting
Persons have no plan or proposals which relate to or would result
in any of the transactions described in subparagraphs (a) through
(j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Company.
(a) The Reporting Persons currently beneficially own the
following numbers of Shares: Cuddy - 1 Share; Cuddy International
- - 7 Shares; and A.M. Cuddy - 7 Shares. Each of the Reporting
Persons shares the power to vote and to dispose of the Shares
beneficially owned by him or it. Upon closing of the transactions
contemplated in the Asset Purchase Agreement, the Reporting
Persons, for the purpose of Rule 13d-3 promulgated under the
Exchange Act, may be deemed to beneficially own from 1,100,007 to
1,283,340 Shares, representing approximately 9.0% to 10.5% of the
Shares of the Company outstanding at such time. Following the
closing of the transactions contemplated by the Asset Purchase
Agreement, the number of Shares beneficially owned by the Reporting
Persons will be increased or decreased pursuant to certain post-
closing adjustments.
Except as set forth in this Item 5(a), neither the
Reporting Persons, Limited, Holdings nor, to the best of the
knowledge of any of the Reporting Persons, any persons listed on
Schedule I hereto beneficially owns any Shares.
(b) Except as set forth in Item 5(a), none of the Reporting
Persons, Limited, Holdings nor, to the best of the knowledge of any
of the Reporting Persons, any of the persons listed on Schedule I
hereto, currently has sole or shared power to vote and to dispose
of any Shares.
(c) There have been no acquisitions of Shares by the
Reporting Persons, Limited, Holdings nor, to the best of the
knowledge of any of the Reporting Persons, any persons listed in
Schedule I hereto since June 8, 1994.
(d) Inapplicable.
(e) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Company.
Except as otherwise described above, there are no contracts,
arrangements, understandings or relationships (legal or otherwise)
between any of the Reporting Persons, Limited, Holdings or, to the
best of the knowledge of any of the Reporting Persons, any persons
listed on Schedule I hereto and any other person, with respect to
any securities of the Company, including, but not limited to,
transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding
of proxies.
Item 7. Material to Be Filed as Exhibits.
Exhibit A: Joint Filing Agreement, dated August 8, 1994,
by and among Cuddy Foods, Inc., Cuddy
International Corporation and A.M. Cuddy.
Exhibit B: Asset Purchase Agreement, dated July 27, 1994,
by and among Cuddy Farms, Inc., Cuddy
International Corporation, WLR Foods, Inc. and
Wampler-Longacre, Inc. (including the form of
the Non-Competition and Name Use Agreement and
the form of the Voting Trust Agreement).
Exhibit C: Indemnification Agreement and Release, dated
July 27, 1994, by and between WLR Foods, Inc.
and Cuddy Farms, Inc.
Exhibit D: Indemnification Agreement and Release, dated
July 27, 1994, by and among Cuddy Farms, Inc.,
Cuddy International Corporation and WLR Foods,
Inc.
Exhibit E: Form of Registration Rights Agreement
<PAGE>
SIGNATURES
After reasonable inquiry and to the best knowledge and belief
of the undersigned, the undersigned certifies that the information
set forth in this statement is true, complete and correct.
Date: August 9, 1994
CUDDY FARMS, INC.
By: /s/ A.M. Cuddy
A.M. Cuddy, Chairman
CUDDY INTERNATIONAL CORPORATION
By: /s/ A.M. Cuddy
A.M. Cuddy, Chairman
A.M. CUDDY
/s/ A.M. Cuddy
A.M. Cuddy<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF CUDDY FARMS, INC.
The name, business address, title, present principal
occupation or employment of each of the directors and executive
officers of Cuddy Farms, Inc. ("Cuddy") are set forth below.
Unless otherwise indicated below, the director's or officer's
business address is P.O. Box 247, Marshville, North Carolina 28103-
0247. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to Cuddy. Unless otherwise
indicated, all of the persons listed below are citizens of the
United States of America.
Name and Business Address Present Principal Occupation
Directors
Dr. A.M. Cuddy (Canadian citizen)
Cuddy International Corporation
465 Richmond St., Suite 600
London, Ontario
CANADA N6A 5P4
Chairman of Cuddy International Corporation
Brian A. Cuddy (Canadian citizen)
Cuddy International Corporation
465 Richmond St., Suite 600
London, Ontario
CANADA N6A 5P4
President of Intercontinental Operations,
a division of Cuddy
International Corporation
Robert A. Cuddy (Canadian citizen)
Cuddy Food Products
1226 Trafalgar Street
London, Ontario
CANADA N5Z 1H5
President of Cuddy Food Products
Vaughn L. Correll
Executive Vice President, Secretary -
Treasurer
Executive Officers (Who Are Not Directors)
Charles D. Blackshear
Senior Vice President - Foods
Ben Lybrand
Senior Vice President - Farms
Kenneth K. Krueger
Senior Vice President - Research
DIRECTORS AND EXECUTIVE OFFICERS OF CUDDY INTERNATIONAL
CORPORATION
The name, business address, title, present principal
occupation or employment of each of the directors and executive
officers of Cuddy International Corporation ("Cuddy International")
are set forth below. Unless otherwise indicated below, the
director's or officer's business address is 465 Richmond Street,
Suite 600, London, Ontario N6A 5PA Canada. Unless otherwise
indicated, each occupation set forth opposite an individual's name
refers to Cuddy International. All of the persons listed below are
citizens of Canada.
Name and Business Address Present Principal Occupation
Directors
Dr. A.M. Cuddy
Cuddy International Corporation
Chairman
Peter A.W. Green
Cuddy International Corporation
President and Chief Executive
Officer
Dr. William E. Coyne
3M Building 220-14E-11
2501 Hudson Road
St. Paul, Minnesota 55144
Vice President, Research and Development of 3M Company
(Diversified manufacturer)
Douglas S. Cuddy
Cuddy Transportation
3003 Page Street
London, Ontario
CANADA N5V 4J1 Vice President, Transportation
John F. Robinson
Retired
28 Linksgate Road
London, Ontario
CANADA N6G 2A7 President of Xylan Inc. (Management consultant)
Mitchell A. Baran
Trudell Medical
926 Leathorne Gate
London, Ontario
CANADA N5Z 3M5
Chairman and Chief Executive Officer of Trudell Medical Group
Brian A. Cuddy
Cuddy International Corporation
President of Intercontinental
Operations, a division of Cuddy International Corporation
Robert A. Cuddy
Cuddy Food Products
1226 Trafalgar Street
London, Ontario
CANADA N5Z 1H5
President of Cuddy Food Products
Executive Officers (Who Are Not Directors)
Robert B. Clark
Senior Vice President, Chief Financial Officer
and Secretary
Brian A. Cram
Vice President, Corporate Development and Marketing
Kathy Houde
Vice President, Human Resources
DIRECTORS AND EXECUTIVE OFFICERS OF CUDDY GROUP LIMITED
The name, business address, title, present principal
occupation or employment of each of the directors and executive
officers of Cuddy Group Limited ("Cuddy Limited") are set forth
below. Unless otherwise indicated below, the director's or
officer's business address is 465 Richmond Street, Suite 600,
London, Ontario N6A 5PA Canada. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to Cuddy
Limited. All of the persons listed below are citizens of Canada.
Name and Business Address
Present Principal Occupation
Directors
Dr. A.M. Cuddy
President and Secretary;
Chairman of Cuddy
International Corporation<PAGE>
Executive Officers (Who Are
Not Directors)
None
DIRECTORS AND EXECUTIVE OFFICERS OF AMC FAMILY HOLDINGS LIMITED
The name, business address, title, present principal
occupation or employment of each of the directors and executive
officers of AMC Family Holdings Limited ("Holdings") are set forth
below. Unless otherwise indicated below, the director's or
officer's business address is 465 Richmond Street, Suite 600,
London, Ontario N6A 5PA Canada. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to
Holdings. All of the persons listed below are citizens of Canada.
Name and Business Address Present Principal Occupation
Directors
Dr. A.M. Cuddy President and Secretary; Chairman of Cuddy
International Corporation
Executive Officers (Who Are Not Directors)
None
<PAGE>
Exhibit A
Joint Filing Agreement
Each of the undersigned hereby agrees that the Schedule 13D, to
which this Agreement is attached as Exhibit A, and all amendments
thereto, may be filed on behalf of each such person.
Date: August 8, 1994
CUDDY FARMS, INC.
By: /s/ A.M. Cuddy
A.M. Cuddy, Chairman
CUDDY INTERNATIONAL CORPORATION
By: /s/ A.M. Cuddy
A.M. Cuddy, Chairman
A.M. CUDDY
/s/ A.M. Cuddy
A.M. Cuddy
EXHIBIT 13.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made and entered in to
this [Closing Date], by and between WLR Foods, Inc., a Virginia
corporation (including its successors, the "Issuer"), and Cuddy
Farms, Inc., a North Carolina corporation, ("Cuddy") (Cuddy and any
transferee as permitted in Section 2.2 hereof being the "Holder").
RECITALS
A. The Issuer and Cuddy are parties to an Asset Purchase
Agreement dated July 27, 1994 (the "Purchase Agreement"), which
Purchase Agreement provides, in part, for the issuance of shares of
common stock of the Issuer (the "Common Stock") to Cuddy.
B. The Issuer, as an inducement to Cuddy to enter into the
Purchase Agreement, has agreed to provide for the registration
under the Securities Act of 1933, as amended (the "Securities
Act"), of shares of Common Stock to be issued under the Purchase
Agreement (the "Shares") under the circumstances set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, the parties agree
as follows:
ARTICLE I
REGISTRATION RIGHTS
Section 1.1. Certain Definitions.
(a) As used herein, the term "Commission" means the United
States Securities and Exchange Commission.
(b) As used herein, the term "Public Offering" means any
underwritten public offering of securities of the Issuer pursuant
to an effective registration statement under the Securities Act.
(c) As used herein, the term "Registrable Securities" means
any (i) Shares and (ii) securities issued or issuable with respect
to the Shares by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation, or other reorganization. As to any particular
Registrable Securities, such securities will cease to be
Registrable Securities when they (i) have been effectively
registered under the Securities Act and disposed of in accordance
with the registration statement covering them, (ii) have been
transferred pursuant to Rule 144 (or any similar provision then in
force) under the Securities Act, unless such securities are held at
such time by a holder of Registrable Securities who may be deemed
an "underwriter" or "affiliate" with respect to the Company (as
those terms are defined under the Securities Act), (iii) constitute
less than one percent (1%) of the total outstanding securities of
the same class as the Registrable Securities, (iv) except as
provided in Section 2.2, have been transferred, directly or
indirectly, from the Holder to any other person without the express
written consent of the Issuer.
(d) As used herein, the term "Incidental Registrable
Securities" means (i) Registrable Securities and (ii) other
securities of the Issuer entitled to registration rights.
Section 1.2. Registration on Request of Holders.
(a) Upon the written request at any time after the earlier of
(i) the expiration of the voting and transfer restrictions
applicable to the Shares by virtue of Section 13 of the Purchase
Agreement, or (ii) 150 days prior to the fourth anniversary of the
Closing Date under the Purchase Agreement (the "Registration
Date") by the Holder requesting that the Issuer effect the
registration under the Securities Act of all or part of its
Registrable Securities, the Issuer will promptly use its best
efforts to effect, as expeditiously as possible, but in no event
prior to the expiration of the above-referenced restrictions, the
registration under the Securities Act of (i) the Registrable
Securities which the Issuer has been requested to register by the
Holder; and (ii) all other Incidental Registrable Securities which
the Issuer has been requested to register by any other person
having incidental registration rights from the Issuer or other
securities of the Issuer which the Issuer desires to register, all
to the extent necessary to permit the disposition of the
Registrable Securities so to be registered, provided that (A) the
Issuer shall not be obligated to file a registration statement
relating to a registration request under this Section 1.2(a) within
a period of 180 days after the effective date of any other
registration statement filed by the Issuer, other than any
registration statement filed by the Issuer (1) in connection with
any employee benefit or similar plan of the Issuer, (2) in
connection with an acquisition by the Issuer of another person or
(3) relating to any non-convertible debt securities of the Issuer
to be offered and sold by the Issuer on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act ("Rule 145");
(B) the Issuer shall not be obligated to effect more than two
registrations pursuant to this Section 1.2(a), each of which may
not be requested earlier than 180 days after the consummation of an
offering effected pursuant to demand registration hereunder; and
(C) such registration may not relate to an offering of Registrable
Securities on a delayed or continuous basis pursuant to Rule 415
and (D) may be delayed by the Issuer for up to 135 days if the
Issuer determines that the filing of the registration statement
would require the disclosure of material nonpublic information that
is in the best interest of the Issuer to maintain as confidential;
provided, however, that, in the event of a delay hereunder, the
Holder may withdraw its request which, if withdrawn, will not be
considered one of the demand registrations requested pursuant to
Section 1.2 hereof.
(b) Expenses. The Issuer will pay all registration expenses
in connection with each registration of Registrable Securities
pursuant to this Section 1.2, and the Holder shall pay all
underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of the Registrable Securities
pursuant to a registration statement effected pursuant to this
Section 1.2.
(c) Effective Registration Statement. A registration
requested pursuant to this Section 1.2 shall not be deemed to have
been effected unless the registration statement relating thereto
(i) has become effective under the Securities Act and any of the
Registrable Securities of the Holder have actually been sold
thereunder and (ii) has remained effective for a period of at least
90 days (or such shorter period in which all Registrable Securities
registered thereunder have actually been sold thereunder); provided
that. if after any registration statement requested pursuant to
this Section 1.2 becomes effective, such registration statement is
interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court
solely due to the actions or omissions to act of the Issuer, such
registration statement shall not be considered one of the
registrations which may be requested pursuant to Section 1.2
hereof.
(d) Selection of Underwriters. If any requested registration
pursuant to this Section 1.2 is in the form of a Public Offering,
then (i) all holders of Incidental Registrable Securities to be
included in such registration requested shall sell their Incidental
Registrable Securities to the underwriters on the same terms and
conditions and (ii) the Holder shall have the right to select the
managing underwriter that will administer the offering with the
consent of the Issuer, which consent shall not be unreasonably
withheld or delayed.
(e) Pro-Rata Participation in Requested Registrations. If a
requested registration pursuant to this Section 1.2 involves a
Public Offering and the managing underwriter shall advise the
Issuer that, in such underwriter's reasonable view, the number of
securities (including all Registrable Securities) requested to be
included in such registration exceeds the largest number of
securities (the "Maximum Offering Size") which can be sold without
an adverse effect on the terms of the proposed offering (including,
without limitation, the price at which such securities can be
sold), the Issuer will include in such registration, in the order
listed below, up to the Maximum Offering Size:
First, Registrable Securities of the Holder.
Second, Incidental Registrable Securities proposed to be
sold by any other holder requesting registration allocated pro-rata
among such holders based on the relative number of Incidental
Registrable Securities proposed to be sold in the proposed offering
by each such holder or on such other basis as Issuer may have
agreed with such holders.
Third, securities of the Issuer proposed to be sold by
the Issuer.
Section 1.3 Incidental Registration.
(a) If the Issuer at any time after the Registration Date
proposes to register any securities of the Issuer under the
Securities Act (other than a registration (i) on Form S-8 or S-4 or
any successor or similar forms, (ii) relating to securities of the
Issuer issuable upon exercise of employee stock options or in
connection with any employee or grower benefit or similar plan of
the Issuer or any of its subsidiaries, or (iii) in connection with
a direct or indirect acquisition by the Issuer or any of its
subsidiaries of another company) in a manner which would permit
registration of Registrable Securities for sale to the public under
the Securities Act, the Issuer may, but shall not be required to,
give prompt written notice to all (but not less than all) holders
of Incidental Registrable Securities of its intention to do so
(including its intended method of disposition) and of such holders'
rights in the event the holders are notified, under this
Section 1.3. Any such notice, if given, shall offer the Holder the
opportunity to include in such registration statements such number
of Registrable Securities as the Holder may request. Upon the
written request of the Holder made within 20 days after the giving
of such written notice by the Issuer (which request shall specify
the number of Incidental Registrable Securities intended to be
disposed of by the Holder), the Issuer will use its best efforts to
effect the registration under the Securities Act of all Incidental
Registrable Securities which the Issuer has been so requested to
register by the holders thereof, to the extent requisite to permit
the disposition of the Incidental Registrable Securities so to be
registered in accordance with the Issuer's intended method of
disposition; provided that (i) if such registration involves a
Public Offering, all holders of Incidental Registrable Securities
requesting to be included in the Issuer's registration must sell
their Incidental Registrable Securities to the underwriters
selected by the Issuer on the same terms and conditions as apply to
the Issuer and (ii) if, at any time after giving written notice of
its intention to register any securities pursuant to this
Section 1.3 and prior to the effective date of the registration,
the Issuer shall determine for any reason not to register any
securities, the Issuer shall give written notice to the Holder of
Incidental Registrable Securities and thereupon shall be relieved
of its obligation to register any Incidental Registrable Securities
in connection with such registration. The Issuer will pay all
registration expenses in connection with each registration of
Incidental Registrable Securities requested pursuant to this
Section 1.3, and the Holder shall pay all underwriting discounts
and commissions and transfer taxes, if any, relating to the sale or
disposition of the Holder's Incidental Registrable Securities
pursuant to a registration statement effected pursuant to this
Section 1.3.
(b) Priority in Incidental Registrations If a registration
pursuant to this Section 1.3 involves a Public Offering and the
managing underwriter advises the Issuer that, in its view, the
number of securities (including all Registrable Securities) which
the Issuer, the Holder and any other persons intend to include in
such registration exceeds the Maximum Offering Size, the Issuer
will include in such registration, in the following priority, up to
the Maximum Offering Size:
First, all the securities of the Issuer proposed to be
included by the Issuer and by any person exercising a demand
registration right; and
Second, Incidental Registrable Securities requested to be
included in such registration by the holders thereof allocated pro-
rata among all holders based on the relative number of Incidental
Registrable Securities each holder proposed to be sold in the
proposed offering.
Section 1.4. Registration Procedures. Whenever the Holder
requests that any Registrable Securities be registered pursuant to
Sections 1.2 or 1.3 of this Agreement, the Issuer will, subject to
the provisions of such Sections, use its best efforts to effect the
registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof as
promptly as reasonably practicable, and in connection with any such
request:
(a) The Issuer will as promptly as reasonably practicable
prepare and file with the Commission a registration statement on
any form for which the Issuer then qualifies or which counsel for
the Issuer will deem appropriate and which form shall be available
for the sale of the Incidental Registrable Securities to be
registered thereunder in accordance with the intended method of
distribution thereof, and use its best efforts to cause such filed
registration statement to become and remain effective (including by
the filing of amendments or supplements to such registration
statement) for a period of not less than 90 days (or such shorter
period in which all Registrable Securities registered thereunder
have actually been sold thereunder).
(b) The Issuer will, prior to filing a registration statement
or prospectus or any amendment or supplement thereto, furnish to
the Holder and to each underwriter, if any, and to each person who
may be deemed to be a controlling person under Section 15 of the
Securities Act (a "Controlling Person") of each of the foregoing
copies of such registration statement as proposed to be filed, and
thereafter the Issuer will furnish to the Holder, each underwriter
and each Controlling Person of each of the foregoing, if any, such
number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto and
documents incorporated by reference therein), the prospectus
included in such registration statement (including each preliminary
prospectus) and such other documents as the Holder, underwriter or
Controlling Person may reasonably request in order to facilitate
the disposition of the Registrable Securities.
(c) After the filing of the registration statement, the
Issuer will promptly notify the Holder, each underwriter, if any,
and each Controlling Person of each of the foregoing of any stop
order issued or threatened by the Commission and take all
reasonable actions required to prevent the entry of such stop order
or to remove it if entered.
(d) The Issuer will use its best efforts to (i) register or
qualify the Registrable Securities under such other securities or
blue sky laws of such jurisdictions in the United States as the
Holder reasonably (in light of such Holder's intended plan of
distribution) requests and (ii) cause such Registrable Securities
to be registered with or approved by such other governmental
agencies or authorities, if any, as may be necessary by virtue of
the business and operations of the Issuer and do any and all other
acts and things that may be reasonably necessary or advisable to
enable the Holder to consummate the disposition of the Registrable
Securities; provided that the Issuer will not be required to (A)
qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this paragraph (d),
(B) subject itself to taxation in any such jurisdiction or
(C) consent to general service of process in any such jurisdiction.
(e) The Issuer will immediately notify the Holder, each
underwriter, if any, and each Controlling Person of each of the
foregoing, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the
occurrence of an event requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter delivered to
the purchasers of the Registrable Securities, such prospectus will
not contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading and promptly make
available to the Holder, underwriter and Controlling Person any
such supplement or amendment; provided, however, that, if such
supplement or amendment would require the disclosure of nonpublic
information that is in the best interests of the Issuer to be
maintain as confidential, the Issuer may delay such supplement or
amendment for up to 135 days except: (i) with respect to sales made
but not closed pursuant to the registration statement on or before
the date of receipt of notice by the Holder of the Issuer's
intention to delay; and (ii) as to any delay extending for more
than two weeks, the Holder may elect to terminate the registration
statement and such registration statement shall not be considered
one of the registrations which may be requested pursuant to Section
1.2 hereof.
(f) The Issuer will enter into customary agreements
(including an underwriting agreement in customary form) and take
such other actions as are customary and are reasonably required in
order to expedite or facilitate the disposition of the Registrable
Securities.
(g) The Issuer will make available for inspection by the
Holder, any underwriter participating in any disposition pursuant
to such registration statement and any attorney, accountant or
other professional retained by the Holder or underwriter
(collectively, the "Inspectors"), and any Controlling Person of any
of the foregoing such financial and other records, pertinent
corporate documents and properties of the Issuer (collectively, the
"Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Issuer's
officers, directors and employees to supply all information
reasonably requested by any Inspectors in connection with such
registration statement. Each Holder shall be given adequate
opportunity to comment on such registration statement and to
request the insertion therein of material furnished to the Issuer
in writing which in the reasonable judgment of such Holder upon the
advice of counsel experienced in securities laws should be included
in order to avoid a violation of applicable law and to request the
deletion of its name from the registration statement if the
materials furnished are not included in such registration
statement, and, if such registration statement is the Holder's
second demand registration statement under Section 1.2 hereof, such
registration statement shall not be considered a demand
registration statement. Records which the Issuer determines, in
good faith, to be confidential and which it notifies the Inspectors
are confidential shall not be disclosed by the Inspectors unless
the release of such records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction; provided,
however, that if the Holder reasonably believes that disclosure of
such Records is necessary to avoid or correct a misstatement or
omission in such registration statement and the Issuer declines to
make such disclosure, the Holder may withdraw from participation in
the registration and, if, such registration statement is the
Holder's second demand registration statement under Section 1.2
hereof, such registration statement shall not be considered a
demand registration statement. The Holder agrees that information
obtained by it as a result of such inspections shall be kept
confidential by it and shall not be used by it except in connection
with the discharge of its due diligence in connection with a
registration unless and until such is made generally available to
the public otherwise than through disclosure by the Holder or
Inspectors. The Holder further agrees that it will, upon learning
that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Issuer and allow the Issuer, at
its expense, to undertake appropriate action to prevent disclosure
of the Records deemed confidential.
(h) The Issuer will furnish to the Holder, each underwriter,
if any, and each Controlling Person of each of the foregoing a
signed counterpart, addressed to such Holder and Controlling Person
and underwriter, if any, of (i) an opinion or opinions of counsel
to the Issuer and (ii) a comfort letter or comfort letters from the
Issuer's independent public accountants, each in customary form and
covering such matters of the type customarily covered by opinions
or comfort letters, as the case may be, as holders of a majority of
the Incidental Registrable Securities included in such registration
statement or the managing underwriter therefor reasonably requests
provided the same are customarily provided in similar transactions
at such time.
(i) The Issuer will otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and
make available to its security holders, as soon as reasonably
practicable, an earnings statement covering a period of 12 months,
beginning within three months after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and
regulations thereunder.
(j) The Issuer will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange on
which similar securities issued by the Issuer are then listed.
(k) The Issuer will provide a transfer agent for all such
Registrable Securities not later than the effective date of such
registration statement.
The Issuer may require the Holder to promptly furnish in
writing to the Issuer such information regarding the distribution
of the Registrable Securities as the Issuer may from time to time
reasonably request and such other information as may be legally
required in connection with such registration.
The Holder agrees that, upon receipt of any notice from the
Issuer of the happening of any event of the kind described in
clause (e), the Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement
covering such Registrable Securities until the Holder's receipt of
the copies of the supplemented or amended prospectus contemplated
by clause (e), and, if so directed by the Issuer, the Holder will
deliver to the Issuer all copies, other than permanent file copies
then in Holder's possession, of the most recent prospectus covering
such Registrable Securities at the time of receipt of such notice.
If the Issuer shall give such notice, the Issuer shall extend the
period during which such registration statement shall be maintained
effective (including the period referred to in clause (a)) by the
number of days during the period from and including the date of the
giving of notice pursuant to clause (e) to the date when the issuer
shall make available to the Holder a prospectus supplemented or
amended to conform with the requirements of clause (e).
Section 1.5 Indemnification by the Issuer. The Issuer
agrees to indemnify and hold harmless the Holder, its officers,
directors, employees, agents, shareholders, partners, legal
counsel, and accountants and each Controlling Person of each of the
foregoing from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable attorneys' fees and
expenses) caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as
amended or supplemented thereto) or any preliminary prospectus or
blue sky application, or caused by any omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or expenses
are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information furnished in
writing to the Issuer by the Holder or on such Holder's behalf
expressly for use therein; provided that with respect to any untrue
statement or omission or alleged untrue statement or omission made
in any preliminary prospectus, or in any prospectus, as the case
may be, the indemnity agreement contained in this paragraph shall
not apply to the extent that any such loss, claim, damage,
liability or expense results from the fact that a current copy of
the prospectus (or, in the case of a prospectus, the prospectus as
amended or supplemented) was not sent or given to the person
asserting any such loss, claim, damage, liability or expense at or
prior to the written confirmation of the sale of the Registrable
Securities concerned to such person if it is determined that the
Issuer has provided such prospectus and it was the responsibility
of such Holder to provide such person with a current copy of the
prospectus (or such amended or supplemented prospectus, as the case
may be) and such current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) would have cured the
defect giving rise to such loss, claim, damage, liability or
expense. The Issuer also agrees to indemnify any underwriters of
the Registrable Securities, their officers and directors and each
Controlling Person of such underwriters on substantially the same
basis as that of the indemnification of the Holder provided in this
Section 1.5.
Section 1.6. Indemnification by Holder of Registrable
Securities and Underwriters. The Holder agrees to indemnify and
hold harmless the Issuer, its officers, directors, employees,
agents, shareholders, partners, legal counsel, and accountants and
each Controlling Person of the Issuer to the same extent as the
foregoing indemnity from the Issuer to the Holder, but only (i)
with respect to information furnished in writing by the Holder or
on the Holder's behalf, in each case, only with respect to
information concerning the Holder, expressly for use in any
registration statement or prospectus relating to the Registrable
Securities, or any amendment or supplement thereto, or any
preliminary prospectus or (ii) to the extent that any loss, claim,
damage, liability or expense described in Section 1.5 results from
the fact that a current copy of the prospectus (or the prospectus
as amended or supplemented) was not sent or given to the person
asserting any such loss claim, damage, liability or expense at or
prior to the written confirmation of the sale of the Registrable
Securities concerned to such person if it is determined that it was
the responsibility of the Holder to provide such person with a
current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) and such current copy of the
prospectus (or such amended or supplemented prospectus, as the case
may be) would have cured the defect giving rise to such loss,
claim, damage, liability or expense. The Holder also agrees to
indemnify and hold harmless underwriters of the Registrable
Securities, their officers and directors and each Controlling
Person of such underwriters on substantially the same basis as that
of the indemnification of the Issuer provided in this Section 1.6
As a condition to including Registrable Securities in any
registration statement filed in accordance with Section 1.2 or 1.3
hereof involving a Public Offering, the Issuer may require that it
shall have received an undertaking reasonably satisfactory to it
from any underwriter to indemnify and hold it harmless to the
extent customarily provided by underwriters with respect to similar
securities. Notwithstanding the provisions of this Section 1.6,
the Holder shall not be required to pay any amount under this
Section 1.6 in excess of the amount by which the total price at
which the Registrable Securities were sold to the public exceeds
the amount of any damages which the Holder has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
Section 1.7. Conduct of Indemnification Proceedings. In
case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 1.5 or 1.6 hereof, such
person (an "Indemnified Party") shall promptly notify the person
against whom such indemnity may be sought (the "Indemnifying
Party") in writing and the Indemnifying Party shall assume the
defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses; provided that the failure of any
Indemnified Party so to notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations under these
indemnification provisions, except to the extent that the
Indemnifying Party is materially prejudiced by such failure to
notify, or from any liabilities it may have to any Indemnified
Party otherwise than under these indemnification provisions. In
any such proceeding, any Indemnified Party shall have the right to
retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) in the reasonable
judgment of such Indemnified Party representation of both parties
by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that
the Indemnifying Party shall not, in connection with any proceeding
or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for all
such Indemnified Parties, and that all such fees and expenses shall
be reimbursed as they are incurred. In the case of any such
separate firm for the Indemnified Parties, such firm shall be
designated in writing by the Indemnified Parties. The Indemnifying
Party shall not be liable for any settlement of any proceeding
affected without its written consent, but if settled with such
consent, or if there be a final judgment for the plaintiff, the
Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the
extent stated above) by reason of such settlement or judgment. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Party is
or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Party from
all liability arising out of such preceding.
Section 1.8 Contribution. If the indemnification provided
for in this Agreement is unavailable to the Indemnified Parties in
respect of any losses, claims, damages, liabilities, or expenses
referred to herein, then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such
losses, claims, damages, liabilities or expenses (i) as between the
Issuer and the Holder of Registrable Securities covered by a
registration statement on the one hand and the underwriters on the
other, in such proportion as is appropriate to reflect the relative
benefits received by the Issuer and such Holder on the one hand and
the underwriters on the other from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the
relative benefits but also the relative fault of the Issuer and
such Holder on the one hand and of the underwriters on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other
relevant equitable considerations and (ii) as between the Issuer on
the one hand and the Holder of Registrable Securities covered by a
registration statement on the other, in such proportion as is
appropriate to reflect the relative fault of the Issuer and of the
Holder in connection with such statements or omissions, as well as
any other relevant equitable considerations. The relative benefits
received by the Issuer and the Holder on the one hand and the
underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting
expenses) received by the Issuer and the Holder bear to the total
underwriting discounts and commissions received by the
underwriters, in each case as set forth in the table on the cover
page of the prospectus. The relative fault of the Issuer and the
Holder on the one hand and of the underwriters on the other shall
be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Issuer and the Holder or by the
underwriters. The relative fault of the Issuer on the one hand and
of the Holder on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by such party, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Issuer and the Holder agree that it would not be just and
equitable if contribution pursuant to this Section 1.8 were
determined by pro-rata allocation (even if the underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages, liabilities or expenses referred to in
the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 1.8, no
underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holder's obligation to
contribute pursuant to this Section 1.8 is several in the
proportion that the proceeds of the offering received by such
Holder bears to the total proceeds of the offering received by all
the holders and not joint.
Section 1.9. Participation in Public Offering. No person
may participate in any Public Offering hereunder unless such person
(a) agrees to sell such person's securities on the basis provided
in any underwriting arrangement approved by the persons entitled
hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably under the
terms of such underwriting arrangements and this Agreement.
Section 1.10. Other Indemnification. Indemnification similar
to that specified herein (with appropriate modifications) shall be
given by the Issuer and the Holder of Registrable Securities with
respect to any required registration or other qualification of
securities under any federal or state law or regulation or
governmental authority other than the Securities Act.
Section 1.11. Rule 144. With a view to making available the
benefits of Rule 144 under the Securities Act (or similar rule then
in effect) available to the Holder, the Issuer shall:
(a) Make and keep available adequate current public
information with respect to the Issuer within the meaning of Rule
144(c) under the Securities Act (or similar rule then in effect);
(b) Furnish to the Holder forthwith upon request (i) a
written statement by the Issuer as to its compliance with the
informational requirements of Rule 144(c) (or similar rule then in
effect) or (ii) a copy of the most recent annual or quarterly
report of the Issuer; and
(c) Comply with all other necessary filing and other
requirements so as to enable the Holder thereof to sell Registrable
Securities under Rule 144 under the Securities Act (or similar rule
then in effect).
ARTICLE II
MISCELLANEOUS
Section 2.1. Termination of Agreement. This Agreement shall
terminate on the third anniversary after the Registration Date
except as to any request for registration pursuant to Section 1.2
hereof from the Holder received by the Issuer on or before such
date and as to incidental registration rights pursuant to Section
1.3 hereof with respect to any registration statement filed by the
Issuer on or before the such date.
Section 2.2. Non-Assignment; Binding Effect. The Holder
shall not assign any of its rights under this Agreement without the
express written consent of the Issuer; provided, however, that the
Holder may assign, without consent, its rights hereunder to Cuddy
International Corporation or any wholly-owned subsidiary of Cuddy
International Corporation or to a creditor of the Holder to whom
the Shares are pledged, mortgaged or otherwise encumbered, all
subject to the terms and conditions of a Voting Trust Agreement,
regarding the Shares, dated the date hereof. In the event of
assignment, the provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns and the Holder's transferees of Registrable
Securities who execute and deliver to the Company a counterpart of
this Agreement.
Section 2.3. Severability. If any provision or provisions of
this Agreement shall be held to be invalid, illegal or
unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this Agreement
(including, without limitation, all portions of any paragraphs of
this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal
or unenforceable) shall not in any way be affected or impaired
thereby; and (b) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any
paragraphs of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
Section 2.4. Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be
telecopied or delivered against receipt to the party to whom it is
to be given at the following address (or such other address as the
party shall have furnished in writing in accordance with the
provisions of this Section):
(a) If to the Issuer:
WLR Foods, Inc.
P.O. Box 7000
Broadway, VA 22815
Attn: James L. Keeler
Fax No.: (703) 896-0498
(b) If to the Holder:
c/o Cuddy International Corporation
465 Richmond Street, Suite 600
London, Ontario Canada N6A 5P4
Attn: President
Fax No.: (519) 679-9355
Any notice or other communication given by telecopy shall be deemed
given on the first business day of the recipient after the date of
the telecopy, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.
Section 2.5. Counterparts; Governing Law. This Agreement
may be executed in any number of counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of
Virginia without giving effect to the conflict of laws.
Section 2.6. Modifications, Waivers. This Agreement sets
forth the entire understanding of the parties with respect to the
subject matter hereof, supersedes all existing agreements between
them concerning such subject matter, and may be modified only by a
written instrument executed by the Issuer and the Holder. Any
waiver by any party of a breach of any provision of this Agreement
shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more occasions
shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any
other term of this Agreement. Any waiver must be in writing.
Section 2.7. Headings. The headings in this Agreement are
solely for convenience of reference and shall be given no effect in
the construction of interpretation of this Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed as of the day and year first above written.
WLR FOODS, INC.
By:
________________________________________
Name:
Title:
CUDDY FARMS, INC.
By:
__________________________________________
Name:
Title:
17897
