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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No._____)*
WLR Foods, Inc.
________________
(Name of Issuer)
Common Stock
______________________________
(Title of Class of Securities)
929286 10 2
______________
(CUSIP Number)
James B. Blair
Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
Tel. (501) 290-4000
________________________________________________________
(Name, Address and Telephone Number of Person Authorized
to Receive Notice and Communications)
Copies to:
Leslie A. Grandis, Esq. Lawrence Lederman, Esq.
McGuire, Woods, Battle & Boothe Milbank, Tweed, Hadley & McCloy
One James Center 1 Chase Manhattan Plaza
901 E. Cary Street New York, New York 10005
Richmond, Virginia 23219 Tel. (212) 530-5732
Tel. (804) 775-1000
February 23, 1994
________________________________________________________
(Date of Event which Requires filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box|__|.
Check the following box if a fee is being paid with the statement|x|. (A fee
is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the
class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less
of such class.) (See Rule 13d-7).
Page 1 of 71
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SCHEDULE 13D
CUSIP No. 929286 10 2
-----------
1 NAME OF REPORTING PERSON:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) |__|
(B) |x |
3 SEC USE ONLY
4 SOURCE OF FUNDS*
BK, WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |__|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER 63
8 SHARED VOTING POWER 600,000
9 SOLE DISPOSITIVE POWER 63
10 SHARED DISPOSITIVE POWER 600,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
600,063
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.47%
14 TYPE OF REPORTING PERSON*
CO
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SCHEDULE 13D
CUSIP No. 929286 10 2
___________
1 NAME OF REPORTING PERSON:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WLR Acquisition Corp.
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) |__|
(B) |x |
3 SEC USE ONLY
4 SOURCE OF FUNDS*
BK
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |__|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER 600,000
8 SHARED VOTING POWER
9 SOLE DISPOSITIVE POWER 600,000
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
600,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.47%
14 TYPE OF REPORTING PERSON*
CO
3
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SCHEDULE 13D
CUSIP No. 929286 10 2
___________
1 NAME OF REPORTING PERSON:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Tyson Limited Partnership
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) |__|
(B) |x |
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |__|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER
8 SHARED VOTING POWER 600,063
9 SOLE DISPOSITIVE POWER
10 SHARED DISPOSITIVE POWER 600,063
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
600,063
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.47%
14 TYPE OF REPORTING PERSON*
PN
4
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SCHEDULE 13D
CUSIP No. 929286 10 2
___________
1 NAME OF REPORTING PERSON:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Mr. Don Tyson
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) |__|
(B) |x |
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |__|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER
8 SHARED VOTING POWER 600,063
9 SOLE DISPOSITIVE POWER
10 SHARED DISPOSITIVE POWER 600,063
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
600,063
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.47%
14 TYPE OF REPORTING PERSON*
IN
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Item 1. Security and Issuer.
This statement relates to the common stock, no par value ("Shares"),
of WLR Foods, Inc., a Virginia corporation (the "Company"). The address of
the principal executive office of the Company is P.O. Box 7000, Broadway,
VA 22815-7000.
Item 2. Identity and Background.
This statement is filed by Tyson Foods, Inc. ("Tyson") and WLR
Acquisition Corp. (the "Purchaser"), each of which are Delaware
corporations, Tyson Limited Partnership, a Delaware limited partnership
(the "Partnership"), and Mr. Don Tyson. The principal business address of
each of Tyson, the Purchaser, the Partnership and Mr. Don Tyson is 2210
West Oaklawn Drive, Springdale, Arkansas 72762-6999.
Tyson's principal business is the production, marketing and
distribution of a variety of food products consisting of value-enhanced
poultry, fresh and frozen poultry; value-enhanced beef and pork products;
value-enhanced seafood products; fresh and frozen seafood products; flour
and corn tortillas, chips and other Mexican food-based products. The
Purchaser was recently incorporated in Delaware and has not engaged in any
business since its incorporation other than that incident to its
organization and the transactions described in Item 4 hereof. Tyson owns
all of the issued and outstanding capital stock of the Purchaser and
therefore may be deemed to control the Purchaser. The principal business
of the Partnership is investments, which includes, among other things,
investment in Tyson capital stock.
Information regarding the directors and executive officers of Tyson
and the Purchaser is set forth on Schedule I hereto, which Schedule is
hereby incorporated by reference. All directors and executive officers of
Tyson and the Purchaser are United States citizens.
Mr. Don Tyson, Chairman of the Board of Tyson, and the Partnership,
collectively own 1,021,145 shares of Class A Common Stock of Tyson ("Class
A Shares") (approximately 1.3% of the outstanding Class A Shares) and
68,399,040 shares of Class B Common Stock of Tyson ("Class B Shares")
(approximately 99.9% of the outstanding Class B Shares), such Class A
Shares and Class B Shares representing approximately 89.7% of the aggregate
voting power of all outstanding Tyson capital stock. Mr. Don Tyson has a
54.4464 combined percentage interest as a general and limited partner in
the Partnership. The managing general partner of the Partnership is Mr.
Don Tyson. The other general partners are Leland E. Tollett, Director,
Chief Executive Officer and President of Tyson; Joe Fred Starr, Director
and Vice President of Tyson; John H. Tyson, Director and President of the
Beef and Pork Division of Tyson; James B. Blair, General Counsel to Tyson
and President of Purchaser; and Harry C. Erwin, Jr. Mr. Don Tyson, as
managing general partner, has the exclusive right, subject to certain
restrictions, to do all things on behalf of the Partnership necessary to
manage, conduct, control and operate the Partnership's business, including
the right to vote all shares or other securities held by the Partnership,
as well as the right to mortgage, pledge, or grant security interests in
any assets of the Partnership. The present principal occupation or
employment, and the name, principal business and address of any corporation
or other organization in which such employment is carried on, of each of
the general partners of the Partnership other than Mr. Erwin is set forth
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on Schedule I hereto. Mr. Erwin is a certified public accountant with
Erwin & Company, C.P.A., tax accountants to Tyson, whose address is 900
South Shackleford, Suite 515, Little Rock, Arkansas 72211. Mr. Erwin is a
United States citizen. By reason of Mr. Don Tyson's beneficial ownership
of the Class A Shares and the Class B Shares, he may be deemed to be a
controlling person of Tyson.
Neither Tyson, the Purchaser, the Partnership nor, to the best
knowledge of Tyson and the Purchaser, Mr. Erwin or any other person named
in Schedule I, has been, during the last five years (a) convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors)
or (b) a party to a civil proceeding of a judicial, or administrative body
of competent jurisdiction and as a result of such proceeding was or is
subject to a judgement, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
600,000 of the Shares owned beneficially by the Purchaser and Tyson as
of the date hereof have been purchased with general working capital funds
of Tyson, for an aggregate purchase price of $17,220,683.30 (net of
brokerage commissions). The remaining 63 Shares owned beneficially by
Tyson were acquired through the acquisition by Tyson of two corporate
entities in the 1980's. See Item 5 hereof for more detailed information
regarding Tyson's acquisition of Shares during the past 60 days. On March
1, 1994, Tyson contributed 600,000 Shares to the Purchaser as a
contribution to the capital of the Purchaser.
The total amount of funds required by Tyson and the Purchaser to
purchase the Shares heretofore purchased, to purchase all other Shares
outstanding on a fully diluted basis pursuant to the Offer (as defined in
Item 4) and to pay related costs and expenses is estimated to be
approximately $340 million. Tyson and the Purchaser have received a firm
loan commitment for $340 million from Bank of America National Trust and
Savings Association and BA Securities, Inc. to provide financing to Tyson
and the Purchaser for the Offer. A copy of such commitment letter is
attached hereto as Exhibit 99.2, and incorporated herein by reference.
Item 4. Purpose of Transaction.
On January 24, 1994, the Chairman of Tyson proposed to the Board of
Directors of the Company the acquisition of the Company by means of a
merger in which each Share would be exchanged for $30.00 per Share in cash.
A copy of Tyson's written proposal is attached hereto as Exhibit 99.3, and
is incorporated herein by reference. On February 6, 1994, the Company
announced that at a meeting of the Company's Board of Directors held on
February 4, 1994, the Company's Board of Directors rejected Tyson's
proposal. A copy of the letter, dated February 6, 1994, from Charles W.
Wampler, Jr. to Mr. Tyson describing the Company's decision is attached
hereto as Exhibit 99.4, and is incorporated herein by reference.
Commencing on February 7, 1994, Tyson purchased an aggregate of
600,000 Shares in open market transactions at prices not exceeding $29.375
per Share (net of brokerage commissions).
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On March 3, 1994, the Purchaser announced that it will commence a
tender offer on March 9, 1994, for all outstanding Shares (other than those
owned by Tyson, the Purchaser or their affiliates), pursuant to which
holders of Shares will receive $30.00 per Share in cash (the "Offer"). A
copy of the Purchaser's press release containing such announcement is
attached hereto as Exhibit 99.5, and is incorporated herein by reference.
The purpose of the Offer is for Tyson, through the Purchaser, to
acquire control of, and the entire equity interest in, the Company. Tyson
currently intends, as soon as practicable following consummation of the
Offer, to propose and seek to have the Company consummate a merger or
similar business combination (the "Proposed Merger") with the Purchaser or
another direct or indirect wholly-owned subsidiary of Tyson, pursuant to
which each Share then outstanding (other than Shares held by the Purchaser,
Tyson or any of their affiliates, Shares held by any subsidiary of the
Company and Shares held by shareholders who perfect their dissenters'
rights under the Virginia Stock Corporation Act (the "VSCA")) would be
converted into the right to receive an amount in cash equal to the price
per Share paid pursuant to the Offer. Upon consummation of the Proposed
Merger, the Purchaser would seek to cause the Shares to cease to be
authorized to be quoted on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") and to cause the deregistration of
the Shares pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
The Purchaser intends to request, at such time as it deems
appropriate, that the Company call a special meeting of shareholders of the
Company under Article 14.1 of the VSCA (the "Virginia Control Share
Acquisitions Act") for the purpose of allowing the disinterested
shareholders of the Company to decide whether to accord full voting rights
to Shares acquired by the Purchaser and its associates pursuant to, and in
contemplation of, the Offer.
If the Proposed Merger is submitted to the Company's shareholders and
the voting rights of Tyson and the Purchaser are not limited by operation
of the Virginia Control Share Acquisitions Act, Tyson and the Purchaser
intend to vote all Shares acquired pursuant to the Offer and otherwise
owned by them in favor of the Proposed Merger.
Regardless of whether the Purchaser is able to consummate the Proposed
Merger, if the Purchaser purchases Shares pursuant to the Offer, the
Purchaser presently intends to seek to obtain at least majority
representation on the Company's Board of Directors, and to exercise control
over the business and affairs of the Company.
If the Offer cannot be consummated by reason of the Company's recently
adopted poison pill rights plan or otherwise, the Purchaser and Tyson may
determine to seek majority representation on the Company's Board of
Directors through a proxy contest at the Company's next annual meeting of
shareholders, which under the Company's Bylaws would be held in October,
1994. In connection with such a proxy contest, the Purchaser would seek
to amend the Company's Bylaws to increase the size of the Company's Board
of Directors and seek to have representatives of the Purchaser elected to
fill the vacancies created by such increase as well as those seats on the
Company's Board of Directors which otherwise come up for election at such
annual meeting. The ability of the Purchaser to succeed in such a proxy
contest would depend on events and conditions at that time. No assurance
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can be given as to whether the Purchaser would proceed with such a contest
at that time or, if it chooses to pursue such a contest, whether the
Purchaser would prevail. If the Purchaser succeeded in obtaining control
of the Company's Board of Directors through such a proxy contest, the
Purchaser would then cause the Company to redeem the Company's poison pill
rights so as to allow consummation of the Offer. However, even if the
Purchaser obtains such representation and consummates the Offer, the
Purchaser would not necessarily be able to consummate the Proposed Merger
as a result of the requirements of Article 14 of the VSCA (the "Virginia
Affiliated Transactions Law"), if it is applicable to the Purchaser at such
time.
If the Purchaser is unable to acquire control of the Company, Tyson
and the Purchaser may choose to sell or otherwise dispose of some or all of
the Shares owned by them.
In contemplating the Offer, Tyson and the Purchaser have reviewed, and
will continue to review, on the basis of publicly available information,
various possible business strategies involving the Company and its
operations that they might consider in the event that they acquire control
of the Company. If and to the extent that Tyson and the Purchaser acquire
control of the Company or otherwise obtain access to the books and records
of the Company, Tyson and the Purchaser intend to conduct a detailed review
of the Company and its assets, corporate structure, dividend policy,
capitalization, operations, properties, policies, management and personnel,
and may on the basis of such review propose or seek to effect changes or
transactions with respect to or affecting any of such matters. Based on
its review of the information available to it at this time, Tyson and the
Purchaser do not currently intend or contemplate seeking to effect any
material changes in the operations or structure of the Company or in its
relationships with employees, suppliers or customers.
On February 6, 1994, the Company filed a lawsuit (the "Virginia
Action") in the United States District Court for the Western District of
Virginia, Harrisonburg Division (Civil Action No. 94-0012(H)) naming Tyson
as a defendant. The Virginia Action seeks a declaratory judgment that the
Company's Shareholder Protection Rights Agreement adopted on February 4,
1994, is valid and was duly adopted and, that any rights issued thereunder
are valid, binding and legally enforceable under state and federal law.
The Virginia Action also seeks a declaration that the Virginia Control
Share Acquisitions Act and the Virginia Affiliated Transactions Law are
constitutional under the Virginia and United States Constitutions and valid
under any other applicable law. The Virginia Action also seeks a
temporary, preliminary and permanent injunction enjoining Tyson and the
Purchaser from bringing any action in any other court relating to Tyson's
proposal to acquire the Company.
On February 25, 1994, Tyson answered the Company's complaint in the
Virginia Action, and filed counterclaims against the Company and all of its
directors. Tyson's counterclaims allege, among other things, that on
February 4, 1994, the Company's Board of Directors took a series of actions
designed to erect numerous barriers that would insulate the Company from
any acquisition not approved by the Company's existing Board of Directors.
Tyson's counterclaims allege that through its actions, the Company's board
attempted to impose its will on the Company's shareholders and deprive them
of the benefits of an acquisition proposal from Tyson or any other third
party not endorsed by the Company's existing Board of Directors.
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Specifically, Tyson's counterclaims allege that on February 4, 1994,
the Company's directors breached their duties to the Company's shareholders
by: (a) adopting a Shareholder Protection Rights Agreement and issuing the
poison pill rights pursuant thereto; (b) adopting certain executive
severance arrangements; (c) adopting certain severance packages for all
salaried and hourly clerical employees; (d) amending the Bylaws of the
Company relating to the status of the Chairman and Vice Chairman of the
Company as officers in an effort to enhance management's voting power to
block Tyson's merger proposal; (e) taking actions which denied the
Company's disinterested shareholders a full and fair opportunity to
consider Tyson's proposal; and (f) purporting to terminate the employment
by the Company, and/or status as officers of the Company, of certain of the
Company's directors, while at the same time continuing their engagement as
directors and promising to expend substantial sums for the benefit of those
directors in the future, again to enhance management's voting power to
block Tyson's merger proposal.
Tyson's counterclaims further allege that the Virginia Affiliated
Transactions Law and the Virginia Control Share Acquisitions Act are
unconstitutional and should be declared invalid. Tyson alleges that the
Virginia statutory scheme is unconstitutional because, among other things,
it conflicts with federal law regulating tender offers.
In its counterclaims, Tyson seeks a declaration that: (1) both of the
Virginia statutes referred to above, as well as Section 13.1-646 of the
VSCA, are unconstitutional; (2) that the poison pill rights and the various
severance arrangements adopted by the Company's Board of Directors are
invalid; (3) that none of the Company's directors whose status was
purported to be affected by the actions taken on February 4, 1994 will be
permitted to vote their shares in any shareholder referendum that might be
held under the Virginia Control Share Acquisitions Act; and (4) that the
Company's directors breached their fiduciary duties to the Company's
shareholders in taking the actions described in Tyson's counterclaims.
A copy of the Company's amended complaint is attached hereto as
Exhibit 99.6, and is incorporated herein by reference. A copy of Tyson's
answer, affirmative defenses and counterclaims is attached hereto as
Exhibit 99.7, and is incorporated herein by reference.
Except as described above, Tyson and the Purchaser have no present
plans or proposals with respect to the Company that relate to or would
result in any of the matters listed in Items 4(a)-(j) of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
As of the close of business on March 3, 1994, the Purchaser was the
direct beneficial owner of 600,000 Shares, which constitute in the
aggregate 5.47% of the Shares outstanding (based on 10,967,193 Shares
outstanding as of February 1, 1994, as reported in the Company's Quarterly
Report on Form 10-Q for the fiscal quarter of the Company ended January 1,
1994), and Tyson was the direct beneficial owner of 63 Shares (constituting
less than 1% of the outstanding Shares). Tyson, by virtue of its ownership
of all of the outstanding capital stock of the Purchaser, may be deemed to
own beneficially and have the power to vote and dispose of the Shares held
by the Purchaser directly. Additionally, the Partnership, by virtue of its
ownership of securities of Tyson, and Mr. Don Tyson, by virtue of his
control over the Partnership and ownership of securities of Tyson, may be
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deemed to own beneficially and have the power to vote and dispose of the
Shares held directly by the Purchaser and directly and indirectly by Tyson.
The Purchaser has the sole power to vote and dispose of the Shares
owned by it. Tyson has the sole power to vote and dispose of the Shares
owned by it.
Transactions in the Shares by Tyson and the Purchaser effected during
the past 60 days are described in Schedule II hereto, which Schedule is
hereby incorporated by reference. All such transactions were effected by
Tyson in the open market on the NASDAQ National Market System. On March 1,
1994, Tyson contributed 600,000 Shares to the Purchaser as a contribution
to the capital of the Purchaser.
No person other than the parties described in this Item 5 are known to
have the right to receive or the power to direct the receipt of dividends
from, or the proceeds from the sale of, the Shares owned directly by the
Purchaser.
Mr. James B. Blair, the President and a Director of the Purchaser and
General Counsel of Tyson, owns 100 Shares (constituting less than 1% of the
outstanding Shares), jointly with his wife, which Shares were purchased for
investment purposes in June, 1991. Mr. Blair and his wife jointly share
the power to vote and dispose of such 100 Shares. Mr. Wayne Britt, Vice
President and Treasurer of Tyson, owns 1,000 Shares (constituting less than
1% of the outstanding Shares), which Shares were purchased for investment
purposes over two years ago. Mr. Britt has the sole power to vote and
dispose of such 1,000 Shares.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Except as described herein, neither Tyson, the Purchaser, the
Partnership nor Mr. Erwin or any other person referred to in Schedule I
attached hereto has any contracts, arrangements, understandings or
relationships (legal or otherwise) with any person with respect to any
securities of the Company, including, but not limited to, transfer or
voting of any of the securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees or profits, division of
profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
99.1. Joint Filing Agreement among Tyson, the Purchaser, the
Partnership and Mr. Don Tyson.
99.2. Commitment Letter, dated March 1, 1994, between Tyson, Bank
of America National Trust and Savings Association and BA
Securities, Inc.
99.3. Letter dated January 24, 1994, from Mr. Don Tyson to the
Board of Directors of WLR Foods, Inc.
99.4. Letter, dated February 6, 1994, from Charles W. Wampler, Jr.
to Mr. Don Tyson.
99.5. Press Release of Tyson, issued March 3, 1994.
99.6. Amended Complaint of WLR Foods, Inc., filed February 9, 1994.
99.7. Answer, Affirmative Defenses and Counterclaims of Tyson,
filed February 25, 1994.
11
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
TYSON FOODS, INC.
March 4, 1994 By:/s/ Leland E. Tollett
_____________________
Name:Leland E. Tollett
Title:President and Chief
Executive Officer
12
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
WLR ACQUISITION CORP.
March 4, 1994 By:/s/James B. Blair
__________________
Name:James B. Blair
Title:President
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
TYSON LIMITED PARTNERSHIP
March 4, 1994 By: Mr. Don Tyson, its Managing
General Partner
/s/Don Tyson
_____________
Mr. Don Tyson
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
March 4, 1994 /s/Don Tyson
___________________
Name: Mr. Don Tyson
15
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SCHEDULE I
__________
The following table sets forth the name and present principal occupation or
employment, and the name, principal business and address of any corporation
or other organization in which such employment is carried on, of the
directors and executive officers of Tyson and the Purchaser. Unless
otherwise indicated, the principal business address of each director and
executive officer is 2210 West Oaklawn Drive, Springdale, Arkansas 72762-
6999. Each director and executive officer listed below is a United States
citizen.
DIRECTORS AND EXECUTIVE OFFICERS OF TYSON
Name Present Principal Occupation or Employment
____ _____________________________________
Don Tyson Chairman of the Board of Directors of Tyson.
Leland E. Tollett Vice Chairman of the Board of Directors
and President and Chief Executive Officer of
Tyson.
Neely Cassady Chairman of the Board and Chief Executive
Cassady Associates, Inc. Officer of Sunmark and Chairman of the Board of
P.O. Box 1810 Cassady Associates, Inc. and its affiliate,
121 West College H. H. Brewer Electric; Arkansas State Senator;
Nashville, Arkansas 71852 Director of Tyson.
Lloyd V. Hackley Chancellor and Tenured Professor of Political
Fayetteville State University Science at Fayetteville State University,
1200 Murchison Road Fayetteville, North Carolina; Director of
Fayetteville, N.C. 28301-4298 Tyson.
Shelby Massey Farmer and private investor; Director of Tyson
Sparks Commodities
Brokerage House
889 Ridgelake Blvd., Suite 30
Memphis, Tennessee 38120
Joe F. Starr Vice President of Tyson; Director of Tyson.
Barbara Tyson Vice President of Tyson; Director of Tyson.
John H. Tyson President, Beef and Pork Division and Director
of Governmental, Media and Public Relations of
Tyson; Director of Tyson.
Fred S. Vorsanger Private business consultant, Walton Arena
University of Arkansas Manager and Vice President (Emeritus) of the
P.O. Box 7777 University of Arkansas; Director of McIlroy
Fayetteville, Arkansas 72701 Bank & Trust Co. of Fayetteville, Arkansas;
Director of Tyson.
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Donald E. Wray Chief Operating Officer of Tyson; Director of
Tyson.
Ellis Brunton Group Vice President, Research and Quality
Assurance of Tyson.
Wayne Britt Vice President, International Sales of Tyson;
Vice President, Wholesale Club Division of
Tyson; Vice President and Treasurer of Tyson.
William Jaycox Group Vice President, Human Resources of Tyson.
Gary Johnson Controller of Tyson.
Gerald Johnston Executive Vice President, Finance of Tyson.
Greg Lee Senior Vice President, Sales and Marketing of
Tyson.
Bill Moeller Group Vice President, Swine Division of Tyson.
David S. Purtle Senior Vice President, Operations of Tyson.
Mary Rush Secretary and Director of Investor Relations of
Tyson.
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
Name Present Principal Occupation or Employment
____ __________________________________________
James B. Blair President, Secretary and a Director of the
Purchaser; General Counsel of Tyson.
Gerald Johnston Vice President and a Director of the Purchaser;
Executive Vice President, Finance of Tyson.
17
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
___________
Schedule of Transactions in the Shares
______________________________________
No. of Shares Price Per
Date Purchased Share *
____ ________________ ______________
<S> <C> <C>
2/07/94 196,700 28.788
2/08/94 103,500 28.877
2/09/94 73,000 28.933
2/14/94 22,000 28.892
2/15/94 25,000 29.125
2/16/94 25,000 29.375
2/22/94 80,200 28.151
2/23/94 54,100 28.185
2/24/94 20,500 28.125
<FN>
* Net of brokerage commissions.
</TABLE>
18
<PAGE>
Exhibit Index
Exhibit Sequential
Page No.
1. Joint Filing Agreement among Tyson,
the Purchaser, the Partnership and Mr. Don Tyson 20
2. Commitment letter, dated March 1, 1994,
between Tyson, Bank of America National Trust
and Savings Association and BA Securities, Inc. 21-29
3. Letter dated January 24, 1994, from Mr. Don Tyson
to the Borad of Directors of WLR Foods, Inc. 30-33
4. Letter, dated February 6, 1994, from
Charles W. Wampler, Jr. to Mr. Don Tyson 34
5. Press Release of Tyson, issued March 3, 1994 35-37
6. Amended Complaint of WLR Foods, Inc., filed
February 9, 1994 38-46
7. Answer, Affirmative Defenses and Counterclaims
of Tyson, filed February 25, 1994 47-71
19
<PAGE>
EXHIBIT 99.1
JOINT FILING AGREEMENT
In accordance with rule 13d-1(f) promulgated under the
Securities Exchange Act of 1934, the undersigned agree to the joint filing
of a Statement on Schedule 13D (including any and all amendments thereto)
with respect to the shares of common stock, no par value, of WLR Foods,
Inc., and further agree that this Joint Filing Agreement be included as an
Exhibit thereto. In addition, each party to this Agreement expressly
authorizes each other party to this Agreement to file on its behalf any and
all amendments to such Statement.
Date: March 4, 1994 WLR ACQUISITION CORP.
By: /s/James B. Blair
--------------------
Name: James B. Blair
Title: President
TYSON FOODS, INC.
By: /s/
---------------------
Name:
Title:
THE TYSON LIMITED PARTNERSHIP
By: Mr. Don Tyson, its
Managing General
Partner
/s/Don Tyson
-------------------------
Name: Don Tyson
Title: Managing General
Partner
/s/Don Tyson
-------------------------
Don Tyson
20
<PAGE>
EXHIBIT 99.2
March 1, 1994
Mr. Gerald Johnston
Executive Vice President-Finance
Tyson Foods, Inc.
2210 Oaklawn, Drawer E
Springdale, AR 72765-2020
Re: Acquisition of WLR Foods, Inc.
Dear Gerald:
Tyson Foods, Inc. (the "Company") has advised Bank of America National Trust
and Savings Association ("Bank of America") and BA Securities, Inc. ("BA
Securities") that the Company, through WLR Acquisition Corp., a newly-formed
corporation ("Acquisition Corp."), will offer to acquire all of the
outstanding shares of common stock (the "Shares") of WLR Foods, Inc. ("WLR"),
a Virginia corporation, pursuant to a cash tender offer (the "Tender Offer").
We understand that the Tender Offer would contemplate that, following
consummation of the Tender Offer, the Company would propose and seek to have
WLR consummate a merger of Acquisition Corp. with WLR (the "Merger").
The Tender Offer would be made upon the terms and subject to the conditions
of an Offer to Purchase satisfactory in form and substance to Bank of
America. All material changes or waivers in or to the terms of the Offer to
Purchase shall be satisfactory to Bank of America. We understand that the
Tender Offer will be conditional upon the purchase of at least that number of
Shares which when aggregated with the number of Shares of WLR owned by the
Company and to be contributed to Acquisition Corp. would constitute a
majority of the Shares on a fully diluted basis and upon Acquisition Corp.
having full voting rights with respect to all Shares acquired by it. We
understand that, even if such conditions are satisfied and the Tender Offer
is consummated, the Company and Acquisition Corp. may be unable to assure
that the Merger will be consummated following the consummation of the Tender
Offer. Bank of America shall be satisfied that the Shareholder Protection
Rights associated with the Shares shall be invalidated or inapplicable to the
transactions contemplated hereby or redeemed for a nominal amount.
You have also advised Bank of America and BA Securities that in order to
finance the Tender Offer and the Merger and related costs and expenses, the
Company will require a credit facility (the "Facility") of up to
$340,000,000. Neither the purchase of
the Shares pursuant to the Tender Offer nor the Merger shall require any
external financing or funding other than the Facility.
21
<PAGE>
Bank of America is pleased to advise you that it is willing, subject to the
terms and conditions contained in this letter and in the attached Summary of
Indicative Terms (the "Term Sheet") to provide the total financing for the
acquisition (the "Financing"). Upon your acceptance of this commitment,
however, Bank of America, through BA Securities, reserves the right to
syndicate part of the Facility to a group of financial institutions (together
with Bank of America, the "Banks") acceptable to the Company and to Bank of
America as agent for the Facility (in such capacity, the "Agent").
As previously discussed, BA Securities is a wholly-owned, direct subsidiary
of BankAmerica Corporation, the parent company of Bank of America, and is a
registered broker-dealer. You hereby authorize Bank of America to share
credit and other information regarding you with BA Securities.
The fees payable to BA Securities and to Agent in connection with the
Facility are set forth in a separate letter of even date herewith (the "Fee
Letter").
To assist BA Securities in its syndication efforts, you agree to provide upon
its request all information reasonably deemed necessary by it to successfully
complete the syndication of the Facility including, but not limited to,
information relating to the transactions contemplated hereby. Bank of
America and BA Securities acknowledge that they may be exposed to certain
information with respect to the Company, Acquisition Corp., WLR and the
Tender Offer which is of a confidential and proprietary nature ("Confidential
Information") and each agrees that the Confidential Information will be held
in confidence by Bank of America and BA Securities and will be divulged only
to those employees, agents, and representatives and controlled affiliates
that have an actual need to know said information and that have been informed
of the nondisclosure obligations hereunder; provided, however, that these
restrictions do not apply to information which is disclosed pursuant to a
requirement of a judicial or administrative order or as is otherwise required
by law (provided no disclosure will be made without first giving the Company
the opportunity to oppose the disclosure by appropriate judicial or
administrative proceedings). You hereby authorize BA Securities to commence
syndication efforts immediately and agree actively to assist BA Securities in
achieving a syndication that is satisfactory to BA Securities, Bank of
America and you. BA Securities, as arranger, reserves the right (in
consultation with the Company and Bank of America) to allocate the
commitments offered by the Banks.
22
<PAGE>
In addition to the conditions to funding or closing set forth in the Term
Sheet, Bank of America's commitment to provide the financing is subject to
(i) the accuracy and completeness of the information concerning WLR that is
publicly available or that has been or will be provided by you; (ii) the
negotiation and execution of a definitive bank loan agreement and other
related documentation, satisfactory to Bank of America; and (iii) there being
no material adverse change in the financial condition, business, operations,
properties or prospects of the Company or WLR and its consolidated
subsidiaries from the date of the audited financial statements most recently
provided prior to the date hereof.
The Term Sheet is intended only as an outline of principal terms and
conditions, and does not purport to summarize all of the terms, conditions,
covenants, representations and warranties, defaults, and other provisions
that will be contained in the definitive legal documentation for the Facility
and the transactions contemplated thereby. Such definitive legal
documentation will include other provisions customary for this type of
financing transaction or otherwise appropriate, in the view of the Banks, to
the Financing.
The Company hereby agrees to indemnify and hold harmless each of Bank of
America and BA Securities, and their respective directors, officers,
employees and affiliates (each, an "indemnified person") from and against any
and all losses, claims, damages, liabilities (or actions or other proceedings
commenced or threatened in respect thereof) and expenses that arise out of,
result from or in any way relate to the purchase of the Shares, the proposed
Merger, the Tender Offer, this commitment letter, or the providing or
syndication of the Facility, and to reimburse each indemnified person, upon
its demand, for any legal or other expenses (including the allocated cost of
in-house counsel) incurred in connection with investigating, defending or
participating in any such loss, claim, damage, liability or action or other
proceeding (whether or not such indemnified person is a party to any action
or proceeding out of which any such expenses arise), other than any of the
foregoing claimed by any indemnified person to the extent incurred by reason
of the gross negligence or willful misconduct of such person. Neither Bank
of America nor BA Securities shall be responsible or liable to the Company or
any other person for any consequential damages which may be alleged.
23
<PAGE>
In addition, the Company hereby agrees to reimburse Bank of America and BA
Securities from time to time upon demand for their reasonable out-of-pocket
costs and expenses (including the allocated cost of in-house counsel)
incurred by Bank of America or BA Securities in connection with the Facility,
regardless of whether the credit agreement is executed or the Facility
closes.
If the foregoing is satisfactory to you, please indicate your agreement and
acceptance below and return the enclosed counterpart of this letter to us.
Upon your delivery to us of a signed copy of this letter and the Fee Letter,
this letter agreement shall become a binding agreement, under New York law,
as of the date so accepted. This letter will survive the closing of the
Facility.
This letter and the Term Sheet are confidential and, except for disclosure to
your board of directors, officers and employees, to professional advisors
retained by you in connection with this transaction, to WLR or as may be
required by law (in connection with the Tender Offer, the Merger, or
otherwise), may not be disclosed in whole or in part to any other person or
entity without our prior written consent. No such consent shall give rise to
any third-party beneficiary as to our commitment.
This offer will terminate on March 11, 1994 unless on or before that date you
sign and return the enclosed counterpart of this letter and the Fee Letter.
This commitment will expire on May 10, 1994 if the Facility has not closed on
or before that date.
We are pleased to have this opportunity and look forward to working with you.
Very truly yours,
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ J. Stephen Mernick
J. Stephen Mernick
Senior Vice President
BA SECURITIES, INC.,
as Arranger
24
<PAGE>
By: /s/ John A. Finan
John A. Finan
Vice President
ACCEPTED AND AGREED TO:
this 2nd day of March, 1994
TYSON FOODS, INC.
By: /s/ Gerald Johnston
Title: EVP Finance
SUMMARY OF INDICATIVE TERMS
$400,000,000 Acquisition Facility
Borrower: Tyson Foods, Inc. (the "Borrower")
Arranger: BA Securities, Inc. (the "Arranger")
Agent: Bank of America National Trust and Savings
Association (the "Agent")
Purpose: General corporate purposes including the
purchase of the stock of WLR Foods, Inc. and
related expenses.
Amount: Up to $340,000,000. The aggregate of Bid
Loans and advances shall not exceed
$340,000,000.
Facility: A 364-day revolving credit facility (the
"Facility") providing for short-term advances
with interest periods of up to six months/180
days. Amounts borrowed and repaid may be
subsequently reborrowed and repaid during the
commitment availability period.
25
<PAGE>
In addition to drawing committed advances,
commitments may be utilized by inviting Banks
to bid for advances ("Bid Loans") during the
commitment availability period. Total
committed advances and Bid Loan outstandings
under the Facility may not exceed the Facility
Amount.
Term Option: At a predetermined time prior to maturing,
Borrower may elect to convert the outstanding
amount of the Facility to a one year term loan.
Commitment Availability: 364-days from the closing of the credit
agreement.
Availability: Committed advances shall be in a minimum
principal amounts of $5,000,000 and in
multiples of $1,000,000 in excess thereof and
subject to three days' prior written notice in
the case of LIBOR advances and two days' prior
written notice in the case of CD Rate advances.
Same day advances may be made on a Reference
Rate basis.
Bid Option: The Bid Loan Option will be available on an
uncommitted basis through a competitive auction
mechanism. The Borrower may from time to time
invite bids for advances.
Requests for such bids shall be for minimum
principal amounts of $5,000,000 and in
multiples of $1,000,000 in excess thereof. The
Borrower shall be under no obligation to accept
any of the bids received. Each Bank may (but
shall not be required to) bid for advances in
excess of its respective commitment.
26
<PAGE>
Voluntary Reduction or
Cancellation: Upon three business days' prior written
notice, the Borrower may reduce without penalty
all or a portion of the Facility unutilized for
advances, in minimum amounts of $5,000,000 and
in multiples of $1,000,000 in excess thereof.
Voluntary Prepayment: The Borrower may prepay at any time without
penalty committed advances minimum amounts of
$5,000,000 subject to three days' prior written
notice in the case of LIBOR advances provided
that LIBOR or CD Rate advances prepaid at any
time other than at maturity shall be subject to
reimbursement of break-funding costs and
related expenses, if any.
Commitment Fee: A per annum fee, payable quarterly in arrears
and upon termination of the Facility,
calculated on a 360-day basis on a the daily
unused portion of the Facility in accordance
with the attached Pricing Matrix. Bid Loans
will not count as usage in the calculation of
their fee.
Interest on Committed
Advances: The Borrower shall have the option to choose
between domestic dollar and eurodollar funding,
at per annum interest margins that will vary
according to credit ratings of the Borrower as
outlined in the attached Pricing Matrix.
Default Interest Rate: Interest will accrue at an agreed upon
premium of two percent (2%) above the
prevailing rate if an Event of Default exists.
Documentation: Documentation shall include but not be
limited to: representations and warranties,
covenants and events of default customary in
credit agreements.
27
<PAGE>
Indemnities: Those customary in credit agreements of this
type, including but not limited to increased
costs, capital adequacy, taxes and duties, and
break funding.
Representation
and Warranties: Those customary in credit agreements of this
type, including but not limited to: corporate
existence; corporate authorization;
enforceability; financial information;
environmental matters; compliance with laws; no
material litigation; payment of taxes; and full
disclosure.
Covenants: Those customary in credit agreements of this
type including, but not limited to, the
following financial covenants (which will
mirror the covenant definitions and levels in
the existing $350 million and $500 million
credit facilities):
1. Consolidated Net Worth
2. Interest Coverage Test Ratio
3. Debt Ratio
Events of Default: Those customary in credit agreements of this
type, including, but not limited to: failure to
pay any interest, principal, or fees payable
under the credit agreement; failure to meet
covenants; cross default to other debt of the
Borrower.
Governing Law: State of New York
28
<PAGE>
TYSON FOODS, INC.
$340,000,000 ACQUISITION FACILITY
Pricing Grid*
(in basis points)
<TABLE>
<S> <C> <C> <C> <C> <C>
===============================================================================================================|
| Senior Unsecured | Pricing Level | Pricing Level | Pricing Level | Pricing Level | Pricing Level|
| Debt Rating | I: | II: | III: | IV: | V: |
| | A-/A and | BBB+/Baa | BBB/Baa | BBB-/Baa | Below |
| | Above | | | | BBB-/Baa |
|--------------------------------------------------------------------------------------------------------------|
| Commitment Fee: | | | | | |
|---------------------|------------------|------------------|-----------------|-----------------|--------------|
| Total Undrawn Cost:| | | | | |
|---------------------|------------------|------------------|-----------------|-----------------|--------------|
| LIBOR Margin: | | | | | |
|---------------------|------------------|------------------|-----------------|-----------------|--------------|
| Base Rate Margin: | | | | | |
|---------------------|------------------|------------------|-----------------|-----------------|--------------|
|Total Drawn Cost: | | | | | |
|==============================================================================================================|
* Intentionally left blank for filing and exhibit purposes.
<FN>
Notes:
1. Senior unsecured debt ratings as assigned by Standard & Poor's or
Moody's rating agencies. In the event of a split rating, the higher
rating will determine the applicable pricing level.
2. In the event of a material adverse change in the loan syndication or
capital markets which would have a substantial negative impact on the
ability to syndicate the Facility, the Borrower and Agent agree to
renegotiate the above pricing and/or other terms and conditions in order
to successfully syndicate the Facility.
29
</TABLE>
<PAGE>
EXHIBIT 99.3
January 24, 1994
Board of Directors
WLR Foods, Inc.
Gentlemen:
We at Tyson have long admired WLR Foods and the outstanding job
you and your management team have done for your stockholders. We believe now
is an ideal time for your stockholders to have the opportunity to realize the
tangible benefits of your efforts through a combination of WLR Foods with
Tyson on the very favorable basis which I will describe in this letter.
We think that there are extremely attractive opportunities for
pursuing the continued growth and development of our two companies through
this combination in which it will be essential that you and members of your
management team play a significant role. Accordingly, one of our top
priorities is to negotiate mutually satisfactory arrangements enabling the
combined enterprise to have the benefit of your experience and that of WLR's
key managers.
I have discussed this matter thoroughly with our Board of
Directors, and we are pleased to propose a merger of WLR and Tyson or a
subsidiary of Tyson in which the stockholders of WLR would receive $30.00 in
cash for each of their WLR Foods shares.
We are confident that this proposal will be extremely attractive
to your stockholders. We also believe that a combination of WLR and Tyson on
the terms described below will prove to be the most advantageous alternative
to your stockholders, management, employees and other important
constituencies. This offer represents a 56% premium over last Friday's
closing market price of $19.25 per share. It also represents approximately
2.26 times WLR book value per share, and a price to earnings multiple of 21.4
times WLR's fiscal 1993 earnings. Accordingly, we believe our offer is a
full and fair one. We are willing to assure the communities where your
plants operate that they will benefit, not suffer, from this proposed merger.
We recognize that you must consider what alternatives, if any, may
be available for WLR and its stockholders, including a sales transaction with
a third party, a leveraged buyout or leveraged recapitalization of WLR. We
believe that the combination of Tyson and WLR will quickly prove to be the
most attractive alternative to you. For that reason, we believe it would be
30
<PAGE>
mutually desirable and advantageous if you would give us the opportunity to
negotiate with you and your Board of Directors a definitive merger agreement
embodying the terms of our proposal. We are prepared to negotiate in good
faith and to conclude a transaction which we believe will be enthusiastically
supported by your Board, stockholders, management, employees and other
constituencies.
Although we would prefer an all cash transaction, we would also be
willing to negotiate other possible ways of merging if a tax free
reorganization would be more desirable for a significant number of your
shareholders. A part stock, part cash merger would enable your shareholders
to participate in the future growth of the combined entity. We would also be
willing to attempt to time the closing of a transaction such that your
shareholders who purchased shares in your secondary offering last year
qualified on their capital gains holding period.
We respectfully request that any pertinent information which is
available to your management or is made available to your investment bankers
or third parties for the purpose of evaluating or pursuing alternative
transactions be made available to us as well, so that our proposal and its
terms may be formulated with the benefit of a level and fully illuminated
playing field.
Although, as a board, you have apparently been unwilling to meet
with us we believe it would be mutually desirable to give us a chance to meet
with you to answer any of your questions and to negotiate in good faith.
Our proposal is based upon and subject to the information we have
received to the effect that:
1. There are approximately 10,956,856 shares of WLR Foods common
stock outstanding;
2. That the disclosures in your 10-K's and 10-Q's are
substantially accurate and that there are no undisclosed matters that would
be financially material to the detriment of WLR Foods;
3. That the provisions of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 will be complied with prior to the consummation of a
merger;
31
<PAGE>
4. That your Board or management will not take any actions which
would materially reduce the value of WLR Foods to Tyson (normal conduct of
your business in the manner you have been conducting it in the past will not
constitute such a reduction);
5. That a majority of the disinterested Directors of WLR Foods
will make such approvals as necessary to prevent the Virginia Stock
Corporation Act from being an impediment to the proposed merger, and that the
Virginia Stock Corporation Act will not otherwise be used to disadvantage
Tyson in the purchase of WLR Foods stock, in the voting of WLR Foods stock,
or in any merger with Tyson or a subsidiary of Tyson;
6. That no "Poison Pills" or other "Anti-Takeover"
measures will be used to obstruct a merger and that you will repeal any such
measures prior to the consummation of any transaction; and
7. The preparation, negotiation and execution of a definitive
merger agreement containing such terms (including but not limited to
representatives, warranties and covenants) as are customary in transactions
of this nature.
We and our advisors are prepared to meet promptly with WLR
directors, management and advisors at their convenience in order to answer
any questions you or they may have about our offer and if appropriate, in
order to negotiate a mutually desirable and beneficial transaction.
We believe that under the existing case law including U.S. Supreme
Court cases concerning disclosure of merger negotiations, it is likely that
you will be advised that this proposal must be disclosed to your
stockholders. Similarly, our counsel has advised us that this proposal could
be sufficiently material to our stockholders to require its disclosure to
them. In view of these concerns, we believe that prudence requires that we
make a public announcement of this proposal before the opening of the market
tomorrow morning.
Since this matter is of the utmost importance, we feel compelled
to ask for a response to our proposal from your Board of Directors no later
than the close of business on Thursday, February 4, 1994, after which time
our proposal will expire unless extended in writing.
32
<PAGE>
We look forward to hearing from you at your earliest convenience.
Very truly yours,
Don Tyson
Chairman
33
<PAGE>
EXHIBIT 99.4
February 6, 1994
Mr. Don Tyson
Chairman, Board of Directors
Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, AR 72762-6999
Dear Mr. Tyson and Directors:
The Board of Directors of WLR Foods, Inc., along with management and its
professional advisors, has carefully considered your unsolicited offer to
negotiate the acquisition of WLR Foods, Inc. by Tyson Foods, Inc. We decline
your invitation to discuss your acquisition as we strongly believe it is in
the best long-term interests of WLR Foods, Inc. and its shareholders for our
company to remain independent. Our decision to remain independent is
unanimous.
Not only do we believe that WLR Foods, Inc. and our shareholders are best
served by the continued independence of the company, we further believe that
now would be the wrong time to sell. We have made significant capital
expenditures and sizable acquisitions in recent years to strategically
position this company to profit in a more favorable poultry cycle and
national economy. A sale at this time would deprive our shareholders from
realizing the benefits of the confluence of these factors.
Our Board is committed to taking whatever action it deems necessary and
appropriate to protect the interests of WLR Foods, Inc., its shareholders and
other constituencies.
Sincerely,
Charles W. Wampler, Jr.
Chairman, Board of Directors
WLR Foods, Inc.
34
<PAGE>
EXHIBIT 99.5
NEWS RELEASE
Tyson Announces Tender Offer For All
Shares of WLR Foods at $30 Per Share
Springdale, Arkansas (March 3, 1994) - Tyson Foods, Inc. (NASDAQ:
TYSNA), today announced that it will commence a tender offer on March 9, 1994
to purchase all outstanding shares of common stock of WLR Foods, Inc.
(NASDAQ: WLRF), at $30 per share in cash. Tyson stated that it beneficially
owns in excess of 5% of the outstanding shares of WLR common stock.
WLR Foods has approximately 11 million shares outstanding. The
tender offer will be subject to certain conditions, including the tender of
at least a majority of the shares. The tender offer however, will not be
subject to a financing condition.
On January 24, 1994, Tyson delivered to WLR Foods a proposal to
merge WLR Foods into Tyson in which WLR shareholders would receive $30 per
share in cash. On February 6, 1994, WLR Foods announced that its Board of
Directors had rejected Tyson's proposal.
Tyson stated that it intends to request a special meeting of WLR
Foods shareholders pursuant to the Virginia Control Share Acquisitions Act.
At such meeting WLR Foods shareholders will be asked to vote on a proposal to
accord full voting rights to the WLR Foods shares acquired by Tyson pursuant
to the tender offer. The Act provides that, unless such proposal is adopted,
Tyson will not have any voting rights with respect to shares purchased by it
in the tender offer. Approval of the proposal requires the affirmative vote
of the holders of a majority of the WLR Foods shares, other than those shares
held by Tyson and its associates or by officers of the Company or directors
of the Company who are employees. The purpose of the Control Share
Acquisitions Act is, in effect, to allow the disinterested shareholders of
WLR Foods to express a view on Tyson's tender offer.
On February 4, 1994, the WLR Foods Board of Directors took a
series of actions aimed at changing the status of four of its directors to
purportedly allow them to vote their shares of WLR Foods common stock on
Tyson's proposal under the Virginia Control Share Acquisitions Act. These
four directors hold in excess of 10% of the outstanding shares. The WLR
35
<PAGE>
Foods Board of Directors also changed the record date provisions of WLR
Foods' Bylaws with respect to special shareholders meeting called under the
Act, effectively eliminating advance notice of the record date.
"As a result of these actions," Mr. Don Tyson, Chairman of the
Board of Directors of Tyson, stated, "WLR Foods has attempted to frustrate
the voting rights of their own shareholders under the Act and to entrench
management."
Tyson has filed claims against WLR Foods and its directors in
federal district court in Virginia in response to the actions taken by WLR
Foods and its Board of Directors. Tyson's claims ask the court to negate the
improper actions taken by the Board and thereby allow a fair vote by the
disinterested shareholders of WLR Foods under the Virginia Control Share
Acquisitions Act.
Also in connection with its rejection of Tyson's proposal, the WLR
Foods Board of Directors adopted a poison pill rights plan and lucrative
golden parachute severance arrangements for WLR Foods executives as further
defensive and entrenchment tactics. The claims filed by Tyson also request
that the poison pill rights plan and lucrative golden parachute arrangements
adopted by WLR Foods after its receipt of Tyson's original merger proposal be
invalidated.
Tyson's claims also challenge the Virginia statutory scheme
regulating take-overs as an unconstitutional barrier to Tyson's ability to
acquire shares pursuant to the tender offer.
In addition to the tender of a majority of the outstanding shares,
the tender offer will be certain other conditions, including WLR Foods'
recently issued poison pill rights having been redeemed or invalidated or
otherwise found to be inapplicable to the tender offer; Tyson's satisfaction
that the restrictions contained in the Virginia Affiliated Transactions
Statute Act will not apply to the proposed merger between Tyson and WLR
Foods; and full voting rights for all shares of WLR Foods common stock
acquired by Tyson pursuant to the tender offer having been approved at a
special meeting of WLR Foods' shareholders, or Tyson's being satisfied that
the Virginia Control Share Acquisitions Act is inapplicable to Tyson or its
acquisition of shares of WLR Foods common stock.
Notwithstanding its commencement of the tender offer, Tyson stated
that it remains willing to enter into negotiations at any time with WLR Foods
regarding its proposal.
The Information Agent for the tender offer will be MacKenzie
Partners, Inc.
36
<PAGE>
For further information, contact Tyson's Director of Media, Public
and Government Affair, Archie Shaffer, III at 501-290-7232.
37
<PAGE>
EXHIBIT 99.6
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
HARRISONBURG DIVISION
WLR FOODS, INC.,
Plaintiff,
v. CIVIL ACTION NO. 94-0012(H)
TYSON FOODS, INC.,
Defendant.
AMENDED COMPLAINT FOR
DECLARATORY AND INJUNCTIVE RELIEF
Plaintiff WLR Foods, Inc. ("WLR"), by its undersigned attorneys,
for its complaint, upon knowledge with respect to itself and its own acts and
upon information and belief as to all other matters, alleges:
I. NATURE OF ACTION
8. This Action seeks a declaration that WLR's Shareholder
Protection Rights Agreement (the "Rights Plan"), adopted on February 4, 1994,
is valid and was duly adopted in full conformance with applicable law and
that any rights to be issued pursuant to the Rights Plan (the "Right(s)") are
valid, binding and legally enforceable under state and federal law.
9. This action also seeks a declaration that Article 14, Va. Code
13.1-1-725, et seq., and Article 14.1, Va. Code 13.1 1-728.1, et seq.,
of Virginia's Stock Corporation Act (collectively the "Articles") are
constitutional under the Virginia and the United States Constitutions and
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valid under any other applicable law. The Articles were adopted by the
Commonwealth of Virginia as a means of protecting Virginia corporations and
their shareholders.
II. JURISDICTION
10. This Court has jurisdiction over this matter pursuant to 28
U.S.C. 1331, 28 U.S.C. 1332 (a) (1) and 28 U.S.C. 2201.
III. PARTIES
11. WLR is a Virginia corporation with its principal executive
offices in Rockingham County, Virginia. Shares of WLR's common stock are
publicly traded on the NASDAQ National Market System.
12. Defendant Tyson Foods, Inc. ("Tyson") is a Delaware
corporation with its principal executive offices in Springdale, Arkansas.
IV. CLAIMS
13. By letter dated January 24, 1994, Tyson proposed to WLR's
board of directors a merger of WLR and Tyson (or a subsidiary of Tyson)
pursuant to which the shareholders of WLR would receive $30.00 in cash for
each of their WLR shares (a copy of the letter is attached hereto as Exhibit
A and is incorporated by reference). In that letter, Tyson stated, among
other things, that the proposal was contingent upon WLR's board of directors
not using what Tyson termed any "Poison Pills" or other "Anti-Takeover"
measures to "obstruct a merger." This language indicates that Tyson believes
39
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a basis may exist for challenging the validity of measures such as the Rights
Plan.
14. Tyson's January 24, 1994 letter also made its acquisition
proposal contingent upon the WLR board of directors taking necessary action
to prevent the Virginia Stock Corporation Act from being an "impediment" to
the proposed merger. This condition to Tyson's proposed acquisition
indicates that Tyson believes a basis may exist for challenging the validity
of provisions of Virginia's Stock Corporation Act ("Stock Corporation Act"),
including the Articles.
15. By letter dated February 6, 1994, WLR rejected Tyson's January
24, 1994 acquisition proposal (a copy of the letter is attached hereto as
Exhibit B and is incorporated by reference).
A. Articles 14 and 14.1 of Virginia's Stock
Corporation Act Are Constitutional
16. Article 14 of the Stock Corporation Act ("Article 14")
prohibits a corporation from engaging in certain transactions including
mergers, with an "interested shareholder" for three years from the date that
the person is determined by the corporation's board of directors to be an
"interested shareholder." An "interested shareholder" is defined by Article
14 to be, among other things, the beneficial owner of more than ten percent
of any class of outstanding voting shares of the corporation.
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17. Article 14 provides for certain exceptions from the
requirements of the Article, including an exception for transactions approved
by a majority of the disinterested directors of the corporation and two-
thirds of the voting shares (other than those shares beneficially owned by
the interested shareholder).
18. Article 14.1 of the Stock Corporation Act ("Article 14.1")
limits the voting rights of the shares of a corporation acquired, in a
"control share acquisition." A "control share acquisition" is defined by
Article 14.1 to be the direct or indirect acquisition of sufficient shares to
give the owner various specified levels of voting power in connection with
the election of directors of the corporation.
19. Article 14.1 provides for certain exceptions from its
requirements. For instance, the corporation's board of directors may take
certain actions, under specified procedures and conditions, that will remove
the acquisition from the limitations imposed by Article 14.1. In addition,
any acquiring person may request that the corporation call a special meeting
of the shareholders for the purpose of considering the voting rights to be
granted shares acquired or to be acquired in the control share acquisition.
20. Articles 14 and 14.1 were adopted by the Commonwealth of
Virginia as a means of protecting Virginia corporations and their
shareholders and do not conflict with either the Virginia or the United
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States Constitutions or any other applicable law.
21. In its January 24, 1994 letter, Tyson states that its proposal
is contingent on WLR's board of directors taking action "necessary to prevent
the Virginia Corporation Act from being an impediment to the proposed merger"
and the board of directors not using the Act to "disadvantage Tyson in the
purchase of" WLR's stock. Thus, rather than viewing and respecting the
Articles as a measure by the Commonwealth of Virginia to protect Virginia
corporations and their shareholders, Tyson apparently believes them to be an
"impediment" and "disadvantage" to its acquisition efforts.
B. WLR'S Shareholder Rights Plan Is Valid
22. At a meeting held on February 4, 1994, WLR's board of
directors adopted the Rights Plan. In adopting the plan, the board of
directors and each of its members acted in good faith, in conformity with
fiduciary and other duties, and conducted a reasonable investigation which
included receiving the advice of the company's management and legal and
financial advisors.
23. Pursuant to the Rights Plan, among other provisions, the board
of directors declared a dividend distribution of one Right for each
outstanding share of the Company's common stock (the "Common Stock"). The
occurrence of certain events, including commencement of a tender offer for
acquisition of at least 15% of WLR's common stock, entitles the holder of
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each Right to purchase one-hundredth of a share of WLR Participating
Preferred Stock at a price set by the board of directors in consultation with
the Company's financial advisers (the "Exercise Price"). The Participating
Preferred Stock would be designed so that each one-hundredth of a share has
economic and voting terms similar to those of one share of Common Stock.
24. If any person acquires 15% or more of the outstanding Common
Stock (the "Flip-in trigger"), then:
(i) Rights owned by the person acquiring such stock
or transferees thereof will automatically be
void; and
(ii) each other Right will automatically became a
right to buy, for the Exercise Price, that
number of shares of Common Stock or
Participating Preferred Stock having a market
value of twice the Exercise Price.
The Rights may be redeemed by the board of directors, at any time until a
Flip-in trigger has occurred, at a Redemption Price of $0.01 per Right.
25. WLR believes and alleges that the Rights Plan is valid and
lawful and was duly adopted in full conformance with applicable law, and that
its adoption was a legitimate exercise of business judgment by WLR's board of
directors, and not otherwise contrary to Virginia state law and federal laws.
The Rights Plan is binding in all respects, valid and enforceable.
26. Based on the language of Tyson's January 24, 1994 letter, WLR
believes and alleges that the defendant or persons or entities acting in
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concert with them or on their behalf will contest (a) the constitutionality
or validity otherwise of Articles 14 and 14.1 and (b) the validity of the
Rights Plan and the Rights. Thus, an actual controversy exists between the
parties to this action which is within the power of this Court to determine
pursuant to 28 U.S.C. 2201-2202. This Court's determination of the issues
presented herein will afford relief from uncertainty and insecurity with
respect to rights, status, and legal relations between the parties.
27. Without a declaratory judgment, WLR and its shareholders will
be deprived of the assurance that (a) Articles 14 and 14.1 are applicable to
Tyson's efforts to acquire the corporation and (b) the Rights Plan was
validly adopted and the Rights thereunder exercisable.
28. WLR has no adequate remedy at law as to matters which require
injunctive relief.
WHEREFORE, plaintiff hereby requests that the Court enter a
judgment:
a. Declaring that Articles 14 and 14.1 of the Virginia Stock
Corporation Act, are valid, lawful and binding under both the Virginia and
the United States Constitutions and any other applicable laws.
b. Declaring that:
(i) the Rights Plan and the
Rights are valid, lawful
and binding;
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(ii) the Rights Plan was
adopted in full compliance
with the laws of the
Commonwealth of Virginia
and any other applicable
law; and
(iii) the Rights distributed
pursuant thereto will be
valid and enforceable.
c. Temporarily, preliminarily and permanently enjoining defendant,
its affiliates, subsidiaries, officers, directors, and all others acting in
concert with them or on their behalf, from bringing any action in any other
court (a) challenging the constitutionality and validity of Articles 14 and
14.1 of the Virginia Stock Corporation Act; (b) attacking any aspect of the
Rights Plan, including the Plan's adoption under Virginia or in regard to any
other applicable law; and/or (c) otherwise relating to or involving Tyson's
proposal to acquire WLR and the response to that proposal by WLR and/or its
directors, officers or agents, under state law and/or federal law.
d. Awarding to WLR and against defendant, costs and disbursements
of this action, including reasonable attorneys fees, if permitted by law; and
e. Granting such further relief to WLR as may be just and proper
under the circumstances.
____________________________
Douglas L. Guynn
VSB No. 19748
Wharton, Aldhizer & Weaver
A Professional Limited
Liability Company
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100 South Mason Street
Harrisonburg, Virginia 22801
(703) 434-0316
Attorneys for Plaintiff
OF COUNSEL:
William R. Norfolk
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
(2120 558-4000
Dated: February 9, 1994
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EXHIBIT 99.7
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
Harrisonburg Division
______________________________
)
WLR FOODS, INC. )
)
Plaintiff, )
)
v. )
)
TYSON FOODS, INC., )
)
Defendant. )
)
and )
)
TYSON FOODS, INC., )
) Civil Action No. 94-0012(H)
Counterclaimant, )
)
v. )
)
WLR FOODS, INC., )
Counterclaim- )
Defendant, )
)
and )
)
GEORGE E. BRYAN, )
CHARLES L. CAMPBELL, )
STEPHEN W. CUSTER, )
CALVIN G. GERMROTH, )
WILLIAM H. GROSECLOSE, )
J. CRAIG HOTT, )
JAMES L. KEELER, )
HERMAN D. MASON, )
CHARLES W. WAMPLER, JR., )
WILLIAM D. WAMPLER, )
)
Additional Counter-)
Claim Defendants. )
______________________________)
ANSWER, AFFIRMATIVE DEFENSES
AND COUNTERCLAIMS OF TYSON FOODS, INC.
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ANSWER
Defendant Tyson Foods, Inc. ("Tyson"), by counsel, answers WLR Foods,
Inc.'s ("WLR") Amended Complaint as follows:
1. Admits that the Amended Complaint purports to seek a declaratory
judgment regarding the "Rights Plan" as that term is defined in the Amended
Complaint. The remaining allegations are legal conclusions which do not
require a response. To the extent a response is required, Tyson denies them.
2. Admits that the Amended Complaint purports to seek a declaration
that Article 14, Va. Code 13.1-725 et seq. and Article 14.1, Va. Code
13.1-728.1 et seq. of Virginia's Stock Corporation Act are constitutional
under the Virginia and United States Constitutions. The remaining
allegations are legal conclusions which do not require a response. To the
extent a response is required, Tyson denies them.
3. Denies, except to the extent the allegations constitute legal
conclusions which require no response.
4. Admits.
5. Admits.
6. Admits that Tyson believes a basis may exist for challenging the
validity of measures such as the Rights Plan. Tyson denies the remaining
allegations, except to the extent that the letter dated January 24, 1994 is
quoted accurately.
7. Admits that Tyson believes a basis may exist for challenging the
validity of provisions of Virginia's Stock Corporation Act. Tyson denies the
remaining allegations, except
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to the extent the letter dated January 24, 1994 is quoted accurately.
8. Admits.
9. Denies, except to the extent that the allegations constitute legal
conclusions to which no response is required.
10. Denies, except to the extent that the allegations constitute legal
conclusions to which no response is required.
11. Denies, except to the extent that the allegations constitute legal
conclusions to which no response is required.
12. Denies, except to the extent that the allegations constitute legal
conclusions to which no response is required.
13. Denies, except to the extent that the allegations constitute legal
conclusions to which no response is required.
14. Denies, except to the extent that the letter dated January 24, 1994
is quoted accurately.
15. Admits that Tyson is aware that the Board of Directors of WLR
adopted a "Shareholders Rights Plan." Tyson is without sufficient
information to admit or deny the remaining allegations and therefore denies
them.
16. Admits that Tyson is aware that the WLR Board of Directors adopted
a "Shareholders Rights Plan." Tyson refers to the full text of the
"Shareholders Rights Plan" for its content.
17. Admits that Tyson is aware that the WLR Board of Directors adopted
a "Shareholders Rights Plan." Tyson refers to the full text of the
"Shareholders Rights Plan" for its content.
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18. Denies, except to the extent that the allegations constitute legal
conclusions to which no response is required.
19. Tyson is without knowledge or information sufficient to form a
belief as to the truth of the allegations relating to WLR's belief. Tyson
denies the remaining allegations except to the extent that the allegations
constitute legal conclusions to which no response is required.
20. Denies, except to the extent that the allegations constitute legal
conclusions to which no response is required.
21. Denies, except to the extent that the allegations constitute legal
conclusions to which no response is required.
22. The remaining allegations are a demand for relief to which no
response is required. To the extent a response is required; Tyson denies
them.
23. Tyson denies every allegation not specifically admitted.
AFFIRMATIVE DEFENSES
1. The Amended Complaint fails to state a claim upon which relief may
be granted.
2. WLR is guilty of unclean hands.
3. The claims pleaded are barred by the doctrine of estoppel.
4. The claims pleaded are barred by the doctrine of illegality.
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5. The claims pleaded are barred by WLR's fraud, which is set forth in
the Counterclaims.
COUNTERCLAIMS
Counterclaim plaintiff Tyson, by counsel, states as its counterclaims:
The Parties
1. Tyson is a Delaware corporation with its principal place of business
in Arkansas. Tyson has operations throughout the United States, including
facilities in the Commonwealth of Virginia. At all relevant times, Tyson
owned shares of WLR. Tyson purchased additional shares at times during the
relevant period.
2. WLR is a Virginia corporation with its principal place of business
in Rockingham County, Virginia. Shares of WLR's common stock are publicly
traded on the NASDAQ National Market System.
3. George E. Bryan, Charles L. Campbell, Stephen W. Custer, Calvin G.
Germroth, William H. Groseclose, J. Craig Hott, James L. Keeler, Herman D.
Mason, Charles W. Wampler, Jr., and William D. Wampler "("Directors") are
members of the WLR Board of Directors.
Jurisdiction and Venue
4. This Court has subject matter jurisdiction over these counterclaims
pursuant to:
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(a) 28 U.S.C. 1331 because the matter in controversy arises
under the United States Constitution and the laws of the United States;
(b) 28 U.S.C. 1332 because there is complete diversity of
citizenship between the counterclaim plaintiff and the counterclaim
defendants and the amount in controversy, exclusive of interest and costs,
exceeds $50,000;
(c) 28 U.S.C. 1337(a) because the action arises under an act of
Congress regulating commerce;
(e) 28 U.S.C. 1367 under the principles of supplemental
jurisdiction.
Factual Background
5. On January 24, 1994, Tyson sent a letter to the Board of Directors
of WLR proposing a merger of WLR with Tyson (or a subsidiary of Tyson).
Tyson's merger offer proposed to pay WLR shareholders $30.00 per share in
cash for each of their shares. This offer represented a premium to WLR
shareholders of approximately $110 million or 56% over the pre-offer market
share price for WLR stock. Tyson requested a response to its January 24th
letter by close of business on February 4, 1994. No response from WLR was
received by that time.
6. On January 25, 1994, James L. Keeler sent a letter on behalf of the
Directors to WLR shareholders in which WLR promised to "keep you posted on
important corporate developments."
7. On February 4, 1994, the WLR Board held a meeting in which they
rejected Tyson's proposal. At that February 4
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meeting, WLR's board took a series of actions designed to erect numerous
barriers that would insulate WLR from any acquisition not approved by the WLR
board. Through its actions, WLR's board attempted to impose its will on
WLR's shareholders, by eliminating any opportunity for those shareholders to
exercise their shareholder rights thereby attempting to deprive them of the
benefits of an acquisition proposal from Tyson or any other third party not
endorsed by the Board of Directors.
8. Specifically, at the February 4, 1994 Board meeting, the Directors:
(a) adopted a Shareholder Rights Agreement ("Poison Pill");
(b) adopted certain executive severance arrangements ("Golden
Parachutes");
(c) adopted certain severance packages for salaried and hourly
employees ("Other Parachutes");
(d) amended the corporate bylaws of WLR relating to the roles that
the Chairman and Vice Chairman of WLR play as officers to enhance
management's voting power to block Tyson's merger proposal;
(e) took actions which denied WLR's disinterested shareholders the
opportunities to consider Tyson's proposal; and
(f) purported to terminate the employment of a number of WLR
officers, while at the same time promising to expend substantial sums for the
benefit of those officers in the future,
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again to enhance management's voting power to block Tyson's merger proposal.
These actions are described in WLR's Form 10-Q for the quarterly period
ending January 1, 1994, which was filed with the Securities and Exchange
Commission on February 15, 1994
("Form 10-Q").
9. Pursuant to the Poison Pill, the Board of Directors of WLR
declared, among other provisions, that a dividend of one "Right" per
outstanding share of WLR stock be issued to WLR stockholders.
10. The Poison Pill provides that it is triggered, or "flips-in," when
any person acquires voting control of 15% or more of the outstanding Common
Stock of WLR. Once triggered, the Poison Pill provides that the Rights owned
by the acquiring person are automatically void, and all other Rights holders
automatically may purchase for shares of Common Stock in WLR at half the
market price. The Board of Directors of WLR may redeem the Rights at anytime
before the flip-in trigger occurs for $0.01 per Right.
11. The Poison Pill adopted by the Board of Directors of WLR makes any
acquisition of more than 15% of the shares of WLR prohibitively expensive to
any prospective acquirors. In addition to imposing a severe financial
penalty on a potential acquiror, the "flip-in" of the Poison Pill would cut
that potential acquiror's voting rights almost in half. As a result, the
adoption of the Poison Pill has the effect of deterring any
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takeover offers for WLR except those that are approved by the Board of
Directors of WLR. Through their adoption of the Poison Pill, the Board of
Directors of WLR have entrenched themselves and the present officers of WLR
in their positions, and at the same time have deprived WLR's shareholders of
the opportunity to consider lucrative offers for their shares.
12. The Golden Parachutes fall into at least three categories. In the
first category is James L. Keeler, President and Chief Executive Officer of
WLR. If Keeler decides to leave WLR during a specified period after a
"Change of Control" (as that term is defined in the Golden Parachutes) in
WLR, Keeler will receive three times his total compensation, including base
salary, bonuses, and deferred compensation. In addition, Keeler would
receive a cash payment equivalent to the value of his stock options which are
not vested at the time of the Change of Control, and his fringe benefits such
as health insurance will be extended for three years. The Board provided
that Keeler's compensation will be "grossed up" if necessary to ensure this
level of compensation is received by Keeler as a net amount and any taxes
ordinarily paid by Keeler will be borne by WLR. Under Federal tax law,
however, a substantial portion of those payments may not be deducted by WLR
for federal income tax purposes.
13. In the second category of Golden Parachutes are Delbert L. Seitz,
Chief Financial Officer, Secretary, and Treasurer of WLR, and James L. Mason,
President of Wampler-Longacre, Inc., a subsidiary of WLR. The terms of
Messrs. Seitz' and Mason's
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Golden Parachutes are identical to those of Mr. Keeler's Golden Parachute,
including the "gross up" provision, except that they do not include deferred
compensation.
14. The third category of Golden Parachutes provide certain executives
with a payment equal to 150% of their annual compensation (base salary plus
bonuses) if the individual is terminated after a "Change in Control." The
individuals in the third category will also receive a cash payment equivalent
to the value of their stock options which are not vested at the time of the
Change of Control and their fringe benefits, such as health insurance, will
be extended for one and one-half years. Again, where applicable, these
benefits will be "grossed up" at WLR's expense.
15. The terms of the Other Parachutes are not disclosed in the 10Q,
thereby depriving Tyson and the other shareholders from learning the true
cost to WLR of these precipitous acts by the Directors. Also, because of the
gross-up provisions of the Golden Parachutes, the shareholders are further
deprived of learning information about the true cost to WLR caused by the
Directors' self-serving actions.
16. The Golden Parachutes adopted by the Board of Directors of WLR
provide for extremely lucrative financial benefits to WLR's present
management, a number of whom presently are members of WLR's Board of
Directors. At the same time, the Golden Parachutes and Other Parachutes
adopted by the Board of Directors make any acquisition of WLR considerably
more expensive, and thereby reduce the likelihood of any such acquisition, or
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at the least reduce the price that WLR's shareholders might receive as a
result of any such acquisition. WLR has never disclosed the true financial
cost of the Golden Parachutes and Other Parachutes that it has conferred on
its officers and employees. These costs, which cannot be calculated based on
available information run into an indeterminable number of millions of
dollars.
17. In addition, the WLR Board adopted a bylaw that provides that the
record date for any special meeting held pursuant to the Virginia Control
Share Acquisitions statute will be the day on which an Acquiring Person (as
defined by the statute) requests such a meeting. Other provisions of the
Virginia Control Share Acquisitions statute regarding the timing of such a
meeting, and the solicitations that may precede such a meeting, make it
extremely difficult for any third party to prevail against management at such
a meeting. The bylaw adopted by the Board compounds any such third party's
problems because it maintains voting rights for numerous shareholders who
will have sold their shares to purchasers who will not have had advance
knowledge of a record date. Accordingly, the purchasing shareholders will be
disenfranchised at a special meeting held pursuant to the Control Share
Acquisitions statute. On the other hand, the selling shareholders who will
maintain their voting rights will have little incentive to vote at all. Such
non-voters would be counted against the third party, and in favor of
management. The bylaw, in combination with other provisions of the Virginia
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Control Share Acquisitions statute, make it extremely unlikely that a third
party could effectively make its case to WLR's shareholders in connection
with a meeting, and thereby eliminates the possibility that WLR's
shareholders will have the opportunity to participate in a fair referendum
with respect to a third party's participation in WLR's future. Moreover, in
light of the bylaw adopted by WLR, the operation of the Virginia Control
Share Acquisitions statute would conflict with the operation of federal law
regarding the solicitation of proxies.
18. Also on February 4, 1994, the Directors amended the corporate
Bylaws purporting to "clarify" that the roles of the Chairman of the Board
and the Vice Chairman of the Board are officers of the Board, not of WLR.
Notwithstanding this supposed "clarification", in truth and in fact, both the
Chairman and the Vice Chairman of the Board have always acted as officers of
WLR, as well as to WLR's Board. Simultaneously, two members of the Board,
William D. Wampler and George E. Bryan resigned as Senior Vice Presidents;
and Charles W. Wampler, Jr., Herman D. Mason, William D. Wampler, and George
E. Bryan, the four of whom who control well in excess of 10% of the shares of
WLR, resigned as employees of WLR but remained as directors.
19. The sole motive for the actions described in paragraph 18 was to
circumvent the fundamental purpose of the Control Share Acquisitions statute
which is to leave solely to the disinterested shareholders the decision
whether "interested" shareholders will have a right to vote on a transaction.
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These cynical acts by the Directors are intended directly to dilute the
voting power of the disinterested shareholders, allowing these four directors
the opportunity to vote their shares, totaling well in excess of 10% of the
outstanding voting shares of WLR, while at the same time barring Tyson from
exercising its voting rights, all in direct violation of the plain intent of
the statute. The effect of the Board's actions is compounded by the fact
that under the Control Share Acquisitions statute, Tyson will be unable to
vote its shares, thereby enhancing the voting rights of the remaining
shareholders. Thus, unless the Board's actions are rescinded, its own
officers who have a plain interest in the outcome of a special meeting called
pursuant to the Control Share Acquisitions Act, will have enhanced voting
power because of the statute's provision that Tyson will not be able to vote
its own shares at such a meeting.
20. On February 6, 1994, defendant Charles W. Wampler, Jr., Chairman of
WLR, sent a letter to the Chairman of the Board of Directors of Tyson
reporting that the WLR Board unanimously rejected Tyson's offer of merger.
21. By letter dated February 6, 1994, WLR announced to the public that
on February 4, 1994 the Directors rejected Tyson's January 24, 1994 merger
proposal.
22. Also on February 6, 1994, the Directors sent a letter to WLR's
shareholders describing the Poison Pill.
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23. None of the February 6, 1994 letters nor any other voluntary
communication revealed the actions taken by the Board of Directors of WLR
that are described in paragraphs 8 (b)-(e), 12-14 or 17-18.
24. These actions were only made public through the compulsory filing
of the Form 10-Q, eleven days after the fact.
Count I
25. Tyson realleges paragraphs 1-24.
26. In its Amended Complaint, WLR seeks a declaration that the Virginia
Affiliated Transactions Statute is constitutional.
27. On its face and as applied, the Virginia Affiliated Transactions
Statute essentially gives a Virginia corporation's pre-existing board of
directors de facto veto power over mergers and therefore thwarts shareholder
democracy and burdens interstate commerce.
28. By denying a meaningful opportunity for success by any possibly
interested merger partner other than one receiving the pre-existing board's
approval, the Virginia Affiliated Transactions statute on its face and as
applied:
(a) is preempted by the Williams Act and therefore violates the
Supremacy Clause of the United States Constitution;
(b) violates the Commerce Clause of the United States
Constitution.
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29. The unconstitutionality of the Virginia Affiliated Transactions
Statute has injured and continues to injure Tyson because it:
(a) diminishes the value of Tyson's shares in WLR; and
(b) may affect Tyson's ability to merge with WLR.
Count II
30. Tyson incorporates paragraphs 1-24.
31. The Virginia Control Share Acquisitions statute defines "interested
shares" in pertinent part as the shares of a corporation subject to the
statute, the voting of which may be exercised or directed by (a) an acquiror
with respect to a control share acquisition; (b) any officer of a corporation
subject to the statute; and (c) any employee of a corporation subject to the
statute who is also a director of the corporation. Va. Code 13.1-728.1.
32. Among other things, the Virginia Control Share Acquisitions statute
provides that shares acquired in a control share acquisition, as that term is
defined by the statute, shall have no voting rights unless voting rights are
granted by resolution adopted by a majority of all the votes which could be
cast in an election of directors by all outstanding shares, other than
"interested shares," which are not entitled to vote on the matter. Va. Code
13.1-728.3(A)-(B).
33. The actions taken by the WLR Board of Directors on February 4,
1994, including (a) the amendments made to the WLR corporate bylaws relating
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to the roles that the Chairman and Vice Chairman play as officers of the
corporation; (b) the resignations of Additional Counterclaim Defendants
William D. Wampler and George E. Bryan as Senior Vice-Presidents; and (c) the
termination of compensation from WLR to Additional Counterclaim Defendants
Charles W. Wampler, Jr., Herman D. Mason, William D. Wampler, and George E.
Bryan, were intended to circumvent the clear purpose of the statute by
allowing "interested shares" owned by "management" to vote in a manner
prohibited by Va. Code 13.1-728.3(B).
34. Notwithstanding the actions taken by the WLR Board described in
paragraph 18, the shares owned or controlled by Additional Counterclaim
Defendants W. Wampler, C. Wampler, Bryan and Mason are "interested shares"
under the Virginia Control Share Acquisitions statute.
35. An actual controversy exists concerning whether the shares owned or
controlled by Additional Counterclaim Defendants W. Wampler, C. Wampler,
Bryan and Mason are "interested shares" prohibited from voting on a
resolution to extend voting rights to shares acquired in a control share
acquisition as provided by Va. Code 13.1-728.3(A).
36. Similarly, if the Court determines that the bylaw described above
in paragraph 18 is not rescinded, then such statute as applied:
(a) is preempted by federal proxy law developed under Section 14
of the Securities Exchange Act of 1934 and thereby violates the Supremacy
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Clause of the United States Constitution; and,
(b) violates the Commerce Clause of the United States
Constitution.
37. In the event the Directors' actions described in paragraph 15 are
not rescinded, Tyson is entitled to a declaratory judgment, pursuant to 28
U.S.C. 2201, that all WLR shares owned directly, indirectly or
beneficially, by Additional Counterclaim Defendants W. Wampler, C. Wampler,
Bryan and Mason, are "interested shares" under the Virginia Control Share
Acquisitions statute and accordingly may not be voted in the referendum
provided by the statute.
38. Alternatively, if the Court determines that the shares owned
directly, indirectly or beneficially, by Additional Counterclaim Defendants
W. Wampler, C. Wampler, Bryan and Mason, are not "interested shares" under
the Virginia Control Share Acquisitions statute, then such statute as
applied:
(a) is preempted by the Williams Act and therefore violates the
Supremacy Clause of the United States Constitution;
(b) violates the Commerce Clause of the United States
Constitution.
39. The unconstitutionality of the Virginia Control Share Acquisitions
statute as applied has injured and continues to injure Tyson because it:
(a) diminishes the value of Tyson's shares in WLR; and
(b) may affect Tyson's ability to merge with WLR.
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Count III
40. Tyson realleges paragraphs 1-24.
41. The operation of the Virginia Affiliated Transactions Statute, the
Virginia Control Share Acquisitions statute, and Va. Code 13.1-646, taken
together, on their face and as applied, gives a Virginia corporation's pre-
existing board of directors a de facto veto power over mergers, and therefore
thwarts shareholder democracy and burden interstate commerce by, among other
things:
(a) allowing intransigent management to manipulate the record date
for determining stock ownership to deprive shareholders of the ability to
vote their shares in a fully informed and meaningful way;
(b) discouraging shareholders from voting their stock by
permitting a discriminatory poison pill to be adopted in the face of a
noncoercive proposal, particularly when combined with the manipulation of
these statutes by the Board as in this case;
(c) frustrating the full purposes and objectives of Congress in
enacting the Williams Act by giving intransigent management the ability to
impede a noncoercive proposal without consulting shareholders; and
(d) impermissibly tilting the balance between management and an
acquiror in the context of a noncoercive proposal.
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42. By denying a meaningful opportunity for success by any possibly
interested merger partner in the face of intransigent management, the
operation of the Virginia Affiliated Transaction statute, the Virginia
Control Share Acquisitions statute, and Va. Code 13.1-646, taken together,
on their face and as applied,
(a) are preempted by the Williams Act and therefore violate the
Supremacy Clause of the United States Constitution;
(b) violate the Commerce Clause of the United States Constitution.
43. The unconstitutionality of these Virginia statutes have injured and
continue to injure Tyson because they:
(a) diminish the value of Tyson's shares in WLR; and
(b) may affect Tyson's ability to merge with WLR.
Count IV
44. Tyson realleges paragraphs 1-24.
45. The Directors have fiduciary duties and a duty of loyalty to WLR's
shareholders and others.
46. The actions described in paragraphs 7-18 violate these fiduciary
duties; are contrary to the interests of WLR's shareholders; and are intended
to entrench WLR's present management in its positions at WLR by making an
acquisition by Tyson or any other third party practically impossible, all for
the purpose of protecting existing management and depriving shareholders the
opportunity to consider a non-coercive proposal.
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Specifically, the actions taken by the Board of Directors of WLR:
(a) allow intransigent management to manipulate the Record Date of
stock ownership to deprive shareholders of the ability to vote their stock;
(b) discourage shareholders from voting their shares by permitting
a discriminatory poison pill to be adopted in the face of a noncoercive
proposal;
(c) frustrate the full purposes and objectives of Congress in
enacting the Williams Act by giving intransigent management the ability to
defeat a noncoercive proposal without consulting shareholders;
(d) impermissibly tilt the balance between management and a
potential acquiror in the context of a noncoercive proposal;
(e) burden WLR with increased and undisclosed costs through
operation of the Golden and Other Parachutes;
(f) manipulate WLR's Bylaws and the status of WLR's officers
solely for the purpose of entrenching existing management;
(g) fail to disclose Board action to the shareholders in a timely
and meaningful way; and
(h) establish a series of corporate artifices in an attempt to
deprive the shareholders of the opportunity to consider the Tyson proposal in
a fully-informed manner.
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47. These violations have injured and continue to injure Tyson because
they:
(a) diminish the value of Tyson's shares in WLR; and
(b) may affect Tyson's ability to merge with WLR.
Irreparable Injury
48. Unless preliminary and permanent injunctive relief is granted,
Tyson will be irreparably harmed because it will be denied the opportunity to
have its proposal freely and fairly considered by WLR's shareholders, and
WLR's shareholders will be irreparably harmed because they will be denied the
opportunity to consider and, if they so choose, to accept Tyson's proposal.
49. Unless preliminary and permanent injunctive relief is granted,
Tyson will be irreparably harmed in at least the following additional
respects:
(a) Tyson will be denied a meaningful opportunity to consummate the
proposal;
(b) WLR's management will hold a decided and unlawful advantage in
opposing Tyson's proposal;
(c) Tyson will be compelled to terminate its efforts to acquire control
of WLR due to the economic and financial uncertainties posed by the Virginia
statutes, the Poison Pill, the Golden Parachutes, the Other Parachutes, and
the Board's other actions described above;
(d) WLR's shareholders will be discouraged from tendering their shares
to Tyson because of the economic and financial uncertainty created by the
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Virginia statutes, the Poison Pill, the Golden Parachutes, the Other
Parachutes, and the Board's other actions described above;
(e) Tyson will be deprived of the opportunity to acquire control of
WLR, a unique business;
(f) Tyson will suffer a massive dilution of its equity and voting
interest in WLR, pursuant to a discriminatory, unlawful, and ultra vires
Poison Pill; and
(g) Tyson will be subjected to unnecessary and unreasonable delay in
obtaining the approval of any business combination by the incumbent Board of
Directors and management, which could prevent it from consummating an
acquisition of WLR.
50. Unless preliminary and permanent injunctive relief is granted,
WLR's shareholders, including any residing in the Commonwealth of Virginia,
will be irreparably harmed by losing their right to sell their shares to
Tyson at a premium.
51. The foregoing circumstances constitute a deprivation of Tyson's
rights under the Williams Act, the United States Constitution, and the laws
of the Commonwealth of Virginia, and will result in irreparable injury to
Tyson, to WLR shareholders, and to the investing public.
Relief Sought
52. Tyson has no adequate remedy at law.
53. Tyson seeks a declaration that:
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(a) the Virginia Affiliated Transactions statute (Va. Code 13.1-
725 et seq.) on its face and as applied is unconstitutional;
(b) the Control Share Acquisitions Statute (Va. Code 13.1-728.1,
et. seq.) as applied is unconstitutional;
(c) Section 13.1-646 of the Virginia Stock Corporation Act as
applied is unconstitutional;
(d) the Directors breached their fiduciary duties and duty of
loyalty in taking the actions described in the Counterclaims;
(e) the Poison Pill, Golden Parachutes and Other Parachutes are
invalid;
(f) notwithstanding the actions taken by the WLR Board described
in paragraph 18, the shares owned by Additional Counterclaim Defendants W.
Wampler, C. Wampler, Bryan and Mason are "interested shares" under the
Virginia Control Share Acquisitions Statute.
54. Tyson seeks to temporarily, preliminarily and permanently:
(a) enjoin defendants from taking any action invoking the terms of
the Virginia Affiliated Transactions and Control Share Acquisitions statutes;
(b) enjoin defendants from taking any action in furtherance of the
Poison Pill, Golden Parachutes or Other Parachutes;
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(c) directing the Directors to rescind the actions described in
paragraphs 8-18;
(d) directing the Directors to redeem the Poison Pill;
(e) directing the individuals identified in paragraph 18 to
rescind the transactions described in paragraph 18.
(f) directing the Directors to rescind the bylaw described above
in paragraph 18, or in the alternative enjoin the operation of such bylaw.
55. Tyson seeks such other and further relief as this Court may deem
just and proper, including its costs and attorney's fees.
Respectfully submitted,
TYSON FOODS, INC.
BY: /s/ R. Craig Wood _
Of Counsel
James L. Sanderlin (VSB #05878)
Thomas E. Spahn (VSB #17411)
Thomas F. Farrell, II (VSB #19109)
R. Craig Wood (VSB #24264)
McGUIRE, WOODS, BATTLE & BOOTHE
One James Center
901 East Cary Street
Richmond, VA 23219
(804) 775-1000
Russell E. Brooks
MILBANK, TWEED, HADLEY & McCLOY
1 Chase Manhattan Plaza
New York, NY 10005-1413
(212) 530-5000
James R. Sipe, Esq. (VSB #3742)
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LITTEN & SIPE
Post Office Box 712
410 Neff Avenue
Harrisonburg, VA 22801
(703) 434-5353
Attorneys for Defendant and
Counterclaimant, Tyson Foods, Inc.
CERTIFICATE OF SERVICE
A copy of this document was mailed on February 25, 1994, to:
William R. Norfolk, Esq.
SULLIVAN & CROMWELL
125 Broad Street
New York, NY 10004
Douglas L. Guynn, Esq.
WHARTON, ALDHIZER & WEAVER
100 S. Main Street
Harrisonburg, VA 22801
/s/ R. Craig Wood _
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