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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
_____________________
July 29, 1994
Date of Report (Date of earliest event reported)
WLR Foods, Inc.
(Exact name of registrant as specified in its charter)
Virginia 0-17060 54-1295923
(State of (Commission File Number) (IRS Employer
incorporation) Identification No.)
Highway 33 West, P.O. Box 228,
Hinton, Virginia 22831
(Address of principal executive offices) (Zip Code)
(703) 867-4001
(Registrant's telephone number,
including area code)
N/A
(Former name or former address, if changed since last report)
Exhibit Index is on Page 7
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Items 1 - 4. Not Applicable.
Item 5. Other Events.
On July 27, 1994, WLR Foods, Inc. (the "Company") entered
into an Asset Purchase Agreement ("Asset Purchase Agreement"), of same
date, with Cuddy Farms, Inc. ("Cuddy"), Cuddy International Corporation
("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, $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 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 common stock 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 of the Company's common
stock; or (c) the date on which a "Change of Control" in the Company
occurs. For purposes of the Voting Trust Agreement, a Change of
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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 of common stock of
the Company 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 the Company's common
stock;
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purchase or otherwise acquire the Company's common stock; 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 indemnifica-
tion agreements (the "Indemnification Agreements"), mutually agreeing
to certain indemnifications. On the part of the Cuddy Corporations,
indemnification of Wampler is required in connection with certain
possible litigation relating to stockholder and employee complaints.
On the part of Wampler, indemnification of the Cuddy Corporations is
required in connection with pending or possible litigation relating to
the efforts of Tyson Foods, Inc. to acquire the Company. Both agree-
ments terminate upon final termination of all actions, suits,
proceedings or investigations relating to the respective litigations.
The foregoing description is qualified in its entirety by
reference to the Asset Purchase Agreement and the Indemnification
Agreements, copies of which are filed as exhibits hereto and which
are incorporated herein by reference.
Item 6. Not Applicable.
Item 7. Exhibits.
(2) 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 Agree-
ment and the form of the Voting Trust Agreement).
(10.1) Indemnification Agreement and Release, dated July 27,
1994, by and between WLR Foods, Inc. and Cuddy Farms,
Inc.
(10.2) Indemnification Agreement and Release, by and among,
Cuddy Farms, Inc., Cuddy International Corporation,
and WLR Foods, Inc.
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(99.1) Press Release, dated July 28, 1994.
(99.2) Form of Letter to Shareholders of the Company,
dated July 28, 1994.
Item 8. Not Applicable.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
WLR FOODS, INC.
By /s/ James L. Keeler
Name: James L. Keeler
Title: President and Chief
Executive Officer
Date: August 1, 1994
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EXHIBIT INDEX
Exhibit No. Description
(1) 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).
(2) Indemnification Agreement and Release,
July 27, 1994, by and between WLR Foods,
Inc. and Cuddy Farms, Inc.
(3) Indemnification Agreement and Release,
by and among, Cuddy Farms, Inc.,
Cuddy International Corporation, and
WLR Foods, Inc.
(4) Press release, dated July 28, 1994.
(5) Form of Letter to Shareholders of the
Company, dated July 28, 1994.
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Exhibit No. Description
Under Reg. Form 8-K
S-K, Item 601 Exhibit No.
(2) 1 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).
(10.1) 2 Indemnification Agreement and
Release, July 27, 1994, by and
between WLR Foods, Inc. and
Cuddy Farms, Inc.
(10.2) 3 Indemnification Agreement and
Release, by and among, Cuddy
Farms, Inc., Cuddy International
Corporation, and WLR Foods, Inc.
(99.1) 4 Press release, dated July 28, 1994.
(99.2) 5 Form of Letter to Shareholders of
the Company, dated July 28, 1994.
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ASSET PURCHASE AGREEMENT
among
CUDDY FARMS, INC.,
CUDDY INTERNATIONAL CORPORATION,
WLR FOODS, INC.,
and
WAMPLER-LONGACRE, INC.
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . 1
1.1. Assets to be Transferred . . . . . . . . . . . . . . . . 1
1.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . 4
1.3. Non-Competition and Name Use Agreement . . . . . . . . . 4
2. PURCHASE PRICE AND PAYMENT . . . . . . . . . . . . . . . . . . 5
2.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . 5
2.2. Payment . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3. Allocation . . . . . . . . . . . . . . . . . . . . . . . 8
3. ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . . 9
3.1. Liabilities Assumed by Wampler-Longacre . . . . . . . . . 9
3.2. Excluded Liabilities . . . . . . . . . . . . . . . . . . 9
3.3. Employees . . . . . . . . . . . . . . . . . . . . . . . . 10
4. CLOSING AND CLOSING DATE . . . . . . . . . . . . . . . . . . . 10
5. CONDITIONS TO WAMPLER'S DUTY TO CLOSE . . . . . . . . . . . . . 10
5.1. Certificate as to Representations and Warranties . . . . 10
5.2. Certificate as to Corporate Authority . . . . . . . . . . 11
5.3. Closing Documents . . . . . . . . . . . . . . . . . . . . 11
5.4. Business Records . . . . . . . . . . . . . . . . . . . . 13
5.5. Non-Competition and Name Use Agreement . . . . . . . . . 13
5.6. Trademark Assignments . . . . . . . . . . . . . . . . . . 13
5.7. License of Patents . . . . . . . . . . . . . . . . . . . 13
5.8. Opinion of Counsel . . . . . . . . . . . . . . . . . . . 13
5.9. Environmental Audit . . . . . . . . . . . . . . . . . . . 12
5.10. Bulk Sales . . . . . . . . . . . . . . . . . . . . . . . 12
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6. CONDITIONS TO CUDDY'S DUTY TO CLOSE . . . . . . . . . . . . . . 14
6.1. Representations and Warranties True . . . . . . . . . . . 14
6.2. Certificate as to Corporate Authority . . . . . . . . . . 14
6.3. Opinion of Counsel to Wampler-Longacre and WLR Foods . . 14
6.4. Assumption of Liabilities . . . . . . . . . . . . . . . . 15
6.5. Purchase Price . . . . . . . . . . . . . . . . . . . . . 15
7. CONDITIONS TO CUDDY'S AND WAMPLER'S DUTY TO CLOSE . . . . . . . 15
7.1 Ancillary Agreements . . . . . . . . . . . . . . . . . . 15
7.2. Anti-Trust Laws Compliance . . . . . . . . . . . . . . . 15
7.3. Consents . . . . . . . . . . . . . . . . . . . . . . . . 15
7.4. Litigation . . . . . . . . . . . . . . . . . . . . . . . 15
8. COVENANTS PRIOR TO CLOSING DATE . . . . . . . . . . . . . . . . 16
8.1. Access . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2. Operation of the Business . . . . . . . . . . . . . . . . 16
8.3. Grower Contracts . . . . . . . . . . . . . . . . . . . . 17
8.4. Cuddy/Modern Storage . . . . . . . . . . . . . . . . . . 17
8.5. Publicity . . . . . . . . . . . . . . . . . . . . . . . . 17
8.6. Cooperation and Disclosures . . . . . . . . . . . . . . . 17
8.7. Acquisition Proposals . . . . . . . . . . . . . . . . . . 18
8.8. Good Faith . . . . . . . . . . . . . . . . . . . . . . . 18
9. REPRESENTATIONS AND WARRANTIES OF CUDDY . . . . . . . . . . . . 19
9.1. Organization, Power and Authority . . . . . . . . . . . . 19
9.2. Due Authority, No Breach . . . . . . . . . . . . . . . . 19
9.3. Liabilities . . . . . . . . . . . . . . . . . . . . . . . 20
9.4. Ownership of Assets . . . . . . . . . . . . . . . . . . . 20
9.5. Accounts and Notes Receivable . . . . . . . . . . . . . . 21
9.6. Inventory . . . . . . . . . . . . . . . . . . . . . . . . 21
9.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . 21
9.8. Trademarks . . . . . . . . . . . . . . . . . . . . . . . 21
9.9. Licenses; Permits . . . . . . . . . . . . . . . . . . . . 22
9.10. Compliance with Environmental and Other Laws . . . . . . 22
9.11. Labor . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.12. Bonuses and Vacation Policies . . . . . . . . . . . . . . 24
9.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.14. Leases . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.15 Financial Statements . . . . . . . . . . . . . . . . . . 25
9.16. Transactions with Affiliates . . . . . . . . . . . . . . 26
9.17. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 26
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10. REPRESENTATIONS AND WARRANTIES OF CUDDY INTERNATIONAL . . . . . 26
10.1 Organization, Power and Authority . . . . . . . . . . . . 26
10.2 Due Authority, No Breach . . . . . . . . . . . . . . . . 27
11. REPRESENTATIONS AND WARRANTIES OF WAMPLER-LONGACRE . . . . . . 27
11.1. Organization, Power and Authority . . . . . . . . . . . . 27
11.2. Due Authority; No Breach . . . . . . . . . . . . . . . . 27
12. REPRESENTATIONS AND WARRANTIES OF WLR FOODS . . . . . . . . . . 28
12.1. Organization, Power and Authority . . . . . . . . . . . . 28
12.2. Due Authority, No Breach . . . . . . . . . . . . . . . . 28
12.3. Reports . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.4. Liabilities . . . . . . . . . . . . . . . . . . . . . . . 29
12.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . 29
12.6 WLR Stock . . . . . . . . . . . . . . . . . . . . . . . . 30
13. STOCK RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . 30
13.1. NonRegistration . . . . . . . . . . . . . . . . . . . . . 30
13.2. Investment Intent . . . . . . . . . . . . . . . . . . . . 31
13.3. Registration Rights . . . . . . . . . . . . . . . . . . . 31
13.4. Voting Trust . . . . . . . . . . . . . . . . . . . . . . 33
14. COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
14.1. Environmental Site Assessment . . . . . . . . . . . . . . 32
14.2. Tax Prorations . . . . . . . . . . . . . . . . . . . . . 32
14.3. Sales Tax . . . . . . . . . . . . . . . . . . . . . . . . 32
14.4. Recordation and Title Costs . . . . . . . . . . . . . . . 32
14.5. Other . . . . . . . . . . . . . . . . . . . . . . . . . . 32
15. POST CLOSING ACTIONS . . . . . . . . . . . . . . . . . . . . . 32
15.1. Additional Instruments . . . . . . . . . . . . . . . . . 32
15.2. Charlotte Processing Facility . . . . . . . . . . . . . . 32
15.3. Cuddy/Modern Storage . . . . . . . . . . . . . . . . . . 33
15.4. WLR Foods' Board of Directors . . . . . . . . . . . . . . 33
15.5. Access to Records . . . . . . . . . . . . . . . . . . . . 33
15.6. Customer Introductions . . . . . . . . . . . . . . . . . 33
15.7. Second Closing Date . . . . . . . . . . . . . . . . . . . 33
16. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 33
16.1. By Cuddy and Cuddy International . . . . . . . . . . . . 33
16.2. By Wampler-Longacre and WLR Foods . . . . . . . . . . . . 35
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17. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 36
17.1. Termination . . . . . . . . . . . . . . . . . . . . . . . 36
17.2. Survival . . . . . . . . . . . . . . . . . . . . . . . . 36
18. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 37
18.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 37
18.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . 38
18.3. Waivers and Amendment . . . . . . . . . . . . . . . . . . 38
18.4. Governing Law; Venue . . . . . . . . . . . . . . . . . . 39
18.5. Binding Effect; No Assignment . . . . . . . . . . . . . . 39
18.6. Counterparts . . . . . . . . . . . . . . . . . . . . . . 39
18.7. Specific Performance . . . . . . . . . . . . . . . . . . 39
18.8. Severability of Provisions . . . . . . . . . . . . . . . 40
18.9. Captions . . . . . . . . . . . . . . . . . . . . . . . . 40
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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EXHIBIT INDEX
1.1(a) Processing Facility
1.1(b) Further Processing Facility
1.1(c) Feed Mill
1.1(d) Turkey Farms
1.1(e) Scheduled Assets
1.3 Non-Competition and Name Transfer Agreement
2.1(c) Cuddy's Capital Expenditures
3.1 Assumed Liabilities
5.3(a) Real Estate Title Exceptions
5.8(a) Opinion of Counsel to Cuddy
5.8(b) Opinion of Counsel to Cuddy International
6.3 Opinion of Counsel to Wampler-Longacre and WLR Foods
7.3 Third Party Consents
9.5 Notes Receivable
9.8 Trademarks
9.10(a) Regulatory Investigations or Audits
9.10(c) Off-site Treatment, Storage and Disposal Locations
9.16 Transactions with Affiliates
13.3 Registration Rights Agreement
13.4 Voting Trust Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into this 27th day
of July, 1994, by and among CUDDY FARMS, INC., a North Carolina corporation
(Cuddy), CUDDY INTERNATIONAL CORPORATION, a corporation incorporated under
the laws of Ontario and controlling shareholder of Cuddy (Cuddy
International), WLR FOODS, INC., a Virginia corporation (WLR Foods), and
WAMPLER-LONGACRE, INC., a Virginia corporation and wholly-owned subsidiary
of WLR Foods (Wampler-Longacre) ("WLR Foods" and "Wampler-Longacre"
collectively sometimes referred to herein as "Wampler").
RECITALS
A. Cuddy operates two divisions. The farm division is a major
supplier of turkey eggs and poults with facilities in North Carolina, South
Carolina, Iowa, Missouri, Ohio, Virginia and Minnesota (the Poult
Business). The food division is an integrated turkey processor with three
turkey processing facilities, a feed mill, grow-out operations, and an
interest in a cold storage distribution center, all located in North
Carolina (the Business).
B. Cuddy desires to sell, and Wampler desires to purchase,
substantially all of the assets related to the Business, and certain
additional assets more particularly described herein.
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NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties represent and agree
as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1. Assets to be Transferred. Upon the terms and subject to
the conditions of this Agreement, on the Closing Date provided for in
Section 4, Cuddy shall sell, transfer and convey to Wampler all of the
following assets (Assets):
(a) All those certain tracts or parcels of land, with
improvements thereon, which comprise Cuddy's processing facility in
Marshville, North Carolina, which real estate is more particularly
described on Exhibit 1.1(a) (Processing Facility) attached hereto.
(b) All those certain tracts or parcels of land, with
improvements thereon, which comprise Cuddy's further processing facility,
including its research and development facility, in Monroe, North Carolina,
which real estate is more particularly described on Exhibit 1.1(b) (Further
Processing Facility) attached hereto.
(c) All those certain tracts or parcels of land, with
improvements thereon, which comprise Cuddy's feed mill in Union County,
North Carolina, which real estate is more particularly described on Exhibit
1.1(c) (Feed Mill) attached hereto.
(d) All those certain tracts or parcels of land, with
improvements thereon, which comprise Cuddy's three turkey grow-out farms in
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Union County, North Carolina, which real estate is more particularly
described on Exhibit 1.1(d) (Turkey Farms) attached hereto. The real
estate described by these subsections (a), (b), (c) and (d) of this Section
1.1, and the improvements located thereon, shall hereinafter collectively
be referred to as "Real Estate." The Real Estate, together with the
Charlotte Facility (defined below) shall be referred to as "Facilities."
(e) All machinery, fixtures, equipment, including all
poultry processing equipment and all computer and data processing
equipment, tools, spare parts, cleaning and other supplies, furniture,
rolling stock and other tangible personal property of the Business located
in or used for the benefit of the Facilities or that section of Cuddy's
corporate headquarters to be leased by Wampler-Longacre according to a
lease agreement described in Section 7.2 hereof, and including without
limitation those assets listed on the schedules attached hereto as Exhibit
1.1(e) (Scheduled Assets).
(f) All inventories held by the Business for resale,
including without limitation, live poultry and poultry products (whether
dressed, packaged, processed, frozen or otherwise), and all inventories
used in the Business including without limitation, all grain, feed and
medication, supplies and all packaging inventory existing as of the Closing
Date (the Inventory).
(g) All uncollected accounts receivable and notes
receivable of the Business, including without limitation, grower advances
and receivables, as of the Closing Date.
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(h) All right, title and interest of Cuddy in and to
all prepaid rentals and other prepaid expenses related to the Facilities
made by Cuddy in the ordinary and usual course of business as of the
Closing Date.
(i) All right, title and interest of Cuddy in and to
all customer lists, customer account records, personnel files and other
business records of the Business (Business Records).
(j) All trademarks, tradenames and other intangible
property used in connection with the Business, exclusive of the name or
mark "Cuddy" as registered in the U.S. Patent and Trademark Office alone or
in combination with other names or marks (such name or mark being the
subject of the NonCompetition and Name Use Agreement described in Section
1.3 hereof).
(k) All right, title and interest of Cuddy in and to
all franchises, leases, contracts, including all grower contracts, except
those identified on Exhibit 9.16, and the sublease of the further
processing facility in Charlotte, North Carolina (the Charlotte Facility),
and obligations assumed by Wampler pursuant to Section 3.1.
(l) All right, title and interest of Cuddy in and to
all certificates of occupancy and other transferable licenses, permits and
authorizations of regulatory authorities or private parties relating to the
construction, use, operation or enjoyment of the Assets.
(m) All claims of Cuddy against third parties relating
to the Assets.
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(n) All policies of insurance for the benefit of any of
the Assets to the extent such policies are assignable and pro rata to the
extent they cover the Assets and other assets.
(o) All unfilled orders for the sale of any inventory
and by-products.
(p) An exclusive license to use, in the continental
United States, all patents issued to and owned by Cuddy for use in the
Business for the duration of the term for which such patents were issued.
(q) All right, title and interest in "Cuddy/Modern
Storage," a North Carolina general partnership (the Cold Storage Facility).
(r) Cuddy's post office box and address at: P. O. Box
668, Marshville, North Carolina, 28103.
1.2 Excluded Assets. Cuddy is retaining its Poult Business.
Cuddy corporate headquarters are located in Marshville, North Carolina, and
Cuddy is retaining ownership of the commercial building and its contents,
other than those items specifically listed on Exhibit 1.1(e). All hedging
contracts and related balances of Cuddy are excluded from this transaction.
1.3. NonCompetition and Name Use Agreement. On the Closing
Date, Cuddy and Cuddy International will enter in to, and Cuddy will cause
A.M.C Family Holdings, Ltd. and Messr. A.M. Cuddy, Cuddy's shareholders, to
enter into a Non-Competition and Name Use Agreement with Wampler-Longacre
in substantially the same form as Exhibit 1.3 (Non-Competition and Name Use
Agreement) attached
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hereto. Cuddy will use all reasonable efforts to cause D. Bruce Cuddy to
enter into a substantially similar but separate NonCompetition and Name Use
Agreement.
2. PURCHASE PRICE AND PAYMENT.
2.1. Purchase Price.
(a) The purchase price for the Assets shall be
Seventy-Three Million Three Hundred Thousand Dollars ($73,300,000.00)
subject to the Post-Closing Adjustments as defined in Section 2.1(c) below.
(b) Within 30 days following the Closing Date, auditors
KPMG Peat Marwick shall prepare and deliver to Cuddy and Wampler an audited
schedule of working capital of the Business as of the commencement of
business on the Closing Date (Closing Date Working Capital) according to
generally accepted accounting principles, consistently applied; provided,
however, that the following items shall be excluded from the determination
of working capital:
(i) Cash accounts, except those cash accounts set
up to fund specific liabilities assumed by Wampler;
(ii) Any accounts related to hedging activities;
(iii) Prepaid insurance accounts where the
insurance policy will not be transferred to Wampler;
(iv) Short-term borrowing, current installments of
long-term borrowing, and related accrued interest;
(v) officer receivables;
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(vi) deposits held by Cuddy, payments paid by
Cuddy on account of non-competition obligations, and the interest in the
Cuddy/Modern Storage partnership (which are to be conveyed in the
transaction as other assets); and, provided further that;
(vii) repairs and maintenance, exclusive of truck
parts, shall not be adjusted from the value of $185,000 as set forth in the
statement of working capital reflected on a May 31, 1994 balance sheet
which was internally prepared by Cuddy and previously delivered to Wampler
(May Balance Sheet);
(viii) the inventory write-up, if any,
attributable to feed costs in finished products resulting from adjusting
standard costing methods utilized in the May Balance Sheet to generally
accepted accounting principles for the Closing Date Working Capital shall
not exceed $300,000.
(c) The purchase price set forth in Section 2.1(a)
above shall be adjusted according to the following post-closing
determinations (Post-Closing Adjustments):
(i) The purchase price shall be increased by the
excess of Closing Date Working Capital over $40,400,000, or decreased by
the excess of $40,400,000 over the Closing Date Working Capital; and
(ii) The purchase price shall be increased by the
excess of the amount of expenditures, as determined by KPMG Peat Marwick,
related to Cuddy's capital expenditure program set forth on Exhibit 2.1(c)
and
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reflected in construction in progress of the Further Processing Facility as
of the Closing Date over $467,725 (Cap Ex Audit).
(d) During the ten (10) days following Cuddy's receipt of the
Closing Date Working Capital and Cap Ex Audit as required by Section 2.1(b)
and (c) hereof, Cuddy's auditors, Potter & Company, shall be permitted to
review the Closing Date Working Capital and Cap Ex Audit and working papers
of KPMG Peat Marwick related thereto. If any matter is in dispute and
cannot be resolved in such ten (10)-day period, both accounting firms
shall, within an additional five (5)-day period following expiration of
Potter & Company's ten (10)-day review period, submit the question or
questions in dispute to Price Waterhouse which shall resolve the dispute
within ten (10) days after the questions are referred to them and whose
decisions shall be final and binding on all parties hereto.
One business day after the earlier of Cuddy and Wampler
agreeing on the Post Closing Adjustments or the final decision of Price
Waterhouse, the payments described in Section 2.2(c) below shall occur (the
Second Closing Date).
2.2. Payment.
(a) On the Closing Date, Wampler-Longacre shall pay to
or for the benefit of Cuddy, by certified or bank cashier's check or other
current funds acceptable to Cuddy, the sum of Forty-Two Million Five
Hundred Thousand Dollars ($42,500,000); and
(b) On the Closing Date, subject to the restrictions
described in Section Section 13 hereof, WLR Foods shall issue to the
independent corporate
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trustee of the Voting Trust Agreement described in Section 13.4 hereof (the
Trustee), for the benefit of Cuddy that number of shares of WLR Foods
common stock, rounded to the nearest whole number, which is determined by
dividing the sum of Thirty Million Eight Hundred Thousand Dollars
($30,800,000) by the weighted average closing price of WLR Foods common
stock as quoted by NASDAQ's National Market System for the ten (10)
consecutive WLR Foods common stock trading days ending at the close of
market two business days prior to the Closing Date; provided, however, that
if such average is below $24.00 per share, $24.00 shall be the divisor and
if such average is above $28.00 per share, $28.00 shall be the divisor
(Stock Value), less 100,000 shares.
(c) On the Second Closing Date, (i) if the purchase price,
after making the Post-Closing Adjustments, exceeds $73,300,000, WLR Foods
shall issue to the Trustee on behalf of Cuddy 100,000 shares of WLR Foods
common stock plus that additional number of shares of WLR Foods common
stock, rounded to the nearest whole number, which is determined by dividing
the sum of the Post-Closing Adjustments by the Stock Value; (ii) if the
purchase price, after making the Post-Closing Adjustments, is equal to
$73,300,000, WLR Foods shall issue to the Trustee on behalf of Cuddy
100,000 shares of WLR Foods common stock; or (iii) if the purchase price,
after making the Post-Closing Adjustments is less than $73,300,000, WLR
Foods shall issue to Cuddy 100,000 shares reduced by that number of shares
of WLR Foods common stock, rounded to the nearest whole number, which is
determined by dividing the sum of the Post-Closing Adjustments by the Stock
Value;
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<PAGE> 10
provided, however, that if the Post-Closing Adjustments exceed the Stock
Value of 100,000 shares of WLR Foods common stock, Cuddy shall pay to WLR
Foods a sum equal to such excess amount, in cash. Any stock issuances
shall be subject to the restrictions set forth in Section 13.
2.3. Allocation. Cuddy and Wampler agree to allocate a
portion of the purchase price described in Section 2.1 under Class III
assets in accordance with Internal Revenue Code Section 1060 on the
Forms 8594 filed by both parties with the Internal Revenue Service as
required by law. The allocation to those assets is listed below:
Land $3,060,000
Land Improvements 900,000
Buildings and Related Components 12,450,000
Equipment 15,790,000
Accounts receivable, the covenant not to compete, and any other
Class III assets not listed above will be determined as of the Closing Date
and will be included on the Forms 8594.
3. ASSUMPTION OF LIABILITIES.
3.1 Liabilities Assumed by Wampler-Longacre. As further
consideration for the transfer of Assets by Cuddy to Wampler-Longacre,
Wampler-Longacre agrees, upon the terms and subject to the conditions set
forth herein, to assume all ordinary and customary accounts payables of the
Business as of the Closing Date specifically excluding checks presented but
unpaid, and all accruals and
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<PAGE> 11
obligations arising under the contracts (including all the grower
contracts) leases and other agreements listed on Exhibit 3.1 (Assumed
Liabilities).
3.2. Excluded Liabilities. Other than obligations or
liabilities related to the Business which accrue after the Closing Date,
Wampler-Longacre does not assume, nor does it agree to pay, any debts,
liabilities, or obligations not referred to in Section 3.1, including any
federal, state, or local income taxes or payroll taxes (except to the
extent included in Closing Date Working Capital) of Cuddy, whether for the
period ending as of the Closing Date or any prior period, or any other
taxes of any kind or nature for such periods. Cuddy shall remain liable
for any defaults or acts or any claims occurring or made prior to the
Closing Date in connection with the Business, regardless of whether any
suits, proceedings or claims with respect thereto arise before or after the
Closing Date. Wampler-Longacre shall not assume or be liable for any tax
liability of Cuddy in respect of any profit derived from the sale provided
for in this Agreement. Further, Wampler-Longacre shall not assume any
liability for products shipped prior to the Closing Date, nor for any
leases, contracts, or any other agreements not listed in Schedule 3.1
hereto, other than such contracts, agreements, orders and other
transactions incurred or entered into by Cuddy after the date hereof in the
ordinary course of the Business prior to the Closing Date. It is
expressly agreed that Wampler-Longacre assumes no obligation to continue
any employee welfare or benefit plan currently maintained by Cuddy.
3.3 Employees. On the Closing Date, Wampler-Longacre will
offer continued employment to all Cuddy employees then employed in the
Business with
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<PAGE> 12
salary and benefits, taken as a whole and where administratively
practicable, comparable to what Cuddy provided prior to the Closing Date,
except as to any key executive benefit arrangements. Cuddy will have no
ongoing obligation for employees who accept the Wampler-Longacre offer, and
Wampler-Longacre shall have no ongoing obligation to retain employees for
any specific term.
4. CLOSING AND CLOSING DATE. The closing of the transactions
anticipated by this Agreement shall take place within three business days
after Hart-Scott-Rodino clearance is obtained at the offices of Wharton,
Aldhizer & Weaver, as the parties may mutually agree in writing (Closing
Date). TIME IS OF THE ESSENCE TO THE CLOSING OF THIS TRANSACTION.
5. CONDITIONS TO WAMPLER'S DUTY TO CLOSE. The obligations of
Wampler to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, on or before the Closing Date, of the covenants
and conditions set forth in Sections 7 and 8 herein and the following
conditions and the receipt of the following documents (subject to the right
of Wampler to waive any such requirement):
5.1. Certificate as to Representations and Warranties. All of
the representations and warranties of Cuddy and Cuddy International
contained in this Agreement or in any certificate, document or instrument
delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be true and correct in all material respects on
and as of the Closing Date, and Cuddy and Cuddy
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<PAGE> 13
International shall deliver to Wampler certificates signed by a senior
officer to such effect.
5.2. Certificate as to Corporate Authority. A copy of the
appropriate board resolutions of Cuddy and Cuddy International authorizing
the execution and performance of this Agreement and all necessary documents
to consummate this Agreement as certified by a senior officer shall be
delivered at closing.
5.3. Closing Documents. The following documents shall be
delivered at Closing:
(a) Deeds conveying title to the Real Estate with
General Warranty and otherwise in accordance with the form of warranty deed
customarily used for conveyance of North Carolina real property, but
subject to easements, covenants and restrictions of record to the extent
the same lawfully affect the Real Estate to Wampler-Longacre. Wampler's
obligation to close shall be conditioned upon Cuddy's being able to convey
marketable title to the Real Estate, subject only to the title exceptions
listed in Exhibit 5.3(a), and such other matters as do not materially
adversely affect marketability of title. In the event an examination of
title or survey of the Real Estate reveals objections to title not
described above, Wampler shall give Cuddy prompt notice thereof. Upon
receipt of notice of objection, Cuddy shall have the right (but not the
obligation) to attempt to cure the defect, and shall thereby be entitled to
a reasonable extension of the Closing Date during which to attempt to cure
the defect, but not more than 30 days. If the defect is not cured,
Wampler-Longacre shall, within ten (10) days following the expiration of
the 30-day
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<PAGE> 14
period or earlier notice from Cuddy regarding the defect, as the case may
be, either (i) waive the defect and promptly proceed to closing under this
Agreement without reduction in the purchase price set forth in Section 2.1,
or (ii) terminate this Agreement by written notice to Cuddy. To the extent
an owner's policy of title insurance can be obtained by Wampler from
Lawyers Title Insurance Corporation, without exception to such objections,
Wampler-Longacre waives any such objection and agrees to look solely to
such policy for the title insurance with respect to that objection.
(b) Bills of sale as to the Assets containing the
following two representations: (i) all Inventory is of a quality and
quantity which are saleable and usable in the ordinary course of the
Business other than ordinary spoilage, and other than obsolete packaging
material, and (ii) all of the machinery, equipment and vehicles taken as a
whole are in working order and suitable for their intended purposes within
the Business. The portion of the total purchase price represented by WLR
Foods common stock shall be in exchange for Cuddy's transfer of that amount
of inventory and, if necessary, an appropriate amount of accounts
receivable, reflected in a bill of sale from Cuddy to WLR Foods. The
balance of the Assets conveyed pursuant to a bill of sale shall be conveyed
by a bill of sale from Cuddy to Wampler-Longacre.
(c) Motor vehicles certificates of title, duly endorsed
to Wampler-Longacre, for all titled rolling stock of the Business.
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<PAGE> 15
(d) An assignment or assignments of Assumed Liabilities
to Wampler-Longacre.
(e) Satisfactory evidence of the consent of any third
party whose consent must be obtained to transfer the Assets and assign the
Assumed Liabilities, specifically including the required written consent of
ConAgra to the assignment of Cuddy's existing sublease related to the
Charlotte Facility and, subject to Section 8.4, the consent of Cuddy's
partner in Cuddy/Modern Storage.
5.4. Business Records. The Business Records shall be
delivered to Wampler-Longacre.
5.5. Non-Competition and Name Use Agreement. Executed copies
of the Non-Competition and Name Use Agreement described in Section 1.3
shall be delivered to Wampler.
5.6. Trademark Assignments. An assignment of all trademarks,
tradenames and other intangible property used in connection with the
Business as described in Section 1.1(j).
5.7. License of Patents. An exclusive license of all patents
issued to and owned by Cuddy as set forth in Section 1.1(p).
5.8. Opinion of Counsel. An opinion of Griffin, Caldwell,
Helder & Lee, counsel for Cuddy and an opinion of Blake, Cassels & Graydon,
counsel for Cuddy International, both dated as of the Closing Date,
substantially as set forth in Exhibit 5.8(a) and 5.8(b) respectively.
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<PAGE> 16
5.9. Environmental Audit. Receipt of a copy of the existing
environmental site assessments, if any, as to the Real Estate, and the Cold
Storage Facility within the possession or control of Cuddy. Receipt of an
environmental site assessment as to the Charlotte Facility or any other
Real Estate. If any environmental audit reveals any matters requiring
corrective action, the parties hereto shall discuss and agree as to any
corrective action recommended by such report and the allocation of the cost
and responsibility therefor.
5.10. Bulk Sales. Wampler hereby waives compliance by Cuddy
with the provisions of any so-called bulk transfer laws in connection with
the sale of the Assets, and Cuddy and Cuddy International hereby agree to
indemnify and hold harmless Wampler against any and all liabilities which
may be asserted against Wampler as a result of such non-compliance.
6. CONDITIONS TO CUDDY'S DUTY TO CLOSE. The obligations of Cuddy
to consummate the transactions contemplated by this Agreement are subject
to the fulfillment, on or before the Closing Date, of the conditions set
forth in Sections 7 and 8 and the following conditions and the receipt of
the following documents (subject to the right of Cuddy to waive any such
condition):
6.1. Representations and Warranties True. All the
representations and warranties of Wampler-Longacre and WLR Foods contained
in this Agreement or in any certificate, document or instrument delivered
pursuant hereto or in connection with the transactions contemplated hereby
shall be true and correct in all material respects on and as of the Closing
Date, and Wampler-Longacre and WLR Foods shall
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<PAGE> 17
deliver to Cuddy a certificate signed by their respective secretaries or
assistant secretaries to such effect.
6.2. Certificate as to Corporate Authority. A copy of the
appropriate board resolutions of Wampler-Longacre and WLR Foods authorizing
the execution and performance of this Agreement, including the reservation
of 200,000 shares of WLR Foods common stock for possible distribution to
Cuddy pursuant to Section 2.2(c), and all necessary documents to consummate
this Agreement as certified by their respective secretaries or assistant
secretaries shall be delivered at Closing Date.
6.3. Opinion of Counsel to Wampler-Longacre and WLR Foods. An
opinion of Wharton, Aldhizer & Weaver, counsel for Wampler-Longacre and WLR
Foods, dated as of the Closing Date, substantially as set forth in
Exhibit 6.3.
6.4. Assumption of Liabilities. Written acknowledgement of
assumption as to any Assumed Liabilities shall be delivered on the Closing
Date in a form reasonably suitable to Cuddy's counsel.
6.5. Purchase Price. The consideration set forth in Section
2(a) and (b) shall be delivered at the Closing Date.
7. CONDITIONS TO CUDDY'S AND WAMPLER'S DUTY TO CLOSE. The
obligations of Cuddy or Wampler to consummate the transactions contemplated
by this Agreement are subject to the fulfillment, on or before the Closing
Date, of the following conditions and the receipt of the following
documents (subject to the right of any party to waive any such condition on
its own behalf):
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<PAGE> 18
7.1. Ancillary Agreements. Cuddy and Wampler-Longacre shall
enter into an office lease and computer operations agreement, a poult
supply agreement, a feed supply agreement and a breeder hen processing
agreement within 7 days of the date hereof effective as of the Closing Date
on terms acceptable to them.
7.2. Anti-Trust Laws Compliance. Cuddy and Wampler shall have
duly complied with all provisions of the Hart-Scott-Rodino Anti-trust
Improvements Act of 1976 applicable hereto.
7.3. Consents. Cuddy shall have obtained all necessary third
party consents and approvals as set forth on Exhibit 7.3.
7.4. Litigation. No United States or state court or other
entity of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment, decree,
injunction or other order (whether temporary, preliminary or permanent)
which is in effect and prohibits consummation of the transactions
contemplated by this Agreement.
8. COVENANTS PRIOR TO CLOSING DATE.
8.1 Access. Until the Closing Date, Cuddy shall give the
authorized representatives of Wampler access, during normal business hours
and upon reasonable notice, to all of the records and properties of Cuddy
relating to the Assets. Cuddy will furnish the representatives of Wampler
during such period with all information as such representatives may
reasonably request and cooperate with such representatives in connection
with such review and examination.
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8.2. Operation of the Business. Cuddy agrees that from the
date hereof until the Closing Date, except as otherwise provided below, it
will operate the Business substantially as presently operated and only in
the ordinary course, and, consistent with such operation, it will (i)
maintain its assets and properties in good repair, order and condition,
reasonable wear and tear accepted; (ii) maintain in full force and effect
all patents, trademarks, patent and trademark applications, copyrights,
franchises, licenses, permits, easements and rights and other
authorizations currently in effect; (iii) use all reasonable efforts to
maintain in full force and effect the insurance policies and binders
currently in effect, including, without limitation, those listed on Exhibit
9.17 or to obtain equivalent policies and binders with insurers approved in
writing by Wampler; (iv) use all reasonable efforts to keep available the
services of its present officers, employees and agents and to maintain its
relations and goodwill with its suppliers, customers, distributors, and any
others having business relations with Cuddy; (v) promptly advise Wampler in
writing of the commencement of any claim, action, suit or proceeding,
arbitration or investigation when the amount claimed is $50,000 or more in
the aggregate or the occurrence of any development of a nature that is or
may reasonably be expected to be materially adverse to the operations,
properties, assets or prospects of the Business; (vi) not propose or take
any action which would make any representation or warranty in Section 9
hereof untrue; (vii) maintain salaries, bonuses and other compensation
levels as of the date hereof; and (viii) maintain computation methods for
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<PAGE> 20
payment to growers consistent with those methods used as of the date hereof
and not pay any discretionary bonuses.
8.3. Grower Contracts. Prior to the Closing Date, the grower
contracts listed on Exhibit 9.16 shall have been restated into standard
grower contracts substantially similar to the grower contracts presently in
use by Cuddy for non-related parties.
8.4. Cuddy/Modern Storage. Cuddy shall use all reasonable
efforts and work with Wampler-Longacre to obtain Modern Storage Company's
agreement to (i) accept Wampler-Longacre as a partner in Cuddy/Modern
Storage, a North Carolina general partnership, and (ii) continue the
partnership despite the transfer of Cuddy's partnership interest to
Wampler-Longacre.
8.5. Publicity. Cuddy and Wampler shall consult with and
obtain approval from each other prior to making any filings with any
regulatory authority; provided, however, that WLR Foods shall be permitted
to make all required disclosures regarding this Agreement, including
details as to price and terms. Cuddy shall consult with and obtain
approval from Wampler prior to issuing any press releases or otherwise
making public statements with respect to the transactions contemplated
hereby.
8.6. Cooperation and Disclosures. (a) Each party shall use
all reasonable efforts (i) to prepare and promptly file all necessary
documentation, to effect all necessary applications, notices, petitions,
filings and other documents, and to take, or cause to be taken, all actions
necessary to comply promptly with all legal
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<PAGE> 21
requirements which may be imposed on such party with respect to this
Agreement and (ii) to obtain (and to cooperate with the other party to
obtain) as promptly as practicable any consent, authorization, order or
approval of, or any exemption by, any regulatory authority and any private
third party which is required to be obtained or made by such party in
connection with this Agreement.
(b) Cuddy shall use all reasonable efforts to obtain
necessary consents and approvals and shall permit Wampler's advisors to
work directly to obtain such consents.
(c) Each party shall have the right to review in
advance all the information relating to the other parties which appears in
any filing made with, or written materials submitted to, any regulatory
authority in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties shall
act reasonably and as promptly as practicable. Each party agrees that it
will consult with the other party with respect to the obtaining of all
permits, consents, approvals and authorizations of all third parties and
regulatory authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the
other parties apprised of the status of matters relating to completion of
the transactions contemplated herein. The parties agree that all
proprietary information will be maintained as such except as otherwise
permitted by this Agreement.
8.7. Acquisition Proposals. Cuddy agrees that neither it nor
any of its related entities shall directly, through any officer, director,
agent, employee or
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representative, initiate or solicit or respond to, on or after the date
hereof, and up to and including the Closing Date or the date of termination
of this Agreement in accordance with the terms hereof (as the case may be),
any inquiries or the submission of any proposals or offers from any person
relating to any merger, consolidation or similar business combination
involving the Business.
8.8 Good Faith. The parties agree to act in good faith and
use all reasonable efforts to execute the ancillary agreements referred to
in Section 7.1 previously agreed to as soon as final versions are available
and to satisfy all other conditions of this agreement within their
respective power.
9. REPRESENTATIONS AND WARRANTIES OF CUDDY. Cuddy hereby
represents and warrants to Wampler as follows:
9.1. Organization, Power and Authority. Cuddy is a
corporation duly organized and existing in good standing under the laws of
North Carolina with all necessary corporate power and authority to carry on
its business as now being conducted and to own, lease and operate the
Assets.
9.2. Due Authority; No Breach. The execution and delivery by
Cuddy of this Agreement and the performance by Cuddy of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action of Cuddy. This Agreement is a valid and binding obligation of
Cuddy, and each instrument contemplated by this Agreement, when executed
and delivered by Cuddy in accordance with the provisions hereof, will be a
valid and binding obligation of Cuddy, in each case enforceable against
Cuddy in accordance with its terms (except
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as such enforceability may be limited by applicable creditors' rights law).
Neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will (a) conflict with or result in
any violation of any provision of the Certificate of Incorporation or
Bylaws of Cuddy, (b) except as disclosed on any exhibit to this Agreement,
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) in the terms, conditions or provisions of
any material obligation (or obligations which in the aggregate would be
material) to which Cuddy is a party or by which Cuddy or the Assets are
bound; (c) violate any judgment, order or award of any court,
administrative agency or governmental body against or binding upon Cuddy or
the Assets, or (d) constitute a violation by Cuddy of any law or regulation
of any jurisdiction as it relates to Cuddy or the Assets.
9.3. Liabilities. Except for the Assumed Liabilities, Cuddy
has no accrued or absolute liabilities, debts or obligations, and to the
best of its knowledge, no contingent liabilities, debts or obligations,
which will, subsequent to the Closing Date in any manner materially
adversely affect any of the Assets or the Business. Cuddy has no knowledge
of any material breach or default, or claimed or alleged breach or default
by Cuddy, or any other party under any term or provision of any of the
Assumed Liabilities, and to the knowledge of Cuddy, no event has occurred
which, with the passage of time or the giving of notice or both, would
constitute a breach or default by Cuddy or any other party thereunder.
9.4. Ownership of Assets. The Assets as described in Section
1.1 and the Exhibits thereto are complete and accurate descriptions and
listings of all
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<PAGE> 24
material assets used to conduct the Business, as conducted by Cuddy, which
is being sold to Wampler. Except as set forth on Exhibit 9.4 or any other
exhibit to this Agreement, Cuddy is the owner of the Assets and has good
and marketable title to all such Assets, free and clear of any lien, charge
or other encumbrance, except for: (a) statutory liens for current taxes or
assessments not yet due or delinquent, (b) mechanics', carriers', workers',
repairers' and other similar liens arising or incurred in the ordinary
course of business relating to obligations as to which there is no default
on the part of Cuddy, none of which are of character, amount or extent
which materially detract from the value, or interfere with respect to the
properties subject thereto, or otherwise impair operations of the Business
and (c) such other liens, imperfections of title, charges, easements,
restrictions, encumbrances and other matters of similar nature which do not
relate to borrowed money and do not materially interfere with the operation
of the Business.
9.5. Accounts and Notes Receivable. All accounts and notes
receivable reflected on the May Balance Sheet, and all accounts and notes
receivable of Cuddy arising subsequent to October 30, 1993, have arisen
only in the ordinary course of business for goods sold and delivered or
services performed. Exhibit 9.5 is a complete listing of all notes
receivable as of the May Balance Sheet. The reserves for bad debts
reflected on the May Balance Sheet are in accordance with generally
accepted accounting principles.
9.6. Inventory. All inventory reflected on the May Balance
Sheet, a complete copy of which has been provided to Wampler by Cuddy, and
all inventory
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<PAGE> 25
acquired by Cuddy subsequent to October 30, 1993 is reported in a manner
consistent with past practice.
9.7. Litigation. There is no pending (or, to Cuddy's
knowledge, threatened) judicial, administrative or arbitral action, suit or
proceeding against Cuddy which, if adversely determined, could reasonably
be expected to have a material adverse affect on the Assets or the Business
or result in any material adverse change in the Assumed Liabilities or
which questions the validity of this Agreement or any action taken or to be
taken in connection herewith. Cuddy is not subject to any material order
or injunction of any court or governmental agency or body involving the
Business or the Assets. Cuddy is not conducting or carrying on business or
affairs in violation of any federal, state, or local law or regulation, or
court or administrative order, which violation could reasonably be expected
to affect, materially and adversely, the Business or the Assets.
9.8. Trademarks. Exhibit 9.8 contains an accurate and
complete list of Cuddy's trademarks, trade names, service marks and brand
names included in the Assets or the operation of the Business except those
containing the "Cuddy" name. Except as disclosed on Exhibit 9.8, each
trademark, trade name, service mark, or brand name included in the Assets
is owned solely by Cuddy or an affiliated corporation free and clear of all
liens and restrictions (other than restrictions applicable generally to
trademarks, trade names, service marks or brand names) and is not currently
being challenged in any way, and to the knowledge of Cuddy, the use
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by Cuddy thereof as presently utilized does not infringe upon or conflict
with the rights of any person.
9.9. Licenses; Permits. Cuddy has all material governmental
license, permits, authorizations, and approvals and has made all material
filings and registrations which are necessary in order to enable Cuddy to
conduct the Business in all material respects.
9.10. Compliance with Environmental and Other Laws.
(a) Except as set forth in Exhibit 9.10(a) or as
disclosed in the assessment reports to be delivered under Section 5.7,
Cuddy is in material compliance with all federal, state or local law,
regulation, ordinance or code concerning environmental matters, or
concerning health and consumer or employment safety matters, including
without limitation, applicable regulations, ordinances, permits, standards
and agreements, the failure to comply with which would affect, materially
and adversely, the Business or the Assets. A list of all regulatory
investigations or audits pertaining to the Business, including any tax
audits, since January 1, 1991, is set forth in Exhibit 9.10(a).
(b) Cuddy, to the best of its knowledge, has not
discharged, disposed, released, placed, or dumped onto or under the
Facilities (or into the air or water on or surrounding such premises) any
"hazardous substances" or "toxic substances" as those terms are defined in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901,
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et seq., any amendments to the aforementioned laws heretofore enacted, and
in the regulations adopted pursuant to such laws which were in effect on
the date of this Agreement.
(c) Exhibit 9.10(c) contains a complete and accurate
list of all off-site treatment, storage, and disposal locations, including
without limitation, landfills, surface impoundments, waste piles, recycling
facilities, incinerators, and regeneration plants, which have been used by
Cuddy for the management of solid wastes and any "hazardous substances" or
"toxic substances" as those terms are defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
42 U.S.C. Section 9601, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., any amendments to the aforementioned
laws heretofore enacted, and in the regulations adopted pursuant to such
laws which are in effect on the date of this Agreement, and Cuddy has not
received any written notice from any governmental agency or private or
public entity that it is responsible or potentially responsible for
response costs with respect to a release or threat of a release of any
"hazardous substances" or "toxic substances" as those terms are defined in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq., the Resource
Conservation Recovery Act, 42 U.S.C. Section 6901, et seq., any amendments
to the aforementioned laws heretofore enacted, and in the regulations
adopted pursuant to such laws which were in effect on the date of this
Agreement.
9.11. Labor.
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(a) With respect to employees of Cuddy:
(i) Cuddy is and has been in compliance in all
material respects with all applicable laws governing employment and
employment practices, terms and conditions of employment and wages and
hours, including without limitation any such laws respecting employment
discrimination and occupational safety and health requirements, and Cuddy
has not engaged in any unfair labor practices;
(ii) there is no litigation, arbitration
proceeding, governmental investigation, citation or action of any kind
pending or, to the knowledge of Cuddy, proposed or threatened against Cuddy
relating to employment, employment practices, terms and conditions of
employment or wages and hours.
(b) Cuddy has no collective bargaining relationship or
duty to bargain with any labor union or organization, and Cuddy has not
recognized any labor union or organization as the collective bargaining
representative of any of its employees.
9.12. Bonuses and Vacation Policies. The list of all
compensations, bonus arrangements, labor or employment contracts and any
accrued vacation or sick leave benefits and all other fringe benefits
presently being furnished to Cuddy employees related to the Business,
including any profit sharing plans, hospitalization, group life insurance
and reimbursable expenses presently furnished by Cuddy to such employees,
previously provided to Wampler by Cuddy is a true, complete and accurate
representation of such matters.
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9.13. Taxes. All tax returns and reports of Cuddy relating to
the Business required by law to be filed have been duly filed and all
taxes, assessments, fees and other governmental charges upon Cuddy which
are due have been paid, other than those which are presently payable
without penalty or interest, or the failure to comply with which would not
affect, materially and adversely, the Business or the Assets.
9.14. Leases. Included in Exhibit 3.1 is a list of all leases
with respect to the Assets which will be assumed by Wampler-Longacre, and
Cuddy has furnished to Wampler-Longacre complete and correct copies of all
such leases (including all amendments thereto). All such leases are valid,
binding and in full force and effect against Cuddy and, to the best of
Cuddy's knowledge, valid, binding and in full force and effect against the
respective lessors and have not been materially amended or modified except
as disclosed. Cuddy is not in default, and no notice of alleged default
has been received by Cuddy, under any such leases. To Cuddy's knowledge,
no lessor is in default or alleged to be in default under any such leases.
To the best of Cuddy' knowledge, there exists no condition or event which,
after notice or lapse of time or both, would constitute a material default
by Cuddy.
9.15. Financial Statements. Cuddy has delivered to Wampler-
Longacre: (i) its audited balance sheets as at October 30, 1993 and
October 31, 1992, and the related audited statements of income, changes in
shareholders' equity and cash flow, together with the report thereon of
Potter & Company, independent certified public accountants; and (ii) the
May Balance Sheet and the related unaudited
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statement of income for the period then ended. The audited financial
statements and notes fairly present the financial condition and results of
operations of the Cuddy as at the respective dates thereof and for the
periods therein referenced, all in accordance with generally accepted
accounting principles; the financial statements referred to in this section
reflect the consistent application of such accounting principles throughout
the periods involved, except as disclosed in the notes to such financial
statements.
Since October 30, 1993, Cuddy has conducted its business
in the ordinary course of business and there has not been (i) any change in
Cuddy of which its management has knowledge which is reasonably likely to
result in a material adverse effect on Cuddy; (ii) any material
transactions such as a transfer of assets to related parties, a contract
cancellation, an asset sale or transfer or a loss other than in the
ordinary course of business; (iii) any development (exclusive of general
economic factors affecting business in general) or threatened development
of a nature that is or may be materially adverse to the operations, assets,
properties or property of the Business; or (iv) any change by Cuddy in
accounting principles, practices or methods (except as required by changes
in generally accepted accounting principles as concurred to by Cuddy's
independent auditors).
9.16. Transactions with Affiliates. No director, officer or
shareholder of Cuddy, or any member of such person's family, owns or has an
ownership interest in any business, corporate or otherwise, which is a
party to, or in any property which is the subject of, business arrangements
or relations of any kind with the Business,
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other than by ownership of less than two percent of the stock of a
publicly-held corporation and except as disclosed on Exhibit 9.16.
9.17. Insurance. The copies of policies, insurance
certificates, and binders previously provided to Wampler by Cuddy
accurately identifies all fire, liability, product liability, vehicular,
title and other insurance held by or on behalf of Cuddy relating to the
Business.
10. REPRESENTATIONS OF CUDDY INTERNATIONAL. Cuddy International
hereby represents and warrants to Wampler as follows:
10.1. Organization, Power and Authority. Cuddy International
is a corporation duly organized and existing in good standing under the
laws of the Ontario. Cuddy International has all necessary corporate power
and authority to enter into and be bound by the terms and conditions of
this Agreement.
10.2. Due Authority; No Breach. The execution and delivery by
Cuddy International under this Agreement, and the performance by Cuddy
International of its obligations contemplated hereby, have been duly
authorized by all necessary corporate action. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will conflict with or result in any violation of the
articles of incorporation or Bylaws of Cuddy International or constitute a
default in the terms, conditions or provisions of any material obligation
to which Cuddy International is a party or by which Cuddy International is
bound, violate any judgment, order or award of any court, administrative
agency or governmental body against or binding upon Cuddy International or
constitute a
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violation by Cuddy International of any law or regulation of any
jurisdiction as it relates to Cuddy International.
11. REPRESENTATIONS AND WARRANTIES OF WAMPLER-LONGACRE. Wampler-
Longacre hereby represents and warrants to Cuddy as follows:
11.1. Organization, Power and Authority. Wampler-Longacre is a
corporation duly organized and existing in good standing under the laws of
the Commonwealth of Virginia. Wampler-Longacre has all necessary corporate
power and authority to enter into and be bound by the terms and conditions
of this Agreement.
11.2. Due Authority; No Breach. The execution and delivery by
Wampler-Longacre of this Agreement, and the performance by Wampler-Longacre
of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action. This Agreement is a valid and binding
obligation of Wampler-Longacre, and each instrument contemplated by this
Agreement, when executed and delivered by Wampler-Longacre in accordance
with the provisions hereof, will be a valid and binding obligation of
Wampler-Longacre, in each case enforceable against Wampler-Longacre in
accordance with its terms (except as such enforceability may be limited by
applicable creditors' rights laws). Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will conflict with or result in any violation of the Certificate of
Incorporation or Bylaws of Wampler-Longacre or constitute a default in the
terms, conditions or provisions of
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<PAGE> 33
any material obligation to which Wampler-Longacre is a party or by which
Wampler-Longacre is bound, violate any judgment, order or award of any
court, administrative agency or governmental body against or binding upon
Wampler-Longacre or constitute a violation by Wampler-Longacre of any law
or regulation of any jurisdiction as it relates to Wampler-Longacre.
12. REPRESENTATIONS AND WARRANTIES OF WLR FOODS. WLR Foods hereby
represents and warrants to Cuddy as follows:
12.1. Organization, Power and Authority. WLR Foods is a
corporation duly organized and existing in good standing under the laws of
the Commonwealth of Virginia. WLR Foods has all necessary corporate power
and authority to enter into and be bound by the terms and conditions of
this Agreement.
12.2. Due Authority; No Breach. The execution and delivery by
WLR Foods under this Agreement, and the performance by WLR Foods of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
conflict with or result in any violation of the Certificate of
Incorporation or Bylaws of WLR Foods or constitute a default in the terms,
conditions or provisions of any material obligation to which WLR Foods is a
party or by which WLR Foods is bound, violate any judgment, order or award
of any court, administrative agency or governmental body against or binding
upon WLR Foods or constitute a violation by WLR Foods of any law or
regulation of any jurisdiction as it relates to WLR Foods.
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<PAGE> 34
12.3. Reports. WLR Foods has previously delivered to Cuddy a
true and complete copy of its Annual Report on Form 10-K for the fiscal
year ended July 3, 1993, Quarterly Reports on Form 10-Q for each quarter
ending after July 3, 1993, and each communication sent by WLR Foods to its
shareholders generally since such date. None of such documents or
information contains an untrue statement of a material fact or omits a
material fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
Until the Closing, WLR Foods will deliver to Cuddy copies of any Annual
Reports on Form 10-K. or Quarterly Reports on Form 10-Q filed, all
communications sent by WLR Foods to its shareholders generally, and all
press releases and other public statements relating to the transactions
contemplated by this Agreement between the date hereof and the Closing
Date.
12.4. Liabilities. WLR Foods has no accrued or absolute
liabilities, debts or obligations, and to the best of its knowledge, no
contingent liabilities, debts or obligations, which will, subsequent to the
Closing Date in any manner materially adversely affect its business. WLR
Foods has no knowledge of any breach or default, or claimed or alleged
breach or default by WLR Foods under any material agreement to which it is
a party, and to the knowledge of WLR Foods, no event has occurred which,
with the passage of time or the giving of notice or both, would constitute
a breach or default by WLR Foods.
12.5. Litigation. Except for pending or threatened litigation
related to WLR Foods' efforts to resist a takeover attempt by Tyson Foods,
Inc., which
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litigation has been disclosed to Cuddy, there is no pending (or, to the
best of WLR Foods' knowledge, threatened) judicial, administrative or
arbitral action, suit or proceeding against WLR Foods which, if adversely
determined, could reasonably be expected to have a material adverse affect
on WLR Foods' business or which questions the validity of this Agreement or
any action taken or to be taken in connection herewith. WLR Foods is not
subject to any material order or injunction of any court or governmental
agency or body involving the its business. WLR Foods is not conducting or
carrying on business or affairs in violation of any federal, state, or
local law or regulation, or court or administrative order, which violation
could reasonably be expected to affect, materially and adversely, its
business.
12.6. WLR Stock. The WLR Foods' stock to be issued on behalf
of Cuddy as part of the purchase price has been duly authorized and, when
issued in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable in compliance with all applicable
securities and corporate legislation.
13. STOCK RESTRICTIONS.
13.1. NonRegistration. Cuddy acknowledges that the WLR Foods
common stock to be issued to it pursuant to Section 2 will not be
registered under the Securities Act of 1933 or the securities laws of any
state, but will be issued pursuant to exemptions from the registration
provisions of the Securities Act of 1933 and applicable state securities
laws. Accordingly, the certificates representing such stock will bear the
following restrictive legend:
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<PAGE> 36
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
THE SECURITIES LAWS OF ANY STATE AND HAVE BEEN ISSUED
PURSUANT TO EXEMPTION FROM FEDERAL AND STATE REGISTRATION
LAWS. THESE SHARES MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND APPLICABLE STATE LAWS,
PURSUANT TO AN EXEMPTION THEREFROM IN ACCORDANCE WITH THE
PROVISIONS OF RULE 144.
13.2. Investment Intent. Cuddy acknowledges that the WLR Foods
common stock to be issued to it under Section 2 is being acquired solely
for its own account, as principal, for investment and not for the interest
of any other entity and not with a view to, or in connection with, any
resale or distribution of such stock.
13.3. Registration Rights. On the Closing Date, WLR Foods and
Cuddy will enter into a Registration Rights Agreement in substantially the
same form as Exhibit 13.3 (Registration Rights Agreement) attached hereto.
13.4. Voting Trust. On the Closing Date, WLR Foods and Cuddy
will enter into a Voting Trust Agreement in substantially the same form as
Exhibit 13.4 (Voting Trust Agreement) attached hereto. Because the Voting
Trust Agreement restricts the voting of the shares of WLR Foods common
stock issued pursuant to Section 2 hereof and the transfer of voting trust
certificates representing such stock, in addition to the restrictive legend
set forth in Section 13.1 hereof, the certificates of such stock will bear
the following restrictive legend:
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THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A VOTING TRUST AGREEMENT PREPARED IN ACCORDANCE WITH
VIRGINIA CODE SECTION 13.1-670, A COPY OF WHICH IS ON FILE AT
THE OFFICES OF THE CORPORATION.
14. COSTS. Cuddy, Wampler-Longacre and WLR Foods shall each bear
their own direct and indirect expenses incurred in connection with the
negotiation (including any brokerage fees) and preparation of this
Agreement and the consummation and performance of the transactions
contemplated by. However, the following specific allocation of costs are
hereby agreed to:
14.1. Environmental Site Assessment. The cost of obtaining
environmental site assessments after the date hereof shall be for the
account of Wampler-Longacre.
14.2. Tax Prorations. All utilities, personal property taxes,
gross receipts or business license taxes and real estate taxes relating to
the Business shall be prorated as of the Closing Date.
14.3. Sales Tax. Cuddy shall be solely responsible for and
shall undertake to discharge all state and local sales and use taxes with
respect to the transfer of the Assets pursuant to this Agreement; provided,
however, that Wampler-Longacre shall pay all motor vehicle transfer taxes
(but not sales taxes) with respect to the transfer of the Assets.
14.4. Recordation and Title Costs. Cuddy shall pay the
grantor's cost of preparing and recording the deeds including the cost of
revenue stamps for
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recordation of the deeds to the Real Estate and Wampler-Longacre shall pay
for the cost of title insurance.
14.5. Other. Wampler-Longacre shall be responsible for payment
of the application fee for the Hart-Scott-Rodino filing.
15. POST CLOSING ACTIONS.
15.1. Additional Instruments. As soon as practicable after
Closing, the parties hereto shall cooperate in exchanging any instruments
that both parties may need after the closing to complete required
transactions.
15.2. Charlotte Processing Facility. Cuddy shall use all
reasonable efforts, if requested by Wampler-Longacre, to assist Wampler-
Longacre in obtaining (i) an extension of the existing Sublease for ConAgra
of the Charlotte Facility or (ii) a new lease from the owner of the
Charlotte Facility.
15.3. Cuddy/Modern Storage. If not accomplished prior to the
Closing Date, Cuddy shall continue to use all reasonable efforts and work
with Wampler-Longacre to obtain Modern Storage Company's agreement to (i)
accept Wampler-Longacre as a partner in Cuddy/Modern Storage, a North
Carolina general partnership and (ii) continue the partnership despite
Cuddy's sale of its partnership interest to Wampler-Longacre.
15.4. WLR Foods' Board of Directors. WLR Foods shall appoint a
Cuddy representative, agreeable to all parties, to the Board of WLR Foods,
which director shall serve until the next annual meeting of shareholders
and shall be
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recommended by the Board for election by such shareholders at the annual
meeting along with the Class A slate directors.
15.5. Access to Records. Upon reasonable request, Wampler
shall provide Cuddy with copies or access to any and all Business Records.
15.6. Customer Introductions. Cuddy management shall introduce
Wampler representatives to customers of the Business as reasonably
requested by Wampler.
15.7 Second Closing Date. On the Second Closing Date the
payments described in Section 2.2(c) shall occur, and WLR Foods shall
deliver an opinion of counsel substantially similar to Exhibit 6.3, subject
only to the conditions described in Section 7.4.
16. INDEMNIFICATION. For a period ending on the second anniversary
of the Closing Date, the parties hereto indemnify each other as follows:
16.1. By Cuddy and Cuddy International.
(a) Cuddy and Cuddy International hereby agree to
indemnify, defend and hold Wampler and their affiliates and such entities'
officers, directors, agents, employees and advisors harmless from and
against any and all claims, losses, damages or expenses (including, but not
limited to, reasonable attorney fees) which Wampler incurs by reason of, or
in relation to, (i) the inaccuracy of any representation or warranty made
by Cuddy or Cuddy International herein or the omission of any such
representation or warranty of any statement of fact necessary to make such
representation or warranty not misleading; (ii) any failure by Cuddy or
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<PAGE> 40
Cuddy International to perform any obligation or duty required to be
performed by it under any provision of this Agreement, including without
limitation Section 5.8; and (iii) any and all liabilities and obligations
of Cuddy not specifically assumed by Wampler-Longacre pursuant to this
Agreement (the Losses). For purposes of this Section only, Losses shall
include losses described in this paragraph which would not be deemed
material as that term is used in many of the representations, covenants and
warranties contained herein. Cuddy and Cuddy International shall have no
liability under this Section 15.1 unless and until the aggregate of all
Losses exceeds Two Hundred Fifty Thousand Dollars ($250,000) (the Minimum
Amount) in which event Cuddy shall be liable only for Losses in excess of
the Minimum Amount.
(b) Wampler-Longacre or WLR Foods shall give Cuddy and
Cuddy International prompt notice (within 60 days) of any claim by any
third party which claim relates to a matter subject to indemnification
hereunder by Cuddy and Cuddy International, and Cuddy and Cuddy
International shall have the opportunity to settle such claim and to
control the defense thereof in any suit, action or proceeding arising
therefrom. Cuddy and Cuddy International may employ counsel at their
expense in connection with any such settlement or defense and shall permit
Wampler-Longacre or WLR Foods to participate in any such defense at
Wampler-Longacre's or WLR Foods' own expense. Should Cuddy or Cuddy
International fail to undertake such defense or fail diligently to
prosecute the same, Wampler-Longacre or WLR Foods may undertake and assume
control of such defense, at Cuddy's and Cuddy International's expense.
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16.2. By Wampler-Longacre and WLR Foods.
(a) Wampler-Longacre and WLR Foods, jointly and
severally, hereby agree to indemnify, defend and hold Cuddy and its
affiliates and such entities' officers, directors, agents, employees and
advisors harmless from and against any and all claims, losses, damages or
expenses (including, but not limited to, reasonable attorney fees) which
Cuddy incur by reason of, or in relation to, (i) the inaccuracy of any
representation or warranty made by Wampler-Longacre or WLR Foods herein or
the omission of any representation or warranty of any statement of fact
necessary to make such representation or warranty not misleading; (ii) any
failure by Wampler-Longacre or WLR Foods to perform any obligation or duty
required to be performed by it under any provision of this Agreement; and
(iii) any of the Assumed Liabilities.
(b) Cuddy shall give Wampler-Longacre and WLR Foods
prompt notice (within 60 days) of any claim by any third party which claim
relates to a matter subject to indemnification hereunder by Wampler-
Longacre and WLR Foods, and Wampler-Longacre and WLR Foods shall have the
opportunity to settle such claim and to control the defense thereof in any
suit, action or proceeding arising therefrom. Wampler-Longacre and WLR
Foods may employ counsel at their expense in connection with any such
settlement or defense and shall permit Cuddy to participate in any such
defense at Cuddy's own expense. Should Wampler-Longacre and WLR Foods fail
to undertake such defense or fail diligently to prosecute the
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same, Cuddy may undertake and assume control of such defense, at Wampler-
Longacre's and WLR Foods' expense.
17. TERMINATION.
17.1. Termination. Anything herein or elsewhere to the
contrary notwithstanding, except for the provision set forth in Sections 14
and 17.3 of this Agreement, this Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing
Date:
(a) By mutual consent of the respective boards of
directors of Cuddy, Cuddy International, Wampler-Longacre and WLR Foods;
(b) By Cuddy, if any of the conditions set forth in
Sections 6 or 7 shall have become incapable of fulfillment and shall not
have been waived by Cuddy;
(c) By Wampler-Longacre, if any of the conditions set
forth in Sections 5 or 7 shall have become incapable of fulfillment and
shall not have been waived by Wampler-Longacre; or
(d) By any party if the Closing has not occurred by
November 1, 1994; provided, however, that no party may terminate this
Agreement pursuant to this subsection (d) if such party's actions or
failure to act has caused the nonoccurrence of the Closing.
17.2. Survival. Except as otherwise specifically provided
herein, all representations, warranties, covenants and agreements contained
in this Agreement by any party shall survive until two (2) years after the
Closing Date (the Survival Date)
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at which time they shall lapse. Notwithstanding the provisions of the
preceding sentence, any representation or warranty in respect of which
indemnification may be sought under this Agreement shall survive the
Survival Date if written notice, given in good faith, of the specific
breach thereof is given to the indemnifying party prior to the Survival
Date, whether or not liability has actually been sustained. No
representation or warranty shall survive the Closing to the extent such
representation or warranty shall have been breached at or before the
Closing Date if the party to which the representation or warranty was made
shall have actual knowledge, as demonstrated by a preponderance of the
evidence, of such breach or of all the facts and circumstances relating
thereto on or before the Closing Date.
17.3. Return of Records. If the Agreement is terminated other
than under Paragraph 17.1(c) as a result of a failure of a condition set
out in Section 5 only, Wampler shall promptly return to Cuddy all documents
and records of Cuddy and copies thereof in Wampler's possession and destroy
all working papers and records relating to Cuddy which Wampler has prepared
in contemplation of this Agreement and the transactions referred to herein.
Wampler shall not thereafter use any confidential or proprietary
information relating to Cuddy and not in the public domain.
18. MISCELLANEOUS.
18.1. 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
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address as the party shall have furnished in writing in accordance with the
provisions of this Section):
(a) If to Cuddy or Cuddy International, at:
Cuddy International Corporation
465 Richmond Street, Suite 600
London, Ontario Canada N6A 5P4
Attn: Peter A. W. Green
Fax No.: (519) 679-9355
with a copy to:
Blake, Cassels & Graydon
Suite 2800, P. O. Box 25
Commerce Court West
Toronto, Canada M5L 1A9
Attn: J. Rob Collins
Fax No.: (416) 863-2174
(b) If to Wampler-Longacre or WLR Foods, at:
WLR Foods, Inc.
P.O. Box 7000
Broadway, VA 22815
Attn: James L. Keeler
Fax No.: (703) 896-0498
with a copy to:
Wharton, Aldhizer & Weaver
100 S. Mason Street
Harrisonburg, Virginia 22801
Attn: John W. Flora, Esquire
Fax No.: (703) 434-5502
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.
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Inadvertent failure to deliver a copy to counsel as contemplated above
shall not invalidate giving of a notice.
18.2. Entire Agreement. This Agreement (including the exhibits
annexed hereto or referred to herein) and the collateral agreements
executed in connection with the consummation of the transactions
contemplated hereby contain the entire agreement between the parties with
respect to the transfer of the Assets to Wampler-Longacre and the
assumption by Wampler-Longacre of the Assumed Liabilities and supersedes
all prior agreements, written or oral, with respect thereto.
18.3. Waivers and Amendment. This Agreement may be amended and
the terms hereof may be waived only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No
delay on the part of either party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of either party of any such right, power or privilege, or any
single or partial exercise of any such right, power or privilege, preclude
any further exercise thereof or the exercise of any other such right, power
or privilege.
18.4. Governing Law, Venue. This Agreement shall be governed
and construed in accordance with the laws of the Commonwealth of Virginia
applicable to agreements made and to be performed entirely within the
Commonwealth. The Circuit Court of the County of Rockingham, Virginia or
the United States District Court for the Western District of Virginia,
Harrisonburg Division, as appropriate, shall have exclusive jurisdiction
and venue over any claims or cause of action
<PAGE>
<PAGE> 46
concerning this Agreement, except that any claim asserted against Cuddy
International shall be pursued only in Ontario, Canada courts.
18.5. Binding Effect; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and legal representatives. This Agreement is not assignable
without the prior written consent of the non-assigning party.
18.6. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed
by all, of the parties hereto.
18.7. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof,
in addition to any other remedy at law or equity.
18.8. Severability of Provisions. If any provision or any
portion of any provision of this Agreement or the application of any such
provision or any portion thereof to any person or circumstance, shall be
held invalid or unenforceable, the remaining portion of such provision and
the remaining provisions or portion of such provisions as is held invalid
or unenforceable to persons or circumstances, other
<PAGE>
<PAGE> 47
than those as to which it is held invalid or unenforceable, shall not be
affected thereby.
18.9. Captions. All section titles or captions contained in
this Agreement or in any exhibit annexed hereto or referred to herein, and
the table of contents to this Agreement, are for convenience only, shall
not be deemed a part of this Agreement and shall not affect the meaning or
interpretation of this Agreement. All references herein to Sections shall
be deemed references to such parts of this Agreement, unless the context
shall otherwise require.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
<PAGE>
<PAGE> 48
IN WITNESS WHEREOF, the parties have caused this Asset Purchase
Agreement to be executed by their respective officers hereunto duly
authorized as of the day and year first above written.
CUDDY FARMS, INC., a North Carolina
corporation
By:________________________________________
Its__________________
CUDDY INTERNATIONAL CORPORATION, an
Ontario corporation
By:_________________________________________
Its __________________
WAMPLER-LONGACRE, INC., a Virginia
corporation
By:________________________________________
Its President
WLR FOODS, INC., a Virginia corporation
By_________________________________________
Its President
17606
<PAGE>
<PAGE> 1
Exhibit 1.3
NON-COMPETITION AND NAME USE AGREEMENT
THIS NONCOMPETITION AND NAME USE AGREEMENT is made and entered into
this [Closing Date], by and among WAMPLER-LONGACRE, INC., a Virginia
corporation (Wampler-Longacre) and CUDDY FARMS, INC., a North Carolina
corporation (Cuddy), CUDDY INTERNATIONAL CORPORATION, a corporation
incorporated under the laws of Ontario, A.M.C. Family Holdings, Ltd., a
corporation incorporated under the laws of Ontario, and A.M. Cuddy
(collectively "Cuddy Group").
RECITALS
A. Cuddy has heretofore operated two divisions. The farm division
is a major supplier of turkey eggs and poults with facilities in North
Carolina, South Carolina, Iowa, Missouri, Ohio, Virginia and Minnesota (the
Poult Business). The food division is an integrated turkey processor with
three turkey processing facilities, a feedmill, growout operations, and an
interest in a cold storage distribution center, all located in North
Carolina (the Business).
B. Wampler-Longacre has today purchased substantially all of the
Business.
C. Wampler-Longacre desires to pay Cuddy, on behalf of the Cuddy
Group, a certain sum to protect itself and its affiliates from competition
and control contests by the
<PAGE>
<PAGE> 2
Cuddy Group and for certain rights, described herein, to the use of the
"Cuddy" name.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration the receipt and sufficiency thereof is hereby acknowledged,
the parties represent and agree as follows:
1. Covenant Not To Compete. The Cuddy Group jointly and
severally agrees that it will not engage in, directly or indirectly, either
themselves or for any other person, partnership, corporation, company or
entity, or participate (as defined below) in any enterprise involved in the
businesses of poultry production for processing, further processing or
marketing of processed poultry products (specifically excluded is poultry
production of eggs and poults and the marketing of such products) (the
Protected Business), in the geographical area in the continental United
States in which Wampler-Longacre or its affiliates currently conducts its
business, including without limitation, Virginia, West Virginia, North
Carolina and Pennsylvania, for a period of four (4) years from the date
hereof. As used herein, the term "participate" means lending one's name
to, acting as consultant or advisor to, or acquiring any direct or indirect
interest in any enterprise, whether as stockholder, partner, officer,
director, employee or otherwise (other than by ownership of
<PAGE>
<PAGE> 3
less than two percent of the stock of a publicly-held corporation and
ownership in WLR Foods, Inc.). The Cuddy Group agrees that this covenant
is reasonable in its scope, geographical area and duration. However, Cuddy
International Corporation and its affiliates will continue to be permitted
to provide poultry products for distribution in the United States, but only
to McDonalds, Delta Daily Foods and for distribution under three private
labels, namely President Choice Products, Master Choice Products and
Sensational Brand Products.
2. Covenant of No Contest. The Cuddy Group agrees that during the
period that common stock of WLR Foods, Inc. acquired today by Cuddy in
exchange for the Business is subject to voting and transfer restrictions as
set forth in Section 13.4 of the Asset Purchase Agreement dated the date
hereof, the Cuddy Group, jointly and severally, agrees none of them, nor
any of their affiliates will, directly or indirectly, without in each
instance the prior written consent of WLR Foods, Inc., parent corporation
of Wampler-Longacre, expressed in a resolution duly adopted by the Board of
Directors of WLR Foods, Inc.: (a) solicit any proxies, under any
circumstances, for any matter whatsoever with respect to any class of
capital stock or other securities of WLR Foods, Inc. which is then entitled
to vote in the election of directors or on any other matter (Voting
Securities), or become a "participant" in any "election
<PAGE>
<PAGE> 4
contest" relating to the election of directors of WLR Foods Inc. (as such
terms are used in Rule 14a-11 of Regulations 14A under the Securities
Exchange Act of 1934, as amended, or to seek to advise or influence any
person with respect to the voting of any Voting Securities of WLR Foods,
Inc. on any matter whatsoever; (b) act together with any other person for
the purpose of acquiring, holding, voting or disposing of any Voting
Securities of WLR Foods, Inc. or any options or other rights to acquire any
such securities; (c) purchase or otherwise acquire, or offer, propose or
agree to purchase or otherwise acquire, or advise, encourage or assist in
the acquisition of, any Voting Securities of WLR Foods, Inc. or options or
rights to acquire any such securities; or (d) act alone or together with
any person to acquire, or propose a business combination with, WLR Foods,
Inc.
3. Use of "Cuddy" Name. Cuddy hereby grants Wampler-Longacre a
five (5) year exclusive right and license to use the name or mark "Cuddy,"
alone or in combination with other names or marks, within the continental
United States in connection solely with the Protected Business. This five
(5)-year term shall terminate on the fifth anniversary of this Agreement
but shall thereafter be renewable upon such terms and conditions as
Wampler-Longacre and Cuddy may mutually agree. In addition, Cuddy agrees
to allow Wampler-Longacre to license perpetually, or acquire a trademark
for
<PAGE>
<PAGE> 5
"Masterpiece" and "Heritage" in the continental United States.
4. Cuddy Group Rights. Except as set out in Paragraph 3, the
Cuddy Group shall retain all rights to the "Cuddy" name.
5. Other Users. Cuddy warrants and represents that it has
authorized no other person or entity to use the name "Cuddy" or any similar
name alone or in conjunction with any other word or symbol for any purpose
in the continental United States and that, to its knowledge, no other
person or entity is using in the continental United States, without
authorization, the name "Cuddy" or any similar name for any purpose other
than the corporate name Cuddy Farms, Inc. as used in conjunction with the
Poult Business.
6. Payment. In consideration hereof Wampler-Longacre shall pay
Cuddy, by certified or bank cashier's check or other current funds
acceptable to Cuddy, the sum of Five Hundred Thousand Dollars ($500,000)
payable upon execution hereof. The amount of payment, if any, to be made
to D. Bruce Cuddy pursuant to a substantially similar, but separate,
agreement shall reduce this sum.
7. Remedies. The parties acknowledge that a breach of this
Agreement by any party will result in substantial and irreparable injury to
the other party. If any of the provisions herein are violated, in whole or
in part, Wampler-Longacre shall be entitled, upon application to any
<PAGE>
<PAGE> 6
court of proper jurisdiction as herein agreed, to restrain and enjoin the
Cuddy Group, or any one of them, from such violation, and to recover cash
and reasonable attorneys' fees in connection with such action, without
prejudice to any other remedies Wampler-Longacre may have at law or in
equity.
8. Reformation and Severability. In the event that any provision
herein should ever be deemed to exceed the time, geographic, occupational
or use limitations permitted by law, the parties agree that such provisions
shall be and are reformed to the maximum time, geographic, occupation and
use limitations permitted by applicable law. Such determination shall not
affect the remaining provisions of this Agreement, all of which shall
remain in full force and effect.
9. Binding Agreement. All of the terms and provisions of this
Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, each of the parties hereto and their respective legal
representatives, successors and assigns.
10. Governing Law, Venue. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of Virginia
applicable to agreements made and to be performed entirely within the
Commonwealth. The Circuit Court of the County of Rockingham, Virginia or
the United States District Court for the Western District of
<PAGE>
<PAGE> 7
Virginia, Harrisonburg Division, as appropriate, shall have exclusive
jurisdiction and venue over any claims or causes of action concerning this
Agreement, except that any claim asserted against Cuddy International
Corporation, A.M.C. Family Holdings, Ltd. and A.M. Cuddy shall be pursued
only in Ontario, Canada courts.
11. Waiver. A waiver by any party of a breach of any provision of
this Agreement shall not operate as, nor be construed as, a waiver of any
subsequent breach thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
WAMPLER-LONGACRE, INC.
(SEAL)
By:__________________________________
Its:___________________________________
Attest: _______________________________
CUDDY FARMS, INC.
By:___________________________________
Its:___________________________________
CUDDY INTERNATIONAL CORPORATION
By:____________________________________
Its:___________________________________
<PAGE>
<PAGE> 8
A.M.C. FAMILY HOLDINGS, LTD.
By:____________________________________
Its:___________________________________
______________________________________
A. M. CUDDY
STATE OF VIRGINIA
CITY/COUNTY OF _____________________________, to-wit:
The foregoing instrument was acknowledged before me in the
jurisdiction aforesaid this _____ day of _____________________, 1994, by
____________________________, ________________ of Wampler-Longacre, Inc.
My commission expires: _______________.
______________________________________
Notary Public
STATE OF VIRGINIA
CITY/COUNTY OF _____________________________, to-wit:
The foregoing instrument was acknowledged before me in the
jurisdiction aforesaid this _____ day of _____________________, 1994, by
<PAGE>
<PAGE> 9
____________________________, ________________ of Cuddy Farms, Inc.
My commission expires: _________________.
______________________________________
Notary Public
JWF/mc/17939
<PAGE>
<PAGE> 1
EXHIBIT 13.4
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT, dated [Closing Date], is made by and
among WLR FOODS, INC., a Virginia corporation (WLR Foods), CUDDY FARMS,
INC., a North Carolina corporation, its successors and assigns (Cuddy), and
[Independent Corporate Trustee], Trustee, and its successors (Trustee) who
agree as follows.
RECITALS:
A. As of the date hereof ____ shares of WLR Foods common
stock (the Shares) have been issued to the Trustee hereunder, on behalf of
Cuddy in consideration for the transfer of certain assets pursuant to the
terms of an Asset Purchase Agreement between Cuddy, WLR Foods and others
dated July 27, 1994. The parties anticipate that additional shares of WLR
Foods common stock may be issued to the Trustee, on behalf of Cuddy,
following certain post-closing adjustments which, when issued, shall also
be considered "Shares" hereunder.
B. A condition precedent to WLR Foods' obligation to issue the
Shares was Cuddy's execution of this Agreement in order for the Cuddy
acquisition not to compromise the continuity and stability of WLR Foods'
long term business strategy and policies as effectively confirmed by a
recent vote of shareholders of WLR Foods and as implemented and managed by
WLR Foods' Board of Directors and management.
<PAGE>
<PAGE> 2
C. The Trustee has consented to act under this Agreement for the
purposes hereunder.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the
parties agree as follows:
1. Transfer of Stock to Trustee. Concurrently with the closing of
the above-referenced Asset Purchase Agreement, the Shares were issued to
Trustee, on behalf of Cuddy, who shall hold the Shares subject to the terms
of this Agreement and shall issue and deliver to Cuddy voting trust
certificates for the Shares.
2. Voting Trust Certificates. The voting trust certificate shall
be in substantially the same form as set forth on Exhibit A attached
hereto.
3. Transfer of Certificates. Unless otherwise agreed to in
writing by WLR Foods, 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 Corporation or a wholly-owned
subsidiary of Cuddy International Corporation; provided, however, that the
person or persons in whose favor such certificates are transferred shall be
bound by all of the provisions of this Agreement as though that person were
the holder and shall exercise the rights of the voting trust certificates
only in accordance with this Agreement. In the event of any
<PAGE>
<PAGE> 3
permitted transfer, the certificates shall be transferable at the Trustee's
principal office in [place] (and at such other office as the Trustee may
designate by an instrument signed by it and sent by telecopy to the
registered holders of voting trust certificates), on the books of the
Trustee, by the registered owner thereof, either in person or by attorney
thereto duly authorized, upon surrender thereof, according to the rules
established for that purpose by the Trustee.
4. Term of Agreement. This Agreement shall terminate upon the
earlier of:
(a) The fourth anniversary hereof.
(b) The date on which a business acquisition by WLR Foods
occurs in which (i) in excess of five percent (5%) of its then outstanding
shares of common stock is issued without voting and transfer restrictions
similar to those set forth herein, and (ii) Cuddy's stock ownership in WLR
Foods after such business acquisition is less than five percent (5%) of the
total outstanding shares of common stock of WLR Foods.
(c) The date on which a "Change of Control" occurs in WLR
Foods. For the purpose of this Agreement, a "Change in Control" shall mean
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
<PAGE>
<PAGE> 4
more than thirty percent (30%) of either the then outstanding shares of
common stock of WLR Foods or the combined voting power of the then
outstanding voting securities of WLR Foods entitled to vote generally in
the election of directors.
5. Termination Procedure.
(a) Immediately upon the termination of this Agreement as
provided in Section 4 above, the voting trust certificates shall cease to
have any effect, and their holders shall have no further rights under this
Voting Trust Agreement other than to receive certificates for shares of the
WLR Foods' stock or other property distributable under the terms hereof and
upon the surrender of such voting trust certificates.
(b) Immediately upon surrender of the voting trust
certificates at the Trustee's offices, the Trustee shall deliver to the
registered holders of all voting trust certificates certificates for the
number of shares of the WLR Foods' common stock represented thereby.
(c) If any voting trust certificate has not been surrendered
within thirty (30) days after the termination of this Agreement, the
Trustee may deposit with WLR Foods stock certificates representing the
number of shares of common stock represented by such voting trust
certificates then outstanding, with authority in writing to WLR Foods to
deliver such stock certificates in exchange for voting trust certificates
representing a like number of shares of the
<PAGE>
<PAGE> 5
capital stock of WLR Foods. Upon such deposit, all further liability of
the Trustee for the delivery of such stock certificates and the delivery or
payment of dividends upon surrender of the voting trust certificates shall
cease, and the Trustee shall not be required to take any further action
hereunder.
6. Dividends.
(a) Prior to the termination of this Agreement, the holder of
each voting trust certificate shall be entitled to receive payments equal
to the cash dividends, if any, received by the Trustee upon a like number
and class of shares of WLR Foods' common stock as is called for by each
voting trust certificate. If any dividend in respect of the stock
deposited with the Trustee is paid, in whole or in part, in WLR Foods'
common stock, the Trustee shall hold, subject to the terms of this
Agreement, the certificates for stock which are received by it on account
of such dividend. In the event of a dividend payable in cash or stock at
the shareholder's election, the Trustee shall make such election upon the
direction of the registered holder of the voting trust certificate, or, in
the absence of such election, shall elect a cash dividend payment. The
holder of each voting trust certificate representing stock on which such
stock dividend has been paid shall be entitled to receive a voting trust
certificate issued under this Agreement for the number of shares and class
of stock received as such
<PAGE>
<PAGE> 6
dividend with respect to the shares represented by such voting trust
certificate. Holders entitled to receive the dividends described above
shall be those registered as such on the Trustee's transfer books at the
close of business on the day fixed by WLR Foods for the taking of a record
to determine those holders of its stock entitled to receive such dividends.
(b) If any dividend in respect of the stock deposited with
the Trustee is paid other than in cash or in common stock, then the Trustee
shall distribute the same among the holders of voting trust certificates
registered as such on the Trustee's transfer books at the close of business
on the day fixed by WLR Foods for the taking of a record to determine those
holders of its stock entitled to receive such dividends.
(c) In lieu of receiving cash dividends upon the common stock
of WLR Foods and paying the same to the holders of voting trust
certificates pursuant to the provisions of this Agreement, the Trustee may
instruct WLR Foods in writing to pay such dividends to the holders of the
voting trust certificates. Upon receipt of such written instructions, WLR
Foods shall pay such dividends directly to the holders of the voting trust
certificates. Upon such instructions being given by the Trustee, all
liability of the Trustee with respect to such dividends shall cease. The
Trustee may at any time revoke such instructions and by written notice
<PAGE>
<PAGE> 7
to WLR Foods direct it to make dividend payments to the Trustee.
7. Rights of Trustee.
(a) Until the actual delivery to the holders of voting trust
certificates issued hereunder of stock certificates in exchange therefor,
and until the surrender of the voting trust certificates for cancellation,
the Trustee shall have the right, subject to the provisions hereof,
including, without limitation, paragraph (b) below, to exercise, in person
or by his nominees or proxies, all stockholder voting rights and powers in
respect of all stock deposited hereunder, and to take part in or consent to
any corporate or stockholder action of any kind whatsoever. The right to
vote shall include the right to vote for the election of directors, and in
favor of or against any resolution or proposed action of any character
whatsoever, which may be presented at any meeting or require the consent of
the WLR Foods' stockholders. Without limiting such general right, it is
understood that such action or proceeding may include, upon terms
satisfactory to the Trustee or to his nominees or proxies thereto appointed
by him, mortgaging, creating a security interest in, and pledging of all or
any part of the WLR Foods' property, the lease or sale of all or any part
of its property, for cash, securities, or other property, and the
dissolution of WLR Foods, or its consolidation, merger, reorganization, or
recapitalization.
<PAGE>
<PAGE> 8
(b) In voting the stock held by him hereunder either in
person or by his nominees or proxies, the Trustee shall vote in accordance
with the recommendation of the WLR Foods' Board of Directors as it exists
at the time of the vote of WLR Foods' shareholders, or if there is no such
recommendation, as directed by the registered voting trust certificate
holder.
8. Trustees.
(a) The Trustee (and any successor Trustee) may at any time
resign by mailing to the registered holders of voting trust certificates a
written resignation, to take effect ten (10) days thereafter or upon its
prior acceptance. In the event of resignation, a successor Trustee shall
be mutually acceptable to, and designated by, WLR Foods and Cuddy, and, in
the absence of an agreement between the parties, designated by an
independent third party selected by them. No person or entity shall be
named as successor Trustee who is restricted from voting WLR Foods common
stock by any other law, agreement or regulatory or judicial order.
(b) The rights, powers, and privileges of the Trustee named
hereunder shall be possessed by the successor Trustees, with the same
effect as though such successors had originally been parties to this
Agreement. The word "Trustee," as used in this Agreement, means the
Trustee or any successor Trustees acting hereunder, and shall include both
the single and the plural number.
9. Compensation and Reimbursement of
<PAGE>
<PAGE> 9
Trustee. The Trustee shall serve for an annual fee of $____________ which
shall be paid by WLR Foods. The Trustee shall have the right to incur and
pay such reasonable expenses and charges, to employ and pay such agents,
attorneys, and counsel as it may deem necessary and proper to effectuate
this Agreement. All such expenses or charges incurred by and due to the
Trustee shall be reimbursed by WLR Foods.
10. Indemnification. WLR Foods shall indemnify and hold harmless
each of Cuddy and the Trustee and their respective officers, directors,
employees, shareholders, partners, agents, legal counsel and accountants
(each an "Indemnitee" and together the "Indemnitees") to the fullest extent
permitted by applicable law in effect on the date hereof or as such laws
may from time to time be amended from and against any and all losses,
claims, damages, liabilities and expenses (including attorneys' fees and
expenses and any and all expenses whatsoever incurred in investigating,
preparing or defending any action, suit, investigation or proceeding), and
amounts paid in settlement (together, "Losses") incurred by an Indemnitee
if such Indemnitee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit, investigation or proceeding,
whether civil, criminal, administrative or investigation in nature, arising
from, caused by or in connection with the negotiation, execution, delivery
and performance of this
<PAGE>
<PAGE> 10
Agreement (including any other agreements entered into in connection
herewith), other than as a result of the breach by the Indemnitee of any
terms of this Agreement or such agreements.
11. Notice.
(a) Unless otherwise specifically provided herein, any notice
to or communication with the holders of the voting trust certificates
hereunder shall be deemed to be sufficiently given or made if 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 this Section):
(i) If to Cuddy or Cuddy International Corporation, at
Cuddy International Corporation
465 Richmond Street, Suite 600
London, Ontario Canada N6A 5P4
Attn: President
Fax No.: (519) 679-9355
(ii) If to WLR Foods, at
WLR Foods, Inc.
P.O. Box 7000
Broadway, VA 22815
Attn: James L. Keeler
Fax No.: (703) 896-0498
(iii) If to the Trustee, at
___________________________
___________________________
___________________________
<PAGE>
<PAGE> 11
(b) All distributions of cash, securities, or other property
hereunder by the Trustee to the holders of voting trust certificates shall be
made, in the Trustee's discretion, by overnight delivery to the addresses
set forth above.
12. Modifications and Non-Waiver. This Agreement may be modified
only by a written instrument executed Cuddy, WLR Foods and the Trustee;
provided, however, that the Trustee's consent shall not be necessary to
modifications except as they expressly relate to its fees, indemnification
and right to resign. No delay or failure by a party to exercise any right
under this Agreement, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right, unless otherwise
expressly provided herein.
13. Headings. Headings in this Agreement are for convenience only
and shall not be used to interpret or construe its provisions.
14. Governing Law; Venue. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of Virginia
applicable to agreements made and to be performed entirely within the
Commonwealth. The Circuit Court of the County of Rockingham, Virginia or
the United States District Court for the Western District of Virginia,
Harrisonburg Division, as appropriate, shall have exclusive jurisdiction
and venue over any claims or causes of action concerning this Agreement.
<PAGE>
<PAGE> 12
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
16. Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of each of the parties and their
respective legal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties have caused this Voting Trust Agreement to
be executed by their respective officers hereunto duly authorized as of the
day and year first above written.
CUDDY FARMS, INC., a North Carolina
corporation
By:__________________________________
Its President
WLR FOODS, INC., a Virginia corporation
By:__________________________________
Its President
[INDEPENDENT CORPORATE TRUSTEE]
By:__________________________________
Its ________________
17919
<PAGE>
<PAGE> 13
Exhibit A
No. __________________
Shares_____________________
WLR Foods, Inc.
a Virginia corporation
Voting Trust Certificate for Common Stock
This certifies that Cuddy Farms, Inc., or registered assigns, is entitled
to all benefits arising from the deposit with the Trustee under the Voting
Trust Agreement hereinafter mentioned of certificates for _________ shares
of WLR Foods, Inc., a Virginia corporation (WLR Foods), as provided in such
Voting Trust Agreement and subject to the terms thereof. The registered
holder hereof, or assigns, is entitled to receive payment equal to the
amount of cash dividends, if any, received by the Trustee upon the number
of shares of common stock of WLR Foods in respect of which this certificate
is issued. Dividends received by the Trustee in WLR Foods' common stock
shall be payable in voting trust certificates, in form similar hereto.
Until the Trustee has delivered the stock held under such Voting Trust
Agreement to the holders of the trust certificates, or to WLR Foods, as
specified in such Voting Trust Agreement, the Trustee shall possess and be
entitled to exercise all rights and powers of an absolute owner of such
stock, including the right to vote thereon for every purpose according to
and as restricted by the terms of the Voting Trust Agreement, and to
execute consents in respect thereof for every purpose, it being expressly
stipulated that no voting right passes to the owner hereof, or assigns,
under this certificate or any agreement, expressed or implied.
This certificate is issued, received, and held under, and the rights of the
owner hereof are subject to, the terms of a Voting Trust Agreement dated
[Closing Date] by and between WLR Foods, Cuddy Farms, Inc., its successors
and assigns, and _________________, Trustee and its successors, a copy of
which is on file with WLR Foods, Inc. The holder of this certificate, by
acceptance hereof, assents and is bound to all the provisions of the Voting
Trust Agreement.
In the event that the Trustee receives any dividend or distribution other
than in cash or WLR Foods' common stock, the Trustee shall distribute the
same to the registered holders of voting trust certificates pursuant to the
provisions of the Voting Trust Agreement.
<PAGE>
<PAGE> 14
The Voting Trust Agreement shall continue in full force and effect until
the earlier of [four years from Closing Date], a change of control, and
certain other events, as provided in the Voting Trust Agreement. Stock
certificates for the number of shares of common stock then represented by
this certificate, or the net proceeds in cash or property of such shares,
shall be due and deliverable hereunder upon the termination of such Voting
Trust Agreement as provided therein.
Except as provided in the Voting Trust Agreement, this certificate is not
transferable except that the holder hereof may pledge, mortgage or
otherwise encumber the certificates; provided, however, that the person or
persons in whose favor such certificates are pledged, mortgaged, or
otherwise encumbered, shall, except as WLR Foods and they may otherwise
agree, be bound by all of the provisions of the Voting Trust Agreement as
though they were the holder and shall exercise the rights of this
certificate only in accordance therewith. In the event of any transfer by
virtue of a pledge, mortgage or encumbrance, the certificates shall be
transferable at the Trustee's principal office (set forth in the Voting
Trust Agreement) on the books of the Trustee, by the registered owner
thereof, either in person or by attorney thereto duly authorized, upon
surrender thereof, according to the rules established for that purpose by
the Trustee.
This certificate shall not be valid for any purpose until duly signed by
the Trustee.
The word "Trustee" as used in this certificate means the Trustee or the
successor trustee acting under such Voting Trust Agreement.
In witness whereof the Trustee has signed this certificate on
____________________, 1994.
_____________________________________
Trustee
(Form of Assignment):
For value received ________________________ hereby assigns the within
certificate, and all rights and interests represented thereby, to
______________________ and appoints __________________ attorney to transfer
this certificate on the books of the Trustee mentioned therein, with full
power of substitution.
<PAGE>
<PAGE> 15
Dated: ____________________
__________________________________
________________________________(SEAL)
Witness
THIS VOTING TRUST CERTIFICATE MAY NOT BE TRANSFERRED
WITHOUT THE EXPRESS WRITTEN CONSENT OF WLR FOODS, INC.
<PAGE> 1
INDEMNIFICATION AGREEMENT AND RELEASE
This INDEMNIFICATION AGREEMENT AND RELEASE is made and entered
into this 27th day of July, 1994 ("Agreement"), by and between WLR FOODS,
INC., a Virginia corporation (including its successors, the "Company"), and
CUDDY FARMS, INC., a North Carolina corporation ("Cuddy"):
WHEREAS, the Company desires to purchase certain of the assets
of Cuddy pursuant to a Asset Purchase Agreement, to be dated as of July 27,
1994, between the Company and Cuddy (the "Purchase Agreement"); and
WHEREAS, the Company is the subject of a hostile takeover
attempt by Tyson Foods, Inc. (the "Takeover") and in connection therewith
certain litigation between the Company and Tyson Foods, Inc. is pending in
the United States District Court for the Western District of Virginia,
Harrisonburg Division (Civil Action No. 94-0012(H)); and
WHEREAS, Cuddy is concerned that it might incur significant
costs and expenses if it were made a party to the above mentioned
litigation or other litigation which has been or may subsequently be
brought if Cuddy were to enter into the Purchase Agreement; and
WHEREAS, the Company, recognizing Cuddy's legitimate business
concerns and possible exposure, desires to indemnify Cuddy to the fullest
extent permitted by law as set forth herein;
<PAGE>
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and the
covenants contained herein, the Company and Cuddy do hereby covenant and
agree as follows:
Section 1. Indemnification. The Company shall indemnify and
hold harmless each of Cuddy, Cuddy Foods, Inc., Cuddy International
Incorporated, and their respective officers, directors, employees,
shareholders, partners, agents, legal counsel and accountants (each an
"Indemnitee" and together the "Indemnitees") to the fullest extent
permitted by applicable law in effect on the date hereof or as such laws
may from time to time be amended from and against any and all losses,
claims, damages, liabilities and expenses (including attorneys' fees and
expenses and any and all expenses whatsoever incurred in investigating,
preparing or defending any action, suit, investigation or proceeding), and
amounts paid in settlement (together, "Losses") incurred by an Indemnitee
if such Indemnitee is made a party or is threatened to be made a party to
any threatened, pending or completed action, suit, investigation or
proceeding, whether civil, criminal, administrative or investigative in
nature, brought or to be brought in connection with the Takeover or any
action commenced by any bidder which commences its bid on or prior to June
30, 1995 (including the bidder in the Takeover) for control of the Company
arising from, caused by or in connection with the negotiation, execution,
delivery and performance of the Purchase Agreement (including any other
agreements entered into in connection therewith), other
<PAGE>
<PAGE> 3
than as a result of the breach by Cuddy of any of the terms of the Purchase
Agreement (or any other agreement entered into by Cuddy in connection
therewith).
Section 2. Indemnification for Costs, Charges and Expenses of
Successful Party. Notwithstanding the other provisions of this Agreement
and in addition to the rights to indemnification set forth in Section 1
hereof, to the extent that any Indemnitee has served as a witness on behalf
of the Company or has been successful on the merits or otherwise
(including, without limitation, obtaining the dismissal of an action
without prejudice), in defense of any action, suit, investigation or
proceeding referred to in Section 1 hereof, or in defense of any claim,
issue or matter therein, such Indemnitee shall be indemnified against all
Losses incurred by such Indemnitee or on behalf of such Indemnitee in
connection therewith.
Section 3. Partial Indemnification. In addition to the rights
to indemnification set forth in Sections 1 and 2 hereof, if any Indemnitee
is only partially successful in the defense, investigation, settlement or
appeal of any action, suit, investigation or proceeding described in
Section 1 or 2 hereof, and as a result is not entitled under Section 1 or 2
hereof to indemnification by the Company for all Losses incurred by such
Indemnitee, the Company shall nevertheless indemnify the Indemnitee, as a
matter of right pursuant to Section 2 hereof, to the extent that the
Indemnitee has been partially successful.
<PAGE>
<PAGE> 4
Section 4. Presumptions and Effect of Certain Proceedings.
The Secretary of the Company shall, promptly upon receipt of an
Indemnitee's request for indemnification, advise in writing the Board of
Directors of the Company that the Indemnitee has made such request for
indemnification. Upon making such request for indemnification, the
Indemnitee shall be presumed to be entitled to indemnification hereunder
and the Company shall have the burden of proof in the making of any
determination contrary to such presumption. The termination of any action,
suit, investigation or proceeding described in Section 1 or 2 hereof by
judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, adversely affect the
rights of the Indemnitee to indemnification.
Section 5. Advancement of Expenses and Costs. All expenses
and costs incurred by each Indemnitee as to which such Indemnitee may seek
indemnification or contribution hereunder (including attorneys' fees,
retainers and advances of disbursements required of the Indemnitee and any
and all expenses whatsoever incurred in investigating, preparing or
defending any action, suit, investigation or proceeding) shall be paid by
the Company in advance of the final disposition of any action, suit,
investigation or proceeding at the request of the Indemnitee within 10 days
after the receipt by the Company of a statement or statements from the
Indemnitee requesting such reimbursement from time to time. The
Indemnitee's entitlement to such expenses and costs shall include those
incurred in connection with any
<PAGE>
<PAGE> 5
proceeding by the Indemnitee seeking the enforcement of such Indemnitee's
rights under this Agreement. Such statement or statements shall reasonably
evidence the expenses and costs incurred by the Indemnitee in connection
therewith. An Indemnitee may be required by the Company to provide an
undertaking by or on behalf of the Indemnitee to repay such amount on
condition that it is ultimately determined by a court (as provided in
Section 16) that the Indemnitee is not entitled to be indemnified against
such expenses and costs by the Company as provided by this Agreement or
otherwise.
Section 6. Remedies of Indemnitee in Cases of Failure to
Indemnify or to Advance Expenses. In the event that the Company fails to
indemnify the Indemnitee hereunder, or if expenses and costs are not timely
advanced pursuant to Section 5, the Indemnitee shall be entitled to a final
adjudication in a court (as provided in Section 16) of the Indemnitee's
entitlement to such indemnification or advance. The Company shall not
oppose the Indemnitee's right to seek any such adjudication or any other
claim. Such judicial proceeding or arbitration shall be made de novo and
the Indemnitee shall not be prejudiced by reason of a determination (if so
made) by the Company that the Indemnitee is not entitled to indemnification
or advancement of costs and expenses, or that the Company has failed to
indemnify the Indemnitee or to so advance costs and expenses. The Company
further agrees to stipulate in any such court that the Company is bound by
all the provisions of this Agreement and is precluded
<PAGE>
<PAGE> 6
from making any assertion to the contrary. If the court shall determine
that the Indemnitee is entitled to any indemnification hereunder, the
Company shall pay all expenses (including attorneys' fees and costs) and
costs actually incurred by the Indemnitee in connection with such
adjudication (including, but not limited to, any appellate proceedings).
Section 7. Other Rights to Indemnification. The
indemnification and advancement of costs and expenses (including attorneys'
fees and costs) provided by this Agreement shall not be deemed exclusive of
any other rights to which any Indemnitee may now or in the future be
entitled under any provision of the Certificate of Incorporation or By-laws
of the Company, agreement, vote of stockholders or disinterested directors,
provision of law, or otherwise.
Section 8. Contribution. (a) In the event any Indemnitee is
not entitled to the indemnification provided for in this Agreement in
respect of any Losses solely as a result of the Indemnitee's conduct, then
the Company, in lieu of indemnifying such Indemnitee, shall contribute to
the amount paid or payable by such Indemnitee as a result of such Losses as
between the Company on the one hand and each Indemnitee on the other, in
such proportion as is appropriate to reflect the relative fault of the
Company and of such Indemnitee in connection with the actions or inactions,
statements or omissions giving rise to such Losses as well as any other
relevant equitable considerations. The relative fault of the Company on
the one hand and of such
<PAGE>
<PAGE> 7
Indemnitee on the other shall be determined by reference to, among other
things, whether any untrue statement of a material fact or the omission or
alleged omission to state a material fact on which any of such Losses are
based relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and obligation to correct
or prevent such statement or omission.
(b) The Company and the Indemnitees agree that it would not
be just and equitable if contribution pursuant to this Section 8 were
determined by pro-rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
the immediately preceding subparagraph. 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.
Section 9. Procedure. The Indemnitee shall give the Company
prompt notice of any claim made on the Indemnitee which relates to a matter
subject to indemnification under this Agreement. The failure of any
Indemnitee to provide such notice shall not relieve the Company from
liability pursuant to this Agreement, except to the extent such failure had
a material adverse effect on the ability to defend such matter. The
Company shall have the right to settle such claim (subject to the consent
of the Indemnitee if the proposed settlement involves any action or
inaction by the Indemnitee, which consent will not be
<PAGE>
<PAGE> 8
unreasonably withheld) and to control the response thereto or the defense
thereof in any suit, action or proceeding arising therefrom. The Company
shall advise the Indemnitee within 10 days of receipt of notice of any
claim whether it elects to settle such claim, or control the response
thereto or defense thereof. If the Company does not timely advise the
Indemnitee as provided above, the Indemnitee shall be entitled to settle
such claim, or control the response thereto or defense thereof at the cost
and expense of the Company as herein provided. After consultation with the
Indemnitee, the Company shall employ competent counsel at the Company's
expense in connection with any such settlement or defense, and the
Indemnitee shall be entitled to participate in such defense. The
Indemnitee shall cooperate with all reasonable requests of the Company or
counsel retained by the Company with respect to any such settlement or
defense, and the Company shall keep the Indemnitee informed of the progress
of any such settlement or defense and obtain the consent of the Indemnitee
as contemplated herein.
Section 10. Attorneys' Fees and Other Expenses To Enforce
Agreement. In the event that an Indemnitee is subject to or intervenes in
any proceeding in which the validity or enforceability of this Agreement is
at issue or seeks an adjudication to enforce such Indemnitee's rights
under, or to recover damages for breach of, this Agreement, the Indemnitee,
if such Indemnitee substantially prevails in such action, shall be entitled
to recover from the Company and shall be indemnified by
<PAGE>
<PAGE> 9
the Company against, any actual expenses for attorneys' fees and
disbursements reasonably incurred by such Indemnitee in connection with
such action.
Section 11. Release by Company. The Company hereby fully and
unconditionally releases and discharges all claims and causes of action
which it or its successors, or assigns ever had, now have, or hereafter may
have against the Indemnitees, in each case, past, present, or as they may
exist at any time after the date of this Agreement, and each person, if
any, who controls, controlled, or will control any of them within the
meaning of Section 15 of the Securities Act of 1933, as amended, or Section
20(a) of the Securities Exchange Act of 1934, as amended, except claims and
causes of action arising out of, based upon, or in connection with a breach
by Cuddy of the terms of the Purchase Agreement (or any other agreement
entered into in connection therewith).
Section 12. Term of Agreement. The term of this Agreement
shall expire upon the final termination of all actions, suits, proceedings
or investigations with respect to or relating in any way to the Takeover or
any action commenced by any bidder which commences its bid on or prior to
June 30, 1995 (including the bidder in the Takeover) for control of the
Company. This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of the Indemnitees
and their respective successors, assigns, spouses, heirs, devises,
<PAGE>
<PAGE> 10
executors, administrators and other legal representatives, as the case may
be.
Section 13. 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
paragraph 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 14. Notices. All notices and other communications
provided for or contemplated by this agreement shall be delivered by hand
or sent by certified mail, return receipt requested, addressed as follows:
If to the Company: WLR Foods, Inc.
P.O. Box 7000
Broadway, Virginia 22815
Attn: James L. Keeler
<PAGE>
<PAGE> 11
If to an Indemnitee: c/o Cuddy International
Corporation
465 Richmond Street
Suite 600
London, Ontario
Canada N6A SP4
Attn: Peter A. W. Green
or to such other address as the addressee may specify by written notice
pursuant to this Section 14. Notices or communications sent by mail shall
be deemed to have been given on the date of mailing. In the event of any
Indemnitee's death or incapacity, any notice or communication from the
Company may, at the Company's option, be addressed either to the Indemnitee
at his or her last address specified pursuant to this Section 14 or to the
Indemnitee's estate, executors, administrators, heirs, or legal
representative.
Section 15. 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 16. Jurisdiction, Venue and Service of Process. The
parties hereby irrevocably consent to the exclusive jurisdiction and venue
of the courts of the Province of Ontario in connection with any action or
proceeding arising out of or relating to this Agreement, any document or
instrument delivered pursuant to or in connection with this Agreement, or a
breach of
<PAGE>
<PAGE> 12
this Agreement or any such document or instrument. In any such action or
proceeding, the parties waive personal service of any summons, complaint,
or other process and agrees that service thereof may be made in accordance
with Section 14. Within 30 days after such service, or such other time as
may be mutually agreed upon in writing by the attorneys for the parties to
such action or proceeding, the party so served shall appear or answer such
summons, complaint, or other process. Should the party so served fail to
appear or answer within such 30-day period or such extended period, as the
case may be, the party so served shall be deemed in default and judgment
may be entered by the plaintiff in such action against the party so served
for the amount as demanded in any summons, complaint, or other process so
served. The parties covenant and agree that they will not commence or
maintain any such action or proceeding in any jurisdiction or forum other
than the courts of the Province of Ontario.
Section 17. 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 Company and Cuddy. 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
<PAGE>
<PAGE> 13
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 18. 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 parties hereto have executed this
Agreement on the day and year first above written.
WLR FOODS, INC.
By:
Name:
Title:
CUDDY FARMS, INC.
By:
Name:
Title:
<PAGE> 1
INDEMNIFICATION AGREEMENT AND RELEASE
THIS INDEMNIFICATION AGREEMENT AND RELEASE is made and entered into
this 27th day of July, 1994 ("Agreement"), by and among CUDDY FARMS, INC.,
a North Carolina corporation ("Cuddy") and CUDDY INTERNATIONAL CORPORATION,
an Ontario corporation and controlling shareholder of Cuddy Farms, Inc.
("CIC") (together, including their successors, the "Company"), and WLR
FOODS, INC., a Virginia corporation ("WLR"):
WHEREAS, WLR desires to purchase certain of the assets of Cuddy
pursuant to an Asset Purchase Agreement, to be dated as of July 27, 1994,
between the Company and WLR and Wampler-Longacre, Inc. (the "Purchase
Agreement"); and
WHEREAS, there is a possibility that the Company may be the subject
of complaints by stockholders and former employees in connection with
certain actions taken by the senior management of the Company with respect
to management and employment issues and litigation with respect thereto
could ensue (the "Cuddy Litigation"); and
WHEREAS, the WLR is concerned that it might incur significant costs
and expenses in connection with any Cuddy Litigation or other litigation
related to the subject matter of the Cuddy Litigation; and
WHEREAS, the Company, recognizing WLR's legitimate business concerns
and possible exposure, desires to
<PAGE>
<PAGE> 2
indemnify WLR to the fullest extent permitted by law as set forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and WLR do hereby covenant and agree as
follows:
Section 1. Indemnification. The Company shall indemnify and hold
harmless each of WLR Foods, Inc., Wampler-Longacre, Inc., and their
respective officers, directors, employees, shareholders, partners, agents,
legal counsel and accountants (each an "Indemnitee" and together the
"Indemnitees") to the fullest extent permitted by applicable law in affect
on the date hereof or as such laws may from time to time be amended from
and against any and all losses, claims, damages, liabilities and expenses
(including attorneys' fees and expenses and any and all expenses whatsoever
incurred in investigating, preparing or defending any action, suit,
investigation or proceeding), and amounts paid in settlement (together,
"Losses") incurred by an Indemnitee if such Indemnitee is made a party or
is threatened to be made a party to any threatened, pending or completed
action, suit, investigation or proceeding, whether civil, criminal,
administrative or investigative in nature, brought or to be brought in
connection with the Cuddy Litigation and arising from, caused by or in
connection with the negotiation, execution, delivery and performance of the
Purchase Agreement (including any other agreements entered
<PAGE>
<PAGE> 3
into in connection therewith), other than as a result of the breach by WLR
of any of the terms of the Purchase Agreement (or any other agreement
entered into by WLR in connection therewith).
Section 2. Indemnification for Costs, Charges and Expenses of
Successful Party. Notwithstanding the other provisions of this Agreement
and in addition to the rights to indemnification set forth in Section 1
hereof, to the extent that any Indemnitee has served as a witness on behalf
of the Company or has been successful on the merits or otherwise
(including, without limitation, obtaining the dismissal of an action
without prejudice), in defense of any action, suit, investigation or
proceeding referred to in Section 1 hereof, or in defense of any claim,
issue or matter therein, such Indemnitee shall be indemnified against all
Losses incurred by such Indemnitee or on behalf of such Indemnitee in
connection therewith.
Section 3. Partial Indemnification. In addition to the rights to
indemnification set forth in Sections 1 and 2 hereof, if any Indemnitee is
only partially successful in the defense, investigation, settlement or
appeal of any action, suit, investigation or proceeding described in
Section 1 or 2 hereof, and as a result is not entitled under Section 1 or 2
hereof to indemnification by the Company for all Losses incurred by such
Indemnitee, the Company shall nevertheless indemnify the Indemnitee, as a
matter of right
<PAGE>
<PAGE> 4
pursuant to Section 2 hereof, to the extent that the Indemnitee has been
partially successful.
Section 4. Presumptions and Effect of Certain Proceedings. The
Secretary of the Company shall, promptly upon receipt of an Indemnitee's
request for indemnification, advise in writing the Board of Directors of
the Company that the Indemnitee has made such request for indemnification.
Upon making such request for indemnification, the Indemnitee shall be
presumed to be entitled to indemnification hereunder and the Company shall
have the burden of proof in the making of any determination contrary to
such presumption. The termination of any action, suit, investigation or
proceeding described in Section 1 or 2 hereof by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, adversely affect the rights of the
Indemnitee to indemnification.
Section 5. Advancement of Expenses and Costs. All expenses and
costs incurred by each Indemnitee as to which such Indemnitee may seek
indemnification or contribution hereunder (including attorneys' fees,
retainers and advances of disbursements required of the Indemnitee and any
and all expenses whatsoever incurred in investigating, preparing or
defending any action, suit, investigation or proceeding) shall be paid by
the Company in advance of this final disposition of any action, suit,
investigation or proceeding
<PAGE>
<PAGE> 5
at the request of the Indemnitee within 10 days after the receipt by the
Company of a statement or statements from the Indemnitee requesting such
reimbursement from time to time. The Indemnitee's entitlement to such
expenses and costs shall include those incurred in connection with any
proceeding by the Indemnitee seeking the enforcement of such Indemnitee's
rights under this Agreement. Such statement or statements shall reasonably
evidence the expenses and costs incurred by the Indemnitee in connection
therewith. An Indemnitee may be required by the Company to provide an
undertaking by or on behalf of the Indemnitee to repay such amount on
condition that it is ultimately determined by a court (as provided in
Section 16) that the Indemnitee is not entitled to be indemnified against
such expenses and costs by the Company as provided by this Agreement or
otherwise.
Section 6. Remedies of Indemnitee in Cases of Failure to Indemnify
or to Advance Expenses. In the event that the Company fails to indemnify
the Indemnitee hereunder, or if expenses and costs are not timely advanced
pursuant to Section 5, the Indemnitee shall be entitled to a final
adjudication in a court (as provided in Section 16) of the Indemnitee's
entitlement to such indemnification or advance. The Company shall not
oppose the Indemnitee's right to seek any such adjudication or any other
claim. Such judicial proceeding or arbitration shall be made de novo and
the Indemnitee shall not be prejudiced by reason of a
<PAGE>
<PAGE> 6
determination (if so made) by the Company that the Indemnitee is not
entitled to indemnification or advancement of costs and expenses, or that
the Company has failed to indemnify the Indemnitee or to so advance costs
and expenses. The Company further agrees to stipulate in any such court
that the Company is bound by all the provisions of this Agreement and is
precluded from making any assertion to the contrary. If the court shall
determine that the Indemnitee is entitled to any indemnification hereunder,
the Company shall pay all expenses (including attorneys' fees and costs)
and costs actually incurred by the Indemnitee in connection with such
adjudication (including, but not limited to, any appellate proceedings).
Section 7. Other Rights to Indemnification. The indemnification and
advancement of costs and expenses (including attorneys' fees and costs)
provided by this Agreement shall not be deemed exclusive of any other
rights to which any Indemnitee may now or in the future be entitled under
any provision of the charter documents or By-laws of Cuddy or CIC,
agreement, vote of stockholders or disinterested directors, provision of
law, or otherwise.
Section 8. Contribution. (a) In the event any Indemnitee is not
entitled to the indemnification provided for in this Agreement in respect
of any Losses solely as a result of the Indemnitee's conduct, then the
Company, in lieu of indemnifying such Indemnitee, shall contribute to
<PAGE>
<PAGE> 7
the amount paid or payable by such Indemnitee as a result of such Losses as
between the Company on the one hand and each Indemnitee on the other, in
such proportion as is appropriate to reflect the relative fault of the
Company and of such Indemnitee in connection with the actions or inactions,
statements or omissions giving rise to such Losses as well as any other
relevant equitable considerations. The relative fault of the Company on
the one hand and of such Indemnitee on the other shall be determined by
reference to, among other things, whether any untrue statement of a
material fact or the omission or alleged omission to state a material fact
on which any of such Losses are based relates to information supplied by
such party, and the parties' relative intent, knowledge, access to
information and obligation to correct or prevent such statement or
omission.
(b) The Company and the Indemnitees agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by
pro-rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding subparagraph. 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.
<PAGE>
<PAGE> 8
Section 9. Procedure. The Indemnitee shall give the Company prompt
notice of any claim made on the Indemnitee which relates to a matter
subject to indemnification under this Agreement. The failure of any
Indemnitee to provide such notice shall not relieve the Company from
liability pursuant to this Agreement, except to the extent such failure had
a material adverse effect on the ability to defend such matter. The
Company shall have the right to settle such claim (subject to the consent
of the Indemnitee if the proposed settlement involves any action or
inaction by the Indemnitee, which consent will not be unreasonably
withheld) and to control the response thereto or the defense thereof in any
suit, action or proceeding arising therefrom. The Company shall advise the
Indemnitee within 10 days of receipt of notice of any claim whether it
elects to settle such claim, or control the response thereto or defense
thereof. If the Company does not timely advise the Indemnitee as provided
above, the Indemnitee shall be entitled to settle such claim, or control
the response thereto or defense thereof at the cost and expense of the
Company as herein provided. After consultation with the Indemnitee, the
Company shall employ competent counsel at the Company's expense in
connection with any such settlement or defense, and the Indemnitee shall be
entitled to participate in such defense. The Indemnitee shall cooperate
with all reasonable requests of the Company or counsel
<PAGE>
<PAGE> 9
retained by the Company with respect to any such settlement or defense, and
the Company shall keep the Indemnitee informed of the progress of any such
settlement or defense and obtain the consent of the Indemnitee as
contemplated herein.
Section 10. Attorneys' Fees and Other Expenses To Enforce Agreement.
In the event that an Indemnitee is subject to or intervenes in any
proceeding in which the validity or enforceability of this Agreement is at
issue or seeks an adjudication to enforce such Indemnitee's rights under,
or to recover damages for breach of, this Agreement, the Indemnitee, if
such Indemnitee substantially prevails in such action, shall be entitled to
recover from the Company and shall be indemnified by the Company against,
any actual expenses for attorneys' fees and disbursements reasonably
incurred by such Indemnitee in connection with such action.
Section 11. Release by Company. The Company hereby fully and
unconditionally releases and discharges all claims and causes of action
which it or its successors, or assigns ever had, now have, or hereafter may
have against the Indemnitees, in each case, past, present, or as they may
exist at any time after the date of this Agreement, and each person, if
any, who controls, controlled, or will control any of them within the
meaning of Section 15 of the Securities Act of 1933, as amended, or Section
20(a) of the Securities Exchange Act of 1934, as amended, except claims
<PAGE>
<PAGE> 10
and causes of action arising out of, based upon, or in connection with a
breach by WLR of the terms of the Purchase Agreement (or any other
agreement entered into in connection therewith).
Section 12. Term of Agreement. The term of this Agreement shall
expire upon the final termination of all actions, suits, proceedings or
investigations brought or to be brought with respect to or relating in any
way to the Cuddy Litigation. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of
the Indemnitees and their respective successors, assigns, spouses, heirs,
devises, executors, administrators and other legal representatives, as the
case may be.
Section 13. 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
paragraph of this Agreement containing
<PAGE>
<PAGE> 11
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 14. Notices. All notices and other communications provided
for or contemplated by this Agreement shall be delivered by hand or sent by
certified mail, return receipt requested, addressed as follows:
If to an Indemnitee: c/o WLR Foods, Inc.
P.O. Box 7000
Broadway, Virginia 22815
Attn: James L. Keeler
If to the Company: c/o Cuddy International
Corporation
465 Richmond Street
Suite 600
London, Ontario
Canada N6A 5P4
Attn: Peter A. W. Green
or to such other address as the addressee may specify by written notice
pursuant to this Section 14. Notices or communications sent by mail shall
be deemed to have been given to the date of mailing. In the event of any
Indemnitee's death or incapacity, any notice or communication from the
Company may, at the Company's option, be addressed either to the Indemnitee
at his or her last address specified pursuant to this Section 14 or to the
Indemnitee's estate, executors, administrators, heirs, or legal
representative.
<PAGE>
<PAGE> 12
Section 15. 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 State of North Carolina without giving
effect to the conflict of laws.
Section 16. Jurisdiction, Venue and Service of Process. The parties
hereby irrevocably consent to the exclusive jurisdiction and venue of the
federal or state courts in Harrisonburg, Virginia in connection with any
action or proceeding arising out of or relating to this Agreement, any
document or instrument delivered pursuant to or in connection with this
Agreement, or a breach of this Agreement or any such document or
instrument. In any such action or proceeding, the parties waive personal
service of any summons, complaint, or other process and agrees that service
thereof may be made in accordance with Section 14. Within 30 days after
such service, or such other time as may be mutually agreed upon in writing
by the attorneys for the parties to such action or proceeding, the party so
served shall appear or answer such summons, complaint, or other process.
Should the party so served fail to appear or answer within such 30-day
period or such extended period, as the case may be, the party so served
shall be deemed in default and judgment may be entered by the plaintiff in
such action against the party so served for the amount as
<PAGE>
<PAGE> 13
demanded in any summons, complaint, or other process so served. The
parties covenant and agree that they will not commence or maintain any such
action or proceeding in any jurisdiction or forum other than the federal or
state courts in Harrisonburg, Virginia.
Section 17. 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 Company and WLR. 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 18. 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.
<PAGE>
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
WLR FOODS, INC.
By: __________________________________
Name:
Title:
CUDDY FARMS, INC.
By: ___________________________________
Name:
Title:
CUDDY INTERNATIONAL CORPORATION
By:____________________________________
Name:
Title:
17981-1
<PAGE> 1
[WLR FOODS, INC. LETTERHEAD]
FOR IMMEDIATE RELEASE Contacts: Delbert L. Seitz
Chief Financial Officer
703-896-7001
Gail E. Price, Director of
Corporate Communication
703-896-0403
WLR FOODS ANNOUNCES AGREEMENT TO ACQUIRE
CUDDY FARMS INC. FOOD DIVISION
Broadway, Virginia, July 28, 1994 -- WLR Foods Inc. (NASDAQ: WLRF) today
announced the signing of a definitive agreement to purchase the turkey
processing and production assets of Cuddy Farms Inc. in a transaction that
will grow WLR Foods into the nation's second largest turkey company. WLR
Foods will acquire Cuddy's three turkey processing facilities, a feed mill
and growout operations, and Cuddy's interest in a cold storage and
distribution facility, all in North Carolina, with additional growout
operations in South Carolina. Cuddy Farms is headquartered in North
Carolina and is a subsidiary of Canada-headquartered Cuddy International.
-more-<PAGE>
<PAGE> 2
WLR FOODS ANNOUNCES AGREEMENT TO ACQUIRE
CUDDY FARMS INC. FOOD DIVISION
July 28, 1994
Page 2
The purchase price for the Cuddy assets is approximately $73.8 million and
includes a five-year non-competition agreement. WLR Foods will pay
$43 million in cash and issue common stock for the balance. The
transaction will be handled as a purchase of assets, and not as a pooling
of interest. The purchase price is subject to certain post-closing
adjustments which are not expected to be material.
In making the announcement, James L Keeler, president and chief executive
officer of WLR Foods, commented: "WLR Foods has been talking with Cuddy
about this acquisition for several years, and we are excited to have Cuddy
now join the WLR Foods family and our first-rate turkey division. The
board's decision to acquire Cuddy's food division is another example of its
commitment to building shareholder value through smart, friendly
acquisitions. We are most pleased to expand WLR Foods significantly,
especially in further processed foods, without expanding the industry's
capacity. With Cuddy, we will become the nation's second largest turkey
processor, supplying 11% of the American turkey market sales in the coming
year. Building value for WLR
-more-<PAGE>
<PAGE> 3
WLR FOODS ANNOUNCES AGREEMENT TO ACQUIRE
CUDDY FARMS INC. FOOD DIVISION
July 28, 1994
Page 3
Foods shareholders has been our top priority, and we expect a positive
impact on earnings per share even before improvements and economies of
scale from this acquisition are realized. WLR Foods will achieve a billion
dollars in sales in 1995, ahead of our projected management goals."
Following the acquisition, Cuddy is expected to own between nine and 10.5%
of WLR Foods outstanding common stock. According to terms of the
agreement, Cuddy's stock will be voted with recommendations of WLR Foods
board of directors for four years unless there is an earlier change of
control in WLR Foods. Peter Green, chief executive officer of Cuddy
International, will be named to the WLR Foods Board of Directors at the
closing of the acquisition, which is expected within 30 days.
Cuddy will retain its farm division, a major supplier of turkey eggs and
poults.
WLR Foods is a fully integrated provider of high quality turkey and chicken
products primarily under the Wampler-
-more-<PAGE>
<PAGE> 4
WLR FOODS ANNOUNCES AGREEMENT TO ACQUIRE
CUDDY FARMS INC. FOOD DIVISION
July 28, 1994
Page 4
Longacre(r) label and retail ice under the Cassco(r) label. This
Fortune 500 company, with current annual revenues of $720 million, exports
to more than 40 countries and has processing operations in Virginia, West
Virginia and Pennsylvania, close to its major mid-Atlantic markets.
###
<PAGE> 1
[WLR FOODS, INC. LETTERHEAD]
July 28, 1994
Dear Fellow Shareholder:
We are very pleased to enclose your quarterly dividend check. If you
participate in our dividend reinvestment plan, you will receive your
activity statement within two weeks. But most importantly, I'm pleased to
enclose our announcement of the agreement to acquire Cuddy Farms, Inc. --
Food Division.
Cuddy's production numbers right now, when coupled with Wampler-Longacre,
Inc.'s, clearly make us second in the nation in the turkey industry without
changing market supply. Cuddy's product line is excellent, diversified and
further processed, exactly into the strategic direction WLR Foods is
headed. Close to us geographically, yet taking us into new market areas,
Cuddy will enable us to expand our entire distribution line.
Timing couldn't be better as we look forward to the Thanksgiving holiday
season with strong tom prices and quite adequate hen prices. We expect
this proposed merger to receive regulatory approval and to be completed by
late August. As turkey clearly becomes the meat of choice in the 1990s for
the American lifestyle and diet, Wampler-Longacre, with the new addition of
Cuddy Farms, will be even better positioned to meet customer needs.
On behalf of the Board of Directors, we appreciate your investment and
belief in WLR Foods and the promising future that each day becomes reality
at our company. Our commitment to enhance shareholder value continues day-
by-day, and we expect the market to reflect the success of our producers
and employees. Thank you for your continuing investment in WLR Foods.
Sincerely,
James L. Keeler
President and Chief Executive Officer
- over -<PAGE>
<PAGE> 2
[WLR FOODS, INC. LETTERHEAD]
FOR IMMEDIATE RELEASE Contacts: Delbert L. Seitz
Chief Financial Officer
703-896-7001
Gail E. Price, Director of
Corporate Communication
703-896-0403
WLR FOODS ANNOUNCES AGREEMENT TO ACQUIRE
CUDDY FARMS INC. FOOD DIVISION
Broadway, Virginia, July 28, 1994 -- WLR Foods Inc. (NASDAQ: WLRF) today
announced the signing of a definitive agreement to purchase the turkey
processing and production assets of Cuddy Farms Inc. in a transaction that
will grow WLR Foods into the nation's second largest turkey company. WLR
Foods will acquire Cuddy's three turkey processing facilities, a feed mill
and growout operations, and Cuddy's interest in a cold storage and
distribution facility, all in North Carolina, with additional growout
operations in South Carolina. Cuddy Farms is headquartered in North
Carolina and is a subsidiary of Canada-headquartered Cuddy International.
-more-<PAGE>
<PAGE> 3
WLR FOODS ANNOUNCES AGREEMENT TO ACQUIRE
CUDDY FARMS INC. FOOD DIVISION
July 28, 1994
Page 2
The purchase price for the Cuddy assets is approximately $73.8 million and
includes a five-year non-competition agreement. WLR Foods will pay
$43 million in cash and issue common stock for the balance. The
transaction will be handled as a purchase of assets, and not as a pooling
of interest. The purchase price is subject to certain post-closing
adjustments which are not expected to be material.
In making the announcement, James L Keeler, president and chief executive
officer of WLR Foods, commented: "WLR Foods has been talking with Cuddy
about this acquisition for several years, and we are excited to have Cuddy
now join the WLR Foods family and our first-rate turkey division. The
board's decision to acquire Cuddy's food division is another example of its
commitment to building shareholder value through smart, friendly
acquisitions. We are most pleased to expand WLR Foods significantly,
especially in further processed foods, without expanding the industry's
capacity. With Cuddy, we will become the nation's second largest turkey
processor, supplying 11% of the American turkey market sales in the coming
year. Building value for WLR
-more-<PAGE>
<PAGE> 4
WLR FOODS ANNOUNCES AGREEMENT TO ACQUIRE
CUDDY FARMS INC. FOOD DIVISION
July 28, 1994
Page 3
Foods shareholders has been our top priority, and we expect a positive
impact on earnings per share even before improvements and economies of
scale from this acquisition are realized. WLR Foods will achieve a billion
dollars in sales in 1995, ahead of our projected management goals."
Following the acquisition, Cuddy is expected to own between nine and 10.5%
of WLR Foods outstanding common stock. According to terms of the
agreement, Cuddy's stock will be voted with recommendations of WLR Foods
board of directors for four years unless there is an earlier change of
control in WLR Foods. Peter Green, chief executive officer of Cuddy
International, will be named to the WLR Foods Board of Directors at the
closing of the acquisition, which is expected within 30 days.
Cuddy will retain its farm division, a major supplier of turkey eggs and
poults.
WLR Foods is a fully integrated provider of high quality turkey and chicken
products primarily under the Wampler-
-more-<PAGE>
<PAGE> 5
WLR FOODS ANNOUNCES AGREEMENT TO ACQUIRE
CUDDY FARMS INC. FOOD DIVISION
July 28, 1994
Page 4
Longacre(r) label and retail ice under the Cassco(r) label. This
Fortune 500 company, with current annual revenues of $720 million, exports
to more than 40 countries and has processing operations in Virginia, West
Virginia and Pennsylvania, close to its major mid-Atlantic markets.
###
