-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, IX3Gzo0LMhNEvzxHgUxYlz0MV5Zpngft+0FvPc2pn2dRX1ozTKf+v3IN2x28oCU9 HWkc1asvsDQFfa17/uDQFg== 0000891836-94-000059.txt : 19940817 0000891836-94-000059.hdr.sgml : 19940817 ACCESSION NUMBER: 0000891836-94-000059 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19940729 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19940801 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WLR FOODS INC CENTRAL INDEX KEY: 0000760775 STANDARD INDUSTRIAL CLASSIFICATION: 2015 IRS NUMBER: 541295923 STATE OF INCORPORATION: VA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17060 FILM NUMBER: 94541113 BUSINESS ADDRESS: STREET 1: P O BOX 7000 CITY: BROADWAY STATE: VA ZIP: 22815 BUSINESS PHONE: 7038674001 MAIL ADDRESS: STREET 1: 800 CO OP DRIVE CITY: TIMBERVILLE STATE: VA ZIP: 22853 FORMER COMPANY: FORMER CONFORMED NAME: WAMPLER LONGACRE ROCKINGHAM INC DATE OF NAME CHANGE: 19881114 FORMER COMPANY: FORMER CONFORMED NAME: WAMPLER LONGACRE INC DATE OF NAME CHANGE: 19880209 8-K 1 FORM 8-K 1 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 2 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 -2- 3 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; -3- 4 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. -4- 5 (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. -5- 6 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 -6- 7 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. -7- 8 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. -8- EX-2 2 ASSET PURCHASE AGREEMENT 1 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 2 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 -ii- 3 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 -iii- 4 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 -iv- 5 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 -v- 1 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. 2 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 3 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. 4 (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. 5 (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 6 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; 7 (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 8 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 9 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; 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 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 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 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 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. 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. 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 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): 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. 19 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 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 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 22 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 23 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 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 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 26 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, 27 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. 28 (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. 29 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 30 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, 31 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 32 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 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. 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 35 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: 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: 37 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 38 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 39 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 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. 41 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 42 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) 43 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 44 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. 45 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 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 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.] 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 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 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 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 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 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 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 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:___________________________________ 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 9 ____________________________, ________________ of Cuddy Farms, Inc. My commission expires: _________________. ______________________________________ Notary Public JWF/mc/17939 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. 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 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 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 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 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 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. 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 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 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 ___________________________ ___________________________ ___________________________ 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. 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 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. 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. 15 Dated: ____________________ __________________________________ ________________________________(SEAL) Witness THIS VOTING TRUST CERTIFICATE MAY NOT BE TRANSFERRED WITHOUT THE EXPRESS WRITTEN CONSENT OF WLR FOODS, INC. EX-10.1 3 INDEMNIFICATION AGREEMENT 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; 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 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. 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 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 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 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 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 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, 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 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 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 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: EX-10.2 4 INDEMNIFICATION AGREEMENT 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 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 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 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 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 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 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. 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 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 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 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. 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 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. 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 EX-99.1 5 PRESS RELEASE 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- 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- 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- 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. ### EX-99.2 6 LETTER TO SHAREHOLDERS 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 - 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- 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- 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- 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. ### -----END PRIVACY-ENHANCED MESSAGE-----